The Diplomatic Agent and Consul General at Tangier ( White ) to the Secretary of State

No. 27

Sir: I have the honor to inform the Department that, by note dated August 21, 1940, the Resident General of France, as Minister for Foreign Affairs of the Shereefian Government, has requested that increased taxation on petroleum products decreed by a Dahir of August 8, 1940, be made applicable to American ressortissants in the French Zone of Morocco.

Copy of the French text and English translation of the Dahir in question are annexed hereto.70

Instruction No. 756 of August 3, 1933 (File No. 881.512/113),70 indicates that the Department’s assent to a similar taxation Dahir, dated February 27, 1933, was subjected to reservations of the following purport: [Page 825]

The jurisdiction of the American Consular Courts over American nationals and ressortissants in the French Zone of Morocco is not abridged in any manner by reason of the Dahir in question.
The taxation referred to in the Dahir shall become applicable to American ressortissants as of the date of the notification of the Department’s assent thereto.
The taxation measures in question shall be applied, without discrimination, to persons, concerns or groups of whatever nationality they may be.
Article 7 of the above Dahir refers to the search of private dwellings or business premises in the event of suspected concealment of stocks. As regards premises occupied by American ressortissants, such search may be carried out only with the previous consent of the American Consul and with the assistance of a delegate of the American Consulate at Casablanca.

If the object of the Dahir of August 8, 1940, now under consideration, is purely the creation of additional revenue, the Department’s assent thereto might be given, subject to the above reservations.

I enclose herewith a copy of a letter dated September 9, 1940,73 containing Mr. Goold’s comments on this point, and also reporting the attitude of the Socony Vacuum Oil Company towards the question of this taxation.

It is not strictly correct to say that the Socony Vacuum Oil Company is the only American corporation doing business in Morocco under the extraterritorial regime. To speak only of oil companies, an American corporation, subsidiary of the Atlantic Refining Company, operates in Morocco on the same legal status as the Socony Company.

Nevertheless, in so far as their sales policy is concerned, it is true that the American Oil Companies, in order to conciliate the Moroccan authorities, usually submit to the Protectorate’s taxation measures and to regulations concerning the local oil trade without reference to the treaty position.

Since therefore the American Oil Companies are in fact already paying the tax on their products, as decreed in the Dahir of August 8, 1940, the question of the Department’s giving or withholding its assent thereto will have no practical influence upon the revenue purposes of the decree.

In so far as it is taxation upon a commodity of primary necessity, a consumption tax on gasoline at 1.45 francs per liter is rather a heavy tax. In actual circumstances, it is not gasoline taxation, whatever be the scale of increase, that will affect the Moroccan import trade in motor vehicles; however, this trade might be seriously impaired if taxation of this or perhaps greater severity were to be maintained with the return of normal facilities for the supply of motor fuels to Morocco.

[Page 826]

It is suggested, therefore, that the Dahir of August 8, 1940, herewith submitted, might be classed and treated as one of those exceptional war-time measures, in regard to which the Department’s reservations, as indicated in Instruction No. 1054 of December 4, 1939 (File No. 681.006/67)75 have already been made known to the French Residency General at Rabat.

Respectfully yours,

J. C. White
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  4. Foreign Relations, 1939, vol. iv, p. 692.