Memorandum of Telephone Conversation, by the Officer in Charge of United Kingdom and Ireland Affairs (Jackson)

Subject: Requisitioning of Oil Stocks in China

Participants: Mr. H. A. Graves, Counselor, British Embassy
Mr. Wayne G. Jackson, BNA

Mr. Graves called me and referred to the statement in the Foreign Office cable which he read to us on July 18 to the effect that the Admiralty’s requisitioning of oil stocks of British companies in Hong Kong would be extended to American companies. The cable stated that it was presumed that the American companies would not object. Mr. Graves said that the action of the Admiralty in dealing only with Shell Company stocks in the first instance had given rise to some comment that the Shell Company had been uncooperative. The British were anxious to extend the requisitioning to the stocks of American companies. While the British Government had, of course, the technical power to take the stocks of American companies, they preferred to find out how those companies would react.

I talked with Mr. Magill in CA who had discussed this matter with the American companies, Caltex and Stanvac. He told me that they understood that the requisitioning was not a, taking of title but was in essence a stop order which forbade the companies from making disposition of the petroleum without approval of the Admiralty. In fact the distribution for use in Hong Kong was not interfered with. On the basis of this understanding, the American companies not only did not object to having their stocks requisitioned, but would prefer to be treated the same way as Shell so that they could argue with the Communists that they had no choice.

I relayed this information to Mr. Graves.