New-York tribune., 1919-06-25
Witnesses Are Closely Ques-
toned in Regard to the
Activities of the Coun-
Gil of National Defense
General Lord Is Heard
Purpose to Seek Possible
Chances for Civilians
to Profit Is Indicated
Ne1c York Tribune
WushtuUtOn Bxrenu

W0SNtngtOn bxTe0u
3 WASHINGTON, June 24.-General H
M. Lord. director of finance of the War
Department, and Colonel Julian Schley,
director of the division of purchase and
storage, the only witnesses to-day be-
fore the general committee of the
House investigating the war expendit-
ures of the War Department, were
grilled concerning the activities of the
Council of National Defence in con-
nection with War Department func-
tions. The evident purpose of the COM
mittee was to find out to what extent
dollar -a-year men and other civilians
we're involved, the ultimate objective
apparently being to ascertain the pos
sibilities Of private interests getting
into profitable touch with the War De-
partment through them.
General Lord produced a personnel
list of the Council of National De-
fences numerous committees. and
Chairman Graham announced that he
would call some of the men on the list
and go searchingly into the councils
activities.
In explaining the functions of the
office of Director of Finance, which
+ was created last September, to con-
solidate army financial control, General
Lord said:
= "The new system was absolutely nee
essary to the protection of the gov
ernment. Without an Independent
finance division an independent audit
Of disbursements is impossible"
Sigatures Called irregular"
Representative Reaves questioned
General Lord closely in regard to the
so-called illegal contracts and oral
orders. The general objected to the
term illegal" saying that he pre-
ferred to describe them as irregular.
He explained that the irregularity in
the case of written contracts consist
ed for the most part in proxy sigma
tures," meaning by that that the con-
tract officer whose name appeared in
the body of the contract did not actu-
ally sign his name to the contract, but
designated some other officer to act for
him. In July of last year the Con-
troller of the Treasury had ruled that
such contracts were invalid. The
proxy practice had been resorted to as
the only means of dealing with the
enormous amount of work that over
whelmed purchasing officers.
General Lord defended oral contracts
and non-competitive purchases by say
by advertising for bids would have
Spelled disaster to the A. E. F." Cen
eral Pershing, he said, was continually
cabling for supplies to be forwarded
at once. The committee was informed
that all of General Pershing's cables of
this nature were available.
General Lord ascribed the origin of
the system of consolidated financial
control of all the bureaus of the War
Department to General Goethals, who
had sent for him and asked him to un-
he i1o of
sion of finance. AS he worked out his
system ne submitted it to an advisory
council made up of Otto Kahn and
number of other business men and
tnanciers of national fame.
How System Worked
Under this system acquisitions for
supplies went first to the storage di-
vision, which, if it did not have them
in stock, referred them to the require
ments division, which surveyed them
and passed them OH to the purchase
division, which finally drew the con-
tracts and then turned them over to
the finance division for final execution
and approval.
During the war the procurement Of
hcers, or purchasing agents, were al
most entirely civilians, either in civil
ian clothes, or temporarily commits
stoned. They represented the best
business ability of the nation. Unless
such officers we're in the Quartermas-
ters' Corps they were not bonded.
Nevertheless, the inspector general had
found only twenty cases of dishonesty
IN the scores of thousands of trans
actions that were made.
While Colonel Schley was on the
stand, members of the committee were
specially anxious to learn why the
lowest bids were not always accepted
and to get the facts about the Board
! Of Review in his division as we'll as
such boards in other divisions. Colonel
Schley explained again and again that
In his judgment the acceptance of the
lowest bid was often the most expensive
course, but Chairman Graham and other