890F.51/2–1847
Memorandum of Conversation, by Mr. Richard H. Sanger of the Division of Near Eastern Affairs
| Participants: | Amir Saud, Crown Prince of Saudi Arabia |
| Ambassador Fuad Bey Hamza | |
| The Saudi Arabian Minister to Washington | |
| His Excellency, Sheikh Sulaiman Al-Hamad | |
| The Secretary of State | |
| Mr. Loy Henderson—NEA | |
| Mr. Richard H. Sanger—NE |
After an exchange of complimentary greetings between the Crown Prince and the Secretary of State, the Crown Prince said that he had discussed various topics with Mr. Truman and Mr. Byrnes when he was in Washington in January, and that if Mr. Marshall desired he would be glad to review the Saudi Arabian position with regard to them. The Secretary replied that he was familiar with the subject of those conversations, and that he wished to bring the Prince up to date [Page 1332] in regard to the American position on the proposed development loan. He then gave the following statement to Ambassador Hamza for translation to the Crown Prince:
“We have had a number of conversations with the various interested parties. The Oil Company1 has informed us that it is planning to build a railroad from Dammam to Dhahran and thence to Abqaiq. It also says that it is considering the advisability of extending it to Hofuf. The officials of the Company now express their willingness to talk with the Government of Saudi Arabia about having the railroad extend from Hofuf to Riyadh so that there would be a continuous railway from Dammam through to Dhahran and Riyadh.
“The Export-Import Bank, we understand, in addition to the loan of $10,000,000 already granted, has on its books a further line of credit for $15,000,000 for Saudi Arabia. In case the Oil Company arranges with the Saudi Arabian Government for the construction of the railroad, financed directly or indirectly by it, the State Department is considering asking the Export-Import Bank eventually to increase somewhat this line of credit to perhaps $20,000,000 or more.”
The Crown Prince asked several questions about the loan. It was pointed out that of the Saudi Arabian request for $50,000,000 the sum of $10,000,000 had already been loaned by the Export-Import Bank. The idea was being considered of dividing the remaining $40,000,000 into two parts: $20,000,000 for the railroad2 and $20,000,000 for the development of other projects, such as public utilities, harbors, hospitals, etc. It was doubted that the Export-Import Bank, which was not responsible to the State Department but to Congress of the United States, would be willing to extend the whole $40,000,000. Therefore the suggestion had been advanced that $20,000,000 be obtained from private firms for the construction of the railroad, and $20,000,000 be provided by the United States Government, through the Export-Import Bank, for utilities and other items. The Department of State had discussed the matter with the Arabian-American Oil Company and the suggestion had been put forward that that concern either advance the money needed for the railroad or that it assist the Saudi Arabian Government in obtaining funds from private sources. The Department was hopeful that the loan of $15,000,000 now tentatively on the books of the Export-Import Bank could be raised to $20,000,000 once an arrangement for the building of the railroad had been effected with private investors. Mr. Marshall pointed out that as Chief of Staff he could ask for funds and they could be granted, but that the Secretary [Page 1333] of State did not control the policy of the Export-Import Bank in peace time.
The Crown Prince then raised the question as to whether this railroad would be owned by the Oil Company or Saudi Arabia, if it were built under these conditions. He was told that it was our preference that, although American private enterprise should put up the money, the actual owner should be the Government of Saudi Arabia. Amir Saud asked whether it could be said that the $15,000,000 loan which was on the books of the Export-Import Bank was a definite commitment. He was informed that it was not a definite commitment but that the Department felt that there was a strong likelihood that at least such an amount could be placed at the disposal of the Government of Saudi Arabia. The Department’s statement that it would try to get the amount raised should also not be considered as a commitment either.
The Crown Prince said that he was grateful for this information, and Minister Hamza implied that although they had hoped for a more specific commitment, this was nevertheless satisfactory.
The Prince thereupon told the Secretary that his visit to the United States had been a most successful one, and that he felt a great store of “goodwill” existed between Saudi Arabia and the United States. The Secretary assured him that this was the case.
Mr. Marshall was then presented with a golden ceremonial sword by the Crown Prince, after which various photographs were taken of the Amir and the Secretary, and the conversation closed on a most friendly note.
- The Arabian American Oil Company (Aramco).↩
- In despatch 123, January 17, from Jidda, Minister Childs reported the opinion of the Vice President of Bechtel Brothers–McCone International Corporation that the building of a railroad between Riyadh and Dhahran would cost approximately $18,000,000 rather than the $50,000,000 originally estimated: (890F.77/1–1747).↩