The Ambassador in Germany ( Dodd ) to the Secretary of State

No. 3112

Sir: I have the honor to report that information has recently come into the possession of the Embassy respecting the granting of an oil concession in Afghanistan to American interests. While the Department may already be aware of this matter, it has been learned that the negotiations for this concession have been recently carried on in Berlin between the American interests involved and the Afghan Minister for Foreign Affairs, the latter having come here subsequent to the sessions of the League Assembly in Geneva. Without being informed in any way concerning the background of this matter, I present the following information for what it may be worth:

Several days ago Mr. Charles C. Hart, former American Minister to Albania and Iran, in conversation with a member of the Embassy staff stated that he was on the point of coming to an agreement with the Minister of Foreign Affairs for Afghanistan, at present in Berlin, respecting the granting of an oil concession in Afghanistan to an American syndicate. The agreement in question, I understand, has been drafted in final form and Mr. Hart intimated that it would be signed in the near future.

The American interests involved in this matter are, according to Mr. Hart, the Seaboard Oil Company, the Texas Oil Company, Case and Pomeroy, and Fisher Brothers. They are represented in the negotiations with the Afghan authorities by Mr. Hart and Mr. Frederick G. Clapp, Petroleum Adviser to the Imperial Government of Persia in 1927.

From the information available through Mr. Hart, the terms of this agreement will grant the syndicate exclusive oil rights in five Afghan provinces, the choice of provinces to be made within a year. It is further stipulated that the ownership must remain American or Afghan. Mr. Hart explained that a “few shares” might be allocated [Page 598] to Afghan ownership but that the control would be vested in American interests. He further revealed that the Afghan Government did not desire that either German or Italian influence should penetrate into the concession.

With respect to the method of exploitation of whatever fields may be eventually chosen, Mr. Hart said that the syndicate contemplated constructing a pipe line through Iran to the town of Shiraz, a distance of approximately four hundred miles. This development, however, is dependent upon permission of the Iranian authorities and is also dependent upon a possible oil concession which the same interests contemplate negotiating with the Iranian Government. If these negotiations are not successful, an alternative route for the pipe line through Baluchistan is under consideration. Mr. Hart also asserted that the interests he represents are on good terms with the Anglo-Persian Oil Company and that no difficulties were envisaged from that quarter with respect to Iran. He implied that the Anglo-Persian Oil Company had no objection to the development of Afghan fields by American capital, the more so because it did not desire to have German or Italian interests involved in this area. Mr. Hart intends to depart soon for Teheran and eventually to go to Kabul.

The foregoing is reported for such interest as it may offer, with the additional explanation that as the agreement has not been seen, there may be other terms of which the Embassy is not aware. Mr. Hart has been the sole source of information on this matter.

Respectfully yours,

William E. Dodd