Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1920-11-17
SAYS 2 BILLION
DOLLARS LOST
IN SHIP DEALS

If we keep the valuation at eost-abOut
1920 per dead weight ton"
Through the lack Of proper account
| ing system, Gillen said, tine shipping
board lost all track of S500,000,00O Of
ship-butlding supplies, what they cost,
who got them, and whether they were
used in ship building.
For two years the accounting system
had broken down." said Gillen land de-
cisions taken by the shipping board in
that time were not based facts"
Shipping Board expended nearly $4.
o00,000,000 on Americas shipping pro-
gram and earned nearly $400000,000 by
its operation Of government owned yes
! sells, but it has no system of accounting
for these stupendous sums and up to
Feb. n, 800, never knew where it stood
financially, according to the testimony of
fered by Martin j. Gillen Of Racine, Wis
Gillen was formerly associated with the
war industries board and was special
assistant to John Barton Payne when
he was head of the Shipping Board.
Gillen cited one instance where pri-
vate shipping companies derived $780,
600 900 from the operation of government
owned ships, which he said became
lost" SO that there was no record Of 1t
at Washington. Private shipping com
panies so tangled their accounts that the
shipping board had no accurate idea Of
whether there had been a profit or loss
on the operation Of It's ships. Gillen tes-
titled.
ION Oct 3, 1919" he continued, I'VE
started drive TO ascertain where the
shipping board stood. Some 900 clerks
were put to work disentangling Govern
meut accounts from private shipping
firms books.
There was no record at Washington
Of the excess moneys received by pri-
vate ship owners from Government ships,
amounting. we ascertained, TO S12O,OOOO00'
There was no system Of accounting at
| Washington on Oct i. 1919, to show
where the money was, and no SYSTEM
whereby Information regarding this
money could be traced
Startling testimony az to the lax
methods Of handling huge sums was
placed before the committee by Gillen.
we found" he continued, that or
5000 voyages made by Government ships
there had seen audits on only eight OF
these
I'VE knew there were vast sums from
these voyages belonging 10 the Govern
ment. but there was no record OF them
IN the United states Treasury or the &C
counting department OF the shipping
Board.
II came to New York and at eight
or the twenty seven banks where ship.
ping Board funds were supposed 70 be
deposited I found there was 81, $4,000,
most OF which was carried In private ac-
counts and not in the Shipping Boards
name and that interest varying from
10 3ts per cent was being paid.
h.t an nj
York banks there was about s35,oO0OQ
being carried ms Shipping Board FUNDS
One tenth Of this sum would have been
sufficient.
"Our audit showed that one shipping
firm alone had on its hands $4,000, o0t
~ the shipping Boards money"
Gulen said that S35u00oQ 600 had been
appropriated for tae Governments ship
building program and that TO this amount
should De added 400Oo00O0 received
from operation ~ the ships built.
AN Of this S5Go0O00.o00 except about
$50 10000 has been spent" Glllen said
Concerning the Item OF the l2o.o0ooot
which became 4ost' Glllcu said John
Barton Payne instituted search for f.
found #, and then established weekly
auditing system whereby some track was
Kept Of the shipping Board's vessels
which we're operated by 1T companies.
The state Department, said Gillen,
contrary % the principle established
by the shipping board made settle
rnent 20 Norwesians involving n loss Of
s23 600 coo
This was IN settlement for twenty
seven ships being built in American
yards and which were reQuisiuoned by
the United States Government when we
entered the war
The Norweglans actually had paid
only Sli 404 5e5 ou these contracts. and
the state Department, by a process o:
trading. settled for SSf5Oo 600.
we paid Cor the gambling tn shipping
tonnage that was going on in Norway
shin tonnage was ordered here at $lG0
a ton and resold in Scandinavia at $500 a
ton"
The witness said a search OF the rec
ords showed that there was no data avail
able or $50 ships reugisitioned by tie
Government at the outbreak OF the war
and which were building in American
yards.
"The william Jacobson, being built by
the Union Iron Works" testified Gillcn
was requisltioued on Aug. 8. 1917. The
Norwegian buyer had contracted to pay
81 0S5 coo for the ship but had paid only
SG72, 600.
THE State Department paid the Nor
wegians $2.O45 600 and then paid $3i5,O0J
to complete the ship"
"Who made these Norwegian adjust
ments?" asked Chairman Walsh.
Comm ssioner Ray Stevens the wit
ness replied.