856d.6363/583

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

No. 1931

Sir: I have the honor to acknowledge the receipt of the Department’s Instruction No. 676, of May 26 [29], 1929, in regard to certain rumors to the effect that there is an arrangement between the Dutch Government, the Royal Dutch Petroleum Company and the Colonial Petroleum Company (Koloniale) concerning the division of oil lands in the Dutch East Indies which may adversely affect American interests. The Department desires a map showing as far as possible the concessions already granted in Netherland India.

[Page 544]

The Department’s request for such a map had been anticipated and the Legation is pleased to be able to forward it at once. The map was obtained through the kindness of the engineers of the Koloniale and the late Mr. Horstmann, its director. It has required more than six months to prepare due to the fact that the Legation felt a detailed chart of this kind would be of more value if the areas included in the pending applications were also shown. This caused a long delay as it was necessary to await the arrival in The Hague of the resurveys made after the boundary settlement between the Royal Dutch and the Koloniale mentioned in my confidential despatch No. 1852, of April 11, 1929.8 The map is unique and Mr. Horstmann, requested that it should in no way come to the attention of any possible competitors. If this map is made available to the Navy Department and to the Department of Commerce, as the respective Attaches of these Departments at this Legation have requested, it is suggested that this injunction to confidence be carefully pointed out. A study of the map and the enclosed sheet showing the areas in hectares of the concessions granted and pending confirms the statements frequently made to the Legation by Mr. Horstmann that since the Djambi region was closed by virtue of the agreement between the Royal Dutch and the Netherland Indies Government for the establishment of a mutual company to operate in this region, subsequent concessions have been fairly equally divided between Dutch and American interests.

The Department’s Instruction under acknowledgment indicated that in some manner the impression has arisen that Mr. Loomis’ failure to return with the concessions he desires is due to some exclusive arrangement between the Dutch Government, the Royal Dutch and the Koloniale oil companies for restricting the apportionment of oil rights in the Dutch East Indies. I believe this assumption to be wholly unfounded. The rumors in question were reported to the Department in order that it might know what was in Mr. Loomis’ mind. A confirmation of my impression that Mr. Loomis did not put too much faith in these reports is his own statement that he did not ask Mr. Six, the Chief of the Mining Bureau of the Department of Colonies, to confirm or deny them. Needless to say, had I not felt the rumors to be without foundation I would of course have discussed the matter fully in the despatch under reference.

The fact is that Mr. Loomis did not follow the preliminaries necessary to gain concessions. He did not establish a Dutch company; he complied with none of the required legal formalities; he not only never formally applied for a concession, but he did not even put his company legally in a position to do so. In more than one conversation and in writing (see despatch No. 1706, November 22, 19288), [Page 545] I emphasized that in order to accomplish the same results as the Standard Oil of New Jersey it would be advisable to adopt the same means they had employed. I am still convinced of the good faith of the Dutch Government in this matter and that if Mr. Loomis was told it would be useless for his company to apply for leases in Atjeh 1 and 2, it was not because these whole regions had been “reserved” for the Koloniale and the Royal Dutch, but because the particular fields in Atjeh in which Mr. Loomis’ company was interested, had been allocated some months previously to the Royal Dutch and the Koloniale (see despatches No. 1484, of April 16, 1928 and 1729, of December 17, 1928.9) The enclosed map, showing the scattered character of the concessions granted these two companies in the Atjeh districts illustrates the point nicely. That the Dutch Government was not disposed to withdraw the promises given to these two companies which have complied with all the legal formalities and with which it has done business satisfactorily for a number of years, in favor of a company which has done nothing in this way, is not surprising. Briefly stated, when Mr. Loomis reappeared on the scene he found that the fields, which a preliminary survey four years before had shown to be valuable, to be already in the hands of active rivals whose tenacity and persistency had been rewarded by primary consideration in the fields they had so closely watched.

There are still opportunities for American interests in the development of the petroleum resources of the Indies. It is for the Standard Oil of California to decide if it wishes to carry on. Should it conclude to do so, it must be prepared to expend sums sufficient for the necessary prospecting and for the establishment of a substantial Dutch company.

To any one who has followed the struggle of the Koloniale to obtain a foothold in the Dutch East Indies, the suggestion that an agreement exists for the exclusive apportionment of oil rights to which that company is a party is quite untenable. What success the Koloniale has won has come only after years of preparation and hard work and even now, to quote the words of the late Mr. Horstmann: “We apply for all we think we may get but we are never sure how our applications will be received. If our requests are considered favorably they are invariably reduced and even then we must expect negotiations and delays sometimes covering years before final approval is obtained.”

In concluding I would like further to point out that such an exclusive arrangement as has been intimated would be next to impossible under the Dutch law, which necessitates parliamentary approval of every concession granted and then only after a contract [Page 546] for each concession has passed through more than eight different and independent agencies of the Government. Such an arrangement would therefore presuppose not only an understanding between the Royal Dutch and the Koloniale, two powerful rivals, but also between these various and, in some instances, widely separated departments of the Dutch Government. If any additional proof were needed it would be found in the fact that the Government, as recently as April of this year granted a concession to a private individual having no connection with the Koloniale or the Royal Dutch.

I have not taken up this question with the Dutch Government as I felt that the Department has perhaps been misinformed regarding the situation.

I have [etc.]

Richard M. Tobin
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