Charles L. Harding of the Socony-Vacuum Oil company, in speaking of the nationalization of Iranian oil, says: “We must all agree that if sovereign governments are going to abrogate contracts unilaterly [sic] whenever it suits their purpose, there will be no basis for international commercial relations. Faith in some spoken or written contracts is a prerequisite to every business deal. International business is no different.”

That statement is proverbial. We presume no person in the world would say it is not right. But Mr. Harding reaches controversial ground when he continues: “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.”

We take it the gentleman means by that latter statement that anytime an American company or an American individual makes an agreement with a foreign government, this country should automatically see to it the other country carries out the contract. That could lead to complications and maybe war with any nation in the world.

There can be some justification in one nation’s compelling another nation to carry out a contract made between the two, but to say a nation is under obligation to enforce contracts made by citizens without the authorization and approval of the government could create endless confusion.

As a matter of fact there is no more obligation, as we see it, for a government to carry out a contract with the people of another nation than with its own people. This country has repeatedly abrogated contracts made with Indians and with all the people. One illustration will suffice. Gold certificates were issued on the strict promise any person could take those certificates to the government and get gold, but the government abrogated that contract. Much of the world’s business is still unilateral.