CHAPTER XIV

HOW THE UNITED STATES LOST SUPREMACY OVER OIL

The Americans themselves realize that they are about to lose their supremacy over oil. "While we were basking in a false security, lulled by the knowledge of our resources," the American _Nation_ wrote recently, "foreign companies silently and energetically took possession of the unexploited oil-fields." The _Mexican Eagle_, a British company, received vast concessions in Mexico. The _Shell_, another British group, established itself in many places. The _Royal Dutch_, which, in appearance at least, was originally a Dutch company, was founded to exploit the oil of the East Indies. Later, a fusion of the _Royal Dutch_ and the _Shell_ took place, and the _Mexican Eagle_ sheltered under the wings of the new company. The _Anglo-Persian_ was created to exploit Persia and the East, and the British Government subscribed £2,000,000, reserving the control for itself in order to supply the needs of the navy.[27] This company was for years closely connected with the _Royal Dutch_.[28] This gigantic aggregation of British interests, at the present time, owns or controls a great part of the oil of California, Oklahoma, Louisiana, Mexico, Trinidad, Venezuela, Colombia, Rumania, Russia, Persia, Egypt, India, and the East Indies. Except in North America, many of the concessions are so vast that they exclude American companies from the most profitable oil-fields. However, adds the _Nation_, the experts of the United States Geological Survey were making disturbing discoveries that 40 per cent. of American oil was exhausted, and that, at the present rate of production, the exploitation would be complete in fifteen or twenty years, for home requirements were becoming so great that more oil would have to be imported than was being exported. In 1920, the imports exceeded the exports by 100 million barrels. And _British companies, closely connected with the British Government, are now in exclusive possession of 90 to 97 per cent. of the future world production_. What a change in the situation!

Ten years ago, Britain possessed no oil, to-day she is independent, to-morrow she will be mistress. The feat has been accomplished by the silent efforts of a few men such as Sir Marcus Samuel, chairman of the _Shell_, Lord Cowdray (Pearson), Lord Curzon, formerly Viceroy of India, Sir John Cadman, technical adviser to the British Government, Professor in the University of Birmingham, and Chairman of the Inter-Allied Petroleum Conference during the War, Lord Strathcona, creator of the Canadian railways, who played a great part in the _Anglo-Persian_, and, above all, Admiral Lord Fisher.

These men acted _even without the knowledge of the British people and its parliamentary representatives_. Their fellow-countrymen and their opponents only heard of their activities _when they had endowed their country with a world-wide oil empire_.

There was veritable amazement in the House of Commons when it was informed of what Lord Fisher and Lord Strathcona had done with the _Anglo-Persian_. Their work narrowly escaped undoing. Lord Fisher himself described, in September 1919, the opposition he met with, even among his colleagues. "I was dubbed 'an oil maniac' when I was at the Admiralty in 1885. Lord Ripon, the First Lord, sent for me and told me I was called a Radical enthusiast and nicknamed 'Gambetta,' and said he meant to make me a member of the Board of Admiralty. I told him all the rest of the Board would leave. He saw me a week after and confessed it was so; but, thank God! I was spared to be Director of Naval Ordnance instead."

Lord Fisher experienced the same difficulties when he wished to equip the British Navy with submarines. It is to him, and to the Bethlehem Steel Works (United States), that the Allies owed the prompt completion of the special type of submarines which "went, unconvoyed from America to the Dardanelles and acted there prodigiously." A few of these submarines which succeeded in passing through the wire nets of Chanak-Nagara, for a long time controlled the Sea of Marmora and prevented the Turks from taking supplies by sea to their fortifications on the Straits. Oil supremacy and naval supremacy go hand-in-hand. When he wished to give his country empire over oil, Lord Fisher's principal object was to preserve her dominion over the seas. For that fleet will be victorious which has at its disposal the most abundant sources of oil. Ships using oil have driven out those burning coal, just as the latter replaced sailing ships.

When we compare the results obtained by France and by Britain, on whose soil it seems that no deposits of mineral oil have yet been discovered (a fact which rendered Lord Fisher's task none the easier); and when we see Britain mistress of nearly all the oil remaining in the world, we stand confounded with admiration before the genius of those to whom she owes such an empire.

British Oil Policy

Having been obliged to allow the first place to America, the country which first discovered oil, and which until recently produced 70 per cent. of the world's output, Great Britain began to gain upon her by keeping command of oil-carrying ships. Whoever transports a commodity controls it, and is master of it up to a certain point, for he is the indispensable intermediary for those who wish to obtain it. Should any difficulty arise, the transporter, according as he fulfils his office or not, grants or withholds supplies for the markets, as he pleases. The British genius has always sought to compensate, by maritime superiority, for the inferiority of Great Britain in certain respects. If the United States occupied the first place among producers of oil, they ranked second to Great Britain as transporters. Great Britain, understanding that oil "is destined to play the same part in the world as coal, cotton or steel," made a special point of retaining control of oil-carrying ships. It was a thrilling duel.

The world tonnage of tank-steamers rose by June 30, 1919, to 2,616,000, tons, of which 1,500,000 tons sailed under the British flag, 1,000,000 tons under the American. In June, 1920, the United States had gained the first position. They had 308 tank-steamers, amounting to 1,734,843 tons, or 51 per cent. of the whole (3,386,091 tons). On January 1, 1921, the supremacy of Great Britain was restored. Of the 524 oil-steamers afloat, 252 belonged to her, the United States having only 191. But she lost this position again six months later.

Mistress of one of the foremost oil-carrying fleets, Britain next sought, until 1922, to monopolize almost all the remaining resources of the world. The _Royal Dutch-Shell_, _British Controlled Oil-fields_, and _Anglo-Persian Oil_ were valuable auxiliaries of the Foreign Office for this object. According to Dr. David White, one of the members of the American Geological Survey, this is what Great Britain possesses to-day:--

Million barrels. Canada: the whole of the deposits are reserved for British control 995 Algeria, Egypt: 50 per cent. 462.5 Persia, Mesopotamia: 75 per cent. 4,365 S.E. Russia, S.W. Siberia, Caucasus: 50 per cent. 2,925 Rumania, Galicia, Europe: 50 per cent. 1,567.5 New Russia and Sakhaline: 50 per cent. 462.5 Dutch Indies: 50 per cent. 753.75 India: the whole 995

In Peru alone have the United States triumphed over Great Britain. The discovery of oil there is due to the English. But, thanks to the power of its capital, the _Standard Oil_, through the medium of the _International Petroleum Company_, managed to acquire the shares of the four most important British companies. And the United States at present controls 70 per cent. of the output there, the British retaining only 27 per cent. and Italy 3 per cent. The Peruvian production, however, is not very high; it does not yet reach 3 million barrels.

The need for oil has grown so great that the deposits containing this precious liquid fuel are greedily coveted by the various governments which take shelter behind financial groups. _There is a shortage of 250 million tons of coal on this planet, and it produces only 98 million tons of oil._ But no Government can boast, in this matter, of having shown a foresight equal to that of Great Britain.

The British Government is no longer content to-day to encourage, favour and defend its own nationals. Better than this, it makes conquests or establishes protectorates having as essential object the reservation exclusively for its nationals of new oil-bearing territories, such as Persia and Mesopotamia. The treaty recently imposed on Persia was nothing but a disguised protectorate. Fortunately for Britain, the Soviet Government has voluntarily given up its advance into that country since it concluded a trade agreement with London. And it is sufficient to read the Treaty of Sèvres to see the underlying motives of the British negotiators: the desire to monopolize the oil of Asia, and anxiety to keep out the United States, all the oil-fields left to France being in particular granted to her with the idea of a future British participation.

The British Government is so jealous of its position in Mesopotamia that it will not even tolerate American prospectors there, and certain incidents have happened in connection with which the disappointed Yankees have asked the State Department at Washington to demand satisfaction.

The British oil policy is not uniform. Sometimes, when it seems possible, she gets possession of proved oil-fields. Sometimes, in the case of a country which would hold its own, she negotiates for an advantageous share in the profits--this is what happened with France by the San Remo Agreement--or she makes contracts ensuring abundant supplies of the precious mineral oil.

When a State does not fall in with her views sufficiently quickly, Britain does not recoil from any means of pressure. This is what led Admiral Degouy, in April 1920, to write: "As a corollary to well-known negotiations with one of the richest countries in oil in the Near East, the British Admiralty has organized and is maintaining on the Danube a numerous flotilla of gunboats and river monitors." The reason is easy to guess.

From 1918 to 1920 an unofficial squadron of small Russian steamers, requisitioned and armed by Great Britain, dominated the Caspian Sea, so that Batum, the port of embarkation for oil on the Black Sea, and Baku, its place of production, were both in the hands of the British. They disposed of the petroleum and mazut there at their own pleasure, permitting no control over their purchases. Britain first took as much as she could; it was only afterwards that she allowed France to replenish her stores in turn, provided there was any petroleum left.[29]

Thus ends the work of Lord Fisher, who applied himself for more than thirty years to the problems of oil. Thus end the experiments and observations conducted modestly and quietly for so long at Portsmouth.

Henceforward the British Navy is sure of its supplies of oil for a century. But the position is such that the United States can avoid war only at the price of industrial servitude.

Hemming-in of the United States

While Great Britain was pouncing upon nearly all the oil remaining in the world, the United States basked in a false security. Had they not supplied 80 per cent. of the needs of the Allies during the War? It is true that if the War had continued the United States would not have been able to satisfy those needs. "In September and October 1918," declared Mr. Deen, who played such an important part in the alliance of the _Royal Dutch_ with the _Shell_ and who now directs the oil industry of Oklahoma, "the Allies were taking each day 194,000 barrels of petrol, while the average daily output was 191,000. Adding together the consignments sent to Europe by Mexico and the United States, we reach the figure of 1,200,000 barrels a day, while the United States was producing only 960,000 and Mexico 140,000. The daily deficit was thus 300,000 barrels."

The United States sacrificed themselves in the cause of the Allies during the War.[30] Great Britain has shown no gratitude. They had already reached the point at which they could not supply their home consumption, since 25 per cent. of the petroleum consumed in the States used to come from Mexico, and they sent the Allies more than their own production. The War contributed not a little to placing them in their present position.

According to Walter Teagle, the new chairman of the _Standard Oil_, if their consumption continues to increase at the present rate they will consume, in a few years, 630 million barrels, or double what they produced in 1919. Since 1914 alone the number of motor-cars in the United States has increased from 1,700,000 to 8,000,000 (Ford cars swarm there). These alone absorb 85 per cent. of the national output, leaving only 15 per cent. for the railways, shipping, manufactures and export.

The American companies have made a great effort. They have speeded up production, raising it from 376 million barrels in 1919 to 443 million in 1920. New exploratory work has been carried on, especially in Texas and Kansas. But will not this hasten yet more the time when the resources of the United States will be exhausted?

At the word of command from the United States Government, "Draw more and more on the oil in foreign countries," the _Standard_ sent out prospectors all over the world. But everywhere they ran up against an unforeseen obstacle. An American prospector had the misfortune to appear on the shores of the Dead Sea in October 1919. Without hesitation the British General who was Governor of Palestine had him arrested in Jerusalem. To the indignant protests of President Wilson Britain simply replied that it was not a question of measures aimed specially against the Americans, but that all prospecting in Palestine was forbidden until a new order. The same thing happened in Mesopotamia.

Everywhere in the world, except possibly Canada, in which country they have considerable influence on account of their geographical proximity, the Americans for two years found the "closed door."[31] Generally they were either completely excluded from oil-bearing concessions situated in the territory, the colonies, or even the sphere of influence of Great Britain, Japan and the Netherlands; or else they were authorized to establish themselves only under such conditions that they would lose the effective control of their undertakings. Foreigners are forbidden to prospect for oil in Burma, India, Persia, Uganda and the United Kingdom. A policy which _excludes foreigners from the control_ of petroleum products is followed in Algeria, Australia, Barbados, Kenya Colony, British Guiana, France, French West Africa, Guatemala, Japan, Formosa, Saghalien, Madagascar, Mexico, New Guinea, and probably in the Union of South Africa. Venezuela and Uganda are considering a similar policy.

The _right to exploit mineral wealth_ cannot be granted to foreigners in Australia, Barbados, Kenya Colony, New Guinea, the Dutch Indies, France, French West Africa, Guatemala, India (probably), Great Britain, Japan (practically), Trinidad (in part), Venezuela, Madagascar, and, except for rights already acquired, in Rumania and Slovakia. Temporary restrictions have been placed on the acquisition of oil concessions by foreigners in two districts of Colombia and in the new Rumanian territory.

The ownership of oil deposits belongs to the Government in Bolivia, Costa Rica, Slovakia, South Africa, Uganda, Venezuela, Great Britain, and partly so in the Argentine, Australia, British Guiana, Ecuador, India, Trinidad, Canada and Colombia. The Dominican Republic, Mexico, Rumania and Russia are considering the possibility of following the same course. But the United States have pledged themselves not to recognize the new Mexican Government unless it renounces this measure. In France the Government has regalian rights over the riches of the subsoil; it grants them at its discretion.

In face of this situation, Senator Gore of Oklahoma, on March 10, 1920, demanded of the Federal Government a report upon the measures taken by foreign Governments to exclude Americans from oil-fields. Two months later, on May 17th, President Wilson transmitted to the Senate the report of the Secretary of State.

"The policy of the British Empire," wrote the Acting Secretary of State, Frank L. Polk, "is reported to be to bring about the exclusion of foreigners from the control of the petroleum supplies of the Empire, and to endeavour to secure some measure of control over oil properties in other countries. This policy appears to be developing along the following lines, which are directly or indirectly restrictive on citizens of the United States:--

"1. By debarring foreigners and foreign nationals from owning or operating oil-producing properties in the British Isles, colonies and protectorates.

"2. By direct participation in ownership and control of petroleum properties.

"3. By arrangements to prevent British oil companies from selling their properties to foreign-owned or controlled companies.

"4. By Orders in Council that prohibit the transfer of shares in British oil companies to other than British subjects or nationals."

These measures have led to the control of the _Shell_, by agreement with the _Royal Dutch_, which holds 60 per cent. of its shares. "It is understood that the British Government has a controlling interest in the _Anglo-Persian Oil Company_, and that it has also assisted in the development of the Papuan oil-fields by bearing one-half of the expense and contributing experts...." All prospecting for oil in the United Kingdom must be authorized by the Board of Trade. In fact, the only borings carried out in the country are by _S. Pearson and Son, Ltd._, acting as petroleum development managers to the Government. In Trinidad no one may acquire oil-bearing land without the authorization in writing of the Governor, subject to the approval of the Secretary of State for the colonies. Now the latter requires of every British company that not more than 25 per cent. of its capital is to be held by aliens and that the majority of the directors shall be British.

The Polk Report goes on to prove that almost all other countries, even the smallest, close the door to Americans. Only Bolivia, Colombia and Costa Rica, which has recently annulled the concessions granted to the _British Controlled Oil-fields_ place Americans and their own nationals on the same footing. The case is different in Guatemala, in Ecuador, and, above all, in Mexico, "only Mexicans by birth or naturalization and Mexican companies have the right to acquire ownership in lands, waters and their appurtenances, or to obtain concessions to develop mines, waters, or mineral fuels in the Republic of Mexico. The nation may grant the same rights to foreigners provided they agree before the Department of Foreign Affairs to be considered Mexicans in respect of such property and accordingly not to invoke the protection of their Governments in respect to the same, under penalty, in case of breach, of forfeiture to the nation of property so acquired. Within a zone of 100 kilometres (62.14 miles) from the frontiers and of 50 kilometres (31.07 miles) from the sea-coast, no foreigner shall under any conditions acquire direct ownership of lands and waters."

Meantime the San Remo Agreement had been signed, by which the French Government--voluntarily or no--associated itself with Great Britain in order to drive out America from the Asiatic centres of petroleum production, and delivered over to her the resources which might be discovered in the zones of influence reserved for France. The French Government was so embarrassed about this agreement that for three months it dared not publish it.

When it made up its mind to do so, the publication aroused grave anxiety in the United States.

The Struggle for Mesopotamia

However, public opinion and American official circles followed the progress of the struggle with passionate interest. The situation became even more strained in consequence of an article in _Sperling's Journal_ by Sir Edward Mackay Edgar, which constituted a literal defiance. Great Britain openly boasted of her triumph. "I should say," wrote Sir Edward, "that two-thirds of the oil-fields exploited in Central and South America are in British hands. In the states of Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, and Ecuador, the great majority of the concessions are in the hands of British subjects and will be developed by our capital.

"The Alves group (_British Controlled Oil-fields_) whose properties extend two-thirds round the Caribbean Sea is entirely British; and the regulations controlling it ensure the absolute perpetuity of direction in the interests of Great Britain. No citizen, no American group, has attained, or will ever attain, in Central America a position ... like that of Mr. Alves. If we consider the greatest of all petroleum organizations, the _Shell_ group, it possesses or controls undertakings in every oil-producing country of the world, including the United States, Russia, Mexico, the Dutch Indies, Rumania, Egypt, Venezuela, Trinidad, India, Ceylon, the Malay States, China, Siam, the Straits Settlements and the Philippines.

"No doubt we shall have to wait some years before the benefits of this position can be reaped; but there is no doubt that the harvest will be magnificent. Before long America will be obliged to buy from British companies, at the rate of millions of pounds every year and to pay in dollars, in increasing quantities the oil she cannot do without, and which she can no longer obtain from her own reserves.

"I estimate that if their consumption continues to increase at the present rate, in _ten years the Americans will be obliged to import 500 million barrels_, which, at the very low price of two dollars a barrel, means an annual paying out of a thousand million dollars, of which the greater part will fall into British pockets. With the exception of Mexico and a small part of Central America, _the whole world is solidly barricaded against an attack in force by the United States_. The British position is impregnable."

One year after the peace the struggle between Great Britain and America reached its bitterest phase. The United States wished to obtain, at any price, part of the oil deposits of Mesopotamia and of the new oil-bearing territory which had just been discovered at Djambi in the Sunda Islands. Consequently, on November 20, 1920, Mr. Colby, Secretary of State, addressed a Note to Lord Curzon, which the American Press published on the 24th, in which he protested against the exclusion of Americans from Mesopotamia and claimed equality of treatment for all nations.

The British Government made, at the time, only a vague reply to the Colby Note. The English Press published the complete text.[32] Lord Curzon then declared that the existing British rights in Mesopotamia were only the confirmation of those acquired before the War by the _Turkish Petroleum Company_, the control of which the British Government holds in common with the _Royal Dutch_, for it has bought 200,000 ordinary shares in this company. But for the War the exploitation of the oil deposits of Mosul and Baghdad would long since have begun. The rights acquired by the French Government under the San Remo Agreement represent only the German share, and they were granted in return for facilities given for the dispatch to the Mediterranean of the petroleum produced. Neither the rights of the _Turkish Petroleum Company_, nor the San Remo Agreement will preclude the Arab State of Iraq from enjoying the full benefit of ownership or from prescribing the conditions upon which the oil-fields shall be developed. The British Government has no desire whatever to deny the United States a share in the expansion of the petroleum industry of Mesopotamia. And the British Note draws attention to the fact that London by no means agrees with Washington on the estimate of the petroleum resources of the various nations. While the potentialities of the future are necessarily problematical, the undisputed fact remains that at present United States soil produces 70 per cent. of the oil production of the world.[33] It is not easy, therefore, to justify the United States Government's insistence that American control should now be extended to resources which may be developed in mandated territories. The British Government, nevertheless, is in general agreement with the contention of the United States Government that the world's oil resources should be thrown open for development without reference to nationality.

This somewhat hypocritical reply did not satisfy the Federal Government. Great Britain might be in agreement with its contention that "oil resources should be thrown open for development without reference to nationality," but that did not make her open up Mesopotamia to Americans. And on the occasion of a meeting of the Council of the League of Nations at Paris, to examine in detail the problem of mandates, Washington, to annoy London, sent a Note on February 1, 1921, demanding that the question of mandates over former German colonies should be reconsidered. In the end America won her point, for during the negotiations which were conducted in London at the end of July 1922, Walter Teagle asked that the shares in the _Turkish Petroleum_ granted to the _Anglo-Persian_ (50 per cent.), to the _Royal Dutch_ (25 per cent.), and to France (25 per cent.) should be reduced in order to make room for American interests. Deterding protested, but finally accepted. The British Government gave way immediately. It is a doubtful victory for the United States, for who knows when this region will be pacified? And France will do her utmost to avoid the diminution of her share. The Angora Government showed itself at Lausanne determined to resume possession of the Mosul region, which is so rich in oil and which M. Clemenceau gave up to Britain with so little resistance.

The Struggle for Djambi

Meanwhile the _Royal Dutch_, which, in agreement with the _Anglo-Persian_, had asked the British Government to reserve for it the exploitation of Mesopotamian deposits, was endeavouring to monopolize the new deposits discovered at Djambi in the Sunda Islands.

Djambi is the last great territory to be exploited in the Dutch Indies; the oil-fields in this district cover four million acres. At first the designs of the _Royal Dutch_ met with no opposition, and it obtained from the Dutch Lower Chamber the grant of these deposits for its subsidiary, the _Bataafsche Petroleum_. But two representatives of the Standard brought a communication to the Dutch Chamber and Ministers at The Hague. The _Standard_ offered to found a company in partnership with the Dutch Government, which would hold half the territories of Djambi on the same terms as the _Royal Dutch_. It recalled the fact that in the United States the Dutch had been given every facility, and counted on reciprocal treatment.

This unexpected communication caused great disturbance in the financial and political world of the Netherlands. A deputy asked if the note from the _Standard_ came from the American Government. The Prime Minister replied that he did not know, but that in any case this note must express the views of Washington. A Socialist member proposed exploitation of the whole field by the State; this was defeated by 55 votes to 24. The Liberals, fearing international complications, were opposed to the Government plan. Finally, the Second Chamber adopted this plan by 49 votes to 30.

Thereupon a vigorous Note arrived at The Hague from Mr. Hughes, the Secretary of State, who nearly defeated Wilson on the occasion of his re-election to the Presidency and who holds to-day the most important post in Mr. Coolidge's Cabinet. Mr. Hughes ordered the United States Ambassador to insist vigorously that the Dutch Government should grant the same facilities in the Dutch Indies to American as to other companies. For, he said, the nationals of all countries have an equal right to vital natural resources, and one cannot forbid access to one particular nation. "We do not seek preference over other countries, but we do not wish other countries to obtain advantages to our detriment. And concerning oil, the solution of the problem is to give equal rights to all the companies of all nations."

The Government of the Netherlands sent to Washington its reply to the American Note. It drew special attention to the disinterestedness shown by the Americans at the time when competition was free, a time chosen by the _Royal Dutch_ to make a much more advantageous offer than those of its rivals. In 1915 the exploitation of the deposits in the Sumatra regions was granted to the State; but in 1918 this ruling was modified, and it was decided that exploitation might take place directly by the State, or through the agency of a company, or under the system of a State-controlled monopoly.

At this time no American protest had reached the Dutch Government, and none was sent until after the signing of the contract between the _Royal Dutch_ and the Government.

However, added the Note, there still remain numerous valuable oil-fields in the East Indies, and the Dutch Government would be prepared to grant concessions to American capital.

This affair seems to have been by no means settled by the vote of the Dutch Lower Chamber. The polemic continued between Washington and The Hague. In May 1921 the American Government demanded the publication of its Note of April 19th, which The Hague was determined to keep secret. And in Holland the Colonial Secretary was violently reproached for having concealed from the Chamber the details of the correspondence exchanged with the United States. I have been able to procure the text of the letter submitted by the _Standard_:

"The development of petroleum deposits is at present a vital question for every country, and increasing attention must be devoted to it by the whole world. The Dutch colonies have the good fortune to possess extremely rich petroleum deposits, especially in the Djambi region. The _Standard Oil_, an American limited liability petroleum company, asks to be allowed to share in the development of the deposits at Djambi, and a decision must shortly be taken on the matter. Considering the great extent of the oil-fields of Djambi, the Dutch Government will certainly not consider it to the interest of the country and people to allow them to be exploited by a single company.

"The _Standard Oil_ submits for the approval of the Dutch Government a scheme for founding a Dutch company under the mining legislation of the Dutch Indies, according to which part of the Djambi region would be exploited on the basis of the native law. This project would have to be submitted to the Second Chamber of the States-General. The _Standard Oil_ declares itself ready to furnish all necessary guarantees for the exploitation of the said territory.

"The _Standard Oil_ is convinced that the Dutch Government will readily admit that the United States, which are and always have been the greatest producers of petroleum, could bring as much profit to Dutch interests as they have done for their own citizens.[34] We American companies, therefore, believe that we have a right to share in the development of the petroleum fields of Djambi, and we are sure that this participation would serve the interests of Holland equally with those of the United States, and would help to strengthen the bonds of friendship which exist between the two countries."

This did not have a soothing effect on public opinion in Great Britain. Since the War, wrote _The Times_, the question of petroleum had become an international question of the first order. Great Britain took an especial interest in it; its security depended, more than that of other countries, on power over sea and air. Up to Trafalgar, when the essential thing was to have ships of stout oak, she watched carefully over her forests.... She could not do the same with oil, for she possessed so little in the Empire.

The United States desire equality of treatment. Britain denies the justice of this claim. "United States soil," wrote Lord Curzon, "produces 70 per cent., and American interests in adjoining territory control a further 12 per cent. of the oil production of the world." Great Britain, he pointed out, had only 40 per cent., and that in distant territories.

The United States replied that eighteen years from now all their oil would be exhausted, and they would not even be able to satisfy their home consumption. The orders for 1920 exceeded the output. "Not so!" replied the British. The excessive demand caused the price of oil to rise, and the demand then diminished in reaction. You have even been obliged to lower the price. The price of Pennsylvanian crude oil fell from 6.10 to 3.00 dollars a barrel between December 1920 and April 1921. And as Mexico is developed the swing of the pendulum will continue in the same direction. But you need not fear the exhaustion of American petroleum. Read the reports of your experts. Mr. David White, of the United States Geological Survey, has given his opinion that the American fields will have passed maximum production in a few years' time. Mr. Lane, formerly Secretary of the Interior, has gone even further, and has estimated the percentages of exhaustion of the main oil-fields as follows:--

Lima, Indiana 93 per cent. Appalachian 70 per cent. Colorado 65 per cent. Illinois 51 per cent.

But Mr. White himself admits that there are in the United States many oil-fields insufficiently exploited or even still unknown. As for Mexican petroleum, which is said to be threatened by salt water, there is no need for uneasiness. Exploitation there is only just beginning and will produce many pleasant surprises.

Lord Curzon, moreover, sweeps aside all statistics with a disdainful gesture. We cannot trust their accuracy, he says. But this gesture did not impress the United States; they were determined to obtain satisfaction at any price.

FOOTNOTES:

[Footnote 27: This amount has since been more than doubled.]

[Footnote 28: By the contract already mentioned which expired in 1922.]

[Footnote 29: _Revue Universelle_, October 15, 1920.]

[Footnote 30: They did not sacrifice themselves for nothing!]

[Footnote 31: Report of the American Director of the Bureau of Mines, Van H. Manning, to the Secretary of State for the Interior.]

[Footnote 32: _Times_, April 6, 1921.]

[Footnote 33: In reality, at the date of this Note, the United States were only producing 64 per cent., and a great part of this output is in British hands (_Royal Dutch-Shell_).]

[Footnote 34: The question, however, has not been settled as they desired.]