u 
 
 MISCELLANEOUS No. 10 (1921). 
 
 CORRESPONDENCE 
 
 BETWEEN^ 
 
 HIS MAJESTY'S GOVERNMEINT AND THE 
 UWTED STATES AMBASSADOR 
 
 '-rf 
 
 rf^. 
 
 RESPECTING 
 
 ECONOMIC EIGHTS IN MANDATED 
 
 TERRITORIES. 
 
 Presented to Parliament by Command of His Majesty. 
 
 [Cmd. 1226.] 
 
 LONDON : 
 
 FEINTED AND PUBLISHED BY 
 
 HIS MAJESTY'S STATIONEEY OFFICE. 
 
 To be purchased through any Bookseller or directly from 
 
 H.M. STATIONERY OFFICE at the foUowing addresses : 
 
 Imperial House, Kingsway, London, W.C. 2, and 
 
 28, Abingdon Street, London, S.W. 1; 
 
 37, Peter Street, Manchester; 
 
 1, St. Andrew's Crescent, Cardiff; 
 23, Forth Street, Edinburgh; 
 or from E. PONSONBY, Ltd., 116, Grafton Street, Dublin 
 
 1921. 
 
 Price 2d Net. 
 
CJcJrrespFcAitleiiQe between His Majesty's Government and the 
 ■•••:••■• ••■•*UiilteO''States Ambassador respecting Economic Eiglits in 
 Mandated Territories. a '^L^\ 
 
 aM___ ^ ^^^^ 
 
 No. 1. 
 
 Mr. Davis to Earl Gurzon. — {Received May 13.) 
 
 Embassy of the United States of America, 
 My Lord, _ London, May 12, 1920. 
 
 PURSUANT to the instructions of iny Government, I have the honour to inform 
 your Lordship that the Government of the United States has been unofficially informed 
 that the mandates for MesopotMmia and Palestine have been assigned to Great Britain; 
 the mandate for Mesopotamia being given subject to friendly arrangement with the 
 Italian Government regarding economic rights. 
 
 2. The Government of the United States desires to point out that during the peace 
 negotiations at Paris leading up to the Treaty of Versailles, it consistently took the 
 position that the future peace of the \\ orld required that, as a general principle, any 
 alien territory which should be acquired pursuant to the Treaties of Peace with the 
 Central Powers, must be held and governed in such a way as to assure, equal treatment 
 in law, and in fact to the commerce of all nations. It was on account of, and subject to 
 this understanding that the United States felt itself able and willing to agree that the 
 acquisition of certain enemy territory by the victorious Powers would be consistent with 
 the best interests of the world. The representatives of the principal Allied Powers, in 
 the discussion of the mandate principles, expressed in no indefinite manner their 
 recognition of the justice and far-sightedness of such a principle, and agreed to its 
 application to the mandates over Turkish territory. 
 
 3. The administration of Palestine and Mesopotamia during the interim period of 
 military occupation has given rise to several communications between the United States 
 Government and that of Great Britain relative to mattei's that had created the 
 unfortunate impression in the minds of the American public, that the authorities of His 
 Majesty's Government in the occupied region had given advantage to British oil 
 interests which were not accorded to American companies, and further that Great 
 Britain had been preparing quietly for exclusive control of the oil resources in this 
 region. The impression referred to has, it is believed, been due in large part to reports 
 ot authoritative statements regarding the general oil policy of Great Britain, and of 
 actual work such as the construction of pipe lines, railways and refineries, the operations 
 of certain oil wells, the acquisitions of dockyards, cotton investigations, and permitted 
 researches by certain individuals whose activities, tliough stated to be solely in behalf 
 of the civil administration, were attended by circumstances which created the impression 
 that some benefit at least would accrue to British oil interests. 
 
 4. Certain of the occurrences above referred to have been explained by His Majesty's 
 Government as due to military necessity, and certain others as due to laxity on the part 
 of local authorities. It must be realised, however, that it has been difficult for the 
 American people to reconcile all of these reports with the assurance of His Majesty's 
 Government that " the provisional character of the military occupation does not warrant 
 the taking of decisions by the occupying Power in matters concerning the future 
 economic development of the country," and that the invitation of new undertakings and 
 the exercise of rights under concessions would be prohibited. The United States 
 Government has confidence in the good faith of His Majesty's Government in attempting 
 to carry out the assurances given by His Majesty's Foreign Office, but desires to point 
 out that the considerations above referred to indicate tlie difficulty in ensuring the local 
 execution of such undertakings, and the necessity for careful measures to guarantee the 
 practical fulfilment of the principles expressed and agreed to during the peace 
 negotiations at Paris. 
 
 5. With this thought in mind the Government of the United States ventures to 
 suggest the following propositions, which embody or illustrate the principles which the 
 United States Government would be pleased to see applied in the occupied or mandated 
 regions; and which are submitted as furnishing a reasonable basis for discussions. In 
 the event of such discussions, it would be assumed that the legal situation as regards 
 
economic resources in the occupied or mandated regions would remain mi statu qu 
 pending an agreement — •. • •• i '•• , ' 
 
 (1.) That the Mandatory Power strictly adhere and conform to* thfe:',J)rii.teiple8 
 expressed and agreed to during the peace negotiations at Paris, and to" the pHri'ciples 
 embodied in mandate " A " prepared in London for adoption by the League of Nations 
 by the Commission on Mandatories. 
 
 (2.) That there be guaranteed to the nationals or subjects of all nations treatment 
 equal in law and in fact, to that accorded nationals or subjects of the Mandatory Power 
 with respect to taxation or other matters affecting residence, business profession, 
 concessions, freedom of transit for persons and goods, freedom of communication, trade, 
 navigation, commerce, industrial property, and other economic rights or commercial 
 activities. 
 
 (3.) That no exclusive economic concessions covering the whole of any mandated 
 region or sufficiently large to be virtually exclusive shall be granted, and that no 
 monopolistic concessions relating to any commodity or to any economic privilege 
 subsidiary and essential to the production, development, or exploitation of such 
 commodity shall be granted. 
 
 (4.) That reasonable provision shall be made for publicity of applications for 
 concessions and of governmental acts or regulations relating to the economic resources 
 of the mandated territories; and that in general i-egulations or legislation regarding 
 the granting of concessions relating to, exploring, or exploiting economic resources, or 
 regarding other privileges in connection with these, shall not have the effect of placing 
 American citizens or companies, or those of other nations or companies controlled by 
 American citizens or nationals of other countries, at a disadvantage compared with the 
 nationals or companies of the mandate nation, or companies controlled by nationals of 
 the mandate nation or others. 
 
 6. The fact that certain concessions were granted in the mandated regions by the 
 Turkish Government is, ol course, an important factor which must be given practical 
 consideration. The United States Government believes that it is entitled to participate 
 in any discussions relating to the status of such concessions, not only because of 
 existing vested rights of American citizens, but also because the equitable treatment of 
 stich concessions is essential to the initiation and application of the general principles in 
 which the United States Government is interested. 
 
 7. No direct mention has been made herein of the question of establishment of 
 monopolies directly or indirectly by or in behalf of the Mandatory Government. It is 
 believed, however, that the establishment of monopolies by or in behalf of the 
 Mandatory Government would not be consistent with the principles of trusteeship 
 inherent in the mandatory idea. His Majesty's Government has stated its 
 conception of the necessity for the control of oil production in these territories 
 in time of national emergency. The Government of the United States does 
 not intend at present to suggest arrangements that shall extend to any consideration 
 not included in an enlightened interpretation of what constitutes its legitimate 
 commercial interests. The question of control in times of national emergencies of 
 supplies which may be deemed essential by Great Britain is a subject which the United 
 States Government deems a matter for separate discussion. 
 
 8. The Government of the United States realises the heavy financial obligations 
 which will arise in connection with the administration of the mandatory. It believes, 
 however, that any attempt toward reimbursement by the adoption of a policy of 
 mono[)olisation or of exclusive concessions and special favours to its own nationals, 
 besides being a repudiation of the principles already agreed to, would prove to be 
 unwise even from the point of view of expediency both on economic and political 
 grounds. It also believes that the interests of the world, as well as that of the two 
 respective countries, can best be served by a friendly co-operation or a friendly and 
 equal competition between the citizens of the two countries and citizens of other 
 nationalities. 
 
 9. The Government of the United States would be glad to receive an early 
 expression of the views of His Majestj^'s Government, especially in order to reassure 
 public opinion in the United States. 
 
 10. I have the honour, further, to acquaint your Lordship that this note is not 
 designed by way of reply to the Allied note from San Reuio, which will be answered 
 separately. 
 
 I have, &c. 
 
 JOHN W. DAVIS. 
 
 65 »0<JI) 4 I 31 F.U.P. [4102] B 2 
 
 502880 
 
-{'• • '/J ''••''***5' ^'''- Davis to Earl Curzon. — (Received July 29.) 
 
 Embassy of the United States of America, 
 My Lord, London, July 28, 1920. 
 
 PURSUANT to the instructions of my Government, I have the honour to recall 
 to your Lordship the statement in my note of the 12th May, 1920, that the 
 Government of the United States woiild be glad to receive an early expression of the 
 views of His Majesty's Government with respect to its economic policy in the mandate 
 regions of the Near East. 
 
 2. The Government of the United States appreciates that, with respect to the 
 inauguration of the administration of the mandate territories, His Majesty's Govern- 
 ment will consider it necessary to proceed with due deliberation. His Majesty's 
 Government will recall, however, that the Government of the United States is primarily 
 interested in the effective application to these territories of general principles, already 
 clearly recognised and adhered to during the peace negotiations at Paris, that such 
 territories should be held and governed in such a way as to assure equal treatment in 
 law and in fact to the commerce of all nations. 
 
 3. It is the opinion of the Government of the United States that the treatment of the 
 economic resources of the regions which will be held under mandate by Great Britain 
 or other nations involves a question of principle transcending in importance questions 
 relating merely to the commercial competition of private interests or to control for 
 strategic purposes of any particular raw material The Government of the United 
 States in its note of the 12th May, 1920, suggested certain considerations that indicate 
 the necessity for careful measures to guarantee the practical application of the principles 
 expressed and agreed to during the peace negotiations at Paris. Unfortunately, 
 occurrences subsequent to the submission of this note have not served to clarify the 
 situation or to diminish the concern felt by the Government and people of the United 
 States. 
 
 4. The Government of the United States has noted the publication of an agreement 
 between His Majesty's Government and the French Government making certain 
 provisions for the disposition of petroleum produced in Mesopotamia, and giving to 
 France preferential treatment in regard thereto. It is not clear to the Government 
 of the United States how such an agreement can be consistent with the principles of 
 equality of treatment understood and accepted during the peace negotiations at Paris. 
 
 ■'- 5. The Government of the United States desires to record its views that such an 
 agreement, in light of the position the British Government appears to have assumed 
 toward Mesopotamia and its economic resources, will, as a practical matter, result in a 
 grave infringement of the mandate principle which was formulated for the purpose of 
 removing in the future some of the principal causes of international differences. 
 
 6. In the interests of a frank discussion of the whole subject the Government of the 
 United States desires further to call the attention of His Majesty's Government to the 
 existence of reports to the effect that the officials charged with the administration of 
 Tanganyika territory have accorded privileges to British nationals that have not been 
 accorded to the nationals of other countries. 
 
 7. The Government of the United States desires to express anew the hope that in 
 an early reply to the note of the 12th May, 1920, His Majesty's Government will find it 
 possible to elucidate fully its policy regarding the mandated territory of the Near East 
 and other regions. 
 
 I have, &c. 
 
 JOHN W. DAVIS. 
 
 No. 3. 
 
 Earl Curzon to Mr. Davis. 
 
 Your Excellency, Foreign Office, August 9, 1920. 
 
 I HAVE the honour to refer to the notes dated the 12th May and 28th ultimo 
 which you were good enough to address to me, and in which your Excellency, referring 
 to the mandates assigned to Great Britain, had occasion to point out the general 
 principles stated to be advocated by the United States Government and agreed to by 
 the Allied Powers which should be adopted and applied to the mandates over former 
 Turkish territory. 
 
2. You at the same time drew my attention to the existing vested rights of 
 United States citizens in this territory and to the impression which had arisen in the 
 minds of the American people that the authorities of His Majesty's Government in 
 the occupied territory of" Mesopotamia had given advantages to British oil interests 
 which were not granted to American companies, and that His Majesty's Government 
 were taking steps calculated eventually to bring the oil resources of Mesopotamia under 
 their exclusive control. Instances of activities in various directions were quoted which 
 had led to such conclusions. In view of this impression and of the necessity for the 
 adoption of careful measures which would ensure the practical fulfilment of the 
 principles enunciated, you put forward certain proposals which the United States 
 Government would be glad to see applied in the mandated territories, and explained 
 the necessity for giving practical consideration to certain concessions in those regions 
 granted by the Turkish Government, in some of which United States citizens claimed 
 vested rights. 
 
 3. The various points and suggestions which have formed the subject of your note 
 have had the carefnl consideration of His Majesty's Government, and I desire to 
 lurnish you in regard to tliem with the following observations : — 
 
 4. I would wish, at the outset, to refer to the last sentence of the first paragraph 
 of your note of the 1 2th May, to the effect that the assignment to Great Britain of the 
 mandate for Mesopotamia was made subject to a friendly arrangement with the Italian 
 Government regarding economic rights, and to state categorically that the assignment 
 of the mandate has been made and accepted subject to no friendly arrangement 
 whatever with any Government regarding economic rights. 
 
 5. I will next deal with the alleged action of the authorities of His Majesty's 
 Government in the occnpied territories in giving facilities to British oil interests which, 
 it is contended, were denied to United States companies. The matter, as you will 
 recollect, has formed the subject of previous communications between us, and the hope 
 was entertained that whatever doubts had existed in regard to the attitude of His 
 Majesty's Government in the matter had been satisfactorily dispelled. The authorita- 
 tive statements to which you have alluded in the third paragraph of your note of the 
 12th May, and which would appear to be the basis for the reports that actual work has 
 been undertaken in Mesopotamia, are not founded on fact.' Such reports would lead to 
 the assumption that tl)e development of the oilfields has already been taken in hand, 
 which is not the case. No pipe-lines or refineries for dealing with Mesopotamian oil 
 have been constructed. In fact, the only existing work of this nature is a small 
 refinery now in course of erection at Bagdad which was started for purely military 
 requirements and is intended to deal with oil obtained from the Persian oilfields. 
 
 6. The difficulty and cost of conveying supplies of oil by river from the base at 
 Basra to military stations situated north of Bagdad and in the Mosul region have 
 compelled the military authorities in that region to consider the problem of securing 
 Bufiicient supplies locally, and have led to the working of an oil-well which had been 
 partially developed by the Turkish authorities previous to and during the war. The 
 operations at this well have been conducted for purely military purposes under the 
 immediate supervision of the army authorities and at army expense, and no private 
 interests whatever are in any way involved. 
 
 7. In regard to the building of railways and dockyards, I need hardly dwell upon 
 the imperative necessity for providing every possible means of transport during the 
 period of military operations and facilities of every kind at the ports for the landing of 
 troops and stores. The construction of railways in a country utterly destitute of any 
 properly organised means of communication has throughout the period of the war and 
 since the cessation of hostilities been of paramount importance from the military as well 
 as from the administrative point of view. 
 
 8. The suggestion that Great Britain during the period of military occupation of 
 the mandatory territories has been preparing for exclusive control of their oil resources 
 is equally devoid of foundation, and the claims of British commercial interests in those 
 regions, whatever they may be, are to-day no stronger, as they are no weaker, than 
 they were at the outbreak of war. 
 
 9. I would like here to make a passing reference to the very mistaken impressions 
 which appear to be current in the United States in regard to the oil policy of His 
 Majesty's Government. The output of oil within the British Empire is only abottt 
 2|- per cent, of the world's production, and if the production of Persia be included, in 
 virtue of certain oilfields in that country being owned by a British company, the total 
 amounts to about 4J per cent. Against this small percentage, the United States 
 
produces some 70 per cent, of the world's output, besides which United States companies, 
 who own at least three-fourths of the Mexican output, are estimated to produce a 
 further 12 per cent, of the world's output. This overwhelming proportion, over 80 per 
 cent., of the petroleum production of the world is under American control, and tlie 
 predominance of the United States in regard to oil production is assured for many years 
 to come. There is, in any case, no justification for supposing that Great Britain, whose 
 present oil resources are altogether insignificant in comparison, can seriously threaten 
 American supremacy, and any prophecies as to the oil-bearing resources of countries at 
 pi'esent unexplored and quite undeveloped must be accepted with reserve. 
 
 10. The nervousness of American opinion concerning the alleged grasping activities 
 of British oil interests appears singularly unintelligible in view of these facts, and yet 
 it is notable that the United States, notwithstanding their assured supremacy, have 
 taken powers to reserve for American interests the right to drill for oil on United 
 States domain lands and have on various occasions used their influence in territories 
 amenable to their control with a view to secure the cancellation of oil concessions 
 previously and legitimately obtained by British persons or companies. Thus, on the 
 occupation of Hayti by United States forces in 191H, the United States Administration 
 refused to confirm an oil concession which had been approved by the Haytian Govern- 
 ment and Legislature and for which the caution money had been deposited in the 
 republic ; and more recently tlie United States representatives at San Jos^ urged the 
 present Costa Rican Government to cancel ali concessions granted by the previous 
 Government, the only concession in question being an oil concession granted to a British 
 subject. 
 
 11. Very different has been the attitude of the British Government. In assuming 
 the administration of the occupied Turkish territories they have remained fully alive 
 to their obligation, as a temporary occupant, to protect not only the natural resources 
 of the country against indiscriminate exploitation, but also the absolute freedom of action 
 which the authoiity to be created eventually for administering those regions would 
 have rightly expected to enjoy. 
 
 12. Mindful of this obligation, His Majesty's Government have found it necessary 
 to suspend during the period of occupation the grant of facilities and opportunities to 
 British as well as to other private interests to investigate the natural resources of the 
 country with the view of acquiring new claims or strengthening old ones, and there is 
 no reason for assuming that the Administration either of Mesopotamia or of Palestine 
 has at any time failed to carry out the policy which has been laid down by His Majesty's 
 Government. 
 
 J 3. I will now refer to the propositions enunaerated by you on which discussion is 
 invited and which liave been put forward with the object of guaranteeing to the 
 commerce of all nations the practical fulfilment in the mandated regions of the 
 principles of equal treatment in law and in fact. Reference is made in this connection 
 to the desirability of the adherence of the mandatory Power to the principles expressed 
 and agreed to during the peace negotiations at Paris, as well as to the principles 
 embodied in mandate (A) prepared in London by the Commission on Mandates, for 
 adopti(m by the League of Nations. 
 
 14. I would first point out that, in consequence of a divergence of views, the 
 Commission on Mandates proceeded no further with the draft of the mandate form (A), 
 whicli was consequently abandoned. 
 
 15. The draft mandates for Mesopotamia and for Palestine, which have been 
 prepared with a view to secure equality of treatment and opportunity for the commerce, 
 citizens and subjects of all States who are members' of the League of Nations, will, 
 when approved by the Allied Powers interested, be communicated to the Council of the 
 League of Nations. In these circumstances. His Majesty's Government, while fully 
 appreciating the suggestion for discussing with the United States Government the 
 various propositions mentioned by you, with which they are in full sympathy, are none 
 the less of the opinion that the terms of the mandates can only properly be discussed 
 at the Council of the League of Nations by the signatories of the Covenant. 
 
 16. In the matter of concessions granted in the mandated territories by the 
 Turkish Government, His Majesty's Government fully agree with the views of the 
 United States Government that due consideration must be given to all rights legally 
 acquired before the outbreak of hostilities. Provision for the consideration and 
 recognition under certain conditions of concessions situated in territories detached from 
 the Turkish Empire has, moreover, as you no doubt know, been made in the treaty of 
 peace with Turkey. His Majesty's Government are aware that certain rights were 
 acquired in Palestine before the war by American citizens, while British interests, such 
 
as the Turkish Petroleum Company and other groups, claim similar rights either in 
 Mesopotamia or in Palestine. These claims will naturally have to be given practical 
 consideration and receive equitable treatment consistent with the interests of the 
 mandated territories. 
 
 17. As part of the administratis-e arrangements under the treaty of peace with 
 Turkey and the mandate, the oil deposits in Mesopotamia will be secured to the future 
 Arab State, but it is fir from the intention of the mandatory Power to establish on its 
 own behalf any kind of monopoly. 
 
 18. In view of long-standing interests which the French Government possessed in 
 the Mosul districL, arrangements were made whereby the French Government should, 
 on renouncing those interests, be assured of a certain participation in the Mesopotamian 
 oil production. It was accordingly decided that, in the event of the Mesopotamian 
 oilfields being developed by the State, France should be entitled to purchase 25 per cent. 
 of the oil production at ordinary market rates, or, in the alternative of the oilfields being 
 developed by private enterprise, that French participation should not lie less than 
 25 per cent, in tlie share-holdings, while provision was n)ade that the Mesopotamian 
 Administration should likewise have a certain share. 
 
 19. In consideration for such participation, the French Government agreed to 
 permit the laying of a pipe-line from the Mesopotamian oilfields through Syria, besides 
 providing for other facilities. These arrangements, including others for mutual 
 co-operation in other countries, were embodied in an agreement which has been 
 published. The practical outcome of the arrangement, so far as Mesopotamia is 
 concerned, is that, while France secures a share in the output of oil at ordinary market 
 rates, the Mesopotamian State is afforded, in return, facilities for placing the production 
 of tlie oilfields within easy reach of the world's markets. The agreement aims at no 
 monopoly, it does not exclude other interests, and gives no exclusive right to the 
 mandatory Power, while the Mesopotamian State is free to develop the oilfields in any 
 way it may judge advisable, consistent with the interests of the country. 
 
 20. I feel bound to observe that, even if any special privileges were assigned to 
 France under this agreement, such a proceeding would be consistent with the 
 interpretation consistently placed by the United States Government on most-favoured- 
 nation clauses in treaties, namely, that special privileges conceded to particular 
 countries in return for specific concessions cannot, in virtue of such a clause, be claimed 
 by other countries not ofiering such concessions. The United States Government have 
 indeed recently taken a further step in the case of the " Jones " Act, and have taken 
 powers actually to withdraw treatment secured by treaties which in some cases contain 
 no provision for denunciation. 
 
 21. As regards the alleged action of the Administration of Tanganyika territory 
 referred to in the penultimate paragraph of your note of the 28th ultimo, I should be 
 obliged if you would furnish me with the names of any persons who have been refused 
 privileges granted to British subjects and the dates of their applications. 
 
 I have, &c. 
 
 CURZON OF KEDLESTON. 
 
 No. 4. 
 
 Mr. Davis to Earl Curzon. — (Received December 7.) 
 
 Embassy of the United States of America, 
 My Lord, London, December 6, 1920. 
 
 pte. ' WITH reference to my note of the 22nd November last, in which I communicated 
 to you a note from the Secretary of State of the United States concerning the n)andate 
 and Mesopotamian oil situation, I have now the honour to transmit, herewith 
 enclosed, the communication addressed to your Lordship upon this subject, dated the 
 '.iOth November, 1920, and signed by the Honourable Bainbridge Colby, Secretary of 
 State of the United States of America, a comparison of the text of which with that as 
 transmitted in my afore-mentioned note will disclose certain relatively unimportant 
 changes in the verbiage. 
 
 I have, &c, 
 
 JOHN W. DAVIS. 
 
• Enclosure in No. 4. 
 
 Mr Bainbridge Colby to Earl Curzon. 
 
 Department of State, Washington, 
 My Lord, November 20, 1920. 
 
 I HAVE the honour to refer to your note of the 9th August regarding the 
 application of the principle of equality of treatment to the territories of the Near East 
 to be placed under mandates and specifically to the petroleum resources of those 
 territories as affected by that principle. 
 
 Before considering the observations of His Majesty's Government on the general 
 principles advocated by the United States and agreed to by the Allied Powers for 
 application to the mandates over former Turkish territory as outlined in the 
 notes of the 12th May and of the 28th July addressed to you on behalf of this 
 Government, I think it will clarify the discussion to indicate certain of your state- 
 ments and assurances which this Government has been pleased to receive. Thus I note 
 that the assignment to Great Britain of the mandate for Mesopotamia was made and 
 accepted subject to no friendly arrangement whatever with any third Government 
 regarding economic rights, which of course would have been wholly at variance with 
 the purpose and contemplation of any mandate. 
 
 It is also gratifying to learn that His Majesty's Government is in full sympathy 
 with the several propositions formulated in the note of the 12th May above 
 referreil to, which embody or illustrate the principles which this Government believes 
 should be applied in the mandated regions and which are essential to the practical 
 realisation of equality of treatment. 
 
 The statements of your note, to the effect that the British Government has 
 refrained from exploiting the petroleum resources of the mandated territories in 
 question ; that the operations referred to have been conducted for purely military 
 purposes under the immediate supervision of the army auf horities and at army expense ; 
 and that no private interests whatever are in any way involved, are accepted with a full 
 sense of the good faith of the British Government. 
 
 The Government of the United States notes that His Majesty's Government has 
 found it necessary to suspend, during the period of occupation, the grant of facilities 
 and opportunities to British as well as to other private interests to investigate the 
 natural resources of the country, either for the purpose of acquiring new claims or 
 strengthening old ones, and that there is no reason for assuming that the Administration, 
 either of Mesopotamia or of Palestine, has at any time failed to carry out the assurances 
 of His Majesty's Government. 
 
 This Government welcomes your pledges to the efiect that the natural resources 
 of Mesopotamia are to be secured to the people of Mesopotamia and to the future Arab 
 State to be established in that region and that it is the purpose of the British Govern- 
 ment, fully alive to its obligation as a temporary occupant, not only to secure those 
 resources to the Mesopotamian State, but also its absolute freedom of action in the 
 control thereof, and in particular that it is far from the intention of the Mandatory 
 Power to establish any kind of monopoly or preferred position in its own interest. 
 
 The Government of the United States appreciates likewise the concurrence with 
 its view that the merits of all claims to rights alleged to have been acquired in the 
 mandated territories before the outbreak of hostilities must be duly established before 
 recognition of such claims will be accorded. 
 
 Afi verting, at this point, to the views of His Majesty's Government regarding tht^ 
 nature of the responsibilities of Mandatory Powers under the League of Nations, I 
 desire to call to the attention of His Majesty's Government the fact that, while the 
 draft mandate, form " A," was not adopted at Paris, it was the understanding of the 
 American representatives there present, that the British Government entertained and had 
 expressed convictions favourable to said form, and that, presumably, its representatives 
 would exercise their influence in conformity with those convictions. 
 
 I need hardly reter again to the fact that the Government of the United States 
 has consistently urged that it is of the utmost importance to the future peace of the 
 world that alien territory, transferred as a result of the war with the Central Powers, 
 should be held and administered in such a way as to assure equal treatment to the 
 commerce and to the citizens of all nations. Indeed, it was in reliance upon an under- 
 standing to this efiect, and expressly in contemplation thereof, that the United States 
 was persuaded that the acquisition under mandate of certain enemy territory by the 
 victorious Powers would be consistent with the best interests of the world. 
 
It is assvimed accordingly that your statements with reference to mandate " A," 
 together with the statement that the draft mandates for Mesopotamia and Palestine 
 have been prepared with a view to secure equality of treatment for the commerce and 
 citizens of all States which are members of the League of Nations, do not indicate a 
 supposition on your part that the United States can be excluded from the benefits of 
 the principle of equality of treatment. 
 
 This Government is pleased to find that His Majesty's Government is in full 
 sympathy with the principles formulated in its communications of the 1 2th May 
 and of the 28th July. But it is unable to concur in the view, contained in 
 paragraph 15 of your note, that the terms of the mtindatep can properly be discussed 
 only in the Council of the Leatrue of Nations and by the signatories pf the Covenant. 
 Such powers as the Allied and Associated nations may enjoy or wield in the determina- 
 tion of the governmental status of (he mandated areas accrued to thetn as a direct result 
 of the war against the Central Powers. The United States as a participant in that 
 conflict and as a contributor to its successful issue cannot consider any of the Associated 
 Powers, the smallest not. less than itself, debarred from the discussion of any of its 
 consequences, or from participation in the rights ;ind privileges secured under the 
 mandates provided for in the 1 reaties of Peace. 
 
 This Government notes with interest your statement tliat the draft mandates for 
 Mesopotamia and for Palestine, which have been prepared, with a view to secure 
 equality of treatment and opportunity for the commerce, citizens and subjects of all 
 States which are members of the League of Nations, will, when approved by the 
 interested Allied Powers, be communicated to the Council of the League of Nations. 
 The United States is undoubtedly one of the Powers directly interested in the terms 
 of the mandates, and I therefore request that the draft mandate forms be communicated 
 to this Government for its consideration before their submission to the Council of the 
 League. It is believed that His Majesty's Government will be the more readjr to 
 acquiesce in this request, in view of your assurance tiiat His Majesty's Government is in 
 full sympathy with the various principles contained in the two previous notes of this 
 Government upon this subject. 
 
 The establishment of the mandate principle, a new principle in international 
 relations, and one in which the public opinion of the world is taking a special interest, 
 would seem to require the frankest discussion from all pertinent points of view. 
 It would seem essential that suitable publicity should be given to the drafts of mandates 
 which it is the intention to submit to the Council, in order that the fullest opportunity 
 may be afforded to consider their terms in relation to the obligations assumed by the 
 Mandatory Power and the respective interests of all Governments which are or deem 
 themselves concerned or affected. 
 
 The fact cannot be ignored that the re[>orted resources of Mesopotamia have 
 interested public opinion of the United States, Great Britain and other countries as a 
 potential subject of economic strife. Because of that fact they become an outstanding 
 illustration of the kind of economic question with reference to which, the mandate 
 principle was especially designed, and, indeed, a peculiarly critical test of the good 
 faith of the nations which have given their adherence to the principle. This principle 
 was accepted in the hope of obviating in the future those international differences that 
 grow out of a desire for the exclusive control of the resources and markets of annexed 
 territories. To cite a single example : because of the shortage of petroleum, its 
 constantly increasing commercial importance, and the continuing necessity of replenishing 
 the world's supply by drawing upon the latent resources of undeveloped regions, it is of 
 the highest importance to apply to the petroleum industry the most enlightened 
 principles recognised by nations as appropriate for the peaceful ordering of their 
 economic relations. 
 
 This Government finds difficulty in reconciling the special arrangement referred 
 to in paragraphs 18 and 19 of your note, and set ibrth in the so-called San Remo 
 Petroleum Agreement, with your statement that the petroleum resources of Mesopotamia, 
 and freedom of action in regard thereto, will be secured to tlie future Arab State, as 
 yet unorganised. Furthermore, it is difficult to harmonise that special arrangement 
 with your statement that concessionary claims relating to those resources still remain in 
 their pre-wiir position, and have yet to receive, with the establishment of the Arab 
 State, the equitable consideration promised by His Majesty's Government. 
 
 This Government has noted in this connection a public statement <;f His Majesty's 
 Minister in charge of petroleum affairs to the effect that the San Remo Agreement was 
 based on the principle that the concessions granted by the former Turkish Government 
 must be honoured. It would be reluctant to assume that His Majesty's Government has 
 
 [4102] C 
 
10 
 
 already undertaken to pass judgment upon the validity of concessionary claims in the 
 regions concerned, and to concede validity to certain of those claims which cover 
 apparently the entire Mesopotamian area. Indeed, this Government understands your 
 note to deny having taken, and to deny the intention to take, any such ex parte and 
 premature action. In this connection, I might observe that such information as this 
 Government has received indicates that prior to the war, the Turkish Petroleum Company, 
 to make specific reference, possessed in Mesopotamia no rights to petroleum concessions 
 or to the exploitation of oil ; and, in view of your assurance that it is not the intention 
 of the Mandatory Power to establish on its own behalf any kind of monopoly, I am at 
 some loss to understand how to construe tliu provision of the San Remo Agreement 
 that any private petroleum company which may develop the Mesopotamian oil-fields 
 " shall be under permanent British control." 
 
 Your Lordship contrasts the present production of petroleum in the United States 
 with tiiat of Great Britain, and some allusion is made to American supremacy in the 
 petroleum industry. I should regret any assumption by His Majesty's Government or 
 any (jther friendly Power that the views of this Governnient as to the true character of 
 a mandate are dictated in any degree by considerations of the domestic need or 
 production of petroleum, or any other commodity. 
 
 I may be permitted to say, however, for the purpose of correcting a misappre- 
 hension which your note reflects, that the United States possesses only one-twelfth 
 approximately of the petroleum resources of the world. The oil resources of no 
 other nation have been so largely drawn upon for foreign needs, and your Lordship's 
 statement, that any prophecies as to the oil-bearing resources of unexplored and 
 undeveloped countries must be accepted with reserve, hardlv disposes of the scientific 
 calculation upon which, despite their problematical elements, the policies of States and 
 the anticipations of world production are apparently proceeding. The Government 
 of the United States assumes that there is a general recognition of the fact that 
 the requirements for petroleum are in excess of production, and it believes that 
 opportunity to explore and develop the petroleum resources .of the world, wherever 
 found, should, without discrimination, be freely extendeci, as only by the unhampered 
 development of such resources can the needs of the world be met. 
 
 But it is not these aspects of oil production and supply, in so far as they 
 are of domestic interest to the United States, with which I am concerned in this 
 discussion. I have alluded to them in order to correct confusing inferences liable 
 to arise from certain departures, which I believe I discern in your Lordship's com- 
 munication, from tiie underlying principles of a mandate, as evolved and sought 
 to be applied by the Allied and Associated Powers to the territories brought 
 under their temporary dominion by their joint struggle and common victory. This 
 dominion will be wholly misconceived, not to say abused, if there is even the slightest 
 deviation from the spirit and the exclusive purpose of a trusteeship as strict as it is 
 comprehensive. 
 
 Accept, my Lord, the assurances of my most distinguished consideration. 
 
 BAIN BRIDGE COLBY, 
 
 Secretary of State of the United 
 >tates of America. 
 
 No. 5. 
 
 Eai'l Curzon to Mr. Davis. 
 
 Your Excellency, Foreign Office, February 28, 1921. 
 
 I HAVE the honour to acknowledge the receipt of your Excellency's note of the 
 6th December, enclosing a communication dated the 'JOth November from the Secretary 
 of State of the United Slates, relative to the application, in territories placed under 
 mandate, of the principles of equality of treatment and opportunity, and referring 
 more especially to the petroleum resources found in the Near East. His Majesty's 
 Government are pleased to observe that the United States Government appreciates 
 the general policy adopted by His Majesty's Government in territories under military 
 occupation. I notice, however, that Mr. Colby makes certain observations with regard 
 to the San Remo Petroleum Agreement which appear to indicate that the scope of that 
 agreement is not fully understood. 
 
11 
 
 2. The co-operatiou of British and French interests in regard to oil production 
 in various countries was first suggested in the early part of the year 1919 by the French 
 Government, when it was proposed that some arrangement should be arrived at 
 whereby French interests might be given some participation in the production of 
 petroleum in various regions. The proposal put forward by the French Government 
 was carefully considered, and it was found possible to come to an agreement based on 
 the principles of mutual co-operation and reciprocity in various countries, especially 
 where British and French interests were already considerable, and on the whole 
 greater than those of other Allied countries. The agreement aimed at no monopoly 
 or exclusive rights, and could only become effective if its application conformed to 
 the desires and laws of the countries concerned. 
 
 3. As regards the provisions in the agreement relating to Mesopotamia, I desire to 
 make it plain that the whole of the oilfields to which those provisions refer are the 
 subject of a concession granted before the war by the Turkish Government to the 
 Turkish Petroleum Company. The position of such concessions in territory detached 
 from Turkey is expressly safeguarded by articles 311 and 312 of the Treaty of Sevres. 
 The history of this concession is as follows : — 
 
 Prior to the war the position in regard to the Mesopotamian oilfields was ns 
 follows : — 
 
 The concessions for all the oilfields of the two vilayets (provinces) of Mosul and 
 Bagdad were bestowed by the ex-Sultan Abdul Hamid on his Civil List in 1888 and 
 1898 respectively, and private enterprise had long been debarred thereby from acquiring 
 any oil rights in those particular districts. This situation was so far admitted and 
 recognised that in 1904 the Anatolian Bailway Company, nominally a Turkish company, 
 but in reality a German concern, obtained a contract from the Civil List by which the 
 company undertook to carry out preliminary surveys of the oilfields and secured the 
 option for their development on joint account. 
 
 4. The Civil List in 1906, considering the agreement with the Anatolian Company 
 at an end, entered into negotiations with a British group with a view to the development 
 of the oilfields. These negotiations, which had the full support of His Majesty's 
 Ambassador at Constantinople, continued during the year 1907 ; they were suspended 
 during the political crisis which broke out in 1908, but were resumed in 1909 with the 
 Turkish Ministry of Finance, to which Department the Mesopotamian oil concession 
 had been transferred from the Civil List, by firmans issued in 1908 and 1909. The 
 general upheaval caused by the events in those years impeded the progress of the 
 negotiations during the years 1910 and 1911. 
 
 5. In 1912 endeavours were made by German interests to obtain the confirmation 
 by the Turkish Government of the arrangements concluded in 1904 between the 
 Anatolian Railway Company and the Sultan's Civil List, and, with the apparent object 
 of pursuing the matter and of widening the scope of their activity in oil operations in 
 other parts of the Turkish Empire, they formed a British limited liability company 
 called the Turkish Petroleum Company (Limited), the capital of which was partly 
 British and partly German. 
 
 (5. This development was succeeded by a series of negotiations entered into 
 between the British group and members of the Turkish Petroleum Company for the 
 amalgamation of the rival interests and for pursuing jointly the application before the 
 Turkish Government for the grant of a concession for the Mesopotamian oilfields. 
 These negotiations, in which the British and German Governments took an active 
 interest, terminated in the early part of 1914, when an agreeement was reached for the 
 fusion of the interests of the original Turkish Petroleum Company and of the original 
 British group in the new Turkish Petroleum Company. This agreement was signed not 
 only by the parties immediately interested, but also on behalf of the British and German 
 Governments respectively. The German share in this new company was fixed at 
 25 per cent. 
 
 7. In confsequence of this arrangement, His Majesty's Ambassador at Constanti- 
 nople was able to make the necessary representations to the Turkish Government for 
 the grant to the Turkish Petroleum Company of the oil concessions in the vilayets of 
 Mosul and Bagdad, while representations of the same nature were made simultaneously 
 to the Porte by the German Ambassador. The negotiation between His Majesty's 
 Government and the Turkish Government was not confined to the question of the 
 Turkish Petroleum Company, but covered a wide field and involved mutual conces- 
 [4102] D 
 
12 
 
 sions of very material importance. As a result the Turkish Govermnent, on the 
 28th June, 1914, through the Grand Vizier, informed His Majesty's Ambassador, In an 
 official communication, that the Turkish Ministry of Finance having been substituted 
 for the Civil List in the matter of the petroleum deposits known or to be discovered in 
 the vilayets of Mosul and Bagdad, had consented to lease the said deposits to the 
 Turkish Petroleum Company, the Ministry reserving the right to fix later on its share 
 in the enterprise as well as the terms of the contract. I should add that during the 
 war the German interests in the company were liquidated, and thus came into the hand? 
 of His Majesty's Government. 
 
 8. From the facts as narrated, it will be seen that the Turkish Petroleum 
 Company's right to the lease of the oilfields in the two vilayets rests on an official 
 undertaking given by the Turkish Government to the two Governments concerned 
 after prolonged diplomatic negotiations. In the circumstances the oil rights in the 
 vilayets of Bagdad and Mosul cannot be treated merely as a matter of abstract principle 
 or without reference to the special character of the negotiations which preceded the war. 
 Had no war supervened, and had Mesopotamia remained till now under Turkish Kule, 
 the exploitation of these oil deposits would long since have begun. It can hardly be 
 contended that His Majesty's Government should now question the validity of an 
 undertaking granted by the Turkish Government in return for consideration received. 
 And I may add, since the United States Government will presumably expect His 
 Majesty's Government to recognise the rights acquired by the Standard Oil Company 
 in Palestine from the Turkish Government, that these rights, which are based entirely 
 on the grant of a prospecting licence, are no stronger than those of the Turkish 
 Petioleum Company, to whom the Turkish Government had definitely undertaken to 
 transfer a valid and already existing concession. 
 
 9. In this connection I feel bound to remind you that the attitude of the United 
 States Government in suggesting that His Majesty's Government should disregard 
 the rights acquired by the Turkish Petroleum Company is scarcely consistent with 
 that adopted by the United States Government, in regard to similar United States 
 interests in oil properties in Mexico. For instance, in his letter of the 25th November, 
 1920, to M. Pesqueira, the Mexican representative in Washington, Mr. Colby expressed 
 particular satisfaction at the statements made in M. Pesqueira's letter, then under 
 reply, to the effect that President de la Huerta and President-elect Obregon had 
 declared that article 27 of the new Mexican Constitution " is noh, and must not be, 
 interpreted as retroactive or violative of valid property rights." 
 
 1(1. It will be seen from the above facts that the acquisition by the French 
 Government under the San Remo Agreement of an interest in the Mesopotamiau 
 oilfields represents the allotment to the French Governm.ent of the former German 
 interests in the Turkish Petroleum Company in return for facilities by which 
 MesopotamiUn oil will be able to reach the Mediterranean. -The agreement, so far 
 as it relates to Mesopotamia, may therefore be said to be the adaptation of pre-war 
 arrangements to existing conditions, and in this respect His Majesty's Government, 
 far from acting in any selfish or monopolistic spirit, may reasonably claim to have 
 consulted the best interests of the future Arab State. Neither the rights of the 
 Turkish Petroleum Company nor the provisions of the San Remo Oil Agreement 
 will preclude the Arab State from enjoyinjr the full benefit of ownership or from 
 prescribing the conditions on which the oilfields shall be developed. 
 
 11. I have not failed to observe the large amount of public attention directed to 
 the reported resources of Mesopotamia, which, Mr. Colby states, furnish a peculiarly 
 critical test of the good faith of the nations which have given their adherence to the 
 mandate principle. Apart from the fact that these resources are as yet entirely 
 unproved, I can discern nothing in this principle which compels the mandatory Power 
 to discriminate against its own nationals, who, after years of arduous negotiation, 
 secured certain rights, and would, but for the war, have long since been actively at 
 work, in order to afford an equal opportunity to other groups which before the war 
 were not actively concerned In the petroleum resources of Mesopotamia. 
 
 1 2. I have noted with Interest the allusions which Mr. Colby makes to the estimates 
 which have been framed of the distribution of the petroleum resources of the world. 
 While I agree that such calculations are of subsidiary importance in this discussion, I 
 think It desirable that they should be placed in the proper perspective. It Is stated in 
 Mr. Colby's note that the United States possesses only one-twelfth approximately of 
 the world's petroleum resources, but I may be permitted to point out that In 1919 the 
 chief geologist of the United States Geological Survey stated that " the criteria on 
 which such estimates can be based vary In every degree of Inadequacy in the different 
 
13 
 
 regions," and he was then referring to estimates dealing with the United States only, 
 and was not taking into account the infinitely more problematical resources of countries 
 still partially or wholly unexplored, from a geological standpoint. 
 
 13. My object in referring to this aspect of the question in a previous note was to 
 show that the United Sts^tes controls a home pi'oduction of petroleum which, whether 
 it is about to reach its maximum point or not, is actually and potentially vast, while in 
 neighbouring countries it possesses a predominant interest in oil-bearing regions of 
 exceptional promise. The United States Government will doubtless agree that this 
 statement of the existing situation admits of no dispute. 
 
 14. While the potentialities of the future are necessarily .problematical, the 
 undisputed fact remains that at present United States soil produces 70 per cent., and 
 American interests in adjoining territory control a further 12 per cent, of the oil 
 production of the world. It is not easy, therefore, to justify the United States 
 Government's insistence that American control should now be extended to resources 
 which mav be developed in mandated territories, and that too at the expense of the 
 subjects of another State who have obtained a valid concession from the former Govern- 
 ment of those territories. 
 
 15. His Majesty's Government are, nevertheless, i^lad to find themselves in general 
 agreement with the contention of the United States Government, that the world's oil 
 resources' should be thrown open for development without reference to nationality. I 
 observe, however, that by article 1 of the Act of the Philippine Legislature of the 
 31st August, 1920, participation in the working of all " public lands containing 
 
 ■petroleum and otlier mineral oils and gas " is confined to citizens or corporations of the 
 United States or of the Philippines, and I cannot but regard this enactment as in 
 contradiction with the general principle enunciated by the United States Government. 
 In this connection I observe that Mr. Colby does not attempt to refute the statements 
 contained in my note of the 9th August last concerning the action taken by the United 
 States Government to prevent the exploitation by British interests of such resources in 
 Hayti and Costa Rica. 
 
 16. In your note of the 28th July the attention of His Majesty's Government 
 was called to the existence of reports to the efiect that the officials charged with the 
 administration of Tanganyika territory have accorded privileges to British nationals 
 that have been denied to the nationals of other countries. It is from no mere love 
 of controversy that 1 recall this matter to your attention, but rather from the conviction 
 that misunderstanflings between our two countries over oil questions, and indeed our 
 present correspondence, are largely due to the spirit, engendered by reports of precisely 
 this nature, whicli, on dispassionate examination, can frequently be found to lack any 
 basis of truth. In the absence of particulars, which the United States Government 
 were requested to furnish, I can only express my regret at being unable to prove 
 positively that the reports quoted by you are based on misapprehension. 
 
 I have, &c. 
 
 CUEZON OF KEDLESTON. 
 
^S BOOK IS DTIE OK THB I.A8T BATB 
 STAMPED BELOW 
 
 -TIic" OF 25 CENTS 
 AN INITIAL FINE OF ^^ ^^ ^^^^^ 
 
 W.UU BE ASSESSED P°«/^^e. THE PENALTY 
 TH>S BOOK °N THE DATE OOE^^ ^^^ ^^^^^„ 
 
 W.UU -NCREASE TO |0 CEN^^^ ^^^^^^„ „^^ 
 
 DAY AND TO *1U" 
 
 OVERDUE. 
 
 ^»& 
 
 '23 
 
 t9?^ 
 
 APR2 3l55Bir 
 
 l20ct'&^'' 
 
 RECD UD 
 
 OCT 12 19561 
 
 LD 21-50ml,' 
 
 33 
 
Photomount 
 
 Pamphlet 
 
 Binder 
 
 Gaylord Bros. 
 
 Makers 
 
 Syracuse, N. Y. 
 
 PAT. JAN 21, 1908 
 
 
 MG. '.-^.,- K"^ /^- M^.-^i- ,;':;■. > : 
 
 5l)l^S8t) 
 
 
 i- ';'? 
 
 
 y;^:^^Pi':::;^.. 
 
 :'.■■,'>. , >^:-'^"'i' ■.■ ■■■■ ; 
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 
 
 
 !;#'•;-' 
 
 ■'at,ip,»*,«ry«'.!»iVj,V'','.», 
 
few'