Daily capital journal. (Salem, Oregon) 1903-1919, 1918-02-14
PRESIDENT BEGINS
. PROVE OF war CRAFT
AT HOG ISLAND YARDS
Sends Letter to Attorney Gen.
eral Asking Him to Take
Immediate Action


Washington, Feb. 14.-The first gov
ernmcnt investigation of graft charges
in war work was launched by President
Wilson today.
He sent letter to Attorney General
Gregory asking an Immediate probe OF
conditions at the Hog Island shipyards
where large sums of government money
are said to have been appropriated tc
private interests.
Gregory will cooperate in the work
with Chairman Hurley of the shipping
board.
1t was learned officially that Chair.
man Hurley asked the president to take
the action.
For weeks the work at Hog Island has
been under the searchlight of the senate
commerce commission. The climax of
testimony was reached when George
Baldwin, chairman of the American-In
ternational Corporation building the
yards, admitted that approximately So
100000 in profits would be Forthcoming
from the project.
"You can't keep a corporation alive
on patriotism" he said when grilled by
Senator johnson, California.
Baldwin named as the "big stock,
holders In the corporation, Frank Van
derlip, the firm of Stone and Webster
and j. Ogden Armour.
Charles Piez, general manager of the
emergency fleet corporation, started the
expose of conditions when he submitted
reports to the senate commerce commit
fap IN cbnuy fhaf fha II
originally estimated to cost $21 900, ,000
would at the present rate of expendi-
ture cost nearly $50,000,000.
The senate committee learned that the
government had accepted all the esti
mates of the cost of the yard made by
the erican-Internationa corporation
through which the government is build
ing the plant. The government itself
made no independent estimate.
Testimony also showed that the Amer
icon. International Shipbuilding corpor-
ican-International Shipbuilding corpor-
tc1lational corporation is actually
building the yards, though the govern
ment has no, contract with it.
The governments s contract provided
that four percent fec was to be paid
on all ships built in the yard. This fee,
it has been estimated, would yield the
corporation $6,000,00O. The corporation
is furnishing none of the capital for
building the yard or for buying mater
ial, or for paying salaries or wages. The
emergency fleet corporation is paying
for everything. Admiral Bowles told the
committee that the corporation is fur
nishing the technical knowledge and the
organization. Es-;.
The senate committee also developed
from several sources that the American
International Shipbuilding corporation
had sub-let seventy percent of the con-
struction WORK on five per cent fee ba-
SIS. 1he government is paying this fee.
At least ole of the sub-contraetors, 1t
was shown, is an officer of the Ameri-
can International corporation. Several
witnesses told the committee that the
work on the yard was four months be-
hind schedule.
George j. Baldwin, chairman of the
American international Shipbuilding
corporation, denied before the commit
tee this week that the expenditures were
excessive, in view of the government or
der for speed. He also denied that there
was any delay in the work.
The presidents IS letter to the attorney
general said:
"My Dear Mr.. Attorney General:
"Mr. Hurley, of the shipping board,
has called to my attention some very
serious facts which have recently devel-
oped in regard to contracts made in con
nection with the shipbuilding program,
with the company operating at Hog Is
land. They are so serious, indeed, that
1 do not think that we can let them
be taken care Of merely by public dis
closure and discussion.
fFI would be very much Obliged II
YOU would have some trustworthy per
son in your department get into con
sultation about the whole matter with
view to instituting commercial process
in case the facts justify it.
"Cordially and sincerely yours,
WOODROW WILSON,"
This letter was written today. The at
torney general is in Mississippi. Action
in the matter will be taken as soon as
possible.