New-York tribune., 1919-08-02
Copper Magnate Is Charged
With Building Expensive
Railroad for the u. S.
to Aid Own Company
Is Defended by Baker
Publications of Huge Craft,
Involving Large People," "
House Committee Is Told
Nesc York Tribune
Wd.shsnotou Rurenu

Washington Bureau
WASHINGTON, Aug. 1.-The House
aviation investigating committee to-
day examined John D. Ryan, New York
copper magnate, former Assistant
Secretary of War and director Of the
air service, on an intimated charge
that he used his government position
10 advance the interests of the Chi
cago, Milwaukee & st. Paul Railroad,
of which he is director, and associ-
ated companies.
Chairman Frear of the committee
made the veiled attack on Mr.. Ryan
and provoked protest from Secretary
OF War Baker. Mr.. Frear intimated
that Mr.. Ryan, while in charge of air
craft production, caused to be built,
through the United States Spruce Cor
roration, business instrumentality Of
the War Department, thirty eight
mile standard railroad. which is in eff
feet an extension of the Milwaukee
railroad.
Secretary Baker was on the witness
stand AS the railroad extension in
question is advertised for sale through
sealed bids to be received September
., Secretary Baker agreed, at the re-
quest of Mr.. Frear, to delay action on
the bids until the committee completes
its inquiry.
One of the documents read into the
evidence by Mr.. Frear was telegram
from Major Howes, a military intelli-
gerce officer. who was sent to Washing
ton to investigate various ACCUSATIONS.
This telegram said that the railroad
had cost Sl2000000, that it tapped no
spruce en- route. but reached the Lacey
spruce holdings and those of the Mil
waukee Land Company, q subsidiary of
the railroad company, at its terminus.
The telegram added that J. j. Dono-
van, formerly shareholder in the Port
Angeles & Southern Railroad which
sold out TO the Milwaukee, and a d.
rector of the United States Spruce Cor
poration, had a contract from the
Stems Carey kerbaugh Company to cut
part OF the 500.00O,O0O feet of spruce
it was to get out for the corporation at
cost OF S25,000, 900; that he had built
q mill for the side cut" from this con-
tract which would net him $40 thou
sand feet; that the Stems -Carey-Ker-
taugh Company had built on cost plus
contract one $2,000,000 saw mill at Port
Angeles. which was useless until ST.
00O,000 breakwater should be built and
100000 mill at the terminus of the
railway extension. The telegram con-
cludes:
Preliminary investigation indicates
that railroads are attempting to dmi-
nate the lumber industry of the North
west at government expense and in col
lusIon with government officials and
army officers. Indications of huge graft
IN large transactions the compete in
vestigation Of which will involve large
people and will call for commission of
great force"
Other information produced was to
the effect that the contract for the
building of the railroad extension was
worked out by Colonel B. ?. Disuue, in
charge of the division of spruce pro
ton; Presd Byron and General
Manager Earring, of the Milwaukee, and
other railway officials, and was brought
TO Washington, for approval, by Colonel
Disque.
1t was also charged that for some
mysterious reason the Warren Com
pany and the Stems, Carey. Kerbaugh
Company got the big contracts for
getting out spruce, though both were
ignorant of the numbering business and
their operations involved extensive
railroad building, whereas regular
loggers stood ready to get out plenty
Of spruce without building railroads.
The suspicion entertained by vari-
Gus complainants is that the road was
built In the interests of the Milwaukee
road and destined to be taken over by
It and so was made standard instead
OF a logging railway, that it might
form part of the Milwaukee's long
contemplated extension to Grays Har-
Dor. Its actual cost without equipment
or terminals was put down in one
statement at S3,S00,O 900, leaving a dis
crepancy with the $12,0O0,0OO named in
the Howes report.
Ryan Answers Charges
The evidence showed that Secretary
Baker advised Mr.. Ryan of the charges
IN November, after he had left the air
service, and at about the same time in
structed Inspector General Chamber
iaid TO make complete investigation,
which was done by Major M. H. Ray.
Mr.. Ryan wrote long letter to Sec
retary Bakery dealing with the Howes
charges, in which he pointed out that
because he was director of the Mil
waukee Railway he had turned over to
Assistant Secretary of War Stettinius
the handling of the contract relating
70 the extension, which was at first to
De built by the company itself-this af-
ter ne had explained the situation to
eHe SeCrelarV. Mr. SlettlnluS examined q
the contract and recommended some
changes
MIR. Ryan says that he submitted that
contract to Mr.. Kelley for advice, and
that the alterations then made in the
contract indicate whether or not he
was acting in the public interest. In
the remainder of his letter Mr.. Ryan
deals with all the Howes allegations.
Major Rays long report finds that all
tne allegations made by Howes and
others are either groundless or with
out significance.