811.512351Double/48: Telegram

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

209. I conferred yesterday with Mills on double taxation problem which meeting was participated in by several leading representatives of American business interests in France. Mills emphatically opposed any treaty understanding of any character with France at this time. He reluctantly promised with some reservations to sound out congressional leaders in the fall, but even then would he only give Treasury approval if our proposal could be made part of his Hawley bill program and if it were not submitted until and unless the Hawley bill passed which Mills admits is doubtful. In the meantime he would not agree that any understanding or agreement of French should be initialed or signed.

Mills likewise admitted quite frankly even if passed that the Hawley bill probably would not meet the French situation. He said that he took the above attitude because he did not think the treaty would be ratified on account of article 10. He went so far as to decline to approve a treaty at this time even if article 10 were corrected or eliminated. His reason for this was that he had told Garner and other [Page 24] congressional leaders that double taxation problems with foreign countries would be adjusted by reciprocal legislation (the Hawley bill being used as a basis) and that if a separate treaty were now signed with France such action would be considered by the congressional leaders as bad faith on the part of the Treasury Department.

Mr. Mills was informed that France is the only country having the objectionable quotité imposable and would be the only country with whom a separate treaty might have to be made; that it ought to be fairly easy to explain to the congressional leaders especially since they had already received word of it in no unfavorable light from Alvord and could present its ratification if they chose to do so.

It was made clear to Mills by all present that we had no hope of securing as advantageous an agreement, if any at all, in the fall and that reciprocal legislation under the terms of the Hawley bill even if passed was considered impossible by French officials.

All present united in showing the helplessness of American businessmen from now until fall. The unyielding attitude of Mr. Mills created keen disappointment and dissatisfaction among the American business representatives who, following his departure, indicated their desire to frankly present their dilemma to Congress through their home offices. I advised conservatism for present and believe that policy will be followed at least for the time being.

If this is the last word there seems nothing more we can do at this end although we shall of course explain to Borduge as best we can but will await an indication of the Department’s wishes before so doing.

Would suggest your showing this telegram to Dr. Adams.