S/PNSC files, lot 61 D 167, NSC 138

Memorandum by the Director of the Office of International Materials Policy (Evans) to the Counselor of the Department of State (Bohlen)

top secret
  • Subject:
  • Additional Material on Foreign Reaction to U.S. Actions in Regard to Oil

You have pointed out that our NSC paper, 138/1 (1),1 is not very specific in its appraisal of the harmful effects which can result from the criminal proceeding. This, of course, is true. No one can be certain what the effect will be if the Grand Jury investigation results in criminal prosecution and trial. But the geographic bureaus believe that the risk is very great. My own belief is that nationalistic feelings are running so high that almost anything could set them off, and that we should take no unnecessary risks.

[Page 1337]

We purposely omitted some of the more extreme statements available to us for fear of overstating the case. If you have time, you may find it worth while to glance at the attached material:2

A portion of a draft paper submitted by ARA, based in part on an appraisal by Embassy Caracas. The first three pages of this will give you a sufficient idea. Incidentally, ARA strongly urged that we insist on the case being dropped completely without institution of civil proceedings.
A report by Franklin Bates of Trans-Arabian Pipe Line Company to the New York office of that company. This is hardly a disinterested report. His own appraisal must be discounted. But the quotations in his report do indicate that some government officials and some of the press in Lebanon, Syria and Egypt have taken advantage of the FTC report and the Grand Jury proceedings for attacks on the oil companies. I have marked a few of these, on pages 8, 10, 12 and 14 for your attention. A number of the reactions in the Middle East apparently were set off by the United States civil suit to recover what MSA contends were excessive charges in their purchases. Our proposal, of course, would not correct any damage this suit may have done, as we do not propose that it be dropped.

One reason I am fearful of the results of a criminal trial cannot very well be mentioned in the NSC. Mr. Emmerglick, the Assistant Attorney General handling the case, has already made statements in court calculated to appeal to those who oppose United States imports of oil. The Justice report to the NSC again devotes several paragraphs to the danger of oil imports and charges that collusion among the companies is the cause of the high level of imports. I am afraid that a public trial will lead to more of this sort of thing. The effect on both domestic public opinion and foreign relations can hardly be good. A civil proceeding could, of course, also serve as a sounding board for isolationist sentiment by the Department of Justice, but we are hopeful that civil proceedings would lead to negotiations for a consent decree instead of a trial.

  1. Reference is to Part 1 of NSC 138/1, p. 1318.
  2. The materials under reference here were not found as attachments to the source text. A marginal handwritten notation indicates that the attachments were returned to Evans on Jan. 12 as he had requested.