867.602 Ot 81/310a: Telegram

The Secretary of State to the Special Mission at Lausanne


124. 1. Press reports have come to the Department’s attention indicating an expectation on the part of the Turks that they will receive substantial financial aid from America, possibly in the form of a loan of several hundred million dollars to pay off the Turkish, debt and free the country from the domination of Europe. Kuhn, Loeb and Company was named in one report from Lausanne as the firm which was supposedly backing the Chester project. The Department received a telegram on April 27 from Otto H. Kahn,64 in which he denied this report and stated that neither his company nor himself would make any such commitment without first learning the attitude of the State Department.

2. Mr. Kahn visited the Department on May 2 … He stated that unless there appeared to be a national interest he did not think [Page 1211] there was any likelihood of ample financial backing. By “national interest” he did not mean necessarily governmental interest but that a feeling should be expressed through Government authorities that the undertaking of this enterprise would be in the interest of the United States. He spoke also of the uncertain conditions in Turkey, of opposition from other powers, and of the necessity of being supported by the American Government. He explained that he was not expecting an immediate answer but that the subject would probably be brought to the Department’s attention in a few weeks after it had been examined.

3. Mr. Kahn was told that our general attitude was clear although the terms of the concession had not as yet been transmitted to the Department. The Open-Door doctrine, which was most clearly defined in the Washington Conference treaty concerning China, was not an abstract principle, and it was always agreeable to note that Americans took advantage of it by legitimate action when the opportunity presented itself. However, the United States was committed to the principle as one of general application and unless we were just ourselves we could not demand justice from others. Moreover, it could not be expected that the American Government would change its policy as far as territorial questions were concerned simply because concessions had been obtained, nor would the American people wish to become involved in territorial disputes.

4. This conversation emphasizes the belief of the Department that for the Turks to gain the erroneous impression that they can assume that American capital is at their disposal under present conditions, and in the light of recent experience, would be most unfortunate. The facts are very different. Abrogation of treaty obligations by unilateral action, hesitancy in giving satisfactory guarantees for the regime of foreigners in the future, and capricious legislation may shake confidence to such an extent as to discourage American investors from risking their money in Turkey. The fact is that the question has been raised in the minds of practical Americans, by recent exorbitant taxes and customs dues and arbitrary company and school regulations, whether it will be possible to carry on private enterprise in Turkey.

5. It should be understood of course that our treaty negotiations with the Turks must rest upon their own basis. The Department cannot hold out any inducement that American capital will come to the aid of Turkey in return for possible concessions by the Turks during these negotiations. Private American business interests will [Page 1212] decide this matter for themselves. It has been my object in this instruction to point out that for the Turks to pursue a certain course would not assist in bringing about a condition tending to encourage the action by American business interests, which apparently the Turks desire.

6. While this instruction is sent in strict confidence for your information and guidance, you may, if it is necessary in order to avoid any misunderstanding of the Department’s attitude by the Turks, make use in informal conversation at your discretion of the information given in the fourth and fifth paragraphs.

7. Repeat this telegram to Constantinople as our no. 92.

  1. Not printed.