The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-11-01


they cost $4,000 that means a prof
10 the contractors of $500 an engin,
which deducted from what would hav
oeen the profit is a saving OF f275 a
engine. Under old orders there wer
zz'bo0 ordered, thus saving on engine
$6,lS7500.
Division of Authority.
The second division OF the report deal
with the responsible officers and ad
visory boards Of the Signal Corps. Ful
authority was given tho President {
provide, through the War Department
Tor aircraft production. Secretar.
Baker vested this AUTHORITY in the Chic
signal Officer. then Brigadier-Genera
now MaJor-General, George o. squier
Under him Col. Edward A. Deeds wa
made chief Of the equipment division
ana sidney Waldron his assistant. witt
Robert L. Montgomery Of Montgomery
Clothier & Co. chief of the supply divis
ion. In May this year President Wi
son transferred Gen. Squer to the di
rection of military signal duties an,
made Gen. William L. Kenly Directo
OF Military Aeronautics and John D
Ryan Head Director of Aircraft Pro
ductlon. with William G. Potter as hi
assistant.
Mr.. Hughes says that the order undei
which General Spler. with the approva
or Secretaries Baker and Daniels. de
fined the duties of the Aircraft Boart
had the effect OF greatly limiting the au
thority of the board and that the mani
fest purpose was to leave no question
that the actual control of aircraft pro
duction rested with the military ant
naval officers"
Criminal Responsibility.
Getting down 10 the subject OF per.
sonal interests" Mr. Hughes quotes Sec.
tion II OF the Criminal Code OF the
United States. which says:
No officer or agent of any corpora
ton. Joint stock company, or association
and no member or agent OF any Arm. OIL
person directly or Indirectly interested
in the pecuniary profits or contracts OF
such corporation. joint stock company
association. or firm. shall be employed
or shall act as an officer or agent Of the
United States for the transaction OF
business with such corporation. join,
stock company, association, or Arm
Whoever shall violate the provision OF
this section shall be fined not more than
two thousand dollars and be imprisoned
not more than two years"
He also cites the Food and Fuel Con-
troll act OF August 10, 1917. which pro-
hibits any agent or employee of the
United States from inducing or attempt
ing to induce. any person or ofYicer to
make any contract for work or supplies
employee has any pecuniary interest in
such contract or order.
After indicating that other members
Of the nA nal
did not have personal interest in Gov
eminent transactions, Mr.. Hughes con-
siders the case of Col. Deeds. He says
The charges pertaining to the per-
sonal interest In Government contracts
relate particularly to Col Edward A.
Deeds. and grow out OF the highly sug-
gestive transa actions with his former
business associates in Dayton"
Col. Deeds or "Dietx"f
Col. Deeds was born in Granville.
Ohio. on March -. 1874. Mr.. Hughes
has found no public record supporting
testimony that the Colonel once said
his name was originally Dietz. He says
and states that his family has borne the
name Deeds for at least four generations.
As to Col. Deeds the Hughes report
For many years Col. Deeds was an
officer OF the National Cash Register
Company and was one OF several con-
nected with that organization who were
indicted in the Federal District Court
for the Southern District OF Ohio in
1912. for violation Of the Sherman anti
trust act Upon the trial Deeds. with
other defendants. was convicted, but
this conviction was set aside by the Cir
cult Court OF Appeals and the prosecu-
ton went no further.
AT the time OF our entry into the war
Mr.. Deeds had large business interests
at Dayton. His intimate business asso-
tiates were Charles F. Ketterine and II.
E. Talbot. Mr.. Deeds and Mr.. Ketter-
Ing Tan inventor and engineer of ability
have been Jointly associated in many
with equal shares, 1t being
their policy to organize corporations and
10 take their respective interests In
stocks.
MFR. Deeds has supplied the financial
.alent and Mr.. Kettering, who is with
,ut any aptitude for business details,
the engineering skill. They have had
and still have common agent of a
highly confidential sort, George d. Smith
II Dayton. who holds the power OF at
orney OF each. keeps their respective
looks. has charge of their bank accounts.
'lgns their checks and generally looks
lfter their financial affairs. They are
'till associated in various undertakings
md their relations are OF the most in
innate character"
inception of the Da yton Concern.
The report details enterprises In which
Deeds. Kettering and II. r. Talbot. ST.,
md his son were interested and shows
heir stock holdings. Three days after
he declaration OF war April 8, 1917, the
Dayton Wright Airplane Company was
with capital stock of
800. 900, by Deeds. Referring. the two
ralbotts and Orville Wright. Deeds took
10 stock. The capital was later in
reased to 100000. the new common
took being taken by the Talbotts and
md Kettering in the proportion Of two
ifths two-fifths and one-fifth
An early as June l2. 1917. a con-
ract with the company was recon-
nended by the Aircraft Production
board for 400 standard il training
James at n fixed price OF $4,000 for
ach. Shortly thereafter that contract
ras annulled and in it's place was sub
tituted one for 400 Standard ] train
1g planes and 1000 De Haviland service
lanes. There was to be hxed profit
( 1920 on each Standard plane and
s75 on each De Haviland, making
otal fixed profit OF about S3.75O.OOO
OF the profit on spare parts.
The contract Also provided for adj
itonai profits TO the extent OF 20
er cent. OF the saving under the
ogey or estimated cost OF the planes,
nd It is estimated that the additional
rofit on this basis would have amounted
D over $2,600,00O.
When these contracts wore awarded