Basil Zaharoff and the oil industry

 

Zaharoff was able, in his economic projects, to draw on a source of strength which lay directly within the sphere of interest of the British Government. He had already, before the War, stretched out his hand towards that industry which, after the armament business, was bound up most closely with high politics–the oil industry. When, during the War, the military and industrial value of mineral oil became evident, and a struggle for oil began between the Great Powers, Zaharoff entered the field of oil politics. His interests were closely allied with those of the British Government. The Admiralty had taken over the majority of shares of the Anglo-Persian Oil Company shortly before the War, and had thereby proclaimed the great significance of oil to the State. The more officially the problem was treated, however, the greater did the difficulties become. The Anglo-Persian Oil Company only just succeeded in obtaining a footing in the French Colonies by using the Pearson Company as an intermediary. Even the fraternal alliance during the War did not prevent repeated interpellations in the French Chamber concerning the petroleum concession that had been granted to the English firm of Pearson in Algiers. A request for a new and larger English concession was refused on the intervention of the Chamber. In order to avoid further attacks, the Pearson group transferred the concession to a company which was two-thirds controlled by French capital, [174] and was to be administered by Frenchmen. When the Board of this new Société d'Etudes, de Recherches et d'Exploitation des Pétroles en Algérie was examined, it appeared that three of the five Frenchmen were confidential colleagues of Zaharoff.

What ground was there for objection? Sir Basil Zaharoff was not only a British knight, but also a holder of the Grand Cross of the Legion of Honour. He lived in Paris and controlled the Parisian Banque de la Seine. And his nationality? In the summer of 1918 a deputy had had the audacity to enquire in the Chamber how Zaharoff had managed to acquire shares in the Bank of France, since this was only permitted to Frenchmen. The Minister of Finance in Clemenceau's Government had snubbed the impertinent questioner, and had twice given the assurance: "Monsieur Zaharoff is a Frenchman." Could there be more reliable evidence? If Zaharoff was a Frenchman, his capital was good French money, and nobody had the right to suspect him or his confidants of representing foreign interests.

The peculiar international position that Zaharoff had acquired afforded him the opportunity of performing the most valuable pioneer services for British oil interests, not only in Algiers, but in France itself. In the first years after the War, France had become one of the most keenly contested fields of international oil capital. The American Standard Oil Company had established itself in good time in Paris and the French ports, and had found a valuable ally in the [175] enterprising French Banque de Paris et des Pays-Bas. The English world oil trust, the Shell group, found it a serious rival, especially since Clemenceau was no longer at the helm and a noticeable tension had developed between France and England. In these circumstances it was of the greatest importance that Basil Zaharoff succeeded in securing a firm foothold for English oil capital, and in addition for the Anglo-Persian Oil Company, which was half State-owned, in France.

The path to this goal again led through the Banque de la Seine. Included in the bank's sphere of interest was a shipping company-the Société Navale de l'Ouest, which had carried considerable freights between the Franco-Belgian and the North African ports before the War. After the War this shipping company was enlarged and modernised by Zaharoff. A modern fleet has to make sure of its supply of oil, and, as an agreement with the Anglo-Mexican Oil Transport Company proved inadequate, a convenient pretext was available to open the gateway to France for the Anglo-Persian Oil Company. In February 1921 the Société Générale des Huiles de Pétrole was set up with a basic capital of 100,000,000 francs, the Anglo-Persian Company providing 45 per cent of the share capital, while 55 per cent was reserved for French subscribers, though a very large part of the French capital was supplied directly by the Zaharoff group. Chief among the large French shareholders was the Société Navale de l'Ouest, which was controlled by [176] Zaharoff; then came the Banque de la Seine, then another banking institution which was on friendly terms with Zaharoff, and finally Sir Basil Zaharoff himself. In this way the best of all possible precautions had been taken to preserve English interests.

The way had been smoothed by the help of Zaharoff. The oil produced by the Anglo-Persian Company was brought to France by the Société Navale de l'Ouest and sold there by the Société Générale des Huiles de Pétrole. Business was excellent. At the end of 1921 the capital was raised to 227,000,000 francs. Since the fleet of the Société Navale was not itself sufficient to transport all the English oil, a new company was established to purchase tankers. Among the founders of the Association Pétroliere, Zaharoff's Société Navale, the Anglo-Persian Oil Company, and the Société Générale des Huiles de Pétrole (which belonged to both of them) held an almost equal number of shares. The new company also worked with imposing figures, receiving at the outset a capital of 15,000,000 francs (still not much depreciated), which was soon raised to 21,000,000.

Where there is money and power, new forces are soon attracted. The Société Générale des Huiles had a controlling share in the Compagnie Occidentale des Produits du Pétrole, and acquired the petroleum refineries of the house of Paix et Cie. Thus in a few years there was established on French soil under the ægis of Sir Basil Zaharoff, a great English petroleum concern. [177]

The English Government, as the majority shareholder of the Anglo-Persian Oil Company, had no reason to make much fuss about this success. When a member enquired in the House about the relations between the Anglo-Persian Oil Company and the Société Générale des Huiles de Pétrole, he received the pregnant reply that the Government had no right to question the Anglo-Persian Oil Company on the matter. The agreements between the English and the French companies were purely commercial and no more. In English Government circles, however, which saw in oil one of the greatest instruments-and one of the greatest goals-of world politics, they knew the value of Sir Basil Zaharoff's achievement. The extension of English oil interests to French territory was of such importance that they could afford to allow a little elasticity in other directions.

 

REFERENCE

Lewisohn, Richard. The Man behind the Scenes. The Career of Sir Basil Zaharoff, ‘The Mystery Man of Europe’. London: Gollancz, 1929. 173-77.

 

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