The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-11


board of claims for settlement the com
pany was represented by former Gov
Folk Of Missouri. Three times the
claim was audited. Mr.. Richardson said
and three times changes were made
ami allowed by the board increasing
ire amount to he paid to the company
the total sum involved In this contract
was S93.000.Q00. The part taken by
oS-Gov. Folk in the case however. was
not one in which Mr.. Richardson
charged the use OF undue political in
fiuence.
Operators of Shipping Board vessels,
the witness said. were and still are
permitted to retain large balances with
out accounting. though a rule requir-
ing accounting was made by Judge
Nevin during his term of office. The
rule. he said, is in force but is entirely
disregarded Mr.. Richardson said that
when NJ c. Baker was in charge OF tDe
New York district for the Shipping
Board he attempted to enforce this
rule. and on one occasion found opera
tors of Shipping Board boats in pos
session of SlS5 100000 of Government
money. Mr.. Baker Immediately ordered
$4,000, 900 or $50 600 900 of this money
withdrawn and deposited in the United
States Treasury.
I'm fact" said Mr.. Richardson. $50
serious was the situation with regard
70 the lax handling of funds that oper-
ators and others who had Shipping
Board contracts would go to their local
banks and borrow money on the strength
OF these contracts, which they would
prompt divert to some other use The
Shipping Board and the banks both sur
fered. ana in one district the board
found IL necessary 10 warn the banks
70 make no such loans.
MANY instances of such unlawful
and irregular practices were called to
the attention of the board. but prose.
cutions were few and convictions even
less. There was the case of the South
ern Shipbuilding and Dry Dock Com.
pany of Orange. Tex, which diverted
$4,000 of Government money and de.
posted 1t in the Orange National Bank
which 1t controlled. Fred Pennington
paymaster for the company. was ar.
rested for forging pay checks and con.
fessed. Yet the day following his con-
fession Shipping Board official made
p settlement with the company although
advised previously that the company
was lnsolvent and that the bank should
~ i'fH A'I the At1Clency.
attention of the Shipping Board was
called TO this fact and also 10 .he far,
That the local United States Attorney
had said that there were five charges on
which prosecution could be based No
such prosecution ever was begun, and rs
Tar as ] know the whole matter is still
II the files Of the Shipping Board"
An additional instance of whare the
Government lost money on the sale of
savaged and surplus property. the wi :.
ness said was in the case of the Rogers
Impany's contract. by the terms OF
which the company was to get $4,000
Tor removing each partly completed hui!
i"om the building ways when ii was d >
cided 20 build~no more ships Mr. Rich
q, dson said these hulls were valuable
ard the Shipping Board knew IT, Ir
incst cases. he said. the contractor who
>ldc the ships under construction wa
willing to purchase them. Despite this
fact. however. he charged that the hui 6
were given to the Rogers company To-
rothing and that n premium of 5000
was given for removing them.
Under this arrangement, Mr.. Richard
sou said, the Rogers company sold tw1
fulls under construction at the nation ii
yard for $4,000 each with very iitt e
effort and then collected the $4,000
from the Shipping Board for d.sposing
OF them.
Lost SO I-2 Per Cent. on Sales.
Mr.. Richardson testified that ,nicia S
O. the Shipping Boards supply and sale
department admitted 10 him that thei-
system of disposing OF property was
extravaRant. netting the Government
only 1914 per cent. of cost. He gave as
M. example the sale of several hundred
thousand pounds Of oakum to the DietZ
company OF New York at 81 cents a
pound. when a prior bid Of II u cents a
pound from Ness & Co. had been re-
fused. The oal1um was sold by tn .
Dietz Company. he said. to the orig
fral bidder for I "a cents a pound, a
though the current price during all the
negotiations was about % cents pound.
In Mr.. Richardson's opinion much Of
the material could be turned over with
cut loss. The repair and supply bu-
reaus of the board, he said. could Use
n considerable quantity of the salvaged
material. saving the Government the
purchase price on new supplies and
raving the loss incident to the saIvag
gale Of the material now on hand.
Influence and corrupt practices play
m important part. the witness said. In
obtaining contracts for ships and in tho
operation of Shipping Board vessels.
ItillHk Vi Adl1t IIldut
10 the Emergency Fleet Corporation by
concerns applying for contracts. Mr.
Richardson again cited the case of the
National Shipbuilding Company CT sa.
vannah. The company. he said. repre-
scented itself 20 be a going concern In
which former United States Represen.
tative was interested. with a plant 4
mile from the place where the plant
actually was constructed. The Shipping
Board had 20 furnish the money y
credge n marsh before operations coulc
be started This yard. he said. neyei
completed a shin The case is now IL
the hands of the United States District
Attorney, he said. and added that OH
Gals are doing their utmost to have TN,
prosecution shelved.
Contracts calling for yards 30 far In
hnd that canals would have 70 b,
Gredged before "A ship was launched
constituted prolific source OF loss Mr.
Richardson said. Among these wer.
mentioned the Southern Shipbuiiding an,
Dry Dock Company AT Orange. Tex. In,
Hoosatonic yard In Massachusetts, and
yard at York. Me. At the Hoosatoni,
yard. he said n ship could be Launched
only by floating II out 10 sea on pantoons
One company was awarded a contract
for ten vesSes. Mr.. Richardson said
and six months affrrward the o.
tent Of progress was represented by 8
tool house.
without mentioning name, = sug-
rcsted Chairman Walsh. "can you say
whether political influence was used e
secure contracts. extensions Of contract
and 10 bring about favorable settle.