New-York tribune., 1920-11-11

agreements with other agents through
which ships might be kept busy, saying:
There are instances where an oper-
ator with cargo enough for half
dozen ships has but one vessel or two,
while other operators at the same time
may be keeping ships idle for lack of
eargoes." AS an instance he cited the
Strahan Company, of Savannah, which,
he said, was unable TO obtain vessels
for its cargoes at time when but a
short distance from its terminals there
were many Shipping Board vessels
lying ioie.
Make No Effort TO Get Cargoes
No effort is made by the board to
standardizc voyages, said Mr.. Richard
son, and the government is at all times
at the mercy of ship operators so far
as obtaining the creates possible vol
ume of business is concerned. Secure
IN their feeling that the board is
obliged to cover all losses in operation.
Mr. Richardson said. operators take
no pains to obtain return cargoes home
and send vessels back in ballast.
Investigation has revealed. said the
witness, that in cases where many ves-
sells returned home in ballast there
were plenty Of careoes lying. idle IN
foreign ports waiting to be pfc.ed up
for the asking. Some companies opcr-
ating both their own and Shipping
Board ships divert the lattcr's vessels
TO the less profitable routes, letting
the board stand whatever losses may
be involved. 50 laN is the method o.
Keeping accounts of profits and losses
OF ships. said Mr.. Richardson, that tive
have been unable to find any one IN the
Shipping Board who could give us an
idea of the ships operating under
losses"
There is no uniformity whatever, the
witness asserted, in the practice of
handling ships and supplies or of max
ing rates.
"When Judge Nevin was comptroller
Of the Shipping Board said Mr. Rich
srdson, "he laid down the rule that
each operator must keep and file strict
accounts Of expenses and income. That
was never done. Theoretically oper-
ators are supposed to account to
agency and district auditors whenever
srust funds III their possession arc
greater than their needs. In most
cases an operator holds all the money
he has. One week he may have one,
session and the next week ne may have
20 borrow money from the Shipping
Board to operate. This practice is still
continuing. Judge Nevn's rule was
never counternanded. but simply
ignored
Financial Methods Lax
As an illustration Of the lax fnan-
cial methods of doing business in the
relations between the Shipping Board
and the operators Mr.. Richardson said:
Under VI. c. Bakers administration
as agent Of the board i'm New York,
soon after Judge Nevin had laid down
his ruling. Mr.. Baker succeeded in 10
eating Sl35, 100000 in the hands Of sh p
operators. between $50 000,0O and
$40 100000 of which they had no right
10 have in thor possession lie took
ms money away from them and re
turned 1t to the Treasury of the United
states. SO serious did the situatiol
become that many operators would 20
70 banks. obtain money for operation
81 their Shipping Board ships on the
strength of their contracts with the
board and then divert this money TO
other purposes, thus exposing both the
board and the banks to loss. This
pract' &c grew SO wide that finally ia
one district the Shipping Board repre-
sentative had to warn the banks not TO
END money TO operators on the
strength of their agreements with the
board
Another instance OF laxitv in fnan-
clal methods cited by MIR Richardson
was one IN which loss to the govern
ment Of $40 100000 was involved. The
company referred to was the Merritt
stevens Company, ot Jacksonville. Fla.
u
OF Its bonds to the Emergency Fleet
Corporation, later shown to be worth
less, the witness said, submitted claims
Tor losses chargcable to the COMPANY
and inflated funds for various contin-
Gencies. This claim came before the
board OF claims OF the Shipping DoaYd
or settlement the company being rep
resented by formcr Governor Folk o.
Missouri. The claim was audited three
times, the witness testified. although a
Shipping Board auditor had reported
that the loss to the government would
amount to Sl0,50O COO and three times
changes were made and allowed bv Tie
board, increasing the amount to be paid
20 the company The total sum i'm
volyed III taIs transaction was S23 O0O
600
rd Settles Deficit in Forgery
AhOtNef case cited was that OF the
Southern Drydock Company Of Orange
Ten, which, the witness testified. di
verted Sl25,0 Of the government
money and deposited it In the Orang,
National Bank, controlled by the com
pany. Fred Pennington, naymaStcr foi
the company, according to MIR. Richard
son, then proceeded TO draw upon thi,
money by forged checks allegediV in
tended as pay checks. He vas arrested
and confessed and is now serving
sentence IN the penitentiary. Yet IN.
day following his confession Shipping
Board official ;.rrvcd and made settle
ment with the company, although
warned that the company was insoiven
and that the bank should be held foi
the deficiency.
Attention of the Shipping Boar,
was called to this fact and also 10 tn,
fact that the local Federal District At
torney had asserted that there wer,
five counts on which prosecution coull
be brought" said Mr.. Richardson. "N,
such prosecution was ever begun, and
as far as l know, the whole matter stil
rests in the nieS Of the ShirDinl
Board"
Mr.. Richardson sand that there wer,
instances where employees Of the boar,
had offered for a fee to assist contrac
tors in making out their claims agains
the Emergency Fleet Corpora tion. an(
instances OF employees of the Emcr
gency Fleet Corporation being secret,
employed by contractors and OPERATOR
showing them how 10 avoid their obi