851.8363/147
The Chargé in France (Marriner) to the Secretary of State
[Received April 15.]
Sir: I have the honor to recall that, as reported in the Embassy’s despatch No. 3286 of January 26, 1933,12 the Socialist group in January offered, in connection with the draft of the budget law, a proposal for the creation of a monopoly upon the importation of petroleum. It may be further recalled that a member of the staff made an informal visit of inquiry at the Ministry for Foreign Affairs in order that the French Government might not lose sight of the fact that developments which might lead to a monopoly inimical to American investments in the oil industry here were being closely watched. Whether or not as a result of this visit and a similar call made by a representative of the British Embassy, the Socialist proposal was temporarily sidetracked. As surmised might prove to be the case, however, the extreme left parliamentary group did not long abandon its efforts to secure some sort of governmental control of the petroleum industry.
Almost immediately the Socialist deputy, M. Lassalle, protested against the conditions under which the vote was taken by which the monopoly proposal had been ordered returned to the Commission on Mines (the vote of the Finance Commission had occurred at a time when a number of the Socialist group were absent). M. Lassalle proceeded to present a motion inviting the Government to insert provisions for the organization of a monopoly in the Finance Law, a motion which was carried by 20 to 6. This step, putting the monopoly question on the legislative calendar caused some uneasiness among petroleum interests, particularly when taken in conjunction with the reported statement of M. Daladier to Parliament to the effect that when the Government’s program for balancing the budget should have been adopted, it would then be possible to consider the Socialist proposal for “the control of the nation over enterprises of general interest”.
On February 28 the oil situation again came to the fore with the publication in the Journal Officiel of ministerial decrees, the texts of which are attached,13 reducing, for a period of six months, by 5% the individual allocations under the twenty year refining licenses and by 10% the allocations under the three year importation licenses. The ostensible purpose of the decisions was to stabilize market conditions in the face of oversupply. The measure was nevertheless disquieting since [Page 169] it might well constitute an entering wedge towards progressive curtailments which would threaten American and other petroleum investments in France. In consequence the Second Secretary, Mr. Williamson, again called at the Foreign Office, leaving with M. Coulondre of the Commercial Section an aide-mémoire, dated March 8, and its accompaniment, a transcript of a letter of March 1 from Mr. G. H. Michler, written on behalf of the American petroleum interests affected by the decisions. Copies and translations of both documents are attached.14
M. Coulondre inquired whether there was really any disequilibrium brought about by the curtailment, since all companies would seem to be reduced by the same percentage. He was informed that he had touched upon one of the very points in which the Embassy was most interested, since the Compagnie Franeaise de Raffinage secures its oil on a different basis (a percentage basis rather than a fixed amount) and is therefore not directly affected by the ministerial cuts. The result, it was further explained, is that the foreign and other French companies are penalized to the benefit of the Compagnie Française.
M. Coulondre appeared to recognize this distinction. He added that as it happened, he was a member of the oil commission and that he would make a point of attending the next meeting of the commission in order to lay the Embassy’s observations before that body. Some two weeks after this interview, on March 22, M. Pineau, Director of the Office National des Combustibles Liquides, communicated with the Commercial Attaché, advising him that the Embassy’s aide-mémoire had been referred to him for consideration. He said that prior thereto he had already conferred with Mr. Michler regarding the situation and an exchange of correspondence had resulted, establishing a practical accord. It would appear, none the less, that while the assurances given Mr. Michler by M. Pineau are reasonably satisfactory, they are not absolute. The Embassy hardly expects an answer to its inquiries since they were made orally.
On March 25 the American oil interests were again disquieted by press reports that the Prime Minister had promised to introduce into the Finance Law certain of the steps advocated by the Socialists, among them the principle of the petroleum monopoly and that Mr. Baron, President of the Commission on Mines of the Chamber, had made a study of the oil regime in France and intends to make a comparative study of the monopolistic regime as it exists in Spain. The Second Secretary called at the Foreign Office to make informal inquiries as to the accuracy of these reports.
. . . . . . . . . . . . . .
While the Embassy is naturally anxious over the situation, it is of [Page 170] course possible that it will not develop along the unfavorable lines now indicated. There are many obstacles for the protagonists of a monopoly to overcome between the aforecited action of the Finance Commission and acceptance of the proposals by both houses of Parliament. This is not the first time that the shadow of petroleum monopoly has raised its head without bringing about the results feared by oil interests; and furthermore, the press, with the exception of the organs of the extreme Left, has shown itself bitterly opposed to an extension of Government monopolies. Nevertheless it seems advisable to lay the facts before the Department against the event that it should be approached by petroleum companies in the United States. It is felt that the Embassy has done all it properly may at the moment in informally inviting the attention of the Ministry for Foreign Affairs to the probable attitude of the Government of the United States, should present monopolistic proposals crystallize. American oil interests here seem to appreciate what has already been done on their behalf and to understand that official representations up to this time would have been inappropriate.
Since a further informal repetition of the American viewpoint would be useless, the Department may care to consider whether, provided protests are received from the home offices of the oil companies in the United States, the time has not now arrived to instruct the Embassy to make formal representations in the matter. With this contingency in view, it may be stated that the situation is as follows. The Finance Commission has very adroitly taken no step looking towards the expropriation of the physical assets of foreign or domestic oil companies in France. That is, at the moment there is no tangible move towards taking over their storage tanks, equipment and refining facilities. On the other hand, the Commission has avowed its purpose of creating an import monopoly and studying the practicability of a refining monopoly, an intention which, if carried out, might destroy or greatly curtail the market for American oil and would probably reduce the status of American companies operating in France to that of mere middlemen. Furthermore, it would violate the system of licenses upon which these companies have predicated their investments in France.
It is understood that the Commercial Attaché is reporting to his Department concerning the situation in a communication, No. 1321, of April 1.
Respectfully yours,