856d.6363/31

The Minister in the Netherlands ( Phillips ) to the Acting Secretary of State

No. 385

Sir: Referring to the Department’s Instruction No. 97, of November 11th last, and to previous correspondence regarding the petroleum situation in the Netherlands East Indies, I have the honor to transmit herewith the copy and translation of a note dated December 2d from the Minister for Foreign Affairs, which is in reply to my two notes to the Foreign Office of September 7th and 25th last, copies of which I also enclose herewith.15

It will be noted that the defence of the Netherlands Government in granting exclusive privileges for the development of mineral oils to a single company (namely, the Bataafsche) is because of “the lack of interest on the part of American capital to obtain and exploit petroleum concessions in the Indies” in the past.

The point is made that the object of the present legislation regarding the development of oil is in order that the State should profit as much as possible from the exploitation and it is for this reason [Page 289] that the legislation in question gives the Government the right of choice, in regard to the petroleum fields not already exploited, between exploitation by the State or exploitation by virtue of contract. The Government holds that private companies may be considered as contractors working in the service of the Government and obtaining a certain remuneration therefor.

The Netherlands Government having adopted this policy in no uncertain terms, I do not believe that it is advisable or profitable for the Government of the United States to endeavor to obtain a modification of the existing laws at the present time. I think it is advisable, as I have previously informed the Department, to insist upon American capital being permitted to participate through a private arrangement with the Bataafsche Petroleum Maatschappij, in accordance with the terms of the Explanatory Memorandum accompanying the new Government Bill, a copy of which was transmitted in my despatch No. 374, of November 24.16 The Memorandum explains, as the Department will recollect, that

“account should be taken of the fact that circumstances may arise making it desirable that the transfer of a part of the B-Shares should pass to persons or bodies of foreign nationality. Such transfer, however, will not be able to take place except with the express permission of the Minister of the Colonies”,

and also provides that foreigners may become members of the Board of Directors of the new company organized by the Government.

I have [etc.]

William Phillips
[Enclosure—Translation17]

The Netherland Minister for Foreign Affairs ( van Karnebeek ) to the American Minister ( Phillips )

Littera D.A.E.
No. 23397

Mr. Minister: In reply to the notes which Your Excellency was good enough to address to me on September 7th and 25th last, I have the honor to inform you that since the measures, mentioned in the note attached to my letter of June 30 (No. 12542), had been taken, no concession was given to private persons or societies for the exploitation of petroleum fields in the Netherlands Indies.

Before that date the possibility of obtaining such concessions was open as well to foreign interests as to Netherlands interests.

[Page 290]

If therefore the best concessions are controlled at present, as is stated in the Memorandum annexed to Your Excellency’s letter of September 7th, by a single Netherlands company, this state of affairs cannot be attributed to the legislation or the Government of the Dutch Indies, but to the lack of interest on the part of American capital in obtaining and exploiting petroleum concessions in the Indies.

Furthermore, there is no doubt that in the period during which petroleum concessions were given to private persons or societies, the Netherlands-Indian Government has in no manner, in the application of this mining legislation, distinguished between societies with foreign capital, for instance American, and societies with Dutch capital. The note attached to my letter of June 30 has already shown that as a consequence of the proposed modification of the mining policy, the Dutch-Indian Government has since 1913 ceased to accord any concessions for the exploitation of petroleum fields and has given no permission for the prospecting of petroleum.

Since then, the new mining law of July 20, 1918 (S. 466) has established that the discovery of petroleum, coal and iodine, does not give any right to the discoverer of these products to obtain a concession for exploitation.

The exploitation of these minerals will be carried out by the Government, or by contract—to be approved by a law—between the Government and a corporation.

The object of the mining legislation in regard to the three products mentioned is now that the State should profit as much as possible from the exploitation. It is for this reason that the legislation in question gives the Government the right of choice, in regard to the petroleum fields not already exploited, between exploitation by the State or exploitation by virtue of a contract.

In this sense the private companies may be considered in a certain measure as contractors (entrepreneurs de travaux) working in the service of the Government and obtaining a certain remuneration therefor.

Under the present régime no one can claim the right to exploit the petroleum fields, but every society or company may, independently of the question whether its stockholders are Netherlanders or foreigners, solicit from the Government the right to exploit for the State under a contract.

Your Excellency will note from the foregoing that before the modification of the régime of 1913 no distinction was made between foreign and Dutch capital for the exploitation of petroleum concessions; that between 1913 and 1918 no concession was granted, and that under the new régime of 1918 the possibility existed as much [Page 291] for companies with foreign interests as for those with Dutch interests to obtain a contract for exploitation.

I beg Your Excellency to bring the above to the attention of His Government and to assure it that there exists no tendency in the East Indies to set aside the foreign capital and spirit of enterprise in these Colonies.

Indeed, numerous agricultural and mining exploitations exist in the Indies in which American capital and American citizens occupy important and honorable positions, and this to the great satisfaction of the Government of the Queen.

Accept [etc.]

For the Minister:
A. M. Snouck Hurgronje

The Secretary General
  1. Notes to Foreign Office not printed; they were based upon instructions in Department’s telegrams nos. 555 and 573, pp. 276 and 278, respectively.
  2. Not printed.
  3. File translation revised.