Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-02-12
SHIP FIRM HEAD
| DENIES B|GP PROFIT
Effort to Avoid Taxes by
Altering Contracts Is
Counter.Charge.
By the Associated Press.

By the Associated Press.
A sweeping denial by Homer L. Fer
guson, president Of the Newport News
Shipbuilding g. Drydock Co., that the
firm had made wartime profits all
out of line" was presented today 70
the Senate Munitions Committee only
to be met by counter assertions OF
committee counsel that the concern
had sought to avoid taxes by changing
naval contracts.
Ferguson was the first witness called
by the committee as 1t opened its in
quiry into affairs of the Newport News
company. listed as one of the big
three" the committee has accused of
bidding collusively on naval construc-
ton, particularly during the past two
years, when vast building program
was financed by public works funds.
The witness said a member of COM
mittee counsel, Alger Hiss, had made
public a report saying profits Of the
So per cent during the wartime period
for total of about $ls,000,000.
Sl1,000,00o Profit Charged.
Instead, Ferguson said, the COM
pany had made profits Of about SILL
100000 when Federal taxes we're de-
Quoted. and he asserted the percentage
of profit was far less than the COM
mittee counsel had computed.
He put the range as from about
per cent to Q per cent on the volume
OF business done which he described
as the fair basis" for computing
profits
He also presented another estimate,
based on current assets during the
war period. which showed profits
ranging from 8 TO % per cent.
In support of its contention. the
company was seeking TO reduce its
tax burden on profits. Committee
Counsel Stephen Raushenbush intro
duced letter written by Ferguson
July IA. 1919, to the late H. E. Hunt
ington of Los Angeles, then owner of
the company, advising the Californian
OF the negotiations.
I'VE would like to change the battle
cruiser contracts absolutely" the
letter said, so as to get the date OF
the contract out of the war period
and avoid the high tax on profits"
Ferguson commented that the
negotiations were approved by the
Navy, and added at one point:
We made more profit. and the
Navy saved a million dollars apiece
on two ships.
Ferguson was called to testify after
presentation OF a letter written by
Clinton L. Bardo, former president
Of the New York Shipbuilding Corp,
climaxed the committees inveStiga-
ton Of the latter firm.
Letter Talks OF Bids.
Referring TO representatives of the
Navy Department. the letter said
There also was expressed to us the
desire that the builders themselves
should get together and agree as far
as We could upon what each would
bid and then bid on nothing else. -
Questioning of Newport News COM
pany ofiicials was expected to continue
through the remainder of the week,
with the exception of one day when
Secretary lckes may take the stand.
Ickes, due tentatively to appear Fri
day. is to be asked the amount of pub
lie works money made available to the
Navy for shipbuilding in the past two
years. A committee estimate placed it
at nearly half billion"
Senator Nye went to President
Roosevelt recently to gain assurance
that none OF the proposed $4,000 .000,-
900 work relief fund would go to the
Navy for shipbullding. Senator Bone
Democrat) of Washington has pro-
tested repeatedly at the hearings that
shipyard wages have not kept STEP
with profits. Both this and the col
lusIon" charges have been denied Wig
orously by officials of the New York
Shipbuilding Co
Committee agents reported that they
have been unable as yet to locate
Thomas Bragg. Wall Street trader
whom the committee desires to ques-
ton In connection with transfer OF
ownership of the New York company ir
1888 on the eve of big naval build
ing program. Ben Smith. another
trader whose story is sought. was re-
ported critically i'll in a New York
hospital Smiths attorney in New
York said his client will be ready tc
testify as soon as his health permits
Postmaster General Farley was de-
Tended by committee member yes
terday when Senator Long, Democrat
of Louisiana. contended on the Senate
floor that the "colluSion" assertions
were another evidence of Farley in