The sun., 1918-12-11
DENIES M. R. M ADOO
GOT A SLUSH FUND
H. r. Carse, President of Elec-
trio Boat Company, Admits
Paying Him $4,000.
FOR PROFESSIONAL WORK
e. B. Frost's Suit Discloses De-
tails Of Scrap in Submarine
Boat Venture.

The charge against Henry r. Carse,
president OF the Electric Boat Com
pany. that he paid $4,000 to Malcolm
Ross McAdoo, brother of the former
Secretary Of the Treasury. to infiu-
ence Government officials brought forth
indignant denials from Mr.. Carse and
Mr.. McAdoo yesterday, and inciden-
tally revealed lively row in the COM
officials into two factions.
Ono was headed by Carse. who went
to the company in 1915 from his posi-
ton as president of the Hanover
National Bank. and the opposition TO
him was voiced by Elihu B. Frost,
vice president OF the company for
eighteen years. who resigned because
Of tho differences and has now brought
suit to force Carse from his controlling
position in the company's affairs.
Mr.. Carse made no attempt to con-
ceal that he had paid $4,000 to Mr..
McAdoo. but explained that he had
done so out Of his own pocket as pay
ment for an engineering report on the
company's plant in New london.
Calls Charge Ridiculous.
Z have known Mr.. McAdoo for
years. and We are very good friends"
he said. HE has done work for me be-
fore in connection with other engineer
ing propositions. When I came into
the Electric Boat Company I wanted
to know something about the plant.
so I employed him as an analytical en-
gtneer to look over the plant and re-
port to me. He did so, and his reports
make big pile Of paper. The $40 900
was given him by me in payment for
that work. and the charge that It was
to be used for corruption in Washing
ton is ridiculous"
Mr.. Carse was asked IL he had the
reports. and said he had. He looked
for them In a drawer OF his desk, but
apparently they were not there, for he
did not produce them.
However, they are in n safe place
and will be produced at the proper
time" he said. II shall reply to these
charges at the proper time also They
have been kicking around for a couple
OF years and are merely the work Of
disgruntled employee who was dis
charged for the good of the company"
Meaning Mr.. F'rost?" he was asked
Yes. Mr.. Frost"
Mr.. McAdoo's answer was similar,
although he did not go into details OF
his employment by Mr.. Carse. He
said he had known him for years In a
social and business way, having met
him when Mr.. Carse was assistant
cashier Of the Hanover National Bank
II have been retained by him in my
professional capacity as a Consulting
engineer. personally, and by him for
various business organizations with
which he was connected on numerous
occasions during this long period, to
undertake and advise him about mat
tiers which called me TO many parts OF
the world.
Never Knew Cleaner Man.
He never asked me TO undertake
for himself or others anything that
was improper. In fact / have never
known cleaner man in his business
transactions. That he has disposed OF
funds OF others in an improper way
or with improper motives is therefore
unbelievable by me-"
Mr.. Frost was out of town yester-
day, but friend OF his connected with
the case commented upon Mr.. Carse's
statement by saying:
"Inasmuch as Mr.. Carse receives
$4,000 a year as president of the com
pany, 1t seems that his claim that he
gave McAdoo $4,000 for a mere tech
nical report rather speaks for itself"
Mr.. Frost. to whom Mr.. Carse re-
ferred as "A disgruntled employee"
has been connected with the Holland
submarine companies ever since John
Holland. the inventor, went to Calvin
Frost. his father and a prominent
member of the New York bar, in the
early nineties. Mr.. Frost was so fas-
cinated with the possibilities OF the
submarine that he put a good deal OF
his personal fortune into the COMPANY
and with the aid OF Isaac l. Rice, who
stepped In at critical sine, kept the
company out OF bankruptcy.
When the war started It proved an
elixir to the company and Electric
Boat was one OF the most sensational
war babies in the market. Charles NJ
Schwab returned from Europe with
contracts for twenty submarines for
England. This Governments neutral
ity prevented their being built here for
Immediate delivery. so ten OF them
were built In Canada and ten here 10
be delivered after the war. Other con-
tracts were obtained and the stock
went rocket!nE.
In 1915 the stock of the company
was placed IN the hands of three vot-
ing trustees, Carse. Frost and Law
renee \. Spear. also q vice president
and one of the technical heads of the
company. a former Annapolis man. II
is maintained that this was to prevent
sudden or I'll advised change of
policy in the management of Abe tech
meal department. This trust was soon
after increased to five by the addition
of Stacy C. Richmond and Thomas c.
Dawson, brother Of one of the heads
OF the .Vickers-Maxim Company OF
England, which held the English rights
to the Holland patents
Mr.. Rice died in the latter part OF
1914, and when the question OF a new
president came up Il is understood
that Frost recommended Carse for the
position. Frost retained his position
as vice president and manager OF the
Washington end OF the business.
More and more friction developed
between Carse ana Frost, until Carse
announced that he would not stand for
reelection II Frost were also to he re-
elected vice-president. Frost finally
decided to resign. which he did in n
letter TO the board OF directors on Feb