Memorandum by the Under Secretary of State (Phillips)

I spoke with Mr. Chester O. Swain on the telephone this morning. He told me that their representative, Orville Harden, had already arrived in New York and was actually in conference with Mr. Swain as I was speaking. New and very technical telegrams had been received from Europe this morning relating to this whole subject, one of which Mr. Swain read to me. It appears that there is a dispute as to the nature of the bank guarantees, the Shell requesting that the approval of the respective governments should be obtained; the Anglo-Persian, however, objecting to such a course on the ground that it was a commercial proposition and not governmental, I asked Mr. Swain for [Page 328] information as to the supplies of oil contemplated under the new arrangement. He said that it would amount to 1,000,000 tons or, in other words, one year’s oil deposit in Germany,—up to the present the deposit required has been only three month’s supply. I mentioned the fact that in another part of the world, namely, the Far East, we regarded it of great importance that the Standard Oil Company of California and the Shell should work together in close cooperation and that I wondered whether this German situation now might lead to a row between American, British and Dutch companies. Mr. Swain did not undertake to answer this inquiry beyond saying that he would telephone me again later in the day after their morning conferences had ended.

William Phillips