The Vice Consul at Karachi ( Riggs ) to the Secretary of State

No. 662

Sir: I have the honor to refer to Consul Groeninger’s Strictly Confidential despatch No. 573 of February 18, 1936,4 bearing on the acquisition of certain sections of land in Afghanistan, said by geologists to cover extensive and valuable oil deposits.

In the above connection I have to inform the Department that Mr. Frederick G. Clapp, Head Geologist of the Inland Exploration Company, [Page 602] a well-known consulting geologist, arrived in Karachi last week en route to Kabul.

Mr. Clapp telegraphed from Baghdad that he was most desirous of meeting me and upon his arrival I sent my car to the Airfield to meet him. He spent two days in Karachi discussing his contracts, his difficulties in obtaining personnel and restrictions put on Indian labor. He was extremely frank in his conversation and requested my help in assisting him to recruit Indian labor. I assured him that I would do anything in my power to assist him, consistent with my duties as a Vice Consul.

Mr. Clapp informed me that he was just returning from Berlin where he had signed the concession agreement with the Afghan Minister for Foreign Affairs. He informed me in strict confidence, that the German Foreign Office and the Russian Embassy in Berlin did everything they possibly could to hamper the final negotiations for the Concession. Apparently the Afghan Minister in Berlin was most antagonistic towards Mr. Clapp and did everything he possibly could to further the aspirations of the Germans and the Russians. Mr. Clapp informed me that he was called to the hotel of the Afghan Foreign Minister who said that he desired to sign the Afghan Concession agreement immediately, inasmuch as he was thoroughly annoyed at the interference of his own Minister and that of the German Foreign Office and Russian Embassy. The agreement was duly signed and Mr. Clapp left Berlin for Teheran, Iran, en route to Kabul.

The Concession obtained by Mr. Clapp calls for the beginning of operations immediately upon the promulgation of the treaty by the Afghan Parliament. He has already arranged for American specialists, engineers and drillers. The Concession stipulates that labor employed by the Company must be either American or Afghan. In view of the great sparsity of technically educated Afghans, it is expected that the Inland Exploration Company will be called upon to employ several hundred Americans at the beginning of the operations.

During Mr. Clapp’s short stay in Iran, he successfully negotiated a Concession5 with the Iranian Government for oil exploitation over an extended area in Eastern Iran. This Concession has been signed by the Shah of Iran and ratified by the Iranian Parliament, and operations are to begin immediately.

The Afghan Concession stipulates that any oil piped out of Afghanistan must be piped through Iran as they do not care to have their oil resources piped through British India.

Mr. Clapp informed me, in confidence, that it was the intention of his Company, when work is started on the Afghan and Iranian Concessions, to pipe the Afghan oil to a point in Iran in the vicinity [Page 603] of Birjand, a few miles from the Baluchistan Frontier. He plans to have the Afghan-Iranian pipe lines to meet at this junction and from Birjand, the oil from both Concessions will be piped to the Persian Gulf. The Inland Exploration Company, it is stipulated, will build their own port on the Persian Gulf at a place a few miles from the city of Gwadur. The Inland Exploration Company has undertaken to build and operate in Afghanistan a refinery to supply the needs of Afghanistan in fuel oil, lubricating oil, grease and petrol.

Four days after Mr. Clapp signed the Inland Exploration Company Concession, the Afghan Minister of Commerce and Industry died suddenly in Kabul. Mr. Clapp and the Minister for Foreign Affairs of Afghanistan had depended upon the Minister of Commerce and Industry to push the Concession through the Afghan Parliament. Mr. Clapp seemed to feel that the successor of the Minister of Commerce and Industry of Afghanistan would be the head of the Afghan National Bank, who has apparently been hostile to the Concession negotiations of the Inland Exploration Company. However, Mr. Clapp seemed to feel that the Minister for Foreign Affairs, upon his return to Kabul, would be able to see the Concession through Parliament, although certain amendments to the Concession are anticipated.

Mr. Clapp informed me that Russian emissaries, realizing that it was impossible to block the Concession, made a final appeal to the Afghan Government to grant to them a small strip of territory on the Afghan-Russian Frontier. As stated above, this appeal was entirely disregarded by the Afghan Minister for Foreign Affairs, and the Concession was signed by him as originally drawn up.

The Afghan Concession calls for a royalty of 20 percent of the market value of all oils piped out of Afghanistan. I understand the Iranian Concession is considerably more favorable to the Iranians than the Afghan Concession is to the Afghans, inasmuch as the Iranians have demanded that the Concession just granted conform in every respect to that of the new agreement between the Iranian Government and the Anglo-Persian Oil Company.

Mr. Clapp further informed me that it is the intention of his Company, upon the successful exploitation of the Afghan Concession, to build a railroad to cover the oil-fields and hopes to eventually prevail upon the Iranian Government and the Afghan Government to assist in building a railroad to the Persian Gulf. However, this plan is in the distant future and as soon as work is started the transportation of the Inland Exploration Company will be entirely vehicular and automotive.

Mr. Clapp stressed to me the urgent necessity of the assignment of a signing consular officer resident at Kabul. He stated that it was the intention of his Company in New York to ask that a Consul [Page 604] or Vice Consul be stationed at Kabul when their work gets under way, to look after the interests of the several hundred Americans who will be employed on the Inland Exploration Company’s Concession. Mr. Clapp told me that the Foreign Minister had complained to him in Berlin that the only American Consul or Diplomatic Officers that they saw in Kabul were those passing through on a mere visit. He stated that the Foreign Minister told him that they were holding the so-called “house of the 40 columns”, three miles outside of Kabul, in the hope that the Government of the United States would eventually open a Consular office in Kabul.

Mr. Clapp asked me if I had any information regarding the intention of my Government as regards opening an office in Kabul. I told him that I was without any information whatsoever on the subject. He asked me if it were not true that I had at one time been assigned to Kabul prior to the recognition of Afghanistan by the Government of the United States. I told him that I had at one time, prior to the recognition of Afghanistan, been ordered to Kabul, but that this order had telegraphically been cancelled by the Department of State. I also informed him that at the present time, in addition to my assignment as Vice Consul at Karachi, I also had the assignment of Vice Consul to Afghanistan.

Mr. Clapp also informed me that his office or the office of the Inland Exploration Company would shortly be communicating with the Department with regard to representation in Afghanistan.

The conclusion of the Afghan oil Concession by the American Inland Exploration Company has brought forth considerable comment in British official and commercial circles, especially the refusal of the Afghans to permit the Company’s Concession oil to be piped through Baluchistan and the building of a pipe line through Iran.

Respectfully yours,

Lloyd E. Riggs
  1. Not printed.
  2. See pp. 734 ff.