Mr. GILES. We limit it to the gulf-you say now you are not in a position to state definitely whether or not you could use this ship out of the gulf in the first half of March?

What I am driving at is when would you be in position to make that judgment?

Now, if Mr. Oberschall gave you an option on his ship to February 20, could you accept that?

I asked this question, stating at the same time, that I recognize it is outside the terms of the tender and, on that basis, under our stated procedure you are justified and have a valid reason-I won't say justified-I will say you have a valid reason for not accepting it. We are interested in working these matters out on the merits so far as we can. You have the option arrangement provision in your tender in order to meet the requirements of our whole shipping schedule in handling this large amount. If Mr. Oberschall will say, "I will give you an option on my vessel until February 20 and then you let me know at that time whether you can or cannot use it out of the gulf during the first half of March," would you agree to that?

Mr. STOVALL. I believe we could, but I would like to understand it fully. This is at his option, February 20. If we declared it was not workable out of the gulf at that date, it would be his option to cancel ?

Mr. GILES. That is right. And I also want the understanding on Continental's part that you would use that ship out of the gulf-let's forget the differential in weights-but if you could reasonably use the ship-we have a fairly good check on that because we would be able to know and would know what foreign charters are arranged out of the gulf for that period and so on. What I am saying really is, would you consider giving the maximum advantage in time to make this decision, would you consider taking the option from Mr. Oberschall as of February 20 if he gave it to you?

Mr. STOVALL. I would say yes, but I would like to state with this option it would leave us in somewhat of a tenable position if on February 20 we could not arrange gulf and Mr. Oberschall should decide to cancel out, then we are faced with finding rather prompt tonnage as replacement.

Mr. GILES. No, he could not cancel out if he gave you his option through that date.

Mr. STOVALL. But if on February 20, we declare USNH as the loading area and he decided that he would withdraw from the business at that time, it would leave us in the position of trying to cover for the first half of March. If the foreign market should rise it could mean a loss to Continental and conversely, if the market depreciated

Chairman GILES. I understand, so would you drop that back to February 15? That would give you more of an opportunity timewise in case you could not work it out. Would you consider a firm option from Mr. Oberschall good to February 15?

STATEMENT OF VICTOR OBERSCHALL, JR.-Resumed

Mr. OBERSCHALL. May I say something?

Mr. GILES. Yes.

Mr. OBERSCHALL. I could never give him an option like that anyway, so what Mr. Stovall-we are wasting time.

Mr. GILES. Thank you. I was under the impression there was some area where you might get together. Let me ask, is there any number of days-well, the 15th is not far off. Let me ask you this way: you would need to settle this here today or tomorrow?

Mr. OBERSCHALL. I pretty much would have to have it, yes.

Mr. GILES. I understand the situation, I think.

Mr. OBERSCHALL. Frankly, there is a possibility of chartering to India today from the same position, from the gulf only, and any delay in this would work to the shipowners disadvantage.

Mr. GILES. Well, I have gone into this because I wanted to try to consider the substance of the case aside from the mere technicality of the action, but as I understand it you really are not in a position to give any leeway here to Continental on this time.

It does seem that way to me, again forgetting the precise language of the tender and considering the substance of Continental's position, it does seem to me I could not waive not only the wording of the tender which in and of itself has its value and should be respected by both parties, I think, but on the merits of it, I could really ask or urge Continental to make a judgment here today or tomorrow on this.

So, on the basis of what I have heard, I would indicate my conclusion at this point and it is a tentative conclusion subject to our further checking out and going over it all either this afternoon or in the morning. I would indicate my conclusion that I believe your offer not being in compliance with the tender was rejected by Continental with appropriate cause.

Now, that is my tentative conclusion at this point and I appreciate very much your being here and the very frank statements you have made as to your position. It has been very helpful.

Would you like to say anything else at this point?
Mr. OBERSCHALL. No, thank you, sir.

Mr. GILES. Thank you very much, Mr. Oberschall.

Before we take up the next specific case, ladies and gentlemen, I would like to indicate we are not going to complete all matters before lunch and I would like to suggest that we will adjourn at 1:15 and return at 2 unless I hear strenuous objection. We have a cafeteria on the third floor just beneath us and I am suggesting that if we could do it, it would be helpful. If there is a feeling among the parties, or the group, against it, then we will have the full hour.

I see some heads shaking affirmatively on the hour. All right, we will adjourn at 1 and return promptly at 2. I would like to urge the shipowners involved in these specific matters to be here as well as the Continental.

We will go as far on Marine as we can. I understand Mr. Dowd is here now.

I want to announce what I think are now our totals that I was fumbling with awhile ago. We didn't have them added up as to the ships now in issue. That totaled 165,000 tons. For a grand total added to those definitely chartered it gave us a figure of 476,900 tons. We have referred generally to this tonnage. In metric tons, that is 1,500,000 tons. As you know, when we get down to business in charters, we deal in long tons and the Continental for an equivalent

of 988,000 long tons, one-half of that is 494,000; 494,000 is 50 percent and that is what we would endeavor to get American-flag shipping for if it is available. As of right now, not having made a final decision on Mr. Oberschall's case, I will announce to you that to the best of our knowledge and according to our records, in any event 17,100 tons cannot be in issue-17,100, I get that by subtracting 476,900 from 494,000 and those figures are in long tons.

Mr. Dowd, would you please come forward?

I appreciate your coming down on relatively short notice, Mr. Dowd.

STATEMENT OF HENRY R. DOWD, VICE PRESIDENT, MARINE CARRIERS CORP., ON BEHALF OF OCEANIC PETROLEUM CARRIERS, INC.

Mr. Dowd. My name is Henry R. Dowd.

Mr. GILES. Mr. Dowd represents Oceanic Petroleum Carriers, Inc., which has offered the Elemir, a T-2 tanker for the amount of 10,700 tons, and the Marine, a T-2 tanker, owned by U.S. Shipping Corp. Both of those vessels were rejected by Continental Grain Co.

Mr. Dowd, thank you for coming, and will you just go right ahead and state the facts of your offer as you know it and any conclusion you may have for us.

Mr. Down. I apologize for not being here at the original call, but the plane was delayed by fog.

The Elemir, A T-2 tanker, was offered to list a cargo of 16,000 tons, 5 percent, from the U.S. North Pacific to Nakhadka, a Siberian port. At the preliminary negotiations as to terms and conditions, with McLoskey & Co., acting on behalf of Continental Grain Co., we agreed on terms and conditions and then we were advised that the receivers, the U.S.S.R., were not agreeable to accepting tankers into port. This was approximately on January 28. We have the original communications.

We then with that ship tried to secure other business as a ship is due on the west coast in 10 days. Again yesterday we offered it to Continental on the terms of the Maritime Administration. They again informed us the ship could not be accepted, because the receiver, U.S.S.R., was unwilling to use tankers in a North Pacific port.

At the present time, the ship is without employment and heading for the west coast.

Mr. GILES. Mr. Dowd, may I ask just one question before we hear from Continental?

Could either one of these ships get in position on the east coast or the gulf?

Mr. Down. Elemir is for loading on the west coast and to arrive on the east coast would be a substantial loss, it would be catastrophic. The Marine is loading on the U.S. gulf.

Mr. GILES. Excuse me. I was thinking both were from the west coast. The Marine is from the gulf?

Now, you have explained your offer there on the Elemir. Would you explain your offer on the Marine?

Mr. Down. The T-2 flag Marine was offered for a cargo from the U.S. gulf only loading March 10 to 25.

After negotiations with the Continental, we agreed on the basic terms and were informed that the ship could not be chartered because their commitments for these days were filled and they could not use additional tonnage. This was approximately January 31.

Again yesterday we offered the vessels and were informed this vessel could not be used because it was not in accordance with the terms of the Maritime Administration tender.

Mr. GILES. Thank you, Mr. Dowd.

We will now hear from Continental.

First, Mr. Stovall, let us hear what you have to say on the Elemir. Mr. STOVALL. On the Elemir-Mr. Dowd's original offer, I believe, was made against our first tender of January 8. The offer was made without vacuvators-a tanker on the west coast without vacuvators, with, I believe, also the stipulation that vacuvators were not available for the ship.

Mr. GILES. If we could, I would rather focus on the last offer. I was speaking of an offer made during the last 5 days?

Mr. Dowd. Yes, sir.

Mr. GILES. I am not saying it is not relevant to the total overall consideration but at least first I would like to refer or restrict this to the offer now before us.

Mr. STOVALL. The vessel is unworkable at Nakhadka inasmuch as our contract prohibits the use of tankers for this port. It is physically impossible-it is outside the contract terms and, if we should charter a tanker for this port we would be in breach of our contract. Mr. GILES. Why is it impossible?

Mr. STOVALL. The buyers state it is impossible because the facilities are not suitable to accommodate a tanker. They have excluded and will not allow the utilization of a tanker. Even though tanker was not allowed in the original contract, we again approached the buyers after Mr. Dowd's vessel became available in the latter part of January. Again we approached the buyers, and they absolutely refused to use a tanker at Nakhadka.

Mr. GILES. You mean you went back to them?

Mr. STOVALL. We went back and urged them to use this vessel. We gave them the vessel's size, the draft, we gave the vessel's characteristics

Mr. GILES. Do you have copies of any cable or correspondence that you can submit for the record?

Mr. STOVALL. Captain Goodman is in possession of a telegram and a letter written by SOVFRACHT in Moscow, certifying to their inability to use tankers at Nakhadka.

Mr. GILES. Will you briefly state the substance of that and then we will

Mr. GOODMAN. I will read the pertinent part.

We are not very keen on handling tankers, because they slow down the discharging of cargo. We do not object to your shipping by tanker (small tankers preferred) to Black Sea ports. However, we absolutely cannot accept tankers in Nakhadka. You have noted that we ourselves have not chartered any tankers for our grain shipments or any from Australia.

Mr. GILES. That is from whom to whom?

Mr. GOODMAN. From SOVFRACHT-I am having a little trouble with the Russian-it is from SOVFRACHT, and it is addressed to Messrs. Continental Grain Co.

Mr. GILES. What is SOVFRACHT?

Mr. GOODMAN. The chartering operation of Russia.
FROM THE FLOOR. What is the date of that?

Mr. GOODMAN. January 21, 1964.

Mr. GILES. Is there any other item of correspondence?

Mr. GOODMAN. I see nothing else. There may be something in this great volume of papers and I may have missed it.

Mr. STOVALL. I believe the excerpt of the contract says that this shipment to the Far East

Mr. GILES. Would you put that specific reference in the record at this point?

Mr. STOVALL. This is an excerpt from the contract between Continental Grain Co., and the buyers, dated January 2, 1964, which states in part:

Shipments of grain to the Far East by tankers are excluded.

I would like also to add, as I stated before, that subsequent to the contract and again on the second offer of the Elemir, we approached the buyers as late as January 27. I will read their reply to you.

Reference your inquiry regret to inform that it is absolutely impossible for us to accept 1,600-ton tanker offered by you in Nakhadka. Explained to you before cannot accept tankers at this port as there is no elevator there and direct discharge to track cars impossible due to absence of necessary facilities. This is the reason why we provided in our contract that no tankers should be directed to Nakhadka.

This was subsequent to the second offer.

Mr. GILES. All right, Mr. Stovall, would you state-it is not clear in my mind—what is your precise understanding concerning the physical conditions or the lack of them or the facilities or lack of them as to why Nakhadka cannot use the tanker?

You have stated the conclusion and I understand the conclusion and it is very clear in the letters that this is a stated conclusion, but could you elaborate on that? What facility does a tanker ordinarily have to have to ordinarily discharge its cargo?

Mr. STOVALL. Not having visited the port of Nakhadka, it would be difficult for me to state within any degree of accuracy what the facilities are composed of or exactly why the rejection was made. However, the rejection was made and has been reconfirmed and it is a part of our sales contract-that tankers are excluded and cannot be utilized.

Again, as late as yesterday after chartering the vessel Niagara, we received a communication which reads:

Thanks for explanation, however, you have not informed us about chartering tanker Niagara besides chartering tankers to Nakhadka not allowed by our contract. Please explain.

Of course, the Niagara is a bulk carrier.

Mr. GILES. Thank you, Mr. Stovall.

Mr. Dowd, for my own purposes as well as the others here, generally, who may not know nearly as much about shipping as you do, could you indicate to us your understanding of what minimum facility at Nakhadka would be necessary in order to utilize your tanker? Would there have to be an elevator or tank cars?

Mr. Dowd. The biggest problem in accepting a tanker for any port is knowledge on the part of the receivers. Many tankers for discharg