856d.6363/1
The Secretary of State to the Chargé in the Netherlands (Gunther)
Sir: There is transmitted herewith a despatch with an accompanying report dated January 27, 1920 from the American Consul at Batavia, Java, on Mineral Oil Concessions and Eights in Netherlands India.2 Your attention is particularly called to the Consul’s statements regarding the injurious effect of the administration of the laws of Netherlands India on investments of foreign capital and especially the experience of the “Nederland Koloniale Petroleum Maatschappij,” a Dutch company in which American capital is largely interested, and to the Consul’s suggestion that in view of the manifest desire of the Dutch East Indies to find a profitable outlet for its produce in the United States since the European War, it is believed that the present moment would be opportune for approaching diplomatically the Netherlands Government with a view to restoring the “Old Mining Law” in force up to 1912, or in obtaining special guarantees and privileges for American capital which is already established or which may seek investment in Netherlands India.
With reference to laws affecting petroleum development in the United States, you are informed that in general there do not appear to be any provisions the effect of which has been to exclude foreign capital from participation in the development of the petroleum resources of the United States. There are apparently, in certain states, legal provisions the apparent effect of which would be to restrict the ownership of land to citizens of the United States; but it would seem that a company incorporated in the United States, even if controlled by aliens, would not be excluded by such provisions from the ownership of mineral properties. The Royal Dutch-Shell group, an amalgamation of a Dutch and a British Company, in which, it is reported, sixty per cent of the shares are held by the Royal Dutch Petroleum Company which is a Dutch corporation although apparently controlled by the British, has subsidiary companies which own and operate petroleum properties in the United States. An Act to promote the mining of coal, phosphate, oil, gas, and sodium on the public domain, the so-called Public Lands Leasing Bill which has recently become a law, contains the following provisions:
“That deposits of coal, phosphate, sodium, oil, oil shale, or gas, and lands containing such deposits owned by the United States … shall be subject to disposition in the form and manner provided by this [Page 265] Act to citizens of the United States, or to any association of such citizens, or to any corporation organized under the laws of the United States, or of any State or Territory thereof, and in case of coal, oil, oil shale, or gas, to municipalities … And provided further, that citizens of another country, the laws, customs, or regulations of which, deny similar or like privileges to citizens or corporations of this country, shall not by stock ownership, stock holding, or stock control, own any interest in any lease acquired under the provisions of this Act.”3
You are requested to transmit to the Department, as early as possible, your views in detail regarding the advisability of making representations to the Government of the Netherlands with reference to its petroleum policy in Netherlands India, commenting freely on the facts and suggestions contained in the report of the Consul at Batavia and submitting any other information or considerations that you may have derived from your observations of conditions and feeling in the Netherlands. It is suggested that the purpose of these representations, if any are considered advisable, should be to cause the Government of the Netherlands to understand that its policy with reference to the petroleum resources of Netherlands India is a matter of concern to this Government; that it is the view of this Government that this policy, so far as it is revealed and understood, is apparently in many respects antagonistic to the principle of reciprocity, which, it is believed, should, so far as possible, govern the economic relations of the United States and the Netherlands with reference to access to raw materials; that this policy tends to bring about inequality of treatment in colonial possessions; and that a probable effect of this policy is a movement for retaliation in this country. You are requested especially to inform the Department fully regarding any commercial or other considerations that might influence the Government of the Netherlands to take a favorable attitude with respect to the modification of its petroleum regulations.
An expression of your views is also desired with reference to certain suggestions that have been made in the United States. The Board of Directors of the American Petroleum Institute adopted on September 27, 1919, the following resolution:
“That American companies operating, or desiring to operate, in foreign countries, should receive privileges similar to those enjoyed in the United States by companies or citizens of such foreign countries, and that effective steps to that end should be taken through diplomatic channels.”
An officer of the Bureau of Mines of the Department of the Interior has suggested that if diplomatic representations and other ready means are unsuccessful, companies organized or controlled [Page 266] in countries in which American companies are not permitted to acquire, own, or operate oil-producing properties should be prohibited from acquiring, owning and operating such properties in the United States, or its possessions. A Board of Geologists has reported to the Secretary of the Interior that, in their opinion, the United States Government should assure to our nationals the exclusive opportunity to explore, develop, and market the oil resources of the Philippine Islands, provided discriminatory policies of other nations against our nationals are not abandoned or satisfactorily modified. For your further information there is enclosed a copy of a bill3 introduced into the Senate on October 30, 1919.
I am [etc.]