Evening star., 1948-08-25
Kaiser Reveals Lease
OF Blast Furnace as
He Arrives for Probe
Can Buy WAA Plant for
IS Million in 20 Years;
Baldwin Warns Hearing

The KaiSer-FraZer Corp. said
today it has exercised its option
to lease a Government-oWned
blast furnace at Cleveland for
20 years with the privilege of
purchasing the plant for SIS
100000.
Henry j. Kaiser announced the
action as he arrived in Washington
for joint investigation by two
congressional committees of the ne
gotiations by which his company
acquired the $28,OO0,000 plant. The
hearing began today.
Award of the property to Kaiser
Frazer by the War Assets Admin
istration has stirred storm of pro-
tests. Among those protesting have
been Republic Steel Corp, which
has been operating the plant since
it was built during the war, and
Preston Tucker, Chicago automobile
manufacturer. who bid unsuccess-
fully for the property.
To Take Over Plant Sept. /.
Under terms of the agreement
with the WAA, Kaiser Frazer is to
take over the plant September
from Republic K-F was given a
period of interim operation with
privilege of buying the plant "as is,
where is" for $14,200,000. 1t also
was given the option of taking a
long-term lease with the privilege
of buying later at $4,000 900.
Mr.. Kaiser's statement said his
firm had exercised the long lease
option at the higher purchase
figure.
Senator Wherry, Republican. of
Nebraska and Representative Ben
der, Republican, of Ohio, chairmen
of the Senate and House Commit
tees, respectively, promised as the
hearings opened to get full facts"
about the matter.
Baldwin Warns of Slump.
WAA contends that Republic had
given notice it intended to close the
iron-making facility August 81. It.
said negotiations for continued
operation of the plant by Republic
had broken down and for this rea-
son the lease was concluded with
K-F.
Senator Wherry and Mr.. Bender
said many businesses have protested
in fear they would lose their source
of pig-iron supply. Senator Bald
win. Republican. of Connecticut said
at the outset of the hearing that
the East and Middle West are
threatened with grave industrial
slump" if these supplies should be
stopped. He was the first witness.
Senator Wherry said at the outset
that the new contract had given rise
to charges and countercharges' in
volving what appears to be a COM
plex situation. He emphasized the
House and Senate committees join
ing in the investigation are trying
to find the best solution for all con-
cerned.
Murray Interrupts Testimony.
Senator Baldwin said New Eng
land industries have been getting
5000 tons of pig iron monthly from
Republic Steel and will face a seri-
Gus setback if this source does not
continue.
/ Senator Murray, Democrat, of
Montana, interrupted to observe
that in the past small industries
have complained that the big steel
companies would not supply them
with raw materials.
I He was surprised. he said to find
these small concerns now looking
to Republic as a friend and savior
All parties to the controversy
gathered in the Senate Caucus room
today and awaited an opportunity
to give their conflicting versions of
the contract.
! Republic Steel, whose lease on
the plant expires August 81, has
charged that WAA made a clan
destine deal" with Kaiser-Frazer to
lease or buy the furnace.
Tucker Included in Controversy.
A third figure in the controversy
is Preston Tucker, maker of a new
automobile. who says he submitted
higher bid for the plant than
Kaiser Frazer.
Jess Larson. WAA administrator,
and Mr.. Kaiser have denied
the "clandestine deal" charge as
without foundation.
On the eve of the hearings Mr..
Kaiser sent a telegram to President
Truman. challenging C. M. White,
president of Republic Steel, to
prove there was any secret deal
or 'clandestine negotiations in our