A Chip at the Barnacles

In its efforts to doctor the ailing U.S. merchant marine, the Government has often proved as ineffectual as the barnacle-crusted maritime industry itself. Transportation Secretary Alan Boyd not long ago virtually threw up his hands over the prospect of winning general agreement on a plan to renovate the aging U.S. flag fleet, whose dwindling capacity has been strained by the pressure of supplying the Viet Nam war. After months of contentious hearings, the Federal Maritime Commission, however, has just approved a stride toward greater efficiency. By a 3-to-2 vote, the commission authorized the merger of three West Coast companies into the nation's largest ship line.

The three concerns--American President Lines and Pacific Far East Lines, both based in San Francisco, and Seattle's American Mail Lines--would form a combine with an estimated $156 million in annual revenues, $261 million assets and 51 ships (plus eleven more on order) plying mostly the transpacific and Far East trade routes. The new firm, probably to be named American Steamship Lines, would automatically take its place among the world's top steamship companies.

Combined Savings. The merger, largest in U.S. maritime history, aims principally at foreign competition, notably that of merged Japanese lines. The Federal Maritime Commission held that the merger would help the three U.S. companies by permitting several million dollars a year in savings through combined operations--without damaging rival U.S. ship operators. The arrangement would also give a new dimension to the career of Oilman Ralph K. Davies, 70, chairman of A.P.L., who controls all three of the merging lines through a complex of stockholdings.

Virginia-born Davies joined Standard Oil of California as an office boy at 17 after graduating from high school in Fresno; he rose to be a director at 32 and senior vice president at 38. Though many oilmen had tagged him as a future president, Davies and Standard parted company after his wartime service as Deputy Petroleum Coordinator under the industry's old scourge, Interior Secretary Harold Ickes. Davies then founded American Independent Oil Co. (he has since sold his interest in it), later bought control of American President Lines and San Francisco's Natomas Co., which dredges for gold in the Peruvian Andes, owns chunks of industrial land near Sacramento, runs a West Indian oil refinery with Standard of Indiana, holds large oil exploration rights with Sinclair in Java and along the Red Sea. Such far-flung operations have made Davies many times a millionaire; his Natomas shares alone were worth $17.9 million on the New York Stock Exchange at week's end.

From a 22nd-floor penthouse overlooking the San Francisco waterfront, Davies manages these interests amid such antique decor as a rifle marked with Indian scrolls and a collection of Charles Russell oils, watercolors and bronzes depicting scenes from the early American West. He also prides himself on his collection of Indian relics, which he keeps on his 10,000-acre Lake County cattle ranch, 90 miles north of San Francisco.

As for the ship-line merger, Davies believes that it will "strengthen all the organizations involved just when rapid technological change in the maritime industry makes such strength essential." Some possible obstacles still loom. The Justice Department contends that the Maritime Commission lacked jurisdiction to approve the merger. Either Justice or rival ship lines could sue to block the deal.

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