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I think he has a place in the business, he is growing, as I have just mentioned from those figures, but he cannot grow unless he is economically sound and health. He has not been so for the last several years, and the evidence on that I believe is indisputable.

It is perfectly true, as you gentlemen have brought out here, that profits from our foreign operations, some of them, are very large and, as I said to you, I certainly would not want in any way to ever be accused of trying to utilize profits from foreign operations to destroy anything in the United States. That would be a completely silly thing for us to try to do and one that we have never even contemplated.

Senator O'MAHONEY. Perhaps when this study is over we will all be better for it.

Mr. RATHBONE. I hope so.

Senator KEFAUVER. Mr. Rathbone, the reason I was asking about this meeting was that I always felt that the State Department represents the United States in our foreign policy and this business of foreign policy bringing in the chairman of the boards of these companies, rather than having the State Department do it, looked rather strange to me, and I just wondered what explanation you had about it.

Mr. RATHBONE. Of course, the State Department had representatives at these dinners also, as well as the oil company representatives.

I don't quite get your question, sir, because this was a social dinner designed as a gesture of friendship to the King, and at this dinner were representatives of the parent company boards of the Aramco shareholders.

Of course, the Aramco management knows King Saud quite well in dealing with him constantly on matters in connection with the concession and the operations there. I think that one has only to recognize the considerable degree of pride that exists in the minds of many of these foreign nations when they visit the United States, and I am certain that if he had not been what might be called adequately entertained or attractively entertained that he would have felt very hurt.

It is just plain A BC, I think, that you don't want to hurt a landlord of yours on a valuable concession. There was no business talk at the meetings at all.

Senator KEFAUVER. It would also be to make closer ties between the King and the management of the big oil companies. Wouldn't that be part of the purpose ?

Nr. RATHBONE. That is the purpose I just mentioned; yes, sir. We wanted to try to make ourselves agreeable to him.

Senator KEFAUVER. I wanted to ask about Mr. Ingraham. You know him, don't you, Mr. Rathbone?

Mr. RATHBONE. I do not happen to; no, sir.
Senator KEFAUVER. Mr. Coleman knows Mr. Ingraham.
Mr. COLEMAN. Yes, I know him.
Senator KEFAUVER. And what is his position?
Senator OʻMAHONEY. He was with Socony Mobil.
Senator KEFAUVER. What is his position with Socony Mobil!
Mr. COLEMAN. I don't know his exact position.

Senator O'MAHONEY. He is one of the representatives of Socony Mobil on MEEC.

Mr. COLEMAN. That is correct.


Senator KEFAUVER. Anyway, Mr. Coleman, he was present at the meeting at which Mr. Dulles spoke back on August 13 and you were also present, weren't you, a meeting called by Mr. Stewart. Were you present?

Mr. COLEMAN. Yes, sir.

Senator KEFAUVER. We have here a memorandum by Mr. Ingraham which has been put in the record, and I do not want to read it all, but in talking about Mr. Dulles' attitude, the part I did want to ask you about, that is as expressed at the meeting where you were, Mr. Ingraham in his memorandum reporting on this meeting said, speaking of Mr. Dulles :

He indicated that the United States would not acquiesce in the right of nationalization that would affect any other facility in our own interest.

Then further down: Therefore he indicated nationalization of this kind of an asset impressed with international interest goes far beyond compensation of shareholders alone and should call for international intervention.

Is that your recollection of what Mr. Dulles said? Mr. COLEMAN. He was referring, of course, to the nationalization of the Suez Canal by Nasser.

Senator KEFAUVER. No, he was talking here apparently about nationalization of oil companies.

Mr. COLEMAN. I didn't recall that he said it would require intervention. I knew he was very much concerned with respect to the nationalization of the canal or oil. He expressed an international interest.

I think he used the example of a country in Europe, France, that had built up its economy on oil. Therefore, nationalization of that source would have serious international repercussions.

Senator KEFAUVER. He is talking about oil because he said here:

He then stated that he recognized the oil companies were very much in. terested in the nationalization issue.

Then he went on to say:

“About the international intervention" and I wondered what kind of intervention he was talking about.

Mr. COLEMAN. I don't recall any reference to intervention, Mr. Kefauver. Was that in this memorandum, because the only place I have seen it is published here in the Congressional Record.

Senator KEFAUVER. Yes, sir; down at the end of the fourth paragraph, "and should call for international intervention."

Senator OʻMAHONEY. I examined you about this just yesterday.

Mr. COLEMAN. I think you referred to this particular conference, Senator.

Senator OʻMAHONEY. Absolutely.

Senator KEFAUVER. I just wondered what kind of intervention it was that was being talked about.

Mr. COLEMAN. I just don't recall any discussion of intervention in the event of nationalization.

Senator OMVHONEY. Hasn't there been common conversation among these big oil companies operating abroad of having a broader rule of international law than mere compensation?

Mr. COLEMAN. Yes. Certainly anyone would be hopeful that there would be respect for international contracts.

Senator O'MAHONEY. That was the intervention that Secretary Dulles was talking about, if I understand the English language. He was going to a nine-power conference in London, and he was telling the oil companies, members of MEEC, at a secret meeting from which everybody was barred except those who were invited, what he was going to do there. He brought up the present international law with respect to the nationalization of property and he said he did not think it was enough, and that is what the oil companies believe. They have so stated. Don't you know that?

Mr. COLEMAN. He said that he felt that where something was impressed with an international interest, to express his view, that he felt that had a considerable significance and that was the basis on which he was going to discuss the matter of the Suez Canal and nationalization in Europe.

Senator OʻMAHONEY. You are saying, in other words, what I understand it to be; a broadening of the old doctrine of compensation when a nation nationalizes its own natural resources.

It is a situation which we had in Mexico when oil property was nationalized there and the compensation that the American companies finally got was not satisfactory, in their judgment. But that was under the old rule. Now Secretary Dulles wants to broaden it.

Mr. COLEMAN. I would like to make this statement, Senator. We certainly feel that, operating abroad, our company, we should have the support that our Government would give any business enterprise abroad.

The question of respect for contracts on which we make investment in plants, of course, is important to us, but we have never asked or never would expect to ask our Government to give us any support that was not within their general policy, based on an independent appraisal of the situation.

Senator KEFAUVER. Mr. Ingraham is a careful, thoughtful man, isn't he, Mr. Coleman? Mr. COLEMAN. To my knowledge, yes.

Senator KEFAUVER. And you would not question his reporting the meeting as he saw it?

Mr. COLEMAN. No. I simply do not recall Mr. Dulles indicating that the nationalization of an asset impressed with international interest should call for international intervention.

Senator KEFAUVER. That is the opinion of Standard Oil, isn't it, Mr. Rathbone?

Mr. RATHBONE. That there should be intervention?
Senator KEFAUVER. Yes.

Mr. RATHBONE. Our opinion, sir, is exactly as Mr. Coleman just stated.

We feel that our Government should accord to our foreign operations exactly the same kind of diplomatic support and general Government backing that they would accord any foreign operation of an American citizen. I can say this to you, categorically. As long as I have been an executive of our company, we have never asked the United States Government to do anything with respect to the protection of any of our foreign operations that in their own independent

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judgment was not something they wouldn't say was in the welfare of the United States.

Senator KEFAUVER. According to the 1956 issue of Lamp magazine, here, apparently, is what Standard Oil wants done in situations of this kind :

It would be helpful, for instance, if the United States Government were to issue, in conjunction with expressions of support for self-determination and freedom from foreign domination, a firm, unequivocal public statement somewhat in the following vein :

"Any government which by unilateral action abrogates any agreement made by that government may expect the United States, either singly, in conjunction with other countries, or through the United Nations, to take such economic measures and abrogate any agreements with the offending nations as the United States may see that the circumstances warrant."

That is your position?
Mr. RATHBONE. I am familiar with that; yes, sir.

Senator KEFAUVER. And that represents the policy of Standard Oil of New Jersey?

Mr. RATHBONE. What that says, Senator Kefauver, is this: That at the time that this was written, there was a very great uncertainty with respect to what our Government's policy was in the Middle East problems, and there had not come out any sort of a definite policy.

It was our view and the view of many other people that a clearer cut knowledge on the part not only of the United States citizens, but the citizens of all the rest of the world, and most particularly in that area of the world, would be very helpful so that they would know what our thinking was.

Now, as Mr. Coleman has said, when we operate in a foreign land, we have to do it under a contract with a sovereign government, because the mineral rights in almost every other country in the world belong to the government and not to the private citizen. We have no option except to formulate a contract with the government.

If the government, the foreign government, does not regard that contract as being the sort of a document that we are accustomed to looking at as contracts in this country, and that means a contract is a document that you can rely on as being something binding upon both parties, I fail to see how we can possibly carry on operations anywhere in the world where we have to work with those types of contracts.

That statement was a statement that we felt would be very helpful, and I still think it would be very helpful. I subscribe to what that says, if our Government would make clear what its views are with respect to the sanctity of contracts made by American investors with foreign governments.

Senator KEFAUVER. Of course, such economic measures, abrogating any agreements with the offending nations—anyway, I want to get your attitude and your position, and I find in the Lamp a very interesting and illuminating doctrine that you publish.

Mr. RATHBONE. I subscribe to the paragraph, sir that you have read.

Senator KEFAUVER. Then we know your position.
Mr. RATHBONE. Yes, sir.

Senator OʻMAHONEY. Is there anything else you want to say, Mr. Rathbone? Your statement is in the record. It has not been summarized. It has not been read.


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Mr. RATHBONE. I presume, sir, that I will think immediately of some things I would like to have said, but, at the moment, no.

Senator O’MAHONEY. We are very generous people on this committee. If you want to come back again, we will invite you.

Mr. RATHBONE. Are we invited back tomorrow or not? Senator O’MAHONEY. We are under some obligation to the Gulf Oil Co., because we invited the Gulf people to come tomorrow, and I feel that we are under that obligation, but, if you are staying over, we would love to crowd you in somewhere.

Mr. RATHBONE. I am not staying over unless I am requested to by you, sir.

Senator O’MAHONEY. Suppose you take this matter under consideration and we will bring you back again after a few more days. We want to give Aramco a chance, now that it has been mentioned here.

Mr. RATHBONE. I would much prefer if I could do that sooner rather than later, because I have to make a trip abroad next week, which I would like very much to make.

Senator O'MAHONEY. We will be very glad to accommodate you.

Mr. RATHBONE. I would like to make clear, sir, at the moment, beyond the information which we have been asked to put in the record and particularly the statement which Senator Wiley asked for, I have nothing further to present to you.

Senator O’MAHONEY. Are you satisfied you have had an opportunity to express your views?

Mr. RATHBONE. Completely, yes, sir.

Senator O’MAHONEY. Very good. Then the committee will now stand in recess until 10:30 tomorrow morning.

(Whereupon, at 6:35 p. m., the subcommittees stood in recess until 10:30 a. m., Thursday, March 7, 1957.)

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