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71stCongress,3dSession......................HouseDocumentNo.825,Vol.III

PapersRelatingtothe
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1930
(InThreeVolumes)
VolumeIII
UnitedStates
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FRANCE6
NEGOTIATIONSFORATREATYBETWEENTHEUNITEDSTATESAND
FRANCEREGARDINGDOUBLETAXATION

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811.512351Double/4

TheAmbassadorinFrance(Edge)totheSecretaryofState
No.138Paris,January27,1930
ContactUs [ReceivedFebruary7.]

SIR:IhavethehonortorefertomytelegramNo.24ofJanuary27,7p.m.,(1)concerningthedoubletaxationproblemasrepresentedtheBoston
19942009 BlackingCompanycase.Allavailableinformationtotheconclusionthatcontinuedlitigationinthiscasewillresultadverselyfortheplaintiff.Following
Againstthe
severalconferencesandatmyrequest,theForeignOfficehasundertakeninformallytohavethecaseheldinabeyanceuntilthetwoGovernmentshave
Grain
hadanopportunitytodiscussfurthertheentirequestionraisedbydoubletaxation.
TheMinisterofFinancehasagreedtothisplanofaction.

Asaresultoftheabovenegotiations,IencloseacopyandtranslationofanotedatedJanuary21,1930,togetherwithatranslationofitsenclosures,
whichIhavereceivedfromtheForeignOffice.(1)ItwillbeobservedthattheFrenchGovernmentfeelsthatbeforeenteringintoanysuchnegotiationsit

wouldbeadvisablefortherepresentativesofeachofthetwocountriestobemadeacquainted,atleastingeneralwiththefiscallegislationoftheother
State.TheenclosuresaresummariesofvariousfiscallawsinFrance.

IshouldappreciatetheDepartment'ssendingtomeatitsconveniencesummariesofStateandFederallawsoftheUnitedStatesandanyadditional
informationregardingFederalincomeorothertaxeswhichitfeelsmaybeofassistancetotheFrenchGovernmentincomparingourlawswiththeirsin
thematterofdoubleassessment.
Mr.Howell,FirstSecretaryofthisEmbassy,whohasbeenintimatelyassociatedwiththisquestion,willbeinWashingtonaboutmiddleofFebruary
andwilldiscussthecasefullywithyou.
CourtCase

Ihave[etc.]WalterE.Edge
1.Notprinted.

FRANCE7
811.512351Double/9
AmbassadorinFrance(Edge)totheSecretaryofState
No.221Paris,February14,1930.
[ReceivedFebruary27.]
SIR:WithreferencetomydespatchNo.138ofJanuary27last,mytelegramNo.34,February10,4p.m.,(2)Ihavetotransmitherewith
memoranda,(3)arrangedintheirchronologicalorder,offurtherconversationsthathavetakenplacewithFrenchofficialsconcerningtheprincipleof
doubletaxationasexaminingtheBostonBlackingCompanycase,aswellasacopyofamemorandumpreparedformebyMr.Reagan,Acting
CommercialAttache'reportingaconversationwhichhehadonFebruary10withSignorCantu,AssistantCommercialCounseloroftheItalian
Embassy.
TheDepartmentwillnotethatonFebruary1last,atthetimeofmypurelyformalandofficialvisittotheMinisterofFinance,M.Cheron,Iraisedthe
questionoftheBostonBlackingCompanycaseandasaresultofarrangementsmadebytheMinisteratthattimeIcalledonM.Borduge,Director
GeneralofTaxation,duringthecourseofwhichconversationM.BordugemadethedefiniteproposaltheweenterintonegotiationswiththeFrench

SIR:WithreferencetomydespatchNo.138ofJanuary27last,mytelegramNo.34,February10,4p.m.,(2)Ihavetotransmitherewith
memoranda,(3)arrangedintheirchronologicalorder,offurtherconversationsthathavetakenplacewithFrenchofficialsconcerningtheprincipleof
doubletaxationasexaminingtheBostonBlackingCompanycase,aswellasacopyofamemorandumpreparedformebyMr.Reagan,Acting
CommercialAttache'reportingaconversationwhichhehadonFebruary10withSignorCantu,AssistantCommercialCounseloroftheItalian
Embassy.
TheDepartmentwillnotethatonFebruary1last,atthetimeofmypurelyformalandofficialvisittotheMinisterofFinance,M.Cheron,Iraisedthe
questionoftheBostonBlackingCompanycaseandasaresultofarrangementsmadebytheMinisteratthattimeIcalledonM.Borduge,Director
GeneralofTaxation,duringthecourseofwhichconversationM.BordugemadethedefiniteproposaltheweenterintonegotiationswiththeFrench
Governmentlookingtowardsexecutionofadoubletaxationtreaty.
ItwillfurtherbenotedthatM.BordugestatedemphaticallythattheMinistryofFinancecouldnotgiveitsapprovaltotheundertakingenteredintoby
M.CampanaoftheForeignOfficetohavethecaseheldinabeyanceuntilourtwoGovernmentshavehadanopportunitytodiscussfurthertheentire
questionraisedbydoubletaxation.(SeemydespatchNo.138,January27,andmytelegramNo.24,27,7p.m(2)However,inasubsequent
conversationwhichMr.Amour(4)hadwithM.Campana,(EnclosureNo.2(3)),theDepartmentwillnotethatM.Campana,althoughapprizedofthe
refusaloftheMinistryofFinancetoconcurintheproposaltoholdthematterhastakenstepstobringthematterdirectlytotheattentionoftheMinistry
ofJustice,throughtheProcureuroftheRepublic,andishopefulthathisrecommendationswillhavethedesiredeffect.
IdesiretocalltheDepartment'sparticularattentiontotheattitudeshownbyM.BordugewithregardtotheproposalmadebyMr.MitchellCarroll
(5)thatthematterbehandledbyanamendmentoftheexistingFrenchlawintheformofaninterpreting
2.and3.latternotprinted
4.NormanArmour,CounselorofEmbassyinFrance.
5.OftheOfficeoftheGeneralCounsel,BureauofInternalRevenue.

8FOREIGNRELATIONS,1930,VOLUMEIII
actbringingforeignoratleastAmericancorporationsowningthecontrolofFrenchsubsidiarycorporationswithinthepurviewoflawofJuly31,1920,
whichexemptsFrenchcorporationssubsidiariesfromthedividendtaxastodividendsreceivedfromFrenchsubsidiaries.
InviewofM.Borduge'sinsistencethattheonlywayofhandlingthematterisbytheexecutionofatreaty,aswellastheadvicegratuitouslytendered
byM.CampanatoMr.ArmourthathefeelsthatwouldbeuselesstoattempttoreachasolutionthroughanysuchasunilateralactionbytheFrench
Government,IfeelthattimehascometoopennegotiationsandthereforesuggestedintelegramtotheDepartmentthat,ifitapproves,Mr.Carrollbe
designatedandthatheberequestedtocometoParisassoonasarrangementscanbeconvenientlymade.M.BordugeinformsmethatCarrollis
expectedinGenevaforthemeetingoftheFiscaloftheLeagueofNationsinMayanditwouldthereforeseemasthoughheshouldbeableto
advancethedateofhisdeparturesufficientlytoenablehimtohaveafewweekshereinParisfordiscussionswiththecompetentFrenchofficials.
Ihave[etc.]WalterE.Edge
_____________________________________

811.512351Double/16
TheActingSecretaryofStatetotheAmbassadorinFrance
No.137Washington,April23,1930
SIR:Iamtransmittingherewithtwocopiesofastatement"BasicPrinciplesofUnitedStatesTaxes",preparedbytheDepartmenttogether
withthecopiesoflawsandregulationsmentionedtherein.(8)ItissuggestedthatasetofthesebekeptintheEmbassy'sfilesandthattheotherset
betransmittedthroughappropriatechannelstoMr.Borduge,DirectorGeneralTaxation,inorderthathemaystudythembeforetheinformal
discussionstotakeplaceduringMaywithrepresentativesofthisGovernmentinconnectionwiththedoubleassessmentofAmericanfirmsoperatingin
FrancethroughFrenchsubsidiaries.
Inthisconnection,IconfirmtheDepartment'stelegramof19,1930,(8)advisingyouthatMr.E.C.Alvord,SpecialAssistanttotheSecretaryofthe
Treasury,Mr.MitchellB.Carroll,formallyoftheDepartmentofCommerceandnowattachedtotheOfficeofGeneralCounsel,BureauofInternal
RevenueandProfessorS.AdamsofYaleUniversity,aresailingontheGeorgeWashingtononApril23.TheyshouldthereforereachParisintheearly
partofMay.Asatpresentadvised,itiscontemplatedthattheywill
8.Notprinted.

FRANCE9
remaininParisuntilsuchtimeasitmaybenecessaryforProfessorandMr.CarrolltoproceedtoGenevainconnectionwithmeetingsoftheFiscal
CommitteeoftheLeagueofNations.InasmuchitisunderstoodthatMr.BordugewillalsoproceedtoGenevaforthesamepurpose,itisbelievedthat
thediscussionsbecontinuedatthatplace.Itisbelievedthatatotalperiodofthirtydaysshouldbesufficientatthistimetocoverthediscussionsinboth
cities.Mr.deWolfwhohasbeenhandlingtheDepartmentthequestionofdoubletaxationinFrance,issailingontheMajesticonMay15tospendhis
annualleaveinEuropeandexpectstobeinGenevaonMay22,atwhichtimehewillbepreparedtojoininthediscussionsuntiltheirconclusion.
AsindicatedintheDepartment'stelegramNo.62ofMarch19,itispresumedthatthediscussionswillconsistlargelyofcanvassingthepresent
situationandexploringthepossibilityofremedialactioneitherintheshapeoflegislationortheconclusionofatreaty.Whileitisnotexpectedthatthe
informaldiscussionstobeinitiatedinMaywillleaddirectlytotheconclusionofadoubletaxationtreatybetweentheUnitedStatesandFrance,the
basesforsuchatreatywill,however,bethoroughlygoneintoandthepossiblelimitswithinwhichthisGovernmentwillbepreparedtoconcludesucha
treatywillbeexplainedtotherepresentativesoftheFrenchGovernment.
TheEmbassywill,Iknow,extendeverypossibleassistanceinwiththeforthcominginformalconference.Yourpastinterestandendeavorsinthis
casehavebeenofgreatassistancetotheDepartmentindeterminingthebestproceduretobefollowedwithaviewtoprotectingtheimportantAmerican
interestsinvolvedinthiscase.AseparateinstructionisbeingsenttoyouwithregardpaymentofexpensesofthisGovernment'srepresentatives(9)

situationandexploringthepossibilityofremedialactioneitherintheshapeoflegislationortheconclusionofatreaty.Whileitisnotexpectedthatthe
informaldiscussionstobeinitiatedinMaywillleaddirectlytotheconclusionofadoubletaxationtreatybetweentheUnitedStatesandFrance,the
basesforsuchatreatywill,however,bethoroughlygoneintoandthepossiblelimitswithinwhichthisGovernmentwillbepreparedtoconcludesucha
treatywillbeexplainedtotherepresentativesoftheFrenchGovernment.
TheEmbassywill,Iknow,extendeverypossibleassistanceinwiththeforthcominginformalconference.Yourpastinterestandendeavorsinthis
casehavebeenofgreatassistancetotheDepartmentindeterminingthebestproceduretobefollowedwithaviewtoprotectingtheimportantAmerican
interestsinvolvedinthiscase.AseparateinstructionisbeingsenttoyouwithregardpaymentofexpensesofthisGovernment'srepresentatives(9)
Iam[etc]J.P.COTTON
_____________________________________________
811.512351Double/19
AmbassadorinFrance(Edge)totheSecretaryofState
Paris,May6,1930noon.
[ReceivedMay69a.m.]
No.130Your86,April24,5p.m.(9)Messrs.Adams,CarrollandAlvordhavearrivedandarenowhavingconferenceswhichwilllastforseveral
dayswithalltherepresentativesofAmericaninterestsconcerned.InformalnegotiationswiththeappropriateFrenchauthoritieswillbeginonThursday.

Edge

9.Notprinted

COMMENT:IonlyhighlightedafewthingsonebeingtheBureauofInternalRevenuebecauselatertheychangedittoInternalRevenueServiceand
thiswasin1930.AndInternalRevenueServicewasnotcreateduntil:
"TheofficialtitleoftheBureauofInternalRevenuewaschangedtothe
InternalRevenueservicebyTreas.Dept.Order15029,eff.July9,1953."
FromUSGovernmentManual