The Oil Story 7: Why the Flow Continued to Run

Much to the fury of British naval officers and ratings of the blockade fleet who had risked life and limb to prevent American oil getting through to Germany between 1914-1916, faceless men in the highest echelons of the British government gave orders that apprehended ships be released and allowed to continue their journey. [1] Germany was certainly aided by quantities of oil which had been inexplicably allowed through the naval blockade, but the vast bulk of her supplies throughout the war came from Romania, by way of the river Danube. Romania remained neutral for the first two years of the war thus its government was free, by international law, to supply anyone it wished. However, the oil fields were neither owned by the Romanian government nor Romanians, but by individuals closely linked to the Secret Elite. [2] Romania’s neutrality was convenient but immaterial.

Had there been the will to turn off the Romanian oil wells owned by Rothschild and Rockefeller, and bring Germany’s only major supply to a standstill, it could have been effected. Royal Dutch/Shell could perfectly reasonably have claimed to be British, but instead played the neutral card held by Holland. Rockefeller’s Standard Oil followed suit, using its Austrian connections. French banks controlled the Aquila Franco-Romana field, and Rothschild banks and companies centred on Rue Lafitte in Paris, owned and supplied most of the Kaiser’s oil. While Germany’s Deutsche Bank held considerable shares in the Romanian Steaua oil field, they did not own these fields wholesale. Unquestionably a shut down would have come at a huge cost in terms of profit to the investors and the banks, though they were already making massive profits by supplying the Allies. A concerted Allied attempt to isolate Germany from Romanian oil was never attempted. Indeed the very opposite took place. Barriers to supplies were mysteriously removed and thousands of Danube barges constantly sailed back and forth with oil for Germany without the slightest obstruction. Criticism inside Parliament became vociferous and increasing pressure was put on Asquith’s government to take action. [3]

By 1916, with the rapid and massive developments in mechanical warfare, sufficient oil was critical for Germany’s survival. [4] Without oil, defeat was certain. How fortunate then for the warmongers and oil barons that in August that year the Allies enticed Romania into the war with lavish promises of increased territory from Hungarian spoils once victory was finally assured. [5] On the face of it, this might have appeared as a masterstroke to increase the Allied forces and relieve pressure on the Western Front. Furthermore, once Romania declared war on Germany and Austria, their vital supplies of oil and grain would cease. Effectively the war would brought to an end within a few months. But this was never the intention.

The Romanian army of 650,000 men in 23 divisions quickly routed Austro-Hungarian forces in Transylvania, but German troops under General Falkenhayn entered the fray and overwhelmed them. [6] By Christmas 1916, the German army had conquered most of the country and occupied Bucharest. Before reaching the capital, they had captured the oil fields at Ploiesti, and so the same oilfields and wheat fields that had provided much of her needs through 1914-16, continued to serve the German war effort. It was a disaster. According to Lloyd George, ‘it was a blunder of the most inexplicable character’. [7]

‘Inexplicable’? Not so. Let’s examine the facts. The Allies knew that the Romanian army had no heavy guns or adequate supplies of ammunition. Lloyd George went so far as to write; ‘our military advisers [the War Office] must have known that if the Germans chose to withdraw from the attack on Verdun and send a few of their reserve divisions to Roumania’ the Romanian forces would be ‘quite unequal’ in the face of such an attack. [8] Allegedly no-one considered the possibility that Germany, faced with the loss of vital resources, would react. Consignments of ammunition sent from Western Europe were deliberately side-tracked on Russian railways [9] and it was only after the German attack had advanced into a near defenceless Romania ‘that the Allies improvised hurried expeditions to rescue Roumania from her doom.’ [10] Lloyd George accepted that if Germany conquered Romania, ‘the Germans’ stores, much depleted, will be stocked with great quantities of oil and corn, which will place the Central Powers above any anxiety in these two important respects – and yet no one seems to have thought it his particular duty to prepare a plan … which would avert a possible disaster of the first magnitude to their cause.’ [11]

No one seems to have thought of it? How likely was that? In reality, Romania was hung out to dry; deliberately sacrificed. Why? Why would anyone approve a strategy that would so clearly enable the enemy to fight on, unless that was the intention all along? And this from the pen of Lloyd George. Under the cover of Allied incompetence and blunder, the oil companies could continue to supply Germany without any criticism from inquisitive parliamentarians.

A story was put about in Britain that the Romanian oil fields had been utterly destroyed [12] and the country’s wheat stores despoiled so that the Central Powers gained little from the capitulation of Romania. It was a fantastic story; the stuff of legends. [13] A British Lieutenant-Colonel and member of parliament Norton Griffiths MP, had, according to reports placed in newspapers, single-handedly sabotaged the Romanian oil fields, which were spread over several hundred square kilometres, minutes before the German troops marched in. He had, allegedly, destroyed the oil wells together with 70 refineries and 800,000 tons of crude oil. [14] The plumes of smoke over Bucharest some 60 kilometres away were reported to have blocked out the sky, such was the devastation Griffiths was reported to have caused. It was as though Indiana Jones had taken on the might of the German army and thwarted their designs on Romanian oil. Unfortunately Norton Griffiths was a legend in his own mind, a maverick self publicist with a history of ‘incredible’ adventures. John Buchan could not have penned a more daring tale for Richard Hannay. It made great copy for the propaganda machine but in reality the greater part of Romania including its wheat and oil, ‘lay under the heel of the invader.’ [15]

There was some damage and disruption to production, but before the end of the war over one million tons of oil had been transported from the Ploiesti fields to the Central Powers, mainly Germany. Had it been otherwise, the German war machine would have ground to a halt. This is not some lame theory. After the collapse of Bulgaria on 3 October 1918, the German General Staff asked the question:

‘If to-day Roumania falls away, how long can we last out with petrol? Will the collapse of Roumania compel us at once to abandon hostilities?’ The stark truth was that ‘aircraft can maintain their full activity for roughly two months (one month’s service at the front, one month’s service at home). Then they will have to cut down to half service. Lubricating oil is available for six months. Then all machines will be brought to a standstill. … the illuminating oil industry (i.e. provision of petroleum for the civil population, agriculture which is very important) will collapse in one to two months…’ [16]

In a session lead by the Reich Chancellor on 1 October 1918, the Minister of War explained that Germany could only carry on fighting for a month and a half if Romania was not at their disposal. Lloyd George wrote in his memoirs that if the Allies had taken steps to secure the Balkans, and thus control of Romanian oil in 1915, ‘as we ought to have done … the failure of oil supplies would have shortened the war by at least two years.’ [17] Make no mistake, the Germans knew that the war would have been over within six weeks without access to Romanian oil. Lloyd George as British prime minister later agreed that war would not have lasted beyond 1916. Hindsight lends itself to wise conclusions, but if the British government knew this before war was declared, which they most assuredly did, why was appropriate action not taken in 1914-15 to halt the supplies to Germany?

And that oil continued to be supplied by Royal Dutch/Shell and all of the other allied companies, including Standard Oil once America entered the war in 1917. Money has no loyalty; it is the currency through which greed may be measured. The oil companies amassed vast wealth in the war years, serving whichever master paid the asking price. Between 1914 and 1919 Anglo-Persian declared consolidated current assets that rose from £266,297 to £4,352,083,  or roughly eighteen-fold. [18] Their group financial performance rose from £62,258 in 1914/15 to £2,651,931 in 1918/19 or just over forty-fold. This allowed an annual return on investment of 30.1% and a dividend rate of 10%. [19]

The story at Royal Dutch/Shell was equally awesome. At the end of the war, Sir Marcus Samuel  announced to a stockholders meeting in London that cash resources amounted then to £24,000,000 and the Shell company fleet  had risen from 255,965 tons  before the war to 263,746 tons in 1919. Investors might well have expected a serious decline in shipping tonnage, given the U-Boat menace and its impact over the last two years of  warfare. The New York Times reported that profits and dividends were outstanding. ‘Despite the cutting off of the Romanian and Prussian (Galician) oil fields, while war was on, the Shell company continued to pay large dividends’. [20]

In truth, the Romanian oil fields had never at any time been ‘cut off’ from Germany. From 1913 to 1918 the annual disbursement to share owners amounted to 35%. In 1918 a 60% stock dividend was paid. Sir Marcus assured bankers who were interested in a 1919 Wall Street share issue, that the cut in excess profit tax from 80% to 40% in Britain, meant that the company could look forward to increased profits. [21] Truly enormous profits were made by the share-holding classes; but at what a cost to the men in the trenches or on the High Seas?

Matters would have been so different if oil had been blockaded from the Central Powers from 1914. The senior executives of all the great oil monopolies, trusts and merchant banks were close to their governments and moved inside the circles of influence. Rothschilds in London and Paris acted as agents for Allied loans, Marcus Samuel and Henry Deterding (Royal Dutch/Shell) met with Sir Edward Grey, Winston Churchill and senior cabinet ministers. J.D. Rockefeller had instant access to Mandell House and President Wilson; they were already in his gift. The political, financial and business worlds operated with mutual co-operation. Why then did they fail to take concerted action to sever Germany and the Central Powers from oil? Is greed a sufficient answer? No. Primarily, the Secret Elite was determined to destroy Germany in a prolonged and exhausting war, not defeat her in a manner which left the primacy of British domination undecided. The accumulation of massive profit margins was a welcome but subsidiary bonus.

For the Secret Elite it had to be a bitter crushing war that would exhaust and forever end Germany’s threat to the Empire, it’s future, and the ultimate triumph of British ‘values’.

[1] Blockade 10: The Worms Turns, firstworldwarhiddenhistory.wordpress.com 4 February 2015.
[2] The Oil Story 2, firstworldwarhiddenhistory.wordpress.com, 16 December 2015.
[3] Time and again questions were asked in Parliament about Romanian oil and its ownership, who owned shares in various companies and where the war profits were going. One example of this can be appreciated from Hansard, House of Commons Debate, 06 January 1916, vol 77 cc1079-80.
[4] Daniel Yergin The Prize,  p. 163.
[5] C.R.M.F. Crutwell, A History of the Great War p. 292.
[6] Winston Churchill, The World Crisis 1911-1918, pp. 675-9.
[7] David Lloyd George, War Memoirs of David Lloyd George, vol 1, p. 548.
[8] Ibid., p. 549.
[9] Sir William Robertson, Soldiers and Statesmen 1914-1918, vol II, p. 127.
[10] Lloyd George, War Memoirs, vol. I, p. 549.
[11] Ibid.
[12] The Times, 11 December, 1916, p. 8.
[13]  Yergin, The Prize, pp. 164-5.
[14] David Stevenson, With Our Backs to the Wall: Victory and Defeat in 1918, p. 225.
[15] Liddell Hart, History of The First World War, p. 350.
[16] David Lloyd George, War Memoirs, vol.II, p.1921.
[17] Ibid.
[18] R.W. Ferrier, History of the British Petroleum Company, Table 6.9, p. 236.
[19] Ibid., Table 6.6, p. 231.
[20] New York Times, 24 July 1919.
[21] Ibid.

The Oil Story 6: Hypocrisy and a Biblical Blind Eye

Perhaps the most searching question is why, on the outbreak of war, the British government did not force home-based multi-national oil companies, such as those owned by the Rothschilds or Marcus Samuel, to use their influence to stop supplying Germany. There can be no excuse that the government did not realise what was happening. Its close scrutiny of the oil industry in the run up to the war meant that the Foreign Office, the Exchequer, the Board of Trade, the Admiralty, and key members of the Cabinet understood the precise nature and structure of the global oil industry. [1]

Churchill defined the prevailing situation to Parliament one year before war broke out:
‘Our power to obtain additional supplies of oil fuel in time of war depends on our command of the sea’, and spoke of ‘Two gigantic corporations….In the New World there is Standard Oil; In the Old World the great combination of Shell and Royal Dutch with all their subsidiary and ancillary branches has practically covered the whole ground and has even reached out into the New World’. [2] The British government had analysed and itemised the world supply of oil in fine detail in order to assure itself of reliable supplies. It knew exactly where the oil was, who owned it and precisely how Germany obtained her oil.

On the outbreak of war, Germany should have been unable to source oil supplies directly from America. However, oil was not initially included in the definition of contraband, and as a result she could still legally import oil from the USA and other neutral countries. [3] That situation was supposed to have been changed in November 1914 when the House of Commons was informed: ‘His Majesty’s Government have reliable information that in the present circumstances any oil, copper, and certain other substances that may be imported into Germany or Austria will certainly be used exclusively for warlike purposes, and His Majesty’s Government have for this reason felt justified in adding those items to the list of absolute contraband. Every possible care is being taken to ensure that oil and copper intended for neutral countries should not be interfered with.’ [4]

Examine Prime Minister Asquith’s words. His government acknowledged that any oil allowed into Germany ‘would be used exclusively for warlike purposes’. Despite this, parliament was informed that oil intended for neutral countries should not be interfered with. It was classic double-speak. The government was well aware that much of the oil and other goods allowed through the naval blockade to neutral Scandinavian countries was being transferred on to Germany. Placing oil on the absolute contraband list was a sham. It changed nothing. Germany was still allowed to purchase oil from her neighbours in vast quantities.

Enticements were breathtaking. Rear-Admiral Consett, the British Naval Attache in Scandinavia revealed that in 1915 Germany was offering 1,8000 marks (£90) per barrel of oil whose market value in neighbouring Denmark was 125 kroner (about £7) Lubricants were always in short supply in Germany, but most especially in 1915 and 1916 [6] By December 1915 the American Ambassador in Berlin (Gerrard] recorded in his war diary that ‘probably the greatest need of Germany is lubricating oil for machines’. [7]

General Ludendorff, Deputy Chief of Staff, wrote later in his Memoirs ‘As Austria could not supply us with oil, and as all of our efforts to increase production were unavailing, Romanian oil was of decisive importance to us. But even with deliveries of Romanian oil, the question of oil supplies still remained very serious, and caused us great difficulty, not only for the conduct of the war, but for the life of the country.’ [8] Two points should be considered here. Yet again, the German High Command acknowledged that without oil the war could not have continued. He also considered Romanian oil crucial. Who owned the ‘decisively important’ Romanian oil fields? International conglomerates closely linked to the Secret Elite.

German imports of American oil through Scandinavia were well known to the British authorities from an early stage in the war. Rear-Admiral Consett repeatedly sent detailed and urgent alerts about this from his office in Copenhagen to the Admiralty, but nothing was done. Such large-scale abuse of the contraband restrictions became a scandal. In Copenhagen, German ships were openly berthing alongside tankers from America, transferring the oil, and trans-shipping every drop to Germany. Likewise in Sweden, virtually every consignment of oil imported through Stockholm was re-exported to Germany. [9] Profits for the Americans and the Scandinavians were enormous, but what did it profit the British government to turn such a biblical blind eye?

Their empty promises to prevent oil reaching Germany made a mockery of the valiant efforts of the Royal Navy in the dangerous, storm tossed waters of the North Sea. [10] The naval historian Keble Chatterton, likewise exposed the charade. He later wrote about Admiral de Chair, commander of the navy’s blockading fleet, complaining bitterly that the work of his brave sailors was deliberately undermined:

‘Those British authorities who sat in their office chairs on shore went on blundering. With some difficulty and trouble the American SS Llama [Standard Oil] carrying a large cargo of oil, had been chased by vessels of 10th Squadron and finally captured.

An armed guard had run the prevailing risks of submarines and taken her into Kirkwall, [Orkney Islands] yet by a mysterious mentality, someone in authority had ordered her release and allowed her to proceed on her way to Germany. She duly arrived at Swinemunde, where her most welcome cargo fetched a high price. It seems incredible that after a year’s war experience, we should deliberately allow such supplies to reach the enemy after the carrying ship had been intercepted.’ [11]

It did, of course, run much deeper than the ‘blundering’ of office bound officials as expressed by Admiral de Chair. It is inconceivable  that the oil tanker was released and allowed to continue its journey to Germany unless someone at the highest level of the British government had approved it. American vessels, including the Lusitania with the loss of 128 American lives, had been sunk by German U-boats. Outrage was being expressed by the American government, [12] yet American companies were providing the oil which fuelled those very U-Boats. It was not all they were providing.

On 9 July 1916 the large German merchant submarine Deutschland sailed into Baltimore harbour after a 16 day journey from Bremerhaven. She was welcomed with siren blasts from American and other vessels, and an official dinner was given by the Mayor of Baltimore. [13] Her cargo of chemical dyes, gemstones and medicinal products was unloaded and when she left for Germany on 2 August she carried 341 tons of nickel, a mineral essential for hardening steel for weapons production, 93 tons of tin and 348 tons of rubber.

On a second journey in November 1916 to New London, Connecticut she returned with a full cargo which included 6.5 tons of silver bullion. [14] America not only provided Germany with oil and the means to produce heavy weapons, she also helped fund her war effort. The hypocrisy was breathtaking. While the U S President apparently urged peace on Europe, American money enabled both sides to continue the war.

The hypocrisy was by no means confined to America. In exactly the same manner as raw materials such as silver, nickel, tin and rubber, and essential supplies of foodstuffs were deliberately allowed through the British naval blockade, critical supplies of oil poured into Germany from British -owned companies in the first two years of the war. In the House of Commons in July 1916, Walter Runciman, President of the Board of Trade was asked: ‘Whether he can ascertain what sales and deliveries, if any, of petrol, benzine, kerosene or other petroleum products have been made to enemy countries during the period of the war and which of the companies under the control of the Shell Trading and Transport Company, or any of their associated companies, have done this, other than the Astra Romana Company?’ Runciman did not reply in person, but sent his deputy, Lewis Harcourt, a long-time associate of the Secret Elite [15] to provide a typically cryptic non-answer: ‘I have no reason to think that any such sales or deliveries of petroleum products have been made, and the Shell Transport and Trading company inform me that they have not.’ [16]

The MP who put forward the question, Major Rowland Hunt, was well aware that the British company’s field at Astra Romana was selling to Germany. In effect he was not wanting to know if they were supplying oil to it, but how much. The answer was stunning in its conceit. Harcourt, as the government’s spokesman ‘had no reason to think that any sales or deliveries’ had been made. Shell said they had not, so that was the end of the matter. No further discussion, no independent investigation was required on this crucial matter. The Government appeared to accept without question the word of a multinational company that multiplied its profits by supplying the enemy.

It was, however, not a matter of naivety that shaped the official answer. It was a cover up. The war was deliberately being prolonged by oil companies partly owned by British shareholders supplying the enemy, and the top echelons of power in Britain colluded with them.

[1] F.C. Gerretson, History of the Royal Dutch, vol 4, p. 282.
[2] Hansard, House of Commons Debate, 17 July 1913, vol 55 cc1465-583.
[3] Blockade 2: Britannia Waives the Rules, Wednesday 7 December 2014. http://www.firstworldwarhiddenhistory.wordpress.com
[4] Hansard, House of Commons Debate, 17 November 1914. vol 68 cc314-7.
[6] Rear-Admiral M.W.W.P. Consett, The Triumph of Unarmed Forces p.180. Consett’s book is so important that our readers might want to peruse it. https://ia801403.us.archive.org/27/items/unarmedforces00consuoft/unarmedforces00consuoft.pdf
[7] Ibid.
[8] Pierre de la Tramerye, The World Struggle for Oil p. 103.
[9] Consett, The Triumph, pp. 180-189.
[10] E. Keble Chatterton, The Big Blockade, p. 73.
[11] Ibid., pp. 213-214.
[12] The United States and War: President Wilson’s Notes on the Lusitania and Germany’s reply, Brooklyn Daily Eagle, vol. XXX (1915) p. 47.
[13] Paul Konig, Voyage of the Deutschland, The First Merchant Submarine, p. 19. Konig was the Captain of the Deutschland.
[14] Dwight Messimer, The Baltimore Sabotage Cell, German Agents, American Traitors and the U-boat Deutschland During World War 1, p. 139.
[15] Carroll Quigley, The Anglo-American Establishment, p. 38.
[16] Hansard, House of Commons Debate, 31 July 1916 vol 84 cc 2044-6.

The Oil Story 5: Behind The Anglo Persian

Having spent a great deal of his personal fortune on exploration in Persia without any convincing returns, William Knox D’Arcy had had enough. The anticipated profit had not materialised and he transferred his holdings to Burmah Oil, recouped his outlay in full and made a profit of 170,000 Burmah shares, valued around £895,000 [1] for himself and his associates. [2] It was clear to the Secret Elite that D’Arcy’s personal fortune was more important than the future of the Empire and as a consequence he received no official honour for his ‘loyalty’. Not even a knighthood!Then, low and behold, the barren deserts spouted the priceless oil shortly after, in a district which had been identified as oil-bearing more than half a century before. [3] D’Arcy was either decidedly unlucky, or the victim of a calculated plan. In the summer of 1908, two tremendously profitable gushers were struck to the delight of his replacement, Lord Strathcona, a Scottish born Canadian financier, and other investors.

As Chairman of the Hudson Bay Company and Empire philanthropist, [4] Strathcona had all the international contacts necessary to lead from the front. From 1909 he played an active role as the Anglo-Persian Oil Company’s first chairman, ably assisted by Charles Greenway, a British businessman. Greenway’s ambitions reflected those of the Secret Elite; to obtain sufficient capital to transform Anglo-Persian into a major force in world oil, resist the early and unwelcome overtures from Royal Dutch/ Shell, and gain the Admiralty contract to supply the Navy. In 1913 he offered them a twenty-year fuel contract that would both guarantee their supply by a ‘British’ concern and co-incidentally, rescue the company from financial straits. [5] He shamelessly played on Marcus Samuel’s ‘Jewishness’ and Henry Deterding’s ‘Dutchness’ to better accentuate his own patriotic intent, arguing repeatedly that Anglo-Persian was a natural adjunct to British strategy and policy and was a significant national asset.

[6] Admiral Fisher, retired, but still highly influential at the Admiralty, was impressed by these arguments, and in May 1914 an agreement was signed with the British government. Much of Greenway’s biased rhetoric was reiterated in Churchill’s speech to Parliament on 17 June 1914 when he sought Parliamentary approval to purchase a majority shareholding of the Anglo Persian Oil Company at a cost of £2.2 million. [7] Its importance, he stated, was that ‘over the whole of these enormous regions we obtain the power to regulate developments according to naval and national interests’. [8] It was classic British Imperialism at its worst. ‘National interests’ covered a multitude of sins.

Churchill’s role was to front the signing of a deal that flew in the face of all previous Liberal Free Trade philosophy. To accusations of ‘Jew baiting’ he steered the proposal through what could have been troublesome Parliamentary waters with commendable success. His intervention dressed the purchase of oil from Persia in naval uniform and wrapped it in the Red Ensign. It focused minds on the fleet, on the price of oil, on the manipulation of greedy multinational oil companies, and on German rivalries. It played on old bigotries and new found fears. Though Sir Marcus Samuel and his colleagues at Royal Dutch/Shell were apoplectic at Churchill’s sneers and misrepresentations, [9] they could not change the government’s intentions.

But it had all been set up years before through the guiding hands of the Secret Elite who were able to mobilise their wealthy associates, William Knox D’Arcy and then Lord Strathcona, to nurture and protect the oil interests in Persia. They were altering the map of the Middle East and quietly but effectively planting a union flag in the Persian Gulf. Some seven weeks before the outbreak of war the government bought a fifty-one per cent holding in the Anglo Persian Oil Company, and at a stroke changed the rules of engagement. The claim to Persian oil was thus backed by the might of the British Government, not some commercial company. Eleven days before the assassination of Archduke Ferdinand in Sarajevo, the proposal was presented to Parliament for its approval. Ramsay MacDonald, leader of the Labour opposition, warned that the contract ‘was far more political in its significance than economic’ and, with considerable prescience added, ‘commercial concessions, especially when government money was in them, had an unhappy knack of becoming territorial acquisitions.’ [10]

Six days after war had been declared, the Bill received Royal consent. [11] The Secret Elite had played a master-stroke in what one of their leading players, Lord Curzon, described as ‘the game for the domination of the world’. [12] Without the consent of any other government, and in full denial of such intent, the Foreign Office had effectively created a new protectorate to sit beside Egypt, Sudan and the route to India. And it had all started with the bribe which D’Arcy used to gain the concession from the Shah [13]

Once the deal with Anglo-Persian was approved, Churchill quickly contacted  Henry Deterding of Royal Dutch/Shell to negotiate a new agreement with them. Having trashed their reputation in public, he quietly secured their oil. Deterding promised that Britain ‘shan’t want for oil or tankers in case of war’. He was a practical man. He understood what had happened [14] Despite Sir Edward Grey’s denials, this was not primarily about the availability of oil, nor the price of oil. It was about a strategic and vital stretch of land in the Middle East. The decision had been driven not just by the Admiralty, whose technical imperatives demanded that Germany never got ahead in the Naval race, but, more importantly, by the Foreign Office.  It both secured the future of Anglo Persian as a ‘British’ oil company and signalled the fact that this region was now firmly a British sphere of influence.

And where did the money come from? It had not been included in the Naval Estimates, so technically it could not be allocated from the Admiralty. Amazingly, money was found by the Chancellor of the Exchequer without any requirement for additional borrowing. [15] It was indeed a fortunate circumstance that such a large sum [16] just happened to be available. Therefore, the Treasury, the Admiralty and the Foreign Office were in cahoots. In a month of unparalleled domestic upheaval, the rights to a small piece of land in Persia were purchased for the nation by the triumvirate of Secret Elite agents inside the Cabinet without prior discussion. This oil-bearing land had been acquired on the basis of supplying the navy. That was the Admiralty’s public position. In the depth of the Foreign Office oil had been transformed into an instrument of national policy for Britain. It gave the government claim to own part of Persia.

Thus in the weeks immediately before the declaration of war, Britain established its ownership of a potentially invaluable future source of oil. Unlike Germany, which was dependent to a large extent on the monopolies she could not break, it was relatively straightforward for Britain to purchase and transport by sea, oil from America, Mexico, Trinidad, Borneo, Romania and beyond, to guarantee supplies for the Royal Navy. So there was no urgency, no immediate necessity to protect the navy’s oil supplies even in time of war. The deal that was rushed through the British parliament had future ambition written large behind its front cover. The Anglo Persian field would require more time to prove economically effective and it did not disappoint in the long run. [17] But as Britain entered the mammoth struggle with Germany, it had established a claim on the disintegrating Ottoman region around Persia and the Gulf.

And even if the decision to acquire a majority stake in Anglo-Persian had been only an economic consideration, if it was simply the supply of oil for the navy that was of concern, surely that was sufficiently important to beg another question. Given that the politicians and planners knew how critical the supply of oil would be in time of war, why did the Allies not move immediately to deny Germany and the Central Powers access to oil at the outbreak of war? No-one can claim that the British government was unaware of this. Indeed Churchill spoke about the impact of such an embargo in the House of Commons when he argued that, ‘if he [the enemy] were able to stop oil ships and enforce his doctrine of contraband, he could also stop the grain ships, the meat ships, and the ships bringing cotton and all the other varieties of raw material to this country and, of course, he could very quickly bring the war to an end by that means.’  [18] He was absolutely correct. It therefore follows that had Britain stopped the supply of oil and other commodities to Germany from the outbreak of war, it would very quickly have been brought to an end.

And let us not forget another point which Churchill correctly identified. Control of oil throughout the world was in the hands of a relatively few very powerful oil companies. These were essentially Standard Oil (American) and Royal Dutch/Shell (Dutch/British), with Mexican Eagle (British) and the nascent Anglo Persian Oil Company (British) running far behind those two giants. Even though Germany had some influence through Deutsche Bank holdings, most of the shareholdings in Romanian and Russian oil lay with the Rothschild Dynasty and had by 1914 been amalgamated into the Royal Dutch/Shell giant. [19] Such a comprehensive stranglehold on the supply of oil should surely have spelled disaster for Germany after stalemate on the Western Front prolonged the First World War beyond the expectation of most observers. It did not.

[1] The current value of these share at 1909 prices is just over £83,000,000. http://www.measuringworth.com/ukcompare/relativevalue.php Dr FC Gerretson, History of the Royal Dutch states that D’Arcy was paid £170,000 in shares, while Ferrier, see below, cites 170,000 shares.
[2] R.W. Ferrier, The History of the British Petroleum Company, p. 112.
[3] F.C. Gerretson, History of the Royal Dutch, p. 231.
[4] Donna McDonald, Lord Strathconna, pp. 507-526.
[5] Daniel Yergin, The Prize, p. 159.
[6] Ibid., p. 158.
[7] The Times, 18 June 1914, p. 12.
[8] Yergin, The Prize, p. 161.
[9] The Times, 23 June 1914, p. 19. Company Meetings, Shell Transport and Trading Co. (ltd)
[10] The Times, 18 June, 1914, p. 12. Mr Ramsay MacDonald’s Views.
[11] Hansard, House of Commons Debate 10 August 1914 vol 65 cc2308-35.
[12] John Pilger, The New Rulers of the World, p. 101.
[13] Engdahl, A Century of War, p. 20.
[14] Yergin, The Prize, p. 163.
[15] Hansard, House of Commons Debate 05 August 1914 vol 65 c2001.
[16] Roughly £189 million at today’s prices. http://www.measuringworth.com/ukcompare/relativevalue.php
[17] Churchill was later to claim, without a moment’s hesitation, that the sums realised from this venture meant that the cost of all the great ships laid down between 1912-1914 were added to the British navy at no cost to the taxpayer. Winston Churchill, The World Crisis 1911-1918, p. 77.
[18] The Times, 18 June 1914, p. 12.
[19] Gerretson, History of the Royal Dutch, vol. Four, inset pp. 174-5 details the complex interlocking of the giant Royal Dutch/Shell’s organisation in the Western Market in 1914.

The Oil Story 4: British Interest Takes Shape

One essential point has to be reinforced. The Secret Elite ensured that plans had long been in place for war. Any other claim was a lie. The elites had worked assiduously to ensure that the conflict they instigated would appear to be caused by Germany, and written up as such by their pliant historians and journalists. [1]

The absolute advantage rested with the powers behind the scenes in Britain who controlled, among much else, the Foreign Office and Cabinet. They knew that the Empire was going to war – they had planned it after all – and they knew that a prolonged war was necessary to crush Germany economically, commercially and industrially. A short military conflict that was over by Christmas would not have achieved that. Germany, forced to fight for her survival on two fronts, encircled as she was by the proverbial ring of steel, had the most compelling reason for staking its survival on a short war. Theoretically, Germany was cut off from food imports, materials essential for armaments production and oil but, as we have seen in previous blogs, [2] the London elites took steps to facilitate a long struggle by enabling her access to them.

Britain herself had no indigenous oil and in the late nineteenth century had been reliant on America, Russia or Mexico for supplies. This dependency on foreign companies was a cause for concern in times of peace but was completely unacceptable in the event of war. [3] The Secret Elite had to ensure that British companies rectified this deficiency before unleashing the dogs of war.

It should be appreciated that the starting point was not 1914. Long before that date, the strategic importance and economic necessity of securing oil supplies preoccupied minds inside the Secret Elite. We are told that the most outspoken and influential champions of oil, and indeed the development of an oil policy, were Winston Churchill as First Lord of the Admiralty, and Admiral Jackie Fisher, who chaired the Government’s Royal Commission into Oil Fuels in 1912. [4] Unquestionably they were important figure-heads. Churchill was a personal friend of Nathaniel Rothschild, whose advice he cherished. Churchill and Fisher were strongly supported by men with global ambitions for Britain, and ever protective of its Empire. Thus political, financial, commercial, strategic and imperial interests were all interlocked in the drive to secure oil; a drive which was well underway, but given little publicity, in the first decade of the twentieth century.

British interests in Romanian oilfields included the Royal Dutch/Shell Company, an amalgamation in 1907 of the Royal Dutch Petroleum Company and the Shell Transport and Trading company, which in turn had close links to the Rothschilds. As companies began to grapple with the detailed requirements and long term financial commitment that was a prerequisite for successful development, mergers and amalgamations became the order of the day to cut costs and increase profits.  Extracting oil from often remote sources was dangerous, and required complex and technically advanced transport arrangements for the refined, highly volatile petroleum.

Marcus Samuel, founder of the Shell Transport and Trading Company, understood the need for purpose built tankers that could be loaded, moved and unloaded in complete safety. He began by converting merchant ships to tankers that carried oil from Rothschild fields in Russia. [5]

In 1906 fields were acquired in Romania, and by way of further preparation in 1908, two new companies were created; Bataafsche Petroleum Maatschappij in Holland and the Anglo-Saxon Petroleum Company in London. Shell Transport and Trading placed all its assets in these companies which also held the assets of Royal Dutch/Shell. [6] Every possible competitor was bought up or absorbed. Between 1910–1914 fields were acquired in Russia (1910), Egypt (1911), Venezuela (1913) and Trinidad (1914). Henry Deterding, chairman of Royal Dutch/Shell, [7] later claimed that the group carefully cut the ground away from Germany’s feet. This was achieved partly by getting into oil-fields in which Germany hoped to establish herself, and partly by extending Royal Dutch/Shell influence in the German market, and in effect over German internal affairs’. [8]

In Persia and the Arabian Gulf, geologists had determined that the region was a prime candidate for oil exploitation. There were, however, a small but important number of immediate problems. The land technically belonged to the Ottoman Turks and the Persian rulers. To further complicate matters, Russia had long held designs on the same piece of territory in order to establish a warm water port. At the beginning of the twentieth century the Conservative Foreign Secretary, Lord Landsdowne, and his successor in the Liberal government, Sir Edward Grey, maintained identical policies approved by the Secret Elite. Quietly, and with no mention of the word oil, they extended British interests in the region and kept warships in the Gulf.

The Secret Elite, the Foreign Office and the Admiralty were, as always, inextricably linked with forward planning to meet the Empire’s needs. Concessions were bought, officials were bribed, explorations were started and treaties established. It took more than two decades of painstaking preparation, but when everything was in place, a local champion had to be found to promote the purchase of a company that both offered reliable quantities of oil and necessitated a British presence on the direct route to India. They approached a number of chosen individuals in the early 1900s and encouraged them to turn their attention to the possibility of making a fortune by investing in the future of Persian oil. William Knox D’Arcy, a wealthy gold mine director, became the front-man for British investment in Persian oil. Ultimately, however, the real power behind it was the unspoken ambitions of both the Admiralty and the Foreign Office, and the men behind them. They created a company which was ‘little known but intimately tied to the British foreign office and the secret intelligence services worldwide in the quest for control of future oil discoveries. The company was called the D’Arcy Exploitation Company.’ [9]

The Royal Dutch/Shell view of D’Arcy was disdainfully suspicious, and raised the spectre of Secret Elite involvement. [10] ’The only point that is still not clear is whether he [D’Arcy] undertook this extremely important affair entirely on his own initiative and at his own expense, or from the very outset, as a confidential agent of political circles representing British Imperialism. [11] The official History of the British Petroleum Company took a different view. D’Arcy’s action ‘was simply a personal initiative for profit’ and it dismissed as nonsense the ‘most Machiavellian of motives presumed to account for his investment’. [12] Well, they would, wouldn’t they?

Of course he was being used, and willingly so, for oil in Persia was supposed to make him an even greater fortune, and it brought him a credibility within the Secret Elite. In 1901 the Shah of Persia, in exchange for a bribe of $20,000, awarded D’Arcy a ‘firman’, or royal concession with the rights to drill for oil for a period of sixty years provided the Shah received 16 per cent of the profits from whatever oil was discovered. [13] It was a transaction of historic importance, and the Shah’s wasteful, extravagant lifestyle heralded the era of oil in the Middle East with a bribe. It would not be the last.

D’Arcy’s venture in Persia was no instant success. By 1903, only a few traces of oil had been found, and he wanted out. Behind the scenes in London a frantic search was underway to find the right sort of dependable man to ensure that the concession was not abandoned. A British oil company which had been set up in Burmah by a Scottish  investment group was lured towards the Persian concession. Burmah Oil was entirely British in ownership and it amalgamated with D’Arcy and Royal Dutch/Shell in 1908. It was a combine that required the word ‘British’ stamped all over it to send out messages both to investors and to the international community. D’Arcy asked Lord Alfred Milner, leader of the Secret Elite, to take the post of Chairman of this new company, but Milner was the puppet-master, not a marionette, and declined the offer. [14]

The published prospectus for the new company caused apoplexy in the corridors of power. There in black and white it stated that it was the Admiralty that had suggested developing Persia. [15] The company was immediately informed that if this became a matter of public comment, the Admiralty would deny the statement. What an amazing faux-pas. The carefully constructed secret plan for Persia, masked by commercial company investment, was laid bare. And what is more revealing, the company was immediately warned that the government would not hesitate to lie about it if the story became public. They had, after all, ‘fought like a tiger’ to take control of Persia’s oil resources. [16]

The pre-war activity of the British oil industry was far more extensive than is generally acknowledged. Indeed, few official historians give space to the unprecedented lengths to which the British government went to discover and protect supplies. Certain individuals inside or closely related to the Secret Elite played crucial roles. The Rothschilds, in addition to supplying Germany, invested in oil fields across the world which would be invaluable to the Allies. Others such as Marcus Samuel and Lord Cowdray, with oil interests that ranged from Romania and Russia to Mexico and the Far East, were likewise linked to the Secret Elite and the British government. ‘New’ men, loyal and dependable servants of the British Empire whose fortunes were based on success in Canada and Australia, were also encouraged to underwrite and champion the search for ‘British’ oil. [17] Essentially, British interests grabbed control of as much of the world’s oil as possible in the run up to war. At every turn they were aided and abetted by the Foreign Office and the Admiralty for military and strategic reasons that were kept closely under wraps.

[1] John Buchan, for example was a member of the Secret Elite. He wrote Episodes Of The Great War (Thomas Nelson and Sons), Nelsons History of the War in twenty-four instalments and amongst his other duties served as The Times Correspondent in 1915.
[2] firstworldwarhiddenhistory.wordpress.com Blockade in 10 blogs, Wednesday 10 December 2014 – Wednesday 4 February 2015.
[3] William Engdahl, A Century of War, p. 20.
[4] In 1912, retired Admiral Jacquie Fisher was appointed chairman of the royal Commission to enquire into Liquid Fuel, with a view to converting the entire fleet to oil. Classified ‘Secret’, Fisher’s Commission reported on 27 November 1912, with two following reports on 27 February 1913 and 10 February 1914. See National Archives.
[5] F C Gerretson, History of the Royal Dutch, Vol. 1, p.214.
[6] The Times, 1 July 1908. Gerretson, History of the Royal Dutch, Vol. 2, pp. 197-8.
[7] F C Gerretson, History of the Royal Dutch, Vol. 2, p. 303.
8] Glyn Roberts, The Most Powerful Man in the World, The Life of Sir Henri Deterring, p. 106.
[9] Engdahl, A Century of War, p. 63.
[10] Gerretson, History of the Royal Dutch, vol III, p. 228.
[11] Ibid.
[12] R W Ferrier, The History of the British Petroleum Company, p. 5.
[13] Engdahl, A Century of War, p 20.
[14] Ferrier, The History of the British Petroleum Company, p. 97.
[15] Ibid., p. 105.
[16] Engdahl, A Century of War, p 93.
[17] Chief amongst these was Donald Smith, Lord Strathcona a Scottish-born Canadian businessman, financier and philanthropist. Donna McDonald, Lord Strathcona, p. 467.

The Oil Story 3: The Hidden Power Of Rothschild

In the previous blog we briefly discussed the Deutsche Bank’s relationship with Romanian oil. It throws an interesting light on just how complex the matrix of oil ownership was. When a consortium lead by Deutsche purchased the Steaua Romana Petroleum Company in Romanian in 1903, its major market lay in Germany. Steaua had access to substantial oil deposits lying south of the Carpathian Mountains, and owned barges on the Danube to transport it on to Germany from holding tanks at Regensburg in Austria.

It was alleged by those historians who saw imperialist ambitions as the driving force inside the Kaiser’s empire that Deutsche Bank yielded to pressure from the German government to take over Steaua. Not so. The impulse sprang from national economy, not national politics, though the two were often interwoven. [1] By 1914 Steaua had become the largest and most productive plant in Romania [2] and would play a significant role in supplying Germany during the war. Steaua’s success, however, had only been achieved through sourcing vast sums of money, and much of that investment came from the Rothschilds.

In due course, Deutsche Bank appointed a friend and colleague of the Rothschilds, Emil von Stauss, to manage the Steaua Romana company. He was Managing Director of the Rothschild/ Nobel/ Deutsche Bank oil consortium, the Europaische Petroleum Union (EPU), which had originally been set up to counter the ever ambitious Standard Oil. [3] Thus, in the pre-war years, a strategy emerged to guarantee Germany’s future oil supplies under the benign direction of the Rothschilds. With this vital link secured, the German Government was confident that economic growth would continue unabated, but in reality what they had was a source of oil that was far from exclusively German. The Rothschilds, who were among the very first to invest in the European oil markets, had their own agenda and no intention of sharing control with the German or any other government. They put in place a hugely profitable framework for the production of Romanian oil, and its distribution from Romania to Germany, but ensured that its control remained in their gift. In essence, while the major German bank, Deutsche Bank, played a significant role in Romanian oil, the Rothschilds played a significant part in Deutsche Bank. It was never exclusively ‘German’ oil.

In addition, important Rothschild banks involved in the European oil industry, including Romania, were the Disconto Gesellschaft bank and its associated Bleichroder Bank. Established in 1851, the Disconto Bank grew steadily in size and importance through a series of amalgamations to become a leading player in German finance. As revealed in oil blog 2, it was generally considered to be a Rothschild front. In 1901 Disconto officially acquired the Rothschild Bank in Frankfurt, original seat of the Dynasty. The bank was allegedly sold on for two reasons; there was no male Rothschild heir in Frankfurt and it was deemed to be unprofitable. All staff members at the Rothschild Bank were transferred to Disconto and the Rothschild name was withdrawn. [4]

What conceivable reason would they have for doing this? Germany at that time was experiencing massive economic, industrial and technological growth. It was the emerging power-house of manufacturing in Europe. [5] Indeed from the viewpoint of the British Secret Elite, Germany was the most dangerous threat to their wider ambitions [6] Banks were booming. Selling an important asset, especially one in Frankfurt with sentimental attachments in the heart of the original Rothschild family base, sits at complete odds with the Rothschild modus operandi of the previous two centuries. They were in the business of amassing assets, not liquidating them. The sale was undoubtedly a sham. Little had changed other than the bank’s name. Disconto was nothing more than a front. The assets and the staff were simply transferred while the Rothschilds kept control behind the scenes.

In fact the Rothschilds retained their dominant position in German banking. The New York Times, reporting on the German Stock Market in 1902 identified ‘Disconto Gesellschaft and other concerns in the Rothschild Group’ as the agents behind a massive one million crown loan adjustment to the Hungarian Government. [7] In 1909, Senator Nelson Aldrich presented a joint report to Congress in conjunction with Professor Reisser from the University of Berlin on the condition of European banks. [8] It concluded that ‘Disconto Gesellschaft, as a member of the Rothschild syndicate, participated in large numbers of Austro-Hungarian state, railroad and other transactions’ [9] Clearly the Americans knew that Disconto was a Rothschild organisation despite protestations that it had become an independent German entity. It was simply the way Rothschilds worked. They minimised public awareness of their role in the hundreds of banking, oil and industrial concerns they controlled, but maximised the impact they could wield on governments no matter which side those governments fought on in any given war.

The Bleichroder Bank was yet another Rothschild front. [10] ‘It maintained close contacts with the Rothschild Dynasty; the banking house of Gerson Bleichroder acted as a branch office of the Rothschild Bank in Berlin’. [11] Bleichroder was known as Bismarck’s banker. Thus, despite the Rothschilds removing their name from the front office of German banking, they retained all of their influence and control through the ‘back office’ of their Disconto and Bleichroder banks, and their placements and stock interest in Deutsche Bank. And the most crucial product over which that control extended, was oil. The Rothschilds controlled Germany’s oil supply from Europe through these companies. They were to be found in every aspect of European oil, quietly amassing a monopoly. In 1904 they bought up Deutsche Petroleum AG as well as refineries in Galicia and elsewhere, and consolidated them into a company called OLEX. [12] One year later they also bought up and amalgamated a small but significant number of Romanian oil producers to form Allgeneine Petroleum Industrie (APAIG). Aware that a major global war was looming, it was very sound business. [13]

The Rothschild holdings diversified throughout Germany, reaping great reward at every stage from the rapid economic expansion. It was Germany, not Britain that was surging ahead in economic growth in the first decades of the twentieth century. The new scientific and technological developments in Germany were feeding an emerging colossus, and success bred ambition to develop its industries further. [14] The Rothschilds, behind a myriad of different company titles, constructed oil tank wagons for the railways, storage depots and refineries for the production of petrol and kerosene, and bartered with Government departments over concessions and favourable rail cargo fares. OLEX centralised its management at its Berlin subsidiary, OLEX – Petroleum – Gesellschaft, and thus identified itself as a German based company operating from the heart of the capital, close to the political and military decision-makers. With OLEX secure in Berlin, another Rothschild concern, Deutsche Erdol Aktiengesellschaft (DEA) was created by Disconto. It took over APAIG in Romania and gained control of more north German refineries. Disconto, as DEA’s major stockholder, directly administered the finances of these newly integrated oil enterprises. [15]

Behind this bewildering flurry of name changes, of company amalgamations, of buy-outs and stockholdings, of new flotations and aggressive take-overs, the Rothschild Dynasty had control of supplies, distribution and storage of Romanian oil throughout much of Germany. They produced much of the oil, transported it through railroad systems and oil wagons across Austro-Hungaria and then Germany itself. They stored the oil in great purpose-built depots. They refined it into its marketable end products. In essence, they ensured that Germany and the Central Powers would have the supply of oil and infrastructure crucial for the long war planned by the British Secret Elites. And it all looked like normal business.

In most of their business organisation, they operated a complex and sophisticated network of interlocking front companies and trusts which concealed not just the true extent of their ownership of key industries, but their unrivalled power over nations.  They had the finance; they ran the merchant banks that mattered; they controlled politicians and sometimes, governments. Most importantly, the Rothschilds had knowledge. [16] They had a first-rate intelligence gathering service stretching across the business and political world that enabled them to double and then redouble their capital with swift market operations that caught rivals off balance. They had more information at their finger tips than any secret service. They knew what was happening. Everywhere. More importantly, they knew what was going to happen. Their links to numerous governments were legendary, and they ensured that all within the dynasty shared crucial knowledge. Their agents knew more about local business developments, trade agreements, industrial unrest, treaties and concessions than any individual Ministry or Foreign Office. They knew exactly what they were building up and facilitating in Central Europe. One cannot overestimate the power and spread of influence that the House of Rothschild vested in Germany.

Through its Deutsche Bank involvement the dynasty supplied oil for Germany’s war needs, and did likewise through their Disconto and Bleichroder banks. At no point was the Rothschild name directly attached to these German companies. Knowing that war with Germany was imminent they had to make it appear as if they had abandoned their financial, industrial and commercial interests there. Reality could not have been more different.

[1] F.C. Gerretson, History of the Royal Dutch, Vol III, pp. 80-81.
[2] Ibid., p. 123.
[3] Daniel Yergin, The Prize, The Epic Quest For Oil, Money and Power, p. 116.
[4] Niall Ferguson, The House of Rothschild, p. 242.
[5] David S Landes, The Unbound Prometheus, p. 290.
[6] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, p. 14.
[7] New York Times, 10 February, 1902.
[8] 61st Congress, 2nd session, Senate Document 593, National Monetary Commission, the Economic Development of Germany by Dr J Reisser.
[9] Ibid., p. 412.
[10] Ibid.
[11] Fritz Stern, Gold and Iron: Bismarck, Bleichröder and the Building of the German Empire, pp. 9-11.
[12] F C Gerretson, History of the Royal Dutch, Vol. III, p. 119.
[13] Ibid., p. 82.
[14] Landes, The Unbound Prometheus, pp. 235-7.
[15] Alfred Dupont Chandler, Scale and Scope: The Dynamics of Industrial Capitalism, p. 438.
[16] Ferguson, The House of Rothschild, p. xxvii.

The Oil Story 2: Romania And Russia – Whose oil is it anyway?

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.

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.

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.

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.

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.

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.

The Oil Story 1: The Uneven Playing Field

In previous blogs we have shown how the Secret Elite intentionally prolonged the war beyond the Spring of 1915 by providing Germany with raw materials for armaments production and food for her army. There were various facets to the great deception. From the outset, Germany’s crucial source of iron ore from the Briey basin on the Franco-German border was deliberately left intact though it could readily have been destroyed. German commanders admitted that the war would have been over by the summer of 1915 had the Briey supplies been halted. [1] Britain simultaneously ran a sham naval blockade through which food, gun-cotton and desperately needed minerals, including zinc and copper, for armaments production were allowed to pour into Germany. [2] In conjunction with these inactions, a great ‘humanitarian’ deception under the guise of ‘Belgian Relief’ was used as a cover for provisioning the German army. This allowed it to keep fighting and so prolonged the war. [3] Closure of just one of these spigots would have seriously damaged Germany’s war effort. Closure of all three would, without a shadow of doubt, have ended the war by early 1915. That was never their intention.

Another deception by which the Secret Elite prolonged the war was by ensuring that Germany had sufficient oil. It was absolutely crucial to their war effort and over the next series of blogs we will reveal exactly how this was achieved. There could be no effective modern war without sufficient supplies of oil and whoever controlled these supplies, controlled the war. In 1914 contemporary commentators spoke of the revolution in military strategy and the awesome power of destruction brought about by machines. [4] The internal combustion engine changed every dimension of warfare and the mobility of forces on land and sea and in the air. The mechanical innovations included oil-fired ships and submarines, motorised divisions, airplanes and tanks. Virtually every new development depended on access to plentiful supplies of petroleum, and year by year oil increasingly lubricated the means of war. As the leading French politician Henry Berenger stated, ‘On the battlefield, on land, on the sea and in the air, a drop of petrol is equal to a drop of blood.’ [5]  Since both Britain and France on one side, and Germany on the other, had no indigenous supplies, sourcing it was critical to the ability to keep fighting.

The Secret Elite, the power base that caused the first world war [6] either controlled oil production across the globe, or was intimately linked to those who did. It included the Rothschilds in Europe, [7] and J.D. Rockefeller’s empire in America. [8] The Rothschild Dynasty operated one step removed from the public eye and the family’s massive investment in banking and oil gave it a geo-political power that few could equal. The Secret Elite knew that long-term secure supplies of oil, not just for the allies, but for Germany, would be absolutely crucial as they manoeuvred Europe into a protracted war. They ensured that the British Government, and the Foreign Office in particular, was conversant with the developing and potentially vital new oil discoveries in Burmah, Sumatra, Mexico, Mesopotamia and the Gulf. Indeed, it was no accident of history that the British Government took ownership of the Anglo-Persian Oil Company through one of the final Acts of Parliament introduced just as the war began. [9]

Aware that war was coming, the Admiralty, Foreign Office and Board of Trade signed contracts with several oil companies in advance of the hostilities – and it was claimed that Britain was ‘woefully unprepared’ for war. [10] Lord Curzon, senior member of the Secret Elite, later summed up its absolute importance when he stated in 1918: ‘The Allied cause has floated to victory upon a wave of oil’.  [11]

The German Government was no less aware of oil’s strategic and economic importance, but struggled to ensure that supplies could be freely guaranteed. Pre-war opinion in Germany that its complete dependence on a foreign trust like J.D. Rockefeller’s Standard Oil  was absolutely intolerable, had crystallised into fear that in any future war,  lack of oil could do more damage than the most powerful enemy. [12] Germany had emerged by 1914 as a leader in manufacture and export growth, and that ‘stuck in John Bull’s craw’. [13] Their dynamic pre-war economy was bristling with confidence and technological innovation, but despite attempts to be masters of their own destiny, the German government was  dependent for oil on a small number of international producers, refiners and distributors. Even they were not fully aware of who actually owned these. Indeed, such was the labyrinthine nature of European banks and oil company ownership, that few individuals had any notion as to who really controlled the global oil supply.

Germany, like Britain, had plentiful supplies of coal, but no oil. With a stealth and determination that characterised much of the industry, Rockefeller’s Standard Oil had by 1912 grasped a monopoly position in the supply to Germany. Standard’s chosen technique was to acquire existing companies, but operate them under their original names in order to create the illusion that they remained German. It retained prominent German oil merchants as shareholders and this had the effect of diluting objections to its monopolistic growth. Behind the closed doors of corporate greed, such tactics shielded Standard from a public outcry against what had been described as an alien corporation. [14] Standard operated under the banner of the Deutsche Petroleum Verkaufgessellschaft which by 1912 controlled 91 per cent of all German oil sales. The Deutsche Bank was allowed to buy into the company but its stake accounted for little more than nine per cent of the total holdings. Devoid of an independent and secure source of supply, Germany had been locked tightly in the grip of Standard Oil. [15] The massive profits that accrued through this monopoly attracted European investors. It also attracted other companies to become major players capable of challenging Standard’s grip on the oil market.

Standard Oil had created the global market-game and learned to negotiate terms and reach settlements with a profusion of imperial, national, provincial and local governments. [16] But from 1910 to 1912, they found themselves  in a bitter and protracted dispute with the  Austro-Hungarian Empire in what Austria’s leading newspaper called a ‘petroleum war’. [17]  It was not Standard Oil as such that had run into trouble, but its Austrian subsidiary, Vacuum Oil Company AG, Vienna.  [18]

America remained the unrivalled global leader in oil with 60 per cent of the total world production. But thanks to its Galician oil-fields, Austria-Hungary could claim to be the third largest oil-producing country in the world behind the United States and Russia, and produced far in excess of its domestic requirements. Determined to hold on to its European monopoly,  Standard (through its Vacuum Oil subsidiary) used underhand competitive tactics to undermine Austrian producers. The ensuing row embroiled the governments of both Austro-Hungary and America. The U.S. State Department became deeply involved and created an interesting precedent for twentieth century ‘globalisation’. It demonstrated clearly that businesses, even those as powerful as Standard Oil, relied on diplomatic support from their governments. [19] It had long been so. The British East India Company thrived on the back of diplomatic and military intervention on the Indian sub-continent in the eighteenth century, while the Opium Wars in the nineteenth century were an extension of the commercial/political ambitions shared between companies and their national governments.

The relevance of this ‘petroleum war,’ a minor dispute in the history of the global oil industry, is that even in the twentieth century, internationally powerful companies looked to their home base government for protection and support. Ironically, Galician oil production had peaked in 1909, though no-one at the time realised this. Nevertheless, the United States believed it had the right to intervene in a dispute between the Austrian government and a company incorporated inside Austria but owned by American shareholders; come what may, the Vacuum Oil Company was in a meaningful sense, American [20] and how dare any foreign country in which it operated attempt to control it? Bare this in mind as we review the sources which supplied Germany during the First World War.

Theoretically, the German-Austro-Hungarian alliance faced a major obstacle in that their one indigenous oil source in Galicia lay in the hands of alien companies. By 1914 the number of large foreign joint-stock companies investing in Galician oil production, including Rockefeller’s Vacuum, had grown dramatically. The major British player which emerged after its formation in 1910 [21] was the Premier Oil and Pipe Line Company which swallowed up numerous competitors, large and small. By the beginning of the war Premier Oil was the most important foreign company in Galicia. In 1912-13 it owned around 2,752 acres and produced over 262,000 tons of crude oil – almost a quarter of all Galician production. Though its British shareholders queried the legitimacy of its actions, and the company’s relationship with German banks, [22] by the war’s end its holdings encompassed twelve Austrian subsidiaries, 21,000 acres, 110 oil wells and four large refineries. [23] The phenomenal growth of this London-based company was derived from supplying the enemy with desperately needed oil throughout the war.

According to Historian Alison Frank, the Galician wells provided approximately 60% of the Central Powers’ needs. [24] The vast bulk was used by Austria-Hungary. However, the Galician oil supplies fell into decline at the precise moment when the outbreak of war brought the huge pressure of high demand. Although ownership rested in the hands of foreign companies including British, American, French and Belgian interests, they continued to provide oil and petroleum for the Austrian enemy.

But what of Germany? Since Galicia was unable to satisfy her growing demand, from which sources could she draw her oil, surrounded as she was, by enemies?

[1] firstworldwarhiddenhistory.wordpress.com Briey, Blogs 1-4, 12/11/2014 to 3/12/2014.
[2] firstworldwarhiddenhistory.wordpress.com Blockade, Blogs 1-10, 10/12/2014 to 4/2/2015.
[3] firstworldwarhiddenhistory.wordpress.com The Commission for Relief in Belgium, Blogs 1-13, 5/08/2015 to 25/11/2015.
[4] Hew Strachan, The Morale of the German Army, 1917-18, in, Hugh Cecil and Peter H. Liddle, Facing Armageddon, p. 383.
[5] B.S. McBeth, British Oil Policy 1919-1939, p. 20.
[6] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, pp. 12-16.
[7] Carrol Quigley, The Anglo-American Establishment, p. 311.
[8] Docherty and Macgregor, Hidden History p. 158 and 362.
[9] Hansard House of Lords, Anglo – Persian Oil Co. Acquisition of Capital (Bill), House of Lords, 7 August 1914, series 5, Vol 17, cc461-2.
[10] John Howard Morrow, The Great War – An Imperial History, p. 26.
[11] Keith Jeffrey, The British Army and the Crisis of Empire, p. 36.
[12] Dr F.C. Gerretson,  History of the Royal Dutch, Volume III, p. 65.
[13] David S. Landes, The Unbound Prometheus, p. 327.
[14] William Engdahl, A Century of War, p. 25.
[15] Ibid.
[16] Alison Frank,  The Petroleum War of 1910: Standard Oil, Austria, and the Limits of the Multinational Corporation, The American Historical Review, 114 (1) pp. 16-41.
[17] Neue Freie Presse (Vienna) 24 September 1910.
[18] Frank, The Petroleum War, p. 17.
[19] Ibid., p. 28.
[20] Ibid., p. 41.
[21] The Tablet, 1 June 1912, p. 32.
[22] The Times, 14 November 1916, p. 3.
[23] Alison Frank, Oil Empire, Visions of Prosperity in Austrian Galicia, pp. 171-173.
[24] Ibid., p. 173.