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International Politics and Iraqi Oil, 1918–1928: A Study in Anglo-American Diplomacy

Published online by Cambridge University Press:  11 June 2012

William Stivers
William Stivers
Affiliation:
Assistant Professor of Political Science, Colorado College
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Abstract

In recent years the political turmoil in the Middle East, the activities of OPEC, and the threat of “the oil weapon” have created so many reverberations in the industrialized world that it is easy to forget that petroleum has long been a significant factor in international politics. A relatively early case in point is the controversy that emerged after World War I when British and American interests clashed over the control and exploitation of the great oil wealth of Iraq. While the problem was satisfactorily resolved—at least from the Anglo-American standpoint—the action of diplomats on both sides not only reflected the growing importance of Middle-Eastern petroleum but also brought out the differing British and American philosophies of what the international economic order should be. While some people may disagree with the interpretation offered in this essay, Professor Stivers clearly demonstrates that access to and control of petroleum resources lay at the heart of the contentious issues that altered and shaped the international order of the early twentieth century.

Type
Research Article
Information
Business History Review , Volume 55 , Issue 4 , Winter 1981 , pp. 517 - 540
Copyright
Copyright © The President and Fellows of Harvard College 1981

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References

1 Minutes, War Cabinet 457, Imperial War Cabinet 30, August 13, 1914, in Cabinet Office Records, Public Records Office, London (hereafter cited as CAB), CAB 23/43.

2 See pp. 7–8.

3 Memorandum of Conversation with Mr. L. I. Thomas (Vice-President of Standard Oil, New York), by Arthur C. Millspaugh, April 14, 1921, in Department of State Archives, National Archives, Washington, D.C. (hereafter cited as DS), DS 890g. 6363 T 84/9; Memorandum of Conversation, November 21, 1921, by Millspaugh, November 26, 1921, DS 890g. 6363/76; Millspaugh to Dearing (Assistant Secretary of State), November 26, 1921, DS 890g. 6363 T84/24; Memorandum of Conversation between Sir John Cadman and Millspaugh, January 16, 1922, DS 841. 6363/203. For the prewar formation of the Turkish Petroleum Company, see the definitive work by Kent, Marian, Oil and Empire (London, 1976), 33–113.CrossRefGoogle Scholar

4 For a description of the commercial negotiations, see Gibb, George Sweet and Knowlton, Evelyn H., The Resurgent Years, 1911–1927, History of the Standard Oil Company of New Jersey (New York, 1956), 291–308.Google Scholar The remaining 5 per cent share in the TPC was allocated to C. S. Gulbenkian, an Armenian entrepeneur who possessed legal rights in the prewar company.

5 For a sampling of works that argue along the lines described, see De Novo, John A., “The Movement for an Aggressive American Oil Policy Abroad, 1918–1920,” American Historical Review 61 (July 1956), 854–867CrossRefGoogle Scholar; De Novo, John A., American Interests and Policies in the Middle East (Minneapolis, 1963)Google Scholar; Klebanoff, Shoshona, Middle Eastern Oil and U.S. Foreign Policy (New York, 1974)Google Scholar; Nash, Gerald D., United States Oil Policy, 1890–1964 (Pittsburgh, 1968)Google Scholar; Parrini, Carl P., Heir to Empire: United States Economic Diplomacy, 1916–1923 (Pittsburgh, 1969).Google Scholar For the best (and one of the few) works that takes issue with the “conflict” thesis, see Hogan, Michael J., Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918–1928 (Columbia, Mo., 1977).Google Scholar

6 For a discussion of Jersey Standard's postwar marketing aspirations, see Gibb and Knowlton, 259–277, 497–519. It should be noted that the British government was not indifferent to the monopolistic pricing implications of a Standard Oil marketing hegemony. But the means the goverment saw of combating “price gouging” was to preserve the independence of the Anglo-Persian Oil Company. In the government view, so long as the APOC was independent (with its state majority shareholding) it would act as a competitive counterweight to hold prices down. British documents reveal no evidence that the pricing consideration played any significant part in British deliberations over Iraq. For the role of the APOC as a competitive balancer, see Jones, G.Garetti, “The British Government and the Oil Companies 1912–1924: The Search for an Oil Policy,” The Historical Journal 20, No. 3 (September 1977), 651, 660.CrossRefGoogle Scholar

7 Viscount Long to the Prime Minister, September 29, 1921, Power Ministry Archives, Public Records Office, London (hereafter cited as Power 33/-) Power 33/96.

8 Memorandum by First Lord of the Admiralty (Leo S. Amery), December 16, 1922, IRQ 11, CAB 27/206. Admiralty interests were emphasized repeatedly, such as in remarks made by Balfour in the War Cabinet meeting cited in footnote 1. See also Admiralty memo by Admiral Slade, July 29, 1918, GT 5267, CAB 24/59; Memo by First Lord of the Admiralty, GT 5710, CAB 24/64; Petroleum Executive Memorandum, signed by Walter Long, February 22, 1919, GT 6961, CAB 24/76.

9 Admiralty to FO, December 7, 1922, no. E 13749, FO 371/7785.

10 British control was stipulated in article 32 of the TPC “Convention with the Government of Iraq,” March 1925, a copy of which is in DS S90g. 6363 T 84/216. Prior drafts had effectively the same wording. English jurisdiction was provided in article 23 of the commercial agreement between the Company partners, DS 890g. 6363 T84/320. British control and domicile were never points at issue.

11 For a statement of British strategic interests in Iraq, see “Reports, Proceedings and Memoranda of Cabinet Committee on Iraq, 1922–1923,” CAB 27/206.

12 Iraqi self-sufficiency was seen as vital in preventing Iraq from becoming a liability. Only when Iraq became self-sufficient, would it, in the words of a Cabinet memorandum, “constitute a stable factor in the group of British interests in the East, without either imposing a burden upon the British Exchequer or entailing military liabilities which His Majesty's Government would be unwilling to assume.” Report of Committee on Iraq, March 23, 1923, Cabinet 22 (23), Appendix I, CAB 23/45.

13 For a full treatment of the Cairo Conference, see Klieman, Aaron, Foundations of British Policy in the Arab World: The Cairo Conference of 1921 (Baltimore, 1970).Google Scholar

14 Colonial Secretary to Acting High Commissioner in Bagdad, August 4, 1923; FO to CO, December 17, 1923, both in Power 33/183; FO to CO, January 23, 1924, Power 33/183.

15 The Iraqi finance minister, in negotiations held in London in September, 1923, apparently used a document prepared by the Petroleum Department on July 10, 1923 as the basis of his objections to a Turkish Petroleum Company draft convention. Before meeting with Company representatives, he had been coached and primed for his encounter by representatives from the Petroleum Department and the Colunial Office. “Objections to and proposals for revision of Turkish Petroleum Company's concession draft of 15th May, 1923 …,” memo in Power 33/366. Also Colonial Secretary (Leo Amery) to the High Commissioner in Bagdad, February 25, 1925; Colonial Secretary to H. E. Nichols (Turkish Petroleum Company), March 2, 1925, both in Power 33/210.

16 This exchange can be followed in Foreign Relations of the United States, 1919, II, pp. 258–261; 1920, II, pp. 651–655, 663–667, 669–673; 1921, II, pp. 80–84, 89–93. See also Documents on British Foreign Policy, 1919–1939, 1st, IV, pp. 541–542.

17 For a good, short treatment of this, see Hogan, 178–179. On the whole, Churchill tended to take a more dramatic view of the problem than his colleagues. When the questions of U.S. opposition to the mandate was raised in the Cabinet on June 14, 1921, no great urgency was attached to the issue. (Minutes, Cabinet 49 (21), June 14, 1921, CAB 23/26.) Moreover, in early June 1921, Churchill himself hit on a method of skirting the difficulty by scrapping the normal “mandate” and entering into a treaty relationship with the Iraq government. The British proceeded to consolidate their position from that point, despite the fact the League did not formally approve the arrangement until September 1924.

18 Minute by Weakley, directed to Muller, July 28, 1920; minute by Curzon, July 29, 1920, both in no. E 8077; Sir Arnold Wilson to IO, July 20, 1920, no. E 8978, all in FO 371/5085; minute by Tyrell, November 3, 1920; minute by Tilley, November 3, 1920 (quote), both in no. E 13385, FO 371/5086.

19 Memorandum of Conversation with Mr. L. I. Thomas (Vice-President of Standard Oil, New York) by Millspaugh, January 18, 1921, DS 811. 6363/67; U.S. Embassy, London, to Department of State, March 23, 1921, DS 841. 6363/133; Van H. Manning (American Petroleum Institute) to Department of State, August 10, 1920, DS 800.6363/288.

20 Minute by Weakley, December 13, 1921, no. E 12708, FO 371/6364.

21 Minutes, War Cabinet 457, Imperial War Cabinet 30, August 13, 1918; WC 458, IWC 31, August 14, 1918; WC 459, IWC 32, August 15, 1918, all in CAB 23/43; WC 482A, October 3, 1918, CAB 23/14; Intelligence Bureau memorandum, GT 3324, January 19, 1918, CAB 24/39.

22 See “The Unequal Burden of Proposed Mandates,” memo by Lansing, June 20, 1919, Lansing Mss., Confidential Memoranda and Notes, Vol. II. The American side of the Armenian question is treated in Gidney, J. B., An American Mandate for Armenia (Kent State University, 1967).Google Scholar

23 The British quest for “amity” and “cooperation” as values in themselves was of course apparent when they gave up their alliance with Japan solely to satisfy the United States. Evidence of the unfolding British policy can be seen in the following files: Geddes to Curzon, May 28, 1920, no. E 3755, FO 371/4587; Geddes to Curzon, October 18, 1920, no. A 7615, FO 371/4612; minute by J. A. C. Tilley, November 3, 1920; FO to Petroleum Department, November 16, 1920, both in no. E 13385, FO 371/5086; Geddes to Curzon, September 21, 1921, no. A 7148, FO 371/5619; minute by W. Tyrell, October 4, 1921, no. E 7146, FO 371/5619; “Iraq Oil,” memo circulated by Winston Churchill, March 13, 1922, CP 3882, CAB 24/133.

24 The decisions on the tungsten mines and foreign property restrictions are found in Minutes, WC 580, June 8, 1919; Minutes, WC 585, June 30, 1919, both in CAB 23/10; Minutes, Committee of Home Affairs, 67, June 25, 1920, CAB 26/2. For an overview, see Lowe, Rodney, “The Erosion of State Intervention in Britain, 1917–1924,” Economic History Review 31, No. 2 (May 1978) 270–286.CrossRefGoogle Scholar

25 See, for example, “Investment of Foreign Capital in the British Empire,” Colonial Office memo, October 28, 1918, CP 6141, CAB 24/68.

26 Admiralty Memorandum, signed by R. E. Wemyss, December 22, 1918, CAB 24/72/1; Minutes, Interdepartmental Committee of Petroleum, May 26, 1921; R. Whaley Cohen (Shell Company) to Petroleum Department, May 15, 1923; Cadman (Anglo-Persian Oil Company) to Cole (HM Mines Department), July 29, 1929; Sir Arnold T. Wilson (APOC) to FO, May 17, 1929, all in Power 33/275.

27 See footnote 5.

28 Two examples are: “Summary of Facts and recommendations bearing upon the petroleum policy of the United States prepared by the Subcommittee on Mineral Raw Materials of the Economic Liaison Committee, July 11, 1919,” DS 811. 6363/45; “Draft Report to the Secretary of Merchant Marine Fuel Oil Supply,” August 20, 1919, Department of the Interior Archives, Washington, D.C. (hereafter cited as RG 48), file 2–209.

29 “Protection of tlie Petroleum Industry of the United States,” memo by W. E. Perdew directed to Bernard Baruch, February 4, 1919; supplemental memo, Perdew to Baruch, February 10, 1919. These communications were sent to the President in Paris by Fuel Administrator Garfield, Wilson Mss., Series 53. Some months later, a U.S. Shipping Board memorandum embodied the same concerns as the two above. W. S. Benson (United States Shipping Board) to Department of State, August 22, 1919, transmitting memo by Captain Paul Foley, August 18, 1919, DS 800. 6363/11.

30 Teagle or Bedford to Baruch, “Memorandum on Mesopotamia and Other Oil Bearing Regions, Affected by the Peace Settlements,” sent to the State Department by Thomas A. O'Donnell (American Petroleum Institute), September 30, 1919, DS 800.6363/89.

31 Memorandum of Conversation with Mr. L. I. Thomas (Socony), April 14, 1921, by Millspaugh, DS 890g. 6363 T 84/9.

32 Memo by Millspaugh, directed to Mr. Dearing and the Secretary, September 24, 1921, DS 811.6363/75.

33 Requa to Naramore, November 28, 1918, Bureau of Mines Special Files, National Archives, Washington, D.C. (hereafter cited as RG 70), file 142.I.B; Perdew to Requa, December 28, 1918, RG 70, file 139.I.C.

34 See, for example, B. S. Cutler (Chief, Bureau of Foreign and Domestic Commerce), to the Secretary of Commerce, May 27, 1918, RG 40, file 77255. The State Department took note of the potential effects on American trade of a government-controlled oil corporation in Australia. Department of State to American Embassy, London, May 24, 1920, DS 841.6363/49; American Counsel General, Melbourne, to Department of State, May 27, 1920, 841.6363/76; Resident Trade Commissioner, Melbourne, to Bureau of Foreign and Domestic Commerce, October 13, 1920, DS 841.6363/97.

35 Hoover, Herbert, The Memoirs of Herbert Hoover, the Cabinet and the Presidency, 1920–1933 (New York, 1952) 79–80, 85–91.Google ScholarTenth Annual Report of the Secretary of Commerce, 1926 (Washington, D.C., 1927) 35, 104–106, 116–121, 131–143.

36 Memo by Millspaugh of a Conversation ot the Secretary with Mr. Bedtord and Mr. Wellman of Standard Oil of New Jersey, June 22, 1922, DS 890g. 6363/147.

37 Hughes to Teagle, December 2, 1922, DS 890g. 6363/199a.

38 Hughes to Coolidge, October 31, 1923, DS 890g. 6363 T 84/117.

39 Memo by Millspaugh, April 29, 1922, DS 890g. 6363/181.

40 Herbert Hoover to Department of State, March 21, 1921, DS 800.01 M31/14a.

41 Hoover to Hughes, August 19, 1922, DS 890g. 6363/47.

42 Memo by Arthur N. Young, May 19, 1923; Memo by Stanley K. Hornbeck, April 26, 1923, both in DS 890g. 6363 T 84/92; Memo by Allen W. Dulles, June 14, 1923, DS 890g. 6363 T 84/97; Memo by Dulles directed to the Secretary, October 26, 1923; Charles Evans Hughes to the President, October 31, 1923, both in DS890g. 6363 T 84/117.

43 Wesley Frost (Acting Foreign Trade Adviser) to Van Manning (American Petroleum Institute), November 27, 1920, DS 800.6363/205a.

44 Memo of Conversation, June 22, 1922, see footnote 36.

45 Memo by Dulles, October 26, 1923, see footnote 42.

46 Memo by Young, May 19, 1923, see footnote 42. My view on how U.S. policymakers defined an “open door” follows closely that of Hogan, who applies the argument to other cases—the China Consortium, cable policy, and radio communications. For a differing view, see Parrini, Carl, “Anglo-American Corporatism and the Economic Diplomacy of Stabilization,” Reviews in American History 6, No. 3 (September 1978), 379–387.CrossRefGoogle Scholar

47 Geddes to Curzon, April 27, 1923, no. E 4624, FO 371/9151; Memo by Dulles of Conversation with Wellman, directed to the Secretary, November 28, 1922, DS 890g. 6363 T 84/89; Memo by Dulles of Conversation with Wellman, directed to the Secretary, January 30, 1923, DS 890g. T84/79 (quote).

48 Redfield to Hurley (U.S. Shipping Board), May 28, 1918, RG 40, file 77270.

49 Bristol War Diary, September 28, 1922, Bristol Mss., Division of Manuscripts, Library of Congress, Washington, D.C. Bristol's comments are ironic in this respect, because the British felt him to he anti-European and pro-Turk.

50 “Self-determination and the Dangers,” memo by Lansing, December 30, 1918. Lansing Mss., Confidential Memoranda and Notes, Vol. I.

51 Memo by MacMurray, April 28, 1920, DS 741. 9411/76; President Harding to Hughes, July 6, 1921, DS 741. 9411/136; Hughes to Harvey (U.S. Ambassador in London), July 6, 1921, DS 741. 9411/36a (quote); Butler Wright, in London, To Department of State, April 29, 1921, DS 741.9411/76.

52 Engert, Teheran, to Department of State, January 22, 1922, DS 890g. 01/19; Memo by Dwight, directed to Harrison (Assistant Secretary), April 13, 1922, DS 890g. 01/23; Memo by Dulles, directed to Harrison, September 25, 1922, DS 890g. 00/57.

53 Memo by Millspaugh on the General Petroleum Situation, February 19, 1921, directed to the Secretary by Van S. Merle-Smith, DS 800.6363/325.

54 Hughes to the President, October 31, 1923, DS 890g. 6363 T84/117.

55 For A concise, yet broad, treatment of U.S. “harmony or interests” perceptions, see articles by Gardner, Lloyd and Smith, Robert Freeman in Bernstein, Barton, ed., Towards a New Past (New York, 1969), 202–256.Google Scholar

56 Governor of Louisiana to Department of State, February 26, 1921; Hughes to Governor of Louisiana, April 20, 1921, both in DS 811. 6363/46.

57 Davis to Senator Henry Cabot Lodge, February 28, 1921, DS 811. 6363/35.

58 J. W. Alexander to Senator James D. Phelan, June 7, 1920, Department of Commerce, Petroleum, General.

59 Leland Hamson (Bogota) to Department of State, April 17, 1913, DS 821. 6363/1; Harrison to Department of State, May 1, 1913, DS 821.6363/4; Harrison to Department of State, August 11, 1913, DS 821.6363/7; William Jennings Bryan to American Legation, Bogota, October 1, 1913, DS 821.6363/8; Harrison to Department of State, November 14, 1913, DS 821.6363/19; Harrison to Department of State, November 22, 1913, 821. 6363/22; Bryan to American Legation, Bogota, November 25, 1913, DS 821. 6363/22; Lansing to American Legation, Port-au-Prince, September 30, 1916, DS 838.63/5; Ruan (American Financial Advisor to Haiti) to American Minister, Port-au-Prince, DS 838. 63/12. Lansing to American Legation, Costa Rica, June 21, 1918, DS 818. 6363 Am6/2; FRUS, 1919, 1, pp. 865–876; memo by Millspaugh, February 19, 1921, DS 800. 6363/325; Millspaugh to Dearing, May 14, 1921, DS 818.6363/85.

60 Memo by Millspaugh, February 19, 1921, DS 800. 6363/325; Millspaugh to Dearing, May 14, 1921, DS 818. 6363/85; Millspaugh to Dearing and the Secretary, DS 818. 6363/124; Hogan, 166–171.

61 E. L. Doheny (Mexican Petroleum Company, Pan-American Petroleum Company) to Franklin K. Lane, October 16, 1919, RG 48, file 2–208.

62 Conference at the Bureau of Mines, April 1, 1921, DS 811. 6363/46.

63 Wellman to William Phillips (Undersecretary of State), March 23, 1923, DS 810. 6363/75.

64 British Petroleum Trade in 1925, Bureau of Foreign and Domestic Commerce Reader Information Bulletin No. 407 (Washington, D.C., 1926).