This upset the staff considerably and in Arnold's absence notice was served upon the Negotiating Committee that the staff would insist upon an amendment to the proposed consent decree under which all pipeline companies would be required to continue to operate as common carriers.

Upon Arnold's return from the West he asked the Committee to meet with him in Washington and stated in effect that if the pipeline was to be constructed the settlement would go through as planned and without modification; that if the pipeline was not to be constructed, he would have to restudy the entire situation and discuss it again with Senator Gillette.

At that time the industry was confident that the pipeline would actually be built. A plan had been worked out by the industry's technical committee and the OPM for the substitution of tubular steel for the plate steel originally contemplated. C. I. T. had been advised by the coordinator that OPM's order had already been drafted, tentatively approved, and would be issued by Director Nelson within a few days. In C. I. T.'s presence the coordinator made the same statement to Arnold. It was then agreed that the entire matter should be held in abeyance pending a final decision respecting the pipeline.

Ickes (as well as the industry) has now been convinced that there is no oil shortage in the East. Moreover, a resolution has been introduced in Congress for the appointment of a Board of Experts to investigate the necessity of the pipeline. It becomes more obvious every day that the line will not be constructed at any time in the near future.

The industry's point of view is that Arnold agreed to carry out the Elkins Act settlement if the industry agreed to build the pipeline and he should fulfill his promise.

The Department of Justice's problem is this: Since the Elkins Act settlement will achieve all the economic objectives which the Government originally sought in the test suits under the Elkins Act and in the antitrust suit, should not the settlement be consummated even though the national-defense pipeline is unnecessary and will not be built?

So far as the Phillips Petroleum Co.'s petition filed with the ICC for leave to discontinue common-carrier operations is concerned, everyone in the industry to whom I have talked and the majority of Arnold's staff are of opinion that the petition is ill founded and will not be granted by the ICC because of the Transportation Act clearly makes Phillips a common carrier as a matter of law.

The industry is ready and willing to consummate the bargain but will not make substantial additional concessions.

Arnold has not formally repudiated the negotiated Elkins Act settlement. An extension of time to answer in the antitrust case has just been granted until the latter part of January.

So far as the future is concerned, there are the following possibilities:

1. It is possible, but not probable, that Arnold will go through with the present settlement without modification.

2. Arnold may propose supplemental paragraphs to be added to the negotiated Elkins Act consent decree, and such paragraphs may or may not be acceptable to the industry.

3. Arnold may propose (and this is quite probable) to consummate the nego tiated Elkins Act settlement as a part of a larger settlement involving other problems raised in the antitrust case.

Since there is at the present time no definite impasse, there is no specific action which the Negotiating Committee wants us to ask Biddle to take. It does seem advisable to everybody that if, as, and when the opportunity arises, Biddle should be informed of the present status of the situation. There is a distinct feeling that time is running in favor of the industry and that it would be a mistake in policy to precipitate an impasse. If, as, and when we get in a shooting war, it would seem unlikely that the Government would actively prosecute Elkins Act claims. If the test suits were won by the Government, apart from the tremendous penalties collectible, the practical result would be divorcement of pipelines from major oil company ownership. Disintegration of the industry at such a time would be a catastrophe from the point of view of national defense.

From every point of view, the happiest solution of the present situation would be to enter the negotiated consent decree settling the Elkins Act controversy for all time, and either to postpone the antitrust litigation until the emergency is over or settle it within the terms and scope of the Sherman Act.

C. I. T.

HARRY T. KLEIN, Esquire,

DEPARTMENT OF JUSTICE, Washington, D. C., November 5, 1941.

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,

Standard Oil Company of New Jersey, New York, N. Y.

Mr. BUELL F. JONES,

Standard Oil Company of Indiana, Chicago, Ill.

Mr. C. I. THOMPSON,

Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa.

DEAR SIRS: Please refer to my letter to you of even date and the enclosures therein mentioned.

Colonel Klein has requested that I advise you gentlemen that he desires to have a meeting of the negotiating committee on Monday, November 24, at 2 p. m., in his office.

If for any reason this date will not suit your convenience, please advise me promptly by wire.

With kindest regards.

Very truly yours,

(Signed) GEORGE W. RAY, Jr., Attorney.

Mr. CHARLES I. THOMPSON,

THE TEXAS Co., New York, N. Y., December 6, 1941.

Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa. DEAR CHARLIE: I have today written the following letter to Messrs. Jones and Emery:

"Yesterday afternoon Jim Cosgrove discussed with Messrs. Hall, Green, Thompson, and me a proposed substantial revision of paragraph V of the pipeline decree and a couple of other proposed minor amendments of the pipeline decree. We unanimously decided it would be better to have the committee submit our proposed drafts to Mac Asbill along the lines we decided on Thursday afternoon and then subsequently have Jim Cosgrove personally submit to the Department his proposed revisions to cover the Great Lakes situation.

"Accordingly I telephoned Mac Asbill and arranged to submit our counterproposals to him on Tuesday, December 9, at 11 o'clock. Our group decided that I should do this as chairman of the committee unaccompanied by any of our members.

"I am forwarding herewith five copies each of the December 5 drafts of the proposed decree in the Pipe Line cases and of the proposed decree in the Mother Hubbard case."

Very truly yours,

(Signed)

HARRY T. KLEIN.

12/5/41

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

The United States of America filed its complaint

herein on September 30, 1940; each of the defendants party
to this Degree appeared and filed its answer to such complaint,
and asserted the truth of its answer and its innocence of any
violation of law; the plaintiff and the said defendants desire
to avoid the expenses of a trial of the issues therein and the
loss of time occasioned thereby: no testimony having bean
taken, each of the defendants party to this Decree consented
to the entry of this Decree without any findings of fact,
upon condition that neither such consent nor this Decroo
shall be considered an admission or adjudication that it has
violated any statute: and the United States of America by
its counsel having consented to the entry of this Decree
and to each and every provision thereof and having moved
the court for this injunction,

follows:

Therefore, it is ordered, adjudged and decreed as

-1

I. The court has jurisdiction of all parties to this decree; and for the purposes of this Decree and proceedings for the enforcement thereof, and for no other purnose, the court has jurisdiction of the subject matter hereof and the petition states a cause of action against said defendants.

II. The defendant, American Petroleum Institute, and its officers, directors, members, committees, representatives, agents and employees, acting for or on behalf of the Institute be permanently enjoined and restrained from:

(1) Engaging in any activity to raise, depress,

fix, peg, maintain or stabilize the prices

of crude oil or any of its products.

(2) Engaging in any activity to prevent the
establishment or maintenance of a free and
open oil exchange for the purchase and sale
of crude oil.

(3) Promoting, sponsoring or engaging in any
combination, agreement or conspiracy among
those engaged in producing, transporting,
refining or marketing netroleum or its
products with respect to (a) sales; rices
of petroleum products, (b) margins allowed
to jobbers, distributors or dealers of

12-5-41