Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 3, 1906, (In two parts), Part II

Minister Leishman to the Secretary of State.

American Legation,
C onstantinople, February 15, 1906.

No. 1286.]

Sir: I have to acknowledge the receipt of the department’s dispatch No. 998 of January 31, 1906, concerning a complaint addressed to the legation through the consulate-general at Beirut by Messrs. Mourgue d’Algue and Dadre, in relation to the new regulation imposed by the Turkish Government which materially increases the storage charges on petroleum.

The complaint is based upon the recent action of the Turkish Government in establishing central storage depots in the populous centers, under government control, presumably for the better protection of the municipalities, but in reality as a new source of revenue for a rather depleted treasury.

There is no evidence of discrimination, as the law applies equally to all petroleum and other highly inflammable materials, and there is no evidence to show that the regulation would prove especially injurious to American petroleum traders.

As the petroleum in question has long since passed out of American hands, it having been sold originally in bulk to an Italian firm, and by them put up in tins and resold to Messrs. Mourgue d’Algue and Dadre, who are under German protection, I simply instructed Consul-General Bergholz to advise them to await instructions from the German embassy, and I understand that the ambassador has taken the matter up actively.

Since the opening up of the Russian oil fields, the sale of American oil in Turkey has become very spasmodic, as the policy of the American companies appears to favor leaving this territory to the Russians in preference to having other territory invaded by the Russian oil, which, although very inferior in grade, is sold much cheaper, so that about the only American petroleum that is sold here regularly is what is consumed by the light-house service, which declines to use the poorer grade from Russia.

Conditions for the past year, however, have been exceptional, owing to the great falling off in production in the Russian fields on account of the destruction of property by the revolutionists which has brought about a forced demand from America, and as the leaders foresaw a great advance in the price of oil on account of these conditions they laid in heavy stocks, and the action of the Turkish Government in imposing increased storage charges has naturally caused considerable anxiety, as their profits would thus be greatly reduced.

When the question of establishing government storage depots was first brought to the attention of the legation last spring, I immediately addressed a note to the Porte protesting against the conditions of the proposed law on the ground that the new regulation practically amounted to the establishment of a new monopoly and an indirect increase in the customs dues, both of which being contrary to the treaty agreements. (See legation’s dispatch No. 1074 of May 27, 1905, with inclosures.)^a

The action taken by the legation is receiving the support of the Russian and other embassies, and pending a final adjustment I have confined myself with filing another protest with the Sublime Porte as per copy inclosed herewith.

I have, etc.,

John G. A. Leishman.

[Inclosure.]

Minister Leishman to the Minister for Foreign Affairs.

American Legation,
Constantinople, January 31, 1906.

No. 644.]

Excellency: Referring to the note which I had the honor to address to your excellency under date of May 19, 1905, numbered 553, concerning the new regulation proposed by the Imperial Majesty’s Government, with a view of establishing central petroleum depots in the populous districts, I beg to advise your excellency that according to advices received from Beirut and other points, the local authorities, despite the protest contained in above note, are attempting to enforce the payment of the high assessment, which practically amounts to an increase in the customs dues and the establishment of a monopoly, which is contrary to agreement existing between the Sublime Porte and the treaty powers.

As cited in my note of May 19, 1905, the American Government would not be disposed to raise any objection to the establishment of central depots, whether by municipalities or by private enterprise, for the storage of petroleum for the better protection of the different municipalities providing the charges were limited to the cost of proper administration of such establishments, but as the charges proposed in the new regulation are very much in excess of the actual requirements of properly conducted storage depots, the proposed regulation in its present form must be viewed as a revenue measure which indirectly increases the agreed upon customs dues, against which the legation is compelled to renew its protest.

Under these circumstarces I am compelled to instruct the several consulates that the charges proposed are contrary to agreements existing between our two Governments, and the legation reserves the right to file a claim hereafter for all charges that may be improperly assessed upon American petroleum, whether collected directly or indirectly.

I take this occasion to renew to your excellency, etc.,

John G. A. Leishman.

1. a Printed in Foreign Relations, 1905, page 878.