Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 7, 1911

File No. 611.627/456.

Memoranda by M. H. Davis.

[Undated.] Received August 31, 1911.

The attached letter from Mr. C. H. MacDowell, president of the Armour Fertilizer Works; under date of August 26, is interesting. It appears from what Mr. MacDowell says and from what I have learned from others present at the conferences in Germany in June, that the conference to which the German Government agreed for the purpose of settling the controversy resulted simply in the Americans throwing over their low-priced contracts with the independent German mines and making new contracts with the German Potash Syndicate, with whom they had previously had no contracts.

There was apparently no settlement effected as to the excess tax which the Americans had paid under protest and which is to be refunded back to the 1909 prices. There is an understanding that the refunds will be made, but the settlement with respect to this feature lacks definiteness.

Should the independent mines be forced into the syndicate, as apparently contemplated by that organization, arrangements will probably follow for the refund of payments, but if the independent mines do not join I am under the impression that the Germans will defer settlement, perhaps indefinitely.

I think it was the understanding of the Department that all these questions should be settled at the conference and that all parties should be represented. This was the trend of all the diplomatic correspondence. The American company known as the International Agricultural Corporation had its representatives in Germany, but they were not called into the conference. No doubt negotiations are still pending between this particular company and the German syndicate. The numerous buyers in this country who had made their purchases of the independent mines through the International Corporation are not likely to get their share of the refund of taxes unless the German Government makes refund to the International Corporation, which it has thus far declined to do because the corporation’s mine has not joined the syndicate.

M. H. Davis.

[Inclosure.]

Chicago, August 26, 1911.

My Dear Mr. Davis:

Yours of August 17th noted.

The Hamburg negotiations did not involve the old contracts. A trade was made there between the American potash consumers and the syndicate for their requirements, subject to existing contracts, for a period of 5½ years. The contract prices are practically those prevailing in the spring of 1909. Buyers having no contracts in the way made purchases without reserve.

The International were not represented. I have no personal knowledge as to why they were not there. Mr. Schmidtmann was in Hamburg during the negotiations.

The penalty tax paid by some of the buyers under protest and which was in escrow, was collected by the German Government June 1. The understanding was that the Bundesrath would make a ruling whereby American buyers paying this penalty tax would receive a refund down to the 1909 price without admitting liability under their contracts. I am told no such ruling has been made by the Bundesrath. If one has ‘been made it has been suppressed, probably for trading purposes.

The two larger companies were represented by their presidents. The writer represented the Armour interests. The Independent association was represented by Messrs. Moncure, Dempwolf, Lippincott, Brewster, and Lorenzo Wilson. Contracts were made by the four interests represented, the purchase on behalf of the Independents covering the requirements of their members as far as power had been given the committee.

Since the Hamburg meeting it is my understanding that negotiations have been carried on between the Aschersleben and Sollstedt mines with the Syndicate, with the Independents, and the A. A. C. Co. with a view of settling the old contracts. I have no personal interest in these negotiations and know nothing about how they are progressing. The small buyers to whom you refer, customers of the I. A. C., were not represented at Hamburg unless they belonged to the Independent association,

Yours very truly,

C. H. MacDowell.