New-York tribune., 1920-10-22
1t Wasn't ''Cost Plus" but 1t
Cost a Lot, just the Same:
500, 900, 900 to Build and
$10,OOO,OOO as Salvage
Official Evidence Cited
Details of War Departments
Bargain With the du Pont
Powder Co. Are Presented

s
The assertion made in recent Tribune
article that the company built the
plant on cost-plus system.
In letter tc The Tribune the du
Font Company through its publicity
bureau, says: "In the second of your
series of articles revealing what the
nefficiency Of the Administration cost
the people of the United States in the
conduct OF the World War you saw:
The records show that the Old
hickory powder plant, built at cost
Gus for the government by the du
font Powder Company, was completed
1or $50, 100000, and after the armistice
became worth only S1O,00O,0OO in SAL
age value The cost-plus system is
made the point of attack in the entire
article In including the du Pont
Companys work at Old Hickory in this
category you misstate the fact. The
records show that this is one Of the
lew plants possibly the only large
one, which was not built on the cost
plus system"
The Tribune erred in It's fiat state
ment that the O,O0O 900 powder plant
was erected by the du Pont company
or the cost-plus system The cost-plus
system obligated the government to
pay all costs, including materials and
LABOR, and then give the contractor a
1ercentage based on the entire cost,
no matter wha, it amounted to.
Profit Allowance on Powder
1T is shown on page 1921 of hearings
be1ore Subcommittee of the select
committee appointed by the House of
kepres to investigate war ex-
Hehdltures that Major Hunter, War
Department witness, testified:
Our contract with the du Pont En-
Elneerlng Company at Old Hickory is
rased on cost-they were allowed a
certain amount of profit when the cost
or powder was at a certain price, they
you'd benef. by percentage on all
below that We actually prodncod now-
der at Old Hickory for less than 38
cents pound"
Representative Graham, chairman of
the committee interrogating the wit
ness, asked: What did you put in the
jor Hunter-That is everything
except amortization Of plant.
1t is shown on page 1922 of the same
document that another War Depart
ment officer, questioned by Represent
tive Graham, testified that the govern
ment set the bogey price for powdc-
at "A and fraction cents per pound.
Mr.. Graham-This estimate, as | un-
d.erstand it, making up hAbogey price,
includes the price of the raw material
and the labor and the actual expense
OF making the powder, including the
cost of the organization which is MAX
ing it and so on?
Major Uunter-Yes, sir.
ME- Ora n n m Put
ditional element that the plant is fur
njshed, the equipment is furnished, the
necessary utilities are furnished. and
the whole thing is there, so that all the
contractor has to do is to take the ma
terials and has labor and make the
product?
Major Hunter-Yes, sir.
Mr Graham-That is entirely differ
ent from the case of the powder manu-
facturer where he has to furnish his
plant and put in his own money, is it
not?
Major Hunter-Yes, sir; but most
private plants in bidding on con-
tract already had their plants to pro
duce the material which they proposed
TO furnish.
Mr. Graham-still they have their
money in it,
How the Plant Was Built
The testimony elected that the Old
Hickory plant was built for the govern
ment by the du Pont Engineering Com
pany, subsidiary of the du Pont
Powder Company, which received 81
for its work, but the parent company
received the use Of the 800, 100000 gov
ernment plant and all raw materials
with which to make government pow
der at a fixed profit
The du Pont company's letter to The
Tribune under date of October 10 also
stated:
The records show further that the
estimated cost of construction of the
plant was S75, 100000 and had the con-
tract been completed there would have
per cent. The plant was SO Ger cent
complete when the armistice was
igned."
On page 1913 of the Congressional
committee investigation records it is
shown that Representative Jeffries,
member of the committee, questioned
General Williams, of the Ordnance De-
partment, regarding the cost OF the
plant.
Mr.. Jeffries-What was the cost of
the Old Hickory plant?
General Williams About 100000, 900.
Mr.. Jetfries-We have been told that
the cost of Old Hickory was Sl38,-
600 600
General Williams-I don't think so;
! never heard Of that.
According to the testimony Of Lieu
tenant Colonel Odus C. Horney. Ord
nance Department. in charge Of the Old
Hickory property from March to Octo-
Der, 1919, there were 2,114 buildings
aside from the structures erected as
part of the actual plant. These were
erected at cost of about So, ZOO ,000
and included apartment houses, bunga-
lows, garages, stores, ware houses, bunk
houses, dormitories. bachelors quarters,
hotel school, postotfice. bank, drug
store frehouse and other buildings.
The plant covered about 5000 acres.
How the Stores Were Operated
Colonel Horney testified that the du
Pont Engineering Company operated
the government stores from which the
employees of the plant were supplied.
When he took charge in March he took
over supplies worth about s850,o0O.
Mr. Graham-All of which belonged
TO the government?
Colonel Horney-Yes, sir.
Mr. Graham-Did the government use