862.51 D 481/8

Memorandum by the Assistant Secretary of State (Harrison) of a Conversation With Messrs. Gray and Simpson of J. Henry Schroder & Co.

Mr. Gray, who alone spoke during the interview, stated that he had called for the purpose of a little informal chat with regard to the possibility of bringing out in this country the remaining 35 million dollars of the potash loan, and referred to Mr. Simpson’s conversation with me of yesterday.44a

Mr. Gray stated that he had received a letter from Lee, Higginson and Company to be presented to the Department in response to the Department’s letter of November 30, 1925, but that subsequent to Mr. Simpson’s conversation with me and his talks with the Department of Commerce, he had thought it preferable not to present the letter but rather to discuss the matter further in an informal manner. He made it clear that he did not wish to present the letter unless there was some certainty that it would elicit a final and satisfactory response. In other words, he did not wish to present a letter and have us turn it down by reason of some objection that might be raised in other quarters. His desire was, through informal conversations, to reach a formula which might be acceptable to all the interested Departments of the Government.

Mr. Gray explained that while Lee, Higginson and Baron Schroder, of London, were quite prepared and ready to bring out the remaining 35 million dollars, both Baron Schroder and the London branch of Lee, Higginson and Company were anxious to have the business done in the United States, as they were anxious to interest American capital, and they thought that it would be to the best interests of all concerned. As pointed out in the memorandum,45 he felt strongly that as a practicable matter it would be far more advantageous in the last analysis for the American purchasers to have the American [Page 212] bankers interested in this financing. If any control could be exercised over price it certainly could be done in that way if at all.

Mr. Gray said that he thought that they had been successful in establishing in a satisfactory manner the fact that this was not a Government controlled monopoly. For his present purposes, however, he did not wish to argue this specific point. He did feel, however, that he had made it clear that the purpose of the Syndicate was to keep down prices. They wanted to increase their sales in the United States. To that end they wished to have the necessary funds to improve their facilities for production, and to increase their sales they had to keep down the price. In other words, he argued that if this was a monopoly it was a good monopoly. It was not a bad monopoly such as the rubber and coffee monopolies.

In order to facilitate his present purposes, he wished to hand me, and did so, a draft of a paragraph to be incorporated, after confirmation by the Potash Syndicate, in a letter to be written by Lee, Higginson and Company of Boston to the Department. He hoped that I would give this my consideration and that I would not hesitate to blue pencil this suggestion.

I told Mr. Gray that I would be glad to consider his suggestion, and that I understood that his present proposal amounted to this: That Lee, Higginson wished to make a reply to the Department’s inquiry of November 30; that he felt that he could get certain assurances from the Potash Syndicate, and that he was now in an informal manner endeavoring to obtain some indication of what the Department would consider as a satisfactory form of assurance in response to the questions raised in the Department’s letter.

Mr. Gray stated that he expected to see Mr. Hoover again tomorrow (Saturday), and that he would be at the Mayflower and would be glad to come to the Department at any time for further consultation if I desired to see him.

L[eland] H[arrison]

Draft of Paragraph To Be Included in Proposed Letter From Lee, Higginson & Company to the Department of State

Lee, Higginson and Company are prepared to incorporate the following statement in a letter to the Department in case the potash loan matter could be reconsidered:

“It is the purpose of the Potash Syndicate to utilize the proceeds of this loan, after paying off floating indebtedness, in developing and improving the physical properties of its members in order to increase and cheapen production. It is not the intention of the Potash Syndicate [Page 213] to restrict production or raise prices to the detriment of American consumers. This is of course not to be construed as a specific price guarantee, which it doubtless will be agreed no business organization could properly give. However, this is to be considered as a formal communication by the Potash Syndicate to its bankers setting forth the Syndicate’s intention and policy.”

  1. Memorandum of conversation of February 25, not printed (file No. 862.51 D 481/27).
  2. Memorandum banded to the Secretary of Commerce by Mr. Simpson, a copy of which was also given to the Assistant Secretary of State on February 25; not printed.