The Ambassador in France (Edge) to the Secretary of State
[Received February 27.]
Sir: With reference to my despatch No. 138 of January 27 last, and confirming my telegram No. 34, February 10, 4 p.m.,2 I have the honor to transmit herewith memoranda,3 arranged in their chronological order, of further conversations that have taken place with French officials, concerning the principle of double taxation as exemplified in the Boston Blacking Company case, as well as a copy of a memorandum prepared for me by Mr. Reagan, Acting Commercial Attaché, reporting a conversation which he had on February 10 with Signor Cantu, Assistant Commercial Counselor of the Italian Embassy.
The Department will note that on February 1 last, at the time of my purely formal and official visit to the Minister of Finance, M. Chéron, I raised the question of the Boston Blacking Company case and as a result of arrangements made by the Minister at that time I called on M. Borduge, Director General of Taxation, during the course of which conversation M. Borduge made the definite proposal that we enter into negotiations with the French Government looking towards the execution of a double taxation treaty.
It will further be noted that M. Borduge stated emphatically that the Ministry of Finance could not give its approval to the undertaking entered into by M. Campana of the Foreign Office to have the case held in abeyance until our two Governments have had an opportunity to discuss further the entire question raised by double taxation. (See my despatch No. 138, January 27, and my telegram No. 24, January 27, 7 p.m.2) However, in a subsequent conversation which Mr. Armour4 had with M. Campana, (Enclosure No. 23), the Department will note that M. Campana, although apprized of the refusal of the Ministry of Finance to concur in the proposal to hold the matter in abeyance, has taken steps to bring the matter directly to the attention of the Ministry of Justice, through the Procureur of the Republic, and is hopeful that his recommendations will have the desired effect.
I also desire to call the Department’s particular attention to the intransigeant attitude shown by M. Borduge with regard to the proposal made by Mr. Mitchell Carroll5 that the matter be handled by an amendment of the existing French law in the form of an interpreting [Page 8] act bringing foreign or at least American corporations owning the control of French subsidiary corporations within the purview of the law of July 31, 1920, which exempts French corporations owning subsidiaries from the dividend tax as to dividends received from their French subsidiaries.
In view of M. Borduge’s insistence that the only way of handling the matter is by the execution of a treaty, as well as the advice gratuitously tendered by M. Campana to Mr. Armour that he feels that it would be useless to attempt to reach a solution through any method such as unilateral action by the French Government, I feel that the time has come to open negotiations and therefore suggested in my telegram to the Department that, if it approves, Mr. Carroll be designated and that he be requested to come to Paris as soon as arrangements can be conveniently made. M. Borduge informs me that Mr. Carroll is expected in Geneva for the meeting of the Fiscal Committee of the League of Nations in May and it would therefore seem as though he should be able to advance the date of his departure sufficiently to enable him to have a few weeks here in Paris for discussions with the competent French officials.
I have [etc.]