The Secretary of State to the Chairman of the Federal Trade Commission(Mead) 1
My Dear Mr. Mead: This is in further reference to the recently completed Federal Trade Commission study of cartel activities in the world petroleum industry. In his letter to you of December 27, 1951,2 Under Secretary of State James Webb stated that if in the future the Federal Trade Commission plans to publish this study the Department would appreciate an opportunity to present its views prior to publication owing to the importance which it could have on certain aspects of U.S. foreign policy. I have since been informed [Page 1262] by Assistant Secretary of State Willard Thorp that he has been told by Mr. Corwin Edwards of your staff that the Federal Trade Commission is contemplating publication of the study. For that reason, an expression of the views of the Department of State would seem to be in order.
It is not appropriate for the Department of State to interfere in any way with the Federal Trade Commission in carrying out the duties and responsibilities imposed upon the Federal Trade Commission by the laws of the United States. It is the responsibility of the Department of State to bring to the attention of the Federal Trade Commission the effect which the release of the report would have on the foreign relations of the United States. The Federal Trade Commission can thus have this aspect of the national interest before it when it makes its decision.
In the view of the Department of State, the publication of the report will not help the achievement of the foreign-policy aims of the United States in the Middle East and may seriously impair their attainment.
The report makes the point that one aspect of the alleged cartel concerns control of the major oil-producing areas in the world, particularly in the Middle East. This will inevitably be interpreted by the peoples of the region as a statement that, were it not for such agreement, they would be getting a higher return from their oil resources. This will, of course, strengthen the movement for renegotiation of the present concession agreements and may give encouragement to those groups urging nationalization. Since the issues are not only economic but also political, the net effect will probably be to cause a decrease in political stability in the region.
At the present time, the political instability in the Middle East has created a situation unfavorable to the investment of new capital in that area. For that reason it is unlikely that any decision with respect to publication would have the effect of bringing new American enterprises into the Middle East to aid in the development of the oil resources of the area until the political situation has been clarified.
The Department of State makes these considerations available to the Federal Trade Commission in order that the Federal Trade Commission may be fully advised of all the implications of the proposed action when it makes its decision as to its future course of action.
The Department of State is expressing only its own views on this report and is not undertaking to express the views of other Government agencies which may be interested in this matter.