The Minister in the Netherlands (Tobin) to the Secretary of State

No. 1522

Sir: I have the honor to refer to my telegram No. 24, of May 26, 1928, 1 p.m.

Upon receipt of the Department’s telegram No. 17, of May 21, 3 p.m., I obtained an interview with the Minister for Foreign Affairs. I expressed to him some disappointment at the continued delay my government had encountered in establishing reciprocal relations in the matter of American participation in the petroleum development of the Dutch East Indies. I reminded him that negotiations with this end in view had been carried on by my predecessor, Mr. Phillips, and had been the object of my unceasing efforts since my arrival—in all a period of something like eight years; that I had been assured more than a month ago by Mr. Snouck that the considerations contained in the Legation’s memorandum of March 5th were acceptable in principle and that such delays as we were now encountering were occasioned merely by formal difficulties in making a satisfactory draft of the reply to our memorandum; that I was now surprised and disappointed to learn that more serious difficulties had been advanced.

Mr. Beelaerts said to me: “When we sign this important concession and turn it over to you we will have taken an irrevocable step. Before [Page 392]we do so we would like to feel certain of your action. Why should you wish to hold all the trumps in your hand? We desire formal assurances that when we have formally accepted your conditions and signed the concession we may be certain to be removed from your list of non-reciprocating nations and that the only Dutch company desirous of entering upon public lands may be free to do so.” He spoke also of the objections, already reported in my despatch No. 1517, of May 14, 1927 [1928], which had been urged against the Bill by the Dutch Minister in Washington.

I reminded him that it had never been the purpose of the United States Government to advance the interests of any particular company, but only the interests of American nationals at large; that the design of my government was to establish facilities for the nationals of each country to obtain access to the mineral resources of the other upon equal and reciprocal terms: that there was no desire upon the part of the American Government to obtain all the advantages; that, as a matter of fact, Dutch oil companies were now operating and had been operating for years past in America under most favorable conditions. I conveyed to him the assurance that if a satisfactory answer were obtained to the three inquiries of my government—contained in the Legation’s note of March 5th—my government would then be in a position to discuss in a most friendly spirit the position of any Dutch owned American company.

The Minister made a very strong plea, difficult to resist, that the matter be left in the hands of Mr. Snouck, now absent on his vacation. While I protested at what seemed an unnecessary delay, I had no course but to submit.

The Minister reiterated the assurance of Mr. Snouck—that the matter was settled in principle and that the Bill would surely be signed—but it was impossible to extract from him any assurances as to the time when such signature might be expected.

As a result of my conversation with the Minister for Foreign Affairs, I am convinced that the Dutch Government is acting in good faith in requiring convincing assurances that their action in acceding to the requirements of the United States Government will be followed by the recognition of the Netherlands as a reciprocating country.

I believe from the expressions of Mr. Snouck, which have been previously reported, and those of Mr. Beelaerts, that the position of the Dutch Government may be summarized as follows: It is prepared to meet the conditions set forth in the Department’s No. 8 of May [March] 2, 1928, provided such action on its part will be promptly followed by acknowledgment on our part of the Netherlands as a reciprocating country and also by an assurance in some form on the part of the United States Government which will satisfy the Foreign [Page 393]Office that the Shell Union will be regarded as a Dutch company if and when that company applies for leases in our public lands. The Dutch Government also desires it to be understood that, in meeting the views of the American Government as set forth in the third condition advanced in the above-mentioned memorandum, Holland, like other countries with a parliamentary system, cannot bind succeeding governments, but that it would prefer to say, as Mr. van Royen has already stated (see note from Dutch Legation November 14, 1927), that it is its “present intention” to pursue in the future a liberal policy with regard to American participation in the petroleum development of the Dutch East Indies. Also with reference to the third condition contained in our memorandum, the Dutch Government desires to point out that while determined to accord equal opportunity in the Netherland East Indies to American petroleum interests it cannot bind itself to grant in every instance absolutely identical treatment to American and Dutch interests. To this summary of the Dutch position should also be added the objections referred to by both Mr. Snouck and Mr. Beelaerts relative to the uncertainties and conflicts in American oil legislation and the influence of politics on the operations of foreign controlled oil companies in the United States. To these latter objections I do not believe the Foreign Office will attach much weight.

These facts, which have at various times in the past three months been communicated orally to the Legation, have in turn been reported to the Department. They reveal, I believe, no differences of opinion which cannot be reconciled. The tendency of the past few months has been to give greater emphasis to the less important points of difference and thus minor disagreements have been made more prominent than the fact that agreement has been reached on the basic issue.

In order to solve the present problem, I venture to suggest for the Department’s consideration that the Legation be authorized to put into writing (1) the substance of the Department’s telegram No. 10, March 28, 7 p.m.—the contents of which have already been conveyed orally to the Foreign Office—and (2) an assurance on the part of the United States Government, that the advantages to be enjoyed by Dutch owned American companies, when Holland shall have been declared a reciprocating country, will not be denied to such companies, even though their stock is to a minor extent in the hands of nationals of a non-reciprocating country. If these assurances could be presented formally to Mr. Snouck upon his return, to be effective when the Dutch have fulfilled the assigned conditions, I believe matters would be brought to a point where I can obtain the definite and satisfactory answer to our requirements.

It may seem the Legation, in its desire to obtain prompt action and to meet every contingency, is urging a too conciliatory course. [Page 394]The concessions suggested do not, however, cost us anything in bargaining power. The assurances contemplated are merely promises of action contingent upon the Dutch Government having first accepted our conditions. It would appear to the Legation that compliance with the second assurance desired by the Foreign Office, i. e., recognition in some form of the Dutch character of the Shell Union, is an essential part of and flows directly from the promise we have made orally that Holland will be held a reciprocating country. To grant one request and not the other might give rise, in the Dutch mind, to doubts regarding our good faith, for Dutch nationals cannot actually enjoy advantages of the promised reciprocity if we withhold the desired recognition from the only Dutch company in the United States which, according to the Foreign Office, is interested in obtaining American concessions.

I should greatly appreciate receiving by telegraph an expression of the Department’s views.14

I have [etc.]

Richard M. Tobin
  1. Marginal notation dated June 14, 1928, by the Economic Adviser, Department of State: “All points have been substantially covered in telegrams. A[rthur] N. Y[oung].”