The Secretary of State to the Sinclair Exploration Company

Gentlemen: The Department has received your letter of February 7, 1923, concerning a contract which you report that you concluded January 7, 1922, with the representatives of the so-called Far Eastern Republic providing for certain oil exploration and development rights in the northern or Russian portion of the island of Sakhalin. You say that this contract has been confirmed by the so-called Soviet Government of Russia, as the successor of the Far Eastern Republic; that it is your intention to send out a geological party with the opening of the next navigation season; and that, as the region in question is in military occupation by the Government of Japan, it would facilitate the work of your party if the Japanese authorities were notified of the nature of your contract and the status of your representatives.

The Department does not doubt that the Government of Japan is ready to show due courtesy and consideration to American citizens and it is the general purpose of the Department to give proper support to American citizens in pursuit of their commercial interests abroad. The present case involves, however, special considerations.

The contract relates to territory which is actually occupied by the representatives of the Japanese Government, and it is not likely that, [Page 805] until the questions relating to the Japanese occupation have been adjusted, the Japanese Government would be willing to recognize or facilitate proceedings under a contract which has been made with other authorities during the period of occupation and relates to operations in the occupied territory.

Aside from this difficulty, you will readily understand that it is impossible for this Government to take official cognizance of a contract which purports to have been concluded with a government which has not been recognized by the United States, and to make It the subject of diplomatic representations to another government.

The Department regrets to have to reply that it does not feel that it is in a position, in view of these circumstances, to present the matter to the Government of Japan in accordance with your request.

I am [etc.]

Charles E. Hughes