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State power and industry influence: American foreign oil policy in the 1940s

Published online by Cambridge University Press:  22 May 2009

Robert O. Keohane
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Type
Review Essays
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International Organization , Volume 36 , Issue 1 , Winter 1982 , pp. 165 - 183
Copyright
Copyright © The IO Foundation 1982

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References

1 Neff, Thomas L., “The Changing World Oil Market,” in Deese, David A. and Nye, Joseph S., eds., Energy and Security (Cambridge, Mass.: Ballinger, 1981), pp. 23–27.Google Scholar

2 I am using the current names for these firms. Exxon was known in the 1940s as Standard Oil of New Jersey, or simply “Jersey”: Mobil was referred to as “Socony-Vacuum” or “Socony”; Texaco was known as the Texas Company. “Socal” is the customary abbreviation for the Standard Oil Company of California.

3 The concise account by Krasner, Stephen D., in Defending the National Interest: Raw Materials Investments and U.S. Foreign Policy (Princeton: Princeton University Press, 1978), p. 192Google Scholar, omits mention of the State Department initiative and is therefore incomplete. Krasner's book is a synthetic work of theory and interpretation, relying for information on secondary sources. It has been a rich source of ideas for this essay, as well as indicating what careful scholars knew about some of these episodes before the archives had been explored.

4 The quotation is from Turner, Louis, Oil Companies in the International System (London: Allen & Unwin, 1978)Google Scholar. Kolko's, Gabriel pioneering book, The Politics of War (New York: Vintage, 1968)Google Scholar, also ascribes a crucial role to the lobbying oilmen; see pp. 295–96. In a footnote (no. 31, p. 49), Anderson argues that the incorrect inference that Rodgers and Collier “were the prime movers behind Lend Lease for Saudi Arabia” can be traced to a 1948 congressional study, Petroleum Arrangements with Saudi Arabia (U.S., Senate, Special Committee Investigating the National Defense Program, Part 41, 80th Cong., 1st sess.).

5 Krasner, , Defending the National Interest, p. 214Google Scholar. For Krasner, “general foreign policy objectives” are most important, followed by increasing security of supply, then by maximizing the competitive structure of the market. ibid., p. 331.

6 ibid., pp. 193–94.

7 Anderson, p. 63. Krasner, , Defending the National Interest, pp. 194–95Google Scholar, emphasizes congressional opposition to the purchase of stock in Casoc, and argues that the industry prevailed through its influence in Congress. It seems plausible to infer that Ickes may have been worried about both his standing with the industry and Roosevelt directly, and with the fate of any agreement in Congress. Anderson's account, however, somewhat undermines Krasner's argument (pp. 18–19) to the effect that Congress is the critical factor weakening central decision makers faced with opposition from private corporations. If Anderson is correct, industry opposition to the PRC purchase plan, even without Congress, would have given Ickes second thoughts.

8 This account of what was previously known, apart from records in the archives, is based on research that I did on this issue in 1977. The quotation from Acheson appears in Executive Sessions of the Senate Foreign Relations Committee (Historical Series), volume 1, 80th Congress, 1st and 2nd sessions, 1947–48 (Washington: Government Printing Office, 1976), p. 77Google Scholar. Important secondary sources available at that time included Herbert Feis, Seen from E. A.: Three International Episodes (New York: Knopf, 1947)Google Scholar, and Shwadran, Benjamin, The Middle East, Oil, and the Great Powers (New York: Praeger, 1955)Google Scholar. The hearings on the Agreement appear in U.S., Senate, Petroleum Agreement with Great Britain and Northern Ireland, Hearings before Committee on Foreign Relations, 80th Congress, 1st sess., June 1947. For information on Senate action (or inaction), see New York Times, 14 June 1947Google Scholar; Congressional Record, 80th Cong., 1st sess., p. 8289; and Foreign Relations of the United States 1945, VI, p. 244.Google Scholar

9 Feis, , Seen from E. A., pp. 135–36Google Scholar; testimony by Davies, Ralph and Rayner, Charles at hearings, Petroleum Agreement, pp. 101, 135Google Scholar. By 1948 this theme was muted: Feis downplayed its importance under questioning before the Brewster committee, indicating that “I should not think that the British would be in any way eager to disturb our position out there at the present time.” By 1948, American dominance was so firmly established that this justification could not be seriously offered as a major reason for the agreement. See U.S., Senate, , Petroleum Arrangements with Saudi Arabia, Special Committee Investigating the National Defense Program, Pt. 41, 80th Congress. 1st and 2nd sess. p. 25309.Google Scholar

10 Feis, , Seen from E. A., p. 135Google Scholar; Rayner, , in Petroleum Agreement, p. 35Google Scholar; Davies, in ibid., pp. 95, 101.

11 Rayner, and Davies, in Petroleum Agreement, pp. 36, 95, 104Google Scholar. Davies refers to the Red Line Agreement as an example of the kind of restrictive agreement that the treaty is aimed against.

12 This was a muted theme in early testimony (Rayner, Petroleum Agreement, pp. 35–36) but became more prominent in later discussions. See Acheson's testimony in 1947 (Executive Sessions), and Feis's testimony before the Brewster Committee (Petroleum Arrangements with Saudi Arabia).Google Scholar

13 Davies', testimony, Petroleum Agreement, pp. 112, 242–43Google Scholar. Such discrimination did later take place, as Anderson recounts.

14 Krasner's, account is accurate within the limits of the published information available at the time he wrote. See Defending the National Interest, pp. 199–205Google Scholar. The quotations in this paragraph appear on pp. 200 and 204 of his work.

15 “Memorandum on the Department's position,” folder, “Petroleum Reserves Corporation Activities, 7/3/43–1/1/44,” box 1, records of the Petroleum Division, RG 59, National Archives (cited by Anderson, fn. 27, p. 78). All three authors agree that the major impetus for the agreement came from the desire of governmental officials to conserve American petroleum reserves, although for political reasons attempts were often made to conceal this motivation. The head of the Petroleum Division in 1945, John A. Loftus, expressed similar views to those of Sappington. See Loftus memo, 31 May 1945, National Archives, decimal file 1945–49, Box no. 5849, file no. 841.6363/5–3145.

16 Krasner, , Defending the National Interest, p. 201.Google Scholar

17 Anderson, p. 95, quoting a memorandum by Loftus, John A. of the Petroleum Division, Department of State, 9 November 1944Google Scholar. Anderson conveniently reprints both versions of the Agreement in Appendix B, p. 216–28.

18 Anderson, p. 131. The memo in question is one from Clair Wilcox to Will Clayton, 19 February 1946. National Archives, Record Group 59, decimal file 800.6363/2–1946.Google Scholar

19 Blair, John M., The Control of Oil (New York: Vintage Books, 1976), p. 39.CrossRefGoogle Scholar

20 In addition to Blair's account, previous discussions of the breaking of the Red Line Agreement can be found in the following: U.S., Senate, The International Petroleum Cartel, staff report to the Federal Trade Commission, submitted to the subcommittee on monopoly of the Select Committee on Small Business, 22 August 1952 (reprinted, 22 April 1975)Google Scholar; U.S., Senate, Multinational Oil Corporations and U.S. Foreign Policy, Committee on Foreign Relations, subcommittee on multinational corporations (1975), chap. 2, ‘The 1947 Aramco Merger,” pp. 45–55.

21 Of the three books under review, only Anderson's mentions these overriding payments. Miller shows no interest in the sale price at all, and Stoff puts it simply at $102 million (p. 198).

22 Anderson, Irvine H., The Standard-Vacuum Oil Company and United States East Asian Policy, 1933–1941 (Princeton: Princeton University Press, 1975).Google Scholar

23 George, Alexander L., “Case Studies and Theory Development: The Method of Structured, Focused Comparison,” in Lauren, Paul Gorden, ed., Diplomacy: New Approaches in History, Theory, and Policy (New York: Free Press, 1979), pp. 43–68.Google Scholar

24 Krasner, Stephen D., “United States Commercial and Monetary Policy: Unravelling the Paradox of External Strength and Internal Weakness,” in Katzenstein, Peter J., ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978), pp. 51–88.Google Scholar

25 Darmstadter, Joel and Landsberg, Hans H., “The Economic Background,” in Vernon, Raymond, ed., The Oil Crisis: In Perspective, special issue of Daedalus (Fall 1975), pp. 31–33.Google Scholar

26 Engler, Robert, The Politics of Oil: A Study of Private Power and Democratic Directions (Chicago: University of Chicago Press, 1961).Google Scholar

27 An excellent recent account of decisions by the Eisenhower administration to institute an oil import quota program can be found in Barber, William J., “The Eisenhower Energy Policy: Reluctant Intervention,” in Goodwin, Craufurd D., ed., Energy Policy in Perspective: Today's Problems, Yesterday's Solutions (Washington, D.C.: Brookings, 1981), especially pp. 229–61Google Scholar. During these years, as earlier, it was domestic oil and coal interests, and their supporters in the administration and Congress–not the military or civilian leaders of the Defense Department–who pressed for import controls on grounds of “national security.” For a concise discussion of agitation for import controls during the Truman presidency, see Goodwin, Craufurd D., “Truman Administration Policies toward Particular Energy Sources,” in Energy Policy in Perspective, especially pp. 84–90 and 104–7.Google Scholar