The Minister in Saudi Arabia (Childs) to the Secretary of State
164. While in Riyadh March 27 King informed me most confidentially SAG had been approached by foreign company having British participation through Central Mining Company, London and American participation through Superior Oil Company of Los Angeles seeking oil exploration and concessionary rights in the off-shore area of Saudi Arabia in Persian Gulf. His Majesty sent word to me upon my arrival and said it would be appreciated if US Government would give him its opinion concerning participation British capital in proposed [Page 12]oil concession as he had hitherto reserved oil concessions to purely American capital.
Later, when I had my final audience with King, he asked my personal opinion. I replied that since His Majesty in my last visit Riyadh had himself expressed desire we, British and Saudi Arabians work together in closest concert in maintaining peace and security Middle East, I saw no objection admittance British capital in oil ventures. I added that by strengthening Britain economically we were in effect strengthening those forces best adapted to working with US. His Majesty stated that such being my opinion he would give orders to Finance Minister to begin discussion at once.
I observed that unless the question were pressing I would much prefer him delay action until my government could give its opinion as it might have altogether different views and in any case was able see problem in much broader perspective than I was.
His Majesty accepted suggestion and said he would order Finance Minister delay discussions for 30 days while awaiting answer from Washington.
King was insistent matter be treated with utmost discretion and asked in particular no word of subject be conveyed to Aramco.
Sent Department 164, repeated London 45.