The CHAIRMAN. Although the bulk of your business is attached some place to the United States mainland?

Mr. TEITSWORTH. The bulk of it.

The CHAIRMAN. Yes.

Mr. TEITSWORTH. The bulk of the capital invested by Socony Oil Co. is in the United States.

The CHAIRMAN. The products involved and everything.

Mr. TEITSWORTH. But in this foreign dollar trade, that is largely the Caribbean, West Africa, and that type of thing. Our business in Europe rather largely is conducted in soft currencies and not dollars. The CHAIRMAN. I have another question, and maybe you can be helpful, I don't know. You will agree with me that it would be much more desirable and you would rather, if the circumstances were such, fly the American flag; would you not? There ought to be a little pride in it to begin with.

Mr. TEITSWORTH. Yes; we are American citizens and the corporation is an American citizen.

The CHAIRMAN. If the climate was right, the economic climate, you would rather fly the American flag, would you not, and even make a little sacrifice, if necessary?

Mr. TEITSWORTH. If the sacrifice weren't too great, we certainly would examine that very carefully.

The CHAIRMAN. Our whole problem is how we can figure out some means whereby we can do that. The drastic means is to allow no transfers at all.

Mr. TEITSWORTH. Yes.

The CHAIRMAN. That is the extreme end.

Mr. TEITSWORTH. Yes.

The CHAIRMAN. Then you would have to sharpen your pencil. Do you know of any other maritime country in the world that allows transfers?

Mr. TEITSWORTH. Yes.

The CHAIRMAN. Which country?

Mr. TEITSWORTH. The British. It has been the greatest maritime. nation.

The CHAIRMAN. How many British ships are under the Panamanian flag?

Mr. TEITSWORTH. Let me go ahead here and finish this now, Senator. The British are allowing some of the British oil companies to form Bermuda companies and enjoy this tax privilege.

The CHAIRMAN. They will never let them get out of the British Empire, I will tell you that.

Mr. TEITSWORTH. And, so far as other flag transfer is concerned, I think you will find the British are pretty reasonable about transferring out.

The CHAIRMAN. To a Bermuda company or a Canadian company or an Australian company, but at any time you get out of the British Empire, I think you will find there is no transfer. Now there may be. I would like to know and maybe we should put it in the record, any British ships that have been allowed to transfer Panamanian, or Liberian, or Nicaraguan. I would like to know the name of it. I think they would recall the Prime Minister if it was allowed.

97220-57- -3

Mr. TEITSWORTH. I think it would depend on the circumstances at the time.

you.

Mr. BROWN. We will be glad to check into that matter for The CHAIRMAN. I think you will find it is only the United States. that allows this broad privilege of transferring to another flag. They would chop your head off in Japan if you tried to transfer a Japanese ship. They would take you out and cut your head off if you tried it. Mr. TEITSWORTH. One thing about this Panamanian shipping business is the tax aspect of the thing, and the fact is that a nation such as Britain that is dependent on its shipping is now permitting the operations of these shipping companies in Bahama, or Bermuda, where they are immune from the British income tax. And we have to meet that kind of competition, Senator.

The CHAIRMAN. The fact is that most of these maritime countries subsidize their shipping much more than we do, taxwise, constructionwise-take Italy, for instance. Constructionwise, it subsidizes its shipping. Holland; Germany. And there is no Norwegian ship plying the seas that doesn't fly the Norwegian flag, I will guarantee you that.

Mr. TEITSWORTH. But the point is that we have to compete with these foreign oil companies and others who are operating under those circumstances and with those low costs. That is the point.

The CHAIRMAN. That is our problem here. That is what we are trying to get at.

Senator BUTLER. What is that cost differential; a third to a half? The CHAIRMAN. Per ship and per annum and per day, here it is right here in the prepared statement.

Mr. TEITSWORTH. I think that is fairly representative.

The CHAIRMAN. Do you have some questions, Mr. Luckey?
Mr. LUCKEY. Yes, sir.

The CHAIRMAN. I would say the witnesses here have been very frank about their problem, and that is what we are trying to get at, and see if we can do something. I don't like to keep repeating this, but I think we would all like to have a situation where we could have American ships flying the American flag, with American crews.

Mr. TEITSWORTH. We certainly all want a first-class American tanker fleet. That is a very important thing.

The CHAIRMAN. And we need it for not only peace, but for war. Mr. TEITSWORTH. For any emergency.

The CHAIRMAN. The Suez pinpointed this thing, how dependent we are upon our own American merchant marine. You know this, and all of us in this room know it: In World War II we couldn't depend upon anybody else for our maritime need. We not only had to furnish our complete maritime need, but we had to furnish the maritime need of other countries.

Mr. TEITSWORTH. That was an abnormal situation.

The CHAIRMAN. It could come again.

Mr. TEITSWORTH. The problem involved there, then, is to what extent is private enterprise entitled to increase capital in lay-up and standby facilities to insure against political upheaval. That is a difficult thing for a private corporation.

The CHAIRMAN. But we would be much better off if we had our own American-flag fleet; you will agree with me on that?

Mr. TEITSWORTH. I agree the American-flag fleet should be as large as it is consistent with our national interests.

The CHAIRMAN. And keep our own seamen employed, instead of Indians.

Mr. TEITSWORTH. We haven't laid off any seamen, here, and I hope I have made the record amply clear.

The CHAIRMAN. But as you grow you are not employing any more American seamen but are picking up Indians.

Mr. TEITSWORTH. As we grow in our United States operations we build pipelines and other things, but, at the same time, I think our record will show that we have kept a stable manning force on our ships.

The CHAIRMAN. You haven't decreased your American employment but you have been getting bigger all the time.

Mr. TEITSWORTH. But we have been getting bigger much faster in our foreign operations than in our domestic operations.

The CHAIRMAN. Let me ask this as a matter of information: Do you trade out before you get delivery of a new ship, or at the time you deliver?

Mr. TEITSWORTH. I pointed out earlier that we do not propose to transfer out any ships until the new ships are in being and in operation. The CHAIRMAN. Sometimes they trade out, after the construction contract is signed.

Mr. TEITSWORTH. We as a company do not have an ample surplus of shipping to be able to do such a thing as that.

The CHAIRMAN. At least I want to compliment you on that. You don't trade out until you get the other one.

Mr. TEITSWORTH. Thank you.

The CHAIRMAN. Go ahead, Mr. Luckey.

Mr. LUCKEY. Mr. Teitsworth, I would just like to develop a few things for the record to augment what the Senator has brought out. With regard to your statement and your listing of the vessels, in 1950 you testified before a committee of Congress that Socony at that time had 32 vessels under the foreign flag, and today the figures indicate that you have 29; is that correct?

Mr. TEITSWORTH. I am not entirely familiar with the testimony to which you refer, but perhaps that related to our entire world fleet operation.

Mr. LUCKEY. Yes, sir; it did.

Mr. TEITSWORTH. This testimony today, as I understood it, was limited to our dollar fleet operations.

Mr. LUCKEY. That is right.

Mr. TEITSWORTH. Now, I believe we have some figures on our worldwide operations here. Would you like some figures comparable to

that!

Mr. LUCKEY. What I was interested in mainly was the number of ships that you have under foreign operation today, and which Socony either owns or is a majority stockholder, or is a 50-percent stockholder.

The CHAIRMAN. I might say here, we will leave the record open so that you can change any figures.

Mr. TEITSWORTH. I have here the annual report. At the end of 1956, our foreign deep-sea fleet comprised 16 owned tankers, 311,000

deadweight tons, and 53 long-term charter vessels totaling 1,062,000 deadweight tons. Those figures do not include ships that might be calculated from our half interest in the Standard Vacuum Oil Co. Mr. LUCKEY. Which are nine ships?

Mr. TEITSWORTH. In Standard Vacuum?

Mr. LUCKEY. Yes.

Mr. TEITSWORTH. Standard Vacuum at December 31 owned 24 vessels, of 342,000 deadweight tons, and 39 under period charter totaling 656,000 deadweight tons. So Standard Vacuum as you can see has a sizable fleet of its own.

Mr. LUCKEY. In that same period it was testified-June 1, 1949— that you owned 21 tankers under the American flag, of 342,493 deadweight tons. Today, according to your statement, you own 15 tankers under the American flag and plan to trade out 5; is that correct? Mr. TEITSWORTH. Yes.

Mr. LUCKEY. In consideration of new construction?

Mr. TEITSWORTH. Yes.

Mr. LUCKEY. And you are building three.

Mr. TEITSWORTH. Just how the tonnages compare, I think your statement does not bring that out, but this written statement will allow you to calculate the relative tonnages.

I think, too, you will have to bring into consideration, in addition to the owned ships, those ships that were bareboat chartered and that may have varied one way or the other in this period.

Mr. LUCKEY. I was going to get to that. In 1949 you had 21 tankers, and after you trade out your 5 and get your 3 built here, you will have an American-flag fleet of 13, which will be a decrease of 7 ships. Now, does that include any ships under bareboat charter?

Mr. TEITSWORTH. I believe the tonnage may be greater and the speed greater, so the effective transportation is increasing although not at a rapid rate.

Mr. LUCKEY. Now the three ships that you have bareboat chartered by Socony-Mill Spring, Mobil Gas, and Perryville-from whom are they chartered; American operators?

Mr. TEITSWORTH. Yes; it is an American firm.

Mr. LUCKEY. You are a director and vice president of Socony and in charge of the marine transportation department. Now, are you a director or officer of Mobil Tankers, the Panamanian corporation? Mr. TEITSWORTH. No; I am not.

Mr. LUCKEY. What relationship do you have, if any, with Mobile Tankers?

Mr. TEITSWORTH. I shouldn't say that I personally have any direct contact. Our marine transportation department has a general manager and an assistant general manager, Mr. Steyn, who is here with me today. It is their job to handle the administrative part of these operations. This marine transportation is just one part of my portfolio as a director in charge of supply and distribution for the Socony Mobil Oil Co.

Mr. LUCKEY. Mr. Steyn works for you, but what control or influence does he have over the Panama subsidiary of Mobil Tankers?

Mr. TEITSWORTH. Would you like to ask the question of Mr. Steyn? Mr. LUCKEY. Yes, I will direct the question to Mr. Steyn.

Mr. STEYN. I believe our effective control is through the 100 percent stock ownership.

Mr. LUCKEY. I refer to the basic business arrangements-the dayto-day operations that you have with Mobil Tankers. Is your only contact with Mobil Tankers once a year at the board of directors meeting?

Mr. STEYN. No. In other words, they provide us with a certain amount of our transportation requirements. Our department is in daily contact with them on furnishing us with those requirements and working out schedules with them, the employment of the ships, and so forth, to fit in all together.

Mr. TEITSWORTH. And that is done generally through this parent marine transportation company to see that the supplies get to the right place at the right time.

Mr. LUCKEY. Your contact with them is one of hiring another company to pick up and deliver your product?

Mr. TEITSWORTH. That is correct.

Mr. LUCKEY. And you have no voice in the way that company, Mobil Tankers, is run?

Mr. TEITSWORTH. I think maybe I could answer that one better than Mr. Steyn by saying that Mr. Steyn and his department do not interfere with the day-to-day operation of the Mobil Tankers Co. They have their own administrative staff and conduct a day-to-day busi

ness.

Mr. Steyn does, however, have personnel which transposes the company's need for oil in the various consuming areas into tanker quantities and he refers that to Mobil Tankers or our other transportation companies.

The CHAIRMAN. In your foreign operation, were you a part of the so-called agreement for the oil lift after the Suez closed? Were you one of the companies involved in that?

Mr. TEITSWORTH. Do you mean the MEEC?

The CHAIRMAN. Yes.

Mr. TEITSWORTH. Yes.

The CHAIRMAN. Were those tankers assigned to different places because of the Suez thing?

Mr. TEITSWORTH. I never attended a meeting of the MEEC, but I do not believe that the MEEC in its operations did any directing of the disposition of anybody's tankers.

The CHAIRMAN. Did the State Department interfere in any way with the movements of those ships?

Mr. TEITSWORTH. No, sir.

The CHAIRMAN. As far as you know, they did not?

Mr. TEITSWORTH. As far as I know, they did not.

Mr. LUCKEY. To get back to the other question, Mr. Teitsworth, does anybody with Socony Mobil have any influence or direction in the day-to-day operation of Mobil Tankers? In other words, does anyone on Socony, other than by electing a board of directors, affect a policy for Mobil Tankers?

Mr. TEITSWORTH. By policy, do you mean shipbuilding program, capital commitments, and that kind of thing?

Mr. LUCKEY. Anything for the company at all.

The CHAIRMAN. Day-to-day operation, I think he refers to.

Mr. TEITSWORTH. As far as day-to-day operations are concerned,

Mobil Tankers is equipped to take care of its needs. So far as fitting