The Chattanooga news. [volume] (Chattanooga, Tenn.) 1891-1939, 1918-12-20
TANGLED MASS
0NHOC ISLAND
Probe Fails to Develop, Any
Clear Explanation of
Discrepancies.
NO CRIMINAL INTENT
Commission to Determine Ne
cessity of Heavy Ex-
penditures.
NO CRIMINAL INTENT

day on wireless instructions from
President Wilson, says searching In
vestigation has disclosed no criminal
liabilities, but recommends that a
board of arbitration determine what
part IL any. of the more than $780,
100000 plant cost was in excess OF
reasonable necessity and should be
demanded of the contractors by thf
government. In brief, the investt
gators report:
No Criminal Intent. "
That the facts do not justify crii :
inal process and that no fraud or =.
cret profits have been establishet'
That the probable cost of the psS
will be about Sol 100000 Uncludins
$6,00O,O00 for additions by order Of
the emergency fleet corporation)
compared with an original estimate
of $21,000,000 and a, revised estimate
of $27,0Oo,OO0.
Organized Riot. ~
That no clear explanation or this
discrepancy has been forthcoming;
that prior to Feb. last condition
existed at Hog Island which, super
ficially at least. would impress any
one as an organized riot tangled
mass or stage of chaos;' that the
contra cter. or agent Of the American
International corporation. in sub
stance, has taken the position that
since this was a war job, cost was
of minor Importance; and that the
question of reasonableness of the
expenditures should be referred to
board of arbitration provided for
in the contract, proceedings to be
closed, il the board finds the eXpen-
ditures reasonably necessary. or 9TH
erwise payment Of the excess to be
demanded by the government"
The report, which is dated Sept.
IL, 1918, also stated that the plant
would be completed in September;
that the contract substantially was
being complied with and that the
controversy hinged mot so much
upon means. methods and expendi-
tures," but attached Is a letter from
the investigators, dated Sept. FL,
which the attorney general trans
mitted to the president, referring to
press.,r reports that the program is
falling behind schedule and calling
attention to the fact that the report
was based upon conditions as they
appeared early in July.
General Manager Piez. of the emer-
gency fleet corporation, appearing
ycsterday- before the senate COM
merce committee, testified that the
Hog Island yard would be completed
in about sixty days: that the cost
would be about $63.300.000. and that
the plant had delivered one ship and
laid fifty keels.
Charges OF Graft.
The department of justice inves-
tigation began last February, when
President Wilson asked the attor-
ney- general to get in consultation
with Chairman Hurley, of the ship
ping board, about the whole matter
with a view to instituting criminal
in case the facts justify
it," Charges of graft and gross
waste had been made in an inquiry
conducted by the senate commerce
and Mr.. Hurley had writ
ten to the president and to Mr.. Greg
ory. saying there was SERIOUS dis
and negligence at Hog
Island" and that he desired the aid
of the attorney general in 1nVesu-
eating conditions.
The Investigators worked from
February until July and then pre-
pared their report, which was sent
to the general under date
of Sept. IL. Mr.. Gregory's letter or
transmittal to the president Is
dated Sept. 81. Since then there
have been demands in congress Tor
of the report. The un-
has been that publica-
ton was delayed pending an agree
ment between the department OF JUS
tice and Chairman Hurley as to the
causes of delay as shown by the in
quiry.
The report describes at the out
set the contract entered into by the
emergency fleet corporation on Sept.
13, 1917, under which the American
corporation or New
York agreed to purchase S46 acres
of land at Hog Island, to be utilized
for the purpose of the contract upon
a G per cent. rental basis, to build
on this tract with funds furnished
by the emergency feet corporation
shipyard of fifty ways and to con-
struct with funds supplied from the
same source fifty or more steel cargo
ships at an estimated cost OF $1,100,-
900 each. The agreement was that
upon completion of the ships the
feet corporation might purchase the
land at cost. failing which the con-
tractor might purchase the plant at
a value to be fixed by appraisal,
failing which the government would
scrap the plant and remove 1t. The
estimated cost of constructing the
ward was $21,O00,000. On Oct. q the
orods nrdar Tor
additional steel ships, esti-
mated to cost $1.650,000 each, calling
for longer ways and piers, ana also
more shop and storage capacity. On
Nov. 27 the contractor revised the
estimate Of yard construction COST
adding $2,750,000 on account or the
additional seventy ships and $3,2bo,-
600 on account of unfavorable sub
soil conditions, costly labor and nee
essary extensions Of the plant. On
May z an order for sixty more ships
to cost $1,425,000 each was placed.
All of the 1S0 ships were to be COM
pleted by Aug. 4, 1919. The contract
ing company's compensation for
building both the yard and the ships
was fixed at q percentage OF the esti-
mated cost Of the ships. with pre-
miums for early delivery or savings
in cost and penalties for delayed de-
liveries or increased cost. The maxi
mum fee under this arrangement
would be $f4.400,000 and the mini
mum fee $S,910,000. Mr.. Piez testi-
fed yesterday that to date the COM
pany had been paid nothing. Al
though the contract was made with
the American International corpora
ton, the report says there was an
unwritten obligation publicly admit
ted by all parties to consider the
frm Of Stone & Web
ster and the New York Shipbuildng
as Jointly Interested in
the benefits and burdens. A sep