NATIONAL INSTITUTE OF SOCIAL
SCIENCES 12/6/73 [Y]

December 6, 1973

Dear Frank:

I hope that you understand why I must be absent tonight. I would appreciate it if you would read the following personal message from me to those attending the dinner.

"I deeply regret that the press of recent events and my imminent trip to Europe and the Middle East prevent me from being with you tonight. My sense of regret is heightened by my great respect for the enduring goal of your organization -- to provide a distinguished forum for the discussion of urgent national problems.

"No problem facing this nation is more urgent than the search for a lasting peace. For over a quarter century, the building of a more peaceful world has depended upon American vitality. Now America's vitality increasingly depends upon the creation of a more peaceful world. It is no longer meaningful to measure domestic priorities against foreign priorities -- almost all aspects of our national life now contain both dimensions.

"The past weeks have demonstrated that America is uniquely able to engage the trust and respect of others in the search for an enduring peace. But we must match the confidence of others with confidence in ourselves so that we have the constancy and strength to turn our hopes into reality. We have an unparalleled opportunity to help bring a new sense of legitimacy and durability to the international order, to a world all nations share in creating and all have an interest in maintaining.

The Honorable
Frank Pace, Jr.,
President,
National Institute of Social Sciences,
545 Madison Avenue,
New York, New York.

New York, New York.

442 Madison Avenue.

President,
Frank Pace, Jr.,
The Honorsable

maintaining.

all nations share in creating and all have an interest in
legitimacy and durability to the international order, to a world
have an unparalleled opportunity to help bring a new age of
the constancy and strength to turn our hopes into reality. We
dence of others with confidence in ourselves so that we have
search for an enduring peace. But we must match the confi-
mately aspire to engage the trust and respect of others in the
"The past weeks have demonstrated that America is
dimensions.

-- almost all aspects of our national life now contain both
intuitive to measure domestic priorities against foreign priorities
the creation of a more peaceful world. It is no longer meas-
vitality. Now America's vitality increasingly depends upon
building of a more peaceful world has depended upon American
search for a lasting peace. For over a quarter century, the
"No problem facing this nation is more urgent than the
national problems.

to provide a distinguished forum for the discussion of urgent
my great respect for the enduring goal of your organization --
being with you tonight. My sense of regret is heightened by
imminent trip to Europe and the Middle East prevent me from
"I deeply regret that the press of recent events and my
message from me to those attending the dinner.

I would appreciate it if you would read the following personal
I hope that you understand why I must be absent tonight.

December 6, 1973

SCIENCE 2 15/6/73

NATIONAL INSTITUTE OF SOCIAL

KISSINGER, HENRY A. Awards

Dear Frank:

I am both pleased and honored to be
asked to address the National Insti-
tute of Social Sciences at your annual
dinner and to be the recipient for a
second time of the Gold Medal. I
would be delighted to attend the dinner
and give a short talk. I am looking
forward to hearing from you in the near
future for further details.

Mr. Frank Page, Jr.
President
National Institute of
Social Sciences
545 Madison Avenue
New York, N. Y. 10022

Enclosures filed in 12022
Oversize Attachments #____

RECEIVED
JUN 2 3 1973

CENTRAL FILES

NATIONAL INSTITUTE OF SOCIAL SCIENCES [lc]

PRESIDENT

FRANK PACE, JR.

VICE PRESIDENTS

HOYT AMMIDON
MRS. ERIC L. F. ARCHDEACON
H. ADAMS ASHFORTH
BERNHARD M. AUER
HUGH BULLOCK
MRS. THOMAS L. CHADBOURNE
FRED G. CLARK
GILBERT DARLINGTON
LEWIS W. DOUGLAS
PHILIP L. R. DU VAL
L. PHILIP EWALD
MRS. JOHN GERDES
PETER GRIMM

INCORPORATED BY ACT OF CONGRESS, JANUARY 29, 1899

545 MADISON AVENUE
NEW YORK, NEW YORK 10022
688-6400

VICE PRESIDENTS

WILLIAM E. HILL
WALTER HOVING
MRS. JOHN P. LINS
MRS. OSWALD B. LORD
MRS. JUNIUS SPENCER MORGAN
SAMUEL F. PRYOR, JR.
OGDEN R. REID
MRS. CHARLES M. RICHTER
EDWARD RUSSELL, JR.
THOMAS SHEPARD, JR.
MRS. JOHN W. SHEPPARD
MRS. HARPER SIBLEY
ELVIS J. STAHR, JR.
JUAN T. TRIPPE

TREASURER

RICHARD I. BURNHAM

April 25, 1973

Dr. Henry A. Kissinger
The White House
Washington, D. C.

Dear Henry,

Last year at the Annual Dinner of the National Institute of Social Sciences, I stated that you had advised me that if you could conclude your Paris discussions on the day in question you would be there, obviously events made this impossible. I then stated that I would recommend to the Medals Committee that you be awarded the Gold Medal for a second time which is most unusual in our organization. I did so recommend and the Medals Committee has unanimously voted you the Gold Medal for 1973.

The dinner will be black tie and will be held at the Plaza Hotel on December 6. The subject of your talk can be one of your own choosing not to extend beyond ten minutes. The audience is of the highest quality.

I am sending you brochures on those honored in the past to refresh your memory and I look forward to having you with us in December.

THIS FILE HAS BEEN CHARGED OUT OF THE WHITE HOUSE CENTRAL

International
Executive
Service Corps

622 Third Avenue, New York, N. Y. 10017 (212) 490-6800

FRANK PACE, JR.
President

September 13, 1974

The Honorable Henry A. Kissinger
Secretary of State
Department of State
2201 C Street
Washington, D. C. 20520

Dear Henry,

We have had in the past year quite a unique
success with IESC. It not only has grown substantially in size
but its impact on the developing countries has been maximized.
I am enclosing an article which appeared in Fortune on the
accomplishments of Ralph Gibson in Brazil. It is a great tribute
to the determination of the retired men we send out.

I know you have a great present interest in the
transfer of technology to the developing countries. Frankly this
can best be achieved by individual approach which this
organization has mastered.

Busy as you are I hope you will glance at this
article. I am convinced IESC has a significant role to play and
you would know best how to use it.

Those of us who know you well are extremely proud
of your thoroughly remarkable accomplishments.

Ralph Gibson and his medal

by Arthur M. Louis

Work will begin early next year on one of the most important construction projects in the history of Latin America. A $400-million pipeline, extending 1,400 miles from the heart of Bolivia to the coast of Brazil, will bring natural gas to São Paulo and Rio de Janeiro, the two largest Brazilian cities. The pipeline, scheduled for completion in 1977, also will be a great boon to Bolivia, the poorest South American nation. Bolivia will receive around a billion dollars for the gas over a twenty-year period, plus Brazilian financing for a steel plant, a fertilizer plant, and a cement plant.

Since the deal was consummated, the Brazilian and Bolivian authorities have been cheerfully taking credit for the pipeline project. And indeed, there is a certain amount of justification for their pride. The negotiations that led to the agreement were complicated and arduous, continuing intermittently over a period of seven months, and involving a host of political leaders and financial and engineering experts from both sides. The project obviously could not have come to life without the wholehearted participation of the two governments.

## In the face of skepticism

But the project might never even have reached the conference table if it hadn't been for Ralph F. Gibson, now sixty-six, a retired corporate executive from the U.S. A slender six-footer with a gravelly voice and a liking for Jamaican cigars, Gibson used to head the Intermountain Gas Co., of Boise, Idaho. For the past three years he has served as a consultant to a municipally owned company that distributes manufactured gas in São Paulo. He sized up Brazil's pressing need for natural gas soon after arriving in the country, and pinpointed the Santa Cruz fields of Bolivia as the likeliest source.

A quiet but determined man, Gibson persistently promoted the idea of a Brazilian-Bolivian pipeline for more than a year in the face of skepticism and indifference. Although the authorities prefer not to admit it, Gibson's efforts, more than anything else, drew them into their negotiations.

Gibson first decided to go to Brazil

# A Gas Man from Idaho Wins the Southern Cross

170 FORTUNE August 1974

THE LADY
GETS A
NEW FLAME

The Statue of Liberty has worn well since it arrived from France in 1885. But with the passing years the monument—which employees of the National Park Service fondly call “The Lady”—came to need some major repairs. As a contribution to the 1976 bicentennial, American Express donated $50,000 to help spruce up The Lady— the celebrated torch in particular.

Replacing the 600 pieces of tinted cathedral glass that make up the flame presented the contractor with a rare challenge. To get to the torch each day, craftsmen employed by J. Sontag Glass & Shade Co. of New York City had to climb a long, winding stairway to the shoulder. Then they went up inside the right arm—closed to the public for fifty-eight years now—on a narrow steel ladder. The torch swayed in the wind, sometimes so perilously that the workmen had to retreat. When it came to fixing up the very tip, a glazier was strapped to a ladder and swung some 300 feet above New York Harbor.

American Express was the first corporation to sponsor a bicentennial project. Now the National Park Service has compiled a “wish list” of other projects, all over the country, that it hopes corporate angels will support with gifts in celebration of the nation’s 200th birthday. For one thing, the Statue of Liberty could use a new external lighting system.

Photographs by Robert Reib

FORTUNE August 1974 169

after he was approached in the spring of 1971 by the International Executive Service Corps. A nonprofit organization based in New York, the I.E.S.C. recruits retired businessmen to advise foreign companies. (See "Those 'Retired' Management Missionaries," FORTUNE, September 1, 1967.) Gibson agreed to lend his expertise to the little Companhia Municipal de Gás, which derives $7 million a year in revenues from piping manufactured gas to about 6 percent of São Paulo's 6.5 million residents. Comgás, as the company is commonly known, wanted to expand and improve its operations, and it had asked I.E.S.C. to supply managerial guidance.

The Comgás assignment was far from lucrative—I.E.S.C. consultants receive only their air fare and $60 a day in living expenses—but Gibson found it highly attractive anyway. From a description sent him by I.E.S.C., he learned that the Comgás plant produced gas by heating coal, a process that has all but vanished in the U.S., but was common here during the Thirties and Forties. Gibson, who started in the gas business in 1930, had managed manufactured-gas plants himself for Associated Gas & Electric, the predecessor of General Public Utilities Corp. The Comgás operation thus offered nostalgic appeal.

## Stepping into a shambles

Gibson also was delighted at the chance to return, if only indirectly, to the challenges of business management. After twelve years as president of Intermountain Gas, he had retired abruptly in 1968, following a proxy fight with some fellow board members. The fight had been touched off by Gibson's efforts to expand Intermountain into real estate, irrigation projects, and other ventures outside the normal range of a gas utility. Gibson's slate won a majority of the board seats, but Gibson was exhausted and disillusioned by the fracas, and he still had to contend with a vocal minority of anti-Gibson directors. After quitting, Gibson played a lot of tennis and golf, and he and his wife traveled extensively. But most of the time he found idleness uncomfortable.

Soon after he arrived in bustling São

Paulo in August, 1971, Gibson discovered that his assignment would be far more challenging than he had imagined. The top people at Comgás had been appointed to their positions only recently, and none of them could claim any previous experience in the gas business. The company had been owned by British interests from its founding in 1872 until 1967, when the proprietors, finding it chronically unprofitable, handed it over to the city free of charge.

For a while, the city tried to run Comgás by delegating its functions to existing municipal agencies. But the operation deteriorated, and in April, 1971, the mayor of São Paulo appointed a board of five directors to oversee

Comgás. The board was headed by Flávio Musa de Freitas Guimarães, thirty-nine, a personable, articulate engineer who had been in charge of the city's transit system.

When Gibson stepped in, soon after the new board was appointed, Comgás was an incredible shambles. Applications from prospective customers went unheeded for months at a time. Gas leaks were repaired belatedly or not at all, and occasionally some hapless citizen would be asphyxiated by the fumes. Customers in scattered parts of the city would find their service mysteriously cut off without warning or explanation. And sometimes the entire system would break down. Drainage was inadequate at the company's plant, and heavy rains would flood out the furnaces used to heat the coal.

Although it was the only company in São Paulo that offered piped gas, Comgás was rapidly losing customers. Most consumers preferred doing business with firms that delivered so-called "bottled" gas—propane or butane in cylindrical steel containers. The bottled gas was not only more reliable, but cheaper as well. Because Comgás was so inefficient, the piped gas cost 20 percent more than the bottled gas.

## Everything to help a gas man

Appalled by the conditions at Comgás, Gibson was tempted to abandon the project and go back to the U.S. But he decided to try to create order out of the chaos. "There's a code of ethics in the gas business," he explains. "You do everything you can to help another gas man." One of his more crucial contributions was to hurry along construction of a new gas plant with proper drainage. The plant, designed to produce gas from naphtha, a more efficient feedstock than coal, had been started before Gibson arrived, but it was far behind schedule. All he did, Gibson says, was bring in "the American way of getting things done." The plant finally went into operation in September, 1972.

Gibson also started teaching the Comgás directors and their 1,100 employees the rudiments of the gas business. But that chore was clearly more than one

FORTUNE August 1974 171

man could handle, and he asked I.E.S.C. for additional consultants. In April, 1972, he was joined by two specialists. Hubert M. O'Haver, a former sales manager for the Southern California Gas Co., was assigned to show the Comgás sales force how to win and hold new customers. Dewey B. Larson, who had been chief engineer of Northwest Natural Gas Co., of Portland, Oregon, was brought in to demonstrate proper maintenance and safety procedures.

Gibson had been in Brazil only a short

safer as well. Keeping bottled gas in houses and apartment buildings is dangerous, Gibson says. "In São Paulo, we have a lot of skyscraper apartment buildings, all loaded with bottles of gas. It's a veritable arsenal. The containers are made of extra-heavy steel, but when they are exposed to fire or flame, the gas will expand and explode."

This danger was dramatically underscored soon after Gibson went to São Paulo. A small fire on the ground floor of a twenty-eight-story apartment building

should be explored further. During his long business career, he had come to be known as a man who won't see the trees for the forest. "He was always impatient with problems and details," recalls a former colleague at Intermountain Gas. "He was an imaginative person and dedicated to goals. If someone came along and said you can't do this because of so and so, he didn't like to hear that. He didn't want to recognize the problems. But then again, he wouldn't have succeeded if he'd listened to all of them."

Gibson persuaded the Comgás directors that they should hire a U.S. management-consulting firm to study potential pipeline routes, assess the engineering problems, and fix the probable cost. He and Flávio Guimarães, the Comgás president, flew to the U.S. to discuss the project with several firms, and finally picked Stone & Webster, of New York. Stone & Webster began the study in January, 1972, and completed it in July, 1973. The consultants came up with an estimated cost of $350 million for a 1,200-mile pipeline from the Santa Cruz fields to São Paulo. When the Brazilian government insisted that such a pipeline should extend the extra 200 miles to Rio, the estimate was hiked to $400 million.

## Glimpses of poverty

After the arrival of O'Haver and Larson, the new I.E.S.C. consultants, Gibson was free to devote most of his time to the pipeline. The overriding question was whether Bolivia had enough gas to make a pipeline worthwhile, so Gibson decided to go there and find out. In May, 1972, he flew to La Paz, the capital, for talks with officials of the government-owned petroleum monopoly, Yacimientos Petroliferos Fiscales Bolivianos. The company's president, Rodando Prada, assured Gibson that the Santa Cruz fields contained plenty of natural gas for Brazil. But Prada insisted that specific figures would have to wait until the Brazilian government initiated negotiations.

Gibson came away from Bolivia with an additional incentive to push for a pipeline. The Bolivian economy obviously needed the stimulation such a project

time when it dawned on him that he was in a position to make a major contribution to the nation's economy. Brazil's economy was booming, of course—and it still is. Yet in the most highly industrialized region, the 200-mile coastal area extending from São Paulo to Rio, manufacturers were forced to choose between bottled and manufactured gas, both extremely expensive. If substantial quantities of natural gas could be piped in, Gibson reasoned, there would be a chain reaction of benefits.

## Arsenals in the skyscrapers

"My preliminary estimates indicated that if natural gas could be brought in, the price of gas fuel could be cut to less than half of the price then being paid for bottled gas," Gibson recalls. "This would be reflected in reduced costs of all sorts of manufactured items. For example, nearly every major automobile company has large plant installations in São Paulo, which means cars could be manufactured cheaper. The same would be true for vacuum cleaners, kitchen appliances, and a lot of other products."

For residential customers, natural gas would be not only cheaper and more convenient than bottled gas, but a lot

spread to an area where gas containers were stored. The containers burst and flames engulfed the building. Fortunately, all 420 occupants were able to escape to the roof, where they were rescued by helicopters.

Gibson recalled that a natural-gas pipeline was under construction from Bolivia to Argentina. In September, 1971, at his first formal meeting with the Comgás directors, he suggested that Bolivia might hold the answer to Brazil's energy needs as well. The directors told him that the idea of a Bolivian-Brazilian pipeline had been floating around for years, but that everybody considered it impractical. Bolivian governments were notoriously unstable. There had been nine changes of leadership in ten years, and the Brazilians feared that an agreement negotiated with one regime might be nullified by the next.

There also was considerable doubt whether Bolivia had enough gas to supply Brazil and still meet its obligations to Argentina—under an agreement between the countries, Argentina will be drawing 150 million cubic feet of gas per day from the Santa Cruz fields until 1992.

The arguments failed to shake Gibson, who insisted that the pipeline plan

172 FORTUNE August 1974

would offer. Although his trip lasted only three days, he got some telling glimpses of the country's poverty. As he strolled the streets of La Paz, it struck him that everyone looked ill-clothed and unhappy. "On each corner, there'd be some poor little soul selling nuts or some kind of hard candy."

There were few stores, and night life was nonexistent. "By eight o'clock, all you'd hear was dogs barking." His hotel provided neither warm water nor heat. He had to sleep in his street clothes —May is a chilly month in the Southern Hemisphere.

## A governmental conflict of interest

Returning to São Paulo, Gibson triumphantly reported the news about Bolivia's gas reserves to the Comgás directors. At this point, he was all for traveling to Brasília, the seat of government, and pounding on a few desks. But Guimarães counseled caution. He explained that while an aggressive, direct approach might be effective in the U.S., it was the wrong way to deal with the leaders of Brazil's military government. The government had to be persuaded, subtly and discreetly, that the opportunity to get natural gas from Bolivia was too good to ignore.

Dealing with the Brazilian government was a delicate task under any circumstances. But it could prove especially so in this case, since the government had strong reasons for maintaining the status quo. The state-owned petroleum company, Petrobrás, was the sole supplier of the propane and butane sold by the bottled-gas companies in São Paulo, and it also was to be the sole supplier of naphtha for the new Comgás plant. The government obviously would not be eager to see these sources of revenue dry up. If anyone—particularly a foreigner—tried hard-sell tactics, the pipeline plan would surely be squelched.

Guimarães suggested that Gibson talk to outsiders who might be able to influence the Brazilian government, and that he also continue to gather information in support of the pipeline. Guimarães agreed to relay Gibson's reports to his own contacts in Petrobrás and elsewhere in the government.

After all the years he had spent giving orders, Gibson felt sorely out of character in the role of catalyst, but he was anxious to get the pipeline built, and he went along with the slow, indirect approach. "Underneath all of this bureaucratic procedure," he says, "I knew São Paulo had to have a massive supply of gas. I knew Bolivia had the gas to sell. It was a good exchange, and I just proceeded on that basis."

Once he tried, Gibson discovered that he actually *did* have a talent for subtle persuasion. During October, 1972, he attended a convention of the American Gas Association, in Cincinnati, and, stretching the truth, he told the people there that Comgás was going to build a pipeline from Bolivia. The report was picked up by the convention newsletter and, as Gibson had hoped, many conventioners spread the word after they got home. Comgás soon was deluged with queries from construction companies eager for a piece of the project. Guimarães was then able to pass word through government channels that Brazil could count on a ready supply of contractors if it ever decided to build a pipeline.

In February, 1973, Gibson discussed the pipeline scheme with bankers in

New York, and got them to attest that the project could be completely financed by a mixture of bank loans, bonds, and common stock. "It was important to show that the money could be raised externally," Gibson says.

## A summons to the ministry

Gibson also took the case for a pipeline to diplomats who might be able to help. In January, 1973, he met with William M. Rountree, then the U.S. Ambassador to Brazil (he stepped down four months later). "I explained there was a possibility of using American supplies and material on the pipeline, and that this could be a step toward developing more trade and business with Brazil and Bolivia." Rountree was impressed, and said he would help.

In February, during a trip to the U.S., Gibson visited Edmundo Valencia, the Bolivian ambassador in Washington, and Walter Guevara, the Bolivian ambassador to the U.N. "I wanted to get them interested in stimulating action on the Bolivian side," Gibson recalls. "I pointed out that this could be a major source of continuing revenue in Bolivia. They were very receptive."

Finally, all the months of coaxing and

*continued page 228*

Gibson and Flávio Guimarães, president of Comgás, at company headquarters.

THE
FORTUNE
DIRECTORY

of the 300 Largest
**Industrial Corporations Outside the U. S.** (Ranked by Sales)

Propelled by last year's worldwide economic boom, the 300 largest industrial companies outside the U.S. obliterated all previous sales and net-income records for the list. Combined sales of the 300 rose by 34 percent last year (versus 19.6 percent for the 500 largest U.S. industries). And the 300's profits rose by a gaudy 91 percent (versus 39 percent for the 500).

To some extent, those whopping sales and profit figures were pumped up by widespread double-digit inflation. And, since FORTUNE calculates the totals for foreign companies in U.S. dollars, the numbers were also inflated by the 10 percent dollar devaluation of February, 1973. But even after adjusting for inflation and devaluation, the main point of the figures is clear: the business of the 300 was terrific.

The sales gains were broadly based. Except for the food and beverage groups, every industry had a median gain of more than 25 percent. Manufacturers of paper and wood products showed the largest sales gain of all, with 45.2 percent. The mining industry was second, with 44.4 percent. Last year a record forty companies joined the billion-dollar club, bringing the total to 145.

## British Steel pours it on

The profit gains were also broadly based; only thirteen of the companies lost money last year. One special stand-out was British Steel, which is in effect the U.K.'s nationalized steel industry, and which went from a poor performance in fiscal 1973 to a great one this year. Its profits increased more than sixteenfold.

Helped along by British Steel, the fifty-five British companies on the list now have 23.7 percent of the 300's total profits, more than any other country's entries. The eighty-five Japanese companies on the list account for only 20.5 percent of the total profits. Strong anti-inflation measures in Germany kept profits down in that country, and the forty-one German companies among the 300 account for only 7.5 percent of total profits.

Manufacturers of paper and wood products did even better on profits than on sales, with a median gain of

Research associate: Linda Grant Martin

104.6 percent. Profits in iron and steel, boosted by British Steel, showed a median increase of 96.9 percent.

The current 300 list contains a number of interesting newcomers. National Iranian Oil checks in at No. 28; in the past, this giant concern (1973 sales: $4 billion) had not made figures available. Since oil prices have quadrupled this year, the company's sales totals should be prodigious on next year's list. The appearance of Neste Oy, at No. 287, brings Finland back on the list. An oil and gas distributor, Neste Oy has just completed a pipeline to bring out Soviet natural gas.

## Faster when measured in dollars

Once again this year, the difficulties of gathering data have been greatly exacerbated by changes in the relative value of currencies. FORTUNE converted sales and profit figures into dollars by averaging exchange rates for each month of the year. Asset figures are converted at the exchange rates prevailing whenever the companies close their fiscal year. Because of the decline in the value of the dollar, many companies, especially in Germany, grew faster in dollars than in terms of local currencies.

To qualify for inclusion among the 300, a company must derive more than 50 percent of its sales from manufacturing or mining. FORTUNE requests that consolidated accounts include data only from subsidiaries that are more than 50 percent owned, but not all companies are both willing and able to provide information on this basis. Although some companies continue to include excise taxes and customs duties in their sales figures, FORTUNE excludes such items, and this may result in lower sales totals than are indicated in company reports.

Profit figures also are influenced by accounting and reporting requirements that vary widely among countries. Depreciation practices, for example, may differ considerably from one country or company to another. Some companies compile sales figures on a consolidated basis and give their profit figures for the parent company only. Comparison of various companies' returns on sales and stockholders' equity, therefore, would in many instances be misleading.

—HERBERT E. MEYER

174 FORTUNE August 1974

## The Tanker Game *continued*

coming into the market on schedule. They expect more
than the usual amount of slippage in the delivery sched-
ules. Steel supplies are tight and shipyard unions are
notoriously strike-prone. Many supertanker orders may
be converted into orders for smaller tankers and carriers
of refined petroleum products. Past recessions have
brought outright cancellations. But under some current
contracts, shipowners would have to forfeit a down pay-
ment of as much as $20 million to cancel construction of a
very large ship.

While many owners will have a tough time making a
profit on ships ordered in 1973, many shipyards face a
loss on almost every ship ordered before then—inflation
hit the shipyards, too, particularly in Japan. This situa-
tion would seem a natural for a "walkaway deal," in
which owners and shipyards agree to cancel a number of
old and new orders. But it does not really seem probable
that many such deals will come about. Shipyards and the
governments that subsidize them would rather build
money-losing ships than let facilities stand idle.

Eventually, almost everyone concedes, hard choices
will have to be faced. (Such is the optimism of shipown-
ers that most expect the hard choices will have to be
faced by others.) In every recession a certain number of

ships are laid up or scrapped. In the current climate there
is considerable uncertainty about which ships will get
pushed out of the market first. Normally they have been
the older, smaller, less efficient ships. But there are so
many VLCC's coming along, and so few ports to handle
them, that many experts think supertankers will soon
join the lay-up fleet.

## Well, maybe there will be a war

In the past, the tanker industry has often been bailed
out by political disturbances that increase the demand
for ships. The instinctive feeling of shipowners is that
history will repeat itself. One veteran shipowner, speak-
ing with extreme candor, puts the proposition baldly:
"War is the rule of existence, and war is good for busi-
ness—especially the shipping business. Between 1945
and 1974 we've had four wars. The odds are for some
kind of conflagration. The way humanity is led today
you never know what is going to happen." The man does
not go home at night and pray for war. He simply sees
himself as a realist.

Shipowners are also fatalists. They face with equa-
nimity levels of risk and uncertainty that would paralyze
others. In the words of Constantine Gratsos, the Onassis
man: "The cards have already been dealt; all you can do
is pick up your hand."

END

## Gas Man from Idaho

*continued from page 173*

cajoling from the sidelines paid off. In
April, 1973, Flávio Guimarães was sum-
moned to a meeting in Brasilia with the
Brazilian Minister of Mines and Energy,
the president of the country's National
Petroleum Council, the president of
Petrobrás, and the president of the mu-
nicipally owned gas company in Rio de
Janeiro. Brazil and Bolivia, it was an-
nounced, had agreed that a pipeline
should be built, and that negotiations
would begin the following month.

Three years after Ralph Gibson first
set foot in São Paulo, Comgás is prepar-
ing for an incredible metamorphosis.
Once a local joke, and a bad one at that,
the company is now in a position to be-
come one of the largest gas utilities in
the world. In the wake of the pipeline
agreement, Comgás has negotiated ex-
clusive rights to pipe gas to around 20
million people—more than a fifth of the
nation’s population.

The metamorphosis will have to be a
gradual one, however. The supply of gas

from Bolivia will not be sufficient for 20
million people. Barring the discovery of
some other source of natural gas, Com-
gás will continue to rely heavily on man-
ufactured gas; it has immediate plans
to build four more naphtha plants. The
company will also have to import lique-
fied natural gas from Algeria, Nigeria,
and elsewhere. Moreover, it will take
many years, and cost billions of dollars,
to install the necessary gas mains in the
expanded Comgás territory.

## The highest honor

To Ralph Gibson, the Brazilian-Bo-
livian pipeline represents, as he puts it,
"the greatest achievement of my busi-
ness career." Those are strong words for
someone who served twelve years as
president of an important U.S. company.
But Gibson insists he isn't exaggerating.
"The pipeline," he says, "will affect more
people, and do more for the people, than
anything I've done before."

Gibson's pride of accomplishment was
heightened considerably last June when
the Brazilian government gave him its
treasured Cruzeiro do Sul—the South-

ern Cross award. Gibson now has pal-
pable evidence of his accomplishments:
a handsome gold medal and a sheepskin
certificate. But in an official decree ac-
companying the award, the Brazilian
Foreign Ministry omitted any mention
of the pipeline. Instead, it spoke in the
most general terms of Gibson's "out-
standing service to Brazil in connection
with his I.E.S.C. projects here." When a
reporter pressed the point, a Foreign
Ministry spokesman denied that the
award had anything to do with the pipe-
line. He explained that it was simply a
tribute to Gibson's "disinterested, dedi-
cated services to Comgás."

It should be pointed out, however, that
Brazil does not bestow the Southern
Cross lightly. The medal is the nation's
highest honor, normally reserved for for-
eign heads of state and for the elite of
Brazil's own government. Over the
years, more than three hundred I.E.S.C.
consultants have offered their help to
Brazilian businesses, and most of them
have provided "disinterested, dedicated"
service. Only Ralph Gibson has received
the Southern Cross.
END

228 FORTUNE August 1974

FRANK PACE, JR.
President

May 12, 1976

The Hon. Henry A. Kissinger,
Secretary of State
Department of State
2201 C Street
Washington, D. C. 20520

Dear Henry:

My congratulations on the very effective program
you outlined in Nairobi. It was thoughtfully con-
ceived and is the only sensible approach to the
problem.

Its implementation will be complicated and difficult
but it represents the one solution.

FP Jr./lmh

BOB PACKWOOD
OREGON

United States Senate

WASHINGTON, D.C. 20510

March 19, 1975

The Honorable Henry A. Kissinger
Secretary of State
Department of State
Washington, D.C. 20530

Dear Doctor Kissinger:

I have had in my library a copy
of Nuclear Weapons and Foreign Policy
for years. I read it often and each
time gain a greater admiration and re-
spect for your brilliance and leader-
ship.

I am taking the liberty of enclos-
ing my copy of your book under separate
cover, Doctor. A few personal words of
inscription would mean a great deal,
your time permitting.

Thanks so much.

Racine, Wisconsin.
The Johnson Foundation,
President,
Mr. Leslie Paffrath,

Personal Visitation
Suzanne B. McFarlane

Sincerely,

the Secretary,
which is, as you know, of much concern to
lated for the part it has played in this important study,
send him. The Johnson Foundation is to be congratulated
the copy of "Desegna" which you were so kind to
African trip, and I know he will be interested to see
Secretary Klaasinger returns today from his

Dear Mr. Paffrath:

May 7, 1976

THE JOHNSON FOUNDATION

Racine, Wisconsin

Office of the President

March 22, 1976

Dear Secretary Kissinger:

We are sending you what we believe is an important
volume on an important subject:

ARMS, DEFENSE POLICY AND ARMS CONTROL.

DAEDALUS, the Journal of the American Academy of Arts
and Sciences, has devoted this publication to a series
of essays by arms control and foreign policy specialists
from the United States.

The Johnson Foundation is proud to have had a role in
initiating and supporting this timely project through
cooperation with the study committee of the American
Academy.

For this study arms control is defined as efforts to:

a) reduce the probability of war,

b) reduce the costs of preparations for war,

c) reduce the death and destruction if control
fails and war comes.

(over)

MORGAN GUARANTY TRUST COMPANY
OF NEW YORK

23 WALL STREET, NEW YORK, N.Y. 10015

New York

WALTER H. PAGE
President

November 19, 1974

The Honorable Henry A. Kissinger
Secretary of State
The Department of State
Washington, D.C. 20520

Dear Mr. Secretary:

I am presently serving as Vice Chairman of the Foreign Policy Association. On behalf of FPA's Board of Directors, I am pleased to inform you that we have elected Carter Burgess to become the full time Chairman of FPA effective November 1. We feel fortunate that he has agreed to undertake this difficult assignment.

A short release is attached for your information.

FPA has long been at work to encourage and help Americans to become better educated and interested in foreign policy and its meaning to our daily lives. Carter Burgess' long experience in key government, education and business positions will be most useful to FPA's nationwide program and its role in the vital international times ahead.

Carter's willingness to render another public service, I believe, deserves our interest and support, and I feel that the past accomplishments of FPA in its field of education in international affairs will be well served by his leadership.

WHP/dmh
Attachment

NEWS

FOREIGN 345 EAST 46 STREET
POLICY NEW YORK, N.Y. 10017
ASSOCIATION (212) 697/2432

RELEASE

[L.C.]

FOR IMMEDIATE RELEASE

Department of Public Information-Contact: Ms. T. Reavis

CARTER L. BURGESS ELECTED FPA CHIEF EXECUTIVE

The Board of Directors of the Foreign Policy Association, at their fall meeting elected its Chairman, Carter L. Burgess, to be chief executive officer of the Association effective November 1, 1974. His election took place on the occasion of the retirement of Dr. Samuel P. Hayes, FPA's President since 1962.

Walter H. Page, Vice Chairman of the Foreign Policy Association, issued the following statement on behalf of the Board:

> "...FPA has been most fortunate to have Dr. Hayes as its Chief Executive Officer over the past twelve years. He has served the nation well in creating and organizing educational programs on important foreign policy issues for a wide audience of adult and young Americans. FPA's Directors salute Dr. Hayes on the occasion of his retirement and express great admiration and appreciation for his skilled and dedicated leadership.

The Board is gratified that Carter Burgess has accepted its invitation to succeed Dr. Hayes. Ambassador Burgess' long experience in government, education and business will be most valuable to FPA..."

Mr. Burgess' biography is attached.

FPA was founded in 1918 and its Board of Directors is comprised of 74 scholars, lawyers, businessmen and civic leaders who guide this nationwide, non-partisan organization and its educational programs in world affairs.

10/21/74

October 1974

## Biography of
Carter L. Burgess

Carter L. Burgess is Chairman of the Foreign Policy Association.

Mr. Burgess serves as a director of the Ford Motor Company, the Morgan Guaranty Trust and the SmithKline Corporation and is a trustee of the George C. Marshall Research Foundation and Hollins College. He is a member of the Business Council and is a Woodrow Wilson Fellow.

Born in Roanoke, Virginia, Mr. Burgess graduated from the Virginia Military Institute in 1939.

During World War II, Mr. Burgess served with the Combined Chiefs of Staff in Washington as Administrative Secretary of the Casablanca Conference, Assistant Secretary of AFHQ in North Africa and finally as Secretary of the General Staff of Supreme Headquarters (SHAEF) in Europe. He attained the rank of Colonel and was decorated by the United States, Great Britain, France, Belgium and Tunisia during his long service overseas.

In 1945, he entered the Department of State and first served as Deputy Executive Secretary in the International Secretariat of the founding United Nations Conference in San Francisco. He has performed other assignments over the years for the White House, U. S. Senate and Cabinet offices.

Mr. Burgess later assisted President Donald Russell with the expansion of the University of South Carolina and holds an honorary Doctor of Laws degree from the University.

From 1954 to 1957, Mr. Burgess was Assistant Secretary of Defense for Manpower and received the highest Department of Defense and Army Civilian awards.

During his more than twenty-five years in international business, Mr. Burgess has served as Chief Executive Officer of Trans World Airline, AMF Inc., and the subsidiary operations of American Airlines.

After leaving AMF in 1968, Mr. Burgess was named U. S. Ambassador to Argentina. On his return, Mr. Burgess became the founding Chairman of the National Corporation for Housing Partnerships - a "Comsat" style entity financed by business and labor to assist in the development and provision of housing for families of low and moderate income. Mr. Burgess continues as a director of NCHP.

Mr. and Mrs. Burgess have five daughters and a son and reside in Pelham Manor, New York.

10/3/74

Laguna Hilla, California.
Leisure World,
3266 N - Via Carrizo,
Mrs. Willa F. Painter,

Peraousal Vaaiatant
Suzanne S. McFarlane

Sincerely,

Honored place in the Klaasinger, peraousal library.
and perceptive book, and I know it will have an
volume of poetry by your late husband. It is a lovely
know how much he appreciates your sending him the
Secretary Klaasinger has asked me to let you

Dear Mrs. Painter:

July 28, 1976

THE SECRETARY OF STATE
WASHINGTON

Moscow

October 26, 1974

Dear Mr. Paley:

I would be very pleased if you could join me for lunch at the Department of State on Friday, November 15, at 1:00 p.m. I would also be glad to have your principal officer responsible for public affairs programming matters join us.

On this occasion, I hope to obtain your views and those of other national network executives as to the adequacy of the domestic public dialogue on the issues we face in an increasingly interdependent world, and whether and how that national discussion might be broadened.

I hope you will be able to be with us, and look forward to seeing you then.

Mr. William S. Paley, Chairman,
CBS Incorporated,
51 West 52nd Street,
New York, New York.

April 20, 1976

Dear Bill:

I want to thank you for a most stimulating
and enjoyable evening with you and your
colleagues at CBS. I doubt that an equally
distinguished and thoughtful cadre of journalists
could have been assembled by any other
organization.

It was a pleasure and a privilege I
hope we can one day repeat.

It was good to see you again.

Warm regards,

Henry A. Kissinger

Mr. William S. Paley,
Chairman,
CBS, Inc.,
51 West 52nd Street,
New York, New York.

I do have the highest regard for Jen Tso-hsuan, and potentially you all have a very important book in the making. No one is better qualified to provide irrefutable evidence of Mao Tse-tung's mixed up, selfishly motivated policies and actions. No one is better qualified to put the Communist movement, as interpreted and activated in the Far East, in perspective, than Jen Tso-hsuan [Yeh Ch'ing].

When Mao and Chou were guests in my home, [in Chungking] I discovered that they were not particularly knowledgeable and certainly were confused about many of the promises generally accepted as woof and warp of Communism. Courteously but firmly I drew comparisons between Communism and Capitalism and hoped to elicit information from them that would reveal their innermost convictions or motives. I experienced a modicum of success, and I repeat my conclusion that they were not particularly aware of the implications of Communism. ..

Albert C. Wedemeyer,
General, U. S. Army retired.

亞東問題 紐約
研究所

East Asian Research Institute, Inc.

86 RIVERSIDE DRIVE
NEW YORK, N. Y. 10024
U. S. A.

TELEPHONE:
AREA CODE: 212
799-2600
799-2601
799-2623

New York, N.Y. 10025

September 30, 1975

His Excellency Dr. Henry A. Kissinger
Secretary of State
The Department of State
Washington D.C. 20013

My dear Secretary:

The press informs us that President Gerald Ford is contemplating a visit to Peking this autumn to meet with Mao Tse-tung and Chou En-lai and other leaders of the People's Republic of China.

In preparation for this historic visit I am sure that you will be deeply involved. Having paid several visits to Peking and having discussed matters of mutual interest with Chinese Communist leaders, you have no doubt formed your own opinion on how to deal with the Peking regime.

However, there may be some aspects of Mao and his policies and actions that have escaped your notice. I am here with sending you a copy of a new book published this month in New York that may throw some light on this aspect of Maoism. It is an edited translation of Yeh Ch'ing's INSIDE MAO TSE-TUNG THOUGHT, originally published in Chinese. Yeh Ch'ing is the pen name of Jen Tso-hsuan, a former top Chinese Communist leader, who cooperated with Chou En-lai in Paris, spent some time with Lenin and Stalin in Moscow, then directed Communist propaganda in China and Southeast Asia, and finally joined Mao Tse-tung in promoting peasant riots in central China. After Japan's invasion of Manchuria in 1931, Jen urged Mao to cease sabotaging the Chinese government's resistance to Japan's aggression. Condemned by Mao as a Trotskyite and a traitor, Jen began writing books critical of Chinese Communists and their ideology.

General A.C. Wedemeyer after reading the book writes:
"I do have the highest regard for Jen Tso-hsuan ...
No one is better qualified to put Communist movement, as interpreted and activated in the Far East, in perspective."

Senator Barry Goldwater's comment on reading the book:
"Every American concerned with the strategic interests of the Western world in the rapid rise of Communist China should make this book on the inner meaning of Mao Tse-tung Thought an item of _must_ reading."

亞東問題 紐約
研究所

-2-

Although I respect your right to have your own opinion on matters dealing with the China situation, I have sometimes taken issue with you. In my Introduction I have mentioned you and your activities seven times; pp. xviii, xix, xx, xxi, xxii, xxix, and xxxii. We would like you to have the fullest possible knowledge of the errors, inconsistencies, and dangers of Maoism. We would caution you to think twice before agreeing to any detente with Peking.

You and President Nixon may think Chou En-lai is a moderate and can be trusted. Please allow me to quote Chou's Political Report to the Tenth Congress of the CCP on August 28, 1973, in which he reveals his zeal as well as his Party's real attitude about detente:

> "We should point out here that necessary compromises between revolutionary countries and Imperialist countries must be distinguished from collusion and compromises between Soviet revisionism and U.S. Imperialism. Lenin puts it well: 'There are compromises and compromises. One must be able to analyse the situation and the concrete conditions of each compromise, or of each variety of compromise. One must learn to distinguish between a man who gave the bandits money and firearms in order to lessen the damage they can do and facilitate their capture and execution, and a man who gives bandits money and firearms in order to share the loot.'... The Brest-Litovsk Treaty concluded by Lenin with German Imperialism comes under the former category; and the doings of Khrushchev and Brezhnev, both betrayers of Lenin, fall under the latter."

Both Mao and Chou have claimed to be true disciples of Leninism.

May we respectfully call your attention to the Conviction of all of us three translators and editors, that Mao Tse-tung's "ultimate goal is world revolution with China as the leader of the Third World. This revolution has as its primary target the United States, the leading superpower of capitalistic imperialism." p. xxix.

399 Marlboro Street
Apartment 8
Boston, Massachusetts 02116
October 7, 1976

Dr. Henry Kissinger
Secretary of State
Department of State
Washington, D. C. 20520

Dear Dr. Kissinger:

I wish to thank you for the response to my letter, even
in heat of your congested official duties.

May I also seize this opportunity to congratulate you for
the skillful handling of the most unprecedented historic
mediation in the South African situation which threatened
international peace and could have exploded into perhaps a
Third World War. You have made a place in history both for
yourself and your nation.

The issues that I planned to have discussed as mentioned
in my previous letter, are here handled under their respective
areas - national and international.

**National** - This is of very grave concern to me, considering the very deplorable situation of my people in Sierra Leone. Since the assumption of the A.P.C. (All Peoples Congress) Government into power in 1968, there has been a continuous decline in the internal affairs of the country. No honest Sierra Leonean could say where the country is heading for. A shadow of death now hangs over the country; as a result of the wreckless and irresponsible administration under the Stevens regime. They have no regard for decent international relations - complete violation of the International Declaration of Human Rights, sanctified at the United Nations General Assembly, December 10, 1948, with the indiscriminate arrests and executions which even borders on Genocide.

Economically, the country is virtually bankrupt - as appears in the report of the Governor of the Bank of Sierra Leones as published in the magazine - "Africa" of May, 1976, page 57/58. President Stevens himself, in an interview with the newsman of

Dr. Henry Kissinger

2

October 7, 1976

the same issue Page 38/41, could not help to conceal the state
of the country's economy; he struggled to explain causes which
further revealed evidence of his maladministration. Nonetheless,
it's an open secret now that he and most of his ministers have
investments and savings in foreign countries. They still go
abroad to other countries seeking aids, loans, etc. for develop-
ment projects which will not be carried out; and if given the
loans or aids, these would only be shared amongst them. So at
the time of President Stevens' visit to the States, sometime in
May, 1976, the United States Department of State was alerted by
a mailgram, dated May 23, 1976, not to loan money to the Sevens'
regime. Other International Agencies (World Bank and Internation-
al Monetary Fund) were also informed and warned not to give loans
to the present government. Wherever Stevens and his aides now go
abroad (England and the United States) students demonstrate dis-
satisfaction and lack of any confidence in his government. People
in Sierra Leone now live in utter fear and squalor.

**Foreign Policy** - The Stevens' Government has no system. They are a group of political fanatics, cynical in their administration and egoistic in behavior. They are blind to reason and even international relations and public and world opinion. They harassed the American Embassy in 1971 and even had their hooligans tear down the American Flag. It is now clear and evident to our people what Soviet influence means and this Stevens Government made its way by the Soviet support with the connivance of the neighboring President Sheku Toupe of Guinea.

**International** - The area I felt would concern you and the United States, was the unfortunate deflection of the President Tolbert Jr. of Liberia (a close and over the years a National ally of the United States) on assuming the Presidency after the death of Latc William Tubman, by his associating with the melagomanie of the Amin group. The axiom "Evil communication corrupts good manners" could mean a lot in this instance.

**Balance of Power** - The balance of power internationally is gradually shifting from a purely political to economic area. In view of this, the Soviet bloc is surreptitiously busy maneuvering entry into Africa by all possible means. From the experiences of the people in the areas they had managed to enter and influence, nothing but regret and suffering by the masses was sustained. Confidence and trust are lost in their ideology. People must be free in every respect which is only possible with Democracy, as I have seen practiced in the United States. I admire it, like it and would appreciate having my people enjoy it.

Dr. Henry Kissinger

3

October 7, 1976

My reason for writing and requesting the interview was to discuss these issues, and simultaneously appeal to the United States through you as Secretary of State with a distinguished record, to use your best influence to help alter the situation and save my suffering people, in the name of Democracy. At the time of my first letter, I hoped I could have had the opportunity of even equipping you with this information since the visit of President Tolbert Jr. was then pending.

The Soviets are embarking on very mean maneuvers in their planned penetration of Africa. There must be a check and this I leave to you for a solution.

These are no moments of holding back. They are to me, toothless bull dogs. They back but don't even attempt to bite when checked. Recall the Cuban Crisis with President Kennedy's ultimatum.

I still look forward to meeting you.

JGP:cam

Office of the Secretary

Date 10/20

[Y]

Thru S/S

Direct

FAH

Per Conversation

FYI

Translation

ACTION

S/S + I
personal files

INFO

files

____ Prepare Reply for S

____ Prepare Recommendation for S

____ Prepare Reply for ____

____ Reply Directly on Behalf of ____

____ Clear with ____

____ Return to Originating Office

____ Retype ____ Redraft ____ Copy back to S ____

____ Check with this Office

Remarks:

David Passage

x29572

July 6, 1976

COPIES TO:

S
RF-ws

Dear Mr. Minister:

I would like to offer my congratulations
for your skillful leadership at the Paris OECD
Ministerial.

I believe the Conference was an
important step in maintaining harmony among the
industrialized nations as we strive to promote
economic growth while restraining the inflation
which has bedevilled us over the last several years.
As Conference Chairman, you played a key role in
helping to achieve the positive results which
characterized the meetings.

His Excellency
Panayiotis Papaligouras,
Minister of Coordination and Planning,
Athens.