open door plan is adopted and 10% free oil will be delivered by Turkish Petroleum Company to Anglo-Persian Oil Company Limited as nominee of American Group in consideration its support and cooperation at Bagdad and as shareholders and further 2334% of Turkish Petroleum Company share will be transferred to American group by Anglo-Persian Oil Company, Limited after concession is granted. 10% free oil is limited to 24 areas to be selected by Turkish Petroleum Company under open door plan.

2nd: Supplementary agreement likewise being initialled to be signed by all groups including Anglo-Persian Oil Co. Ltd. whereby in the event of invalidity above mentioned royalty contract four groups will pro rata to their holdings of voting shares buy 92% oil from Turkish Petroleum Company and deliver same freely to Anglo-Persian Oil Co. Ltd. and this obligation attaches only to voting shares so that holder may by transferring its shares to AngloPersian Oil Co. Ltd. free of cost be released from this contract. Separate contracts will provide that article 10 foreign office agreement is to be cancelled thus leaving all groups free as far as former Turkey in Asia is concerned except Mosul and Bagdad as bounded prior to the war this being area of existing claim of Turkish Petroleum Co. and in addition whatever other territory comes under Irak Convention. As to Mosul in Turkey, if any we have made our participation conditional upon acceptance for purpose Anglo-Persian Oil Co. Ltd. and N. Gulbenkian royalty and of self denying ordinances that either first Irak Convention must apply to such part Mosul or second that Turkish Petroleum Company shall obtain from Turkey by virtue of its existing claim concession not worse as to royalty than proposed Irak Convention and if higher royalty necessary then Anglo-Persian Oil Co. Ltd to assume excess with regard to its 10% free oil and further if Turkey rejects claim and will grant concession 4 groups they are to take it and operate it on equal terms through another corporation and finally if Turkey unwilling to grant such joint concession all groups to be free to act individually. Both these agreements are void if İrak concession not granted by December 31st, 1925. Provision is also to be made for equal groups voting rights under first agreement and also for transfer of additional 114% shares and for putting working agreement into effect if and when N. Gulbenkian settlement made. Now planned that Turkish Petroleum Co. directors shall authorize first contract next Tuesday and that four groups shall thereafter sign second contract. Meantime French group now expected to agree settlement N. Gulbenkian on the basis of 1 shilling per ton whereupon discussion with N. Gulbenkian will be resumed. Pressure for early granting of concession seems to be relieved and Keeling advises that concession will not be granted before Dec. 15th. M. Piesse concurs in foregoing procedure. Guy Wellman has arranged to sail Dec. 9th Majestic please advise his office."

"Other_groups urge American group to become participant in Turkish Petroleum Co. and to agree to take shares as soon as same are available even though Irak concession shall not have been granted. In view of previous position American group on this point please telegraph me whether or not it can now make such an agreement.

To the second cablegram, we have replied this afternoon as follows:

"Have called meeting of American Group for Monday afternoon. It is my understanding that American Group can not safely agree to take Turkish Petroleum Company shares before Irak concession is granted because of attitude State Department which requires that its open door policy shall be definitely realized through actual grant of proposed concession permitting open door plan before American Group can take its shares in company."

We have called a meeting of the American Group to discuss the same on Monday next, at two o'clock. I shall greatly appreciate it if you will call me on the telephone on Monday morning in the event of your having any comments or suggestions to make in connection therewith.

Yours very truly,

W. C. TEAGLE

890g.6363 T 84/186

The Chief of the Division of Near Eastern Affairs, Department of State (Dulles) to the Secretary of State

[WASHINGTON,] December 1, 1924. MR. SECRETARY: While I did not myself telephone Mr. Teagle in reply to the inquiry in his letter of November 28th, he called me on the telephone this afternoon and asked whether the Department had any comment to make on his letter. I told him, in reply, that while the Department would not, of course, desire to advise the Group in connection with a business matter, such for example as their taking shares in the Turkish Petroleum Company, the Department's view that the Turkish Petroleum Company had no valid concession had undergone no change whatever and that therefore if American companies participated in the Turkish Petroleum Company they would, so far as we were concerned, be participating in a company which had acquired no valid concessionary rights as yet. Mr. Teagle said he fully appreciated this position and that it appeared to be the opinion of the Group, which was then meeting, that they should maintain their position that they would not take shares in the Company until the concession were actually granted.

Mr. Teagle then asked whether the Department had any comment to make on the longer telegram quoted in his letter of November 28th. I said that, as I recalled, this telegram related largely to business matters and that I did not believe that there was any point therein upon which the Department would desire to comment. Mr. Teagle said that the Group would probably agree to the arrangement outlined in this telegram.

A. W. D[ULLES]

890g.6363 T 84/190

The Associate General Counsel of the Standard Oil Company of New Jersey (Guy Wellman) to the Chief of the Division of Near Eastern Affairs, Department of State (Dulles)

NEW YORK, December 17, 1924.

[Received December 19.]

DEAR MR. DULLES: Since my return from London on Tuesday last, Mr. Dodge told me of his recent conference with you and your inquiry regarding the phraseology of Article 34 of the proposed concession from the Iraq Government to the Turkish Petroleum Company, with particular reference to the subleasing plan.

In order to ensure the adoption of the plan against any objecting minority shareholder of the Turkish Petroleum Company, we proposed that the elements of the subleasing plan should be embodied in the draft concession as a condition of the grant. This suggestion was adopted, and Mr. Keeling at Bagdad was instructed to endeavor to bring this about by agreement with the Iraq Government. While we have not been advised as to the definite acceptance of this suggestion by the Iraq Government, the proposed draft concession contains, in Articles 5 and 6, the definite obligation of the Turkish Petroleum Company to select its twenty-four plots of eight square miles each not later than the third 31st of October after the date of the convention, and to construct a pipe line as soon as it shall become commercially justifiable. In Article 6 it is also stipulated that the Company shall, not later than four years after the date of the convention, and annually thereafter, carry out the provision of offering not less than twenty-four plots of eight square miles each, "subject to the provisions of Article 34 hereof," for competitive bidding between all responsible corporations, firms and individuals without distinction of nationality. The other provisions regarding the right of the prospective operator to select plots, and of the furnishing of geological information, together with the provision of 30% of the capacity of the Company's pipe line for the transportation of oil on subleases at a cost not exceeding 2 of one anna per barrel per mile, are included. The sublease shall bind the operator of each plot to drill not less than 1500 feet during the three years after the execution of the sublease, and thereafter not less than 500 feet each year until the plot shall have been fully tested.

With reference to Article 34, the Iraq Government has consistently insisted, as a matter of national dignity, that it must have some supervision over the transfer, by way of subleases, of the area covered by the concession. We have continued our insistence that the phraseology of Article 34 should be retained, whereby the right of rejection

of a sublessee by the Iraq Government should be limited to the objection of the proposed sublease on the ground that it would be prejudicial to Iraq political independence or territorial integrity, or that the sublessee is an unreliable person. The Iraq Government has served, in effect, an ultimatum that it must have the right of rejection of a sublessee upon reasonable grounds, and that the other restrictions above-referred to which we proposed must be deleted. The other three groups acquiesced in this change, and the American Group, as a matter of necessity, has also consented to the following phraseology:

"The Company shall have the right from time to time to underlet or transfer any part or parts of its rights and obligations hereunder with respect to portions of the defined area on such terms as it may think fit, provided always that the Company shall not transfer its obligations under article 5 hereof, and that the Company shall give the Government written notice of any intended underletting or transfer, and the Government shall have the right on reasonable grounds, to be stated in writing, within 60 days of receipt of such notice, to notify the Company in writing that they object to such proposed underletting or transfer, and if such notification be given the Company shall not proceed with such underletting or transfer; and provided also that the Company shall accept full responsibility to the Government for the performance by underlessees and transferees of all obligations due hereunder."

In view of the provision of Article 6 requiring that a sublease be made to a person without restriction as to nationality, there is no objection to be feared on the ground of nationality, at least so far as Americans are concerned.

It is also to be noted that the Turkish Petroleum Company must guarantee to the Iraq Government the performance by each sublessee of all the provisions of the concession applicable to the subleased area in question. Hence, a trivial objection on the ground of lack of financial responsibility or operating experience could hardly be raised by the Iraq Government.

While Article 34 is not in exactly the form which I personally would select in order to avoid any delays or complications in the operation of the sub-leasing plan, yet it is essential to recognize that this concession, if granted, is coming from a sovereign government which may properly insist upon some degree of supervision of transfers of the territory under the subleasing plan. In fact, it is also to be noted that in almost all cases of concessionary grants, the right of transfer of the grant or any territory under it is subject to the approval of the granting government.

The concession was, when I left London on the 8th instant, still under discussion at Bagdad by Mr. Keeling on behalf of the Turkish Petroleum Company, with the Iraq Government.

Mr. Nichols has given me his personal assurance that Mr. Keeling has been instructed that, if the phraseology of Article 34 as abovequoted be adopted, it must be with the concurrent adoption of Articles 5 and 6 which embody, as conditions of the concession, the provisions for carrying out the subleasing plan of the Company.

With best wishes [etc.]

GUY WELLMAN

REPRESENTATIONS BY THE UNITED STATES AGAINST TRADE DISCRIMINATION BY NEW ZEALAND IN SAMOA, AND COUNTERCOMPLAINT BY NEW ZEALAND

611.62 m 31/23: Telegram

The Secretary of State to the Ambassador in Great Britain (Kellogg)

WASHINGTON, April 8, 1924—3 p. m.

64

89. Department's telegram 1155, November 17, 1920.63 Despite repeated requests which Department has made to British Government through Embassy for an indication of the attitude of the British Government with respect to the preferential tariff now in force in Samoa, in contravention of the Tripartite Convention between Great Britain, Germany and the United States, of 1899, nothing has been received except statement that the matter was under consideration and that it would be dealt with as quickly as possible. The last word from the British Government was contained in Ambassador Harvey's telegram No. 236 of June 2, 1 p. m. 1922 s to the effect that the Colonial Office would be pressed for an early decision.

The Department learns that the New Zealand Order in Council of September 3, 1923 which modified customs regulations in Samoa reiterates the position of the New Zealand Government with respect to American goods which by the above mentioned Order are subjected to the same duties as all goods of origin other than British. Furthermore, an Order in Council of September 25, 1923 admits the entry free of duty of German Austrian products. This Government has consistently objected to this discrimination against United States products. At present, articles of British origin enjoy 72% preference in tariff over American goods.

It is obviously desirable that this matter be adjusted at the earliest possible moment in view of the severe losses resulting to American firms having business with Samoa. Department is informed that one large American firm in Samoa has retired from business, the owner attributing his action to the preferential duties established by New Zealand in Western Samoa. It is assumed that you have all the pertinent facts relating to the case at your disposal and that you are thoroughly familiar with this Government's attitude. If not, the