Evening star., 1934-06-21
Action, Taken on Request of
House Members, Follows
Two Lines.
AUTO BUYING AND BASE
LEASE DEAL ARE STUDIED
Acceptance of Favors in Form of
Car Discounts and Parties"
Is Charged.
BY REX COLLIER.

BY REX COLLIER.
The Department of Justice has
launched an investigation Of charges
made before a House committee that
certain War Department officials ac-
cepted favors from firms doing busi-
ness with the Army, in alleged vio-
lation of Federal bribery laws.
The inquiry, it developed today, is
proceeding along two separate lines
at the request Of two subcommittee
of the House Military Affairs Com
mittee One has to do with auto
mobile purchases and the other with
the leasing of an old Army base.
Chairman Rogers of the subcom-
mittee which is demanding removal
of the Army air chief, Maj. Gen.
Benjamin D. Foulois, disclosed today
that the Division of Investigation of
the Justice Department is looking into
the "Holabird situation" at the COM
mittee's request.
Base Leasing Probed.
At the same time, at the suggestion
Of Chairman McSwain of the military
affairs group. Attorney General Cum
mings has named special assistant
to review evidence of alleged colluSion
in connection with the leasing by
the Mercur Corporation, terminal
firm, of the former Army base at
Port Newark, N. j.
The cff pnOorS
explained. involves allegations that
Army officers accepted unlawful favors
from motor manufacturers bidding
for Army motor truck and automobile
contracts. Camp Holabird is the
Army's testing ground for motor
vehicles.
Harry B. Fleharty, special assistant
to the Attorney General, is studying
testimony before McSwain's commit
tee to the effect that high Army Of
ficers had enjoyed choice seats at
world series base ball games and at
New York night clubs and other
amusements at the expense Of the
Mercur Corporation.
The Justice Department, It was
said at the Capitol, is endeavoring to
learn if any Federal laws were vio-
lated by Government officials, with
view to launching criminal pro-
ceedings If the findings warrant.
Car Discounts Alleged.
Members of Rogers Committee re-
Gently asserted that testimony showed
certain Army officers received dis
counts on automobiles purchased for
their own use. Committee members
are of the opinion this was grossly
improper" and they asked the JUS
tice Department to determine if the
practice constituted a law violation.
The Department of Justice is max
ing no investigation of plane pro-
curement methods of Gen. Foulois,
Rogers said. The committee, he said,
was dissatisfied merely with Foulois'
administration of Air Corps policies
and believes he should be removed
from the corps for alleged "dishon-
esty" and Incompetence" The dis
honesty allegation, he pointed out,
had reference solely to Foulois state
ments to the committee.
Foulois Prepares Answer.
Gen. Foulois today was preparing
his answer to the committees
charges, contained in a report sub
! mitted to Secretary of War Dern.
The latter forwarded the report to
the air chief for comment" Foulois
in a public statement already haI oe-
MED all charges against him and
has offered to meet his accusers in
court.
The Port Newark lease project is
said to have been brought to the at
| tention of Justice officials at the
time Of the grand jury inquiry into
charges of illegal lobbying before the
War Department. This inquiry ended
| with no indictments, but with a
special report to the President and
Secretary Dern condemning lobbying
| conditions allegedly existing at the
War Department.
The former base. consisting Of
dock and warehousing facilities at
Port Newark, bought by the Govern
ment from Newark for $1,000, 600,
was leased to the Mercur Corpora
ton under an agreement that the
corporation would pay the War De-
partment 81 year and e5 per cent
of the profits from the warehousing
| business.
No Profits Reported.
The committee was advised by wit
nesses that the Government has re-
ceived only 81 a year because the
| corporation Gained there were no net
profits. Officials said that revenue
exceeding s4,000,OO0 were collectS
by the corporation. but "expensi,
and maintenance" had eaten up
\ sum.
In report on the project etramd
Swain subcommittee cbargesS that
and collusion." and deciS nsarIv
among the "expenses ~ Arr,v
$4,000 for entertainnsT To-, hoi1
officers at base ball ;as ord o+har
games, night clubs, ps'' ~ 0'-
places of amusepens thoss ,tsrs
The testimow Dsd hv ths iudoe
had been dissppaF tba Ar,,,v hut hsd
advocate GENT re Frederick II. payne,
torn,sr erm sse,astsht Secretary of War.
ioi ,anS,aSs ne report alleged that pre-
estfmates indicated that i'm
~ expenditures totaling about
p,os aao had been made out of the
el'.O.uss from the base and that this
ere eventually might run much
bSber.
/ n..l:~ No~as Mnronrx, Euunu