711.672/122: Telegram
The Secretary of State to the Special Mission at Lausanne
251. Replying to Mission’s 545 of July 20, relating to the question of taxes imposed on Americans in disregard of the capitulations, the Department believes that at this late date it would be better not to attempt a settlement by embodying a compromise in the treaty. The Department considers that it will still be in a position to settle the question of taxes by direct negotiations with Turkey, since the understanding is that nothing in the treaty will prejudice the Department’s contention that the capitulations cannot be formally abrogated before the ratification of the treaty. But in view of the compromise [Page 1105] to which the Allies have agreed, the Department realizes that you may be unable to make our view acceptable to the Turks.
It now appears desirable to try to get treaty provision for most-favored-nation treatment as well as national treatment in the taxation of individuals. This view is impressed on the Department by the situation growing out of the collection of taxes and the Allied compromise which we may wish later to invoke. You are referred to Mission’s 432 of June 16,88 which provides for only national treatment, and to first paragraph of article 6 of original draft89 which provides for most-favored-nation treatment.