The Ambassador in France (Caffery) to the Secretary of State

No. 1411

The Embassy has the honor to enclose herewith the wording of the Petroleum Supply Agreement as submitted to the French Foreign Office on March 15, 1945.5


The American Embassy to the French Foreign Office


Experience of war conditions has shown that the demands for petroleum products or for tanker tonnage with which to move such products, are consistently greater than the supplies of oil or the number of tankers available. For this reason it was found necessary to set up in the early days of American-British military cooperation special organizations in the United States and Great Britain which are responsible for the centralization of all demands for petroleum products and which allocate, according to the availability of products and of tanker tonnage, such supplies to each individual consuming country as the exigencies of war permit.
The organizations in question work in the closest collaboration and harmony. Any decisions as to the source of supplies are made by the American and British authorities together in the light of their joint war oil supply program and on the basis of the short-haul principle, that is, the utilization of nearest available sources of supply in order to effect the greatest shipping economy.
Insofar as can be foreseen, these heavy demands for petroleum products will persist after the end of the war in Europe and the quantities of oil available to importing countries will continue to be limited on account of direct war demands for transportation and supply.
In these circumstances it is essential that such quantities of petroleum products as are available shall be equitably distributed between importing countries, and with this end in view it is proposed to ask the European oil importing countries to participate with the United States and Great Britain in the arrangements set out below. It should be clearly understood, however, that in areas where there is military responsibility for the supply of petroleum products these arrangements will only come into effect when that responsibility terminates [Page 776] and that they will only last as long as limitations arising from the war with respect to supplies and ocean transportation continue.
It is accordingly suggested that the French Government, acting in consultation with the local petroleum industry, or such other agency as can best advise on the particular grades of oil required, should prepare, with full information and justification, the program of requirements for petroleum products. Such programs would be transmitted simultaneously to the United States and British Governments through their respective Embassies in Paris and would be considered by the Anglo-American Oil Allocating Board. The Anglo-American Oil Allocating Board would know at all times the amount of oil and transportation available for importing countries. It would be the Board’s function to assure an equitable distribution of available supplies as between importing countries, and to authorize the supply through the normal channels of the quantities allocated. Upon authorization being given for the supplying of a petroleum allotment, notice thereof would be transmitted promptly through the American and British Embassies to the appropriate authorities of the French Government.
The United States and Great Britain would undertake to make available oil supplies and transportation facilities and for that purpose supply committees would be established in the United States and Great Britain to deliver to each importing country oil supplies authorized by the Oil Allocating Board and to coordinate shipping therefor. These two supply committees would be advised of all authorized allotments and would be instructed concerning the sources of supply upon which they are to draw.
To effect distribution of supplies within the importing participating countries, it is further suggested that each such country would establish, if it has not already done so, a national pool committee, consisting of representatives of all the companies operating in the market prior to the war in order that all distribution facilities and organizations would be utilized to the common benefit of all participants. The national pool committee would deal directly with the supply committees mentioned above on all operating details and, within the limits of authorized allotments, would nominate to the supply committees deliveries desired by ports. The pool committee would receive quantities delivered by the supply committees and would divide them among distributors on the basis of an equitable sharing formula established by the Government of the importing country. Distribution within the country would then be made in accordance with the regulations of the rationing authorities. It would be the duty of the national pool committee to advise the local rationing authorities, the supply committees, and the Embassies concerning the receipt of supplies, civilian stocks-on hand on first of each month, rate of consumption, and any other information [Page 777] required by the responsible authorities. The national pool committee would, of course, be kept currently informed by the supply committees concerning the scheduling of delivery of all authorized supplies. It is understood that the French Government has already set up an organization which is more or less in line with the above proposals.
All participating importing countries would undertake that all available supplies and facilities are utilized on the basis of the principles governing the operation of the arrangement. This means that any indigenous supplies, or supplies imported into a participating country from any source, must be considered a part of authorized allotments. Should supplies be obtained by any participating country from sources other than those of the American and British supply committees, deliveries by the supply committees would be reduced by equivalent amount. It is only in this way that equitable distribution and the most efficient utilization of all available supplies can be effected. Moreover, any tanker or transportation facilities becoming available to a participating importing country must be operated within the framework of the supply arrangement.
The arrangement contemplates, insofar as supplies furnished on a cash basis are concerned, that payments should be made through regular commercial channels. In the case of such supplies, it is understood that the French Government will agree to make available promptly the requisite amount of exchange.
The Embassy of the United States has been instructed to invite the French Government to participate in the foregoing proposals. In the event they are found agreeable to the Government, the Embassy would appreciate receiving a reply to the present communication, together with an indication of the agency of the Government which will centralize data regarding the oil requirements of France and to which information concerning available supplies can be sent.
  1. Submitted simultaneously to the French Government by the British Embassy.