Memorandum by the Petroleum Adviser ( Rayner ) to the Secretary of State

Mr. Secretary: In connection with the outline of principles of the proposed agreement covering the pipeline from the Persian Gulf area [Page 22] to the Eastern Mediterranean22 which was discussed at the meeting of the Directors of the Petroleum Reserves Corporation yesterday [January 27], I raised the question of the desirability of Government operation of the pipeline and also of Government ownership after the war emergency period had passed.

There was complete agreement that the word “operate” should be deleted from the proposed agreement and the following sentence added:

“The Government shall determine the most feasible plan for the operation of the facilities and shall retain supervision thereof”

The general feeling was that actual operations would be conducted, under Government supervision, by the companies, as that would be the most practical arrangement.

Secretary Ickes was strongly of the opinion that the pipeline should be Government owned throughout its entire period of operation. The representatives of the other agencies were in agreement. The Secretaries of War and Navy were not present. I agreed to Government ownership as far as the war emergency was concerned but stated that after that period had passed, it was my feeling that the question of ownership by private interests rather than by the Government should be examined in the light of the then existing conditions. After some discussion it was agreed that the minutes of the meeting would contain the following statement:

“That without now committing itself to any policy in connection therewith, the Board is agreed that when the war is ended and the existing emergency has passed, the question of continued ownership by an agency of the United States Government of the pipeline system would be reviewed.”

In view of the foregoing, I am in accord with the outline of principles of the proposed agreement as revised and recommend that you send the attached letter to Secretary Ickes23 signifying your approval.

Charles B. Rayner
  1. In a letter of March 29, 1944, to the Secretary of the Petroleum Reserves Corporation (Fortas), Mr. Rayner stated he had been given a copy of the “Outline of Principles of the Proposed Agreement” a day or so prior to the meeting of the PRC Board of Directors on January 27 (800.6363/1566). Draft of Outline of Principles, dated January 24, 1944, not printed.
  2. Infra.