811.512351Double/30: Telegram

The Secretary of State to the Ambassador in France ( Edge )

117. Your 160, June 4, 1 p.m. The following for Alvord from Treasury:

  • “1. No agreement is to be signed or even initialed until you have returned and there has been time for study.
  • 2. As we read tentative draft all articles containing concessions on our part embody existing law or practice except articles 11 and 7–C.
  • 3. Department is willing to give favorable consideration to agreement embodying existing provisions of law and practice though it is unable to see why France should not grant reciprocal concessions. You should endeavor to obtain these as far as possible.
  • 4. Department does not agree to article 11–B and has some doubt as to 7–C.
  • 5. Department is unwilling to consider exemption from Federal surtaxes of income of nonresident French citizen from personal services, business, and real estate, even on reciprocal basis. This would mean end of Hawley Bill and complete abandonment of sound principles we are endeavoring to establish in field of double taxation.
  • 6. We have no objection to granting exemptions provided for in Hawley Bill on reciprocal basis but see no occasion to embody in treaty or agreement. As a practical matter it will be infinitely easier to obtain Hawley Bill than treaty. Any treaty going beyond provisions of existing law will raise constitutional question and give grave offense to House of Representatives.
  • 7. As a general proposition, we are unable to see why France by the imposition of an unjust tax should obtain from the United States greater concessions than we grant to those who do not indulge in unfair practices. If no agreement can be reached, Treasury will seriously consider advisability of recommending to Congress retaliatory legislation along the lines we discussed last winter.”

Stimson