Memorandum by the Assistant Economic Adviser (Livesey)

Mr. Guy Wellman26 brought in the attached letter addressed by Mr. Frank A. Howard December 26 to Mr. C. O. Swain of the Standard Oil Company of New Jersey,27 which is a brief recital that the Standard Oil Company, the Royal Dutch Shell and Anglo-Persian have entered into a contract with a subsidiary of the German Dye Trust to supply the latter with 400,000 tons of oil products over the next eighteen months on terms of full payment in cash in supplier’s currency against shipping documents on each cargo. The letter also states that there will be further discussion as to an arrangement for 600,000 tons more to be delivered beginning about July or August, 1935, and for a continuing supply for an indefinite future term of [Page 331] about 250,000 tons more per annum as auxiliary raw material for consumption in the German coal hydrogenation plants.

Mr. Wellman said that he did not know much about the matter but Mr. Swain had sent him the letter by special delivery to Washington and requested him to bring it in. He supposed Mr. Swain might want to know whether there is any objection by the Department to the contract on broad grounds. I told him the British Foreign Office had raised a question about the wisdom of a previous proposal involving a sale on credit and that the Department had informed the Foreign Office that the Standard Oil of New Jersey would inform the Department of developments in the matter. I judged that the only action required at the moment was to thank the Standard Oil Company for supplying the information in the letter.

In conversation Mr. Wellman mentioned that the Standard Oil Company is having difficulties with the North German Lloyd Company over the execution of a seven year fueling contract which provides for payment in the currency of the country of delivery. The North German Lloyd owes some $700,000 on the contract. Mr. Well-man contemplates informing North German Lloyd that deliveries can be continued only on terms that the laid-down cost shall be paid in dollars and any additional elements in the currency of the country of delivery. It is a big contract including the fueling of the Bremen and Europa.

  1. Counsel of the Standard Oil Company of New Jersey.
  2. Not printed.