Evening star., 1946-09-23
Committee Told
.0f S2,080,000
Profit on $500
Florida ShipbuiIdine
Figures Revealed;
Kuiser Defends Self
By J. A. O'leory

Accounting Office told the House
Merchant Marine Committee to-
day that one company, the st.
Johns River Shipbuilding Corp.
of Jacksonville, Fla, made profits
estimated at $4,000, COO with an
original investment of $500
The opening session Of the COM
mlttee's hearings into the cost
of wartime shipbuilding also was
marked by strong defense by Henry
J. Kaiser OF his part in the war
shipping program, in which he took
sharp issue with some of the state.
ments he said had been made.
AS evidence of the need for pro.
lection of taxpayers. the GAO esti.
mated that 10 wartime shipbuilders.
including the ST Johns Corp, made
profits of 56,000,0O0 on capital in
vestment of s22,979,275.
Ralph E. Casey, GAO representa-
tive, told the committee the figures
indicated the need for restoring
some of the safeguards, checks and
controls which experience has die.
tated are absolutely essential to the
protection OF taxpayers against ex-
.cessive and illegal expenditure OF
public funds"
The committee is studying the
operations of the l9 companies who
used shipyards built by the Gov
eminent.
Mr.. Casey summed up his testi-
mony with this statement:
Il dare say, that at no time in the
history of American business.
whether in wartime or in peacetime,
that SO few men made so much
money with so little risk-and all at
the expense of the taxpayers, not
only of this generation, but of gen.
erations to come
Both the committee counsel, Mar
vim Coles and Mr.. Casey. gave fig-
ures on the st. Johns River Corp. in
their opening statements.
346,666 Per Cent Profit Seen.
Mr.. Casey testified that the esti-
mated profits of the st. Johns Corp.
represented T346,666 per cent of their
capital investment"
Turning next to the Kaiser group,
Mr., Casey said companies owned
or controlled by Henry j. Kaiser
and his associates, namely, Cali
fornia Shipbuilding Corp, Kaiser
Co., Inc. Kaiser Cargo, Inc; Oregon
Shipbuilding Corp, Permanente
Metals Corp. and Walsh-Kaiser,
Inc, had total capital investment
of s2,510,000 and made profits esti-
mated at sl92,237. .284in other
words. these companies with but
one ninth of the total private capi-
tai invested, realized more than half
of the total profits"
ut would seem. Mr.. Casey con-
tinued. that when profits from
Government contracts paid from
public funds soar to such astronomi-
cal heights in proportion to invested
capital, some one-either Govern
ment representative or contractor
should come forward with a satis-
factory explanation.
Kaiser Claims Negligible Profit.
Mr.. Kaiser, who was seated in
the crowded committee room as the
hearing began, issued statement
and pamphlet, setting forth his side
OF what his companies did to pro-
vide ships and other war supplies.
Under the heading of profits, his
pamphlet set forth:
THE combined net profits of the
corporations operating the seven
Kaiser managed shipyards during
wartime amounted to less than one
tenth of per cent of dollar volume
including materials costs, after taxes
and after deducting losses of Kaiser
Co., Inc, which built and operated
Fontana to produce wartime steel
for ships and shells.
Kaiser enterprises performed over
$21O, 100000 of construction for the
Government without fee or profit,
including S125 100000 worth of ship
yards. Many other activities were
without fee or profit. including
seven months management of the
Brewster Aeronautical Corp, for the
Navy"
Start of War Recalled.
In laying the groundwork for the
investigation, Committee Counsel
Coles said that at the outbreak of
war existing shipyards were made
quate and the Government was
forced to turn to the newly formed
companies. most with little capital
and with little background or exper-
ience in shipbuilding
Mr.. Coles said the production Job
done by these shipyards was excel
lent, but that it also was costly. He
said the Maritime Commission has
recently admitted that in parts of
the program there was waste, ex-
travagance and high costs"
Mr.. Coles said that in the next
few days the committee will receive
evidence as to the profits and fees of
the various companies that oper-
ated Government-owned shipyards.
There is no accurate formula or rule
TO establish a dividing line between
reasonable and unreasonable profits,
Mr.. Cole told the committee, but
added his belief that sufficient in
formation would be presented to en-
able the committee to decide whether
the amounts paid to the companies
were proper.
In defending concerns that went
into war production, Mr.. Kaiser said
in his statement that if invested
capital were the only standard.
thousands of small manufacturers
(See SHIPBUILDING, Page A-49