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The British Oil Empire

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

HOW THE UNITED STATES LOST SUPREMACY OVER OIL

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 , 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 ; 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 . 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.

Million barrels. Canada: the whole of the deposits are reserved for British control 995 Algeria, Egypt: 50 per cent. 462.5 Persia, Mesopotamia: 75 per cent. 4,365 S.E. Russia, S.W. Siberia, Caucasus: 50 per cent. 2,925 Rumania, Galicia, Europe: 50 per cent. 1,567.5 New Russia and Sakhaline: 50 per cent. 462.5 Dutch Indies: 50 per cent. 753.75 India: the whole 995

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 S?vres 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 of small 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.

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

The United States sacrificed themselves in the cause of the Allies during the War. 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.

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?

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:--

Meantime the San Remo Agreement had been signed, 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

"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.

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 Struggle for Djambi

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."

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.

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. "Not so!" 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:--

Lima, Indiana 93 per cent. Appalachian 70 per cent. Colorado 65 per cent. Illinois 51 per cent.

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.

Lord Curzon, moreover, sweeps aside all statistics with a disdainful gesture. We cannot trust their accuracy, he says. But this gesture did not impress the United States; they were determined to obtain satisfaction at any price.

FOOTNOTES:

THE AMERICAN RETORT

The United States began to retort by feverishly carrying out a naval program which aimed at depriving Great Britain of the supremacy of the sea. They built an immense merchant marine, which already numbered, on June 30, 1920, more than 28,000 ships. And their dockyards were busy constructing battleships more powerful than those of Britain. At the Washington Conference, Great Britain was obliged to renounce her claim to the sole naval supremacy. Besides, she could not have continued to struggle for it. The United States can devote hundreds of millions of pounds to their fleet without inconvenience, but Great Britain, who has suffered more from the War, and whose budget--if we are to believe her statesmen--is balanced with difficulty, could not do so. The British people are so over-burdened with taxation that it would be impossible to obtain more from them.

Now, if the American fleet is in a position to prevent access to the American coast and to the Gulf of Mexico, its adversaries may have the most powerful battleships in their naval bases and the most imposing reserves of motor-lorries and aeroplanes in their depots, yet all these forces, in the present state of oil production, run the risk of being paralysed for want of sufficient supplies.

The system of reciprocity was inaugurated by President Harding. Governments which allow free competition to American companies receive the like treatment.

Thus, the threats uttered by Walter Teagle at the meeting of the American Petroleum Institute in 1920 are beginning to be put into execution: "If foreign Governments insist on carrying out their policy of nationalizing oil-bearing territory, if they insist on keeping petroleum deposits for their own future profit, at the same time demanding from the United States the satisfaction of their present needs, then there is no alternative for us but to take note of their attitude and, as a means of self-protection, to examine the methods of preserving our own oil for our own needs. Given their position in the world's commerce and the economic and financial weapons they have in their hands, the United States could certainly compel other countries to a redistribution of oil-bearing land, so as to obtain a part of those territories which these countries wish to keep for themselves."

FOOTNOTES:

FROM WASHINGTON TO GENOA

The Struggle for the Oil-fields of Russia

The question of oil is the primary political question of the present age, but in this Conference at which the future of Europe was to be enacted, France was the only nation which seemed not to notice the fact.

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