This simple alliance became a complete union ten years later. The Royal Dutch and the Shell amalgamated on the following basis:—
On January 1, 1907, the two groups transferred their assets to two companies, one Dutch, one British. These were the Bataafsche Petroleum Maatschappij and the Anglo-Saxon Petroleum.
The Bataafsche, or Batavian Oil Company, which now has a capital of 200 million florins, was specially entrusted with the extraction of oil and with everything concerning its production. Its oil-fields are situated in Java, Sumatra and Borneo, and it exploits them directly or by subsidiary companies. It has interests in the Mexican Corona company and in many Russian companies.
Although this last part of its program has not hitherto been productive, the Bataafsche has distributed during the last few years dividends representing annually nearly half its capital. Directly or indirectly, it is responsible for almost the whole production of the Dutch Indies, which amounts to nearly 20 million barrels annually, and is steadily rising. To meet this increase, the Batavian Oil Company is obliged every year to construct new reservoirs. In 1920 their capacity had reached more than 900,000 tons.
The Anglo-Saxon Petroleum, with its head-quarters in London, was entrusted with everything concerning the transport and sale of oil, that is to say, with the commercial side of the business. Unlike the Bataafsche, this company undertakes no direct exploitation, although it controls the production of a large number of subsidiary companies in Ceylon, British India, Malay, Northern and Southern China, Siam, the Philippines, Australia, New Zealand and South Africa. For the Royal Dutch-Shell has an almost organic structure. Instead of reproducing itself in new companies, always the same, like the Standard Oil, it only receives new adherents for distinct functions. One company is entrusted with the distribution of its products, another with the exploitation of oil-fields or with refining. The Royal Dutch and the Shell have become to-day holding companies. In 1907 the Royal Dutch ceased to be an industrial enterprise and became an omnium of oil securities.
Forty per cent. of the profits resulting from this co-operation were to come to the Shell, 60 per cent. to the Royal Dutch, which has reserved the lion's share for itself.
At the time of signing this agreement the Shell was not without a certain anxiety. Thus it was agreed, in order to safeguard its interests, that the Royal Dutch would buy, on January 1, 1907, half a million ordinary shares of the Shell at the price of thirty shillings, and would undertake not to sell again without the consent of the board of directors of the Shell.
In case of liquidation or sale by private contract before January 1, 1932, it was stipulated that the net product of the liquidation, up to £9,000,000 sterling, was to be divided equally between the Shell and the Royal Dutch, and that only above this amount the products should be shared in the proportion of 40 and 60 per cent. We see how closely these two concerns are allied. The only difference which exists between them is that, officially, one is Dutch, the other British.
Deterding's First Victory. The Chinese Campaign
Freed from all obstacles in the Dutch Indies and allied with one of the most powerful British firms, the Royal Dutch, under the skilful guidance of Henry Deterding, was ready to attempt a conquest of the world.