A war was going on, after all, and there were critical things to deal with.
The nation banded together once again, and got to work. For its leaders, that meant overseas meetings.
There was more than that, however, for American businesses were already setting their sights on a post-war world.
Something that would help them with that was exactly what the foreign bankers had proposed to President Woodrow Wilson in 1913 – American military intervention should their business dealings turn sour.
Leading this push were what FDR called the “economic royalists,” business and banking heads that he’d been able to push to the side following the Great Depression.
He’d needed their help, however, in order for the nation to ramp up for war, and their power grew during the war years.
A large part of this power came from the clandestine intelligence services of the US, agencies that would morph into the CIA.
When FDR left the stage, those “economic royalists” no longer had a check on their power, and were once again free to essentially do what they pleased. More and more, that involved oil.
Following the Yalta Conference in February 1945, FDR headed from the Black Sea to Egypt and the Middle East.
He met with leaders there, including King Abdulaziz of Saudi Arabia, a meeting that would cement current US-Saudi relations.
Montanans have always joined up for America’s wars, and they’ve died in them in great numbers.
World War II was no different, and to understand the wars that have come after that conflict we have to understand the resource battles that are causing those wars.
That resource is oil.
The Rise of Big Oil
In 1892 Shell Oil started, getting its name from the seashells lining the shores of Indonesia, which was then a Dutch-controlled Archipelago.
From there it was shipped through the South China Sea, up through the Suez Canal, and then to the western world.
The Far East wasn’t close enough to Europe, however, and new sources would have to be found. Explorers embarked on voyages of discovery, mainly to the Middle East.
The whole Middle Eastern oil syndicate began when the D’Arcy Concession, a 50-year mining deal, was granted to Baron Julius de Reuter of Britain by the country of Persia in 1901.
The terms of the deal gave the Persian Shah £20,000 and 16% of the future profits. This led to the formation of the Anglo-Persian Oil Company in 1908.
By 1913 the world’s largest oil refinery had been built at Abadan. These moves convinced Winston Churchill to move Britain’s Royal Navy from coal to oil. Oil dependence was initiated.
The Middle East oil trade was split evenly between the British and French following WWI when the San Remo Agreement was signed.
America responded by passing the Open Door Policy, allowing their oil companies to get in on the trade. Congress was overtly doing the bidding of the Big Oil companies.
It was clear even that long ago that Big Oil was wielding considerable influence over Congress, perhaps illegally.
That changed in 1898 when oil was found at Baku, just north of Iran on the Caspian Sea.
Unfortunately for the western powers, the local people were not thrilled to have the Rockefeller- and Morgan-controlled Far East Trading Company come in, and they burned their installations.
In 1915 the Russian Revolution started, possibly with help from the American International Corporation, which may have funded Vladimir Lenin, who, in 1917, left New York with “a wad of cash” in his pocket but within a few months was on a train from Switzerland to Russia with $5 million in cash.
When Lenin died in 1924 he attributed his success to “monopoly finance capitalists.” In 1925 Chase Manhattan bank signed the first business deals with the Soviets, cotton and machinery for raw materials.
In 1926 Standard Oil of New York gave the Bolsheviks $75 million “in exchange for exclusive rights to market Soviet oil in Europe.”
Also, Royal Dutch/Shell came about in 1927 after the Royal Dutch Petroleum Company discovered oil on the island of Brunei. Shell Oil was already in the area and the Rothschild company, Far East Trading, combined with them.
Saudi Arabia and Israel
To help with that, the family of Saud was recruited that very same year. Ibn Saud was told to “repel Ottoman Turks from the Gulf Region.”
The Ottomans fell in 1918 and from their crumbling empire the countries of Iraq, Jordan and Saudi Arabia rose up.
In 1922 Saudi Arabia gained its full independence with the Treaty of Jeddah, and during the rest of the decade Saud consolidated his power.
Something that helped with that was his capture of Mecca and Medina from the Hashemites, a group that traces their lineage back to the great-grandfather of the Islamic prophet Mohammed. This essentially gave Saud control of Islam through its two holiest cities.
The Jews were trying to gain control of both Judaism and Christianity by securing Jerusalem, which had been the goal of most western cultures dating back to the time of the Crusades.
Britain was getting awfully close, and by propping up the right friends in the region they could get there.
The Saudi royal family was one of those friends, even if they treated women terribly and created conditions of poverty and starvation for their own people.
They practice a form of Islam called Wahhabism, which was only practiced in one other place, Afghanistan.
Even though FDR had embargoed the export of gold the year before, the oil company got around this by going through the London banks.
Both Standard Oil of New Jersey and Standard Oil of New York were brought in on the 1933 Saudi oil-for-gold deal, as was Texaco.
That was all the major oil companies in America, and they now had a free-flowing spigot of Saudi oil, which had all come about because the British had secured the land following WWI and then gotten the appropriate tyrant to hold it for them.
One of the main problems for Big Oil was the smaller and independent American producers. With their foreign oil supplies, Big Oil began to manipulate prices in an attempt to drive those producers from the market.
The oil industry was ruthless in its price controls. They started in 1928 after a meeting of the leading companies was called in Scotland.
One of the first areas targeted was Texas, where the large companies drove prices down from $0.98 a barrel to $0.10 a barrel from 1931 to 1933.
That drove most Texas wildcat drillers out of business and those that remained were forced to agree to the syndicate’s prices.
Big Oil was ruthless overseas as well, fighting against America’s interests by supplying I.G. Farben with oil. As we saw, I.G. Farben was Hitler’s war machine and chemical producer.
Big Oil went after foreign countries as well, using America’s clandestine intelligence service, the CIA. “Nationalistic governments were destabilized, discredited and overthrown by the CIA at the behest of Big Oil,” Dean Henderson writes, and we’ll discuss that shortly.
Bahrain’s oilfields were developed in 1936 when both Chevron and Texaco started up the Bahrain Petroleum Company with Caltex as the brand name out front in America for that.
The East India Company needed protection from Ottoman Turks rising up in Iraq, which Kuwait was still a part of, so they gave the family of al-Sabah olive groves in return for keeping the peace for them, however brutally that might have been achieved.
By 1900 the British carved Kuwait off of Iraq and gave the land to the current patriarch of the family, Mubarek al-Sabah.
In 1914 al-Sabeh gained official recognition from the British government when he turned on his Ottoman allies and attacked a region in today’s Iraq.
Ever since then the same family has ruled the country, a country that the majority of people never wanted to see created from Iraq in the first place.
The trust had come about in 1933 after the Glass-Steagall Act had split apart the Morgan Bank into three separate entities – Morgan Stanley, J.P. Morgan & Company, and Morgan Guaranty Trust.
Having Morgan Guaranty in the Middle East was a real boon in 1950 when Saudi Arabia decided to defy their puppet masters and start charging royalties on the profits of ARAMCO.
At the time ARAMCO was nothing more than the foreign front for the American oil company’s overseas ventures. They cried foul to Congress, who granted them tax credits on those lost profits.
Seeing that there was no real consequence, except for the American taxpayer, Saudi Arabia boosted up that royalty rate several times over the coming decades.
Adding insult to injury, those American oil companies – Exxon, Mobil, Chevron, and Texaco – were hardly paying anything in taxes.
In 1974 Exxon had a tax rate of 5.9% while Mobil and Texaco were both ‘burdened’ by a 1.6% rate.
Saudi Arabia in 1950s
BP and Royal Dutch/Shell had a 52% share while the five American oil companies had a 42% share.
Considering that the Middle East comprises nearly 50% of the world’s known oil supplies today, and even more back then, this was quite the advantageous geo-political position to be in.
In effect, by controlling the world’s oil, Big Oil was controlling the countries dependent upon it.
In 1952 the US/Saudi Security Agreement was signed so that arms for oil became the standard operating procedure. With 261 billion barrels of oil under their desert sands, Saudi Arabia had the largest oil reserves in the world.
Neighboring states only had around 100 billion barrels. America wasn’t going to risk losing that supply, which its economic prosperity depended upon.
Whether there were other sources of energy that could have been used instead of oil – solar, wind, or even natural gas – was never thought of after that.
America had oil, and the big corporations and banks had their profits…even if they were propped up by taxpayers.
After the security deal was signed, the US military built a huge base called Dhahran in Saudi Arabia, one that served as a forward base for nuclear weapons.
The western powers were able to cement their rule in Saudi Arabia by propping up twenty families and lavishing them with wealth and contracts so they could continue making money and wielding influence.
They’re the upper crust of society in the undemocratic country, and the majority of people live in misery.
The Seven Sisters
In 1972 Standard Oil of New Jersey changed its name to Exxon.
Chevron came about in 1984 from Standard Oil of California and Standard Oil of Kentucky.
Gulf Oil was controlled by the Mellon family until Chevron absorbed it in 1984.
Amoco came about in 1985 after Standard Oil of Nebraska, Standard Oil of Kansas and Standard Oil of India all formed.
In 1975 the oil companies were given the name “Seven Sisters.”
They were mostly Standard Oil companies, and today they and their successors are known as Exxon, Mobil, Texaco, Chevron, BP, Royal Dutch/Shell, and Gulf Oil.