862.51 D 481/1

The Secretary of State to Lee, Higginson & Company

Sirs: I beg to refer to your letters of November 5 and November 25, 1925,41 concerning your interest in a proposed loan to the German Potash Syndicate, of which it is proposed to issue $26,000,000 at the present time in the United States and additional amounts, up to a total of $40,000,000 and £2,000,000, in Great Britain, Holland, Sweden and Switzerland.

The Department notes the following statements in the draft prospectus which accompanied your letter of November 5, 1925:

“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. …

[Page 209]

“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 … The resolutions of the Reich Potash Council can, of course, be repealed by the Ministry of Labour for the Reich, should there be a danger that they would imperil the prosperity of the country.”

It appears from the foregoing that the Syndicate in question is monopolistic in nature and that an agreement has been entered into which extends to the sale of potash in the United States. It is further noted that, while the German Government appears to maintain a control with respect to the prices that might be charged in Germany by the Syndicate, that organization is free to control the prices at which it markets its goods in the United States.

In these circumstances, this Department, in connection with its consideration of the matter, has to inquire what assurances the Potash Syndicate is prepared to give against restriction of production or the taking of other measures with a view to regulating the price of potash marketed in the United States.

I am [etc.]

For the Secretary of State:
Leland Harrison

Assistant Secretary
  1. Neither printed.