told we didn't comply with the tender. Contrary to commercial terms, we did not have an option to even take the business if we were willing to go to USNH.

Mr. GILES. Let me get this straight. You say you had an original offer that was in compliance with the terms of the tender?

Mr. Down. No, the original tender also specified gulf loading. I will say we will be willing to accept USNH loading but I want it clear that, if we do, we have two extra charges and we have two large tankers. The 30-ton tankers-we have to repatriate the crew, which is an individual ship problem, from USNH to the gulf. Our last voyage was from the gulf.

Mr. GILES. We are talking about the Marine, aren't we?

Mr. Dowd. That is correct.

Mr. GILES. What is the tonnage of that?

Mr. Down. It is a 16,000-ton T-2-a small vessel.

And the other vessels quite a few were 24,000- and 30,000-ton ships. Our immediate expense is repatriating the crew which costs us $6,000. In addition, if we load at the elevator in Norfolk, it costs us another $8,000.

We have a $14,000 extra expense by loading at USNH over the gulf which we consider an undue burden. But the Maritime Commission believes we should accept it to carry the voyage.

But we think it is much more of a hardship to accept the voyage from the gulf, because they will have to move out of the 200,000 tons, in the one shipping period, March 15-30. I am confident right now that 100,000 tons minimum will move out of the gulf.

And if, as he previously stated, he has the option on this 100,000 tons to move from USNH or gulf, there is no hardship whatsoever to Continental.

Mr. GILES. All right. Now, Mr. Dowd, at this point I just want to make this observation, so that both you and Continental's representatives will understand the point that concerns me.

I am opening up these points, here, on what I would call the merits, even though it is clearly apparent, and no disagreement, that the specific case, here, involves a departure from the terms. In a technical sense, we could say that you don't even get in the door.

Now, I am doing that because I think it is desirable for me to have the full picture before me. But I do want to make this point to you, and you have given much emphasis to what Continental should be in a position to do.

If I adopt that principle for Continental, I have to adopt it for the shipowners. And there are many items in these charters-many items where Continental could, if we opened all of that up, come in any say: "Well, we ought to get a little bit better, here, on the merits from the shipowner, because really he can work it out without any difficulty." And I am sure that must be true on many specific items, which would add up and mean money, or less money, to the ship

owner.

Well, I am simply expressing that thought to let you know the difficulty I have, here, on this point, of trying to balance the equities. I can't forget, though I am considering the merits-I can't ignore entirely our technical point.

39-375-64--14

Captain Goodman, do you have any questions of either of the parties on this?

Mr. GOODMAN. I would just like to ask Mr. Stovall a few questions, just to clarify the record, if he could.

Mr. Stovall, in the overall approximately 1 million tons, excluding the 150,000 from the west coast, have you any idea at this point what your plans contemplate in actual loading out of the gulftotal?

Mr. STOVALL. No, sir; I don't know at this particular point. Mr. GOODMAN. Would you say it would be 10 percent; 20 percent?

Let me ask you this: How many elevators do you have, Mr. Stovall, on the Atlantic and the gulf?

Mr. STOVALL. We have two elevators on the Atlantic and three elevators on the gulf that we operate. There are other elevators that possibly may necessarily be used for this business.

Mr. GOODMAN. I don't want to pin you down. I would just like to have an expression.

If you have three elevators on the gulf and two on the Atlantic, it is reasonable to assume that a substantial amount of cargo you expect to move through the gulf?

Mr. STOVALL. Possibly 50 percent: I don't know.

Mr. GOODMAN. At least 25 percent of that must go on American ships?

Mr. STOVALL. It will probably be necessary, before the program is finished, to divide it up as evenly as possible in order not to overload any one particular area or one particular period, to avoid heavy steamship demurrage charge or railroad charges.

Mr. GOODMAN. I have a point, if you don't mind, I would like to make on that: Now, you have presently 311,900 tons actually booked; is that correct?

Mr. STOVALL. Yes, sir.

Mr. GOODMAN. We will exclude February, if you want to take out a certain amount of that tonnage. On any tonnage remaining, which is a substantial amount, that is all under option right now; isn't it? You haven't declared it, either North Atlantic or gulf. You can go either way; isn't that correct?

Mr. STOVALL. The present tonnage that we have is all optional.
Mr. GOODMAN. It is all optional?

Mr. STOVALL. Except for the vessels which are in the February position, and for which loading orders have already been given.

Mr. GOODMAN. You said before, as I recall, when Mr. Oberschall was on the stand, that at this time you couldn't possibly tell them before February 15 where the cargo would be going. You don't know? Mr. STOVALL. For March positions, that is true. But we are now speaking of February positions.

Mr. GOODMAN. What I am getting at is: With this terrific amount of optional tonnage that you have, that is still a long way off, you have a tremendous amount of flexibility, haven't you, between the gulf and the North Atlantic? Is that true, or isn't it?

Mr. STOVALL. Yes. But we have no cargo for this

Mr. GOODMAN. My specific question is: You have a great amount of flexibility on a fairly large and substantial amount of tonnage, whether

you put it in the gulf or whether you put it in the Atlantic. And you have three elevators in the gulf and two in the Atlantic, so a substantial amount is going to go in the gulf. Is that correct? So you have a great deal of flexibility; haven't you?

Mr. STOVALL. Yes.

Mr. GOODMAN. But don't you have enough flexibility to move one T-2 tanker in and, perhaps with all of this optional tonnage, you can move another ship into the North Atlantic? Is that unreasonable? Mr. STOVALL. But again I repeat, Captain Goodman, we have no cargo for this vessel, either USÑH or gulf.

I would like to put in the record that Mr. Dowd originally offered this vessel, the T-2 tanker, on January 9. Since January 13, our tender has called for 110,000 tons of American-flag tonnage, required U.S. gulf or U.S. Atlantic, for the March 15-30 position.

Not until January 27, I believe it was, did we receive a firm offer from the Marine, wherein he advised that he could supply vac-u-lators for the vessel and was interested in this business.

At this time, we were fully booked. Our last American-flag vessel for this position was the Venore, which I believe was booked on January 25 or 26. So there was no cargo available for this vessel, either USNH or gulf, or for any other vessel in this position.

Mr. GILES. The only departure was no vac-u-lators?

Mr. STOVALL. Yes, and it was previous oil, and there was a question of contamination, so consequently the vessel was unworkable. On January 13, when we put out a tender for the entire quantity going right through February and March, some 75 to 80 days ahead of schedule, we posted the entire tender conditions right through, and we had an opening for 105,000 tons of American-flag, for this position. Other tonnage was offered, and other tonnage was booked. And the last vessel taken I believe was the Venore on January 26.

There was no reoffer with vac-u-lators suitable for this business made until January 27, and consequently, he was advised on that date that we had no cargo and his dates were unworkable.

We again yesterday stated that, "As previously advised, your dates are not acceptable."

Mr. DowD. That is true. We offered the vessel originally without vacs, because we were negotiating with Maritime to have them accept vessels-the receiver paying the cost of vacs.

We amended our offer by allowing us to furnish the vac-u-lators, which cost us $100,000. This was a major consideration, which we did not concede, with the other tank owners, for 2 weeks.

We cooperated with Maritime, and were having meetings. It is not just a time lapse, when we were not interested in the business, but we were having numerous meetings and trying to conciliate the differences.

On January 27, when we offered the vessel, we complied with the terms, because at that time Maritime ruled that the owners would supply the vac-u-lators. We were not just idly sitting by, as the record might indicate so far.

Mr. GILES. Now, Mr. Dowd, it is true that by that time we had ruled in effect on that, but we had ruled on that, as I recall, on January 17. Mr. STOVALL. January 8, Mr. Giles, it was agreed that discharge equipment was required, and it was shown in our first tender of January 8.

Mr. GILES. But Mr. Dowd is correct that we did after January 8 reconsider many of these items.

But the point I am making is that as of January 17, after hearing many of these points, we did put out our rather long list of terms and conditions.

So it seems to me that as of January 17, you were by that time fully advised what our position would be on the matter of discharge, and it wasn't until, say, 10 days later, January 27, that you made your offer.

Mr. Dowd. Our only justification: We made an assumption that there would be sufficient business available. If we offered on January 27 and took the business, there would be other American business, other American ships, that would not have employment to date.

And the shippers, Continental, Cargo, would receive a waiver, and displace one American ship or the other.

I don't think it is material, the fact that our ship wasn't offered earlier. We weren't pressed at this time. Perhaps the other owner was already committed and knew where he was going.

Mr. GILES. All right. Mr. Dowd, you have indicated, here, in your conversation, that you will amend your offer to provide the North Atlantic option. Is that correct?

Mr. Dowd. Yes.

Mr. GILES. And the only point at issue is the date schedule. You have offered for the last half of March, under our schedule of distribution, which we expressed to Continental would be proper. That is filled, that last half, so far as I know.

Captain Goodman, do you have any question about that, as a matter of fact?

Mr. Dowd, could you amend your offer to come within the first half of March?

Mr. Dowd. No. It is not physically possible to ship. It is presently sailing from the Persian Gulf, and won't be here until March 15. We will reserve the ship for cargo or something else.

Mr. GILES. Do you have any other ship you could substitute?
Mr. Dowd. No, sir.

Mr. GILES. What date would you commit yourself on? You can't commit yourself by the 15th of March. What is the earliest date that you would? What is the earliest date after the 15th?

Mr. Dowd. We generally want at least a 7-day leeway period, to the 22d, but we prefer the 25th.

I'll concede we would do the 22d canceling.

Mr. GILES. You would give a firm date of the 22d?

Mr. Dowd. Yes.

Mr. GILES. Is that your earliest date that you feel you could do? Mr. Down. When we say the 22d, that is the last date on which the ship can arrive. If we arrive prior to that, it immedately goes on hire, but if we arrive after the 22d, the vessel will be canceled and we will be without employment.

Mr. GILES. I understood a while ago you mentioned the 18th.

Mr. Down. That is when we expect the ship to be ready for loading, on the 18th. But after all, it is more than 30 days away, and the ship is traveling across the ocean and has to clean for the cargo, and we have to have a little leeway. It is normal to have a 10-day leeway in most shipments.

Mr. GILES. Well, it is sort of abnormal for me to be sitting up here trying to work out a charter, too, and I am trying to see what are the substantive merits, here.

Under all of the circumstances, Mr. Dowd, in view of the fact that it is clear that you did have a considerable period of time to offer in for the last half of March and be in place, be in a position to be accepted, 22 days after the 22d, 7 days after the 15th-that is a whole week-that strikes me as a fairly large margin.

I would like to ask Continental: Again, keeping in mind that Continental has the ground rule in its favor, here, I would like Continental to consider the merits of this in terms of what they could do reasonably under all of the circumstances, without regard to the ground rules.

You are not booked, you do not have your commitments filled, for the first half of March. I think you would concede that this schedule that we have made up is not something that is absolutely firm so far as your physical arrangements are concerned, so far as what you could reasonably do as a business matter is concerned, again apart from the ground rule.

Would you indicate whether or not you would be in a position to accept Mr. Dowd's offer, which he has now amended to give you the full option on the North Atlantic, and give him the 22d date?

Mr. STOVALL. No, sir. Mr. Giles, on the basis of the owner's expected readiness of March 18, which I estimate would put him in the range on March 14 or 15th-there is no cargo available in this position.

Mr. GILES. Well, your position essentially, then, Mr. Stovall, is that you feel you are entitled to stay with our ground rules. Is that it?

Mr. STOVALL. I feel that since we were forced, Mr. Giles, to go along with these ground rules from the beginning, it is too late now to endeavor to deviate from them, because certain commitments have been made on our part with interior offices, et cetera, for this cargo. And this particular period is fully booked, both American and foreign.

Mr. GILES. Mr. Dowd, you have heard all the conversation up to this point. Again, because I don't know any other questions to ask, in an effort to enlighten me, first you concede that the ground rule or the technicality is in favor of Continental. There is no question about that; is there?

Mr. Down. Yes.

I would also like to enlarge on that. I think technically the ground rules are in favor of all the grain houses compared to the American shipowners. They negotiate the sales contract without any of our advice. They have every advantage to obtain waivers along the line, which might be good business for them.

Mr. GILES. Well, now, Mr. Dowd, I don't believe I could regard that as relevant, here, because what you are saying there is that you are really talking about a situation, if that exists, that is applicable across the board, as a business matter, in any transaction, and I am talking about all commercial transactions, even where the Government isn't involved.

I cannot sit here, I don't think-I think it would be grossly improper, even if I had the authority, which I don't think I do--I cannot sit here and, in the midst of trying to administer and help police this particular requirement-I can't sit here and revise or reform well-established shipping practices.