Chapter 6

FOOTNOTES:[42]Report placed before the Chamber on March 20, 1919, by the Duc de la Trémoïlle.[43]Statement by M. Henry Bérenger in the Senate, June 2, 1920.[44]Affairs of theArchbold, theGoldshell, and theMuskogee. André Tardieu's reply to the oil magnates when challenged by them to state exactly when and how his mission was impeded by their proceedings.The oil-men revenged themselves for the State collaboration which was imposed upon them by a bitter criticism of the system of the consortium in theRevue Politique et Parlementaire: accounts badly kept; profits arising from the State's arbitrary allowances for working expenses; ships arriving in ports where they were not expected, and without bills of lading (hence no means of control), etc....

FOOTNOTES:

[42]Report placed before the Chamber on March 20, 1919, by the Duc de la Trémoïlle.

[43]Statement by M. Henry Bérenger in the Senate, June 2, 1920.

[44]Affairs of theArchbold, theGoldshell, and theMuskogee. André Tardieu's reply to the oil magnates when challenged by them to state exactly when and how his mission was impeded by their proceedings.The oil-men revenged themselves for the State collaboration which was imposed upon them by a bitter criticism of the system of the consortium in theRevue Politique et Parlementaire: accounts badly kept; profits arising from the State's arbitrary allowances for working expenses; ships arriving in ports where they were not expected, and without bills of lading (hence no means of control), etc....

The oil-men revenged themselves for the State collaboration which was imposed upon them by a bitter criticism of the system of the consortium in theRevue Politique et Parlementaire: accounts badly kept; profits arising from the State's arbitrary allowances for working expenses; ships arriving in ports where they were not expected, and without bills of lading (hence no means of control), etc....

CHAPTER XIX

HOW GREAT BRITAIN WON OVER FRANCE TO HER SIDE IN THE STRUGGLE WITH THE UNITED STATES

I. Activities of the Royal Dutch and the Anglo-Persian.

On the morrow of the Armistice, on November 21, 1918, Lord Curzon gathered together all the members of the Inter-Allied Petroleum Conference at a great banquet, and there uttered the famous saying: "The Allies floated to victory on a wave of oil." M. Henry Bérenger, the French Commissioner for Petrol, proposed to retain the great inter-allied organizations for the distribution of oil, wheat, coal, etc. TheStandard Oilrefused. Besides, Sir John Cadman, Sir Marcus Samuel and Lord Curzon were not sorry to regain their freedom. They had only one idea—to bring to a successful conclusion their vast scheme, followed up for ten years with such admirable tenacity, in every country of the globe, for the acquisition of oil-bearing territories.

France, in compensation for the great damage shehad suffered during the War, was to receive important rights for the development of concessions in Galicia, Rumania, and Turkey, formerly belonging to Germany. The great thing was to keep out the American rival. To attain this end, as M. Delaisi pointed out, the task was rather complex. Several things were necessary:—

1. To negotiate directly with the Quai d'Orsay in order to get the principle admitted of anexclusive associationbetween France and Great Britain, for the exploitation of French concessions throughout the world;

2. To create Franco-British companies to carry out this agreement;

3. To establish a State monopoly in France, which, under pressure of diplomatic conventions, would be bound to keep off American competitors.

On January 21, 1919, although the War was over, the mandate of the Petrol Commission was extended for another six months. The State retained the monopoly of buying oil and the system of the consortium. That prevented our oil-men from working hand in hand with theStandard Oilas they did before the War.

Then, on January 30th, M. Clemenceau granted diplomatic powers to M. Henry Bérenger. He immediately sent commissions of inquiry into every country in which France might have petroleum interests, to London, Warsaw, Bukarest, Constantinople, Baku, and Mesopotamia. M. Bérenger was all in favour of a great scheme for founding an inter-allied company in which the French State, bringing as its share the German concessions which would be ceded to her by the treaty of peace, should enter into association with Great Britain and theRoyal Dutch. On March 7th, the Walter Long-Bérenger agreement was signed, fixing the broad outlines of a common oil policy in Mesopotamia, Rumania, and eventually in Galicia and Russia. It was a preliminary sketch of the San Remo Agreement. It remained only to prepare for its realization. Eighteen days later, without losing any time, theRoyal Dutchoffered to co-operate in the plans of the French Government in matters concerning the management and exploitation of the various oil interests which might be reserved to France as a consequence of the treaty of peace. It proposed, moreover, to place at France's disposal "all its world-wide technical, industrial, commercial and financial organization, not only in the countries mentioned, but alsoin all other countries" in which she might need its co-operation. And it offered to supply France by priority, in time of peace as in time of war.

M. Clemenceau welcomed the proposal. In order not to offend Parliament and public opinion, which was tending more and more in favour of a nationaloil policy, theRoyal Dutchentered into partnership with one of the great commercial banks, theUnion Parisienne, in order to create with its concurrence companies of which the nationality, if not the capital, should be French.

In this manner were created theSociété pour l'Exploitation des Pétrolesin July, and theSociété Maritime des Pétrolesin August 1919, the former with a capital of 20 million francs, and the latter of 10 million francs. In the first of these companies five out of nine of the directors bear names well-known in theRoyal Dutch: Deterding, Gulbenkian (the Talleyrand of oil), Colijn, who at one time nearly succeeded Deterding and who has been Minister of War in the Netherlands, Cohen, Jonckheer, Hugo. France has only a minority on the Board of this "French" company, for M. Deutsch de la Meurthe, whose influence brought over the Cartel of Ten from the side of theStandardto that of theRoyal Dutch, is little more than the mouthpiece of London and The Hague. TheRoyal Dutch, besides, subscribed 60 per cent. of the capital of theSociété pour l'Exploitation des Pétroles, though it now holds only 49 per cent. In theSociété Maritime des Pétroles, the disproportion is still greater; out of seven directors, two only are French, and have played an important part in French politics during the last few years. It is to them, in particular, and to the skill of Gulbenkian, who conducted the negotiations very cleverly, that theRoyal Dutchowes its triumph in French official circles.[45]

But the British Government is not content with these two companies founded by theRoyal Dutch, (The second is so little French that 19,600 out of the 20,000 shares of its capital belong to the Anglo-Dutch trust, and 400 only have been subscribed by the two French members of its council.) In spite of the opposition of Parliament, it authorized theAnglo-Persianto found a company much more important than the other two put together, a company with a capital of 227 million, theSociété des Huiles de Pétrole. This Franco-BritishAnglo-Persianwas created by one of the most powerful personalities of the financial world in Eastern, Southern, and Western Europe,[46]to whom Great Britain owed the policy she was then following against the Turkish Empire.[47]

Through the agency of Sir Basil Zaharoff, who is interested both in theSociété Navale de l'Ouestand in theBanque de la Seine, and holds 70 per cent. of the capital of Vickers, this British firm undertook to construct immediately, giving preference over the other trusts, the whole of the tank-boats, of 10,000tons on an average, destined to ensure to the new "French" company the monopoly of the transport of oil for the French market. France will depend for its future supplies, in great part, on this Franco-BritishAnglo-Persian. Its stations will be found on all her coasts, as well as in her African possessions. TheSociété Générale des Huiles de Pétrolewill erect vast reservoirs at Dunkirk, Le Havre, Rouen, Saint-Nazaire, La Pallice, Bordeaux, Marseilles, Bizerta, Algiers, Oran, Casablanca, and Dakar (Senegal).

As the United States will probably still have the advantage for another dozen years as regards oil supplies—for it is not very likely that they will exhaust their reserves so soon as 1927, as the Smithsonian Institute pretends—, the new enterprise set out to gain immediate control in the matter of tank-steamers.

Everything being thus prepared in the banks and chancelleries, it only remained to drive out theStandard Oilfrom the French market and to establish firmly the monopoly of purchase and importation granted provisionally to the Petrol Commission. On May 6, 1919, M. Henry Bérenger announced in the Chamber the profits which remained for the State under the consortium system—profits not paid into the Treasury, but devoted to a special object, the development of the petroleum industry; and on June 17th, M. Klotz brought forward a Bill to establish this monopoly permanently.

TheStandard, which, since the Armistice, had been impatiently waiting for the time when restrictions upon trade in France would be removed, no longer had any illusions about the desire of the Commission to expel it from that country. Although theStandardhad resumed its freedom from the conclusion of hostilities, it had none the less continued its supplies of oil to France, and knowing the Treasury was in difficulties, had accepted 5 per cent. bonds in payment. Now, in self-defence, it declared that it refused all credit.

The Oil Commission, in thus breaking free, had taken precautions against being caught unprovided. Three days after the rupture with theStandard, on November 25th, it obtained a credit of £2,000,000 from theRoyal Dutch, which was increased on January 5, 1920, to £5,000,000. TheStandard Oilwas ejected and the great Franco-British trust established in its place, thanks to this long-date contract.

But shortly after the fall of the Clemenceau Cabinet, this success came near to being undone. No new commissioner had been appointed in place of Henry Bérenger: a high official of the Exchequer was given the title of Director-General. The politics of oil, when we needed a real Petroleum Department, as in Britain, were reduced to the common level of current events.

For more than a month (February-March, 1920),what remained of the Petrol Commission was left at a loose end, only indispensable deliveries were made. A state of anarchy ruled. The stocks, which had, until then, been laid in four months in advance, fell to almost nothing. TheStandard Oiltook advantage of this to regain its footing.

In spite of its promises, theRoyal Dutchdid not succeed in delivering sufficient quantities of oil. By March 13, 1920, the reserves had fallen below the danger-line, to less than 75,000 tons. The Director-General, anxious about supplies, decided to resort to the Americans. And as the powers of the Petrol Commission had been legally extinct since April 26th, and its provisional monopoly at an end since April 21st, he established the system of authorizing imports, and granted licences to several companies which had made contracts with theStandard Oil. Would theStandard Oilsucceed in re-entering France?

It was not given the time, for the San Remo Agreement had just been signed (April 24, 1920). A few days later, the French Government resumed control of oil, and M. Laurent Eynac, the new Commissioner, taking the view that what had happened during the interregnum had no legal existence, hastened to annul the licences to import granted to theStandard.

The great American trust found once more in France, as it had so often found since the War in other parts of the world, the "closed door."

II.Diplomatic Negotiations

"The diplomatic history of the Franco-British negotiations concerning Mosul will, when it is made known, constitute the most eloquent document upon British policy towards France."[48]According to the agreements of 1916, Mosul was in the French zone of influence in Arabia. Great Britain began by obtaining the cession of our territorial rights, as recognized by this treaty. The French Government gave way to her desires in spite of the opposition of its Foreign Minister. But when, later on, we demanded in compensation that 50 per cent. of the oil of Mosul should be reserved for us, Great Britain produced at the propitious moment the difficulty, unsuspected by our negotiators, of theTurkish Petroleum, a company which she had opportunely created in collaboration with theRoyal Dutcha few months before the declaration of War in 1914. Now theTurkish Petroleumhad obtained from the Turkish Government the grant of all the naphtha of the vilayets that we lost in renouncing the Sykes-Picot Agreement of 1916. So, having abandoned Mosul, all we were to receive in exchange was the oil with which Britain consented, as a special favour, to supply us.

"When one knows England well," wrote M. LePage, with justice, "one is not surprised that, when, with the help of France she has driven out America from the territory she covets, she should strive to throw over her helper, having got rid of her rival."

The petroliferous basin, which extends from Persia to Mesopotamia, is one of the most extensive as yet discovered in the whole world. The great deposits reach as far as twenty miles to the north of Mosul. In the valley of the Naphat, the oil flows naturally into the river. At Hit, on the Euphrates, there are asphalt deposits which have long been exploited by the natives. And it is probable that this petroleum basin, which also includes Palestine,[49]continues through Syria right to the shores of the Mediterranean. Near Latakia (Laodice) there are asphalt beds, which theLatakia Oil, a British company, has been exploiting since 1915. On the eastern side of the Gulf of Alexandretta, the streams which flow down from Mount Alma bear traces of oil. Thus, it is not surprising that this region has aroused, and still arouses, so much covetousness among the Powers. As early as 1903, theImperial Ottoman Bagdad Railway Company, the famousBagdad Bahn, obtained the grant of the right of exclusive exploitation of all deposits found within adistance of fifty kilometres from its lines. Germany transferred this right to theTurkish Petroleumwhen the latter company was created. The capital of theTurkish Petroleumwas, to begin with,

50 per cent. British;25 per cent. German (Deutsche Bank);25 per cent. Dutch (Royal Dutch).

Germany's share has been handed over to France by Great Britain in order to obtain her support in the struggle against the United States.

As the War broke out almost at once, theTurkish Petroleumhad not time to begin the exploitation of the oils of Mesopotamia. After the new King of Iraq has decided definitely what is to happen to them, it will take nearly five years to develop them fully.

In 1914, an Anglo-German agreement had expressly recognized the rights of France in Asia Minor. These rights, moreover, were respected in all essentials in the agreements between France, Russia, and Great Britain, in 1915 and 1916, for the partition of Asia Minor. This latter, in March 1916, defined French and British zones and French and British spheres of influence. "In a letter of May 15th," wrote the reporter of the Public Works Commission, "Sir Edward Grey requested that, in the zone which was to become French under the Sykes-Picot Agreement, it should be understood thatall existing concessions, navigation rights, and the rights and privileges of all British religious, educational and medical establishments would be maintained."

In a letter of the same date, M. Cambon agreed. By these means France was tricked, for doubtless M. Cambon was not aware at the time that, from June 26, 1914, a British firm, theTurkish Petroleum Company, had obtained from the Turkish Minister of Finance, Saïd Halim, the concession of all rights over oil discovered or to be discovered in the vilayets of Mosul, Basra, and Bagdad.[50]Now, it was just from these three vilayets that the oil in the French zone came; so much so that, by the interpretation of the Franco-British Agreement of May, 1916, France was completely ousted from the oil production of Mesopotamia.

Thanks to Henry Bérenger, a new agreement was concluded between him and Mr. Walter Long in March and April, 1919. Henry Bérenger recalled the agreement made before 1914 between Saïd Halim and theBagdad Bahn, the railway company which had passed into French and British hands since the German defeat. TheTurkish Petroleum Companywas subject to this agreement, because the railway passedthrough its oil-fields. Rights had been reserved for the Germans over half the production of Mesopotamia. "Thus, France obtained 25 per cent. as her half-share of the German rights." Unfortunately, this agreement met with a certain opposition at the Quai d'Orsay. It was held up, and M. Clemenceau did not sign it, "because, on February 8, 1919, after we had ceded Mosul and Palestine at the request of Mr. Lloyd George upon the threefold condition of the oil agreement—whole-hearted British support of the French point of view in the event of American objections—and finally the exact fulfilment of the 1916 treaty concerning the frontiers of Syria, Mosul excepted, our British friends presented to us a map which deprived us of one-third of Syria in addition."

Such was the explanation given to the Chamber by André Tardieu! A certainty was sacrificed for a possibility. M. Henry Bérenger strove to have the treaty revived, and on December 21st signed a new contract with Sir Hamar Greenwood, the British Minister in charge of oil questions, very similar to the Long-Bérenger Agreement, except in the matter of native interests. This time, however, Lloyd George, not considering it advantageous enough to Britain, refused to sign it.

Such was the situation when France went to the Conference of San Remo.

The San Remo Agreement

It was not merely the oil deposits of Mesopotamia that France, in return for a lowly and subordinate participation in British control, was abandoning to Britain—as they would have had the Chamber believe at the time of the noisy debate upon Mosul—but the whole of French oil interests, present and future, whether in the colonies or abroad. The first article of the agreement which Mr. Lloyd George and the real "Grand Master" of British oil policy, Sir John Cadman, presented for signature, stipulated, it is true, that "this memorandum relates to the following States or countries: Rumania, Asia Minor, territories of the old Russian Empire, Galicia, French Colonies," and that the agreement might be extended to other countries by mutual consent; but, of British territories, only "British Crown Colonies" were opened to French co-operation, and then only "so far as existing regulations allow." Thus, London kept an easy method of evasion in reserve. Now, though the British Empire counts many "Dominions," there is not nowadays a large number of "Crown Colonies." The former German Colonies themselves, with one exception, have been handed over to the Commonwealth of Australia, or to New Zealand, or to the Union of South Africa. Thus, apart from former German East Africa and a small strip of theCameroons which France ceded to Nigeria, these will not be open to "Franco-British co-operation."

There is but a single country in which the San Remo Agreement has provided equal treatment for France and Britain, at least in theory; that country is Rumania.

Rumania is the State in which French interests were the most important; they would be increased still more by the spoils of theDeutsche Bankand theDisconto-Gesellschaft. Accordingly, the two Governments pledged themselves to support each other in acquiring concessions which belonged to sequestrated companies, such as theSteaua Romana,Concordia, andVega, and in obtaining fresh concessions. "All shares belonging to former enemy concessions which can be secured and all other advantages derived from these negotiations shall be divided, 50 per cent. to British interests and 50 per cent. to French interests. It is understood that in the company or companies to be formed to undertake the management and the exploitation of the said shares, concessions, and other advantages, the two countries shall have the same proportion of 50 per cent. in all capital subscribed, as well as in representatives on the board, and voting power."

This equality was not a favour, for the French capital invested in Rumanian oil was at least as important as that of Britain.

In the territories of the old Russian Empire, where French interests are much less important than British interests, an equal distribution is not provided for: it would have been to the advantage of France. But it is stated that the two Governments will give their "joint support" to those of their nationals who make "joint efforts" to obtain concessions, and to export and deliver oil. Now, at the present moment, such efforts are being made by theRoyal Dutch-Shellalone, which is even going to the length of proposing to the Soviet Government to restore the oil industry of Russia, if it is granted extra-territoriality for its concessions.

In Mesopotamia, "the British Government undertake to grant to the French Government 25 per cent. of the net output" if the Mesopotamian oil-fields are developed by Government action. If a private company is used, the British Government will place at the disposal of the French Government a share of 25 per cent. in such company. Thus, in the one case France will be simply a consumer of oil, or in the other she will be both a producer and a consumer. The negotiators took care to have inserted that "the price to be paid for such participation shall be no more than that paid by any of the other participants." They remembered the price at which British coal had been sold them!

"It is also understood that the said petroleum company shall beunder permanent British control." Should a private company be constituted, "the native Government or other native interests shall be allowed, if they so desire, to participate up to a maximum of 20 per cent. of the share capital of the said company, the French contributing one-half of the first 10 per cent. of such native participation." With this system, as M. Delaisi has observed, France would subscribe athirdof the capital, upon which condition she would have a right to aquarterof the oil produced.

If Britain consented to give France this share of the Mesopotamian oil, when, according to the document which Sir Edward Grey had got M. Paul Cambon to sign on May 15, 1915, she wasunder no obligationto give anything at all—the more so because France had given up Mosul without previously laying down any conditions about the oil[51]—it was because the present carried with it as a counterpart privileges and exemptions granted by France to theAnglo-Persian, which will have access, if it so desires, to the Mediterranean by pipe-lines across Syria. It will even be able to build railways, refineries, andreservoirs there, and France is pledged to guarantee the security of its installations in her zone without levying any tolls. No export or transit dues are to be levied upon the oil which it sends through French ports.

Finally, while the British Government only opens its "Crown Colonies" to French penetration, and in these restricts the favour to the "territories of the Crown,"[52]with the further condition that the concessions in question are not already the subject of negotiations initiated by private interests, the French Government threw open the whole of its great colonial empire, and undertook to facilitate the acquisition of concessions by "any Franco-British group or groups of good standing." It simply called attention to the fact that Parliament had resolved that, in companies formed for the exploitation of colonial deposits, French interests should be represented in the proportion of 67 per cent. But the French Parliament was under an illusion: in order to have control of a business, it is not sufficient to hold one-half or three-quarters of the shares. Every one knows that, in France, shareholders rarely attend the general meetings which appoint the directors. Still less will they undertake the journey to London, where the head office will almost always be located. They do noteven go to The Hague; this explains why they have no influence in theRoyal Dutch, although they hold more than half its capital. The last increase of capital of theRoyal Dutchwas voted byforty-four persons, representing 218 votes. People did not allow their private arrangements to be disturbed by an event which might have notable results upon the world-future of this trust: not one share in 1,110 was represented.

However, Britain did not wait till the San Remo Agreement was signed before grasping the oil-fields of the French colonial empire: she gained possession of them while the War was being fought!

FOOTNOTES:[45]These facts are still too recent and too controversial for me to be able to make any more detailed reference to them.[46]Agreement signed in London, October 27, 1920. Cp. chap. xi,A State-subsidized Company (the Anglo-Persian).[47]Policy of the "Auxiliary Greek Empire."[48]Revue Universelle, October 15, 1920, Le Page,L'Impérialisme du Pétrole.[49]TheStandard Oilobtained the grant of seven concessions there, to the south of the Dead Sea, which the British are preventing it from exploiting.[50]If he knew of it, there can never have been so serious a diplomatic blunder.[51]One of two things should have been done: either Mosul should only have been given up against the promise of a large share of its production, or Upper Mesopotamia should have been retained, because, even if its deposits had been exploited by British companies, the presence of France would have forced them to reckon with her.[52]This phrase does not appear in the official English text of the San Remo Agreement.—Translator's Note.

FOOTNOTES:

[45]These facts are still too recent and too controversial for me to be able to make any more detailed reference to them.

[46]Agreement signed in London, October 27, 1920. Cp. chap. xi,A State-subsidized Company (the Anglo-Persian).

[47]Policy of the "Auxiliary Greek Empire."

[48]Revue Universelle, October 15, 1920, Le Page,L'Impérialisme du Pétrole.

[49]TheStandard Oilobtained the grant of seven concessions there, to the south of the Dead Sea, which the British are preventing it from exploiting.

[50]If he knew of it, there can never have been so serious a diplomatic blunder.

[51]One of two things should have been done: either Mosul should only have been given up against the promise of a large share of its production, or Upper Mesopotamia should have been retained, because, even if its deposits had been exploited by British companies, the presence of France would have forced them to reckon with her.

[52]This phrase does not appear in the official English text of the San Remo Agreement.—Translator's Note.

CHAPTER XX

GREAT BRITAIN AND THE OIL-FIELDS OF THE FRENCH COLONIAL EMPIRE

As early as July 10, 1914, M. Clémentel had appealed to the French Government to prevent foreign Powers from laying their hands upon the oil deposits of Northern Africa. "At a time when Britain is pursuing in Persia a policy which is well known to you, and when oil concessions are, at bottom, the chief cause of the troubles in Mexico," he exclaimed, "the French Government cannot permit its representatives in Algeria, or in Morocco, to give deposits of oil to all comers."

The Government paid no attention to this, for, two years later, Lord Cowdray (Pearson) had obtained a concession of 730,000 hectares for prospecting, and 101,000 for immediate exploitation. These extensive territories were bounded on the east by the railway from Ténès to Orléansville, on the south by the railway from Orléansville to Relizane and thence to Saint-Lucien, on the west by the lines from Saint-Lucien to Saint-Barbe and from Trelat to Oran, andon the north by the sea between Oran and Ténès. And when, on November 9, 1916, M. Ernest Outrey submitted to the Chamber documents demonstrating how the French Government had proceeded to hand over the oil riches of Algeria without consulting Parliament, M. Marcel Sembat, the Minister for Public Works, deemed the following reply a complete justification:

"If you are dealing with lands where the presence of oil is doubtful and where, according to technical experts, you would have to spend many millions upon prospecting, and if a company says to you 'Here are our guarantees; we have competent technicians, and we are prepared, under Government control, to spend four million francs upon prospecting,' what are you to do?"

When the Pearson firm addressed its request for a concession to the French Government, on January 18, 1915, the Minister, in forwarding it to the Governor of Algeria, did not hesitate to write that "the question would have to be submitted to Parliament."[53]

But he was not long in changing his opinion, and, in order to dispense with Parliament, it was decided to deal with the request "by decree enacted by the Council of State."[54]

On August 18, 1916, before any final decision had been taken upon the matter, M. Marcel Sembat instructed the Governor of Algeria "to give the petitioning company every facility for the sale of oil obtained as a result of the investigations which it may undertake." And, on October 11th, M. Lutaud forwarded to him the following letter from the Prefect of Oran, which pointed out an ingenious method ofevading the law upon concessions:

"In conclusion, M. Dussert (Engineer-in-Chief for Mines at Algiers) proposes, if the Administration should decide not to present a Bill to Parliament, a different solution from that contemplated by the Minister for Public Works. He suggests that an immense mining concession, covering the whole of Dahra, the Bel-Hacel range, and the forest of Mouley-Smaïl, should be granted to Algeria, leaving the colony, from the date of this concession, to give the oil company a three years' lease, renewable for two years, which could be made permanent as soon as the company had selected the lands which it wished to retain."

There followed a report by M. Dussert upon the petition: "This petition is formulated upon entirely abnormal conditions;the boundaries to which it would apply would enclose an area fifteen times as great as the concessions which are usually granted."

What the English desired above everything was toget a grip on these vast lands so as to keep off their American rivals, should important sources of oil be found there later on. The production of oil in Algeria is still insignificant, though it increased almost tenfold between 1914 and 1917. Henceforward, the majority of companies operating there, theSociété co-intéressée des Pétroles algériens, theSociété algérienne des Pétroles de Tiliouanet, theSociété d'Études, de Recherches et d'Exploitation des Pétroles en Algérie, are invariably British. Lord Murray has even been ingenious enough to have inserted in the articles of association of the last-mentioned company a clause which nullifies all the precautions taken by the legislature: two-thirds of the directors are to be French, as the law requires; the managing director is to be French; but "the Board may in addition by special resolution confer powers upon such persons as it deems fit and for such purpose or purposes as it may determine."[55]This little paragraph alone changes the whole aspect of these articles of association, which, on the surface, appear to conform so closely with the requirements of Parliament. The company will entrust its interests to whomsoever it wishes.

But Britain has not been content with seizing thedeposits in Algeria.[56]She has also installed herself in Madagascar. Since June, 1921, theRoyal Dutchhas been making a minute inspection of the fields of Sakalava.[57]

And if the hope to which M. Launay gave expression at the Academy of Sciences is realized, and oil is found in Indo-China, Laos, Tonkin, and Annam, theRoyal Dutch-Shellwill probably waste no time in gaining possession of deposits so near its base.

FOOTNOTES:[53]Letter from the Minister to M. Lutaud, Governor of Algeria, January 27, 1915.[54]Ibid., June 26, 1916.[55]Article 27 of the articles of association of theSociété d'Études, de Recherches, et d'Exploitation des Pétroles en Algérie, registered at Algiers, December 18, 1918.[56]The majority of firms operating in Algeria are British companies registered under French law, just as theMexican Eagle(El Aguila) is a British company registered under Mexican law. The most important is theSociété co-intéressée des Pétroles algériens, which Pearson founded with a capital of ten million francs, and in which he has retained a considerable interest. But the one which has given the best results is theSociété algérienne des Pétroles, de Tiliouanet, whose oil yields 15 per cent. of petrol, 65 per cent. of illuminating oil, and 20 per cent. of paraffin residues.[57]TheRoyal Dutch-Shellcontemplates the formation of a French company with a capital of twenty-five million francs for the exploitation of the oil deposits of Madagascar. This company would take over the concessions of theSakalava Proprietary Oil-fields, which is already working there.

FOOTNOTES:

[53]Letter from the Minister to M. Lutaud, Governor of Algeria, January 27, 1915.

[54]Ibid., June 26, 1916.

[55]Article 27 of the articles of association of theSociété d'Études, de Recherches, et d'Exploitation des Pétroles en Algérie, registered at Algiers, December 18, 1918.

[56]The majority of firms operating in Algeria are British companies registered under French law, just as theMexican Eagle(El Aguila) is a British company registered under Mexican law. The most important is theSociété co-intéressée des Pétroles algériens, which Pearson founded with a capital of ten million francs, and in which he has retained a considerable interest. But the one which has given the best results is theSociété algérienne des Pétroles, de Tiliouanet, whose oil yields 15 per cent. of petrol, 65 per cent. of illuminating oil, and 20 per cent. of paraffin residues.

[57]TheRoyal Dutch-Shellcontemplates the formation of a French company with a capital of twenty-five million francs for the exploitation of the oil deposits of Madagascar. This company would take over the concessions of theSakalava Proprietary Oil-fields, which is already working there.

CHAPTER XXI

THESTANDARDAND FRANCE

On May 17, 1921, Mr. Hughes Wallace, the United States Ambassador, handed to France an official statement of his Government's grievances. He pointed out all the obstacles which American companies encountered in France, and asserted thatBritish companies did not meet with the same difficulties.

Now, as Mr. Hughes Wallace observed, France needed ten times the quantity of mazut that she was getting, and many French factories were idle for want of fuel. Thus there was room in the French market for both British and American firms. Mr. Wallace therefore asked that they should be treated on an equal footing.

M. Laurent Eynac, under whom the Commissariat for Petrol had been re-established, without mentioning the Agreement which bound him to the British, replied by putting all the blame on the inevitable delays of official inquiries, which were "the same for everybody."

But a few days afterwards,Le Tempspublished an incomplete summary of the San Remo Agreement;it did not give the official text till July 25th.

The United States now understood the reasons for the attitude of silent hostility which France had adopted towards American oil companies. The San Remo Agreement aroused grave anxiety in Washington. President Harding displayed very clearly his intention not to tolerate such a policy. He made representations to the British and French Governments and protested against the exclusion of America from the Franco-British partition of the oil of Asia; he declared firmly that the British monopoly countersigned by France at San Remo was not to be tolerated, and that United States citizens were not to be ousted through the complacency of France towards the imperialism of London. TheWashington Postwrote as follows: "Oil is indispensable to America, and American companies only provide inadequate quantities at excessive prices. The complacent arrangement between France and Britain for the partition of the oil resources of lands which are not in their possession is subject to revision upon the request of the United States, intent on the pursuit of their naval policy."

By subservience to British policy in the East, France was to reap the enmity of the United States. Its effects were soon felt, for, at the Brussels Conference in the following October, the "unofficial" delegate of the American Government declared thathis country would not participate in any international loan for the capitalization of the German indemnity. This was one hope definitely lost, upon which France had long been relying. The same thing happened with the repayment of the French debt to the United States: France fondly hoped that the Americans would renounce what they had lent her during the War, just as Louis XVI renounced the millions which he advanced to their infant Republic, but when President Harding was sounded indirectly upon the subject, he returned a pointed refusal.

The French Government recognized somewhat tardily the mistakes which it had committed, and, when Mr. Bedford came to Paris in the autumn to found theStandard Franco-Américaine, it allowed M. Jules Cambon to accept the presidency. To get round the eviction order which has been served upon them in the Near East and the French colonial empire, the United States adopted the ingenious method of founding a French company, which will have just as good a right as theSociété pour l'Exploitation des Pétrolesto share in any concessions reserved to France. Abandoning the high-handed policy, which played the game of its opponents, theStandard, upon the advice of Walter Teagle, decided to employ the insinuating methods of the Anglo-Dutch trust. In France, theRoyal Dutchrelied upon theBanque de l'Union Parisienne, theBanque Bénard, theBanqueRothschild, and also, it is said, theCrédit Lyonnais. TheAnglo-Persianhad the support of theBanque Transatlantiqueand theBanque de la Seine. TheStandardnow allied itself with theBanque de Paris, the most powerful of the commercial banks in Europe.

51 per cent. of the capital of theStandard Franco-Américaine(20 million francs) was subscribed by theBanque de Paris et des Pays-Bas, and 49 per cent. by the American Trust. And in the constitution of the Board, theStandardacted much more prudently than theRoyal Dutch: five out of eight directors were French.

Mr. Bedford, the actual head of theStandard Oil, went so far as to content himself with the vice-presidency, leaving the first place to a Frenchman.

The establishment of theStandard Franco-Américaineat this time was the more hazardous because M. Laurent Eynac, taking up the former Klotz-Bérenger program, was working for a definite State monopoly of the purchase and importation of oil. But the French market is of such importance to theStandard Oilin its struggle with theRoyal Dutchthat it preferred to take all the risks. "France," Mr. Bedford said, "on account of its geographical situation, is naturally a field for competition among all great companies." TheStandarddesires to have its place there. It proposes to resuscitate the refiningindustry, which has almost passed out of existence, and set up great warehouses in the ports to receive the crude oil; and it would even go to the length of installing special reservoirs of petrol for supplying motor vehicles in the neighbourhood of the municipal toll-houses.

Events have turned in its favour, for the idea of monopoly is to-day thoroughly discredited in France. M. Laurent Eynac was obliged hurriedly to withdraw his proposal owing to the commotion which it aroused. An extremely violent Press campaign broke out, and the political and diplomatic dangers of the San Remo Agreement became plain to every eye.

The present diplomatic situation is strangely like that of Fashoda. In 1905, France was at one of the turning-points of her history: she had to choose between the two Powers which had hitherto been her hereditary enemies. She decided to follow the British, and not the German, policy. Will she have to choose between the British policy and the American policy—between the two countries which helped her to emerge victorious from the great world conflict?

CHAPTER XXII

CONCLUSION

The World in 1923

The political independence of a people may sometimes be nothing but a sham. France, having neglected to obtain her share in the division of the world's oil, is to-day in a position of dependence upon Britain and America. If, to-morrow, she had to defend herself against a fresh attack, her tanks, her aeroplanes, her submarines, and the whole of her supply services could only function by consent of her Allies. Even with the first army in the world, France could be victorious only if Britain and the United States permitted.[58]

Already in time of peace, nations without oil were in a position of considerable inferiority, in view of the hundreds of uses to which oil is put in industry, and especially in the important sphere of the transport and distribution of commodities. There is no true independence for a people but that which is assured economically and financially. Military supremacy is only the happy result of proper efforts undertaken to attain it. During the War, such independence was to be desired for France even more than during peace: it would have avoided the heavy debts which she incurred to her Allies, and it would have enabled her to exploit herself the resources at home and in the colonies which she has been compelled to hand over to foreigners.

Before the War, France consumed more than 400,000 tons of oil a year. To-day, she requires 1,500,000, and the oil wells of Alsace, which the Treaty of Versailles has restored to her, produce only 60,000 tons, and Algeria 3,000-4,000 tons.[59]Thus, she is obliged to pay the foreigner nearly 2,000 million francs a year in order to obtain the oil which she lacks.

Nevertheless, there is almost certainly oil in France, in the Ain valley, the Jura Mountains, Auvergne, and the Landes; there is oil in the French possessions in Northern Africa and in Madagascar; there must be some in the Cameroons, in Indo-China, and in New Caledonia. Is it not abnormal that the West Indies and Guiana, when in British or American hands, produce oil, but when in French handsnever yield anything? The same applies to Oceania. But there is no reason to be astonished at this; for, under the legislation which was in force since 1810, no Frenchman had any inducement to search for oil. This explains the epigram of one of the most important members of the French cartel, when he declared that "the greatest misfortune that could happen to an oil magnate in France would be to discover a spring of oil." Happily, on March 22, 1922, the Chamber altered this state of affairs by granting, as was suggested in the first edition of this book, the guarantees which are indispensable to prospectors. Till that year, the exploitation of deposits which a prospector had discovered might be conceded to any foreign company which came on the scene at the right moment to reap the fruits of his labours. Repayment of money laid out was highly problematical, for the local authorities used to grant this only to those responsible for the final investigations leading directly to the discovery of oil. Now, hunting for a "wild cat"—the American term for a boring—is a very risky operation, which entails considerable expenditure. In a protest submitted to the Ministry of Public Works by five Algerian colonists, who had carried out explorations and borings upon land for which a concession was now asked by a company of foreign origin, the colonists stated by affidavit that they had spent 870,000 francs upon 14 borings and85 wells, of which seven alone were actually producing a few tons of petroleum. Even so, the proportion of seven successful wells out of 85 is rather high. O'Donnell, the president of the American Petroleum Institute, estimates that, out of every hundred borings made, 98 are unprofitable. But for fifty years the 2 per cent. which succeeded sufficed for the consumption of the world.

The policy of France in the Near East since the War has been simply one long suicide. Little by little, French diplomacy has abandoned everything that was promised by the agreements of London. While the San Remo Agreement marked the complete downfall of France in Asia, it considerably strengthened the position of Britain: not only does it recognize all rights acquired by Great Britain, including those which, as in Mesopotamia, rested upon a highly insecure foundation, but it gives British capitalists an important opening in French colonies which are still almost untouched, whereas the corresponding advantages which it confers upon France in some (not all) British colonies apply to territories where the most desirable fields are already being exploited.

France is paying for her past inertia.

If the Allies have to thank the two great trusts for enabling them to get their supplies of oil during the War, the latter in return have notably increased their power. The defeat of the Central Empires hasbrought about the ruin of their rival, theEuropeanische Petroleum Union, and the destruction of the network of interests which Germany had succeeded in spreading over Galicia, Rumania, Russia, and Turkey.

The ambition of theRoyal Dutchsince it linked its fortunes with those of the British Empire knows no bounds. Its latest success at Djambi has now spurred it to ask the Netherlands Government for a monopoly of exploitation in all the Sunda Islands. It has almost reached the point of eliminating its American rival completely from the Far East.

TheStandardretaliates, and sends prospectors wherever they are admitted—to Abyssinia (January 1921), Peru, Colombia, the Philippines, Bolivia. It has gained a footing in the Azores, and in July 1922 was trying in Ecuador to acquire control of theLobitosfrom theAnglo-Ecuadorian. It is actively cultivating the Government of Czecho-Slovakia for the grant of exclusive rights of exploitation, and it has obtained from the Italian Government a concession for the oil deposits of San Saba, near Trieste. But the Chinese Government has refused the permanent agreement which it proposed.

Walter Teagle wishes theStandard, like theRoyal Dutch-Shell, to become a producer of oil and not to content itself with the mere control of refining and distribution. But the time is long past when Rockefeller controlled 95 per cent. of the sales of oil in the United States. Although theStandard'scapital has risen to $1,310,000,000 and the number of its subsidiaries to 62 it now refines only 49 per cent. of American oil. In the United States there are forty-four independent companies, representing a capital of two thousand million dollars, which carry on, not only the extraction, but also the transport, refining, and sale of oil. Still more serious, the Anglo-Dutch trust has succeeded in establishing itself on the territory of the Union itself; at a recent congress of the American Petroleum Institute, Walter Teagle showed that theRoyal Dutch-Shelldrew 43 per cent. of its total production from the United States. Be that as it may, theStandard, in America, is always regarded as the great national champion, upon which falls the task of fighting theRoyal Dutchand the British Empire, which have laid plans for depriving the United States of their supremacy in oil.Who attacks theStandardattacks the Washington Government directly. And in Europe it still occupies a strong position through its various subsidiary companies.The struggle for oil is no longer a rivalry between great trusts; it is a struggle between nations.

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