Because there was no PG when *Oliver!* was released. As per the [Wikipedia article](https://en.wikipedia.org/wiki/Motion_Picture_Association_of_America_film_rating_system#From_M_to_GP_to_PG):

> The ratings used from 1968 to 1970 were:[8][9]

>Rated G: Suggested for General Audiences

>Rated M: Suggested for Mature Audiences – parental discretion advised

>Rated R: Restricted – persons under 16 not admitted, unless accompanied by parent or adult guardian.

>Rated X: Persons Under 16 Not Admitted

While the film might be on the stronger side of a G, it probably wasn't harsh enough to warrant an M rating.