Truman Library, Spingarn papers, FTC International file

Memorandum by Federal Trade Commissioner Stephen J. Spingarn to the Chairman of the Federal Trade Commission (Mead)


In re: Publication of International Oil Cartel Report.

Attached is a memorandum which I have had prepared itemizing some of the constructive results that might be expected to follow the publication of our Oil Cartel Report. In view of the arguments which have been made on the other side, I thought it worthwhile to have such a memorandum prepared.

It occurs to me that when you see the President about this matter, you might think it worthwhile to give him a copy of this memorandum.

S[tephen] J. S[pingarn]
[Page 1265]


Memorandum Prepared by the Staff of the Federal Trade Commission


Some Constructive Results Which May Be Expected to Come From the Publication of the Federal Trade Commission’s International Oil Cartel Report

1. Publication of the international cartel report would be the most effective way of inducing oil companies to alter their restrictive policies and improve their relations with foreign governments in advance of the time when these governments will have a belligerent minority strong enough to nationalize the oil industry. It is much better that the facts be revealed now when there is still time for policies to be changed and differences settled by negotiation rather than suppressing the facts and postponing changes, as was the case in Iran, until the foreign oil companies are engulfed by a wave of hatred.

2. Publication of the report would not reveal to Middle East governments additional information which would enable them to take undue advantage of the oil companies in future negotiations. Middle East governments are acquainted with most of the major points made in the report. For example, in stating the grounds for the Iranian Government’s decision to nationalize the oil industry, an Iranian Government official stated:

“… In arriving at this conclusion, the Oil Commission was aware of the existence of the ‘World Oil Cartel’ and fully realized that the implementation of nationalization would be met by the opposition, not only of the AIOC and the British Government, but the other major oil companies as well. This opposition was expected in terms of the boycott of technical assistance, tanker transportation, and intimidation of independent companies who might otherwise consider buying oil from Iran.”*

Although they may not be aware of all the facts and details, they are well aware of the effects of the policies which the oil companies have followed. As a matter of fact, many of the Middle East governments have already acted upon information in their possession, [Page 1266] similar to much of that in the report, to bring about a change in oil company policies. Evidence of this is the new oil royalty agreements recently concluded by the governments of Iraq, Kuwait, and Saudi Arabia.

3. Publication of the report would be an effective counter to the Communist propaganda, which is widely distributed in the Middle East and which claims, in effect, that the resources of the Middle East are subject to monopolistic exploitation at the hands of “Wall Street” with the support of the United States Government. To have one arm of the United States Government present the facts on the international petroleum cartel will show unmistakably that this government is opposed to cartels and monopoly by oil companies operating abroad and that exploitation will not be condoned.

4. Issuance of the oil report would tend to ease restrictions on world trade and stimulate rather than retard foreign investment. As the hold of the cartel is loosened, competition will to that degree be established; and as competition is reestablished, independent American companies, as well as cartel members, will have more opportunities for expanding foreign investments.

5. Publication of the facts respecting the private oil cartel will go a long way toward counteracting the view which appears to be developing in foreign lands that the United States talks at great length of removing international barriers to trade but does nothing about them. Issuance of the report would thus be a timely symbol of good faith on the part of this government. Moreover, a prerequisite to removal of international trade barriers is public knowledge of the nature and extent of those barriers.

6. Finally, issuance of the oil report would supply to both the Congress and the executive branches of the U.S. Government information essential to the formulation and administration of both domestic and international oil policies, and to the American public, information basic to intelligent public opinion.

  1. Oil Forum, “Iran Presents Its Case for Nationalization,” March 1952, p. 90. [Ellipsis and footnote in the source text.]