FISCAL ESPIONAGE

Dominion, Volume 7, Issue 2238, 26 August 1914, Page 3

FISCAL ESPIONAGE

HOW THE AMERICAN TARIFF IS UPHELD THREAT TO INVESTMENTS

French merchants and manufacturers doing business with the United States are greatly interested, in the fiscal espionage 'disclosures made as a consequence of the application for permis-. sion to an American bank in Paris to disclose particulars of one of its customer's accounts. The United States Treasury Department maintains an agent in Pans whose business it is to obtain information as to the price paid for goods "afterwards imported into the United States. This agent, Mr. Howland, has an office in tho United States Consulate General. The Paris dressmakers go so far as to say that he employs a small army of spies, but of this there is no proof. He admits, however, that he goes to business houses and asks them to state what price Mr. oi- Mrs. So-and-So paid for such-and-such an article. They can, of course, refuse to reply, but some of them say they_ have noticed that,- after such manifestations of independence, consignments of goods made by them to the • L mted States are mysteriously and unaccountably held up for months by the Customs in New York, Boston, and other American ports, causing their customers so much loss and annoyance that they have found it necessary for their o\yn protection to satisfy Mr. Howland's curiosity. Of all this, says the "Financial Times," Mr. Howland is naturally as innocent as the babe' unborn He. does his best to follow the Treasury's instructions, lie says, and what happens in American ports is no af- . fair of his. In reality his position very much resembles .that of a military ati ? J m 1S "■ and acknowledged official, but.it is his business to collect information,; and he oannot do it without employing outsiders who, if caught, are promptly disavowed by the Ambassador, whd can say with perfect truthfulness that 'he is unaware of their existence. If, as we know, there is military ; espionage in , time of peace,-why should'there not be fiscal espionage? Both are officially ignored,' but both exist. It is a concealed branch of government which is likely to become more and more important with the increasing _ tendency of Governments'to tax capital. . • International Law Expert. • T ll° Peculiarity about fiscal espionage is that Governments can and do practise it in common] -thus enlisting foreign aid against their own nationals. ■ it an "exchange of infonnation.. .. Just as high, protective tariffs stimulate sniugglmgyso does this understanding between Governments foster tho business of,the international legal oxpert. He has become a sort of pilot acquainted with the shoals of the fiscal narrows and. skilled in steering' his client's ship clear of them. His, services are in considerable request in connection- with the emigration of French capital, for which Swiss..and Belgian banks are bidding keenly, and for which even ■ Spanish; banks are beginning to compete. There can be no doubt that a large amount of capital has v gone abroad to escape taxation, but I am inclined to think that the stream is slackening, because French capitalists are,beginning to realise, on reflection, that there is no satisfactory guarantee for the secrecy which some of the Swiss banks, for instance, are promising. The fiscal spy is everywhere, and the Government icaii get.all the information it wants' through the numerous channels at its disposal. An American's Experience, Let mo give an instance of the man. ner in. ; which the French and! Belgian authorities act .together against private individuals.;" An American living in' Paris was induced to take'shares in, a Belgian company, which went into liquidation with suspicious speed soon after the first instalment had oeen paid. Acting under advice, he refused to pay tho remaining calls. The promoters found out that Tie had a safe deposit in a Paris bank, and they obtained an order from a Belgian Court attaching the deposit , This order was notified to the French authorities, and, strange to say, was confirmed by a.Paris Court, with the result that when the American endeavour, ed to go to his safe to 'take out some papers he was refused admission to tho basement in which the safe wan situated. Ho had to go to tho Court and obtain tho withdravval of the order under which the bank had acted. This process took about two weeks, during which timb he was deprived of all access to his papers and securities, to his great loss and inconvenience. His Belgian creditor, who was claiming £720, afterwards compounded for £32. His' only satisfaction .was to withdraw his business from the bank, not because the latter could have, disobeyed the CourtV buthecause the bank officials seemed.to think that;all,, they had to do was to obey the Court, and that any sympathy with their client was unnecessary. , Tho most remarkable part of the caso was that tho French Court should confirm the order of a foreign tribunal without giving the person chiefly concerned . an opportunity to he heard: This shows how tho principle of international fiscal ■action against individuals, if once ad-; I'mitted, can be extended not only to the executive, but tihe judicial branches. England, like Belgium, has an "exchange of information" with- France.