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

No. 1617

Sir: There is enclosed a paraphrase of a telegram of October 19,53 and a copy of despatch No. 1872 of October 20, 1928 from the Consulate at Jerusalem concerning the tender of bids for the construction of a proposed harbor works at Haifa, Palestine. As the Embassy is aware, these works are to be financed by the Government of Palestine from funds raised under the Palestine Loan Ordinance.

The enclosed communications indicate that the British Crown Agents in charge of the contract for the construction, apparently sometime in July, 1928, furnished eleven selected British firms with the specifications of the harbor works, and fixed November 4, 1928 as the closing date for the final submission of bids. On July 23, 1928 the Consulate at Jerusalem had requested from the Palestine Government information regarding the contract for the harbor works in order that it might advise interested American concerns, but it was not informed of the action taken by the Crown Agents until October 19, 1928. By that time it was obviously too late for the American firms to carry out the preliminary investigations, prepare estimates, and submit tenders by November 4, the date fixed by the Crown Agents.

The Department is of the opinion that the line of action adopted by the British Authorities in respect to the submission of tenders is in harmony neither with the spirit of the mandate54 nor with the provisions of the American-British Palestine Mandate Convention of December 3, 1924.55 Article 18 of the Mandate, to the benefits of which the United States is entitled under the terms of its Convention with Great Britain, provides as follows:

“The Mandatory shall see that there is no discrimination in Palestine against the nationals of any State member of the League of Nations (including companies incorporated under its laws) as compared with those of the Mandatory or of any foreign State in matters concerning taxation, commerce or navigation, the exercise [Page 65] of industries or professions, or in the treatment of merchant vessels or civil aircraft. Similarly, there shall be no discrimination in Palestine against goods originating in or destined for any of the said States, and there shall be freedom of transit under equitable conditions across the mandated area.

“Subject as aforesaid and to the other provisions of this mandate the Administration of Palestine may, on the advice of the Mandatory, impose such taxes and customs duties as it may consider necessary, and take such steps as it may think best to promote the development of the natural resources of the country and to safeguard the interests of the population. It may also, on the advice of the Mandatory, conclude a special customs agreement with any State the territory of which in 1914 was wholly included in Asiatic Turkey or Arabia.”

The provisions of this article, especially the term “exercise of industries,” appear to apply to such discrimination as that which has taken place in connection with the submission of tenders for the construction of the harbor works at Haifa. Moreover, this Government on several occasions during the course of the correspondence with the British Government in regard to the Palestine Mandate Convention stated in no uncertain terms its insistence upon the principle of the open door and of equality of commercial opportunity in Palestine and in other mandated territories.

As early as May 12, 1920 the Embassy at London in a communication to the Foreign Office56 suggested several propositions which embodied or illustrated the principles which this Government desired to see applied in the mandated regions. Among these propositions were the following:

That the mandatory power strictly adhere and conform to the principles expressed and agreed to during the peace negotiations at Paris, and to the principles embodied in mandate “A” prepared in London for adoption by the League of Nations by the Commission on Mandatories.
That there be guaranteed to the nationals or subjects of all nations treatment equal in law and in fact, to that accorded nationals or subjects of the mandatory power with respect to taxation and other matters affecting residence, business profession, concessions, freedom of transit for persons and goods, freedom of communication, trade, navigation, commerce, industrial property, and other economic rights or commercial activities.

The Foreign Office in reply to this communication stated that it was “in full sympathy” with the “various propositions mentioned.”57 Other communications setting forth the viewpoint of this Government in regard to the equality of commercial opportunity in Palestine are to be found in the Department’s confidential publication [Page 66] entitled “Mandate for Palestine,”58 a copy of which is understood to be available in the Embassy.

In view of the consistent attitude of this Government in regard to the granting of concessions in Palestine the Department is at a loss to understand the action of the British Crown Agents and of the Palestine Government in arranging the submission of tenders for the construction of the harbor works at Haifa so as effectually to exclude the participation of other than British firms. Such action appears clearly to be discriminatory and in violation of the rights of this Government under the American-British Palestine Mandate Convention of December 3, 1924.

The Department therefore desires that you seek an early occasion to bring the foregoing orally to the attention of the Foreign Office. At the time of your interview you may leave with the appropriate officials a memorandum recapitulating the points discussed in this instruction.

You will, of course, furnish the Department with a copy of any memorandum that you may leave at the Foreign Office and inform it promptly of the result of your representations.

I am [etc.]

Frank B. Kellogg
  1. Not printed.
  2. For revised final draft of the mandate for Palestine, see Foreign Relations, 1922, vol. ii, p. 292.
  3. Ibid., 1924, vol. ii, p. 212.
  4. ibid., 1920, vol. ii, p. 651.
  5. Ibid., pp. 663, 666.
  6. See Department of State, Near Eastern Series No. 1, Mandate for Palestine (Washington, Government Printing Office, 1931).