374.115 Standard Oil Company/1

The Minister in Bulgaria ( Shoemaker ) to the Secretary of State

No. 291

Sir: I have the honor to report that on September 11, 1931, Mr. Lewis R. Owen, district manager for the Standard Oil Company of New York, called at the Consulate to bring to its attention a recent decision of the Commission for the reduction of the cost of living in Bulgaria. This decision involved the lowering of price of kerosene to 7.38 leva per kilogram wholesale at Rousee, Bulgaria, the Danubian port of importation of the oil from Rumania into Bulgaria. Mr. Owen was greatly perturbed over this decision which if put into effect would work considerable loss to the Standard Oil interests. He further explained that a clause in this decision or at least an interpretation thereof rendered stocks of oil in Bulgaria subject to confiscation in case the dealers refused to sell at the price decreed by the Cost of Living Commission. Mr. Owen, on the basis of instructions from his company, informed the Consulate that the only course left for him was to close up and not to sell as the Standard Oil Company was not inclined to be forced into bankruptcy by the arbitrary ruling of this Commission. At the suggestion of the Consul, Mr. Owen visited the Legation to inquire its attitude in supporting him should he make a move not to sell. In as much as the decision had not yet been published officially it was thought advisable to take no immediate action in the matter but to await developments and in the meantime make a careful study of the situation. This was done and in several conversations with Mr. Owen I became convinced of the justice of his claim, as embodied in the memorandum submitted by him which is appended to this despatch.1 Mr. Owen was particularly worried by the wording of the law of August 7, 1924, which is brought into effect by the decree of the Commission and which reads as follows: [Page 887]

“All producers and merchants failing to sell at standard prices will be punished in accordance with paragraphs 10, 11 and 12 of the law for relieving and reducing the high cost of living.

“Persons, societies or corporations hiding, accumulating or destroying merchandise of prime necessity in order to force the market price up will be condemned to one year’s imprisonment and to the payment of a fine of from 10,000 to 500,000 levas.

“The accumulated merchandise of prime necessity will be confiscated at the lowest wholesale price of the market reduced by 25%, according to the decision of the Municipal Board and approved by the Chief Commissariat.[”]

On September 17, 1931, the Commission promulgated the decision above referred to in the Official Gazette. The same day in a telephone conversation with Mr. Owen I was informed that he had instructed all of his agents to refuse to sell at the price named by the Commission and that he had heard that measures were being taken to remove the oil from the warehouses of the Standard Oil Company but as yet had not been able to verify this rumor. At the same time he spoke of a visit he had had with representatives from all the large oil companies to Mr. Mooshanoff, the Acting Prime Minister, which had had unsatisfactory results. On the morning of September 18, Mr. Owen called at the Legation to say that reports were becoming more general that the oil of the Standard Oil Company was to be confiscated and that he had been advised by his company heads at home to stand on his legal rights and resist such action. In view of these developments it was thought advisable by the Legation to make informal representation to Mr. Mooshanoff. Accordingly on the afternoon of the same day I called on Mr. Mooshanoff accompanied by Mr. Frank W. Barnes, in charge of the Consulate, on account of whose early activities in the matter I thought made it important that he should be with me. While Mr. Mooshanoff as usual was very cordial and met me with assurances which in the course of the conversation proved vicarious, I was not at all satisfied with the result of the talk.

We presented our side of the case to Mr. Mooshanoff and pointed out to him the fact that the decree, at least superficially, seemed designed to discriminate against foreign and particularly American interests in Bulgaria. Mr. Mooshanoff hastened to assure me that nothing was further from the intention of his Government or the Commission, but that it was simply a “necessary method” in connection with lowering the cost of many staple necessities directly affecting the peasants of the country who were, as he said I must know from my travels in Bulgaria, in a deplorable state and made imperative, he declared with great earnestness, immediate steps in their behalf, especially if they were to be saved from being influenced by the oratory of radical groups. He then further stated that by lowering the prices of certain commodities, cotton and kerosene included, his Government [Page 888] would solidify its position with the peasants who, as I was aware, constituted the bulk of the people. Although he did not put the matter in so many words, the only possible interpretation to make was that the decision more than anything else is a “publicity move” to popularize the existing Government with the peasants. That foreign capital should suffer, although Mr. Mooshanoff desired to give the impression that this was not actually the case, was regrettable but entirely in keeping with the world crisis. Any argument to be advanced in this connection seemed vitiated, however, by his previous remarks. Mr. Mooshanoff assured me that the memorandum prepared by Mr. Owen and which I left with him would receive his immediate and most careful attention. When questioned as to what might actually develop in the way of confiscation of property belonging to the Standard Oil Company he admitted that such measures while in accordance with the laws of Bulgaria would hardly be applicable to foreign concerns in peace times (as we had previously pointed out to him) and added that “Bulgaria not being at war we might rest assured that such would not come to pass”. He again insisted that the measure was one prompted by necessity to relieve the peasants immediately and was not to be considered as permanent.

Meanwhile the American interests in Bulgaria will have to cease to function until the Government sees fit to enable them to do so without too great a loss. Mr. Owen has been informed that confiscation of Standard Oil property will not be contemplated and in the meantime his company will make no importations of oil into Bulgaria and will hold the stock on hand until matters adjust themselves.

A statement by Mr. Mooshanoff appeared in one of the morning papers in Sofia on September 19th and appended hereto would show that this Government has lost no time in announcing that it will abide by its intention to take all possible measures to reduce living costs in the country. It is apparent from the article that the interview with the American Minister is turned to the advantage of the Government. Annexed to this letter will be found an English translation of Mr. Owen’s memorandum given by me to Mr. Mooshanoff, a statement prepared by Mr. Owen giving a history of the price reducing situation and an article from Zora of September 19, 1931.

Respectfully yours,

Henry W. Shoemaker
  1. None of the enclosures mentioned in this despatch are printed.