Ensuing discussion may be summarized as follows: Weygand 50 said that he understood British proposal to mean that the building of this airship for the United States should not be an argument to maintain the present Aeronautical Commission of Control in Germany but the Principal Allied Powers are now negotiating between themselves with a view to substituting for the present big commission of control a smaller one and he hoped that there would be no gap in the workings of these commissions as it is absolutely necessary that some sort of control should go on at all times. Cheetham 51 said that he was in accord with Weygand's explanation and only wanted to insist on the point that the construction of this dirigible should not be used as an argument for maintaining present commission of control in Germany. Cambon observed that neither did French wish British proposal [to] be used as an argument to have no control whatever.

Our resolution was then adopted subject to the above-mentioned amendment and understanding.

HERRICK

811.348 Z 4/90: Telegram

The Secretary of State to the Ambassador in France (Herrick)

WASHINGTON, December 23, 1921-6 p.m.

560. Your 685, December 16, 6 p.m.

Department informed that Captain F. B. Upham, Naval Attaché your Embassy, has been designated by Navy Department as its representative in all matters dealing with the construction of this airship. The conditions and specifications required by the Navy Department are being sent him direct. You are requested if necessary to support him in the conduct of his negotiations and to notify the Conference of Ambassadors of his designation. Inform Berlin.

HUGHES

Gen. Maxime Weygand, representing Marshal Foch, president of the Allied Military Committee.

"Sir Milne Cheetham, British minister plenipotentiary, British representative on the Conference of Ambassadors.

GREAT BRITAIN

PROTEST BY THE BRITISH AMBASSADOR AGAINST AMERICAN ALLEGATIONS OF UNFAIR BRITISH COMPETITION FOR CONTROL OF IMPORTANT SOURCES OF PETROLEUM

841.6363/143

The British Ambassador (Geddes) to the Secretary of State

No. 292

WASHINGTON, April 20, 1921. MY DEAR MR. SECRETARY: I know how great is the importance which you attach to the existence of cordiality and understanding between the peoples of the United States of America and the British Empire. I therefore without hesitation venture to approach you on a matter which appears to me to be of importance in connection with the feelings of friendship existing between our respective countries. It is I believe common knowledge that on numerous occasions articles and paragraphs have appeared in American newspapers and magazines indicating that the British Government was making determined efforts to secure for the British people control over an unduly large share of the world's oil resources. Somewhat similar statements have been made in the Congress of the United States and assertions have not been lacking that the British Government was attempting to secure, or had already secured, a dominating position in the petroleum industry. Facts and figures adequate to support such assertions have never to my knowledge been included in the articles and speeches which contained them. After the most careful enquiries I have failed to find either in the official information at the disposal of the British Government or in unofficial information gathered from all available sources any solid foundation for the statements and assertions to which I have referred.

Realizing the risk of friction which might attend serious misapprehension on the important subject of the relations of Governments to the petroleum industry, I have followed the example of my predecessors and have attempted whenever opportunity offered to dispel misapprehension regarding the position and interests of the British Government and to assure your predecessors and the Department of State that the allegations to which I have referred are devoid of foundation in fact.

This subject does not lose importance with the lapse of time and I am led to address you upon it now by an indication that many misapprehensions as to the facts still persist in the mind of a member of the American Government, in spite of the fact that so recently as the 13th of January of this year I formally informed the Acting Secretary of State of the United States of the British Government's position with regard to these matters. I understand fully the practical difficulty of maintaining the continuity of Government knowledge at a time of change of Government personnel and this letter is written, therefore, in no spirit of criticism but from a desire to dispel misunderstanding.

I desire to direct your attention to the report appearing in the Congressional Record of April 12th, Vol. 61, No. 2., pages 81 to 90," of the debate which took place in the United States Senate on the 12th instant, regarding the ratification of the Treaty of April 6th, 1914, with the Republic of Colombia.2 Incorporated with the speech made on that occasion by the Senator from Massachusetts (Mr. Lodge) is the text of a letter addressed to him on March 21st, 1921, by the Secretary of the Interior, dealing largely with the petroleum question. That letter contains several statements based on misinformation and I feel it my duty to bring them to your notice with the request that you may be good enough to place the Secretary of the Interior in possession of the true facts.

After having stressed the seriousness of the oil question from the American point of view, Mr. Fall's letter contains the following paragraphs:

"Other nations are aware of the seriousness of the situation and Great Britain learned at least one lesson from the recent war. That is to say, that the nation which controlled the oil industry controlled commerce by sea, in view of the fact that no coal burner can compete with an oil-burning ship.

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Realizing this, Great Britain, the nation, has within the last two years particularly followed a policy which she had adopted in many of her provinces many years ago; that is, of excluding Americans from or placing heavy burdens upon such Americans or other foreigners in any British oil field."

This statement appears to me to be misleading.

In the United Kingdom itself there is no restriction whatever on the exploitation of possible oil-bearing lands by foreigners or foreign companies. A regulation (No. 30 BB) which had been introduced during the war, under the Defence of the Realm Act, restricting the participation of foreigners in British oil under

1 No record of this communication in Department files.

1a

Vol. 61, pt. 1, pp. 157-168.

'Foreign Relations, 1914, p. 163.

takings was aimed at preventing the indirect exercise of enemy influence. It has long since been withdrawn-a fact of which the Department of State was duly apprized.

In Canada the annual production is only about 34,000 tons, which meets but a small proportion of the Dominion's needs. The regulations, generally speaking, require simply that operating companies shall be registered or licensed in Canada, and have their principal place of business within the British Empire. It is, perhaps, worthy of note that the most active company in Canada, both in regard to imports and prospecting work, is Imperial Oil Limited, a subsidiary of the Standard Oil Company of New Jersey.

Since 1883, prospecting or mining leases in India have been granted only to British Companies, but the production of petroleum in that country is only about 1,200,000 tons per annum, a quantity which falls short of the country's requirements.

In Trinidad there is no nationality restriction in the case of private lands. The lessees of Crown lands, however, must be British subjects or British controlled companies. Exception has, however, been made in the case of a particular American Company which has been permitted to lease certain Crown lands in that Colony. Similar regulations apply [in British Guiana, British Honduras, Nigeria, Kenya Colony and Brunei. On the other hand, there are no nationality restrictions whatever] in Jamaica, Barbadoes, Sarawak, Somaliland, British Honduras, British North Borneo and Egypt, in all of which countries prospecting operations have been, or are being, carried on. These are the main facts with regard to the regulations governing the exploitation of oil lands in British territory and they appear to me entirely to disprove the assertion that the British Government have deliberately adopted a policy" of excluding Americans from or placing heavy burdens upon such Americans or other foreigners in any British oil field".

4

Even in the case of India, where certain restrictive regulations exist, it will be observed that those regulations have been in effect for nearly 40 years. When they were introduced, the oil situation was very different from that now prevailing and the problem was not so much to find new sources of oil as to secure markets for that already produced. There was real danger that oil-lands might be taken up by large foreign oil companies and kept unworked so that prices might be maintained.

Section in brackets added in accordance with note of July 27 from the British Embassy (file no. 841.6363/170).

'By note of Aug. 8 the British Embassy informed the Department that the second mention of "British Honduras was due to a typist's error and requested its deletion (file no. 841.6363/171).

The next two paragraphs of the Secretary of the Interior's letter are quoted as follows:

"Within the last two years however, taught by the lessons of the war, Great Britain has deliberately pursued a policy of obtaining governmental control of all the great oil companies in which British subjects had been interested, and, going beyond this has secured practical, if not sole, control of the great 'Royal Dutch-Shell' and other foreign companies, particularly through what is known as the "Royal Dutch-Shell Group' combine, which was effected in January 1907.

Of course, it is impossible to give exact figures, but our government, through at least two of its departments, has information satisfactory beyond question that the British Government actually controls the Royal Dutch-Shell' combine, sixty per cent of the stock of which is owned by the Royal Dutch' and forty per cent of whose stock was owned by the Shell Transport & Trading Company, Ltd.”

The meaning which I understand these paragraphs to convey is that the British Government has a direct controlling financial interest in the Royal Dutch Shell group of companies. If there were any doubt as to this being the correct interpretation to place on the Secretary's words it is dispelled by the following dialogue which took place between the Senator from Massachusetts and the Senator from Indiana in the course of the debate:

66

Mr. WATSON of Indiana: The Senator says that England controls the Royal Dutch Shell group. Does he mean by that the Government of England or citizens of England?' Mr. LODGE: The Government ’.

Mr. WATSON of Indiana: The Government itself?"

Mr. LODGE: The Government has sixty per cent of the stock of the Royal Dutch and forty per cent of the Shell, I think. It may be the reverse, but it controls both. Of course, the Royal Shell is an English corporation. In the Royal Dutch the Government has the absolute control of sixty per cent; at least, that is the report in response to the enquiry of our Government."

It is difficult to understand how, in the face of repeated denials by the British Government and by the companies concerned, as well as in the face of formal statements made by me to the Secretary of State of the United States, these errors come to be perpetuated and I would ask you to inform the Secretary of the Interior and any others who may be seeking the truth in this matter, that the British Government have no financial interest whatever, directly or indirectly, in the Royal Dutch-Shell group. The controlling interest in this group is Dutch and not British.

I now pass to what I regard as the most serious point raised at this time and I quote the following passages from the printed copy of Mr. Fall's letter to Senator Lodge:—