Evening star., 1934-09-05
PERU BOND SALE
LAID TO U. S. FIRM.
Senator Accuses Arms
Maker of Profiting on
"WorthIeSs" Paper.
Continued From First Page.)

Missions to South America after the
war was mentioned by Clark in asking
Spear about a $4,000. 900 naval order
that was being arranged in 1920.
Testimony was presented that the
American Naval Mission to Peru was
not advised as to details of the sub
marine transaction because they likely
would not approve of selling that gov
ernment secondhand and virtually
obsolete equipment.
Loan Hard to Get.
Correspondence brought out that
Peru had difficulty borrowing money
in New York for the naval transaction
because bankers there pointed out
Peru's national debt was $34 900, 900
the country had hooked about every
thing she owns" and that it would be
poor business to float an $4,000, 900
loan at that time to purchase
armament.
Senator Bone, Democrat, of Wash
ington interrupted the questioning to
remark that later Peru did float a
very large loan in the United States,
and suggested American bankers prob
ably prof1ted handsomely thereby.
Carse expressed the opinion it was
unfair to criticize his company's sales
manship at the time when America
was attempting to expand industrially.
There are some people in this
country who believe munitions sales
may some day involve this country in
a war costing far more than any little
profit made on munitions sales," Clark
replied.
Bonds, Submarines Linked.
isn't it true that you received pay
ment on some submarines in 1924
after Peru had negotiated a loan in
this country?"
That's true" Carse replied, "but
the money we got didn't come out of
the bond issue. It came out of pop
ular subscription raised by the people
for patriotic purchases"
THE net result" Clark said, "was
you sold submarines and got paid while
the American people bought Peruvian
bonds and got stuck"
Carse objected that the topics were
unrelated
After the Aubry incident had been
cited. Senator Bone asked Spear:
Along with all these things we were
sending men to Geneva in an effort to
promote peace and at the same time
we were trying to sell shells, torpedos,
dynamite and ships to other countries.
Isn't that Inconsistent"
But submarines help protect peace"
protested Carse.
"Yes, submarine sank the Lusi-
tania," observed Bone. do you call
that promoting peace?"
1.-THE Germans sank the Lusitania
with the patents they stole from U.s."
Carse replied.
officials of the company said they
authorized special commissions" in
business, but denied they were for
bribery"
Extra Money Needed.
In correspondence in connection
with Chilean contracts, however,
Spear was disclosed to have written
to Vickers official: '' - .''
"I would like to add little unso-
hcited and perhaps superfluous advice
which is that would not be too mod
est about the price and would cover
into it a substantial amount in excess
of the 10 per cent above referred to,
my own experience being that at the
last minute something extra is always
needed to grease the ways"
Chairman Nye raised his eyebrows
in surprise at this revelation.
Clark asked what officials were
creased"
1T wasn't necessarily paid to Off
Gals" Spear said. 1T was an old
custom down there to take care of
your friends on business transac-
tions."
Dealt With Foes.
Other correspondence disclosed that
Aubry sought to deal secretly at the
same time with several South Amer
ican countries, some of which were
hostile toward each other.
The letter mentioned Peru, Chile
and Brazil.
Meanwhile, in another quarter of
the city, Secretary Swanson told re-
porters the Navy was willing to CO.
operate with the committee in max
ing available all documents not con-
f1dential and not incompatible with
the public interest.
IF there is anything wrong we
want to know about it," Swanson said.
He said the Navy had bought 10
submarines from the Electric Boat Co.
since 1905 and that contracts for
three submarines given the company
recently still stood.
Suggested U. S. Intervene.
Testimony developed at yesterday
afternoons hearing included:
Sir Basil Zaharoff in 1925 suggested
Intervention of the American State
Department through Ambassador
Moore in Madrid to shut out German
ship-building competition.
Michel Clemenceau, son Of the war
time premier of France, was a British
arms company salesman in Europe,
and his name was suggested by Ia
haroff to Electric Boat as a likely as
sistant to Zaharoff in Europe and to
watch the South American business
zaharof in general was contemptu-
GUS of disarmament conferences, while
munitions companies generally regard
ed them as necessary evil whose
practical effect was to slow up the
munitions business.
Zaharof mysteriously controlled the
Spanish naval business, both before
and after the fall of the monarchy.
Electric Boat Co. for the last three
years has been sharing with the Navy
Department the business of building
submarines for the United States Gov
ernment.