862.6363/158: Telegram

The Secretary of State to the Ambassador in Great Britain (Bingham)

421. Your 595, November 20, 2 p.m. You may advise Foreign Office by memorandum in following sense:

The Department has inquired into the matter and is advised that a transaction substantially as indicated in the Foreign Office memorandum has been under negotiation between the German Dye Trust on the one hand and a group consisting of Anglo-Persian, Shell and Standard Oil of New Jersey on the other. London representatives of [Page 330] Standard have conducted correspondence with the Dye Trust collaborating with the Shell Company and keeping Anglo-Persian advised. Standard and Shell committed themselves in principle to the Dye Trust with Anglo-Persian reserving right to participate if they later decided to do so. Acceptance in principle was expressly conditioned upon buyer furnishing satisfactory and adequate London and New York bank guarantees in sterling and dollars to ensure of payment in full in any event. Therefore, Standard felt that all commercial hazards were eliminated.

Standard is advised today (Monday) by its London representatives that in view of difficulties encountered in working out agreement on details pursuant to the basis first discussed, Dye Trust without definitely abandoning original basis has suggested following new basis and indicated willingness to accept and proceed with same:

Standard, Shell, Anglo-Persian group to undertake to supply Dye Trust requirements of petroleum products up to approximately 1,000,000 tons over calendar years 1935 and 1936. All shipments to be paid for in full in currency of supplier at time of delivery.

This new proposal is being studied by Standard, Shell, Anglo-Persian group. As a result of the British memorandum, more particularly the suggestion that the oil companies might be building up for Germany an emergency reserve at their own expense, the Department has requested Standard to keep it advised as to the result of these deliberations.