In the decades before the outbreak of war the German government, companies and banks understood the vulnerability of the country’s dependence on imported oil.

This early 20th century map shows Romania and its access to the Danube on the left, and Baku on the Caspian Sea on there right. The distances between here and Germany were formidable.

Supplies from the rich Russian fields at Baku on the Caspian Sea were piped 450 miles overland to the port of Batum on the Black Sea, shipped by tanker to Romania, then taken in barges up the River Danube to Germany. Romania itself was fortunate to have major oilfields and since it was much closer to the industrial power-house of central and northern Germany, it became Germany’s main supplier. Romanian oil was first registered in international statistics in 1857 when 250 tons were produced. [1]

Development was initially slow, but by the turn of the century international oil magnates, banks and investors descended like vultures who reaped rich pickings as it became the third largest oil producing country in the world. Its main commercial advantage lay in the fact that Romania was comparatively close to most European capitals and the river Danube offered a relatively straightforward route for transportation. The major fields at Ploesti and Campina, some 80 kilometers north of Bucharest, had their own refineries and storage installations. By 1900 production had risen to 250,000 tons, and by 1914 it stood at around 1.8 million tons. [2] Growth was spectacular. One might think that Romanian oil was controlled by the state. It was not. Ownership belonged to foreign investors who had their own agenda and profits flowed abroad rather than to the Romanian people.

Romanian oil wells around 1910

One of the major Romanian fields, Steaua Romana, was bought over by German capital in 1903, and Germany thus appeared to have control of some 35 per cent of Romanian production. The Romano-Americana complex was gobbled up by Rockefeller’s Standard Oil in 1904, and Astra Romana, the second largest, in 1910 by British interests in the Royal Dutch Shell company. By 1914, Romanian oil had been thoroughly internationalised [3] with British, Dutch, French and American interests controlling a majority of the wells.

It is important to understand who actually owned the companies that controlled Romanian production and supplied Germany throughout the war. In 1913 Germany imported 125,000 tons of oil per year from Romania, approximately 10 per cent of its total production. The advent of war cut Germany off from her other suppliers and she then needed every barrel that could be squeezed from Romania. Apart from small and rapidly diminishing Galician supplies, this became the only major source of oil available to Germany. [4]

German investment gave them a nominal 35 per cent control of Romanian oil by 1914, but behind this bland fact lies the question: what precisely did German ownership mean? Was it the German government or German industrialists, merchant banks and investors? Or were there other ‘owners’? While Germany, through the Deutsche Bank and the Disconto Gesellschaft bank, appeared to have a considerable stake, Disconto Gesellschaft was in fact a Rothschild concern [5] and so under British and French influence rather than German. Nathaniel Rothschild, as we have shown in previous blogs, was a leading member of the Secret Elite in London. Disconto bought up three substantive Romanian companies, Concordia SA, which drilled for oil, Vega, which refined it and Creditul Petrolier which stored and transported it. In reality, Germany only controlled around 20 per cent of Romanian oil, far less than the statistics might suggest.

Birdeye view of Romana-Americana oil refinery

Who then were the decision-makers who permitted the commercial agreements and understandings that directed the supply of oil before and during the war? The dark and murky world of international business stood ready as always, to shed patriotism for profit, and it is important to examine some historical facts. The greatest name in global oil in the nineteenth century and around the time of the First World War was J D Rockefeller in America. His Standard Oil Company had not only been vulnerable to the American anti-trust lobby which in 1911 demanded its dissolution into smaller parts [6], but had been stalked by more dangerous predators, the Rothschilds. Before the turn of the century the Rothschilds had no intention of allowing Rockefeller to monopolise European oil fields, and they moved swiftly to take control of Russian oil at Baku on the Caspian Sea.

Oil had been discovered in the Baku district of Russia (now Azerbaijan) in the1850s. Such was the extent of these massive fields that in 1901 Russian production outranked American output but that situation was rapidly reversed. The problem of limited investment in Baku was neatly summarised by Prince M. Golitsyn, Governor-General of the Caucasus: “The situation in the Caucasus is unique. Without participation of Russian capitalists, it is difficult to solve. The lack of free capital, the limited industrial infrastructure, the low level of agriculture, the lack of technical knowledge and weak business initiative of the resident population are long term obstacles to the economic growth of the region. Under such circumstances, the participation of foreigners in the economy in the Caucasus should not be rejected. In addition, the prohibition on purchasing real estate could lead to a stoppage of foreign capital inflow, and to unavoidable damage to its economic interests.”  [7] It was an open invitation that attracted some very big investors, amongst whom were the Nobel Brothers, Robert and Ludvig, as well as the ubiquitous Rothschilds.

Ludvig Nobel, held to be the driving force behind Branobel oil

The Nobels came originally from Sweden. Their father, Immanuel, moved to Russia and invented an exploding sea mine which greatly impressed the Tzar, but he went bankrupt in 1859. Robert and Ludvig converted the failed business into a small arms company that sold rifles to the Russian Government. Their rags to riches story involves the rather fanciful tale of Robert travelling through Russia in search of rare walnut timber for rifle stocks, and chancing upon Baku where he immediately grasped the commercial potential of the oil wells. The brothers founded the Branobel Oil company in 1876, purchased oil wells near Baku and constructed an eight mile long pipeline to carry the oil to the Caspian Sea. They also built the world’s first oil tanker, the Zoroaster, to transport the raw product for export. Within a few years the Nobels had built a railway system with hundreds of tank wagons and a network of storage depots. Branobel became a dominant company in the Russian oil market, and, remarkably, it managed to keep Standard Oil at arms length. [8] This systematic and expertly co-ordinated development was the complete antithesis of what was happening in Austrian Galicia. So, how did the Nobel brothers manage to fund such an awesomely expensive investment? They didn’t.

It was the Rothschilds.

Reports filtered back to Standard Oil that the Nobels could not meet their obligations and were heavily in debt to the Paris Rothschilds. [9] The Rothschild Dynasty had built much of its massive fortune by rescuing and secretly taking over potentially successful companies and banks which had overstretched themselves. While the Nobel brothers appeared to control Russian oil in Baku, they operated as an important front for Rothschild interests. The main advantage the Nobels had in gaining their original foothold in Baku was their good relationship with the Tzarist government. [10] The advantage that the Rothschilds had over Rockefeller and Standard Oil was that they served as official bankers to the Tzar. In any event, by the turn of the century the Rothschilds had amassed vast and highly profitable investments in Baku, and there was little space left for Standard Oil.

At least that is how it seemed. While the Rothschilds and the Rockefellers were apparently engaged in the ‘oil wars’ of the 1890s, grasping control over whatever oilfields and companies that could be drawn into their clutches, relationships were different behind the scenes. Certainly there were periods of ‘blistering competition’ [11] but there was also a will to divide the spoils and share out the market.

Baron Alphonse de Rothschild

In 1892, Baron Alphonse de Rothschild accepted Rockefeller’s invitation to go to New York for secret talks behind the closed doors of Standard Oil’s headquarters on Broadway. As Rockefeller’s biographer saw matters ‘Beneath the competitive veneer, the Rothschilds were keen to come to terms with Standard Oil. [12] No doubt the Rothschild version of events would reverse that order, for clearly both saw mutual benefit from monopolistic collusion.  Standard Oil’s chief spokesman, John Archbold, reported directly to Rockefeller that they had quickly reached a tentative agreement (without being sufficiently indiscreet to add its precise nature), but stressed that ‘it was thought desirable on both sides that the matter be kept confidential’. [13] Indeed, Alphonse de Rothschild thought it desirable to keep the Nobel brothers out of the discussion, and Standard Oil executives were instructed to deal exclusively with them. Thus, in the pre-war years, much of the great rivalry between Rothschild and Rockefeller was a convenient façade, though both would have the world believe otherwise.

These were the powers who dominated the oil industry and endlessly continued to grasp more and more of the global market. Powers that were deeply involved in the close-knit Anglo-American cabal, the Secret Elite, who planned to crush Germany. Ironically, in order to do so they would provide her with oil, as our future blogs will show.

[1] http://www.150deanidepetrol.ro/history.html
[2] Ibid.
[3] Keith Hitchins, Rumania 1866-1947,  p. 192.
[4] Daniel Yergin, The Prize, p.163.
[5] 61st Congress, 2nd session, Senate Document 593, National Monetary Commission, the Economic Development of Germany by Dr J Reisser. http://babel.hathitrust.org/cgi/pt?id=uc2.ark:/13960/t7cr5qn19;view=1up;seq=432
[6] New York Times 16 May 1911. Articles explain the decision of the Supreme Court. http://query.nytimes.com/gst/abstract.html?res=9900E5DA1431E233A25755C1A9639C946096D6CF
[7] MYM Babayev, Baku Baron Days, http://www.azer.com/aiweb/categories/magazine/ai122_folder/122_articles/122_foreign_investment.html
[8] Professor Robert W Tolf, The Russian Rockefellers, pp. 90-92.
[9] Ron Chernow, Titan, p. 246.
[10] Ibid.
[11] Ibid., p. 247.
[12] Ibid., p. 248.
[13] Ibid.