The Waterbury Democrat., 1934-09-05
Business or Selling Warships Was Graft
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 brought into the hearing as a possible recipient of commissions on submarines sold to his country. Henry E. Carse, Electric boat president testified to the accuracy of an agreement which showed that Young Leguia was to have received s4O.000 commission on an order for two submarines. How ever, he said, the company did not make the deal, and therefore Legulia was not paid.
 Spear replied that he "wouldn t call it bribery" but admitted that you can't do business in South America without paying special commission"
 "They don't call it bribery down there" he added.
 Clark read letters showing that Aubrey was to pay S15,000 boat to three persons in Peru for each order electric boat received.
 We all know Spear wrote to Craven, however, that the real foundation of all South American business in graft and he (the a. gent in Chile) Nave know tn people to pay in Santiago"
 The correspondence between the boat company and Vickers warned the latter that it would be "best for tho time being to continue to talk about nothing but British construc- ton" of submarines sought by Chile.
 'Why did you, an American sub marine builder, insist on pushing this business to a British concern ?' Clark asked
 ''We then were building two boats for Peru" Spear replied, and we didn't think it looked very well for us to he dealing with the Chuleans when we were dealing with the Peruvians. Then, too, l had an experience some years be- fore with Chile and it was not so happy"
 The letter to Vickers' ended:
 'Tn conclusion I would like to add little unsolicited and perhaps superfious advice which is that 1 would not be too modest about the price In my own experience be- ing that at the last minute some- thing extra is always needed to grease the way"
 What does grease the ways mean Clark asked.
 "I meant special expenses" Spear replied. ficials," said Clark.
 Not necessarily to officials. v Spear explained. ''They have GUS tom down-"
 .An old Spanish custom" Clark snapped.
 "Yes," Spear replied. "a custom of employing their friends"
 "Such as the son of the presi- dent of Peru Clark suggested.
 Employing their friends" Spear replied.
 Under an agreement of October IA, 1925. Aubrey was to be paid. $6,000 year by Electric Boats, ,plus a three per cent commission on submarines, torpedoes and ann munition.
 How far could electric boat have gotten in South America" asked committee chairman Gerald P. Nye, R., N. D., Without such aid as came from the state department, navy department and your various activities with money?"
 We competed for orders in sev- eral countries" Spear replied. Tt boils down to whether the United States government was a deciding factor in the Peruvian order 1 don't think it was, but it was help full"
 In May 1927, Aubrey wrote Spear that the company owuld have to pay the usual commissions ''plus the one for J. L., tentatively Identified as Juan Leguia, son of the president of Peru.
 "Leguia came to see me with a suggestion that Peru should have bigger submarines" Spear said.
 Did you arrange a commission for Juan Leguia ?" Clark asked.
 'No,' Carse replied, II never paid him a commission but I paid him a retainer to go to Venezuela where his family was related tc President Gomez and he thought he could get us some business"
 Clark asked if a $20,O00 com. mission had not been paid to Les uia.
 We will come to that in min ute," the senator said when Spear denied knowledge of any payment
 The Aubrey letter said President Leguia had told him That he was not instructed, commissioned or re- quested his son Juan Leguia to acl In any capacity whatever in con. nection with armament purchases.
 Wanted to Help Peru
 Washington. Sept. - (UP) - The Electric Boat company, Grot- on. Conn.,, submarine builders attempted to help Peru obtain an ] American loan nj 1920 so the South American country could buy warships from the munitions con- cern, testimony revealed today al the senate's inquiry into world arms traffic.
 OfficiaIs of the boat company who yesterday at the first sessior revealed amazing connections witf Sir Basil Zaharoff, mysterious ssmerchant of death." were called back to the witness chair today b, Sen. Bennett Champ Clark, d.. Mo. committee member, who promised sensational testimony before thii phase of questioning is finished.
 Simultaneous with the Peruvian loan disclosure. 1t was revealed fhaf New York bankers believed Peru had insfigated a revolufsoi tn Bolivia 10 join her in opposition Bankers conducting soutf American fInance told the boa u |H