Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)

By agreement with the Foreign Oil Policy Committee, I brought before Sir Frederick Phillips54 this afternoon, on the occasion of his visit to this office on other business, the reports regarding certain projects in the banking and currency field in Saudi Arabia. I spoke quite openly.

I said that as he knew, the budget of Saudi Arabia over the past few years had proven continuously insufficient. The British and American Governments had both been called upon to make up the deficits. The advances of the British Government I understood now exceeded $20,000,000. The American oil companies had advanced in the neighborhood of $10,000,000 and now the American Government was on the point (after informal discussion of the matter with the British Government) of extending lend-lease assistance on a very modest scale to Saudi Arabia. Our participation in this assistance program naturally gave us an interest in all economic developments there.

I said to him besides he was no doubt aware that American oil interests had large properties in Saudi Arabia, in the stability and welfare of which this Government had a great interest.

I informed him that reports had come to us from our representatives in Jidda and elsewhere that British representatives had been [Page 860]working out proposals and perhaps discussing these with representatives of Ibn Saud’s Government which, according to our information, seemed to contemplate the establishment of a bank of issue in Saudi Arabia and a program of currency issue. We did not reliably know what the nature of the project under consideration was, or how it would operate, or how far it had been advanced. We would greatly welcome advices from the British Government on all of these matters.

I stated that after due study of the subject it might well be, if there seemed to be an opportunity for any such useful undertaking at this time, we might wish to suggest to the British Government that it be carried out jointly by the American and British interests, but always in accord with Ibn Saud. Sir Frederick Phillips listened to these professions with calm and without any change in his friendly gaze. He said he would endeavor to find out what he could as to what might be under consideration in these matters and put it at our disposal. He said he probably would act through direct inquiry of the Treasury, but it may be on thinking it over that he would want to refer the matter to the Embassy and have any future discussions on it carried on through the Foreign Office.

  1. British Treasury representative in Washington; head of the British Supply Council in North America.