File No. 611.627/458.
[Untitled]
Department of State, November 4, 1911.
Referring to my memorandum of November 3, wherein I sought to show the amount of saving effected for the American buyers of potash through the settlement recently made with the German Syndicate and the independent German mines, I now desire to call attention to a statement made by Mr. Robert S. Bradley in a letter just received from him.
Mr. Bradley had evidently noted the published statements as they appeared in the Boston News Bureau and the Financial Bulletin of Philadelphia. He takes exceptions to the conclusions drawn with respect to the actual savings of the Americans through the terms of the recent settlement. He cites the case of the American Agricultural Chemical Co., which he says had paid out in penalty or supercontingent taxes $710,371 of the $3,500,000 so paid by the entire American interests. The A. A. C. company obtains a refund from the German Government to the amount of $568,157. From this refund a payment must be made to the Aschersleben (independent) mine for the cancellation of the A. A. C. company contract with it, and this payment, together with the expenses incident to the “fight” made by the A. A. C. company amounts in all to $340,000. Thus, so far as the A. A. C. company is concerned, it has left $228,157 as the net refund of the taxes. Having paid penalty taxes to the amount of $710,371 and obtained a refund, net, of only $228,157, Mr. Bradley reckons that the balance, being the sum of $482,214, represents the net amount of money that his company has had to pay out in consequence of the German potash law, and of course he is right in this calculation. This sum, $482,214, equals $12.54 per ton on the potash received by the A. A. C. company under its contract with the independent mine, which, added to the original contract price of $20 per ton, makes the potash for the period of one year subsequent to the passage of the law cost the A. A. C. company, net, $32J4 per ton, muriate basis. From the published statements above referred to and which apparently had been authorized by parties familiar with the settlement, I had reached the conclusion that $28.34 per ton represented the actual settlement price, muriate basis, for [Page 243] invoices since May 28, 1910. The Department has had no official statement and in preparing my memorandum I have had to depend upon the published statements that have appeared, presumably emanating from reliable sources. According to Mr. Bradley’s figures these published statements have not been reliable. Instead of the independent mines receiving their settlement money from the supercontingent fund paid in by the Americans, 40 per cent of this fund was first deducted for the uses of the German Government and the German Syndicate, and out of the other 60 per cent refunded to the Americans the latter have had to pay the independent mines their price for the cancellation of the 1909 contracts.
The German Government or the German Syndicate seems to have worked along Bismarck’s lines of “real politics” in putting through this settlement, if they have retained as their share of the rake-off 40 per cent of the $3,500,000 supercontingent tax paid in by the Americans. This 40 per cent amounts to $1,400,000, while the Americans get back $2,100,000. They are obliged to pay out again the greater part of this sum in order to obtain release from the mines with whom they made the low-priced contracts which the German potash law rendered untenable.