Far Eastern Alliance

Chinese bandits cheerfully take pot shots at almost any foreign vessel plying the yellow waters of the Yangtze-kiang. But never will they fire on a ship of Mei Foo (Standard Oil Co. of New York, now-one of the two operating subsidiaries of merger-born Socony-Vacuum Corp). Socony is a Chinese institution. Socony has sold kerosene in China for more than 50 years.* Socony's agents are venerated in the community. Socony's ships thoughtfully slow down so that their wash will not upset frail sampans bound down river.

Two thousand miles due south of the Yangtze lie the Dutch East Indies, whence Royal Dutch-Shell and its swart, dynamic head, Sir Henri Deterding, began their march around the world. In these oil fields Standard Oil, not of New York but of New Jersey, has a heavy stake. Standard of New York's foreign market is all the Near and Far East. Standard of New Jersey abroad concentrates on Europe and South America. Jersey sold oil to Socony for its Chinese markets, but a large part of the production was shut in. Socony meantime was buying Russian oil for India, shipping kerosene from the U. S. Oilmen have long wondered why Jersey and Socony did not forge a closer hookup. The question became more pointed after Socony merged with Vacuum Oil two years ago, adding Australia and New Zealand to Socony-Vacuum Corp.'s Pacific empire. Last week it was learned that Jersey's Teagle and Socony-Vacuum's Pratt were finally hammering out the legal bumps in a plan to merge their Far Eastern properties into a single jointly-owned subsidiary. Although in volume Europe is the best U. S. oil customer, rivalry in the East is much more intense, always more colorful. As everyone knows, one-half the world's people squat on that portion of the globe that lies between Karachi and Harbin. And all oilmen know that one more gallon of kerosene each year for each & every Hindu, Siamese, Chinese and Japanese would lift sales to figures fantastic. Thus there is always desultory scrimmaging between the big oil companies. It broke into open warfare in 1927 when Socony and Royal Dutch were fighting for the Indian gasoline market. Sir Henri Deterding loudly shamed Socony's Charles Meyer for buying "bloody" Russian oil. Mr. Meyer quietly pointed out that Sir Henri did precisely the same thing until Sir Henri became a bugaboo to Russia and his contracts were not renewed. Sir Henri, who not only sells his oil in every country except Russia but also markets in all the 48 States, still dominates India. With his close British friend Anglo-Persian, he sells three-fourths of all Indian oil. In China U. S. companies do 65% of the business. Socony-Vacuum does the bulk of that. Texas Corp. is the only other U. S. company with important Eastern interests and they are relatively small. Last spring Russia started to flood China with kerosene. Prices were slashed 50%, the market demoralized. It was this Russian invasion, observers thought last week, that really forced the Jersey-Socony-Vacuum deal.

*Standard Oil has dominated the Chinese oil market ever since its engineers devised a lamp that would burn its brand of kerosene to perfection but, if competing brands were used, would send up such a smoking stench that Chinese were terrified.

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