Gift to Arabia backed in 1941 by Roosevelt (3-15-44)

The Pittsburgh Press (March 15, 1944)

Gift to Arabia backed in 1941 by Roosevelt

Senators trace history of plan
By Henry J. Taylor, Scripps-Howard staff writer

New York –
Members of the Senate committee investigating oil matters have determined that money payments to King Ibn Saud and the Saudi Arabian government were sponsored by President Roosevelt as early as 1941, according to a letter written by Secretary of Commerce Jesse Jones on Oct. 9, 1941, to James A. Moffett, then vice president of Standard Oil Company of California.

Ibn Saud’s chief income used to come from imposts on Muslim pilgrims to his capital city of Mecca. But from the time of the Ethiopian War in 1935, the pilgrim traffic fell off until, by 1941, Ibn Saud was hard pressed for cash.

In 1933, the King sold jointly to Standard Oil of California and the Texas Company what may or may not turn out to be immense valuable oil-development privileges in his land. However, the oil companies are nervous about their “rights,” according to Mr. Moffett. Ibn Saud, as a sovereign, can cancel his oil concession at any time.

Viewed as reserve

The two oil companies in 1933 looked on Saudi Arabia as a reserve. With many years’ supply left in neighboring Bahrain, the American companies have not developed any production in Ibn Saud’s domain.

But Senators point out that the oil companies got entangled deeper and deeper in Saudi Arabia as time went on. From 1933 through 1941, they invested over $83 million in Saudi Arabia surveys and development work and advance royalties.

As the pilgrim trade grew worse and worse, the next blow fell. King Ibn Saud called on the American companies for a conference in March 1941. The 61-year-old potentate is said to have complained that the British government, which had been sending him around $1,650,000 a year on a personal goodwill basis, had declined to boost the ante to $3,600,000 a year.

Asks $6 million

Accordingly, Ibn Saud asked the American oil executives to accommodate him with a further advance of $6 million a year for the next five years. This was relayed to Washington promptly after the desert meeting broke up in a stalemate.

President Roosevelt first had the matter presented to Secretary of the Navy Knox. The thought was that America might build goodwill with the King by having our Navy buy “underground oil.” Secretary Knox is then reported to have called attention to the vast Venezuelan and Colombian fields, already operating in America’s backyard, and to have returned the idea to the White House in May 1941.

But as Ibn Saud continued to press for action, President Roosevelt is said to have suggested next that the Reconstruction Finance Corporation might assist in obtaining Arabian goodwill. The idea was communicated to RFC chairman Jesse Jones on July 21. Mr. Jones is reported to have been even more disapproving than Secretary Knox, and to have returned the idea to the White House on Aug. 1.

Halifax conference

Ibn Saud persisted in his appeal for goodwill, however, and finally in October 1941, at the suggestion of President Roosevelt, Mr. Jones saw British Ambassador Halifax in Washington.

Members of the Senate committee are preparing to ask whether, as a result of the Jones-Halifax meeting, the U.S. government’s famous loan of $450 million to Great Britain against British-held American securities did not contain a stipulation that part of this sum be delivered to Ibn Saud.