Evening star., 1953-01-13
The Oil Cartel Case

The attempted Government prosecution Of
seven major oil companies-five Of American
and two Of foreign ownership-on charges Of
worldwide monopoly practices has led to the
inevitable impasse and has furnished support
for the opinion that it is genuine threat to
American interests and to the national security.
Seeking to take the case out Of the context
of criminal prosecution, President Truman ad-
vised the Justice Departmental the eleventh
hour before grand jury deadline for Subnis
sion of company records-that the interest of
national security might best be served by re-
solving the issues through civil rather than
criminal proceedings. Inexplicably however
he added that this would be the case only II
the companies agreed to produce the documen-
tary material required under the existing court
order based upon the grand jury subpoenas.
Since the same subpoenas, the same court
order and the same records are involved In
either type of proceeding, 1t is difficult to un-
derstand Mr.. Truman's distinction. II subnis-
sion of the records for one purpose jeopardizes
the national security, presumably their sub
mission for any other purpose would carry the
same threat. Or if a different screening and
different use of the records are contemplated
in civil proceedings it is still difficult to under
stand Mr.. Truman's qualified concern for the
abandon the criminal prosecution only If the
companies agree to cooperate in their own
civil prosecution.
There are two clear grounds on which the
national security might be endangered by the
type of open-end proceedings undertaken by
the Justice Departmental instigation of the
Federal Trade Commission.
The production and marketing of petro-
leum products is global industry in the truest
sense Of the term. It's sources Of supply, its
transport and It's centers of consumption are
scattered all over the world. American interests
have an important foothold in this industry
with Government encouragement and assist
ance. 1t is foothold which has been Of in
calculable value to the United States in peace
and in war; it is one of the elements Of our
power in todays cold war and would be one Of
equal Importance in event Of another world
conflict. The creation and maintenance Of this
foothold are based upon network Of agree
ments between the American companies and
numerous foreign governments, particularly in
the Middle East and in South America, and in
some cases with foreign companies where the
endeavor is joint one. Even If the American
companies were willing that these agreements
should be publicized in detail the foreign sig
natories quite UNDERSTANDABLE may not share
this willingness. Communist and extremist ma
tionalist forces, already capitalizing on this
Governments attack upon our own companies
abroad, undoubtedly would make additional am
munition out of the texts Of such agreements.
The second ground for danger is the in
hibiting effect which prosecution, particularly
criminal is likely to have upon American ven-
ture capital. American participation in the de-
velopment of strategic resources abroad has
been an objective of the recent Democratic ad-
ministrations and is expected to continue as
an objective Of the incoming Republican ad-
ministration. To growing degree the emphasis
has been upon encouraging private American
capital, rather than Government agencies, to
undertake such endeavors. It is easy to foresee
a marked reluctance on the part Of individual
or corporate investors to continue this practice
If they are to be threatened with prosecution
by the same Government that has encouraged
the effort.
Many other valid doubts arise about the
Governments conduct in this case, including
the question of whether the Federal Trade Com
mission has any proper jurisdiction at all over
worldwide practices by either American or
foreign concerns. The problem of recovering
on overcharges, If there were such, can be dealt
with without coupling it with an effort to place
the entire petroleum industry abroad in q
straitjacket, or placing our own segment Of it
at . disadvantage vis-a-vis foreisn-owned
competitors. 4