New-York tribune., 1918-02-16
President Stone Telegraphs
Attorney General lnvit-
ing Investigation
Builders Defend
Their Expenditures
A merican International
Corporation Declares 1t
Has Done Its Duty

and complete" investigation of all rec
ords and acts in connection with its
work as agent for the Emergency Fleet
Corporation in constructing the gov
ernment's fabricating shipyard at Hog
Island, near Philadelphia.
The telegram, signed by Charles A.
Stone, president Of the corporation, was
dispatched to Washington after meet
ing of the organizations executive
committee in 120 Broadway, called as
result Of President Wilson'S action
on Thursday in directing the Attorney
General to make a searching investiga-
tion Of alleged waste and extravaganza
in the construction Of the Hog Island
enterprise
resolution contained the mes
sage invited a full inquiry into the Hog
Island deal and stated that all officers
Of the corporation had been instructed
to assist in "open and complete man
ner' any investigation Attorney Gen
eral Gregory may make.
The wire further declared that The
American international Corporation
was invited to undertake the Hog ISL
and work "as q great public duty" and
adds "in that spirit The corporation
! through its officers has endeavored
from the tilst 40 carry on the work"
Work Up to Schedule
Later in the day Mr. Stone, Tho had
returned the night before from Phila-
delphia, where he had spent most of
the week AT Hog Island. issued lengthy
yard was fully up to schedule, despite
many difficulties
Mr.. Stone made no direct reference
to the charges of alleged misuse Of
government moneys. He pointed out.
however, that the government en-
ployed the corporation tc build the
yard and 120 ships, itself paying the
cost OF doing so, and ultimately giving
the corporation a fixed fee per vessel.
The total fees, it was said, would
amount TO approximately $4,000. 600.
The corporation. Mr.. Stone stated,
makes no indirect profits whatever out
side its final fee. which it must di-
vide, he said, with associated ship
building and engineering firms.
Radical changes in the original plans
ordered by the government. had wcathe,
and railroad congestion, he pointed out,
caused expense unforeseen at the time
OF the original estimates. He con-
cluded with the statement that the gov
ernment in dealing with the corpora
tlon laid emphasis always on the mat
ter OF time, and observes that "th4
essence of the task was to push for
ward with all possible haste, even
though that involved increased cx-
, pense." The statement follows:
"'Ehe work at Hog Island is pro-
gressing we'll, and we are to-day fully
up to schedule. With steady flow OF
material to the yard we shall complete
production of the l20 ships on time
despite the many difficulties that We
have encountered in the last five
, months.
"rhese difficulties have been Of :
most harassing nature, and can best be
understood by very brief recital OF
. the facts. Last May the American In
tcrnational Corporation was requested
by the Shipping Board to undertake
construction of an enormous shipyart
: and to build in 1t 200 fabricated stee
ships. Tentative plans were prepared
and tentative estimates made of cost
but the summer passed before the con
tract between the government and ths
American International Corporation
was finally signed.
No Indirect Profits
5 THE essence OF this contract wa.
that the government employed the cor
poratlon to build the yard and 12(
t shlps' itself paying the cost of doins
, so,' and ultimately giving the corpora
tlon fixed fee per vessel, the tota
amount of which could not in any even
exceed 3.2 per cent upon the estimate
cost OF the total work, which fee is d
, VIded by this corporation with its as
soclated expert firms and organization,
. IN shlpbuilding and engineering More
eyer. from the residue must be provided
5 the excess profits tax. The corporatio,
makes no indirect profits whatever ont
t SIDE OF It's final share of this fee.
'Orglnal plans had to be radically
l changed owing to change ordered by
the government in the design of SOM
OF the ships, and this caused an exDens,
unforeseeable at the time of the orig
} mai tentative estimates. Loss of tht
: summer months-the contract bein.
signed only on September 13, real con
, struction of the yard could not ba he
! gun much before the beginning of o.
/, tober-was another great factor II
e increasing expenses, for it threw mucl
i o. the heavy work into the wors us'
!, months of what has proved to be tn,
: worst winter in living memory.
e Winter Brings Trouble
Then came the winter. with it
trouDleS OF weather and railroad con
gestion, and it became a herculean ta 81
to accomplish what would under ordi
nary conditions have been relativel
) SIMPLE. Moreover, there was a larg
increase i'll material prices as compare,
>, with those ruling in the previous sum
mer. 1t is not surprising. under tn
: CIRCUMSTANCES, that actual costs expert
Il enced were largely in excess of thos
Il winch had to be most roughly guesse
d at many months before. and on the as
/ SUMPTION that work would be don
Y, during summer instead of winter.
; 1T must be remembered that on
q most important reason why these cost