FOOTNOTES:[16]"During the last nine years," wrote a New York editor on the occasion of the last revolution, "there has not been a single disturbance in Mexico in which Americans have not taken part by lending their aid to the party opposed to the government.... Americans have supported Madero against Diaz, Huerta against Madero, Carranza against Huerta, Villa and Sapeta against Carranza."[17]Secretary of State for the Interior, an ardent partisan of intervention. Mr. Fall is a believer in the slogan "Standard Oilmust prevail."[18]Evidence of Edward Doheny before Committee on Foreign Affairs of the United States Senate.[19]Since elevated to the peerage under the title of Lord Cowdray.[20]According to official statistics of July 2, 1920, the Mexican petroleum industry represents a value of 300 million Mexican dollars.Milliondollars.,Wells bored and in production100Value of ground on which they are situated50Pipe-lines, railways and rolling-stock50Refineries, buildings and machinery50Various properties, chiefly British50[21]Cp. chap. ii,Oil: Its Origin, Discovery, and History.[22]July 1920.[23]Each Mexican well produced as much, in 1920, as 537 American wells.
FOOTNOTES:
[16]"During the last nine years," wrote a New York editor on the occasion of the last revolution, "there has not been a single disturbance in Mexico in which Americans have not taken part by lending their aid to the party opposed to the government.... Americans have supported Madero against Diaz, Huerta against Madero, Carranza against Huerta, Villa and Sapeta against Carranza."
[16]"During the last nine years," wrote a New York editor on the occasion of the last revolution, "there has not been a single disturbance in Mexico in which Americans have not taken part by lending their aid to the party opposed to the government.... Americans have supported Madero against Diaz, Huerta against Madero, Carranza against Huerta, Villa and Sapeta against Carranza."
[17]Secretary of State for the Interior, an ardent partisan of intervention. Mr. Fall is a believer in the slogan "Standard Oilmust prevail."
[17]Secretary of State for the Interior, an ardent partisan of intervention. Mr. Fall is a believer in the slogan "Standard Oilmust prevail."
[18]Evidence of Edward Doheny before Committee on Foreign Affairs of the United States Senate.
[18]Evidence of Edward Doheny before Committee on Foreign Affairs of the United States Senate.
[19]Since elevated to the peerage under the title of Lord Cowdray.
[19]Since elevated to the peerage under the title of Lord Cowdray.
[20]According to official statistics of July 2, 1920, the Mexican petroleum industry represents a value of 300 million Mexican dollars.Milliondollars.,Wells bored and in production100Value of ground on which they are situated50Pipe-lines, railways and rolling-stock50Refineries, buildings and machinery50Various properties, chiefly British50
[20]According to official statistics of July 2, 1920, the Mexican petroleum industry represents a value of 300 million Mexican dollars.
[21]Cp. chap. ii,Oil: Its Origin, Discovery, and History.
[21]Cp. chap. ii,Oil: Its Origin, Discovery, and History.
[22]July 1920.
[22]July 1920.
[23]Each Mexican well produced as much, in 1920, as 537 American wells.
[23]Each Mexican well produced as much, in 1920, as 537 American wells.
CHAPTER XI
A STATE-SUBSIDIZED COMPANY: THEANGLO-PERSIAN
Although the United States, in spite of the civil wars they let loose there, could never drive Pearson out of Mexico, they triumphed over him in Central America and the chief States of South America by the mere force of their prestige. During 1912 and 1913 Pearson obtained concessions in Costa Rica, Colombia, Venezuela, and Ecuador. That would have given him a monopoly of the supply of oil to all shipping passing through the Panama Canal. Washington placed its veto on these concessions and caused them to be annulled in the name of the Monroe Doctrine. No South American republic dared to resist.
Meanwhile theShellinstalled itself in Trinidad, a British colony, then in Venezuela and Colombia. To quiet all fears it was wise enough to associate itself with American firms: for example, theColon Developmentwas founded, a British company constituted in common with the AmericanCarib Syndicate. It has since come out that all the British shares aregrouped in the hands of theBurlington Investment, which is itself dependent on theRoyal Dutch-Shell. Not having succeeded directly, through Pearson, who was too much distrusted by America, Britain has none the less succeeded indirectly, through Deterding, in controlling the entrance to the Panama Canal.
It is a strange fact that, while the United States were watching the activities of the Pearson group with evident hostility, they displayed not the least mistrust of theRoyal Dutch-Shell. By a bold and masterly policy, the latter obtained a footing in the very heart of the territory of theStandard Oil. American law, unlike French, does not distinguish between ownership of land and ownership of the minerals. As in Mexico before 1917, both belong to the owner of the surface. TheRoyal Dutch-Shellbought land, sank wells, and was thus able to exploit oil as it pleased. Cleverly following the example of theRoyal Dutch, theShellendeavoured to place its shares with the American people, so as to give them an interest in its prosperity. It was not difficult, considering its high dividends. In 1919 theShellplaced 750,000 shares upon the New York market; by so doing, it realized a premium of £4,390,623, of which £4,000,000 were appropriated to reserve and to amortization. The source of its capital did it no harm, for, before the War, all American large-scale industries had had to make calls uponEuropean savings. And if theShellwas British, theRoyal Dutchwas without a considerable German element, although officially a Dutch company. Deterding had not yet openly joined forces with Great Britain. He was hesitating. Foreseeing the imminent outbreak of the world conflict, he was much too clever to bind himself before he knew who would win.
These two companies, connected since 1907, but each keeping its separate financial organization (at the same time reserving for each other a 40 per cent. share in any new subsidiary company), were thus freely allowed to install their reservoirs and pipe-lines beside those of theStandard. Besides, the Democrats, fearful of the political and commercial power of the American trusts, were not sorry to set against them competitors who could have no influence upon the domestic politics of the United States. They came to be looked upon as international undertakings without any political ends. To complete the illusion the British Government, which assisted them in secret, simulated fear of their excessive growth.
The British Admiralty declared that it was important to free the Royal Navy from the tutelage of the trusts. It was voted the money required to obtain an interest in the operations of theBurmah Oil, thus ensuring for itself a share of the oil of Burmah; andin May 1914 it bought half the shares of theAnglo-Persian Oil, which holds a thirty-years' monopoly for the exploitation of oil deposits in Persia, excepting only the five northern provinces. For Persian territory on the borders of the Caspian Sea was always reserved for Russian influence.
TheAnglo-Persianbegan obscurely. Its inception, in 1909, passed unnoticed. It was founded,without an appeal to the public to subscribe its capital, by theBurmah Oil, a company at that time better known in Scotland than on the London Stock Exchange. Its first object was to take over the concessions which the Australian, d'Arcy, had obtained in 1901, and which covered the enormous area of 500,000 square miles. D'Arcy had obtained these concessions from the Persian Government for the infinitesimal sum of 200,000 francs, of which 100,000 francs only were paid in cash and the rest in shares. The Persian Government was to receive 16 per cent. of whatever profit d'Arcy might make. It was much disappointed, for the first investigations along the Turko-Persian frontier were really discouraging. D'Arcy spent five million francs in vain, and he was thinking of abandoning the whole affair when he heard of oozings and gushings in the Shustar region, 140 miles north of Mohammerah, to the north of the Persian Gulf. D'Arcy recognized the presence of oil, but had to face the construction of a pipe-line and refinery, andto find new capital for these purposes. Certain foreign capitalists made him tempting offers, but D'Arcy, who had found a staunch supporter in Admiral Fisher, the reorganizer of the British Navy in the twentieth century, resolved that the Persian concessionsshould remain under British control. He obtained the financial assistance of theBurmah Oil, and the latter founded theAnglo-Persianin 1909. The Royal Navy had already 150 ships burning oil. Pretyman, a Lord of the Admiralty, got Lord Strathcona appointed to the chairmanship of theAnglo-Persian, the first results of which were encouraging, so that the British Government could direct its future. The capital of the new company was very quickly used up. It constructed a pipe-line 145 miles long to bring its oil to the Persian Gulf, and a refinery on the island of Abadan which cost a great deal. But as the prospecting then taking place revealed the existence in Persia of rich deposits, a commission of geological experts, presided over by a rear-admiral, was sent to the spot by Winston Churchill, then First Lord of the Admiralty, to make an inquiry. On the conclusions embodied in its report, the British Government decided to take control of the business. In the month of May 1914 theAnglo-Persianmade a somewhat stormy entrance into history, for up to then very little had been heard of it: the negotiations and then the contract with the Admiralty had beenconducted with the greatest secrecy. Parliament showed great surprise when Winston Churchill placed the matter before it, and asked for its sanction to the agreements which had been made. It was even necessary for Sir Edward Grey to come to the rescue in order to win a majority in the House.
The Government had a certain majority of two thousand votes by the purchase of £2,200,000 of new ordinary shares. This amount has since been more than doubled, for on March 6, 1921 the Government announced in the House of Commons that it held £5,200,000 ordinary shares, £1,000 preference shares, and £199,000 debentures. Two-thirds of the ordinary shares of theAnglo-Persianare to-day in the hands of the British Government, the other third is held by theBurmah Oil, which is directed by the Admiralty. Thus absolute Government control is assured.
TheAnglo-Persianhas become literally a State-directed company, but British officials are wise enough to entrust to technical experts the actual management of the undertaking. This explains its great success. Two trustees, Lord Inchcape and Sir E.H. Packe, represent the Government on the Board of Directors: they have the right of absolute veto upon all decisions.
Finally, the Government has made a contract with theAnglo-Persianfor the supply of important quantities of oil at an advantageous price for a certain number of years. The needs of the Navy are thus guaranteed for a period of years. There is no surprise to be feared, for the oil-fields are near the Persian Gulf, where Great Britain reigns as mistress, and where no foreign ship can enter without her permission. It is, moreover, an important strategic point; ships can be dispatched from there to all parts of the world where Great Britain has interests—Suez, Gibraltar, India, Australia, Africa.
The oil-deposits of Persia are so rich that it will soon be necessary to increase tenfold the projected development of the equipment, pipe-lines, and refineries, to deal with future production. Even in our time the natives collect the oil by rudimentary processes and transport it on the backs of camels to the markets of the interior, where it serves as an object of exchange. Persia is one of the few countries in which numerous spontaneous springs and seepages reveal the existence of oil. In certain valleys it flows along the slopes and pours into the rivers, making the water unfit for consumption. TheAnglo-Persianalready ranks among the chief oil-producing companies of the world. It is precisely this success, we may believe, which has caused so much apprehension in the United States on the subject of the rivalry between British and American producing companies. TheAnglo-Persiancontrols an almost unlimited production in Persia, and as soon as there are enough pipe-lines and reservoirs, the output will increase in enormous proportions.From 1923 onward, theAnglo-Persian,by itself, will be in a position to supply a large proportion of the needs of Great Britain. It will then be free of the contract which, for more than seven years, has bound it to theRoyal Dutch-Shell, obliging it to dispose of a considerable portion of its production through the latter company.
When its program is completed, theAnglo-Persianwill possess a fleet, the capacity of which will exceed a million tons. Expenses are small, because of the great productivity of the wells, which gives to Persia a marked superiority over all the other oil-fields of the world, except perhaps Mexico. Its yield of benzine and kerosene is much superior to that of most of the oil-fields of the United States; it is richer than that of Mexico.
But for several years, theAnglo-Persianhas no longer been content with Persia, rich as it is. Its ambitions now extend to the whole world. It is in process of installing its depots in all the great ports of the world. In French territory alone, reservoirs will be constructed in the ports of Dunkirk, Le Havre, Rouen, Saint-Nazaire, La Pallice, Bordeaux, Marseilles, Bizerta, Algiers, Oran, Casablanca, Dakar. Through the agency of its subsidiary, thed'Arcy Exploration, it is prospecting for oil in every part ofthe globe. Wherever geological conditions appear to indicate the presence of oil in commercial quantities, the operations of drilling are undertaken. The activities of thed'Arcy Explorationare carried on at present in Great Britain, Australia, New Zealand, Canada, Hungary; and again, quite recently, the company has concluded arrangements for investigating and prospecting in districts of France and her colonies which are likely to produce oil. A French company, theSociété Générale des Huiles de Pétrole, has been founded, with an initial capital of 100 million francs, jointly subscribed by French and British groups, with the object of undertaking the refining and distribution of oil in France as well as her colonies. According to the agreement signed in London on October 27, 1920, by Sir Basil Zaharoff for theBanque de la Seine, nine subsidiary companies will be founded, each having a different function: importation, refining, distribution, and transport of oil.[24]And this "Franco-British Anglo-Persian" is even going to build an oil fleet, thanks to theSociété Navale de l'Ouest.
Other enterprises are also under consideration.TheAnglo-Persian Oilhas acquired important interests in theBritish Oil Bunkering, and it has also founded theTankers Insurance Company Limited, an insurance company with a capital of £100,000, for it intends, henceforward,to do its own insurance. By means of theScottish American Oil, of which it has technical and commercial control, it has even succeeded in penetrating into Mexico, thus completing the work begun by Pearson and continued by theShell.
Its activities, during the month of December 1920 alone, were remarkable. It obtained a footing in Spain, founding a company with a capital of 25 million pesetas, of which 55 per cent. was subscribed by theAnglo-Persianand 45 per cent. by a Spanish group having at its head theBanco Urquijoand theSpanish Credit Bank. It concluded a contractwith the Hungarian Government guaranteeing it exclusive rights of exploitation on Magyar territory, in case oil should be discovered there, which has happened. Deposits have been found near Letenye and the quantities which it is hoped to obtain will no doubt be more than sufficient to supply the needs of Hungary.
The Hungarian Minister of Finance submitted to the National Assembly, in December 1920, a report concerning the cession of rights to prospect for oil to a syndicate controlled by thed'Arcy Exploration. The Government at Budapest, not having the necessary capital for exploration, was favourably disposed to the offers of the subsidiary of theAnglo-Persian. The negotiations were conducted by Dr. Telesky, a former Minister of Finance, and Dr. von Bockh, Secretary of State. According to the agreement reached, thed'Arcy Explorationundertook to devote at least £100,000 to prospecting for oil; if the results were satisfactory, the company would exploit one-third of the geological productive units, one-third would be kept in reserve, and the remaining third would revert, free of all expense, to the State. As regards the second portion, the Hungarian Government reserved complete freedom of action. A company was formed with a capital of £1,000,000 sterling, of which the Hungarian Government subscribed ten per cent.; the company had to deposit with the Government 25 per cent. of the shares, and to undertake to hand over to it each year one-tenth of the production, in kind or in money.
TheAnglo-Persianhas also obtained possession of the oil-bearing territory of Transylvania, ceded to Rumania. During the War, this was seized and exploited by the Austrian military authorities, for it belonged to theHungarian National Petroleum Company. The capital of this company was heavily drawn upon for repairs undertaken at the close of hostilities. An appeal for funds became necessary. TheAnglo-Persiandemanded that the technical andcommercial management of the undertaking should be entrusted to it and that two of its nominees should sit on the Board of Directors; it then subscribed £500,000 in preference shares. Each of these shares carried twenty votes against one for an ordinary share: thus theAnglo-Persianhas complete control.
In addition to this, it has taken over the share which was reserved for Britain in the German interest in theSteaua Romana, and disposes of nearly 80 per cent. of the shares in theTurkish Petroleum, which has claims to oil concessions in Mesopotamia.
On October 13, 1921, theAnglo-Persianmade an agreement with the Japanese companyTei-Koku, undertaking to supply it with 350,000 barrels of petroleum yearly. Half of this is destined for the Japanese Navy.
Organizations for the sale of its products are to be found in Belgium, Denmark and Norway.
Part of the famous deposits of Rivadavia, which the Argentine Government intended to reserve for itself, has fallen under its control.
In co-operation with the Australian Government—from which it had already obtained, in May 1920, exclusive rights in the former German colonies of Papua—theAnglo-Persianfounded theCommonwealth Oil Refineries, with a capital of £500,000. It is prospecting actively in Western Australia, andhas asked the Government of Perth for a concession of 100,000 acres.
In New Zealand it has offered to subscribe 50 per cent. towards the formation of a capital of £100,000 for prospecting purposes.
And theAnglo-Persianis, at the present moment, building vast works in New Brunswick, for the distillation of oil from shale. The oil produced will be used for heating the boilers of British ships. The oil-bearing lands in this region are rich and extensive, and the shale of which it is composed has been found twice as rich in oil as the Scottish shale, the first from which the precious "rock-oil" was distilled.[25]As in Wyoming, Colorado and Utah, there are enormous laminate rocks, stretching in beds below the valleys, of a thickness of eight to ten metres; when distilled they may produce up to 240 litres of oil to the ton. When the Mormons, fleeing from persecution in 1846, took refuge in the Far West and discovered these oil shales, they never suspected the service they would render half a century later to the British and American Navies.[26]They foundthemselves held up in their march across the desert for want of fuel, but one of their leaders announced that Providence would soon supply their needs. The prophecy came true that very day: a Mormon was surprised to notice that the stones on which he placed his saucepan took fire. Since then, hunters and prospectors venturing into these desolate regions use no other fuel than these rocks.
FOOTNOTES:[24]TheAnglo-Persianwill subscribe 45 per cent., France 55 per cent. of the capital of each of these companies. The Agreement of October 27, 1920, was the occasion of very sharp attacks from certain short-sighted members of the House of Commons, who did not understand that the British Government was about to lay hands, in concert with theRoyal Dutch, upon the oil wealth of France, and reproached the Government with dispersing its efforts.[25]The Scottish factories treat three million tons of shale annually, from which the average yield is only 122.5 litres of oil to the ton, half the yield of the Canadian and American rocks. Apart from this bituminous shale, it seems unlikely that Great Britain, which controls 90 per cent. of the future production of the globe, would have succeeded in finding oil-deposits in her own soil.[26]Anticipating the time when the oil-fields of the United States will be exhausted, the American Government has taken possession of millions of hectares of land containing bituminous rock, in order to ensure the fuelling of its Navy.
FOOTNOTES:
[24]TheAnglo-Persianwill subscribe 45 per cent., France 55 per cent. of the capital of each of these companies. The Agreement of October 27, 1920, was the occasion of very sharp attacks from certain short-sighted members of the House of Commons, who did not understand that the British Government was about to lay hands, in concert with theRoyal Dutch, upon the oil wealth of France, and reproached the Government with dispersing its efforts.
[24]TheAnglo-Persianwill subscribe 45 per cent., France 55 per cent. of the capital of each of these companies. The Agreement of October 27, 1920, was the occasion of very sharp attacks from certain short-sighted members of the House of Commons, who did not understand that the British Government was about to lay hands, in concert with theRoyal Dutch, upon the oil wealth of France, and reproached the Government with dispersing its efforts.
[25]The Scottish factories treat three million tons of shale annually, from which the average yield is only 122.5 litres of oil to the ton, half the yield of the Canadian and American rocks. Apart from this bituminous shale, it seems unlikely that Great Britain, which controls 90 per cent. of the future production of the globe, would have succeeded in finding oil-deposits in her own soil.
[25]The Scottish factories treat three million tons of shale annually, from which the average yield is only 122.5 litres of oil to the ton, half the yield of the Canadian and American rocks. Apart from this bituminous shale, it seems unlikely that Great Britain, which controls 90 per cent. of the future production of the globe, would have succeeded in finding oil-deposits in her own soil.
[26]Anticipating the time when the oil-fields of the United States will be exhausted, the American Government has taken possession of millions of hectares of land containing bituminous rock, in order to ensure the fuelling of its Navy.
[26]Anticipating the time when the oil-fields of the United States will be exhausted, the American Government has taken possession of millions of hectares of land containing bituminous rock, in order to ensure the fuelling of its Navy.
CHAPTER XII
AN AMERICAN BALKANISM
The British Controlled Oil-fields
TheAnglo-Persian Oilis no longer sufficient for Great Britain, which founded a new company in 1918, theBritish Controlled Oil-fields, specially commissioned to fight theStandard Oil. Established under Canadian law with an initial capital of £12,000,000, increased later to £40,000,000, and capable of a further increase up to £159,000,000, theBritish Controlled Oil-fieldswill be one of the greatest financial powers of the world. Like theAnglo-Persian, it is entirely in the hands of the British Government under the system of the voting trust. It seems that an immense tract of oil-bearing territory exists from Mexico to the Argentine, a continuation of that of the United States. Already Mexico has become the second greatest producing State in the world; and oil has been found in almost all the South American States, even in Brazil and on the plateaux of Bolivia. Of these immense deposits theBritish Controlled Oil-fieldswishes to gainpossession on behalf of the British Government, thus completing the work of theRoyal Dutch-Shellin Venezuela and in the neighbourhood of the Panama Canal. It possesses properties of very great value from Mexico to Brazil, in Trinidad, Venezuela and Costa Rica. In 1920 it began operations in Ecuador, and it is at present prospecting in Brazil, in the State of Bahia, where bituminous seepages and traces of asphalt abound. Its concessions actually surround two-thirds of the Caribbean Sea: they are situated in the States of Guatemala, Honduras, Nicaragua, Costa Rica, Panama, British Guiana, Colombia, Venezuela, Peru, Ecuador, and the island of Trinidad. The concessions of theBritish Controlled Oil-fieldsare nearly always on the sea coast—or rather in close proximity to the sea—which is a considerable advantage. It has expressly chosen them, on both the Atlantic and the Pacific, as a precautionin case war should break out between Britain and the United States; for, even with the help of the Japanese fleet, the British Navy might not be able to seize the Panama Canal. And its units must be in a position to replenish their stores of fuel without being obliged to make a long detour round the Magellan Straits.
TheBritish Controlled Oil-fieldsis at present negotiating for the control of important concessions in Panama and Nicaragua. It controls all those ofBritish Guiana, nearly all those of Honduras, but I fear it is about to lose those it had in Costa Rica. In order to obtain them, Great Britain did not hesitate to foment revolution in this little Republic. Unable to obtain anything from the established Government, it helped to place in power the revolutionary President Tinoco, from whom it got all it wanted: more than 6,000 square miles granted to theBritish Controlled Oil-fields. Unfortunately Tinoco has been overthrown: the regular Government, restored to power, hastened to annul these concessions. Great Britain, to compel it to ratify these concessions, stirred up a war between Costa Rica and Panama, while she sent the cruiserCambrianto the coast of Costa Rica in order to increase the pressure. Events went against her. Costa Rican troops invaded Panama. A landing took place on February 28, 1921, on the Pacific coast, south of the Dulce Gulf, the eastern shore of which is common to both countries, and another less important one on the Atlantic, towards Bocas del Toro. Panama lost the territory of Coto.
Mr. Alves, Chairman of theBritish Controlled Oil-fields, set out in March 1921 for Costa Rica, to study the question at issue. But the United States stepped in; and Judge White, as arbitrator, pronounced in favour of Costa Rica. On August 26, 1921, an American naval detachment assisted the Costa Ricanforces to take definite possession of the contested territory, in spite of the indignant protests of the Government of Panama against the violent measures of which it was the victim.
There is continual warfare among the little republics of Central America. The imbroglio of British and American affairs around the Gulf of Mexico and the Caribbean Sea (British Controlled Oil-fields,Mexican Eagle,Royal Dutch Shell,Mexican Petroleum,Standard Oil) makes this regionthe Balkans of the oil world.
TheBritish Controlled Oil-fields, the board of which includes a British admiral and a Member of Parliament, is the result of long investigations pursued by Lord Fisher on behalf of the Admiralty. The results of these studies are being methodically turned to account in order to ensure to Great Britain the supremacy of the sea by means of the supremacy of oil.
CHAPTER XIII
POLITICAL TENDENCIES OF THEROYAL DUTCH
The British Oil Empire
Until 1914, the British Government seemed to resist the formidable extension of theRoyal Dutchthroughout the world. Under the pretext of ensuring reserves for itself, it got possession of outlets which this company had not yet touched, taking control of theAnglo-Persianand in 1918 founding theBritish Controlled Oil-fields. The reason was that they were not yet allied. But since the War an event of considerable importance has taken place: Deterding has thrown in the fortunes of his trust with those of the greatest empire in the world, the British Empire, whose policy at present dominates the world.
At the beginning of its history, theRoyal Dutchwas a Dutch company. If theRoyal Dutchbecame British by its union with theShell, it was German through its Rumanian share in theDeutsche Petroleum, which united the petroleum interests of theDeutsche Bank,Steaua,European Petroleum, and theDeutsche Mineratal Industrie. The first important capital of this powerful consortium was furnished by German banks: theDeutsche Bank, theDisconto Gesellschaft, and the firm ofBleichröderare, as it were, the fundamental tripod supporting the edifice. It has been justly said that if Germany had not the most important place in theRoyal Dutch, it is because Mr. Deterding was more concerned with British interests. He uses the power of nations as he uses money. Great Britain being mistress of the seas, he has given to British capital the most important part in his undertakings. But the Rothschild family is international. There are branches in London, Paris, Berlin, and Vienna. Mr. Deterding had safe places to anchor while waiting for the wind. During the retreat of the Rumanian army, the wells controlled by theRoyal Dutchwere partly destroyed. Whether this destruction was the work of Rumanian or of German soldiers is not important. TheDeutsche Bankwas associated with Mr. Deterding in Rumania. Whatever was the result of the War, theRoyal Dutch-Shellhad to be compensated....
It would have been just the same as far as Bagdad. If Germany had gained Asia Minor, the property of theRoyal Dutchwould still have been saved by theDeutsche Bank. As the Allies have the upper hand, Mr. Deterding has nothing to fear. He is inclose touch with France and Britain. He is in opposition only to America. And this coalition of the oil powers is a very curious one, in which enemy nations agree at certain times and disagree at others, all of them being led by a superior power to unsuspected ends, just as they were in the world race for armaments. An important fact which may puzzle the simple-minded, is that, during the War, Mr. Deterding made his flag respected.
His cleverness was such that,whichever side was victorious, he was bound to come out unscathed from the conflict.
Since Great Britain has conquered Germany, he has thrown in his fortunes with hers.
It was a master-stroke for British policy. Allied to this powerful trust, Great Britain now possesses an oil empire extending throughout the world:—
Europe
America
Asia
Oceania
Africa
CHAPTER XIV
HOW THE UNITED STATES LOST SUPREMACY OVER OIL
The Americans themselves realize that they are about to lose their supremacy over oil. "While we were basking in a false security, lulled by the knowledge of our resources," the AmericanNationwrote recently, "foreign companies silently and energetically took possession of the unexploited oil-fields." TheMexican Eagle, a British company, received vast concessions in Mexico. TheShell, another British group, established itself in many places. TheRoyal Dutch, which, in appearance at least, was originally a Dutch company, was founded to exploit the oil of the East Indies. Later, a fusion of theRoyal Dutchand theShelltook place, and theMexican Eaglesheltered under the wings of the new company. TheAnglo-Persianwas created to exploit Persia and the East, and the British Government subscribed £2,000,000, reserving the control for itself in order to supply the needs of the navy.[27]This company was for years closely connected with theRoyal Dutch.[28]This gigantic aggregation of British interests, at the present time, owns or controls a great part of the oil of California, Oklahoma, Louisiana, Mexico, Trinidad, Venezuela, Colombia, Rumania, Russia, Persia, Egypt, India, and the East Indies. Except in North America, many of the concessions are so vast that they exclude American companies from the most profitable oil-fields. However, adds theNation, the experts of the United States Geological Survey were making disturbing discoveries that 40 per cent. of American oil was exhausted, and that, at the present rate of production, the exploitation would be complete in fifteen or twenty years, for home requirements were becoming so great that more oil would have to be imported than was being exported. In 1920, the imports exceeded the exports by 100 million barrels. AndBritish companies, closely connected with the British Government, are now in exclusive possession of 90 to 97 per cent. of the future world production. What a change in the situation!
Ten years ago, Britain possessed no oil, to-day she is independent, to-morrow she will be mistress. The feat has been accomplished by the silent efforts of a few men such as Sir Marcus Samuel, chairman of theShell, Lord Cowdray (Pearson), Lord Curzon,formerly Viceroy of India, Sir John Cadman, technical adviser to the British Government, Professor in the University of Birmingham, and Chairman of the Inter-Allied Petroleum Conference during the War, Lord Strathcona, creator of the Canadian railways, who played a great part in theAnglo-Persian, and, above all, Admiral Lord Fisher.
These men actedeven without the knowledge of the British people and its parliamentary representatives. Their fellow-countrymen and their opponents only heard of their activitieswhen they had endowed their country with a world-wide oil empire.
There was veritable amazement in the House of Commons when it was informed of what Lord Fisher and Lord Strathcona had done with theAnglo-Persian. Their work narrowly escaped undoing. Lord Fisher himself described, in September 1919, the opposition he met with, even among his colleagues. "I was dubbed 'an oil maniac' when I was at the Admiralty in 1885. Lord Ripon, the First Lord, sent for me and told me I was called a Radical enthusiast and nicknamed 'Gambetta,' and said he meant to make me a member of the Board of Admiralty. I told him all the rest of the Board would leave. He saw me a week after and confessed it was so; but, thank God! I was spared to be Director of Naval Ordnance instead."
Lord Fisher experienced the same difficulties when he wished to equip the British Navy with submarines. It is to him, and to the Bethlehem Steel Works (United States), that the Allies owed the prompt completion of the special type of submarines which "went, unconvoyed from America to the Dardanelles and acted there prodigiously." A few of these submarines which succeeded in passing through the wire nets of Chanak-Nagara, for a long time controlled the Sea of Marmora and prevented the Turks from taking supplies by sea to their fortifications on the Straits. Oil supremacy and naval supremacy go hand-in-hand. When he wished to give his country empire over oil, Lord Fisher's principal object was to preserve her dominion over the seas. For that fleet will be victorious which has at its disposal the most abundant sources of oil. Ships using oil have driven out those burning coal, just as the latter replaced sailing ships.
When we compare the results obtained by France and by Britain, on whose soil it seems that no deposits of mineral oil have yet been discovered (a fact which rendered Lord Fisher's task none the easier); and when we see Britain mistress of nearly all the oil remaining in the world, we stand confounded with admiration before the genius of those to whom she owes such an empire.
British Oil Policy
Having been obliged to allow the first place to America, the country which first discovered oil, and which until recently produced 70 per cent. of the world's output, Great Britain began to gain upon her by keeping command of oil-carrying ships. Whoever transports a commodity controls it, and is master of it up to a certain point, for he is the indispensable intermediary for those who wish to obtain it. Should any difficulty arise, the transporter, according as he fulfils his office or not, grants or withholds supplies for the markets, as he pleases. The British genius has always sought to compensate, by maritime superiority, for the inferiority of Great Britain in certain respects. If the United States occupied the first place among producers of oil, they ranked second to Great Britain as transporters. Great Britain, understanding that oil "is destined to play the same part in the world as coal, cotton or steel," made a special point of retaining control of oil-carrying ships. It was a thrilling duel.
The world tonnage of tank-steamers rose by June 30, 1919, to 2,616,000, tons, of which 1,500,000 tons sailed under the British flag, 1,000,000 tons under the American. In June, 1920, the United States had gained the first position. They had 308 tank-steamers, amounting to 1,734,843 tons, or 51 per cent. of the whole (3,386,091 tons). On January 1, 1921, the supremacy of Great Britain was restored. Of the 524 oil-steamers afloat, 252 belonged to her, the United States having only 191. But she lost this position again six months later.
Mistress of one of the foremost oil-carrying fleets, Britain next sought, until 1922, to monopolize almost all the remaining resources of the world. TheRoyal Dutch-Shell,British Controlled Oil-fields, andAnglo-Persian Oilwere valuable auxiliaries of the Foreign Office for this object. According to Dr. David White, one of the members of the American Geological Survey, this is what Great Britain possesses to-day:—
In Peru alone have the United States triumphed over Great Britain. The discovery of oil there is due to the English. But, thanks to the power of its capital, theStandard Oil, through the medium of theInternational Petroleum Company, managed to acquire the shares of the four most important British companies. And the United States at present controls 70 per cent. of the output there, the British retaining only 27 per cent. and Italy 3 per cent. The Peruvian production, however, is not very high; it does not yet reach 3 million barrels.
The need for oil has grown so great that the deposits containing this precious liquid fuel are greedily coveted by the various governments which take shelter behind financial groups.There is a shortage of 250 million tons of coal on this planet, and it produces only 98 million tons of oil.But no Government can boast, in this matter, of having shown a foresight equal to that of Great Britain.
The British Government is no longer content to-day to encourage, favour and defend its own nationals. Better than this, it makes conquests or establishes protectorates having as essential object the reservation exclusively for its nationals of new oil-bearing territories, such as Persia and Mesopotamia. The treaty recently imposed on Persia was nothing but a disguised protectorate. Fortunately for Britain, the Soviet Government has voluntarily given up its advance into that country since it concluded a trade agreement with London. And it is sufficient to read the Treaty of Sèvres to see the underlying motives of the British negotiators: the desire to monopolize the oil of Asia, and anxiety to keep out the United States, all the oil-fields left to France being in particular granted to her with the idea of a future British participation.
The British Government is so jealous of its position in Mesopotamia that it will not even tolerate American prospectors there, and certain incidents have happened in connection with which the disappointed Yankees have asked the State Department at Washington to demand satisfaction.
The British oil policy is not uniform. Sometimes, when it seems possible, she gets possession of proved oil-fields. Sometimes, in the case of a country which would hold its own, she negotiates for an advantageous share in the profits—this is what happened with France by the San Remo Agreement—or she makes contracts ensuring abundant supplies of the precious mineral oil.
When a State does not fall in with her views sufficiently quickly, Britain does not recoil from any means of pressure. This is what led Admiral Degouy, in April 1920, to write: "As a corollary to well-known negotiations with one of the richest countries in oil in the Near East, the British Admiralty has organized and is maintaining on the Danube a numerous flotilla of gunboats and river monitors." The reason is easy to guess.
From 1918 to 1920 an unofficial squadron ofsmall Russian steamers, requisitioned and armed by Great Britain, dominated the Caspian Sea, so that Batum, the port of embarkation for oil on the Black Sea, and Baku, its place of production, were both in the hands of the British. They disposed of the petroleum and mazut there at their own pleasure, permitting no control over their purchases. Britain first took as much as she could; it was only afterwards that she allowed France to replenish her stores in turn, provided there was any petroleum left.[29]
Thus ends the work of Lord Fisher, who applied himself for more than thirty years to the problems of oil. Thus end the experiments and observations conducted modestly and quietly for so long at Portsmouth.
Henceforward the British Navy is sure of its supplies of oil for a century. But the position is such that the United States can avoid war only at the price of industrial servitude.
Hemming-in of the United States
While Great Britain was pouncing upon nearly all the oil remaining in the world, the United States basked in a false security. Had they not supplied 80 per cent. of the needs of the Allies during the War? It is true that if the War had continued the United States would not have been able to satisfythose needs. "In September and October 1918," declared Mr. Deen, who played such an important part in the alliance of theRoyal Dutchwith theShelland who now directs the oil industry of Oklahoma, "the Allies were taking each day 194,000 barrels of petrol, while the average daily output was 191,000. Adding together the consignments sent to Europe by Mexico and the United States, we reach the figure of 1,200,000 barrels a day, while the United States was producing only 960,000 and Mexico 140,000. The daily deficit was thus 300,000 barrels."
The United States sacrificed themselves in the cause of the Allies during the War.[30]Great Britain has shown no gratitude. They had already reached the point at which they could not supply their home consumption, since 25 per cent. of the petroleum consumed in the States used to come from Mexico, and they sent the Allies more than their own production. The War contributed not a little to placing them in their present position.
According to Walter Teagle, the new chairman of theStandard Oil, if their consumption continues to increase at the present rate they will consume, in a few years, 630 million barrels, or double what they produced in 1919. Since 1914 alone the number of motor-cars in the United States has increased from1,700,000 to 8,000,000 (Ford cars swarm there). These alone absorb 85 per cent. of the national output, leaving only 15 per cent. for the railways, shipping, manufactures and export.
The American companies have made a great effort. They have speeded up production, raising it from 376 million barrels in 1919 to 443 million in 1920. New exploratory work has been carried on, especially in Texas and Kansas. But will not this hasten yet more the time when the resources of the United States will be exhausted?
At the word of command from the United States Government, "Draw more and more on the oil in foreign countries," theStandardsent out prospectors all over the world. But everywhere they ran up against an unforeseen obstacle. An American prospector had the misfortune to appear on the shores of the Dead Sea in October 1919. Without hesitation the British General who was Governor of Palestine had him arrested in Jerusalem. To the indignant protests of President Wilson Britain simply replied that it was not a question of measures aimed specially against the Americans, but that all prospecting in Palestine was forbidden until a new order. The same thing happened in Mesopotamia.
Everywhere in the world, except possibly Canada, in which country they have considerable influence onaccount of their geographical proximity, the Americans for two years found the "closed door."[31]Generally they were either completely excluded from oil-bearing concessions situated in the territory, the colonies, or even the sphere of influence of Great Britain, Japan and the Netherlands; or else they were authorized to establish themselves only under such conditions that they would lose the effective control of their undertakings. Foreigners are forbidden to prospect for oil in Burma, India, Persia, Uganda and the United Kingdom. A policy whichexcludes foreigners from the controlof petroleum products is followed in Algeria, Australia, Barbados, Kenya Colony, British Guiana, France, French West Africa, Guatemala, Japan, Formosa, Saghalien, Madagascar, Mexico, New Guinea, and probably in the Union of South Africa. Venezuela and Uganda are considering a similar policy.
Theright to exploit mineral wealthcannot be granted to foreigners in Australia, Barbados, Kenya Colony, New Guinea, the Dutch Indies, France, French West Africa, Guatemala, India (probably), Great Britain, Japan (practically), Trinidad (in part), Venezuela, Madagascar, and, except for rights already acquired, in Rumania and Slovakia. Temporary restrictions have been placed on the acquisition of oil concessions by foreigners in two districts of Colombia and in the new Rumanian territory.
The ownership of oil deposits belongs to the Government in Bolivia, Costa Rica, Slovakia, South Africa, Uganda, Venezuela, Great Britain, and partly so in the Argentine, Australia, British Guiana, Ecuador, India, Trinidad, Canada and Colombia. The Dominican Republic, Mexico, Rumania and Russia are considering the possibility of following the same course. But the United States have pledged themselves not to recognize the new Mexican Government unless it renounces this measure. In France the Government has regalian rights over the riches of the subsoil; it grants them at its discretion.
In face of this situation, Senator Gore of Oklahoma, on March 10, 1920, demanded of the Federal Government a report upon the measures taken by foreign Governments to exclude Americans from oil-fields. Two months later, on May 17th, President Wilson transmitted to the Senate the report of the Secretary of State.
"The policy of the British Empire," wrote the Acting Secretary of State, Frank L. Polk, "is reported to be to bring about the exclusion of foreigners from the control of the petroleum supplies of the Empire, and to endeavour to secure some measure of control over oil properties in other countries. This policy appears to be developing along the following lines,which are directly or indirectly restrictive on citizens of the United States:—
"1. By debarring foreigners and foreign nationals from owning or operating oil-producing properties in the British Isles, colonies and protectorates.
"2. By direct participation in ownership and control of petroleum properties.
"3. By arrangements to prevent British oil companies from selling their properties to foreign-owned or controlled companies.
"4. By Orders in Council that prohibit the transfer of shares in British oil companies to other than British subjects or nationals."
These measures have led to the control of theShell, by agreement with theRoyal Dutch, which holds 60 per cent. of its shares. "It is understood that the British Government has a controlling interest in theAnglo-Persian Oil Company, and that it has also assisted in the development of the Papuan oil-fields by bearing one-half of the expense and contributing experts...." All prospecting for oil in the United Kingdom must be authorized by the Board of Trade. In fact, the only borings carried out in the country are byS. Pearson and Son, Ltd., acting as petroleum development managers to the Government. In Trinidad no one may acquire oil-bearing land without the authorization in writing of the Governor, subject to the approval of the Secretary ofState for the colonies. Now the latter requires of every British company that not more than 25 per cent. of its capital is to be held by aliens and that the majority of the directors shall be British.
The Polk Report goes on to prove that almost all other countries, even the smallest, close the door to Americans. Only Bolivia, Colombia and Costa Rica, which has recently annulled the concessions granted to theBritish Controlled Oil-fieldsplace Americans and their own nationals on the same footing. The case is different in Guatemala, in Ecuador, and, above all, in Mexico, "only Mexicans by birth or naturalization and Mexican companies have the right to acquire ownership in lands, waters and their appurtenances, or to obtain concessions to develop mines, waters, or mineral fuels in the Republic of Mexico. The nation may grant the same rights to foreigners provided they agree before the Department of Foreign Affairs to be considered Mexicans in respect of such property and accordingly not to invoke the protection of their Governments in respect to the same, under penalty, in case of breach, of forfeiture to the nation of property so acquired. Within a zone of 100 kilometres (62.14 miles) from the frontiers and of 50 kilometres (31.07 miles) from the sea-coast, no foreigner shall under any conditions acquire direct ownership of lands and waters."
Meantime the San Remo Agreement had beensigned, by which the French Government—voluntarily or no—associated itself with Great Britain in order to drive out America from the Asiatic centres of petroleum production, and delivered over to her the resources which might be discovered in the zones of influence reserved for France. The French Government was so embarrassed about this agreement that for three months it dared not publish it.
When it made up its mind to do so, the publication aroused grave anxiety in the United States.
The Struggle for Mesopotamia
However, public opinion and American official circles followed the progress of the struggle with passionate interest. The situation became even more strained in consequence of an article inSperling's Journalby Sir Edward Mackay Edgar, which constituted a literal defiance. Great Britain openly boasted of her triumph. "I should say," wrote Sir Edward, "that two-thirds of the oil-fields exploited in Central and South America are in British hands. In the states of Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, and Ecuador, the great majority of the concessions are in the hands of British subjects and will be developed by our capital.
"The Alves group (British Controlled Oil-fields) whose properties extend two-thirds round the Caribbean Sea is entirely British; and the regulations controlling it ensure the absolute perpetuity of direction in the interests of Great Britain. No citizen, no American group, has attained, or will ever attain, in Central America a position ... like that of Mr. Alves. If we consider the greatest of all petroleum organizations, theShellgroup, it possesses or controls undertakings in every oil-producing country of the world, including the United States, Russia, Mexico, the Dutch Indies, Rumania, Egypt, Venezuela, Trinidad, India, Ceylon, the Malay States, China, Siam, the Straits Settlements and the Philippines.
"No doubt we shall have to wait some years before the benefits of this position can be reaped; but there is no doubt that the harvest will be magnificent. Before long America will be obliged to buy from British companies, at the rate of millions of pounds every year and to pay in dollars, in increasing quantities the oil she cannot do without, and which she can no longer obtain from her own reserves.
"I estimate that if their consumption continues to increase at the present rate, inten years the Americans will be obliged to import 500 million barrels, which, at the very low price of two dollars a barrel, means an annual paying out of a thousand million dollars, of which the greater part will fall into British pockets. With the exception of Mexico and a small part of Central America,the whole world issolidly barricaded against an attack in force by the United States. The British position is impregnable."
One year after the peace the struggle between Great Britain and America reached its bitterest phase. The United States wished to obtain, at any price, part of the oil deposits of Mesopotamia and of the new oil-bearing territory which had just been discovered at Djambi in the Sunda Islands. Consequently, on November 20, 1920, Mr. Colby, Secretary of State, addressed a Note to Lord Curzon, which the American Press published on the 24th, in which he protested against the exclusion of Americans from Mesopotamia and claimed equality of treatment for all nations.
The British Government made, at the time, only a vague reply to the Colby Note. The English Press published the complete text.[32]Lord Curzon then declared that the existing British rights in Mesopotamia were only the confirmation of those acquired before the War by theTurkish Petroleum Company, the control of which the British Government holds in common with theRoyal Dutch, for it has bought 200,000 ordinary shares in this company. But for the War the exploitation of the oil deposits of Mosul and Baghdad would long since have begun. The rights acquired by the French Government under the SanRemo Agreement represent only the German share, and they were granted in return for facilities given for the dispatch to the Mediterranean of the petroleum produced. Neither the rights of theTurkish Petroleum Company, nor the San Remo Agreement will preclude the Arab State of Iraq from enjoying the full benefit of ownership or from prescribing the conditions upon which the oil-fields shall be developed. The British Government has no desire whatever to deny the United States a share in the expansion of the petroleum industry of Mesopotamia. And the British Note draws attention to the fact that London by no means agrees with Washington on the estimate of the petroleum resources of the various nations. While the potentialities of the future are necessarily problematical, the undisputed fact remains that at present United States soil produces 70 per cent. of the oil production of the world.[33]It is not easy, therefore, to justify the United States Government's insistence that American control should now be extended to resources which may be developed in mandated territories. The British Government, nevertheless, is 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.
This somewhat hypocritical reply did not satisfy the Federal Government. Great Britain might be in agreement with its contention that "oil resources should be thrown open for development without reference to nationality," but that did not make her open up Mesopotamia to Americans. And on the occasion of a meeting of the Council of the League of Nations at Paris, to examine in detail the problem of mandates, Washington, to annoy London, sent a Note on February 1, 1921, demanding that the question of mandates over former German colonies should be reconsidered. In the end America won her point, for during the negotiations which were conducted in London at the end of July 1922, Walter Teagle asked that the shares in theTurkish Petroleumgranted to theAnglo-Persian(50 per cent.), to theRoyal Dutch(25 per cent.), and to France (25 per cent.) should be reduced in order to make room for American interests. Deterding protested, but finally accepted. The British Government gave way immediately. It is a doubtful victory for the United States, for who knows when this region will be pacified? And France will do her utmost to avoid the diminution of her share. The Angora Government showed itself at Lausanne determined to resume possession of the Mosul region, which is so rich in oil and which M. Clemenceau gave up to Britain with so little resistance.
The Struggle for Djambi
Meanwhile theRoyal Dutch, which, in agreement with theAnglo-Persian, had asked the British Government to reserve for it the exploitation of Mesopotamian deposits, was endeavouring to monopolize the new deposits discovered at Djambi in the Sunda Islands.
Djambi is the last great territory to be exploited in the Dutch Indies; the oil-fields in this district cover four million acres. At first the designs of theRoyal Dutchmet with no opposition, and it obtained from the Dutch Lower Chamber the grant of these deposits for its subsidiary, theBataafsche Petroleum. But two representatives of the Standard brought a communication to the Dutch Chamber and Ministers at The Hague. TheStandardoffered to found a company in partnership with the Dutch Government, which would hold half the territories of Djambi on the same terms as theRoyal Dutch. It recalled the fact that in the United States the Dutch had been given every facility, and counted on reciprocal treatment.
This unexpected communication caused great disturbance in the financial and political world of the Netherlands. A deputy asked if the note from theStandardcame from the American Government. The Prime Minister replied that he did not know,but that in any case this note must express the views of Washington. A Socialist member proposed exploitation of the whole field by the State; this was defeated by 55 votes to 24. The Liberals, fearing international complications, were opposed to the Government plan. Finally, the Second Chamber adopted this plan by 49 votes to 30.
Thereupon a vigorous Note arrived at The Hague from Mr. Hughes, the Secretary of State, who nearly defeated Wilson on the occasion of his re-election to the Presidency and who holds to-day the most important post in Mr. Coolidge's Cabinet. Mr. Hughes ordered the United States Ambassador to insist vigorously that the Dutch Government should grant the same facilities in the Dutch Indies to American as to other companies. For, he said, the nationals of all countries have an equal right to vital natural resources, and one cannot forbid access to one particular nation. "We do not seek preference over other countries, but we do not wish other countries to obtain advantages to our detriment. And concerning oil, the solution of the problem is to give equal rights to all the companies of all nations."
The Government of the Netherlands sent to Washington its reply to the American Note. It drew special attention to the disinterestedness shown by the Americans at the time when competition was free, a time chosen by theRoyal Dutchto make a muchmore advantageous offer than those of its rivals. In 1915 the exploitation of the deposits in the Sumatra regions was granted to the State; but in 1918 this ruling was modified, and it was decided that exploitation might take place directly by the State, or through the agency of a company, or under the system of a State-controlled monopoly.
At this time no American protest had reached the Dutch Government, and none was sent until after the signing of the contract between theRoyal Dutchand the Government.
However, added the Note, there still remain numerous valuable oil-fields in the East Indies, and the Dutch Government would be prepared to grant concessions to American capital.
This affair seems to have been by no means settled by the vote of the Dutch Lower Chamber. The polemic continued between Washington and The Hague. In May 1921 the American Government demanded the publication of its Note of April 19th, which The Hague was determined to keep secret. And in Holland the Colonial Secretary was violently reproached for having concealed from the Chamber the details of the correspondence exchanged with the United States. I have been able to procure the text of the letter submitted by theStandard:
"The development of petroleum deposits is at present a vital question for every country, and increasing attention must be devoted to it by the whole world. The Dutch colonies have the good fortune to possess extremely rich petroleum deposits, especially in the Djambi region. TheStandard Oil, an American limited liability petroleum company, asks to be allowed to share in the development of the deposits at Djambi, and a decision must shortly be taken on the matter. Considering the great extent of the oil-fields of Djambi, the Dutch Government will certainly not consider it to the interest of the country and people to allow them to be exploited by a single company.
"TheStandard Oilsubmits for the approval of the Dutch Government a scheme for founding a Dutch company under the mining legislation of the Dutch Indies, according to which part of the Djambi region would be exploited on the basis of the native law. This project would have to be submitted to the Second Chamber of the States-General. TheStandard Oildeclares itself ready to furnish all necessary guarantees for the exploitation of the said territory.
"TheStandard Oilis convinced that the Dutch Government will readily admit that the United States, which are and always have been the greatest producers of petroleum, could bring as much profit to Dutch interests as they have done for their own citizens.[34]We American companies, therefore, believethat we have a right to share in the development of the petroleum fields of Djambi, and we are sure that this participation would serve the interests of Holland equally with those of the United States, and would help to strengthen the bonds of friendship which exist between the two countries."
This did not have a soothing effect on public opinion in Great Britain. Since the War, wroteThe Times, the question of petroleum had become an international question of the first order. Great Britain took an especial interest in it; its security depended, more than that of other countries, on power over sea and air. Up to Trafalgar, when the essential thing was to have ships of stout oak, she watched carefully over her forests.... She could not do the same with oil, for she possessed so little in the Empire.
The United States desire equality of treatment. Britain denies the justice of this claim. "United States soil," wrote Lord Curzon, "produces 70 per cent., and American interests in adjoining territory control a further 12 per cent. of the oil production of the world." Great Britain, he pointed out, had only 40 per cent., and that in distant territories.
The United States replied that eighteen years from now all their oil would be exhausted, and they would not even be able to satisfy their home consumption. The orders for 1920 exceeded the output. "Notso!" replied the British. The excessive demand caused the price of oil to rise, and the demand then diminished in reaction. You have even been obliged to lower the price. The price of Pennsylvanian crude oil fell from 6.10 to 3.00 dollars a barrel between December 1920 and April 1921. And as Mexico is developed the swing of the pendulum will continue in the same direction. But you need not fear the exhaustion of American petroleum. Read the reports of your experts. Mr. David White, of the United States Geological Survey, has given his opinion that the American fields will have passed maximum production in a few years' time. Mr. Lane, formerly Secretary of the Interior, has gone even further, and has estimated the percentages of exhaustion of the main oil-fields as follows:—
But Mr. White himself admits that there are in the United States many oil-fields insufficiently exploited or even still unknown. As for Mexican petroleum, which is said to be threatened by salt water, there is no need for uneasiness. Exploitation there is only just beginning and will produce many pleasant surprises.