New-York tribune., 1919-01-08
Full Explanation of Huge
Expenditure Criticised in
Report TO Be Sought
Queer Situation Is Seen
Arbitration Idea Held Up
Because No Dispute Is
Left To Be Adjudicated
By Theodore NJ. Knappen


WASHINGTON. Jan. 7.-Counsel for
the Emergency Fleet Corporation and
the Shipping Board are trying to solve
the problem precipitated by the advice
of the Department of Justice to the
President that board of arbitration
be appointed to decide a dispute that
does not exist The non-existent dis
pute is between the Emergency Fleet
Corporation and the American Inter
national Corporation regarding the ex-
cessive cost of construction of the Hog
Island yard.
1t will be remembered that the De-
partment of Justice Investigators came
to the conclusion that while there was
no offence in the fact that Hog Island
cost much moro than the estimates,
they were of the opinion that the agent
the American international Corpora
tion-had not made a sufficient eX
planation of why the yards cost what
they did. They then said that the mat
ter should be settled by the application
of a paragraph of the contract between
the Emergency Fleet Corporation and
the American International Corpora
ton, which provides for arbitration in
the case of any dispute that cannot be
satisfactorily settled by the general
manager of the Fleet Corporation.
No Dispute Exists
This sounded very reasonable. but
upon an examination of the actual stu
alton it appears that there has never
been a dispute on this subject between
the Fleet Corporation and its agent,
and that consequently no case has ever
been submitted to General Manager
Piez, from whose decision appeal might
he taken to the proposed arbitration
board.
The Fleet Corporation has never
charged that the cost of the yards was
excessive in view of the conditions.
On the contrary, Director General Piez
is now on record with a letter that has
become part of the record of the
effect that he considers it extremely
doubtful whether Hog Island could be
reproduced to- day, even under more
favorable weather conditions than eX-
sted last winter, for any less than it
finally cost"
Hypothetical Dispute Planned
In the face of such a statement it
becomes very difficult to arrange even
friendly dispute for arbitration pur
poses between the Fleet Corporation
and the American international.
To get around this awkward situa
tion Of one department of the govern
ment advising another through re-
port to the President to do something
that it considers an adventure into the
realm of fiction. it is now proposed
that the subject be reopened, with the
consent of the President, and finally
dignity of the Department of Justice
and the vindlcation of the American
International Corporation, in the fol-
lowing manner:
It is to be assumed that the report
Of the Department of Justice on Hog
Island was made by the Attorney Gen
eral to President Wilson just as a
lawyer might advise private client.
In fact, the President is really the
finally responsible head of the Emer-
gency Fleet Corporation, inasmuch as
struction were intrusted by Congress
10 the stewardship of the President,
and he appointed the Emergency Fleet
Corporation as his agent.
Hence the Attorney Generals report
IS merely counsel to the President as
to what he should do. However, it
predicates It's advice on a discrepancy
which can be satisfactorily explained
and proposes a way for the President
TO deal with an agent of an agent that
is not workable. If that discrepancy
can be disposed of there is no reason
for trying to follow the awkward ad
vice that is its consequence.
II is now intended to present to the
President. through his counsel, thor
ough explanation of why Hog Island
cost so much more than the estimates,
and also why it cost more than the
technical advisers of the Attorney Cen
erals office thought it should cost.