POLITICAL AND COMMERCIAL CONTROL OF RESOURCES
The accompanying diagram ([Figure 2]) shows graphically the approximate commercial control of the world’s production of petroleum in 1917.
Fig. 2.—Approximate commercial control of the world’s production of petroleum in 1917.
Commercial control of the petroleum industry in the United States is in the hands of the so-called “Standard Oil Group” of companies, through their control of most of the great pipe-line systems of the country, of probably 75 per cent. of the refining facilities and of a substantial part of the actual production. Other domestic interests having important shares in the control of the petroleum industry in the United States include the Southern Pacific Railroad Co., Cities Service Co. (Doherty interests), General Petroleum Corporation, Gulf Oil Corporation, Ohio Cities Gas Co., Cosden & Co., Sinclair Oil & Refining Corporation, The Sun Co., the Texas Co., the Tide Water Oil Co., and the Union Oil Co. Foreign interests in the United States include purely British companies, which control a production of about 2,000,000 barrels a year; British-Dutch companies represented by the Royal Dutch-Shell Syndicate, which control a production of about 9,000,000 barrels a year, together with refining and marketing facilities; and Franco-Belgian companies controlling a yearly production of about 1,000,000 barrels. Aside from the very probable holdings by individual Germans of shares in companies engaged in one or more phases of the petroleum industry of the United States, the author is aware of no organized German interest in any phase of the domestic industry.
Commercial control of the petroleum industry of Russia is, under the political conditions now existing in central Europe, largely a matter of speculation. As nearly as can be ascertained, the dominant control is in the hands of purely British, Franco-British, and British-Dutch (Royal Dutch-Shell Syndicate) interests. Certain of the second-named interests are allied closely with an additional group of capitalists represented by the firm Nobel Bros., of much importance, the present control of which is by no means clear, from the literature available on the subject. Though originally Swedish, the financial interests now involved in Nobel Bros. are believed to include representatives of financial groups in England, France, and Germany as well, with control probably lying with the Anglo-Swedish interests. Before the war, direct German interest in Russian petroleum included control by the Deutsche Bank through a Belgian company (the Petrole de Grosny) of the important producing and refining company, A. I. Akverdoff & Co., control of which is now in British or British-Dutch hands. As in the United States, a considerable part of the actual production of petroleum in Russia is distributed among a large number of individually weak companies, dominated, through the control of pipe-line or refining facilities, by one or another of the principal groups.
Of considerable importance in Russian petroleum affairs at one time was the European Petroleum Union, organized for combat in the world markets with the Standard Oil trust. This union included among others such important petroleum operators as Nobel Bros., the Rothschild interests (now Dutch-Shell), Mantaschoff (now Russian General Oil Corporation) (British), and the Deutsche Bank, the latter controlling Akverdoff and Spies in Russia, together with important companies in Roumania and Galicia. How far this union controlled the affairs of its constituent companies is not evident from available data, and its present influence on companies now operating in Russia is uncertain.
Conditions in Russia make impossible any definite statement on the petroleum situation. A decree of the Bolsheviki government, dated June 20, 1918, on the nationalization of the petroleum industry, declared as the property of the state all movable and immovable property employed in and belonging to that industry. Trading in oil was declared a state monopoly and was delegated to the chief petroleum committee of the fuel department of the supreme Council of National Economy. As the chief producing areas are now under British military control, this decree is ineffective.
Commercial control of petroleum in Mexico is divided among United States, British, and British-Dutch interests, which controlled about 65, 30 and 2 per cent., respectively, of the production in 1917. The interests of the United States include the Doheny group, operating principally as the Huasteca and Mexican Petroleum companies; the Standard Oil Co. of New Jersey, operating as the Penn-Mex Fuel Co.; the Sinclair interests, operating as the Freeport and Mexican Fuel Oil Co.; the Texas Co.; Gulf Co.; Southern Pacific Railroad; and others. The British interests are represented by the Pearsons, operating as the Mexican Eagle Oil Co.; and the British-Dutch interests by La Corona Petroleum Co., and Chijoles Oil, Ltd., controlled by the Royal Dutch-Shell Syndicate. No exclusively German interests are known to hold a substantial portion of any important company operating in Mexico.
Formerly concessions were freely granted to foreign individuals and companies for the exploitation of mineral deposits, and oil lands were sold by the native owners to foreigners. Article 27 of the constitution of 1917 expressly forbids any but Mexican companies acquiring directly or operating directly petroleum lands in Mexico.
All recent concessions for the exploitation of oil properties contain a provision stating that the concession will be declared null if any of the rights are transferred to any foreign government. The provisions and the intent of a series of presidential decrees issued on February 19, 1918, July 8, 1918, July 31, 1918, and August 1, 1918, are to nationalize all petroleum lands and to permit them to be worked only by Mexican citizens or by companies that agree to consider themselves Mexican and further agree not to invoke the protection of their governments. A bill was presented in December, 1918, to carry out Article 27 of the new constitution, but thus far no action has been taken in the matter. The decrees and legislation growing out of Article 27 have been protested by the chief petroleum companies operating in Mexico and by their respective governments.
Commercial control of the petroleum resources of the Dutch East Indies is in the hands of the Royal Dutch-Shell Syndicate and is essentially absolute by reason of the restrictions contained in the Netherlands East India Mining Act and subsequent supplements on foreign acquisition of mining rights in the East Indian Archipelago. Actual control is in the hands of the Bataafsche Petroleum Maatschappij, which has a capital of $56,000,000 divided into five shares, three of which are owned by the Royal Dutch Petroleum Co., and two by the Shell Transport Trading Co. (British). Purely British interests control an inconsequential production of petroleum in British North Borneo and in Sarawak.
Prospecting licenses and concessions are granted only to Dutch subjects and to Dutch companies. It is officially stated that the object of these restrictions is not to exclude foreign capital; this is precisely their effect, and on account of the economic monopoly which the Royal Dutch-Shell now has of the petroleum industry of the Dutch East Indies, it would be very difficult for any new enterprise to gain a foothold.
Commercial control of the petroleum resources of India is exercised by the Burma Oil Co. through its dominance of production, refineries, and pipe-line facilities, and by reason of agreements as to marketing with its principal competitor, the British Burma Petroleum Co., both controlled by British capital. The Burma Oil Co. is allied with, if not directly controlled by, a group of British financiers, one or more of whom is interested in companies in Trinidad and in Persia.
During the war the petroleum industry of Roumania was temporarily wholly in control of German and Austrian interests. The advanced stage of development of the oil fields prior to the war and the intentional damage, much of which is irreparable, wrought in the fields by British detachments in 1916, when capture of the fields by Austro-German forces became inevitable, are believed, however, to have deprived Germany of a large part of the fruits of her conquest, as it is considered doubtful if the Roumanian fields can ever again be made to yield petroleum at the pre-war rate of 12,000,000 barrels per annum.
The American Petroleum Institute states that “Roumania is considering the erection of a state monopoly of both production and distribution on the ruins of the monopoly which Germany sought to establish there but was compelled by the armistice to renounce.”
Prior to the war Dutch or rather British-Dutch (Dutch-Shell) interests controlled about 30 per cent. of the annual production of petroleum in Roumania, German interests about 26 per cent., United States interests (Standard Oil Co. of New Jersey) about 18 per cent., French interests about 16 per cent., purely British interests about 6 per cent., and Belgian and Roumanian interests the remainder.
Through the Austrian “Society Gaz” and the German “Deutsche Erdoel Aktien-gesellschaft,” German interests have dominated the petroleum industry of Galicia for years through the direct control of the larger producing and refining interests and by reason of the fact that the smaller scattered interests were dependent almost entirely on the two leading companies, the Galizische Karpathen Petroleum A. G. (controlled by Society Gaz), and the Premier Oil & Pipe Line Co. (controlled by the Deutsche Erdoel A. G., which is in turn controlled by the Diskonto und Bleichroeder, a branch of the Deutche Bank) for their transportation and refining facilities. British and Dutch capital were involved in the Galician fields prior to the war, but not, it is believed, to a controlling extent in either of the dominant companies.
The petroleum industry of Japan is controlled wholly by Japanese interests and to a preponderant extent by a single company, the Nippon Oil Co. So far as the author is aware, no foreign interests share in any way in the development or control of the Japanese petroleum industry.
Commercial control of the petroleum industry of Peru is exercised by the Standard Oil Co. of New Jersey through its subsidiary, the Imperial Oil Co. of Canada. This control involves about 70 per cent. of the annual production, the remaining 30 per cent. being divided in the ratio of 27 to 3 between British and Italian interests respectively. So far as is known no other interests are involved.
The interests engaged in the petroleum industry of Trinidad include financial groups purely British, controlling about 57 per cent. of the production; British-Dutch interests (Dutch-Shell) controlling about 23 per cent., and United States interests (General Asphalt Co.), controlling the remainder. The leading operator in Trinidad is the Trinidad Leaseholds, Ltd., a British company that in 1917 produced about 42 per cent. of the petroleum output credited to Trinidad that year.
Commercial control of the petroleum resources of lower Alsace has been in the hands of the Vereinigte Pechelbronner Oelbergwerke Gesellschaft and the Deutsche Tiefbohr A. G. Both of these companies are believed to be controlled by the Deutsche Bank through the Deutsche Erdoel A. G., and the Diskonto und Bleichroeder. The negligible production of petroleum in Hanover is doubtless under the same financial control, although data that would warrant a positive statement to that effect are not at hand.
The petroleum reserves of Argentina, which comprise the only areas from which petroleum is being commercially produced in that country, are operated by the state through the Comodora Rivadavia Petroleum Commission. German interests are thought to have been involved in two or three unsuccessful efforts in the last decade to obtain petroleum on tracts adjacent to the government reserves in the Comodora Rivadavia district.
The petroleum industry in Egypt is controlled wholly by British-Dutch capital operating as the Anglo-Egyptian Oilfields, Ltd., a subsidiary of the Royal Dutch-Shell Syndicate, through the Anglo-Saxon Petroleum Co., the last-named company being predominantly British.
Commercial control of the petroleum industry in Canada is exercised in effect by the Standard Oil Co. of New Jersey, through its subsidiary the Imperial Oil Co. of Canada. This control is exercised through a virtual monopoly of pipe-line and refining facilities, and by the producing interests, though British and Canadian, being individually small and unorganized.
The production of petroleum in Italy, which is small, represents the output of two companies, the Petroli d’Italia, in which French capital is predominant, and the Petrolifera Italiana, which is believed to be essentially Italian.
Financial groups interested in petroleum in Venezuela include the Royal Dutch-Shell Syndicate (British-Dutch), the General Asphalt Co., (United States), and a group of British financiers who control properties in Trinidad as well as the most important group of companies, other than Nobels and the Dutch-Shell, in Russia.
United States interests, including the Standard Oil Co., the Doherty interests, the Texas Co., the Gulf Corporation, and the Island Oil Transport Corporation, are predominant in the quest for petroleum in Colombia. The Venezuelan Oil Concessions, Ltd., an English company operating in Venezuela, is reported to have obtained a concession to explore for oil in the northwest district of British Guiana.
The Sinclair interests (United States) are particularly active in the search for petroleum in Costa Rica and Panama; and the Sun Co. (United States) is understood to be investigating petroleum possibilities in other Central American republics.
The Pearson interests (British) have expended considerable effort in the quest of petroleum in Algeria and Morocco, and in the former country American interests (E. E. Smith) are reported to have recently sought petroleum concessions from the French government.
British interests, including the British government, control extensive petroleum concessions in Persia, from which oil in unreported quantities is now being produced.
The most promising oil territory of Persia has recently been closed to American activity through the granting of a concession aggregating approximately 500,000 square miles to a British concern, the Anglo-Persian Oil Co., a majority of whose voting stock is owned by the British government. This concession runs until 1961. The importance of the oil territory is indicated by its reported potential capacity of 30,000,000 barrels yearly, with tremendous reserves undeveloped.
United States interests (Standard Oil Co. of New York) are understood to still retain control over the petroleum rights in certain provinces in China, where active prospecting in two or three localities a few years ago was reported to have yielded unfavorable results.
Petroleum in small quantities is produced in New Zealand by purely British interests.