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890F.51/32 Memorandum of Telephone Conversation, by the Assistant Chief of

the Division of Near Eastern Affairs (Alling)

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[WASHINGTON,] June 18, 1941. Mr. Hamilton 21 telephoned to me at my home last night to say that he had just learned that Mr. James A. Moffett, Vice President of the Standard Oil Company of California,22 had had a talk yesterday with Mr. Harry Hopkins.23 Mr. Hopkins said that he had discussed with the President the question of extending financial assistance to King Ibn Saud and that the President had given him the “green light”. It was Mr. Moffett's understanding that Mr. Hopkins would now discuss the matter with Mr. Jesse Jones. Mr. Hamilton said he was passing this information along to us for our use and so that we might take such steps as we thought necessary or desirable.

890F.51/32

Memorandum of Telephone Conversation, by the Assistant Chief of

the Division of Near Eastern Affairs (Alling)

[WASHINGTON,] June 19, 1941. Mr. Hamilton telephoned today to say that Mr. James Moffett had seen Mr. Jesse Jones yesterday in regard to the proposed financial assistance to King Ibn Saud. Mr. Jones had told Mr. Moffett that the President had approved the project but that he (Mr. Jones) did not see as yet how it could be handled under the Lend-Lease Act. Mr. Jones said, however, that he would try some other way in taking care of the matter. He asked Mr. Moffett numerous questions regarding the organization of the company, the situation in Saudi Arabia and the need of the King for financial assistance. Mr. Hamilton concluded by saying that he expected to obtain additional information either tonight or tomorrow which he would pass on to us.

890F.51/23 : Telegram

The Minister in Egypt (Kirk) to the Secretary of State

CAIRO, June 26, 1941–5 p. m.

[Received July 1–3:32 a. m.] 826. My 825, June 26, 4 p. m.23a I hope the Department will see its way clear to exploring exhaustively the possibility of extending finan

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a Lloyd Hamilton, general manager of the California Arabian Standard Oil Co.

Mr. Moffett apparently held no official position in the Standard Oil Co. of California.

Special Assistant to the President. 239 Not printed; it contained a message from the Saudi Arabian Government requesting a credit of $10,000,000 (890 F. 51/22).

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cial aid to Saudi Arabia and to giving its encouragement and support to any feasible project to that end. The importance of insuring the sympathy of the Arab world at this time cannot be too strongly emphasized and the Kingdom of Saudi Arabia is the logical field for American endeavor in that regard. I am convinced that immediate financial assistance to that Government should be regarded as a profitable investment over and above all actual business considerations.

I have noted from the Department's confidential instructions Nos. 13 and 14 of May 9,24 that the question of the extension of economic assistance to Saudi Arabia by the United States has been brought to the Department's attention and that proposals have been made envisaging both increased oil purchases as well as financial advances through the Export and Import Bank. I made no mention of these possibilities to the Secretary of the Legation of Saudi Arabia when he handed me the note transmitted in my telegram under reference but merely asked him to inform his Minister for Foreign Affairs that I would communicate at once with my Government and that I would be glad to be notified for my personal information if any representative of Saudi Arabian financial interests was now in the United States who might be qualified to facilitate any preliminary investigations that might be found possible to initiate. He replied that he knew of no such individual but would make inquiries of his Government.

As the matter of extending financial aid to Saudi Arabia is regarded as one of urgency I shall appreciate telegraphic advice at the earliest possible moment as to the nature of the preliminary reply I may make to the Saudi Arabian Government in the premises.

KIRK

890F.51/34 Memorandum of Conversation, by the Assistant Chief of the Division

of Near Eastern Affairs (Alling)

[WASHINGTON,] July 2, 1941. Participants: Mr. Butler, Minister-Counselor of the British

Embassy

Mr. Murray While calling today on another matter, Mr. Butler said that he had just had word from his Government that the ten million rials which the British Government was minting in India for King Ibn Saud would be given to the King without charge. Previously it had been expected that the Saudi Arabian Government would be asked to pay for these coins. Mr. Butler said that the bullion value of the coins was somewhere between one and a half million and two million dollars. He pointed out this was a further evidence of the desire of the British Government to assist the King and it was hoped of course that the United States Government could also see its way clear to offer financial assistance to Saudi Arabia.

24 Neither printed.

890F.51/29 : Telegram

The Minister in Egypt (Kirk) to the Secretary of State

CAIRO, July 23, 1941–1 p. m.

[Received July 24—2:45 p. m.] 1004. Personal for the Acting Secretary. My 827, June 26, 6 p. m., and Department's 287, July 11, 10 p. m.,25 last paragraph. I feel I must again emphasize the importance of a favorable and prompt action on the matter of financial aid to Saudi Arabia. The Saudi Arabian Legation here has again approached me with a view to expediting a reply to the King's request for a loan and it is clear that further delay will detract from the beneficial effect of whatever we may ultimately do. I realize that there must be technical difficulties involved but it seems that they have been overcome in other instances and if my word counts I can only state categorically and emphatically that a failure to make this gesture at this moment will constitute a disregard of realities in an area where we are constantly confronted with the success of such tactics when employed by the other side. It is not merely a question of buying support but chiefly one of preventing a recourse to other sources of support and that we should try to prevent everywhere regardless of the relative insignificance or geographical remoteness of the factor involved. In my opinion a great deal of unnecessary damage has resulted here from a deplorable absence of a realistic sense on the part of the democracies and I am ready to go to the limit in advocating a step which in the present scheme of things is so little and holds such beneficial potentialities within its limited context.

KIRK

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890F.51/35 Memorandum of Conversation, by the Assistant Chief of the Division

of Near Eastern Affairs (Alling)

[WASHINGTON,] July 24, 1941. Mr. Hamilton and Mr. Davies 26 called yesterday. Mr. Hamilton said that he would like to inform the Department of the most recent developments in connection with the proposal of extension of financial assistance to King Ibn Saud. He stated that about a week ago he

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25 Neither printed.

Fred Davies, president of the California Arabian Standard Oil Co.

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and Mr. Davies had gone to New York to discuss this whole question with officials of the company. As a result of that discussion a letter had been drafted to Mr. Jesse Jones setting forth the company's viewpoint. Mr. Hamilton and Mr. Davies had taken this letter over the past weekend to discuss with Mr. James A. Moffett at his summer home at White Sulphur Springs. At that conference it was agreed that Mr. Moffett, accompanied by Mr. Rogers, 27 President of the Texas Oil Company, would present the letter to Mr. Jesse Jones. This was done in a conference on Monday lasting about two hours. Mr. Jones pointed out that he had up to the present been unable to find any way by which he could extend direct financial assistance to Saudi Arabia. He thought it might be possible, however, to extend such assistance provided collateral could be arranged. Apparently both Mr. Moffett and Mr. Rogers felt that such collateral could be forthcoming in the shape of deliveries of petroleum products for the use of the American Navy. Both Mr. Rogers and Mr. Moffett, however, expressed the view to Mr. Jones that it would be undesirable to handle this matter on a purely commercial basis in such a way that the funds to be turned over to Saudi Arabia would be handled by the Standard Oil Company rather than by the United States Government. In other words, they both attached great importance to a direct extension of credit to King Ibn Saud but agreed that such credit should be secured by deliveries of petroleum products. According to Mr. Hamilton, Mr. Jones said that he would be glad to explore this suggestion and let Mr. Moffett know his decision within the next two or three days.

Later in the day I saw Mr. Moffett and he confirmed all of the foregoing statements and added that from his own conversations with the President he was certain that the latter desired something to be done in the way of working out financial assistance for Saudi Arabia.

890F.51/29 : Telegram

The Acting Secretary of State to the Minister in Egypt (Kirk)

WASHINGTON, July 29, 1941-9 p. m. 333. Your 1004, July 23, 1 p. m. The Department thoroughly appreciates the desirability of extending aid to Saudi Arabia and the question is receiving every attention: Legal difficulties apparently make impossible an unsecured loan, from this Government to that of King Ibn Saud, but the Reconstruction Finance Corporation is considering means whereby credit may be extended against collateral in the form of future deliveries of petroleum products. A decision is expected very shortly.

27 W. S. S. Rodgers.

In your discretion you may informally advise the Saudi Arabian Legation that its request is receiving the closest attention of this Government and that a reply will be made at the earliest possible moment.

WELLES

890F.51/37 Memorandum by the Federal Loan Administrator (Jones) to the

Secretary of State

WASHINGTON, August 6, 1941. You will recall that James A. Moffett, Chairman of the Board of the California-Texas Oil Company, Limited, New York, which is jointly owned by the Texas Corporation and Standard Oil Company of California, appealed to the President for assistance to be furnished by the United States Government to the King of Arabia since his normal source of income has been cut off and his demands continue beyond the ability of the oil company to make further advances toward the payment of future oil royalties.

It is represented by Mr. Moffett that the oil companies have advanced the King of Arabia some $6,000,000 or $7,000,000 to pay the royalties on future production. The royalty is at the rate of 20¢ a barrel.

The President referred the matter to you and later to the Secretary of the Navy in the hope that the Navy could buy oil, but it developed that the oil produced there is not suitable for the Navy and, furthermore, that not enough of it could be gotten to the Navy to be of any use.

Mr. Hopkins sent the file to me some weeks ago with the statement that the President would like to be of some assistance in the situation if a way could be found; that he did not feel that he had a right to use Lend-Lease money for this purpose.

The RFC has no authority to give money to the King of Arabia or to buy oil in the ground in Arabia in the expectation that it could ever be delivered to the RFC.

When I spoke to you about the matter, you told me that you had requested the British to look after the King and that they had been advancing him funds. Prior to our closing the loan of $425,000,000 to the British Government,28 I spoke to Lord Halifax on two occasions about this matter, also to Sir Edward Peacock,29 Sir Frederick Phillips,3o and Mr. Carlyle Gifford.31 The President wrote me the

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29

See pp. 1 ff.
Director, Bank of England.
British Treasury representative in the United States.
81 British Treasury official.

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