893.6363/11–1449: Telegram
The Consul General at Shanghai (McConaughy) to the Secretary of State
[Received November 14—12:13 p. m.]
4784. Remytels 4481, October 22, 4760, November 11 and 4762, November 12.62 Manager Standard-Vacuum estimates if California Texaco contract with CPC goes through, pro rata cost to 3 major oil companies, Shanghai to cover payrolls would be US $200,000 monthly each with burden on California-Texaco heaviest due largest staff. He claims Anglo-Iranian made no offer to CPC, does not know origin that report, but says Shell heard about California-Texaco deal, presumably from London.
Possibly position American oil companies would be somewhat eased if California-Texaco proposed contract were reduced to “minimum 3 months’ requirements” with optional renewal clauses for 6 to 9 months if unavoidable and with initial sale limited to some 30,000 to 40,000 tons on grounds present uncertainty Shanghai too great to warrant long-term commitments. Implementation such amendments at this late date would probably require adroit explanations from California-Texaco head office, if pressure on California-Texaco Shanghai office to be abated. If feasible, such a policy might give time for interested companies to get together, instead of working at cross purposes as at present. Obvious that indiscriminate competition merely enable Communists play off one oil company against others to their sole advantage, both from commercial and strategic political viewpoints. Communists apparently shopping energetically among independents in USA, elsewhere.
Re-establishment intergovernment [garble] with effective British, Middle East, [NEI,] South American and Mexican participation has [Page 1031] been suggested by which all shipments to Communist China from Western sources would be screened with aim forcing Communists to deal on our terms or lean more heavily on USSR and European satellites. In view apparent difficulties getting international concurrence for more effective export controls, Communist China, and relatively small Chinese market vis-à-vis world total, unlikely such proposal could be worked out.
Oil company representatives apparently not unduly concerned with diversion POL imports ostensibly made for civilian needs to military uses, so long as imports in line with their idea of “normal civilian consumption”, say 30,000 to 40,000 tons monthly as ceiling. However, any large import POL by CPC, especially crude, would clearly serve Communist military political, economic objectives, aside from impairment local position major oil companies.
- Nos. 4760 and 4762 not printed.↩