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.
[Attachment]
Memorandum Prepared by the Staff of the Federal
Trade Commission
secret
[Washington,] April 30, 1952.
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.
