Naval History and Heritage Command

Edward N. Hurley, Chairman, United States Shipping Board, to Commander Paul Foley and L. I. Thomas

Action Copy.                                File No. <46-4-1>

Cablegram Received 19019 July <17, 1918.>

Origin    Opnav Washington                  Ser. No. 8649.

29 ADR.

Simsadus.

8649. Hurley 12 for Foley and Thomas – Referring the British Minister of Shipping’s2 proposal in regard to troop ships in Eastern service. American Gov’t proposes an agreement between the two countries the principles of which are as follows:

     1.   For the period of the war and irrespective of the source of supply the kerosene oil business shall be divided on a percentage basis between the British and American oil interests based upon the total deliveries of kerosene into consumption during the year 1913 by the respective interests in each of the following named countries: India and Ceylon, Straights,3 Netherlands, Indies, Siam, Indo – China, South China and Formosa, North China, Japan and Korea, Egypt.

     2.  (a)  The American and British Governments to decide as to the minimum quantity of refined oil required by and to be shipped to each of these Eastern countries from the nearest source of supply, and representatives of the two Governments to agree as to the most efficient assignment of tonnage necessary for the transportation of these fixed quantities of refined oil to be allocated in accordance with the percentage arrived at as provided above.

(B)  The assignment of the tonnage for the transportation of these quantities of refined oil would carry with it the most economical assignment of the tonnage necessary for the transportation of such of the Eastern Naphtha products as must be marketed.

     3.   The New York Export price as approved from time to time by the oil division of the United States Fuel Administration for Standard white 76 degreeable test is to be taken as the basic price for all American oil supplied and also to be the basic price F.O.B. Sumatra, Burma or Persia for all High Grade Sumatra, Burma or Persian oil supplied. If oil inferior to High Grade Sumatra, Burma or Persian are supplied a differential in price now to be established corresponding to the prevailing differential in each of the Eastern Countries for such inferior oils. To these F.O.B. oil prices is to be added freight by tank ships at the British Blue Book rates. In this way the delivered price at each of the direct importing installations is to be arrived at.

     Payment to be made by telegraphic transfer on London,England for all cargoes of Eastern origin taken by American oil interests three (3) Days after the delivery of the cargo at destination; and payment to be made by telegraphic transfer on New York for all cargoes of American origin taken by British oil interests three (3) Days after delivery of the cargo at destination. Immediately on receipt of a cable that the British Government acquiesces in the plan herein submitted by the American Government then the American oil interests to file with Mr. M.L. Requa oil director of the fuel Administration certified figures of their delivery into consumption by countries for the year 1913 and the British oil companies to be required by the British Government to file similar certified statements of their delivery by countries. These figures to be exchanged by the 2 Governments and to form the basis for percentage of trade as indicated in (1).4 17017, 8649.

Benson.