File No. 20437/96.
The Acting Secretary of State to the American Ambassador.
Washington, June 9, 1910.
Sir: The Department is in receipt of your telegram of June 6, 2 p.m., and now confirms its reply under date of June 7. There is little to add in view of the complete statement of the case of the American potash contracts contained in the Department’s instructions of June 4, No. 393. However, the importance of pressing for an early and definite conclusion of this case is emphasized somewhat by the fact that the options extending the one and two year contracts for periods of seven years from June 30, 1909, must be closed by or before July 1, 1910. It is feared by Americans that the interests in Germany will endeavor to prolong the uncertainty to a point beyond July 1, so that Americans will not exercise their option, to which they are fairly entitled, within the time specified in the contracts. Assuming that their contracts for one and two years will not be affected or invalidated by the new law, the Americans would naturally desire to extend their contracts by exercising their option so to do before July 1, 1910. For your information it may be added that it has always been the custom of Americans, during the many years they have been buying potash from German mine owners, to contract ahead for a period of several years and that the provision for doing so in the present contracts is no innovation.
Complaints continue to be made to the Department that invoices of shipments since May 10 are coming in with the full amount of Government tax added. These invoices the Americans are obliged to pay because payments, as has been the custom heretofore, are made against letters of credit in German banks. The drafts can not be refused as in ordinary transactions where the drafts with documents are payable on arrival. It is only a question of a short time when, with continued shipments, Americans will have a large amount of money locked up in this arbitrarily imposed Government tax amounting to more than the value of the potash delivered on this side. This, unaided, they are powerless to prevent.
I am, etc.,