278. Memorandum of a Conversation, Department of State, Washington, November 22, 19571
SUBJECT
- Oil Cartel Anti-Trust Case
PARTICIPANTS
- Mr. Victor R. Hansen, Assistant Attorney General
- Mr. Robert A. Bicks, First Assistant, Anti-Trust Division, Department of Justice
- The Under Secretary
- Mr. Krebs
Mr. Hansen called to discuss the anti-trust case the Department of Justice has pending against five major oil producing companies: Standard Oil of New Jersey (SONJ), Socony-Vacuum, Standard Oil of California, Gulf and Caltex. He referred briefly to the previous history of the matter. He said State became interested when the question of new Middle East pipelines came up, and had urged Justice to investigate the possibility of a consent decree in view of the national security aspects of this case.
Since April 1957 Justice has been negotiating with SONJ which they considered the toughest nut to crack. Eventually agreement was reached with SONJ on a basis that was acceptable to the Attorney General and the President, although it is still anticipated that it may cause trouble with the Congress. With respect to the other companies there remains one unresolved issue, i.e., the requirement by Justice that SONJ and Socony divide up their joint interest in the overseas distribution facilities of Standard-Vacuum. This requires a separate agreement between SONJ and Socony. Last week Socony notified SONJ of its refusal to accept the latter’s proposal for the split, in a letter which, according to Hansen, “slammed the door”. Mr. Bicks commented that Socony’s grounds for refusal were wholly commercial. He agreed with Mr. Herter’s suggestion that this may be an attempt to drive a hard business bargain.
The court has set a limit of December 17th for acceptance of the consent decree by the parties. However, Justice must know by November 26th whether to go ahead with the decree procedures, or to initiate the complex preparations for a full trial. On November 21st SONJ approached Hansen informally seeking a delay of 3 days to permit them to intercede with Socony in a final effort to reach agreement. Mr. Hansen added he was convinced the other three [Page 746] companies would go along if SONJ and Socony made a settlement and accepted the decree.
Mr. Hansen said Justice does not want to bring pressure on State, nor to suggest any specific action. He felt, however, that he should report this critical situation because State was responsible for initiating the consent decree action. The Under Secretary explained that, because of a possible conflict of interest, he had previously abstained from taking part in policy decisions involving petroleum matters. However, he felt that in this instance he need not hesitate because both State and Justice had already agreed on the need to avoid a court fight, particularly in the light of the current situation in the Middle East.
Mr. Hansen concluded by saying he felt they were very close to a satisfactory settlement and that he hoped the State Department might find some way to call the attention of Socony officials to the importance we attach, from the standpoint of national interest, to a settlement by consent decree. Mr. Herter agreed the Department would immediately explore what might be done in this connection.
- Source: Department of State, Central Files, 811.2553/11–2257. Limited Official Use. Drafted by Krebs. A copy is also in the Herter Papers at the Eisenhower Library.↩