To effectuate the above, according to the Cabinet Committee, we must keep a reasonable balance between domestic and foreign supplies.

Now, what ratio would accomplish these results?

The ratio that the Cabinet Committee found back in 1955 was the ratio between imports and domestic production that existed in the year 1954 which was 16.6 percent.

This was specifically found by the Committee, and there were many statements, both by this committee and by various Senators on the floor of the Senate, which indicated that it was the intention of this committee and of the Senate to preserve that ratio.

Gov. Price Daniel, who has submitted his statement today without personally appearing, has documented those talks on the floor of the Senate and statements by the various members of this committee, and I refer you to Governor Daniel's statement for that purpose. Now have the controls worked?

The administration says they have worked.

The administration says they are 95 percent successful. And why? Well, I will read you one paragraph from a statement, a speech made by the Honorable Fred A. Seaton, Secretary of the Interior, as delivered by the Honorable Hatfield Chilton, Under Secretary of the Interior, at the meeting of the Interstate Oil Compact Commission at Salt Lake City on June 24 of this year.

He said:

The Federal Government has issued 58 separate import allocations and to my best knowledge there have been only 3 who could possibly be called noncompliers, therefore the program has gained 95 percent compliance over the past 9 months.

Moreover, because one company, which had previously not been in compliance is now and probably will remain so in the future, the program today has 97 percent compliance.

Moreover, if still another company reverses its present policies and practices and one is reported considering doing so, the program will have achieved almost 99 percent compliance.

Now we might argue with the question of how many

Senator DOUGLAS. Which are the companies that have not complied?

Mr. LOCKE. Eastern States is definitely not complying. They have definitely filed a lawsuit. Tidewater was not complying for a long time. It now states that it is complying.

I can't call offhand the three companies that he refers to here in the beginning, but I feel certain one of them is Eastern States.

Senator DOUGLAS. Is not Tidewater the center of the so-called Getty Empire?

Mr. LOCKE. That is correct. It certainly is, sir.

Senator Douglas, the thing I want to invite your special attention to here is this: In the first place the effectiveness of the program as to being 99 percent effective does not depend on the amount of companies that comply.

The one company that is not complying might be Gulf Oil which is concededly the chief importer.

We could get a hundred percent compliance by quadrupling the quotas you set. So to me saying the program is 95 percent effective because 95 percent of the companies comply is somewhat ridiculous, frankly.

Now, what is a proper standard and has it worked, by the proper standard?

Well, let's take the 1954 ratio. That is the standard that they set. That is at least one standard.

We have a chart in our testimony, chart No. 1 at the back, which shows the increase in the percentage of imports to domestic supply through the years from 1946 on up through 1958.

It shows that in 1954, the critical year, there was a 16.6 ratio. In 1958, to date there is a 23.5 percent ratio.

Now you will notice that the difference between 16.6 and 23.5 is over a 40 percent increase.

In other words, imports today are 40 percent greater than they would be if the 1954 standard had been retained.

So the obvious answer is that it has not been retained and we have about a half million barrels a day coming in, in excess of the 1954 ratio.

But let's go further than that. Let's just not take the ratio, let's take these general standards that they set for themselves in the Cabinet Committee report.

Standard No. 1, oil coming in in ever-increasing quantities, disproportionate to the needs to supplant the domestic supply. It was supposed to prevent that. We are getting 500,000 more barrels per day above the 1954 ratio and what is happening to the domestic production?

The domestic production today is 100,000 barrels a day under 1954 ratio and actually it is a million barrels a day under the 1957.

So actually we have a great increase in imports and we have a decrease in domestic production.

So they have not accomplished No. 1 that they set themselves to accomplish.

Two, discouragement and decrease in domestic production. That is supposed to be stopped. Well, it has not been stopped, because as we have stated, there is a decrease of 100,000 barrels a day over 1954 even though there is an increase in imports.

Third, marked decline in domestic exploration and development. They are supposed to set a program that will prevent that. Well, in 1957, for the first time, drilling was down in 1957, about 10 percent in 1956 throughout the country and below 1954.

In 1958, it is down 13.5 percent from 1957; in other words 10 percent in 1957 from 1956; 13.5 percent from 1958 to 1957.

But look at exploratory drilling, wildcat wells. It was also in 1957 down about 10 percent but in 1958 it is down about 25 percent over 1957.

You have the same thing on rotary rigs, 1957 they were down about 9.6 percent, rotary rigs in operation; 1958 over 1957, down 27.8 percent.

The exploratory crews in operation, down 13.2 percent in 1957 over 1956.

I do not have the exact figures for 1958, but if you have the same ratio in exploratory crews going out that you have in rotary rigs why then they would be down about 50 percent.

So the administration definitely, if one of the objectives of this program is to keep these crews operating and keep these wells producing domestically, they have not done it.

They have not encouraged exploration; they have discouraged it. Now, one of the things they said we ought to do is encourage free enterprise exploration at rates consistent with rates of the growing economy.

Well, they say we ought to increase exploration as the economy grows and the demand increased in 1957 over 1956, demand for petroleum production, but even though the demand increased exploration went down substantially.

So we find that by the standards that the administration set for themselves through the Cabinet Committee report that they have not accomplished a single one of the things that they set out to do. Now, why haven't the controls worked?

In the first place, there has been no attempt to make a ratio that will achieve the job, to provide a total number of imports to achieve the job.

In the second place, voluntary controls depend on the good will of these importing companies and there is a limit to how far you can drive that good will, and when they are making money more on imported oil than they are on domestic oil, why the amount they are going to comply is going to depend on how much money they can make over here as opposed to how much voluntary pressure you can bring on them over here, and that just is not going to work.

Third, what about the pressures on the Administrator?

Now what happens?

Take anybody administrating this program.

You get a number of independent refineries and new producers who come in and they want a quota.

Well, they ought to have a quota because you just do not want to give a quota to the big companies so where are you going to have to take that quota from?

You are going to have to either increase imports or cut the big companies. When you cut the big companies that have been importing what are they going to say?

They are going to come down to scream. What is the easiest thing to do, that is, for the Administrator?

That is for him to say the national security requires the level to be up here instead of down here.

So long as it is voluntary you have got those pressures that are human and you just cannot get around them.

Now fourthly, the administration has not made attempts, outside of import controls, that we think they should have made, such as encouraging a west coast pipeline, enabling us to put oil out in the west coast, which is a deficiency area.

I understand the administration has indicated that imports are too great on the Pacific coast and stocks are too high, but today they came out and did not cut the imports on the Pacific coast.

I just got that information while I was in the room.

Senator DOUGLAS. There has been some reduction on imports.

Mr. LOCKE. Yes, sir; they reduced them to 713,000 barrels in districts 1 to 4 in March. The quotas that they set from quotas which had previously been high.

Now those quotas which they set in March have not been met, actual imports of 50,000 barrels a day, I understand in excess of those.

Now on the west coast, I do not think they have cut those, and they were stating that they would, and the west coast is at the present time, although a deficiency area in production, and needs a pipeline to take care of that nevertheless they have had so many imports in there they have been flooded with oil on the west coast but today we understandas I say, I just got it since I have been in the room-I have not seen any order but I understand that the administration determined not to cut back west coast imports.

Senator DOUGLAS. Was this done to sweeten the impending visit of the President to Canada?

Mr. LOCKE. I don't think I don't know, sir, why it was done. But I think a lot of those imports on the west coast are not Canadian imports.

Actually Canadian imports, Canada has been able to import into this country all of the oil that Canada wanted to. The quotas which had been set for companies importing Canadian oil as I understand it have been such

Senator DOUGLAS. Canadian newspapers and Canadian representatives have complained quite bitterly about what they alleged either had happened or was going to happen.

Mr. LOCKE. Well, I think probably they may have fears about what might happen, Senator, but as I understand it, Canada has been able to bring into this country, and I might also say with respect to Canada that as a contiguous country from a defense standpoint, particu larly if Canada were to limit her imports so that they could not be a fund and would operate just as another state that the Canadian situation could be taken care of and I think properly so.

Senator DOUGLAS. You mean it is Venezuelan and ultimately the Persian Gulf states that you are worried about really?

Mr. LOCKE. Well, it is the Middle East this is the primary thing. Of course we are worried about all imports.

Senator DOUGLAS. Is the Middle East shipping oil into here now? Mr. LOCKE. Yes, sir.

Senator DOUGLAS. Into the United States?

Mr. LOCKE. My understanding is that they are.
Senator DOUGLAS. That is a new change, is it not?

Previously the Middle East

Mr. LOCKE. Well, the Middle East has sold most of their oil to Europe, of course.

Senator DOUGLAS. Yes.

Mr. LOCKE. Replacing Venezuelan oil in that area and replacing some of the United States oil in the old days in that area but I understand there is oil from the Middle East coming into this country.

Senator DOUGLAS. I wondered if in the time remaining you could supply for the record some figures on that.

Mr. LOCKE. I do not have those figures, Senator, but we can supply them for the record, yes, sir, if we can.

Senator DOUGLAS. Will you do that before 3 o'clock?

Mr. LOCKE. Yes, sir.

(The information referred to appears at p. 1443.)

Mr. LOCKE. Now, as to the new language of the act, the new language that the House of Representatives put into the act that is now before you, as to whether that language will work, well basically that language does nothing more than to establish general criteria.

It gives no yardstick. Will it work? Well, you already have that criteria in the reports of this committee, the passed act, in the debates on the floor of the Senate, in the Cabinet Committee reports, and they were spelled out much more carefully there than they have been in this new language, and yet they haven't worked so I would say that the effect of saying that the President should consider this, that, and the other thing, is not telling how he should consider it or what yardstick to use and that that language will be inadequate.

Now, secondly, the administration line has been that the voluntary program works and it is not working and presumably if they say that the voluntary program works, they don't intend to make any substantial changes in the voluntary program.

Now, Mr. Seaton's recent statement that I just referred to contained a statement in it-I won't attempt to read it, but he goes along the line of the voluntary program is working and that nothing further needs to be done.

Also Mr. Mueller, in a recent speech that he made up in Bradford, Pa., stated:

If we are to take the independent petroleum associations' words for it, severity of conditions caused by foreign imports, I suspect, it would be difficult to sell.

Now his idea is that foreign imports presumably are not causing any problems because our position that it does cause problems and the position of the independents throughout the country would be difficult to sell.

I don't think we can expect much help from people who are administering this program and who take that position.

Another thing is the lawsuit that you have heard of, Eastern States is already challenging the legality of the entire program.

So I would say that the language in the bill is not adequate, and that it needs to be implemented.

What language is needed?

In the first place, Congress should find, rather than the President, Congress should find that we need import controls.

Secondly, the controls should be made mandatory.

Thirdly, there shoud be some kind of a yardstick and we think the 1954 yardstick that was originally put in by the Cabinet Committee and that this committee in the Senate-should be or is at least a good yardstick, but there should be some yardstick.

Finally, we believe that there should be some equalization features such as tariff or license feature that would equalize the profits that are made on foreign production with those made on domestic production.

Now, the Long bill does those things and we want to publicly compliment Senator Long and say we are a hundred percent behind his bill and also we want to express appreciation for all-for the work of all the other Senators who are on the bill.

We think it is a fine bill and we are for it.

There is one other thing that I would like to mention here which is another reason that I think imports should be limited, and it has nothing to do with the national defense.

We have been talking about national defense. But basically I think, and we think, as an association, I would state, that limitation of