800.6363/183
The Acting Secretary of State to the Netherland Chargé (De Beaufort)
Sir: I have the honor to advert to your note dated September 27, 1920, conveying your views regarding the operation of the Netherlands East India mining laws and transmitting a memorandum relating to certain features of these laws.
In accordance with your request, I have transmitted copies of your note and of its enclosure to the Department which is charged with the administration of the general leasing laws of February 25, 1920. That Department has also in its possession copies of various other communications on the same subject addressed to the Department of State by private companies in which Netherlands citizens are interested. It has been informed in addition regarding recent conversations on the same subject between the American Minister at The Hague and officials of the Netherlands Government.
Before taking up the specific points under discussion between the two Governments in this connection, I beg to refer to the attitude of this Government in the past relative to the participation of aliens in the petroleum industry in this country, and the policy it wishes to maintain in the future. It is common knowledge that nationals of other countries, including those of the Netherlands, have been accorded complete and equal freedom of access in fact to the petroleum deposits of this country. It is hardly necessary to point out the large extent to which Netherlands citizens and subsidiaries of Netherlands companies have availed themselves of this privilege. The general leasing law of February 25, 1920, like the provisions of the placer mining laws relating to petroleum, now repealed, does not permit an alien or an alien corporation as such to acquire or lease public petroleum lands; but this Government has always, prior to February 25, 1920, permitted corporations, organized under the laws of the United States, in which a part or even a controlling amount of the stock was owned by citizens of the Netherlands or of any other foreign country, to acquire title to petroleum lands.
[Page 285]The present leasing law of the United States does not permit corporations, the stock of which is owned or controlled by citizens of the Netherlands or any other foreign country, to obtain leases on the public lands, unless the Netherlands or other foreign country extends like privileges to American citizens. This law, as you are aware, provides in Section 1:
“That citizens of another country, the laws, customs, or regulations of which deny similar or like privileges to citizens or corporations of this country, shall not, by stock ownership, stock holding, or stock control, own any interest in any lease acquired under the provisions of this act.”
The purpose underlying the enactment of this provision was to bring about between the United States and foreign countries a condition of reciprocity and mutual freedom of access with respect to the development of petroleum resources. It is possible, however, that this limited and purely defensive provision may appear inadequate in case the principle of equality of treatment is not to be applied to petroleum production in other countries, as it has been applied in the United States.
If the laws of the Netherlands will not permit corporations formed under the laws of the Netherlands, part of the stock of which is owned and controlled by American citizens, to obtain leases or concessions for the development of oil lands in the Netherlands or its colonies, the United States cannot, under the law of February 25, 1920, grant an oil lease or permit to any corporation whose stock is owned or controlled by citizens of the Netherlands. The Government of the United States does not contend that American citizens or American corporations should be granted leases or permits in the Netherlands as such, but its position is that if reciprocity is desired American citizens should be permitted to organize corporations in and under the laws of the Netherlands, or to own, hold, and control stock in corporations organized by others under the laws of the Netherlands and that such holding, ownership, or control should not debar such corporations from obtaining concessions or privileges for petroleum development in the Netherlands or its colonies. Unless assurances to this effect are given, it would appear that the Government of the United States cannot, under the law of February 25, 1920, permit any corporations organized under the laws of the United States, controlled by stockholders who are citizens of the Netherlands, to obtain leases or permits for the development of oil or gas on the public lands of the United States. Moreover, the reciprocity alluded to in the general leasing law must be not only in the letter of the law but also in its administration and operation.
[Page 286]I am aware that a subsidiary of an American petroleum company procured a number of years ago some minor concessions in the Netherlands East Indies, prior apparently to certain changes in the Netherlands East Indian laws. This circumstance, however, does not point to the conclusion that American citizens are accorded at the present time in the Netherlands East Indies a position in regard to petroleum production similar to that of aliens enjoying reciprocity in the United States.
I may add that the Government of the United States welcomes the intimation contained in your note that the Netherlands Government does not intend to give to the Royal Dutch Petroleum Company a virtual monopoly of the exploitation of the remaining petroleum fields in the Netherlands East Indies. As you are aware the bill, referred to in your note, which is now under consideration by the Netherlands Government and which provides for an agreement with the Bataafsche Petroleum Maatschappy, a subsidiary of the Royal Dutch Petroleum Company, according to which the subsidiary company is to receive exclusive exploitation rights in the Djambi concessions in Sumatra, has formed the subject of representations to your Government by the American Minister at the Hague. While it is recognized that this agreement provides for the disposition of only one field, it is understood that this field includes the most valuable of the remaining prospective petroleum territories in the Netherlands East Indies, and that American companies thus far have been unsuccessful in requests for a share in the concession. Frankness requires me to state that the disposition of this field at the present time in the manner stipulated by the proposed agreement impresses this Government as an indication of a policy to exclude companies controlled by American citizens from the petroleum industry of the Netherlands East Indies.
I shall be pleased, accordingly to receive any further information or assurances on the part of your Government which might promote real reciprocity in the relations of the two countries with respect to petroleum production.
Accept [etc.]