891.51/361
The Chargé in Persia (Murray) to the Secretary of State
[Received October 22.]
Sir: Referring to the Consulate’s telegram No. 9 of July 29, 1924 reporting the departure from Teheran of the representative of the Sinclair Exploration Company, I have the honor to inform the Department that, in a conference on September 17 with the Prime Minister immediately after his return from Khorammabad, I advised him of the departure, on September 11, during his absence, of Mr. Addison T. Ruan, representative of Ulen & Company. This together with the departure on July 28 of Mr. Soper, the Sinclair representative, closely subsequent to the killing of Vice Consul Robert W. Imbrie in Teheran would, I remarked, appear to have dealt, at least for the present, a severe blow to the “American economic program” in Persia so assiduously sponsored by the Prime Minister himself [Page 549] as well as by most Persian patriots. As both the Sinclair and Ulen projects were originally predicated upon the possibility of a Persian loan being floated on the American market, a more fatal blow could hardly have been struck at this program than the destruction of American confidence in Persia inevitably resultant from the killing of the American Vice Consul.
Before I could proceed to a discussion of the only asset remaining from the wreckage, the American financial mission, whose existence hangs now by a thread, the Prime Minister launched at once into the question of the oil concession and expressed his deep personal disappointment that, after three years effort, and an expenditure by the Persian Government of more than 300,000 tomans on telegrams alone, and the passage by the Medjliss of all but two of the articles of this concession, the Sinclair company now appeared to have lost interest in the fate of the concession and was willing to let it lapse. Despite repeated efforts on the part of the Persian Government to ascertain the intentions of the company since Mr. Soper’s departure, no answer to its inquiries had been received.
I thereupon requested the Prime Minister to inform me exactly of the present prospects for the passage of the oil concession and promised him I would do what was possible under the circumstances to obtain, through the Department, information from the Sinclair company as to its intentions. He then assured me that the concession could and would pass the Medjliss if that body were sure of its acceptance by the Sinclair company, and that he personally would see that the loan clause was eliminated. It was desirable that Persia find money, it was true, but in view of the urgent necessity of resuscitating her economic life, the question of an immediate loan could be disregarded.
As the circumstances attending the passage, up to the last important article of this concession, despite America’s disinterest and the bitterest opposition of the British, are so remarkable, the Legation would find it very helpful if the Department were inclined to instruct it as to the best policy to follow in the circumstances.
Since my arrival in Teheran in April 1922, I have watched closely the evolution of this exceedingly complicated question so that I trust the Department will not take it amiss if I venture to offer the following observations based on my personal acquaintance with the issue from this angle.
1. It is unquestionable that the Standard Oil Company could, in November 1921, after the decision of the Medjliss to negotiate with that company for the award of the oil concession in the northern provinces, have had it for the asking. This was never done.
2. It is equally as unquestionable that, after the alliance between the Standard Oil Company and the Anglo-Persian Oil Company [Page 550] and the subsequent incredible offer to the Persian Government to exploit these provinces on a basis of 50–50 participation with the Anglo-Persian Oil Company, the Standard Oil Company could have obtained the concession by no means short of a miracle. A most casual knowledge of the state of Persian sentiment (right or wrong) towards the British since the ill-fated Anglo-Persian Agreement, and of Soviet Russian sentiment since the collapse of Britain’s attempt to seize Baku in 1919 should suffice to prove the truth of this statement.
3. Any company, American or otherwise, that obtains the concession to exploit these provinces must, of necessity, have made its peace, at least economic, with Soviet Russia. It is obvious from a glance at the geographical lay of these fields that, barring unexpected events in Russia, the Soviets have, and will continue to have, the last say as to the development of these resources in North Persia. The key of these resources is the Caucasus, and that key is in Russia’s possession.
4. It is exceedingly unlikely that, even granting the recent Anglo-Soviet Russian reconciliation, such as it is, and the possibility that an agreement will be reached on a mutual policy and plan of action elsewhere, such a cooperation could easily be arrived at with regard to the Asiatic policy of these Powers. Hence, were American economic intervention in North Persia for the moment blocked or even definitely defeated, it is inconceivable that Great Britain will be able to obtain what she may have prevented America from obtaining.
The advantage to Britain of such a “negative victory” is, however, by no means to be underestimated. Great Britain’s interest in Persia dates from the seventeenth century, and her policy may be said to be geared to centuries, whereas ours is scarcely geared to years. She can wait.
It is furthermore the conviction of the Prime Minister, as of most enlightened Persians, that the policy of the Standard-Anglo-Persian combination in seeking to acquire these fields was purely that of the dog-in-the-manger awaiting a new turn in Russia and an absorption on world markets of a greater oil supply without menacing present prices.
5. If American participation in the development of Persia is to be regarded as desirable, the circumstances attend[ing] the competition of these two American companies for the concession may be regarded as unfortunate, and this for the following reason, namelitem:
Whereas the British Government would appear to have regarded the Standard Oil Company, by virtue of its alliance with the Anglo-Persian Oil Company, a company in which 50% of the stock is owned by that Government, as entitled to the mobilization of the last ounce of influence available to the British Legation at Teheran in [Page 551] order to acquire, in the American company’s name, a concession that doubtlessly would have passed eventually into the complete possession of the British shareholders, the American Government, justly, of course, was obliged to regard both of the American companies as equally entitled to the support, or rather to the neutrality, of the American Legation in Teheran. Hence the anomalous situation of one American company competing without the assistance of its Government’s representative against another American company enjoying the fullest protection and support of a foreign Legation. It may therefore be safely stated that, had the American Government been in a position under the circumstances, to have lent its open assistance in the matter, the concession would doubtlessly have been granted two years ago.
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I have [etc.]