Sir Henri Deterding and Royal Dutch-Shell: Changing Control of World Oil, 1900-1940 (review)

During the first decades of the twentieth century, Henri Deterding was one of the most important figures in the international oil business. As the executive who brought together Royal Dutch and Shell into a single company, he was the European equivalent of John D.Rockefeller, Sr. Paul Hendrix has written the first biography of Deterding in English. The work is a manuscript draft that Hendrix finished in rough form before his death in 1999, and it appears to have been published without scholarly or professional editing and with numerous grammatical errors throughout. While valuable for some of the primary source material quoted from Deterding's own correspondence, the book is very difficult to follow unless read in conjunction with more contextual oil industry histories such as Daniel Yergin's The Prize: The Epic Quest for Oil, Money, and Power (1991).

Nevertheless, Hendrix highlights the significant—and controversial —themes associated with Deterding's long career. He emphasizes that Deterding was the first in the industry to discover the "swing producer" formula: by controlling enough of the low-cost export market supply of oil, a producer could decisively balance supply and demand relative to competitors and therefore control price. Most of Hendrix's book focuses on this issue of control over price, especially the "world price" of oil. Deterding emerges as a highly skilled tactician who built alliances with one company or group while opposing others, all to advance the position of his company and its allies.

Deterding led the industry in his realization that the demand for gasoline as fuel would overtake lamp oil (kerosene) demand. Connected to this foresight in technological shifts was his realization of the importance of the political control of oil. Deterding anticipated the change in naval ship fuel from coal to oil, a key factor in determining global dominance of the sea in the 1910s. In seeking to supply the British Admiralty with fuel during World War I, he faced considerable opposition from rival Anglo-Persian, which unfairly portrayed Royal Dutch-Shell as un-British (because of Deterding's Dutch nationality) and dominated by Jews (because the Rothschilds, for example, had an interest in the company). Deterding's relationship with Winston Churchill, who became First Lord of the Admiralty (civilian head of the British Navy) during World War I, is detailed here, but in its broader historical context that story is told far better by Yergin.

Hendrix highlights how Deterding used his oil industry position to advance an anti-Soviet, anticommunist agenda, at one point even setting up his own secret service against the Comintern directed by former British director of military intelligence General Sir George MacDonough. Despite simplistic and often inaccurate characterizations, such as Josephus Daniels, Franklin Roosevelt's Mexican ambassador, being portrayed as "a convinced Marxist" (p. 250), we gain new insights into Deterding's political machinations.

Hendrix argues that the meeting of top oil executives at Achnacarry Castle in Scotland, organized by Deterding in 1928, has been unfairly portrayed as establishing a cartel rather than as advocating stabilization of production, distribution, and prices among the big companies. This can be said of the U.S. Federal Trade Commission's 1952 report on the industry, but not of authors like Yergin. Under the "as-is" arrangement that came out of the meeting, Yergin states, "each company was allocated a quota in various markets—a percentage share for the total sales" (Yergin, p. 264)—a view consistent with Hendrix's.

Finally, Hendrix attacks critics who he believes wrongly accuse Deterding of pro-Nazi sympathies, but he ends up giving further evidence to support the critics. Deterding not only met but also sought to directly influence top Nazi officials for a more "progressive" German economic policy. He advocated German reliance on oil (particularly that of Royal Dutch-Shell...