862.51 D 481/4

The Secretary of Commerce ( Hoover ) to the Secretary of State

My Dear Mr. Secretary: I am greatly obliged for your letter of the 28th instant in reference to the German Potash Syndicate. I agree that an inquiry on the lines that you suggest would be useful. I have the feeling that we should not by any manner or means give any present encouragement to this loan.

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I notice in the prospectus particulars that there occur the following expressions:

“The Potash Syndicate was organized as a ‘legal entity’ under a law of the Reich.”

“The members of the Syndicate, producers and manufacturers, are obliged to place all their products at the disposal of the Syndicate for sale. The law also requires that all imports of potash and potash products must be handled by the Potash Syndicate.”

“The German Potash Syndicate has made an agreement with the French organization for the Alsatian potash mines, which agreement has been signed by the French State. This agreement reserves for the German Potash Syndicate the exclusive supplying of the German market, and as far as Alsace is concerned, the exclusive supplying of the French market, and provides for the division of the whole world into sales districts.”

“Besides the Potash Syndicate, the Reich Potash Council has certain powers in the management of the potash industry.”

“The Reich Potash Council is a legally constituted body of officials. … It determines the price of potash in Germany. … The resolutions of the Reich Potash Council can, of course, be repealed by the Ministry of Labour for the Reich, should there be a danger that they would imperil the prosperity of the country.”

From all the above it is obvious that this is a governmental monopoly of the most vicious order, and that the German Government takes the precaution to maintain public control of the prices at which it may sell its products in Germany and apparently gives it full liberty to milk the rest of the world.

Yours faithfully,

Herbert Hoover