File No. 20437/94.
The Secretary of State to the American Ambassador.
Washington, June 1, 1910.
Your telegram May 12, and dispatch 697, May 18. Notwithstanding your assurances from the German secretary of state for foreign affairs that American potash contracts will in no respect be invalidated or impaired by the new law, shipments made since May 10 [Page 210] are invoiced at prices including full Government tax equal to $22 per ton of muriate of potash. It is the firm conviction of the Department that the power of the Bundesrath under paragraph 46 of the law should be invoked and exerted to the fullest possible extent in “support of the American contracts. This Government must insist that good faith requires that the price fixed in these contracts, which were freely and fairly made after solicitation by-the German interests, shall not be unduly increased. The necessary recognition in the contracts of the German right of taxation related to a proper and moderate exercise, now provided for in paragraph 27, and not to the excessive burden of paragraph 26, which practically trebles the normal price of the product and confiscates the contracts under the guise of a tax on excess production. It is obvious without demonstration that neither the principle of conservation of natural resources nor the doctrine of trust control is an underlying motive or justification for this law.
You will examine the whole subject carefully again and advise the Department whether the matter can best be presented and urged upon the Government and the Bundesrat by further representations of the Department through you, or by the private interests involved.