Evening star., 1934-02-19
Testifies on Bagley.

Black turned to the subject OF
Browns relations with the late Joseph
Bagley.
The former Postmaster General said
he had no business transactions with
Bagley before 1928 He added he
might have paid some trifling bill"
for Bagley prior to that time.
In a previous committee session,
Bagley's secretary had testified to a
partnership between his employer and
Brown in a million dollar brokerage
account.
Later, other witnesses told the COM
mittee Bagley had been Washington
representative for a flooring concern
whose product was used in Post Office
buildings.
Brown agreed under Blacks ques-
tioning that he did arrange for Bagley
to invest $4,000 in 1924 in the Frazier
Electric Transmission Corporation in
which he (Brown) and some other
Ohio persons were interested.
Black produced check for $4,000
drawn in Browns favor by Bagley on
July 81, 1924.
oh yes, remember all about that"
Brown said, adding he arranged for
Bagley's investment.
In his statement, Brown said, "All
OF the extensions and consultations
authorized by me were in the public
interest" and every such action re-
suited in improved public service and
ultimately in lower flying costs, which
were passed on to the Government in
the form of reduced mail pay"
Extensions Recognized.
Payment for service on the extern
sions authorized was in every instance
approved by the controller general
then and now in office, and the va
lidity Of such extensions was repeat
edly recognized in appropriations for
the airmail voted by Congress-" the
statement continued.
With the passage of the McNary-
Watres act giving the Post Office De-
partment the requisite authority, it
exerted pressure on the airmail car
riers, who with minor exceptions had
heretofore been conf1ning their oper-
ations exclusively to carrying the mail,
to transport passengers and express
in order to build up revenues from
the public and thus tighten the bur-
den on the Post Office Department:
and it exerted every proper influence
to consolidate the short, detached and
falling lines into well-f1nanced and
well-managed systems, providing three
independent transcontinental opera
tions with appropriate north and
south intersecting services, believing
that the pressure Of competition would
In time attract public patronage, re-
duce operating costs and develop, if
possible, q transport airplane capable,
under the competitive conditions in
the passenger and express transpor-
tation industry, of earning enough to
pay its way without any subsidy"
Mentions Stock Deals.
Brown said public attention has
been drawn to my investment in the
securities of three corporations whose
business Is related to transportation
the International Mercantile Marine
Co., the Pennroad Co. and the Penn
sylvania Railroad Co."
During my term as Postmaster
General" he added, mo mail con-
tract was awarded to the Interna-
tional Mercantile Marine Co. or to
any other ocean carrier in which the
International Mercantile Marine Co.
held a financial interest.
Five ocean mail contracts were
awarded by me to competitors Of
International Mercantile Marine,
three in the North Atlantic and two
In the Caribbean. No mail contract
was awarded 70 The Peunroad com.