New-York tribune., 1920-11-18

States. The claim amounted to $14,
$4,000. BY the application of the Cot
ton rule this claim WAS scaled down to
$2,506,3S7. The Norwegians refused to
accept this sum, and appealed to the
State Department. The State Depart
ment upheld the Shipping Board.
In the case of several French claim
ants, who had turned over twenty mine
ships to the Shipping Board, a bill of
.S60,000.0o0 was presented. The French
men were allowed $7,677, ,179. The
upheld the Shipping Board. Since then
the Frcnchmen have accepted 3,o0o,-
900 as part payment. but still persist
in fighting the award.
Italian claimants asked SO 100000 for
two ships and were awarded 100000.
In this case the State Department also
refused to change the award.
Pusey & Jones Case
Describing what he called the famous
Pusey & Jones case, Mr.. Gillen went
into details in narrating the alleged
method whereby the Shipping Board
took over contracts to the value Of
$94.O00,O0O, placed by the Cunard Com
pany in this country for the British
government prior to the entrance Of
the United States into the war.
These contracts, he said, were let to
the Pusey & Jones Company through
have been the sole stakeholder of the
Puscy & Jones Company and it's sew
eral subsidiaries. He had been ad
vanced 100000 by the Cunard Com
pany before the contracts were turned
over to the Shipping. Board, and at the
time of settlement the board proceeded
to deduct this sum from its allowance
to Hennevig. The allowance made by
the board was for $7107 900 Accord
collect a profit. not only on the work
Of the Pusey & Jones Company, but
also on contracts of the subsidiary
concerns to which parts of the con-
tracts had been sublet. He was foiled
in this attempt by Judge Payne, act
ing under the cotton rule, Mr.. Gillen
declared.
Mr.. Gillen said that Robert A. Dean.
attorney in charge in negotiation of
settlements, was man who lacked re
sistance. He said he had the highest
commendation for Mr.. Deans honesty
and that he knew him to be hard and
conscientlous worker. But, rcvertke-
less, Mr.. Gillen said, he lacked resist
ance in dealing with claimants. The
claimant, he said. had all the nerve
possible in pressing his points and Was
able to get the better Of Mr.. Dean be-
cause the latter lacked intimate knowl-
edge OF the contract terms and the law
governing respective cases. This was
before Judge Payne took charge and
the Cotton rule was enforced. Since
the Application of the Cotton rule, Mr..
Glllen said, all points in doubt are in
terrpreted in favor of the government.
Mr.. Gillen also tesiined that for two
years following the organization of the
Shipping Poard owners of ships COM
Tnandeered by the United States in
.917 were permitted profits far.
n excess Of what was permitted other
industries. He said that ships, regard
less of age and depreciation Of original
value, were taken over on basic con-
tact of rental value of Is cents a dead
weight ton a month. In addition, an
allowance for profit. interest on in
vestment and depreciation was given,
based on war time earning value of
normal SIS. This, he said, allowed the
owners to make a profit of 671a per
cent.
Mr.. Gillen said that ships thirty
years old made these profits on con-
tracts with the Shipping Board. 1t was
in comparing these figures with what
Great Britain allowed that he made the
point that American owners received
230 per cent more than did British own
ers for their ships. The British figures,
he said, were established in 1914, on
the basis of prewar valuation and con-
t'nued throughout the war The Ship
ping Board, he said, fixed its rates on
the basis of valuation existing in 1917,
which was $500 above the 1914 figure.
Mr.. Gillen said he knew of one ship
bought by New York firm for $500
COO on which alterations of $475,000
were made and which earned more than
$600,000 in six months.
This ship was later sunk by a sub
marine" the witness said, "and the
government paid the insurance.
Must Accept Losses
Questioned by Congressman Steel on
the matter Of the disposition of ships
now owned or controlled by the board.
MIR. Gillen said that the government
should sell its ships at market prices
and that, despite the fact that no
profits have been made in the operation
Of government ships, the government
would have to go on operating those it
cannot sell. He added, however, that
under the present valuation of tonnage
it is impossible for this country to
operate an efficient merchant marine.
He said the price should be cut 1925
deadweight tom and, by establishing
a fair value for tonnage there would
be created a sound investment market