The Chargé in Lithuania (Kuykendall) to the Secretary of State

No. 395 (Diplomatic)

Sir: I have the honor to refer to the Legation’s despatch No. 314, of September 20, 1935, concerning the petroleum situation in Lithuania, and to previous correspondence on the same subject, and to report the substance of a conversation had on December 28, 1935, by Vice Consul Macgowan with Mr. Erich Quitinau, Vice Director of the “American Oil” Amerikos Zibalo Akcine Bendrove, the local branch organization of the Standard Oil Company of New Jersey.

Mr. Quitinau informed the Legation that a general meeting of the principal stockholders* of the Lithuanian firm took place in the Principality of Liechtenstein on or about December 3, 1935, at which a resolution was adopted to liquidate the Kaunas branch organization, which is incorporated under Lithuanian laws. The official notification of the company’s decision was communicated on December 23, 1935, to the Lithuanian Minister of Finance, who was informed that liquidation would begin January 1, 1936.

Mr. Quitinau stated further that the “Amerikanische Petroleum Handels Gesellschaft m. b. H.”, of Memel (Klaipeda), also a subsidiary of the Standard Oil Company, would continue to function in the Memel District and that, upon the liquidation of the Kaunas firm, it might henceforth include Lithuania Major within its sales territory.

The decision of the stockholders to liquidate the Kaunas organization is due partly, according to Mr. Quitinau, to the continued deficit shown by the local company, but primarily to the repeated refusals of the Lithuanian authorities to issue licenses to the local firm for the importation of petroleum products (other than lubricating oils) from [Page 577] its own sources, thereby forcing it to distribute Russian petroleum products or none at all. The Company’s last application for a license for the importation of 500 metric tons of gasoline from the United States or Aruba was formally refused by the Lithuanian authorities on October 10, 1935.

In order to continue in operation pending the outcome of the negotiations conducted between Kaunas, Hamburg and New York, the local branch organization has been forced during the past six months to replenish, at a considerable loss, its exhausted stocks of gasoil, kerosene and gasoline with petroleum products purchased, as needed, from “Lietukis”, the local representative of the Russian petroleum syndicate. According to Mr. Quitinau, there appeared to be little prospect for an improvement in the situation during 1936, although the Lithuanian Government promised to relax its policy upon the expiration of the Lithuanian-Russian Trade Agreement on December 31, 1935, since “Lietukis” has been able to dispose of only a part of the quota allotted the Soviet Union and has sufficient stocks on hand at the present time to supply Lithuania’s requirements until about August 1936. Furthermore, the Lithuanian Government is now negotiating with Russia for the conclusion of a new trade agreement. Consequently, rather than to go on distributing Russian petroleum products indefinitely, the stockholders decided it would be more expedient to liquidate. It is expected that final liquidation can not be accomplished under two years.

Appended hereto is a table22 showing the imports of petroleum products into Lithuania since July 1, 1935, as compared with the corresponding period in 1934, together with appropriate comments. This period has been taken as it shows import trends after the definite refusal of the Lithuanian Government to issue further import licenses to the local branch organization of the Standard Oil Company and, supposedly, to the Shell Company and other distributors.

… The Standard Oil Company has the largest distributing organization of the three groups operating in Lithuania and it is accordingly believed that the Lithuanian Government (especially the Ministry of National Defense) would be hesitant in allowing the local branch organization to liquidate. In this respect, it is pertinent to point out that “Lietukis”, the local cooperative society which received in March 1935 the exclusive rights for distributing Russian petroleum products in Lithuania, is dependent entirely on the former Russian agents and on the local branch organization of the Standard Oil Company, since it has no distributing facilities of its own as yet.

[Page 578]

Future developments will be reported promptly to the Department as they occur.

Respectfully yours,

C. Porter Kuykendall

[In his despatch No. 73 (Diplomatic) to the Department from Kaunas on October 24, 1936, the Chargé in Lithuania reported that the branch organization of the Standard Oil Company of New Jersey sold out its entire investment and interests in Lithuania to the Royal Dutch Shell Company of London, and ceased operations on October 1, 1936. (660m.116/19)]

  1. According to information supplied in May 1935 by Dr. H. Wittig, the director of the Kaunas firm, the Standard Oil Company of New Jersey, owns 100 per cent of the outstanding shares of the local firm. It has been ascertained that a few shares are owned by local officials of the company to comply with Lithuanian laws. In this respect, reference is made to Enclosure No. 18 to Memorandum attached to Despatch No. 240, dated May 15, 1935, from the Legation at Kaunas. [Footnote in the original. The enclosure under reference is not printed.]
  2. Not printed.