Mr. LUCKEY. There has been no increase in the Mobil Tanker rates to the parent. Mr. TEITSWORTH. I wouldn't say that. There has been a relative minor increase. None of these 200 percent or anything of that kind. Mr. LUCKEY. What would relatively minor be? Mr. TEITSWORTH. Well The CHAIRMAN. 15 cents a barrel, or 10? Mr. TEITSWORTH. Yes, possibly, in that order. Mr. LUCKEY. Does the Mobil Tankers pay competitive charges for bunker fuel or are they given a special price by the parent company? Mr. TEITSWORTH. No, they are given a special price. All of our billing transactions were within our company-we aim to make those at open market prices, or on the basis-very nearly open market prices. There might be some slight discounts in certain instances. Mr. LUCKEY. I would like to ask you a few questions about construction, if I may, on these other tankers, going away from operations for a minute. Your company is building in an American yard. Do they inquire. whether or not the Maritime Administration or the Navy desire to install defense features on your unsubsidized building? Mr. TEITSWORTH. So far as I know, the question of national defense features has not been raised with us. If it had been, I am quite sure I would have heard of it. The CHAIRMAN. And if they came to you and suggested some things, and they would pay for it, you would cooperate? Mr. TEITSWORTH. We definitely would cooperate, in the national interest; yes. Mr. LUCKEY. Would the installation of such features upon any of your vessels prohibit their foreign transfer in the future? Mr. TEITSWORTH. I don't know just what kind of installations you have in mind. Mr. LUCKEY. For example, speed, increased speed. Mr. TEITSWORTH. Well, increased speed. You wouldn't think-I would think that a fast ship of that kind would be more in the national interest to keep under United States flag. So I don't know that we would be very intelligent in asking for a flag transfer on a fast ship. Mr. LUCKEY. Well, at the time all of them are built they are fast ships and are kept under the United States flag. It is just laterMr. TEITSWORTH. Yes, but the tankers that we are building and having built for us here they are listed in our written reply-are faster ships than the ships that they are replacing, at least 2 knots. But that doesn't conform with any national defense dequirement of the Navy. Mr. LUCKEY. Yes, sir. Mr. TEITSWORTH. As a matter of fact, I am not familiar with what those requirements are. Mr. LUCKEY. You mentioned earlier this morning that the money is brought into the United States from Mobil Tankers to build in the United States shipyards. Now Mobil Tankers or Socony do not have to pay any income tax on that money; is that correct? Mr. TEITSWORTH. That is right, unless it has been declared out from Mobil Tankers to Socony as dividends. Mr. LUCKEY. You also mentioned this morning that you are borrowing money to continue your construction program. Mr. TEITSWORTH. That is right. Mr. LUCKEY. Were you referring to Mobil Tankers or to Socony? Mr. TEITSWORTH. I am referring to the overall tanker construction program of the company, worldwide program. This discussion we have had here today of our dollar fleet is only one part of that thing. Mr. LUCKEY. Well, are you saying, then, that Mobil Tankers is also borrowing money? Mr. TEITSWORTH. Mobil Tankers will need money to help finance. some of that other building; yes. Mr. LUCKEY. Now, with regard to building in United States shipyards, have you had any trouble in regard to space, your space reservation, to build? Mr. TEITSWORTH. As to deliveries? Mr. LUCKEY. No, sir; as to build-to get space in the shipyard. Mr. TEITSWORTH. I assume what you refer to is delivery date. Mr. LUCKEY. Well Mr. TEITSWORTH. Because if you wait long enough you can always get space. We find these latest ships that we have ordered, within the last couple of months Mr. LUCKEY. Well Mr. TEITSWORTH. Delivery is late in Mr. STEYN. 1959. Mr. TEITSWORTH. Is in 1959. I think one of them later in 1959, isn't it? Mr. STEYN. Yes. Actually, that was in keeping with our program. Mr. TEITSWORTH. Well, it was in line with our program. But had we wanted an earlier delivery, I don't think it wasn't available to us at the time. Mr. LUCKEY. For example, here is what I am getting at. If you go to a shipyard to effect a construction contract and find they do not have any space available, that the space starting in December through next February is allocated to company X. Mr. TEITSWORTH. Yes. Mr. LUCKEY. Have you come across any instances where company X might make that space available to you for a fee, in other words, sell you that space now? Mr. TEITSWORTH. Yes, we have had that kind of offer. We have not accepted any. We have had one or two such offers to my knowledge, but we have not accepted them. Mr. LUCKEY. Would you mind telling who you received those offers from? Mr. TEITSWORTH. It was a foreign interest, taking a position in a United States yard. Mr. LUCKEY. A foreign interest? Mr. TEITSWORTH. Yes. Mr. LUCKEY. Could you supply that name for the record later on? (Mr. Teitsworth confers with Mr. Brown.) Mr. STEYN. I don't have it. Mr. TEITSWORTH. Yes, I believe we could advise you on that. 97220-57-4 The CHAIRMAN. Well, if you don't Mr. TEITSWORTH. I don't know that we have any written documentation on it, though. Mr. LUCKEY. Yes, I understand. The CHAIRMAN. If you don't want to, why it is all right. Mr. TEITSWORTH. I would prefer not to. The CHAIRMAN. But there has been a practice of offering space, available ways in yards, that somebody else has tied up. Mr. TEITSWORTH. I know of one instance. Mr. LUCKEY. You haven't offered to sell any that you had, have you? Mr. TEITSWORTH. No. [Laughter.] The CHAIRMAN. They are looking. Mr. TEITSWORTH. We are still struggling with early delivery problems on ships. The CHAIRMAN. They are the buyers. Mr. LUCKEY. Mr. Teitsworth, you mentioned that you self-insured. Mr. TEITSWORTH. Yes. Mr. LUCKEY. As is Socony Mobil. Mr. TEITSWORTH. Yes. Mr. LUCKEY. In the event that one of your Panamanian-flag tankers came into this country and into one of our harbors and exploded, some type of catastrophe Mr. TEITSWORTH. Yes. Mr. LUCKEY. Whereby American seamen and American citizens were injured and American property destroyed Mr. TEITSWORTH. Yes. Mr. LUCKEY. How would the Americans go about getting damages or getting control of you people for damages, to sue for damages? What protection would they have? Mr. BROWN. I think that is more or less a matter of law with which Mr. Teitsworth isn't generally familiar. That involves a question, as you know, of liability and so forth. Mr. LUCKY. Yes. Mr. TEITSWORTH. That is a legal question. Mr. BROWN. And would involve such questions as the possible marshaling of your assets, limitation of liability, and that sort of thing. I think that probably the law would speak for itself on that point. He is not an expert on the law here. The CHAIRMAN. Well, I would sue the Socony Vacuum on the ground they owned the Panamanian company. Mr. TEITSWORTH. You would probably find we are responsible. The CHAIRMAN. And your lawyers would move to strike the complaint because you are a foreign country and we would have an argument about it. Mr. BROWN. Well, Senator, we are very cognizant of public rela tions. The CHAIRMAN. They would keep it in courts for years. Mr. TEITSWORTH. I think you would find that we are cognizant of public relations and where we feel like we should be responsible for our just debts we would be. Mr. LUCKEY. Well, would Socony feel that Mobil Tankers' disaster is a just debt of Socony? Mr. TEITSWORTH. Of course, that I assume so many different aspects. You can't assume any one given set of circumstances. The CHAIRMAN. You would go to their lawyers and get their advice and they would tell you. Mr. TEITSWORTH. Whether or not we were liable or not, morally or legally liable for it. The CHAIRMAN. Yes. Mr. LUCKEY. Morally but not legally, is that what you said? Mr. LUCKEY. How are you legally liable? Mr. TEITSWORTH. That would be determined on the facts and circumstances of the individual case. Mr. LUCKEY. Well, if the facts were that a Panamanian ship came into an American harbor and blew up right next to the dock and killed all the people on the dock and sailors working on the ship. Mr. TEITSWORTH. I don't know that necessarily we can certainly submit some sort of assumptions on different fact situations. You have all sorts of maritime disasters which involve different types and different kinds of liability. You had one kind of liability in the Texas City disaster when the ship blew up there. You had other liabilities over in the harbor of France. You still have others in other maritime disasters. I don't think that we could assume unless we had a complete set of facts and circumstances any answer, any definite answer to what you are asking at this time. But if the committee is interested in that sort of thing, why if we could have a definite fact situation submitted to us, we would be glad to advise you on it. Mr. LUCKEY. Let me ask you a theoretical question, Mr. Brown, and I am not referring to your company whatsoever. Would it not be possible in the case of Panamanian corporation when this disaster occurred, to have the Panamanian corporation declare whatever dividends they are holding or whatever surplus they are holding into dividend with the parent company and then form a new Panamanian corporation and have the parent company purchase the stock of the new Panamanian corporation? Mr. BROWN. You mean to evade any liability there? Mr. LUCKEY. Yes. Mr. BROWN. By subterfuge? Mr. LUCKEY. Yes. Mr. BROWN. I rather feel that the law-under the principles of law as I understand them, with those facts and circumstances given, I think you could probably follow the assets. Mr. TEITSWORTH. And I should like to add unconditionally that we don't conduct our business in that fashion. Mr. LUCKEY. No. I said I wasn't referring to your corporation whatsoever, sir. The CHAIRMAN. Well, there have been some people that have. We have had some trouble along that line. Senator PASTORE. That isn't essentially why you have a subsidiary, to avoid tort liability. Why do you really have a subsidiary? Is it because you are under a foreign flag? Must you have a foreign corporation? Mr. TEITSWORTH. Yes, that is what we feel. I have a little summa-tion of that thing here that I would like to read, as to what I havebeen trying to say this morning. The CHAIRMAN. Why don't you answer the Senator from RhodeIsland by reading it? Mr. TEITSWORTH. I should like to very much, Senator. Senator PASTORE. Have you read it before? Mr. TEITSWORTH. I have not. The CHAIRMAN. All right. Mr. TEITSWORTH. I would like to say that Socony Mobil, and I havetried to say this morning that Socony Mobil is an American company doing business on a worldwide basis. In order to do so, we must meet competition as we find it. The policy of the United States Government as we have understood. it for many years has been to encourage and promote foreign trade by American business enterprise. Our foreign operations are consistent with these objectives and wefeel they are definitely in the national interest. That really essentially is what I have been trying to say. Senator PASTORE. That is the question I was going to ask you, sir,. looking at your own paper here on page 4. You said, "To be competitive we must have low cost transportation." That is understandable. "Accordingly it is necessary for us to construct and operate tankers under the foreign flag where foreign trade is involved." Mr. TEITSWORTH. Yes, sir. Senator PASTORE. Now, for the purposes of the record and for my own personal illumination and edification, what kind of competition. are we talking about? Competition against whom and with whom? Mr. TEITSWORTH. We are talking about oil company competition. Senator PASTORE. What oil companies? Mr. TEITSWORTH. Primarily Senator PASTORE. You mean American oil companies or foreign? Mr. TEITSWORTH. American, British, Belgium, French. Senator PASTORE. Selling their oil to whom? To America? Mr. TEITSWORTH. Selling their oil in the markets in which we operate. Senator PASTORE. And what are those markets? Mr. TEITSWORTH. Worldwide markets. Senator PASTORE. Including America? Mr. TEITSWORTH. Including the United States; yes. Senator PASTORE. Now, why do you have to have a foreign ship. under a foreign flag to be competitive in the United States? You mean against the foreign company selling oil to Americans? on. Mr. TEITSWORTH. That is right. There is quite a bit of that going Senator PASTORE. Is it quite sizable, that volume of business? Mr. TEITSWORTH. It isn't really substantial, no, in the sum total of the American oil business. It is a small element. But primarily what we are talking about here is not our domestic business, SenatorSenator PASTORE. Will you say that again, please? Mr. TEITSWORTH. Primarily what we are talking about here are ships to serve our foreign business, not our domestic business. Senator PASTORE. Well, that is what I was getting at. I mean I hope that this isn't competition among American companies to do |