The explosive Iranian oil situation has received a great deal of attention in the world press. All sides of the controversy have been aired, including the Iranian claim that she was getting the short end of the stick and socialization of the British-owned oil company was the only solution.

This attitude evades the most important issue. In 1933, the Iranian government freely entered into an agreement with the oil company which said unequivocally that the terms then established should not be altered by either administrative measures or executive authority for the time of the contract, which was to be 80 years. [60 years, until 1993] Therefore, the present issue is not whether a government has the right to nationalize enterprise or not. It is whether a government’s solemn word is good.

As Charles L. Harding, of the Socony-Vacuum Oil Company, said in a comprehensive discussion of the Iranian situation-and its historical background, “We must all agree that if sovereign governments are going to abrogate contracts unilaterally whenever it suits their purpose, there will be no basis for international commercial relationships . . . Faith in some spoken or written contract is a prerequisite to every business deal. International business is no different . . .

“Recognition of property rights and the sanctity of contracts is essential. Wherever there is an attempt to violate these principles, then we, as a country, should make it known that we expect any nation to discharge contractual obligations freely made.”

There is the real issue. It is a direct question of economic and political morality—and of the honor and principle of nations. The goal of world cooperation for the benefit of peoples will be forever unattainable if governments cynically violate their word at will.

[Nationalization is perfectly legal, providing compensation is paid, as the British did domestically.]