University of California • Berkeley
Regional Oral History Office University of California
The Bancroft Library Berkeley, California
Pillsbury, Madison & Sutro Oral History Series
James E. O'Brien
ODYSSEY OF A JOURNEYMAN LAWYER
With Introductions by
William E. Mussman, Sr.
and
Francis R. Kirkham
An Interview Conducted By
Carole Hicke
1987-1989
©1991 by The Regents of the University of California
Since 1954 the Regional Oral History Office as been interviewing leading
participants in or well-placed witnesses to major events
in the development of Northern California, the Vest, and the nation. Oral
history is a modern research technique involving an interviewee and an
informed interviewer in spontaneous conversation. The taped record is
transcribed, lightly edited for continuity and clarity, and reviewed by the
interviewee. The resulting manuscript is typed in final form, indexed, bound
with photographs and illustrative materials, and placed in The Bancroft
Library at the University of California, Berkeley, and other research
collections for scholarly use. Because it is primary material, oral history
is not intended to present the final, verified, or complete narrative of
events. It is a spoken account, offered by the interviewee in response to
questioning, and as such it is reflective, partisan, deeply involved, and
irreplaceable .
****************
All uses of this manuscript are covered by a legal agreement between the
University of California and James E. O'Brien dated January 18, 1990. The
manuscript is thereby made available for research purposes. All literary
rights in the manuscript, including the right to publish, are reserved to The
Bancroft Library of the University of California, Berkeley. No part of the
manuscript may be quoted for publication without the written permission of
the Director of The Bancroft Library of the University of California,
Berkeley.
Requests for permission to quote for publication should be addressed to
the Regional Oral History Office, 486 Library, and should include
identification of the specific passages to be quoted, anticipated use of the
passages, and identification of the user. The legal agreement with James E.
O'Brien requires that he be notified of the request and allowed thirty days
in which to respond.
It is recommended that this oral history be cited as follows:
James E. O'Brien, "Odyssey of a Journeyman Lawyer," an oral
history conducted 1987-1989 by Carole Hicke, Regional Oral
History Office, The Bancroft Library, University of
California, Berkeley, 1991.
Copy No.
JAMES E. O'BRIEN
1966
Photograph by Hartsook
Cataloging Information
O'BRIEN, James E. (b. 1912) Attorney
Odyssey of a Journeyman Lawyer. 1991, xii, 229
Childhood in the Philippines, Shanghai, and Oakland, California; Pillsbury,
Madison & Sutro in the late 1920s and 1930s, founders and early partners;
service in U.S. Army Air Force intelligence in World War II; antitrust
cases, including the oil cartel case in 1950s; Chevron Corporation
(formerly Standard Oil of California) international operations; formation
of the Iranian Consortium for oil production in 1954; oil production in
Saudi Arabia and Indonesia; the Aramco arbitration award, the Libyan
arbitration, and problems of international law.
Introductions by William E. Mussman, Sr. , Esq., of Carr & Mussman, and
Francis R. Kirkham, Esq., of Pillsbury, Madison & Sutro.
Interviewed in 1987-1989 by Carole Hicke for the Pillsbury, Madison & Sutro
Oral History Series. The Regional Oral History Office, The Bancroft
Library, University of California, Berkeley.
ILLUSTRATIONS
James E. O'Brien [frontispiece]
O'Brien family 6a
View of Shanghai 6a
O'Brien in Tokyo 6a
O'Brien and Norbert Korte 56a
Francis Kirkham, O'Brien, and Gerald Levin 56a
O'Brien and Members of Intelligence Staff 64a
O'Brien and Hillyer Brown 150a
O'Brien in Sumatra 166a
O'Brien and His Excellency Nabuhiko Ushiba 178a
O'Brien at Loch Kishorn 202a
O'Brien at Southwestern Legal Foundation International
and Comparative Law Center 218a
Pillsbury, Madison & Sutro Oral History Series
John B. Bates, Litigation and Law Firm Management at Pillsbury. Madison &
Sutro; 1947-1987, 1988.
Albert J. Brown, Building the Corporate-Securities Practice at Pillsbury.
Madison & Sutro; 1942-1987, 1988.
Noel J. Dyer, Lawyer for the Defense; Forty Years Before California Courts
and Commissions, 1988.
Harry R. Borrow, A Career in the Practice of Tax Law at Pillsbury. Madison &
Sutro, 1988.
Wallace L. Kaapcke, "General Civil Practice" - A Varied and Exciting Life at
Pillsbury. Madison & Sutro. 1990.
Francis R. Kirkham, Sixty Rewarding Years in the Practice of Law. 1930-1990.
In Progress
Francis N. Marshall, Looking Back; A Lifetime Among Courts. Commissions,
and PM&S Lawyers. 1988.
Turner H. McBaine, A Career in the Law at Home and Abroad, 1989.
James E. O'Brien, Odyssey of a Journeyman Lawyer, 1990.
Charles F. Prael, Litigation and the Practice of Labor Law at Pillsbury.
Madison & Sutro; 1934-1977. 1986.
Frank H. Roberts. In Progress.
John A. Sutro, Sr., A Life in the Law. 1986.
TABLE OF CONTENTS
PREFACE i
INTRODUCTION by William E. Mussman, Sr ii
INTRODUCTION by Francis R. Kirkham v
INTERVIEW HISTORY ix
BRIEF BIOGRAPHY xi
I BACKGROUND 1
Grandparents and Parents 1
Childhood in China 5
Move to Oakland 11
Office Boy at PM&S; E. S. Pillsbury and Alfred Sutro 15
Summer Work in PM&S Library; Gerry Levin, Vincent Butler 20
Education at University of California and Part-Time Work 22
Law School 24
II PM&S: THE EARLY YEARS--1930s 30
Joining the Firm 30
Learning the Ropes: Methods of Felix Smith 31
Other Partners: H. D. Pillsbury, Frank Madison, Alfred Sutro, Oscar
Sutro, Vincent Butler, More About Felix Smith 37
W. P. Fuller & Co. and Cobbledick-Kibbe v. United States 40
The Infested Prunes Case 46
The Firm Offices 49
Eugene Prince 50
Eugene Bennett, Insurance Cases, and the Davidowitz Trial 51
The Webb Motor Company Case 56
Howard Marshall, Del Fuller, Charles Ruggles, Gene Prince 57
III WORLD WAR II 60
Santa Ana Air Base 60
Assignment in Europe: Intelligence 61
Post-Hostility Section: Rescuing Scientific Technology 64
Demise of the Red Baron: The Technological Revolution 73
IV POSTWAR RESPONSIBILITIES AT PM&S 75
Lawyers Who Came and Went 75
Price-fixing Cases: Paint, Glass, and Wallpaper 86
Abercrombie & Fitch Company 88
Mary Eudora Miller Clover 91
Tubbs Cordage 95
El Portal Mining Company 97
V OIL CARTEL CASE: 1952-1968 100
Inception 100
Historical Background 102
Mootness Study 104
Socal's Concession in Saudi Arabia 107
Grand Jury Investigation 109
The Civil Suit 113
Impact of Iranian Crisis on Cartel Case 121
Caltex Breakup 123
VI FORMATION OF THE IRANIAN CONSORTIUM: 1954 127
The Issues: British Control 134
Distribution and Marketing 145
International Law and Antitrust Law 147
VII ARAMCO RESTRUCTURING 151
Background 151
Tapline 154
The Follis Plan 156
VIII INDONESIA: 1964-1966 160
Background: Oil and Resolution 160
Legal Principles of the Concession 163
Geopolitical Implications 166
Edward H. Hills and the Gambling Casino: An Aside 169
IX ARAMCO ARBITRATION AWARD: 1955 173
Background 173
Drafting the Arbitration Agreement 175
Members of the Tribunal 177
International Law: Relationships Between Sovereign Governments and
Private Investors 183
X SOME OTHER SOCAL MATTERS 188
Permanent Sovereignty Over Natural Resources: The Libyan Arbitration,
1974 188
Why the Saudi Concession Went to Socal 193
The KySo Merger 194
Church Congressional Hearings 198
Joining Socal as Director and Vice President: 1966 202
Relationships Between Socal and PM&S 209
XI PRACTICING LAW AT PM&S 213
XII COMMUNITY SERVICE. 216
TAPE GUIDE 222
APPENDIX: Resolution, Standard Oil Company of California 224
INDEX
PREFACE
The history of Pillsbury, Madison & Sutro extends more than one hundred
years. Its founder, Evans S. Pillsbury, commenced the practice of law in San
Francisco in 1874. In the 1890s, Frank D. Madison, Alfred Sutro, and
Mr. Pillsbury1 s son, Horace, were employed as associates. In 1905, they and
Oscar Sutro became his partners under the firm name Pillsbury, Madison &
Sutro.
In serving thousands of corporate and individual clients over the years,
the firm helped to write much California history. It played a leading role
in landmark litigation in the Supreme Court of California and other courts.
In its offices, a number of California's largest corporations were
incorporated and legal arrangements for numerous major transactions were
developed. In addition to its services to business and other clients, the
firm has a prominent record of services to the legal profession and to the
community, charitable, and other endeavors.
In March 1985, with the firm approaching four hundred attorneys situated
in multiple offices, the Management Committee approved the funding of an oral
history project to be conducted by the Regional Oral History Office of The
Bancroft Library of the University of California, Berkeley. The purpose of
the project is to supplement documents of historical interest and earlier
statements about the firm's history with the recorded memories of those who
have helped build the firm during the past fifty years. It is our hope that
the project will preserve and enhance the traditional collegiality, respect,
and affection among the members of the firm.
George A. Sears
Chairman of the Management Committee,
1984-1989
May 1986
ii
INTRODUCTION by William E. Mussman, Sr.
The fascinating story which this introduces is essentially an
autobiography of one of the truly great American lawyers of this twentieth
century. While I have not read the transcript, I know from my forty years
of association with James O'Brien that his modesty and humble spirit will
have resulted in the narrative passing ever so lightly over the parts where
his wisdom, foresight, planning and advocacy were single to the successes
related. How benefited we all would be if the whole James O'Brien story
were set out in footnotes to the text!
The oral history which follows is essentially a road map through the
legal life of Jim O'Brien. The readers will know that Jim has been in the
middle of some of the most complex, critically important lawsuits of our
day. The face-off with Kaddafi in the World Court and the ultimate victory
is but one of many such cases. And the readers will see Jim as a
participant in matters having critical international political
significance. For example, his role in holding for his company (and his
country) the oil concession in Indonesia at the time of Sukarno's overthrow
was an accomplishment of enormous historical consequence. These triumphs
pile one on another to create a magnificent memorial to the professional
accomplishments of this great man.
There is another side to Jim O'Brien which even surpasses the
superlatives of his professional self. Many- -probably most- -of those we
meet along our way are forgotten in the ebb and flow of life. Like sand
castles, they disappear in the flood tide of time. But always there are a
few who attach themselves to our hearts and memories and forever become
part of our very being. Jim O'Brien is one of these few. He is a warm,
compassionate human being with a heart as big as the whole outdoors and a
charismatic personality highlighted by his quick Irish wit and smiling blue
eyes.
One can quickly identify Jim O'Brien with Ben Adhem in the famous poem
by James Hunt. There Ben Adhem awakens from a dream to find an Angel
writing, in the Book of Gold, the names of those who loved the Lord. On
being told that his name was not on the list, Ben Adhem asked that he be
put down as "one who loveth his fellow man." The next night the Angel came
again with her Book of Gold to reveal that "Ben Adhem' s name led all the
rest." James O'Brien is one who loves his fellow man. And he expresses
that love in every way- -serving, giving, helping, supporting, forgiving,
sympathizing, counseling, et cetera, et cetera. Perhaps most endearing is
his fierce loyalty and dedication to both friends and causes .
Ill
All of this is not to say that Jim O'Brien is an easy mark or is in any
way "wishy washy." He has a passion for truth, for justice, and for right,
and he will not be beguiled from these goals by threat, entreaty, or personal
reward. In this respect, too, his Irish heritage shines through.
On a personal note, I was assigned to work with Jim O'Brien and Francis
Kirkham when I joined Pillsbury, Madison & Sutro in September of 1949. Jim
was the newest partner in the firm -- I believe they totaled fourteen at the
time -- and he at once became my mentor and my friend. In the years that
followed, I was continually and intimately exposed to James O'Brien, the
prominent lawyer, and to James O'Brien, the extraordinary man. I learned
from him in both roles, the most important lesson being this: strive always
for perfection in the practice of the law but never at the expense of being
the very best husband, father, son, and friend. Jim's life reflects this
perspective in action. While the fates deprived Jim and Mary Louise of the
joy of children, they served eagerly and effectively as godparents to the
offspring of hosts of friends. My son is a grateful recipient of their
devotion to this very special calling.
In 1966, Jim O'Brien left his partnership in Pillsbury, Madison & Sutro
to become the legal vice president and director of Standard Oil Company of
California. He quickly organized the legal talent within the company into an
effective, cohesive unit, and then went on to also become a confidant in all
matters to Otto Miller, the chief executive officer of Standard. But this is
not the time or place to chronicle Jim's successes as an officer and director
of the company. Suffice it to say that he retired with full honors in 1977
in accordance with Standard's mandatory retirement policy. Once more I was
the beneficiary of his friendship; he nominated me as his successor and thus
opened for me a whole new world of fascinating, delightful professional
experiences .
In retirement, Jim was made counsel to Pillsbury, Madison & Sutro. His
service continues -- active and productive. Jim's avocation has always been
books. He is both a prodigious reader and an accomplished collector. How
fortunate The Bancroft Library at the University of California, Berkeley, has
been to have Jim serving as the chairman of its Council of The Friends of The
Bancroft Library. The challenge is fulfilling for him and rewarding to all
who use the library. Again, this is not the place to recount all of the pro
bono projects that Jim O'Brien is undertaking in retirement, but be assured
that they are many, varied, and publicly beneficial.
iv
I am richly blessed to have had during most of my adult life the caring
concern and invaluable counsel of James O'Brien. And I appreciate this
opportunity to express publicly my deep affection for him and my gratitude to
him for being such a positive force in my life.
William E. Mussman, Esq.
Carr & Mussman
December 1990
San Francisco, California
INTRODUCTION by Francis R. Kirkham
Bill Mussman's words so aptly capture Jim O'Brien's achievements,
character, and inner spirit that I hesitate to attempt an added word. But
Jim has been so much a part of my life for more than 50 years that I cannot
let his story be told without at least an attempt briefly to express my
affection and esteem.
Perhaps the best start is to borrow the words of his colleagues when the
time came for Jim to retire from the Board of Directors of Standard Oil
Company of California and from the post of chief legal officer of that vast
and complex international organization. In its farewell Resolution the Board
described him not only as "a sage, pragmatic, and resourceful lawyer," but
also as a "contemporary 'Renaissance Man' --possessing that rare combination
of intellectual brilliance and compassion for others and having an abiding
interest in literature, art, culture, and the humanities."
Jim's accomplishments as a lawyer are extensive and brilliant indeed;
they are reflected in the records of his law firm and those of numerous
courts and international tribunals, enriched by his own recollections
chronicled in the pages that follow. The other facets of Jim's character and
career that round out the true Renaissance Man are so diverse and extensive
that it is difficult to encapsulate or define them. I tried, at Jim's 70th
birthday party where hundreds came to pay him tribute, by calling them,
collectively: that indefinable something in Jim's heart, mind, and spirit
that reaches out and touches with warmth and goodness all who pass his way,
that brings him joy in love, friendship, laughter, and song; pleasure in rich
scholarship; satisfaction in quiet generosity; and, perhaps above all, that
whimsical yet absolutely certain knowledge he has that there are fairies at
the bottom of the garden. His Irish ancestors would not have it otherwise.
Jim's war record in a way reflects the pattern of his career—beginning,
as he would put it, as a one-feather Indian, and ending with a stream of
remarkable accomplishments stretching from Eisenhower's headquarters through
Berchtesgaden to our own top air command. One episode which he does not
disclose in the pages that follow is, characteristically, an illustration of
the accomplishment of the impossible. An injury during his college years
left Jim with limited motion in one shoulder. If discovered it undoubtedly
would have barred him from active service. With carefully prepracticed
moves, quick diverting conversation at the right moments, and more than a bit
of Irish luck, he got by his physical and was commissioned a Second
Lieutenant in the Air Corps. He was mustered out a Lieutenant Colonel with
the French Croix de Guerre with Silver Star, awarded by General de Gaulle for
exceptional services rendered in the liberation of France, and with the
vi
Legion of Merit awarded by his own country for "exceptionally meritorious"
conduct in the performance of "outstanding service" in the Strategic Air
Forces in Europe :
Lieutenant Colonel O'Brien constructed a program without
precedent, representing a notable contribution to the success
achieved in obtaining from Germany documents and air technical
intelligence of great value to the United States Army Air Forces,
thereby reflecting the highest credit upon him and armed forces
of the United States.
Included in the background of these citations is an almost
unbelievable chapter of army intelligence. As the war ended Jim, with one
German speaking aide, dashed in a jeep through Germany and into Austria to
the little town of Zell am Zee where he located the entire Headquarters
Staff of the German Air Force- -60 to 70 general officers, including General
Von Koller who had succeeded Goering as Chief of the German Air Force.
What follows is from the Arabian Nights. Realizing that this group
must be kept together for intelligence purposes, Jim flew immediately to
Eisenhower's headquarters at SHAEF and obtained an order from General
Beedle Smith that the entire group be kept intact. He then returned to
Austria with an American major general and escorted the entire German Staff
to Berchtesgaden. The debriefing that followed, by both American army and
civilian experts, became an important part of the war's intelligence and
also of the curriculums of the United States war colleges .
Before Jim left the service, he was sent by General Spaatz , Commanding
General of the Air Force in Europe, on special duty to Washington to
coordinate through General Arnold and various divisions of the Air Force, a
paper he had prepared on the future mission of the intelligence arm of the
Air Force. General Spaatz also directed that regular Air Force officers
being returned home should not leave without interviewing Jim about the Air
Force of the future --in the new world of technological and scientific
developments, where, as Jim puts it, "optical capabilities [exist] that
would give you, from a satellite, the number [of a car] on the parking
lot."
Between those dramatic years and today, Jim's career has continued to
be one of exceptional achievement. As the years went by his practice with
the firm trended more and more toward international law, antitrust law, and
other problems of large international business enterprises. When the
position of Director and Vice President in Charge of Legal Affairs became
vacant at Standard Oil Company of California, Jim was immediately
recognized as the one best qualified for that important office. Many years
after his appointment, Gwin Follis, Chairman of the Board and Chief
Executive Officer of Standard, told me that he considered his selection of
James O'Brien as the best step he had ever taken for the company in his
many years of service .
vii
Through the succeeding busy years and into his retirement, Jim found
time to carry on with distinction his important work for the company and at
the same time devote his rich scholarship to improvements in the
administration of justice and to community activities. In 1973, the Asia
Foundation and the Southwestern Legal Foundation, of which Jim is a Founding
Trustee, jointly sponsored a legal and economic conference in Singapore for
lawyers, judges, ministers of economics, commerce, finance and development
from all the countries on the Pacific Rim. Jim ended the meeting with a call
for a world of law:
We are all men of the law, the law that is society's
discipline, whether we make the law, administer it or,
like most of us, try to understand it and breathe life
into it. We truly know that only through law can we hope
to live as a peaceful and thriving compact of nations.
If we fail we shall fall into chaos and darkness and
witness the failure of our human edifice—so painfully
built, stone on stone.
Commitment to the law is not easy . . .
We have much to do and much to gain.
Let us hope to meet again in the service of the law.
Just last year Jim, a beloved trustee of Mills College, spoke at the
dedication of the rare book room of its new library to his old and dear
friend, Ellie Raas Heller, who had contributed so many of its treasures. His
words reflect his scholarship and sensitivity:
I mentioned the chain of human beings stretching
back in time. Indeed, through all recorded history,
monasteries, ancient libraries, book collectors,
librarians, printers, have (over the centuries) protected
fine books. . . . Think of the monks buffeted and harried
by bloodthirsty marauders who secretly carried the Book
of Kells from lona to Ireland where it may be seen today
in all its glory in the library of Trinity College,
Dublin, where a page is turned each day.
Such loyalty to books is a recognition that a book,
and particularly a rare and beautiful book, has a life of
its own—a life which endures far beyond the life of any
man or any woman. No one, faithful to the ideals of
beauty, can ever be more than a temporary custodian,
nurturing, preserving, and loving precious books; and
finally surrendering the treasured books to the next
generation— and they to the next votaries, who in the
procession and chain of human life, assume the same role
and mission. When each of us in turn faces death's
viii
dateless night, the choice and selection of a caretaker
must be made. . . .
In the pages of the books on the shelves here are
recorded man's inspiration, his soaring spirit, his
horrifying crimes, his vaulting imagination, his
unimaginable cruelties, his baseness, and his
exaltation. . . .
As the poet said, 'Beauty endures though towering
empires die." Now Ellie's books have found safe harbor.
They shall endure beyond the lives of all those within
the sound of my voice.
Jim is approaching his 80th year — a milestone I passed some years ago.
For more than half a century we have stood shoulder to shoulder in the
practice of law and in a friendship which has been, to me, rewarding beyond
words. I join Bill Mussman in expressing my affection and gratitude.
Francis R. Kirkham
Pillsbury, Madison & Sutro
May 1991
San Francisco, California
ix
INTERVIEW HISTORY
James E. O'Brien was interviewed as part of the series of oral
histories being done with twelve advisory partners at Pillsbury, Madison &
Sutro. Starting with the firm as office boy in 1928, Mr. O'Brien joined
the firm as an associate after graduating from Boalt Hall Law School in
1935 when he was twenty-three years old.
He participated in a wide variety of matters during his early years
with the firm, eventually handling major national and international affairs
for Chevron Corporation (then Standard Oil of California) before leaving
PM&S in 1966 to become Chevron's legal vice president and director. After
retiring from Chevron in 1974, he became counsel to PM&S, where he was
interviewed for this oral history.
Mr. O'Brien relates stories of the early founders and senior partners
of the firm, including Evans S. and Horace D. Pillsbury, Frank Madison,
Alfred and Oscar Sutro, Felix Smith, and others. For example, he recalls
of senior partner Felix Smith that "he was an extraordinary man in every
way --beautifully educated, with extraordinary intellectual attainments, a
writer of pure Anglo-Saxon prose; a lion in his den and a pussycat
outside." As an illustration of the lion side, O'Brien explains that
Smith's method of training young associates "was to make you walk the plank
and watch to see whether you sank or swam." O'Brien's engaging manner of
telling an anecdote, plus his own warmth and good humor, are clear in the
transcript but especially vibrant on the actual tape-recording.
In discussing some of the early cases he tried, Mr. O'Brien describes
with satisfaction some that he won, but he also adds a word of caution
regarding the necessity of careful preparation: "Such cases were great
seasoning, and you learned very quickly that what you thought was a perfect
case when you finished preparing it in the library at the Standard Oil
Building proved to be full of holes when some seasoned lawyer began to take
you over the jumps in the courtroom."
He also documents the type of law practiced at Pillsbury, Madison &
Sutro, discussing different kinds of cases and matters and then proceeding
with information about work done for Chevron Corporation. Antitrust law
became a special area of expertise for James O'Brien, and his skill and
finesse in fending off government onslaughts on the oil industry are much
admired by his colleagues. He discusses the principal aspects of the oil
cartel case that began during the Harry S. Truman administration and lasted
for years .
He participated in significant international agreements, such as the
formation of the Iranian consortium, and arbitration, such as the Aramco
arbitration award. Becoming well versed in international law, Mr.
O'Brien has made a strong effort to educate American thinking about the
rights and duties of nations. He has taken on innumerable speaking
engagements on this and other law and business topics. As a trustee of
the Southwestern Legal Foundation, he helped establish its International
Comparative Law Center .
This oral history, as part of the Pillsbury, Madison & Sutro Series,
does not attempt to document the years 1966-1974 when O'Brien was vice
president for legal affairs and director of Chevron, although he carried
on Chevron's strong relationship with the firm as Chevron principal
counsel .
In addition to his law firm practice and his term as Chevron vice
president, Mr. O'Brien has given generously of his time and talents to
various groups that serve the community and society- -the Asian Art Museum
of San Francisco, for example, and the Friends of The Bancroft Library.
He served on the boards of the Youth Council, the San Francisco Chamber
of Commerce, Stanford Hospital, and the Academy for Educational
Development in Washington, B.C.
Twelve interview sessions took place in Mr. O'Brien's ninth floor
office where he is surrounded by books, pictures, and travel mementos.
The office is in the Adam Grant Building, located in San Francisco's
financial district. The interviews took place on January 13, 20, 26,
February 2, March 17, 24, April 7, June 7, September 22, 1987; March 28,
November 30, 1988; June 19, 1989.
The tapes were transcribed at Pillsbury, Madison & Sutro and were
carefully edited by the interviewer and Mr. O'Brien. He collected
photographs and clippings to be included in the transcript.
The Regional Oral History Office was established to record
autobiographical interviews with persons who have contributed
significantly to recent California history. The office is headed by
Willa K. Baum and is under the administration of The Bancroft Library.
Carole Hicke, Project Director
January 1991
Regional Oral History Office
The Bancroft Library
University of California, Berkeley
Regional Oral History uince
Room 486 The Bancroft Library
university or calltornla
Berkeley, California 94720
Your full name
Date of birth
Father's full
Occupation
Mother's full
Occupation
BIOGRAPHICAL INFORMATION
E.
Birthplace
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Birthplace
Birthplace^u^^^? .
Family
Where did you grow UP?
Education y .
tT C*^T "^
Areas of expertise
Special interests or activities C r
xii
O'Brien, James Edward
OCCUPATION^ 5): lawyer
BORN:
March 22, 1912 Trinidad. CO US
PARENTS: GecrQe A O'Brien and Alice A Lapsley O'Brien
SEX: Hale
FAMILY:
Married Mary Louise Janes, January 2, 1 935 (dec 1 978 ) 5
married Jeanne Gilnore LaClair, 1379
EDUCATION:
AB, U Calif at Berkeley, 1932;
JD. U Calif at Berkeley, 1935
CERTIFICATION: Calif bar, 1935
CAREER :
practice in, San Francisco, CA , US, 1 935-1 955 5
assoc, partner Pillsbury, Madison 8> Sutro , 1935-1966;
vp., dir Standard Oil Co Calif, San Francisco, CA , US, 1555-1977;
of counsel firm Fillsfaury, Madison & Sutro, 1 977-preseni ;
dir WP Fuller & Cc;
dir Ei Portal Mining Cc;
dir Abercrombie & Fitch Co;
pres bd dirss Stanford Hosp;
bd dirs Acad for Ednl Devel NY;
bd dirs Nat Fund fcr fled Edn;
bd dirs Am Enterprise Inst ;
trustee Internal ar.d Corcparativs Law Center, Dallas, TX , US;
trustee Southwestern Legal Found;
trustee Mills Coil;
trustee San Francisco Asian Art Conwn
MILITARY:
Served as It col U5AAF , 194Z-154E
AWARDS:
Decorated Legion of Merit;
Decorated Bronze Star;
Croix de Guerre with Silver Star
MEMBERSHIPS:
Men San Francisco G of C 'past vp , dir);
Mer, Internal C of C;
Md« A?i Ear Assn;
Men An Sec Internat Lau;
Men !r>ternai Lau Assr,;
Me.*. An Law Inst
CLUBS AND LOOSES: Pacific-Union < Sen Francisco)! Bohemian (San
Francisco); Stock Exchange
HOME: Pale Alto, CA US
OFFICE: San Franc 15:0, CA US
I BACKGROUND
[Interview 1: January 13, 1987 ]//*
Grandparents and Parents
Hicke: I wonder if we could just start this morning by your telling me a
little bit about your family background -- something about your
grandparents and your parents.
O'Brien: I know very little about my grandparents. I grew up as a youngster
outside the United States. As a consequence I had very limited
exposure to my grandparents. Once, for a month or two, when my
older brother John was in Children's Hospital in New York, I was
sent off to spend some time with my paternal grandfather and his
wife. They lived in Ashland, Wisconsin. It was wintertime;
bitterly cold. I had just come from the Philippines, and the shock
of that climate and those surroundings are indelibly printed on my
mind.
My father had two sisters who lived with their parents, and
they pampered me and spoiled me, but I spent a winter with a runny
nose and severely chapped hands; a little lonesome boy playing in
the snow on a tiny sled. And that was the only time I ever saw my
grandfather or my grandmother -- I don't think she was my father's
mother; I think she was the second wife of my grandfather.
Hicke: This was your paternal grandfather?
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segment. A guide to the tapes is provided at the end of this
volume.
O'Brien: Paternal grandfather.
My mother's father I saw, to the best of my recollection, only
once in my life. He had been seriously wounded in the Civil War.
He lived very modestly as an old soldier in ¥est Los Angeles, near
my mother's sister. I do have some pictures of him, taken with the
whole O'Brien tribe, when he visited us in Ocean Park, California.
He was a tall, handsome, erect, old gentleman, with a most
impressive, white, handlebar mustache, a great shock of white
hair -- beautiful to behold. My mother, when we lived in China and
earlier in the Philippines, I know wrote him with considerable
frequency and, I think, probably helped support him.
I never met my grandmother on my maternal side. She died
before my mother and father were married. My mother was born in
Evansville, Indiana. How she came there, how her family came
there, I haven't the slightest idea, or why they moved to
Colorado -- all lost in the mist of time. She lived there with her
father and mother as a young girl --
Hicke: In Evansville?
O'Brien: No. In Colorado.
Hicke: Where in Colorado?
O'Brien: In Trinidad, Colorado, which is a small railroad and mining town on
the southern border of Colorado -- a railroad town because the
principal activity, as I look back on it, seemed to be the fact
that the Santa Fe Railroad roared through there.
How my mother got there with her family, I don't know. But
she was married at an early age, probably eighteen, to a prominent
citizen of this small town -- a man much older than she -- who was
a railroad construction engineer or had a construction company. In
any event, he was the leading citizen or one of the leading
citizens of this small town. It is a rather picturesque little
place. Behind the small group of streets in those days there was a
tall bluff called Fisher's Peak, which was easily climbed. That
part of Colorado lies in the Sangre de Cristo range of mountains
that run generally north and south through Colorado.
In any event, she was married to this gentleman whose name was
McKeough, James McKeough. He had a son who was, I believe, older
than my mother. He was, in those days, a young lawyer in Trinidad,
Colorado -- representing the railroad, I guess, in all of their
personal injury cases and whatever other sort of business they had.
That was a coal-mining area of Colorado. Nearby was
Walsenburg, a coal-mining town. I recall my mother telling me
about the terrible, bloody massacres and strikes that had taken
place in the coal mines in those very early days. When
Mr. McKeough died, his son assigned all of his interest in his
father's estate to my mother. She thus inherited, I don't know,
three or four little houses and perhaps some other small
inheritance.
She lived on there with her mother as a young widow. Her
mother died there. I believe her father had already moved away to
Southern California, but I may be mistaken about that. At least I
have no consciousness of her ever having talked about him in
connection with Trinidad, Colorado. I think she was a widow for
perhaps five or six years, maybe longer, when my father appeared on
the scene as an energetic, promising, young employee of the old
Wells Fargo Express Company. In those days the Wells Fargo Express
had an express car on every train in the country, and the express
messengers rode those trains and handled the express packages,
insured packages; they handled money, gold and silver, and safes,
and all that kind of business.
Hicke: Were they guarded?
O'Brien: They were the guards -- there were sometimes extra guards. They
were usually armed. I don't think he was an express messenger,
although I might be mistaken; I think he was sort of a divisional
superintendent, superintending the running of the express service
in some part of Arizona and Colorado.
Hicke: And your father's name?
O'Brien: Was George Augustus O'Brien. He was born in Bay City, Michigan.
He was of Irish and, I believe, German descent; I'm not terribly
sure. There are other Irish names in the tribe -- there are
Fitzgerald O'Briens, and so on -- but I really don't know anything
whatever about the family.
He had a brother by the name of Harry O'Brien. And my father
had been married some few years, perhaps five or six years, before
he met my mother. His first wife had had two children, Harry Birge
O'Brien and George Fitzgerald O'Brien. When his wife died, he was
left with two tiny boys. How they were taken care of, I haven't
any idea. Anyway, he was younger than my mother by maybe five or
six years.
They made common cause, and shortly after they were married,
he was sent to Mexico City to take charge of the Wells Fargo
business there. On second thought, I think they lived in Nogales,
Arizona first, and then he was sent to Mexico City. My father had
these two children. My parent's first child was my older brother,
John, who was eighteen months older than I. They lived in Mexico
City. When I arrived, my mother had four small children. There
were some fairly hectic experiences with tremendous earthquakes and
the turmoil of the Mexican revolutions.
I was born in 1912. My mother, I guess, decided that I was
going to be president -- at least she came back to Trinidad,
Colorado, and 1 was born there in her old home.
Hicke: She came back specifically to --
O'Brien: For that purpose, yes, to be delivered of me. And shortly
thereafter we went back to Mexico City. That was in 1912. In 1914
the civil wars in Mexico City drove us out of Mexico. There were
soldiers stationed on the roof of the house, and we were right in
the thick of all the shot and shell and fire. My mother and the
four children left Mexico by way of Vera Cruz.
My father stayed in Mexico and had a few hair-raising
experiences of his own. Pancho Villa, for example, commandeered
all of the equipment of the Wells Fargo Express Company there --
their carts, their horses, and so on -- and when my father went out
to meet the general, Pancho Villa, he was promptly clapped in jail
in one of these railroad cars and held there. He was ultimately
marched through the streets of Mexico City on the way to be
executed when the [U.S.] State Department, in the person of William
Jennings Bryan, intervened with the Mexican government. Somehow
his release was secured and he left Mexico.
Hicke: That's an amazing story.
O'Brien: Yes.
Hicke: William Jennings Bryan was down there on a visit, or something?
O'Brien: He was Secretary of State.
Hicke: But he wasn't in Mexico City himself?
O'Brien: No, no. Some State Department messages were sent back and forth
presumably.
Hicke: And your father was representing Wells Fargo there?
O'Brien: Yes. He wanted Villa to sign some sort of receipt for all this
stuff that he had confiscated. The revolutions that swept Mexico
were really bloody revolutions. Somewhere in my papers I have some
letters that my father wrote from Mexico at the time, with his
accounts of all the contending forces.
He was not a formally educated man- -he had, I assume, a high
school education- -but he was what I would call a well-educated
man. He had read widely, he wrote excellent prose. Maybe
because he had been a railroad messenger, he wrote a beautiful
hand, very legible hand. So his accounts of those episodes in
Mexico's history were very interesting.
Hicke: That would be fascinating.
O'Brien: Yes. So then, after that, he was transferred to the Philippines.
Hicke: This is 1914, or so?
O'Brien: Yes. Right. And the four of us, four boys, and our parents
lived in Manila- -at first in the Manila Hotel. My two older
brothers --his sons, Harry and George- -were sent off to Baguio,
which is in the mountains in the Philippines, to a famous boys'
school. I think it's an Episcopal school; it may still be there.
And occasionally we'd take a train that went to Baguio and visit
them up in the mountains . But my brother and I lived very
happily as two lively, small boys in Manila.
Childhood in China
O'Brien: My family moved out of the hotel eventually. My earliest
recollections are of this lovely house in which we lived on the
Avenue Mabini. And I played in the Luneta, which was the big,
main park. And life was very pleasant and agreeable until--!
can't remember, the dates have completely escaped me- -my older
brother, John, fell off a pony. He was a little boy and tumbled
from the pony and hurt his hip, and it did not heal. The upshot
was that my family just packed up and left the Philippines, and--
he was their first born- -took him to New York, put him in
Children's Hospital, and my father and mother did nothing but
tend to him for perhaps a year or more .
We lived in East Orange, New Jersey, and they took the ferry
and train and went to the hospital every day. But none of those
things succeeded. John ultimately died in the hospital there and
is buried in East Orange, New Jersey. Maybe twenty years ago I
went to the cemetery (my mother was a Catholic; he is buried in
the Catholic cemetery) and arranged for so-called perpetual care.
In the cemetery I found his headstone, and so on. His name was
John Lapsley O'Brien, which was my mother's maiden name --her name
was Alice Lapsley; Alice Alberdine Lapsley.
Hicke: Is that Scottish?
O'Brien: Sounds to me like a manufactured name.
Hicke: Maybe. I was thinking of Aberdeen, Scotland.
O'Brien: Yes. So after his death, my father was asked by the Wells Fargo
Express to become their representative in the Far East. My two
older brothers were put in school at the Mt. Tamalpais Military
Academy in Mar in County, and my father, mother, and I moved to
Shanghai .
Hicke: You had seen a lot of the world already.
O'Brien: Yes. And we lived there until about 1921, or maybe 1922, or '23,
I've forgotten precisely. That was a happy time in my life. We
lived in a fashionable hotel in Shanghai in those days called the
Astor House, which was in the British zone. It was right on the
river. It's still there; I looked it up when Mrs. [Jeanne]
O'Brien and I were in China several years ago. And I was sent to
a famous missionary school called the Shanghai American School.
It had been established by missionaries. It was primarily a
boarding school for missionary children. Many of their parents
were in the interior of China, up the Yangtze, out of sight, and
their children were left in Shanghai at this boarding school, but
they took day pupils as well.
When I look back on it, I think my mother was very brave,
because I had started school in the Philippines in a private
school run by two very nice spinster ladies, school teachers, and
run in their private home. As I recall, there were maybe fifteen
children altogether- -all little monsters, six or seven or eight
something like that- -kind of kindergarten age. But we did pursue
the alphabet and phonics- -vowel sounds and so on. I can remember
the banners that they used to display with all of the "cos" and
"ahs."
Hicke: Well, speaking of languages, can I just interrupt? Where you
lived, did you learn the languages? Like in Mexico, did you
learn Spanish?
O'Brien: I spoke Spanish before I did English, because I had a Spanish
nursemaid. And when I was in Shanghai, I learned, I'm sure, a
very vulgar brand of rickshaw-boy Chinese. I also took Chinese
in school, however. We had a Chinese teacher, and we did
calligraphy.
I never advanced very far in that, but I could make myself
understood.
But to go back to my mother: she would walk to the corner
with me when I was on my way to school, put me on a British tram
car, and I would ride halfway across Shanghai, changing trams, and
then walk maybe a quarter of a mile on what was called Bubbling
Well Road to the site of the school. And then I would repeat that
process in the afternoon when I came home. And I never had, you
know, the slightest anxiety, except fear that I might lose my way,
until I learned it well. I guess perhaps she rode with me a couple
of times to make sure that I had it in mind, but if so, I don't
recall that.
As I became more accustomed to the routine, we used to play
games with the Chinese conductors, because it was sort of like the
cable cars except there were two of them hooked together. And when
the conductor would come to collect your fare, you would hop off
the thing and get on the back car, and then you'd get off the back
car and hop on the front. Not that that really, I think, fooled a
Chinese conductor -- to see a little foreign devil running back and
forth between one car and another. Anyway, I went to school.
Hicke: Was the expression "foreign devil" used by them?
O'Brien: No. I had a Chinese amah — nursemaid — and we had a couple of
house boys that waited on us in the hotel, took care of the
apartment and so on, and I felt great affection for them, and they
for me. I was sorely troubled when we finally parted, because they
had been wonderful, affectionate friends. I had a favorite
rickshaw boy. When I wanted to go anywhere, I would hop into his
rickshaw and be carted around the town. And I used to play on the
banks of the river. You could take a small, four-wheeled cart,
which was common sort of toy for a little boy [gestures] --
Hicke: Looks like about two feet long?
O'Brien: Yes, and walk along the river and catch, maybe, fifty turtles in
the course of afternoon -- of all sizes, little tiny ones and big
ones -- and then I'd bring them back to the hotel --
Hicke: For dinner?
O'Brien: And put 'em in the — no — in the bath tub. They were pets.
Hicke: Pets? Oh, okay.
O'Brien: And then I'd have to turn them loose. But I always kept one or two
around.
8
Well, my favorite rickshaw boy -- I remember only one episode
about him. The British zone of Shanghai was policed by these
tremendous, ferocious, Indian Sikhs in police uniforms, and they
treated the coolies, Chinese coolies, with the greatest cruelty.
For example, the big Sikh who stood in front of the Astor House
Hotel keeping order among the rickshaw coolies, carried a whip like
a riding crop, only longer, and he didn't ever hesitate to flay
those poor coolies over the back. I created quite a fuss one day,
because he slashed my rickshaw boy. I was sitting in the rickshaw,
and as he struck this poor fellow, I wrapped my umbrella around his
head. I came down on the Sikh's head.
Hicke: You whacked the Sikh?
O'Brien: Yes.
Hicke: Well, good for you.
O'Brien: Well, that was strictly verboten. I created quite a fuss, but I
was loudly applauded on all sides by the Americans who felt the
same horror at the way these poor people lived.
In those days -- if you go to Shanghai now it's all cleaned
up -- in those days the sampans were --
ft
Hicke: You were just saying the sampans were tied up on shore.
O'Brien: On the shore, and then tied up to each other, and they came
practically out to the center of the channel of the huge river
there.
Hicke: One tied to the other in a string?
O'Brien: Yes. Not in strings -- side-by-side. The poor Chinese that lived
on those sampans, many of them had never been on dry land. They
scurried around on those little sampans, which were about as big as
the top of this desk. They cooked and ate and slept and lived and
died on those little potato chips in the utmost degradation and
filth; barely keeping body and soul together. I used to look out
the window and watch the scene every day from the windows of our
apartment. The Astor House is right at one of the main bridges
that goes across the river, and on the other side of the river was
the infamous park, reserved for English people -- the Americans
were permitted to use it as well --
Hicke: Condescendingly?
O'Brien;
Hicke:
O'Brien:
Hicke:
O'Brien:
Yes, which had the sign on it, "No Dogs or Chinese Allowed." My
father, at some stage, bought me what I guess was the first pair of
roller skates ever seen in Shanghai. I learned to skate, skating
up the rather precipitous slope of this bridge and then coasting
down the other. But the bridge was lined with beggars with every
ugly, horrible sore, with every deformity — many of them self-
inflicted for the purpose of attracting sympathy, and so on -- and
I knew them all by name, because I fell so often into their arms.
They would set me up on my feet again, and I would struggle to
scramble up one side and down the other.
I was ill once or twice, rather seriously. I not surprisingly
got some sort of a paratyphoid, or something of the sort, some very
debilitating sort of disease. My parents, naturally, having lost
one child, were quite anxious about that. My mother brought me
home once or twice in the summertime to be in Southern California.
I can't help but be amused now when I see the pictures of Venice,
California, with all the skaters and hot-rodders and hot dogs and
grotesque people. In those days Ocean Park and Venice, which was
next to it, were sleepy little Southern California communities of
little, old-fashioned summer cottages. My mother and my father
would rent one of these, and my mother would bring me over to spend
the summer playing on the sand in the wonderful Southern California
sunshine. I learned to swim and to play on the beach and in the
breakers. That was great.
That was a great adventure, because it took perhaps thirty
days from Shanghai on a coal-burning ship to come to the West
Coast. You went to Japan and Hong Kong, and then set out on the
long voyage across to Hawaii. In Japan, you would stay for a few
days while they made provision for the next stage of the voyage.
And they loaded coal on these ships from huge barges full of coal.
The coal was lifted into the hold of the ship by women, many of
them with babies on their backs, handing these baskets along up
into the bowels of the ship. And then we would go to Hong Kong.
So I saw a lot of Japan. When there 'd be time enough, you
could go to Tokyo and have some pictures taken in front of the
great hotel in Tokyo built by Frank Lloyd Wright -- the Imperial,
whatever you call it. Can't think of the name of it now.
The Imperial Palace or something?
It came down in the great earthquake in Tokyo,
been replaced.
I've read about it.
Yes. The Imperial, that's the name of it.
And, of course, has
10
Hicke:
So that was a very pleasant and happy existence. My parents
were much interested in me and devoted to me, so I had lots of love
and affection.
You started to tell me about school too.
in
O'Brien: Yes. Well, we had American teachers -- missionaries, no doubt.
There was a very strenuous curriculum. I had a better education
that missionary school, I guess, than any other school I ever
attended, although I went to an excellent high school when I came
back. But there was no kidding, you were there to learn things,
and it was run very cordially but very firmly, and you were
expected to achieve something. You were not putting any beads on a
string, and you were not fooling around when you were in class. So
without really being conscious of any effort, I fell into the habit
of learning things.
Hicke: Was it enjoyable?
O'Brien: Yes. I enjoyed school. I liked it.
Hicke:
O'Brien:
They didn't make it very difficult?
No, there wasn't any great austerity or discipline or anything of
the sort. I didn't go home for lunch; I was fed in the school, and
then we had periods of play and recess, and then regular periods of
exercise and games. I learned to love to play soccer. So it was
really an excellent school. The amazing thing is that there are,
in this area, a tremendous number of people, the descendants of all
those missionaries, who attended that school at one time or
another. .As a matter of fact, they have an association. I didn't
graduate from the school. I wasn't there long enough to graduate
from the school.
Hicke: You mean in San Francisco there are a number of --
O'Brien: Oh, around the western United States, and in the East. There's a
marvelous book, an enchanting book, written by a fellow named
Espey, who attended that school. I can't think of the name of it,
but it's full of the most entertaining, delightful stories. His
father and mother were missionaries, and they lived on the other
side of the river, the other side of the tracks, if you like. He
grew up learning to speak, as his young sister did, Chinese of an
absolutely astonishing profanity. Listening to all of the Chinese
people around him, he came to have a superb repertoire of profane
Shanghaiese -- the Chinese have a gift for colorful profanity. And
this book has really delightful stories about his life and his
little sister's life in what was pretty largely a Chinese
community. They lived in a missionary compound, but their whole
life was spent among the Chinese, because their parents, bless
11
Hicke:
O'Brien:
their hearts, were trying to convert the heathen, which at this
distance seems like a ludicrous and perhaps even a melancholy way
to have to waste your life.
But it was a great school. I can think of a number of
people -- one of them comes to mind who's a good friend of mine:
Davy Napier, who graduated from that school. He became an ordained
minister himself -- a somewhat controversial chaplain at Stanford.
He was a Yale Fellow and the Master of Calhoun College at Yale; I
had a card from him just a few days ago. But the world is
sprinkled with graduates of that missionary school, which had a
marvelous, well-deserved reputation.
That's one thing they did right.
Yes, right.
Move to Oakland
O'Brien: Then I don't know what happened. Something happened in my father's
company. Whether there was a change of signals, whether he fell
out of favor, whether they began to suffer losses, or what, I don't
know, but we packed up and came back to California.
Then I don't really know, but it was the beginning of very
considerable tensions between my mother and my father. My father
seemed to be out of work and looking for things to do, and
gradually the situation got more and more acute, and finally there
was a total rupture, and he left and went off to Cuba. My mother
and I were left in a flat, in a very wretched, poor part of
Oakland -- below San Pablo Avenue -- which in those days was full
of impoverished blacks, Italians, Irish, Spanish people.
I went to school at the Durant School, which was on about 30th
and West Street, just above San Pablo Avenue, and I walked back and
forth to the school from where we lived. But my father took a
position with the Wells Fargo again in Cuba, and became, I guess,
the manager of their operations in Cuba. He was headquartered in
Camaguey, which is in central Cuba, and he and my mother
corresponded. But their relationships, at least on his side, were
rapidly changing, and he finally asked her for a divorce, which she
resisted with all her might. In the end, she and I went to Cuba;
we got on a train in Oakland, California, and went to New Orleans
by train, and caught a boat to Havana, and from Havana we got on a
train and went to Camaguey. We spent a month there while they
tried to solve their problems, unsuccessfully. Eventually they
were divorced. And so my mother and I were kind of high and dry in
a tough part of Oakland, and so life took another turn. I climbed
12
out of my Little Lord Fauntleroy clothes and turned into a street
kid that had to fend for himself.
Hicke: What a complete turnabout.
O'Brien: Yes, it was quite a turnabout. But my mother was in terrible shape
emotionally, psychologically, and I was about her last resource.
Ve were living on a shoestring, so as soon as I was able, I had to
do some things to help.
Hicke: You were still only about ten or eleven.
O'Brien: Ten, or eleven, yes, twelve. I graduated from Durant School when I
was twelve. Yes, that's right. I graduated from high school when
I was sixteen. So she and I lived there in that place. My older
brother, Harry, lived with us part of the time. My older brother,
George, who was my father's older son, went to Cuba and joined him
and worked for the Wells Fargo Express Company there.
Hicke: You started to tell me that you were going to help your mother out.
Did you get a job?
O'Brien: Oh, I did everything that a little boy could do. I mean, I sold
newspapers, and I can remember marching through the streets -- in
those days even the first crystal sets had not yet arrived --
walking through the streets at night with extras, shouting to sell
extras, and distributing programs for the local movie house, which
was on San Pablo Avenue at about 27th or 28th Street, and washing
windows, and doing, you know, all sorts of little chores that
people could afford to have done -- not much -- but I don't recall
being the least bit discouraged about life.
My mother was really in terrible shape. For a while we used
to go to the movies every night of our lives. It was before sound,
so there was this little movie house with a piano player there, and
I'm not sure she ever saw much of what was flashing on the screen,
but it kind of helped her over a tough time. I'd wake up in the
middle of the night and she'd be wandering around the house,
looking out the window, and all that business. So it was a very
hard time.
But I reveled in school, although I had to learn to take care
of myself and, as usual, there were a couple of guys that were
bigger than I was who were kind of the school bullies, who
naturally had to take me on. And I had my share of the fights.
Fortunately I was befriended by a good-sized kid.
Hicke: Oh, that's good.
13
O'Brien: But there is a certain ritual about all this. I had to stand up to
them or I would have never made it, you know. So finally we had a
regular fight. We went off the school yard to the basement of some
abandoned house and fought with gloves. And my second was my
larger friend; he made sure I didn't get clobbered with some dirty
trick. I guess, you'd call it a draw, but at least I established
my willingness to fight, so I never was bothered after that. Oh,
once I wanted to play the violin, and we somehow managed to put
together enough money to buy a three-quarter size violin, which was
my size. Naturally carrying a violin around that part of town was
not the form. So I finally busted that violin over somebody's
head, you know, in one of those kind of brawls.
Hicke: They were teasing you about the violin.
O'Brien:
Hicke:
O'Brien;
Yes, sure, and pushing me around. But I got into the swing of
things. I could take care of myself, and there were kind of street
gangs in that part of town -- little kid gangs, you know. They'd
go to a vacant lot and dig a big tunnel, and that would be kind of
like a fort. And you'd take some potatoes from home, go down
there, and build a fire, and bake potatoes. There 'd be another
gang two blocks away, and each had its turf. It was kind of an
innocent thing. The worst thing that ever happened was they threw
a few rocks at each other or something like that, but none of the
sort of big, serious, knife fights that you read about in the
papers nowadays.
What happened to these kids as they grew up?
serious gangs?
Did they form more
No, I don't have any consciousness of that, because when I got to
be just high school age, I decided that I wanted to go to Oakland
Technical High School. That was at about 41st and Broadway, and it
looked like the capital of the world as far as I was concerned.
It's a lovely old building with columns; it's quite a handsome
facade .
So by golly, we up and moved to a little flat right across the
street from the school, and in many ways that was the happiest time
of my life, because I lived right next to school. I was still
small, I was twelve years old, and I hadn't begun really to grow
up, and yet I played in the school yard,
used to play basketball in the evenings.
The industrial leagues
I got good enough to be
invited to play for one of the industrial teams, and I played with
their shirt on, you know, some plumbing company or whatever it was
in the industrial league.
School was wonderful. I had a straight one average for four
years of school, and I enjoyed it all. It wasn't very hard work,
14
except for Latin -- I got a poor start in Latin with a very nice
woman who didn't know much Latin herself.
Hicke: Oh dear.
O'Brien: But I was rescued in the second year of Latin by a very tough woman
who knew Greek and Latin, and who taught in a very old-fashioned
way. You were severely examined every day on the lessons, and your
seat in the room was switched each week. She made some sort of a
cryptic notation every time you answered a question or something,
and at the end of the week, you shifted. If you were a dunce, you
sat in the back of the room, and if you knew your stuff, you sat in
the front row.
Hicke: Oh, that's where that expression comes from, "You go to the head of
the class." Literally.
O'Brien: Right. Literally. Right. I was not about to sit in the back row,
so I began to learn some Latin.
Anyway I enjoyed that school very much, and there were some
exceptional teachers. I had at least one very exceptional teacher
when I was in this Durant School. She was a tall, gaunt, pioneer-
looking woman, with her hair done in an old-fashioned knot on the
top of her head named Henrietta M. Jones. Among most school kids
she was a terrifying sight; she was severe and blunt and so on, but
she really was a marvelous teacher.
Hicke: And what did she teach?
O'Brien: The fifth grade or the sixth grade or the seventh grade or
something like that. She told me then that I should try to be a
Rhodes scholar.
Hicke: Is that right?
O'Brien: Yes. And that school was a pretty tough school. I didn't realize
it, but the language that was being used was usually quite profane.
It didn't mean anything to me; I adopted all the words without the
slightest idea of what they meant. Apparently it was finally
reported to her that I was swearing like a Prussian trooper, and
she asked me about it. I think she was quite persuaded of my
innocence, that I really didn't know what these words meant. But
anyway, I do remember her, and I do remember being sent to the
principal once with my good friend for being sassy or something of
this sort, and he said, "I want you to be back here tomorrow
morning with this scene from Shakespeare memorized. You be Brutus
and you be Cassius, but be here at nine o'clock and recite the
whole thing." Which we did.
15
Hicke: Now that makes a lot of sense to me.
O'Brien: Does to me, too.
Hicke: I mean, it taught you something in more ways than one.
O'Brien: Yes, right. As a matter of fact, for years after that, I carried a
little, tiny edition of Julius Caesar in my pocket, and at one
time, I thought I knew the whole thing.
Hicke: Just in case?
O'Brien: Yes. But I was interested. I can still say some of the lines from
that scene. You know, that sticks in your mind like lots of tags
of memory.
Hicke: Well, that was a very good way for him to discipline, I think.
O'Brien: Right. So I graduated from high school in 1928, and I was tied
with a young girl by the name of Clarissa Young. I think she had a
perfect score, too.
Hicke: Oh, tied for the school graduating class?
O'Brien: Yes. But I was chosen as the valedictorian. We had a combined
graduation ceremony with the other Oakland high schools at the
Oakland Auditorium. I spoke -- gave the speech -- and I could just
barely be seen over the top of the lectern.
Office Boy at PM&S; E. S. Pillsbury and Alfred Sutro
O'Brien: And so that summer I worked at PM&S.
Hicke: Well, how did that come about?
O'Brien: That came about because one of the principal clients of Alfred
Sutro -- one of his favorite clients, I should say -- was the
Railway Express Agency, which was the successor of the Wells Fargo
Express. The vice president in charge of the affairs of the
Railway Express Agency in the West was the senior officer in
contact with Alfred Sutro.
tt
Hicke: The vice president was the contact?
O'Brien: He was the contact for legal matters affecting the Railway Express
Agency with Alfred Sutro, who represented them.
16
Hicke: And what was your contact with him?
O'Brien: Well, he had been a contemporary of my father's. And Mr. Graham --
his name was Clarence Graham -- and his wife were friends of my
mother. They knew we were having a tough time. So Mr. Graham
undertook to speak to Alfred Sutro, and asked him whether he needed
an office boy for the summer -- an office boy who claimed he was
going to be a lawyer, someday.
Hicke: Now have we finished that part?
O'Brien: Yes.
Hicke: Okay. Well, maybe we should get back and find out how, when, and
where you decided to become a lawyer.
O'Brien: All right. I had said that from the time I was a child, I don't
know quite why, whether I read some story, but I can remember even
in China when I used to vow I was going to be a lawyer. My father
and mother were always great when they entertained people. I was
always invited to join the festivities, at least briefly. If they
had a cocktail party, the servants always gave me a drink that
looked exactly like those that were being served to the guests.
Hicke: What fun.
O'Brien: Yes. So I somehow fastened on the idea when I was a very small boy
that I was going to be a lawyer. And I never really departed from
that notion. I thought at the beginning that that was what I
wanted to do. By age twelve I had been a caddy and a lot of other
things to earn money, so when the opportunity came to work as an
office boy in a law office -- "to polish up the handle on the big
front door" -- I --
Hicke: "Never go to sea.".
O'Brien: Yes. I accepted with alacrity.
Hicke: Did Mr. Sutro interview you?
O'Brien: No. No, I don't recall that.
Hicke: Tell me about your first day.
O'Brien: Well, I don't really remember. I can tell you a lot about the
office. There was an office manager by the name of Bill Draycott,
who was a garrulous, ineffective, good-hearted guy. The whole
office occupied just part of the nineteenth floor of 225 Bush. The
whole thing has been turned around so much it's hard to quite
Above: View from O1 Brian's house in Shanghai
with bridge, park on left.
Left: Jim O'Brien (age 8 or 9) . In front of
the old Imperial Hotel, Tokyo.
Below: The O'Brien family. Left to right:
George Fitzgerald, James E. , George Augustus,
Alice, Harry B. Ca. 1918.
17
understand, but if you get off of the elevator now at the
nineteenth floor, the entrance into the office is now right
directly in front of you. In the early days, the entrance was
where the receptionist sits now, and you walked in that door.
Hicke: This was in 1928?
O'Brien: Yes. There was a counter there, and the office, including the
bookkeeper, the telephone operator, the vault, the office boys, and
so on, was behind that counter. The telephone switchboard
consisted of a unit about this big. [gestures with hands]
Hicke: Three feet, maybe two feet?
O'Brien: Yes, two or three feet. And there was a telephone operator by the
name of Billie, who was practically a lieutenant general. She knew
everything, she knew everybody, she knew everybody's business, she
knew where everybody was, she ran a magnificent intelligence
system -- no doubt from listening in on the phone calls.
Hicke: Well, being a telephone operator was the right spot for that, I
gue s s .
O'Brien: Right, right. She sat over in one corner of the office. There was
a lineup of offices down the hall. If you begin at 1906 -- I don't
really know who's there now -- that was the beginning of the Gold
Coast, if you will, and Felix Smith sat in that office. Next to
him was Vincent Butler. Next to him was H. D. Pillsbury, then
E. S. Pillsbury. I haven't fitted Oscar Sutro in there, but it's
my recollection that he had an office on the nineteenth floor,
although he had just recently joined the Standard Oil Company as
vice president in charge of their legal affairs. Down at the very
end of the hall was Mr. Alfred Sutro. It's my recollection that
John A. Sutro had an office next to him. And Marshall Madison.
And then in the very corner was Frank D. Madison. And all of them
were in the office, busy lawyers all the time.
Mr. H. D. Pillsbury was also president of the telephone
company [Pacific Telephone & Telegraph Company] at the same, but he
was also a partner in PM&S, and he kept an office there. And
Mr. E. S. Pillsbury came to the office only rarely.
Hicke: He was already retired. I think he retired in 1923.
O'Brien: Yes. Right. But in 1928 he was still around, and when he arrived,
it was usually with an entourage of people carrying lap robes and
so on. I occasionally witnessed this arrival in those days. A big
car would pull up in front of the Standard Oil Building, and a big,
beefy, flat-footed guard, a ruddy Irishman, would run out, fling
open the door, and help Mr. Pillsbury, who would do his best to
18
evade this guy, all the time swearing at him to take his hands off
him. He didn't want to be helped. Then he would be escorted up to
the office.
I think that the old gentleman by then was getting close to
being blind. I say that because of one personal experience I had
with him. I went in his office -- I was naturally anxious to be a
good office boy and meet all the requirements of good Horatio
Algier hero — with a sharp pencil and a clean shirt and shoes
polished.
Hicke: And a smile?
O'Brien: And a smile. And so I went into his office one day to look around
for some reason, or to deliver something there, and I thought his
desk was a mess. So I put a new blotter on it, arranged it all in
a perfectly handsome way. Apparently the next day he came into the
office, led in and followed by the usual train bearers. He plunked
down in his chair. I gather he knew precisely where everything
was, because the first thing he did was to reach out and plunge his
hand in the inkwell where I had put it.
That almost was the end of my legal career.
Hicke: Oh, that's a great story.
O'Brien: I was taken to a quiet room and told not only to never change ..
his blotter again, but never to go in that room again.
I had a somewhat similar experience with Alfred Sutro.
Naturally I wanted to say to him that I was grateful to him for
having given me the job for the summer. I was very timid about all
that, and he obviously didn't know me from Adam, and he was a very
busy man.
One of the first times I went into his office, he was working
away on a draft of a brief. He had a whole handful of pencils
there, and without looking up -- so I really didn't have an
opportunity to say, "I'm James O'Brien," et cetera -- he said,
"Please sharpen these," without turning away from his work. So I
took them, and I went down the hall to the outside office. I
sharpened them and took them back, put them down where he had had
them, and marched back down the long hall.
As I marched down, I could hear -- they had a buzzer system
for the office boys, you know, every office had a number -- and as
I walked back toward the office, I could hear one buzzer that was
just going, going, and not stopping. When I got into the outside
office, they were all running around like somebody had kicked their
19
anthill, because it was Mr. Alfred Sutro's buzzer, and he
obviously was in a state. They were all kind of terrified of him
anyway .
So under the classification of "last man out, the first man
in," I was wheeled around and sent down the hall to see what was
going on. I walked in, and Alfred was sitting there with his
thumb in his mouth. Obviously he had stuck himself with one of
these pencils. He said to me, gravely, "Young man, did you think
these were surgical instruments?"
Hicke: That's a wonderful anecdote!
O'Brien: Oh, dear. So anyway, I had a very happy summer.
As for the office and the library, if you now go in the main
entrance on the nineteenth floor, turn left, and walk down about
three or four offices, the library occupied the rest of what was
then the south side of the whole nineteenth floor before they
built the new wing. The library occupied that south side of the
nineteenth floor. On the other side, there were no offices at
all. There was a big bay, and the office boys used to repair to
that big open room to play catch. There were two or three
characters among those office boys.
Hicke: Do you recall any of their names, or any stories about them?
O'Brien: There was a fellow named Jerry, who was a big, round fellow with
kind of a butch haircut, pear-shaped, heavy, horn-rimmed glasses-
- really kind of an entertaining fellow. There was another one,
whose name I can't remember, who really had a checkered career in
the office. He was given the job of taking care of some of Mr.
Smith's private affairs, and I think he made off with a lot of
loot.
Hicke: Oh, dear.
O'Brien: In addition, Mr. Pillsbury had a tall, slender fellow, who was
kind of his personal assistant; I've forgotten his name now. And
then there was a whole string of lawyers: Mr. Smith was in 1906,
and then there was a string of lawyers down the hall. Woodson
Spurlock--
Hicke: He was an associate then?
O'Brien: He was an associate. He was a Rhodes scholar from Iowa. A very
deliberate speaker, a very low-key fellow, worked principally on
Standard of California affairs. There was Henry Hayes, who was a
brilliant lawyer; a little man, perhaps five feet two or three. I
came to know him well as a lawyer, and we worked together a good
deal; I was very fond of him. He did not have a successful career
in the firm, although he was very gifted. Next to him was a man
20
named Renato Capocelli, who spoke with such a marked Italian accent
that it was very difficult to understand him, until you really got
clued in. He was an absolutely eighteenth century gentleman. He
did primarily land work on Standard's oil and gas leases. There
was a fellow named Dave Mannoccir, a big, tall, handsome guy. He
didn't stay around very long. And a fellow named Garry Owen. That
was about it, as I remember.
Summer Work in PM&S Library; Gerry Levin, Vincent Butler
O'Brien: Twice after that summer — I can't remember whether it was during
law school or whether it was during college -- but I worked in the
library. Gerry Levin was the librarian. He went on to have a very
fine career as a lawyer and federal judge. It was quite out of
bounds, I think, before then for anybody that had ever worked as
part of the help, if you like, to be hired as a lawyer. I think
that Gerry Levin was probably the first exception to that, and I
was perhaps the second. I don't know that there was any rule about
that, but it normally just didn't happen.
Gerry Levin was a great favorite of mine, and he became
president of the San Francisco Bar Association. He was a man of
great good instincts who did a tremendous amount of good in various
civic organizations in San Francisco. I was just enormously
pleased and did whatever I could to help in his appointment as a
federal district judge in San Francisco, where again he made a fine
reputation, fine career.
Anyhow, I worked as an office boy in '28. Then I worked in
the library at least one summer. I can't remember whether I did
anything else.
Hicke: Do you happen to recall how much you were paid?
O'Brien: It would be about $60 a month, I guess, because I made $100 a month
when I began to practice as a lawyer in 1935.
In 1930, Vincent Butler, also a Rhodes scholar, was then the
youngest partner. The partners were all family members except
Felix Smith, Gene Prince, and Vincent Butler. I think he had gone
to Galileo High School, University of San Francisco, and was a
Rhodes scholar.
Hicke: I'm just going to flip through here and see when he became a
partner.
O'Brien: I'd be interested if you have your list there.
21
Hicke: Yes, I do. Let me just put this on hold.1
a
O'Brien: It must have been during law school when I met him, the summer
that I was here. And I showed you that book I had, written
shortly after his death.
Hicke: Right.
O'Brien: And a letter written to Eddie O'Day by Alfred Sutro shortly after
Vincent's death. Let me just take a look- -I can see that book
from here, I think. [goes to bookcase]
a
Hicke: You have the letter there that was written about Vincent Butler
in 1935.
O'Brien: Well, Alfred says, "This is a letter which Mr. Butler dictated
and intended to sign on his return, but he was killed." He
dictated it on the fifth, and Alfred sent it to Eddie O'Day on
the seventh. So that must have been about the time that Vincent
was killed.2
When they built the new building, the new wing, I was given
the job of redesigning the entire firm's space. We moved the
library down to the fourth floor, and I created typing pools,
which were highly unpopular, and which after ten years or so were
finally abandoned--! think some time after I had left the firm.
Hicke: Okay. Well, maybe we can get to that next time.
* * *
O'Brien: Yes. I had a wonderful secretary in mind, who had been on the
night force, Jean Lejeal--she was kind of a famous character in
her own right. Her father came out of the coal mines in Montana.
She had a very tough time .
1 Butler joined the firm in 1930, probably as a partner, since he
had been practicing law since 1914.
2 Butler was killed on October 7, 1935.
22
Education at University of California and Part-Time Vork
[Interview 2: January 20, 1987 ]#/
Hicke: I wonder if we could just start this morning with something about
the life and times of 1928, when you entered the University of
California.
O'Brien: Well, I've explained something about my personal background, the
struggle my mother and I had to keep upright, and when I entered
the University of California in 1928 I was sixteen years old;
already I had had a lot of miscellaneous, part-time jobs, and it
was evident that I was going to have to work to stay in the
university. I'd had a pretty fair high school record, but I felt
some anxiety about the prospect of college. First, I was a little
young, and the difference of two or three years at that age was
considerable. I decided to become an economics major and enrolled
in the beginning courses in economics.
Berkeley had a famous professor of economics who taught the
beginning courses. His name was Ira B. Cross.
Hicke: He wrote at least one famous book that I know of.
O'Brien: Banking in California. And he was an extremely entertaining and
gifted lecturer. Several years later, I felt that perhaps I had
selected the wrong major, because as I grew two or three years
older, my interests were more seriously engaged by English courses,
poetry, and the like. I enrolled in naval R.O.T.C. [Reserve
Officers Training Corps] but quickly discovered that the classes
would be held at a time of day which would interfere with my
working in the afternoons and evenings. So I had to go to the head
of naval R.O.T.C. and plead to have my "enlistment" torn up.
Hicke: Oh, dear.
O'Brien: That gentleman was Chester Nimitz. I often have thought of that
episode, because you wouldn't think it possible that the leading
admiral of World War II, responsible for the conduct of naval
operations throughout the world, could have been washed up on the
beach as the head of naval R.O.T.C. at Berkeley in 1928. I guess
it says something about his naval discipline; despite that
assignment, he continued to study and read and take courses and
hang in there until the day that events brought him to the pinnacle
of naval operations.
23
Anyhow, at or about that time I succeeded in getting a job
working at the 16th Street Depot in Oakland as a freight handler.
So I had to leave the campus around three o'clock every day to get
to my job at the 16th Street Depot.
Hicke: That was a fair distance.
O'Brien: Yes. The job went on at least four hours every day, and I earned
50 cents an hour, so I made about $50 or $60 a month, which was
quite a lot; it managed to pay my way. I started out as what they
call a sticker boy. In those days, on the big, long, drafty
platform, covered with boxes, two teams of billers, callers, and
stickers billed all the freight on the platform. It was thereafter
segregated and put on carts and sent off on the right trains.
My particular pals there were Buck Sawyer and Art Hanson. Art
Hanson ultimately became a policeman in Oakland, and Buck Sawyer
was a college student with me and became president of a San
Francisco insurance company. As I grew more experienced, we took
turns in writing up waybills, calling the freight, and sticking the
waybills on the packages and moving them across the platform
scales. And, over time, we became the fastest guns in the West.
We would clean the whole warehouse of all of the outgoing freight
in two hours instead of four hours. And, with the indulgence of
our Irish foreman, a ruddy-faced mick with the broadest Irish
accent imaginable, we were permitted to tiptoe out of the warehouse
and go our ways, and he would punch out our time cards.
Hicke: Oh, well, good for him.
O'Brien: I tried, as an undergraduate, to keep an A average in my major,
which I pretty largely did. At the end of the first semester, I
won a so-called Kraft prize, which I think was related to getting
one of the highest set of grades as a freshman. I don't think it
was a single prize; I think there were a number of such prizes.
That honorarium amounted to $50.
Hicke: Oh, that was nice.
O'Brien: Yes. Anyway, I was not able to keep the job, which was a perfect
one for a schoolboy, although it involved a lot of hard work and
cut into my study and social life. Because the Depression got
worse and worse, finally expressmen with years of seniority were
compelled to bump me off my job to keep working at all. I was
bounced off that job and in pretty desperate shape, doing odd jobs
at the university, hazing the books around in the library, working
in the registrar's office, washing windows, and a whole variety of
such chores. A classmate of mine, with whom I had gone to grammar
school and high school, by the name of Kerwin Rooney, found us a
24
job selling newspapers at the auto ferry in Oakland. We wore an
S. P. butcher boys cap, and we had the --
Hicke: "S. P." for Southern Pacific?
O'Brien: -- yes -- sole concession for selling newspapers to people in
automobiles who were waiting to get on the auto ferry.
Hicke: You went up and down the line?
O'Brien: So we walked up and down the line. I made more money at that than
I did as a freight handler.
I had a lot of other jobs of no great importance. I have no
great pride in my undergraduate record. I should 've been Phi Beta
Kappa, but as a sixteen-year-old, a seventeen-year-old, and
eighteen-year-old, I suddenly began to grow up to be six feet, one
inch tall and became preoccupied with other interests in life. So
I graduated with no great distinction and immediately went on to
law school.
Law School
O'Brien: I had been saying that I'd be a lawyer since I was seven, eight, or
nine, and it never occurred to me to reexamine that decision.
Obviously, given the times, it was evident even to a youngster that
unless I succeeded in getting an education, being qualified in a
profession, I might be stuck as a freight handler for life. And so
it was apparent that the only way to fame and fortune was to get to
law school, get a degree, get admitted, and hopefully get out of
that economic rut. I knew I wasn't going to be satisfied with that
lot in life, and law school was the answer. It was inexpensive in
k those days, and there were no particular qualifications except a
college degree. And so in the fall of 1932 I began the great
adventure.
Hicke: There were no grade qualifications?
O'Brien: I don't recall that there were any.
Hicke: No tests to take?
O'Brien: I think we submitted our college transcripts, but I'm not even sure
of that. We may have only submitted our college diplomas. There
were about -- it's a guess now -- approximately a hundred in my
class when we started. Most of the people in the class were in the
same predicament that I was; we were all pretty impoverished and
25
penniless, and by then -- of course, we had had the crash in 1929,
and the Depression got worse and worse and deeper and deeper, and
we hadn't really begun to emerge in 1932.
Hicke: Did most of those hundred make it all the way through?
O'Brien: Most of them did. You know the classic story: "Look at the fellow
on your left, look at the fellow on your right, one of you is going
to be gone." And there was certainly some attrition. The
attrition, I think, was in part a problem of grades, but it was
probably at least equally the result of an inability to put
together enough money to stay in school, to support yourself. So a
lot of people dropped out, I think, because life was just too
strenuous, and they couldn't make it.
Hicke: Sure.
O'Brien: I remember a dear friend of mine who arrived at law school; he had
hitchhiked all the way from Southern California. He had just the
clothes that he had on his back, a big hole in the elbow of his
sweater, and he had the $25 that it took to register. Then he
walked down Telegraph Avenue and got a job, as he described it, as
a pearl diver, i.e., washing dishes in a restaurant.
Oh, people had every kind of job. There was one fellow who
was a conductor on the streetcar. He used to arrive in class with
his conductor's hat on. It had very little resemblance to the
school now, or to what you might call the Ivy League schools.
The leading scholar in the class, Richard Barrett, became a
very dear friend of mine. He was number one in our class in law
school. He was a minister's son, and he and I became very close
friends. After I was married and working at PM&S, he became the
law clerk to Judge Denman in the Ninth Circuit Court of Appeal. He
fell in love with a Mills girl, who was a friend of my wife, Mary
Louise.
Hicke: From Mills College?
O'Brien: Yes. We put on the wedding reception for Richard Barrett and his
wife .
The faculty at the University of California Law School was
quite extraordinary in 1932. There were a number of nationally
recognized scholars on the faculty. Orrin Kip McMurray was the
Dean, George Costigan, Dudley McGovney, Max Radin, who was aced out
of being appointed to the Supreme Court of California, Charles
Ferrier, who taught Property, "Pat" McBaine -- Turner McBaine's
father -- who taught Procedure, Evidence, and Common-Law Pleading,
a course which I assume has vanished from the present curriculum.
26
The extraordinary thing to me was that having said for all
those years that I was going to be a lawyer, I was very
disenchanted with the whole exercise.
Hicke: Oh, really?
O'Brien: I don't know what I expected, or should have expected, but it
seemed like a highly confused operation. The Socratic Method,
while it might have stretched your mind, led to no particular
conclusions, which I found unpleasant.
Hicke: They just questioned you, and you sort of discussed things and --
O'Brien: It was sort of a give and take, and so on. You never really came
to a conclusion where you recognized the one and single principle
or rule which was to govern; it was kind of left in the middle of
the air. Maybe it was my need to have something that you could
really take a grip on, rather than just the process of looking at
some proposition from forty different sides and then going on to
the next case.
In any event, I was a little scared at first. I worked pretty
hard. Then, as I say, I got a little disaffected with the whole
thing, but at the end of the first year, I wound up as number five
in the class, so I thought to myself I must be doing something
right.
Hicke: Right.
O'Brien: So I thought, well now if I really begin to work at it and study
instead of complaining about it, I ought to be able to really ring
the gong. So I worked like a galley slave the second year, and
fell to about number twelve.
Hicke: Oh, no.
O'Brien: I knew too much. I'd read all of the law review articles that were
cited in the footnotes, et cetera, et cetera. I was overloaded
like a computer. So the third year I got a little better balance
into it, and I think wound up about ten or eleven, somewhere along
in there.
But it was a remarkable faculty, and I got a fine legal
education. I, again, did various chores. I prepared the syllabi
for Professor [Barbara] Armstrong's undergraduate courses. She
taught a number of courses, undergraduate courses in family law,
and I collected the cases in each state in the western states that
illustrated the points that she was trying to teach. I did a
little legal research to put those together. And then I acted as
27
Hicke:
O'Brien:
Hicke:
the reader in the courses and corrected some of the papers and did
things of that sort. I was very fond of her. I admired her and
she was a bright, able, intelligent, dynamic woman, with strong
convictions on most subjects, and snapping brown eyes, stood erect,
and was quite a figure.
But I also had great affection for George Costigan and
"Captain" [Alexander M.] Kidd and others. It was interesting to
me, because I don't really think Kidd was much of a teacher, but he
was a character, and a beloved character. He was a man with an
explosive temper and sort of frightened his classes because he was
so explosive. He would ask a question, and then put his hand out,
look around the room and fasten on some unfortunate student,
propound his question, and if he didn't like the answer -- if he
thought it was stupid or irrelevant -- he sometimes would take his
green eyeshade, which he wore, and pull it right down over his
face, around his neck, bundle up all his papers, and stamp out of
the room. These fireworks were always a great time.
It's an interesting thing: a year ago I arranged for the
fiftieth reunion of my law school class. We held it at Yosemite
[National Park] for two days, and we had a considerable turnout.
People came from as far away as Washington and Tennessee, with
wives and companions, and in many cases with children and
grandchildren. The university got us a block of rooms at the
Ahwanee [Hotel]. We didn't have any pomp and circumstance. We had
one big reunion dinner, and we had lunches. In the daytime people
could go their own way.
I asked everybody in the class to send me a biographical
statement of the sort that I had them produce ten years before at
the fortieth reunion of my class, and to supply pictures. One of
the questions I asked them was, "What professors did you like the
best?" And almost everyone listed Kidd, despite his fierce aspect,
along with others.
That is interesting.
But he showed up on nearly everyone's list. I don't know the
present faculty. No doubt they have very great distinction. I'm
certain that that's true of the dean and many others. But the
faculty was much smaller; the courses were more traditional. This
was not the day of environmental law or securities law and so on;
it was kind of novel that they gave a course in taxation, taught by
Roger Traynor, who became chief justice of the State Supreme Court
of California and led a very distinguished court in his time.
Yes, that is unusual. I don't think there was too much
specialization in those days.
28
O'Brien: No. There was a brilliant professor, whom I vastly enjoyed, who
taught part- time. He also practiced in San Francisco with some
firm, and I can't think of his full name- -his last name was
Haynes. He taught Equity, which was a course that particularly
fascinated me. I thought he taught it brilliantly; that was a
course I just relished.
One summer in there, and maybe even two summers, I can't
really remember, I also worked in the PM&S library. I was the
summer librarian, I guess, and I hazed books around there, put
them back, found things for people. And I was doing some sort of
a job in the law school for the professor who taught legal
bibliography. I fancied that I knew a lot about how to look up
legal problems and how to use all the tools of the trade , and
particularly after a couple of summers and using all the indices
and working with all this material, I thought I was pretty hot
shot at looking up the law and getting into the cases from
various directions in which it could be done. This was long, of
course, before computers or anything of that sort.
I had some very dear and exceptional friends in that class .
I can't mention them all. I've mentioned Dick Barrett. I'll
mention just one other: Lawrence Parma, who came from Santa
Barbara. He was a very good student in law school- -must have
been number three or four in our class . He had very poor
eyesight, wore--
O'Brien: --heavy glasses, and he used to hold his book right up to his
nose to see. He ate up the law; he was good. We had lots of
entertaining experiences in law school, because he and I and a
couple of other people would take turns briefing the cases that
we were supposed to be reading and reporting on, so that if we
were suddenly braced in class we would have a brief of the case,
whether we'd read it or not. Most people took that
responsibility seriously, because in turn you would be reading
somebody else's brief, and you didn't want a bum piece of paper
and one that hadn't been the result of thought and care.
We would type these briefs, and then each fellow got his
copies, so he'd have it in his notebook if he was suddenly
attacked. Parma had a puckish sense of humor, and he would write
the brief and the holding of the court, reciting the facts in a
perfectly lucid style. But then gradually it would begin to lead
you into some cul-de-sac. Before you knew it you were well
launched into this recitation, with a horrifying conclusion. Oh,
we had lots of fun.
There is a famous lawyer in Los Angeles named Raoul Magana.
Magana I met sometime between high school and college. I met him
29
at a party in Berkeley, and he had just won the California
Shakespearean contest for high school students. He is dark, big,
lovely features, and full of mischief. He was a real character in
law school.
Hicke: Was he Othello in Shakespeare?
O'Brien: Yes. When he was supposed to be in class, he would be down
wrestling in the gym or something. But he was so gifted that he
got through law school and went on to become an enormously
successful personal injury lawyer. In Southern California, he has
taken a terrible toll on the railroads and everybody else in sight.
And he and I've remained good friends over all those years. But we
had great fun in law school. He and two or three other fellows,
Parma, and Everett Matthews, who also worked with PM&S, and a
friend of mine who was a great success as a personal injury lawyer
in Oakland, whom I've known from high school days, Charlie McLeod,
used to bum around a lot together in law school.
I'll give you a typical example of Magana. The first course
we had was legal bibliography, which was given by the librarian in
the school whose name was Rose Parma. She was a distant relative
of my friend Lawrence Parma. So the M's -- McLeod, Matthews,
Parma, and O'Brien -- all sat pretty close together, with Magana
well sandwiched in. And I knew that Raoul had one of those acts
where he'd play the poor Chicano, you know, speaking broken
English.
Miss Parma decided that the best way to come to know each
student in the class was to have each to stand up in turn -- and we
were seated alphabetically -- and read a paragraph or two out of
this book on legal bibliography. That would help fix in her mind
the face and the name. As the days wore on in this class, two or
three of us kept working on Raoul that when his turn came, he
should read his paragraph in Chicano. He was the guy who had won
the Shakespeare contest in the state of California. Sure enough,
when his turn came, he stood up and read in a broken Mexican-
English dialect. Everybody in class absolutely roared, you know.
He was the most articulate man around town.
Hicke: Oh, that's wonderful.
O'Brien: She thought that we were laughing at this poor Mexican. She was
horrified and indignant. You could imagine how she felt when she
discovered this charade. She nearly went into orbit.
Well, enough of that.
30
II PM&S: THE EARLY YEARS- -1930s
Joining the Firm
O'Brien: So I was reading these courses at the time I graduated, and in the
meantime I had applied for a job at PM&S. I was interviewed by
Jack Sutro, who had just become a partner that year.
Hicke: This was 1935?
O'Brien: Yes, 1935. And also by Felix Smith. Felix Smith was -- I'll come
to him in due course, but he had an office in the northwest corner
of the 19th floor, 1906. You go in the entrance and turn right and
go to the door at the end of the hall; that is 1906. Those offices
came to be known in my days as the "Gold Coast." He interviewed me
briefly.
As I've mentioned, it was something of rule, I'm sure, that
people who had worked in the firm as hired hands would not be
employed as lawyers. There was kind of a sense of that, at least.
Anyway, Mr. Smith said to me -- a very brief interview -- "I hear
you've graduated." He knew me, because I'd worked here in the
summer, both as an office boy and later in the library. He said,
"How are your grades?" And I said, "Well, I think I was number
twelve," or something like that. And he said, "That sounds fine.
Why don't you come to work?" So I started the next day.
I was still reading courses. Had to do all the blue books,
you know, had mounds of blue books to read, but I managed to do
those at night. Jobs were few and far between. I think in my
class -- it may not be exactly right, but this is near the fact --
of approximately seventy graduating from Boalt Hall in 1935, only
ten or eleven of us found paying jobs.
Hicke: Oh, wait a minute. Ten or eleven found jobs?
31
O'Brien: That paid any money. Most people had to take desk space in some
older lawyer's office, and depend on working for him, and accept
such small cases as he might give them to handle, and do various
chores of that sort to get established. PM&S, on the other hand,
paid me the princely wage of $100 a month, which was the starting
salary for everyone, I assume.
A few days before I was hired, Fred Hawkins had been hired,
and at or about the same time I was hired, Stanley Madden came to
work, and Marcus Stanton. Hawkins had graduated a year earlier
from Stanford Law School and had been teaching night law school
somewhere -- I guess Golden Gate [University] . Madden had
graduated from Stanford, and Marc Stanton had graduated from
Harvard [Law School] and come to California, and married that
summer.
Hicke:
O'Brien:
Hicke:
O'Brien:
Was there some reason why four people were taken on?
like quite a few, or was that normal?
That seems
That was a vast expansion; for the firm suddenly to hire four
people was quite extraordinary. I guess that there must have been
a growth in their business. In any event, we all worked like
beavers that summer. I found it a little hard to get my footing.
I worked for Jack Sutro briefly, but then I began to work for Felix
Smith principally.
You were a roadman first, is that right?
No. Not immediately.
Learning the Ropes; Methods of Felix Smith
O'Brien: I remember having considerable difficulty with Felix Smith, because
his idea of teaching the practice of law was to make you walk the
plank. He normally neglected to tell you much about the background
of the problem or the people, and sometimes I would walk out of his
room shell-shocked, not really knowing even what file to call for.
But there were a number of his associates down the hall who were
extremely helpful to a young, unpracticed associate.
Hicke: Did he do this purposefully, or was he just too busy to explain?
O'Brien: He was too busy. But he did expect you to handle the whole thing,
to go ahead and do it. He didn't expect you to do little memoranda
and shove them through a wicket; he wanted you to take charge and
32
do whatever was necessary and get it done, which was kind of
terrifying.
That summer was a very strenuous time, because everybody in my
class was studying like mad for the bar examination. And I,
instead, was working like a beaver to get a foothold at PM&S.
Occasionally at night I would go out to the library at Boalt Hall
and see all my friends, who were in studying all day and all night,
and taking the Witkin course -- doing a systematic job of preparing
themselves for the bar examination.
As the summer wore on, I finally got my wind up, got really
frightened about what would happen, because in those days there was
no thought that you could continue to be employed by PM&S if you
didn't pass the bar. So one day about two weeks before the bar
examination, I went to see Mr. Smith and said that I'd like to take
ten days off. He looked at me in astonishment.
Hicke: Raised his eyebrows?
O'Brien: Yes, and said, "Why?" since I had only recently gone to work. I
said, "Well, I think I need the time to study for the bar." He
looked at me with the greatest scorn, and said, "Well, if you'd
asked for the time to go fishing, that I could've let you have."
Well, he was kidding, I hoped.
In any event, I got the time off, and I read my notes morning,
noon, and night, and I went through the harrowing experience of the
bar examination. And at the end of the day, I left it sort of be
numbed, without any idea whether I had really done well or poorly.
We all walked over together — Hawkins, Madden, O'Brien and
Stanton -- the day it was announced that the bar examination
results were available at the state bar office. We all marched
over there in a body.
Three of us had passed, but Marc Stanton had not, which was a
great sadness. He was a brilliant fellow, unusual man, very gifted
with his hands -- he was a cabinet maker, and so on, and I think he
was pretty well fixed financially. Failing the examination was the
not unusual consequence of a Harvard Law School background, without
sufficient preparation for questions on the bar examination dealing
with California procedure, evidence, community property, and
subjects like that. Marc had recently married, was looking for a
place to live, or to buy, and so on -- lots of preoccupations. He
passed it readily enough the next time, but he decided not to stay
with the firm, perhaps in part because of that unfortunate
experience, and I guess it just turned out that it really was not
his dish of tea to practice in a big law firm like this. He went
to Napa County and practiced happily and successfully there.
33
I should add one
When I went there
d like to see the
Hicke: As an individual practitioner?
O'Brien: Yes. So that was the beginning of the exercise,
thing: the firm was much smaller in those days,
as a lawyer, there were maybe twenty lawyers. I1
roster someday, just as a matter of interest.
Hicke: Yes. I would, too.
O'Brien: It wasn't, therefore, nearly as structured as it is today. We were
not divided into "litigation" groups, or "securities," or so on.
There were people who specialized in things of that sort -- the
trial lawyers -- but they were a corporal's guard compared to the
total number of partners and associates now devoted to the firm's
enormous litigating practice. And there were two or three people
who did a lot of securities work. There was a marvelous lawyer who
never became a partner in the firm, who was probably the most
learned securities lawyer in town, Charles Ruggles, who was very
good to me. He and I became dear friends. He was old enough to be
my father, and we worked happily together on all kinds of
securities problems.
And so, I think, instead of selecting an area of the law in
which one chose to become a specialist, certainly my ambition and I
think the ambition of most of us was to be a general practitioner.
You hoped to become a sufficiently well-rounded lawyer to be a
general counsel to a large corporate client, and to handle trial
work and to be able to handle estate work and know something about
tax, and so on. So I consciously made an effort to work for
everybody and ricocheted around the office, taking on jobs from one
person or another. Sometimes that was a little disastrous, because
two or three people might suddenly be on your back for the answer
or a memorandum or whatever.
Hicke: Nobody kept track of what you did except you?
O'Brien: Well, you had a primary assignment to a partner. We were made up
of informal teams. But people borrowed each other's associates,
and things would come along that were of a particular interest, or
some minor crisis, and you would take off your coat and work on
that along with other things. So for the first seven years of my
practice, until I got to be a fairly senior associate and the war
intervened, I had a practice that kind of covered the waterfront.
Hicke: About that time there were a lot of new regulations coming out of
the New Deal.
O'Brien: Right.
34
Hicke: How did that affect the firm?
O'Brien: Well, one of the first things that happened to me was that with the
Depression, Mr. Frank Madison — very senior, very dignified, very
nice, very grave -- said to me that he anticipated that we would
have some clients who would find themselves in financial
difficulty, and that I should make it my business to become the
firm's expert in corporate reorganization. The bankruptcy law had
just been amended, as you say, in those days to provide for
corporate reorganizations. It was called -- I don't know what it's
called now, but in those days it was called a Section 77 (b)
reorganization. So you didn't go bankrupt; you went into
reorganization .
So one of the things I did was to read every case in the
Bankruptcy Commerce Clearing House service, and brief it, and try
to keep myself abreast of every development in the field of
corporate reorganization. I recall once that Felix Smith was sent
a rocket by the Chase Bank, which was the trustee under a major
bond issue, seeking to intervene in the corporate reorganization of
the Western Pacific [Railroad], which was in bankruptcy proceedings
under Section 77 (b). The Chase Bank wished to intervene to
participate in the negotiations of the reorganization.
Felix Smith called me in one afternoon about three o'clock and
said, "Here, I have this letter from the Chase" -- about that thick
[gestures with hands] --
Hicke: About two inches?
O'Brien: "And here is this petition for intervention in the bankruptcy
proceeding." [gestures with hands]
Hicke: About eight inches high?
O'Brien: Yes, with a lot of exhibits and bond indentures and all of the rest
of it, and there were about seven or eight parties to this
proceeding already. And he said, "Chase wants to have this heard
by next Monday." It was some critical date. So he said, "Take
care of it . "
I looked at that stuff, and it became evident to me that I had
to get an order shortening time, because normally a motion in
federal court took five days' notice, and we didn't have five days
left. The only person who could give me that order shortening time
was the senior federal district judge. So I got in a taxicab and
roared out with all these papers.
He was in the middle of a jury trial, but fortunately I had
made a good friend of his courtroom clerk. Given my knowing him, I
35
Hicke:
O'Brien:
Hicke:
O'Brien:
O'Brien:
whispered to him about the urgency of this whole thing. He
whispered to the judge, and the judge looked very -- he was kind of
an irascible old guy anyhow -- he looked a little upset, but he
finally interrupted the proceedings long enough for me to make my
very short presentation to ask him for this order shortening in
time, and asked that the petition be heard on the following Monday,
et cetera.
He said, "I'll do that, providing that you serve copies of all
this material on all the other parties in interest today."
It must have been already five p.m.
Yes. I sped around town in a taxicab, and got everybody served and
their acknowledgment of service. When the whole thing was done, I
brought it back to Felix, and he said, "Thank you."
And then there was this long letter from the Chase Bank saying
that "we'd like to have your opinion on this and that," -- all
sorts of the most esoteric and obscure questions of bankruptcy law.
Felix said, "I'll answer that." So he buzzed on his buzzer, and in
came Aggie Steel, his long-time secretary, and he said, "Miss
Steel, take this letter." And he said, "Dear Sir, I received your
letter" -- he could write the shortest, most lucid, Anglo-Saxon
prose I've ever read -- "We received your letter. The petition for
intervention of bankruptcy has been filed and will be heard on
Monday. Paragraph. You ask my opinion on a variety of questions.
In my view, this is the time for masterly inactivity. Yours truly,
Felix Smith. "
Oh, that's incredible.
I should tell you another thing about him, and then we'll stop. He
was the general counsel of the Standard Oil Company, and he ran
that job on the old army system. When Standard Oil Company wanted
an answer to a question, they would send him a memorandum in two
copies. No matter how complicated, he would go through it and put
an asterisk where there were questions in the course of a long
memorandum. And then he would answer the memorandum at the end of
the page: "Yes," "No," "Maybe," "I doubt it," "Felix Smith." And
we all dealt with the Standard Oil problems that way.
Or if you had to write a longer memorandum, you sent it in to
Felix
ft
--in two copies -- his copy, and the one that was going forward,
written on the original memorandum that had been sent up to him,
with such additional pages as you might have to add to that if you
36
had a longer answer than there was space available at the foot of
the page. At the end of the day, he had a stack of correspondence
that high [gestures with his hands], because he signed every letter
that went to the company.
Hicke: And did he read everything?
O'Brien: Yes. His stack would maybe be two feet tall, and he'd sit there
and read the answers and sign it, and if he didn't like it, he'd
throw it on the side and call you in to discuss the thing.
Otherwise, he signed out his mail at the end of the day, and that
was the way the business was conducted.
Now, nobody could do that nowadays. Nobody could handle the
volume of it. But quite apart from that, nobody would quite
tolerate his "yes" "no" answers.
Hicke: Yes. Who was the president -- he was dealing with the president of
Socal at that time?
O'Brien: Everybody else of the company, too, but mostly with the top level
people. I guess in the early part of his regime, there would have
been a brief period after Oscar Sutro's death when Mr. [Kenneth]
Kingsbury was probably still president; after that it would have
been Harry [H. D.] Collier.
Well, Felix did things like that. I got to know him very well
indeed, because of these cases, the briefs of which are there: the
glass cases, so-called.
Once in the middle of those glass cases, when I was preparing
them for trial, he dropped into my office one afternoon, which was
then down the hall on the nineteenth floor. He sat down at my desk
with his hat cocked on the back of his head, and he said, "You know
what tomorrow is?" I said, "No, sir." He said, "Tomorrow is the
day I leave for a month's vacation."
He owned a beautiful lake back of Truckee, about thirty miles
over a corduroy road, called Frog Lake. His children still own
it -- his sons Felix and Nathan and Lawrence. I visited there once
or twice. He said, "I've just heard this afternoon from my good
client, Standard Oil Company of California, that there's a
deputation from Dillon, Reed arriving in the morning. The company
is going to put out a $50 million debenture issue." He said, "Al
Tanner," a young partner in the firm who specialized in securities
work, "Al's out of town. So you take care of that, will you?"
Hicke: There wasn't going to be any way to contact him to ask him
questions at Frog Lake, was there?
37
O'Brien: No. Once in the middle of the thing though -- which is a great
horror story, although I finally got it done, with a lot of heavy
lifting -- some emergency in the glass case came up, and I needed
to go talk to him. He said, "Okay, come on up," so I took the
train to Truckee. He met me. We drove over this corduroy road, I
stayed overnight, we went trout fishing off a boat, and he
absolutely refused to talk about anything to do with the glass
case. He took me back to the train, and I came home no wiser than
when I'd left.
Other Partners; H. D. Pillsbury, Frank Madison, Alfred Sutro,
Oscar Sutro, Vincent Butler, More About Felix Smith
[Interview 3: January 26, 1987 ]ti
Hicke: We have just finished talking about Felix Smith, and I wonder if
this morning you could tell me a little bit more about some of the
other early partners?
O'Brien: Well, as you know, the firm was started by E. S. Pillsbury. Frank
Madison, Alfred Sutro, and Oscar Sutro became associates of his,
and by the time I arrived on the scene in 1928 as an office boy,
Mr. Pillsbury had almost ceased to come to the office, although, as
I told you in an earlier session, he did appear occasionally,
usually followed by a number of train-bearers. He never stayed
very long.
His son, H. D. Pillsbury, I believe at that time was not only
a senior partner in Pillsbury, Madison & Sutro, but president of
the telephone company. And so a fair share of his time was spent
out of the office.
Mr. Frank Madison was a distinguished gentleman, quiet,
dignified. I saw him that early summer, and he continued to be in
the firm when I first became an associate, because I recall his
asking me to become the firm's expert on corporate
reorganizations -- having in mind that we were still in or perhaps
just beginning to emerge from the Depression of the early '30s.
Alfred Sutro was an eighteenth century gentleman. He wore a
rather tall collar, he was the soul of courtesy, he conducted a
personal correspondence with other gentlemen in a way that you
might have expected to see among the Edwardians. He was an
extraordinarily gifted lawyer. By the time I came to know him, he
was getting on in years, somewhat nervous and preoccupied. He was
an eminent book collector. He had a marvelous library of fine
38
books and fine letter press printing. He had been the guiding star
of The Book Club of California for a very long time.
Hicke: Do you happen to know what became of his book collection?
O'Brien: No, I don't.
Hicke: I think he donated it to someplace.
O'Brien: Well, I know that John Sutro, his son, very generously gave a
considerable number of books to The Bancroft Library and some to
Stanford University, but I don't know whether that constituted the
bulk of his library.
Oscar Sutro was a tall, dignified, impressive gentleman, with
a delightful smile and a wonderful way of dealing with his
subordinates -- both the attorneys that worked around him and the
hired hands. He had a very considerable reputation as a trial
lawyer, and while I've forgotten the details now, there were in
those days tales about some of his great courtroom clashes with
Garret McEnerney and other eminent trial lawyers in San Francisco.
It was said that whenever he and some of these others were in a
heavy trial, it was standing room only in federal and state courts.
And there are records of some of the famous cases which he tried
and won -- jury cases -- and many apocryphal stories about his
courtroom presence and some of the great cross-examinations he
conducted.
When I first became acquainted with the firm in 1928, I
believe the partnership consisted of E. S. Pillsbury, Frank
Madison, Alfred Sutro, H. D. Pillsbury, Oscar Sutro, Felix Smith,
Marshall Madison, Eugene Prince, and that was it. John Sutro did
not join the firm until 1929, Vincent Butler until 1930, and Gene
Bennett, and others, at a later time.
Del Fuller was undoubtedly an associate, but I do not now
remember the other associates in the office. But my memory could
easily be refreshed if I saw some personnel records.
Hicke: I'll see if I can get some of those.
O'Brien: I'd like to see who the associates were, because I would have
probably more recollections of some of them than I would of some of
the partners.
Hicke: Okay. In 1928, and also then in the '30s.
O'Brien: Yes, and from '35 forward.
39
I joined the firm as an associate in 1935. That was the year
that both Oscar Sutro and Vincent Butler died. I had a few
occasions to see Vincent Butler before he embarked on that fatal
airplane trip. He was a lively, intelligent, articulate gentleman,
whose Rhodes scholarship showed in his manner of speech and certain
habits. After his death, I came to know his widow well, and his
sons, Vincent and Lewis. Mrs. Butler, Lucy Butler, was a dear
friend of Mrs. William Farmer Fuller, and of Mary Tressider (Mary
Curry) -- her husband, Dr. Tressider, subsequently became president
of Stanford University -- and Lucy Butler, Mary Tressider, and
Mrs. Fuller frequently went on high Sierra camping trips together.
Felix Smith, with whom I worked closely from 1935 until I left
the firm in 1942 to join the air force [U.S. Army Air Corps], had a
tremendous influence on my life as a lawyer. He was an
extraordinary man in every way -- beautifully educated, with
extraordinary intellectual attainments, a writer of pure Anglo-
Saxon prose, a lion in his den in room 1906, and a pussy cat
outside .
When I first joined the firm, we were not nearly as structured
as the firm is today, and it was possible for an associate to have
what was effectively a primary assignment with one partner, and
continue to work up and down other sides of the street for other
partners and associates. There was less specialization, and
certainly as an apprentice, it was my hope and ambition to school
myself in as many sides of the law as possible. I think young
lawyers then felt that their ambition should be a well-rounded
career of the law with the capacity to advise people as, let us
say, a general counsel. So I tried to make it my business to do
every kind of work.
Hicke: That brings up a question I had wanted to ask. Did you ever think
of going into solo practice yourself?
O'Brien: No. Times were so hard that I felt fortunate to have a job,
particularly at such a distinguished firm. The prospects for solo
practice in 1935 were not good.
As a consequence, I came to know a good many of the partners,
and did odd jobs for most of them, but gradually I came to work
primarily for Mr. Smith. It wasn't always easy. He had a
tremendous capacity for work. He worked rapidly, dictated short
memoranda and letters, saw a great many clients and particularly
people from Standard Oil, because of the proximity of our offices
to those of the executives of the company, and other people with
whom he conferred. He read Latin and Greek, spoke French, Spanish,
and Italian, and had the equivalent of an advanced degree in
geology. So he was a formidable man to work for.
40
Hicke: Do you have any sense of how he was able to accomplish all of these
things? Did he have a photographic memory?
O'Brien: Well, he had a brilliant mind, and he had very few preoccupations
outside of his career as a lawyer and his achievements in the
fields of literature and science. His wife, Martha, was equally
gifted intellectually. They lived a very quiet life and raised
three children. Felix left the office usually rather promptly
after five o'clock; he arrived promptly in the mornings -- he was a
man of regular habits.
He, so far as I know, did not belong to the usual clubs or
societies or professional organizations, or participate in things
of that sort. He was a highly reserved man outside of his
office -- that's what I meant by pussycat, because while he could
be frightening and formidable in his office, outside of his office
he was a very shy man.
Hicke: You did tell one story where you went all the way up to Frog Lake
to talk over a problem, and he never would let you talk about it.
O'Brien: Right. Well, that was because, I think, he consciously had a
theory about the way to bring along young lawyers. I think he
thought the only way to do that was to make you grab the hot
rivets, to walk the plank, and he would give you some horrifying
problem and watch to see whether you sank or swam. And frequently,
given the tremendous burden and workload that he carried himself,
he really didn't supervise you a great deal. He expected you to
turn in the job. I think I explained in an earlier interview how
he conducted business with the Standard Oil Company.
Hicke: Yes. The asterisks and "yes" and "no."
O'Brien: Yes. It would be impossible to do it that way now, but it enabled
him to keep track of the myriad problems of a major corporation,
signing all the correspondence, and having all of the questions and
answers flow through him. He was totally in command and totally in
tune, totally briefed on all of the affairs of his clients.
W. P. Fuller & Co. and Cobbledick-Kibbe v. United States
O'Brien: I remember a lot of episodes in working with him, because he was so
remarkably gifted. I won't pause to rehearse a lot of yarns of
that sort, but I should say that we came to know each other much
better in the late '30s when I was asked to represent, but really,
rather to introduce an important client to the firm -- a major
company in San Francisco, W. P. Fuller & Company. The president of
41
that company, V. Farmer Fuller, Jr., was as brilliant a man in his
way as Felix was.
I should add by way of background that in 1938 or '39 after
the NRA [National Recovery Act] -- the Blue Eagle — had been
declared unconstitutional, the Roosevelt administration reversed
course and in the person of Thurman Arnold began a national crusade
to enforce the antitrust laws. That crusade began in San Francisco
with the impaneling of federal grand juries to conduct
investigations for alleged antitrust violations. You could pick up
the afternoon Call any day and see that another major company had
been indicted for alleged violation of the antitrust law.
That was what was about to happen to W. P. Fuller & Co. when
Mr. Farmer Fuller became so concerned about the way his lawyers
were acting on his behalf in relation to such an investigation that
he decided he needed the support of a major firm like Pillsbury,
Madison & Sutro. As a consequence, he asked me to represent his
company and arrange for him to call on Felix Smith. The
investigation was boiling over with subpeonas and grand jury
appearances and so forth.
Hicke: Did you know Mr. Fuller before he met Mr. Smith?
O'Brien: Yes. I can explain that in greater detail. Felix promptly got
Gene Bennett into this, and Mr. Smith, Mr. Bennett, Henry Hayes,
and O'Brien constituted themselves a team to represent Fuller &
Company and subsequently almost everybody else in the glass
business in San Francisco in relation to this investigation.
The company had previously been represented by Chalmers
Graham, and he remained as one of the counsel of record in the
course of this investigation. In those days, there was no code of
criminal procedure in federal courts, and in effect we were
practicing criminal law based on the English common law of grand
juries, of grand jury oaths, of subpoenas, et cetera. And we
promptly began to challenge the scope of these subpoenas, the
appearance of witnesses before the grand jury, the propriety, the
legality, the constitutionality of the oath of secrecy that was
given to witnesses before the grand jury, et cetera.
Hicke: I take it this was the first time these challenges had been put
before the court?
O'Brien: Challenges had been made, I'm sure, in the past to the breadth of
subpoenas duces tecum on the ground that they violated the Fourth
and Fifth Amendments -- and in our case we argued the Sixth
Amendment as well -- but nearly every day there was a court
appearance by Felix Smith or Gene Bennett, and occasionally by
O'Brien, to challenge some aspect of this ongoing investigation.
42
We challenged the constitutionality of the oath of secrecy,
which had been given to the daughter-stenographer of one of the
potential defendants in the case. She refused to take an oath of
secrecy that would prevent her telling her father or her lawyer
about any testimony she gave before the grand jury.
Hicke: That was Doris Goodman?
O'Brien: Yes.
The thrust of the government's investigation was that a
gentleman by the name of Sam Goodman, who represented the Employers
Association in the flat glass industry in San Francisco, was really
the nexus of an illegal conspiracy to fix the price of glass and to
fix the price at which contracts to install glass were let in San
Francisco. Doris Goodman worked for her father in this small
office he had, and Sam Goodman was one of the principal targets of
the investigation.
I won't rehearse all of the stories about the case. We did
challenge the oath of secrecy. The Ninth Circuit more or less
waffled on the issue, but said that the oath had to be interpreted
in a way which was consistent with the right to counsel provided in
the Constitution. We had refused to allow Doris Goodman to take
the oath on the ground that her constitutional rights were being
invaded, and the Ninth Circuit Court of Appeals held that she
hadn't yet suffered any invasion of her constitutional rights,
which in effect meant that the only way to test the legality of the
oath was to take it, and then violate it, and then be held in
contempt, and be sent to jail, and then test the issue. So I took
her out before [Judge Adolphus F.] St. Sure just before Christmas,
I think in 1939, proffered her as a witness, and she took the oath
of secrecy.
ft
O'Brien: I moved the court in the person of Judge St. Sure, the chief judge
of the federal district court, to relieve her of the thirty-day
jail sentence, the sentence that she had received, and he did that.
So that aspect of the matter was successfully maneuvered.
Hicke: She was somewhat courageous to do that.
O'Brien: She was courageous. And her father was courageous. And when they
passed the Federal Rules of Criminal Procedure later, the first
thing that went into the rules was a provision that you could no
longer give such an oath to a witness before the grand jury.
43
I had the extraordinary experience of finding out that despite
that new rule, the U.S. attorney in the Northern District continued
to give such an oath of secrecy to witnesses before the federal
grand jury. I believe it was in '52, or after Eisenhower was
elected president, and there was a new United States attorney. In
the federal district court I submitted a brief on this subject,
which was presented to the senior district judges and all the other
judges of the district court. They decided to follow the Criminal
Rules of Procedure finally.
Hicke: Good heavens. That took a long time.
O'Brien: Yes, a long time. We took another issue in the glass case to the
Supreme Court of the United States in the course of the
investigation -- Cobbledick-Kibbe v. United States1 -- to test the
question of the appealability of an order denying a motion to quash
a grand jury subpoena duces tecum.
In the middle of the investigation, the special assistant to
the attorney general, Morris R. Clark, in charge of this
investigation --
Hicke: I've got the brief, so we can fill it in.
O'Brien: -- yes -- was relieved of his job, and in his place there was
appointed one Mr. Tom Clark.
Hicke: That's a familiar name.
O'Brien: Tom Clark was as about as far away from the action as you could
get. He was still trying cases left over from World War I about
so-called service-related total and permanent disability, in which
ex-soldiers and veterans were claiming that their disabilities, for
which they should be compensated, had been incurred in the course
of their service in World War I.
Hicke: World War I?
O'Brien: World War I. But Tom Clark was appointed the head of the San
Francisco office of the antitrust division and took over this
investigation. Ultimately all of the companies involved in the
glass business in San Francisco were indicted, and many of the
individuals: Mr. Farmer Fuller, Jr., and Mr. A. H. Brawner in
Fuller & Company, and the partners of a number of smaller glass
companies .
1. (1939) 60 S.Ct. 299; 107 F2d 975.
44
The case was ultimately settled after a great many months of
slugging it out. I spent a year or so preparing the case for the
trial and then moved to set the case for trial, which was an
extraordinary thing for a defendant to do in a criminal case. The
government, which really never had intention of trying these cases
but expected everybody to come in and pay $5,000 and walk away, was
astonished when we moved to set the case for trial. Mr. Clark
promptly hired one Mr. Joseph Alioto as an assistant in the
Antitrust Division in the San Francisco office to help him prepare
the case.
Hicke: Had quite a few famous names in there.
O'Brien: Yes. But in the end, the case was settled by dismissing all the
personal defendants, including the members of partnerships, and if
you look this case up in the Blue Book, which is the record of the
disposition of antitrust cases, you'll see that it says that it was
possible to fine the partnerships while dismissing all the
partners, on the theory that the partnership was some way an entity
apart from the partners who composed it. The Blue Book says that
this result was reached because of the peculiarities of the
California Law of Partnership. In fact, California had adopted the
Uniform Partnership Act as had most states of the union.
Tom Clark was a formidable opponent. He was hard to get a
rope on, but I must say, when he finally gave his word he kept it.
Once during the course of the case, I went to call on him about
some matter in connection with the suit. After some sparring
around, he told me that he had that day impaneled a new grand jury
in the federal court. I asked him what were they investigating
now, and he said they were investigating me for suborning the
government's witnesses in the glass case.
Hicke: This was because of Doris Goodman?
O'Brien: Well, it was because the principal complaining witness on behalf of
the government appeared in my office one day and asked me to
represent him. I discussed that with Felix Smith.
Hicke: Who was this?
O'Brien: He was the owner of a small glass business in San Francisco -- I
can't think of his name at the moment -- who had complained
originally about the other glass companies, saying that they were
conspiring to exclude him from participating in these big glass
jobs in the city.
Hicke: I wondered how the case got started, so that explains that.
45
O'Brien: Yes. After I had moved to set the case for trial and they were
beginning to dust off all their old transcripts of the federal
grand jury, he appeared and asked me to represent him. And I was
simply stunned. So I talked to Mr. Smith and Mr. Bennett about it,
and so Felix said, "Well, why not?"
Having in mind this oath of secrecy, I was careful not to ask
him any questions about his testimony before the grand jury. But
he explained to me that he had come to see me because he now
realized he'd been totally off-base and wrong about the accusations
that he had made against the other glass companies; that he no
longer believed in the charges he had made, and he wanted me to
protect him, because he had had a phone call from Joe Alioto, who
wanted to come out and see him and get him woodshedded to testify
in the forthcoming trial.
So I said to him, "Well, I guess the only thing to do is to
wait for Mr. Alioto to call you and then tell him that you are
perfectly willing to talk to him, but you'd like to have your
lawyer present." That's what happened. Joe called him, and he
said, "Why, certainly, I'd be delighted to have your lawyer.
What's his name?" I couldn't ask the man what he had said to the
grand jury, but he had a right to a lawyer,
them.
That really puzzled
Hicke: You certainly gave them a few things to think about all the way
around.
O'Brien: They thought it over for a week or two, and then they called him
again, and he said the same thing to them. So after they had
called him the second time, knowing that I represented him, I
called Joe and I said, "Joe, how long have you been practicing
law?" He said, "What's it to you?" He said, "Oh, I don't know,
three years." I said, "Well, you know enough to not to talk to a
man's client out of his presence, don't you?"
That was how Mr. Clark came to tell me that they were
investigating me for obstructing justice. So I said to him, "I'll
tell you what I'll do, Tom: I'll waive my right against self-
incrimination if you will swear me as the first witness in your
investigation and let me testify about some of the shabby things
you people have done." That was the last I heard of that
investigation.
Hicke: Oh, very interesting.
O'Brien: Well, anyway, Felix went back to Washington to try to settle the
case with Clark, and they got closer and closer, and ultimately we
did make a settlement. All the individuals except one were
dismissed from the case. W. P. Fuller & Company probably paid a
46
fine of $5,000. These little partnerships paid about $2,000 or
$3,000 and that was it. One gentleman by the name of
[Alexander H.] Brawner was the sacrifice. He pleaded nolo
contendere and was put on probation for six months with the
understanding that at the end of that period the record would be
expunged, which it was. That was the end of the lawsuit.
I worked like a galley slave, and I worked very closely with
Felix and Gene Bennett, and it was a mighty hassle. It was a
really a big deal for the time, and it led me from one grand jury
investigation to another. And since by then I'd had my nose
bloodied considerably with many things, I began to move into many
more grand jury investigations and antitrust cases and so on.
That went on until 1942, when I left the firm. I continued to
represent the Fuller, along with other people, and by the time the
war came along I'd been practicing law about six or seven years.
The Infested Prunes Case
Hicke: Before we get to the war, you mentioned that you had tried a series
of lawsuits with Sam Wright, among others, and Herbert Korte, as
well as Gene Bennett and Del Fuller?
O'Brien: Yes. I used to prepare these cases for trial, and I tried a few
little cases, and I tried a case over in Oakland in the justice's
court. They were always pretty careful about letting you go out on
your own and start trying cases. But I put together a lot of cases
in the insurance field, total and permanent disability cases. I
did try a number of cases with Sam Wright, a couple of important
ones .
Norbert Korte and I tried the first criminal case involving
the then brand-new provision of the Food and Drug Act, which had
criminal sanctions for shipping adulterated food in interstate
commerce. It was really a fascinating case, because a cargo of
prunes had been shipped from San Francisco through the canal, found
their way to New York and into a cold storage warehouse. Six
months later, a Federal Food and Drug inspector found this cargo of
prunes in the warehouse and discovered that they were infested with
some sort of insects. The charge was ultimately made that the
prunes had been infested before they left San Francisco.
A criminal suit was filed against Libby, McNeil & Libby.
There was no real discovery in a criminal case in those days. The
defendant really couldn't do much to get a disclosure of what the
government intended to prove, but it was the first criminal case
47
brought under the Food and Drug Act, and the government was
extremely eager to show that the new law had lots of teeth. And
they really made a federal case of it.
They had all of their chief scientists and heavy enforcers
here working on the case. Norbert and I were defending Libby,
McNeil & Libby. The government was represented by a fine young
lawyer in the United States Attorney's office by the name of
Alfonso Zirpoli, who became a distinguished federal district judge.
The case was a scientific case in effect: what were the insects?
What was their stage of development? Could they have infested the
cargo before the ship left San Francisco, having in mind that in a
cold storage warehouse they obviously couldn't develop?
Hicke: Yes. They had to see if they were California bugs or something
that had been picked up along the way?
O'Brien: Yes. Right. Whether they could have been infested when they went
through the Panama Canal, or what. But bear in mind it was a
criminal case, and the government had the burden of proof of
showing beyond a reasonable doubt that the prunes were infested
when they left San Francisco.
I made a motion to discover, to get my hands on, the samples
of the prunes that the government inspectors had taken, and the
judge would just barely listen to me. He started up and almost
walked off the bench when I stood up to speak. For once in my life
in a courtroom I was quite indignant. His name was St. Sure; he
was the senior district judge, kind of an irascible old gentleman.
I said to him, "I'm entitled to be heard, and this is an important
issue, and this is an important case." I said something about the
first criminal case in the Food and Drug Administration. So he sat
down. So I argued my head off, and about a half an hour later he
turned to Zirpoli and said, "Well, why shouldn't they have it?"
So we ultimately got the samples, and that enabled us to hire
some very eminent entomologists, who were prepared to testify that
they [the samples] didn't indicate in any way that the infestation
had occurred before the prunes were shipped. The government had
two or three equally distinguished entomologists, one from Stanford
University that I remember.
I had moved for a jury trial in this case. And one day when I
was in front of St. Sure, he said to me, "Counsel, I notice you've
asked for a jury trial in this case. Why did you do that?" He was
going to try the case. So I said, "Well, your Honor, this case is
really a factual case. The law is perfectly clear. If these
prunes were infested when they were shipped, then we're guilty of
the crime that we're charged with. But if they weren't, we aren't.
Hicke :
O'Brien:
Hicke:
O'Brien:
Hicke:
48
So that's pretty straightforward and it's all a question of fact.
And a jury is the traditional trier of the fact."
He said, "I hear you. Let me suggest to you that if you
waste the court's time in this case with a jury trial, and you're
found guilty, you can count on"- -getting more or less the maximum
was the idea. "On the other hand, if you are sufficiently
considerate of the court to waive a jury in this matter, the
court might be more inclined to treat you with some leniency."
So I waived a jury.
We tried the case for about three or four days , and about
every half hour, the judge would begin to wiggle around up there,
after the government had put its case, and we had put on one or
two witnesses, "Are you prepared to rest, counsel?" And Norbert
and I would go into a deep trance, not knowing whether to call
another witness or what to do. So then we'd call one more so if
there was a finding against us, at least we'd have a record to go
up on appeal .
We finally rested, and he said, "Mr. Clerk, take this," and
he dictated an opinion right from the bench. "Not guilty."
He had it already in mind?
Yes, but we didn't know that.
He probably had it ready when he was asking you to waive the
jury.
Well, maybe so. I don't know. But he found that it was an
entomological mystery and the government had not carried its
burden of proof.
The canning industry and the food industry naturally were
watching this case with great interest, because it was the first
criminal case brought under these new provisions of the Food and
Drug Law. So it was quite a celebrated case at the time. We
were vastly pleased that we had a successful result.
Indeed.
The Firm Offices
[Interview A: February 2, 1987 ]tt
O'Brien: I'm moving back to 1928 and the summer when I worked in the office.
In those days you got off the elevator on the nineteenth floor,
walked toward the present front door, but turned into the office on
the right where the receptionist now sits. There was a counter
there, and all visitors to the office walked into a small anteroom
and stood at the counter. The office manager, Mr. Draycott, sat
just behind the counter. In the far corner of the room, near a
short hallway that connected with the long corridor on the
nineteenth floor, sat the calendar clerk. At first, that corner
was devoted to a one-place switchboard, which was the throne of a
snappy-eyed, dark-haired woman by the name of Billie, who as I told
you ran a magnificent intelligence system. As time wore on, she
had a relief, a handsome, young, blonde woman by the name of
Leslie.
There was a buzzer system for associates, most of whom did not
have telephones in their offices. Since they were all situated on
one floor, running down the hall from 1906, when Billie received a
telephone call for an associate, she buzzed that attorney's special
code signal, and he repaired to the counter in the outside office
to answer the telephone.
Hicke: The partners had telephones in their rooms?
O'Brien: Yes.
Hicke: Did the associates have offices to themselves?
O'Brien: Most of the associates had offices. We, at some stage, took over
the twentieth floor, or part of the twentieth floor, and a whole
series of offices were created there. Most new associates, when
they were hired -- certainly in my day in 1935 -- did not have
offices, and we all sat in the library and worked there, responding
to our buzzers to see partners. We went to the telephone to find
out what the message was, whether to go to the phone, or to see a
partner, or et cetera. About 1936 or 1937, the firm took over half
of the twentieth floor and remodeled it into offices, and those of
us who had resided in the library were doubled up in offices on the
twentieth floor. And I first shared an office on the twentieth
floor with Fred Hawkins.
Hicke: You've indicated that he was employed at about the same time you
were, and became partner about the same time.
50
O'Brien: He was employed a month or two before I was employed. He graduated
from Stanford Law School with a fine law school record in 1934. I
guess he had trouble finding a job.
In any event, during the intervening year, he had been
teaching law at some local law school, and was hired to PM&S just a
few months before I in 1935. He was a tall, athletic, blond
gentleman, outgoing, vivacious, nervous, a racehorse sort of
gentleman — had been a star basketball player at Stanford during
his college days. And we hit it off well.
Eugene Prince
O'Brien: I have not talked about Gene Prince, although I could write volumes
about him. I first met him when I was still in law school, and he
was president of the Boalt Hall Alumni Association and came to
Boalt to give a speech. He was a wonderfully impressive man with a
Lincolnesque face, a command of the language, a shining sincerity,
and immediately attracted everyone in sight with the warmth of his
wonderful smile and his legal accomplishments.
As the years wore on, we became dear friends. In fact, I felt
honored that he named me, along with Harry Borrow, to be his
executor. As a consequence, before his death, I had many long
discussions with him about his personal life, his personal affairs,
and after his death was able to resolve in a satisfactory way some
of the problems which he had foreseen. He was a greatly beloved
man, highly respected and honored at the California Bar, and a
superb appellate lawyer. I stop there, because there's so much to
say that it's better not to launch into a long, discursive account
of his life and career.
Hicke: Does, perhaps, one outstanding illustration come to mind of his
activities -- appellate activities -- or his contributions to the
firm?
O'Brien: There really are so many. The case that comes to my mind is one
that he lost. He was retained by the Regents of the University of
California to represent them in the litigation involving the
loyalty oath, a case which he ultimately lost.1 The lawyer on the
other side was Stanley Weigel, later a federal district judge in
San Francisco. The litigation was conducted, despite the political
1. Tolman v. Underhill (1952) 39 Cal.2d. 708.
51
Hicke:
O'Brien:
atmosphere and the intense feelings on all sides, on a standard of
legal excellence which one could not help but admire.
¥as this in the '60s?
I've forgotten,
the '50s.
It's so long ago. I think it must have been in
Eugene Bennett, Insurance Cases, and the Davidowitz Trial
O'Brien: I also worked closely with Gene Bennett as a young associate. I
helped Gene Bennett in a whole series of lawsuits to prepare for
trial. Anyone who has ever seen a photograph of Gene Bennett will
understand irantediately that he was a man of distinction, and he was
a superb trial lawyer -- certainly the most gifted that I came to
know personally. He had a style which was unique. He was the soul
of courtesy in a courtroom, not only to the witnesses, and of
course to the court, but more particularly with respect to opposing
counsel. And many of the barroom floor attorneys in San Francisco
were totally disarmed by his considerate and courtly style.
One of the earliest cases in which I was involved with Gene
Bennett was a lawsuit against Armour & Company in the superior
court in Oakland. It was a case we lost under circumstances that I
won't relate, but there were several co-defendants who ganged up on
us with the plaintiff's lawyers to fasten liability on us in the
case, and we could not extricate ourselves from this in the face of
some very shady testimony.
I won't mention the lawyer's name on the other side. He was a
highly successful personal injury lawyer, and this was a personal
injury case involving an accident in a big market in Oakland. But
he was absolutely mystified at Gene Bennett's conduct in the
courtroom. He puzzled to find an opponent who treated him with
respect, and with good manners, and with a civility which were not
part of his lexicon. In fact, when the case was over, he promptly
offered me a job, and he talked with amazement about the wonderful
character and style of Gene Bennett.
I may not have mentioned that I prepared a whole series of
cases for him -- for Gene Bennett -- involving claims under life
insurance policies with total and permanent disability provisions.
The firm represented Equitable, New York Life, and Pacific Mutual.
The only cases I recall involving claims for payment under total
and permanent disability clauses were those involving The
Equitable. During the Depression, many people who had lost their
52
money and suffered terrible psychiatric trauma concluded that they
were indeed totally and permanently disabled.
The insurance companies in the halcyon days of the '20s had
written policies with provisions that offered substantial monthly
income to insureds who became totally and permanently disabled
during the term of the policy. The life insurance companies that
had written such policies -- and that meant most of them -- were
flooded with claims, many of them without any merit.
Gene Bennett and I tried a number of these cases, both in
state and federal courts. It was my job to prepare the cases for
trial, interview the witnesses, prepare summaries of their
testimony, prepare a legal brief of the issues involved in the
case, make and argue the preliminary motions in the lawsuit, and
hand the finished product in a pink bow to Mr. Bennett for trial.
With a few rare exceptions, he didn't spend much time on the
legal memoranda or the preparatory briefs, and I often felt great
anxiety as we repaired to the courtroom to think that he could not
be in total command of the issues in the case, although he always
turned out to be.
Hicke: Do you attribute his success to his manner in the courtroom, or at
least partly?
O'Brien: Oh, I attribute it to his tremendous experience, not only his
manner, but his great gift for cross-examination, his intuition,
his ability to dismantle an adverse witness through some
unparalleled gift of shrewdness and experience of life that enabled
him to find a soft spot in the witness's testimony, and his
tremendous appeal to juries. One could not watch him in a
courtroom without coming to have a confidence and respect for what
he said, the way he said it, and he enjoyed a tremendous success.
Hicke: It sounds as if he was a person who could think like lightning on
his feet, I mean with an immediate reaction to the testimony that
was being given.
O'Brien: That's correct. I'll give you just one example. We defended on
behalf of Equitable a large total and permanent disability case
brought by a gentleman by the name of [Hyman] Davidowitz.
Davidowitz had been a successful operator of a very large
restaurant at Coney Island. He claimed to have been wiped out by
the crash in 1929. In any event, he moved to San Francisco and
brought a lawsuit against The Equitable, claiming that he was
totally and permanently disabled from arthritis, unable to raise
his arms, et cetera. We suspected that he was a crook, and we
hired an investigator -- along with The Equitable 's
investigators -- to keep him under surveillance.
53
To make a long story short, we discovered that he was doing
business in the commodities market under a fictitious name, and we
took films of him carrying great loads of wood up the back stairs
with these arthritic arms, tossing his ten-year old daughter up in
the air in a swimming pool -- all of these were recorded with
perfect film.
When we came to trial, Davidowitz, when asked to raise his arm
to take the oath, claimed that he was unable to raise his arm, and
we made a considerable fuss about whether he could properly take
the oath without raising his arm.
The plaintiffs put on a doctor, a trained professional
witness, who testified about Davidowitz 's disability, claiming that
he was totally disabled as a consequence of hypertrophic arthritis.
Gene Bennett cross-examined him for two days without much success.
The witness had brought to the courtroom a human vertebra with the
pelvic bones, and he rattled this around on the stand like
castinets.
Hicke: That's an actual skeleton, not just a picture?
O'Brien: Yes, it was an actual skeleton. And he gave a lecture on the
cervical spine and the lumbar spine, and this grisly object was
handed to the jury for examination.
After two days, Gene Bennett strode across the courtroom to
our counsel table and glanced at me and said in a whisper, "I'm
about to give up on this guy." With that he turned around, and
asked the witness about this skeleton and said, "Doctor, please
tell us whether this is a man's or woman's skeleton that you have
there." The doctor looked very puzzled, and then embarrassed, and
finally said, "I don't know." And Bennett was all over him like a
tiger: "Was it an old person? A young person?" et cetera. He
absolutely demolished the witness.
What quirk enabled him to ask that question after breaking his
pick on the witness for a day or two, I don't know. Although,
years later, I discovered in a book The Art of Cross Examination1
an episode that dealt with just exactly that question.
it
The Davidowitz case is interesting, because in the course of
my investigation -- and I learned a great deal in these cases about
1. The Art of Cross Examination by Francis L. Wellman.
54
Hicke:
O'Brien:
Hicke:
O'Brien:
investigation, wearing off shoe leather, standing out in the rain
waiting for a witness to come home, looking at records, et
cetera -- I discovered that Davidowitz, as I said, was doing
business in the market under a fictitious name.
I called on the customers' man in the brokerage house where he
placed his orders and identified Davidowitz with pictures. I then
served a subpoena on this gentleman to appear in the court -- the
case was being tried in Judge [Harold] Louderback's court -- but I
asked the witness not to come into the courtroom, but to wait
outside the courtroom until the given moment.
When the moment arrived, I saw the witness's face in the oval
of the courtroom door. I went out, got him in front of me, and
marched him up the middle of the courtroom facing Davidowitz, who
was on the stand and being cross-examined by Mr. Bennett.
Davidowitz got one look at this customers' man from a brokerage
house. The judge leaned over and said to Davidowitz, "Are you all
right? Would you like to take a recess?" Davidowitz said, "No,
I'm fine, Your Honor." And with that, fainted and fell off the
chair, sprawled out on his face in the middle of the courtroom.
That was the end of that lawsuit, and I never had an opportunity to
show my wonderful films of Davidowitz tossing his little daughter
in the air.
Well, it sounds like you played that for dramatic effect.
For the effect on the witness, yes.
Yes. Very successful.
Well, Gene Bennett and I had, as I say, a whole series of such
cases. Sometimes he would see the issues of the case far
differently from the way I saw them, and then he would write across
the face of my brief his point, and say, "Nothing done." Sometimes
I would make a point that he didn't appreciate.
We won two cases by raising such a point. There is in the law
a privilege between patient and doctor. In two cases the insured
was dead, but his heirs or surviving spouse was suing, claiming
that the policy was in effect at the time of the insured 's death,
because in addition to the total and permanent disability clause,
there was a clause which provided that if insured was totally and
permanently disabled, the premiums were waived. So the claim was
made that even though the policy had lapsed for nonpayment of
premiums, in fact, it was still in effect at the time of the
insured 's death, because the insured had been totally and
permanently disabled.
55
I conceived the point that with the death of the insured,
since the privilege belonged to the insured, there was no one who
could waive the privilege between doctor and patient. As a
consequence, I was prepared to argue to the court that the doctor
for the insured could not testify, since there was no one alive to
waive the privilege. Gene Bennett thought that was a pretty
technical exercise, and only by tugging on his coattails very hard
did I get him to rise in Judge Teresa Michaels 's court to make this
objection in a case brought by a widow against The Equitable,
claiming that her deceased husband was totally and permanently
disabled from syphilis at the time of his death.
This objection took the plaintiff's attorney totally by
surprise, as it did the court. I had prepared a brief on the
subject --
— which was submitted to the judge and to opposing counsel, and
the case was adjourned for two or three days to give the other
lawyer an opportunity to explore the legal question. Ultimately
the judge ruled in our favor and that ended the case, since there
was no one else able to testify about his medical condition at the
time of his death. We used the same objection in at least one
other case that I can remember, once in the federal court, which
resulted in a victory for our side.
As you probably know, Gene Bennett was a man of many parts,
who had a career on a variety of fronts and who had very wide
interests. As you'll see from this clipping from the Chronicle,
Tuesday, December 16, 1968, about Bennett, he had a distinguished
career on many fronts.1
He was very active in civilian service to the army. He had
been a lieutenant in the First World War in artillary. Toward the
latter part of his life, he was quite deaf in at least one ear. He
was called to active duty early in World War II, and served in the
Pacific as a full colonel. But as the article indicates, he served
as a civilian aide to the Secretary of the Army for the Sixth Army
Area and was decorated with the army's Distinguished Civilian
Service Medal.
But he had many other interests. He was a superb fisherman.
My friends, the Fullers, invited the Bennetts to their country
place in Lake County one summer, and I recall admiring Gene's skill
as a dry fly fisherman along the streams there. In any event, the
1. See next page.
Tues., Dec. 17; 1968
55a
S.F. Lawyer
Eugene D.
Bennett Dies
Eugene D. Bennett, a
prominent local attorney
whose long career included
honored service with the gov
ernment and the Army, died
yesterday at St. Francis Me
morial Hospital. He was 74.
Mr. Bennett, of 3320 Baker
street, was predeceased by
his wife, Gertrude Douglass
Bennett, last week.
A member since 1936 of the
San Francisco law firm of
Pillsbury, Madison & Sutro,
Mr. Bennett was a distin
guished trial attorney who
argued several cases before
the United States Supreme
Court.
In 1964, he was honored as
outstanding graduate by the
Hastings College of Law,
from which he was graduat
ed in 1920.
ARMY
A native of Kansas, Mr.
Bennett served overseas as a
first lieutenant in World War
I and as a colonel during
World War II. He attended
the Army War College in 1927
and the Command and Gen
eral Staff College in 1942.
Since 1950, he had served
as civilian aide to the Secre
tary of the Army for the
Sixth Army Area and earlier
this year was awarded the
Army's Distinguished Civil
ian Service Medal:
Within Federal govern
ment, he served as chief dep
uty United States attorney
here, chairman of the Inter-
American Tropical Tuna
Commission and member of
a commission dealing with
judicial and Congressional
salaries and court conges
tion.
At the State level, he was
executive officer and counsel
for the California Fish and
Game Commission and a
member of the Pacific Ma
rine Fisheries Commission.
EUGENE D. BENNETT
Government service
sei veu as a trustee
of the San Francisco War
Memorial Commission, and
as a trustee and fellow of the
California Academy of Sci
ences. . . . ,
He was a director of the
American Judicature Socie
ty, Regent of the American
College of Trial Lawyers,
Fellow of; the American Bar
Foundation and member of
th« American, California and
San Francisco Bar Associa
tion.
At the national bar level,
he served as chairman of the
Committee on Internationa
and Comparative Law arid
was noted for his work on the
Standing Committee on Fed
eral Judiciary, which reports
on all nominees for Federal
judgeships.
A-.i ardent sportsman, he
directed the National Rifle
Association's Legislative
Center and was a national
trustee of Ducks Unlimited.
j He was a member of the
Pacific Union, St. Francis
Yacht, Olympic, Press, Com
monwealth and- Stock Ex
change Clubs.
Mr. Bennett is survived by
a brother, Dr. Dudley W.
Bennett of San Francisco.
I Funeral arrangements are
1 pending.
56
article will give you some idea of the enormous range in his
interests, and activities.
Hicke: Thank you. I'll get that right back to you.
The Webb Motor Company Case
O'Brien: I worked very closely with Del Fuller during my early days with the
firm. He was a business lawyer. He represented The Equitable and
a great many other clients in relation to their real estate
problems. The total and permanent disability cases came to the
firm through his work with The Equitable, so that in preparing the
cases for trial, I frequently worked very closely with him.
I do recall one case that he and I tried, but for the life of
me I can't think what the issues were. But it was tried against
Teddy Roche, Theodore "Teddy" Roche, the famous San Francisco
lawyer. Between Del and me, poor Teddy Roche, who could talk like
a Catling gun, never got out a complete sentence during the whole
trial. I'm sorry I can't recall any of the details, but I do
recall with what great glee we succeeded in prevailing.
Del Fuller also gave me a number of little cases to try, and I
got my nose bloodied a few times in some of those cases. I do
recall a case I tried in Oakland. It involved nearly every issue
in the book of attachment/execution agency -- an ostensible
agency -- et cetera, involving the repossession of an automobile
for a Seattle bank which had been removed, in violation of the
conditional sales arrangement, by the buyer from Washington to
California, where the car was raced in stock car races and then
ultimately sold for a new car to the Webb Motor Company in Oakland.
Webb defended the case with the greatest vigor, and we had a
full-fledged trial in the justice's court that lasted at least
three days. They claimed, among other things, that their sales
manager had no authority to buy the car, and therefore they were
not liable to the Seattle bank for its value. I cross-examined the
sales manager and persuaded the court that he did have authority.
They refused to pay the judgment, and I could not find any
property on which to execute. With Del Fuller's help, I served a
writ of execution on every bank in Oakland, executing on all
accounts in which they had a beneficial interest, whether held in
the name of the Webb Motor Company or otherwise. That routed out
all banks, and I finally collected the whole judgment.
57
Such cases were great seasoning, and you learned very quickly
that what you thought was a perfect case in the library at the
Standard Oil Building was full of holes when some seasoned lawyer
began to take you over the jumps.
Howard Marshall, Del Fuller, Charles Ruggles, Gene Prince
Hicke :
O'Brien:
Hicke ;
O'Brien:
Hicke:
I think there are a couple more people I wanted to hear about.
Yes. There was Howard Marshall,1 but I can't remember quite when
he came. I have very little recollection of Howard Marshall. I
think he came to the firm as a partner on the strong suggestion of
Ralph K. Davies. He was obviously a very bright, aggressive,
ambitious man. He was badly crippled. He worked, so far as I
know, almost exclusively with Felix Smith.
It should be recalled that Ralph K. Davies was president of
the Standard Oil Company before World War II and left the company
to become Petroleum Administrator for War. Evidently he thought he
was slated to become the chief executive officer [of Standard] when
the war ended; certainly Secretary [Harold] Ickes thought so. This
resulted in a controversy between Davies on one hand; Harry
Collier, chief executive officer at Standard; and Mr. Ickes, who
purchased shares of Socal stock and undertook to appear at the
annual meeting of the company to excoriate the company for not
appointing Mr. Davies as chairman. I may be getting all mixed up
here.
No, I think that's right. On his return from the service, he
expected to take up in his place of seniority.
Yes. In any event, Mr. Davies withdrew his candidacy the day
before or on the day of the annual meeting and left Mr. Ickes sort
of high and dry. Somewhere prior to that time, I have the
impression that Howard Marshall had come to the firm as a partner,
and that he did not survive all these events. He left the firm
shortly thereafter for greener pastures. He did ultimately become,
I believe, the chief executive officer of Ashland Oil Company.
Howard Marshall?
1. J. Howard Marshall joined PM&S in 1935, and became a partner in
1938. In 1941 he left to become chief counsel for the Petroleum
Administration for War.
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58
O'Brien: Howard Marshall did, and was very successful in the oil business.
I never had any personal contact with him, and having been away
from the firm from 1942 to '46, these events were really beyond my
ken.
I want to add something else about Del Fuller. Del had come
from very humble circumstances, had fought his way through law
school, and come to work for the firm. He always arrived at the
office early in the morning, worked like a Trojan, and was part of
a sort of informal working group composed of Frank Madison,
Marshall Madison, Charles Ruggles, and himself.
I've forgotten exactly what year it was, but perhaps '38, Del
became ill, seriously ill, and in many people's view, fatally ill
with cancer -- abdominal cancer. He never gave up for an instant.
He continued to work, and in the course of a year or so had, as I
recall, two major cancer operations. He had a young family -- two
boys -- and his wife, Marie, was wonderfully supportive.
He was operated on by a famous surgeon at Stanford Medical
School, whose name I will supply when I think of it [Emile Holman] ,
and miraculously, through the intervention of this surgeon and
Del's own courage and determination, he survived and went on to
resume his practice and to live to a ripe old age. When he had
completely recovered his health, he raised a new family, and had
two additional children, his daughter, and a younger son by the
name of Richard.
My first wife and I were dear friends of the Fullers and often
saw them socially, and they frequently came to see us in Palo Alto
on weekends. It was a wonderful example of family solidarity and
courage. I'm sure many another would have given up the ghost, but
Del went on to become very successful in his private financial
affairs, particularly in real estate, as he was extremely
knowledgeable and experienced in that area. He made a great
contribution to the firm and was a hard, successful worker.
Hicke: I just wanted to ask you what this group of the two Madisons,
Ruggles, and Fuller did. Was it mostly Socal work?
O'Brien: No. They didn't do Socal work. They did the Bank of California
work, California Packing Corporation work, and other corporate and
securities work. I think Frank Madison was a director of the bank.
I know Marshall Madison became a director of the bank, but we were
general counsel for the bank. That involved a lot of corporate
work. Charles Ruggles was a superb corporate lawyer. While he
never became a member of the firm, he was an absolute mountain peak
so far as his knowledge of corporate finance, et cetera, and the
man could literally sit down and dictate a fifty-page trust
indenture right off the top of his head.
59
Hicke: Oh, dear.
O'Brien: He was simply fabulous — Harvard Law School graduate, older than
Marshall Madison, with boundless energy, and wonderful to work
with. That group, and it wasn't very structured, also represented
the California Packing Corporation and handled a great many
business deals. Those were always Frank Madison's and Marshall
Madison's fields.
Hicke: Well, maybe the next time we can start with the list of associates?
O'Brien: Sure. Ruggles, Renato Capocelli.
[Interview 5: March 17, 1987 ]H
Hicke: You mentioned that you could say something about Gene Prince's
funeral.
O'Brien: Gene was one of the most popular lawyers in the state of
California, had a national reputation as an appellate lawyer and
was full of honors. At the time of his death there were
proceedings both in the federal and state courts in memory of Gene.
I recall that Burnham Enersen, "Ham" Enersen, a senior partner of
the McCutchen firm,1 subsequently to be the president of the State
Bar himself, made a short speech about Gene before the presiding
judge of the Superior Court, who at that time was Gene's former
partner, Judge Gerry Levin, who was also a former president of the
San Francisco Bar Association -- and I can't remember whether he
was perhaps, or also had been president of the California Bar
Association. In any event, Ham Enersen spoke, Sol Silverman spoke,
and Gerry Levin, wonderful man that he was, made a lengthy response
to the remarks of Ham Enersen and Sol Silverman.
On the following day, there was a memorial service at Grace
Cathedral. I attended those services, and the huge cathedral was
completely full. People were standing on the steps outside, which
perhaps gives some notion of what a tremendously popular figure he
was .
Hicke: Well, I think that finishes up some of the early partners that you
were talking about. And so maybe we can go back to --
chronologically — where we left off, which was the late '30s, and
start with the early '40s and your war service.
1. McCutchen, Doyle, Brown & Enersen of San Francisco.
60
III WORLD WAR II
Santa Ana Air Base.
O'Brien: By the late '30s, I was deeply involved in antitrust work,
particularly criminal grand jury proceedings and the ensuing
indictments. The war in Europe had already begun with the invasion
of Poland, and I felt in my bones that the day would arrive when I
would join the fight. My wife, Mary Louise, and I were profoundly
affected emotionally by the invasion of Poland, the bravery of the
Polish people, and treachery of the Nazis and the Communists in
their original treaty, and Hitler's subsequent invasion of Russia.
In any event, after Pearl Harbor on December 7, [1941] I
immediately applied for a commission in the Army Air Force. My
application, along with thousands of others, went through the usual
tanglefoot. One day early in May, after all the physical
examinations and so on, I got a telegram saying that I had been
appointed second lieutenant in the Air Force and ordering me to
report to the Santa Ana Army Air Base forthwith. I didn't really
have much time to compose myself or bring any order out of my legal
affairs. I got myself a couple of uniforms and drove to Santa Ana.
Hicke: What were you doing in the law firm at that time? Do you recall?
O'Brien: Well, I had a lot of clients. I can't remember all of the things I
was doing, but I was involved in the grand jury investigations, I'd
become the regular attorney of Fuller, I had other personal
clients, and did Standard Oil work.
I became an intelligence officer in the Air Force. I tried
very hard to get overseas from the day I arrived at Santa Ana. My
assignment was in the Western Training Command, which involved the
technical training of Air Force cadets, pref light training. The
Santa Ana Army Air Base was where they all started in the Western
Region. It became, before I left it, a huge base, with perhaps a
61
complement of 25,000 people. The cadets went through all of their
initial drill and all of the preflight training courses before
proceeding to flight training.
My efforts to get an overseas assignment weren't very
successful, and I stayed there from May '42 to about the middle of
'43. I did finally get sent to the Air Force intelligence school
at Harrisburg, Pennsylvania. There the students in the course were
told that the person graduating number one would be able to select
an overseas assignment in any theater he wished. It wasn't a very
difficult course. Like a lot of army courses, it seemed to me
mostly to require keeping a nice, neat notebook.
Hicke: And appearance, probably.
O'Brien: Yes. In any event, I graduated number one, and was called in one
day toward the end of the course. I thought, "Well, now I'm going
get my chance." They had noticed on my record that I had lived in
China, and asked me how I'd like to go to work for General
[Joseph W.] Stilwell. I said I thought that would be delightful.
They asked me about my Chinese, and I gave them a highly
exaggerated idea of my ability to speak the language.
Instead, after a few days, they called me back and said they'd
like to have me stay in Harrisburg and teach. I thought that was a
dirty trick, and I was highly indignant, and I said, "No way." And
so when the graduation ceremonies were over, I went back to Santa
Ana.
Assignment in Europe; Intelligence
O'Brien: I was there only a few weeks, however, when a call came for an
overseas assignment for one intelligence officer. As it happened,
there was another officer at Santa Ana Army Air Base who also
wanted desperately to get overseas. The commanding officer of the
base called us in and said that we were both qualified for the
assignment and he was puzzled as to how to make a choice between
us. He suggested we decide for ourselves -- the military mind at
work. So this officer, who was a good friend of mine, and I
repaired to the officers club, asked the bartender for a deck of
cards, shuffled it, and cut for the assignment.
Hicke: Oh, no.
O'Brien: I cut an ace. And within a very few days, I was on my way to
Jefferson Barracks.
62
Hicke: Where is that?
O'Brien: It's in Missouri, outside of St. Louis. I stayed there for perhaps
three weeks, going through what was called the staging process,
drilling troops, which I had enjoyed at Santa Ana Army Air Base,
and putting together a replacement squadron of various enlisted
specialists, for whom there was a special call from the Eighth Air
Force. As a consequence, when my squadron got put together, it had
eight first sergeants and all sorts of technicians, radar
specialists, and so on.
Eventually we went to a base in New Jersey, and from there, we
were put aboard a British ship, along with a lot of other troops,
to sail for England. On the day of our departure, I got a telegram
from the adjutant general that I had been promoted to my captaincy.
We had a rough voyage over. I bunked with the radar officer.
We were in a large convoy, and he used to come home at night with
all these terrifying stories about the attacks that had been
launched on the convoy from various directions . My squadron was
down in about the fifth hold of the ship. I thought the British
were totally indifferent to the welfare of the enlisted personnel
on the ship, so I posted a watch on every companionway for twenty-
four hours a day in the hope that if we got hit, some of my men
would get out of that deep hold and up those companionways with a
little advice and help from officer's watch that I posted. The
Brits thought I was nuts. So we had an officer roster, and each of
us stood watch trying to make sure if we had any episode or
incident of that sort, that we could get our men out of the ship.
Fortunately we never got hit.
I want to tell you, I was very glad to see Liverpool when we
arrived. We disembarked and marched through the streets of
Liverpool and got on a British train, and I delivered my squadron
to a brand-new air base way up in the northeast corner of England,
somewhere on The Wash. Then I was detached and sent to an officers
reassignment center in Newcastle.
Hicke: Your taking a squadron over was a temporary duty?
O'Brien: Yes, just to command a squadron on the ship.
Hicke: To get them over there?
O'Brien: To get them there. And they were not an ordinary squadron, because
there were enough first sergeants for a regiment.
Hicke: It must have been an interesting squadron.
63
O'Brien: I hung around this replacement center for a few days, and
ultimately orders came for me to go to Ireland, of all places. I
was profoundly disappointed with that, because it seemed to me
about as remote from the war as had Santa Ana Army Air Base -- but
there was no alternative. So I took a train up to Scotland, and
caught a boat across the Irish Sea, got to Belfast, and then drove
a jeep to a place called Mullighamore, God forbid -- I can't even
spell it.
Hicke: Well, I can find it on a map probably.
O'Brien: Yes. It was in the County of Londonderry, and it was a brand-new
base. The only personnel on the base were the surviving members of
the 82nd Airborne Division that had just been pulled out of Italy
after a big jump, and they were in bad shape. The place was
commanded by an absolute wild man, and after I had been there a few
days, I was determined I was not going spend any longer there than
I could possibly manage. So I asked him for permission to go to
the command headquarters of that command -- it was called the
Composite Command of the Eighth Air Force.
I drove across Ireland in a absolute pouring, drenching rain,
to the headquarters of this command, which was kind of a casualty
of the war itself. It had originally been put together for a very
dangerous and secret mission and had been manned by some very
capable and skillful people: many regular officers and some very
high-class, and high-ranking, officers. At the last minute before
that mission was to be carried off, as often happens in war, the
situation changed, and the whole thing was called off. These
people were left high and dry in Ireland. They were mighty unhappy
and, to some degree, discouraged, depressed, if not disaffected.
Anyway, I did the biggest sales job I could think of about how
much they needed my services in that command headquarters, and
after being there for two or three days, they cut an order
transferring me to that headquarters. So I went back to
Mullighamore and collected my few possessions. My footlocker had
been lost coming overseas, and I was living a very hand-to-mouth
existence.
Fortunately I was only there for a few months when I was
transferred to an air base at Cheddington, near Tring, in England,
which became the command headquarters of this same command. It was
an operational base for the Eighth Air Force, and we began to
regroup. The command began to hand out assignments for a variety
of secret missions involving people and special operations on the
continent. I got involved in some of those. Sometime in 1944, I
was transferred to Headquarters of the Strategic Air Forces.
Hicke: Where was that?
64
O'Brien: That was outside of London. I moved into the huge house with all
of the top generals of the American Air Force — it was near
Wimbledon. Maybe it was at Bushy Park; I've kind of forgotten.
Bushy Park was where Eisenhower's SHAEF headquarters was located.
SHAEF was Supreme Headquarters Allied Expeditionary Forces.
My boss was an extraordinary man by the name of Huntington
Sheldon. He was American but had been born in Paris and raised in
England. Indeed, he had gone to Eton, become the racquets champion
of England, belonged to all the best clubs in the Vest End —
Brooks and Boodles — and he and I spent many happy hours there.
Hicke: I was just going to ask if you were a tennis player.
O'Brien: No. He also was the Fives champion at Eton. Fives is a game which
began, perhaps, in the fifteenth and sixteenth centuries among Eton
students. It was a sort of handball, played up by the little boys
against the sides of the chapel while they were waiting for chapel.
The buttresses of the chapel came out and made sort of a natural
court, except in the one corner there was a drain hole, and then
there's a step in the middle of the court. Over the centuries,
they built courts just like that at Eton, and my friend Huntington
Sheldon, who had been the Fives champion at Eton, had several
courts named after him.
It's just like handball, except that it's played against the
side courts (the walls of the extended buttresses) as well as the
front court, but with a step in the middle of the court, and "dead
man's corner," which was the drain.
Post-Hostility Section; Rescuing Scientific Technology
O'Brien: In any event, he became the officer in charge of what was called
the post-hostility section, which was designed to think about what
would happen at the end of the war. I, as an intelligence officer,
was assigned the task of drawing a plan -- an intelligence plan.
I began to have the wild surmise that this was an unparalleled
opportunity in history to exploit the whole continent of Europe for
intelligence, by which I meant first, operational intelligence
against the Japanese, since they were part of the German orbit. Ve
knew they had exchanged information about their military
capabilities, their productive capabilities for weapons, the
locations of their aircraft factories, et cetera, and personnel.
65
That would be of an immediate operational interest as the European
war wound down.
But in perhaps even more important terms, the winding down of
the war would give us an opportunity for the exploitation of all of
the very high-level scientific and research secrets of the Germans.
Ve knew a good deal about German research through intelligence
channels: locations of research centers, and so on. Over a period
of a month or two -- took me a long time to formulate my ideas -- I
finally drew a plan, which served as the basis of this operation.
Then we began to try to accumulate the people to man such a
scheme. It was obvious that the military would not, by itself,
have the technological, the scientific capability of exploiting
these research centers by themselves, and so it was necessary from
time to time to recruit very high-level scientists from the United
States to man some of these somewhat chancy missions.
So we followed right on the heels of the invasion of the
continent. As soon as the allied armies had moved across onto the
continent after D-Day, we followed with our technical exploitation
teams at selected targets, where we knew that high-level research
had been done.
Hicke: Was there some kind of provision made to try to spare these -- were
they offices or labs or some such thing?
O'Brien: Veil, not really. But they were not military targets, so they, for
the most part, were not damaged in the war. They were damaged by
some of the displaced people who had been forced to work in them:
the people who had been hauled around the face of the earth, and
were slave labor in some of these places, doing all sorts of menial
tasks. Promptly after they were liberated, the first thing they
attempted to do was to attack and destroy the scientific machines.
In any event, that was the theory of it. Ve had some notable
successes, fortunately, in the early days after the invasion. As a
consequence. Dr. Von Karman, the chief of scientific advisors to
General [Henry "Hap"] Arnold, who was the head of the Air Force,
visited me in London. I began to get very high priorities for
moving my people into targets and developing a much more
sophisticated intelligence system as to what were most important
targets and what were the highest priorities.
One of the first targets we hit, which resulted in our getting
these priorities, was a target in the Low Countries. The captured
material I had couriered back to Vashington immediately. After
being appraised and evaluated in Vashington, it was said to have
resulted in saving a couple hundred million dollars in research
1943. Cheddington Air Base, England. Office
of Intelligence staff. O'Brien, center, standing.
66
that we might otherwise have had done in the United States. But
the results of that research were there, done by the Germans.
Hicke: Would this have been with rockets and that sort of thing?
O'Brien: All sorts of things, yes. So then, until the end of the war and
for many months afterwards, I had the fascination of helping to
direct this show under my boss, and under a very understanding,
intelligent general, who was the chief intelligence officer of the
Strategic Air Forces in Europe, General George McDonald — someone
should write his biography -- under whose auspices we ran a show
all the way from Scandanavia to North Africa, playing cops and
robbers with all of the secret radar, aerodynamics, optics,
rockets, scientific intelligence of the enemies at a later stage,
manufacturing --
II
— and technological achievements. Ve had an eight-story building
in London, which became a documents center. Ve had there twenty
librarians from the United States. Ve got the equipment together,
we catalogued this material, duplicated it, gave copies to our
British friends, had airplanes flying documents back and forth
across the channel to London where they would be fed into this
library system, if you like. Much of it highly classified
research.
Hicke: Where were you spending most of your time?
O'Brien: Veil, I was living outside of Paris, but I had a flat in London. I
got very tired of living with the generals in Bushy Park, being --
by then I was a major, I guess, at that time, so I --
Hicke: You would probably have to salute every time you turned around.
O'Brien: Right. I was sitting well below the salt, and I got very tired of
standing up and sitting down. It was sort of "Yes sir, no sir,
three bags full. "
So I got permission to move from the generals. Vith the help
of a delightful British solicitor named Ballentine -- who
represented the Standard Oil Company of California in many of its
early negotiations in the Middle East in the acquisition of the
Bahrain concession -- I was able to find a comfortable room in
which to live in a modern hotel in London, which was an absolute
miracle. Nobody could believe that I had lucked into this
comfortable room in what was then a new hotel called Atheneum Court
on Picadilly, right across from Green Park.
67
Hicke: Obviously there wasn't much in the way of living quarters in London
at that time.
O'Brien: No. Things were getting knocked down, and people were being
evacuated from London, and so on. After D-Day, when I was on the
continent a lot, I continued to keep that flat. I was gone for a
couple of years, so London began to seem like home, and I could
leave all my stuff there.
But I did live in a beautiful home for a while with a lot of
other officers in St. Germain outside of Paris, on the estate of
one Mr. Gervais, the cheese manufacturer in France, with lovely
formal gardens. And then we established another base in Wiesbaden,
and I had a place to live there. So I led kind of a triangular
life — London, Paris, Wiesbaden — and I was back and forth all
the time.
By then I had a card which enabled me to commandeer an
airplane whenever I needed one, and I flew a lot with this General
McDonald, who had been one of the original Hap Arnold, Billy
Mitchell, wild-blue-yonder boys himself.
Hicke: That must have been exciting.
O'Brien: Yes. It was kind of hair-raising.
Hicke: Yes, that's what I meant.
O'Brien: He had an RAF pilot for his own private airplane. But a general
officer, in the Air Force had the right to check himself out of an
airfield no matter what the weather.
Hicke: Oh, he did the actual flying?
O'Brien: Yes, and this RAF pilot, too. But even if the weather report says
zero/zero [visibility], he would decide he was going to go anyway,
you know.
Hicke: And you went along?
O'Brien: And I was along. So we'd first go down the deck to see whether you
could see anything, and if not, then we'd go up as high as his
plane would go to see if you couldn't break out of the overcast. I
finally got so I could go to sleep. The plane was dolled up with a
berth, which was for the general, but I couldn't stand looking out
the window wondering whether we were about to hit a mountain or
plunge into the sea.
Anyway, I stayed on doing this until December of '45. By
then, most of the material had been collected, transportation
68
Hicke:
O'Brien:
Hicke:
O'Brien:
arrangements had to be made. I got the British, at one time, to
give us a carrier, and we picked some of the most esoteric examples
of German technology and put it on the carrier and shipped it back
to the United States.
A few very remarkable things were flown from England back to
Wright Field. Ultimately, the documents that had been collected in
the document center in London found their way into the Technical
Intelligence Archives of the American Air Force.
In the end, I represented the Air Force in the negotiations
with the British Air Ministry as to the division, if you like, of
the loot. We began with a whole bunch of generals on both sides,
air chief marshals and ranking generals, and the British absolutely
clobbered us, because they were so skillful at negotiations that
within a few minutes they'd have the American generals arguing with
each other. That seemed a big catastrophe to me, so we kept
getting the groups smaller and smaller, and I finally succeeded in
being named as the single American negotiator, and I negotiated the
final deal with a British counterpart.
The British had a marvelous intelligence service; they taught
us a great deal. We had the advantage of them in the sense that,
in relative terms, we had unlimited money. While they had to
decide on particular equipment to go ahead and build it and use it,
we could keep experimenting on the basis of what we learned from
their equipment, and continue to improve and refine all sorts of
technical advances -- as, for example, airborne radar.
Well, I notice that you got the Legion of Merit, the Bronze Star,
the Croix de Guerre [with Silver Star], perhaps others I don't know
about, but that was all for that work?
Yes. One of the things I monitored when I was in the Composite
Command was in relation to the French Resistance. There was a
highly sophisticated system that had to do with rescuing our downed
fliers in Europe. They were fed into a pipeline, and ultimately
out of the nonoccupied countries.
Underground?
Yes, an underground. And I had some piece of that for a while. So
when it was possible to go into Paris where I spent V-E Day and a
few days thereafter, I looked up a lot of those people who had
risked their lives for American fliers. I made some life-long
friends .
You know, it's kind of par for the course for Americans to be
highly critical of the French, and vice versa, particularly now.
And yet if you lived through World War II, and saw the tragedy of
69
Hicke:
the downfall and defeat of France and its occupation, and also saw
the absolutely unlimited courage of some Frenchmen to help the
Allies and the American fliers, it makes you hesitate to be so
critical.
There wasn't any great future in trying to help an American
flyer. If you were a French farmer and a fellow came down in a
parachute and you hid him in your house and you got caught, they'd
just lock you, your wife, and your children inside of it and burn
it down. It was not calculated to add to your longevity. So it
was a very touchy thing to run such a thing, and I met some of the
people who were actively engaged in that.
You may remember, we were reading the German messages -- it
was called "Ultra."
I was just going to ask you if you were involved in breaking the
German codes.
O'Brien: No, I wasn't involved in that at all, but I was on the receiving
end of the information. So having sent a lot of other people to a
lot of interesting places, we learned that [Hermann] Goering had
moved the main body of his general staff to a secret headquarters
in Bavaria. I decided I couldn't resist that one.
In the final days of the war, Hitler and Goering had a great
falling-out. They had made an arrangement when Hitler was in the
bunker, or maybe even a little before, that if he got absolutely
surrounded and couldn't escape, he would send a message to Goering,
and Goering would then officially succeed Hitler as Die Fuhrer, and
lead the. troops to a final victory. They still had hundreds of
thousands of troops in the Hartz mountains, and Goering was
supposed to lead them in one last, great Gotterdammerung.
You remember that General Eisenhower did not go to Berlin for
the armistice signing ceremonies. He sent Beedle Smith, and
Eisenhower stayed with his troops, because he was fearful of a
flank attack from the great number of German troops still up there
in the mountains. And, also, he didn't want to have a
confrontation with General Zhukof, the commanding general of the
Russian force, in Berlin.
In any event, I flew to Salzburg in a plane with a jeep on it.
Another fellow -- German- speaking -- and I tooled off across the
country looking for this headquarters staff of the German Air
Force. We worked our way down through the country. The German
soldiers were pouring out of the mountains, and we drove through
them. We kept getting pointers: "They're there; they're over that
way." We finally got down into Austria to a little place called
Zellam See, and lo and behold, that's where they were.
70
They were just waiting. The war was essentially over. This
guy and I drove up to the little inn that they had turned into
their headquarters; there was a German sentry there. I said I
wanted to see General Von Kohler, who, by then had succeeded
Goering as the commanding general of the Air Force -- he had been
appointed in the final days of the war by Hitler. There's an
intervening story which I'll tell you; that's kind of interesting.
Anyway, Von Kohler came into the dining room that they had
turned into a war room with all their maps and the battle lines and
the locations of their ground forces and all that stuff, and I
asked him to send immediately for the personnel general. I've
forgotten his name now but he came in, very high ranking officer.
For effect, I had my associate lay down a chart which was the
result of the intensive intelligence efforts from day one of the
war both by the British and the Americans. I spread out this chart
of the structure of their headquarters, with the names of all the
people who occupied the positions in their headquarters, and this
German general looked at it for a moment, and said, "It's a lot
better than mine." Anyway I stayed with them for a few days.
Hicke: Was he just there? He wasn't under arrest?
O'Brien: No. They were waiting for somebody -- some representative of
American forces, or some enemy force -- to come and officially take
possession of them.
That first day, I walked through the headquarters out onto the
lawn in the back, which led down to a lovely little jewel of a
lake, and there they were. There were about sixty or seventy
German generals there, full uniforms, decorations, and side arms,
just waiting -- strolling up and down arm-in-arm, waiting for
somebody to come and officially end the war.
Hicke: That's fascinating.
O'Brien: I might have been a major or a lieutenant colonel by then, maybe --
in any event, I was very greatly out-ranked.
So I stayed there for a couple of days with them. I took
their personnel charts. I sat down and I said, "I want to know the
whereabouts of everybody on this staff." Some had disappeared;
some had been sent off on special missions and never returned; some
had been killed; some had been taken prisoner, I guess, but most of
them were still there. I had had this idea for a long time that I
wanted to keep that staff together as a staff, intact, with all of
the leading generals there and all of their principal colleagues
and associates, and then bring over from the Pentagon their
71
opposite numbers from the American Air Force so they could refight
the war: "When you did this?" "Why did you do that?" et cetera.
Hicke: Fantastic.
O'Brien: And I knew there would be a great effort to grab off these people,
to pull everyone in different directions -- the Signals people
would want to talk to the Signals man, you know, and all that sort
of business. So after I had done my best to locate them -- I still
have in my papers their chart of their headquarters staff with my
notes on it -- I flew to SHAEF, to Eisenhower's headquarters, and
was fortunate enough to get to see Beedle Smith, who was his
deputy. He gave an order that the staff should be kept intact and
not pulled to pieces.
They then appointed an American general who had just come over
from the training command -- a major general -- to be the official
representative of the American side. He and I and some other
officers -- some of his entourage -- flew back and met these people
again at Zellam See. Then we moved them, in their trucks and ours,
back to Berchtesgaden, where they had had a secret headquarters dug
into the mountains .
Hicke: The Eagle's Nest.
O'Brien: Yes. Well, the Eagle's Nest was nearby, but this was a big
compound of buildings disguised as a girls' school. It had a big
signals center, and it had gates and walls around it, so it was a
good place -- one that they were familiar with, it was their
headquarters. And there we disarmed them.
Then as time wore on we were fortunate to find their papers,
which they had been ordered to destroy but which they had secretly
microfilmed and buried the microfilm in the Hartz mountains. We
found those. So then we had the bodies and their papers, and it
was time to begin the interrogations, and ultimately we brought
over their counterparts from the U.S.
Hicke: They actually did have this dialogue?
O'Brien: Yes. It was used in the war colleges for a long time; I don't know
what ultimately happened to it.
So that was essentially the completion of the job, as far as I
was concerned. I took possession of the German officer who was the
intelligence officer in the German Air Force. An enlisted man and
I found him in an upstairs room in a little building. I had a
small detachment of soldiers from the 82nd Airborne that went with
me when I was trying to find him. He wasn't with the rest of these
fellows .
72
Hicke: Is this at Berchtesgaden now?
O'Brien: Oh, I've forgotten where it was; it must have been in
Berchtesgaden. In any event, we got him; he was in an upstairs
room. I didn't know what would happen, you know, whether he was
going to fire at us or what. So we kicked open the door, and he
was in a bedroom with twin beds in it. There was this tough little
soldier that was with me from the 82nd Airborne, and this German
officer, impeccably dressed -- uniform, decorations, and so on --
kept sort of shuffling around in the room, and kept talking about
the Geneva Convention. I don't know whether he was scared of us,
but I was plenty scared of him. Finally he reached down in his
boots, where he had a long knife. When he did that this youngster
from the 82nd Airborne knocked him over both of those beds, and we
took possession of the guy.
Hicke: Was he about to attack?
O'Brien: I don't know. I think he must have been. I think he got spooked
and frightened. Maybe he thought he was protecting himself, I
don't know. But we hadn't laid a glove on him up until then. I
took his handgun, and it was a British gun, a Webbley Scott, a
beautiful little revolver. I brought it home as a souvenir.
Ultimately I gave it, along with some other souvenirs like that, to
a friend of mine who is a gun collector, and about month or two
later he called me up one day and said, "You know that little
Webbley Scott you gave me?" I said, "Yes." I said, "I'm sorry I
gave it to you. I loved that little gun. It felt so good in my
hand." He said, "Well, it wouldn't ever have done you any good,
because somebody had very carefully sawed off the firing pin." So
this German officer was carrying around a gun which he probably
didn't know wouldn't fire. He must have had some real friend who
fixed him up.
Hicke: That is fascinating.
O'Brien: Anyway, as a consequence of all of those experiences, by the time I
came home, I had met a great many people, I had had considerable
responsibilities. There were no intelligence manuals about how to
do such a job, you know, and I worked with a bunch of very bright,
able people within the regular Air Force, and surrounded by very
bright people who were ready to take a risk and take a chance and
try to do something that was really going to be valuable.
73
Demise of the Red Baron: The Technological Revolution
O'Brien:
If you've read any history, we were really a generation behind the
Germans in our weapons. They were flying jet aircraft; we were
still flying Model T Fords. They had rockets, and we had nothing
of that sort. They had very sophisticated radar; their optics were
fantastic. In one single research center in Brunswick, they had
more experimental research equipment than we had in the United
States. So when Hitler said he had secret weapons, he did. And
the war was great deal closer than most people in the United States
ever realized.
It seemed to me that this was an opportunity really to get the
United States up to speed and to understand that what was coming
now was a great technological revolution which would change the
whole concept of warfare and would change the whole idea of being
an Air Force officer.
So I got permission from General Spaatz, who was the
commanding general of the Air Force in Europe, to write a paper
about my ideas and what I thought should be done: no more of this
just flying airplanes and being a group commander, a wing
commander, or whatever -- a wild-blue-yonder boy -- that was not
going to win any wars for us. We now had to have people who were
highly educated, scientifically oriented, engineers and scholars
and research people to make sure that we kept up with the
scientific and technological developments and to run an
intelligence system that was commensurate with that sort of
prospective warfare.
So I wrote that paper,
things .
I don't have a copy of it, of all
Hicke: I was just going to ask if you did.
O'Brien: I was sent on special duty to Washington for two weeks, and I
coordinated my paper through all of the great crowned heads of the
Air Force and presented my ideas in writing to General Arnold as to
the future mission of the intelligence community in the Air Force.
I don't know what ever happened to it, but it at least had
some glimmer of understanding that it was a brand-new world. And I
did get Spaatz, while I was still there, to issue a directive that
regular Air Force officers who had completed their allotted number
of missions and were going to be returned home couldn't leave the
theater without coming and talking to me. I did that because I
wanted to try to explain to them that the old values about the Air
Force were going to disappear very quickly, that the way to rise in
74
the ranks of the Air Force was going to be through education,
intelligence, and technical orientation, and so on, that just
getting out there and firing your guns and going 500 miles an hour
was not going to win any wars.
Hicke: The demise of the Red Baron.
O'Brien; Yes, the day of the Red Baron was over.
Hicke: It sounds like you not only imported the technological revolution,
but also the philosophical revolution that changed ways of
thinking .
O'Brien: Well, out of all the people I interviewed, I got perhaps ten or
fifteen to transfer out of the flying business into technical
intelligence and into strategic intelligence. I don't know what
happened to all of them. I know that one of that group became a
lieutenant general and there were two major generals: one of them
became head of the technical intelligence -- what do they call
it? -- it's a technological command of the U.S. Air Force's.
Anybody could see that the world had gone through a great
revolution in a technological sense with the development of rockets
and radar and optical capabilities that would give you, from a
satellite, the number on the parking lot. So I came back, in many
ways, quite a different fellow from the one that had left.
Hicke: You were different, and the Air Force was different.
O'Brien: Yes. Four or five years of that business had changed my own values
and my own perceptions.
75
IV POSTWAR RESPONSIBILITIES AT PM&S
[Interview 6: March 24, 1987 ]
Lawyers Vho Came and Went
Hicke: Last time, I think, we ended up when you were just getting back to
PM&S after your war service, and you told me a little bit about
coming back. But before we start that, at one point we were
talking about a list of associates, and this is the only list that
I could come up with, and I gleaned that from John Sutro.
O'Brien: [looks at list] Gee, that's a pretty scrappy little list.
Hicke: Yes. Those are the ones that John Sutro hired; he kept a record of
some of the ones that he hired.
O'Brien: There must be yellow cards somewhere. There used to be a yellow
card for each person -- information about each person.1
Harlow Rothert is practicing law in San Francisco. He was a great
Stanford athlete, and he and a fellow named Duncan Lowe and another
named John Hancock formed a firm, and it was quite a successful
firm. Lowe is dead; Rothert and Hancock are still alive and
thriving. Ralph Kleps left the firm to became the administrative
head of the California courts, the job in which he served with
1. Despite numerous inquiries, the interviewer has not been able
to locate the yellow cards or any similar file of personnel
information dating back to the 1930s.
76
great distinction until Rose Bird came along. They didn't hit it
off at all, and he retired, I guess, or resigned. Tom Caldwell
became the secretary of some judge; he left the firm. Scott
Lambert had a marvelous career. He started to work as a hall boy
for the Standard Oil Company when he was about sixteen or
seventeen, I guess.
Hicke: A hall boy?
O'Brien: Yes. In those days, there was on every floor of the Standard Oil
Building, a receptionist when you got off the elevator, and
messages were delivered by hall boys carrying baskets between the
floors, and Scott Lambert was such a messenger. He went on to get
his law degree with the encouragement of the company [Standard
Oil]. They liked him very much and were very supportive, and he
was a fine, able, bright, energetic, attractive-looking guy.
Then they asked the firm to have him serve an apprenticeship
at PM&S. He came to the firm and was primarily interested in tax
matters. He worked very closely with Sig Nielson; they were the
dearest friends, and Scott was a very popular, very successful
young lawyer. After he had been in PM&S for a few years the
company took him back and he became, ultimately, the chief tax
counsel of the Standard Oil Company, and ultimately was made a vice
president of the company and general tax counsel, and retired at or
about the same time I did, I guess. He's alive and well, and a
very peppy, attractive, charming gentleman. So he had quite a
career.
Hicke: Yes. He would be interesting to talk to.
O'Brien: I'm not aware of ever having heard of any of the other names.
Hicke: Okay. Well, they probably came and left. Those were the war
years.
O'Brien: See, they did. They were wartime -- '43, '44, '45, and they all
left before I came back to work.
Hicke: Yes. Including -- there was one woman there, I see.
O'Brien: Yes, Mrs. Dean Lawrence, but she left. She came in '44 and left in
'45. But the people in the '30s — I still want to talk someday
about the Capocellis and the Spurlocks and Garry Owen and all the
rest of them.
Hicke: Okay. Well, there's that list and one that I compiled from Francis
Marshall's memories of people that he remembered.
77
O'Brien: Yes. Right. Well, I could add something to these stories, because
I knew all of these people.
Hicke : Okay . Do you want to do that now?
O'Brien: Well, I don't care, sure. Whatever.
Hicke: All right.
O'Brien: Charles Ruggles. When I came to the firm in 1935, he was probably
sixty. A man of boundless energy, and a great corporate lawyer.
Hicke: Had he been with the firm for a long time?
O'Brien: He'd been with the firm, as far as I know, from the beginning.
He'd never become a partner, but he was a brilliant
corporate/securities lawyer, and he and I worked together. I was
eager to find out about corporate work, and I worked with him
writing trust indentures and bond indentures, and I worked a lot
with him in preparing applications to the State Corporations
Commissioner for permits that were required required under
California corporation law -- securities law --
Hicke: Permits to issue?
O'Brien: -- for the issue of securities. I learned a great deal from him.
He worked principally with F. D. Madison and Marshall Madison, but
he was an absolutely delightful man, beautifully educated and
highly charged all the time. He used to sprint up and down the
halls; he seemed nervous and excitable. He'd sit down and dictate,
practically from his head, a bond indenture fifty printed pages
long, you know -- absolutely amazing capacity. He retired, I
guess, maybe during or shortly after the war. But he was a great
favorite of mine, and I admired his capacity.
Renato Capocelli: don't know how he began. He was probably
in his middle fifties when I started at the firm. He had an office
just down the hall from Mr. Smith, and he worked exclusively, to
the best of my knowledge, on the land problems of the Standard Oil
Company.
Hicke: That must have been quite a job.
O'Brien: Yes. It can be enormously complicated, with all the layers of
agreements that affect property. So he was an expert on oil and
gas rights and land law. When you first sat down across from
Capocelli, you used to think, "I need simultaneous translation."
He had such a pronounced accent that until you got tuned in, he was
difficult to understand. He was a superb, nineteenth century,
Italian gentleman. I never met a man with more grace of manner and
78
real consideration for other people -- he was marvelous. He went
about his work quietly, and apparently did it with great
effectiveness. I didn't have much to do with him, because I didn't
really ever get into that work until I was responsible for some of
it in the Standard Oil Company.
Hicke: Yes.
O'Brien: Hugh Fullerton was one of a kind. I think his father had been an
executive in the telephone company. When I met Hugh Fullerton he
was a broad-shouldered, stocky, energetic swinger. He flew his own
airplane. He was a very lively customer. I had some wonderful
experiences with him and some of his small cases.
Hicke: Does anything special come to mind as an example?
O'Brien: Yes. I remember a case that he had involving a fellow who had
leased a storefront, or one-half of a storefront, or something like
that. I guess he was a penman, or something of the sort, as I
remember. In any event, he attracted a huge crowd sitting in the
storefront of this building, so that the rest of the tenants
couldn't get in. The landlord, whom Fullerton represented, wanted
to get rid of this guy, and he had just a month-to-month tenancy,
or something of that sort.
So Hugh Fullerton served a notice on him to quit, gave him a
statutory notice, but the fellow didn't leave. And then we filed
an unlawful detainer suit against him, and he claimed he'd never
received any of these notices.
I was sitting in the library one day, shortly after I had come
to the office, and Hugh Fullerton called for me. I went in and he
was taking the deposition of this guy and inquiring about this
letter. The fellow denied he'd ever received anything of the sort.
Fullerton said to me, "Ask this man some questions. I have to go
flying." So I sat down, with what little I knew about it, and
examined the fellow, and we continued the deposition, then, until
another day.
Ultimately Hugh Fullerton hammered away at that guy, at some
future date when the deposition was continued, when Hugh again
asked about the letter, the fellow made some involuntary gesture
toward his inside pocket of his coat, and Hugh reached over and
pulled out what the fellow had in it. There was the notice. So
he'd had it all the time.
Hicke: And carried it with him, yet.
O'Brien: He even had it with him, but he made some pass like that at it
[makes hand gesture], and Hugh just reached over and took it away
79
from him — out of his pocket. And he said to this fellow, "Why
you S.O.B1" And the other lawyer said, "Let the record show that
Mr. Fullerton has called my client an S.O.B.* Mr. Fullerton said,
"Let the record show your client is an S.O.B."
Hicke: Oh, wonderful I
O'Brien: End of story I
So Hugh went to Washington and was originally in charge of our
Washington office. Washington fit his style perfectly. He was
really into everything, you know -- Washington was a huge cafeteria
for Hugh. But he fell on bad times: he got into trouble with the
government, and resigned from the firm, and that was the end of
Hugh Fullerton.
Norbert Korte I've talked about to some degree. Del Fuller
I've talked about. Garry Owen was a remarkable young lawyer when I
first joined the firm, and he was very kind to me. He worked with
Felix Smith, and Felix had such a shorthand style in describing the
legal problem of the people involved, and the things he wanted you
to do -- I used to hurry down the hall and talk to Garry to see if
I could get a rough idea of the dramatis personae.
Hicke: Another "simultaneous translation" needed.
O'Brien: And Garry was very helpful. He would look at the things I had
drafted to see whether they made any sense, and so on. Considering
I was a one-feather Indian right out of law school who needed some
seasoned lawyer to give me a hand, he was always very generous and
friendly, and we became warm friends.
When Aramco was formed, he left the firm and went to Saudi
Arabia in the early days -- in the '30s. He became, over time,
sort of Aramco 's ambassador to the court of the king, and had a
very successful career. He was very highly regarded everywhere,
had the confidence of the people and of the king and his ministers.
So it was a fascinating career.
Hicke: Indeed.
O'Brien: I used to see him from time to time when he'd be on home leave or
be in New York or San Francisco on something in connection with
Aramco affairs, and we remained good friends until his death.
Woodson Spurlock came from Iowa, and I think he'd been
educated at the University in Iowa. He was a Rhodes scholar, tall,
slender, fair, with cobalt blue eyes, friendly, reserved, quiet,
but very bright and very highly thought of by Felix Smith. He
obviously was a highly intelligent fellow with a scholarly turn of
80
mind. He too left the firm and went to work for Aramco in Saudi
Arabia, ultimately, where he had a high-level legal job in the
hierarchy of Aramco affairs. He became, it is said, something like
a Lawrence of Arabia — that is, he lived from time to time in the
desert, traveled with the Arabs, I guess spoke the language by
then, and became a considerable scholar of Islamic culture, and
continued to work for Aramco until his retirement. Now he's
deceased.
Sam Wright I've talked about, a great fellow.
Dudley Miller: I have the impression, I may be wrong, that he
left the office and went to work for the Standard Oil Company in
some capacity. And then he and Leland Groezinger, whose name is
next on your list, and a couple of other fellows formed a firm
which was quite a successful operation.
Hicke: A law firm?
O'Brien: A law firm, yes. And Miller and Groezinger, and someone else --
whose name escapes me at the moment -- were the senior members of
that firm. Lee Groezinger worked principally for Marshall Madison,
and he and I worked on a lot of food and drug problems -- labeling,
and misleading advertising and, oh, a thousand and one things.
Hicke: For various clients?
O'Brien: Because Marshall Madison was general counsel of California Packing
Corporation, which was Del Monte --
Hicke: Oh, okay. Yes.
O'Brien: -- and it was an important client. They were, of course, very
large manufacturers of canned fruits and vegetables. They may well
have grown some of their own things, but they had contracts with
the farmers for their crops of vegetables and fruits. They
harvested them, and then they put them through their canning
plants, and they sold these things worldwide. So they were an
important client, and Lee Groezinger worked on those, and I worked
with him.
As a matter of fact, I had two interesting experiences that
arose out of that. Some time before World War II, the Bank of
China or its local subsidiary in San Francisco failed. California
Packing Corporation had shipped a cargo of some sort of canned
goods to China, and before the money got back through the banking
channels, or had been paid by the Bank of China, the bank failed
and was taken over by the superintendent of banks in California. I
was given the chore of seeing what we could collect. So I went
over to call on the bank authorities.
81
Hicke: Was there a bankruptcy law at that time? Did they go into
bankruptcy?
O'Brien: Yes. A receivership, I think it was. In any event, the Chinese
government was greatly embarrassed about this, and they sent over
an important, young, let's say Assistant Minister of Finance or
something, to supervise the liquidation of the bank's affairs. So
I went to call on him, and they were offering creditors to the
bank, let's say, forty cents on the dollar. In our first meeting
that is what he offered me.
As I watched the man, even though they're supposed to be so
inscrutable, it seemed to me that the poor fellow was just as
lonesome and out of sorts as he could be. And I said to him one
day, "You know, it must be very hard for you here. You are
separated from your wife and your children, and it's not the most
hospitable place for you. You must miss China. Where is your
home?" He said, "Shanghai." I said, "Well, I grew up in
Shanghai. "
Well, gee, the whole atmosphere changed. He did an unusual
thing for a Chinese gentleman: he pulled out of his wallet a
picture of his wife and his tiny son, and I admired them.
So he said, "Well, why don't we settle this matter?" He did a
few calculations with his abacus and said, "I'll pay you this."
And I said, "Well, that sounds pretty good. I'll take it and
discuss it with my client" -- I didn't have the authority to settle
the case.
I did a little arithmatic of my own as we were talking about
it, and then I walked down the street right then to the Wells Fargo
Bank and went to the foreign exchange department and asked them to
translate that for me. What he was offering me was about 85
percent of the price.
I thought that over for a minute. I hadn't even come back to
the office, and I hadn't conveyed it to my client. So instead of
coming home, I walked back to his office, and I said to him, "As
you know, I obviously am interested in winning the most favorable
settlement I can for my client. But, and I hesitate to mention
this to you because your offer is very generous, but before I
convey it to my client, I want to make sure that it's right from
your point of view."
He looked a little angry and a little upset. He again wrote
down some numbers in Chinese, and he pushed a button and in came a
couple of people and he handed the paper to them, and they went
out. And they came back in and, sure enough, he had offered me 85
82
percent. And he absolutely refused to change it. I could see some
kind of look of dismay go over his face.
Hicke: It was a mistake?
O'Brien: It was a mistake on his part, but was one that he declined to
change. First, because he had given me his word, and because there
would be some loss of face involved. I'd given him the opportunity
to switch the signals and wasn't trying to take advantage of some
arithmetic mistake, but he absolutely declined. So I took it back
to the client, and we settled for that. That was kind of an
unusual experience.
Hicke: Amazing. Maybe you could tell me more, as we go along about the
so-called art of negotiation, but one of the things I've read is
that it's particularly true of Americans that they don't want to
take advantage in negotiations.
O'Brien: I don't think you can generalize about that, Carole.
Hicke: Okay. Well, maybe that isn't the right way to put it. Maybe what
I'm saying is apparently you have found that the best way to
negotiate is not to take advantage, but to try to arrive at
settlement where everybody is happy.
O'Brien: Or not to fool somebody.
Hicke: Yes.
O'Brien: I had another story I was going to tell about. I guess the first
case I ever tried was one that I tried for the California Packing
Corporation, and I tried it in Fairfield in the justice's court
against a very famous lawyer by the name of Lloyd Robbins, who had
the world's greatest collection of canon law, which he left to the
University of California. One of the great canon lawyers of our
times, Mr. Noonan, who was on the law faculty at Berkeley --
special legal advisor to the Pope and served on all sorts of
special commissions -- worked with that Lloyd Robbins ' s canon law
collection, which was a fantastic thing. Robbins also left the law
school a great deal of money as an endowment for that library.
Hicke: He was a Californian, obviously.
O'Brien: Yes. He had a big spread around Vacaville or Fairfield. And he
objected to the charge that the California Packing Corporation made
to farmers for the boxes that they put in the fields that belonged
to the California Packing Corporation. The charge they made was
called box rental. They would put out the boxes in the field, and
the crops or fruit would be harvested and then put on trucks. He
wouldn't pay it.
83
Finally the company felt compelled to sue him. So they sued
him for about one month's rent -- it was more a matter of principle
than anything else -- and I was drafted to try the case before the
justice of the peace, some sort of magistrate in Fairfield.
We tried the case for about three or four days. Every day
when I would arrive in court, Lloyd Robbins would be closeted with
the judge in chambers. That was a little unnerving to start with.
And then whenever I would put on a witness, Lloyd Robbins would
promptly rise and say, "No, that isn't the way it is." I finally
said to the judge one day, "You know, I'd be happy to waive
Mr. Robbins 's taking the normal oath of the witness, but I do wish
that when he was testifying he'd be sitting in the chair and not
standing in the well of the court."
Well, he was very indulgent with me. At the end of every day
he'd say, "Come on, let's go have a drink," and I'd get in his car,
and he'd drive me out to the ranch. And he said to me, "Now young
man, the doctors only allow me one drink a day." And then he'd
shout at some attendant, and they'd bring him a martini in one of
those [demonstrates with hands] --
Hicke: A foot high?
O'Brien: About a foot high, really.
ft
Hicke: How did the case turn out?
O'Brien: It didn't take that judge very long to decide in Mr. Robbins 's
favor. He was the squire, he ran the whole county. But he was an
agreeable old gentleman, and I learned a lot about --
Hicke: You didn't learn how to get closeted with the judge before --
O'Brien: No. How to get clobbered, I guess.
Hicke: Oh, on one drink.
O'Brien: Let's see. Who else is on here [looks at list]. Al Tanner worked
for Felix Smith, and as the years wore on he, as I recall, became
primarily interested in corporate securities work. I think a lot
of young lawyers in the firm found him hard to work for. He was a
man who was frightfully meticulous, meticulous to a fault, shall we
say, and I guess that's a good fault if you are a corporate lawyer
and you really need to dot every "I" and cross every "T" and so on,
but it would be an enterprise that would drive you up the wall.
But he had the confidence and respect of Felix Smith, and he
84
handled a lot of important matters for the Standard Oil Company
over the years. He was a partner in the firm, and retired, and
lived on after his wife's death for quite a number of years.
Henry Hayes was a particular favorite of mine, and he just
died a few months ago.
Hicke: I saw the notice in the paper.
O'Brien: He didn't have what you'd call a happy career exactly, because he
was profoundly disenchanted that he hadn't been made a partner. He
was about that tall. [gestures with hands]
Hicke: Five feet?
O'Brien: I would guess less than five feet. He was a brilliant fellow with
great charm. He had gone to Deep Springs School -- that was a very
special school, I think maybe sponsored by Yale University, but it
was a very special place. He went from there to Yale and the Yale
Law School, I think, and he had a fine academic record when he was
in school. He worked very closely for and with Felix Smith.
He and I were the two associates that worked on all those
glass cases that I described for you. Henry was very quick and an
excellent draftsman and a most agreeable person to work with. But
for some reason unknown to me, he didn't become a member of the
firm, and during the war he left the firm and went to teach at Deep
Springs. Then after the war, he came back. He still didn't become
a partner, but he worked on, I think, until his retirement, as I
remember.
In any event, I thought he was a very good lawyer indeed, and
a most charming, entertaining, and engaging friend. He had a wife
named Kit. They had a big, open car, and they had one of those
huge, woolly sheep dogs. I have a vision of Henry and Kit and this
enormous sheep dog tooling down the road. They lived in Marin
County. And we became good friends.
I've lost track of some of these people, because they
disappeared during the war. Bud Pringle I knew before the war. He
had been the roadman. I don't think I succeeded him as the
roadman. I think it was Bud Pringle, and then Bob Bolander, and
then O'Brien. And as I've told you, the roadman argued a great
many preliminary motions and demurrers and that sort of thing, and
Bud Pringle had an unbroken record of having something like forty
or fifty or sixty demurrers sustained against other people. A
demurrer is a common law legal motion which says in effect that I
concede all the facts that you state in the complaint, but they
don't state a legal cause of action; there's something faulty about
85
your pleading.
Pringle.
Nobody could plead a cause of action against
Hicke :
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
I bet they were sorry to lose him as roadman.
He then went on to handle -- I think after Francis Gill, who was
another real character, an associate -- workman's compensation
matters and promptly became possessed of every disease of every
case. He was not a very prepossessing-looking guy, kind of pale
and sallow, but he was a bright man, and we both knew the grip,
both having been roadman. But he had a long tenure as roadman or
he never would have scored as he did on all these demurrers.
Bob Bolander: I don't know what happened to him. He was a
very attractive, good-looking, young man. He was the roadman, I
think, before me; I
road about,
like that.
pulled off the road.
think I took over from him. I was only on the
I don't know, three or four months, maybe something
I guess I got into some of these cases and had to be
But I think I succeeded Bob Bolander. I
never knew him very well, but he was a very pleasant, agreeable
person. I've kind of forgotten what happened to him, whether he
stayed on until the war started and left in that context, or
otherwise.
And I guess that's about it on those people on the list.
You mentioned Francis Gill. Do you have a couple more minutes?
Oh, Francis Gill. He was a real character. Where he came from I
don't know, but he was a true eccentric -- skinny, intense,
brighter than the dickens, and a nonconformist. I remember that he
somehow got an important case involving workmen's compensation law
into the Supreme Court of the United States before anybody in the
firm realized what had happened. And in those days, where
everything was, you know, so carefully supervised -- anything that
an associate did was carefully reviewed by serried ranks of elder
lawyers and partners -- suddenly they found themselves with Francis
Gill about to go to Washington to argue a case in the Supreme
Court. And how he got it there, I don't know, perhaps on some
special writ, because he was a very creative, imaginative, skillful
lawyer. But as I say, he really paid very little attention to the
form.
He was working away and --
Working away and doing his thing. And I haven't any idea of what
became of him. I guess he must have left during the war. Of
course, a lot of us got into the service, and I don't know the end
of that story.
86
Price -fixing Cases: Paint. Glass, and Wallpaper
[Interview 7: April 7, 1987 ]##
Hicke: I am going to just recap a little bit. We got you back from the
war the time before, and then last time you talked about the
associates. So we really didn't make any forward progress
chronologically. So where we stand now, chronologically, is with
what you started to do after you got back from the war.
O'Brien: All right. I came back gradually to resume my role with some of
the clients that I had represented before the war- -personal
clients and corporate clients. My practice changed in the sense
that I became more of a business lawyer and antitrust lawyer than
an active litigator. I ceased to have anything really to do with
frequent courtroom appearances. As it happened, immediately
after the war, with the end of price controls, there was again a
great flurry of antitrust proceedings. I represented Fuller in
three successive national antitrust grand jury proceedings:
paint, wallpaper, and glass.
Hicke: Those are the three different subjects --
O'Brien: Segments of their business that were involved in national
investigations. As I recall, one investigation was in
Pittsburgh, one was in Philadelphia, and one in San Francisco.
Hicke: I'd like to interrupt you just to ask if you could tell me a
little bit more about what was involved?
O'Brien: They all involved federal criminal grand jury proceedings for
alleged price fixing- -conspiracies- -in paint and glass and
wallpaper.
Hicke: Were these in response to a complaint by competitors, as the
other one was?
O'Brien: Not to the best of my knowledge. If so, I don't identify any
individual complainant. It really may have been, again, kind of
a political exercise. After the war, there was tremendous pent-
up demand, and prices tended to rise rather rapidly after World
87
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
War II. I think these grand jury investigations, in part, were an
effort by the federal government to help keep prices down.
I know that in the case of Fuller & Company, the chief
executive officer, Harry Brawner, who had served in the Air Force
during the war, as many of the other Fullers did, was very much
concerned about prices in the paint industry. He made a trip
around the country, in the course of which he managed to see the
chief executives of many of the other major paint companies. I am
sure that he acted in all innocence and had no intention whatever
of entering into any price arrangements or agreements. He was a
very well-intentioned gentleman, if a little naive about the legal
niceties, and when I learned of this trip, we had a number of
heart-to-heart talks.
I then helped him to issue a memorandum to all of the branches
of Fuller & Company (and they then had approximately two or three
hundred branch stores in the western United States) in which he
recited to the local managers that he had made this trip, noting
that he had talked to these various competitors, and that as far as
he was concerned, Fuller & Company was going to follow Mr. Truman's
plea and hold the price line.
Now as it happened, most of the rest of the industry increased
the prices of paint, and so we were not what you would call a good-
looking conspirator.
Right.
In fact, we had gone the other direction. Ultimately the matter
came before a grand jury in Pittsburgh, which was the headquarters
of the Pittsburgh Plate Glass Company, one of the largest paint
manufacturers of the country. All of the major paint companies and
most of the executives except Fuller were indicted.
It was a good bit of preventive medicine you arranged.
Yes. We had a number of similar cases. I also gradually got into
the Aramco problem and those of Caltex. I picked up a number of
other clients -- I can't remember them all. I represented TWA for
a while on the West Coast. I represented Sylvania when they
decided to move west, and we acquired some property in Mountain
View. I went through an annexation, a so-called strip annexation,
under which we annexed the plant site land which lay outside the
city limits into the city. It was a very highly contested
proceeding, with public hearings on the zoning, a lot of marching
and counter-marching by people who didn't want this Sylvania plant
to come to their rustic community.
Just because they didn't want any more development?
88
O'Brien: I guess.
Abercrombie & Fitch Company
Hicke: Had you done any real estate work before?
O'Brien: Yes.
Hicke: I know you said Abercrombie [& Fitch Company], but maybe that was
after?
O'Brien: Yes, I also represented Abercrombie. One of their first ventures
outside of New York City was in San Francisco, where they built a
beautiful store. The store property belonged to the Crocker family
trust. The president of Abercrombie first came to see me pretty
much after he had agreed with the Crocker trust on a form of lease.
When I looked at the lease, I was horrified because it was so one
sided and such a rip-off. After I'd explained all of its ins and
outs to him, I said I thought it really had to be renegotiated.
The executive director of the Crocker family trust -- a
property-holding company -- was a gentleman named Dante Lembe. I
made an appointment to see Lembe to discuss the lease. I took
along the president of Abercrombie, who was a gentleman named Otis
Guernsey. After a little sparring around, we made a second
appointment, and Lembe came to my office, and we began to slug it
out. He was furious that I had unraveled his tentative
arrangements with Guernsey, and we had a very hard time and a lot
of negotiations before we finally got a more balanced and more
reasonable lease.
Hicke: How did it happen that they had gone ahead and worked out the lease
without legal advice?
O'Brien: Oh, I don't know, they were just businessmen who came out, thought
they knew a lot about these things -- this was a percentage lease,
where you paid so much of the gross revenue that was developed by
this outlet. Anyway, they spent a lot of money remodeling the
building, which is now occupied by Eddie Bauer.
Hicke: Oh, yes.
O'Brien: It is just below Gump's on Post Street. We had a great opening,
and there were all sorts of window boxes and flowers. The store
was a great success for a while. At the end of that negotiation,
89
Mr. Guernsey asked me if I would go on the Abercrombie board in New
York, which I did. That was kind of an interesting experience.
V.P. Fuller & Company had, as I say, two or three hundred
retail stores. I handled their legal matters. They owned stores
and they leased stores, so I negotiated the leases and property
arrangements -- got a liberal education. I once went to Hawaii to
negotiate with the Big Six families when we wanted to build a store
in Honolulu, and discovered how expert they were in the drafting of
leases .
Hicke: You had to deal with all six of them?
O'Brien: No, no. It was one of the Big Six companies.
Hicke: Does anything else come to mind about being on the board of
Abercrombie? Did you go back there for meetings?
O'Brien: Well, I went to their meetings. Some were held in New York, others
in Florida and elsewhere. Mr. Guernsey retired within a year or
two after I went on the board. He was succeeded by a fellow named
John Ewing -- a very attractive, nice man, but without much retail
merchandising experience. Though he worked like an absolute galley
slave, he couldn't seem to get a handle on the marketing side of
the business -- he tried very hard indeed. I stayed on that board
almost until the time that I went to work for Chevron.
Hicke: So they got some legal advice before they actually entered into
some of these things?
O'Brien: Yes. Sure. Although I didn't purport to be their counsel, I was a
regular board member, but you know, when these things came before
the board, at least I would be aware of them and could look at the
papers. They had a very fine board in those days.
Hicke: Who else was on the board?
O'Brien: There were two in particular: one of them had been a former
secretary of the navy -- I can't be sure of his name, I think it
was [Artemus L . ] Gates; one of them was a gentleman named Gilbert
Scribner, who was a very successful financier, real estate magnate
of Chicago, who was on the General Motors board and other boards,
and he and I became very good friends in the course of all of this.
Later on I was able to help his children when they moved out to the
West Coast. Anyhow, I made some interesting associations.
Abercrombie was a special company because of its unique
carriage trade and the extraordinary things that you could acquire
and buy at Abercrombie. The company finally went over the
waterfall, principally because they expanded and opened stores, not
90
only in San Francisco, but in Palm Beach and Colorado Springs and
so forth, and began to try to follow the fashions and carry all
sorts of sporting wear and special things for these resort
atmospheres, and I don't think they really knew too much about how
to do that. And they had big overhead costs, et cetera, et cetera.
Then a gentleman, whose name I've forgotten at the moment, who
was a sort of a collateral branch of the DuPont family, a
congressman from Delaware, became gradually -- he was on the
board -- the pre-eminent stockholder in Abercrombie. He and some
of his investment banker friends in Delaware undertook to manage
the company, with little or no success. And about that time, I
went on the Standard board and resigned from the Abercrombie board.
So I came back in 1946, and in addition to these private
clients, I spent some time on behalf of a personal client by the
name of Mary Eudora Miller Clover, who's worth a book by herself.
She was the cousin of John Foster Dulles, the secretary of state.
I spent a considerable amount of time trying to rescue the
fortune of Mrs. Forrest Meyers, whose husband was an extremely
wealthy man in Manila and who suffered a fatal stroke after he and
his wife were released from Santa Tomas. She came to me for help
to marshal the family fortune in the Philippines and get it back to
the United States. That is another volume of litigation in the
Philippines: attempts at blackmail, threats, double-dealing and
all sorts of horrendous things. At one point, the poor lady had a
judgment against her for a million or two dollars in the Philippine
courts, which we ultimately reversed in the Supreme Court of the
Philippines. We finally succeeded in getting the bulk of her
fortune back to the United States.
Hicke: But it all had to go through the courts?
O'Brien: Well, yes. I was very fortunate in enlisting the help of a famous
American, who had been a great hero in the Philippines in World
War II, a fellow named Charles Parsons. With his help, we managed
to get a handle on most of everything Mr. Meyers owned and not to
get too badly ripped off.
Oh, we also got sued in the United States, in a case that Noel
Dyer handled here. There was a determination by the Labor
Department in the Philippines, upholding a fraudulent claim that
Mr. Meyers had promised all of his workers that if they would go to
Corregidor with [General Douglas] MacArthur, he would pay their
salaries for the duration of the war. A judgment was taken against
Mr. Meyers and Mrs. Meyers based on that preposterous promise or
alleged promise. There were U.S. income tax problems which Frank
91
Roberts handled with great skill,
client.
So that was an interesting
Mary Eudora Miller Clover
Hicke:
O'Brien:
Indeed. ¥ell, let's go back to Mary Eudora.
worth a book, but you skipped right on by.
You said that was
Hicke:
O'Brien:
Yes. Mary Eudora Clover was the daughter of an American admiral
who had been the naval attache in various embassies around the
world. He, in turn, was the son of some famous gentleman who first
established the family fortune by acquiring the seal concession in
the Pribilof Islands.
I think her grandfather was an early senator in California.
At least when her father died, she was left with two enormous
ranches: one in the Napa Valley, and one near Helm, outside of
Bakersfield. This was long before I knew her. She lost the one in
the Napa Valley, because it was so immense. She had no money to
pay the taxes, and she was being sued right and left by farmers in
the valley who wanted to get her water rights away from her. She
ultimately lost that property. But she managed to hang onto the
one in Helm, which was farmed by a family that had been on the
property for a generation or two, and that paid enough to pay the
taxes and give her some small income.
She, through all these years, had lived in France, because it
was less expensive, and for her, a great deal more interesting.
When World War II was about to start, she got permission from the
State Department to go back to France -- she happened to be in the
United States -- and disappeared behind the German invasion and was
not heard of for the duration of the war. She did survive it. In
the meantime, her local representatives in the San Francisco bank
took a flyer, even though they couldn't reach her (they held some
sort of power of attorney). In the wartime search for oil, one of
the oil companies took a lease on this farming property in Helm and
brought in a huge oil field.
So shortly after I came back in 1946, the phone rang one day,
and Eudora Clover was on the phone. She was in a San Francisco
hotel. She had just arrived after a triumphal procession across
the country in which she acquired a farm or two in Maryland, and an
apartment house in Chicago.
She had a nice bank account waiting for her.
Yes, right. And various other properties.
92
Hicke: How did she happen to call you?
O'Brien: I haven't any idea. I don't know how she ever got hold of my name.
In the years in which she had lived in France, she had become very
closely identified with the the White Russians that lived in Paris,
and with the remnants of the Czar's family. So I helped her
acquire a house — I can't think of the name of it, off of Lake
Street -- beautiful house out on the bay. It has a special name --
the area.
Hicke: Oh, where Dianne Fienstein lives.
O'Brien: Yes, I guess.
Hicke: Yes, I can't think of the name of it either.
O'Brien: Anyway, we put an elevator in it. She was immense. She had some
sort of thyroid trouble, so she was huge. She had brought out with
her two body servants, two attractive, nice, black people to take
care of her. So we got them all safely ensconced in this house,
and then she invited the two remaining heirs [to the Russian
throne], two real Romanovs -- two nephews, who had been raised at
Hampton Court in England — to come and live with her. They did,
and she once said to me, "The only trouble with the Romanovs was
that none of them ever had a decent education." So she was
determined to educate these two boys.
Everything was great, except that she was bored and she lacked
for interests; she was relatively immobilized, because of her
disease and her bulk. But she had a sister who lived in the East,
and the sister had a son, Miss Clover's nephew, who was the natural
object of her bounty, and he in turn had two children, two little
girls. I represented her for quite a number of years, until her
death in 1954. In the meantime, she was constantly casting around
for something new, just to enliven her personal equation.
For example, she once went down to Shreve's one afternoon and
bought three or four hundred thousand dollars worth of jewelry,
which she brought home in a brown bag, I guess.
Hicke: Oh, my goodness.
O'Brien: She called me up and said, "I've just acquired this jewelry, and I
need to modify my will to decide to whom I intend to give it." I
went out, I looked at the jewelry, and then discussed with her
which friend or relative she should leave it to. I said to her,
"Is it insured?" She said, "Oh, no, no." So while I was there, I
called up her broker, and said, "We've got all this jewelry here,
and the invoice on it is two-three thousand dollars. Will you put
93
a binder on it until it can all be scheduled and added to her
regular policy?" So that was arranged. About a week later, it was
all stolen.
Hicke: Again, some good preventive medicine.
O'Brien: Yes. Well, anyway, we, of course, had all the police in. In those
days it was easier; they put some sort of surveillance on her
telephone, and sure enough within a few days some fellow called her
up and tried to ransom this jewelry back to her -- not only this
stuff she'd bought at Shreve's, but some of her own family jewelry,
which she really prized. We did our very best, and once or twice
we got within an inch of the person. She, in meantime, was having
an absolutely uproarious time, enjoying every moment of it, under
instructions to try to keep the caller on the phone long enough for
us to go back through the telephone exchange to locate the booth he
was phoning from. Well, we never quite made it, and she never got
the jewelry back, but she got all the money back.
Hicke: From the insurance?
O'Brien: Yes.
Hicke: And she had a good time.
O'Brien: Yes, a good time. Over the years she gradually became quite
disenchanted with this nephew, who paid little or no attention to
her. She continued to write wills all the time, and in the end, I
had maybe seven or eight wills that I had drawn for her -- long,
elaborate wills with all sorts of trusts and contingencies -- and
you could see this gentleman's stock falling, falling, and falling
through these wills. Finally she decided not to leave him
anything, and I remonstrated with her. I didn't think that was
quite fair. I argued that she certainly didn't want to see him
become ill and destitute or anything of that sort. I said, "At
least you should have a provision that in the event that he does
become ill or disabled or prevented from conducting his career, you
would support him in his lifetime." So I wrote a reasonably
generous provision, with lots of elbow room in it, with discretion
to do the appropriate thing, and she --
it
Hicke: She took a blue pencil to that, you were saying.
O'Brien: Yes. The way she wrote it, it sounded like the most beady-eyed
insurance policy draft you've ever read: ". . .in the event he
became totally and permanently disabled from conducting any useful
occupation," or something of the sort. I made arrangements for her
too, to be buried in Arlington Cemetery, which soon after that were
94
needed. Because of the fact that she was a spinster and that her
father had been a naval officer, an admiral in the navy, she was
entitled to be buried in the National Cemetery, and I made
arrangements for that, and promised I'd go with her when the time
came. Instead, I was in England working on the Iranian consortium
when she died.
That was the end of the story, except for the fact that when
the nephew discovered that he was not going to inherit this
tremendous fortune, he went to Foster Dulles, who went to Herman
Phleger, who was the senior partner of Brobeck1 and the then legal
advisor to the State Department -- very eminent lawyer in San
Francisco's history. Mr. Phleger hired the McCutchen firm to see
if they could break Eudora Clover's will.
Hicke: It sounds like you had a formidable array of soldiers drawn around.
O'Brien: Yes. So they conducted an in-depth study of Miss Clover, her
habits, peccadilloes, and considered the prospect of undue
influence, or whatever. But she was far too cunning for them,
because she had left this vast fortune to this nephew's daughters,
in trust until they became thirty or thirty-five. He therefore had
the uphill task of proving that his dearly beloved auntie was out
of her mind because she'd left her money to his children rather
than to him. Besides which, under the California law, if you
successfully attack a will, you are then relegated to the next-to-
the-last will, and so this whole series of wills in which his stock
had been declining made that an absolutely insuperable obstacle.
Hicke: He wouldn't have been that much better off according to the next
will.
O'Brien: No. So I finally had a climactic conference with all the parties
and all the lawyers (including Brent Abel representing the nephew).
I produced all these wills, and that was essentially the end of it.
Hicke: That is an interesting story.
O'Brien: Yes. She was a remarkable woman. Very bright.
Hicke: Did the oil continue to come in all this time?
O'Brien: Yes. The discovery was made by Amerada, which ultimately became
Amerada Hess.
1. Brobeck, Phleger & Harrison,
95
She occasionally used to take a house in Carmel. She had a
big, black limosine, and my wife and I would drive to Carmel and be
her guests over the weekend. But she just was lonesome and lacked
company and interest in her personal equation. That's why if her
nephew had been more attentive and had helped fill her life up, and
shared his own experiences and career in the State Department, he
would have come into a large fortune.
She did have these two young Russians who lived with her. One
of them was Nikita Romanov, with whom I stayed in close touch for a
number of years; we became good friends. He went to the University
of California and became a professor of history, and then married a
very wealthy Texas girl. We corresponded -- I've lost track of him
now -- we corresponded for years. I would hear from him in
Mozambique or Hong Kong or someplace, and they apparently traveled
very widely.
The other son, who was Andrew Romanov, married a San Francisco
girl, left school. I don't know what became of him. But that was
an interesting sort of episode, because I was fond of Miss Clover,
and she had an interesting life.
Hicke: Yes.
Tubbs Cordage
O'Brien: Anyway, by '51, I guess it was, the cartel grand jury began.
Hicke: Okay. Before we get onto that, I have the names of some of these
other companies. Tubbs Cordage?
O'Brien: Yes. I represented them principally in connection with an
industry-wide suit charging price fixing by all of the major rope
companies in the United States. It was a complaint by the Federal
Trade Commission claiming that the pricing system used by all of
the cordage companies, which was a so-called universal delivered
price system, was a price-fixing agreement implemented through the
cordage association, the National Association of Cordage
Manufacturers .
Tubbs Cordage was a simply wonderful old California company.
Mr. Tubbs had been a contemporary of Senator [Leland] Stanford, and
if my recollection serves me, Mr. Tubbs was one of the original
Stanford trustees and had been invited by Mr. Stanford to
participate in discussions about his idea of forming a university.
96
Tubbs Cordage had an old-fashioned ropewalk here in San
Francisco where they made rope. In my day, in my earliest
association with the company, Henry Nichols was the president, a
delightful, eighteenth-century gentleman. His son, Herman Nichols,
became president of the company subsequently.
In any event, the Federal Trade Commission began this
proceeding, and -- well, to make a long story short, we ultimately
won the case. We did an industry price study -- a statistical
study -- based on the actual invoices of all of these companies.
Their price lists would make it seem as though they were all
selling rope at a single price at a given destination.
In fact, after we had done a price study in which we examined
a representative sample over, say, a six-months' period, of all of
the sales of all of these companies, done with the help of a
statistical operating group, their prices were all over the lot.
Behind the facade of this universal delivered price, it was a very
competitive industry. When you charted the prices of individual
companies for a given product over time, and then you plotted -- I
think there were twenty-one companies, defendants in this case --
you plotted all twenty-one companies, the chart looked like a bowl
of spaghetti.
There was no uniform price at all; the prices were up and
down. I was able to demonstrate to Tubbs that their own subsidiary
that presumably was following their pricing practices had different
price schedules with discounts and rebates with customers. They
were all over the lot, sometimes higher and sometimes lower than
the parent company.
So, the trial examiner in the case ultimately concluded that
there was no substance to this charge of price fixing and that
indeed it was a highly competitive business, and that ruling was
ultimately sustained by the commission itself.
Hicke: When you come up against a case like that, how do you go about
deciding how to defend it?
O'Brien: Well, you just explore the facts, you know. And some exploration
of the facts convinced me that this universal price system was
being honored in the breach. There wasn't any such system at all.
In fact, they quoted price lists, but every company individually
told its customer what discount it would give him off that price
list, and it was just done to get the business. Behind those price
lists, there was an intense struggle going on for business. Rope
was beginning to be kind of a dying industry as the plastics came
along -- all sorts of plastic materials that began to take away a
significant share of the old-fashioned rope.
97
But it was a fascinating business. In the first place, it was
one of the earliest businesses in the country — it goes back to
Plymouth Rope.
Hicke: Oh, it's that old?
O'Brien: Yes. Plymouth Rope Company was the biggest and the oldest,
probably. Tubbs Cordage had been started in the 1850s, and it had
been a very respectable, profitable business over all those years.
It's now gone out of existence. But I did become the general
counsel of the company -- rather briefly, because it wasn't long
before I left to go to work for Chevron.
El Portal Mining Company
Hicke: I also brought a few files from El Portal [Mining Company]. Do you
want to do the oil cartel case first, or this?
O'Brien: I don't care. El Portal was just kind of a personal thing. One of
the most famous families around San Francisco for years was the
Drum family -- if you just go down the street, there is a Drum
Street -- and they were clients of the office. The principal
member of the family was a fellow named Frank Drum, who couldn't
have been a finer, nicer man. I think he was Marshall Madison's
client.
In any event, I had met him at Santa Ana Air Base when we were
both assigned there in early 1942. He was another one of the
ninety-day wonders who was commissioned and sent to Santa Ana, and
we had become good friends, not intimate friends.
Somewhere along in this period, Frank wanted me to help with
the El Portal Mining Company. The El Portal Mining Company, I
guess, had once been a successful mining company. Its affairs at
that time consisted principally of owning the entire town of El
Portal outside of Yosemite, and leasing some of its property to
major mining companies for prospecting. So he had all the problems
of operating a town. He owned all the stores, the residences, the
waterworks, had to run this little, miniature city.
Hicke: But there was no mining operation?
O'Brien: No mining operation.
Hicke: Oh, I see.
98
O'Brien: He just rented the houses, but we had to keep the houses up and all
that kind of business. And there was a little hotel there, and a
gas station, grocery store, and all the streets had to be paved.
It was tough.
Hicke: There was something about a railroad in the files.
O'Brien: I don't remember much about the railroad. There's no doubt that
there was a railroad, because that was the way people got to
Yosemite.
Hicke: Yes, that was the one and it was sold, I guess, eventually.
O'Brien: Yes. Anyway I went on the El Portal board, and its affairs were
pretty largely managed by the American Trust Company in those days.
Frank had a cousin, I think his name was Hugh Drum, who was on the
board, and this bank officer and probably one other person and I
constituted the board. Anyway, it was a small operation.
We ultimately sold the whole town to the National Park
Service, because they were very eager to have someplace outside the
park where they could house some of the park employees, and they
foresaw at that time that some of their major, heavy equipment and
things that cluttered up the park could be stored at El Portal. It
would logistically fit their pistol.
So ultimately we sold the whole town and all of its works.
And I guess we must have sold all of the land, too. I guess that
mining leases came to end, and so on. I think we probably sold the
whole thing, lock, stock, and barrel, to the federal government.
But anyway, I did it really because Frank was a good friend of
mine, and I admired him. He was a very devout Catholic, and very
much interested in the Hanna Home for Boys in Marin County, of
which he was a major benefactor. So, I had clients of that sort.
Like every other lawyer, I accumulated a number of personal
clients that came to me through representing a corporation, you
know. Officers and people involved with the company would
gradually become your personal clients as well.
Hicke: It sounds like you did a little bit of everything -- wills, and
real estate, and corporate law, antitrust.
O'Brien: Right. That's the way I liked it. As I told you in an earlier
meeting, that had always been my idea of the way to practice law.
But through this antitrust business, I kept getting more and
more involved in some of Standard's foreign affairs, and then in
1951, when the cartel cases started, and eventually when the civil
99
suit was filed, that became a major preoccupation of mine. For the
first year or so, before jets, I often made two round trips a week
to New York when various things were happening.
Hicke: Those were the days of real lag, not jet lag.
O'Brien: Yes, right. And we had to organize a team to produce the hundreds
of thousands of documents, and we fought and bled over the
production of all Caltex's papers around the world. Bill Martin
and Jerry Doppelt and others had a major role all through that
period in masterminding the development of a structure and orderly
procedures for all of the discovery processes in the lawsuit.
100
V OIL CARTEL CASE: 1952-1968
Inception
Hicke: Maybe we should back up a little bit and start at the beginning.
O'Brien: Yes. Well, the beginning of the case — if it were told
chronologically, I guess — was that the attorney general of the
United States persuaded [Harry] Truman that a big, national,
vicious attack on the oil companies was the way to win the
presidential election in 1952.
Hicke: The attorney general was?
O'Brien: [J. Howard] McGrath. So he and a fellow -- I think his name was
[Stephen] Spingarn, a Federal Trade Commissioner — had in their
files a report prepared by the staff of the Federal Trade
Commission, written by a guy whose name escapes me at the moment --
but he's a principal actor in this thing — the staff report of the
Federal Trade Commission, entitled "International Oil Cartel."
Hicke: Let's see. I have Stan Barnes, but he was the head of the
Antitrust Division.
O'Brien: No, Barnes was later head of the Antitrust Division in the
Eisenhower Administration. Anyway, his name will occur to me.
He's the fellow who after the war was the principal author of the
antitrust laws that we foisted onto the Japanese as the occupying
power in Japan. I can't think of his name at the moment.1
He had spent many years studying the international oil
companies, and had prepared a staff report called the
1. The gentleman was named Corwin Edwards.
101
"International Oil Cartel." It rehearsed events in the '20s --
notably in 1928 -- '32, and so on, when a number of the
international oil companies, the Anglo-Persian Oil Company, Shell,
the French, and a couple of American companies -- Exxon, Gulf and
for some period of time, I think, Texaco -- had made a series of
arrangements about the international oil industry. Chevron was
never a part of those arrangements, because it had no interest in
the Middle East in any way.
Anyway, the Federal Trade Commission staff report -- never
approved by the Federal Trade Commission itself, but gathering dust
on the shelves there -- was suddenly resurrected, dusted off, and
leaked to the press. And before we knew it, a federal grand jury
had been impaneled in Washington, D.C., and all of the so-called
"Seven Sisters"1 and a lot of other companies, had received
subpoenas duces tecum to produce their documents from the four
corners of the universe before this federal grand jury in
Washington. The newspapers absolutely ridiculed Truman, gave him
the works. Instead of taking his charges about the wicked and
sinister oil companies seriously, they were not only skeptical, but
they were downright amused by the whole thing.
Hicke: The newspapers?
O'Brien: Yes. We kept vast files of clippings. It created, though, a
tremendous furor around the world, because the integrated,
international American oil companies were in many respects the
principal emissaries of the United States government and all of its
works in many countries of the world -- the same oil companies, who
were now being branded as common criminals by the United States
government, our own government I
Hicke: That also includes at least one British company, right? And Shell?
O'Brien: Yes. Shell, the Dutch company, which is 60 percent Dutch and 40
percent British, as well as the old Anglo-Persian Oil Company, then
British Petroleum Company. They and the five American companies
and, I guess -- I can't remember now -- CFP [Compagnie Francaise
des Petroles], the French company, maybe?
Hicke: Oh, we can check that.
O'Brien: Yes. We all got these subpoenas to produce our papers.
Hicke: Did they subpoena companies in other countries?
1. The "Seven Sisters" are Standard Oil of New Jersey (Exxon),
Gulf, Texaco, Socal (now Chevron), Socony Mobil, British Petroleum,
Royal Dutch Shell.
102
O'Brien: Well, yes. They wanted documents from all the countries of the
world -- the Far East, the Middle East, et cetera.
Historical Background
[Interview 8: July 7, 1987]##
Hicke: Well, I think today that we're about to the point where we can
start on the early roots of the oil cartel case, which I thought
maybe began in World War II antitrust immunities, but I know there
were interlocking agreements before before World War II, and you
were just now reciting to me a list of files which go back to, I
think, 1926 at least, that you have seen.
O'Brien: Yes.
Hicke: So perhaps you can give us some of the background.
O'Brien: As a matter of fact, the story really begins at the end of World
War I. The Middle East at that time was a British sphere of
influence. The Germans, who had to tried to get a big position
there, and their allies, the Turks, had lost their position in the
Middle East because they were the defeated enemy. The U.S.
Government, commencing with President Woodrow Wilson, tried from
the end of World War I for over ten years before the U.S. went
through the sound barrier and finally got the grudging consent of
the British government to permit any American oil company into
their private domain in the Middle East. And the position of the
American oil companies in the Middle East was first evidenced by
their participation in the Iraq Petroleum Company [IPC] .
Hicke: Did the Red Line Agreement come in here?
O'Brien: That came in as part of that arrangement. Exxon and Mobil, Gulf,
and I think briefly Texaco, became shareholders in the Iraq
Petroleum Company, along with Anglo-Persian, Shell, the French and
Mr. [C. S.] Gulbenkian — Mr. Five Percent.
*i
There was a lot of pushing and shoving going on in the Iraq
Petroleum Company, and as a consequence, they finally agreed that
none of the participants in the Iraq Petroleum Company could
separately take any concession within the Red Line area, which was
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke :
103
a line drawn on a map and embraced the entire Saudi Arabian
peninsula.
A circular line?
Well, it went through the Persian Gulf and up the Red Sea, and what
it meant was that none of them could individually compete for any
concessions in that area. They'd have to take any concession
jointly within the arrangements for the operation of IPC.
The Standard Oil Company of California had never been in the
Middle East. It had explored in Central and South America -- as I
recall, it spent quite a lot of money for a relatively small West
Coast company -- in Bolivia and elsewhere, with no great success.
But Gulf had taken a concession in Bahrain, and when its IPC
partners learned of this, they compelled Gulf to disgorge its
Bahrain concession. None of the rest of them wanted any part of
Bahrain, so they did not take it into IPC, but they made Gulf, in
effect, get rid of it, and Standard Oil Company of California
negotiated a transfer of the concession.
I've just recently looked at some of the files that affected
all of those negotiations.
That was done by PM&S?
It was handled by PM&S, and was handled -- I have the company's
files here -- by Mr. [Kenneth] Kingsbury, who was the president of
Standard Oil Company, Mr. [Maurice E.] Lombard!, and others. And
they were men of great courage and vision, because by the time that
concession became available, the world had fallen into deep
depression.
So they literally purchased this concession?
Yes, they bought the rights, and it took an absolutely heroic
effort. The foreign relations of Bahrain were handled by the
British government, and it took heroic efforts finally to persuade
the British government to let in this intruder, this upstart oil
company, not part of IPC or anything, totally a maverick, totally
outside whatever arrangements they had.
Who handled that for PM&S, do you know?
company?
Who represented the
O'Brien: Felix Smith.
In the upshot, they got the concession. I subsequently
learned when I -- in a later stage of the cartel case -- got access
to the papers that had been produced by Standard Oil of New Jersey
104
and Gulf, that IPC was very much alarmed at this. They -- BP
[British Petroleum] — controlled the oil production in Iran. BP
and its partners controlled oil production in Iraq. And that was
it.
Hicke: This was Anglo-Persian, before BP.
O'Brien: Yes. Yes, before BP.
Hicke: And so here they had somebody completely from outside getting into
this Red Line area.
O'Brien: Yes. Right.
Hicke: But then, they really forced Gulf to do that. What else did they
expect?
O'Brien: Well, I don't know what they expected. Maybe they expected Gulf to
cancel the concession.
Hicke: Oh, I see.
O'Brien: They didn't expect the competition from the Standard Oil Company of
California.
Mootness Study
O'Brien: All of this is briefly described in a chapter of the Mootness
Study, in which I wrote the history of our participation in foreign
oil production.
Hicke: That's on your shelf, isn't it?
O'Brien: Yes. Let me get it.
Hicke: Okay.
O'Brien: There's a much more detailed and longer history of all this.
Hicke: Oh, yes.
O'Brien: The Jacoby Study.
Hicke: That was done by Neil Jacoby for --
O'Brien: Yes. This is called the Mootness Study, which was titled "Postwar
Changes in The Foreign Oil Industry," and it was written in 1963,
105
ten years after the cartel case began. Let's see, it's Chapter Two
of the study, I guess.
Hicke: Is that study available anyplace except here in your office?
O'Brien: Oh, yes. I finally put it into evidence in the Church hearings.
Vhen it was prepared in '63, it was submitted to the head of the
antitrust division as a confidential document -- we had numbered
copies -- because it had chapters describing our relationships with
foreign governments and a lot of other sensitive material.
I made a presentation of the findings of the study to the
Department of Justice, with all the crowned heads -- the assistant
attorney general and the head of the trial staff and the works,
along with [Francis] Kirkham and John Sonnett from the Cahill firm.
But Jacoby, Jerry Doppelt, and I and a platoon of economists --
some of his choosing and many in the company -- spent nearly two
years writing this.
Hicke: That's a gigantic work.
O'Brien: Yes. I'm getting ahead of myself. But it was submitted to the
Attorney General, and they then asked for some additional copies to
submit to the State Department, the Defense Department, Joint
Chiefs of Staff, and so on, which was done. And that's another
day.
But Chapter Two of this study describes what I've been saying
to you. It discusses the structure of the international oil
industry prior to World War I, the consequences of our efforts --
the United States 's efforts -- to get foreign oil concessions in
the Middle East before World War I, and then after World War I, the
efforts by Congress and the president to formulate proposals to
encourage foreign exploration by the United States. Because as
this study indicates, the U.S. feared our country was running out
of oil. It was commonly said that the Allies in World War I had
floated to victory on a sea of oil. And we had made a major
contribution of our. oil supplies to fuel the navies of the world,
and there was anxiety that we were running out of oil.
So the United States adopted a policy of encouraging American
oil companies to look abroad for oil. But we couldn't get into the
Middle East. That's why I say our presidents, starting with
President Wilson, spent from about 1918 to '28 before we broke into
the Middle East. All of that is discussed, and I don't really need
to elaborate on all of it; all you need to do is to read this
study.
Here's an example here, "The American government of 1919 had
already viewed the situation with sufficient concern to declare
106
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
that the British administration in these areas --" this was also
true of the Dutch in Indonesia, in the East Indies, so called, for
keeping out American oil companies -- anyway, "had created the
unfortunate impression in the minds of the American public that
Great Britain had been preparing quietly for exclusive control of
the oil resources of the region. "
Although we furnished their navy with oil.
Well, when we fought the war together, sure,
this is elaborated on in the study.
Okay.
But anyway, all of
So then to go back to the beginning of the cartel case, three of
the IPC participants, that is to say, Shell, BP, and Jersey
[Standard Oil of New Jersey] were said in this staff study of the
Federal Trade Commission to have entered into a wicked and sinister
worldwide cartel to control production, refining, distribution, and
marketing of oil. The first agreement was called the Achnacarry
Agreement, and then there was a so-called As Is Agreement, and then
there were subsequent agreements.
Take, for example, the fact that our resentment of the Dutch,
because of their resistance to any American oil company entering
the East Indies, the area of Indonesia and so on, reached the point
where we passed a law that said that Shell couldn't take any
American concessions; they couldn't bid in competative lease sales
in the United States.
This was in the '30s or '40s?
No. It was in 1921. The United States retaliated by refusing to
grant Shell a permit to prospect certain U.S. public lands until
the Netherlands was declared a reciprocating company under the
Mineral Leasing Act. So, you see, all of the people who by 1951
were talking about this evil, wicked international cartel and so on
didn't realize that the United States government itself had
actively espoused, had urged, had, as an official government
policy, done its utmost to break into the British and Dutch spheres
of influence in the Middle East and the East Indies, and now that
we had been successful, the politicians tried to pull the rug on
us .
There's something to be said for studying history, right there.
Yes. As Mr. [George] Santayana said, "Those who do not study
history will be condemned to relive it," right?
Hicke:
Yes.
107
O'Brien: As I told you, this staff report was released by the chairman of
the Federal Trade Commission, although it had never been approved
by the commission itself, at the suggestion of Howard McGrath, who
was the attorney general.
It didn't work, because the press just ridiculed the whole
thing. There are volumes of clippings from the national press
saying what a phony baloney deal. But in any event, it was a
tremendously serious thing, because they released the staff report,
hit the press with this nationwide, accusing the heads of all of
the major international oil companies of the United States of being
criminals, impanelled a federal grand jury, and appointed a special
prosecuter from the Department of Justice, a very brilliant, able
guy by the name of Leonard Emmerglick, to conduct the criminal
investigation of the crowned heads of the international oil
companies.
Socal's Concession in Saudi Arabia
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Didn't you say that only Exxon in the United States, plus BP and
Shell, was involved in the agreements?
Well, yes -- I think. But those agreements, if that's what they
were, took place in 1928, presumably, and then in 1932. The
depression came first to Europe and then hit us. October 1929 was
the great stock market crash, and along came Mr. [Franklin Delano]
Roosevelt. We took the concession in Saudi Arabia just about the
time that the president of the United States closed the American
banks .
1933?
Yes. So it took a lot of moxie, a lot of courage, a lot of vision,
to go ahead and take the concession in Saudi Arabia and drill half
a dozen dry holes.
Yes, indeed. That was —
Half way around the world.
Yes. That was Mr. Kingsbury you were talking about?
Yes. Right. And his board of directors, and his officers. Stoner
was one of them, Reg Stoner.
108
I interviewed Mr. Lombardi in the cartel case, who was still
alive. I started to say to you that we subsequently learned the
reaction of the IPC partners to our taking this concession in
Bahrain. They were very much alarmed. They flew airplanes over
Bahrain to see what we were doing, they sent all sorts of letters
home saying these fools are really making us look bad, they're
drilling for oil, you know. They controlled the whole area, you
see, and they had all of the major companies that were in the area
subject to this Red Line Agreement. So nobody could independently
go for a concession in Saudi Arabia or Kuwait. Iran was already
locked up by BP.
Hicke: Isn't it in Ted Lenzen's book, this wonderful story of him, or
somebody who was sitting in Bahrain gazing across the Gulf of
Bahrain to Saudi Arabia?
O'Brien: That was Mr. [Fred] Davies, yes, a marvelous man, who was one of
the first geologists, who went to Bahrain. He looked out over
across the water -- now we have this beautiful causeway that runs
from Bahrain to Saudi Arabia joining the island in to the mainland,
but in those days, looking from the Island of Bahrain, he saw these
formations that looked promising to him. And that history is
described in this study as well.
Hicke: Okay.
O'Brien: And I guess I didn't quite state it right. Gulf had an option to
take this concession; they didn't actually take the concession. My
study says, "The oil concession in Bahrain, although within IPC's
Red Line, was not considered to be very choice property. Gulf had
been assigned an option to the concession by a British syndicate,
but because of its Red Line commitment, Gulf was prevented from
holding the concession, and a transfer of the option to Socal was
arranged. The British Colonial Office at first opposed the
transfer, insisted on control by British nationals. However,
because of the prompt and positive intervention of the United
States State Department, Socal obtained the concession in 1930,
thereby initiating a successful Middle East entry by a venture
controlled by Americans rather than by British interests.
"Once the diplomatic hurdle was cleared, development began
promptly. Exploration commenced in 1931. Oil was found in '32 and
commercial export was begun in '34. The intrusion of this new
American oil company into the IPC sphere of influence was no doubt
a rude shock to the established companies, but it was followed by
an earthquake. The discovery of oil on Bahrain generated great
interest in the oil prospects in Saudi Arabia. Negotiations for a
concession were begun in February 1933, a month before the United
States closed its banks and revised the gold standard. The Saudi
concession was won only after fierce opposition from IPC." At the
109
Hicke:
last minute they came down and offered the king a barrel of gold,
chests of gold. Anyway, the story is here.
Okay.
Grand Jury Investigation
O'Brien: The grand jury investigation began, and to carry out the thesis of
the Truman administration, it was important that they get the oil
companies and their officials indicted before the election. Now
that was a very rash and foolish thing to have done from the
viewpoint of our national security. If you think of the reaction
of Western European nations to the notion that these respected
businessmen were really criminals being sued by their own
government, if you think of the reaction in the Middle East where
we controlled Aramco, in Indonesia, in South America, and the rest
of the world, it was catastrophic.
The grand jury investigation went on. I went back at least
once a week, sometimes twice a week, and was reporting here at
home, and dealing with this end of it, and then going to court with
our New York lawyers, the Cahill firm, Mr. John Cahill and John
Sonnett, and we were doing our best to think of things -- Kirkham
was into it, too -- think of things that would delay the issuing of
any indictments .
Hicke: Your strategy was to delay it?
O'Brien: To delay it, yes.
Hicke: And what methods did you use?
O'Brien: Well, there must have been a hundred lawyers in the courtroom the
first hearing.
Hicke: All of the oil companies?
O'Brien: Yes. All the oil companies, large and small, who'd been served
with these subpoenas -- subpoena duces tecum -- to produce
documents from all over the world. Most of the lawyers intended to
argue that the subpoenas were too broad, that it was under the
Constitution of the United States an unreasonable search and
seizure, that they -- the subpoenas -- lacked specificity.
¥e also argued -- and I think it was Francis Kirkham' s idea --
that the grand jury was an illegal grand jury. There were twenty-
three members of the grand jury, and it only takes a majority of
110
twelve to indict. We argued that since a majority of the members
of the grand jury were government employees it was an illegal grand
jury.
We thought that if we could somehow delay the return of an
indictment until after November, people might come to their senses
then and realize how prejudicial all this was to the security of
the United States, how baseless it was, and do something about it.
So we filed every conceivable motion attacking the composition of
the grand jury on the ground that a majority of the members of the
grand jury were federal employees.
Hicke: Did that work?
O'Brien: Well, we got to the Supreme Court of the United States on that
issue -- on very rushed proceedings, to be sure, on typewritten
transcripts and all that business -- but it did slow it down. And
then every company, I think, filed motions to quash these subpoenas
on the ground that they constituted unreasonable searches and
seizures, which also raised constitutional points. These were all
heard by a federal district judge in Washington.
We argued every point. And we had some very bitter sessions
standing in the hall outside the courtroom with the rest of the
lawyers who wanted to get busy arguing about the unconstitutional
breadth of the subpoenas while we were going ahead with our
arguments about the illegal grand jury.
Hicke: How did they proceed with that many people involved?
O'Brien: Well, after all, there were only about -- I've forgotten now --
maybe ten or fifteen companies that had been subpoened. BP had
been subpoened, and they --
ft
-- argued it was not subject to the jurisdiction of the United
States, at least the parent company was not; they had an American
subsidiary that did business. But that didn't mean their parent
company in England, the old Anglo-Persian Oil Company, was present
in the United States.
Then at a later stage of the grand jury proceedings, they
appeared with a document under the great seal of England with all
the red ribbons on it, and the court didn't address himself to the
question whether BP was present in the U.S. He, in effect, said
they were an instrument of the British government, because the
majority of the stock was owned by the British government, and so
he kind of gave them sovereign immunity and dismissed them from the
proceeding.
Ill
Those were really stirring events. The court finally denied
our motion on the illegality of the grand jury, and we took an
appeal, and the appeal was heard, I think, the same day. We went
from the District court to the Court of Appeals of the District of
Columbia Circuit and argued this on a typewritten brief in the
afternoon. That was denied with an opinion, I think. Then we
petitioned for certiorari in the Supreme Court of the United
States, and that took a longer time.
In the meantime, we went back and argued this question about
the unreasonable search and seizure, and the breadth of the
subpoenas, and the illegality of attempting to produce documents
from foreign countries over the objection of the foreign countries,
things of that sort -- whether the writ of the United States, like
that of the Roman Empire, ran to the known boundaries of the earth,
and whether the subpoenas served on Saudi Arabian companies would
have to be complied with because they had an American parent.
Well, there are a lot of really good questions like that.
Hicke: What legal jurisdiction does the U.S. government have over a
foreign company?
O'Brien: Well, they continue to argue for wide extraterritorial
jurisdiction. In those days they were even more expansive, I
think, in their ideas of the reach of U.S. jurisdiction. The rest
of the world bitterly complained about our intrusion into their
sovereignty. All of these companies outside the United States were
formed under the laws of foreign countries and were considered by
those governments to be their companies. And here the United
States government was giving them directions to produce documents
from their company in the United States.
The consequence of that ultimately was the passage of statutes
in various foreign countries making it a crime to comply with a
subpoena duces tecum from an American court. Which left the
American multinational in a very awkward dilemma, because it was
being ordered by a federal district court in this country to
produce documents and were being ordered by a foreign court, or a
foreign government, not to do so.
So, we had some very ouchy problems, and the efforts to compel
the production of these documents from foreign countries created
great bitterness and rancor among our friendly allies: the
British, the French, the Germans, the Italians. And what was even
more of a problem were countries like Saudi Arabia where the king
was the law, if you like. What they were attempting to do was to
get an indictment against all these people, and shake their gory
locks at all the wicked things the international oil companies had
done and were doing, going back for generations. The inception of
112
the case really involved allegations of things that had happened in
the late '20s — 1928 or before.
Hicke: Yes. Well, this is about the time the Korean War was coming on.
Did it have any influence on the proceedings?
O'Brien: It had influence on the proceedings. In the meantime, the State
Department was privately urging President Truman to drop the
federal grand jury, arguing that it was creating serious tensions
and really bringing about ruptures in our relationships with our
allies. As a matter of fact, the legal advisor to the State
Department testified in court about some of this business. His
name was Adrian Fisher. He subsequently became an editor on the
Washington Post, I believe, and is now deceased.
The National Security Council also went to the president of
the United States and said, "You have to withdraw this grand jury
proceeding; it's destroying our relationships with friendly foreign
powers." And with great reluctance, Truman did that, and
instructed the attorney general to withdraw the grand jury
proceedings, and Mr. Emmerglick appeared in court and moved to
dismiss the grand jury. It was a really big deal, a major
collision and a clash between the government and the court and the
companies .
Hicke: Did you know that the State Department and National Security
Council were going to Truman with this request? Or was this a
total surprise?
O'Brien: I've forgotten now. We may have had a signal a day or two before
the government actually moved in court.
Hicke: I can imagine it was a very dramatic announcement.
O'Brien: Well, I remember being in the court when the special prosecutor
rose and asked the court to withdraw the grand jury proceeding. I
often used what the judge said a good many times after that. He
said, "Mr. Attorney General, this is a wise and patriotic act." He
was glad to be shut of that, and he didn't want to bring on World
War III.
Hicke: Do you remember who the judge was?
O'Brien: I've forgotten his name now. He died rather shortly after that.
He was a federal district judge in Washington, and he had no
experience whatever in international affairs at all, and he was
doing his best to do it right. All of this is easily checked. We
have the transcripts of all those proceedings.
Hicke: Okay.
113
O'Brien: So then the grand jury was dismissed, and no indictment was brought
before the election.
Hicke: This was still prior to the election? Prior to November?
O'Brien: I think it was in December -- I've forgotten now. I probably have
a transcript here.1
Hicke: Well, that's in the record, too. We can find that.
O'Brien: It's in the records. I'm sure it's on my shelf over there. I have
at least one volume of the early transcripts there; the rest of the
transcripts I don't have, but I have an early volume with the first
proceedings.
The Civil Suit
O'Brien: Anyway, the grand jury was dismissed, but the baby was left on the
door of the new Republican administration. And after the new chief
of the antitrust division was appointed. He was a gentleman named
Stanley Barnes -- a football player from Berkeley and a judge on
the Ninth Circuit Court of Appeals at a later time. He stooged
around for three or four or five months. Somehow it sticks in my
mind he subsequently said, "Nobody came to see me or told me what
to do."
The. upshot of it was that the Eisenhower administration didn't
have the courage just to say, "Well, that grand jury was a big
political act. That was a big vaudeville act that Truman put on,
and we've put it to bed." They felt that, politically, they
couldn't be seen as lending aid and comfort to these big, wicked
monsters in the oil companies. So they filed a civil suit instead
of a criminal suit. What that distinction made to a foreign power
I don't know, except that it didn't have the onus that they were
now accusing the CEOs of the major oil companies of being
criminals. Instead they were accusing them of having participated
in a conspiracy to control and dominate every phase and every
aspect of the international oil industry 1
Then they changed their theories. Since Standard of
California hadn't been in the Middle East at all at the time of the
creation of this worldwide conspiracy, the company was a little
1. January 1953.
114
hard to hook up to this conspiracy,
of doing that, but they finally --
It was hard to find some way
Hicke: You mean Chevron [formerly Socal] was hard to hook up?
O'Brien: Chevron, yes. So they concluded that they would then attack
Caltex, which was the partnership between Socal and Texaco, within
the context of the cartel case; that they would attack Caltex as an
illegal part of the whole, overall arrangement, a somewhat
amorphous kind of thing. And also they leveled an attack on
Aramco .
Now arguably Socal owned the whole Aramco concession in Saudi
Arabia. It did not become part of IPC or the rest of the group,
and I think was totally rebuffed by the IPC partners. So when
Socal discovered the huge size of this concession, looking for an
outlet for this enormous supply of oil, it made a partnership with
Texaco and acquired a half interest in Texaco 's marketing assets
east of Suez, and took an option to acquire a half interest in
Texaco 's assets in Western Europe. That was the genesis, the
birth, of the arrangements with Texaco, which ultimately resulted
in our operating in sixty or seventy foreign countries.
Hicke: Did the Red Line Agreement then kind of fall apart?
O'Brien: Veil, no, because Texaco had nothing to do with the Red Line
Agreement. It wasn't in the IPC by then.
Hicke: But the others still stuck to their Red Line agreement?
O'Brien: They stuck to their agreement. But I tell that story in here, as
well.
Hicke: Okay.
O'Brien: Because as soon as the war was over the whole world had undergone a
tremendous change. Western Europe lay prostrate after enormous
destruction all over the continent. The Russians had lost twenty
million people, the world was just a smoking ruin. But the United .
States had never had a bomb fall on it.
We had people who had the genius to do something to make the
world livable again, i.e., the Marshall Plan, which I think my
friend John McCloy had a major role in. He told me once that he
was going to announce the Marshall Plan at Amherst, where he was
Chairman of the Board, but there was some hitch in the proceedings,
and instead Marshall announced it at Harvard the next week. In any
event --
Hicke: It would have been the McCloy Plan?
115
O'Brien: Well, maybe. I don't know. I know he's a very modest man. He
never said it was his idea, but it could well have been. And in
the meantime, the two partners, Texaco and Socal, had set up a
whole apparatus of committees to plan how they were going to invade
the world market and compete with these entrenched companies in
Western Europe — with Shell, and Jersey, and BP, and others. And
in the cartel case, we made a great many studies -- there was a
study, for example, of three or four hundred printed pages -- of
our efforts to get into Italy and the resistance we met from the
established companies.
But that didn't deter Socal and Texaco. They had in mind —
and the record proved all this, because the minutes of the meeting
were extant — they had in mind seizing 25 percent of the oil
business in Western Europe. They had a new, cheap source of
supply. The United States government thought it was so important
they tried to buy it.
Hicke: Outright?
O'Brien: Outright. They wanted to establish an oil reserve in the Persian
Gulf, and they wanted to buy out Socal and Texaco. Mr. Ickes
formed a corporation called Petroleum Reserve Incorporated, and
negotiated with the companies to acquire their interests in the
Aramco concession. At the end of the war there was great alarm in
the U.S. government that we'd run out of oil, that we'd pulled our
wells too hard to supply the navies of the world and all the
aircraft fighting for the survival of the free world. And so the
U.S. government wanted us to sell the huge Aramco reserves so it
could create something like Elk Hills in the Persian Gulf.
Hicke: Well, we were up to the civil proceedings, and Caltex was under
attack.
O'Brien: Yes. Well, we were going after 25 percent of the market. Then
Marshall Plan came along. The Europeans had to decide how to use
the Marshall Plan money. And then the United States government --
when Icke ' s plan to acquire Aramco failed -- gave us the priorities
to build Tapline, a huge pipeline that would lift oil from Saudi
Arabia, run it across to the Mediterranean to Sidon. So then we
had this huge oil reserve, we had a way of getting it to the
Mediterranean, we had a short haul across the Mediterranean to
Western Europe. We gave the economies of Western Europe a
transfusion that brought about their resurrection. And that's
actually what happened.
That cheap crude oil from Saudi Arabia brought the whole
economy of Western Europe to life again, and the shipments of oil
from the concession were financed, in effect, through the United
116
States government and the Marshall Plan. There was an organization
called MSA, the Mutual Security Agency, which in effect guaranteed
those transactions.
And with the usual ambivalance of the United States, MSA
subsequently sued us on the theory that we were overcharging
Western Europe for the oil. They brought a horrendous suit against
us in New York for overcharging, which went to trial, and we won
it. Hillyer Brown was extremely active in that case and spent a
great deal of time in New York during his regime working on the MSA
case. It was a famous victory.
Hicke: Indeed.
O'Brien: Yes. Again, the company was vindicated.
Anyway, to go back to my story, the United States
government -- that's all rehearsed in this study, too -- made this
effort to acquire Aramco for itself as a petroleum reserve, just
like Elk Hills, for the benefit of the United States and its
allies. But that didn't fly in the Senate of the United States.
And I stated in this study, on the basis of the evidence that I was
able to glean from State Department records (they wouldn't let me
see the really critical messages, but I read the diplomatic
correspondence to the extent it had been published, and the United
States government subsequently said, "We don't disagree with
anything you've said") that they secretly encouraged Jersey and
Mobil to break the Red Line Agreement and become part owners of
Aramco, so that this huge concession, which is beyond the financial
capacity of even two big companies like Texaco and Socal, would
have the added strength of Jersey and Mobil, and it would be an
all-American concession.
And this study says that's what happened, because when Jersey
and Mobil broke the Red Line Agreement, Gulbenkian filed a lawsuit
against them in London for breaking the agreement. And the French
government filed an official protest with the United States
government, which meant to me that the French knew that the United
States government was secretly encouraging Jersey and Mobil to
break the Red Line Agreement and join Aramco, which is what they
did.
We sold Mobil a 10 percent interest, and Jersey a 30 percent
interest: that made Aramco 30, 30, 30, and 10 deal. I'm sure
that's true. I'm dead sure that that's exactly what happened. But
now, along comes the cartel case, and they are attacking Aramco as
being an instrument of this worldwide conspiracy in the
international oil cartel. Which just shows you what a slippery
bunch the politicians really are.
117
Hicke: Did you begin to feel like a baseball being batted around?
O'Brien: No. I began to feel a certain skepticism and cynicism about the
way we conduct our domestic politics -- and even our international
politics.
Hicke: Yes.
O'Brien: And that was the inception of the civil cartel case. It began
about April 1953 and didn't really end until about 1968. I had
gone to Standard by the time the case was over, but in the
meantime, we had written this Mootness Study.1 ¥e appeared twice
before the crowned heads of the antitrust [division], and we
updated the Mootness Study twice to show that there was no
conceivable way that the allegations that related to 1928 could
have any truth or any bearing on the world international oil scene
in the 1950s and '60s.
In the first place, the case charged that we controlled
exploration and production and refining and distribution and
marketing worldwide. And this study traced the entry of two or
three hundred companies in the international exploration and
production business in the Middle East and elsewhere.
Hicke: During that period?
O'Brien: Yes. So the notion that we were controlling exploration-production
was ridiculous. The Mootness Study discusses every aspect and
actually charts the acreage that these other independent companies
owned. We did that sort of study with refining capacity, and so
on. Now in the antitrust law, there are matters of elementary
economics. There are so-called concentration ratios -- the amount
of a particular aspect of a business which is controlled by the top
three, the top four, the top five, the top six, so on -- and we
took those classic measures of concentration, and we developed
concentration ratios -- this was Neil Jacoby's genius -- for every
aspect of the international oil industry. And we showed that in
exploration acreage we were going downhill abruptly in relation to
the number of new companies owning acreage around the world. Ditto
on production, ditto on refining. So the Mootness Study was really
written around this thesis.
1. So-called because I argued that whatever the truth of the
complaint's allegations in 1928 and 1932, such profound changes had
taken place in the international oil industry post war that the
case was moot.
118
While Socal was never part of any agreement like Achnacarry or
any of the other so-called "As Is" Agreements, we assumed for the
purpose of this study that those allegations were true in 1928, and
that even though we weren't even in the international oil business,
we assumed we were. Then we said: "Now let's take a look at the
postwar changes in the foreign oil industry and see how those
allegations measure up against the realities of the world today."
And the consequence of the study was that it showed that it was
total absurdity to suggest that this huge, dynamic industry could
conceivably be controlled by four or five companies. It was
ridiculous, but it took sixteen years for the USG to give up.
They took consent decrees against Jersey, Gulf, which had been
participants in IPC; Texaco got on a kick of its own and finally
took a consent decree, but that did not affect the legality of
Caltex or Aramco. We hung tough. We wrote this study. The head
of the antitrust division, an eminent federal judge, now retired in
San Francisco, was head of the antitrust division when we first
presented this study to them.
Hicke: Who was that?
O'Brien: [William H.] Bill Orrick. I said to him at the conclusion of the
first session in which this study was tabled with them that it was
a perfectly absurd case, that they were fighting the Punic Wars.
Their contentions and allegations had about as much relevance as
the Punic Wars. When the meeting was over, he got me aside and
said, "I guess that's the first time anybody ever accused the
antitrust division of fighting the Punic Wars." And I said, "Well,
Bill, that's the way it really is." "Well, you'll hear from us."
And they got the additional copies. Then a year went by. They
called us back again, and this time he said in effect, "Well, we
don't disagree with this." Years afterwards, I used to see it on
the desk of every head of the antitrust division.
Hicke: Oh, really. Oh, very good.
O'Brien: They said: "We don't disagree with it, but we've got big problems.
You know, we don't want to get into some big hassle with Congress
and so on. So why don't you take some kind of an innocuous consent
decree, so we can get rid of the case?" No wayl
Hicke: This must have been about '64?
O'Brien: Meanwhile we had had months and months and months and months of
discussions with them about this earlier on. Kirk led those
discussions for many, many months, and I was with him, and a fellow
from the Cahill office by the name of Bill Sayre, and a couple of
Texaco lawyers. We had months of discussion about a consent
decree. They had these ridiculous ideas that you should put on the
119
handcuffs for twenty years when nobody knew what would happen the
next time the earth took a turn, and nobody could predict whether a
decree like that would come close to fitting. Nobody knew what the
Saudi government might do next, in effect, to expropriate the
concession in a few years, all that kind of business. There was no
way that you could advise your client to accept a pig in a poke
like that.
Anyway, in the end they came back at the end of the year and
said, "Why don't you take a consent decree?" And we said, "No
way." Bill Orrick said to me, "Well, Jim, I guess we'll just have
to bite the bullet some day." Well, he went out of office without
biting any bullets.
Hicke: This was Mr. Orrick?
O'Brien: Yes. Two succeeding assistant attorney generals made all sorts of
threatening noises about it. They were going to set the case for
trial, and they were going to do this and that, and so on. Along
came a Harvard professor, who was the head of the antitrust
division, and he called us up one day and said, "Would you mind if
I dismissed the case?"
Hicke:
O'Brien:
He ' s a man I knew well, too -- well, not well. I can't think
of his last name; his first name was Don [Turner]. He was a
visiting professor at Stanford for a while. He used to teach in
the mornings, and I was interested in antitrust stuff and had done
a lot of antitrust, and I lived in Palo Alto, and I met him there.
So occasionally I'd invite him to lunch. This was in an earlier
incarnation, before he ever joined the antitrust division.
But he was the most threatening of all, and he was just going
to eat us alive when he became head of the antitrust division, and
set the case for trial and take steps that would astonish us and
all that. But he was the one that finally had the courage to
dismiss the case. And so that's the end of the saga. Fifteen or
sixteen years with a lot of heavy lifting.
Well, clearly it was the Mootness Study which convinced them.
Well, it was the lapse of time, the lapse of time. Well, Jacoby
did a brilliant job. And Jerry Doppelt, who worked with me in
PM&S, and whom I persuaded to leave the firm to become my assistant
when I took the job as the legal honcho for the company, did a
magnificant job, too, working on the Mootness Study. He and I used
to fly down to see Jacoby, and Jacoby would fly up here, and we
would draft and write and redraft, and we had a team of Standard
economists who were very skillful, sophisticated, and so on. But
it was a brutal thing. If I'd ever known what a monster it was
120
Hicke:
O'Brien:
going to turn into, I don't think I ever would have had the courage
to suggest that we could do it.
Jacoby got so involved, he gave up his whole sabbatical year,
really, to help write this, and then it wasn't finished by the time
the year was up, so he didn't quit at all on it; we blazed away at
it until it was done. It was such a hot paper, it was such a
pumpkin paper. It is really the only objective economic study
that's ever been done on the international oil industry. And I
thought it was so important, and that it was in a way such an
important policy paper for the United States government, that
without waiting to get it printed up in the usual fashion, we had
it bound in these rings. [gestures to book]
It's kind of a spiral binding.
Spiral binding. We numbered some copies, and took it back to get
it in the hands of the United States government, because they were
just looking through the wrong end of the telescope. And to have
them subsequently say a year or so later that they didn't disagree
with anything that was said was gratifying. It went the rounds,
not only of the antitrust division, but of State, Defense, and the
White House.
Some of the subsequent antitrust cases, government cases,
probably have been bigger, but none was more important to the
position of the United States in the world international scene than
the cartel case. None was more important to our national security,
in the sense that even now, we have American warships in the
Persian Gulf, and we're flagging Kuwaiti tankers to maintain our
presence in the Persian Gulf. Seventy to seventy-five percent of
the world's oil reserves are in the Persian Gulf, and our national
security still depends upon access to that oil, and that of our
allies as well. So it was a good thing we won the case.
Hicke: Yes, I should say so. Well, is it your sense that this was really
just a political football from beginning to end?
O'Brien: Well, you know, these things get to have a life of their own. It
was a political shenanigan to begin with, but once it started, it
turned out to be something nobody could stop.
[tape interruption] ti
O'Brien: Look at what the government did to the telephone company.
Hicke: Yes.
121
O'Brien: Look at what we almost did to IBM [International Business Machines
Corporation] before somebody finally intervened. Here we are, our
great weapon is our capacity for computers and communications, and
we wanted to perform major surgery on IBM, cut it in half, and then
cut it in quarters -- absolute bunk. And we almost did that with
the international oil industry, so far as the American companies
were concerned.
Impact of Iranian Crisis on Cartel Case
O'Brien: Veil, I'll tell you another thing that happened in this case that
broke its back. I should have mentioned this earlier because it
was a very important factor. The civil case was commenced in 1953;
in 1954 came the Iranian oil crisis. The Shah fled, Mossadegh took
power, the Iranian government confiscated the oil concessions of
the Anglo-Persian Oil Company, the World Court refused to accept
jurisdiction under the arbitration provisions of the Concession
Agreement to hear Anglo-Persian's complaint that their concession
had been confiscated in violation of international law. The
International Court of Justice held that it was not the judicial
successor of the World Court.
That concession went back to World War I. Mr. [Winston]
Churchill was the one who turned the British navy from a coal-
burning into an oil-burning navy on the basis of his access to the
Persian Gulf oil.
Iran was very quickly slipping into the hands of the Russians.
Most people have forgotten that the first resolution that went to
the United Nations Security Council was a resolution by the United
States to compel the Russians to get out of Northern Iran, out of
Azerbaijan, which they had occupied during World War II.
Now the Tudeh party, the Communist party of Iran, was becoming
dominant, and the United States government came to the American oil
companies and said, "Look, BP is down the tubes. Iran is rapidly
disappearing in a Red revolution, and you must do something to get
the economy of Iran going again. We want you to take over the oil
concessions in Iran and run them, generate revenue to reestablish
the government of the country." And we said, "No way. We've got
our hands full of problems in Saudi Arabia, Kuwait, and all the
rest of the area." They said, "No way. You get out there and do
something about it." So these reluctant dragons did something
about it.
Hicke: Well, we want to get into that in more detail.
122
O'Brien: Yes. But what I'm saying to you is that suddenly they found
themselves in the position where they said, "Now you oil companies
get together with BP, Shell, and CFP, and everybody else, and you
sit down in London and get your heads together and figure out how
to rescue Iran." And the attorney general of the United States
gave an opinion that what we were doing was okay, that if we were
violating the law, what we were doing to rescue Iran didn't make it
any worse. That's the kind of an opinion he wrote.
Hicke: Oh, that's amazing.
O'Brien: But you can see that kind of pulled the rug on the antitrust
division. Reality overtook the political abstractions of the
cartel case. The events were out of their control, the
international crisis. The government was restored. We now learn
the coup that toppled Mossadegh was engineered by the CIA. The
Shah came back, and the agreement that we executed in 1954 with the
Iranian government, which became the law of the country, was passed
by the Iranian Parliament. Turner McBaine, down the hall here, was
a part of the team that went out to negotiate the so-called
Government Agreement with the Iranians.1 I sat in London working
on the participants' agreement: what kind of a deal we would make
among the many companies to run the thing, if we could make an
agreement with the Iranian government.
But you can see what an impact that had on the cartel case.
In the Church hearings, Senator [Frank] Church's hearings, years
later, I got access to the internal correspondence of the
Department of Justice, courtesy of some of Senator Church's staff
who didn't like what he was doing. I read what the Department of
Justice had to say about the cartel case against the remaining two
defendants, Socal and Mobil (Mobil just rode our coattails). The
trial staff of the Department of Justice said, in effect, to the
chief of the litigation section and the assistant attorney general
in charge of the antitrust division that they had a very weak case,
that if they brought it to trial, we'd probably beat them, and
they'd get all sorts of flak and adverse publicity; that they
should select some suitable time to get rid of the case where they
wouldn't catch all this adverse publicity. So that's what
happened.
Hicke: That's truly an amazing story.
O'Brien: Well, it occupied a lot of my time for a good many years.
Hicke: Well, it was a worthwhile cause.
1. See Turner H. McBaine, "A Career in the Law at Home and
Abroad," an oral history, conducted in 1986 as part of this series.
123
O'Brien: I was pretty dedicated.
Caltex Breakup
Hicke: Did the Caltex breakup have any effect on this particular case?
O'Brien: Well, it was kind of the other way around. Did the case have any
effect, and did it bring about the partial break-up of Caltex? I
think it did, yes. I was conducting the so-called negotiations
with the consent judgment division of the antitrust division. A
fellow by the name of Bill Kilgore was the head of the Justice
Department. It became evident that Texaco, for commercial reasons,
wanted out of Caltex. And they, therefore, discovered a new legal
principle which said — inspired by the pendency of the cartel
case -- I may have to seal this.
Hicke: Okay.
O'Brien: They discovered a new legal principle, which was that in order to
be safe under the antitrust proceeding and to comply with the
antitrust laws as they read them, they had to compete with Caltex 1
That led to some major ruckus ses.
Hicke: What was the year that they actually broke up? Or about when? I
can get the actual year. It was after this was settled?
O'Brien: No, no. They took a consent decree in the case.
Hicke: Oh, yes. That's right.
O'Brien: So, let's see, the case was dismissed about 1968. I would think
about 1964 or '65 they took a decree. It's in the law books --
their consent decree. But they did that because, in fact, they
wanted to compete with Caltex. So they adopted this air of great
piety arguing that it was essential to the antitrust position of
their company that they compete with the creature that they had
created -- Caltex.
Hicke: Okay.
O'Brien: That did not fly in San Francisco. Neither with the chairman of
the board, or the board of directors, or their lawyers.
Hicke: You put your foot down?
124
O'Brien: Yes, we got ready to sue them. Sure. There are, you know, lots of
episodes in that war that went on for a number of years. Turner
handled some of them, and Kirk handled some of them, and I handled
some of them. We had a complaint prepared. Those were stirring
days.
Hicke: Yes. Is there anything else about the oil cartel case that we
haven't covered?
O'Brien: Oh, you know, there a million things about the cartel case. There
were some fascinating international legal problems involved in the
case.
For example, we produced experts from the Netherlands to prove
that if we complied with the U.S. court's order for the production
of documents from the Netherlands, we'd all go to jail; the Dutch
had a criminal statute against the production of papers in response
to a subpoena from an American court.
I was just reading last week that there are something like
twenty nations now that have adopted such laws: Britain, France, a
lot of the Western European nations deeply resent the efforts of
the United States to apply its antitrust laws on an international
basis. They think it's an intrusion into their national
sovereignty for the United States courts to be giving directions to
British subsidiaries of American companies as to how they should
perform.
Hicke: What's the United States 's position?
O'Brien: Well, I don't know. I think, if I read the tea leaves right,
they're gradually understanding that we no longer are like the
Roman Empire; we have neither the power nor the influence to compel
people to dance to our tune all the time; that we are a little more
willing to listen to some of the concerns that are expressed,
notably by our allies. I mean, the Brits have statutes on this
subj ect .
We had a number of lawsuits in this country where we had an
absolutely violent collision with the British courts. In the Nylon
Spinners case, an American court directed an American parent
defendant to order its British subsidiary to reassign British
patents which its British subsidiary had already licensed to some
British companies. The High Court in England held that those
licenses were valid. It issued an injunction against this British
subsidiary transferring the patents to its American parent.
So, you'd have courts on both sides of the Atlantic reaching
opposite results, with the hapless defendant in the middle of it.
That's a ridiculous thing. And it was perceived by many people as
125
an effort by the United States to give extra-territorial effect
to its antitrust laws. Other civilized nations have different
ways of doing things.
We've modified our views about some of the antitrust
strictures, as witness the mergers that are going on now. So we
were not the sole embodiment of wisdom in the field of
competition in international trade. I think that the passage of
these laws in many, many nations now has kind of sobered us up a
little. And also the fact that we no longer have the commanding
position in the world. Everybody danced to our tune after World
War I. We gave the Germans an antitrust law, we gave the
Japanese an antitrust law, even though it was totally foreign to
their culture and their heritage and tradition. We fastened one
on them like a can on a dog's tail.
Hicke: Do we agree to produce documents and so forth according to other
nation's directives?
O'Brien: Well, I don't think the other nations have tried that very much.
There are international techniques for the discovery of foreign
documents, and ways of taking the depositions of witnesses in
foreign countries, but they don't cotton to the way we've tried
to force our way into the international arena. And now, on the
other hand, we've got to deal with their antitrust provisions in
the European Community, you know, the Treaty of Rome, and they
have a commission that has rather Draconian views about
antitrust.
The funny thing was that when it started, some of the
European countries didn't even have antitrust laws. The one
which had the model antitrust law was the Germans , which we
forced on them at the end of the war. But they had such a swift
economic revival that they became great devotees of antitrust law
and competition, because they didn't want anybody in the rest of
Europe to get in their way while they were making great economic
headway. I may sound kind of skeptical.
I'm a great believer in the antitrust laws and competition.
I'm a great disbeliever in all of the foolish economic nonsense
that passes for economic theory in the enforcement of our
antitrust laws. I'm against price -fixing agreements, boycotts,
and so on. But a lot of the malarkey about potential competition
and a lot of stuff like that is just nonsense. And in the last
four or five years, it's been pretty largely discarded. They've
repealed most of the stuff I spent so many years trying to learn.
Okay.
126
Hicke: Well, I want to go on to the history of the Iranian consortium
next time.
O'Brien: Yes.
127
VI FORMATION OF THE IRANIAN CONSORTIUM: 1954
[Interview 9: September 22, 1987]//
Hicke: Maybe we could start this morning on the Iranian consortium, in
which I know you had a very instrumental part,
where to start with that.
It1 s hard to know
O'Brien: Yes. It all happened in 1954 and I sort of backed into the problem
of the Iranian consortium. In one or more of our earlier sessions,
I've talked about the cartel case. That case was filed in 1953 --
I think in April or May -- shortly after Eisenhower took office.
Up until that time, I had done very little work for Standard
Oil Company after World War II.
I had done quite a lot of things for Standard when Mr. Smith
was alive before the war, but in 1952 I was supposed to be an
antitrust lawyer. I had my own practice, acting as counsel for
various corporations and private clients. When the cartel case
grand jury began, I was drafted to work on that. The consequence
was that nearly every foreign problem that the company had
ultimately passed over my desk after 1952 to make sure the
company's actions overseas were consistent with our defense in the
cartel case.
Hicke: Because it was all connected with this cartel thing?
O'Brien: Because we were all concerned that what they might do or were doing
abroad would have some impact on the cartel case or at least was
relevant in respect to one or more of the charges in the case. As
a consequence, I was drawn more regularly and more deeply into the
company's international problems. When the United States
government turned to the American oil companies to rescue Iran from
communist clutches, and when the government became insistent that
128
Hicke:
O'Brien:
the American oil companies do something to get Iran's oil industry
going again so that revenues would be produced in Iran and the
situation would be stabilized and the threat of a communist
takeover might be avoided, Mr. [Gwin] Follis and the other chairmen
of the American oil companies were absolutely dragooned into taking
some major steps to help in the effort to keep Iran from going
behind the Iron Curtain.
As I mentioned before, most people don't even remember that
the first resolution that came to the Security Council after the
United Nations was formed was one by the United States to compel
the U.S.S.R. to get out of Northern Iran, which they had occupied
during World War II. In any event, the Tudeh Party -- the
Communist Party in Iran -- was in its ascendancy and Mossadegh had
taken over the government. The Shah had fled, the Anglo-Persian
Oil Company -- now British Petroleum [BP] -- had been unsuccessful
in its efforts to get the International Court of Justice to take
jurisdiction over its dispute with Iran involving the confiscation
of their great oil concession, and things were rapidly going
downhill.
There were a series of preliminary meetings, with which I had
nothing to do, in which Follis participated with the other heads of
the American oil companies and BP and Shell. Those meetings took
place in London, and Follis was accompanied by Ted Lenzen and
Turner McBaine -- Turner can give you that whole story and probably
has .
Well, he has told me about the negotiations that went on in Iran
and meanwhile, you were in London --
Well, my participation came later, after they had sort of agreed in
principle on the structure of some new deal under which the
American oil companies would acquire a substantial interest in the
Iranian concession of BP. They would buy out BP's interests under
a so-called compensation agreement. Within that structure, a team
was formed of legal representatives headed by an Exxon executive to
go to Iran and negotiate with the Iranians, and Turner McBaine was
a member of the team of lawyers that went out there.
When the whole process had reached that stage, I was suddenly
asked -- I was the antitrust lawyer, but I was suddenly asked to
put on my hat and go with Fred Boucke to London to work with the
other lawyers and executives in London, who were beginning the
process of trying to work out what sort of an internal arrangement
they would have among themselves to own and operate these interests
in Iran if eventually a deal could be struck with the Iranians.
129
Hicke: Could I interrupt a minute? First of all, it's very interesting
they chose an antitrust lawyer, because certainly there were a lot
of antitrust implications in this.
O'Brien: Veil, there were. After all, the cartel case was pending and now
suddenly the United States government came forward and implored and
commanded the American oil companies to get their heads together --
Hicke: To form a trust?
O'Brien: -- to form some sort of a new apparatus and structure to operate
the Iranian oil industry.
Hicke: So was that important in your being chosen?
O'Brien: Veil, I don't know whether it was or not.
Hicke: And the other thing was that you were on top of all the Standard
affairs .
O'Brien: I had been involved in their affairs to a considerable degree. But
I really had had no experience in the negotiation -- nobody had
really had experience in the negotiation of a monster deal like
this. So Boucke and I left on very short notice. I had just one
conversation with Mr. Follis before I left, for about fifteen
minutes .
Hicke: Vhat kind of preparation did you have to do?
O'Brien: I didn't really. Ve had a few papers that had been put out by an
informal kind of drafting group that had been formed in the offices
of Britannic House -- BP in London -- as this was in its earliest
stages and just beginning to emerge.
Hicke: Did the State Department make available any of its papers?
O'Brien: Veil, there were some conversations with the State Department, but
I don't recall that I was involved in those. Herbert Hoover, Jr.
of the State Department was the guy who was ramrodding this around
and insisting that the American oil companies must come to the aid
of the party.
So Boucke and I rocketed off to London to get into what was a
vast unknown. It was the worst carborundum process I've ever
gotten into in my life. In the first place, the negotiators on
this team in Iran were having tremendous difficulty with the
Iranians, who were just as bad then as they are today.
Hicke: I was going to say, probably a continued tradition.
130
O'Brien: So it was extremely difficult to formulate principles around which
a deal could be made. They of course had expropriated BP's
concession and they were not about to give it back. There were
national sensibilities of that sort that had to be dealt with.
Within the framework of their new ownership of their oil rights in
the name of the Iranian nation, some way had to be worked out of
giving us -- even if we didn't own the concession in the
traditional sense -- the assurances that were needed to assure we
would have the exclusive right to explore and produce and
manufacture and distribute the oil of Iran and operate the great
refinery at Abadan and the pipelines and the distributions system.
And at the same time, we had to do this in such a way that it
would be compatible with U.S. antitrust laws. So while we could
operate through a jointly owned company the exploration, producing,
manufacturing activities, once the crude oil had been produced as
crude oil and was to be shipped out of the country, that had to be
done by each individual company, and each separate company had to
decide the price at which it was going to sell that oil in its own
markets to its own customers. Ditto in respect to the products
that were produced by the Abadan Refinery.
It was an extraordinarily complex situation. No sooner would
they get going in Iran and come up with a tentative draft than it
would fall out of bed and we would tear up all the papers that we'd
been drafting in London and start over. I think we made something
like fifteen separate beginnings to try to shape the internal
mechanics of operating this great concession with eight companies.
As it turned out, we had the five American companies: Exxon,
Texaco, Gulf, Mobil, Socal, and BP and Shell and the French.
So we landed in London -- Boucke and O'Brien. Texaco was of
course there, and I met with Texaco 's representatives the afternoon
that we arrived, a Sunday afternoon, lurching around after flying
from San Francisco.
But I could see even before the meeting that there were going
to be some tremendously important problems of English corporate
law. Already it was being envisaged that there would be maybe
French companies or Dutch companies or something else that would
operate aspects of this deal, but at the top of the pyramid there
would be an English company that would control the whole thing, and
the members of this consortium would be shareholders in that
organization and in the other corporate organizations. By then the
deal was beginning to take shape so that it was understood that BP
would have 40 percent of the new company; it would no longer have
control.
Hicke: This was before you got there?
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O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Yes, as I recall now, that was pretty well understood. Each of the
American companies would have 8 percent, that was another
40 percent -- that made 80. Shell would have 14 percent and the
French would have 6.
Now you can think of mutations of that structure, and who was
going to really control this deal. The only thing that Mr. Follis
said to me before I left -- mind you, the Standard Oil Company of
California itself had never played ring-around-the-rosy with these
people. We were the maverick; we had discovered the huge oil
resource in Saudi Arabia which shook the whole oil world. And the
British in Persia and Iran and the owners of IPC were horrified --
You were outside the Red Line Agreement.
Yes, we were outside the Red Line,
waltzing party.
We were outside of the whole
How was Standard chosen as one of the consortium companies?
We had the Saudi Arabian concession. We had a major interest in
the Middle East, ditto, Texaco. So it was inconceivable that they
could go forward without us, and it was barely conceivable that we
would sit down at a table with them.
Mr. Follis said to me before I departed, and this was the only
specific instruction I had, "The British have blown this thing in
Iran and we must not let them take it over again." I mean, he
conceived of the fact that the cause of all this -- in part at
least, and I shouldn't speak for him; he can speak for himself --
was the British intransigence. We had already agreed to a 50/50
tax arrangement in Saudi Arabia, which meant that we were sharing
the producing profit of that great concession on a 50/50 basis with
the Saudi government. But the British didn't make such a deal in
Iran, and resisted such a deal. And that of course fueled a great
deal of the difficulty that they had.
Hicke: I read that Sir William Fraser was very conservative. Do you
attribute a lot of this to him?
O'Brien: He was, he was, right. I don't think I ever met Sir William; I
might have. But I do know that I practically lived with his son.
Hicke: Who was different, I think, from his father.
O'Brien: Billy Fraser, yes -- Lord Strathalmund later -- was a British
barrister who had also practiced with one of the big firms in New
York. A charming guy and came to be my principal antagonist
throughout the whole negotiation in London of the '54 agreement.
132
He was a very skillful manipulator, playing on his own field, and I
was young but energetic.
Hicke: That helped didn't it?
O'Brien: And determined not to let the British take the thing over again.
So we began our meetings with all of these companies. The
French company was represented by a very distinguished British
solicitor, and all of the British companies had both inside and
outside counsel, solicitors and barristers there. I retained an
eminent British firm that had already done some work for us --
principally for George Parkhurst, who had originally made the
contact with this outfit.
Hicke: You don't happen to recall the name?
O'Brien: Yes, I do, very well -- Coward Chance & Co. Almost at once I
called up the firm and asked to speak to one of the senior
partners, Tim Tyler was his name. It turned out he was in Rhodesia
or some other outpost of the Empire, so I spoke with a young
partner by the name of Tom Johnson-Gilbert -- a hyphenated name,
Johnson-Gilbert. He showed up at the Savoy [Hotel] one evening
very soon after I'd arrived.
Boucke and I had got ourselves a big suite with a big living
room and two bedrooms down the hall. We used our hotel suite as
our working space. The company didn't have an office in London, we
didn't have any of the normal facilities, and with Tom's -- Coward
Chance's -- assistance, we hired a secretary who used to come about
5 or 6 o'clock in the evening when we'd take a break from the
meetings -- although we often met in the evening as well.1 Boucke
and I would sit there then and dictate cables to San Francisco to
try to keep them abreast of what was happening, but it was almost a
hopeless task.
Although we were very faithful about it, we had to decide
things in the London meetings before they could really react in San
Francisco. If they had thought we were way off the track they
might have intervened and said something, but otherwise it was
pretty much giving them information on what had happened. The
British are very skillful at this. Here we were, two green peas
from San Francisco a long way from home. There was no way of
communicating by telephone in those days. There was a
radio- telephone, but whenever I tried to call Mr. Follis -- which
1. Her name was Margaret. She stayed on with Iran California
Corporation and retired twenty- five years later.
133
meant I had to sit up until 3 o'clock in the morning or
something -- I'd hear about one word in ten. It was a most
frustrating thing to try to give him any coherent report and get
any ideas or instructions.
Hicke: You were really on your own.
O'Brien: Oh, yes, we were. I felt very isolated. And more than that, the
meetings had hardly begun when it became apparent that just what
Mr. Follis had said was very much in BP's mind: they really
intended to get a rope on this whole thing all over again and to
structure the new deal in such a way that their 40 percent in the
new arrangement would really be a controlling interest, because
here they would be faced with four or five companies, American
companies, each owning only 8 percent and Shell owning 14 percent
and the French owning 6 percent. They intended just --
Hicke: Divide and conquer.
O'Brien: — to strike up the music the way they had before. I was bent on
frustrating that. I agonized over this, but I had really to do it
for better or for worse. I don't want to make it sound too
dramatic .
Hicke:
O'Brien:
Hicke:
O'Brien:
We met for about four or five days. The first meetings were
at Britannic House, which was the headquarters of BP. The American
companies quickly decided that we wanted some separate headquarters
outside of BP's offices. For the sake of appearances with the
Iranians, we didn't want to be seen as doing all these negotiations
under the aegis of British Petroleum Company after it had just been
expropriated by the Iranians. The Brits and the Iranians were at
each others' throats. So we rented a big share of the Grosvenor
House in London, in the West End. We had a couple floors of
Grosvenor House, as I recall, for offices.
This was for the meeting place?
For offices, for the meeting places. We had secretaries and
conference rooms, even cots where we could go lie down once and a
while .
Could I interrupt with one more question?
position with the company?
What was Fred Boucke ' s
At that time Lenzen was the vice president in charge of these
foreign affairs under Mr. Follis, and Fred Boucke was his
assistant.
Hicke:
I see.
134
O'Brien: Fred had been the head of the foreign staff; I believe that was his
official job. He then became Lenzen's assistant, and he and Ted
kind of ran the foreign business out of their hats. They really
roared around the world a lot.
Ted Lenzen was on the road all the time. He was the Caltex
director, and he was in charge of Indonesia. He was a very busy
man, and he had absolutely enormous capacity to sit down no matter
where he was -- I've been in Lagos with him, or Tripoli, or Tehran,
or London -- to sit down at the end of the day and write a long,
coherent message, which he would dispatch to Mr. Follis regularly
after coming out of these meetings. Gee, I've been in I don't
know, a hundred meetings with Lenzen when he'd sit down immediately
afterwards and send a succinct, coherent message about what had
happened that day.
Hicke: If those were collected somewhere, they would make a remarkable
story of the foreign operations of the company.
O'Brien: Yes. Because they would provide the details of many of the major
negotiations that went on in the company's foreign business.
Anyway, Lenzen appeared from time to time in the course of our
deliberations in London. There were supposed to be legal meetings
and meetings of principals -- those were the executives that were
supposed to be meeting at the same time that the lawyers were
meeting trying to put together an agreement covering the
arrangements. The principals were supposed to be negotiating the
substantive aspects of what the deal would be among themselves.
Hicke: Was Fred Boucke then representing the principals?
O'Brien: Yes, he was representing the principals but Lenzen showed up with
considerable frequency.
The Issues: British Control
O'Brien: Almost at once the issue of who was going to run this thing came
up. It could have come up in any one of a number of ways, but
almost the first thing we attacked was drafting the articles of
incorporation. That's not what you call them in English law, but
that's what they are -- the basic document for this top British
company that would be the controlling mechanism for the whole
arrangement.
Hicke: Would it be similar to a holding company?
135
O'Brien:
O'Brien:
Hicke:
O'Brien:
Well, kind of a holding company. It would have a whole series of
subsidiaries that managed exploration, production, and so forth and
so on. Obviously, there had to be a huge supply company to buy and
ship to Iran the materials needed -- so-called country goods and
all the apparatus and tools and so on to run one of the largest
refineries in the world, pipelines and all that. So there would be
a huge company to operate that concession.
Almost at once, the issue of how to do all this arose. By
then I had invited Johnson-Gilbert to come sit with me at the
meetings, and every time he would interject any remark, he would
get absolutely spanked by all of these great mandarins of the
British bar -- he being only a young partner in a solicitor's firm.
But he is a very bright, able fellow. He doesn't look as though he
could punch his way out of a paper bag, but it turned out he was a
mountain climber, a direct descendant of Dr. Samuel Johnson. And
he really hung in there. He ' s a marvelous draftsman, an Oxford
graduate who is now the senior partner of this firm, which has
recently merged to become one of the very largest, if not the
largest firm of solicitors in London, and therefore in England.
We became great friends through all sorts of other
negotiations that followed the Iranian Consortium.
II
The issue arose over British control almost at once in the drafting
of these articles of incorporation. The British wrote a set of
articles of incorporation that empowered this new British
corporation that was to be created with every power known to the
world. It could operate in all countries, it could do everything.
I said, "No way. We couldn't conceivably agree to that. In the
first place," I reminded them, "this agreement would have to be
cleared with the attorney general of the United States." I argued,
"He is not going to approve of some formulation that would give
this new English corporation the power to hold properties or
explore, produce, refine or sell oil in all the countries of the
world." I said, "We're not going to create some superpower in the
oil business. What we want is a company that is strictly limited
to rescuing the Iranian properties and operating them, and we must
draw the articles of incorporation as narrowly as possible."
That wasn't what they had in mind?
No. They accused me of waving the
antitrust laws . "
'bloody shirt of the American
Hicke: Did they have antitrust laws?
136
O'Brien: No, not really. They subsequently had some that have become more
rigorous as the years have worn on. They don't have anything that
compares with criminal investigations or criminal indictments nor
do they have treble damage suits or anything like that. They have
a Restrictive Practices Commission to which agreements which
conceivably are in restraint of trade must be reported. And they
can make you dissolve those agreements if they violate the
Restrictive Practices Act.
Anyway, this started out in kind of a gentlemanly way. We sat
around the lawyers' meeting, and I kept making my point, and they
kept drafting something that was just as bad, from my point of
view.
Finally, the Brits put up to challenge me a British solicitor,
a very fine man, who ostensibly was representing the French, the
CFP [Compagnie Francaise des Petroles]. One day when I walked in
there -- I was already tired -- he said that I was so obstreperous
and so obstructive that there was no point in continuing the
lawyers' meetings until the lawyers had received instruction from
the principals as to how to do this, that it was outrageous that
they couldn't go ahead and create a normal kind of corporation with
the powers that were needed. They didn't want to be charged at
some subsequent time of doing things that would be beyond the
powers granted to the corporation, what the lawyers called ultra
vires of the corporation. And it was a folly to try to write some
narrow provision restricting the powers of this company in the way
that I had proposed. So, geez, I suddenly had against me the whole
mighty array of British counsel and all the Brits, and I didn't get
one word of encouragement or support from any American company.
Hicke: I was just going to ask what the other American companies were
doing.
O'Brien: They all just sat on their hands. And I was particularly offended
because our partner, Texaco, didn't move a muscle. So that's what
happened.
The legal meetings stopped. An appointment was made for this
gentleman -- this English solicitor -- and O'Brien to appear before
the crowned heads of the international oil industry and argue our
respective positions. So at two o'clock the same afternoon, this
guy and I waited in the anteroom until we were called in, and there
all these fellows sat at a huge table that extended down this great
room with the chandeliers and so on. We each got up in turn and
argued our position.
Hicke: Was that a little overwhelming?
137
O'Brien: Well, I was a little spooked, because in the first place, Standard
Oil Company of California was not their favorite company. It
wasn't one of the -- let's say, in that sense, one of the old boy
network. I was a young partner in PM&S, and I was a long way from
home, and I didn't have any chief executive right at my hand here
to tell me what was right and what was wrong. That was a problem
that came up several times when I was challenged subsequently.
Anyway, we went in there and we argued our position.
Hicke: Most of what you did was on the strength of what Mr. Follis had
told you when you left?
O'Brien: Yes, "Don't let them get it back after they have blown it." When
we had finished arguing there were some questions, and each of us
answered the questions from his point of view. Then they said,
"Thank you, " and we were excused.
We waited outside in the hall for what seemed like an hour to
me. Finally we were called in and the chairman said, "We want to
do it the way Mr. O'Brien is suggesting."
Hicke: Hooray 1
O'Brien: Oh, man, that lifted me up.
Hicke: That indeed was a major victory.
O'Brien: So we marched out of the room. The lawyers had assembled in their
meeting room in another part of the building and were waiting for
me to come back on a stretcher. And I walked in the room -- I'll
never forget -- and the Texaco lawyer, who was a terribly nice
fellow but not given to sticking his neck out, said to me, "Well,
Jim, do you come home on your shield or with it?" I was followed
into the room by this British lawyer representing the French, and I
said, "Well, I'll let Mr. So-and-so explain." So he did, fairly,
so that we started up this thing again.
Hicke: Who all was in the room with the crowned heads? All the principals
of the American companies and all the companies who were involved?
O'Brien: Yes, or their principal representatives; all of the companies that
were involved.
Hicke: Why do you think that they decided your way?
O'Brien: I made a number of arguments. I can't remember them all, but I
remember two. I made the antitrust argument, certainly, that here
we were in the midst of a lawsuit brought by the United States
government charging that we were party to a worldwide conspiracy
involving just these same companies and now they wanted to write a
138
set of articles -- it's called a memorandum of association -- that
would confirm the Department of Justice's allegation that here we
were united in a worldwide company that could go anywhere, do
anything. In fact, everybody knew that we were there to try to get
the Iranian concession going again and to work out an agreement to
compensate British Petroleum and to get Iran going.
Then I said, "Suppose that we draft the articles the way they
suggest that they be done, and British Petroleum has 40 percent of
the piece. Any Iranian can go down to the government office and
buy a copy of this piece of paper for a shilling and see that BP
now has got a corporation with worldwide powers. What do you think
that means in terms of Iranian sensibilities? We're having a very
hard time finding any way to shape this transaction that's
consistent with their sensibilities, their ambitions, their great
sense of sovereignty and all that. Here we are saying we're going
to create a corporation that's worldwide and vast and powerful."
Now I think the latter argument persuaded the Shell people; I
don't know. I came to be friends with a lot of these people, of
course, as the negotiations wore on -- this was fairly early in the
game. Well, that identified me as a radical and a --
Hicke: -- a power to be reckoned with.
O'Brien: No. Anyway, the fallout of all that was that I then began to
explore options with British lawyers -- with Coward Chance, with
Johnson-Gilbert and a number of their experts, and with a retained
barrister. I always thought a barrister did nothing but try cases.
But in England, you can hire a corporate barrister who advises; he
tries cases involving corporate matters, but he is a specialist in
corporate affairs.
Hicke: Acts as counselor also?
O'Brien: Yes. So you can brief a British barrister and ask him a specific
question on some aspect of corporate law and he'll give you an
opinion. And we did that, because I was aware that under British
law, the managing director of a British corporation has very wide
powers -- not like a board of directors in California or in the
United States generally. Under the corporation law, the chairman
of the board operates under the authority given him by the board of
directors, but traditionally in British law, the managing director
does pretty much as he pleases and only reports to the board once a
year. So it was quite a different stroke.
I wanted to make sure that the managing director of this
company was not going to be given all of those powers; that he was
going to be restricted in the things he could do, and that the
board of directors on which all the companies would now all sit in
139
this new organization would be the controlling, operating force of
the consortium. If we could accomplish that, then we would have to
figure out what kind of voting requirements there should be on
every kind of an issue to make sure that we couldn't get clobbered
by a combination of, let us say, BP and Shell, or BP, Shell, and
the French against the American companies, or let us say, BP and
Exxon and Mobil.
Hicke: You had your work cut out for you.
O'Brien: Yes, and we were plowing absolutely new ground in British corporate
law. Well, there's no use going into all that, but essentially we
did it my way in the end. There was no managing director of this
top consortium. There was a new animal called "managing agent"; he
was given just the limited powers delegated to him by the board of
directors, and there was no managing director who had ill-defined
but very broad grants of power under the British law.
Hicke: How in the world did you persuade them to accept it?
O'Brien: Well, it came down to the very last session of the whole consortium
practically. It was, of course, a very hotly debated point with
the British, and there was a final climactic meeting about this
issue -- this was weeks later -- which took place about twelve or
one o'clock in the morning. This time, Lenzen was there, and
Boucke was there, and all the other CEOs -- the senior executives.
Mr. Follis wasn't there but most of the other major international
companies' executives were sitting in the room when this provision
about the managing agent was put forward. Of course the British --
BP -- just despised that idea. The first managing director they
wanted was going to be a senior executive from their company, a
very distinguished guy by the name of [William] Snow.
So, again, I made a presentation on the subject.
Hicke: Had the lawyers agreed?
O'Brien: The lawyers had at least agreed it was to put forward as a
proposition to the principals. But certainly BP's lawyers hadn't
agreed to it. They had both their house lawyer and they had a very
distinguished lawyer from a big firm of solicitors representing
them. That was kind of interesting, because after these arguments
and discussion and so on had gone around the table on this whole
thing, the principals felt a little embarrassed and awkward about
it, and they didn't want to grasp the nettle. So they said,
"Mr. O'Brien, we want you to go out with" -- his name was John
Gauntlet, who was the solicitor from this firm representing BP --
"and see if you can't draft something that you both can agree on
and bring it back to us in a few minutes."
140
Hicke: Just step outside in the hall?
O'Brien: Just step outside and draft it. I remember he and I went out and
sat on a wicker bench and I quickly drafted something that was
really quite outrageous. It was all my way, let's say 100 percent
my way, and I made him fight to change every word of it. I kept
hanging in there and arguing and so on. Billy Fraser had come out
of the meeting room and he was leaning over our shoulders trying to
see what I had written and what Gauntlet was saying in trying to
change it .
Finally, I kind of wore Gauntlet down, I think, I said, "Does
that suit you now, John? Can we go in there and say this is it?"
And he said, "Oh, yes, okay." So we went back in and presented
this piece of paper which now had the approval of their lawyer, and
I sat down next to the No. 2 man in international Shell -- I can't
think of his name but he was a very bright, shrewd fellow. I had
this provision only in my handwriting, and he said, "Let me see
it." So I passed it along the table. He looked at it, and he
turned to me and he said, "It's shocking. You've given them a
comma. "
Hicke: Well, you have to give something, don't you?
O'Brien: Anyway, BP was highly dissatisfied with it. But the rest of the
group now, since it in effect had been agreed on by BP's counsel,
were prepared to go along with it. BP called a recess. This was a
huge room. All of the BP executives went down to a corner of this
room where we were meeting and they must have talked for forty
minutes. The rest of us sat there, and it got to be 2:30-3
o'clock. Finally, they stood up and said, "Okay, we'll buy it."
That ended the whole affair.
I got up and rushed over to see Mr. Snow, who was going to be
the managing agent, and said, "I want you to understand that the
Standard Oil Company has nothing but the highest regard for you and
that the issue involved here had nothing to do with you. On the
contrary, we endorse your appointment as the chief executive of
this operation with great enthusiasm."
Hicke: That was a good idea.
O'Brien: In the meantime, I got absolutely played out. As we went down the
home stretch, I sent a message to Hillyer Brown and Marshall
Madison asking that Al Brown be sent over to help me on the
corporate aspects of all this. See, the British were, among other
things, very skillful, because in a deal like this they would
immediately form five committees -- a committee on this subject and
a committee on that subject, a committee on whether we should have
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Hicke:
O'Brien;
Hicke:
O'Brien:
an arbitration clause, a committee on something else, a committee
on the fiscal regime.
In the meantime, I should say that Scott Lambert was there
almost from the beginning, and that was an entirely kind of
separate working party to work out how this thing could be
structured in a way to insure that we would get a foreign tax
credit in the United States for the taxes that we paid Iran in a
way that was also consistent with the British Inland Revenue -- all
of the national tax laws of all of the participating companies.
You can imagine what a wrangle that was .
Scott Lambert was with Aramco?
Scott Lambert was with Standard of California,
tax counsel.
He was their first
Oh, okay, I was thinking he went to Aramco, but that's right.
No, he had started out in -- a marvelous man -- he started out as a
hall boy at Standard, went to night law school somewhere. The
company thought extremely well of him, as they should have, and
they sort of farmed him out to PM&S and he worked in PM&S for a few
years with Sigvald Nielson, who was our chief tax lawyer in those
days. Then they put Scott back into the company again, and
eventually he emerged as general tax counsel, and ultimately he was
made a vice president. But he was there in '54, and that's another
big story, because the tax regime which he and a Texaco lawyer --
Will something or other [Will Young], who ultimately became vice
chairman of Texaco -- worked out was promptly attacked by the
British as being impossible if not illegal. So we had another
great brannigan over that.
Just a footnote to all that story. It was ultimately signed,
sealed, delivered. Al Brown came over. He's a fabulous corporate
lawyer, probably the best securities and corporate lawyer in the
country. Of course, he has had a great career in the firm. So he
and I managed to live through it. Toward the end, we actually did
stay up all night for nights trying to get these papers put
together.
In the end, there's a fascinating story about how the
agreement was signed, the so-called Government Agreement, which was
the agreement between the companies and the Iranian government. It
was insisted that that agreement be enacted into the law of Iran.
Hicke: By the Majlis?
142
O'Brien: Yes, by the Majlis. And it was essential that these agreements all
be signed in a single day.1 This was before the day of jets. So
the agreement was signed by representatives in Tehran, and it was
enacted into law by the Majlis. The document, with all the ribbons
and seals and whistles on it, was put on a chartered airplane and
flown to London, where we rented a big pub outside Heathrow
Airport -- the whole affair with residential rooms and all that, a
small hotel, in effect -- where representatives of all the
companies were sitting.
They then signed all of these documents that we had
prepared -- the compensation agreement, the creation of all these
corporations, and all of the participants' agreements (the main
agreement regulating the legal relationship among all of the
companies that were part of the consortium) . Representatives of
all the companies initialed those documents. Then the fellow got
on the plane and flew from there to New York, where the chiefs of
all the corporations were sitting in the Exxon boardroom about
midnight, and the documents were signed, sealed, and delivered. A
cable was then sent to Iran.
In the meantime, mind you, the final documents also had been
cleared with the attorney general of the United States. He wrote
an opinion. I guess it went through the National Security Council
to the White House and everything else. The State Department had
insisted that there be a provision in these agreements under which
each of the American corporations would sell to independent
American oil companies X percent of the interest it had acquired.
Let's see, we had 8 percent originally and I guess we each agreed
to sell 1 percent to "other financially responsible American
corporations. "
Now State did that to indicate that they were not going to
sprinkle any holy water on the five monster American oil companies
by allowing them to be the sole participants in this vast new
international oil consortium. We must each sell 1 percent of what
we had acquired. So that made a kitty of a 5 percent interest. We
said, "We will have nothing whatever to do with selecting the
companies that can become eligible or actually buy any or all of
that 5 percent interest. That's your provision, Mr. State
Department; you run that." So they hired Price, Waterhouse, and
maybe twenty or more American corporations -- smaller ones --
produced their financial reports and the rest of it to Price,
Waterhouse, which ultimately -- with the seal of approval from the
State Department -- declared X number of companies as eligible to
bid on the interest.
1. The Consortium Agreement was signed on October 29, 1954.
143
That was an interesting affair, because as soon as they were
declared to be eligible, they had a seat at the poker table, which
each conceived might be worth a lot of money. Each now had a right
to participate, and so to give up that right he figured he deserved
to get a lot of money from somebody else that was interested in
acquiring that right. In the end, I think there were some nine
companies that were selected to acquire participating interest in
the 5 percent.1
Then we had to prepare the sale documents -- this was months
later, maybe six months after the first deal was all over -- we had
to prepare the documents for the five companies to sell to the nine
companies -- if that's the right number. We insisted that they act
through a single entity that they had to create so we wouldn't be
orchestrating the whole deal twice, with all the companies sitting
on one board.
I spent months working with the rest of the lawyers on this
deal in New York in the Exxon offices with my great friend, Tom
Monahan -- he was general counsel of Exxon, a superb lawyer and a
marvelous human being -- writing up all this stuff to sell this
5 percent interest, all the papers that the transferers had to
sign. The transferees had to take over their shares of the
obligations under all the previous agreements that had been
executed with the government of Iran and among the rest of the
participants. It was a hair-raising exercise. When we came to
sign the documents, two officers from every one of these
corporations -- buyers and sellers -- appeared in the cafeteria of
Texaco in the Chrysler Building in New York.
II
O'Brien: We had an all-day session to sign these papers in the cafeteria.
We had nine buyers and five sellers, and every document -- and
there were many of them -- had to have about twenty copies. So
each document had to be signed twenty times to make sure that
everybody had an executed copy -- and copies for the government of
Iran and governments of other participating companies. The lawyers
had to keep the copies straight to make sure the people signed
their names in the right place and put the corporate seal on each
copy. I once calculated that there were 5,000 signatures to get
all those copies of all those documents in twenty executed copies.
1. American Independent Oil Co., Atlantic Refining Co., Hancock
Oil Co., Pacific Western Oil Corp., Richfield Oil Corp., San
Jacinto Petroleum Corp., Signal Oil and Gas Co., Standard Oil Co.
(Ohio), Tide Water Associated Oil Co.
144
Hicke: How long did it take?
O'Brien: It took from about 9 o'clock in the morning until about 5:30 p.m.
At the end of the day we lined up the five sellers with their
documents and the nine buyers with their documents. We'd call out
the name, and one would step forward and hand his documents to the
other fellow and receive a check at the same time for the 1 percent
interest we were selling. We managed to keep the whole thing
straight.
Hicke: I hope you all went out for champagne.
O'Brien: We did. That was quite a day. One amusing thing that happened
that I recall. Harold Severance was the assistant secretary of the
Standard Oil Company of California. By mistake he signed one of
the copies of one of the documents on the line meant for the
secretary of Mobil. He got up and walked around the room -- and I
went with him — to where the secretary of Mobil Corporation was
sitting. He was a fine, distinguished, eighteenth century-looking
gentleman. We explained that through inadvertence Harold had
signed the wrong line. He looked up with a big twinkle in his eye
and said he didn't mind a young man trying to improve himself.
Hicke: That's great. Apparently people still kept a sense of humor
through all of that.
O'Brien: Yes. So after that, I went back to peddling my papers. I pretty
much dropped out of the whole Iranian thing. By then Johnson-
Gilbert in London, who had gone through this whole exercise and
kept careful records and so on, was the world's greatest expert on
the Iranian consortium. He had worked on all the drafts and the
compromises and had been at the meetings and the rest of it.
The legal advice in respect to the consortium from then on
forward was handled by Tom Haven in San Francisco in PM&S. He
became the world's greatest expert on the Iranian consortium and
eventually the most senior man in the industry on the legal aspects
because he had greater continuity, as it turned out, in this legal
advice. Tom, from about 1954 forward, became a great expert on
every aspect of Iranian operations. The agreement went through all
sorts of changes over the years; the Shah insisted that it be
modified in later years. Tom handled all of that tremendously
complex, tremendously important work.
Hicke: Why was it that you dropped out of that?
O'Brien: I had gotten into this thing only because I was involved in the
cartel case. When I came back, the cartel case was still going
strong. We had produced documents from forty or fifty countries of
145
the world. We had court appearances in New York; you know, it was
a tremendous case in its day.
Distribution and Marketing
Hicke: I have another question about the Consortium Agreement. What about
the take, or the distribution? Did you have to negotiate that --
who gets how much oil at what price?
O'Brien: Well, it was really divided up. All of that was negotiated, but
the price was not set. Each company posted its own price. To meet
antitrust requirements, we each created a so-called trading company
which bought the oil from the government of Iran and then turned
around and sold it for whatever it could get in international
markets, in competition with every other participant in the Iranian
consortium and in competition with every other producing concession
in the world, whether it was Saudi Arabia or Kuwait or Oman or the
Trucial States or Nigeria. But the oil was lifted by the
individual trading company of each participant and sold for what it
was worth, and we individually paid Iranian and U.S. taxes.
Naturally, on a competitive basis like that, nobody could sell
it for much more or was willing to settle for much less than
anybody else. The abstractions of the cartel case, the theories of
the antitrust lawyers in the cartel case in the Department of
Justice about all the wicked and sinister things that they
contended we had been doing, ultimately yielded to a great
international convulsion and crisis. The United States, as it does
today, understood how essential the oil of the Middle East was to
the free world. They could not let the Russians take over Iran any
more than we can today. As a consequence, I said once that the
Iran consortium agreement went through the Department of Justice
and to the Attorney General like a Baldwin locomotive. They had to
yield up these theories that really had no basis in fact about this
great international cartel.
Now maybe the companies that were in the Red Line Agreement in
1928 had had some sort of a deal in the '20s. But by 1954 the
world had gone through World War II, Western Europe was beginning
to make a great recovery after being laid waste, and we had made
the huge discoveries in Saudi Arabia which changed all of the
pieces on the board. It was and is by far the greatest deposit of
oil in the world. The United States, as I've told you before,
wanted to turn Arabia into a petroleum reserve just like Elk Hills
and to own it themselves. Mr. Ickes created a corporation to take
over the concession. So -there was an appreciation, an
understanding as I tried to say in that Mootness Study, that in the
146
classic eighteenth century phrase, which we still use with the same
meaning, that area was an area of strategic importance to us and
affects our vital interest as a country.
Hicke: Again, what about the Korean War which was going on? Did that have
any effect on all this?
O'Brien: Yes it did, in this sense. All the time that these things were
going on, the U.S.S.R. was continuing to beam into the Middle East
all of its propaganda about "you should confiscate all these
concessions." From the minute the cartel case started, when the
U.S. government itself was accusing the American companies of
conspiring to monopolize the whole of the international oil
business and to fix prices worldwide, it was a propaganda
opportunity for the Russians which they did their best to exploit.
And then they kept urging confiscation, as they had in Iran -- you
know, they got the Iranians to take over the oil concession
there -- and they were telling every other Arab country that they
should do the same. So there were some mighty forces working on
the earth.
Those were pretty stirring times, including the Korean War,
where we had the Chinese just barely over the horizon and the
United States and China came within an inch of having a major
confrontation of their own. When [Douglas] MacArthur went across
the thirty-eighth parallel into North Korea and the Chinese
attacked on the other side of the border, we were within an ace of
a major conflagration. The oil in the Middle East would have been
the resource to fuel the war.
The U.S. government already felt that the U.S. had run out of
oil, because we had pumped our domestic wells through World War II
so that the Allies had floated to victory on a sea of oil. We had
been encouraged to look for oil abroad to replace the reserves of
the United States which had been depleted in World War II. So if a
major war with the Chinese had commenced, the oil in the Middle
East would have been absolutely strategic, important, as it is
today.
We're working ourselves into exactly the same position we were
in 1971 now: our imports are increasing, our domestic production
is falling, and it's going to be as alarming as it ever was in
1971. We're doing nothing about it; we're going down the same old
street whistling Dixie.
147
International Law and Antitrust Law
Hicke: Veil, I know that you got very interested in international law.
Was this really where you developed your interest, or had you been
doing something in that area before?
O'Brien: Well, I had been interested in it. When I went to law school it
was in the middle of the Depression. The only thing that was of
interest to anybody going to law school in my day was how to
graduate, how to hang in and finish school, graduate and pass the
bar. While there was a very distinguished international law
professor at Berkeley, Edwin Dickinson (who was retained as an
expert, incidently, in the Onassis arbitration -- the Aramco
arbitration), I didn't take international law.
Hicke: But I think you've given speeches on it and so forth.
O'Brien: Oh yes, yes, I have given speeches on it. I used to give a seminar
at Berkeley for a few years at the law school in the summertime.
They had a course or courses for young law professors in smaller
universities where they didn't have a full-fledged international
law program. They used to invite me to come over and give a
seminar, which I did for a number of years. I think that they did
that not because of my prowess as a teacher but because they wanted
to demonstrate that there were live bodies to whom these issues
made some real difference. But it wasn't some abstraction, it
wasn't some theory, some arcane or esoteric idea that had no
practical application. We won the Aramco arbitration on principles
of international law.
Hicke: I guess that's really where we should talk more about international
law. Were there antitrust regulations in Holland and France?
O'Brien: There were some very ancient laws, but they had nothing like our
laws, and the French for centuries had not really enforced what few
they had. Before the days of the Common Market, which has a very
rigorous antitrust law as it turns out, most of the antitrust laws
in Western Europe were so-called abuse laws. They didn't mind
cartels so long as they didn't abuse people. They really thought
that the organization of business in large, cooperative ventures
was not wrong so long as they didn't abuse their position. Then we
came along at the end of World War II and did a transplant of the
Germans' model antitrust law. It was written by Corwin Edwards of
the Federal Trade Commission.
We did the same thing with our defeated enemy in the Pacific.
We gave the Japanese a very refined and complicated antitrust law,
and we imposed it on them. It was totally foreign to their
148
tradition, their heritage. The great companies, the great
daibutsu, had operated in the country, and lol and behold, within a
few years they rose again from the waves and took exactly the same
position in the Japanese society that they had had before. While
the Japanese still have the antitrust laws, they only dust them off
when they want to keep, let's say, American companies from selling
into Japan's markets. Then they suddenly discover there might be
something in our activities that would raise an antitrust question.
But the Germans, on the other hand, embraced their antitrust
law. There was a remarkable resurrection of the German economy,
and because of the Cold War, we threw billions of dollars into
Germany. Through the Marshall Plan, we gave transfusions to all
the Western European countries. And the Germans leaped out ahead
with their marvelous capacity for organization and their mechanical
genius. Their new industries with new equipment began to enjoy a
great economic revival, and they got ahead of the rest of the
countries.
They therefore thought that the antitrust laws were great,
because they didn't want any combination of other countries to
interfere with the tremendous progress that they were making in
their development of export markets. So they espoused these
antitrust laws. I used to talk to the head of the German cartel
office, who had been a prisoner of war in World War II in the
United States, and he was more doctrinaire than a lot of people in
the Department of Justice.
Hicke: Well, how do you account for the fact that this seems to be a
uniquely American phenomenon up until World War II, and even then
we exported it rather than other countries arriving at it on their
own?
O'Brien: That's right. See, we did a lot of missionary work too. That's
how some of these antitrust concepts got into the Common Market --
the Rome Treaty.
Hicke: I guess what I was saying is, why do you think it developed in the .
United States?
O'Brien: Well, it really developed in the English common law. We inherited
the tradition of the illegality, if you like -- yes, the illegality
of combinations in restraint of trade. When the Sherman Act was
passed in 1890, it reflected -- often ignored, but reflected a
tradition of the English common law against price fixing agreements
and so on.
Hicke: Which the English themselves, though, did not have.
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149
O'Brien: The English never carried it out in the bloodthirsty way that we
have. Now an extraordinary thing has happened, though, because
much of the law that I spent forty years trying to master has been
largely moderated by court decisions and by some amendments in the
law. Some of the extreme positions, which led to things like the
cartel case, some of the total hot air that worked its way into the
economic theories applied in antitrust laws with great solemnity as
though it were their important concepts of thought -- some of these
notions have been abandoned.
Like the whole subject of potential competition. It's almost
impossible to judge the effects of actual competition in the
marketplace as a matter of economics. To judge the supposed
effects of potential competition -- the hypothetical consequences
of something that hadn't happened -- was such rubbish. I gave a
speech on the subject of potential competition and the Sherman Act
years ago before the antitrust section of the American Bar in the
hope of heading off this nonsense.
That didn't restrain anybody. All these governments went for
all these stupid concepts. Now a little light and air have been
let into some of these notions, and we're a good deal more
pragmatic. There is a growing sense that we were carrying some of
these ideas to such extremes that we were handicapping American
corporations in international commerce. When we began to have
these great trade deficits and so on, people began to say, well
gee, we are trying to tie their hands behind their back in
international competition by concepts about potential competition,
a lot of hot air like that. So the pendulum swung back again.
We went through the same thing in the United States when we
had the great Depression. We had Mr. Roosevelt and the National
Recovery Administration, we had the Blue Eagle, and you could go to
jail if you didn't follow the prices set in the marketing orders.
The government was fixing the price in consultation with the
industries involved. When those were all declared unconstitutional
by the Supreme Court of the United States, they suddenly reversed
their course and did a ISO-degree turn. That was how I started in
the antitrust business in 1937 and '38, when they began criminal
indictments of everybody in sight, starting in San Francisco. So
we go from one extreme to the other.
Now I think we've probably a little more balance, but we had
made some profound mistakes, like breaking up the telephone company
[American Telephone and Telegraph Company], technologically a
country mile ahead of anybody else's telephone company. We were
provided superb service at fair prices by a monopoly regulated by
the federal government and the public utility commissions of the
several states. Now it is chaos.
150
We almost did it to IBM. Somebody finally had the sense to
dismiss the case, and yet our computer capabilities -- our capacity
to combine computers with communications -- has put us at least a
generation ahead of our adversaries in the U.S.S.R. and the
satellite countries. They're falling further behind except when
they can steal something.
The consequence is that now they are driven -- this is maybe a
little oversimplification — by the problems of their domestic
economy and their failure to keep pace with the free societies and
their free market systems. Now if we had broken up IBM into little
satisfying pieces, we would not have that sort of a lead. The
U.S.S.R. wouldn't be worried about our capacity to stay ahead of
them and to get into a new generation of communication. In the end
it's about as simple as that.
So the antitrust laws have to be administered with some horse
sense. They can't just be an arena to espouse every crackpot idea.
The stakes are too high for that. And I used to say that to the
people in the Department of Justice in the oil cartel case:
"Suppose you did succeed in breaking up one of these major
companies that are integrated all the way from the wellhead to a
service station in Dubuque, would you in any way be increasing the
efficiency or lowering the price of a system which has been able to
survive world wars and every other kind of emergency and assure a
steady supply of oil from every corner of the earth into the
domestic market of the United States?"
Hicke: Did that have any effect on them?
O'Brien: Oh, I think it must have in the end, because they ultimately
dismissed the case. But an experience like that broadens and
changes your own horizons, your own perceptions. I think my first
experience in the criminal investigations in the late '30s probably
did more, had a larger effect on my own thinking about the way the
great republic works than many other episodes.
V
•
151
VII ARAMCO RESTRUCTURING
Background
[Interview 10: March 28, 1988]#f
Hicke: Today I'd like to ask you about Aramco restructuring. There were
actually several different types and occasions for restructuring.
O'Brien: Yes. You'll remember that originally the Standard Oil Company of
California successfully negotiated a concession which involved
substantially the whole country of Saudi Arabia -- the Arabian
Peninsula. That contract was made before World ¥ar II with King
Ibn Saud.
After a lot of dry holes, the company eventually struck oil.
But the great fields of Saudi Arabia could not be developed because
of the intervention of World War II. By 1939 Europe was at war and
it was impossible to develop the fields. Nobody really understood
the enormous extent of the oil reserves in Saudi Arabia in those
days. There was a small teapot refinery built in Saudi Arabia
during the war, I guess with U.S. government help, which was in
support of the war effort.
Before World War II, Standard of California had negotiated a
contract to sell half interest in the concession to Texaco for a
half interest in Texaco 's refining -- all of its downstream assets,
refineries, distribution, stations, and interests east of Suez --
with an option to acquire a half interest in all of Texaco 's
properties west of Suez. It's my recollection that they exercised
only the option in respect of Texaco 's properties east of Suez
before World War II.
152
I think in an earlier session I mentioned the fact that at the
end of the war, the United States government felt considerable
anxiety about the oil reserves of the United States. They thought
that the American companies -- certainly with the encouragement of
the government -- had perhaps overproduced American reserves in
support of the Allied war effort, and they encouraged American
companies to go abroad, hopefully to discover new oil reserves. It
was recognized, particularly by Secretary Ickes, the Secretary of
the Interior, that the reserves which Standard of California had
discovered in Saudi Arabia were trememdously important to the
future of national security of the United States. He did his best
to negotiate the acquisition of those reserves by the United States
government.
He created a corporation called Petroleum Reserves Inc., and
negotiated with the companies to acquire their rights, in the hope
that we would establish for our national security a oil reserve
like Elk Hills or any of the great national reserves that we have
in our own territory. That's a very long story, and it's recounted
in part in the Mootness Study. You can get the details of that
episode there.
When the war was over and Europe was devastated and prostrated
from the war, the genius of the American government and of the
people who led it at that time resulted in the creation of the
Marshall Plan. One important aspect of that was to revive the
economies of Western Europe by supplying all of the devastated
countries -- Italy, France, Germany, England, et cetera -- with
cheap oil, and the United States government provided the priorities
to build Tapline -- TransArabian Pipeline Company -- which crossed
from Saudi Arabia to the Mediterranean Sea at Sidon and enabled oil
to be picked up by ships on a short haul to Western Europe.
That, in effect, was a massive transfusion that did in fact
help in a very significant way to put all of the European countries
back on their feet and to provide the cheap energy that resulted in
their industrial revival. At the same time, the United States
government -- after Ickes 's plan of the acquisition of Aramco had
failed -- the United States government, I firmly believe, secretly
encouraged Mobil and Standard of New Jersey to seek to acquire an
interest in Aramco. They were both members of IPC, the Iraq
Petroleum Company, bound by the provisions of the so-called Red
Line Agreement, which prohibited its members from independently
exploring any area within the boundaries of the Red Line Agreement,
which included Saudi Arabia. Accordingly, the agreement
effectively prevented Mobil and Jersey from becoming part owners of
Aramco without somehow extricating themselves from the provisions
of the Red Line Agreement.
153
Hicke:
O'Brien:
Hicke:
O'Brien:
You said that involved exploring,
of --
Would there be any question
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Well, yes, of taking any separate concession, inside the Red Line,
without turning it over to IPC.
I see .
So eventually they did break the Red Line Agreement and they were
sued in England by their partners in the IPC concession --
Gulbenkian and Shell and others -- and they made some settlement of
that arrangement and became partners in Aramco. Jersey took a
30 percent interest and Mobil took a 10 percent interest.
That was the first restructuring?
Yes, right.
Felix Smith was involved in it.
Felix Smith was involved in that. And the acquisition by Jersey
and Socal was reported to the Department of Justice, and they did
not object and took no action.
Interesting. Was it reported before or after the fact?
No, simultaneous, contemporaneously with the execution of the
agreement.
Were you involved with any of this?
Only as a trainbearer. Meantime, Texaco and Socal, after the
formation of Caltex, had long since begun an all-out program to
take away a substantial part of the international market from the
IPC partners -- Jersey, Mobil, Shell, BP, and Gulf -- the
international majors which held the predominant market positions in
all of the countries of Western Europe, Scandinavia, and the Far
East.
At one stage of my life, I reviewed all of the multitudinous
meetings that were held by the committees of Socal and Texaco
planning how they would wrest from their competitors at least a
25 percent interest in all of the markets of the world -- now that
they were armed with these huge reserves in Saudi Arabia of cheap
oil with a pipeline that enabled them to deliver oil into the major
markets at a highly competitive prices.
Hicke: How did they plan to do this?
154
O'Brien: Well, to establish their own marketing companies and to invade
these markets --
Hicke: Lower the price a little bit?
O'Brien: Lower the price and fight their way into the business and stake out
a big market position. And as their business grew, to build
distribution points and refineries and pipelines and marketing
service, station outlets, et cetera.
Hicke: That was an enormous plan.
O'Brien: It was an enormous plan, and it worked. The rest of majors, which
traditionally had enjoyed the majority of market positions in all
of these countries, fought Caltex tooth and nail. But Caltex made
substantial progress.
Tapline
Hicke: Before we get too much farther, have we passed the building of
Tapline? Because I think you were involved in preparing contracts.
O'Brien: Well, yes, when the Tapline came along, a company was formed -- the
TransArabian Pipeline Company -- and I guess, I can't remember what
year that was -- I guess that by tat time, Mobil and Jersey were
part owners of Aramco.1 In any event, the headquarters of Aramco
was still in San Francisco at that stage, along with Tapline.
Tapline had its first headquarters here in San Francisco and the
company was headed by a fellow named Bert Hull, who was an old
Texaco pipeline hand.
I recall that Felix Smith delegated me to keep track of what
was happening within the Tapline and to represent our interests in
relation to the negotiations and the legal aspects of Tapline ' s
problems while they were here. This involved drawing the major
contracts with the pipeline construction companies -- Williams
Brothers in Texas, I guess -- for the construction of the pipeline
itself and to some degree in the negotiations and review of the
transit concessions that had to be made with the countries through
which the pipeline passed. It had to be, of course, all ratified
by their parliaments and with such provisions as could be
1. The TransArabian Pipeline Company was formed in 1945.
Construction of the pipeline began in 1947, and the company began
operations in 1950.
155
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien;
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
negotiated against expropriation and to secure the rights to
maintain the pipeline to the countries.
[telephone interruption] it
But you weren't involved in the actual negotiations of these
contracts?
No, no, I was reviewing and making suggestions about their
provisions and so on. Those went back out to Saudi Arabia. But I
remember working at that time with Herb Navis, who later became a
vice president of Standard Oil Company. In those days, he was a
young, energetic, bright fellow, and he and I worked out some of
these contracts. But that was sort of short lived, because the
headquarters of Tapline along with Aramco moved away from here to
New York, and so my role in that ceased to be of any significance.
What was PM&S's involvement then?
there?
Did somebody have to go back
Aramco got its own lawyers in New York, which turned out to be
¥hite & Case. But we were responsible for watching over the
interests of the Standard Oil Company as a participant in Aramco.
Why did they move their headquarters?
Well, we had two new owners -- Jersey and Mobil -- and Texaco, and
all three of them were in New York.
Oh, I see.
They were within a few blocks of each other, so it was hard for us
to resist the gravitational force of having three out of the four
owners in New York City. To make a very long story short, this
will be the subject of three or four volumes of Standard Oil
Company history some day I hope —
I hope so too, but we can just maybe get your part of it here --
Yes, just a touch.
-- and part of the background.
156
The Follis Plan
O'Brien: The fellow who would have the most accurate recollection of what
I'm about to say would be Hugh Taylor, who became in effect the
steady guiding advisor on all Aramco affairs for the duration of
his career. He became the senior statesman of all of the lawyers
who through the years counseled their clients in respect of Aramco.
He has the greatest background and continuity and so on.
Hicke: Somebody should certainly get that story.
O'Brien: Yes, we must get the story from Hugh Taylor of his participation in
Aramco affairs, because it's a brilliant story and a very involved
one.
But I got into the act again when Bev Letcher was the
operating vice president -- he'd been treasurer of the company and
then became the operating vice president who represented Socal's
interests in Aramco. He was an Aramco director. Over time there
developed a very bitter internal hassle between Socal and Texaco on
one side and the other two shareholders. When the Aramco agreement
had been made among the four shareholders, there was a provision in
it that said that Aramco would be operated in its own best
interests.
Hicke: Is that a standard part of an agreement itself?
common sense to me.
It sounds like
O'Brien: ¥hat Jersey and Mobil began to say that the provision meant -- and
it had been stuck in there by a very bright and subtle Jersey
executive -- that Aramco must sell its oil to its shareholders (who
took all of the oil that Aramco produced) at the full market price.
Hicke: No discounts or special favors?
O'Brien: And not at a discount. That would have effectively put Caltex out
of business, because it would be buying at the market price and
trying to resell it at the market price in competition with Jersey
and Mobil. We took the position that the way to operate Aramco in
its best interests, among other things, was to sell it at a
discount so that it could produce infinitely more oil that could be
moved in the market. That led to increasingly antagonistic,
hostile, and bitter divisions among the shareholders.
It reached the stage when Jersey had privately consulted
counsel of all sorts and prepared a complaint and was about to sue
Socal and Texaco. We together controlled 60 percent of the
shares -- 60 percent of the vote. The other two shareholders
157
together had only 40 percent; so we were the majority shareholders,
and that promised to be a very serious hassle. About that time I
started going to New York with Mr. Letcher and sitting in the
anteroom while all these brannigans were going on in the board room
and advising with him.
Hicke: They'd come out and consult with you?
O'Brien: Yes, right. A culmination of all that was that they finally -- I'm
leaving out huge chapters of this -- but the culmination of all
that was that they ultimately adopted what was called the Follis
Plan. The Follis Plan was a plan by which you could buy your
equity share of the oil produced by Aramco at 18.3 percent below
the market price -- that much of a discount. That enabled Caltex
effectively to compete with the other two owners.
I can recall that I flew back to meet Mr. Letcher.
Mr. Letcher sometimes took the train and his trunks and spent the
entire summer in New York with these Aramco discussions and
negotiations and in Caltex affairs. I flew back to meet him.
I met him in the hotel early in the evening. He explained
this problem to me and asked me to draft a short piece of paper
which embodied this so-called Follis Plan. I sat up nearly most of
the night drafting such a short document, and the next morning
attended a meeting of the lawyers' committee for the Aramco
shareholders. I sold that document to all the lawyers. One of
them said, "Well, we'll have to check it out with our executives."
In the afternoon reservations began to appear about the document.
In the end Hugh Taylor and Scott Lambert and a dozen other people,
I guess, spent nine months drafting a Follis Plan, which turned out
to be about forty pages long in its printed form.
Hicke: How did you sell Jersey and Mobil on this first plan?
O'Brien: I don't know. It was a perfectly shorthand way of saying what they
ultimately developed, but by the time everybody found problems
under every rock and so on, every word of it had to be elaborated
into pages of explanation and protections and procedures. It got
to be an enormously elaborate thing. It was a document that
required all sorts of help from tax lawyers. That's why I
mentioned Scott Lambert, because such a plan had to protect the tax
position of all of the participants as well. So it was a great
problem.
Hicke: It's interesting that the lawyers were the first group to accept
this very short and concise plan, and when it got back to the
executives, it started to be elaborated on.
O'Brien: Yes. Well, they may have had other fish to fry.
158
Hicke: Well, I understand it was an advantage to Caltex, but what was in
it for Mobil and Jersey? Why did they agree to this?
O'Brien: Well, I guess they must have thought we were at le? .•.. ~ half right
and they didn't want to spend ten years litigating the question
with us. It was a period of great stress and strain and lots of
travel. But I kind of got out of it, then, because in 1952 the
cartel case started and Hugh Taylor took over.
First, Mr. Letcher retired and his place was taken by George
Parkhurst, and I went with George Parkhurst a few times to these
meetings. I was so preoccupied with the absolute hassle that was
going on in the grand jury proceedings and in the federal district
court in Washington, I made frequent trips. It just happened that
my wife had hurt her back very badly, and I made two round trips a
week to New York, eight-hour trips, before the day of jets. I flew
the Redeye Special regularly while we were burning up the track
before the election. And so I kind of got out of Aramco affairs
until '51, until the arbitration proceeding came along.
Hicke: Do you remember any of the people that were involved particularly
in Aramco?
O'Brien: Do you mean in our company?
Hicke: Well, any of the people that were involved in the negotiations
other than the ones you've told me about.
O'Brien: Hillyer Brown and Mr. Follis, Letcher, Parkhurst, Lenzen --
t*
O'Brien: Then there were a whole bunch of Aramco study groups that were
formed and there were a lot of people who were in the foreign
staff -- Standard's foreign staff -- who would have been members of
those study groups, like George Keller and Jones McQuinn and Perrin
Fay and others; all of them ultimately became vice presidents and
some of them directors, and Keller the CEO.
Hicke: Sounds like a good proving ground.
O'Brien: Yes, right. So I really kind of got out of that business. I was
talking to Kirkham -- I guess Marshall Madison was general counsel
then, yes he was, and he was much involved -- and I talked to
Francis Kirkham, who was also involved, and that was a lot of heavy
lifting.
I remember once or twice I had to fly home from New York, when
I was involved in something to do with the cartel case, to come
159
back out here to consult with Hugh Taylor and satisfy myself that
we were going to be capable of giving a legal opinion on some
important Aramco issue at the moment.
Hicke: So you still carried it around in your head.
O'Brien: Yes, I still had some kind of a hand in it but not in the daily
negotiations. I guess my next real contact with Aramco was in
connection with the famous arbitration, the Aramco arbitration with
the Saudi government.
Ibn Saud's oldest son became briefly the king but turned out
to be wholly incompetent and was in effect booted out by King
Faisal. The new king was in there long enough, among other things,
to adopt as his first royal decree a decree which effectively said
that thereafter all of the oil from Saudi Arabia would be
transported on Saudi ships. These would be Aristotle Socrates
Onassis's ships put under the Saudi flag, so that we would be
moving our oil on Greek ships supplied by Mr. Onassis.
He created for King Saud these exciting and cloudy visions of
Saudi Arabia becoming a great maritime nation. We contended that
the requirement was a violation of our concession rights under the
original concession agreement, which provided explicitly that we
would be free to move the oil on ships of our own choosing. And
most of the oil, as you know, was sold as crude oil to purchasers
who picked it up in their own ships at the docks in Saudi Arabia.
We didn't transport it all on our own ships by any means. The
fleets of the world came in there and loaded up oil -- customers of
all four of the owners.
That undoubtedly was the most important international
arbitration of the last fifty years.1
1. See Chapter IX below -for more information on the Aramco
arbitration.
160
VIII INDONESIA: 1964-1966
Background; Oil and Resolution
Hicke: Did the Indonesian problem come along before you became Socal's
vice president for legal affairs?
O'Brien: It came on just before and just after.
Hicke: Well, maybe you could talk about that.
O'Brien: Now that's '64, '65, '66.
Hicke: You became vice president in '66?
O'Brien: Yes, '66. Things had been going from bad to worse in Indonesia for
quite a long time. In the first place, [President] Sukarno's
relationships with the United States had deteriorated very badly
and he seemed to be moving into a Communist orbit. The Communist
party in Indonesia was becoming stronger and stronger -- the
so-called PKI, which was the name of the Communist party. In
consequence, he was gradually taking over all of the foreign oil
companies in his country.
Hicke: One after the other, or how was this being done?
O'Brien: Well, they were being either bought out or forced out in some way,
and the international situation was deteriorating. He adopted all
sorts of tactics. He was very shrewd. He didn't want to adopt a
decree of expropriation in so many words, but he was making life so
miserable and so difficult and so unprofitable that most people
were ready to throw in the towel. Shell, Jersey, Mobil and the
rest of them all got out of the country.
161
Among other things, he had a special oil rate and exchange
rate, which was a way of milking the oil companies. Finally, the
thing came to a head for Caltex Indonesia when he manufactured a
lot of riots, and we had people banging on the doors and shouting
and yelling -- what we see too typically in protests around the
world now. These were all phoney-baloney riots, as a consequence
of which he adopted a decree putting our operations, in effect,
under protective custody allegedly in order to keep us out of the
hands of these rioters. And "to protect" our interests, he put in
a supervisory team to run our business.
The chief executive in Indonesia at that time was one of the
greatest guys I ever met. His name was Art Brown. Art Brown was a
tall, spare, graying man with enormous energy and absolutely
imperturbable style, endless patience, and very smart. He had
served in Venezuela and had had other overseas assignments. We
were fortunate as well that the president of the company was a
famous Indonesian by the name of Julius Tahiya. Tahiya had been a
war hero in Indonesia in the wars of revolution to throw the Dutch
out of Indonesia, and I believe that he was an officer himself in
the Indonesian army. But he was a fellow of infinite skill, highly
respected, with great courage, because now things were really
getting pretty dangerous.
Hicke: Was he seen to be a traitor to the enemy?
O'Brien: Oh, I don't know that he was -- it's very hard for me to say. We
talk about the Chinese being inscrutable, but I often think that
the Javanese are far more subtle than the Chinese and the
Orientals.
In any event, a decree was adopted, as I say, that put teams
in to run our business for us. And these were largely made up of
peoples' committees, and those committees were in turn made up of
some of the labor leaders, things of that sort. So they came and
sat down in the manager's chair and took his automobile over and
all that and started to run our business.
I got called in then -- I was a partner in PM&S -- to advise
with the company as to how we should respond. Mr. Follis felt
great concern and anxiety over these developments, particularly
since the United States government despised Sukarno. Howard Jones,
who was our ambassador and was the senior member of the diplomatic
corps in Indonesia, was constantly being humiliated by Sukarno. As
the senior diplomat in the corps he usually, at receptions and
public affairs, sat very close to Sukarno, who just practically
spit in his face. And the United States government had just about
had it with Mr. Sukarno.
162
But Howard Jones, bless his soul, insisted that we ought to
hang in there, that we ought to stay. Meanwhile, here was Caltex
gradually and effectively being driven down to the shore and poked
with a sharp stick and no longer able to control its affairs and
with government intervention and so on. I think Mr. Follis was
very much concerned about the security of our people. We had an
expatriate corps and we had a lot of Indonesian employees who might
suddenly go through some blood bath. We were aware of the internal
rumblings that were going on in the country.
Hicke: Were you the only oil company left? You said that the others had
gone.
O'Brien: I think we were. We were the largest; we always have been and
still are the largest producers in Indonesia, and at that time we
were probably generating at least 50 percent of the country's
revenues .
There had been an earlier revolution, or attempted revolt, in
Sumatra against Sukarno, which the United States government was
suspected of having possibly engineered but certainly supported, by
a fellow named Nasation. I think the CIA might have been involved
in that, at least that's what the press reported. In addition,
Indonesia was at war with Malaysia, and President Johnson had
announced that he was sending foreign aid and military equipment to
Malaysia.
So here we had the situation of our affiliate controlling the
major oil production that fueled Indonesia's military, its ships,
its airplanes, its tanks, its military armada, if you like, all in
the hands of foreigners who were openly supporting a country with
which Indonesia was at war.
Hicke: A very odd situation, certainly.
O'Brien: Yes, an odd situation. Anyway, I was in very close contact with
the State Department and with some of the other agencies of the
U.S. government. Once or twice I went to Hawaii or Hong Kong --
I've forgotten which -- and Art Brown and Julius Tahiya flew there
from Indonesia because I couldn't get into Indonesia. I guess
there must have been a Texaco representative there, but I can't
remember -- I'm not sure there was.
In any event, we would figure out, plot and plan as to how we
ought to handle ourselves. Mr. Follis was toying with the idea of
shutting down completely, because obviously this was a very
dangerous and explosive situation. Moreover, it was not a very
good example for other places in which we held important
concessions. If Indonesia could effectively get away with this
rinky-dink of running your business and protecting you against the
163
angry populace that was being exploited by the wicked oil company
and all that kind of jazz -- feeling these great nationalistic
surges -- it would be an unfortunate example of our weakness and
passivity if we couldn't counter in some way.
Legal Principles of the Concession
O'Brien: I got into this because Mr. Follis asked me to give the company an
opinion on the question of whether we were legally entitled to shut
down. I wrote an opinion saying we were not.
Hicke: What was that based on?
O'Brien: Well, a study of the concession agreement and the legal principles.
It was based on a construction of provisions of the concession. I
remember remarking that there were some very broad provisions in
the concession agreement that said that we had to act in the
interests of the great nation of Indonesia, and that we could be
challenged for failure to perform our part of the contract if we
shut down through a failure to recognize the spirit of that
provision which in some vague ways obligated us to support
Indonesia in its independence. I suppose that opinion could be
resurrected. I wrote such an opinion.
In any event, we played along, and as I say, I went to the
Pacific a couple of times and met Art Brown and Julius Tahiya, and
then they flew back to Indonesia and I flew to Washington to talk
to the State Department and to others to keep them apprised as to
what was really happening and not let them get so outraged and
indignant that the U.S. would break off relationships with
Indonesia. Then the fat would really be in the fire; we'd be done.
Hicke: You'd really be stranded then.
What would be the legal consequences, had you shut down in
violation of the concession?
O'Brien: Well, we'd forfeit the concession, perhaps. We would have provided
the government of Indonesia an excuse to rescind the contract, to
cancel it, and given them the excuse of saying, "Well, that's that,
it ' s over. "
Anyway, fate intervened. That was the time when the palace
guard murdered all the generals, threw their bodies down the well,
and destroyed everybody except Suharto, who rallied his troops and
overcame the rebels who were inspired, I guess, by Sukarno.
Meanwhile, we were privately negotiating all the time with the
16A
foreign minister and other people. I can't remember all their
names, but I'll tell you an interesting story.
I saw last week an article that said that the foreign
minister -- Sukarno's foreign minister -- has been in jail ever
since that thing happened. His name was [Dr.] Subandrio, a really
wicked man. Subandrio, the New York Times reported a week or two
ago, offered to tell the Indonesian government finally where some
billions of dollars in gold had been secreted by Sukarno if they'd
let him out of jail finally. He's been in jail since 1966, '67.
Hicke: You'd think he would have thought of this before.
O'Brien: Yes.
Hicke: Did it say they actually came up with the money and freed him?
O'Brien: No, they haven't done that and a lot of people -- the Swiss and
others -- say it would be impossible for anybody to have hidden
away that much gold in Switzerland or other places. So I don't
know whether there's anything to the story or whether he's just
trying to get out.
Some of the other people in Sukarno's inner group were left
out in the wet to die after this takeover attempt which failed.
And the Communist party, the PKI, was effectively destroyed in
Indonesia. Nobody knows how many people died in that great
revolution. There were reports coming out, but very meager
reports, that all of the great rivers in Indonesia were just full
of bodies that clogged the harbors. They probably destroyed three
or four or five hundred thousand people.
What started out as a revolution to rid themselves of
Communist influence in their country, I guess turned into a few
other sorts of bloodbaths that involved paying off old scores. The
Chinese suffered a great deal because they were the merchant class
and the Indonesians felt no affection for them. Anyway, it went on
for months and the country was essentially sealed off, and nobody
knew the extent of the deaths or how the whole thing would turn
out. But ultimately, Suharto emerged in control of the country.
One of the first official acts that happened to me after I
became a vice president of Standard Oil Company was this: I was
about to leave with Bud Lund, who wanted to take me and Mary Louise
O'Brien and an entourage of explorationists on a trip all through
South America to visit all of the places where we were producing
oil -- Columbia, Venezuela, and elsewhere -- and introduce me
around and show me a little bit about the foreign exploration and
production business.
165
Almost the day before we were to leave Otto Miller called me.
He was now president, and he was keenly interested in everything
that was happening in Indonesia and watching it very closely along
with Mr. Follis. He called me in and said that Ibnu Sotowo, the
general who was a confidant of General Suharto and who was now the
minister of petroleum after months of silence and no really
detailed communications between us and our people who were keeping
their heads down, was going to the Netherlands and he would like
very much to see representatives of Socal and Texaco in Amsterdam.
Hicke: That was the wrong direction for you.
O'Brien: Yes. A gentleman named Harvey Cash from Texaco, who was a very
senior director and officer of the company, and I met in Amsterdam
and spent a day talking to Ibnu. Julius Tahiya was there. I can't
remember whether Art Brown was there or not. Anyway, we said,
"We're practically flat on our back. You've manipulated the
exchange rights and taken over our business. But if it's your
intention really to honor your contractual arrangements with us, if
you'll correct some of these basic things that are fundamental to
our being able to continue to operate, we're prepared to continue
to make the investment to get the country going again, to start
producing oil in substantial quantities that will provide the
revenue for this new government to make its way."
Ibnu Sotowo is blacker than the ace of spades, shiny, speaks
pretty good English, was smart as the dickens, very bright, very
cunning, very Javanese. And within a few weeks, he fixed most of
those things; they fixed the currency rates and so on. We began
again, and we've enjoyed a wonderful relationship with the
Indonesians. They keep trying to get more money out of us all the
time, but it's one of the biggest moneymakers on the Standard Oil
balance sheet.
Hicke: That was a nice bit of advice you gave on not giving up on the
concession -- it saved Socal 's operations there.
O'Brien: Well, there wasn't any other advice to give. But now we couldn't
go on the way we were, and they had gone through a bloody
revolution, and they needed support and encouragement. If you look
at the thing from a geopolitical point of view, it was probably the
most important event after World War II, and I'll explain why.
n
166
Geopolitical Implications
O'Brien: In the '60s, China -- huge, mysterious, menacing with a billion
people -- was our mortal enemy. Around the perimeter of China, you
have Korea, Japan, Taiwan, Philippines, Indonesia, Australia, New
Zealand, and on through the Straits of Malacca into the Indian
Ocean and the Middle East. Those countries on the perimeter of
China are all part of the free world except for North Korea. The
great sea routes from the Middle East into the Far East run through
Indonesia and the Straits of Malacca. If the Chinese, in effect
through the PKI, had prevailed and Indonesia had ceased to be part
of the free world, that would have blocked the most important
strategic gateway into the Far East from the Middle East.
Here are nations that became a showcase of industrial
development in the Far Pacific -- the South Koreans, the Japanese,
the Taiwanese -- all had this incredible industrial growth. The
Philippines lagged only because of their inability to get their act
together -- their political problems and so on. But because the
Communists lost in Indonesia, all of those nations continued to be
part of the free world and part of an open Pacific basin, if you
like, and we are still moving.
Look at Japan today: it has no indigenous oil production
today, one of the greatest -- the greatest -- industrial nations in
the world in terms of their financial condition today, relying
totally on supplies of oil produced in the Middle East. They had
modified their refineries, at our urging and salesmanship and
marketing, to use Indonesian crude. Caltex was partners in Japan
with the biggest company, the Nippon Oil Company, in the
construction of some of the largest refineries to use Indonesian
crude, because it was practically free of any sort of pollution.
It was a very heavy, waxy crude that had almost no sulphur in it.
So it made a profound contribution to the situation in a country
that's consumed by air pollution.
All of those things were important, and the United States,
after General Suharto emerged victorious from this struggle, took
tremendous interest in Indonesia and its survival. I'll tell you
another little story just before we quit. They became the darling
of the World Bank in the days when Mr. [Robert] McNamara was
running the World Bank, and it made substantial loans to Indonesia.
And Indonesia gradually came to be "run" in an economic sense by a
bunch of Ph.Ds from Berkeley, a bunch of Indonesians who taken
their doctorates at Berkeley and were called the Berkeley Mafia in
Jakarta.
167
I'll give you an example. At that time in the United States
we had oil import restrictions, and only so much foreign oil could
be brought into the United States. It was controlled by a system
of granting so-called tickets, import tickets, given to those
traditional importers who had received supplies in the United
States from foreign countries. It occurred to Tom Powell and me
that maybe we could greatly increase the market for Indonesian oil
if we could get the import control program modified in a way to
permit the shipment of Indonesian oil to the United States and
particularly into the Los Angeles area where it would have a
tremendous effect on the pollution problem there. I thought it
would require new legislation, and Mr. Powell and I drafted such
legislation.
Hicke: Federal?
O'Brien: Federal legislation. We went to Washington and we presented it to
the Interior Department and then we went over and presented it to
the State Department. We saw a gentleman, an assistant secretary
of state in the State Department who was in charge of monitoring
all of Indonesia's foreign debt -- the debt it owed to all foreign
countries -- and working out patterns of rescheduling their debt so
that they could balance their payments of their debt with the
revenues that they were generating in their own economy, all that.
When we explained this program of ours, he practically jumped
out of his chair, he thought it was so great. He was so eager to
do it, and I said, "Well, wait until we talk to the Interior
Department, at least. They're the ones that have control of this."
Anyway, to make a long story short, that eventually happened, and
Indonesian oil was given a place, over the resistance of most of
the other domestic oil companies who opposed this. After hearings,
the regulations on oil imports were modified to permit the
importation of Indonesian oil, which added to Indonesian revenues.
Eventually, they actually shipped Indonesian oil to New York.
Hicke: They need it also [to diminish pollution],
O'Brien: Indonesian oil occupied a very important strategic role in the mind
of the United States.
Hicke: I'm thinking back to that moment when you told Mr. Follis that he
shouldn't close the concession. That was pretty crucial.
O'Brien: I wasn't aware of all the strategic considerations.
Hicke: Well, obviously you couldn't see what was going to happen, but
looking back on it, that was certainly a crucial point.
Visit to an important discovery well in Central Sumatra, March 1970.
O'Brien and Douglas Magee.
James E.
168
O'Brien: Veil, another thing that worried me at the time was that we had
undertaken an obligation to Indonesianize our operation. That
meant that maybe 90 percent of everybody connected with the
operations in Indonesia had to be Indonesian. I wanted to make
sure that we couldn't be caught out of school on how that provision
was interpreted and whether we had met, in every category of our
operations, that 90 percent requirement.
And there are other things like that that would be a concern
to any lawyer reading the agreement, about whether we were
absolutely on solid ground in shutting down our operations. Maybe
we could have done it by suspending them, or something of that
sort, but Sukarno had us right down onto the shore, and almost any
step we took might have provided him with an excuse. My role was
really trying to preserve our legal position, so that if the ax
finally fell, we would have an international arbitration against
Indonesia, because we had a very airtight contract which provided
for international arbitration. But more importantly, once you're
out of business, you're out of business. You couldn't have made
water run uphill, I'm afraid.
In any event, for whatever reason, we managed to worry our way
through the thing. I wound up with a profound affection for the
country, for the people, and I've enjoyed going back there from
time to time. Still have friends there.
Hicke: During this blackout period, did you maintain telephone contact
with Julius Tahiya, or cable?
O'Brien: Well, the company did, yes.
Hicke: They were able to get --
O'Brien: Well, they would fly to Singapore and telephone.
Hicke: Oh, I see.
O'Brien: I think that was the way it was probably done. You had to get out
of the country a little bit.
Hicke: Can you tell me a little bit more about General Suharto?
O'Brien: Well, no, I can't tell you very much.
Hicke: Did you know him personally?
O'Brien: No. He was just reelected for another term, another eight years.
Someday they're going to have to turn the country over to the
civilian operation again: It's still effectively a military
dictatorship, although they have this huge parliament. It has • not
169
been what you'd call a functioning democracy. There have been
tremendous accusations over all the years of corruption among the
generals. I don't know what truth there is in it. Even the
newspapers in Indonesia have been bold enough to accuse Mrs.
Suharto of lining her pockets.
Hicke: Building up the shoes in her closet and so on?
O'Brien: Well, I don't think she's Mrs. [Imelda] Marcos. If any of that's
true, she's probably just a good businesswoman.
Hicke: And did you ever get your tour through the oil-producing
countries of South America and the Pacific?
O'Brien: Yes, after I saw Ibnu Sotowo, I flew to New York and from there
to Caracas and picked up this company plane that was flying Bud
Lund and Mrs. Lund and a dozen other people, including Mrs. [Mary
Louise] O'Brien; she went with them. I joined them in Caracas
and we did some of the rest of the trip.
Edward H. Hills and the Gambling Casino: An Aside
[Interview 11: November 30, 1988 ]##
Hicke: You indicated that you remembered a story about the Edward H.
Hills estate up at Nevada.
O'Brien: Yes. This is just sort of an asterisk. Edward Hills who was the
senior member of this Hills tribe- -Hills [Bros.] Coffee Company- -
had a lovely summer home at Lake Tahoe. The only problem was
that next door was a big gambling casino. One day he called
Marshall Madison to say that he had heard from his caretaker that
the gamblers- -let' s say the place was Stateline; I don't remember
whether it was Stateline or CalNeva--the gamblers had bulldozed
down all the man-proof fences between Hills' property and the
gambling casino and started building a string of bungalows to
house their guests. Naturally, Mr. Hills was much alarmed and in
considerable uproar.
Marshall handed over the problem to me and I --after some
lengthy conversations with Mr. Hills- -engaged an attorney in Reno
to represent him. We promptly filed a suit against the gambling
170
casino and sought a temporary restraining order and permanent
injunction against their trespass on Mr. Hills ' s property.
We got the temporary restraining order and construction of the
bungalows was suspended, but it seemed to be impossible to get the
case to trial. I hired some private detectives to check out the
gamblers who were listed on the casino's license. I did that
because I had the impression that perhaps the true owners were some
Chicago hoods for whom the recorded licensees were just fronting.
Those investigations took several months and in the end it appeared
that all the licensees really had Ph.D degrees in gambling, since
all of them had long arrest records in other states for gambling
violations .
Hicke: You said that these were the famous Pinkerton detectives that you
called in.
O'Brien: Well, I called them Pinkertons. They were a number of
investigating agencies, because these gamblers were fairly mobile
and had operated in various states of the United States.
In any event, I finally noticed the depositions of these
gentlemen and they promptly took off for vacations in Hawaii and
Tahiti and various parts of the Pacific. After a lot of milling
around, they were finally ordered by the court to come back to be
deposed, and I went to Reno and participated in these depositions.
We asked them a lot of questions about their prior arrest records
and convictions, et cetera, which they found quite annoying. But
still it seemed hard to get a final disposition of the lawsuit.
Hicke: Did they answer these questions, or did they take the Fifth
Amendment?
O'Brien: No, the arrest records and the convictions were all on the record;
there was no use denying them. What I was trying to demonstrate
was that they were just acting on behalf of the true owners, who
were more menacing and sinister people in the underworld. I must
say that during the course of those investigations, I turned up all
sorts of remarkable information about San Francisco lawyers who
were bagmen for these gamblers, and foolish cafe society people who
thought that it was entertaining to consort with these hoods.
Hicke: Did you feel at risk yourself?
O'Brien: No, not particularly. Once in a while I felt a little uneasy.
I should say that the casino and the individual gamblers were
represented by one of the best firms in Reno. In fact, they were
the firm that normally represented the Standard Oil Company of
California, so that --
171
Hicke: Which firm was that?
O'Brien: I can't remember their names right now, it could easily be
checked. But they were putting every obstacle, every conceivable
obstacle in the way of a final resolution of the matter. One day
Eddie Hills came to see me and said that his wife was very
agitated about our seeming inability to get the case decided
and- -
Hicke: They were still building and going ahead with their--?
O'Brien: No, the building had been suspended, because we had a temporary
restraining order. He handed me a shiny dime and said that he
was willing to bet me the dime that I'd never get a rope on these
gamblers .
Inspired by that challenge, I made an appointment to see the
governor of Nevada.
Hicke: Was it difficult to get in to see him?
O'Brien: No. As a matter of fact, I didn't really have any trouble making
the appointment nor were there a great many inquiries as to why I
wanted to see him.
Hicke: Interesting.
O'Brien: But in any event, I went to Carson City on the appointed day and
had my meeting with him. I explained what had happened to Mr.
Hills, the pendancy of the lawsuit, and concluded by saying in
effect that while it was inappropriate for me to comment about
the policy of the State of Nevada in raising its revenues through
the activities of gamblers, I though he should be aware of the
fact that these hoods were a bunch of musclemen who were pushing
around innocent, decent people who didn't deserve that sort of
treatment and which brought the State of Nevada into bad repute.
When I had finished my peroration he said to me, "Well, this
is all very interesting, because I just happen to have on my desk
the application of the casino for a renewal of its gambling
license, and in view of what you say to me , I will hold it up and
start an investigation of my own." Well, that investigation did
not last very long because by the next morning, I had received
word from the lawyers for the casino that they were prepared to
submit to any injunction that I could think of.
Hicke: His investigation consisted of thinking it over or something?
172
O'Brien: Yes. Veil, just the notion that their license might not be renewed
and could be suspended, which would put them out of business and
cut off their oxygen right now, was enough to bring the case to an
end. And so we got a very sweeping injunction to restore Hills ' s
property to its previous condition, pay damages, turn off the
casino loudspeakers, and act with a good deal more civility. That
ended the whole lawsuit. Kind of a back-door method of winning
such a suit.
The interesting thing was that the gamblers thought I had some
special clout with the governor and had been given access to the
confidential files of the Nevada Gambling Commission, which in its
efforts to keep out the really dangerous hoods from Chicago and
elsewhere, had a staff principally of ex-FBI agents that conducted
rigorous examinations of all of the applicants for gambling
licenses. But since I had spent a certain amount of money
investigating the background of these gentlemen, they were alarmed
to think that I had access to the gambling commission files. That
may also have persuaded them that it would be wise to settle. In
any event, just another lawsuit but a rather curious and unusual
one.
Hicke: Your information must have been excellent to give them that
impression.
O'Brien: Well, yes, we checked all of the available sources, public records
and things of that sort in compiling the dossiers on these
particular people.
Hicke: Whatever happened to that information?
O'Brien: Well, it's all in the file. I didn't do anything with it.
Hicke: But it didn't go anywhere else, like to the gambling commission.
O'Brien: No, it didn't go anywhere else, no. I was just trying to get rid
of the lawsuit, not chase anybody around.
173
IX ARAMCO ARBITRATION AWARD: 1955
Background
Hicke:
0' Brien:
Hicke:
O'Brien:
Okay, well then, maybe we can switch to the Aramco arbitration
award. This was -- I think the award was in 1955, is that correct?
I have the award here in front of me.
February 23, 1955.
The award was made on
I guess we should start with the background of the problem.
Let me say to begin with that this arbitral award was undoubtedly
the most important international arbitraton affecting the rights of
foreign investors in host countries that had been decided in the
last fifty years. It is still the most important precedent in
international arbitration matters of this sort.
The original concession had been given to Standard of
California. It was an agreement made in May of 1933, and was
subsequently ratified by a Royal Decree in July of 1933.
Hicke: That is by the Saudi —
O'Brien: -- by the Saudi government. The original Aramco agreement, which
was years later supplemented by additional agreements granting more
territory, in effect granted to Standard of California most of the
onshore territory oil rights of the huge kingdom of Saudi Arabia.
At a later time, an agreement was negotiated for all of the
offshore rights of Saudi Arabia in the Persian Gulf.
After the concession was granted, the company created, as they
were required to under the agreement, a company called California
Arabian Oil Company (Casoc) exclusively for the purposes of
enterprise, and assigned to that company the rights and obligations
174
Hicke :
O'Brien:
under the concession agreement. As I said, at a later time, indeed
it was in October of 1948, the concession agreement was modified to
cover offshore rights.
By 1948, Standard of California had taken three partners in
the venture -- Texaco, Standard Oil Company of New Jersey, and
Mobil. In 1947, Aramco entered into an agreement with Standard of
New Jersey, Caltex Oceanic -- which was jointly owned by Texaco and
Socal -- and Socony under which, to make a long story short, Aramco
sold its crude oil to the shareholders more or less in proportion
with their shareholding rights in Aramco, both crude oil and
refined products. That was the general shape and structure of the
venture until 1954, when the new king -- after Ibn Saud's death --
in his first royal decree made an agreement with Aristotle Socrates
Onassis (described in the arbitration agreement as of Greek birth
and Argentine nationality, resident in Montevideo and domiciled in
Paris).1
Can I stop you just for a minute?
interested in this venture?
Do you happen to know how he got
Oh, he was a real beady-eyed Greek tanker owner who had acquired a
lot of tankers after World War II when they were a dime a dozen.
Just as a footnote, he was subsequently indicted by the United
States government for his activities in the way in which he
acquired these V-2 tankers and was represented by an English
solicitor friend of mine, in responding to the criminal indictments
in the Southern District of New York. Onassis paid a
million-dollar fine. I remember my friend describing how he took
the million dollars in cash and slapped it down on the clerk's desk
in the United States District Court.
Hicke: Good heavens. So now he needed someplace for his tankers to go, is
that what that was about?
O'Brien: Right. So he persuaded the new king that he would make Saudi
Arabia a great maritime nation. He would establish a maritime
academy. He would transfer a large number of ships to the Saudi
flag and turn the Saudis into a seafaring race.
It seemed like a promising thing, and the only way he could do
that was to take away the rights of Aramco given under the
concession agreement to transport the crude oil and products which
they produced in Saudi Arabia on ships of their own choosing --
either their own ships or their customers' ships.
Hicke: They were going to make sailors out of desert nomads.
1. The new king was Saud ibn Abd Abdul-Azia, or Saud IV.
175
O'Brien: Yes, right. So that agreement was ratified by a royal decree in
April '54 and Aramco was officially notified for the first time
that it was going to be required to comply with this provision.
That was the heart of the dispute: whether the company and its
shareholders were compelled to recognize this new regulation of its
activities governing the transport of oil from Saudi Arabia.
As I say, the agreement with the new company that Onassis
created, called Saudi Arabian Maritime Tankers Company (Satco), was
to maintain a minimum of 500,000 tons of tankers under the Saudi
flag. The tankers were to bear Saudi Arabian names, and Satco was
to establish a maritime school at Jeddah and employ the graduates
of that school on the Satco tankers. Preference was to be given to
Saudis as employees and workmen on the tankers, and also Satco was
going to carry free of charge X thousands of tons of oil for the
Saudi government to ports in Saudi Arabia.
Aramco protested that new decree and claimed that it was
contrary both to the letter and spirit of existing agreements
between the Saudi government and Aramco; would be contrary to
long-established business arrangements and procedures that had been
developed in reliance on the agreement; would violate international
worldwide custom and practice in the oil business, et cetera.
Ultimately, when it was impossible to reconcile the views of the
company and the Saudi government, the matter went to arbitration.
Hicke: Was this a problem? Was everybody agreeable to submitting it?
O'Brien: Yes, they were.
Drafting the Arbitration Agreement
O'Brien: The parties then met in Jeddah in January and February of 1955 to
draft the text of an arbitration agreement. They were unable to
agree on the text of the joint questions that they wanted to ask
the tribunal; so they therefore agreed that each party would submit
its own question or questions to the arbitration tribunal, and
these separate questions were formulated by the government and by
the company for submission to the tribunal.
Hicke: Was Mr. Onassis involved in this at all?
O'Brien: No, Onassis was not involved in this in any way, so far as I know.
The general counsel of Aramco was George Ray. George was
selected as the agent of the company for the purposes of the
176
arbitration. Lowell Wadmond of White & Case was the chief trial
counsel. On the government side there was first a professor, Hamad
Sultan. Each of those agents and counsels had a very imposing team
of assistants. In the case of the Saudi government, Professor
Roberto Ago, a famous international lawyer --
Hicke: Where was he from?
O'Brien: He was from Italy, I believe.
Also the Right Honorable Sir Lionel Heald, who had been
attorney general in England, and Professor Myers McDougal, one of
the great mountain peaks of international law in the United
States -- Yale professor -- but very widely known around the world.
On our side, we had Lord McNair, who had been the president of
the International Court of Justice, Professor Maurice Bourquin,
Arthur Boal, a Dutchman by the name of [K.] Jansma, and behind the
scenes were the counsel for all of the companies. I was one of
those representing Standard of California from this distance.
Hicke: You were here?
O'Brien: Yes. From my point of view the case was really won in the drafting
of the arbitration agreement, because the Saudi government in that
arbitration agreement implicitly acknowledged that they were bound
to perform the agreement, and that was the major issue really.
They claimed that if the agreement was properly interpreted, we did
not have the exclusive right to select the means under which the
crude oil and products would be shipped from Saudi Arabia. But at
the outset, they didn't undertake to question the binding force of
the agreement. Later on in the arbitration, their memorials argued
that because they are a sovereign state they had special rights to
regulate us, which was the equivalent of saying that the agreement
had less than binding effect.
Hicke: This came about because they could see that --
O'Brien: They had a lot of new lawyers who were attempting to --
H
-- nullify that original provision of the arbitration agreement.
Hicke: What was your part? Somebody told me that you studied the Koran --
O'Brien: Well, we agreed in the arbitration agreement that the agreement
would be interpreted in accordance with the law of Saudi Arabia,
which of course was the Islamic law based on the Koran, and upon
the sacred Shar'iah. The Wahabi tribes of central Saudi Arabia,
177
from which the House of Saud came, followed the Hanbali Code, which
was one of the three or four schools of Islamic law, and it was the
most — how shall I say it -- the most fundamentalist, the most
rigorous, the most absolute in its terms. I did make an effort to
read and understand the provisions of the Koran and, so far as
could be known, of the Hanbali school of Islamic law to try and
understand how they would affect the issues of the case.
I went to New York with considerable frequency to participate
in the discussions that took place there about the tactics and
strategy of the arbitration. It was agreed that the arbitration
would take place in Geneva, that it would be conducted in Arabic
and English with one exception, that at least one oral argument
could be made in French. We had practically simultaneous
translation, and the lead counsel in these arguments -- I think the
French was selected for him -- the lead counsel on our side was
Maurice Bourquin. While Wadman is listed in the book as the chief
trial counsel, Bourquin carried the bulk of the arguments before
the tribunal.
Members of the Tribunal
O'Brien: After the arbitration agreement was signed, each of the parties was
required to select an arbitrator, and those two arbitrators were in
turn to select a referee. The Saudis selected a gentleman named
[Helmi Bahgat] Badawi; Aramco selected Saba Habachy. Both of these
gentlemen were Eqyptians. Saba Habachy became a very dear,
intimate, personal friend of mine, which also stimulated my
interest in Islamic law, because he was a great scholar of Islamic
law and one of the most remarkable men I ever encountered in my
whole life.
I have to take a moment to say a word about him. By the time
I met him, he had been functioning as a consultant to Aramco on
Islamic law matters for some considerable period of time, probably
for seven or eight years and perhaps longer. He had been a
minister, I believe the minister of trade and commerce in Egypt,
under the regime of King Farouk. He was a nobleman in the Egyptian
society, a man of great distinction, slated to become the prime
minister; magnificently educated. Fell out with Farouk in the
later days of Farouk1 s regime, had his estates confiscated, and
left Egypt and became in effect a refugee.
He went first in Geneva. He then came to the United States
and taught Islamic law and international law at Columbia
University, which promptly granted him an honorary degree. A man
of great distinction and attainments, and I would counsel anybody
178
Hicke:
O'Brien:
Hicke:
O'Brien:
interested in Islamic law to read the series of articles that he
wrote in the Columbia Law Review about the sacred Shar'iah. It
will do more, I think, to illuminate for a Western mind the
concepts of Islamic law than anything else I've ever encountered.
Anyway we became fast friends. He is a small, plump gentleman
with exquisite manners, modest, a Christian -- in fact, the lay
head of the Coptic church, the man who ultimately was able from
time to time to resolve the differences -- the factional
differences -- within the Coptic church between the the Ethiopian
Copts and the Egyptian Copts.
Well, rarely have I met any man that I thought was his equal
and certainly in his standards of excellence and his standards of
ethics, his compassionate view of people, an extraordinary and
wonderful guy.
Another footnote: when it was decided that we needed a new
forum to express some of the traditional view of international law
in the United States, a forum was created in Dallas under the aegis
of the Southwestern Legal Foundation -- a new International and
Comparative Law Center. I was involved with that, with many
others, and it was decided that the first thing we ought to do in
advance of holding the first symposium under the aegis of this new
center on international and comparative law was to publish a book
of readings about international law. So we got some of the most
distinguished and able and prestigious people in this country and
others to submit articles, including Lord McNair and Saba Habachy.
I believe Arthur Dean of Sullivan & Cromwell prepared an article,
and others.
When was that published?
It was in the '60s I think. As a consequence of the Aramco
arbitration, I got deeply interested in the question of the rights
of foreign investors in host states, the international law, the
rights and obligations of sovereign states toward investors in
their country.
You must have been on the cutting edge of that.
I followed the problems in the United Nations, where all sorts of
efforts were being made by the U.S.S.R. and its satellites and some
other countries to break down all the international concepts.
Aided and abetted, I should say, by the Arabs and others who began
to feel restive under the concepts of traditional international law
and who felt that since they had gained their independence after
World War II and were now new and sovereign nations, none of the
traditional principles of international law or of acquired rights
James E. O'Brien, as a member of Advisory Board and the Southwestern
Legal Foundation, introduces His Excellency Nobuhiko Ushiba at the
June 1971 Symposium on Private Investments Abroad.
179
should be applied to them. According to them, a new age was
dawning and we should tear up all of the traditional principles.
On the other side were companies like the Standard Oil Company
of California, which had invested hundreds of millions of dollars
in oil exploration and production in various foreign countries on
the faith of the binding force of contracts negotiated in good
faith and performed in good faith. So it was a period in which
there was a great convulsion taking place on all of these
questions .
Hicke: It must have somehow been resolved or there wouldn't be this
enormous increase in overseas investments that all the Western
countries --
O'Brien: I wouldn't say it was resolved, because the effort has gone on ever
since the '50s by the underdeveloped countries, so-called -- the
less developed countries, what is now called the Group of
Seventy-Seven in the U.N. -- to modify, if not repeal, the
traditional concepts of international law including respect for
binding force of contractual obligations by sovereign states.
About the same time, Aramco had on its payroll a young man who
was quite an expert on the U.N. He was located in New York, and he
attended the sessions of the U.N. and kept track of all of the
resolutions and initiatives that were being made by these
underdeveloped countries, aided and abetted by the U.S.S.R., which
was constantly propagandizing the Middle East that they should tear
up all of their concession arrangements. I got very much
interested and very much involved with that.
This is a long aside, if you like. At a subsequent time I
persuaded the company officials that they were not taking enough of
a lively interest in all of these affairs; that it was important
for us to try to influence the position of the United States
delegation to the General Assembly and to the Economic and Social
Council in Geneva (and to some of the specialized agencies) when we
felt that our vital interests were engaged by initiatives that were
being put forward by other countries. That's another story. It's
a story that's kind of relevant to this, because somewhere along in
this period, and we'll have to talk about it another day, the U.N.
decided to adopt some resolutions on permanent sovereignty over
natural resources. I got deeply involved in that in Geneva, and
that's another long story.
Hicke: I would like to get that; that sounds absolutely fascinating.
O'Brien: Anyway, to go back to this arbitration. After Badawi and Habachy
had been appointed, and you can understand Habachy 's position with
the greatest oil concession in the history of the world on the
180
Hicke:
O'Brien:
Hicke:
O'Brien:
table, that these four enormous, international, integrated oil
companies thought he was the man to carry their case. The question
then arose about the referee, and we spent months preparing
dossiers on the candidates that might be selected or considered for
selection as the referee. I was involved in that to some degree.
Cahill, Gordon in the person of John Sonnett in New York was
also involved, and we and the lawyers for the other shareholders
canvassed all of the conceivable people we could think of in the
United States, in France, in Sweden, in England, Australia, former
members of the international court of justice, and so on. We tried
to do a fairly comprehensive job reviewing the opinions they had
written in arbitral proceedings, talking to other lawyers, talking
to banks and to commercial entities about the reputation and
balance and stability and integrity of all of these possible
arbitrators or referee in this case.
I was in New York in the final stages of this process when we
sat down and established our priorities: who was our number one
pick and who was number two and who was number three and number
four. I had been designated as the man to go along with Saba
Habachy and talk out this question with the Saudis. Saba was in
Geneva, and I was to fly the next morning to Geneva to meet him
with my dossiers and my list of priorities and so on.
We called Saba to make sure everything was in order and he
called us back and said that he had gotten a peek at the Saudi list
of referees, and number one on their list was number one on our
list.
Oh, no.
So I didn't have to go. He was a most distinguished professor,
member of the permanent court of international arbitration, a Swiss
gentleman by the name of Georges Sauser-Hall. So Saba Habachy,
Badawi, and Georges Sauser-Hall started out as the arbitration
tribunal.
Would that be fairly unusual, that both sides would pick the same?
I would think so. What it proved to me was the quality of the
people who were representing the Saudi government and the integrity
of the Saudi government itself in not trying to slicker us into
some trained seal that they might select. They were prepared to
put their case to a most distinguished, able man.
In the meantime, our side had retained as consultants to write
opinions -- which is the way it's done in these international
arbitrations -- we had retained most of the Islamic law experts in
the Western world -- and some of them not in the Western world --
181
distinguished professors of law in the faculties of universities in
England and Holland, Belgium, and the United States.
Mr. Dickinson, who was at the University of California on the
Berkeley faculty at Boalt Hall, was one of those. When we talk
about this again, I'll give you a more complete list, because you
never saw such a dazzling array of talent in your life.1
Then the memorials were put together, and these opinions were
attached to the memorials. Each side also had the right to call
witnesses, but in the end, neither side availed themselves of that
opportunity. So the case ultimately went to hearing in Geneva.
The secretary of the tribunal was Professor Pierre Lalive. He was
very close to the International Court of Justice, distinguished
academician and international law scholar whose brother, Jean
Lalive, is also a famous and distinguished lawyer who assisted us
in the Aramco arbitration and was very active in the arbitration we
had some years later with the Libyan government. He has been
involved in many other cases of the same sort. He represented
American Independent Oil Company in a recent arbitration with the
government of Kuwait, and was involved in many other cases. He too
became a good friend of mine over the years, because he also
participated in the activities of this International Comparative
Law Center in Dallas.
So the memorials were filed. You see the government's
memorials; ours were about another foot or two thick [indicating
pile of books] .
Hicke: You've got a stack of books there about a foot and a half wide that
you're talking about.
O'Brien: Yes. The government memorials. Ours were bigger and fatter than
these.
Hicke: And the government memorials are three volumes and yours must have
been --
O'Brien: Well, they were three volumes too.
1. Opinions were written by Professor Abou Zahra,
Professor J. N. D. Anderson, Justice Algot Bagge,
Professor Maurice Gourquin, Professor Henry P. deVries,
Professor Edwin D. Dickinson, Lord McNair, Professor Tomaso
Perassi, Professor Georges Ripert, Professor Henri Rolin,
Judge Ahmed Faraj El Sanhouri, Professor J. Schacht,
Sir Hartley Shawcross and John Megaw, Professor Max Sorensen,
Professor Alfred von Verdross, Professor C. H. M. Waldock,
Professor Hans Wehberg, Professor J. Yanguas Messia.
182
Hicke:
O'Brien:
Hicke j Oh, but considerably fatter.
O'Brien: Yes. In the middle of the proceeding, the Saudi government
arbitrator died — Badawi. By then, it must have been apparent to
the Saudi government and certainly to its lawyers that we had a
very powerful case. I always have given the Saudi government the
highest marks because that would have given them a great
opportunity to slide out of the whole affair. At least begin to
say, "Well, we'll have to start all over," et cetera, and in the
end probably let the whole thing die or become moribund. Instead,
they promptly appointed a second arbitrator to represent them, I
think his name was [Mahmoud] Hassan.
Do you attribute this extremely honorable behavior to their culture
or to some specific people in the government?
I attribute it to Ibn Saud, and I guess to the counsel who
represented them in the case. But I tell you, it would never
happen in this day and age. But in those days it seemed to me the
highest level of honorable conduct --
Hicke: On all sides it sounds like.
O'Brien: Yes. In any event, they appointed this substitute arbitrator. He
listened to the tapes and read the stenographic transcripts of the
arguments, and they went right ahead. Ultimately, the tribunal
rendered a decision in favor of Aramco, with a dissenting
opinion -- a very short and more of a pro forma dissent. The
dissent was one page long. The opinion is 128 printed pages long.
Hicke: Who wrote it, the Saudi arbitrator?
O'Brien: Yes, the arbitrator. The referee and the Secretary General Lalive,
the other two arbitrators, signed the award. Then Mr. Hassan, the
Saudi arbitrator, signed a dissenting opinion, which was not very
weighty. Again to the profound honor of the Saudi government, they
immediately cancelled their arrangements with Onassis, and that was
the last we heard of it.
Hicke: What did the Saudis have at stake here?
O'Brien: Oh, the formation of a huge tanker fleet.
Hicke: Which would be financially beneficial and also prestigious for
them, a nationalistic feeling?
O'Brien: Yes. Now that king did not survive very long. He was defrocked
and his role taken over by Faisal, a much stronger and more
effective ruler of Saudi Arabia.
183
Hicke: I just read The Kingdom last summer, which is a history of the
Saudis.1 I don't know if you've seen it.
O'Brien: Sometime you should get from the company a copy of Floyd Ohliger's
oral history.
Hicke: I've seen that too.
O'Brien: It's an absolutely charming, a fascinating story of the earliest
days in Saudi Arabia and the relationship that grew up between him,
a young petroleum engineer, and King Ibn Saud. The story of these
early days, as always, had a great fascination for me, because
three of PM&S's lawyers with whom I worked when I was a young
fledgling lawyer left the firm to work for Aramco and became part
of that whole thing. One of them, named Woodson Spurlock, appears
in the list of lawyers representing Aramco in the arbitration.
Another, Garry Owen, was essentially Aramco 's ambassador at the
court of the king. Both of them were dear friends of mine who used
to keep me pointed in the right direction in my earliest days at
PM&S. Finally, there was Douglas Erskine, who wound up as Aramco 's
chief tax lawyer.
Hicke: You've had a long association with them.
O'Brien: Yes, two of them now gone. I'm not sure about Doug Erskine, who
moved to Portola Valley after his retirement.
International Law; Relationships Between Sovereign Governments and
Private Investors
O'Brien: Veil, that is essentially the story of the arbitration, but it led
me to have this abiding interest in trying to protect the rights
under international law of some of our clients. Vhen, for example,
the American Law Institute began a draft of the Foreign Relations
Law of the United States, they established some formulations about
whether contracts between sovereign governments and private
investors were binding, and about the standards of prompt,
adequate, and effective compensation in the event of expropriation,
and things of that sort. I happened to be a member of the American
Law Institute, and I attended some of their sessions and banged
away at these drafts and tried to get them changed and fought and
bled over some of the language they had written.
1. Robert Lacey, The Kingdom (New York: Harcourt, Brace,
Jovanavich, 1982).
184
[Interruption] ft
Hickez You were just starting to talk about the American Law Institute.
O'Brien: There was a famous professor at Harvard by the name of Baxter who
consulted with the Libyans years later in the Libyan arbitration
and who became briefly, before his death, a member of the
International Court of Justice. He used to defend the positions
taken by the drafters of this Foreign Relations Law of the United
States with great vigor. He and I tangled a few times on the floor
of the meetings of the American Law Institute. I remember his
rising, after I had made some violent protest about the language
that was being adopted by the Institute in one of its black-letter
paragraphs, and saying that he thought the American Law Institute
was being overcome by fumes of petrol.
I remember writing a letter to the director of the American
Law Institute telling him that if they adopted that draft some
Saturday afternoon when the rest of us had left the proceedings, it
would be an act of faith and not an act of scholarship.
I do remember that we raised so much hell about the drafts
that the powers in the American Law Institute decided that they
would retain a special group of international lawyers to advise
them on the propriety of the language that the American Law
Institute drafters had put forward. They did retain three very
eminent international lawyers who wrote an opinion, finally, saying
that the formulation was a violation of international law. Did I
ever rejoice over that!
Hicke: What was the problem?
O'Brien: This has to do with the extraterritorial application of U.S. laws.
In those days we had this very expansive philosophy about the
enforcement of our laws in the foreign countries, another great
subject that I spent years working on in connection with antitrust.
The American government took the position that an act could violate
the American antitrust laws even if it took place in Mozambique,
and you could be held accountable for it in U.S. courts. That's a
vast controversy that has subsided slightly, because the United
States government is now taking a somewhat less aggressive stance.
Particularly after a good many foreign nations made it a crime to
comply with these U.S. subpoenas directing the production of
documents from foreign countries. Anyhow, these were related
subjects in my mind.
So along came, at some stage, a whole series of resolutions
that were put forward by -the U.S.S.R. and its satellites, some of
these satellite countries, at the Economic and Social Council in
185
Geneva on the subject of permanent sovereignty over natural
resources. This was a fancy way of saying that no matter what
agreements a sovereign made, it never surrendered its sovereignty
over its natural resources, and it could always change the signals
and abrogate your rights and subject you to a new set of rules.
I talked to George Parkhurst about these and said I thought
that they were very dangerous and that we ought to sort of make an
effort to see if we could get them changed. We could also use it
as an experiment to see whether it was possible for some guy
without any special talents or special association or influence
could go to Geneva and do something about it.
So I went off to Geneva with a great lawyer named George
Winthrop Haight, who was representing Shell, and a guy named Ed
Burke, who was a Texaco lawyer. When it appeared that these
resolutions on permanent sovereignty were coming up for decision,
the name of the game from my point of view was to get an audience
with the chief of the U.S. delegation to the Economic and Social
Council and try to persuade him that it was essential to confront
those resolutions head on, to fight it out and go to the General
Assembly and fight it out there and not lay back and vote for this
kind of stuff with a little explanatory slap on the wrist and so
on, but to really go to the mat on these things.
Now the fellow's name escapes me at the moment, but the head
of the U.S. delegation for the time being was a very brilliant,
prestigious, Jewish gentleman from Chicago, very bright, able man,
very civilized guy, very considerable breadth. But how to reach
him, you know. You're can't just walk in and say, now hear me 1 He
was just surrounded, as usual, with a great apparatus of economists
and others that are part of the American delegation, all of the
people from Commerce and State, Treasury, and all that kind of
business, each of whom has his own set of assistants. So you get a
very considerable bureaucracy, and how to try to go through the
sound barrier was the hard to thing to figure out.
Mr. Burke was on a short time fuse. He had been told by the
general counsel of Texaco to be back in New York in ten days, and
as the two main contestants, the U.S. and the U.S.S.R., circled
around each other, not quite wanting to take hold of this problem,
they kept postponing it on the agenda. Finally, Burke thought he
would breast the waves, and he put on his hat one day and roared
over to the U.S. delegation, and they just said, "forget it."
Hicke: They didn't even let him in the door?
O'Brien: No, they didn't. So I bethought myself of that a little bit and
decided I wouldn't try that. Mr. Haight, although he was an
American, was representing Shell. Shell, of course, was British
186
and Dutch, so it didn't seem to me that he would have much clout
with the American delegation. In casting around for something to
do, I recalled that a friend of mine in New York was a very close
friend of a gentleman by the name of Dave Morse.
Dave Morse had been acting Secretary of Labor in Truman's
administration. He was an ail-American football player at Rutgers
[University], a professional football player, an enormously
successful private lawyer, who had been persuaded by Mr. Truman to
become head of the International Labor Organization [ILO] . ILO is
older than the United Nations. It had its international
headquarters in Geneva, and Mr. Morse, as the head of ILO, was the
senior diplomat in Geneva. It was a tremendous listening post,
because the ILO, which went back to the '20s and '30s, had a
members from the U.S.S.R. and China and other places where we
didn't have any access at all, so that Mr. Morse in his position of
heading the International Labor Organization and looking out for
the rights of working people in all the countries of the world and
all that business, could go to and knew people and places to which
the typical American had no access.
Well, anyway I called him up on the phone and said I was a
friend of Phil Allen's in New York, and he promptly invited me to
dinner. We got to be good friends. I went out on his huge
motorboat, which is his only indulgence. He had a big, powerful
motorboat on Lake Geneva, and we went out and picnicked on that. I
explained my problem, and he said, "Well, give me a few days. I'll
think about it." Didn't promise to do anything, but lo and behold I
— at the appropriate juncture I was introduced to the head of the
U.S. delegation.
I had an opportunity to tell him what I thought was the great
gravity of this thing and the tremendous concern of the United
States. He asked me to draft some amendments to these Russian
resolutions. In the end, they turned out to be the U.S. position
when those amendments were introduced. In the meantime, it gave me
an opportunity to get to know his staff a little bit. I
entertained a few of them at some restaurants in Geneva and
discovered that once you got through the sound barrier, and if you
had the credentials of having now spoken to the head man, that they
were a good deal more civilized.
So anyway, in the end the Economic and Social Council did not
decide the issue but bundled up all of these resolutions,
amendments and so on, and sent them to the General Assembly. Then
I came back to the United States. By the time I got back to San
Francisco, it was evident to me that the people in the State
Department in Washington who gave instructions to the delegation at
the Economic and Social Council were less enthusiastic than the
187
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
U.S. representative had been in Geneva to have a knock-down-
drag-out fight over this thing.
So I then wrote a letter -- I wish I could find it because I
remain satisfied with it -- to a fellow named Harlan Cleveland and
his deputy, a guy named Gardener, who is a professor of law
somewhere now, telling them what a tremendous mistake it would be
for the United States not to pull up its socks and fight this thing
out. That if they voted for the U.S.S.R. resolution with an
explanatory statement, that statement would always lag about ten
paces behind the fact that they had voted for it.
So in the end, they put in the first team and they slugged it
out all one hot summer. Ultimately a solemn declaration -- which
took a two-thirds vote and was not an ordinary resolution of the
General Assembly -- a solemn declaration was adopted on the subject
of permanent sovereignty over natural resources, which said that
contracts of the sort we've been talking about all morning were
binding on government and that in the event that they didn't keep
their word or abrogated rights under those contracts, they had to
pay adequate compensation. I thought that was a great victory for
the United States -- a great victory.
Indeed, you must have celebrated that one.
Yes. In another session, we can talk about some of the fallout of
that in subsequent arbitrations.
Ok, I'd really like to hear more about that. That was a worthwhile
fight.
It's interesting. It proved to me that Geneva was no different
from Sacramento. That if you walked up and down the halls long
enough you'd run into somebody that would open the door for you.
Well, you persisted and I think there's really something to that.
I just lucked in. I happened to run into the man who could push
all the right buttons.
Hicke: That was extremely interesting. Thank you.
188
X SOME OTHER SOCAL MATTERS
[Interview 12: June 19, 1989]//
Permanent Sovereignty Over Natural Resources; The Libyan
Arbitration. 1974
Hicke: The last time --
O'Brien: We talked about the United Nations.
Hicke: Yes. And you said that there was some fallout from that in the
declaration of permament sovereignty over natural resources. Maybe
we could take that up now.
O'Brien: The declaration of the General Assembly on permament sovereignty
over natural resources was to play an important role in the
decision of the arbitrator in the Libyan arbitration years later.
The declaration of the General Assembly expressly relied upon the
final decision of Rene-Jean-Dupuy .
The Libyans first expropriated 51 percent of Chevron-Texaco1 s
concessions in Libya, and subsequently, as we proved to be somewhat
intractable, confiscated the entire concession. We immediately
filed a request for arbitration, as we had the right to do under
our concession agreement, and named an arbitrator. But the Libyans
declined to appoint an arbitrator and ignored the whole affair.
As a result, in 1974, after considerable agonizing, we filed a
petition with the President of the International Court of Justice,
as we had a right to do under the concession agreement, asking him
to name a sole arbitrator because of the refusal of the Libyan
government to appoint an arbitrator in response to our request.
The reason for the agony was that the president of the
189
Hicke:
O'Brien:
Hicke:
O'Brien:
International Court of Justice was a Polish gentleman and we were
fearful that we might get somebody either from Eastern Europe or
the Third World appointed as the sole arbitrator.
As it turned out, unbeknownst to us the Libyan government,
perhaps with the help of a Harvard law professor, secretly filed a
memorandum with the President of the International Court arguing
that there was nothing to arbitrate, that in addition to
expropriating our properties and assets and oil fields and
pipelines, et cetera, Libya had expropriated the entire concession
contract, including our contractual rights to ask for arbitration,
the neatest trick of the weekl
We didn't learn of that secret memorandum until after a long
delay; we sweated it out. The president of the International Court
finally appointed a distinguished French lawyer by the name of
Rene-Jean-Dupuy as the sole arbitrator.
What was happening to the oil production?
physically by the Libyans?
Had it been taken over
It was taken over by the Libyans. It was first taken over
51 percent, then they gave permission for the oil companies to lift
their remaining 49 percent. But for a long time, unlike the other
oil companies, we did not lift oil, primarily because I urged the
company not to do so for fear that if we started lifting oil, we
would be deemed to have acquiesced in the confiscation of our
51 percent.
In the meantime, our "partner" in our joint refinery in the
Bahamas, Ed Carey, made a deal with the Libyan government and began
to lift "our oil" from the concession and sell it to Italian
refineries and ship it to the Bahamas refinery to run through our
jointly owned refinery 1 And we filed, oh, perhaps fifteen or twenty
lawsuits against him in Italy and elsewhere to interdict his
movement of our oil, and every buyer of our oil got a lawsuit along
with a cargo of crude oil.
In order to do this, how did you go about filing these suits in
other countries?
Well, we traced the oil. Oil can be fingerprinted, in effect so
that you can trace the cargos of oil. We got writs issued by
Italian courts, for example, and went aboard the ships and tested
the oil and then slapped all sorts of plasters on the cargoes so
that it really effectively slowed down the sale, movement, and use
of our oil. That was a technique which BP had used many years
before when their concession in Iran had been confiscated by the
Iranian government in the time of Mossedeq. That's another story.
190
After the whole affair was over, we were sued right and left
by Mr. Carey and others in New York: they claimed we were going to
put out the lights in the topless towers of New York, et cetera.
O'Brien: Governor Rockefeller sent me word that we were going to bring down
the whole economy of the State of New York if we prevented the
products manufactured from our oil from coming into New York,
through Mr. Carey's company. The head of the Public Utilities
Commission in New York, and others were roaring around.
Ultimately, we defended a whole series of cases in which the claims
ran into billions of dollars based upon our efforts to prevent
others from stealing our oil, of attempting to interdict the use of
our confiscated oil.
In the meantime, to go back to the Libyan arbitration, the
Libyans ignored the official proceedings. They stayed out of them.
But the court, the brilliant academician and jurist, insisted that
the whole matter be briefed in the most careful way. And one of
the key issues had to do with the argument that Libya enjoyed
permanent sovereignty over its natural resources and accordingly
was at liberty to do pretty much what it wished. Mr. Dupuy, maybe
fifteen or twenty years after I had been in Geneva working on
Permanent Sovereignty Resolutions and afterwords on the General
Assembly, relied on the Declaration of the General Assembly in
holding that Libya, despite permanent sovereignty over its natural
resources, was bound by its contract with us, which had been
enacted into Libyan law. And, he concluded, if Libya did not
restore us to our concession -- we had not yet asked for damages --
he would then hold them liable for not only the value of the
property that had been expropriated, but for the loss of all future
profits for the remaining years of the concession, which was an
absolutely astronomical sum of money.
Hicke: That was a joyous day when that came down.
O'Brien: Yes. Well, Libya kept saying, "Well, forget it. What can you do?"
Nonetheless, the Libyans ultimately offered us a settlement of some
$150,000,000 (a nominal sum considering the real value of its
concession) which we accepted. But as a legal proposition, the
fact that we had hung in there years before on these permanent
sovereignty Resolutions, before we were even in Libya, I guess,
made some difference in the upshot years later when the matter was
actually litigated with the Libyan government. So that was that.
Hicke: So actually the fact that you followed through on that, although it
didn't have any immediacy --
O'Brien: Didn't have any relevance to any existing lawsuit, it was just the
general principle of law that we would continue to espouse and
maintain, as we did through all the years that I had anything to do
191
with the international work; that sovereign governments, like
private individuals, were bound by their contracts. That's a
principle of law that applies between nations: pacta sunt
servanda. And by the same token we took the position that
governments that made contracts with private investors were equally
obligated to fulfill their obligations. That had been implicit in
the holdings of the court in the famous Saudi Arabian arbitration
over the Onassis contracts, and it was upheld again in the Libyan
arbitration.
So we have succeeded in maintaining the principle that a
sovereign nation cannot violate the rights of a private investor
with impunity and just kick him out and say forget it. This is a
position that we struggled and fought and bled for over all the
years, as many people had before and after me.
Hicke: Do you know if it was ever used on another occasion?
O'Brien: Oh yes, it's been used and cited. In the Saudi Arabia case we
agreed with the government that the award could be published but
that we would keep confidential all of the memorials -- the
briefs -- that were filed in the proceedings. I don't think any
such restriction was put on us in the case of the Libyan award, and
I'm sure that we did our best to publicize the record in that case.
There have been other arbitrations since that one, involving
Kuwait and Iran and elsewhere, in which the Libyan award has been
cited as a precedent and, of course, among all the academics and
among those involved in international litigation, it was an
important case.
Hicke: Do you have a sense of what finally forced the Libyan government to
settle?
O'Brien: First the size of the possible judgment; if they had not come in
and settled, they would have been exposed to a judgment that would
have run into the zillions. Now, how we might have collected that
is problematical. I think we could have attached their bank
accounts, if we could have found them, in any country in the world,
armed with that judgment. And to be sure, they would have offered
many obstacles and it would have been a thicket of problems. We
could have made them sufficiently uncomfortable, and they might
have had to bury all their gold somewhere in the desert.
Hicke: Instead of in Zurich.
O'Brien: Yes. As a legal precedent it was of worldwide importance, even
though, despite the large amount paid in settlement, it was still a
financial loss for the company, in the sense that we lost a very
valuable concession and never got anything that could be considered
192
prompt, adequate, or effective compensation for its loss. On the
other hand, Mr. [Muammar al-]Kaddafi did not get away with it.
Hicke: Well, that's really a watershed.
O'Brien: That was important as a legal principle and one that gave everybody
a lot of public and private satisfaction, having in mind
Mr. Kaddafi and his eccentricities.
Hicke: Speaking of these concessions, could you just update the record a
little bit on the Iranian consortium? I mean, after all these
years, whatever happened to it?
O'Brien: Well, really, the expert on all that is Tom Haven, because that all
came after my retirement. But it was the result of the last
Iranian revolution and the hostage situation and all the rest of
it. The United States had billions of dollars, presumably in the
United States, that belonged to the Iranians and that money was all
sequestered; those accounts were sequestered. So, ultimately the
Iranian government agreed to a mixed commission of international
arbitrators to settle claims against Iran.
Our claim against the Iranian government for our loss of our
interest in the Iranian concession was presented to that mixed
commission. Tom Haven did a brilliant job in effecting a
settlement of our claim.1 I know very little about it except that
I do understand that in the case of the other oil companies who did
not get in promptly and make a settlement of their claims, the
Iranians turned around and made huge claims against them for
alleged breaches of the concession and tax payments and everything
else they could think of to forstall having to pay the sort of
money required by the settlement that Haven effected for our
company.
Now again, it didn't really compensate the company in any
effective way; but it again maintained the principle that you just
can't play ducks and drakes with these great international
contractual obligations, that they are meant to be and must be
observed. Haven can fill you in on all that, because he
practically commuted for the next few years to -- I've forgotten
whether it was Paris or London -- and marshalled all of our claims
against Iran, made the presentations, argued, and all that kind of
business, and ultimately effected a settlement with Iranian
representatives .
1. $115 million was awarded to Chevron at the Iran-U.S. Claims
Tribunal.
193
That tribunal was -- I'm not even sure of the composition
anymore of that tribunal, but I know it had a couple of famous
Swedish arbitrators. The Iranians conducted themselves in those
proceedings like a bunch of wild Indians, and they didn't gain a
whole lot of favor I think with the tribunal. But I imagine that
there are a great many of those claims still pending and until they
are settled, the United States is not going to release their hold
on the funds of Iran — the government of Iran. That may
contribute to the fact that they are -- really through their
surrogates -- holding our hostages. The Great Satan.
Hicke: Yes. Well, that's another aspect of --
O'Brien: That's another story. I was in London in 1954 with Al Brown when
the original Iranian consortium agreements were written. After
1954 they got modified and modified, and all through that period
from '54 on, Tom Haven handled the legal advice to the company in
respect of the Iranian concession and the participants agreements.
It was always a very lively affair because there were internal
problems of trying to operate in harness with all the major and
minor companies in the world that were members of the Iranian
consortium; and the Shah was always seeking some modification or
trying to chisel on the agreement; so it was a running fight, and
Haven became the world's greatest expert on the Iranian consortium
and all of its ins and outs. He became over time the most senior
and experienced lawyer with the greatest background on the whole
arcane, esoteric subject of the interpretation of the concession
agreements with Iran and among the participants.
Why the Saudi Concession ¥ent to Socal
Hicke: This is skipping about a bit here, but I have a note to ask you
about Follis's story of why Ibn Saud gave the concession to Socal
and not to the British.
O'Brien: Well, Gwin Follis could tell this story much better than I, but he
was in Saudi Arabia paying a visit to the king in his court. After
a more general audience, he had a private audience with the King.
They were discussing the great company of Aramco and discussing how
it had come to be that Ibn Saud had bestowed this vast concession,
which covered practically all of Saudi Arabia, upon this vast
remote American company on the West Coast of the United States.
The king said to Mr. Follis, "Do you know why I selected an
American company?" (having in mind that at the last moment before
the award, the British in the Iraq Petroleum Company, and the
British in Iran, Persia, got very alarmed at the thought of this
194
intruder, i.e., the Standard Oil Company of California, owning this
major concession in their sphere of influence. They arrived in
Saudi Arabia to enter the final bidding with great chests of gold.)
Hicke: Incense and myrrh.
O'Brien: Incense and myrrh. In the end, however, Ibn Saud gave the
concession to Standard Oil. So he said to Mr. Follis, "Do you know
why I gave it to an American company?" Mr. Follis said, "No, Your
Highness, why was that?" He said, "I knew that if I gave it to the
British or the French and we had a falling out, I'd have a gunboat
here." "But," he said, "in your case I knew that the American
government would never support you."
Hicke: Oh, excellent, that's a good one to have on the record.
The KySo Merger
Hicke: Okay, again switching gears here, I'd like to go to the KySo
merger. Mr. Kirkham told me something about that, but I know that
you were in on that and along on most of the proceedings, and I
would like to get something of your view of it, your participation,
perhaps your thoughts on Mr. Kirkham' s work there and the impact of
it.
O'Brien: I recall writing the first opinion on the question of whether there
was any conceivable possibility that the government could be
persuaded to let Standard of California merge with Standard of
Kentucky. I wrote a preliminary opinion about that, and then it
was sufficiently tantalizing, and Kirkham was asked to get into the
problem. Then he and Bill Mussman began actively to explore it at
the company's request.
The government had filed a suit against Standard of New Jersey
and Standard of Kentucky, a civil antitrust case, claiming that
Standard of New Jersey, which was effectively the sole supplier of
Standard of Kentucky, the largest marketer in the world, had agreed
with Kentucky to stay out of Kentucky's territory -- the
southeastern United States -- so long as Kentucky bought its
supplies from Jersey; that was the main thrust of the charge. So
Kirkham began active discussions at Socal's request with the
Antitrust Division.
The government case was being handled at that stage by a
brilliant young lawyer by the name of Gordon Spivak, who
subsequently left the government and became an important partner in
Lord, Day & Lord in New York, I think that he subsequently left
195
that firm with some of his chief partners and chief clients when he
had some falling out with Lord, Day & Lord over some partnership
matters.
In any event, Kirkham said to the government and to Mr. Spivak
that if we were permitted -- Standard of California -- to merge
with Standard of Kentucky, it would introduce a great deal of new
competition into the southeastern United States. Socal had a huge
crude supply in the Gulf and we had lost our market for it. I've
forgotten who was buying it, but their contracts had come to an end
or were terminated by the buyer. Kirk explained to the government
that we would build a huge modern refinery in Mississippi -- the
Pascagoula Refinery -- and we would then be able to supply Standard
of Kentucky. And as soon as we were allowed to merge with
Kentucky, Jersey would promptly start up in the southeastern United
States, and then you would have the clash of two great companies in
the most intensive kind of competition.
Well, only Kirkham would have had the temerity to suggest to
the government that competition would be greatly enhanced by
putting back together two of the original Standard Oil companies
that had been part of --
ft
Hicke: — part of the great Standard Oil trust.
O'Brien: -- a trust which had been chopped up so many years before. But the
logic of that position ultimately prevailed. There was another
master stroke by Kirkham, which was that we were to be named a
defendant in the case pending against Jersey and Kentucky; then a
consent decree was going to be entered by Standard of Kentucky in
which they would be ordered by the court to merge with the Standard
Oil Company of California.
Hicke: That's really doing it right.
O'Brien: All of this happened without the knowledge of the Standard Oil
Company of New Jersey. That came about in a curious way. I had
really no part in the actual negotiations of this deal with the
Department of Justice, but I did have one small part that was
useful. In the cartel case, the Standard Oil Company of New Jersey
made a consent settlement with the government. They sent out a
letter to the rest of the defendants -- including Socal -- saying,
"You have no standing in this matter at all; we're going to have to
go ahead and make our settlement, and the authorities all make it
perfectly clear that another defendant or any party to the
litigation isn't even entitled to know of the existence of the
settlement, and therefore forget it."
196
All of this had been done by Arthur Dean, senior partner of
Sullivan and Cromwell, who was representing Standard of New Jersey
in the cartel case. Well, that was a useful precedent coming from
Standard of New Jersey, when we were in the process of making a
consent settlement with the Standard Oil Company of Kentucky. So I
hastened to give those papers to Mr. Kirkham. Then when the case
was ready to be settled, he made a date with Spivak to see him in
the federal court in Louisville, Kentucky on the afternoon of a
certain day when we would present this whole program to the court.
Kirk and I went down there. We didn't go to Louisville
because we were afraid somebody would see us. Somebody had
suggested to Standard of New Jersey that something, some rumble was
going on, and even that maybe we were fussing around with trying to
get into the act, but they didn't give that any credit at all.
They thought that it was so absurd to suggest that two of the major
Standard Oil companies could get back together again, that they
sort of dismissed that prospect or possibility.
So Kirk and I went to Lexington and spent a beautiful Sunday
driving through the countryside -- out of sight. I remember having
a Chinese dinner with Kirkham, in Lexington of all places, the
night before all this took place.
The next day we sort of tiptoed around until it was time to go
to the federal courthouse in Louisville. Then we went into the
court's chambers. My God, lo and behold, there was a newspaper
reporter that the judge had invited. So my main contribution,
according to Kirkham, was to hang onto this guy who wanted to rush
to the telephone and announce the happy tidings to the whole world!
After all, Standard Oil Company of Kentucky was the biggest company
in Kentucky.
So I held on to his coattails, and the presentation was made
in chambers by the government and by Kirkham. The judge said he'd
like to study the matter, and so we left his chambers. I was still
clutching the hapless reporter. The judge gave the thing
considerable thought and read all the briefs and memoranda that had
been filed in connection with it. Finally he appeared in the
courtroom and entered an order directing the merger, etc. Then
there was a great commotion, as you can imagine, for a few days.
That was a cannonball that whistled through the antitrust world and
the oil industry.
Hicke: You let go of the reporter's coattails first?
O'Brien: Yes, right. Then, of course, it hit the press up and down the
country. Well, only Francis Kirkham could have put that scenario
together, What he had predicted immediately took place. Standard
of New Jersey was fit to be tied, furious and frustrated. The
197
upshot was they began to build stations right and left throughout
the southeastern United States. They came back with a vengeance
and a roar and got be to highly competitive.
That in turn led to another famous piece of litigation,
because when they came into the traditional Kentucky territory,
they put up their traditional signs, "ESSO," which of course means
•S.O.," "Standard Oil." They relied on the terms of a contract
with Kentucky which they claimed gave them the right to use that
name.
Hicke: A contract with who?
O'Brien: With Kentucky.
Hicke: Oh, okay.
O'Brien: Which they said gave them the right to use "ESSO." Then there was
another great litigation. Kirk tried that case in Mississippi, I
think it was; I've forgotten, maybe Alabama. A fine old Southern
judge. We had a platoon of lawyers down there; a lot of young
partners in PM&S cut their teeth on that case. There were all
kinds of extraordinary episodes in this great trademark case over
our right to exclude Standard of New Jersey from using ESSO in
Kentucky's territory. We lost the case in the trial court; we
could hardly expect to win it there, I guess. But Kirkham argued
it in the Circuit Court of Appeals, and the judgment of the
District Court was reversed. The Supreme Court denied certiorari,
as I recall, and that was the end of it.
I think by that time -- I've forgotten when all this happened;
I can't put a date to it -- I had already moved over to Chevron.
I'm pretty sure I had, because I know that maybe a year afterwards
Standard of New Jersey built a refinery in the Bay Area -- at
Benicia — and they started sending their tankers into San
Francisco Bay, now that they had a refinery with crude oil to be
refined in their new refinery. The stacks on those ships said
"ESSO." So I wrote a letter to the Standard Oil Company of New
Jersey telling them to knock it off. I didn't hear from them for
months, but then finally they did, which meant they had to change
everything on that ship -- not only the stack but the silverware
and the life preservers and a hundred other things, the
registration and the rest of it. So we finally made peace.
198
Church Congressional Hearings
Hicke; One thing that took place I think while you were with Chevron --
but Mr. Kirkham was involved and he hasn't talked about it -- is
the Church hearings. Do you want to tell me about that or should
I --
O'Brien: I was in it --
Hicke: I know you were.
O'Brien: -- until it got down to the end, Kirk got in it then --
Hicke: Oh, okay.
O'Brien: -- at the time they were going to indict me. Senator [Frank]
Church was a wicked and sinister man. He had a vicious,
unprincipled fellow by the name of Levison, who was his chief
honcho. Church was really running for president, and he ran for
president against the CIA [Central Intelligence Agency] and the oil
companies. He went a very long way toward destroying our
intelligence capabilities in the United States with his assault on
the CIA; it was unforgivable. He was trying to rewrite history as
far as the oil companies were concerned. He used the most shabby,
underhanded tactics imaginable.
Anyway, it got to be quite a hassle. There is a shelf full of
the transcripts of hearings [gestures].
Hicke: Five feet wide, you're indicating?
O'Brien: Yes, six feet, of the hearings before Senator Church. I was trying
to orchestrate it inside the company. My relationships with
Levison got more and more acrimonious. We weren't about to roll
over and play dead. Ve received a whole series of subpoenas, and I
went to Washington, negotiated with this jerk about the subpoenas,
and we produced documents and all that.
The thing came to a great climax when he began to send us
subpoenas that were so detailed that you had to wonder. Most of
the time you spend with the government is in objecting to the
breadth of subpoenas -- dragnet subpoenas -- that are designed to
require you to produce a hundred or two hundred thousand documents .
In this case the subpoenas were very detailed. Meanwhile, I should
say that three of us had testified before the committee: George
Parkhurst, Dennis Bonney, and I.
Hicke: All from Chevron.
199
O'Brien: Yes, officers of Chevron. I tried to carry the fight to Church by
telling him that he was in effect rewriting history and that if he
really wanted the facts he would put in evidence the Mootness Study
that we had done in the cartel case; that I had originally
submitted that study to the government as a confidential document,
and it had been largely treated that way. Since Church was trying
to do what the Chinese are trying to do today -- saying nothing
ever happened in Tiananmen Square -- I thought it was time to
surface that study.
Now it was in the possession of the committee staff, but
obviously they would never have put it in the record, because it
absolutely blew all of these phony-baloney contentions of Church
right out the window. The man who had worked on it, Neil Jacoby,
the head of the business school at UCLA, who had written much of
the economic study, wrote to Senator Church and asked to be heard.
The committee had all these trained seal economists they were
running through the hearings instead of the guy who had really
studied the subject.
Anyway, I asked Senator Church to put the study in evidence
and offered a copy of it to him. He said, oh, the government
didn't have enough money to publish that kind of stuff. He never
did put in evidence. I said, "Well, you've got enough money to
publish the federal budget, you ought to publish this study." Our
relationships were really pretty rancorous, and mine with Levison
were very bad.
Then we began to get these subpoenas, and they were so
detailed that I finally went back to Washington and saw this guy
and said, "Look, I don't know what you're trying to do, set me up
some way?" I said, "These subpoenas are so specific that the only
conclusion that I can reach is that you have the documents already
in your possession -- you describe them as between A and B and so
on -- that you have them and you're hoping that I won't be able to
produce them or that I won't produce them. Then you can take some
steps against the company or against me. Why don't you give me the
documents and let me see if I can find them? "
So we went around and around and around. Then the word came
back they were about to indict me for obstructing justice. Much
against my feelings, they were finally permitted to search for
these documents in our files, and there were no such documents.
What had happened was that presumably somebody inside the company
200
had forged these documents and had sent them to [Jack] Anderson.1
I wanted to sue Anderson, because I thought that we could take his
deposition and compel him to produce the documents and maybe we
could locate the people who had written them.
I hired some outside investigators to see whether we could
identify the person or persons in the company that had forged these
documents -- typewritten documents. Anyway, the documents
presumably came to Anderson from somebody inside the company, and
Anderson slipped them to Levison. So Levison was subpoenaing me to
produce forged documents, and he thought all the time that I was
withholding the documents and obstructing the work of the
committee.
Well, it was a costly exercise in the sense that we opened up
our files to them to look through, and they made a lot of hay out
of some of the things they found -- our conversations with the King
of Saudi Arabia. I didn't appreciate it at all. But they were
forced to drop these charges about the documents, and Kirkham went
back to the final hearing before the committee.
We were aided in that by one of the staff of the committee, a
fellow who thought that we were being badly mistreated. There were
several such sympathizers on the staff; I know because Bonney and I
once testified -- I think it was both of us -- testified in, what
do they call it? some sort of private hearing; they have a word for
it. After we had testified, I was walking down the street, and one
of the many members of the Church staff came up to me. We were
walking back in the direction of his office, and he said something
like, "You were involved in the cartel case, weren't you?" I said,
"Yes." He said, "Did you ever see the correspondence within the
Department of Justice that led to the dismissal of the case?" I
said, "No, why?" He said, "Oh, I've got that in my file; I'll show
it to you. "
So before the end of the day, I walked out with copies of the
correspondence from the trial staff in the cartel case written to
the head of the antitrust division urging him to dismiss the case.
Here was Church trying to prove all this ridiculous nonsense. So I
put those in evidence -- material supplied from Church's files by
his staff to me -- I put those in evidence at the Church hearing.
You'll find those in the record too, in which this guy says, "We've
got a bum case against Standard of California, and if we try it
1. Newspaper columnist Jack Anderson had supplied Senator Church
with documents he claimed to have received from a secret source
inside Socal.
201
we'll probably get licked, and now is a good time to dismiss it
without too much loss of face," et cetera, et cetera.
Hicke: Marvelous.
O'Brien: A lot of stuff like that. Those are in the record. So not
everybody agreed with his tactics and we forced him to write
reports that were more balanced, and some of his staff intervened
and kept him from making the worst charges. But it was a bloody
exercise and I thought he was an absolutely despicable. And I
still do. He's gone to his great reward now. But it was a very
hectic exercise. Hugh Taylor and I worked night and day on some of
those things for months, and we conducted a very long investigation
trying to identify the person who had precipitated all this
business with his forged documents.
You see, Levison roamed through the CIA files, the State
Department files, and so on. What his purpose was, I'll never
know. I don't know whether he belonged to the KGB or what.
Anyhow, you'll recall that in I guess it was December of 1970 or
'71, when OPEC [Organization of Petroleum Exporting Countries] sent
us word that they were going to cancel all our concessions and to
get the hell out of the Middle East in ten days and give up or
else, we got the approval of the State Department and the antitrust
division to try to make a single response to all of the concession
countries by all of the oil companies. We'd been picked off one by
one; we called it leapfrogging. You'd give one country something
and the other would want that plus some more and then that would
ricochet back to the initial country, and so on.
Such a document was drafted and sent to OPEC with the approval
of the United States government in all of its manifestations asking
for one single negotiation between the OPEC countries and all the
producing companies in all the OPEC countries. It never worked,
because State sent a green pea emissary out to Iran and he got
talked out of it; a U.S. emissary got talked out of it. So instead
of having one single rally, a monster rally involving all of the
concession countries and all of the operators, to try and bring
some sense out of this whole business of international oil pricing,
we wound up having to negotiate with all the Middle East countries
without having Libya, Venezuela, Nigeria, et cetera -- the
countries outside the Middle East -- involved in those
negotiations.
But we also got approval, then, to have a kind of master
strategy group, and that was done with the understanding that
Mr. McCloy, John J. McCloy, and his firm would monitor these
meetings while we were developing the tactics and strategy of
dealing with OPEC, first in the Middle East negotiations and then
in subsequent negotiations in Libya and elsewhere. It was called
202
Hicke:
O'Brien;
the London Policy Group, and it was all done with the knowledge and
consent and with periodic reports to the Department of Justice as
it was developing.
Along comes Church, as I say, running for president against
the oil companies and dismantling the American intelligence system.
Levison got wind of our meetings and he thought, oh Godl have I got
these people by the throat nowl To his profound disgust and
dismay, he ultimately learned it was all being done with the
knowledge and consent of the Department of Justice. He was very
frustrated.
One for the oil companies.
Yes. So that's a very incoherent and sketchy account of our great,
bloody massacre.
Joining Socal as Director and Vice President: 1966
Hicke: Well, let's end the oil story here with a little bit about after
you became vice president for legal affairs and director of
Chevron, what your relationship then was with PM&S.
O'Brien: While I felt honored to be asked, I gave a good deal of thought as
to whether I ought to take that job. After all, I'd gone to work
for the firm right out of law school, and except for the four years
I was away during World War II, my whole professional career, such
as it was, had been spent in the firm, and I had my roots down
pretty deep.
I felt great loyaties to the Standard Oil Company. I had
great respect for Gwin Follis, the chairman and the values for
which he and the Company shared. I also felt some sense of
challenge. After all, it is one of the greatest international
corporations. I was interested in international affairs. I had
done a lot of work on their international affairs and their
antitrust affairs, so the prospect of continuing to work in that
field interested me and I felt I had some experience in it. But I
was also old enough to realize that whatever my earlier
relationships or my position within the firm, I was starting a
brand-new career with a whole new dramatis personae, that I would
have to learn the ropes in a corporate environment, I'd have to
find out how to get things done, and I'd have to start over, in a
way, in my middle fifties to earn the confidence and respect of the
people with whom I would be dealing in my new role.
203
I had a number of conversations with Mr. Follis about the job
before I accepted. As a matter of fact, it took me quite a long
time to make up my mind. Among other things, I said to him, "Has
it occurred to you that many of your colleagues within the company
may conclude that I can't adopt an objective view about PM&S or its
performance or the caliber of legal advice it gives the company,
because, after all, he ' s a bent twig? He's been there all his
professional life."
He said, "Sure, of course I've thought of that." He said, "On
the other hand, you know the firm better than anyone else that
could be selected, and you'll know its great strengths and its
weaknesses, if any, and you'll be able to orchestrate the sources
of legal advice and watch the caliber of work." I said, "Well,
that's great, but the same thing applies to legal fees. People may
think that I can't be objective about the firm and what it's
charging the company, whether they're getting their money's worth,
and so on." Well, he said, "Again, your own experience --
n
-- will enable you to guide us and tell us whether the legal advice
is good, whether they're wasting our time, or we're wasting their
time." That was a fairly wise statement, because obviously there
are people within any big company who may think that if they can't
sell some proposition to the boss, maybe they can sell lawyers on
it. And maybe the lawyers can be manipulated or used in some way
to advance a cause that somebody wants to bring about.
So anyway, having satisfied myself that at least he thought
that I could function in an atmosphere of using the great skills
and talents and experience of the firm in a sophisticated way and
view it as kind of a third force and look at it with objectivity, I
decided to take the job.
It was like getting on a giant roller coaster, of course. I
immediately had a whole legal apparatus, worldwide, to deal with:
in-house lawyers and retained counsel throughout the U.S. and in
all the countries of Western Europe, Canada, South America, the
Near East. And I quickly discovered that in a corporate atmosphere
things happen with lightning speed. There may be a great deal of
deliberation and staff work and research and so on, but once
problems reach the level of the chief lawyer and the chief
executive of the company, each problem has achieved a kind of
momentum that carries it along like a Baldwin locomotive hurtling
down the track.
And if you really expect that you can influence its course or
its speed, you already have to be going at top speed yourself.
This means that gradually you learn to see the problems emerging --
James E. O'Brien
at Loch Kishorn, Scotland
ca 1970s
204
you see it on the horizon. It's kind of like watching the waves
make toward the pebbled shore. You see it begin to crest and grow,
and that's the time you have to start paddling like mad if you want
to keep up with it.
I'd never thought of it quite like body surfing, but maybe
that's the way it is.
Hicke: Yes. Your description makes that very apt.
O'Brien: By the time it peaks, you'd better be on top of it or it'll wash
you right under, and that means you have to keep going. And that
meant to me that I had to keep PM&S going; that I wouldn't be
giving them a fair opportunity to deal with the huge problems that
I could begin to see coming unless I alerted them at the earliest
stages that I could, and gave them an opportunity to get up to
speed on the problem, so that when they were officially approached
for an opinion or for some recommendation or whatever, they didn't
have to start with Genesis. They were already swinging with it,
see.
Hicke: Yes, I see.
O'Brien: And that was one of my objectives. I also quickly discovered that
none of the lawyers inside the company, from one end of the company
to the other, even those that were domestic -- that were in Salt
Lake, New Jersey and New Orleans -- none of them knew each other,
even though it was one company, and even though they might have
common problems in the company. There was no mechanism, no
apparatus, no method by which they became aware of the fact that
other lawyers in other branches of the company might be going
through exactly the same kind of a case, whether it was a
specialized case involving oil and gas law, or whether somebody had
dug up a pipeline, or whatever, that could be happening all around
the thing.
So one of the first things I did was to initiate a system by
which we had an annual conference of all these lawyers. The first
one was devoted to introducing these guys to each other for the
first time.
Hicke: Was this about '67, or something like that?
O'Brien: Yes. And then after that it was done on an annual basis, and I
devised a very rudimentary and primitive computer reporting system.
A printout was sent to every lawyer, which had a synopsis of every
case that we had in the company. That was sent each month to each
of the operating companies, to their lawyers. They, of course, had
to keep that up-to-date in respect to their own cases. But the
totality of all the cases was made known to them, so that if they
205
had a [similar] case, they might be able to use an expert who had
considered this problem before. They might be able to find that
in-house and retained counsel had written voluminous opinions on
this, that, or the other subject, and it had all been researched,
and so on; it would ease their task. There might be questions of
tactics, and so on, all of which could be shared to everybody's
advantage .
And finally there was the problem of gaining the confidence of
the presidents of operating companies, because the company was
organized with separate boards of directors and operating
subsidiaries throughout the country, or their equivalant. There
would be an operating president in Louisiana, Texas, New Jersey,
Denver, Canada and the rest of it. Administratively, each of these
lawyers reported to his boss, and he was responsible to his boss,
and his boss was the primary focus of his life and his future in
terms of his salary, his benefits, his bonus, and so forth.
Well, I was determined that I would create what you might call
an intelligence channel. The lawyers would report to me in respect
to legal matters without regard to their bosses. But there might
be some boss who would think that if his lawyer was reporting to
me, he might be reporting something that'd make that boss look like
a big chump, or that he'd stubbed his toe in some way. Now San
Francisco knows about it, and San Francisco's lawyers are going to
get into the act, and I'll look foolish when San Francisco has to
try to bail me out, and all that.
It was perfectly evident to me, though, that we had tremendous
legal resources. We had PM&S with all of its great capacity,
experience, and talent, and we had retained counsel in every major
city in the United States, and usually the best and the biggest and
the most capable. So we had tremendous ability to move into a
major problem, and the company always had a lot of major problems
to handle -- if we knew about them in time. There 'd been a few
cases while I was in PM&S when cases had gone a long way before
they suddenly reared their ugly heads in San Francisco, and it
turned out that they were a great disaster and they were almost
irretrievable, because a lot had gone on before anybody here truly
became aware of what was happening. So this reporting system and
this hopefully not only vertical communication but lateral
communication between the operating lawyers and the operating
companies would help create a rapport and an intelligence system,
so we could quickly bring to bear all we could in the way of skill
and talent to try and handle some of these tremendous problems.
I think it worked with fair success. I think the lawyers got
to know each other, and gradually, maybe grudgingly, the presidents
of these operating companies came to realize that I wasn't gunning
for them, that as a matter of fact it was an opportunity frequently
206
to bail them out of something for which they were not personally
responsible, but where we needed all of the skill we could muster.
So I traveled to see them; we talked on the phone a lot. I
put some things in the policy manual by which they became obliged
to report certain transactions to me for approval here -- some of
the complicated joint ventures in exploration and production deals,
things of that sort where there were a lot of ouchy problems.
I just had a call the other day from some lawyer in PM&S
asking me about the genesis of some of those provisions in the
policy manual that are still there which require special reporting
of particular kinds of transactions to forestall any difficulty
with federal and state authorities on antitrust grounds, and so on.
So I started out -- physically I moved just one floor down
from where I'd been for thirty years, and I had been, except for
the war, with the firm thirty years and was what they would have
called a fully vested partner. It had its pace.
I think I told you that within the first week or so I was
going off to South America with Bud Lund.
Hicke: Yes, you told me about that.
O'Brien: And I suddenly did a U-turn and found myself in Amsterdam talking
to Ibnu Sotowo, who was the Minister of Petroleum in Indonesia --
the first Indonesian back into Western Europe after the great
internal convulsion that had taken place in Indonesia.
Another interesting thing about relationships was this: Jim
Gosline, who was then then president [of Socal] in 1966, was the
head of a committee of directors called the Profit and Growth
Committee. They were considering all sorts of ways of saving money
and improving efficiency. Some member of that committee proposed
to Gosline that they propound to me the question of why didn't we
have an internal, in-house legal department of the sort that all
the other major international oil companies had?
Well, I studied that question in depth. I talked to the
general counsel of some of the other oil companies, I secretly
compared costs with them, I looked at the PM&S statements, I
bethought myself of the whole thing for several months, and finally
delivered myself of a memorandum to Gosline and his committee which
put that question to bed for the rest of my tenure.
I concluded on the merits that no internal legal department of
any oil company could conceivably match the talents of PM&S. And
if anybody objected to the fact that some senior lawyer in PM&S had
a very high hourly rate, the company had to remember that they were
207
not paying him any benefits, and that if an executive called up
that lawyer and asked him for his view on a question, he'd probably
already considered it for half of the Fortune 500 [companies], and
he answered it on the telephone. And even though his meter ran at
a fairly high rate, the cost to the company was substantially less
than if they'd tried to keep a lawyer on a legal staff who was in
any way prepared to answer an obscure question about some corner of
corporate securities law or things of that sort.
I supplied as part of this memorandum a list of the major
clients of the firm for whom the firm acted as counsel in the
western states or where the firm was general counsel for other
companies and for banks and railroads and fifty other things. When
you racked it up like that, you could see that any firm that was
exposed to the variety of problems that PM&S was, that handled such
high-level negotiations and drew such contracts of such complexity
and handled major litigation for such a wide-ranging, diverse
clientele, that it was almost impossible to conceive that an
internal legal department could ever equal those skills.
And finally, it occurred to me that this being the
international headquarters of the company, I thought to myself I
should really explore a little bit some of the extracurricular
things that some of the major players at PM&S were doing outside of
the law. And of course, it turned out that they were trustees of
major colleges and universities, they were involved in the
symphony, the museums, the bar associations, all of the
professional exercises of the legal profession as well as all of
the cultural things around California. That fabric of
relationships that emerged from that, where they were associated
with people of equal caliber, not only in the profession, but in
the major corporations and other walks of professional life in the
state and in other states, gave them another intelligence system
that in no way could be duplicated by a group of thirty, forty,
fifty, or a hundred in-house lawyers. So I marshalled all of these
arguments, opinions, and views, and as I say, wrote a memorandum on
the subject, which ended the matter.
Several of the directors came along privately afterwards and
were very congratulatory about it and apparently agreed with that
conclusion. But it was written, not under a PM&S banner, but
hopefully in the most objective way, really to look at the costs
and benefits and the rest of it.
Now there were some things that I thought the company properly
did for itself. We had a patent and trademark group in the
company, which was bigger than any private firm of that sort in the
West, with forty or fifty lawyers in it. Very sophisticated people
dealing with all sorts of chemical patents, refining patents,
things of that sort, and operating in eighty /ninety countries then,
208
with copyright and trademark problems throughout the world. Now,
if you like, a fairly narrow corner of the law, but one of
tremendous and practical importance to the company, and here they
had and had had for many years, a very skillful, great group that
handled that.
They had a lot of landmen. Those people all reported to the
land vice president. In my day, for most of my time, that turned
out to be Larry Funkhouser, who is a superb geologist, a dear
friend, and a great oil finder. Those landmen, all of whom were
lawyers, came to a very considerable number. Where we were
tremendous acreage holders, say in the Gulf of Mexico, in Louisiana
and Texas, where we were leasing up thousands upon thousands of
city lots to put together a drilling site in the middle of Los
Angeles, there weren't enough lawyers, despite their numbers, in
all of California to put together a huge operation like that,
covering fifty-foot lots throughout a whole downtown section of Los
Angeles, and signing up everybody on a lease with the right to
cross his property, and drill a well and all that kind of business,
and keep all of the administrative things straight, and pay him his
royalties, and do all that, except within the company.
Some of these oil and gas problems are infinitely complex, and
there were people within the company who, after years of practice
before oil and gas commissions and some of the producing states,
had become very skilled at obtaining the sort of orders that made
for efficient operations of oil fields, production, and so on, and
protected the company's interest.
Then the company had its own tax department for which I had no
direct responsibility, although I got into their act from time to
time. That, for most of my tenure, was run by Scott Lambert, who
himself had a PM&S affiliation.
Hicke: Could I just interrupt to ask, was that memo confidential? Because
it sounds like it was really descriptive of the firm at that point.
I don't know --
O'Brien: I haven't any idea where it would be now, if it's even in
existence .
Hicke: Okay.
O'Brien: My files are gone, I guess, and probably those of the Profit and
Growth Committee. I don't know.
So those were the things that occurred to me within the first
few years that needed to be kind of put in order, some new
initiatives, some kind of consolidating, and so on.
209
Relationships Between Socal and PM&S
Hicke: What kind of oversight did you exercise on the work? For instance,
if somebody from Chevron called up a PM&S lawyer, did you know
about it, or did they carbon copy you, or did they ask you first?
O'Brien: I got a copy of every memorandum that was written by the company to
the lawyers, and a copy of the lawyers' memorandum back. For the
first year or two, until I thought I had digested the dimensions of
the job, I read every piece of paper. That meant in the normal
course of a day I would have a stack a couple of feet high. So I
worked pretty hard -- usually seven days a week and most
evenings -- to ensure that I understood everything that was
happening.
It also gave me an opportunity to watch the caliber of PM&S's
work and to watch for -- and I never found very much of it; just
occasionally -- busy work, where some lawyer would flog some
problem to death and spend more time on it than he should have,
answering a question that probably shouldn't have been asked in the
first place. I could handle both ends of that. I could say to the
lawyer, "Gee, you really flogged that to death." Or I could call
the guy up who'd asked the question and say, "Gee, you got a
three-hundred-pound answer to that question."
Hicke: Who in PM&S were you dealing with mostly?
O'Brien: Most of the time it was Kirkham. Because he -- I've forgotten what
year that he became general counsel — I put it in my piece I wrote
about him. So he was there most of the time.
Hicke: Was that '60 -- just a second I want to get that —
O'Brien: It was '60 to '70. I started in '66. So we really only had four
or five years. But he and I were kind of interchangeable in the
sense -- well, I didn't have his talents for great advocacy.
Because he continued to participate in major litigation, and he was
away from San Francisco a great deal. I could play on the mighty
Wurlitzer of PM&S, and I sent the questions that I had or that the
company had to the PM&S people that I selected that I thought were
the best equipped; I did that always, and there wasn't any problem
about that.
At first when I was traveling a good deal, I'd sometimes just
bundle up my whole stack of mail and send it to Kirk to sort out.
Neither of us was bucking for anything, and we were trying, within
the limits of this avalanche of paper and problems, to keep abreast
210
of them, come out with the best answer, and do all these things in
a timely way.
Hicke: Would you send it to the head of the practice group first, or would
you send it to whoever was working on the problem without going
through the --
O'Brien: Well, if I wrote a memorandum, I'd send it to the person that I
wanted to handle it, and I'd send a copy to Kirk, so that we both
knew that the problem was on the table and who was doing something
about it.
Once in a great while, not very often, I did have occasion to
spank somebody for stooging around and not answering a question for
a long time. I felt that didn't make the firm look good if
somebody was dilatory in answering a problem, where somebody in the
Company was pent up waiting for an answer and didn't get one, and
so on. I kept track of that to some extent, and could gig some guy
if he wasn't really doing his job promptly.
I was as interested in having the firm do well as they were in
doing well. It takes a great deal of consideration on all ends of
this thing. Kirkham and I were kind of interchangeable. We were
so close and had such great affection and confidence in each other
that there never was any question of pointing fingers at either the
firm or each other or anybody else.
Kirkham is the kind of a lawyer -- and I hope I was -- that
was prepared to take off his coat and get down and wrestle on the
barroom floor, you know. I'm sure that's one secret of it; you
can't sit in PM&S and stick little answers through the wicket. You
can't draw yourself up to your full height and just sit there and
respond with a memorandum. You've got to participate in the whole
thing. The genius of PM&S has always been that from generation to
generation they developed people who grew up from their legal
beginnings in knowing their counterparts within the company and
having as much background in the great problems and events of the
company's history.
People in the company came to respect their judgment, their
experience, and their sophistication in their view of the overall
problem, not only of its legal dimensions.
For a good many years I handled the Caltex problems in the
firm. During that period, Hillyer Brown would send me a memorandum
saying, "Review these papers," (and there'd be a stack --
U
211
— about six inches thick, and the deal was pending re Germany or
Amsterdam or wherever, and you were supposed to react to them
immediately) from both a legal and business point of view. "Let me
know what you think of the deal, as well as the way it's being
written up, huh?"
You didn't know if this contract was being negotiated in
London or New York, whether the bright idea you had about it had
already been considered and discarded long ago. So you were on the
telephone with people in various parts of the world trying to make
sure that you were really dealing with the last piece of paper and
not some discarded draft.
Hicke: Did you try to separate the legal and business advice? Or did you
let them sort that out?
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
Sure, sure. In fact, you were almost, let's say you were compelled
to give business advice, because when I was actually a director --
I was just going to say, as a director you certainly would --
If we asked PM&S for an opinion on something and received an
opinion, I'd probably discussed a dozen different ways with the
fellow who was writing the opinion. So when it arrived, then the
chairman of the board would look at it, and say, "Okay, I've read
it, what we do?" So PM&S would point out, let us say, in the
traditional way, the risks involved in this proposed course of
action, whatever: should we settle this case, if so, for how much?
After they had functioned on what they considered the
appropriate scope of the legal problem, then the chairman would
say, "Well, what do I do now?" So then I'd have to function in
another capacity, let's say. Sometimes I had to say, "No way are
we going to do that, we're not going to do that." Because never
once in my tenure that I recall, did the board of directors or the
chief executive ever overrule my advice and decide to do something
that I'd said was out. If my red light went on and I said so, then
that was the end of it. They were trying to live within the law;
they weren't trying to skirt the law or to go beyond the safe
borders of conduct. The job would have been intolerable if it'd
been any other way.
But you took some very strong stances too. For instance, not
lifting any oil in Libya -- that was a tough decision.
Yes, sure,
concerned.
Well, that went with the job, as far as I was
But it's clear they have • the utmost confidence in what you were
doing.
212
O'Brien: Well, I don't know whether they did or not. At least they didn't
overrule me.
Every lawyer in PM&S wants to see the company achieve the
things it's trying to achieve. It wants to give advice in a way
that will facilitate the accomplishment of that objective. On the
other hand, if they see what they consider to be very dangerous
risks involved, their integrity compels them to state those
categorically. They're not going to pull their punches in order to
look like they're just going along to get along.
Their own professional integrity means that they will call the
shots as they see them and will have absolutely the highest
professional standards, and that, of course, is a great, great
benefit to any client. It's too easy, given the momentum of these
problems, the urgency of these problems, the sort of gravitational
force that goes along that tends to pull a professional man in the
direction of the answer that his client wants, particularly when
his client is sitting on top of a great, corporate enterprise
operating around the world, to say, "Yes." But if he feels
compelled to say, "No," he has to do that, or he's not worth his
salt.
Announcing the Christening of the
s.s.JAMES E. O'BRIEN
212a
Built by Mitsubishi Heavy Industries, Ltd.
Nagasaki Shipyard & Engine Works, for
Chevron Tankship (U.K.) Limited
March 10, 1970
Sponsored by
MRS. JAMES E. O'BRIEN
Principal Particulars
Length Overall 1,069 feet,6-f inches
Length Between Perpendiculars 1,017 feet, -f inches
Beam 159 feet,9-J- inches
Depth 80 feet,4-i- inches
Draft, International Summer 62 feet, 1-J- inches
Deadweight 214,000 Long Tons
Gross Tonnage 109,550 Tons
Cargo Capacity '. 1,661,000 Barrels
SHP (Metric) 30,000
Speed, Average 16.0 Knots
Main Engine MHI-Westinghouse Double-
Reduction Geared Cross Compound Steam Turbine
Boilers Two Mitsubishi-Combustion Engineering
Water Tube Boilers
Cargo Pump Capacity 75,500 Barrels per hour
Owner: CHEVRON TANKSHIP (U.K.) LIMITED
Builders: MITSUBISHI HEAVY INDUSTRIES, LTD.
NAGASAKI SHIPYARD & ENGINE WORKS Hull No. 1665
Sponsor: Mrs. JAMES E. .O'BRIEN
Historical Particulars
Contract Signed October 20,1967 Keel Laid August 8,1969 Christened March 10,1970
Class American Bureau of Shipping — 4< Al © Oil Carrier HH AMS
213
XI PRACTICING LAW AT PM&S
Hicke: What you're describing now is a firm of lawyers that have the
client's best interest foremost. Do you think that this is
changing with the intense competition between law firms for growth?
O'Brien: I don't think so.
Hicke: I don't mean just PM&S.
O'Brien: I don't think PM&S has changed its style or its ideals or anything
of the sort. I think, as a matter of fact, given the intensity of
the competition, that there's a greater compulsion within that
competition to be right and to deal with the problem in the most
effective and skillful way, because, perhaps, of the competition.
But having now watched PM&S for over fifty years, and having been
around when the original partners were there, I don't see any
change in their standards of performance, in their aspiration to
practice law against the highest standards of the profession, to be
the most capable and skillful firm.
When I look at the array of talents that are exhibited in that
little binder over there that has the resumes of the 500 lawyers,
why it's hard for me to believe that any other firm in the United
States has such an aggregation of experience and background and
talent. It's absolutely fantastic. Absolutely fantastic academic
records, breadth of experience, and so on. So I don't think the
firm has changed in that regard.
Practicing law, I think, has changed, and to my way of
thinking, not in the happiest ways, because it takes such a
tremendous battery of people to handle the enormous problems now
that some of the personal aspects of practicing law perhaps suffer
a little bit. I can't really judge that. From the outside it
gives that appearance.
214
When I began to practice law, if you went out to try a case
with somebody, and you came home at five o'clock, there 'd probably
be four or five guys waiting at the elevator to find out what had
happened, you know.
Hicke: Oh, yes.
O'Brien: Everybody shared each other's problems. When you first came to
work in the firm, you were put in a big bullpen, and you overheard
the coversations that your colleagues, apprentice lawyers, were
having on the telephone. You kind of multiplied your experience,
and you talked about your problems to each other in this big
bullpen. So you were very much involved in the lives of all of
your contempories. Maybe that happens today. I think it was
easier to happen when it was a smaller firm.
The thing that is astonishing in some ways, but perhaps to be
expected in another, is that commencing fifty years ago when I
began to practice in the firm, there have been great lawyers, ones
for whom I had, profound respect.
Hicke: In the firm?
O'Brien: Yes. Alfred Sutro, Oscar Sutro, the great trial lawyer, Felix
Smith, Gene Prince, Gene Bennett -- people of very great stature
and talent. And the firm's growth, of course, is in part an
expression of the growth of its greatest clients. If you want to
represent the telephone company and handle a great rate case,
you've got to have a platoon of people. As it grew to be a huge
company, the Standard Oil Company emerged from being a West Coast
marketing company into one of the great international, integrated
companies, and their problems involved questions of all countries
of the world -- including Saudi Arabian law. If you wanted to hang
onto the coattails of a client like that, you had to develop
people, and develop skills, and so on, that went with the chore.
That's the way the firm grew. As it grew, it grew in stature
and reputation, and became nationally known. But the same old
rudimentary rules of doing it right always has prevailed --
practicing against a standard of excellence.
Even when I came in 1935, they had comparers. You couldn't
write a letter acknowledging a letter without having sent it to the
comparer and having her put a little rubber stamp on it to make
sure that the letter was properly spaced on the page, and the
secretary read her notes to the comparer, and so on. You're
trained in a firm that has a manual of style and that sort of
thing, so the mechanical parts of this thing are done against that
background. The professional standards -- I used to laugh at
Francis Marshall, because when Alfred Sutro asked him a tough
215
question, he went roaring down to the library, wrote out the names
of the forty-eight states -- there were only forty-eight then --
and he'd look for the latest precedent in every state.
Hicke: Oh, my goodness.
O'Brien: I'm kidding a little bit, but that was the way we all approached
the task of legal research and legal writing.
The miraculous thing is that from that time, fifty years ago,
the firm has cast up in each generation people who serve with the
same style, the same experience, the same kind of, legal judgment as
the founders of the firm did. It's also been able to handle all of
the new fields of law that have emerged.
Beginning in the '30s, the whole corporate securities were
changed with all the federal statutes, the SEC [Securities and
Exchange Commission], the Trust Indenture Act, and you can test
that against the capacity of this firm to handle the legal aspects,
for example, of a Gulf merger -- the biggest merger in the history
of the United States up until that date, a job of infinite size and
complexity. So I don't have any hesitation in saying that the firm
is right up to speed.
Hicke: Veil, one of the questions I usually ask is for characteristics of
the firm. I think you've just covered that very well. Do you have
anything more to add on that subject?
O'Brien: No, I think it has a great future. I think all the members of the
firm nowadays, if they reflect for a moment, must realize that
earlier generations of partners and associates in this firm made
quite a record and frequently made very considerable sacrifices for
the future of the firm. I'm not speaking about myself at all. But
I look back myself on people who went before me with the knowledge
that it wasn't always a cornucopia of riches and that people had to
tighten their belts and work a little harder and forego some of the
pleasures of life to make the firm hum. So long as the firm
retains that spirit, no one can ever doubt its abilities to enjoy
in this generation and those to come the kind of success it's had
in the past.
216
XII COMMUNITY SERVICE
Hicke: That's a wonderful note to end the discussion of PM&S on, but I
want to ask you for a little further information on your community
activities which I think cover the wide world and probably we could
spend several days on. Maybe you could just do some highlights for
me.
O'Brien: When I was younger in the firm, I used to to do some outside
things. I used to do a certain amount of speaking; I had done a
certain amount of speaking in school. I got very much involved
emotionally at the time of the great longshoreman strike in San
Francisco --
Hicke: -- in the '30s?
O'Brien: -- in the '30s with the general strike. I had just begun to
practice law, but I asked Felix Smith if he had any objection to my
roaring around the town making speeches and so on, and they didn't
have any objection, so I debated with a lot of Harry Bridges 's
henchmen in every kind of a forum. Can't remember all the places I
went. I got on their short list, I'll tell you. As a matter of
fact, one day they showed up with a lot of pickets in front of
Standard Oil Company of California raising hell about PM&S.
Hicke: Because of your speaking tours?
O'Brien: I think so, yes, because I debated with a lot of people that I
thought were hammering other people in back rooms. I may have told
you this story. About that time, Stephen Vincent Benet, the great
American poet, had written a long, narrative poem about the
fascists called Burning City. When these goon squads were running
around San Francisco beating up people, I compared them with some
of those people. The communists never like to be called fascists.
When I referred to the fact that they were a bunch of boys with
rubber fists, they didn't particularly like that.
217
But I debated with, among others. Mat Tobriner, who ultimately
became a Supreme Court justice in California and a very
distinguished, likeable, able gentleman. He represented the
AFL/CIO [American Federation of Labor/Congress of Industrial
Organizations]. That was a pretty rough-and-tumble bunch for him
because he was a very sweet and a very courteous and a very
gentlemanly fellow. He had more of the smoky lamp about him than
he did a bunch of two-fisted longshoremen. I must say I came on
pretty strong the night I debated with him. I'm afraid he wasn't
ready for such a rambunctious, young firebrand.
Years later I negotiated a labor contract with him, and we sat
for weeks. He was representing the glassmakers and I was
representing the glass companies. Harry Brawner, who was the CEO
then of Fuller and Company, and I used to go out to the glass plant
in South San Francisco and negotiate all day long. When the
contract was finally agreed upon by Tobriner and O'Brien and
Brawner and the committee, it went back to the union, who
repudiated Tobriner and committee; so we had to start all over
again. I'll never forget how embarrassed he was to call me up and
say that they'd thrown him out a window, in effect.
Anyway, so I have done things like that. I served on the
board of the Youth Council in San Francisco for youngsters who were
kind of handicapped and impoverished. I met some wonderful people
on that board, including Dan Koshland who was, along with Walter
Haas, the principal stockholder of Levi Strauss. One of the most
wonderful men in the history of San Francisco, a man of great
wealth, to be sure, but a man of even greater compassion. That was
a friendship I cherished all my life and which I had occasions to
lean on later in life.
I served on the board of the San Francisco Chamber of Commerce
for a couple of years. That was kind of a romp with some friends
of mine. The president of the Chamber was a close friend of mine,
Farmer Fuller. There were a lot of other Comanches on that board
and we had a lot of fun. I made speeches on public occasions and
presided at things like the celebration of the great earthquake and
fire and dedications when they dug the big hole for the Equitable
building.
I had a pretty busy practice. I worked hard, worked a lot.
In those days, you were still practicing law in the great
tradition. They didn't really think you had your back in it unless
you were around here two or three or four nights a week. Besides
which, when you started out, you didn't have a secretary of your
own and you had to rely on the night staff to get your work out in
the morning -- before morning.
218
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Hicke:
O'Brien:
Oh, dear.
But, I don't know, I turned down various invitations to do things
because I felt I was too busy and I was on the road and I never
really wanted to serve on a board unless you could do something.
You always felt you were filling up a chair that somebody else
might have really done something about.
Since you've retired, you've done lots of things, I know,
been on The Bancroft Library board.
You've
Yes. Well, I served for a number of years at the — while I was
still in PM&S and for a year or two after, I went over to Stanford
as the chairman of the Stanford Hospital board. For a few years, I
was on the National Fund for Medical Education, which was an
organization created by statute at the behest of President
[Dwight D.] Eisenhower. It raised and disbursed funds in the hope
of being on the cutting edge of medical education in the United
States. It was kind of interesting because it had a board composed
of a lot of crowned heads in the medical profession and you got
into the whole area of what were the frontiers of medicine that
should be integrated into the curriculum of the major medical
schools of the country, and we met around the country.
I served on a couple of corporate boards. I enjoyed serving
on Abercrombie & Fitch, because I served on it in the good old days
when it was still selling elephant foot umbrella stands, you could
buy almost any kind of thing you wanted, including fine guns and
the rest of it. They met in New York. I had represented them out
here, they opened a store in San Francisco.
Yes, I think you told me about that.
Yes. And as a favor to a dear friend of mine, I served on the El
Portal Mining Company board.
I think we talked about that one, too.
And I still serve on the board of the Academy for Educational
Development in Washington, which was created by Alvin C. Eurich,
who was, at one time, acting president of Stanford and became the
first president of the State University of New York, which has
about fifty campuses, and subsequently was the head of the
educational division of the Ford Foundation, chairman of the Aspen
Institute, and he was a dear friend of my first wife and mine. He
wanted to start his own nonprofit consulting firm in the field of
higher education. We discussed that for quite a while.
I helped him draw the first articles of incorporation, and
it's now one of the most prestigious outfits of its type in the
219
field of education in the United States. In the intervening years
he has been hired as a consultant to reexamine the curriculum of
most of the major universities in the country, done financial work,
done searches for university presidents, that sort of business.
Then in the last twenty years, the business has become
probably the biggest international dispensers of education and
health care. In the last few years it's been awarded the major
contract for AIDS education in Africa, for all sorts of health
programs involving mothers and children; dehydration and diarrhea.
It established the King Faisal University in Saudi Arabia and
designed the buildings and curriculum and everything else. So
that's kind of a fascinating outfit.
I used to be a trustee for the Southwestern Legal Foundation.
I guess I'm now kind of an honorary trustee. I got interested in
the establishment of their International and Comparative Law
Center, which provided us a forum to express our views about some
of the traditional principles of international law. Never having
studied international law, I guess I had the impression that that
tiny coterie of international lawyers really spend their time
talking to each other at the American Society of International Law
and International Law Association. It was thought to be a great
idea —
tf
— to have a similar organization in the West, and so it was
established under the aegis of the Southwestern Legal Foundation in
Dallas originally on the campus of SMU. The four American
international oil companies and a few other major companies were
really responsible for finding the funding to get it off the
ground. We planned it so that it published first a book of
selected readings in international law by very distinguished
international lawyers and judges.
We established then an Academy in Dallas, which is now
probably in its twenty or twenty-fifth year, in which students come
from all over the world to attend a six- or eight-week course in
Dallas. Most of them are judges and lawyers from Third World
countries and South America and Western Europe and Southeast Asia
and China: the works. It's taught by a very good faculty, and
they have now formed an alumni association that must include five
or six hundred or seven hundred graduates. Usually they turn out
to be a judge of the Supreme Court or the Attorney General or the
Foreign Minister or something in their country.
The result has been that the State Department looks upon this
program with great approval and the Foundation receives, I think,
more Fulbright grants than all the major universities put together
Southwestern Legal Foundation International and Comparative Law Center.
1978 Dallas, Texas. O'Brien speaking
220
Hicke:
O'Brien:
Hicke:
O'Brien:
for travel to the United States for people to attend this course.
In addition to that, there is an annual symposium which now has
become kind of a command performance. It really does have
tremendous support from the profession and from corporations
throughout the country. They put on this symposium on current
subjects of interest in international law, which attracts lawyers
from all over the country and is usually quite a success. The
papers that are given are published by Bobbs Merrill each year, and
I've got a whole shelf full of those books.
So that turned out to be an interesting exercise. I met a lot
of wonderful people there, lawyers from all over the country, all
over the world. Some of the companies with which Chevron is
affiliated have sent lawyers say from Indonesia, Saudi Arabia, and
other countries where we do business to attend that course. I
think it gives the participants some glimpse of how we look at
legal problems and some of our constitutional standards and beliefs
which is useful to them.
My prime example of a success in that respect is the young man
who lost his job as dean of a law school in Bandung at the time
that Sukarno was trying to restructure his society and tell people
what they could teach and what they couldn't teach. This teacher
was rescued from Indonesia, where he was at great risk of either
being imprisoned or executed by Sukarno, and brought to the United
States by Myers McDougal, given some sort of a fellowship at Yale.
Since it wasn't safe for him to go back, we put him through this
course in Dallas at the Southwestern Legal Foundation. Then he
came to San Francisco for a few days as my guest, and he happened
to be here on the Fourth of July. We went to some celebrations and
were invited to some parties and so on.
Subsequently, I saw him in Indonesia and in Singapore when I
attended a conference out there. He became the youngest
representative of any nation in the United Nations at the Law of
the Sea Conference representing Indonesia, where he proved to be a
very skillful and knowledgable negotiator, became a consultant to
their political office, and subsequently Attorney General and then,
more recently, Foreign minister of Indonesia.
And his name is?
Mochtar.
Well, that certainly is an interesting story.
A course like that didn't do him any harm and gave him some
perception of the way we think about things, legally.
221
Hicke: Obviously he took that back to Indonesia, with considerable impact,
I'm sure.
O'Brien: Yes, well, he ' s a very bright, very able gentleman. He's remained
a friend.
¥ell, that's enough.
Hicke: I guess we skipped by your career at Chevron, and your community
activities and quite a few things in a big hurry this afternoon,
but I think we've hit the highlights of those.
O'Brien: Sure, sure.
Hicke: So I do thank you very much for all time that you've —
O'Brien: Bless your heart. I thank you. I never would have done such a
thing without your help and encouragement, and I may say, your
persistence.
Transcribing and revisions by:
Georgia K. Stith
Charlotte S. Warnell
Terrance G. Dempsey
222
TAPE GUIDE - James E. O'Brien
Interview 1: January 13, 1987
tape 1, side A
tape 1, side B
tape 2, side A
1
8
15
Interview 2: January 20, 1987
tape 3, Side A
tape 3, Side B
tape 4, Side A
22
28
35
Interview 3: January 26, 1987
tape 5, Side A
tape 5, Side B
37
42
Interview 4: February 2, 1987
tape 6, Side A
tape 6, Side B
49
53
Interview 5: March 17, 1987
tape 7, Side A
tape 7, Side B
59
66
Interview 6: March 24, 1987
tape 8, Side A
tape 8, Side B
75
83
Interview 7: April 7, 1987
tape 9, Side A
tape 9, Side B
86
93
Interview 8: July 7, 1987
tape 10, Side A
tape 10, Side B
tape 11, Side A
102
110
120
Interview 9: September 22, 1987
tape 12, Side A
tape 12, Side B
tape 13, Side A
127
135
143
223
Interview 10: March 28, 1988
tape 14, Side A
tape 14, Side B
tape 15, Side A
151
158
165
Interview 11: November 30, 1988
tape 16, Side A
tape 16, Side B
tape 17, Side A
169
176
183
Interview 12: June 19, 1989
tape 18, Side A
tape 18, Side B
tape 19, Side A
tape 19, Side B
tape 20, Side A
188
195
203
210
219
224a
RESOLUTION
ADOPTED BY THE BOARD OF DIRECTORS OF
STANDARD OIL COMPANY OF CALIFORNIA
MARCH 30, 1977
224b
ESOJYED
That recognition of the outstanding achievements
of James E. O'Brien be perpetuated
in the minutes of this meeting.
224c
distinguished career in law, industry, and public serv
ice spans more than 40 years.
Jim O'Brien must be considered a contemporary
"Renaissance Man" - possessing that rare combina
tion of intellectual brilliance and compassion for oth
ers, and having an abiding interest in literature, art,
culture and the humanities.
He is a sage, pragmatic, and resourceful lawyer
who is described by his friends in admirable terms as
"tough and firm, but fair."
A nationally recognized authority on antitrust
and international law, Mr. O'Brien was a senior part
ner in the law firm of Pillsbury, Madison $, Sutro
until he joined Standard Oil Company of California
in 1966 as a Director and Vice-President. He had
been a prominent member of the law firm for 30 years.
Born in Trinidad, Colorado, Mr. O'Brien was
graduated in 1932 from the University of California
224d
at Berkeley and in 1935 from the University's law
school, Boalt Hall, establishing a brilliant academic
record at both institutions.
During World War II, Mr. O'Brien was a dec
orated Lieutenant Colonel who served with the U.S.
Strategic Air Forces in Europe.
His unyielding dedication and skill as a lawyer,
negotiator and advisor have had a profound and far-
reaching influence on the Company that will be evi
dent long after his retirement on April 1.
Beyond his ability, intellect, and scholarship
which established him as a prominent attorney,
Company executives looked to Mr. O'Brien as
more than a legal advisor; over the years they sought
his provocative views and advice on a broad range
of policy matters.
Mr. O'Brien wielded strong influence on the
management of this Company through his service on
the Executive Committee of the Board of Directors;
the Annuities Committee; the Public Affairs
Committee; the Foreign Review Committee and the
Insurance Advisory Committee.
224e
J
As Vice-President for Legal Affairs, one of Mr.
O'Brien's principal achievements was establishment
of an annual meeting of Company lawyers based
throughout the world to review the Company's wide
spread and varying legal problems and to foster a
spirit of unity within the legal staff.
In addition to overseeing legal affairs, Mr.
O'Brien frequently played a key role himself repre
senting the Company's interest in Washington,
in the United Nations, and with other foreign
governments.
The successful conclusion of the International
Oil Cartel Case; complex and sensitive negotiations
with the Organization of Petroleum Exporting Coun
tries (OPEC), which culminated in the Tehran
Agreement of 1971; and his on-going negotiations
with Common Market countries on behalf of the
Company, signify benchmarks of achievement in
Mr. O'Brien's distinguished career.
Jim O'Brien's outstanding abilities and public
service have long been recognized not only by his
•A*
224f
Company and law firm, but by his colleagues and
friends in industry, government and law.
He presently is a Trustee of Mills College and
of the International and Comparative Law Center of
the Southwestern Legal Foundation and of the
Foundation itself; and he served as an advisor on
international law programs to several universities.
He has served as a Director of W. P. Fuller &
Co., Abercrombie & Fitch, El Portal Mining Com
pany and the San Francisco Chamber of Commerce.
He is the past Chairman of the Stanford Hospital
Board and a Director of the National Fund for Medi
cal Education, the American Academy for Educa
tional Development and the American Enterprise
Institute.
James O'Brien departs from his day-to-day
duties with us with the knowledge that 'he is held
in the utmost admiration of his colleagues in the
Company. His wise counsel and contributions to
the deliberations of the Board of Directors will be
sorely missed.
224g
We, the Board of Directors, adopt this resolu
tion with'great pride and affection and convey to Jim
and Mary Louise our sincere and warmest best wishes
for long life, health and happiness.
CHAIRMA/OFTHE BOARD
SECRETARY
225
INDEX
Abercrombie & Fitch Company 88-91
Alioto, Joseph L. 44, 45
American Law Institute 183, 184
Anglo-Persian Oil Company 101, 102, 104, 110, 121, 128
antitrust law 41-46, 60, 86-88, 98, 100-125, 127-130, 135-137, 145,
147-150, 184, 194-202, 206, 211
Aramco (Arabian-American Oil Company) 79, 80, 87, 114-116, 118, 147,
151-159, 173-183, 193, 194
Armour & Company 51
Armstrong, Barbara 26
Bank of California 58
Bank of China 80
Barrett, Richard 25, 28
Bennett, Eugene 7, 38, 41, 45, 46, 51-55, 214
Bolander, Bob 84, 85
Boucke, Fred 128-130, 132-134, 139
Brawner 43, 46, 87, 217
British Petroleum (BP) 104, 106-108, 110, 115, 121, 122, 128-130, 133,
138-140, 153, 189
Brown, Albert 140, 141, 193
Brown, Art 161-163, 165
Brown, Hillyer 116, 140, 150a, 210
Butler, Vincent 17, 20, 21, 38, 39
Cahill, Gordon law firm 105, 109, 118, 180
Cahill, John 109, 180
California Packing Corporation 58, 59, 80, 82, 83
Caltex 99, 114, 115, 118, 123, 134, 153, 154, 156-158, 161-166, 174,
210
Capocelli, Renato 20, 59, 77
Chevron Corporation See Standard Oil Company of California
Clark, Tom 43-45
Clover, Mary Eudora Miller 90-95
Compagnie Francaise des Petroles (CPF) 101, 102, 122, 131-133, 136, 139
Coward Chance & Company 132, 138
Davidowitz case 51-54
Davies, Ralph K. 57, 108
Depression 23-25, 34, 51, 52, 149
Doppelt, Jerry 99, 105, 119
Draycott, Bill 16, 49
Drum, Frank 97, 98
226
El Portal Mining Company, 97-99
Emmerglick, Leonard, 107, 112
Equitable Life Assurance Society of the United States, 51-56
Exxon, 101, 102, 107, 128, 130, 142, 143
Federal Trade Commission, 95-97, 100-107
Follis, R. Gwin, 128, 129, 131-134, 137, 139, 156-158, 161-163, 165, 167,
193, 194, 202, 203
Follis Plan, 156-158
Fraser, Billy (Lord Strathalmund) , 131, 140
Fuller, Maurice D.L., Sr. , 38, 56-58
Fuller, W.P. & Co., 40-46, 60, 79, 86-217
Fuller ton, Hugh, 78, 79
gambling casino case, 169-172
Gill, Frances, 85
Goodman, Doris, 42-44
Groezinger, Lee, 80
Guernsey, Otis, 88, 89
Gulbenkian, C.S., 102, 153
Gulf Oil Company, 101-104, 108, 118, 130, 153
Habachy, Sabe, 177-180
Haven, Tom, 144, 192, 193, 208
Hawkins, Fred, 31, 32, 49
Hayes, Henry, 19, 41, 84
Hills, Edward H. , 169-172
Ibn Saud, King of Saudi Arabia, 151, 159, 182, 183, 193, 194
Ibnu Sotowo, 165, 169, 206
Ickes, Harold, 57, 115, 145, 152
Indonesia, ii, 106, 134, 160-169, 206, 220, 221
Infested Prunes Case, 46-48
international law, 147-150, 151-169, 173-187
Iran, 104, 108, 121, 122, 127-150, 192, 193
Iranian Consortium, vi, 127-150, 192, 193
Iraq, 102, 104, 152, 193
Jacoby, Neil, 104-107, 117-120, 199
Johnson-Gilbert, Tom, 132, 135, 138, 144
Kidd, Alexander M. , 27
Kirkham, Francis, iii, 105, 109, 158, 194-198, 200, 209, 210
Korte, Norbert, 46, 79
227
Lambert, Scott 76, 141, 157, 208
Lenzen, Ted 108, 128, 133, 134, 139, 158
Letcher, Bev 156-158
Levin, Gerald 20, 59
Libby, McNeil & Libby company 46, 47
Libyan Arbitration 184, 188-193
Madden, Stan 31, 32
Madison, Frank 34, 37, 38, 58
Madison, Marshall 17, 58, 59, 80, 97, 158, 169
Magana, Raoul 28, 29
Marshall, J. Howard 57, 58, 97
Marshall Plan 148, 152
McBaine, Turner 122, 128
McCloy, John 114, 201
McDonald, George 66, 67
Meyers, Mrs. Forrest 90
Miller, Dudley 80
Mobil Oil Company 101, 102, 116, 122, 130, 139, 144, 152-158, 160, 174
Mochtar 220
Mootness Study 104-107, 117-120, 199
Morse, David 186
Mossadegh, Mohammed 121, 122, 128
O'Brien, Alice L. 2-6
O'Brien, George August 3-6, 11
O'Brien, George F. 3, 5
O'Brien, Harry B. 3, 5
O'Brien, James E.
as intelligence officer 60-74
childhood in China 5-11
community service 216-221
early work at PM&S 15-22
family background 1-5
joining PM&S 30, 31
joining Socal 202
law school 24-29
school in Oakland 11-15
O'Brien, John 1, 3, 5
oil cartel case 100-126
Onassis, Aristotle 147, 159, 174, 175, 182, 191
Orrick, William H., Jr. 118, 119
Owen, Garry 20, 76, 79, 183
Parkhurst, George 132, 158, 185, 198
228
Parma, Lawrence 28, 29
Pillsbury, Madison & Sutro 15-22, 30-51, 75-86, 213-215, passim
Prince, Eugene 20, 38, 50-57, 59, 214
Pringle, Bud 84, 85
Red Line Agreement 102, 104, 108, 114, 116, 131, 145, 152, 153
roadman 31, 84, 85
Robbins, Lloyd 82, 83
Roche, Theodore 56
Romanov brothers 95
Rothert, Harlow 75
Royal Dutch/Shell Group 101, 102, 106, 107, 115, 122, 128, 130, 131,
133, 138-140, 153, 160, 185
Ruggles, Charles 33, 57-59, 77
Saudi Arabian Maritime Tankers Company (Satco) 175
Severance, Harold 144
Sheldon, Huntington 64
Smith, Felix 17, 19, 20, 30-32, 34-41, 45, 79, 83, 84, 103, 153, 154,
214
Sonnett, John 105, 109, 180
Southwestern Legal Foundation 178, 219, 220
Spurlock, Woodson 19, 79, 183
Standard Oil Company of New Jersey 62, 101, 103, 106, 115, 116, 118,
152-158, 160, 174, 194-197, 204, 205
See also Exxon
Standard Oil Company of California (Socal), later Chevron Corporation
36, 57, 58, 101, 107, 108, 114-116, 118, 122, 130, 153, 156,
160, 165, 174, 193-195, 198, 200, 202, 209
St. Sure, Adolph 42, 47
Stanton, Marcus 31, 32
Subandrio 164
Suharto 163-166, 168, 169
Sukarno ii, 160-164, 168, 220
Tahiya, Julius 161-163, 165, 168
Tanner, Al 36, 83, 84
Tapline 8, 115, 152, 154, 155
Taylor, Hugh 156-159, 201
Texaco 101, 102, 114-116, 118, 123, 130, 131, 136, 137, 141, 143, 151,
153, 154-156, 162, 165, 174, 185, 188
Tubbs Cordage 95-97
Webb Motor Company Case 56
Wells Fargo Express Company 3, 4, 6, 11, 12, 15, 81
229
World War II 60-74
Carole E. Hicke
B.A. , University of Iowa; economics
M.A. , San Francisco State University; U.S. history with emphasis on the
American West; thesis: "James Rolph, Mayor of San Francisco."
Interviewer/editor/writer, 1978-present , for business and law firm
histories, specializing in oral history techniques. Independently
employed.
Interviewer -editor, Regional Oral History Office, University of California,
Berkeley, 1985 to present, specializing in California legal, political, and
business histories.
Editor (1980-1985) newsletters of two professional historical associations:
Western Association of Women Historians and Coordinating Committee for
Women in the Historical Profession.
Visiting lecturer, San Francisco State University in U.S. history, history
of California, history of Hawaii, legal oral history.
128445
U.C.BERKELEY LIBRARIES