The Chargé in Germany (Gordon) to the Acting Secretary of State
[Received June 17—9:30 a.m.]
106. The law of June 1 for the decrease of unemployment contains in its second section a provision that when ascertaining taxable profits “expenditures for the purchase or production of machines, implements and similar articles of industrial or agricultural invested capital may be deducted” if the new article replaces a similar article in use up to that time and if the new article is of domestic production.[Page 461]
It is my view and that of the Consulate General that this constitutes a violation of article 8 of our Treaty of Commerce with Germany.99 There would seem to be a clear violation of the provision of this article concerning bounties and a single contention might be sustained with respect to the provision concerning internal taxes.
Representatives of American firms affected held a meeting yesterday at the American Chamber of Commerce and instanced specific cases where orders for American products had been withheld in view of the operation of this German law.
I shall be glad to take such action as the Department may desire to direct.