856d.6363/9
The Minister in the Netherlands ( Phillips ) to the Secretary of State
[Received August 11.]
Sir: With reference to the Department’s telegraphic Instruction No. 493, of July 19 [17], 6:00 P.M., relative to the development of mineral oil in the Netherlands Indies, I have the honor to report that I have had a lengthy conference to-day with the Minister for Foreign Affairs on this subject. I explained to him that so far as the law is concerned citizens of the United States seem to have the same facilities as subjects of the Netherlands in obtaining contracts, provided that the Americans incorporate as a Dutch company. I pointed out that the Dutch laws contain certain restrictions against foreigners which are not applied by the American law against foreigners and that such regulations as a matter of fact operate against the participation of American capital in the development of oil in the Netherlands India, and I informed him of the view of the Department, as set forth in your Instruction under acknowledgment, to the effect that the Netherlands Government has not granted reciprocal privileges to American capital. I left with him a personal Note, a copy of which I have the honor to enclose herewith.6 In communicating this Note, I called his attention at considerable length to the interest in this subject in the United States. I read to him that clause in the so-called Public Lands Leasing Bill, which you were good enough to send me in your Instruction No. 1162, of April 3, 1920; I also advised him of the adoption on September 27, 1919, of the Eeso-lution of the Board of Directors of the American Petroleum Institute, which you also brought to my attention in your Instruction No. 1162; I pointed out the attitude of the Bureau of Mines of the Department [Page 273] of the Interior, and I concluded by saying that while I was not in a position to speak of the possible enactment of any retaliatory legislation on the part of the United States, I felt that he would wish to be advised that a strong public sentiment exists in the United States leaning towards retaliation.
M. van Karnebeek repeated what he has already told me—that American capital was sincerely desired in the development of this industry and others in the Netherlands and in the Netherlands Indies. He felt, however, that the situations of the United States and of the Netherlands respectively were wholly different: the United States was a great Power which easily could look after its own interests, whereas Holland was a small Power which had to be very careful in its dealings with foreign countries, especially within the colonial empire; otherwise its colonial possessions might pass under the political control of other Powers. He said that the reason for the regulations requiring the majority of a Managing Board of foreign capital to be Dutch was in order to make sure that the introduction of this foreign capital would not be used for political purposes. … “Of course,” he said, “we have nothing to fear from America, but that does not mean that we have nothing to fear from others.” M. van Karnebeek did not think that it was quite fair to expect reciprocal arrangements between Governments in all cases because conditions within two countries might be wholly different. In the United States there could be no fear of the exercise of political control by foreign capital, whereas in a smaller country like the Netherlands India there was such a danger always present. “Since conditions are so wholly different why therefore should regulations be the same?” he asked. He concluded by explaining that there was already more foreign than Dutch capital in the Netherlands Indies.
I am of the opinion that M. van Karnebeek is not in favor of recommending a change in the existing legislation in order that the restrictive provisions shall be removed. It is therefore important for me to be in a position to point out to him in detail the difficulties which American capital is having in its relations with the Colonial Authorities. Since M. van Karnebeek assures me that American capital in the development of oil is desired, I should be able to inform him of the actual conditions operating against the participation of American capital.
Please refer to my telegram No. 150, July 2, 3:00 P.M.7 suggesting that the American Consular authorities in the Netherlands India might be able to offer practical suggestions in this connection.
[Page 274]I have the honor to enclose as well copies of previous correspondence7 which I have had with the Minister for Foreign Affairs on this same subject. The substance of the Minister’s reply of June 30th was cabled to you in my telegram No. 150, July 2d.7
I have [etc.]