Coll 6/91 'Saudi Arabia. Policy of H.M.G. Qn. of credits and guarantee of assistance to Ibn Saud.' [‎255v] (511/680)

'1
output of 10,000 barrels per day is about £100,000 gold per annum; it will
naturally be in the King’s interest to increase production, though questions of
marketing and the interests of the Bahrein company may complicate that
question. In contrast to this flourishing picture, the record of the Petroleum
Development (Western Arabia) (Limited) is gloomy; they have found no oil in^
the Hejaz and are thinking of giving up their option. The financial help which
the new concession affords to the King’s schemes for a new army and general
development needs no emphasis, though there has hitherto been no sign of its
resulting in a reduction of the pilgrimage fees. Towards the end of 1939 the
King obtained an advance from the California Arabian Standard Oil Company
of 1 million United States dollars.
2. The second article of export in the King’s eyes must be the gold from
his Mahd mine. The first shipment of gold concentrates left Jedda for America
on the 22nd August; it consisted of 150 barrels, valued at 100,000 dollars, ^ince
then other shipments have been made, though the war has interfered with the
supply of cyanide, an essential ingredient in the extracting process. The original
company, formed solely for the preliminary work of exploitation, has now
written up its capital and transformed itself into an operating company, in
which certain Saudis have been allowed to purchase shares. While a good
dividend ought to be paid, it is unlikely that the capital will ever be paid off, and
the yield of gold per ton of ore is found to he not twelve, as originally hoped, but
seven or eight pennyweights.
3. A committee of irrigation experts from Iraq examined the so-called
bottomless wells of Kharj. not far from Riyadh, during the summer. Their
report, as published in the press, does not read as though the authors were in
the front rank of irrigation engineers, but large centrifugal pumps are being
introduced in the hope of irrigating a 100 square kilometres of desert. An
American driller criticised this operation as likely to exhaust the present supply
and do harm to the strata in which the water collects; he recommended small
lift pumps as better suited to the local water supply. The press reports that
10,000 palm trees have been planted on the newly irrigated area, and that fruit
trees as well as more palms are to be added.
4. Drillings for artesian water at Riyadh, by drillers of the California
Arabian Standard Oil Company, have not yet been successful. They have drilled
down to 2,400 feet, and the King wishes them to go still further. On the other
hand abundant supplies of artesian water have been found at Qatif, Jubeila, and
other places in the Hasa area. Water supply at Jedda remains the same, except
that new boilers have been obtained for the condensers.
5. While nothing has been done about the railway, a step forward has
been made about the roads of the Hejaz. An agreement between Egypt and
Saudi Arabia was actually signed at Jedda on the 5th October, concerning the
construction of the roads from Jedda to Mecca, from Mecca to Arafat, and from
Jedda to Medina (in part), as well as water and electricity schemes at Mecca.
The work is to be done under Egyptian supervision and advice, Saudi labour
being used as much as possible. The road schemes are to cost £E. 145,000 in all,
of which £E. 60,000 is said to exist in cash as the result of three years’ collection
of road tax from pilgrims at £E. 20,000 per yeai, the rest is to be paid for at the
rate of £E. 20.000 per year till it is liquidated. The water and electricity
schemes are to cost £E^ 100,000. Provision is made for training Saudis in
Egypt with a view to employment on road construction. An Egyptian
bacteriologist is to inspect the water. Haramain funds in Egypt are to be devoted
to the work, and there seems no reason why actual construction should not begin.
But it has not begun yet.
6. The Arab Car Company has produced its annual financial statement. It
shows reduced receipts, owing to the smaller number of pilgrims in the 1938-39
pilgrimage; the number of cars on its effective list has decreased to 605; the rate
of depreciation of cars is now declared as 10 per cent, for new cars and 20 per
cent, for cars more than one year old; the big Mecca garage has been built, and
the company runs a town service at Mecca. Two Diesel lorries were bought in
1938 at £580 gold each; they were fitted up for watering streets or fire-fighting,
hut little of either has been done. The annual statement mentions the cessation
of the monopoly of importation of cars, motor tyres and accessories which was