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. 611.627/457.

[Untitled]

Bureau of Trade Relations,
Department of State, November 3, 1911.

This attached statement from the Financial Bulletin of Philadelphia with respect to the potash settlement between American contractors and German independent mines and the German syndicate is incomplete. It omits to state that of the $3,500,000 supercontingent tax paid by the Americans on their shipments of potash between May 28, 1910, and June 1, 1911, about 60 per cent is to be refunded to them. Such refund reduces the cost of the potash bought from the independent mines during the above-named period to a basis of $28.34 per ton of muriate, as against the syndicate price during that period of $34.10. Thus the intervention of the State Department has saved $5.66 per ton to the American contractors, for if the State Department had not intervened the only recourse open to the Americans would have been to avail themselves of the Bundesrath ruling, which would have permitted a reduction only to the syndicate price of $34.10. The terms of the settlement just completed give the Americans a price of $28.34, muriate basis, on their invoices during the year ending June 1, 1911. The payments that Americans must make to the independent companies as the price of the surrender of their contract is paid out of the other 40 per cent of the $3,500,000 supercontingent tax advanced by the Americans in accordance with the German law of May, 1910.

The actual results of the settlement are that the American contractors retain a substantial amount of the profits secured from the low-price contracts made before the potash law went into effect, and at the same time secure a refund sufficient not only to pay for the cancellation of the independent contracts but also to reduce the prices of their 1910–11 purchases.

The independent mines will reenter the syndicate, which organization will supply all American buyers under identical contracts. The monopoly, of course, will thus be reestablished and continue to control the American trade. Opportunity for buying potash, however, will not be restricted either in price or quantity. All will be treated alike as to price. Discounts will be allowed, regulated by the amounts of potash purchased. The syndicate announces that it intends to fix no restrictions on purchasers as to resale of potash salts, either as to quantities or prices.

M. H. Davis.

[Inclosure.]

Extract from article in Financial Bulletin, October 25, 1911.

[October 25, 1911]

Officials of one of the corporations identified with the potash trade announced on Saturday that an agreement had been reached between the American holders of contracts covering the delivery of German potash salts up to 1917 and the independent potash mines, whereby the Americans are; to pay 2,100,000 marks, or approximately $525,000, for the cancellation of these contracts. When this agreement is signed the famous potash war that began on the night of June 30, 1909, will terminate. The Americans, forced to the wall with the aid of the German Government, will be compelled to buy their potash at prices equivalent to those that prevailed previous to the breaking up of the syndicate over two years ago. The only advantage that has been secured in one of a slight increase in the discount allowed certain large buyers on long-time contracts. The cost of the litigation involved in the controversy will amount to a large sum, as very prominent attorneys were identified with the matter from time to time. * * * The aid of the State Department was evoked last year in an endeavor to have the syndicate recognize the independent mine contracts, and at the time of the last tariff revision threats were made that as American commerce was being discriminated against, retaliation against Germany in the form of a maximum tariff should be put in force. The matter was eventually dropped by Washington.