711.672/122: Telegram
The Special Mission at Lausanne to the Secretary of State
[Received 3 a.m.]
545. The question of taxes imposed upon Allied nationals in Turkey before the fiscal year 1922–23 and in disregard of the capitulations, has been settled by a compromise embodied in article 69 of the Allied treaty which corresponds to 75 of the original draft. This arrangement is probably the best the Allies could get, although it is not quite fair to those persons who have paid taxes under protest. It is reported that the possibility of attempts being made to enforce collection is very disturbing to Americans who did not pay taxes. So long as ratification of a treaty with us is in prospect it should be possible to stay collections by making representations to the Turkish authorities. But if once the treaty has been ratified, and if there has been no clear understanding beforehand, the Turks may try to take the ground that the utmost they are prepared to concede is represented by their compromise with the Allies. We should be warranted, on the strength of the position we take regarding the date of the effective abolition of the capitulations, in demanding not only that there should be no attempt to collect noncapitulatory taxes imposed before ratification of our new treaty, but also that taxes already paid under protest should be returned. We are not prepared to say how far our interests may be advanced by holding to our legal contentions on this point. Our opinion is that the Turks will be reluctant to give definite assurances that as against Americans they will not enforce collection of noncapitulatory taxes for any period before the new treaty comes into force, and we suppose that they will hardly agree to return noncapitulatory taxes already collected. Such assurances, on the part of Turkey, if they could be obtained, might be set forth either in a letter or in the minutes of a formal session, and might be merely a confirmation, in part, of our views on the existing situation. It is possible, however, [Page 1104] that the Department may desire, under the circumstances, either to adopt the Allied compromise or to have us avoid altogether any discussion of the question during our negotiations. It might not be feasible to adopt the compromise by a simple exchange of notes or other informal procedure, since there are limitations upon the competence of the Executive to accept modifications of treaty rights. But perhaps the compromise might be included in our new treaty if accompanied by an express reservation upon the question of the date of the termination of our capitulatory rights. The Mission requests instructions.