The Ambassador in France ( Edge ) to the Secretary of State
[Received October 25.]
Sir: I have the honor to refer to my telegram No. 306 of September 30, 1930, 8 p.m., and to my despatch No. 913 of October 7, 1930,28 both on the subject of the proposed double taxation treaty.
In the aforementioned telegram I intimated that it was my purpose to seek a conference with M. Flandin, the Minister of Commerce, in relation to his intervention in the double taxation deliberations and, if deemed necessary, with M. Tardieu, the French Premier. In order that the Department may have complete information of all that has happened up to the eve of my departure for the United States tomorrow, Thursday, October 16th, I am briefly recapitulating the result of these further conferences.
On Friday, October 3rd, at 5:30 p.m., I called on M. Flandin by appointment. I was accompanied by Mr. Williamson S. Howell, Jr., First Secretary of the Embassy. I briefly outlined to M. Flandin the result of the official conferences with M. Germain-Martin, M. Borduge and others as related in my despatch under reference, emphasizing particularly my surprise as well as disappointment upon being informed that he, as Minister of Commerce, had requested that no final adjustment of the double taxation problem be entered into until various questions connected with the American tariff as they related [Page 42] to France be reviewed or disposed of. M. Flandin very frankly admitted that he had made this request and submitted as his reasons the insistence of influential members of the tariff commissions of the French Chamber of Deputies and the French Senate familiar with the negotiations for the settlement of double taxation, that no treaty be signed until some tariff matters could be adjusted in the interest of French producers. M. Flandin endeavored to impress me with the great difficulty he had had immediately before and after the passage of the new American tariff to persuade the committees of the two Houses from taking drastic action by way of reprisals in exchange for the raised American tariff applying to French exports. He unqualifiedly stated that he had been compelled to promise to use his influence against a settlement of double taxation for the time being at least. He assumed much credit for having dissuaded Parliament from taking any unfavorable action and said that he had been severely criticized in many French commercial circles because of that fact which was well known; that various French newspapers had called him a “weak Minister” because he recommended patience. (It is true that M. Flandin did take this position and that considerable criticism to that policy appeared in the French press for some little time after the passage of the tariff bill). M. Flandin reiterated his desire to maintain the most friendly attitude but said he was helpless under the circumstances. (See memorandum attached for further details.)29
I took the position that each problem should stand on its own merits and that we would never be able to adjust any problem if differences in tariff were always introduced as a reason for delay. I outlined to him various complaints made by American producers because of the recent raise in the automobile tariff and in the tariff on lard and other details with which we were both familiar, but he plainly indicated that the members of Parliament were so powerful that no matter what he personally thought, he was directed to take the action he had taken.
While I clearly indicated to M. Flandin that tariff had nothing whatever to do with double taxation, that it was purely a domestic question, that we never officially complained of the French tariff if it was non-discriminatory, and further emphasized the impossibility of adjusting problems when extraneous matters were constantly introduced, he frequently referred to the hope that the United States Tariff Commission would accord relief, and said that various requests for review or reexamination had been made through the French Embassy in Washington and the French Commercial Attaché, and that some indication had been given that relief would be afforded. I told him very frankly that all these investigations must be considered entirely [Page 43] on their individual merits as to the cost of production in the United States and competing countries, and that many times it was not France as much as France’s successful competitors at which a raised tariff was naturally aimed, but that under the United States policy all nations were treated absolutely alike and that even the Tariff Commission would be helpless to make changes unless, as I had indicated, the facts of the cost of production would warrant such changes. He outlined several commodities: walnuts, Roquefort cheese, canned mushrooms, clover seed, but, rather to my surprise, did not emphasize the more important schedules of silk, gloves, textiles, etc. In fact, he stated he would not complain about articles of which other countries furnished large amounts to the United States. The conference closed most pleasantly but the position of the Minister was clearly outlined as above.
On my return to the Chancery, I dictated a letter addressed to M. Flandin, reviewing the impossibility of the position as I viewed it, which I afterwards filed with M. Tardieu upon the latter’s request. A copy of this letter is enclosed.30
On October 7, 1930, at 6 p.m., I called upon M. Tardieu at the Ministry of the Interior by engagement. Mr. Armour, Counselor of the Embassy, accompanied me. I told M. Tardieu that I desired to discuss with him the present status of the proposed double taxation treaty. I indicated to him that we had apparently reached a position of status quo; that I had exhausted the various channels under him and that in view of my early departure for the United States, I felt that the entire subject should be discussed by us. He evinced much interest and indicated that he was generally familiar with the situation and seemed very glad to embrace the opportunity to talk it over. I summarized what had happened, which is outlined in full in previous despatches to the Department.
M. Tardieu admitted that the matter had been brought to the attention of the Council of Ministers by M. Flandin sometime back, in fact, four or five months ago, immediately following the passage of the American tariff and at the time when the feeling as to the tariff was quite acute in French political circles. He said that at the time the Council of Ministers had determined that while every effort should be made to reach an agreement on the taxation treaty, still it should not be finally signed until some indication on the part of the United States Tariff Commission was given that France’s many protests would have friendly consideration. I asked him why we had been permitted to go on with the taxation treaty even to the extent of being questioned as to power to sign a treaty when in any event no treaty could be executed. M. Tardieu plainly admitted [Page 44] that this seemed unfortunate and expressed his desire to try to remedy the situation in any possible manner. He, however, on two occasions during the conversation said that if the taxation treaty were signed at this time without some assurances regarding tariff, his “government would fall in three weeks.” He plainly exhibited his recognition that the various Ministers who have participated in these negotiations were in an embarrassing position as well as himself. He then asked if it were not possible for the representatives of the two Governments to get together on all problems between the two Governments that could be embodied in one commercial treaty just as they had concluded a treaty with Great Britain a few years ago. I told him that I was just as anxious as he was to endeavor to adjust all problems but that I recognized that this was a Herculean task and had proceeded with the taxation treaty independently because it seemed possible to effect a solution.
Our conversation lasted for an hour and half and ended with a suggestion made by M. Tardieu without any intimation from me that he would like to get together all the records in the matter, take them out to the country for two or three days and give me his best thought as to a method to relieve the situation. I expressed my appreciation of his interest and earnestness and, upon his assurance that such a memorandum would reach me before I sailed for the United States, I dropped that subject and opened the subject of naval disarmament, a report upon which has been made to the Department in another despatch.31 I am attaching a memorandum prepared by Mr. Armour giving more details of this interview.32
On October 9th, two nights after the conference above referred to, I again met M. Tardieu at a banquet, sitting next to him. After the exchange of the usual pleasantries, M. Tardieu, without intimation from me, again opened the subject of our conference two days before as it related to double taxation and a commercial treaty. He said that after our conference he had had ten representatives of the government in his office discussing the situation from every viewpoint and was leaving the next morning, Friday, October 10th, for the country at which time he would prepare the memorandum he had promised during the previous interview. In view of the fact that he had been collecting various material from the representatives of his government, I asked him if he would like to have some of the memorandums that we had prepared. He responded in the affirmative and later that night I despatched to his private address the letter I had prepared for M. Flandin, which I had not mailed, together with other memorandums dealing with the matter.[Page 45]
On the evening of October 14th, I received at the Embassy the promised memorandum, a copy of which is enclosed, together with copies of my two replies. Thus the matter stands.