ing to imports it is believed that flexibility should be emphasized in order that adjustments may be made as dictated by economic changes in foreign countries as well as our own." On December 22, 1953, appearing before the Minerals, Materials, and Fuels Subcommittee of the Senate Committee on Interior and Insular Affairs, Gen. Albert C. Wedemeyer, retired World War II commander of the China theaters, testified as follows, and I quote: "I think it is unsound for a nation to depend upon sources of raw materials which are remote from that nation's dynamo or industrial potential." In June of 1954, the subcommittee before which General Wedemeyer had appeared made the following recommendations: "1. We recommend the closest cooperation among the nations of the Western Hemisphere, which is the only dependable source of the necessary critical materials in time of war. This area can be defended and can be made selfsufficient in the production of such materials. We recommend that the spirit of the 130-year-old Monroe Doctrine prevail in our relations with the nations of the Western Hemisphere." "3. We recommend eliminating our Nation's present dependency upon remote and possibly unfriendly or neutral areas of the world for the critical materials, without which we cannot conduct a war * * *” Mr. Arthur S. Flemming, in his capacity as Director of Defense Mobilization, issued the following statement on September 21, 1954, concerning the stockpiling objectives of the Federal Government: "The long-term stockpile program provides additional security and preparedness in the materials area. The objectives are calculated by discounting completely all wartime foreign sources of supply excepting a limited group of countries to which wartime access can be had with the same degree of reliance as afforded within the United States." All of these leaders are agreed that we must have enough oil and that it must be at hand when we need it. Mr. BROWN. The testimony of these leaders is to the effect that: 1. As to source of supply, oil within our own borders stands in first priority. 2. That any foreign oil which is subject to long ocean hauls and vulnerable to submarine attack stands in a secondary position. 3. That Middle East oil, due to its geography and many uncertainties, is a weakest possible link. The importance of this advice is emphasized by the following facts: 1. About 82 percent of the free world's oil reserves outside the United States are in the Middle East within a few miles of Russia. 2. About 70 percent of total imports into the United States are brought in by 5 large international American oil companies and by 1 of foreign control. 3. That these six importing companies have their principal interest in Middle East oil reserves. The concentration of ownership of foreign oil in the hands of a few, and its long-range effect upon the American consumer and the national security is a factor which we believe this committee should carefully consider. The world oil industry outside the United States, and excluding Russia, is dominated by seven large international oil companies. They control something like 90 percent of all foreign oil. The 6 companies which are the principal importers into the United States, accounting for about 70 percent of total imports are: Standard Oil Co. of New Jersey, Gulf Oil Corp., the Texas Co., Standard Oil Co. of California, Socony-Vacuum Oil Co., Inc., Royal Dutch Shell group. The seventh company, which does not import into the United States, is the AngloIranian Oil Co. interrelationship and the scope of their worldwide operations is shown country 2 will be joined together. In another perhaps 4. Their These 7 companies operate as partners around the globe. In 1 on the following chart. (The chart referred to follows:) Mr. BROWN. There should be added to this chart the country of Iran, where recently all seven of these companies have joined together in a consortium. The five American-based companies, although they have grown up in this country and are headquartered here, are rapidly shifting their interest to foreign lands. As an example, in 1953 the Standard Oil Co. of New Jersey, the largest of the group, whose president appeared before your committee last week, derived 65 percent of its net income from foreign operations. Of the total oil reserves owned by the Gulf Oil Corp., whose chairman of the board also appeared before you last week, about 90 percent are in foreign lands, largely in the sheikdom of Kuwait. Taking the five American companies together, they produce more from foreign sources than from domestic sources. Their ownership of reserves of oil is even more unbalanced. This is shown on the following chart. (The chart referred to follows:) Mr. BROWN. For the 5 companies combined, their total production in 1953 was divided 64 percent foreign and 36 percent domestic. Their ownership of proved reserves of oil was divided 89 percent foreign, 11 percent domestic. These five companies control twice as much proved reserves of oil outside the United States as the total presently known reserves within the United States. This is a powerful concentration which, if left unrestrained, poses serious implications as to the survival of the domestic oil producers in this country. It is true that our Government has been generous in its efforts to make easy the operation of our domestic companies in foreign countries where they may be forced to meet competition of State-owned or State-encouraged organizations. To do this we have relaxed, for that purpose, regulations we have found necessary in our domestic operations. It has been the policy of our laws to prevent the use of this favorable treatment to be used to destroy domestic commerce. I there have reference to the Webb-Pomeroy and specific laws like that. The accumulated strength of these companies in oil is now invading the United States. It has reached proportions in size and in strength where they can neither restrain its force nor direct its course. They now enjoy tax advantages denied to the domestic industry. Their operations are, in some instances, not subject to investigation by our domestic authority. Under this policy they have been permitted to increase their power, but they resist any effort to cause them to install adequate brakes on that power. Until they submit to some more effective control, they constitute a dangerous and menacing force on our highways of commerce and security. It is dangerous to all those who must travel the same road. It is dangerous to those who must rely on their successful operations. It could be dangerous to themselves if controls do not become effective before the crash. I do not wish my testimony to be taken as a criticism of these companies for their bigness and their success. It is fortunate that American companies own this oil rather than it being under the control of our potential enemy, so long as the use of it does not weaken us at home. Also, we all desire to become big. We do feel, however, that these are facts which this committee should keep in mind when considering the implications of increasing reliance on imports of foreign oil. An example of the extent to which we as a nation have already grown dependent on foreign oil is revealed by a study of the source of oil that supplies the United States eastern seaboard, an area which is industrially vital. The following chart shows the shift to foreign oil taking place in this market. (The chart referred to follows:) |