Oil Controversy: Oil Controversy

Last week in London Sir Henri Wilhelm August Deterding, director-general of the Royal Dutch-Shell group of oil companies, gave evidence of a world-spread conflict for oil sources and oil markets. The

Vacuum Oil Co. and the Standard Oil Company of New York had made contracts to buy Russian oil which Sir Henri’s company had wished to monopolize (TIME, July 25). Sir Henry expostulated.

Standard Oil of New Jersey. President Walter Clark Teagle of Standard of N. J. was first to protest when Vacuum Oil’s and Standard of N. Y.’s Russian coup became public knowledge three weeks ago. President Teagle has long been an intimate friend of Sir Henri Deterding. Their companies carefully forbear intruding into each other’s markets. Said President Teagle: “The impression has been created, both in Europe and in this country, that the Standard Oil Co. of New Jersey, in the face of the present overproduction in the U. S., is buying Russian oil to displace products of American origin in the European markets supplied in part by its foreign subsidiaries. The impression that the Standard Co. of New Jersey has any trade relations with the Soviet government is incorrect. . . .” This said, President Teagle sailed on his 55th trip to Europe. Last week he was in Paris.

Vacuum Oil. President George P. Whaley of the Vacuum Oil Co. was offended by President Teagle’s criticism. Promptly he retorted:

“There are those who hold it unrighteous to buy petroleum from Russia on the theory that to do so would be to purchase goods wrongfullyconfiscated from Russian subjects by the present governing power. If that view should generally prevail, then Russia could export nothing, as not only petroleum but other industries in Russiawere nationalized. Is it more unrighteous to buy from Russia than to sell to it? Considerable purchases are made by Russia in the United States of cotton and other products.

“The Vacuum Oil Co. believes that trade contacts with Russia will make for wholesome reconstruction, and, further, that it is only common sense to recognize that Russia is the economic source of supply for certain markets. An opportunity given to Russia to dispose of some of its surplus in its natural markets will avoid such surplus being forced into competition with American products in markets where transportation costs are in favor of the United States.”*

Standard Oil of New York. President Herbert Lee Pratt of Standard of N. Y., as is his habit in controversy, said nothing. He was waiting, his office announced last week, for the return from Europe of Charles Evans Hughes who advises him on trade relations with the Russian Soviets. Despite this announcement, President Pratt sailed with his family on the Aquitania last week for a holiday on a grouse moor which he has rented in Scotland.

Royal Dutch-Shell. But President Whaley’s statement was sufficient for Director-General Sir Henri Deterding of Royal Dutch-Shell. Since his companies could not monopolize Russian oil production, he has been disparaging Soviet oil. British retailers of such Russian oil have had to undergo price-cutting, trade repressions. The London Daily Mail, notably, has badgered them mercilessly.

It seemed chiefly for “home” ears that he took up President Whaley’s remarks and replied last week:

“Whether in the Black Sea and Mediterranean areas it may replace Rumanian oil has nothing to do with the question. That argument belongs to the red herring class unless Vacuum Oil Co. believes (which she does not) that because the Vacuum or the Standard of New York have decided to give (in their trade) Russian oil a preference over Rumanian oil, the Rumanian producers are going to curtail their production. . . .

“Why do not the Vacuum and Standard of New York state the truth, namely, that, as they fancy it pays them better to deal in cheap Russian oil, they do not care for the rest of the world and especially not for the American oil producers, as Vacuum looks upon the whole matter from the point of view that they are oil traders wishing to buy in the cheapest market and are not concerned with the American crude production? From an exclusively trading point of view this position only seems to be right, but it is a short view and the folly of it is bound to be shown in the future. Shortsighted people run greater risk of being run over by the traffic than those who have good eyes. . . .”

This said, Sir Henri hastened from London to Paris where last week, he held a private confabulation with his good friend Walter Clark Teagle.

* It requires 17 days to ship oil from U. S. ports to those near East communitieswhich Vacuum Oil and Standard of N. Y. intend to supply with the oil they buy from Russia.