856d.6363/66a: Telegram
The Secretary of State to the Minister in the Netherlands (Phillips)
36. Present to the Foreign Office note in the sense of the following:
“Pursuant to the instructions of my Government I have the honor to advert to Your Excellency’s note of May 10, 1921,26 relative to the bill now pending in the Netherlands Parliament providing for the development of the Djambi concessions in the Netherlands East Indies.
The Government of the United States regrets that the interest which it feels and has repeatedly expressed in obtaining for its citizens a substantial participation in the petroleum industry of the Netherlands East Indies similar to that enjoyed by Netherlands citizens in the United States should be regarded by the Netherlands Government as having been manifested at too late a date to receive consideration.
Your Excellency refers to conversations during the month of January, 1921, and states that at the date of my note of April 19, 1921,27 the method of exploitation of the Djambi field provided for in the pending bill was already in principle a settled question, except for the concurrence of the States-General. In view of the impression which might conceivably be conveyed by the above statement that the Government of the United States and American companies expressed [Page 543] no interest prior to January last in the question of the Djambi concession, I beg to refer again to various communications which during the past twelve months have been exchanged between the Government of the United States and the Government of the Netherlands.
On June 5, 1920, the American Legation at The Hague made inquiry regarding the precise conditions under which American citizens could operate in the oil fields of the Netherlands East Indies, in order that the Legation might be in a position to assure American interests that their cooperation in that region was welcomed. On September 7, 1920,28 the Legation conveyed to Your Excellency the belief of the Government of the United States that the Djambi concession bill, if enacted into law, could hardly fail to be construed as a measure of exclusion and as compromising in that region the principle of equal opportunity. This communication from the Legation was followed on September 8, 1920, by the application of a responsible American company for participation in the Djambi concession.
My Government recalls that certain statements contained in a report prepared by the Department of State, dated May 14, 1920,29 relative to the practical exclusion of American interests from petroleum development in the Netherlands East Indies, led the Netherlands Legation at Washington to submit on June 30, 1920,30 September 27, 1920,31 and February 2, 1921,32 certain information and observations regarding the laws and policy in effect in the Netherlands East Indies.
In these communications, the attention of my Government was especially directed to Articles 5a and 28 (2a) of the Netherlands Indian Mining law. It is the understanding of my Government that Article 28 (2a) provides that the mining of petroleum shall be restricted to the Netherlands Government and to persons or companies entering into contracts with the Government in accordance with Article 5a, and the latter article prescribes that agreements, other than for prospecting work, ‘shall not be concluded until authority to do so has been granted by law in each individual case’. The Netherlands Legation at Washington, in its note dated June 30, 1920, set forth that the Netherlands East Indian Government would either itself develop its oil resources or else do so by contract with persons or private companies, ‘having previously obtained legal authorization to do so’. In the note of September 27, 1920, there was mention of a bill, apparently the bill now pending in the Netherlands Parliament, referring to an exploitation contract between the Netherlands Government and the Bataafsche Petroleum Company in accordance with Articles 5a and 28(2a) of the Netherlands Indian Mining Law.
It is the understanding of my Government, however, that the bill in question provides for the creation of a new company, called the Netherlands Indies Mineral Oil Company, to which shall be [Page 544] entrusted the working of the Djambi concession; but there does not appear to be in the bill any reference to any previous commitments into which the Netherlands Government has entered with the Bataafsche Petroleum Company.
In view of the above considerations, the Government of the United States, while realizing that an arrangement was contemplated with the Bataafsche Petroleum Company, had naturally been under the impression that any decisions which may have been reached by the Netherlands Government in this regard were provisional and, of course, not in any sense binding on the Netherlands Government with respect to the company or companies concerned.
If the Netherlands Government feels that the introduction of the bill constituted an unalterable decision, I beg to remind Your Excellency that the bill was not introduced until November 22, 1920, several weeks after the representations of my Government and the application of a responsible American company.
If the Netherlands Government wished confirmation of the assurances which had been given by the American Legation at The Hague regarding the attitude of this Government and of American companies, such confirmation appears to have been furnished, when, in March and April, 1921, prior to the vote in the Second Chamber on the bill, another American company expressed specifically its desire for a share in the concession.
It seems, accordingly, impossible for my Government to accept the view that its expressions of interest or the applications of American companies were submitted to the Netherlands Government at too late a date.
My Government welcomes the statements in Your Excellency’s note of May 10, 1921, that the Netherlands Indian laws make no distinction between Dutch and foreign capital in so far as companies desiring to participate in the exploitation of the petroleum fields of the Netherlands East Indies are concerned and that the Netherlands Government would view with satisfaction the participation of American capital in the exploitation of the petroleum resources of the Netherlands East Indies. Nevertheless, the Government of the United States is constrained to repeat in substance what was stated in a note of November 2, 1920, to the Netherlands Legation at Washington,33 that, while the law appears to permit the ownership by aliens of stock in companies engaged in oil development in the Netherlands East Indies, the carrying out of the law, in the manner stipulated by the pending bill, can only be construed as evidence of a present purpose, on the part of the Netherlands Government, to exclude American citizens from any substantial participation in its petroleum industry, and therefore to deny to them the equal opportunity which has been enjoyed by Netherlands citizens in the United States.
The Government of the United States especially desires me to express the hope that the Netherlands Government will still be able to adjust this matter in consonance with the fundamental principle of reciprocal treatment which is deemed to be of the utmost importance in connection with the development of natural resources.”
- Not printed; see telegram no. 58, May 11, from the Minister in the Netherlands, supra.↩
- See telegram no. 49, Apr. 25, from the Minister in the Netherlands, p. 536.↩
- See telegram no. 555, Sept 4, 1920, Foreign Relations, 1920, vol. iii, p. 276.↩
- Ibid., vol. i, p. 351.↩
- Ibid., vol. iii, p. 269.↩
- Ibid., p. 279.↩
- Ante, p. 530.↩
- Foreign Relations, 1920, vol. iii, p. 284.↩