File No. 611.627/344.
The Acting Secretary of State to the German Ambassador.
Washington, March 9, 1911.
Excellency: I have the honor to acknowledge the receipt of your note of January 31, enclosing a memorandum containing the reply of the Imperial German Government to the representations on the potash question made by the American ambassador at Berlin under date of December 22, 1910, and January 13, 1911, and also receipt of your supplementary note on the same subject under date of February 15, 1911.
The urgent desirability of ending this controversy, which I believe is also felt by the Imperial German Government, and the equal urgency of relieving the great interests involved from the injurious situation in which they have unfortunately been placed, have dissuaded me, after much consideration, from entering at this time upon any elaborate response to the arguments presented by your excellency’s communications under acknowledgment.
In thus abstaining, in order to save time, from now entering upon such prolonged discussions I must however ask your excellency to take due note of the fact that this course should by no means be understood as an admission of the validity of the contentions made. To show how far otherwise is the case it may suffice to say, for example, that the Government of the United States could not in any discussion allow to pass without refutation the intimation that its conclusions in relation to the German potash law and its effects on American interests were based upon incorrect information. Equally at variance with the understanding of this Government is the allegation that the Bradley-Schmidtmann contract was a mere stipulation and not a binding agreement. The actual terms set forth in the Bradley-Schmidtmann contract, as shown in the contract itself, now before the Department, are materially more extended than those quoted by your excellency, and are as follows:
The above stipulations will be signed as a formal contract by the parties above mentioned as soon as possible, in the city of New York, by the authorized representatives. Such signatures, and the specific performance of this contract are hereby guaranteed through the signature of Robert S. Bradley, of Boston;; and Herman Schmidtmann, of Schloss-Grubhof (Salzburg).
[Signed] Robert S. Bradley.
H. Schmidtmann.
It has moreover been impressed on the Department of State that Mr. Bradley bound himself personally to the performance of this contract and that he had the fullest possible authority to make it on behalf of the American Agricultural Chemical Co., delegated to him [Page 232] by a special power of attorney dated June 7, 1909, which was duly authorized by a vote of its board of directors, executed by its president, witnessed by its counsel, attested and seal affixed by its secretary, acknowledged before a notary public, and viséed by the German consul general at New York.
Moreover, under the same power of attorney Mr. Bradley executed another contract on the morning of July 1, 1909, with Herr Bielmann, the representative of five of the largest potash mines in Germany, which had previous to the expiration of the syndicate combined into a pool for the purpose of selling potash in open competition, in case the syndicate was not re-formed by midnight of June 30. This Bielmann contract has been assumed and is now being fulfilled by the Potash Syndicate in strict conformity with its terms and conditions.
It would thus seem difficult to fail to recognize as legal and binding the Bradley-Schmidtmann contract when a similar contract with the Bielmann group has never been disputed nor denied.
It would be impossible to make slight reference to even a few of the contentions advanced by your excellency without seizing the opportunity to correct the strange misapprehension which appears so unfortunately to have arisen in regard to the relation and activities of Mr. Davis of the Department of State in connection with the potash controversy. Your excellency is well aware that the Americans interested made at Berlin last summer the most earnest efforts to reach a direct settlement, and that the candid and earnest desire of the Government of the United States for such settlement, and the conciliatory spirit that animated it, were the very reasons which induced the Department of State to lend to the Americans interested the good offices and counsel of the Embassy at Berlin, and of a trusted official of this Department whose sole duty has been to elucidate the actual facts and to endeavor to compound the respective contentions. It may be unnecessary here to allude to the regrettable impression that the efforts of those who went to Berlin for the purpose indicated were scarcely facilitated in quite the same spirit.
Turning to the practical question of how now to end the potash controversy, which I feel sure is the sincere desire of both Governments, I was glad to observe as the practical essence of your excellency’s reply of January 31, the intimation that if it should be determined that the American purchasers were liable under their contracts for the payment of the excess production tax, then the Imperial Government would have the syndicate take over the contracts and supply the potash at a price below the syndicate price of 1909.
At the time of placing that communication in my hands your excellency personally concurred in my assumption that if the Americans admitted liability there would of course be no occasion for a private arbitration of the point of liability, even upon the assumption that this point were considered within the purview of the arbitration clause of the contract. Your excellency was also good enough to undertake at my request to seek by telegraph the earliest possible information as to what price the Imperial German Government would name as the basis for this Government’s seeking an understanding with the Americans interested.
I had hoped through the plan suggested that a settlement would be reached much before the present date, but I observed from your excellency’s [Page 233] note of the 15th ultimo that your Government would prefer a formal avowal of liability before proceeding to fix, as it has suggested, a price below the syndicate price of 1909 for the taking over and fulfillment of all the contracts.
While confessing to some disappointment that your excellency’s Government should have seen fit to prefer to make this stipulation as a preliminary to final adjustment, I am glad at least to see established the fact that the way is now practically open to ready settlement.
Before proceeding further with the diplomatic negotiations, in the hope of expediting matters and because of the complexity of the business interests involved, I have now the honor to suggest that the Imperial German Government, which has reiterated its willingness to use its influence with the German interests concerned in order to effect an amicable settlement, now join with the Government of the United States to bring about an early conference, preferably in New York, between the representatives of the German syndicate, the Aschersleben and Sollstedt mines, and the accredited representatives of the American parties to the contracts, again to seek by direct settlement a prompt adjustment by which the contracts may be taken over and filled by the syndicate on the basis proposed in the memorandum of the Imperial German Government.
If this plan commends itself to your excellency’s Government, the Department of State will urge upon the American representatives at such a conference the exercise of the utmost endeavors to reach a settlement that shall, in the light of the knowledge now before both Governments, be equitable and fair to all concerned; and the Government of the United States would implicitly rely in such case upon the Imperial German Government’s bringing similar influence to bear upon the German interests, with whose cooperation a satisfactory adjustment in the spirit of conciliation should involve no serious obstacles.
I have the honor to request your excellency’s earliest attention to the proposal now made, in the hope of early satisfactory results. Meanwhile the Government of the United States suspends further diplomatic action for the unfortunate case, which it hopes will not arise, of failure of the proposed conference or the inacceptability of its suggestion.
Accept, etc.,