No. 429.
Mr. Wallace to Mr. Frelinghuysen.

No. 358.]

Sir: Referring to your telegraphic instruction relative to compromising the petroleum concession dispute, it will be recalled that a compromise, if effected, was to be without special advantage to dealers in the Russian article.

Acting under the instruction and pursuing the line of conduct indicated in my dispatch to the Department, No. 351, I have the honor now to forward a copy of a note transmitted to the Sublime Porte day before yesterday, and to remark that it is identical with a note delivered at the same time by Mr. Nelidow, the Russian ambassador.

You will please observe that while the paper is quite energetic in tone, it nevertheless leaves a door open to compromise upon the basis to reduction of storage charges. That in fact is the end aimed at by the identic presentment. A proposition to settle without some new and decided turn given the affair would have been simple waste of time. Moreover, a compromise, if accomplished now, will be with the Russians conjointly, and upon terms of absolute equality. I could see no better mode of obtaining this latter point, and of putting an end to sales from the decks of small vessels, a practice so ruinous to our interests, than by square co-operation with my colleague in the manner here indicated.

* * * * * * *

Very respectfully, &c.,

[Page 558]
[Inclosure in No. 358.]

Mr. Wallace to Aarifi Pasha.

note verbale.

The legation of the United States had the honor to repeatedly declare most emphatically, by its notes and verbally, that it could not accept the views of the Sublime Porte relative to the right of monopoly granted to the depots of petroleum of Sami Bey, at Tchiboukei, and to the taxes levied on this account by the concessionary.

The United States legation in demonstrating that the taxes in question constituted an onerous charge on the commerce of petroleum and gave rise to just complaints on the part of American importers, requested amongst other things that the company of Sami Bey be required to reduce them to an equitable rate, failing in which the legation of the United States reserved to American importers to avail themselves of the right to establish their own depots in conformity with the exigencies of public security, without prejudice, however, to the question of indemnities to be claimed for the exhorbitant dues arbitrarily exacted of them.

Until now, notwithstanding the importance of this question as regards the commercial interests involved, no sufficient answer has been given by the Sublime Porte to the legitimate complaints of the legation, nor has it been informed of the result of the deliberations of the commission ad hoc appointed at the Sublime Porte, although it has made its report some time since.

The legation of the United States cannot insist too earnestly on the urgency of regulating, without further delay and in a satisfactory manner, this question whose international character is so clear; in fact, the régime to which the commerce in petoleum is now subjected is a direct violation of the stipulations of the treaties and the capitulations in vigor, in virtue of which articles of importation into Turkey are liable to a fixed customs duty only and cannot be subjected to any other imposition. The Sublime Porte will be pleased to acknowledge that the motive for the storage of petroleum, which is an inflamable matter, being altogether for considerations of public security, should not be made a source of revenue for the state, and still less for a private company. Therefore the tax levied on this account should be in strict proportion with the expenses of installation and the maintenance of the depots.

Any sum levied over and above the amount necessary for this purpose constitutes an absolutely illegal charge. Such is manifestly the case as regards the tax collected by Sami Bey, which, according to the data collected by the legation, amounts to nearly the treble of the sum to which he might claim to cover his expenses and have a reasonable profit.

As regards the article of the regulation of the port of Constantinople prescribing the storage of petroleum in a depot fitted up with a view to public security, it cannot be quoted in support of the pretension of Sami Bey, as it was only with the consideration in view that the representatives of the powers gave their assent to that article, and most assuredly it was not with the intention of creating a new source of taxes and an onerous monopoly for commerce.

Therefore, and considering the increasing importance of the commerce of petroleum for the United States, it is the duty of the United States legation to protest against the present state of things, which is unjust as it is injurious to the interests of its commerce, and to demand prompt redress for the losses it has sustained.

In case the Ottoman Government should not, without delay, cause the taxes collected by Sami Bey & Co. to be reduced to an equitable rate, to be established in concert with the powers interested, the American legation will find itself under the necessity of insisting upon the indisputable right of American merchants to establish depots of petroleum of their own under more favorable conditions, as well as to require an indemnity for what may be due them for the violation, as regards them, of the liberty of commerce.