890g.6363 T 84/226: Telegram

The Secretary of State to the Ambassador in Great Britain ( Houghton )

[Paraphrase]

357. Negotiations regarding the Turkish Petroleum Company.

1.
The Department has been informed by the American Group that there is serious danger that their negotiations with the Turkish Petroleum Company will reach an impasse due to failure up to now of the other groups in the Turkish Petroleum Company to come to an agreement with Mr. C. S. Gulbenkian.69 See first paragraph in Department’s telegram No. 331, September 20, 1924, 2 p.m.70 The situation described in that telegram is very much like that existing now.
2.
The American Group informs the Department that they would be sincerely sorry to have to withdraw from further attempts to obtain participation in the Turkish Petroleum Company on a fair basis and that they are still hopeful that an agreement will be reached which will make participation possible. Negotiations with the Turkish Petroleum Company are being carried on by Mr. Piesse on behalf of the American Group.
3.
You may wish to confer with Mr. Piesse regarding the status of the negotiations at present. However, such a critical stage seems to have been reached that the Department wishes you promptly to present the matter again orally to the British Foreign Office, setting forth the view which the Department has consistently maintained and which is fully explained in its telegram No. 331 of September 20, 1924. Except for subparagraph (c) of the third paragraph, the considerations presented in the third, fourth, and fifth paragraphs of that telegram apply to the present situation as well as they did to that of last year. On the point covered by section (c) of the third paragraph, the situation is modified by the fact that a concessionary contract between the Turkish Petroleum Company and the Iraq Cabinet has been signed,71 so that presumably the present claims [Page 240] are based not on the pre-war claims of the Turkish Petroleum Company but upon the recent alleged concessionary grant.
4.
In making your representations at the Foreign Office you should stress especially the views outlined in the fifth paragraph of the telegram of September 20. The Department is aware that neither our Government nor the British Government would wish to intervene in negotiations which are of a purely business nature. The British Government, however, in view of its connection with the Anglo-Persian Oil Company which is one of the chief parties to these business negotiations, may be able to persuade British subjects or companies not to assume an attitude which would make it impossible for American interests to participate in the Turkish Petroleum Company. It is the belief of the Department that its wish to avoid any further controversy regarding the Mesopotamian oil question is shared by the British Foreign Office. The American and British Governments have agreed on important questions of principle regarding this matter, and the development of a selected part of the Mesopotamian oil field by a company in which important oil interests of four nations were to participate was to give practical application to these principles. Effect was being given to the open-door principle as applied to territories under mandate, and thus there was to be brought about a wide basis of participation in developing these oil resources.
5.
Should the American Group withdraw because of failure to obtain participation in the Turkish Petroleum Company on a fair basis, the Department would reserve its entire freedom of action if any reasonable and proper efforts should be made by the interested American companies to secure the right to a fair share in the development of the oil resources of Mesopotamia through other means than the Turkish Petroleum Company.
6.
Should oral representations not be sufficient, the Department would consider sending a written communication on this subject. Please make report.
Kellogg
  1. Calouste Sarkis Gulbenkian, naturalized British subject, a minority stockholder in the Turkish Petroleum Company.
  2. Foreign Relations, 1924, vol. ii, p. 232.
  3. Turkish Petroleum Company, Limited, Convention with the Government of ’Iraq, made the 14th day of March, 1925 ([London,] Blundell, Taylor & Co. [1925]).