This piece began in KTB #153.

In the US, gasoline had been more than $2 per gallon in some areas. In Germany, gas had cost about 2 Marks per liter, a liter is a little more than a quart, a Mark is equal to about 50 cents, making gas in Germany equal to about $4/gal. Who is responsible?

Obviously, the big oil companies are trying to maximize their profits - but this is not the first time. Who can remember the so-called 'Arab Oil Embargo' of 1973? I remember it well, because I was Inventory Control Director at the corporate level of a major petrochemical company and I can assure you, there was no shortage of feedstock or petroleum at all. This contrived shortage allowed the company to raise their prices by 500% on both their industrial chemicals and the consumer products, including a nationally known brand of automotive anti-freeze. These products all use feedstock coming from petroleum and it was never in short supply.

Who gave us WWII? It was the 'Seven Sisters" in part. The 'Seven Sisters' were the world's petroleum companies, of which Standard Oil was the largest. The Chief Executive Officer of Shell Oil was so pro-Nazi that the British Government had to force him out in order to get fuel for their own military. In an interview in LIFE Magazine in 1940, the Chief Executive Officer of Texaco (Thorkold Reiber) stated that if any German U-boat Skipper saw a Texaco tanker helping the Allies, he had Reiber's permission to sink the Texaco tanker. But perhaps the one that made the most profit out of these world events was Standard Oil, today known as Exxon. When the German Luftwaffe bombed England during the Battle of Britain, they got fuel from Standard Oil. When the RAF went up to protect their homeland, they got their fuel from Standard, When the Japanese attacked Pearl Harbor, they had fuel from Standard Oil in their tanks. CHARLES HIGHAM (35-1984) put all this in his book Trading with the Enemy but there is more -- and it is in the records of the United States Senate! What you read in this piece comes directly from the testimony of Hearings before a Special Committee investigating the National Defense Program during the 77th Congress, pursuant to Senate Resolution #71 in 1942.

This is from the report dated Tuesday, 31 March 1942.

The Committee met at 10:38am pursuant to adjournment on Friday, March 27 in Room 318, Senate Office Building with Senator James M. Mead presiding.

EDITOR NOTE – The Committee is asking about the German royalties on a specific product, and the Standard Oil executives are having memory trouble.

Mr. Fulton: “How was that title evidenced – the title to the royalties?”

Mr. Farish: “The title to the German royalties?”

Mr. Fulton: “Yes; the German company’s title to the royalties. How was that evidenced, and was it evidenced in such a way that the Alien Property Custodian could easily ascertain it?”

Mr. Farish: “It was in the original contract, and it was listed for him; yes.”

Mr. Fulton: “It was listed where?”

Mr. Farish: “It was listed for him as part of the German interest, having first been declared to the Treasury under some form they required. I forgot the name.”

Mr. Howard: “TFR-300.”

Mr. Fulton: “So that the effect of that was to divest the Germans of the legal title to the patents, but to leave them with an equitable share of the royalties.”

Mr. Farish: “A fair share of the royalties.”

Mr. Fulton: “Under the contract they had with you.”

Mr. Farish: “That is correct. A settlement in the case of JASCO, which owned the oil-chemical patents, was more difficult. Nobody could estimate with any accuracy what these patents might be worth, and Standard didn’t wish to speculate and pay to the Germans a large sum of money. A solution was found by way of a trade, under which we took over ownership of JASCO – buying the German stock for a small cash consideration – and JASCO surrendered all of its claims on the process for all countries of the world except the British and French Empires and the United States. These JASCO retained for itself. I. G.’s representatives agreed to this only on the condition that their financial return would not be less than under the old arrangement. Since there was no possible method of immediately appraising the financial outcome of this trade we agreed to a future readjustment which would work out the same financial result as the old agreement, if it should appear at any time that the trade had been inequitable.

EDITOR NOTE – their respective countries were at war with each other, but big business was going on as usual. More on the next page.

Mr. Farish (continues): “By the rearrangements made in 1939 therefore, the entire contract relations between the parties became a simple question of money payments. So long as America remained at peace, these money payments were to be made to the account of the I. G. in a New York bank, subject of course, to the exchange control of the United States Treasury Department. If the United States went to war, the same money would be paid directly to the Alien Property Custodian.

There would no longer be any joint management or joint company operations, and Standard would control everything in the United States, France and England.

Those are the arrangements, and the only arrangements, which we ever made or contemplated in connection with the readjustment of the 1929 contracts. They are the arrangements referred to in the paragraph quoted by Mr. Arnold from the letter of Oct. 12, 1939 as ‘complete plans for a modus vivendi which would operate through the term of the war whether or not the United States came in’.

They are the arrangements which still left (while the United States was still at peace with Germany) the unavoidable difficulty of administering the I. G.’s minority interest in the oil patent rights without any personal relations or opportunity for exchange of views. It was this period, while the United States was still at peace with Germany and this difficulty, which was referred to in the sentence.

‘It is difficult to visualize as yet just how successful we shall be at maintaining our relations through this period without personal contacts.’

If America entered the war the American Alien Property Custodian would obviously succeed to these I. G. interest and the difficulty would disappear, and I call attention to the fact that the Alien Property Custodian has actually vested himself with these interests.

The letter of October 12 was a five-page report by the first of our representatives to return from Europe after the outbreak of war, covering the entire situation. The letter was addressed to me as the president of the company and copies were sent directly to all officers and directors of the company and to its general counsel.

Attention is also called to the remainder of that letter which shows:

1. That permission to conduct the negotiations in question was requested of the British foreign office by Ambassador Kennedy in London.
2. That the negotiator offered to the British Foreign Office, through the American Embassy, to conduct all discussions with the Germans in Holland in the presence of a member of the staff of the American Legation at the Hague.
3. That, on explanation of the nature of the arrangements and their purpose.

The American Minister at the Hague telegraphed Washington explaining this situation & asking permission to have the papers - assignments of patent rights to be delivered by the Germans – after certification in Berlin by our Consulate returned directly to Paris by the diplomatic courier. Fortunately, the Department of State had in its files in Washington a statement of our relations with the I. G. on those patent matters which I and the writer, Mr. Howard, had worked out with Ambassador Wilson in Berlin in September of 1938, and which had been forwarded by him to Washington. The necessary permission – to have the State Department’s own courier carry these arrangements from Berlin to Paris – from the State Department was therefore obtained in about three days.”

Mr. Fulton: “On that, Mr. Farish, I believe I have from the State Department the chart that your company furnished it. Is this a photostatic copy of it?”

Mr. Farish: “Yes, sir.”

Mr. Fulton: “Do you regard that chart as correct, particularly the part in there referring to a minority interest in I.G. Farben, on the right-hand side?”

In KTB #164 next month, we watch Mr. Farish and Mr. Howard of Standard Oil Company, try to read this chart – with some prodding.