811.5034/157

The Swiss Minister (Peter) to the Secretary of State

[Translation]
H. 10/1

Mr. Secretary of State: By direction of my Government, I have the honor to draw your attention to the case of the Swiss insurance companies established in the United States, which are subjected to a tax of 5% on the dividends from their American stocks, a tax fixed by the “National Industrial Recovery Act” of June 13 [16], 1933 (Section 213 (a)).48 These companies thus find themselves, with respect to American companies, to which, by virtue of an exception, this tax is not applicable, in an evidently inferior position, which does not seem to be in conformity with the provisions of the Treaty of Friendship, Commerce and Settlement concluded on November 25, 1850 between the United States of America and the Swiss Confederation. Paragraph 2 of Article II of that treaty provides in fact that “No higher impost, under whatever name, shall be exacted from the citizens of one of the two countries, residing or established in the other, than shall be levied upon citizens of the country in which they reside, nor any contribution whatsoever to which the latter shall not be liable”.

One of my predecessors, Minister Pioda, already had occasion in a note verbale addressed by him to the Department of State, under date of March 29, 1899,49 to maintain that a difference of treatment with regard to Swiss Insurance companies within the territory of the United States would be contrary to the provisions of Article II of the Treaty of November 25, 1850, without the slightest objection to this thesis being raised on the part of the American authorities.

It follows from this that the Government of the United States already implicitly recognized at that time the applicability of the treaty to juridical persons as well as to ordinary citizens.

My Government’s point of view in this matter is, moreover, in conformity with a decision rendered by the Supreme Court of the United States in October, 187950 with regard to the interpretation of the treaty in question, a decision in which the following maxim is found: “Where a treaty admits of two constructions, one restrictive as to the [Page 792] rights that may be claimed under it, and the other liberal, the latter is to be preferred.”

In the much more recent case of the New York Company, “Instant Index Corporation,” which had sued a Swiss debtor before a Swiss court, the United States Legation at Berne in a memorandum dated August 18, 1933,51 laid down the principle of the applicability of the Treaty of 1850 to juridical persons, although the latter speaks only of citizens. The Federal Political Department, in its reply of August 31, 193351 took pains to specify that: “no discrimination is made between juridical and physical persons.” This statement did not give rise to any objection on the part of the above mentioned diplomatic mission. It should be pointed out, moreover, that in several conventions (claims conventions) concluded by the United States of America—such as the conventions with Chile, 1892, Colombia, 1857, Ecuador, 1862, France, 1880, Great Britain, 1853, Mexico, 186852—juridical persons are designated as “citizens” of their country. Likewise, the Swiss Federal Tribunal, in its interpretation of the treaties concluded by the Confederation, did not hesitate to assimilate juridical persons to the “citizens” mentioned in the text of those treaties.

By complying with the request of my Government, the American authorities would have thenceforth full guarantees that the principle of equality claimed on behalf of the Swiss insurance companies established in the United States is already applied, and will be in the future also to American corporations established in Switzerland.

I therefore request you, Mr. Secretary of State, to be kind enough to use your good offices with the competent authorities in order to have an administrative decision rendered and promulgated by virtue of which Swiss juridical persons established in the United States, and, in particular, Swiss insurance companies, shall be exempted from the payment of the impost of 5% on dividends from American stocks owned by them.

Please accept [etc.]

Marc Peter
  1. 48 Stat. 195, 206.
  2. Not printed.
  3. 100 U. S. 483.
  4. Not printed.
  5. Not printed.
  6. William M. Malloy (ed.), Treaties, Conventions, etc., Between the United States of America and Other Powers, 1776–1909 (Washington, Government Printing Office, 1910), vol. i, pp. 185, 319, 432, 535, 664, 1128.