The Assistant Secretary of the Treasury (Hope) to the Secretary of State

My Dear Mr. Secretary: Prior to Secretary Mellon’s departure today he went over with me the French Tax situation, which he discussed with you today and asked me to write you.

As a result of preliminary and informal conferences an agreement in principle was reached between the American experts and the French experts, subject to submission here upon their return. Prior to the final drafting of the agreement, Mr. Alvord returned to the United States, principally in order to discuss the proposed agreement with Undersecretary Mills prior to the latter’s departure on his vacation.

The matter is represented to be of serious importance to American industry and financial institutions. The tentative agreement in principle is strongly urged by the American Chamber of Commerce in Paris and by many of the interested concerns in the United States.

The draft of the tentative agreement in its present form is unsatisfactory in many of its provisions. It has therefore been urged that immediate steps be taken to put the tentative agreement in final form, in order that it may be available for action by the United States whenever the administration is in a position to commit itself definitely upon it. It is probable that the administration will not commit itself until after we have had an opportunity to discuss the matter with Congressional leaders next December. However, if there is a reasonable opportunity of favorable Congressional action, an agreement in satisfactory form should be available.

We have been in telephone conversation with the American Embassy in Paris and we are advised that the French officials are willing to resume negotiations and to undertake to place the agreement in final form, and that immediate action on our part is most desirable in order to hold the situation in status quo.

From our point of view, a treaty will probably not be necessary. Rather, the Treasury has in contemplation the enactment of legislation, very likely as a part of the pending Hawley Bill,17a which will grant power to the executive to enter into an agreement of this kind. The Treasury does not know whether it will be possible from the French point of view to enter into an agreement of this kind otherwise than by treaty. Nevertheless the representative of the United States should keep this situation in mind.

I recommend that Mr. Ellsworth C. Alvord, Special Assistant to the Secretary of the Treasury, Mr. Mitchell B. Carroll, of the Office of the General Counsel, Bureau of Internal Revenue, and Mr. Williamson D. Howell, [Page 27] First Secretary of the American Embassy at Paris be designated to resume negotiations with the French officials and, if possible, to arrive at a satisfactory understanding, which is to be embodied in a form of an agreement, or treaty, to be drawn up and initialed by the parties. Mr. Alvord fully appreciates the inadvisability at the present time of committing the United States and the necessity of explaining to the French very carefully that any final draft so agreed upon and initialed will not commit the United States. Any further instructions, of course, can be taken up through cable. The Treasury defers to your judgment as to the advisability in including the above in the instructions to our representatives.

The American Embassy at Paris recommends very strongly that these further negotiations be undertaken at once. The French representatives have agreed to resume the negotiations on July 28th, prior to their departure on vacation. Delay until after their return from vacation might seriously jeopardize reaching any agreement with them. The only available vessel is the Europa, sailing from New York, Wednesday night next week, July 23, arriving in Cherbourg July 29. It is recommended, therefore, that Mr. Alvord be authorized to sail on the Europa.

Very sincerely yours,

Walter E. Hope
  1. H. R. 10165; it was not reported out of the Ways and Means Committee for action.