The Secretary of State to the Consul at Baghdad (Randolph)

Sir: The Department acknowledges the receipt of your despatch No. 548 of September 26, 1927, respecting the Iraq stamp law.

The Department’s position with respect to your paying the stamp tax is identical with that stated in its telegram to you of October 1, 6 P.M., regarding the payment by American nationals of the income tax levied by the Iraq Government. The legal principle on which the Department’s position is based is the same in both cases.

By virtue of the treaty concluded between the United States and the Ottoman Empire, May 7, 1830, the United States obtained certain rights in the territory of the Ottoman Empire, of which Iraq was at that time a part. The Department does not consider that the attempted abrogation of the Capitulations by Turkey in 1914, nor the separation of Iraq from Turkey, as a result of the late war, has impaired the rights obtained under the above mentioned treaty. The [Page 815] rights thus obtained will persist until superseded. The enjoyment of these rights may be suspended by the conclusion of a treaty such as that now under negotiation between the United States, Great Britain and Iraq, or in certain specific matters, such as taxes, when this Government has been requested to make certain laws applicable to American citizens and has given its consent thereto. In this connection see paragraph 3 of the Department’s telegram of October 1, above mentioned.

It is the opinion of the Department that the position taken by the British Adviser, as quoted in your report of September 26, 1927, entitled “Abrogation of Capitulations in Iraq”,80 is at variance with the position taken by the British Government at the Lausanne Conference and during the negotiation of the American-British Palestine Mandate Convention. In this latter connection, your attention is particularly called to documents 29–32 of the Department’s publication entitled “Mandate for Palestine”.

The Department desires that you discuss this question again with the appropriate authorities at Baghdad, emphasizing the fact that requests for this Government’s consent to the levying of new taxes on American nationals in territories under “A” mandate have always been sympathetically considered, but that until such consent is given this Government cannot but maintain that the collection of such taxes from American nationals is a violation of American treaty rights.

If, after discussing the matter with the appropriate authorities, you care to pay the stamp tax, the Department has no objection provided that when so doing, you recall in writing to the attention of the appropriate authorities the fact that you have acquainted them with the views of your Government and reserve the right, if and when your Government so directs, to claim full reimbursement for any amounts so expended.

I am [etc.]

For the Secretary of State:
W. R. Castle, Jr.
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