The Chargé in Egypt ( Winship ) to the Secretary of State

No. 14

Sir: I have the honor to refer to previous correspondence regarding the representations made by the Vacuum Oil Company to the Egyptian Government regarding discrimination against the established oil companies in permitting the practice of floating petroleum storage in Alexandria Harbor, and to report as follows:

Before leaving Cairo I mentioned the case to Lord Lloyd and added that the Vacuum Oil Company’s representative wished the cooperation of the Asiatic Petroleum Company and British support in the presentation of their claim to the Public Security Department of the Ministry of Finance; later Mr. Hodgson also talked to Lord Lloyd on the subject and Mr. Henderson was advised by Lord Lloyd of the desirability of an informal conference as soon as conditions permitted.

On July 16th therefore a conference was called by Cecil Campbell, Acting Financial Adviser to the Egyptian Government, and held at the British Residency. Those present were: Mr. Henderson, Acting High Commissioner, Mr. Wallenger, III Secretary at the Residency, Mr. Campbell, Mr. Lang, Petroleum Expert of the Egyptian Government, Mr. Home representing the Asiatic Petroleum Company, Mr. Henry representing the Vacuum Oil Company and Mr. Hodgson, Commercial Attaché.

Before the meeting I had talked on the subject with Mr. Henderson and had long conferences with Mr. Henry and Mr. Hodgson.

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The Egyptian Government contended that there was no land available for the users of floating docks and that nothing could be done. Mr. Henderson however admitted apparent discrimination at the outset.

Mr. Henry had made an exhaustive study of the situation, and during the present month had obtained a long lease on a piece of property suitable for oil tanks on which the Vacuum Oil Company intends building a two hundred thousand [two thousand]31 ton tank. At the same time Mr. Henry located other land available for oil tanks. This fact was the strong point in his argument.

The fact that the floating docks have been permitted and in existence for several years makes it very difficult for the Egyptian Government to now enforce the long infringed law, especially following pressure from the wealthy American and British Oil Companies.

The danger of an embarrassing attack in Parliament against wealthy companies holding and usurping the Egyptian market and defying competition must be at all times considered.

It was therefore agreed that the first and best hope was for the old established Oil Companies in Egypt to unite and present jointly to the Public Security Department a report and appeal, pointing out the danger of the present system and showing that land is available.

Since the meeting referred to Mr. Henry has drawn up for presentation an extensive report accompanied by a map of the harbor showing all the oil tanks as well as the new land acquired, and the other suitable land still available. A copy of this map is on file in this Legation.

I have had, in the last few days, a long talk with Mr. Henderson on the subject, as well as with the representative of the Ministry of Finance, and in each instance I have presented Mr. Henry’s argument.

The one company still enjoying the floating storage privilege now admits having storage up to one thousand tons, but Mr. Hodgson estimates their storage at three thousand tons.

Mr. Henry left for America last Friday apparently satisfied with the turn of events, especially as the Acting Financial Adviser stated, during the last interview, that no further grants or permits for floating storage would be issued and that the company now existing and holding the permit would not be permitted to increase its stock. This is a very important statement and a decided step in the right direction.

The final outcome in this case will apparently depend on the merits of the joint appeal, upon which I shall report later.

I have [etc.]

North Winship
  1. Corrected on the basis of despatch No. 24, Aug. 1, 1927, from the Chargé in Egypt, received in the Department Aug. 18, 1927 (file No. 883.6363/31).