Mr. Bayard to Mr. Straus.
Washington, January 21, 1889.
Sir: I transmit herewith a copy of a letter from Messrs. La Forme and Frothingham, merchants of Boston, dated the 7th instant, stating that the municipal authorities of Smyrna have under consideration a plan to compel all importations of refined petroleum to be stored in a public warehouse in the city, and that by its operation, if determined upon, they will be put to great and heavy expense.
This is the revival of a question which we had hoped had been finally settled on a previous occasion.
In 1882 a similar complaint was made by the above-mentioned and other firms to the Department. Concessions had been granted to parties at Smyrna and other Turkish ports for the erection of warehouses for petroleum, and this authority of law was invoked to support the private monopoly by prohibiting its storage elsewhere. The charge then made was 8 per cent., thus doubling the rate of duty established by the treaty of 1862. This fact, and the loss which would result to our merchants, being represented to the Government of the Sultan, the concessions were promptly revoked.
It would now appear that another attempt to establish a monopoly in the storing of petroleum is contemplated. It is not alleged that the grant is to private persons, yet it is not the less a monopoly though the warehouses belong to the municipality of Smyrna or the Turkish Government.
It can not be pretended, which would alone justify this measure, that it is necessary for the safety of the inhabitants of Smyrna. I willingly admit the right of a municipality to make all reasonable regulations to provide against accident from the handling and storing of dangerous substances. But refined petroleum of the usual standard fire-tests is non-explosive, not liable to spontaneous ignition, and when stored in sealed tin cases but slightly inflammable. In this country, where millions of cases are constantly handled for export, the origination of a fire in a petroleum storage warehouse is almost unknown. Besides, the warehouse of Messrs. La Forme and Frothingham is outside the city limits. In 1873 the storing of petroleum within the limits of the city of Smyrna or within two kilometers thereof was prohibited, and Messrs. La Forme and Frothingham erected at an expense of $20,000 a stone building for the reception of their shipments in the suburb of Cordelio. Indeed, if the step which the authorities of Smyrna are said to have under consideration be for the sake of greater security it will have exactly the opposite effect to that intended. The storage of large quantities of petroleum in a thickly-built [Page 711] city, where fires originating in surrounding buildings are frequent, is attended with danger. This is shown by the difficulty of obtaining insurance under such circumstances and the high rates asked, which adds an unnecessary charge upon merchants not imposed when isolated suburban storage is resorted to.
Petroleum is one of the most important products of this country, and large sums of money have been invested in the commerce with Turkey, Turkey is not herself a large producer, and can have no reason for unnecessarily hampering its importation. I see no argument which can be now adduced for any such restriction that was not fully met in 1882, while the proposed action of the authorities at Smyrna of entailing an arbitrary and monopolistic tax for storage would be held, as it was then, contrary to tariff stipulations and international law.
I am persuaded that the Turkish Government is as yet unaware of this matter. You will therefore bring it to their attention, and use such endeavors as in your discretion may seem proper against the unreasonable restrictions on the trade in American petroleum, and especially any regulations which, like this complained of by Messrs. La Forme and Frothingham, operate as a practical discrimination against the interests of American importers, who, having at great expense effectively complied with the previous requirements of municipal law, have acquired with the full sanction of the authorities rights which may be regarded as vested and confirmed, and of the enjoyment of which they may not equitably be deprived without compensation.
In this connection I beg to refer you for your information to the Departments Nos. 11, 42, and 65, to Mr. Wallace’s of September 4, 1882, January 16, and March 24, 1883, respectively; and Mr. Wallace’s Nos. 98, of June 9, and 129, of September 30, 1882, published in Foreign Relations for 1882 and 1883, which contain the correspondence then had with our legation on this subject. You would do well to consult also Mr. Heap’s report, contained in Mr. Cox’s No. 34, of October 20, 1885, on the regulation of imports of petroleum in Turkey.
I am, etc.,