890F.51/37

Memorandum by the Federal Loan Administrator (Jones) to the Secretary of State

You will recall that James A. Moffett, Chairman of the Board of the California–Texas Oil Company, Limited, New York, which is jointly owned by the Texas Corporation and Standard Oil Company of California, appealed to the President for assistance to be furnished by the United States Government to the King of Arabia since his normal source of income has been cut off and his demands continue beyond the ability of the oil company to make further advances toward the payment of future oil royalties.

It is represented by Mr. Moffett that the oil companies have advanced the King of Arabia some $6,000,000 or $7,000,000 to pay the royalties on future production. The royalty is at the rate of 200 a barrel.

The President referred the matter to you and later to the Secretary of the Navy in the hope that the Navy could buy oil, but it developed that the oil produced there is not suitable for the Navy and, furthermore, that not enough of it could be gotten to the Navy to be of any use.

Mr. Hopkins sent the file to me some weeks ago with the statement that the President would like to be of some assistance in the situation if a way could be found; that he did not feel that he had a right to use Lend-Lease money for this purpose.

The RFC has no authority to give money to the King of Arabia or to buy oil in the ground in Arabia in the expectation that it could ever be delivered to the RFC.

When I spoke to you about the matter, you told me that you had requested the British to look after the King and that they had been advancing him funds. Prior to our closing the loan of $425,000,000 to the British Government,28 I spoke to Lord Halifax on two occasions about this matter, also to Sir Edward Peacock,29 Sir Frederick Phillips,30 and Mr. Carlyle Gifford.31 The President wrote me the [Page 643]following note, which I showed to Sir Frederick Phillips, with the request that the British Government furnish the King of Arabia with whatever funds it felt were desirable and necessary; that the United States Government was not in a position to make any advances whatever to the King of Arabia, or to buy any oil in the ground in Arabia:

“7/18—41

“Jess—

Will you tell the British I hope they can take care of the King of Saudi-Arabia. This is a little far afield for us!

F. D. R.”

Jesse Jones
  1. See pp. 1 ff.
  2. Director, Bank of England.
  3. British Treasury representative in the United States.
  4. British Treasury official.