Appendices - Hirohito's War
APPENDIX N: THE ROLE OF OIL IN THE PACIFIC WAR
Royal Dutch Shell: The founder Marcus Samuel started selling oriental sea-shells from his shop in the East End of London in the 1830s. Shells gave the company its name. Samuel’s sons developed an import and export trading business with machine tools, textiles and rice. After visiting the Black Sea and seeing the potential for oil, the Samuels took their company into oil trading. Starting in 1892 the Samuels revolutionized transportation of oil by hiring tankers to carry oil through the Suez Canal. Five years later 1897 the Samuels changed the company’s name to the Shell Transport and Trading Company.
Around the same time, in 1890, a new company, Royal Dutch Petroleum Company was formed in the Dutch East Asian colony of Sumatra. The company had its origins in the curiosity of Aeilko Jans Zijlker, a plantation manager for East Sumatra Tobacco Company. While visiting a swampy coastal area of Southern Sumatra, Zijlker came across pools of liquid, which, when tested, yielded 60 percent kerosene. With the help of a royal license from the Dutch government his business took off.
Although Zijlker died in the year the company was founded, his successor Jean Baptiste Kessler, oversaw the building of a 6-mile pipeline to a refinery at Balaban River that started production in 1892. In spite of initial funding difficulties production rose dramatically. In the three years from the beginning of 1895, production increased by 500 percent. Even Standard Oil took notice. One executive noted, ‘Every day makes the situation [Royal Dutch Petroleum] more serious and dangerous to handle. If we don’t get control of the situation soon, the Russians, Rothchilds, or some other party may.”3 In spite of stiff completion from Standard Oil, which offered US$40m to buy out Shell, Samuel’s Shell merged with Royal Dutch Petroleum. Thus Bataafsche Petroleum Maatschappij, a subsidiary of Royal Dutch Shell, was established in 1907; ownership was 60 percent Royal Dutch Petroleum Company and 40 percent by the Shell Transport and Trading. To prevent Standard Oil from buying up shares and closing down the company, the directors of the newly merged company created a special preference voting stock that was tightly controlled.
When the US banned the export of high-octane aviation fuels to Japan in 1940, the Japanese government began to put pressure on the Dutch government to increase exports to Japan of 100-octane gasoline, which Royal Dutch Shell had just started to manufacture at its Plaju Refinery in South Sumatra. Shortages of higher-octane fuels and anti-knock additives were already in short supply by 1938 to the extent that the Japanese government lowered the standard for private car gasoline to 74-octane. When Roosevelt’s freeze on Japan’s financial assets led to an oil embargo in July 1941, Shell’s assets in Sumatra and the Dutch East Indies, the nearest major oil resources to Japan, became the default existential target for Japan’s military government.