Ibn Saud kingdom was heavy in debt. Exchanging resources for credit seemed unfeasible because the outside world viewed Arabia as having few economic resources and of a nature that little could be developed. Yet, over the next few decades’ Saudi importance would increase both politically and economically. Ibn Saud’s religious and military conquests had the affect of increasing his prestige making the most powerful unifying figurehead in Arab since the Mohammad.
In 1931, the states of Saud’s financial security weakened to a point, he might not be able to maintain his realm. Revenue was shrinking. WWII symbolized a world crisis and its reach affect both India and the Far East, a source of pilgrimage revenue; between 1930-1933, pilgrimages decreased from 100,000 to 20,000.
Charles Crane held the prestigious position of Chief Muezzin of the Kabba. Crane would not convert too Islam when Saud made the invitation because of his Christian commitment. Crane hired Karl Twitchell for $75k a year and arranged to have him sent to Yemen to build a road and a bridge. Saud desperately needed water works which Twitchell expertise was valued. Saud provided protection against the Ikhwan, the most radical Islamic group.
In 1932, Standard Oil struck oil in Bahrein, at 2,000 feet. The “Empty Quarter” covered 250,000 square miles from the South East Arabia and included lesser portions of Yemen, Oman, and United Arab Emirates.
A secret combination prevailed in the bidding for the Hasa providence. Karl Twitchell represented SOCAL in the bid for Hasa providence. The British sent Andrew Ryan, the British minister of Jidda. Ryan wanted oil positions in the Arabian Peninsula. In 1932, Saudi was still a protectorate of the British Empire. Ryan hedge heavily on the believe Ibn Saud shared Anti-Imperialistic inhibitions towards the United States which proved to be false. Big oil acted independent of US political influence but the acquisition of Hasa providence would be a turning point, intertwining big oil with the US treasurer and the foreign policy makers. Initially the State Department would make no promises of intervention for SOCAL if disorder should breakout. The State Department response would depend on “the character and growth of American interest in the Arabian Kingdom”. Hamilton join up with Twitchell representing SOCAL and his offer included a substantial load to the Saudi government, a down payment of $250k in gold, and SOCAL advisory position for John Philby and a salary of $1,000 a month and $25K, if commercial oil was found. Philby accepted double crossing Ryan; Ryan did not know Philby was an advisory agent of SOCAL; Ryan was pushing for knighthood for Philby to bring him into the inner circle; the information remained concealed and Philby continued to operate as a SOCAL retainer.
Big oil could have confidence in the word and covenant of Ibn Saud and confidence in his reliability.
British, Major Frank Holmes appeared on the scene wanting the territory to be divided into triple strips designed to give each big company a district. This idea sponsored the belief that Saudi needed all the big oil companies. Holmes proposal included no provision for money deposits.
In 1933, President Roosevelt prohibited the export of Gold from the US. SOCAL was in a crisis to make the gold payment to Ibn Saud and the payment would have to be in paper currency. SOCAL offered loans totaling L50,0000 and yearly rentals of L5,000, a royalty of 4 shillings per ton of oil, the free supply of gasoline and kerosene once the oil was found, immediate start of exploration, construction of refineries once the oil was discovered. The US Treasury authorized $170,327.50 in gold and Hamilton negotiated L35,000 in Gold purchase bought on the London market to be delivered too Saudi Arabia. SOCAL gained the following rights to “explore, prospect, drill for, extract, treat, manufacture, transport, deal with, carry away and export petroleum, asphalt, naphtha, natural greases, Ozo Kerite, and other hydrocarbons.” SOCAL did not have the right interfere with administration, politics, nor religious affairs in Saudi.