The Consul General at Berlin ( Coffin ) to the Secretary of State

Sir: I have the honor to acknowledge the receipt of the Department’s telegraphic instruction No. 810 of July 22nd [27th] 5 P.M.,72 and to refer to my telegram in reply, No. 918 of August 4th, 6 P.M.,72 with reference to the contract of the Anatolian Railway with the Ministry of the Civil List. As the Department will have understood from my report of June 21st,73 the Ministry of the Civil List held from the Porte a concession covering the exploitation of the oil resources on the Civil List properties in the vilayets of Bagdad and Mossoul. On the basis of this concession the contract with the Anatolian Railway was made. This contract was subsequently contested by the Ministry of the Civil List on the ground that the Anatolian Railway had not fulfilled certain of its provisions, notably with respect to test borings. The matter was the subject of conversations and correspondence between the Railway Company and the Ministry of the Civil List and no determination of it appears to have been reached up to the time when, in 1908, the Turkish Revolution occurred and the Ministry of Finance, under the new regime, took over the “assets” of the Ministry of the Civil List. If I am correct in my recollection, the Ministry of the Civil List which was in fact a private business organization of Abdul Hamid’s, disappeared very shortly after the new Turkish regime came into power. The question of the contract between the Anatolian Railway and the Civil List was brought up by the Railway Company with the Ministry of Finance, which adhered to the opinion of the Ministry of the Civil List that the contract was open to question because certain of its provisions had not been fulfilled. The matter seems to have been left open and I doubt very much whether the contract could have been enforced by the Railway Company if subsequent events had not altered the circumstances.

When the British and German interests began their conversations on the subject of Mesopotamian oil properties and succeeded in coming to an arrangement with the Turkish Government their claims were based on the concessions granted to the Anatolian and to the Bagdad Railways, on certain promises made by the Turks to the Nichols d’Arcy group (Anglo–Persian interests), and the oil concession held by the Ministry of the Civil List originally and, subsequently, by the Ministry of Finance.

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The validity of the concession held by the Civil List from the Sublime Porte and transmitted to the Ministry of Finance, and of the contract between the Anatolian Railway and the Civil List seems ultimately to have been admitted by the Turkish Government for two specific reasons: First, the Turkish Government was anxious to avoid any appearance of granting new concessions as they might be called upon to extend similar favors to Russian, American, and other interests; second, the Turkish mining law obligates prospective concessionnaires to follow the “permis de recherche” system, by which prospectors may locate mining or mineral property, then apply to the Turkish Government for a “permis de recherche”, upon the issuance of which expert delegates are sent to the spot by the Turkish Government, the value of the discoveries ascertained, and a basis for a concession determined. This procedure applies to locations and may not cover an entire vilayet, under the Turkish mining law. The desired concession was to cover the properties in the vilayets of Mossoul and Bagdad, and, as the Sultan’s rights in these vilayets covered practically the entire oil-bearing districts, the Turkish authorities held that the concession could not issue under the Turkish mining law unless it was invoked as a right of old standing.

I enclose herewith in original and translation copies of a letter from Prince Lichnowsky, German Ambassador in London, dated April 22, 1914, to the German Chancellor; a letter from the same to the same, dated April 23, 1914; a letter dated May 5, 1914, from the German Ambassador at Constantinople to the German Foreign Office:74 and a letter from the Turkish Grand Vizier, dated June 28, 1914, to the German Ambassador at Constantinople, all bearing on the question of the rights of the Civil List concessions and the Anatolian Railway contract of 1904.

As stated in my telegram above referred to, the present attitude of the British Government seems to be based on the arrangements made by the Germans and British with the Turkish authorities in 1914, as set forth in the foregoing correspondence. The Department will note that, in his letter of June 28, 1914, the Grand Vizier states that the Ministry of Finance consents in principle to lease to the Turkish Petroleum Company the Civil List properties in Mesopotamia, the details to be arranged at a later date.

These details had been embodied in the draft of the concession which appears to have been made in London on March 4, 1914, of which I enclose a copy.75 I never remember to have read a concession granted by the Turkish Government to a foreign interest with such far-reaching rights and privileges as this draft contains. This [Page 662] fact inclines me to believe the statement of the Deutsche Bank that the draft concession was intended to be a first demand, subject to modification should the two Governments be unable to obtain all of the rights desired. The concession was never formally issued as the negotiations were interrupted by the war.

It is advisable to point out that in the enclosed correspondence there appears to have arisen between the Germans and the British some question as to the validity of the contract of the Anatolian Railway with the Civil List. This is evidenced in the letter dated May 5, 1914, from the German Ambassador at Constantinople to the Foreign Office at Berlin, in which it is stated that at a conference in Constantinople between the respective interests it was decided to modify the project for the Convention by asking for the exploitation of the Civil List concession and that by so doing the British would “quiet their consciences” on the subject of acknowledging the rights of the Anatolian and Bagdad Railways as the basis for the new company’s demands.

I also enclose herewith the Annual Statements of the Bagdad Railway from 1911–16 inclusive, and Statements of the Anatolian Railway from 1912–17 inclusive.75

I have [etc.]

Wm. Coffin

The Turkish Grand Vizier ( Said Halim ) to the German Ambassador in Turkey ( Wangenheim )

Mr. Ambassador: In response to the note No. 985 which Your Excellency had the kindness to address to me under date of the 19th instant, I have the honor to inform you as follows:

The Ministry of Finance being substituted for the Civil List with respect to petroleum resources discovered, and to be discovered, in the vilayets of Mossoul and Bagdad, consents to lease these to the Turkish Petroleum Company, and reserves to itself the right to determine hereafter its participation, as well as the general conditions of the contract.

It goes without saying that the Society must undertake to indemnify, in case of necessity, third persons who may be interested in the petroleum resources located in these two vilayets.

Be pleased [etc.]

Said Halim
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