871.6363/190
The Minister in Rumania (Jay) to the
Secretary of State
Bucharest, July 1,
1924.
[Received July 22.]
No. 625
Sir: Referring to my despatch No. 618 of June
9, 1924, the Department’s telegram No. 17 of June 25th, 2 P.M.,14 and my telegrams No. 25
of June 27th 5 P.M.14
and No. 27 of June 29th 9 P.M. on the Mining Law, I have the honor to
report the final enactment of this measure and the fruitless efforts of
the American, British and French Legations to obtain certain
modifications thereto.
In view of the innumerable indications that the law was about to be voted
by Parliament, after informal conversations with my British and French
Colleagues, we decided to make individually on June 21st verbal
representations to the Minister for Foreign Affairs. I enclose herewith
(Enclosure No. 1) a copy of the brief memorandum which I read to Mr.
Duca that evening, leaving with him the text thereof.14 It will be recalled that this
Legation had presented two notes of remonstrance previous to this
one.15 In this memorandum I pointed out the
unfortunate consequences to be foreseen for the economic future of
Rumania if a measure so disastrous to foreign interests were to be
enacted. I also called attention to the inexactness of the contention
often made by the present Rumanian Government to the effect that the
legislatures of other countries have treated foreign petroleum interests
in a manner similar to that envisaged by this law.
On June 24th, the Minister for Foreign Affairs addressed simultaneously
identic notes (Enclosure No. 2)16 to the
British, French and American Legations replying to our several
representations concerning the mining law. …
The day following the receipt of this communication from the Rumanian
Government, the British Minister, Sir Herbert Dering,
[Page 610]
addressed a note to Mr. Duca, of which he
furnished me a copy (Enclosure No. 3)17. … The note renews the remonstrances previously made
by the British Government on this subject.
Feeling that it might be useful for me also to refute certain of the
erroneous statements propounded by the Minister for Foreign Affairs, I
addressed on June 26, 1924, a third written note (Enclosure No. 4)18 to the Foreign Office on the Mining Law. …
. . . . . . . . . . . . . .
The chronology of the passage of the Mining Law through the legislative
bodies is, briefly, as follows: the bill was brought before the Senate
June 17th, and passed by that body June 18th, after eight and a half
hours discussion. It was introduced in the Chamber on the 23rd and voted
on the 26th, after twelve and a half hours discussion; and was finally
approved by the Senate on June 28th without discussion. It is about to
be signed by the King and promulgated in the Official
Monitor.
Certain slight modifications have been made to the bill during the final
passage through the Chambers which I hope to report in a memorandum by
this pouch.17 A complete
resume, prepared by the officials of the Romano-Americana, of the
unsatisfactory provisions contained in this law will form a part of this
memorandum. The outstanding objection to the law, as previously reported
to the Department, is based on the requirement that foreign owned
companies, in order to acquire new lands, must become “nationalized” on
the basis of 55% of the shares and direction being in the hands of
Rumanian subjects.
This Legation was the first and the last to lodge a protest against the
Mining Law and my representations on this subject have certainly
exceeded in number and vigor those of my British and French Colleagues.
I may add that practically every step recommended by our oil interests
in this country as being of possible utility has been energetically
taken by the Legation. It is therefore with confidence that I state that
this Legation has done everything reasonably and properly within its
power to protect American interests in connection with the passage of
this law.
The law has been one of the most cherished policies of Mr. Vintila
Bratiano, Minister of Finance and brother of the Prime Minister. …
. . . . . . . . . . . . . .
I have [etc.]
[Page 611]
[Enclosure
1—Translation]
The Rumanian Minister for Foreign Affairs
(Duca)
to the American Minister (Jay)
Bucharest, June 24,
1924.
No. 32995
Mr. Minister: In reply to your written and
verbal interventions concerning the Mining Law, I have the honor to
communicate to you the following:
In view of the fact that considerable amounts belonging to your
nationals are invested in our petroleum industry, we have found it
quite natural that you should intervene for their protection and, in
consequence, we have examined all your requests in the most friendly
spirit.
In the first place, we have considered that your wish to assure the
respect of the rights acquired was justified, and by the provisions
as well as by the modifications made subsequently to the draft of
the law, complete satisfaction has been given to your just
concern.
Per contra, we have not considered well
founded the demands relative to Article 33. In fact, in all mining
legislation we have been guided only by the wish to give to that
question, and in particular to that of petroleum, which plays, from
day to day, a more important role in the entire world, solutions
which accord with our economic interests and our national
defense.
It is this anxiety which has led us, in so far as future oil
development is concerned, to adopt formulas of collaboration between
Rumanian and foreign capital,—formulas which, besides, are much less
radical than those adopted by certain foreign legislations, notably
that of the British.
The accusation that these solutions hinder the development of the
existing companies, seems to us without foundation. In fact, these
Companies exploit today scarcely 3500 hectares of 25,000 hectares
which they possess and which the new legislation does not affect.
If, aside from these already considerable areas, they desire to
acquire new lands, to require of them a collaboration with Rumanian
capital and initiative does not seem to us an exaggerated demand nor
even an innovation.
It is for that reason we are convinced that a thorough examination of
the draft of law as it is presented today will prove to you that it
gives satisfaction to the legitimate preoccupations of your
nationals and that it does not justify the criticism which it has
provoked in certain circles.
Be pleased [etc.]
[Page 612]
[Enclosure 2]
The American Minister (Jay) to the Rumanian Minister for Foreign Affairs
(Duca)
Bucharest, June 26,
1924.
No. 68
Mr. Minister: I have the honor to
acknowledge the receipt of Note No. 32995 of June 24, 1924, in which
Your Excellency was good enough to communicate to me the reply of
the Royal Government to the verbal and written representations of
this Legation in respect of the proposed mining law for Rumania.
The considerate tone of your Note under acknowledgment confirms my
confident belief that Your Excellency is constantly animated by a
sincere desire to promote, in so far as it lies within your power,
relations of cordiality and mutual helpfulness between our two
countries. This belief inspires me with the hope that it will not be
entirely in vain that I call attention in this communication to
certain arguments advanced in Your Excellency’s Note, which appear
to be based on an incomplete knowledge of the facts.
With regard to the data which Your Excellency was pleased to submit
on the extent of the areas at present under exploitation and held in
reserve by foreign oil companies operating in Rumania, I desire to
point out that the Romano-Americana Company is now exploiting less
than 1000 hectares of oil producing land, which, at the present rate
of production, will be exhausted, according to the most conservative
estimate, in a period of eight to ten years. Moreover, I am informed
that nine-tenths of the undeveloped lands held under lease by this
Company are known to be without oil producing potentialities.
Your Excellency, in referring to the concern felt by my Government as
to the proposed nationalization of the foreign owned petroleum
companies in Rumania, took occasion to express the opinion that the
proposed legislation is much less radical than that adopted by
certain foreign Governments, notably that of Great Britain. This
assertion is doubtless founded on inadequate or inexact information
as to the laws at present in force in the British Empire. As a
matter of fact, American companies, a majority of whose shares are
held by American citizens, are actually carrying on freely all forms
of oil business in various parts of the British Empire. In Canada,
for instance, the American Standard Oil Company of New Jersey mines
petroleum and distributes products thereof throughout that Dominion.
American companies also market their petroleum products in Great
Britain and other parts of the British Empire in competition with
native industries.
I believe myself well advised in declaring that the proposed Mining
Law, if enforced, would establish a regime more prejudicial
[Page 613]
to American petroleum
interests than exists in any other important country of the
world.
At the close of the late world war, when the question of recommencing
operations in Rumania presented itself to the Direction of the
Romano-Americana Company, Mr. E. J. Sadler, on their behalf, in a
letter No. 1810, addressed under date of May 1, 1919, to the
Ministry of Industry and Commerce, solicited certain assurances of
the Rumanian Government. In the final paragraph of this letter he
asked particularly if the Company might know whether “in making new
and important investments” it would be possible for them to
“recommence and continue as in the past the business of the
Company”. The Ministry of Industry and Commerce replied to this
letter in an official and formal Note No. 5177 under date of May 9,
1919, in which it was stated that the Romano-Americana Company might
“resume its former activities with full confidence in the spirit of
equity which the Rumanian Government has invariably shown in the
past”. I might mention that this communication was countersigned by
Mr. Tancrede Constantinesco, today a member of the present
Government.
I cite this communication in corroboration of the statement I made in
our last interview on the Mining Law to the effect that American
capital had been invested in Rumania on the invitation of the Royal
Government.
These assurances, given over five years ago, were taken by the oil
interests of my country, and it would appear reasonably so, to
indicate that American investors might expect for their investments
in Rumania a regime equally favorable to that which they had enjoyed
here in the past. Nor was it, indeed, fairly to be anticipated, in
the light of these assurances, that the Rumanian Government would at
this, or some later date, inaugurate a mining policy, which, as I
have shown above, is, in the entire world, exceptional because of
its features detrimental to foreign investors.
I avail myself [etc.]
