651.116 Nitrate/6: Telegram

The Ambassador in France (Edge) to the Secretary of State

667. Your 435, September 5, 3 p.m. The Acting Commercial Attaché furnishes me with the following information: New regulations governing the issuance of nitrate licenses have not yet been [Page 260] formulated. It is understood that they will be completed by the end of the week and the method employed will probably be based in general upon the annual importation for 1930 and other previous years. The French contend that it is only reasonable that the major portion of the present nitrate requirements of the country should be supplied from those countries which have filled their needs in the past. This method has been used often by France in establishing quotas and was employed several days ago regarding timber. Unfortunately the United States has not exported nitrate shipments to France within the past few years. The Barrett Company have requested a contingent of 25,000 tons which the French say will not be granted but the Acting Commercial Attaché has been assured that a small contingent will be granted to the United States.

The Nitrate Commission which will award quotas is now studying the possibility of levying a tax on nitrate imports roughly equivalent to the difference between nitrate prices in France and Belgium. Nitrate prices in Belgium, a free market, are appreciably lower than in France on account of the fact that prices here are artificially maintained by the Government in order to encourage the domestic industry. The method of assessment and use of the proceeds of this tax are not yet decided upon but there is no indication that the tax would be used as a discrimination in favor of Germany.

Both the Commission and the French Department of Agriculture, under which the Commission acts, are aware that the American Government is watching this question with much interest. The Acting Commercial Attaché has personally taken the matter up with the appropriate French authorities on several occasions and has been in constant touch with the representatives of the Barrett Company.

I have also informally told the Foreign Office of our interest. Unless Department has some other method to suggest for establishing quotas in this case which I doubt would be favorably considered by France it is my opinion, in which the Acting Commercial Attaché concurs, that further action on our part at this time might prejudice instead of help the case of the Barrett Company and that until the terms for fixing the contingents have been decided upon it is not only unwise but impracticable for the Embassy to do anything further.