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Oe- O'CONNOR AND GILMORE NOMINATIONS

GOVERNMEN'i

Storage

HEARING

BEFORE THE

COMMITTEE ON COMMERCE

UNITED STATES SENATE

EIGHTY-SEVENTH CONGRESS

FIRST SESSION

ON

NOMINATIONS

OF

LAWRENCE J. O'CONNOR, FEDERAL POWER COMMISSION

VOIT GILMORE, UNITED STATES TRAVEL SERVICE

r1J JULY 26, 1961

IT'

Lii

c1:1

Printed for the use of the Committee on Commerce

REFERENCE 1:)

c_st•

5 LIBRARY

DEPARTMENT c-D

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U.S. GOVERNMENT PRINTING OFFICE

73078 WASHINGTON : 1901
COMMITTEE ON COMMERCE

WARREN G. MAGNUSON, Washington, Chairman

JOHN 0. PASTORE, Rhode Island

A. S. MIKE MONRONEY, Oklahoma

GEORGE A. SMATHERS, Florida

STROM THURMOND, South Carolina

FRANK J. LAUSCHE, Ohio

RALPH YARBOROUGH, Texas

CLAIR ENGLE, California

E. L. BARTLETT, Alaska

VANCE HARTKE, Indiana

GALE W. NAGEE, Wyoming

II

ANDREW F. SCHOEPPEL, Kansas

JOHN MARSHALL BUTLER, Maryland

NORRIS COTTON, New Hampshire

CLIFFORD P. CASE, New Jersey

THRUSTON B. MORTON, Kentucky

HUGH SCOTT, Pennsylvania

EDWARD JARRETT, Chief Clerk

JEREMIAH J. KENNY, Jr., Assistant Chief Clerk

HAROLD I. BAYNTON, Chief Counsel

JOHN M. MCELROY, Assistant Chief Counsel

.... *4'4
CONTENTS

O'CONNOR NOMINATION TO BE A MEMBER OF THE FEDERAL POWER

COMMISSION

Statement of— Page

Casey, Hon. Bob, U.S. House of Representatives 21

O'Connor, Lawrence J., Jr., nominee 21

Proxmire, Hon. William, U.S. Senate 4

Tower, Hon. John G., U.S. Senate 3

Yarborough, Hon. Ralph, U.S. Senate 1

Letters from—

Kelly, Hon. John M., Assistant Secretary, Department of the Interior_ 29

Thomas, Hon. Albert, U.S. House of Representatives 29

Udall, Hon. Stewart L., Secretary of the Interior, Department of the

Interior 29

GILMORE NOMINATION TO BE DIRECTOR OF THE U.S. TRAVEL

SERVICE

Statement of—

Ervin, Hon. Sam J., Jr., U.S. Senate 33

Gilmore, Voit, nominee 35

Jordan, Hon. B. Everett, U.S. Senate 33

Kornegay, Hon. Horace R., U.S. House of Representatives 34

III

NOMINATION OF LAWRENCE J. O'CONNOR, JR., OF

TEXAS, TO BE A MEMBER OF THE FEDERAL POWER

COMMISSION, FOR THE TERM OF 5 YEARS EXPIRING

JUNE 22, 1966, VICE ARTHUR KLINE, TERM EXPIRED

WEDNESDAY, JULY 26, 1961

U.S. SENATE,

COMMITTEE ON COMMERCE,

Washington,D.C.

The committee met, pursuant to notice, at 10 a.m., in room 5110, New

Senate Mice Building, Hon. Warren G. Magnuson (chairman of

the committee) presiding.

The CHAIRMAN. Mr. Lawrence J. O'Connor, Jr,, of Texas, to be a

member of. the Federal Power Commission. Mr. O'Connor is here I

know. Will you please come forward?

STATENENT OF HON. RALPH YARBOROUGH, OF TEXAS

Senator YARB' OROUGH. Mr. Chairman, I would like to have the privilege of introducing this resident of my home State.

The CHAfiziwAN. We will be glad to have you do so, Senator.

Senator YARBOROUGH. Mr. Chairman, Mr. O'Connor is a resident Of

my State. Unfortunately he is not a native of Texas, but he was born

pretty close by in Tulsa, Okla., was carried to Pennsylvania when a

youth and grew up in Pennsylvania, but got back to Oklahoma in time

to graduate from Central High School, and showed better judgment

from then on.

He went to Rice University for his bachelor's degree and then received a master's degree in business administration from Harvard

University: ".

Since then he has lived in Houston, and has been in business there.

He was director and vice president of the Houston district of the Independent Petroleum Association of America, chairman of the tax study

committee of that association and on committees dealing with oil and

gas supply and demand and with natural gas, oil and gas productive

capacity and economic and cost studies, and has served as director and

vice president of the Houston chapter of the Tax Executives Institute.

He is a licensed certified public accountant in Texas.

Mr. Chairman, I think it is an unusual tribute to Mr. O'Connor, that

when he became assistant director of the Department of Oil and Gas

in the Interior Department in 1959, I heard no protest. Now, to those

who don't k4ow about the oil and gas industry, it is torn asunder by

Staff member assigned to this hearing: Harold I. Baynton.

1
2 NOMINATIONS

internal differences of opinion. I see the distinguished Senator from

Kansas smile. He knows from his State how bitter the fight between

the companies is. Mr. O'Connor then was administrator of the Oil

Import Administration, Department of Interior, appointed on July

1,1960, by Secretary of the Interior Fred Seaton and has served under

both Republican and Democratic administrations, appointed by both.

I have never had a complaint in my office from the industry about his

service, and that is in an industry that is torn by factionalism. I

think it is a high tribute to him that he could serve in this critical area

of oil imports, where they allocate between companies how much oil

each company can import, with so little complaint of him.

It shows a great aptitude, I think, for administration. I personally never heard of Mr. O'Connor taking part in any partisan politics

in Texas. He has shown a judicious temperament in his actions and

a great governmental capacity for giving the patient and careful consideration that the complaints merited. They thought they had a

fair shake and didn't have to come and complain to the Senate about

the consideration or lack of it or favoritism.

I think it is the type of administration that helps us a great deal

in these regulatory bodies, if we can put people on there that are so

fair in their attitude we don't have any complaints. I want to commend him for the way he discharged the duties of the office down

there in that critical field, where he has been able to so conduct himself as to cause no complaints to my office in all the time he has been

there.

I am happy to recommend him to the committee and recommend

that this committee vote approval of the President's appointment of

him to the Federal Power Commission.

The CHAIRMAN. Thank you, Senator. Mr. O'Connor submitted

his biography, which we will place in the record in full.

(The biography referred to follows:)

LAWRENCE J. O'CONNOR, JR., ADMINISTRATOR, OIL IMPORT ADMINISTRATION

Lawrence J. O'Connor, Jr., Houston, Tex., was appointed Administrator of

the Oil Import Administration of the Department of the Interior on July 1,

1900, by Secretary of the Interior Fred A. Seaton.

Mr. O'Connor served as Assistant Director of the Department's Office of Oil

and Gas since October 15, 1959.

Mr. O'Connor was born at Tulsa, Okla., on December 29, 1914. He spent most

of his early childhood in Butler, Pa., and then returned to Tulsa where he

graduated from Central High School. He received his B.A. degree from Rice

University and a master's degree in business administration from Harvard

University.

He has served as director and vice president, Houston district, Independent

Petroleum Association of America. He was chairman of the tax study committee of that association and on committees dealing with oil and gas supply

and demand, natural gas, oil and gas productive capacity, and economic and

cost studies. He has served as director and vice president, Houston chapter of

the Tax Executives Institute. O'Connor is a licensed certified public accountant

in Texas.

During the period September 1, 1938, to March 1, 1945, he was employed by

the certified public accounting firm of Haskins & Sells, Houston, Tex. From

April 1, 1945, to September 30, 1958„ he was employed by the Goldston Oil Corp.

of Houston where he advanced to vice president and treasurer. From October

1, 1958, to October 1959, he was self-employed as a consultant, engaged in

special studies and programs for future oil and gas exploration activities.

"Elk
NOMINATIONS 3

Federal Power Commvission

Name Term expires Politics Residence

Arthur Kline 

Jerome K. Kuykendall 

Howard Morgan 

June 22,1961

June 22,1962 

June 22,1963

June 22,1964 

June 22,1965

Republican_ _ _

do 

Democrat 

Democrat 

Wyoming.

Washington.

Oregon.

Joseph C. Swidler Tennessee.

Commissioners are appointed for 5-year terms. Not more than three Commissioners shall be appointed from the same political party. A Commissioner may

remain in office until his successor has qualified, but not longer than the end of

the next session of the Congress subsequent to the expiration of the fixed term.

A member is designated Chairman by the President and remains Chairman until

the end of his term.

The CHAIRMAN. This has been fairly well covered by the Senator

from Texas. It contains information of his association with the

Independent Petroleum Association of America, and other duties he

has performed.

Are you still an active CPA, Mr. O'Connor?

Mr. O'CONNOR. Yes, Senator Magnuson.

The CHAIRMAN. I presume that you feel that you could be of some

service to the Federal Power Commission with that background, because of the fact that so much of it is looking over books, accounts,

statements, and many other sundry and distaff things regarding applicants for pipelines, powerplants and other things before the Commission.

Mr. O'CoicNoR. Yes, sir.

The CHAIRMAN. The Senator from Texas said as far as he knew,

you never played any part in partisan politics. Now, that may be

commendable in some cases, but in other cases it may not be. Texas

is a little confusing to me in this situation, but the law requires that

not more than a majority of the Commission shall be members of the

same political party. The Commission as now constituted consists

of Arthur Kline, the Republican appointee from Wyoming; Mr.

Kuykendall, the Republican appointee from my State; Mr. Morgan,

a Democrat from Oregon, and Mr. Swidler, a Democrat from Tennessee.

I am going to have to ask you under the law, what are your politics,

if any?

Mr. O'CormoR. lam a Democrat, Senator Magnuson.

The CHAIRMAN. That will make three Democrats, one Republican,

and there is one vacancy to still be filled on the Commission.

All right. We will go now to those who wish to testify on Mr.

O'Connor and I see Mr. Casey is here, and the Senator from Texas,

Senator Tower is here, and Senator Proxmire and we will hear from

them first.

Senator Tower, now we would be glad to hear from you.

STATEMENT OF HON. SOHN C+. TOWER, OF TEXAS

Senator TOWER. Mr. Chairman, I will be brief. I would like to

speak in support of the nomination of Mr. Lawrence J. O'Connor to

the Federal Power Commission.
4 NOMINATIONS

I believe he is a man of high character and integrity. He is well

educated and a hard worker. I believe he will be fair and impartial

and professionally sound in his deliberations and judgments as a

member of the Commission. He possesses a depth of understanding of

and objectivity toward the issues that will confront him. He has my

wholehearted endorsement and I would respectfully urge this committee to endorse his nomination.

The CHAIRMAN. We thank you for coming up here and giving us

the benefit of your views on this matter, Senator Tower.

Senator Proxmire, I believe wants to testify also.

STATEMENT OF HON. WILLIAM PROXMIRE, OF WISCONSIN

Senator PROXMIR:11 Mr. Chairman, I oppose the confirmation of

Lawrence J. O'Connor, Jr., to be a member of the Federal Power Commission. It is with great reluctance that I speak against the appointment of a man who is not from the State I represent, and it is with

equal reluctance that I oppose the confirmation of a member of my

own party, and an appointee of President Kennedy, especially on the

morning following his brilliant appeal for national support in the

international crisis, but my State has a very deep interest in this appointment. Half a million Wisconsin families heat their homes with

natural gas. They have every reason to take alarm at this appointment.

I oppose Mr. O'Connor's confirmation because he is obviously an

industry man. Even before he is appointed, he is of, by, and for the

industry he is appointed to regulate.

Until he entered the Interior Department in October of 1959,

O'Connor was a consultant to gas and oil companies. It is a shocking

fact that the new FPC Commissioner's principal employment has

been as vice president of a Texas oil and gas company.

During the past 2 years, three rate increases have been put into

effect by the company Mr. O'Connor worked for u.ntil 1958 and they

have gone unchallenged by FPC. The Independent Petroleum Association of America, of which Mr. O'Connor is a former director and

committee chairman seeks actively to get the Federal Power Commission out of natural gas regulation.

Appointing Mr. O'Connor to the FPC is like appointing Mickey

Mantle to umpire Yankee baseball games. It is about as fair as a

fourth strike. It is about as ethical as brass knuckles.

Men with oil industry, backgrounds are already serving as Navy

Secretary and Assistant Secretary of the Interior. Oil has become

the tragic Achilles heel of •an otherwise splendid public interest

administration.

My reason for opposina

b

the confirmation of this appointment is not

a personal one. Mr. O'Connor is not known to me personally. I oppose this appointment because it would continue the history of the

Federal Power Commission, which has been so sadly marred by subservience to the industry's point of view. The FPC has been, and

continues to be, the most infamous example of a regulatory agency

fallen captive to the industry itself. A year ago, four Federal Power

Commissioners out of five wanted to get the FIT out of producers'

rate regulation entirely. I want to emphasize the fact that the failure

of the Federal Power Commission in recent years is not just an aspect
NOMINATIONS 5

of a tug-of-war between several competing interest groups. This

is a subject about which the U.S. Congress, the President, and the

Supreme Court have repeatedly pronounced. There is every ground

for suspicion, on the basis of his past associations, that the nominee

will follow the gas industry's firmly stated opposition to the law of

the land.

The reason this appointment is so crucial to 27 million natural gas

consuming families is evident from the FPC's recent experience with

producers' rate regulation. The Supreme Court stated in dictum in

the Interstate Natural Gas Co. case in April 1945 that the Federal

Power Commission had the power, under the Natural Gas Act, to

regulate wellhead sales of natural gas by producers to pipeline companies. The natural gas producers cried out against the verdict and

persuaded the FPC that it had no authority over such sales, despite

the fact that they were clearly in interstate commerce and fell within

congressional intent in drafting the Natural Gas Act.

In July of 1950 the Commission clearly stated that it had such

authority and soon afterward started proceeding against the Phillips

Petroleum Co.,

The reaction on the industry's part was a determined effort to win

control of the Federal Power Commission. When the Kerr bill to

relieve producers from wellhead rate regulation was sent to President Truman, Commissioners Draper and Buchanan and Chairman

Wallgren advised the President to veto the bill, which he did.

By August of the same year, however, Commissioners Draper and

Wallgren had changed their minds to join with the two Commissioners

who had dissented in April of that year in deciding that FPC did not

have jurisdiction over producers' sales.

With the appointment of Commissioners Kuykendall, Stueck, and

Digby in the first year of the Eisenhower administration, the industry's point of view was upheld by a decisive majority of Federal

Power Commissioners. Commisisoner Digby made no bones about

insisting that the FPC had no jurisdiction whatsoever over producers'

rates.

Then began the sensational price rises in the natural gas fields:

from 9.1 cents per thousand cubic feet in 1953 to 10 cents in 1954 to 15

cents in 1959.

The Commission was embarrassed by the Supreme Court's decision

in the Phillips case that the Natural Gas Act did not exempt producers

from the FPC's jurisdiction. Its reaction took the form of requests

to Congress for release from the regulatory duties which the Court

said it had under the Natural Gas Act. When the Commission should

have been working on a formula for keeping producers' rates to the

"just and reasonable" levels required by law, it failed to do so.

For every point the cost of living rose on its 1947-49 base, the cost

of natural gas for home heating purposes rose 2 points, totaling

441/2 percent over the past 12 years. Natural gas companies became

used to charging all that the market would bear, and then some. Gas

companies have socked the consumer with never-ending rate increases,

because the FPC can't bring itself to act in holding rates to the reasonable levels required by law. Twenty-seven million American gasconsuming families are suffering exploitation because the FPC has

gone on a sitdown strike against the consumer.

73078-431--2
6 NOMINATIONS

If the FPC does not pass upon a producers' rate increase within 5

months, it goes into effect pending FPC action.

The CHAIRMAN. I want to suggest to the Senator from Wisconsin

that there is pending before this committee a bill induced by and sponsored by several Senators, that would not allow a rate to go into effect

until it is actually ruled on by the Federal Power Commission. We

are holding hearings on it. I just wanted to let the Senator know that

is pending before the committee.

Senator PROXMIRE. I certainly support that legislation. Over half

a billion dollars is collected annually in the form of rate increases on

which the FPC has failed to act.

In the Cate° case in 1959 the Supreme Court ordered the FPC to act

on spiraling rate increases. In its report for that year FPC replied by

requesting to be freed from such requirements. The U.S. Circuit

Court of Appeals for the District of Columbia stated on December 8,

1960:

We believe that the Supreme Court (in the Gates case) meant to impress

upon the Commission an interpretation of the "public interest" which, in the

context of a rising natural gas market, demands a real administrative effort to

hold back prices. We find nothing in the record before us which would justify

the conclusion that the Commission has adequately performed this duty.

Recent contract prices in Texas have reached 20 cents per thousand

cubic feet, 24-26 cents in Louisiana and 35 cents in Pennsylvania.

Many contracts contain escalation 

Louisiana,

to drive the price up still

further. FPC tried to take action in February of this year with order

232 banning indefinite escalation clauses. But after industry outcry,

FPC climbed down and issued order 232A of March 31, permitting

redetermination clauses operative once every 5 years (if based on

jurisdictional rates not at issue) . The record is clear.

Last week was "Captive Nations Week"—well, this is "Captive

Regulatory Commissions Week"—starring 

industry.

• 

Federal Power Commission in the grasp of the natural gas ndustry.

The FPC has taken so little action in pruning increases that homeowners who bought stoves and furnaces when gas was cheap are now

paying heavily for the inaction of the Federal Power Commission.

Mr. Chairman, this is very hard on consumers. My constituents

in Wisconsin have invested, I think, very nearly half a billion dollars in gas equipment. They are captives, they can't convert to oil

and coal or any substitute fuel. They arev to pay whatever the gas

company charges. Of course, that makes them the victim of the

increases that the producers have been successful in achieving.

The Independent Petroleum Association of America, of which Mr.

O'Connor is a former director and committee chairman, has repeatedly urged the FPC to get out of producers' rate regulation.

The will of the industry is clear.

The consuming public hasn't much of a chance before the FPC.

The gas industry has had the best legal, statistical, and technical

brains money can buy, lobbying the Commission from the outside.

With O'Connor's appointment they will have their boy on the inside.

The public must have commissioners dedicated to fight for the public

right above any private-special interest; men who will stand up to

terrific gas industry pressure. Is anyone so naive as to argue that

O'Connor is this kind of man?
NOMINATIONS 7

At its present rate of action FPC would take 13 years to clear

up cases now pending, during which time some 6,500 more cases

would come in, which the Commission, even with triple its present

staff, could not dispose of until the year 2043 A.D. Meanwhile,

millions of consumers will have to pay hundreds of millions of dollars

a year in unjustified rate increases that- even the FPC will later disapprove. These cases pile up because the Commission has not been

able to devise a formula for settling producers' rate cases.

Recently the FPC has begun to move toward an area-pricing system,

under which prices would be set for each of the major producing

regions. A crucial question, on which the industry's point of view is

well known, is whether the area price is merely to reflect the going field

rate, or whether such prices are to be adjusted to the actual costs of

producing gas in each field. The industry has been keeping such costs

under tight wraps. At the Permian Basin prehearing conference on

March 6 of this year, companies stated that they would surrender their

cost data to Stanley S. Porter of the New York firm of Arthur Young

& Co. only if consumer intervenors would accept Porter's results without trying to force him to divulge the figures for individual companies.

The cost issue is central to the future of area pricing, on which effective

regulation of producers' rates depends.

In view of the industry's reluctance to make costs available, I conclude that effective rate regulation depends upon consumer representatives' seeing that cost data. Once area prices become effective, no consumer representative will be able to assemble enough data to challenge

them. Consumers should not accept the imposition of area prices

without adequate reassurance that they will be represented when area

prices are calculated.

Once again, let me say, the public must have commissioners dedicated to fight for the public right above any private special interest—

men who will stand up to terrific gas industry pressure. Is anyone so

naive as to argue that O'Connor, although a man of excellent education and fine character, is this kind of man?

I reluctantly but vehemently oppose this nomination because justice

and the public interest will be sacrificed to the most powerful special

interest in Government—the oil-gas industry.

The CHAIRMAN. Thank you, Senator Proxmire.

Do any members have questions?

Senator YARBOROUGH. Yes, Mr. Chairman.

I appreciate the diligence with which our able Senator from Wisconsin defends the people of his State, the interests of the people of his

State, and the vigilance with which he looks after their interests. I

think he has been vigilant in this matter, and I don't believe, Senator

Proxmire, that you would object if I ask a question.

Isn't it a fact you have studied pretty thoroughly Mr. O'Connor's

background and that you have found no derogatory act in his life,

nothing but a life of honor and uprightness in everything you have

learned about him?

Senator PROXMIRE. I concluded my testimony by saying he was a

man of excellent education, fine character, but what I am trying to

emphasize throughout is that the important prejudicial fact is that his

whole association, his principal background, his orientation, is toward

the industry.
8 NOMINATIONS

Senator YARBOROUGH. Now when gas is sold in a city. in. Wisconsin,

who gets the lion's share of the money for that thousand cubic feet of

gas? Isn't it your local utility in the city? Doesn't it. get way over

half of everything a thousand cubic feet of gas brings to the burner tip,

in Wisconsin?

Senator PROXMIRE. It varies around the country, as the Senator

from Texas knows and I am going to answer the question by saying in

a city like New York, the utility and the pipeline and so forth gets

most of the funds and the producer will get very little. .

In areas near the producing area, the producer will get as much,

I understand, as 85 to 90 percent. In Wisconsin it is true that the

utility, which is regulated by the public service commission in the

State, will get most of what is received. But the other point I would

like to emphasize is that increases have been forced. on the gas consumers because they have originated with the gas producer. And on

these increases, the Wisconsin Public Service Commission, which

regulates the utility, has no alternative except to pass them on to

the consumer.

Senator YARBOROUGH. Could you name me a city in 4merica where

the producer gets 85 to 90 percent of the price received for gas?

Senator PROXMIRE. I don't have the statistics available. That is my

understanding. I will be happy to try and corroborate that for the

record.

Senator YARBOROUGH. I feel certain there is not a city in my State,

where they are right by the fields, where the producer gets, as much

as 50 percent of the price of the gas. Now isn't it a fact that what ultimately goes into the price of the burner tip to the housewife is made

up of three segments, what the producer gets for his raw gas he sells

at the wellhead, what the interstate pipeline company gets to carry the

gas to the city, and then what the local utility gets?

Isn't it a fact, Senator Proxmire, that relatively, over the country,

about 10 percent of that price goes to the producer, about 30 percent

to the big interstate gas pipelines and about 60 percent .to the local

utility company; and the local utility company, in: the. usual city,

gets more money than this big interstate utility, and the gas producer

at the wellhead?' Isn't that a fact?

Senator PROXMIRE. Well, the Senator is absolutely correct in describing the three institutions which receive the money;.that is, the

utility, the pipeline, and the producer. He is generally:correct, as

I ,understand it, in that the producer receives a smaller share than the

other two. However, as I say, the real driving force that has been

pushing up rates is the fact the producer is not regulated and the other

two are, and the producer has been getting an enormous increase.

My statement of 441/2 percent increase for the consumer since 1947-

49 was the price he pays; the amount that the producer has been receiving of Course is an infinitely higher percentage. ,

Senator YARBOROUGH. Of course a producer in the Southwest, who

is getting 9 or 10 cents per thousand cubic feet was drooling pretty

much over the Pennsylvania producers getting 35 cent§ a thousand

Cubic feet. Naturally they wanted some fair price in relation to gas.

Pennsylvania brings 35 cents a thousand cubic feet. .

, Senator PROXMIRE. I am sure the Senator is well aware of the differences between Texas and Pennsylvania in the cost Of producing

natural gas.
NOMINATIONS 9

Senator • YAMOROUGH, The reason for my question, to go back to

your testimony, in relationship to your statement here, you are talking about the gas industry, and you say with O'Connor's appointment,

they will have their boy on the inside. Have you ever found any

representation' by Mr. O'Connor of these public utilities that sell gas

in the cities, or' the interstate pipeline companies?'

Senator PROXMIRE. I think the Senator is well aware of the fact

that the gas companies are, at least in my State and I think in.

every State, under effective regulation. There is no question that

they are. The, pipelines are, but the producers are not. And Mr.

O'Connor'S experience has been with the producers.

Senator YARBOROUGH. Just how effective is that regulation, when the big interstate pipelines and the big utilities distributing to big cities in the North get 90 percent and that farmer or rancher, pro- ducer, in Texas, is getting 10 percent of what is paid at the burner tip? You say effective regulation. Just how effective is that regula- tion? Just how effective is regulation by city councils in America of public utilitiesin their cities?

Senator PROXMIRE. It can't be effective as long as one of the three elements is not under regulation, as long as they have the monopoly

power they have to push prices up and as long as they have exhibited

as they have. As the Senator knows, he quoted 9 and a fraction

cents, and it seems to me it is higher than that, but at any rate, that is up from about 4 cents a few years ago; an enormous increase.

Senator YARBOROUGH. Of course, I am not debating the regulatory problem with you but because of your sentence about Mr. O'Connor, that they would have their boy inside—now you have three segments of this thing in furnishing gas

'

and if the public interest is really fol- lowed, they wouldn't be in bad with each other.

Senator PROXMIRE. The fundamental controversy is over the pro- ducer and whether or not the producer 

Senator YARBOROUGH. Why? Simply because the big utility is able to kick the little producer in the teeth? The little producer is in the same shape as the housewife. You don't hear any controversy

about the bigs. That is the local utility distributing in the city and the big pipeline that carries it up there. They manage to get some-, body else kicked in the teeth, the little producer or consumer. Who is getting the money out of this thing? It is the big lines taking it

up there and the biggest slug of all, the local distributing utility.

Senator PROXMIRE. My heart bleeds for the little producer, it really

does. But the little producer isn't a commercial factor. It is the big producer -that sells in Wisconsin, the producers that sell less than 2

billion cubic feet don't constitute an important source of production

for most of the country2 and certainly not in my State. It is the big producer who grosses millions of dollars and sells an enormous amount

that is the real factor here. He is in a position to push prices up

and does it.. And the record is clear he has done it.

Senator YARBOR017011. But the relative proportions, I think you will find that I have given you—I won't debate that, that really isn't in issue here with Mr. O'Connor, I don't think. But I want to point out

I think this sentence is harsh and unfair, a man with no connection

with these utilities, to say he is those utilities' boy. It is the interstate

pipeline company and the local utility that is getting the lion's share.
10 NOMINATIONS

Senator PROXMIRE. I am delighted the Senator sharpens this. I

think he puts it well. I won't say the big utilities' boy, pipelines' boy.

I think this is a fine man, not anybody's errand boy. His experience,

however, has been with the gas producers and here is where the real

crux, the real problem, in regulation is, with the producer.

Senator THURMOND. Would the Senator yield on that point?

Senator YARBOROUGH. Yes.

Senator THURMOND. I think the questions that have been asked

here by the Senator from Texas are very pertinent. My State produces no gas. I have no interest in the world in any gas production,

but I remember several years ago we had hearings on this question, and

I just happened to make some notes in my notebook, and I looked back

and found them and found in the city of New York, when gas was selling for $2.43, the producer got only 10 cents.

Senator PROXMIRE. The reason for that in New York, of course, is

because of the bedrock situation on which New York buildings are

based, and the enormously heavy cost of putting pipelines in there.

Senator THURMOND. In Philadelphia, where gas was selling for

$1.36 at that time, the producer got only 10 cents. Now it seems to me

that the producer is certainly not making the profit out of this gas.

It is either the pipeline or the local utility that sells the gas. And I

would suggest that the Senator, if he wants to pursue this matter

further, consider taking some steps against these utilities, if he wishes

to, that actually dispense, sell this gas to the consumers. I agree with

the Senator that in many instances gas is too high, it is too high in my

home city of Aiken, S.C., and I have complained about it. But I don't

blame the producer. He is getting very little out of it. Others are

getting too much out of it. But this man here, Mr. O'Connor, from

Texas, simply because he has been connected in some way with producers, it seems to me that warrants no condemnation, because the

crowd he was with is the one that is getting the least out of it. They

are getting very little out of it. It is the utility that is making the big

profit out of it.

I have a very high regard for the Senator from Wisconsin, but I

feel in fairness to Mr. O'Connor, I ought to bring out that point.

Senator PROXMIRE. Well, I would say the example of Philadelphia

is a good one. You said the producers used to receive 10 cents. I am

informed the producers now get 20 cents. That is 100 percent increase

and that is passed on directly to the consumer. The increases the

utility has gotten there are under strict regulation and I haven't seen

any showing that that has been the reason at all for the sharp increase

in what the consumer pays to the ultimate producer for the gas.

The CHAIRMAN. I might indicate in the record at this point the

importance of what the Senator is discussing. I have a report from

the Federal Power Commission as of May 31, 1961, pipeline rate

increases suspended or pending, 107 cases, with value approximately

$387 million. Pipeline certificate applications pending, 197, representing approximately $872 million worth of facilities of which about

$250 million is being constructed under temporary authority.

Independent producers rate increases suspended and pending,

3,821, value approximately $172 million. Independent producers

certificate applications pending, 3,038, of which 70 percent are operating now under temporary authority.
NOMINATIONS 11

Now this shows the magnitude of this problem in dollars and cents

and the magnitude of its importance to the economy of the consumers

of this Nation, just the cases pending.

Senator PROXMIRE. I thank you very much, Mr. Chairman.

It seems to me those figures showing the independent producers

pending, $132 million, I think was the figure 

The CHAIRMAN. 172 million, rate increases pending, 3,821.

Senator PROXMIRE. $172 million.

The CHAIRMAN. But the Senator from Texas says there are a great

number of them.

Senator YARBOROUGH. I beg your pardon?

The CHAIRMAN. There are 3,000 of them pending, 3,800 pending,

independent producers rate increases, whereas the pipeline cases pending are pretty well concentrated in the big pipelines they total approximately 200, but the value of the facilities and the rate increases

involved run well over $1 billion.

Senator PROXMIRE. May I simply say to the chairman that one of

the interesting aspects of that is of course these 3,000 applications

don't come, as the Senator knows, from 3,000 companies. They are

one piled on top of another, sometimes many, many requests, and

that $172 million, much of that, if it has been pending for more than

5 months, has already gone into effect, as far as consumers are concerned. They are paying it, and they are going to pay it even if it is

denied. Of course they get an interest return, but they are making

a forced loan to the company.

Senator YARBOROUGH. May I make a comment, Mr. Chairman?

The CHAIRMAN. Yes, the Senator from Texas.

I thought this would be a good time to put these figures in the

record, to show the magnitude of the problem we are dealing with.

Senator YARBOROUGH. I want to thank the Chairman for placing

those figures in the record. It shows the pipeline increases are much

more than all the increases asked by producers. Thirty-eight hundred

companies, producers, that would be $172 million, as against the pipelines asking for over a billion.

Senator PROXMIRE. But the pipelines are paid for over a period of

many years and that is the reason that that increase is that big on

pipelines, because the cost of constructing the pipelines is extremely

great. As far as the direct impact on the consumer is concerned, it is

my argument that the impact of the producer increase is extremely

important, very great.

Senator YARBOROUGH. I share with the distinguished Senator from

Wisconsin his concern for producers generally. My State is now urbanized. We had in 1940, 45 percent of our people living on farms

and ranches. Now our percent of urbanization is as high as the State

of Michigan. We have changed to city dwellers, and they are interested in lower gas rates too, and we have this same issue.

I agree with the Senator that gas rates are terribly high in many

cities, it seems to me too high. I made some investigation of this 3

years ago, when this question came up before this committee on something else. Right here in Washington, the company furnishing gas

was making more net profit a thousand cubic feet than the producer

in the Southwestern States was getting for his gas at the wellhead.

They made more net profit on it. Well, to that farmer, when the
12 NOMINATIONS

gas is gone, it is gone forever. His resources are gone. They can find

other sources of supply—I understand they are building pipelines

into Wisconsin now from the Canadian fields.

Senator PROXMIRE. The Senator from Texas keeps talking about the

small farmer and rancher and it is the big companies that are involved here.

And the senior Senator from Illinois has proposed recent legislation

and I support it, that the small companies ought to be exempt.

Then you could go a long way toward regulating this industry.

But the industry has resisted that proposal. We want to exempt all

but the really big producers.

Senator YARBOROUGH. I have introduced a bill in the past session to

exempt these small producers.

Senator PROXMIRE. I am enthusiastic for that.

Senator YARBOROUGH. I believe in that. They are in the same shape

as the housewife. I am not trying to hold up high gas rates for the

consumers, I am for lower rates to the consumers. But I am pointing

out to the able Senator from Wisconsin, he is putting the shoe on the

wrong foot.

Those are not the people getting the big money out of this; it is a lot

of homegrown utility companies, in these big cities that are getting

the lion's share of what the housewife is paying. It is easy to overlook them and jump on what some farmer is getting for gas.

As to Mr. O'Connor, there is no showing he is connected with any of

these utilities. He has been representing the independent producer,

Goldston Oil Corp. of Houston, where he worked as vice president

and treasurer. He severed his connection there and was a self-employed consultant, until he went into Government service and there is

no complaint that he has been biased in favor of any segment of the

industry or the industry itself.

I am not quarreling with the Senator from Wisconsin about his

dedication to the interest of the consumer. That is mine too. I have

shown that in my public record in Texas, as an assistant attorney general and otherwise, in trying to get gas rates down. But the Senator

is pointing arrows at the weak segment.

Senator PROXMIRE. May I say in conclusion -

Senator YARBOROUGH. I say go out after the lions.

Senator PROXMIRE. There is not one single thing the Congress of the

United States can do, in my judgment, about regulating a utility in

Wisconsin. That is under the public service commission of my State,

under the Governor and State legislature.

I think our public service commission has a good record; we have

been pretty tough; we have graduated some fine and outstanding people, like Lilienthal and others, to greater service.

But as far as the Congress is concerned, what we can do is to see that

those who are in interstate commerce, the producers, are effectively

regulated as the Supreme Court and Congress said they should be.

Senator YARBOROUGH. Well, the two first State regulatory utility

agencies set up in America, in the same year, were in Wisconsin and

Texas, the railroad commission in Texas, and the regulatory agency in

Wisconsin, and I agree your agency has in the past had a good record.

The public utility reports from your regulatory agency in Wisconsin

have been widely quoted by other agencies in the course of history and

I agree you have had a lead in that field in the past in Wisconsin.
NOMINATIONS 13

I just, Senator Proxmire, ask this, not to argue with you, but point

out this in the weakest segment of this business and the applicant here

is not from the utility industry.

Thank you.

Senator MONRONEY. Mr. Chairman?

The CHAIRMAN. The Senator from Oklahoma.

I hope we will reserve some of this debate for the Senate floor.

Senator MONRONEY. I will try to be brief, Mr. Chairman.

Have you ever known Mr. O'Connor?

Senator PROXMIRE. I beg your pardon?

Senator MONRONEY. Have you ever known Mr. O'Connor?

Senator PROXMIRE. No. I saw Mr. O'Connor for the first time this

morning.

Senator MONRONEY. You evidently have done a good deal of research on this situation before coming before this committee. This is

well prepared and from your standpoint a very well-documented

presentation.

• I wonder if in your studies you have investigated, his character?

Senator PROXMIRE. I heard nothing whatsoever adverse to the character of Mr. O'Connor.

Senator MONRONEY. He is morally honest and upright and a man of

good patriotic intent?

Senator PROXMIRE. I am sure.

Senator MONRONEY. You do not suspect him of being susceptible

to bribery?

Senator PROXMIRE. No, sir.

Senator MONRONEY. Or suspect that he would willfully, with the

facts clearly on one side, hold on the other side, because of his past

association?

Senator PROXMIRE. No, sir. I think in answer to that particular

question, however, I would say that the record of the Federal Power

Commission indicates that they have had many fine men of high

character, men whose attitude has been oriented toward the industry

and in my viewpoint at least have made decisions which have assisted the producers and industry generally and damaged the consumer.

Senator MONRONEY. Of course Mr. O'Connor has never been a Federal Power Commissioner.

Senator PROXMIRE. I know, but this has been the record of other

people of high character and otherwise good qualifications.

Senator MONRONEY. And these appointments have been made over

a period of years by President Truman, President Eisenhower, and

President Kennedy.

I am a little shocked to read this statement about appointing Mr.

O'Connor to the FPC is like appointing Mickey Mantle to umpire

Yankee baseball games, and it is about as fair as a fourth strike, and

about as ethical as brass knuckles. And on page 2 you say the FPC

has been, and continues to be, the most infamous example of regulatory agency fallen captive to the industry itself:

There is every ground for suspicion, on the basis of his past associations,

that the nominee will follow the gas industry's firmly stated opposition to the

law of the land.

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14 NOMINATIONS

Skipping—

Gas companies have socked the consumer with never-ending rate increases, because the FPC can't bring itself to act in holding rates to the reasonable levels

required by law.

And on the bottom of page 4, you say:

Last week was Captive Nations Week—well, this is "Captive Regulatory

Commissions Week."

And on page 5, you say:

With O'Connor's appointment, they wil lhave their boy on the inside.

I think there is a certain morality attached to men going into

public service, and since you say you have heard nothing wrong, you

have found no rumors clouding this man's character, I think your

statement would at least be open to some criticism of being unfair.

This committee has in the last 2 months confirmed two men to the

Federal Power Commission, and Senator Yarborough and myself

are vitally interested, as this is one of the principal products of our

State, the same as you are interested in cheese in Wisconsin, and we

are anxious to see that the fair economic benefits that flow from our resources are at least in the hands of men who are not prejudging the

case, and yet in the case of Mr. Swidler there was considerable opposition against his appointment.

I don't believe you appeared against him.

Senator PROXMIRE. No, sir • I did not appear against Mr. Swidler.

I voted for Mr. Swidler and Mr. Morgan. I thought they were both

excellent appointments.

Senator MONRONEY. You were aware, of course, that Mr. Swidler—

and I voted for him too, because I judged he was honorable—a man

of character and integrity and although his life had been spent in

public service as general counsel for the TVA, I did not think he

would be unfair to private power.

And when he appeared before us and testified, I cast my vote in

behalf of Mr. Swidler. By the same token, when Mr. Morgan was

here, who has spent some time on a regulatory commission, dedicated

of course to the consumer side, in Oregon, in an area in which public

power is predominant, I felt he would make a very good Commissioner, because of his past experience in this field and I felt both

Mr. Swidler and Mr. Morgan, although they were to regulate both

public and private power, were able to dismiss as unimportant their

previous association and would not be prejudiced in any way.

Now it seems to me the shoe should fit the foot, and if it works

in public power versus private power, to accept, as we readily did,

these men on the Federal Power Commission, the fact a man has

had vast experience in the petroleum industry with the Independent

Producers Association, which is one of the organizations made up of

the nonmajor companies, that experience is not necessarily to disqualify him for the task of serving on the Power Commission, whose

duty in part will be the regulation of the gas industry, both the pipeline industry, the feeder collecting industry, and the producing

industry.

Senator PROXMIRE. I would be delighted to answer that. It seems

to me there is no record that the Federal Power Commission has

been biased in favor of the public power industry. I do not know
NOMINATIONS 15

anybody who has argued that. There is an overwhelming record the

FPC has been very much in favor of the private producers of gas.

It is overwhelming, the Supreme Court has spoken out on it, and the

intent of Congress, it seems to me, has been directly violated, and

the reason for it is very obvious. That is because the private power

people, the private gas people I should say, have a great deal of money

to invest in this, all of it tax deductible. They hire the best legal and

statistical brains, public relations brains, and do a job on the FPC

and they have done it.

I think everybody knows if the public power people try to do anything there will be a far more effective counterbalancing pressure on

FPC from the other side.

There is no chance FPC will become a captive of the public power

industry. It is almost a joke to suggest it, but there is a definite

danger it is going to continue to be dominated by the viewpoint of

the private gas industry.

Senator MONRONEY. Why do you think it will be dominated by the

private gas industry? If the man is morally honorable, I think you

are doing a great disserve to assume 

SenatorPROXMIRE. I would enthusiastically support this man for

any number of government posts. I think he has good qualifications

and as other Senators brought out, his character is good. But it

seems to me it is a mistake to appoint a man to FPC, who has been

identified as closely as this man has with the gas-producing industry,

when this is the real crux of dispute over FPC and when it is subject to such legitimate criticism.

Senator MONRONEY. I don't want to retry the gas case but what is

the burner tip rate of the consumer in Wisconsin.

Senator PROXMIRE. $1.25.

Senator MONRONEY. And raw gas, you say, costs 15 cents?

This is one of the examples, I think, that Mr. Yarborough was bringing out, the gas that comes from Oklahoma is worth 10 cents, accordMg to the last Bureau of Mines statistics, and I believe the gas from

Texas. So this is a problem that will be with us for quite a while, because of the very fact of trying to apply a public utility return rate to

production of a natural resource, which is akin to mining, and has

thus far defied the best efforts of any of the Commissioners and certainly many of the men who have gone on the Commission deciding

that public utility rates could apply. After years of experience they

found they have bogged down in the morass that is presented here

with the constant changing cost of production and the dry holes and

all of the other, mixture between oil and gas production to where it

is difficult to find out what is a valuation base of a dry hole that might

have been drilled either for oil or gas but can wind up very easily in

the valuation rate as a gas well, an effort to discover gas instead of oil.

For that reason, since we have raised no prejudice in any way against

Mr. Morgan or Mr. Swidler, both of whom I say come from backgrounds that were antagonistic at least in the pricing theory to private

power, this committee raised no bar against them and I do not see

why experience with independent producers would necessarily be a

bar against Mr. O'Connor, or subject him to having his appointment

called as ethical as brass knuckles.
16 NOMINATIONS

Senator PROXMIRE. I think I have made my position clear. I feel

the record of FPC is pertinent here and the evidence is overwhelming

that the private gas people have great influence, great dominance, and

it has been lield by the highest court in our land as being, in consequence, improper, and the effect on gas consumers not only in Wisconsin but all over the country has been bad.

Senator MONRONEY. I can't quite agree that people who have grown

up in oil-producing States and have managed to help supply the necessary oil and gas for our Nation are second-class citizens or because

they happen to understand the business are suspect if they are nominated for the Federal Power Commission job, if there is nothing else

you can question in their character whether they are nominated for

the Secretary of Navy or Assistant Secretary of the Interior.

Senator PROXMIRE. I have never argued that.

I certainly would not argue that the people from any State, regardless of what the main resource is, should be barred from receiving

appointments.

I have argued in the case of the Navy Secretary, that he should not

have been appointed because as Navy Secretary he continued to be

the executor of one of the biggest private oil estates in the world, and

as Secretary of the Navy buys all the oil for the armed services.

Mr. Kelly I opposed for Assistant Secretary of the Interior because

he held on to much of his important oil holdings and as Assistant

Secretary of the Interior he was in charge of virtually every important regulatory agency that deals with oil. His is the principal office

in the Executive branch.

These appointments were wrong not because of the State represented but because of the obvious conflict of interest.

Mr. Kelly, as the Senator knows, comes from New Mexico, not

Texas.

Senator MONRONEY. But I still say if a man is honest in his background, unless he has been involved in something questionable, he

should not be ruled out for public service and certainly some experience in the vital necessity of developing of our natural resources is

not so objectionable as to disqualify a man for public service, particularly in agencies and departments dealing with development of oil

or natural resources.

Senator PROXMIRE. Well, I think that in any number of agencies

these men would be well qualified for but not in those in which their

own particular background is so deeply involved.

This is particularly true of FPC, which, as the Senator knows, is

independent of the President, and properly so, is quasi-judicial, makes

virtually definitive decisions only -subject to court review and has

this enormous amount of power.

It is particularly unwise to appoint a man with this kind of background to that kind of body.

Senator MONRONEY. That is all.

The CHAIRMAN. Any further questions?

Senator ENGLE. Just one question.

Senator Proxmire, do you believe that this committee, in considering nominees to these regulatory agencies, ought to, as a matter of

principle

'

exclude anybody who has had any association with the industry to be regulated?
NOMINATIONS 17

Senator PROXMIRE. Generally I would say that if they have had

an association with an industry that is to be regulated, a close association, over much of their lives or are from a group that will exert

concentrated and effective pressure on that agency, I would say if I

were on the committee, I would vote against that kind of appointment.

Senator ENGLE. In other words, we will exclude everybody who

has had enough experience to know what they are doing on the Commission?

Senator PROXMIRE. No, I think if a man had been on a regulatory

body, I think if a man had taught in a university for a number of

years and had become an outstanding scholar and expert on it, if a

man's background were this kind, I think he should go on it.

But I think while expertise is important, expertise can be developed and can also to some extent be hired in terms of a staff. But if

you compromise on expertise to the extent of appointing people who

are from the industry that has the vested interest and is going to exert

overwhelming pressure on that body, then I think you can predict

what the outcome is going to be, the industry will win, the public

interest lose.

Senator ENGLE. Thank you, Mr. Chairman.

The CHAIRMAN. Senator Schoeppel ?

Senator SCHOEPPEL. I don't have any questions but I want to associate myself with the position taken by the distinguished Senators

from Texas, California, and Oklahoma. I have a great respect for

the distinguished Senator from Wyoming—excuse me, I mean Wisconsin.

Senator McGEE. I hope Wyoming, too.

Senator SCHOEPPEL. Incidentally, I do not think the Senator from

Wyoming would hold as suspect anyone ever connected with his State

if he should come up for confirmation before this committee.

I have great respect for the Senator from Wisconsin.

He has a right to take any position he wants to take. Here before

our committee is a man I did not know, I had only heard about him

in the Interior Department. As a member of this committee, I think

he is before us to evaluate whether we should confirm him or not.

His background has been honorable, aboveboard, and open to the

public.

I played some athletics in my day and I loved the game and I loved

the referees when they blew the whistle. But this statement I cannot

let go unchallenged as it relates to this man who is here before us,

qualified and experienced as he is, and a man who has a good public

record. When you say it is like appointing Mickey Mantle to umpire

the Yankee ball games or about as ethical as brass knuckles.

Senator PROXMIRE. If the Senator would yield, I would like to say,

this is a good point, because I certainly would not question the character of Mickey Mantle or Roger Mans. They are fine Americans.

But I would not want them to umpire a Yankee baseball game.

I feel the same about Mr. O'Connor. He is a fine American, an

excellent man, but not for the Federal Power Commission.

Senator SCHOEPPEL. Poor Eddie Rommel, who was a great pitcher

for the Athletics, has made a splendid record umpiring.

Senator PROXMIRE. Did he umpire in the league in which he dewloped his reputation?
18 NOMINATIONS

Senator SCHOEPPEL. I am surprised that the Senator from Wisconsin did not know that.

Senator PROXMIRE. Oh, I knew it. I wanted the Senator from

Kansas to tell me in what league Eddie Rommel umpired.

Senator SCHOEPPEL. If you would apply the yardstick the Senator

would apply to Mr. O'Connor, you would .have to bar Joe Louis forever from crawling in a ring, the great Negro heavyweight, who

fought with distinction and had a record of unqualified cleanliness.

He never could referee a bout.

Senator PROXMIRE. He could referee every bout, providing Joe

Louis, Jr., was not one of the contestants.

Senator SCHOEPPEL. Just a minute. And Walter Eckersoll, the

great Chicago football player, all-American, and I know he blew the

whistle on Wisconsin teams, you would bar him?

Senator PROXMIRE. Another excellent example. He came from the

University of Chicago and he never refereed a Chicago football game.

He refereed many others, but not Chicago. That is one of the things

they do in athletics to be fair. They keep the alumni from refereeing

the games the school plays.

Senator SCHOEPPEL. The point I want to make to the distinguished

Senator from Wisconsin, I cannot let this record stand with some

of the statements in here against Mr. O'Connor.

I do not think that a man because he has a background of some

experience, ability, in an industry that is up for regulation, should

be forever and completely barred. I think that is cutting it a little

too fine.

I just could not go along with you, Senator. And from all I have

heard about this man, and I have checked into his record, I think he

has made a good record. And I think the presumption should be,

when men come up that way, they are entitled at least to a break,

without being prejudged.

I am sorry I have to disagree with my distinguished friend from

Wisconsin in the sharp distinction he is drawing against this man.

I just cannot see it.

Senator PROXMIRE. I think the Senators from Kansas, California,

Texas, and Oklahoma have all made an excellent case. I do think

that many people would disagree with my position, perhaps the majority. But I think in this agency, at this time, this is the wrong kind

of appointment.

Senator ENGLE. Would the Senator yield, because I want the record

straight.

I am not sure I disagree in all particulars with the Senator.

I asked a question as to whether or not you were going to exclude

anybody from appointment to one of these regulatory agencies who

has had any experience in connection in the field to be regulated.

As I listened to the answer, the answer was generally "Yes."

Senator PROXMIRE. Let me clarify the answer.

The answer was, No, I would not disqualify them unless they had

been associated with a particular pressure group which was obviously

clearly effective in influencing the body to be regulated. If, on the

other hand, he had been in the regulatory end of it, or no such record

as this, I wouldn't disqualify him.

Senator ENGLE. I think it can get to be a question of degree. You

could have someone come up here, who obviously was so enmeshed
NOMINATIONS 19

in the industry, whose financial interests were so clearly identified

with it, you would not only have a clear conflict of interest, but a

philosophical orientation to the case that wouldn't make it possible for

that person to be fair.

Now, I would exclude that person. But the question I raise is that

I am not convinced that Mr. O'Connor -has that sort of identification

with this industry and I think that you can't say as a broad proposition that everybody who is associated with an industry is automatically

precluded from serving on a regulatory board. I think it is a matter

of the degree, the type of association he has had with the industry

and notwithstanding his association with it, which gives him experience and expertise in the area which would be helpful to him.

And he is not so closely associated as to distort his performance on

the Board, I wouldn't exclude him for that reason. I wanted to make

that clear in the record so it doesn't appear I am 100 percent for either

side here. I think there is a matter of degree involved.

The CHAIRMAN. I think you both have a point there and there is

another phase that sometimes this committee must consider. I voted

against a power commissioner once, not because he was ever associated

with the industry, but because I felt that his philosophy, on Hell's

Canyon, he would vote against us and I thought the majority of the

people in my area wanted Hell's Canyon.

It turned out he did vote against us. And I think you get into a

question of how a man applies his philosophy. I think a man can

divorce himself from his past association, and men have. But that is

a question for the committee to decide.

Senator McGee, do you have any questions?

Senator McGEE. No, I have no questions really. I can't resist a

comment on my friend Mickey Mantle, with the hope that the Senator

from Wisconsin would advise us if there were some way we could get

him in as umpire of the Yankee (Fames, as a stop the Yankee fan, I

think we would have a better chance of stopping them if he were

umpiring.

Senator PROXMIRE. I am mainly concerned in having Mantle acting

as plate umpire when he is batting.

The CHAIRMAN. We are getting into the 9th inning here now and

we better 

Senator YARBOROUGH. May I make one more observation, Mr. Chairman?

The CHAIRMAN. All right.

Senator YARBOROUGH. Senator Proxmire, lest we leave in the record

the erroneous impression that by virtue of the price of gas, that these

producers in Texas are getting an undue share of this world's goods,

I would like to point out that our average annual per capita income

in Texas is $1,943 a year, and we're 32d among the States of the Union

in the average annual per capita income. We are not pulling up from

the past few years our relative status among the States. We don't

rate as high as Wisconsin on the average annual per capita income

and we are not going to pull up out of 32d place on 9-cent gas.

Senator PROXMIRE. I would say there is an unfortunate amount of

absentee ownership. Somehow many Americans have gotten the impression there are some Texans who are not crowding the poorhouse,

there are some Texans who obviously have the goods of the world

and know how to spend it and spend it beautifully.
20 NOMINATIONS

Senator YARBOROUGH. The recent articles in the New Yorker would

create such erroneous impressions. I want to point out you mentioned

in your statement a few minutes ago that these people have the best

lawyers, the best accountants and the Commission can't cope with them.

These 3,800 small producers cannot hire lawyers and counsel to come

to Washington, and they are forced to sell out to big companies. It

is wiping out the independent operators.

Senator PROXMIRE. We continue to talk about different things. I

am talking about the big producers, 200 or 300 big producers that produce the large proportion of all the gas sold throughout the country

and in my State of Wisconsin. These are the ones that have the money

to hire the lawyers and accountants and do it. And they produce and

sell practically all the gas.

Senator YARBOROUGH. And this man here hasn't represented, he

hasn't worked for them at all.

Senator PROXMIRE. But he has worked with the Petroleum Association, been a top official.

Senator YARBOROUGH. The Petroleum Association is a group of people like a Bar Association. You have a damage suit lawyer in the Bar

Association, with a corporate lawyer. The fact you belong to the Bar

Association, doesn't mean you represent a certain interest in the economy of the country.

Senator PROXMIRE. The viewpoint of the Petroleum Association is

pretty clear, as far as the differences between the producer, the gas

producer and the consumer.

Senator YARBOROUGH. I won't quarrel with you. Mr. Swidler was

experienced in the valuation of electrical utilities, in having been with

TVA. We need someone on the Commission that knows how to value

these things.

Senator PROX1VIIRE. I am delighted you raised that point. Who do

you want on the Commission who knows how to value these properties?

Maybe the accounting background of the nominee would be helpful,

but helpful to whom? Who is the expert? Who would the Commission turn to for expert advice on the gas industry? They turn to the

man who has been president of the Goldston Oil Co., the man who has

been an active officer of the• Petroleum Association that represents the

industry viewpoint. They turn to him. Ile would be the expert, the

fellow giving the advice. What a wonderful position of power the

gas producers will be in.

Senator YARBOROUGH. You are presupposing the man is dishonest?

Senator PROXMIRE. Not a bit, I am sure he is not.

The CHAIRMAN. Let us confine ourselves to the questions here. We

can discnss this on the Serrate floor.

Senator YARBOROUGH. Mr. Chairman, in the interest of time, I

forgo further questioning.

The CHAIRMAN. If there are no further questions, thank you,

Senator Proxmire.

The CHAIRMAN. Congressman Casey, you have a brief statement, I

believe. Sorry to keep you waiting.
NOMINATIONS 21

STATEMENT OF HON. BOB CASEY, MEMBER OF CONGRESS FROM

THE 22D DISTRICT OF THE STATE OF TEXAS

Mr. CASEY. Thank you, Mr. Chairman.

Members of the committee, I am Bob Casey. I am Mr. O'Connor's

Congressman, 22d District of Texas, in Houston. I must say that in

the interest of time, I will refrain from all of the argument in rebuttal

to the previous distinguished Senator, because I don't like to see my

constituents kicked around, gentlemen, and I am inclined to make you

a very long discourse, but I will not.

I have known Mr. O'Connor for many years. I have held public

office in Harris County for better than 12 years, and in all that time,

I think you might be interested to know in the community of Houston,

Harris County, Mr. O'Connor is held in the very highest regard, and

I think that his experience is an argument for his appointment, because if I were going to have someone set the price on cheese, I would

want someone to know about the cost of manufacturing and the cost

of producing this cheese.

By the same token, I think Mr. O'Connor's experience is going to be

of great benefit on the Board, on the Commission, in regard to meeting

the very problems raised by the distinguished Senator that preceded

me.

Gentlemen, I sincerely urge your favorable consideration of Mr.

O'Connor for the Federal Power Commission.

The CHAIRMAN. Like mighty Casey at the bat, you haven't struck

out.

Mr. CASEY. I get that thrown at me once in awhile but I say always

remember he had a damn good batting average, or he wouldn't have

been remembered.

The CHAIRMAN. Thank you, Congressman.

Now, Mr. O'Connor, if you will take the witness chair, there are a

few questions I think the members of the committee want to ask you.

STATEMENT OF LAWRENCE J. O'CONNOR, JR., OF TEXAS, NOMINEE

TO BE A MEMBER OF THE FEDERAL POWER COMMISSION

The CHAIRMAN. I wanted to ask you, Mr. O'Connor, one question.

There are several—not several, but three or four that I personally

know of—very important cases pending before the Federal Power

Commission involving the matter of hydropower licenses and other

things, not rates, but licenses. Some of these cases have taken months,

they have been pending for months and one or two of them have had

weeks of testimony on all sides. I believe in one or two of the important ones, there have been examiner or staff reports. They are now

before the Commission, as I understand it, for decision.

The Commission has been somewhat shorthanded, not due to the

fault of the Congress, but the 'names of the other two Commissioners

didn't come up here until way the latter part of March, and we did

dispatch their nominations, I think, very expeditiously.
22 NOMINATIONS

Do you have any ideas now as to whether or not, when the decisions

are to be made by the Power Commission itself, whether you would

participate in a case that has been pending so long a time, with volumes of testimony, argument, and witnesses, that you did not hear

or were not associated with?

Mr. O'CONNOR. Senator Magnuson, I would say that I would hope

that it wouldn't be necessary to participate in one where it had come

to the decision stage. However, as you know, there will be four new

Commissioners, presumably, within the next 2 months. I would presume under that circumstance, some of these cases will have to be

decided on that basis. I would only say I would have to have time

to look into the background and study them.

The CHAIRMAN. That is what I was going to suggest, that there

have been some cases, and these are very important cases, and I think

you will find that most of the Commissioners are new and in order to

have a majority decision one way or another in a particular case, you

may have to participate and you may have to go back and do a lot

of homework in order to arrive at some decision.

Mr. O'CONNOR. I think that is part of the job I will have to take on,

sir.

The CHAIRMAN. Now you have heard here a lot of discussion regarding gas cases, and the chairman hears a lot of discussion every

year as chairman of the Independent Offices Appropriations Committee, which handles the appropriations for the Federal Power Commission, and about the number of cases pending. There are 3,000-

some certificate applications, and so on, and the Federal Power

Commission comes before us with a budget estimate, to handle this

workload, and we have continually asked them if they had enough

people in the so-called Gas Division of the Commission to see if we

couldn't do something to speed up the work down there.

Senator Schoeppel and I are both members of that committee and

this year we appropriated $8,783,000 for salaries and expenses, which

is some $650,000 over last year's budget, and I hope you will read

the testimony in that particular case, because the reason we did and

the reason the House concurred, is that we were hopeful that the new

Commissioners would use this increase and direct their energies toward cleaning up this terrific backlog of gas rate cases.

Do you share m that opinion?

Mr. O'CONNOR. Yes, sir.

The CHAIRMAN. I think maybe they should have had more, because

at least one part of Senator Proxmire's statement that wasn't controversial was the time it takes to decide gas cases.

Now you have submitted for the files a list of your financial holdings, and you have submitted them for the committee and to the public

if they want to look at them, so that the concern over conflict of interest in this particular case would be taken care of and for the purpose

of the record, without reading them all, we will keep them in the files.

I understand you have a new list now, is that correct?

Mr. O'CONNOR. That is right.

The CHAIRMAN. And you will submit that to the committee?

Mr. O'CONNOR. That is right.

The CHAIRMAN. Now since your name has been sent up by the Presi- dent, what have you done with these personal holdings?
NOMINATIONS 23

Mr. O'CONNOR. I have made no changes in them. I have reviewed

with the committee staff and the assistant general counsel of the

FPC, all of the financial interests, both in securities and in oil and

gas mineral interests that I have ever owned. The FPC counsel made

a review of the securities, and classified them into roughly three

groups, a group of stocks over which the Federal Power Commission

now has jurisdiction over the companies; and I will pass on to you

a list he has made of this classification, which will indicate I will

dispose of all of this group of stocks, prior to taking the oath of

office.

There is a second group that he feels present a conflict of interest,

and in this case, with the exception of one small company, with a few

stockholders of which a considerable amount of my investment is notes,

I will dispose of those and I will expeditiously as possible dispose of

that company. It will be a little difficult to arrange to do that, without taking a substantial loss.

The CHAIRMAN. And the third group, as I look at the list, are

general investments in companies that have no relation to the Federal

Power Commission.

Mr. O'CONNOR. That is right. With respect to my mineral interests, I will dispose of those either by sale or gift, as expeditiously as

I can. It takes some time to transfer title and to establish the sale

value but I will conscientiously see that in none of these cases will

I decide matters pertaining to these interests. All these interests

are oil or gas royalties with the exception of one working interest

and there are no gas contracts, as far as I know, that are before the

Commission or could be.

The CHAIRMAN. When you list the royalty interest, there are several names here and the names are the names of the wells, is that

right?

Mr. O'CONNOR. No, in my case the names could be the name of the

well, it could be the name of the landowner from whom the interest

has been purchased, but in most cases I would say it is the name of the

lease.

The CHAIRMAN. Name of the lease?

Mr. O'CONNOR. Name of the lease: the designation that the well

has in the Railroad Commission report.

The CHAIRMAN. The chairman has no further questions.

The Senator from Oklahoma?

Senator MONRONEY. Mr. O'Connor, do you know of any reason,

because of your past experienceThe CHAIRMAN. Excuse me, Senator Monroney. I want to say

that the list of the holdings, the new list which has been broken down

as the nominee testified, will be available to anyone that wants to look

at them. They will be in the committee files.

Senator MONRONEY. Do you know of any reason, because of your

past experience and because of your past knowledge of the oil industry, that would interfere in any way with you deciding cases as the

facts are presented to you, as a member of the Federal Power Commission_, with complete impartiality?

Mr. O'CONNOR. No, sir.

Senator MONRONEY. And this allegation of your association with

the industry and particularly with the Independent Producers As-
24 NOMINATIONS

sociation of America, would in no way affect or bias any decision

that would come before you on the Commission?

Mr. O'CONNOR. No, sir. I might add, as you know, but it wasn't,

clear in the record, the Independent Petroleum Producers Association of America is by and large an association of small producers.

Senator MONRONEY. Historically the small producers usually are

arrayed, in most of their activities, in contest with the major oil

company, is that correct?

Mr. O'CONNOR. That is correct.

Senator MONRONEY. And this would not, even though you represented the small producers, would not necessarily bias or prejudice

you against the larger producers or against the consuming element,

who are interested of course in the price they pay for the service they

get?

Mr. O'CONNOR. That is correct, sir.

Senator MONRONEY. Thank you.

I have no further questions.

Senator MONRONEY (presiding) . Senator Yarborough?

Senator YARBOROUGH. No.

Senator MONRONEY. Senator Engle

Senator ENGLE. I think not.

Senator MONRONEY. Senator Bartlett?

Senator BARTLETT. Mr. O'Conor, what is the Independent Petroleum Association of America?

Mr. O'CONNOR. Senator Bartlett, the history of the association, it

was established in 1929, at the time when imports of foreign crude

oil were threatening the security of the country. It has been historically an association of the small producers, and there are some companies in there that have grown large, but basically speaking it

doesn't include any major oil companies.

Senator BARTLETT. Now I notice you were director and vice president of the Houston district of this association. Is that one of the

larger districts in terms of membership?

Mr. O'CONNOR. Yes, sir.

Senator BARTLETT. And what is the current program of that association, can you tell us?

Mr. O'CONNOR. Well, when I came to work for the Department of

Interior I severed any relationship or membership in the association.

I would say that in my position in the Department of Interior, I have

been pretty well placed where I have received a good bit of their—

know their stand and I don't think it has changed any. They are

basically still an association of small producers, on a national basis.

Senator BARTLETT. At this time you have no active association with

the group?

Mr. O'CONNOR. No, sir.

Senator BARTLETT. Now about the Goldston Oil Corp. of Houston,

which you joined in 1945, and of which you became vice president and

treasurer and continued in that capacity until September 30, 1958,

how large a company is this?

Mr. O'CONNOR. Well, Senator Bartlett, the Goldston Oil Corp. is

actually an operating company and as such is not what you would call

a large company, but they operate a considerable number of proper-
NOMINATIONS 25

ties of which the Goldston family and family trust had interest in

and also outsiders. I would say they are a medium-sized company.

They at one time had about 3,000 barrels a day production of oil.

Senator BARTLETT. About how many emplyoees ?

Mr. O'CONNOR. About 50.

Senator BARTLETT. I have no further questions.

Senator MONRONEY. You said they had 3,000 barrels of oil production. Did they have gas production?

Mr. O'CoisusioR. Yes.

Senator MONRONEY. What was the extent of the gas production for

the purpose of the record, since it will probably be at issue when the

nomination goes to the floor?

Mr. O'CONNOR. I would say approximately 2 billion cubic feet a

month that they operated.

Senator MONRONEY. 2 billion cubic feet. How would that figure

out in value?

Mr. O'CONNOR. Well, the prices on that gas were by and large I

would say 6 cents, 6 or 7 cents during the last few years I was there.

Senator MONRONEY. Did you have substantial interest in the Goldston Oil Co.?

Mr. O'CONNFR. I had no interest in the company.

Senator MONRONEY. You were employed by them only and no beneficial interest in stock holdings or such?

Mr. O'CONNOR. That is correct.

Senator MONRONEY. And you severed your connections with them

in 1958, which is over 3 years ago?

Mr. O'CONNOR. That is correct.

Senator MONRONEY. As a self-employed consultant, could you

sketch out briefly the type of clients you had?

Mr. O'CONNOR. Well, my principal clients, since I severed my connection with Goldston, was the Goldston family, in settling Mr. Goldston's estate tax return, which was quite substantial and I had two

principal clients at the time for the year I was in business. One

was the Goldston family, which I had already—by the time I had

left, I had already completely severed my connection with them,

even as a consultant, with the Goldston family.

Senator MONRONEY. This was primarily active in settling the estate

and things of that nature.

Mr. O'CONNOR. That is right, evaluation, taxes.

Senator MONRONEY. Your previous employment, 1938 to 1945, was

with an accounting firm. Is that correct?

Mr. O'CONNOR. That is right.

Senator MONRONEY. And I presume since it was located in Houston,

you did have oil clients?

Mr. O'CONNOR. Yes, sir I would say approximately one-third of

my work with Haskins & Sells was with oil clients and probably

one-third with public utilities and one-third general.

Senator MONRONEY. Then you did not own the company you were

merely an employee of the company and went in, I presume, as a

junior accountant and ended up as a senior accountant?

Mr. O'CONNOR. That is right.
26 NOMINATIONS

Senator MONRONEY. Then in 1959, after you left the consultant

work, during which you had two clients one the Goldston Oil Co.

and I don't believe you mentioned the Other one?

Mr. O'CONNOR. The other one was J. Edwin Hill interests in

Houston.

Senator MONRONEY. Are they producers?

Mr. O'CONNOR. Yes.

Senator MONRONEY. Largely crude or substantially gas?

Mr. O'CONNOR. Well, I would say largely crude oil. He wasn't a

substantial producer, he was just establishing himself.

Senator MONRONEY. You were working for him on a fee basis, as

a lawyer would work for a client on a lawsuit, in other words.

Mr. O'CONNOR. Well, yes; that is right. I was on a salary basis

with Mr. Hill.

Senator MONRONEY. No financial interest?

Mr. O'CONNOR. No, sir.

Senator MONRONEY. So far then as your entire experience, other

than the—as we say in Oklahoma—dabbling in oil, you have never

been a major stockholder or substantial stockholder in any company

that was operating in oil or gas activities?

Mr. O'CONNOR. With one exception, which has been disposed of

over a year ago. There was a small supply company I did have a 10-

percent interest in which I disposed of about a year ago.

Senator MONRONEY. This was the sale of oilfield supplies?

Mr. O'CONNOR. That is right, and their total sales were in the neighborhood of $30,000 a year.

Senator MONRONEY. That is all I have. I just wanted the record

clear on that. Thank you.

Senator MONRONEY (presiding). Any further questions?

Senator SCHOEPPEL. Mr. O'Connor, as you of course, know, a large

number of the States in the oil-producing and gas-producing sections

have conservation laws. In other words, let me ask you this: Do you

believe that the requirements for an orderly take from the fields

merits support from the Federal Power Commission?

Mr. O'CONNOR. Yes, sir; I do. I think the conservation of our

natural resources and their proper products in relation to the maximum efficient rate is one of the most important aspects of our mineral

program, and it should be given prior consideration.

Senator SCHOEPPEL. By and large those conservation laws have

proven themselves to be very helpful in the ultimate take from those

fields, over which the States have jurisdiction within their boundaries; isn't that true?

Mr. O'CONNOR. Yes, sir.

Senator SCHOEPPEL. And it is a great conservation measure, conserving these resources and getting the utmost out of them for the

longest period of time.

Mr. O'CONNOR. Yes, sir.

Senator SCHOEPPEL. If you should have a controversial case down

there, and you will have several of them—I can assure you of that,

from the past experience of this committee—would you be reluctant

to dissent or file dissenting views, if you felt strongly and definitely

that way, from the record that was presented before your Commission?

Mr. O'CONNOR. I feel, Senator Schoeppel, that I would be, if I feel
NOMINATIONS 27

strongly about any issue. I think I would neither hesitate to affirm

or dissent, express my view.

Senator SCHOEPPEL. You, of course, know that this is one of the

agencies of Government that is under the jurisdiction—well, it is a,

creature of the Congress, let's put it that way. It is one of the independent agencies.

Now, if you serve as a Commissioner down there

'

and I fully expect

you to, from the standpoint of your record and background, could

you and would you call these shots and make your decisions down

there, without fear or favor from the Congress or the White House or

any place else, strictly on the record as you see it?

Mr. O'CoN-NoR. I think as a matter of integrity, that is the way anybody would have to do it.

Senator SCHOEPPEL. Do you know of any reason you would not be

qualified to serve in that capacity?

Mr. O'CONNOR. No, sir.

Senator SCHOEPPEL. Now there is some testimony here, Mr. O'Connor, you have had a CPA experience and background, and that is your

profession.

It appears that one of the great problems in the Commission and

one of the delaying factors is the time required for a lot of these field

audits.

Do you believe or feel that your CPA background will enable you

to help break up this logjam and devise some new procedures to speed

up this work?

Mr. O'CoNNoR. I think it would be inappropriate of me to say I

could but I would certainly think my background would assist in

doing that.

Certainly the investigatory process has been very long and I know

there is a strong feeling—I am sure people in the Commission and on

the outside—that that in itself will assist materially in getting these

cases developed and in the hands of the Commissioners for decision.

I feel that the background I have had would certainly assist materially, administratively, in the consideration of them to expedite

their processing.

Senator SCHOEPPEL. As one member of this committee and as many

of the other members know, we have had numerous series of complaints about the delays and the backlog down there and naturally

it would be our hope that you could move into this with your experience and background, if you are finally confirmed, to clean up this

backlog as quickly as possible.

As the chairman of this committee said here, on the Appropriations Committee additional funds have been provided and something

should be done down there to expedite that work.

As far as I am concerned, I appreciate your coming into this position, the President designating you for this, with your background

and experience.

Mr. O'CoNNoR. I assure you I will do the best I can, Senator.

The CHAIRMAN. And of course you should know with your background, and I am sure you do, that the longer a case is pending, a

rate case for instance, if the facts seem to be leaning toward the facts

that rate should not have been put into effect, the longer that is pending, the harder it is to change it.
28 NOMINATIONS

Mr. O'CONNOR. Yes, sir.

The CHAIRMAN. The companies come in with all kinds of reasons,

rising costs, this and that, and it has been in effect and people are

used to it and so forth. And you have got to be a public advocate

down there in its very literal sense.

Mr. O'CONNOR. I assure you, Senator, I feel Strongly when you

take the oath of office down there, if you are a person of integrity,

you represent the public and not the producers or distributors, transmission company, or the consumer company.

. The CHAIRMAN. Senator McGee?

Senator McGEE. I just want to observe in personal conversation

with Mr. O'Connor and listening to the testimony this morning and

studying his record, I am impressed with the concept of his obligation in terms of integrity and responsibility in the public interest.

I think this does credit to the job. But I think in all fairness, to

be real candid, that Mr. O'Connor knows better than the rest of us

that riding on his shoulder will be a little extra burden, an extra

weight in this appointment, because of questions that have been

raised, rightly or wrongly, fairly or unfairly.

Those are things beside the point right now. But he is going to

be in special boots and it is a little rough to have to carry that extra

responsibility.

• I am impressed with his willingness to take that on, even so. He

carries not only a special load in terms of this particular job in FPC,

but he carries with it the kind of judgment that this committee subscribes to, in terms of tapping experienced men for public responsibility in the field of their real talent, and I don't need to repeat what Mr.

O'Connor has already made abundantly clear and that is that that kind

of obligation would set us back immeasurably, do irreparable harm,

if. this were not approached with the greatest dedication, his willingness to take this extra weight on his shoulders and I think it is highly

commendable.

Mr. O'CONNOR. Thank you, Senator McGee.

The CHAIRMAN. Mr. O'Connor

'

in 1960 the Senate passed Senate

Resolution 338 which said in part and I quote:

it is the sense of the Senate that individuals appointed to administrative

or policynaaking posts should be willing to serve for a period long enough to

permit them to contribute effectively to their assigned task and it is the sense

of the Senate the nominees appearing before the committees shall indicate their

willingness to serve so long as the President desires.

What is your thought on your length of service?

Mr. O'CONNOR. I certainly intend to serve every day in this job,

until June 22, 1966, if I am permitted to.

The CHAIRMAN. Are there further questions?

• Senator YARBOROUGH. Mr. Chairman, I have one question only.

Mr. O'Connor

'

if confirmed, will you, to the best of your capacity and

ability, judge fairly and impartially, each case before you, with due

regard to the interests of the consumers, the producers, the distributor,

and the transporter and above all, the interests of the Government

in seeing that fairness is done and justice to all concerned?

Mr. O'CONNOR. Yes, sir.

• The CHAIRMAN. Thank you, Mr. O'Connor.

There will be placed in the record at this point letters endorsing

Mr. O'Connor's nomination from the Honorable Albert Thomas, Rep-
NOMINATIONS 29

resentative from the Eighth Congressional District of Texas, the

Hon. Stewart L. Udall, Secretary of the Interior, and the Honorable

John M. Kelly, Assistant Secretary of the Interior.

HOUSE OF REPRESENTATIVES,

Washington, D.C., July 13, 1961.

In re Mr. Lawrence J. O'Connor, Houston, Tex.

Hon. W. G. MAGNUSON,

Chairman, Committee on Commerce,

U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: May I say a few words in behalf of Mr. O'Connor, who

has been nominated a Commissioner of the Federal Power Commission.

I have known Larry for 12 or 15 years. He is a graduate of Rice and Harvard Universities. He is honest, capable, and highly dependable. He has that

gift which so few administrators have—ability to do the job, follow the law,

keep his employees happy and the public, too. He will bring to the Federal

Power Commission talent that is badly needed on the Commissioner level and

which has not been available among the Commissioners themselves for many

years.

As you know, a large part of the workload of the Commission deals with accounting in ratemaking for electric power and gas. Accounting is one of the

big functions and an important section of the Federal Power Commission. Mr.

O'Connor is an expert certified public accountant. In addition, he has had commendable success and experience in the oil and gas business. These two qualities, besides his good common horse sense and his ability to do a job, should

make him an outstanding Commissioner.

I hope your distinguished committee will confirm his nomination.

With kindest personal regards and best wishes, I am,

Sincerely yours,

ALBERT THOMAS.

THE SECRETARY OF THE INTERIOR,

Washington, July 14, 1961.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,

U.S. Senate, Washington, D.C.

DEAR SENATOR MAGNUSON: During the past 5 months Mr. Lawrence J. O'Connor, Jr.—whose nomination for membership on the Federal Power Commission

is now pending before your committee—has served in my Department as Administrator of the oil import program. Of course, this program is a highly complex one, and it has required the careful attention of a skilled administrator.

During my tenure as Secretary, Mr. O'Connor has handled the problems of his

office with sensitivity. He has always demonstrated a sense of balance in preparing the analyses which I have requested of him. His experience in this

office has been a broad one, and he has developed the type of administrative experience which should qualify him for the higher administrative responsibilities

that would be his as a member of the Federal Power Commission.

I would also like to advise your committee that during my acquaintance with

Mr. O'Connor nothing whatsoever has occurred which would reflect adversely

on his character and moral principles. Indeed, all of us in this Department take

pride and satisfaction in the promotion which was accorded him by the President.

Sincerely,

STEWART L. UDALL,

Secretary of the Interior.

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,

Washington, D.C., July 12, 1961.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,

U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN It gives me very real pleasure to endorse the nomination of Lawrence J. O'Connor, Jr., to membership on the Federal Power Commission. While I recognize that the Department of the Interior will be losing
30 NOMINATIONS

one of its most competent administrators, I am convinced that the overall interests of the Government will be advanced by his appointment to this highly responsible post.

During Mr. O'Connor's tenure as Oil Import Administrator, significant progress has been made in developing the program of oil import controls. His energy, his ability to look at all sides of a problem, his unquestioned objectivity.

and his mature judgment have made an essential contribution to the program's

success.

Nor has Mr. O'Connor's contribution been limited to the program of controls

on oil imports. Since entering the Department, I have sought and valued his

wise counsel on energy matters well beyond the sphere of the oil import program

and have always found his advice to be sound, constructive, and thoroughly

unbiased.

Please accept my heartfelt endorsement of this well-deserved appointment.

Sincerely yours,

JOHN M. KELLY, Assistant Secretary.

(Whereupon, at 12:15 p.m., the committee was adjourned.)
NOMINATION OF VOIT GILMORE, OF NORTH CAROLINA, TO BE DIRECTOR OF THE U.S. TRAVEL

SERVICE

WEDNESDAY, JULY 26, 1961

U.S. SENATE,

COMMITTEE ON COMMERCE,

Washington, D.C.

The committee met, pursuant to notice, at 10 a.m., in room 5110,

New Senate Office Building, Hon. Warren G. Magnuson (chairman of

the committee) presiding.

The CHAIRMAN. The committee will come to order.

We have four nominations this morning: Mr. Lawrence J. O'Connor, Jr., of Texas, to be a member of the Federal Power Commission;

Mr. A. Everette Machityre, of Virginia, to be a member of the Federal Trade Commission ; Rear Adm. John Harllee of Washington,

D.C., to be a member of the Federal Maritime Board; and Mr. Voit

Gilmore, of North Carolina, to be Director of the U.S. Travel Service,

Department of Commerce.

The last position of course is created by new legislation, which the

chairman sponsored and introduced, joined by 28 other Senators as

cosponsors, and we have high hopes that the enactment of the legislation and appointment of Mr. Gilmore will do what we hope it

would do, and what we expected it to do with this new agency in

the Department of Commerce.

Mr. Gilmore, we will put your biography in the record in full.

(The biographical sketch of Mr. Gilmore follows:)

BIOGRAPHICAL SKETCH OF VOIT GILMORE

(Designated by President Kennedy To Be Director of the U.S. Travel Service

in the Department of Commerce)

Voit Gilmore was born October 13, 1918, in Winston-Salem, N.C. After receiving his public schooling there, he attended the Georgia Military Academy,

College Park, Ga., for a year. He is a graduate of the University of North

Carolina, Chapel Hill, N.C., where he received the bachelor of arts degree in

journalism and political science in 1939.

After his graduation, he was, successively, a Rockefeller graduate student

in public affairs in Washington, D.C., a staff assistant at the White House, and

secretary to Senator Josiah W. Bailey.

In 1940, he joined Pan American World Airways. He served as assistant

manager of the airline's eastern division at Miami in 1940-41; as assistant

manager and personnel manager of PAA-Africa, Ltd., at New York City, Accra,

Khartoum, and Cairo from 1941 to 1943; and as public relations director of

the Pacific-Alaska division at San Francisco and Seattle in 1946-47.

Between 1943 and 1946, he served as an ensign with the U.S. Naval Air Transport Command on ground and flight duty in the Pacific area. He was a special

observer with the U.S. Navy, Operation Deepfreeze, Antarctica, from December

1957 to February 1958 and from November to December 1960. In October 1958,

he was a special observer with the U.S. Air Force, Arctic Region and DEW line.

31
32 NOMINATIONS

From 1953 to 1957, he served Southern Pines, N.C., as mayor and as town.

councilman.

He was president of the North Carolina Travel Council from 1957 to 1959..

As a member of the North Carolina Board of Conservation and Development

Mr. Gilmore participated in planning and carrying out various business development trips on behalf of the State, including missions to Europe in 1959 and 1960.

He is owner and president of the W. M. Storey Lumber Co., Winston-Salem and

Southern Pines, N.C., and the president of companies operating three motor

lodges in North Carolina.

Mr. Gilmore served from 1957 to 1961 as a member of the North Carolina

Board of Conservation and Development. He is a director of the Business

Foundation of North Carolina, and a member and past president of the Sandhills Kiwanis Club of Southern Pines. He is a director of the North Carolina

Symphony Society and of the North Carolina Medical Association at Chapel Hill,

a member of the Explorers Club of New York City, and honorary vice president

of the American Forestry Association. He is a deacon of the Brownson Memorial

Presbyterian Church at Southern Pines and a trustee of the Consolidated Presbyterian College of North Carolina.

He was married in 1945 to Kathryn Kendrick of San Francisco. The Gilmores

have four children, Katy, Geraldine, Susan, and Peter.

The CHAIRMAN. Because this is a new act you will be working with,

we will also put the act in the record in full at this point.

(The act referred to, Public Law 87-63, follows:)

[Public Law 87-63, 87th Cong., S. 610, June 29, 1961]

AN ACT To strengthen the domestic and foreign commerce of the United States by providing for the establishment of a United States Travel Service within the Department of Commerce

Be it enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That it is the purpose of this Act to strengthen

the domestic and foreign commerce of the United States, and promote friendly

understanding and appreciation of the United States by encouraging foreign residents to visit the United States and by facilitating international travel generally.

SEC. 2. In order to carry out the purpose of this Act the Secretary of Commerce

(hereafter in this Act referred to as the "Secretary") shall—

( 1 ) develop, plan, and carry out a comprehensive program designed to

stimulate and encourage travel to the United States by residents of foreign

countries for the purpose of study, culture, recreation, business, and other

activities as a means of promoting friendly understanding and good will

among peoples of foreign countries and of the United States;

(2) encourage the development of tourist facilities, low cost unit tours,

and other arrangements within the United States for meeting the requirements of foreign visitors;

(3) foster and encourage the widest possible distribution of the benefits

of travel at the cheapest rates between foreign countries and the United

States consistent with sound economic principles;

(4) encourage the simplification, reduction, or elimination of barriers to

travel, and the facilitation of international travel generally:.

(5) collect, publish, and provide for the exchange of statistics and

technical information, including schedules of meetings, fairs, and other

attractions, relating to international travel and tourism.

SEC. 3. (a) In performing the duties set forth in section 2, the Secretary—

(1) shall utilize the facilities and services of existing agencies of the

Federal Government to the fullest extent possible including the maximum

utilization of counterpart funds; and, to the fullest extent consistent with

the performance of their own duties and functions, such agencies shall permit such utilization of facilities and services;

(2) may consult and cooperate with individuals, businesses, and organizations engaged in or concerned with international travel, including local,

State, Federal, and foreign governments, and international agencies;

(3) may obtain by contract and otherwise the advice and services of

qualified professional organizations and personnel:.

(4) after consultation with the Secretary of State, may establish such

branches in foreign countries, as he deems to be necessary and desirable.
NOMINATIONS 33

(b) The Secretary, under the authority of this Act, shall not provide or

arrange for transportation for, or accommodations to, persons traveling between

foreign countries and the United States in competition with business engaged in

providing or arranging for such transportation or accommodations.

SEC. 4. There is hereby established in the Department of Commerce a United

States Travel Service which shall be headed by a Director who shall be appointed by the President, by and with the advice and consent of the Senate, who

shall be compensated at the rate of $19,000 -per annum, and who shall report

directly to the Secretary. All duties and responsibilities of the Secretary under

this Act shall be exercised directly by the Secretary or by the Secretary through

the Director.

SEC. 5. The Secretary shall submit semi-annually to the President and to the

Congress a report on his activities under this Act.

SEC. 6. For the purpose of carrying out the provisions of this Act, there is

authorized to be appropriated not to exceed $3,000,000 for the fiscal year ending

June 30, 1962, and not to exceed $4,700,000 for each fiscal year thereafter.

SEC. 7. This Act may be cited as the "International Travel Act of 1961".

Approved ,Tune 29, 1961, 12:17 D.I11.

The CHAIRMAN. Now there are several Senators here who want to

testify on these various nominations, and we want to hear them as

quickly as possible, because most all of them have meetings this morning of their own committees, which they must go to as soon as

possible.

I know the Senator from North Carolina is chairman of a meeting

in this building that he must go to, and Mr. Jordan wants to make a

brief statement on behalf of Mr. Gilmore, so we will be glad to hear

from you at this time, Senator.

STATEMENT OF HON. B. EVERETT IORDAN, "U.S. SENATOR FROM

THE STATE OF NORTH CAROLINA

Senator JORDAN. Mr. Chairman and members of the committee, it

is a great pleasure for me to appear this morning on behalf of my good

friend of many, many years, Voit Gilmore, who is up for Director

of U.S. Travel Service, which as you said, is a new agency just created

by this committee, and I have known Voit Gilmore for many, many

years. He is a very fine citizen; he has traveled extensively, not

only in this country but over the world, and I think he is highly suited

for this particular job.

I don't think Secretary Hodges could have found a man in the

United States any better suited for this position than he is, and I

recommend this committee report him out with a unanimous report.

The CHAIRMAN. Thank you, Senator. I see our colleague, Senator

Ervin, here from North Carolina and I presume he wants to speak on

Mr. Gilmore.

STATEMENT OF HON. SAM I. ERVIN, JR., U.S. SENATOR FROM THE

STATE OF NORTH CAROLINA

Senator ERVIN. Yes, Mr. Chairman. I appreciate this opportunity.

I have one of those rare privileges when I have an opportunity to

recommend favorable action upon the nomination of a man whom I

can commend without the slightest hesitation and without any evasion

at all whatsoever.

Voit Gilmore is one of the very finest of my many fine constituents.

He is a successful businessman in his own right. He is a man who
34 NOMINATIONS

has engaged in many civic activities in his local community and in

the State of North Carolina and on politics, I will confess he has a

very strong Democratic leaning, but for the sake of advising Senator

Schoeppel, that he also loves Republicans all through the year, except perhaps not with as much fervor on election day as on other

days.

Voit Gilmore, as the committee knows, is to have direct charge of

the program set up under the bill which the able and distinguished

Senator from Washington passed, that is, the encouragement of

tourists to visit the United States.

I do not believe a more ideal selection could be made for that purpose, because anyone who has ever been welcomed anywhere by Voit

Gilmore, not only enjoys his present stay at that place, but he longs

to return.

So I recommended favorable action on his nomination, as an ideally

qualified man for the particular job and I appreciate this opportunity

to say these words.

He is accompanied by Congressman Horace R. Kornecfay. I don't

know whether he would like to say a word, but he has known him a

long time.

I appreciate the committee giving me this opportunity.

The CHAIRMAN. Mr. Congressman, we will be glade to hear from

you.

STATEMENT OF HON. HORACE R. XORNEGAY, A REPRESENTATIVE

IN CONGRESS FROM THE SIXTH DISTRICT OF NORTH CAROLINA

Mr. KORNEGAY. Mr. Chairman, I would like to say it is a real

pleasure for me, as Senator Irvin expressed, to appear on behalf of

one of our most distinguished citizens of North Carolina and urge the

committee to approve him as head of this important travel agency.

I might add that he has been known to take part in politics, but at

the same time, when he comes to matters of official policy, I know of

no one who would be more discreet or more fair in any judgments that

he was called on to make, insofar as the operation of our Government

is concerned.

Mr. Gilmore has distinguished himself in the line of civic affairs.

He is widely traveled, and greatly respected. We all feel that he will

do a splendid job as head of the Travel Service.

• It is certainly an honor for me to have this privilege to appear before this committee and speak on his behalf.

The CHAIRMAN. We appreciate your coming over here and giving

us your views on Mr. Gilmore.

Of course, as has been stated, the Chairman has a very vital interest

in this matter. I conferred with Mr. Gilmore on previous occasions

and I think what you say about him is well founded.

Mr. KORNEGAY. Thank you, sir.

The CHAIRMAN. I want to say for the committee that the Appropriations Committee only recently marked up the bill and the conference

report was agreed to by the Senate yesterday. We allocated funds for

the operation of this new office.

I want to say to Mr. Gilmore, I hoped we would get more, but at

least we will make a beginning and it was understood that as we move
NOMINATIONS 35

along, if we saw an opportunity to do more in this field, because we all

agree I think a dollar spent here will be well returned, that we might

consider another amount.

I have only one question to ask you, Mr. Gilmore, this being a highly

specialized field, and since you are going to have—how many assistants,

how many people working under you?

STATEMENT OF VOIT GILMORE, NOMINATED TO BE DIRECTOR OF

THE U.S. TRAVEL SERVICE

Mr. GILMORE. Mr. Chairman, our total staff will be less than 40.

There will be an immediate staff of only five people.

The CHAIRMAN. And you are proceeding with finding people with

the kind of specialized qualifications for this work?

Mr. GILMORE. Correct.

The CHAIRMAN. In the testimony before the Appropriations Committee, I believe you testified that your intentions were to open up five

offices or six?

Mr. GILMORE. Six offices at the start.

The CHAIRMAN. Would you tell us where they are going to be?

Mr. GILMORE. London, Paris, Frankfurt, Caracas, Sydney, Tokyo.

The CHAIRMAN. Italy is not included?

Mr. GILMORE. No, sir. However, there will be working out of each

of these area offices, a representative covering the major traffic-generating parts of the world, so that for example, Italy would be covered by

our Paris office; a representative calling regularly in Belgium; the

Iberian Peninsula, Italy, as well as France.

The CHAIRMAN. I was curious. There may be a good reason, but

why did you select Frankfurt over, say Rome, where there is much

more traffic generated I believe?

Mr. GILMORE. That is a very good question. The decision in basing

the first six cities as indicated was based on the amount of traffic now

being developed in international travel toward the United States; in

other words, we are running this like a business proposition and like

any company that estimates its potential, we are going first to those

countries that are generating the greatest amount of revenue.

West Germany happens to be supplying the fourth greatest number

of tourists of all countries toward the United States. Consequently,

Italy, which is a very important travel-producing area, but not among

the first six, is on the list for a new office, one of these days, when we

can justify it in a businesslike way.

The CHAIRMAN. SO it is merely a matter of priorities?

Mr. GILMORE. Correct.

The CHAIRMAN. Now you have Tokyo in there?

Mr. GILMORE. Yes, sir.

The CHAIRMAN. Now the law provides you can use counterpart

funds?

Mr. GILMORE. Yes, sir.

The CHAIRMAN. How many of these new offices, in how many countries in which you plan these new offices, do we have counterpart funds?

Mr. GILMORE. As Secretary Hodges testified, unfortunately there is

not going to be a great use of counterpart funds at the outset.
36 NOMINATIONS

Generally speaking, the countries that have citizens best able to

travel are those most prosperous. However, we are aware of that provision and we will be watching it for further use.

The CHAIRMAN. Yes. Because if this works, which we hope it will,

and I am sure you will do everything you can to make it work, we

envision that there will be an enlargement and there will be some

cases where we can take advantage of the counterpart funds?

Mr. GruktoRE. Yes, because Congress specifically directs us to investigate the opportunities for low-cost travel to the United States, so

we get into a completely new economic level of opportunity for travel

and that will take us to countries where there are people extremely

anxious to come to the United States and who perhaps through contributions to social or trade groups, will be able to build up a reserve

and finance their trip here. That will take us into such countries and

we will exploit this to the fullest.

The CHAIRMAN. Now prior to the passage of the law and through

mainly—well, I would not say the prodding, but at least the helpful

persuading, let's put it that way, of myself and members of the committee and the White House itself, we tried to get the departments together, that is the Department of Justice, Immigration, Passport Division, and the others involved, toward a simplification, as far as they

could go, by Executive order, without changes in the law, to a simplification of the visa situation.

Have you had an opportunity to look into that? How is that

working?

Mr. GILMORE. We consider that one of the very first targets for us

to pursue; that is, making visitors to the United States happy with the

prospect of easier facilitation of their travel, beginning when they apply for a visa and all the way through on the trip.

Now, the most important thing, I believe, that Congress has done

in this respect is to establish now at the Cabinet level an opportunity

for the departments such as Treasury, Health, Education, and Welfare, and the Attorney General's Office, a liaison, an understanding

at a high enough level, that national policy can be pursued in the easing

of those legitimate restrictions, the proper easing of those things that

are constituting today travel barriers.

This is in the line of not only visas, but public health, customs, and

so forth.

We respect the laws on the books. We know there are means, however, of, let's say, different interpretation of existing laws, and at the

same time at the Cabinet level, it now becomes possible, due to the International Travel Act of 1961 for us to get together and take a good

look at implementation of all sorts of travel, but never to sacrifice

important things for the protection of our valid national interests, but

at the same time to put us more in line with other countries that have

facilitated travel and have been getting millions of dollars as the

result of making travel to their border easier.

The CHAIRMAN. You would not hesitate though, if after you get

into this thing, if you find some technical changes in the law which

might even more simplify and make it easier for bona fide tourists,

to recommend a change to us, would you?

Mr. GILMORE. Not a bit. The Travel Act instructs us to explore

means of facilitating international travel and we take that as a directive to explore this and come up with specific recommendations.
NOMINATIONS 37

The CHAIRMAN. Now in these offices, let's take the first six how

many Americans do you intend to employ and how many—what will

be the percentage or what is the policy as to the employment of nationals in this case?

Mr. GILMORE. For example

'

at London, we know we would start

with three American personnel and four British personnel.

We are going, as I suggested and as Congress has instructed us,

to open this like a business. We are going in just as any business

house, determining how it can properly spend its money and get its

results. We will go in With a staff that will be geared, a highly professional staff geared in this direction.

Now we have been consulting with the other countries that have

made a successful effort in attracting Americans to their shores and

they tell us it is terribly important that we have fine American faces

at our shops around the world, the type that will be able to give

America's best image and to encourage the people coming to our

shores • thus we want to take Americans as much as we can.

• We know it is a far more expensive proposition to take an American

to a foreign city and keep him there, and we know, likewise, that by

way of being good neighbors, we will want to hire a certain amount

of local personnel.

The CHAIRMAN.. Yes, in some cases a national would be very helpful, language and things of that kind.

Mr. GILMORE. Yes, sir.

The CHAIRMAN. But I do hope you will carry out this policy to

have as many of our citizens experienced in this work as you can get,

I appreciate that we cannot pay them too much, and it is going

to be difficult to get personnel, but there are so many people interested and dedicated, that I feel you will have enough applicants

to find some qualified people.

Mr. GILMORE. I think you Senators would be proud to know this

is such an exciting program that two or three thousand Americans,

wonderful people, have applied for positions with us and one of the

last questions that they have asked is what the price would be; they

think it is such a great opportunity for us to put the image of America

around the world and to participate in it. We are having no trouble

with recruitment and we do not think salaries will be a problem.

They want to do this job and they feel they can do it well.

The CHAIRMAN. I am hopeful that at the Cabinet level, at which

you will give advice on this particular matter, you just keep at this

simplification and eliminate the redtape or bona fide tourists. I

made the statement once, and I wasn't far wrong, that it was harder

at one time to get into the United States than to break into jail.

We have plenty of bona fide tourists and the undesirables aren't

going to come that way, anyway. They probably know how to get

into this country other ways.

Now one thing we have found out on this committee and probably

it is too early to ask your views on it or what your plan is—I know

you have been thinking about it, I know the Secretary has been

thinking about it and the rest of them down there—we have found

that one of the big jobs will be to dispel a common impression all

over the world that it is too expensive to travel in these United

States. Everybody all over the world just believes that. They just
38 NOMINATIONS

assume that. The truth of the matter is that it is not what they

think, but this is a propaganda job or an advertising job or a word

of mouth job that we have just got to set our shoulders to the

wheel on.

Mr. GILMORE. You developed that well in the testimony on this

case and it is one of our first points of attack, because of the fact

that this is such a widespread impression. Yet we know to go

through Europe first-class can be just as expensive as going through

the United States.

The first booklet our new U.S. Travel Office is publishing within

the next couple of months will put emphasis on something that heretofore has not been emphasized to non-Americans, and that is that

there are such accommodations as clean, attractive YMCA, YWCA,

youth hostels, national park camps attractions of that sort.

This new arrangement of traveling anywhere on a bus for $99 in

99 days, we are now persuading travel agents around the world that

they can put together economic tours that will put America within

the reach of millions of people who think it may be too expensive,

but seeing the price of these package trips, they can be brought to

our shores. We know it will work.

The CHAIRMAN. Up to the time I left the bill, we were having

very fine cooperation of all of the industry involved, hotels, motels,

airlines, steamship lines, all of the people, travel agents themselves,

their association. Does that still continue?

Mr. GILMORE. That is the most hopeful thing about this entire bill.

We are off to a wonderful start with the private travel industry, because they know and they have testified to you that they cannot

individually or even collectively tell the job of America and its

attractiveness. This has to be an overall selling job, as every major

country in the world realized years ago.

And once we, telling this total story of America, thrift vacations,

all of the attractive spots to see in America, then we leave it to private

enterprise to do their role, which is to sign up the persons, to get them

here, house them and feed them and show them the attractions of

America.

Yes, private industry is behind us 100 percent and we are going to

keep them that way, because we are working with them every day on it.

The CHAIRMAN. The Hotel Association and the motels, which furnish more in the West than in the East—now you say the bus companies have been considering a $99 for 99 days?

Mr. GILMORE. Yes.

The CHAIRMAN. In other words, this comes from Europe, this idea,

where the railroads of Europe will sell you a 30-day ticket, x number of dollars, and you travel all you want on that ticket. Is this a

similar thing the bus lines are putting into effect?

Mr. GILMORE. It is exactly the same arrangement. You must be

from overseas, you must have a visa to the United States. For $99

you can purchase this permit. A German can visit his uncle in Chicago and for 99 days get on that bus every day and go in a different

direction and see all of America.

The CHAIRMAN. Ride as much as he wants?.

Mr. G ILMORE. Yes, sir.
NOMINATIONS 39

The CHAIRMAN. Now I don't profess to know how to run a railroad,

although we Senators on this committee get exposed to it quite a bit,

but I am hopeful that maybe—and I have suggested this to some of my

friends in the railroad industry who are having passenger trouble—

that this might be a pretty good thing for them to explore.

Mr. GILMORE. The AAR tells us they are exploring it now.

The CHAIRMAN. I think they are and this is an example of the cooperation we are getting. I don't know whether you followed this

through or not, but I did also at one time talk with the car rental people, and they were exploring the idea of very cheap daily rental for a

small compact car that we are now making in America, where a bona

fide traveler could travel just as cheap as he could travel any place in

the world, and this fits into the motels and I hope that cooperation

continues. •

Mr. GILMORE. Yes. Last week there was a German on a combination trip like that who was on a streamliner stalled for a few minutes

in Arizona and he got off to watch the sunrise and the train pulled out

and he couldn't speak any English at all. He came walking into the

middle of a town in his pajamas at high noon and it was quite a surprise. We are really starting this program with a lot of interesting

touches.

The CHAIRMAN. Any further questions?

Senator YARBOROUGH. Mr. Gilmore, I think you are doing a fine

job there. I have been more than pleased with the reports I have

heard. I think this biographical sketch explains lots of it—with

your experience in so many different fields in so many parts of the

world. We wish you every success and continuing success.

By,the way, one question only. You said you had 2,000 to 3,000

people that applied for jobs?

Mr. GILMORE. Yes, sir, for 40 jobs.

Senator YARBOROUGH. They are going to be spread pretty thin,

aren't they?

Mr. GILMORE.' Secretary. Hodges said this project of ours has more

sex appeal than anything in Washington.

Senator YARBOROUGH. I have no further questions.

The CHAIRMAN. Senator McGee?

Senator McGEE. I just want to compliment Mr. Gilmore on the efforts to date to get people beyond New York and Washington and

Disneyland. I think so many of the tourists from abroad sometimes

get an erotic picture of America, if I may say so, and I would hope

that in your literature that you are using to educate these would-be

tourists to places they want to see, that you are heavily loaded with

materials on Jackson Hole and Yellowstone and the Big Horn, and

things in the wonderful State of Wyoming.

Mr. GILMORE. Your point is well made. We have done a survey

that shows the top seven tourist attractions for non-Americans in this

country, including four wonders of nature, that rather than the appeal

of the big city, which we frequently fancy is the main appeal, that

the wonders of the out-of-doors the visits to our national parks, the

great majesty of Niagara Falls,' Grand Canyon, Yellowstone and the

Tetons are among the top things those people want.

• Senator McGEE. Among these four wonders of nature, that includes

everyone in the Senate?
40 NOMINATIONS

Mr. GILMORE. I want to get the Great Smokies of Tennessee and

North Carolina in there too.

Senator YARBOROUGH. We hope you won't forget the Alamo in that

list.

Mr. GILMORE. Yes. Thank you, sir.

Senator, may I merely comment that one important thing you

gentlemen have emphasized to us we are pursuing is this: We are

going to make sure every American that goes overseas for us speaks

fluently the language of the country in which he is to be stationed

and those surrounding languages whenever possible, and we are sending these people not only to the foreign language institutes to be

checked out, but to the foreign travel office of the countries in question, to have them certify that when a man_ goes to Frankfurt, he

sounds just as competently like a good American speaking German

as anybody, because we are resolved to do business in the language

of the country where we are asking them to come to see us.

The CHAIRMAN. Now most States have State commissions on tourism; I think practically all of them, and they expend a great deal of

money. I think my State alone expends as much as the whole Federal

Government budget and I am sure Wyoming does and Texas and all

of them, Kansas now with her centennial.

Do you have any plans for cooperative liaison with the State tourism commissions for any particular thing?

Mr. GILMORE. As an example, we have already met with the Century 21 people and we have told them we are going to be running a

small professional shop but we will be expecting Century 21, Kansas

Centennial, National Park Service, to generate for us a type of copy

we will get overseas to the press for distribution through our overseas

representatives, so that just as the Senator from Wyoming pointed

out, we are telling the story of all America and we have notified the

50 States that they and their private as well as public attractions,

their parks and their cities and monuments and historic sites all are

going to receive emphasis from us, so as to present this total picture.

Yes, sir, we are covering that as thoroughly as we can.

The CHAIRMAN. One other thing that should fit in as a practical

matter. We have steamship lines, for instance, that have so-called

seasons and they have an off-season, going out, say to Europe, when

they could be utilized for special rates, let's say, for people coming

here. Because I think few people in the world realize that this is one

country that you can come to any time of the year and get any kind

of climate you want. This is one of the few rare countries in the

world where you can come in January or July and get any kind of

climate you want. And this should help the transportation people.

Mr. GILMORE. Yes. Europe has emphasized this thrift season idea

but we can take that and run with it and get tremendous mileage out

of it.

The CHAIRMAN. We all wish you well down there, and I know the

Secretary has been deeply interested in this and of course the President too, and all of us, and we are hopeful. There are some guidelines, even now I want to tell the members of the committee, that I

am informed that even since we simplified the visa, and we can do

more of it, that the applications for visas are about 10 or 12 percent

over last year, which is a good sign.
NOMINATIONS 41

Mr. GILMORE. We are grateful for this sendoff and we have a semiannual accounting which we will be proud to send you, because we

need and want your advice as we go.

We thank you very much for a good start.

The CHAIRMAN. If you have any financial holdings on conflict of

interest, you can file them. I don't know where there would be a

conflict here, unless you were running a travel agency for profit, but

I don't think you are.

Mr. GILMORE. I have no conflict no, sir.

The CHAIRMAN. And the same question, I presume you intend to

follow out the spirit of Senate Resolution 388 and serve until this

job is well on its way?

Mr. GILMORE. I do.

The CHAIRMAN. Thank you.

Sentor YARBOROUGH. Mr. Chairman, one comment.

Mr. Gilmore, as I previously discussed with you, I want to again

state the information that I have from people in my State, who travel

south of the border, is that the greatest impediment to tourist travel

from those countries into the United States, for people there who have

the money and are able to come, is the treatment they receive at the

border. They feel they are harshly treated by American immigration

officials and that is, I am told by people that spend a lot of time in

Latin America, one barrier that needs to be overcome. They do not

feel they are treated courteously and civilly by our officials.

Mr. GILMORE. Mexico and Canada, of course, are tremendous sources

of income to us and we must improve and develop and define and

simplify those arrangements. I am glad you make that point. We

have it on the top of our list.

Senator YARBOROUGH. This is principally from Mexico, because that

is the source of the greatest amount of traffic and, of course, the

wealthier Mexicans, they tell me, go to Europe and the middle class

come to the United States; and many more would like to come.

Mr. GILMORE. Right, it is an important point we are concerned

about.

Senator YARBOROUGH. Thank you.

I hope you will work with other agencies in the Government to see

this whole course is smoothed.

Mr. GILMORE. Yes, sir.

The CHAIRMAN. Thank you. We appreciate your coming.

( Thereupon, the committee proceeded to the consideration of other

business.)

0