Read Ebook: The Roman Traitor Vol. 2 by Herbert Henry William

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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.

The Quai d'Orsay had not deigned to appoint a single oil expert to Genoa. More than that, I am in a position to state that the only one of the French delegates who was acquainted with the oil question had received precise instructions before his departure to keep strictly aloof from all discussions about oil. It was, of course, manifestly impossible to expect to settle the question of Russia's oil at Genoa in the absence of any representative of the United States. The French delegation therefore held only a watching brief.

The Cabinet, however, had decided that he alone should be attached to the delegation in an official capacity. And it was not until the afternoon of the day upon which it made this decision that it recognized the necessity of adding M. Pincan, the very able director of the Oil and Petrol Department of the Ministry of Commerce, on account of the fact that M. Eynac for over a year had been out of touch with his former colleagues.

The French delegation adopted the Belgian point of view upon the restitution of private property, and energetically defended French pre-War interests in Russian oil, which, in December 1920, represented a value of 200 million francs. A common policy was elaborated in conjunction with the principal Belgian oil companies, whose importance in the Caucasus equalled our own, with a view to the defence of rights acquired before and after the nationalization of mines and factories by the Soviets. In order to obtain absolute equality of treatment for French interests in the Caucasus, M. Laurent Eynac very pointedly called the British Government's attention to the stipulations of the San Remo Agreement. He relied upon Article 2 of the Agreement, based upon the principle of cordial co-operation and reciprocity in all countries where the oil interests of France and Britain can in practice be combined, and upon Article 6, which runs thus:

In the territories which belonged to the late Russian Empire the two Governments will give their joint support to their respective nationals in their joint efforts to obtain petroleum concessions and facilities to export and to arrange delivery of petroleum supplies.

If, in the light of these explanations, one appreciates the threat of monopoly contained in the insertion, at the instance of the British delegation, of Clause 7 in the Memorandum of May 2, 1922, stipulating that in cases where the exploitation of property formerly belonging to foreigners could be assured only by incorporating them in a general group, the preferential right to the restitution of the property should not apply, one is driven to wonder what in such circumstances has become of the cordial "Franco-British co-operation" spoken of in the San Remo preamble. Would it not be merely an empty formula?

The Russian Soviet Government is prepared to give consideration to a proposal by which the sale of all oil products available for export from the various oil-fields of Russia would be placed in the hands of a syndicate formed upon the following basis:--

The initial capital will be provided by equal contributions from the Russian Government and the foreign group.

The management of the syndicate will have control of all sales and will be entrusted to a Council composed of an equal number of representatives of the Russian Government and the foreign group.

The syndicate will be responsible to the Russian Government for the most favourable sale of oil products possible. In order to derive the maximum advantage from such sale, the syndicate will provide or within an agreed period create the necessary distributive organization, which will entail a certain capital expenditure.

It is suggested that the capital thus required be raised by the issue of bonds bearing a fixed rate of interest.

Payment of the interest upon these bonds will be guaranteed by the foreign group.

The syndicate will receive, as remuneration for its activities, a certain commission upon all sales, which commission will be fixed upon a sliding scale according to the quantities sold.

For quantities not exceeding 100,000 tons 5 per cent. is suggested; for larger quantities a proportionate rate will be arranged by mutual agreement. Furthermore, it is understood that any surplus realized by the sale of Russian oil over and above the export price of the American market will belong entirely to the syndicate.

After meeting working expenses, the profits thus realized will be applied in the first place to the payment of the interest upon any bonds which the syndicate may issue, and the balance will be divided equally between the two parties to the syndicate, i.e., the Russian Government and the foreign group.

These arrangements will hold good for five years certain, after which period the Russian Government will have the right to redeem the bonds at the price of issue or upon such other terms as may be stipulated at the time of issue, and to terminate the agreement. The Russian Government, however, will be obliged to give one year's notice at the end of the fourth year if it desires to terminate the agreement. In default of such notice, the agreement will hold good for another period of five years.

It is understood that the Russian Government reserves the right at any time to sell oil products directly to foreign Governments, but such sales will in no case exceed 50 per cent. of the total quantity available for export in any year.

The success of the syndicate will depend entirely in the early stages upon transport facilities between the places where the stocks of oil products are available and the ports of embarkation. Unfortunately, at the present time these facilities are in some measure lacking, and with a view to remedying the situation, the foreign party to the syndicate will be required to invest at least ?500,000 in the transport system. This sum, as well as all other sums mentioned below, will be guaranteed by the Russian Government, and in case of necessity will be secured upon the stocks of Russian oil.

This money will be used for the purchase of the necessary rolling stock, for the maintenance of pipe-lines, and, if required, for the installation of new pipe-lines for the various products.

Against the sums thus employed, transport bonds will be issued bearing interest at the rate of 8 per cent.; furthermore, these bonds will carry the right to a bonus, the amount of which will be determined by the quantity of oil products transported over and above a pre-arranged quantity.

The amount of this bonus will be fixed by mutual agreement, and will take the form of an agreed tax upon each pool of oil products transported in Russia over and above a pre-arranged quantity.

Payment of the interest upon these bonds will be guaranteed by the Russian Government, and in case of necessity will be secured upon the existing stocks of oil.

The transport organization thus formed by the rolling stock to be acquired and by that which is at present available will be under the management of a Council composed of an equal number of delegates of the Russian and the foreign group.

All rolling stock and everything belonging to this joint undertaking will be exempt from requisition or confiscation whether by the Central Government or by local authorities.

The Council of the undertaking will be free to appeal for qualified foreign workmen, and in general to administer and manage the business in the best interests of the enterprise and the objects it has in view.

Any additional capital which may be required will be provided by equal contributions from the Russian Government and the foreign group.

Such additional capital will be raised by the issue of bonds bearing interest at a rate to be fixed by mutual agreement at the time of issue, the Russian Government being responsible for the subscription of one-half of the issue and the foreign group for the subscription of the other half.

These bonds will carry the right to a bonus in the same way as the bonds mentioned above.

The activities of the Council of the joint undertaking will be subject to all laws and decrees of the Russian Socialist Federal Soviet Republic and to all regulations which may be in force.

Of all the employ?s of the syndicate in Russia, 50 per cent. only may be non-Russian.

If an agreement upon this basis is deemed possible, the foreign group will have the right to appoint representatives in Russia to examine conditions of transport, to take samples of existing stocks, etc.

After the expiry of ten years the Russian Government will be free to redeem the transport bonds at the price of issue or upon such other terms as may be stipulated at the time of issue.

It is clearly understood that these terms will provide for certain bonuses at the time of redemption to be calculated upon the average profits of the joint enterprise during the last two years of its operations.

The Russian Government will signify its intention to redeem these bonds by the end of the ninth year at latest.

But, in spite of everything, I believe in the future of the British people, one of whose leaders was not afraid to say, twenty years before Germany had begun to dream of European hegemony: "I believe in this race, one of the greatest governing races the world has ever known, this Anglo-Saxon race, proud, tenacious, self-confident, resolute, which no climate and no vicissitude can corrupt, and which will infallibly be the predominant force in future history."

FOOTNOTES:

PART IV

FRANCE'S PART IN THE STRUGGLE BETWEEN GREAT BRITAIN AND THE UNITED STATES

THE CARTEL OF TEN

In this bitter struggle between Britain and the United States for dominion over the world's oil, what is France's position? France as yet possesses very little oil, although petroleum has been found in various parts of her colonial empire and that of Alsace has been restored to her; but on account of her political importance, she is a "second" who may decide the victory. Hence the efforts made by the two great Anglo-Saxon nations for her alliance.

After 1870, there was no free competition in petroleum in France. The industry fell into the hands of the great firms which, sheltered behind the customs barriers established by the National Assembly at Versailles immediately after the Commune, formed a cartel enjoying a veritable monopoly, and apportioning the different regions of France. These ten firms did not compete. They fixed their prices in agreement and shared among themselves the quantities to be sold. It would have been impossible for an eleventh to establish itself in France without their consent. In the original cartel of 1885 there were only three members; round these the other existing refineries grouped themselves in 1893. Thus the Cartel of Ten was formed:--

FOOTNOTES:

THE PETROLEUM CONSORTIUM

At the beginning of the War, the French State possessed no reserves of petrol or petroleum: a new example of the unpreparedness so often remarked!

The "refineries" disposed of a stock amounting at the end of July 1914, according to the Customs statistics, to:--

To meet the earliest needs, these were requisitioned. But, from the month of September, this method was changed for that of contracts with the "Ten." The cartel undertook to meet the needs of France; it made itself responsible for purchases from abroad. The State was thus a mere customer enjoying the rights of priority over other customers.

The consumption was then unimportant. At the time of the first battle of the Marne, France had 22 squadrons of 6 aeroplanes , with engines of 80 or 100 horse-power; 110 motor-lorries and 50 tractors . The Germans had 70,000!

Tons. Tons. 1914 200,000 } 476,000 1914 276,000 } 1915 457,000 1916 640,000 1917 610,000 1918 1,000,000

During the month of October 1918, alone, the consumption of the Allied armies was:--

French 39,000 tons American 20,000 tons British 32,000 tons

After the Cartel of Ten was obliged to confess its impotence in the midst of a crisis which nearly lost the War, its work was limited to putting into good condition the products bought and stored by the State. Its r?le had become singularly unimportant when the Minister of Commerce transformed it into a consortium.

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