862.51 P 95/–

The Acting Secretary of State to Harris, Forbes & Company

Sirs: I beg to acknowledge the receipt of your letter of September 1, 1926, regarding your interest in a proposed loan of $20,000,000 to the German State of Prussia, for the purposes and under the terms set forth therein.

In this connection I desire to refer to the Department’s letter to you of November 21, 1925,30 regarding a loan to the City of Duisberg and to state that the Department’s views with respect to German financing remain as set forth in that letter.

In addition to the considerations pointed out in that letter, however, the Department believes that, in view of the fact that Prussia is one of the constituent States of the German Empire, you should give careful consideration to the provision of Article 248 of the Treaty of Versailles under which “a first charge upon all the assets and revenues of the German Empire and its constituent States” is created in favor of reparation and other treaty payments, subject “to such exceptions as the Reparation Commission may approve”.

While, as indicated in the Department’s letter of November 21, 1925, the considerations referred to above involve questions of business risk, and while the Department does not in any case pass upon the merits of foreign loans as business propositions, it is unwilling, in view of the uncertainties of the situation, to allow the matter to pass without again calling these considerations to your attention. In reply to your inquiry, however, I beg to state that there appear to be no questions of government policy involved which would justify the Department in offering objection to the loan in question.

I am [etc.]

Joseph C. Grew