9. Crude oil trading agreements The parties may from time to time make agreements among themselves respect to sale or exchange of crude oil for the purpose of equitably adjusti excesses and deficiencies and enabling each to carry out its commitments here under. Any party which shall be unable to meet its respective commitmen to tender shall nevertheless pay to the new corporations the charges establishe for transportation with respect to oil not shipped, this being the sole penalty fr such failure. 10. Disposition of excess capacity If after the right granted by Section 5 hereof to other companies to become parties hereto has expired by limitation, the pipelines should from time to time have capacity to transport crude oil in excess of the aggregate of all commitmeny to tender, such capacity shall be divided and offered to all parties herete accordance with the percentages set forth in Section 2 hereof. If any p should fail for ten days to accept any capacity thus offered to it, such capaer? shall be divided and offered to the other parties proportionately. This pros shall be continued until all the capacity of the pipelines has been taken or all the parties have failed to take some of the available capacity. Commitments take any such excess capacity shall be for a period of six months. If the parties fail to take all the available capacity of the pipelines, then to the extent neces sary to make full use of the capacity the pipeline corporations may (if the Dire tors so order) purchase and transport crude oil and sell the same. 11. Hypothecation of commitments The pipeline corporations shall be authorized by the parties to pledge f hypothecate their respective several commitments to tender oil with the persons or institutions loaning National Defense Pipelines, Inc., funds for the construc tion and completion of the pipelines. 12. Arbitration In the event a controversy shall arise respecting any matter covered by this Agreement (except Section 5 hereof) or any transactions entered into pursuant to the terms hereof, any party involved in such controversy shall have the right to submit the matter to arbitration. One arbitrator shall be selected by the party or parties advocating one side of the dispute, one by the party or parties adv cating the other side of the dispute, and a third by the two arbitrators thus selected. In the event that the two arbitrators thus selected should fail to designate a third arbitrator, or if either side in the controversy should fail or neglect to designate its or their arbitrator, the unselected arbitrator or arbi trators shall be designated by any United States District Court having juris diction of the party making the application for such appointment, pursuant t the provisions of "The United States Arbitration Act" of February 12, 1925. and any supplements or amendments thereto. The decision of a majority of the arbitrators shall be final and binding and there shall be no appeal therefren. Judgment may be entered upon any award made by such arbitrators in the manner provided by said Act of Congress. 13. Governmental cooperation The construction of the proposed pipelines shall be contingent upon the new corporations having when organized or receiving within ninety days after the execution hereof: (a) Assurance from the Supply, Priorities and Allocations Board, the Office of Production Management or other proper Governmental agencies of a continuous supply of materials as and when required for construction and equipment of the lines; (b) A certificate issued pursuant to the provisions of the U. S. Interna Revenue Code permitting amortization of the entire cost of the construction reconstruction, erection, installation and acquisition of the above described pipelines and facilities over a period of sixty months, commencing with the month following the month in which the said pipelines and facilities are completed. 14. Counterpart execution This agreement may be executed in several counterparts, each of which, so executed, shall be deemed an original, and such counterparts shall together con stitute but one and the same instrument. In WITNESS WHEREOF, the parties hereto have caused these presents to be duly executed the day and year first above written. Attest: STANDARD OIL COMPANY (NEW JERSEY), President. PAN AMERICAN PETROLEUM & TRANS- Attest: President. Secretary. Mr. RODINO. Thank you very much, Mr. Thompson. This concludes this phase of the hearings, and I want to make it clear, however, that the record will be left open for a reasonable period of time, during which other data and information may be submitted. However, it will be presented to counsel before it will be included in the record. Mr. THOMPSON. Mr. Chairman, may I thank you for your courtesy, sir; and counsel for their courtesy. Mr. RODINO. Thank you very much. (Subsequently Mr. Thompson supplied the following:) Hon. EMANUEL CELLER, BALLARD, SPAHR, ANDREWS & INGERSOLL, Chairman, Subcommittee No. 5, Committee on the Judiciary, DEAR CONGRESSMAN CELLER: Pursuant to the request made by your counsel during the course of my testimony before your subcommittee on October 24, (transcript reference p. 846), I attach a copy of each of the following documents from my 1941 Industry Negotiating Committee correspondence file: Copy of letter of November 5, 1941, from Thurman Arnold to Harry T. Klein, executive vice president and general counsel, the Texas Co. Copy of letter dated November 10, 1941, from George W. Ray, Jr. to Thurman Arnold. Letter dated November 12, 1941, from Mr. Thompson to Robert H. Colley, president, Atlantic Refining Co. Copy of letter dated December 11, 1941, from Thurman Arnold to Harry T. Klein. Copy of telegram dated December 15, 1941, from Harry T. Klein to Messrs. Emery, Green and Jones. May I again say that I appreciate the courtesies extended to me both before and during these interesting hearings by the committee and your counsel. Sincerely yours, CHARLES I. THOMPSON. DEPARTMENT OF JUSTICE, Washington, D. C., November 5, 1941. HARRY T. KLEIN, Esq., Executive Vice President and General Counsel, The Texas Co., New York City. DEAR COLONEL KLEIN: As you remember, we deferred presentation of the settlement in the pipeline suit to the senatorial committee until we found out whether the pipeline was to be built. I take it that today there is little immediate possibility of the building of a pipeline. Therefore, I think it might be useful to have another meeting of the Negotiating Committee to determine what disposition should be made of the proposed decree under present circumstances. Senator Gillette is anxious to know what action the Department is going to take. I told him that I felt that the committee should be called together again before any final decision by the Department was made. Will you, therefore, please contact Mr. Asbill so that a suitable date for the conference can be arranged. Sincerely, (Signed) THURMAN ARNOLD, Assistant Attorney General. Hon. THURMAN ARNOLD, Assistant Attorney General, Department of Justice, Washington, D. C. NOVEMBER 10, 1941. DEAR MR. ARNOLD: In the absence of Colonel Klein, your letter of November 5 has been referred to me for reply. Colonel Klein is presently on the Pacific coast and is expected to return to New York about November 18. Promptly upon his return, a meeting such as you suggest will be arranged. Very truly yours, (Signed) GEORGE W. RAY, Jr., Attorney. BALLARD, SPAHR, ANDREWS & INGERSOLL, Re U. S. v. A. P. I. et al. Mr. ROBERT H. COLLEY, President, The Atlantic Refining Co., Philadelphia, Pa. DEAR MR. COLLEY: As you know, Colonel Klein is still on the west coast and will not return to New York until the middle of next week. As you also know, it had been the colonel's plan to call a meeting of the Negotiating Committee promptly after his return to the East. The colonel's assistant, Mr. Ray, telephoned me from New York this morning to say that the colonel had just received a letter from Thurman Arnold in which the latter stated that final disposition of the proposed Elkins Act decree had been postponed pending a decision whether the national defense pipeline is to be constructed; that it now appeared improbable that the line would be constructed at any time in the reasonably near future; that he felt there should be a further meeting between the Department of Justice and the Negotiating Committee for the purpose of coming to some conclusion; that Senator Gillette had discussed the matter with him and that they both hoped that the committee would return to Washington for a conference as soon as mutually convenient. The Negotiating Committee will have a meeting in Colonel Klein's office on Monday, the 24th. I have no doubt we will then decide to accept Mr. Arnold's invitation to confer. Very truly yours, Col. HARRY T. KLEIN, The Texas Co., New York, N. Y. DEPARTMENT OF JUSTICE, Washington, D. C., December 11, 1941. DEAR COLONEL KLEIN: With reference to the proposed pipeline decree which you submitted to Mr. Asbill of my staff on December 9, 1941, we find that minor changes will have to be made before such decree would be satisfactory to us. On page 3, at line 19 of subparagraph (a) the word "earnings" should be changed to "net income" to conform with subparagraph (b) on page 4 and with article V. On page 7, at lines 9 and 10 of article VIII the words "the control of" are to be omitted. On page 8, at line 4 of article X the word "such" before the words "common carrier" is to be stricken and the article "a" substituted. It is to be understood, however, that any acceptance of the proposed pipeline decree will be conditioned upon the inclusion of pipeline provisions as to minimum tenders and common-carrier facilities (as set out in arts. V and VI of the draft of the decree in the antitrust case submitted by you to Mr. Asbill on December 9, 1941) in the pipeline decree if an antitrust decree containing such provisions is not entered at this time. Very truly yours, (Signed) THURMAN ARNOLD, Assistant Attorney General. [Telegram] NEW YORK, December 15, 1941. Messrs. DON EMERY, Phillips Petroleum Co., Bartlesville, Okla.; JOHN E. GREEN, Jr., Gulf Oil Corp., Houston, Tex.; BUELL F. JONES, Standard Oil Co., Chicago, Ill.: This morning I received letter from Mac Asbill suggesting few minor amendments our proposed pipeline-decree draft dated December 5. Copy his letter being forwarded airmail today. He just telephoned Thurman Arnold would like to see our committee Wednesday, December 17, 3 o'clock. After conferring with Messrs. Hall, Cosgrove, I suggest we meet apartment 414 at 2022 Columbia Road, Washington, at 1 o'clock Wednesday. Hope you can be present as prospects indicate we can probably settle pipeline decree and secure postponement Mother Hubbard case on satisfactory basis. Joint Messrs, Emery, Green, Jones. HARRY T. KLEIN. (Record of negotiations of Industry Negotiating Committee submitted by secretary for the industry committee, Charles I. Thompson :) U. S. VS. AMERICAN PETROLEUM INSTITUTE ET AL. CHRONOLOGICAL HISTORY OF NEGOTIATIONS OF EXPLORATORY COMMITTEE WITH DEPARTMENT OF JUSTICE SEPTEMBER 1940 COMPLETE TEXT OF DEFENSE COMMISSION'S REPORT ON OIL DIVORCEMENT SUIT WASHINGTON.-Complete text of Defense Commission's report on effect of proposed antitrust oil divorcement suit, entitled "U. S. v. American Petroleum Institute," as released by the Department of Justice, follows: The Advisory Commission to the Council of National Defense has given consideration to the proposed antitrust suit against the American Petroleum Institute and 22 major oil companies, their subsidiaries and affiliates with a view to determining its probable effect on the defense program. The Commission appreciates that the decision of whether or not to take action against any particular persons or corporations for violation of the antitrust laws must be made by the Attorney General in the exercise of his sound discretion. It further appreciates that in the work of the Department of Justice generally, and in the interpretation of the antitrust laws and the institution of civil proceedings thereunder in particular, there are involved not only problems of laws but also problems of policy, including the harmonization of other aims and purposes of the Nation. This report is submitted in the belief that it will be of assistance with respect to the questions of policy presented. The Commission's primary function is to assure and facilitate the availability of adequate supplies of all materials necessary for the defense of the Nation at the lowest cost consistent with other necessary objectives. The Commission, therefore, would deplore any condition or action leading to a failure of supply of such materials, whether for a short or long time, and whether partial or complete, or leading, among other things, to a lessening of efficiency, waste. of natural resources, or any substantial increase in price to the Government or to consumers. In appraising the impact of the proposed suit on the defense program the Commission has examined the relief prayed for in the complaint and considered the effect of such relief upon the technical task of supplying petroleum products so vital to our defense forces and industry. Emphasis has been placed upon the anticipated effects of granting the prayer for relief, rather than upon the anticipated effects of filling the proposed complaint, largely because the practical result of the suit can be tested only by the objectives of the Department as stated in its complaint. It is impossible, moreover, to say with assurance how long the trial of the issues raised by the complaint will require. how soon the structural changes sought will be achieved, or even what the character of the defense program will be during that interim period. If the objectives of the suit are consistent with the interest of national defense, no |