611.626/231a
The Secretary of State to the Textile Alliance, Inc.
Gentlemen: By agreements entered into in connection with the Peace negotiations, the German Government has given the Allied and Associated Powers options upon certain dyes of German manufacture, [Page 502] which options the United States Government has not yet exercised upon the following:
- (a)
- Dyes herein referred to as Option “A”, being the final apportionment of impounded stocks covered by inventories of the German manufacturers as of August 30th, September 5th, 19th, and 27th, 1919. This option will expire August 10, 1920 if the United States does not by that date notify the Reparation Commission of its intention to exercise the option and specify the kinds and amounts of dyes wanted and furnish shipping directions to the German factories not later than September 1, 1920. You are in possession of the inventories referred to, containing prices, also lists showing the amount of each dye to be apportioned and this country’s share. These inventories and lists will be identified for the purpose of any undertaking that may be entered into.
- (b)
- Dyes herein referred to as Option “B”, being the present existing stocks manufactured between the dates of February 1, 1920 and June 30, 1920, both inclusive. Lists with prices are furnished by the Germans of dyes manufactured monthly. The option upon such dyes expires ninety days after each list is furnished to and approved by the Reparation Commission. None is yet approved. You are in possession of certain of these lists and others are to be furnished you in due course, all of which will be identified for the purpose of any undertaking that may be entered into.
An agreement of similar nature is in contemplation whereby the United States shall have an option upon specified portions of the following:
- (c)
- Dyes herein referred to as Option “C”, being the amount that may be produced by German manufacturers during the period of about five years, beginning with July 1, 1920, which amount it is said may be substantially the entire dye production of the German manufacturers in excess of the quantity required for current domestic consumption in Germany. It appears that in order to participate in Option “C” the United States must shortly express its intention of doing so without, however, committing itself to order, take or pay for any dyes whatever but nevertheless preserving its right to such kinds and amounts within the limits of the option as it may from time to time desire after the dyes have been produced and definite prices established, which shall not exceed the lowest prices at which the Germans currently sell the same dyes to any purchaser, German or other. There are known to be available under Options “A” and “B” appreciable amounts of colors now needed by American consumers and other colors which are quite certain to be badly needed a little later. It is reasonably certain that if Option “C” is not availed of consumers in this country will be at a serious disadvantage with foreign competitors. The Department of State, therefore, deems it essential that this option be exercised and that a suitable concern be found or formed to undertake the matter. Through previous similar undertakings the Textile Alliance has become experienced in these matters and its services have been satisfactory to this Department.
In view of all the foregoing circumstances the Department of State desires and requests and hereby authorizes the Textile Alliance to undertake upon the following terms and conditions, under Option “A” and Option “B” and also, if later found to be necessary, under Option “C”, the purchase of such available dyes as may be necessary for American consumption, or, in discretion of the Textile Alliance for foreign resale as hereinafter provided:
1. It is understood the obligations to purchase on the part of the Textile Alliance pertain only to dyes of standard or pre-war quality. The State Department will render such assistance as may be proper to obtain redress in cases of dyes delivered being of inferior quality.
2. The prices to be paid by the Textile Alliance for all dyes that it may order under Options “A” and “B” shall be the prices in marks that are quoted in the lists referred to, but payment shall be in dollars at the average rate of exchange established by the Federal Reserve Bank in New York for the week prior to the date of the bill of lading from point of origin.
3. No dyes shall be ordered for domestic consumption unless requested of the Textile Alliance, Inc., by consumers or selected by the Textile Alliance and approved by the Department of State.
It shall be within the discretion of the Textile Alliance to order under Options “A” and “B” whatever dyes it may deem advisable for sale or exchange abroad, which sale or exchange shall be such as the Textile Alliance may deem to be satisfactory and without prejudice to the interests of American consumers and producers of dyes, it being understood that the Textile Alliance shall use its utmost endeavor to secure for American consumers the maximum amount of dyes wanted that are not produced in this country.
It shall be within the province of the Textile Alliance, Inc., to negotiate for the sale of stocks of dyes included in Options “A” and “B” held through purchase or exchange by the Textile Alliance other than those dyes listed as importable by the Department of State, and to sell the same for consumption abroad to any firm, corporation, or individual in any country in the world, including the United States, its possessions, and protectorates, providing the price charged by the Textile Alliance, Inc., will in its judgment, be fair and reasonable and not so low that such sale or sales might be considered as “dumping” of the dyes, or that when goods are dyed therewith, the sale price of the dyes would allow foreign manufacturers of finished products to compete with American goods at a price impossible for American manufacturers to meet, or that so far as is reasonably possible the marketing of these dyes will not compete disadvantageously with the sale of dyes exported from the United States.
[Page 504]4. There shall be no obligation upon the Textile Alliance to receive or pay for any dye whatever excepting such kind and amount as it may order, and no obligation, excepting in the case of Option “A”, to order any dye until it shall have been manufactured, the price, rate of exchange and terms definitely fixed, and a firm order received from consumer with suitable provision for payment. Both the Department of State and the Textile Alliance, Inc., each reserve the right to abrogate at any time this agreement with respect to Option “C” dyes, without prejudice to anything to which the Textile Alliance or the Department of State shall at that time be committed.
5. No dyes shall be imported into the United States for domestic consumption without the approval of the Department of State or its nominee.
6. There shall be no discrimination in the sale of imported dyes in favor of or against any consumer in the United States and the prices at which dyes are offered or sold for consumption in the United States shall be subject to the approval of the Department of State or its nominee.
7. Upon the conclusion of the operations under this agreement by the Textile Alliance, the surplus moneys, if any, after the payment of all other expenses, shall be disposed of in the following manner to meet the conditions of underwriting which the Textile Alliance feels obliged to secure for its protection in connection with these operations:
One half to be paid into the United States Treasury. One half to be retained by the Textile Alliance as a revolving fund so long as need may appear for funds to carry on other work upon request of the Department of State and when such need shall have passed, the Textile Alliance shall devote one half of the said revolving fund to educational and scientific institutions conducted for public benefit and not for profit; the remainder to be paid into the United States Treasury. Monies paid into the Treasury shall be disposed of as Congress may direct. The Secretary of State, however, will make recommendation to Congress that said monies paid into the Treasury be appropriated for educational and scientific purposes.
If any liabilities appear to exist upon the conclusion of operations the Department of State will allow sufficient funds to be retained by the Textile Alliance, Inc., to cover such liabilities.
It is contemplated settlements shall be made upon the conclusion of each operation if practicable.
8. Upon the acceptance of these undertakings by the Textile Alliance, the Department of State shall instruct the Embassy at Paris to notify the Reparation Commission, the German Government, and the German manufacturers that the Department of State has empowered the Textile Alliance, Inc., to order and receive any or all of the [Page 505] dyes in question within the limits of the options; on the understanding that the dyes so ordered shall be of standard quality, and that all directions pertaining thereto will be given by the Textile Alliance direct to the German manufacturers or to the Reparation Commission through the proper American representatives.
9. The Department of State shall in due course advise the Textile Alliance to whom and in what manner the cost of the dyes shall be paid. The Textile Alliance shall not be obliged to pay for dyes until shipped and until the receipt of a bill therefor nor shall it in the event of a deferred bill be obliged to pay more than the agreed prices with such interest, if any, as the Textile Alliance may have received thereon subsequent to the date of shipment.
10. At intervals of three months or at such other times as the Department may designate the Textile Alliance shall render reports to the Department of State indicating the dyes that have been ordered showing how disposed of and at what prices. The Department of State shall have a right to audit the accounts covering transactions under this agreement if desired. Should the transactions of the Textile Alliance as evidenced by these reports or audits be unsatisfactory to the Department of State it shall have the right to require such changes as it may desire with respect to future transactions.
11. The Department of State will extend whatever assistance it may consistently offer in overcoming any obstacles the Textile Alliance may encounter in marketing dyes ordered under Option “A”.
I am [etc.]
Under Secretary