Papers Relating to the Foreign Relations of the United States, 1925, Volume II

861b.6363/131

Memorandum by the Secretary of State

[Washington,] June 3, 1925.

Memorandum for the Solicitor’s Office:

re: Sinclair Concession—Northern Sakhalin.

I had an interview with Mr. Lansing⁸ this morning relative to the Northern Sakhalin matter:

(1) I explained to Mr. Lansing that I did not care to discuss the question as to the legality of Sinclair’s concessions from the Soviet Government as between those parties I did not think the question was material to any action which the State Department had been or should be asked to take. He fully agreed with me as to this.

(2) Generally I admitted to be correct the statement that a mere military occupation of foreign territory did not give the occupant the right to dispose of real estate or make permanent concessions, that I did not understand that Japan had done this. It might be true, or it likely was, that the concessions promised by the Soviet Government were induced by the wish of that Government to obtain the military evacuation by the Japanese in Northern Sakhalin but the concessions promised, if made to Japanese concerns or the Japanese Government, could not, of course, be considered on the basis of the military occupation but would depend entirely upon the right of the Soviet Government to dispose of rights in its own territory. He acquiesced in this position.

(3) That in my opinion the clauses in the supplementary contract signed by the Soviet Government and the Sinclair Company relative to protection of Sinclair’s rights in the United States and giving the Soviet Government the right to cancel the contract if that Government was not recognized by the United States within five years, were placed there for the purpose of using the Sinclair Company to influence the United States and [to?] grant such recognition. He admitted this to be true and said this agreement was forced from Sinclair by the Soviet Government. I did not dispute this but told him that nevertheless the fact remained the contract was made for this purpose and that was a question of public policy which did have a bearing upon the action this Department should take in protecting the Sinclair Company’s rights. This he admitted and frankly conceded that the Department should not recognize the Soviet Government and could not and should not protest to that Government for the protection of the Sinclair Company’s rights. He said that Sinclair’s contract had been cancelled by the Soviet Courts, that there was no possibility of the rights being reinstated by the present Government in Russia and, therefore, there was no present necessity of taking any action.

(4) I then discussed with him the Japanese declaration at the Washington Conference, also the Chinese Treaty for equal rights in China, and said that the Department had taken the position that a grant of fifty per cent, of a certain territory was not denying equal rights within China in violation of the Chinese Treaty, that I was not prepared to say that the promises made by the Soviet Government to grant to Japanese concerns or the Japanese Government certain rights of exploration and fifty per cent, of the described territory was in violation of the Japanese declaration. In any event, I did not think it wise at present to make any protest to the Japanese Government in view of the fact that the Sinclair concessions had been cancelled by the courts of the Soviet Government. He acquiesced in this and suggested that the only thing he expected was that if there should be a change of Government in Russia and the new Government should come to the conclusion that an injustice had been done to the Sinclair Company and were prepared to make a concession to it, that we should lay the facts before the Japanese Government and ask, if such occasion should arise, that the Sinclair Company be given an equal opportunity to obtain concessionary rights and without opposition of the Japanese Government. He did not desire to write me a letter asking for it at present and thought that possibly I could take the matter up with the Japanese Government, not with a view to obtaining any immediate action by that Government but should the Sinclair Company in the future some time try to get a reasonable concession, he thought that it would be well to file some sort of a notice to Japan so that the Japanese Government could not claim that we knew all about it and had never made any protest. This seemed to be a very reasonable attitude and, of course, we wish to do everything we can to protect the legitimate interests of the Sinclair Company when those interests are entirely divorced from any agreement to obtain recognition of Russia. I suggest that at the proper time a memorandum be prepared reviewing the history of the whole transaction and informing our Ambassador of the situation so that he can informally take the matter up with the Japanese Government.

8. Robert Lansing (former Secretary of State), of the law firm of Lansing & Woolsey, representing the Sinclair Exploration Co.