Papers Relating to the Foreign Relations of the United States, 1917, Supplement 2, The World War, Volume I

File No. 825.6374/61

The Secretary of State to the Consul General at London ( Skinner)

[Telegram]

Washington, December 4, 1917, 7 p.m.

Replying your cables November 30 and December 1,¹ communicate following to members Nitrate Executive or Commission Internationale, whichever is appropriate.

1. United States Government approves decision to invite Japanese participation in Nitrate Executive.

2. In reply to letter from chairman, Commission Internationale, in behalf of British, French and Italian representatives, urging the appointment of Gibbs & Co. as sole purchasing agent, the Government of the United States appreciates the importance of making use of the efficient organization of that company and agrees that their offer to place their organization at the disposal of the Executive should be accepted, but the Government of the United States believes that it is also important to make use of organizations of Dupont, Grace, and Wessel Duval in purchasing nitrate, acting under a director of purchases, not only because each has business relations with various producers from whom they can purchase to best advantage, but also because their participation will be of assistance in financing purchases. Moreover, the influence which the United States can exert on the producers through the control of the oil supply must be given full weight. For these and other reasons already expressed, the Government of the United States believes that irrespective of who might be selected as agent it would be a mistake to limit the Executive to purchasing through a single purchasing agent for all Governments concerned.

3. On the other hand, the Government of the United States would have no objection to a single agent, acting not as the sole purchaser, but as the director of purchases for the Executive on the understanding that an amount equivalent to the United States’ quota will be purchased through Dupont, Grace, and Wessel Duval in proportion to their normal tonnage, their operations being subject to the direction of the United States Government in case of disagreement among themselves. If this arrangement is satisfactory the United States will agree to the appointment of Gibbs as director of purchases on this basis in executing orders from Executive in London.

4. If the above suggestion is not acceptable, then the Government of the United States prefers to adopt the alternative arrangement proposed in the chairman’s letter for the appointment of Gibbs as purchasing agent for the Governments other than the United States and another agent, designated by the United States, to purchase the amount equivalent to the supply required for use in the United States acting efficiently in cooperation with Gibbs.

5. In agreeing to either of the arrangements above proposed, it is understood that all purchases through any agencies are pooled for Governments interested under Nitrate Executive agreement,¹ including purchases already contracted for from 1918 output.

6. Representations were made recently through Chilean Ambassador here that if the Government of the United States permitted shipment to nitrate producers of necessary oil supply required for maximum production it must receive reciprocal treatment on basis of community of interest in nitrate business, and it was also suggested that Chilean Government should again act as intermediary in arranging for sale to Dupont of nitrate produced by German owned oficinas if oil was supplied to them from United States in same way as Chilean Government arranged for previous purchase of German nitrate by Dupont. The Ambassador reported these views to his Government and the President of Chile has now proposed to Dupont’s representative there that Chilean Government take over all German oficinas and sell to Dupont and/or United States Government all nitrate produced at a price equivalent to cost plus a reasonable profit, the part of price representing cost being paid in Chile and the balance being deposited in bank in United States until end of war. Dupont and/or United States Government to see that bags are contracted for account of the Chilean Government and existing oil contracts fulfilled, and new supply contracted for when necessary. This arrangement to be subject to approval of Allied Governments and to continue during the war. The Government of the United States regards this proposal favorably and requests prompt consideration by the other Governments concerned, on the understanding that it will be treated confidentially and that Gibbs will not participate, and that the nitrate so secured will go into the pool as part of the quota purchased through United States agencies.

7. Ascertain what arrangement is proposed by Executive about supply and price of bags, and what assurance can be given to Chilean Government about this.

8. Ascertain same about coal to Chile from British mines.

9. Relying upon assurances received through Mr. Brand of the British war mission here that the 100,000 tons required by the United States Agricultural Department will be supplied out of the pool, the unfilled portion of Dupont’s order to purchase this amount has been cancelled. It is understood that the price of this 100,000 tons will be at the rate of 12 shillings.

Lansing

1. Neither printed.
1. Ante, p. 667.