The Ambassador in Germany (Schurman) to the Secretary of State

No. 4504

Sir: I have the honor to refer to the Department’s cablegram No. 25 of 3 p.m. April 12, 1926, and my despatch of June 3 of that year87 relative to customs privileges for consular officers under Article 27 of the Treaty of Friendship, Commerce and Consular Rights of December 8, 1923.

During the past months consular officers in Germany have been complaining that the privileges apparently granted to them by the rights of the Treaty have been denied by the application of internal revenue taxation. This matter I personally took up with Dr. von Schubert, leaving with him an Aide Mémoire which is transmitted as enclosure No. 1 of this despatch. The reply of the Foreign Office is enclosed as No. 2. It is to be noted that the attitude of the German Government is that the position of the minor officials of their consular service in the United States has never been clarified and that their interpretation apparently is that such officials (mittlerer Konsulardienst) should be considered on a basis identical with that of consular officers of career. From the Note Verbale of the Foreign Office it would [Page 1108] appear that this matter is already in course of negotiation between the German Embassy at Washington and the Department in order to arrive at a definite premise which would place categorically consular officers and employees upon a reciprocal basis.

The attitude of the German Government relative to the internal revenue tax being assessed upon consular officers of career emanates from a decree of the Eeichsrat of December 7, 1928, (No. II a 15483). This decree was unknown to consular officers until their requests for free entry were refused pending the payment of the internal revenue tax. The consuls certainly should have been apprised of the decree and by adopting this arbitrary attitude the German Government caused a considerable amount of ill feeling inasmuch as under the terms of the Treaty the American Consular Corps had every right to feel that free entry was a privilege that was accorded them. The Embassy is informed that the above-mentioned decree has not been published and a copy cannot be obtained.

The attitude of the Department of State in claiming that neither by Article 27 nor Article 19 of the Treaty a claim could be based for the exemption of consular officers from the traffic and consumption taxes unless such exemption was placed on the basis of a most-favored-nation clause such as appears in the Spanish-American Treaty of Friendship of July 3, 1902,88 is not compatible with the regulations which the German Reich has adopted concerning the position or capacity of the minor officials employed in their consulates. Furthermore, it is pointed out in the Note Verbale that the German Government apparently desires to declare its position to the Department of State through its Embassy at Washington within a short period of time.

Consular officers in Germany have been informed that the question of their exemption from internal revenue taxes (innere Abgdben) is under discussion and that for the time being it is not advisable for them to import such articles as are taxable under the law.

In order to upset the decree of the Reichsrat it would be necessary for that body to pass a new decree which would have to receive general support and a member of the Embassy was confidentially informed at the Ministry for Foreign Affairs that there was little likelihood of this occurring. The relationship of this matter to the interpretation of the automotive tax and sick insurance law, as transmitted by despatches in this pouch should be duly noted.

In view of the above and as the Embassy has no knowledge of the negotiations pending in Washington to arrive at an agreement, I respectfully request that I be instructed in the premises.

I have [etc.]

Jacob Gould Schurman
[Page 1109]
[Enclosure 1]

The American Ambassador (Schurman) to the German Secretary of State for Foreign Affairs (Von Schubert)


The American Ambassador informed Dr. von Schubert that from information he had received from American consular officers in Germany, a decree had been passed by the Reichsfinanzministerium on December 7, 1928, which made it necessary for American consuls to pay duty upon articles imported by them in so far as they were and are subject to “innere Abgaben.”

Inasmuch as this regulation apparently is contrary to the terms of the Treaty of December 8, 1923, the Ambassador felt it necessary to refer to the decree and requested that through the good offices of the Ministry for Foreign Affairs steps be taken in order that the privileges accorded by the said treaty be granted to American consular officers.

[Enclosure 2—Translation]

The German Foreign Office to the American Embassy

V 526

Note Verbale

Adverting to its Note Verbale of November 7, 1928,—V M 5540—regarding the exemption of Mr. Lester L. Schnare, American Consul at Breslau, from the internal revenue tax levied on cigarettes, (Verbrauchssteuer auf Zigaretten), as well as with reference to the aide memoire of February 1, 1929, regarding exemption of American Consuls from “innere Abgaben”, presented on that day by His Excellency the Ambassador of the United States of America, the Foreign Office has the honor to inform the Embassy of the United States of America as follows:

Negotiations have been carried on in Washington for some time, between the German Embassy and the American Department of State relative to the interpretation of Article XXVII of the Treaty of Friendship, Commerce and Consular Service between the German Reich and the United States of America of December 8, 1923.89 In the course of these negotiations the question was discussed, amongst others, as to whether and to what extent the Consular Officers of both parties are to be exempted also from the “innere Abgaben” (taxes on production, manufacture, consumption and sale) levied besides customs duty, (cf. note of the Assistant Secretary of State to the Ambassador [Page 1110] of May 31, 1926—VM 3072—).91 Germany assumed at the beginning that, according to the organization of the German Consular Service, the uncommissioned consular officials (Konsularbeamte des mitileren Dienstes), (chancellors, secretaries, cashiers, file clerks) and higher employees, as for instance commercial experts, were to be counted as consular officers and would thus, if occasion should arise, enjoy exemption from the taxes in question. In the further course of the negotiations the American government then assumed the standpoint that

consular officers are to be understood as including only Consuls-General, Consuls, Vice-Consuls, Interpreters, Student-Interpreters, and Consular Agents, and
that neither on Article XXVII nor on Article XIX of the treaty a claim could be based for the exemption of consular officers from the traffic and consumption taxes, but that the German consular officers in America could be granted such exemption on the basis of the most-favored-nation clause in Article XVII of the treaty in connection with Article XV of the Spanish-American Treaty of Friendship of July 3, 1902, provided the German Reich granted the American, consular officers equal rights.

The American interpretation of the term “consular officers” in Article XXVII of the German-American Treaty is at present being examined again by Germany, as it does not take into account the position and work of the officials of the German middle consular service (mittlere Konsulardienst). The German Government reserves the right of shortly presenting its objections in this matter or of declaring its agreement to the American Government through the German Embassy in Washington.

The German Government agrees with the American Government that exemption of consular officers from “innere Abgaben” can not be deduced from the mere wording of the German-American Treaty of Friendship etc. The German Government, however, for reasons of organization, is not in a position to adopt the method suggested by the American Government for the exemption of consular officers from the “Abgaben” in question. It reserves the right, however, to revise its point of view, in case the American Government should later arrive at another, broader, interpretation of the term “consular officers”. The German Embassy in Washington has been instructed to inform the American Government in this matter.

The exemption from the cigarette tax applied for by Consul Schnare could unfortunately not be granted under the circumstances.