The secret of British oil control

managed to gain concessions for half of Mexico’s oil by the time of Wilson’s invasion.

With clear expectations of a coming war with Germany, Britain decided tactfully to back away from Huerta’s regime, and General Venustiano Carranza’s government was immediately recognized as the legitimate one by President Wilson. Rockefeller’s Standard Oil ran guns and money to Carranza including $100,000 in cash and large fuel credits. U.S. oil had taken Mexico from British oil. Tampico’s wells at the time were the world’s envy, with one well, Cerro Azul, pumping a record 200,000 barrels of oil per day.

When Carranza then proceeded to act to defend Mexican national economic interests rather than those of the American oil companies, he became the focus of an intense campaign in which, in 1916, Standard Oil fi nancially backed the roving bandit, Pancho Villa, against Carranza.

General Pershing, just prior to the U.S. entry into the European war, was sent with troops into Mexico for a brief but unsuccessful mission. With the imminent U.S. entry on the side of Britain into the European war, Britain and America mutually decided to boycott Mexico under Carranza. Fortunately for Mexico, the exigencies of war left the country with something of a respite from the Anglo-American oil wars. Carranza remained president until 1920, when, following Versailles, he was assassinated.

But among the legacies left by Carranza was Mexico’s fi rst national constitution, approved in 1917, which contained a special paragraph, number 27, vesting the nation with ‘direct ownership of all minerals, petroleum and all hydro-carbons—solid liquid or gaseous …’ The only ground on which non-Mexican nationals could obtain concessions to develop oil was to agree to the full sovereignty of Mexican law in their business affairs, without interference from foreign governments. Nonetheless, British and American oil interests continued a fi erce behind-the-scenes battle for Mexico’s oil through the 1920s, lasting until the late 1930s, when a decisive nationalization of all foreign oil holdings by the Cardenas government led the British and American oil majors to boycott Mexico for the next 40 years.

THE SECRET OF BRITISH OIL CONTROL

During the time between the discovery of major oilfi elds in 1910 and the mid 1920s, the British company Mexican Eagle Petroleum Ltd., under chairman Weetman Pearson (Lord Cowdray), was able to

maintain a strong presence in Mexican oil exploitation, presenting itself as a counter to the demanding American Rockefeller oil companies.

Pearson worked for British secret intelligence, as did executives of all the other major British oil groups. He sold his Mexican Eagle interests in 1926 to Deterding’s Royal Dutch Shell group. Pearson became Lord Cowdray, and his Mexican oil fortune was established in a protected trust which later, as the Pearson Group, was one of the most infl uential corporate groups in Britain. It owned the publishing enterprises of the London Economist and the Financial Times, and a signifi cant share of the infl uential London–New York–Paris merchant bank, Lazard Freres.

In global pursuit of major oil reserves, the policies of the British Foreign Offi ce, the secret intelligence services and British oil interests were intermeshed in a covert and highly effective manner, as no other countries’ were at this time, with the possible exception of Bolshevik Russia.7

By the early 1920s, the British government controlled a formidable arsenal of apparently private companies which, in reality, served the direct interests of His Majesty’s Government to dominate and ultimately control all the identified major regions believed to contain signifi cant petroleum deposits. Four companies played an instrumental role, all of which were an integral part of British secret intelligence activities.

Royal Dutch Shell, despite its name, had passed into the secret control of parties who were proxies for the British government. Deterding, a Dutchman, fi rst saw the potential of petroleum as a civil servant in Sumatra in the Dutch East Indies, and rose to become president of a small Dutch lamp oil company using Indonesian oil, the Royal Dutch Oil Company.

In 1897, Deterding had realized the crucial importance of his controlling the vast overseas terms of his trade, and formed a strategic alliance with a ship transport company. He merged his Royal Dutch Oil Co. with the London-based Shell Transport & Trading Co., founded by the shrewd English shipping magnate, Marcus Samuel, Lord Bearsted, the man who built the world’s fi rst oil transport tanker ship. The alliance between Deterding’s Royal Dutch and Samuel’s Shell Transport & Trading Co. created what went on to become the world’s most powerful trust, not least because it enjoyed the covert backing of the British government. It soon rivaled the leading Rockefeller Standard Oil group, even within America, through California Oil

Fields Ltd and Roxana Petroleum Co. of Oklahoma, both wholly owned by Shell from abroad, but exempt from the U.S. antitrust laws which restricted Rockefeller’s Standard inside the United States.

At the same time they had created the Anglo-Persian Oil Company to exploit for the exclusive interest of the British government the oil resources of Persia and the Middle East, the British authorities created another related company, little-known but intimately tied to the British Foreign Offi ce and secret intelligence services worldwide in the quest for control of future oil discoveries. The company was called The d’Arcy Exploitation Company.

The fi ght for oil had assumed a markedly political character by the early 1920s, and Britain’s d’Arcy Exploitation Company was in the midst of the politics. ‘The agents of the d’Arcy Exploitation Company in Central America or West Africa, China or Bolivia, seem always fi rst of all the agents of the British government,’ noted one contemporary.8

The fourth and fi nal entity of the British government’s worldwide secret oil war at this time was a nominally Canadian company, headed by a Mr. Alves, called British Controlled Oilfi elds or BCO. BCO was also secretly owned by His Britannic Majesty’s government, as were Shell and the others. Alves’ mission was to secure new key oil provinces for Britain in Central and South America, countering the designs of the American Rockefeller companies.

Alves secured British recognition of the Tinoco government in Costa Rica in 1918, in return for which his BCO was rewarded with an oil concession covering 7 million acres, near to the Panama border and the important Canal Zone. The United States had refused to recognize Tinoco, and, when in 1921 a border dispute ‘arose’ between Panama and Costa Rica, America intervened, in what was dubbed the Central American ‘toy war’, on behalf of a new Costa Rican regime which immediately declared all previous concessions of the deposed Tinoco regime, most especially that with BCO, to be ‘null and void.’ American oil companies immediately got large new concessions, and the new Costa Rica regime found itself able to secure large new loans from New York banks on easy credit terms.

At that point, BCO moved south to Maracaibo in Venezuela, where, in 1922, prolifi c new wells had been discovered near the mouth of the Orinoco. Alves had secured the largest wells for his British Controlled Oilfi elds. Royal Dutch Shell was quick to follow, setting up its whollyowned Venezuelan Oil Concessions Ltd., and Colon Development Co. Of course, Rockefeller’s Standard Oil Company, through the

Standard Oil Company of Venezuela, was soon fi ghting for hegemony as well, in what was to become one of the most important petroleum countries in the world in the early 1920s.

The successes of the British, with their unique reliance on secret backing by their government, able to utilize British secret intelligence services worldwide, was considerable. In 1912, on the eve of the Great War, Britain commanded no more than 12 per cent of world oil production through British companies. By 1925, she controlled the major part of the world’s future supplies of petroleum.

In an article in a British bank journal, Sperling’s Journal, dated September 1919, Sir Edward Mackay Edgar reviewed the overall situation:

I should say that two-thirds of the improved fi elds of Central and South America are in British hands … The Alves group, whose holdings encircle practically two-thirds of the Caribbean Sea, is wholly British, working under arrangements which ensure that perpetual control of its undertakings shall remain in British hands … Or take again that greatest of all oil organizations, the Shell group. It owns exclusively or controls interests in every important oil fi eld in the world, including in the United States, Russia, Mexico, the Dutch East Indies, Rumania, Egypt, Venezuela, Trinidad, India, Ceylon, the Malay States, North and South China, Siam, the Straits Settlements, and the Philippines. We shall have to wait a few years before the full advantages of this situation shall begin to be reaped, but that that harvest eventually will be a great one, there can be no manner of doubt … America before long will have to purchase from British companies, and to pay for, in dollar currency in progressively increasing proportion, the oil she cannot do without, and is no longer able to furnish from her own store.9

But in 1922, an unexpected shock forced a process which led some years later to a ‘truce’ in this Anglo-American confl ict of the postVersailles period. A threatening new combination coming out of the East forced Washington and London to forge a condominium of global power, in which has formed the strategic center of that power to the present day. We must go to Genoa to see how this development shaped events of global consequence.

Once again, it was Germany which crossed British policy design and forced a closer English collaboration with its Washington rival.