The Ambassador in France (Edge) to the Secretary of State
[Received August 4—3:15 p.m.]
242. For State and Treasury Departments from Alvord:
“Our redraft of the proposed agreement containing necessary technical changes has been agreed to by French experts.
2. Question[s] of policy still remain, namely, (1) our granting exemption from normal tax on dividends, and (2) the effective date of the proposed relief from the double tax, the original draft placing the effective date as of June 1st, 1930, while we are asking May 1st, 1930.
I feel reasonably certain that an agreement on both of the above questions can be reached although, as I anticipated, it may be necessary for us ultimately to yield on both points. However the French have completely backed down on their clear undertaking with the Embassy prior to my coming over to put the agreement in final form and to initial it. They have asked a complete exemption from all surtaxes which of course they realize is impossible and they refuse even to discuss further the above two questions.
They suggest that we now prepare merely report to submit to the respective administrations setting out the provisions agreed to and the provisions not agreed to, leaving the latter for future negotiations whenever both Governments are willing to grant power to sign.
We are reliably informed that the Minister of the Budget took the position after the understanding with the Embassy that the agreement would be put in final form and initialed on both sides; that he would not permit the initialing by Borduge when the position of our [Page 29] administration was so uncertain. He knows Mr. Mills’ attitude and feels that the French should neither take any position so long as such an important official of our Government is seriously opposed to the agreement.
Ambassador Edge will see the Minister of the Budget Monday morning in an effort to adjust the matter.
We have a further conference Monday afternoon with the French experts.
The above is for your information in order that you may be in touch with developments. You will be advised promptly after the Monday conference.”
The above telegram was prepared by Alvord to be despatched last Saturday, August 2nd, but it was not sent as it was hoped that the meeting I was to have and did have with the Minister of the Budget this morning might settle the points of difference. However this meeting was quite unsatisfactory and I am therefore forwarding Alvord’s telegram in order to present matters in their proper sequence. I shall report fully concerning this morning’s and this afternoon’s meetings and the situation resulting therefrom.