The High Commissioner at Constantinople ( Bristol ) to the Secretary of State

No. 134

Sir: I have the honor to transmit herewith copies of a letter which I have received from Mr. Robert H. McDowell, as well as of [Page 968] certain memoranda enclosed with Mr. McDowell’s letter. These documents contain an account of Mr. McDowell’s recent visit to Angora.

I believe strongly that we should extend all proper assistance to American business interests which may desire to go into the Anatolian field. This is the policy which I have followed not only with Mr. McDowell, but in other cases as well.

I have [etc.]

Mark L. Bristol

Mr. Robert H. McDowell, of the Foundation Company of New York, to the High Commissioner at Constantinople ( Bristol )

Sir: I take pleasure in enclosing herewith copies of the memoranda exchanged between the Minister of Public Works and myself during my recent conversations with the Nationalist Turkish Government at Angora. The Government were desirous of concluding a contract of concession at this time, and promised to have the necessary action by the Assembly completed within two weeks. Since I could take no action at this time they promised to hold the offer open until I should have time to communicate with my company.

It will be noticed that the Government do not include the right to construct in the Mosul area in their written statement. Verbally they stated that the right to build extensions which they will give in this concession will take in the Mosul area, and they specifically stated that they would favor the holder of this concession. This is important as the line to Mosul and the Persian border passes thru a part of the oil area around Mosul. The Arghana copper mines and the Kaban silver mine, the best mines in Asia Minor, are specifically included in this concession. Minerals known to exist along the line of the proposed railroad include copper, iron, lead, silver, coal, lignite; along the line of certain branches that will be dependencies of the main road, are found, in addition, tin, asphalt, oil, salt, and gold. The oil is found in the Sassun and Van regions.

The line of the proposed railroad will follow the line of the most important existing artery of trade in Asia Minor, the highway from Samsun to Mesopotamia. The existing traffic, over very poor roads that have caused transportation rates to rise to Ltq. 200. per ton, per 50 kilometers, amounts to more than 500 tons daily, each way, at Samsun. The country thru which the line will pass is everywhere capable of producing a much larger surplus than is the case now. The principal products are cereals, tobacco, fruit, eggs, live stock, hides, wool, cotton, silk, flax, and opium.

[Page 969]

This concession has been several times sought by the French. They were interested in the railroad when there was no prospect of the mineral rights being included. They repeatedly have tried to secure the Arghana copper mines. A great deal of pressure is being brought to bear on the Turkish Government to prevent this concession from being granted to American interests. If no political activity would be manifested by other interests there is no doubt but that the concession would be granted to Americans. If this concession should be granted to us there would be wide spread resultant benefit to all American interests in Turkey. If thru political influence we fail to secure the concession, there will be, as a result, loss of prestige to American interests, that will be a serious handicap to business.

It is well to point out that it is my idea that, without waiting for the results of the Peace Conference, preliminary articles should be signed between the company and the Angora Government, that will secure us the concession without obligating us to commence work, or to go to large expense. The final terms should be signed after the results of the Peace Conference are clearly determined. If no steps are taken now to hold the concession, nothing can be done after the Conference.

The company, according to its usual custom, will look to our Government for advice in this matter.

Respectfully submitted,

Robert H. McDowell
[Subenclosure 1—Memorandum]

Mr. Robert H. McDowell, of the Foundation Company of New York, to the Turkish Minister of Public Works ( Fevzi Bey )

The Foundation Co. desires to obtain a concession to build and to operate a railroad as specified below, to build and to operate a port at a place suitable for such a railroad, and to enjoy the rights specified below as well as such others as axe in common usage accorded in such a concession.
The line of the railroad will follow one of the two alternative routes given below, i. e.
From a port on the Gulf of Alexandretta, near Ayas, to run through the regions Marash-Aintab, Malatia, Arghana, Diarbekir-Mardin, Lake Van, Mosul, and to the Persian frontier.
From a port on the Black Sea, near Samsoun, to Amasia, Sivas, Harput, Arghana, Diarbekir-Mardin, Lake Van, Mosul, and to the Persian frontier.
The company will have the right within this same concession, to construct such branches and extensions as may be necessary to serve as “feeders.”
The exact line to be followed by the railroad and all details not specified herein, will be settled after the necessary studies have been made by the engineers of the Company.
The Government will give the company the sole right to develop the mineral resources and the hydro-electric power in a region covered by the length of the lines to be constructed within the terms of this concession, to a distance on either side of the lines of twenty kilometers.
The company will have the right to place such harbor dues and railroad tariffs as will establish a fair profit of [on] the capital invested.
The company will have the sole right to construct and operate, at the port and along the line of the railroad, warehouses for the storage of goods before shipment.
For the rights granted to the Company, it agrees as follows:
To seek no kilometric guarantee.
To welcome the participation of Turkish capital.
To organise locally as a Turkish Stock Co.
To accept Turkish jurisdiction and laws, which it is understood will be based on internationally accepted principles of law.
To employ Turkish subjects for all positions for which there are such subjects properly trained.
To undertake to train as apprentices such subjects with the idea of fitting them to take over positions which cannot now be filled by such subjects.
The company agrees to begin work within one year after the signing of the concession.
While the idea of an advance in cash upon obtaining a concession is foreign to the ideas of American business men, yet being desirous of benefitting Turkey as soon as possible, such an advance can be arranged if the terms of the Government regarding the rights included within this concession are sufficiently favorable as to enable the company to be reasonably sure of a satisfactory return on their investment.
[Subenclosure 2—Memorandum]

The Turkish Minister of Public Works ( Fevzi Bey ) to Mr. Robert H. McDowell of the Foundation Company of New York

In answer to your letter of February 6, 1338.

I affirm that negotiations can be made with regard to this matter on the basis of the following principles, and confirm my friendship.

Naturally the railroad and the port concessions will include such rights, authorities and obligations as are given in similar concessions.
We consider it proper to give the line marked (b), namely Samsun port, with a railroad which begins from there and runs through Amasia, Sivas, Harput, Arghana, Diarbekir, and from there, or its neighborhood, goes to Bitlis and Van.
The right to build branch lines, which are dependencies of this line, can be given later.
The definite route will be determined by the studies to be made by the engineers of both parties.
Reparation and building of roads, and the giving of raw materials, are not connected with this concession, and this subject can be discussed later.
The monopoly over mines within twenty kilometers on each side of the railroad can be given on condition that these mines are worked. The form and conditions of this right can be decided upon.
The right to use water power in that region, for all sorts of works pertaining to the concession, can be given. Naturally in this article the existing acquired rights are reserved.
A port duty and a railroad tariff which will give a reasonable return for the capital invested is natural.
The right to build warehouses at the port and at railroad stations is natural.
In Article 8 (of your new memorandum) clauses a, b, and c are accepted. The reservation regarding Turkish law in clause d is superfluous. All Turkish law is based on international law. Clauses e, f, and g are appreciated.
The matter of an advance, being very important, you are especially requested to endeavor to settle it.