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Full text of "Munitions industry : hearings before the Special Committee Investigating the Munitions Industry, United States Senate, Seventy-third [-Seventy-fourth] Congress, pursuant to S. Res. 206, a resolution to make certain investigations concerning the manufacture and sale of arms and other war munitions"

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MUNITIONS INDUSTRY 



HEARINGS 

BEFORE THE 

SPECIAL COMMITTEE 

INVESTIGATING THE MUNITIONS INDUSTEY 

UNITED STATES SENATE 

SEVENTY-THIRD CONGRESS 

PURSUANT TO 

S. Res. 206 

A RESOLUTION TO MAKE CERTAIN INVESTIGATIONS 

CONCERNING THE MANUFACTURE AND SALE 

OF ARMS AND OTHER WAR MUNITIONS 



PART 11 ^--_/ </ 

DECEMBER 6, 7, AND 10, 1934 



CHEMICAL PREPARATIONS FOLLOWING THE WAR 

AND 

INTERCHANGE OF MILITARY INFORMATION 



Printed for the use of the 
Special Committee Investigating the Munitions Industry 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASHINGTON : 1935 



MUNITIONS INDUSTRY 



HEARINGS 



BEFORE THE 



SPECIAL COMMITTEE 
INVESTIGATING THE MUNITIONS INDUSTRY 

UNITED STATES SENATE 

SEVENTY-THIED CONGRESS 

PURSUANT TO 

S. Res. 206 

A RESOLUTION TO MAKE CERTAIN INVESTIGATIONS 

CONCERNING THE MANUFACTURE AND SALE 

OF ARMS AND OTHER WAR MUNITIONS 



PART 11 

DECEMBER 6, 7, AND 10, 1934 



CHEMICAL PREPARATIONS FOLLOWING THE WAR 



AND 



INTERCHANGE OF MILITARY INFORMATION 



Printed for the use of the 
Special Committee Investigating the Munitions Industry 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
S3S76 WASHINGTON : 1935 



HARVARD dOLLtgf LIBRAKt 
RFCeiVED\THX0U6H THf 

9UR{^U FORykESEAftCH ih 
KUNICIPALyfcbvERNMENT 



SPECIAL COMMITTEE INVESTIGATING THE MUNITIONS INDUSTRY 

GERALD P. NYE, North Dakota, Chairynan 
WALTER P. GEORGE, Georgia ARTHUR H. VANDEXBERG, Michigan 

BENNETT CHAMP CLARK, Missouri W. WARREN BARBOUR, New Jersey 

HOMER T. BONE, Washington 
JAMES P. POPE, Idaho 

Stephen Raushenbush, Secretary 
Alger Hiss, Legal Assistant 

II 



CONTENTS 



Testimony of — Page 

Beebe, H. F., manager foreign department, Winchester Repeating 

Arms Co 2517, 2521, 2523, 2526, 2532 

Bradwav, F. W., assistant general manager, smokeless-powder depart- 
ment," E. I. du Pont de Nemours & Co 2492,2502 

Casev, K. K. V., director of sales, smokeless-powder department, E. I. 

difPont de Nemours & Co 2428, 2433, 

2449, 2457, 2466, 2475, 2483, 2485, 2489, 2492, 2505 
Davis, C. K., president and general manager. Remington Arms Co-_ 2514- 

2516, 2533 
Du Pont, A. Felix, vice president, E. I. du Pont de Nemours & Co__ 2425, 

2477, 2484, 2486, 2488, 2502 
Du Pont, Irenee, vice chairman of board of directors, E. I. du Pont 

de Nemours & Co 2448, 2457, 2464, 2469, 2474 

Du Pont, Lammot, president E. I. du Pont de Nemours & Co 2397, 

2400, 2407, 2412, 2415, 2482, 2485, 2487, 2491, 2493, 2511 
Du Pont, Pierre S., chairman of board of directors, E. I. du Pont de 

Nemours & Co 2404, 2413, 2418 

Handy, E. E., vice president. Remington Arms Co 2514 

Jonas, Elmslie E., sales agent, Winchester Repeating Arms Co., and 

Western Cartridge Co_: 2521, 2523 

Monaghan, F. J., export manager, Remington Arms Co 2512, 2515, 

2517, 2525, 2528, 2532 

Reisinger, W. U., secretary and treasurer. Remington Arms Co 2514 

Sparre, Dr. Fin, director development department, E. I. du Pont de 

Nemours & Co 2399, 2402, 2411 

Swint, W. R., director foreign-relations department, E. I. du Pont de 

Nemours & Co 2395,2462 

Weston, Charles K., director publicity department, E. I. du Pont de 

Nemours & Co 2400, 2413, 2416, 2420, 2431, 2462, 2465, 2468 

Background of chemical warfare 2395 

Propaganda for protective dye legislation 2400 

Activities of American dye industry in opposing attempt to control chemi- 
cal-warfare business in 1922 2419 

Sale or interchange of military inventions and secret processes 2425 

European countries aim for independence in powder supply 2450 

Exchange of technical information by munitions companies 2461 

Question of control of chemical industry in relation to disarmament 2466 

Methods of doing business: 

Balkan States 2477 

Poland 2489 

China 2496 

Argentina 2502,2549 

Mexico 25 11 

Guatemala 2520 

• Nicaragua 2525 

Bahama Islands 2526 

Dominican Republic 2537 

Colombia 2543 

Brazil 2550 



INVESTIGATION OF MUNITIONS INDUSTRY 



THURSDAY, DECEMBER 6, 1934 

United States Senate, 

Special Committee to 
Investigate the Munitions Industry, 

Washington, D. C. 
The hearing was continued in the Finance Committee room, Senate 
Office Building, Senator Bennett Champ Clark, presiding. 

Present: Senators Vandenberg, Barbour, George, Clark, Pope. 
Present also : Stephen Raushenbush, secretary to the committee. 

At this point the committee concluded that part of the testimony 
which is incorporated in Part X of these hearings, " Embargoes." 

afternoon session 

(The committee reconvened at 2 p.m. pursuant to recess.) 

Senator Clark. The committee will come to order. The Chair 
would like to inquire whether any of the companies are now pre- 
pared to furnish any of the exhibits which have previously been 
requested, and which have not yet been furnished. Mr. Raushen- 
bush, let me suggest that you come up here. I believe everybody 
can hear you better if you come up here. I happen to know that the 
particular place where you are seated is the hardest place in this 
room from which to be heard. 

Mr. Raushenbush. Mr. Chairman, with your permission, may we 
have as witnesses this afternoon the officers of the du Pont Co. who 
are particularly well acquainted with the early post war chemical 
history of the company and the various foreign connections that 
were involved in them. Do you care to call any others, Mr. du Pont? 

Mr. Lammot du Pont. I would like to have Dr. F. Sparre. 

Senator Clark. You were previously sworn, were you not. Doctor? 

Mr. Sparre. Yes ; I was sworn in September, 

Mr. Lammot du Pont. Mr. Chairman, I would also like to have 
Mr. W. R. Swint. 

Senator Clark. You have not been previously sworn, have you? 

Mr. Swint. No. 

TESTIMONY OF F. SPARRE (RECALLED) AND W. R. SWINT 

background of chemical warfare 

(Mr. Swint was duly sworn by the chairman.) 
Mr. Raushenbush. In the absence of the Chairman, he asked me 
to begin an inquiry into a certain phase of the munitions business 

2395 



2396 MUNITIONS INDUSTRY 

which is, frankly, based on one supposition, that the committee is 
not only interested in the munitions business, but is interested in the 
cause and need for a munitions traffic at all, and the next question 
that follows that immediately is the very simple one of why every 
nation feels obliged to arm, and the answer is obvious, because every 
other nation is arming too. 

Then the further question occurs, well, how did this get started — 
how did that situation get started, and because it has seemed to us 
in examining some of the files of the companies that there were some 
slight clues or indications along that line, we wanted to get a little 
more background on the question of the chemical development not 
only of your companies but of others, because certainly the chemical 
developments have a large place in the next Avar, by your admission, 
I am sure, and by everybody else's. 

Let me add, perhaps, one personal statement in that, that it is 
going to be the attempt to be scientific about this. You gentlemen 
do not, perhaps, realize how someone coming to the industry newly 
feels it impossible quickly to make final judgments. If you Avill per- 
mit an illustration, it is a little as if people who have never been in 
the jungle have suddently captured a species of life that they had 
never seen before, and they were observing it. Of course they bring 
nothing but their own understanding of the life around them to 
observe that new species. It lives by its own laws and it functions 
well, but an outsider looking at it cannot say when it kicks with its 
hind legs instead of with its front legs; he cannot say that there is 
anything ethical or unethical about that. It is a matter of scientific 
interest to find out just how the thing functions, and if you will be- 
lieve in the first instance that there is no ethical implication here, I 
will appreciate that. We had here at the earlier hearings an illustra- 
tion of some of our gas companies that took some convicts in one of 
the South American countries and tried out some of their gas on them. 
That met with some ethical comments by the members of the commit- 
tee. But for the moment, what we are interested in is just to see the 
function of this industry not only in connection with the national 
defense but with foreign countries, and with this somewhat lengthy 
introduction I would like to have a rather full story from then on by 
you who are conversant with the early postwar developments of the 
company about that. 

I frankly am undecided in my own mind whether or not to con- 
tinue the practice we have followed on saying, now, is this true, 
and showing you an exhibit on it, or asking for a full story. We 
do know, let me put it that way. that during the war you did go 
into the dve business in a rather large wav. I take it that is correct, 
isn't it? 

Mr. SwiNT. Yes. 

Mr. RAusHENBrsH. It happened about 1917, and we have here quite 
a list of the activities regarding dyes of the du Pont publicity bureau 
from 1917 to 1921, which shows or which covers a great number of 
pages. I do not think I will enter it as an exhibit, but practically 
every day, beginning with A]jril 12, 1917. about the time Ave AA'ent into 
the Avar, thei-c is a story of the dye developments of the company. I 
do not think the time or place or the interest of the company in that 
plan is questioned. So I won't enter that as an exhibit. 



MUNITIONS INDUSTRY 2397 

Now, the investment in that dye industry, we may, without any 
implication, say was made possible the same way the investment in 
General Motors, which we discussed at the earlier hearing. I mean 
there were profits from dealing with the Allies, and these were the 
means of seeking the investment. 

Mr. Lammot du Pont. No, sir ; I think you are under a misappre- 
hension, Mr. Raushenbush. It is true we started into the dye busi- 
ness during the war and, in fact, before the United States went into 
the war, I believe. In the early days we did not require any very 
larsfe investment, because the important thing at that time was the 
study of the processes of the industry which, of course, meant both 
the men and laboratory rather than plant. The construction of a 
plant was started then, but it was very small as compared with 
today. The great growth in the investment in the dye business, in 
bricks, mortar, and machinery, so to speak, took place after the close 
of the war, and it is going on today. 

Mr. Raushenhush. I do not see any great importance of that 
point. Now, immediately after the close of the war is it a fair 
statement to say that both you and the English and the French dye 
companies saw that they had a struggle for life against the German 
d3^e industry, and started to put up, or help to put up protective 
measures against imported dyes? 

Mr. Lammot du Pont. I do not think I ought to speak for the 
English or French, but we, in this country, fully realizing that we 
being an infant industry, must have protection in order to protect 
our home business from those who were far more experienced at 
that time. 

Mr. Raushenbush. At that time, v\-e find a letter from the head 
of your publicity department, who had apparently gone to London 
at the time. The letter is dated December 10. 1920, which I wish 
to offer for the appropriate number. 

(The letter referred to was marked " Exhibit No. 909 ", and is 
included in the appendix on page 2559.)^ 

Mr. Raushenbush. He tells of ''" my mission " 

Mr. Lammot du Pont. Who wrote the letter ? 

Mr. Raushenbush. It is written by Mr. Weston to Mr. Meade, one 
of the vice presidents of your company. 

He states : 

My mission seems to he going fairly well ; I have met a number of our 
Amierican newspaper correspondents, and have, I think, succeeded in selling 
them our idea. One cannot tell, of course, until the results begin to appear in 
American newspapers. 

He goes on to say that he is watching the vote in the House of 
Commons. 

He goes on to say : 

I believe that the great strong point to be brought out by our friends in the 
United States Senate is, that with .Japan. France, and England all protecting 
their dye industries, the United States is left as the only hope of the Germans. 
They will, without doubt, concentrate over there and give us a particularly 
hard fight. 

Now, I do not think that there is any question that the French 
and English were, naturally, interested in protecting their new 
industries. 



1 " Exhibit No. 909 " was referred to further in Part XII, p. 2758. 



2398 MUNITIONS INDUSTRY 

Senator Clark. That is the first mention of infant industries in 
tariff debates for nearly 100 years. 

Mr. Lammot du Pont. What is that ? 

Senator Clark. That is the first mention of infant industries in 
connection with tariff debates for nearly 100 years. That was the 
original theory of tariffs and has, in a sense, been cast into the 
limbo of forgotten things. 

Mr. Lammot du Pont. I do not know about tariff debates. 

Mr. Raushenbush. AVould Dr. Sparre or Mr. Swint care to say 
whether this was the policy followed by the allied countries, that 
they were all trying to protect their new industries from the pos- 
sibility of a large German influx after the war ? 

Dr. Sparre. Yes, I think that is correct; but I have no first-hand 
knowledge except the newspaper reports. 

Mr. Eaushenbush. Mr. Weston goes on on the second page : 

I shall remain here next week to see this bill through and to continue my 
efforts to stoke up the interest of those whom I came to see. 

It seems to indicate, does it not, that he was very interested in 
not only watching the English tariff bill, but to continue to " stoke " 
up the interest of those whom he came to see. It would give the 
impression, and I am willing to be corrected, that the company was 
sufficiently interested in having that English bill go through to, at 
least, send a man over there. He spoke of his mission, and to get in 
touch with the newspaper men and to stoke up interest in the matter. 
It goes on : 

The correspondents in Paris report to the offices here so it is apparent 
that if the men in London get the right angle it will be wonderfully helpful. 

In Paris I shall devote my energy very largely to bringing the correspondents 
in contact more closely with the American sources of news, at the same time 
trying to give them the proper angle so that they will appreciate the importance 
of the news. 

Is there any comment on that particularly ? 

Mr. Lammot du Pont. I have no comment. 

Mr. Raushenbush. Now, at this point we are not particularly in- 
terested in the way the tariff bill in this country was to operate, 
although it does come into your correspondence. What we are 
interested in at the moment is the thinking that underlies your 
interests, but it seems to me, as we examine your files that that 
interest is fairly expressed, and here is a cable from Mr. Poucher, 
dated December 3, 1920, which I think is, if you will let me say so, an 
intelligent cable, an understanding cable. Would you identify Mr. 
Poucher for us? 

Mr. Lammot du Pont, He was employed by the du Pont Co. He 
was in charge of the sales of dyestuffs. 

Mr. Raushenbush. In this country, and traveled abroad for you, 
did he? 

Mr. Lammot du Pont. Yes. 

Mr. Raushenbush. This cable, then, in 1920, follows the beginning 
of the interest in protecting the dye industry here. It gives the 
reason for the thing. That, I think, is very interesting. He says 
that he understands — 

Signor Tittoni has raised League of Nations interest in national monopo- 
lies and their danger to world peace. Urge attention of League be drawn 
to danger of resumption of German organic chemical and dye monopoly. 



MUNITIONS INDUSTRY 2399 

This is by far the most menacing and deserves immediate attention of League, 
who might welcome American support on a chemical disarmament measure. 
You cannot destroy organic chemical factories having peace functions, but 
must insure world redistribution of organic chemical producing capacity by 
support of national protective legislation. This is a critical measure, on 
which all disarmament schemes must stand or fall. 

Now, at this point, you see, Mr. du Pont, the committee becomes 
interested in this chemical thing we want to take up this afternoon. 
It goes on to offer the proposition : 

Disarmament is a farce while Germany retains organic chemical monopolies. 

Now, that statement is the one that struck me : 

Disarmament is a farce while Germany retains organic chemical monopolies. 
You can get full details in disarmament chapter of Major LeFebures' book 
now held by Whetmore — 

And so forth. 

Now, there is a reference to this Major LeFebure, and we find he 
left with your company a memorandum dated February 1, 1921, 
although it seems to be a little redundant. Because of the im- 
portance of the whole chemical warfare equipment industry, I would 
like to read it and, if necessary, get your comments on it. His point 
is that everything possible should be done to destroy the German 
chemical monopoly. He is a British officer, isn't he? 

Dr. Spakre. Yes. 

Mr. Raushenbush. I offer this cablegram for the appropriate 
number. 

(The cablegram referred to was marked " Exhibit No. 910 " and 
is included in the appendix on p. 2559.) 

Mr. Raushenbush. Now, we had a rather interesting illustration of 
the head of your publicity bureau being in London watching, stok- 
ing up the interest in the tariff over there in the British House of 
Commons, and now we have this British major making this comment 
that everything possible should be done in America. I offer this 
for the appropriate exhibit number. 

(The memorandum referred to was marked " Exhibit No. 911 " 
and is included in the appendix on p. 2560.) 

Mr. Raushenbush. He refers to the dyestuffs OA^er there, and he 
goes on to prove the importance of that arsenal in time of war. He 
speaks of clause 168 of the treaty, which — 

demands limitation of munitions and war-material production to factories or 
works approved by the Allied and Associated Powers. 

He says it refers to any war materials whatever, and, roughly, 
makes the argument that that really should include the big I. G. 
plants. He concludes by mentioning specifically : 

In addition to certain specific poison-gas plants a large proportion of the 
Haber process capacity should logically be dealt with under this article of the 
treaty. 

Now, that Haber process for manufacture is one of the most suc- 
cessful processes in the world? 

Dr. Sparre. For ammonia. 

Mr. Raushenbush. For ammonia? 

Dr. Sparre. Yes. 

Mr. Raushenbush. That has been bought by America and other 
countries ? 



2400 MUNITIONS INDUSTRY 

Dr. Sparre. I do not believe it has been bought by the United 
States. 

Mr. RAUSHE^BUSH. Never in the United States? 

Dr. Sparre. No ; but some other countries have. 

Mr. Raushenbush. Some other countries have? 

Dr. Sparre. Yes. 

Mr. Raushenbush. Then he goes on to mention the number of tons 
of poison gas produced in those plants, and makes quite a long case 
about the need for denying Germany the right to have any gas- 
producing capacity at all. 

Then he goes on on page 3 : 

It may be that by taking certain measures in peace regarding these potential 
arsenals, production of poison gases in war would be prevented, because war 
itself would be prevented, and the need to produce would not arise. 

I think I have already entered that as " Exhibit No. 911." 

Then we find that your company was conducting an active cam- 
paign over here for the tariff, and in " Exhibit No. 912 " taken from 
the 1921 file on " Our present and proposed activities ", showing the 
publicity that Shipp & Co., Bronson Batchelor, Inc., and all of the 
articles written, and speakers' publicity. It says the company had 
made arrangements, and I suppose he is speaking for the company, 
and correct me if I am wrong, and that it has many contacts to get 
them to send resolutions and personal letters to their Senators, news- 
papers, and so forth. 

Mr. Lammot du Pont. I have no criticism to make of your state- 
ment, Mr. Raushenbush, but I think I would like to study the letter 
a little before I could say I could confirm it all. 

Mr. Raushenbush. The question is simplj^^ whether or not Mr. 
Hale was speaking as an employee of the company. Could you turn 
that letter over to somebody ? Perhaps Mr. Weston is here, or some- 
body conversant with that, and that you would like to have any 
negative answer registered at the proper place in the record. If 
Mr. Weston wants to state that, we can have the answer inserted at 
this point or later on. 

Mr. Lammot du Pont. You want Mr. Weston to testify directly 
to this? He was the gentleman who was abroad. 

Mr. Raushenbush. If yoii think it is important enough. 

Mr. Lammot du Pont. I do not know whether it is important or 
not. 

Mr. Raushenbush. May we have Mr. Weston sworn, please, Mr. 
Chairman ? 

TESTIMONY OF CHARLES K. WESTON 

PROPAGANDA FOR PROTECTIVE DYE LEGISLATION 

(The witness was duly sworn by the chairman.) 

Mr. Weston. This is a report of the activities, not of the du Pont 
Co. particularly but of the entire chemical — not the entire, but a 
very large part of the chemical industry of the United States at 
that time. They were formed into the Dyes Institute, I think was 
the name, and I was a member of that institute, the publicity and 
legislative committee, and this is a report of the activities of the 
committee representing the industry. 



MUNITIONS INDUSTRY 2401 

Mr. Raushenbush. In 1920 the company contributed $21,773.49 and 
in 1921 $10,100 to the Chemical Institute."^ 

Mr. Weston. I do not know. 

Mr. Raushenbush. That is '' Exhibit No. 913." 

Mr. Lammot du Pont. Not to the chemical industry- 
Mr. Raushenbush. I am sorry, to the American Dyes Institute. 

Mr. Weston. Yes ; later merged into the Synthetic Organic Chemi- 
cal Manufacturers' Associations of the United States. 

Mr. Raushenbush. You contributed to an organization which, I 
take it, paid Dr. Hale his expenses and fees in these matters. I do 
not think it is an important point whether or not he was paid directly 
by the company. The thing I was interested in was whether or not 
this was not a fair statement about this campaign for protecting the 
dye industry that was carried on. Dr. Hale was making speeches 
that fairly represented things that were said, and we make certain 
allowances for the post-war hysteria at that time, in 1921, and we 
find Dr. Hale making a speech that the publicity department quoted, 
dated December 16, 1921, called '• The War After the War." That 
had some interesting conmients to make on the peace treaty from 
the angle of the chemical industry. 

Mr. Weston. May I just interject there? I think Dr. Hale was 
the vice president of the Dow Chemical Co., and not merely an 
employee who was speaking. 

Mr. Raushenbush. Most of the gentlemen, as you list them here 
as paying their fees and expenses, seem to be men of a great deal of 
standing, Mr. Weston, not only Dr. Hale but Dr. Parsons and others. 

Mr. Weston. Dr. Herty and others. 

Mr. Raushenbush. Dr. Herty is not on that particular list. That 
woidd not be the point. You can comment on it, Mr. du Pont, if 
you care to, wdiether that was not the sort of atmosphere in which 
the chemical protection was put over, speeches like this being made 
imder your own auspices and those of the American Dyes Institute. 
I am getting at this simply to get at the point of the matter, because 
it seems to me that w-as the point that carried at that time. 

I now offer the exhibits just referred to as " Exhibits Nos. 912, 
913, and 914." 

(The memorandum referred to as " Our Present and Proposed 
Activities" was marked '"Exhibit No. 912" and is included in the 
appendix on p. 2562.) 

(The Report of the Activities of the Chemical Industry referred to 
was marked " Exhibit No. 913 " and is included in the appendix on 
p. 2563.) 

(The address by Dr. William J. Hale entitled " The War After 
the War " was marked " Exhibit No. 914 " and is included in the 
api^endix on p. 2564.) 

Mr. Raushenbush. Dr. Hale comments: 

The peace treaty was drawn up entirely tri)ni tlie standpoint ol modern 
medievalism, or that period just preceding the advent of cliemistry in the 
world of industry, and the result was appalling. Thus the " Bungle of 
Versailles" was given to man and passed forthwith into obsolete history. Its 
four points, from the standpoint of the future, may be characterized as follows: 

1. National hatreds engendered by silly apportionments of trivial territory. 

2. Germany tinancially crippled but stirred to industrial activities, such as 
will soon reinstate her in the iwsition of world leader. 



2402 MUNITIONS INDUSTRY 

3. Germany deprived of those useless adjuncts of a nation's pride — lier battle- 
ships — and thus saved from wasting her wealth on monstrosities of the future. 

4. As a gift from the gods, there was left to Germany all of the implements 
for future wars, and she was asked to develop them to her best ability. 

Then he tells the story about the Badische-Anilin und Soda-Fabrik 
at Ludwigshafen, and there was the manufacture of indigo, and 
points out that — 

Were Germany to be drawn into war, this entire plant may be converted into 
a mustard-gas plant in less than an hour's time. 

Mr. Lammot du Pont. I think that is a little exaggerated. 

Mr. Raushenbush. That is the vice president of the Dow Chemical 
Co. 

Mr. Weston. I suggested that I think he is. 

Mr. Raushenbush. He may be taking a fee for going around mak- 
ing these speeches, but supposedly he is saying what is accurate. 
He speaks of the indigo plant of the Badische-Anilin which can be 
converted into a mustard gas plant in an hour's time. You know that 
outfit, do you not. Dr. Sparre ? 

Dr. Spakre. It, Badische Co., is part of the I. G. now. 

Mr. Raushenbush. It is part of the I. G. now ( 

Dr. Sparee. Yes, sir. 

Mr. Raushenbush. We do not want to go too far afield in this, 
but the whole point I am making is that this was a tariff speech 
at the time, and he went on to state that the international bankers 
who had trade in Europe would take an awful lacing in this regard, 
and that American industry must be prepared to m'eet tliis after the 
war. In other words, there should be a tariff to protect the chem- 
ical industry. 

This cable from Mr. Poucher, in which he says that disarmament 
is a farce as long as Germany maintains her chemical monopoly, 
and the statement by Lefebure, and the speech by Mr. Hale are only 
typical things which were in the files, showing, it seems to us, that 
the whole question of control of the chemical industry was really a 
very important one to the whole question of disarmament. 

Would you not accept that at this moment? 

Dr. Sparre. If you ask me, I rather have a different opinion. 

Mr. Raushenbush. All right, sir. 

Mr. Sparre. I do not tliink so. 

Mr. Raushenbush. You think these men were wrong ? 

Dr. Sparre. If course, different men have different opinions. So 
far as I am concerned, I was engaged in the munitions end up to 
1916, and that year I was asked to discontinue my work in con- 
nection with munitions and undertake a study of new industries, 
which the du Pont Co. would take up after the close of the war, 
because of at least some people's opinion being, and being also my 
own, that that would probably be the last war in our generation, at 
least the last large war. We had a large organization of very 
competent men, technical men and financial men, and such an organ- 
ization is a very valuable asset. And we did not think it was proper 
business or fair to the men to discharge them immediately peace 
was declared. 

Mr. Raushenbush. Pardon me, but are you not getting into what 
may seem to be a changing over to another industry ? I was simply 



MUNITIONS INDUSTRY 2403 

trying to get at the fact that these people were using this argu- 
ment to put through the tariff: that the chemical industry had a 
relation to war and disarmament, and I asked for an agreement or 
disagreement on that fact. 

Dr. Sparre. It is true that there is a relationship, but I think it 
was very much exaggerated in those days. Certainly the fact is 
that the du Pont Co., being now engaged very widely in the chemical 
industry, probably only 1 or 2 percent of our business is connected 
with munitions. Over 98 percent of our business is commercial. 

Senator Clark. Was not that the theory on which we took over 
the Germans' chemical patents, Doctor? 

Dr. Sparre. The chemical patents were, of course, taken over by 
the United States Government. 

Senator Clark. Is not that the correct theory? 

Dr. Sparre. To some extent, certainl}^, because during time of war 
then everything becomes of military value. 

Senator Ci^ark. We did take them and keep them on that theory, 
did we not? 

Dr. Sparre. Yes, but, when peace is declared these patents have 
no longer military value. 

Mr. Raushenbush. Either the people who sold this tariff to the 
country, if one may use that phrase, in those days — and that is, as I 
say, of course, only typical of a great many other instances — were 
completely wrong, or they were offering a proposition which had 
some sense to it ; that is, this proposition that as long as the Badische- 
Anilin has a plant that can be converted into a mustard-gas plant, 
if true is certainly interesting, on the whole question of chemical 
{irmament, and certainly everybody applied it in those days. 

" Disarmament is a farce while Germany retains organic chem- 
ical monopolies ", signed by your man Poucher, which is a proposi- 
tion which we at this moment are now willing to accept; that the 
chemical questions were right in the middle of the disarmament 
problem, and I wonder whether most of you now here would not 
really accept that even today, after some 10 or 15 years beyond the 
particular instances that led to this particular action on the tariff. 

We still find that in a chemical code you put clauses referring to 
the importance of that industry in the preparedness situation, for 
example, which was undertaken last year, 

Mr, Lammot du Pont, Mr. Raushenbush, I do not think there is 
any question in anybody's mind that the chemical industry is very 
important from the military standpoint, but the degree of import- 
ance is different in every individual's mind. 

Mr. Raushenbush. That is fair enough. There are times, let us 
say, when it is more important, to state it one way, perhaps, than 
another. 

Mr. Sparre. I said, Mr. Raushenbush, that the opinions here im- 
mediately after the war, I thinl?:, were exaggerated, in the light of 
present knowledge. I said that the chemical industry is immensely 
important, during time of war, and I said during peace times that 
it is also so, but it is commercial products. 

Mr. Raushenbush. I do not think there is any argument on that, 
Dr. Sparre. The big chemical companies, not only the German, 
but ours and the French and English, are prominent at peace-time 
conferences, and have to be, so they claim. 



2404 MUNITIONS INDUSTRY 

Mr. Sparre. That is right. 

Mr. Raushenbush. The only point I Avas raising is that in war 
time or the period before war, which Major Casey told us might be 
10 years the other day, they had a peculiar importance, and the only 
thing I was going to draw out of that — and again subject to cor- 
rection on this — I was going to accept the proposition that these 
people, Mr. Poucher and the others, expressed in those days that dis- 
armament would be a farce without such control, and he said with- 
out the German chemical monopoly controlled, and I want to take 
it one step further and say that disarmament would be a farce with- 
out control of the chemical industry. That is what I was trying 
to get at. 

If these people are wrong, then perhaps this conclusion is wrong. 

Dr. Sparre. I think it is very much exaggerated. 

Mr. Raushenbush. You do? 

Dr. Sparre. Because the chemical industry is a commercial indus- 
try, with a negligible part of its sales for munitions purposes during 
times of peace, but during times of war the sales for munitions pur- 
poses become a much larger percentage, but nevertheless, the com- 
mercial requirement is far larger. 

Mr. Raushenbush. The comment which should be made on that, T 
think. Dr. Sparre, is this : That war-time preparedness naturally is 
always taking place in peace times, and if we look across the border of 
Germany, or France looks across the line and says, "All these big 
chemical plants can within a few days be producing poison gas ", it 
has an effect on what France does. 

That is what I was trying to say. What happens after the war 
starts is less important than the feeling about it. I was making a 
very simple point and not trying to make anything very complicated 
out of it; that is, that proposition that your people referred to, that 
disarmament after the war seemed to be a farce as long as Germany 
kept her chemical monopoly, and I wanted to take it one step further, 
and see whether chemical companies were in the middle of the dis- 
armament question toda3\ and whether it might follow that unless 
there was some international control of chemical companies, disarma- 
ment might still be a farce. 

I threw that open as a tentative conclusion from what I had gotten 
out of this. I think possibly we will come back to it later. 

Mr. Pierre du Pont. Might I say a word on this situation ? 

Mr. Raushenbush. Yes, sir. 

Mr. Pierre du Pont. It is just another man's point of view on tht 
whole subject. 

As I recollect the situation before the war, Germany was the 
largest producer of what we call organic chemicals or dyes. There 
is no way of distinguishing between an organic chemical, a dye, and 
an ordinary chemical. There is no sharp difference. Formerly 
organic chemicals were those which grew naturally, either from vege- 
tables or through other natural processes, but later on those chemicals 
were produced artificially from all sorts of inorganic substances, and 
dyes were a part of that group, a small part, probably. 

The whole thing is interwoven. Take the manufacture of indigo. 
That may result in production of a large quantity of byproduct. 



MUNITIONS INDUSTRY 2405 

To get rid of that it is used as a raw material for manufacture that 
some other industry might be engaged in, so that the whole chemical 
industry is one of making major products, and taking the byproducts 
and converting them again into other products and byproducts, still 
going further, so that there is a continual change and interrelation 
of all these products. 

Take the question of munitions : It today happens that the princi- 
pal munitions are classified among the chemical industry, and also 
among the organic chemicals, as I know them, although they were 
never made naturally or never occurred naturallj^ 

Let us take a small instance : We might take nitrotoluene, which 
is used for munitions and commercial explosives. The knowledge 
of making nitrotoluene, which was all we had when the war began, 
put the Government in the position of being able to make trinitro- 
toluene, TNT. It is the knowledge of the one which gives you the 
knowledge of the other. Although the processes for making nitro- 
toluene are not suitable for trinitrotoluene, they are closely allied. 
The same thing occurs all through the industry; that is, the knowl- 
edge of one thing is useful in connection with the knowledge of how to 
make some other product. 

In the war materials, there are continuously new inventions being 
made, which are used in small quantities only, but are very important. 
Such knowledge cannot be had unless a body of experienced men is 
engaged in research, and finding out how to get things, learning what 
others are doing, and reproducing those inventions either by obtain- 
ing direct knowledge or by additional research. 

So that it is very important that every nation shall have the 
knowledge connected with these products. If the whole thing was 
left in German hands, or in the hands of any country, they would 
have not only the know-how, the men to do it, and the apparatus 
to do it, but they would have a tremendous volume of production on 
which to build an explosive business, if it were required. 

The important point, as I see it, at the end of the war, was to 
reduce the important volume of German business and transfer it 
to British or French or other control, so that they would have the 
volume basis, the experience basis, and the man-power basis that 
Germany had practically monopolized. I wdsh you would correct 
me. Dr. Sparre, because I may go wrong on some facts, and if I do, 
you may check me up right away — when Germany started in the 
chemical industry, one of the first things they made was turkey-red 
■dye and indigo dye. 

Is that right. Dr. Sparre? 

Dr. Sparre. Yes, sir. 

Mr. Pierre du Pont. The German plan was to sell those dyes in 
great volume. They put natural turkey-red and natural indigo com- 
pletely out of business, and that whole enormous trade which for- 
merly belonged to China, was transferred to Germany, That en- 
abled Germany to have a great background of industry on which 
they could build the more intricate dyes, those more difficult to make, 
and those used in smaller volume. They would sell their indigo 
and turkey-red at prices with which nobody could compete, and that 
enabled them to make these other dyes, also beyond the competition 
of other people, because they had no volume of production, of course. 



2406 MUNITIONS INDUSTRY 

Mr. Eaushenbush. I think all this is accepted, Mr. du Pont. 

Mr. Pierre du Pont. I think it is. 

Mr. Raushenbush. We accepted that as the proposition that Ger- 
many had a great advantage in the chemical industry. 

Mr. Pierre du Pont. It became necessary to distribute that among 
the nations, if Germany was not to retain this immense monopoly^ 
this great chemical industry. 

Mr. Raushenbush. You might also couple that with the proposi- 
tion, the very sam^e thought Mr. Poucher had, that unless that was 
done, that the matter of disarming was a farce. It would go along 
that line, would it not? That is, if Germany had the whole monopoly 
of dyes and patents that it had before the war, on low-grade products 
and so forth, that other countries could not go in for disarmament. 
Is not that right? 

Mr, Pierre du Pont. That is right. 

Mr. Raushenbush. In 1921 we have some instances of the way that 
this campaign was conducted — and I do not want to dwell on them 
too much — being a letter dated March 25, 1921, from your publicity 
manager to an employee of yours in Washington by the name of 
McNeely, which I will offer for appropriate number. 

(The letter referred to was marked " Exhibit No. 915 " and is 
included in the appendix on p. 2569.)^ 

Mr. Raushenbush. I want to point out what is said in the third 
paragraph of that letter, which reads as follows (reading) : 

It is, of course, a fact and is quite apparent that American dye manufacturers 
want to protect and develop their industry as a business proposition, but we 
want more than the ordinary tariff for the reason that this is an intricate 
industry and cannot be developed except under unusual conditions. It really 
requires the absolute embargo of competitive products so that we can secure 
an income over the sale of these which will be sufficient to pay for the develop- 
ment of the products which we have not yet learned to make. 

I think with the present unsettled condition of world affairs, and with 
Germany's attitude toward the peace treaty argimrents based on the question 
of disarmament are very much stronger than any others. 

We cite your publicity manager because supposedly he was in 
charge of putting the campaign out before the country, and the 
argument was being made on the question of disarmament. I want 
to go back to that a little later. 

We will enter that as an exhibit. 

Then a book was apparently prepared by the American Dyes 
Institute, in the same year, and put out again, making the same 
case, and being sent to all the people, Senators, Congressmen, and 
so forth. 

It makes a stronger case for the dyes, and says that with an efficient dye- 
making industry, no nation need fear disarmament. 

I will repeat that : 

With an efficient dye-making industry, no nation need fear disarmament, but 
without such an industry the disarmed nation would be at the mercy of any 
other dye-making nation in the world. 

Again he makes the same point I was trying to make a minute 
ago, and ran into a little difficulty on, namely, that no nation need 
fear disarmament, if it has an efficient dye-making industry, but 

^ " Exliibit No. 915" was refprrecl to furtlipr in Fart XII, p. 2704. 



MUNITIONS INDUSTRY 2407 

without such an industry the disarmed nation would be at the mercy 
of any other dye-making nation in the world. 

I confess I cannot quite understand what he means by it, but he 
goes on, in the next paragraph, to state (reading) : 

It points out how quickly a nation with an adequate dye industry can expand 
it to make the gases with which Germany almost won the war and which 
must figure so prom'iuently in all future conflicts. 

Again I am not sure I understand what he means. I simply 
want to make the point that here the whole matter appeared to me 
to be somewhat under the guise of war defense — using " guise " 
without any reflection — somewhat under the theory of war defense, 
and was being developed in that way and was being put before 
the public. 

(The document referred to was marked " Exhibit No. 916 " and is 
included in the appendix on p. 2569.) 

Mr. Pierre du Pont. The proposition is exactly the same as it is 
in the matter of food. A nation is at a great disadvantage if it has 
to depend on others for its food, because food is the greatest am- 
munition, without which no one could exist at all. It is the same 
proposition, 

Mr. Raushenbush. Does not your analogy break down if a nation 
can borrow food ? 

Mr Pierre du Pont. I do not think so. 

Mr. Raushenbush. You are talking about the chemical industry 
being like food, and you were talking here about putting in an 
embargo, or putting in a very high tariff with high foreign duties. 
Using your illustration, it would be food. I was just pointing out 
that it was not very analogous, when you look at it. 

Mr. Pierre du Pont. I am not so sure I follow^ you on that, but 
if there is an embargo on the exportation of food to any nation 
in the event of war, it is without food and goes down very quickly. 

Mr. Raushenbush. There was an embargo on dyes into this 
country. 

Now, you kindly furnished us with several tables showing your 
publicity expenses and your contribution to the American Dyes 
Institute, and various other manufacturing organizations, T. R. 
Shipp Services, American Chemical Society, Chemical Alliance, 
and so forth, during those years. I have not added them up, 
however. 

Then, in addition, there are contributions to the Chemical Foun- 
dation, of very considerable sums. Those were for patent royalties? 

Mr. Lammot du Pont. The Chemical Foundation w^as a founda- 
tion organized for the purpose of taking over German patents. 

Mr. Raushenbush. And these contributions of yours were in pay- 
ment for those patents ? 

Mr. Lammot du Pont. I do not think they were contributions, 
were they? 

Mr. Raushenbush. Those payments. 

Mr. Lammot du Pont. I think they were payments for the stock. 

Mr. Raushenbush. It was a stock arrangement? Did the Chem- 
ical Foundation conduct some of the propaganda, if j^ou will, for 
some of these tariffs and embargoes at that time ? 

83876 — 35— PT 11 2 



2408 MUNITIONS INDUSTRY 

Mr. Lammot du Pont. I did not get the question. 

Mr. Raushenbush. Read the question, Mr. Reporter. 

(The pending question, as above recorded, was read by the re- 
porter.) 

Mr. Lammot du Pont. I cannot answer that. 

Mr. Weston. Yes; very decidedly. 

Mr. Raushenbush. They did take part? 

Mr. Weston. Yes, sir ; they were very active in it. 

Mr. Raushenbush. The stock purchasers of the Chemical Foun- 
dation would pay for some of that ? 

Mr. Lammot du Pont. Some of our payments to the Chemical 
Foundation were for stock in the corporation, and some were by 
way of royalties for use of the patents owned by the Chemical 
Foundation. 

(The table showing du Pont publicity expenses was marked " Ex- 
hibit No. 917 '' and is included in the appendix on p. 2570.) 

(The list of du Pont contributions to various chemical organiza- 
tions was marked " Exhibit No. 918 '"' and is included in the appen- 
dix on p. 2571.) 

Mr. Raushenbush. All I was driving at was this — and again it 
is not the most important point — that these contributions listed 
here in " Exhibit No. 918 ", along with all the others, in some way 
brought about a favorable reaction on the tariff legislation at that 
time. 

Mr. Lammot .du Pont. Of course, I cannot say what the actual 
dollars which we paid into the Chemical Foundation were used for. 
Presumably they put it in their bank account and then used the 
money for their expenditures, whatever they were. 

Mr. Raushenbush. It was something more than a foundation sim- 
ply to hold the patents, was it not? It was actively engaged in 
doing what it thought necessary to defend the chemical industry at 
the time? 

Mr. Lammot du Pont. I understand it was formed to acquire the 
German patents. 

Mr. Raushenbush. And also to acquire the German patents; yes, 
sir. 

Then going on to a letter written November 29, 1919, in the middle 
of this, addressed to W. S. Carpenter, a vice president of the du 
Pont Co., from Mr. Meade, and dated in Paris, which I would like 
to have you look at, especially on the second page, where we begin 
to get what seems to be one of the explanations which is of very 
intense interest in the matter of protecting the dye industry in this 
country. 

I will offer that as the next exhibit. 

(The letter referred to was marked " Exhibit No. 919 " and is 
included in the appendix on p. 2571.) 

Raushenbush. The point to which I particularly wish to refer 
in that last exhibit is the end of the second paragraph on that page. 
I wonder if you would read that. The letter deals with a great num- 
ber of things, but largely the negotiations with the German chemical 
industry, and I think you had men over there, did you not, negotiat- 
ing with them off and on pretty steadily, from very shortly after 
the war, on? 



MUNITIONS INDUSTRY 2409 

Mr. Lammot du Pont. No ; I think we had nobody there steadily. 

Mr. Raushenbush. Oif and on. They were constantly going and 
•coming, were they not? 

Mr. Lammot du Pont. I think that is correct; yes, sir, not literally, 
constantly. 

Mr. Raushenbush. Who were your representatives over there ? At 
this moment Mr. Meade was over there, and you also had a Mr. Berg 
over there reporting to you. 

Mr. Lammot du Pont. Yes, sir ; he was over there. 

Mr. Raushenbush. And at various times it seems to me you had 
other officers. Did not Mr. Poucher go over? 

Mr. Lammot du Pont. I think he did. 

Mr. Raushenbush. And Mr. Laffey? 

Mr. Lammot du Pont. I tliink so. 

Mr. Raushenbush. And Mr. Kunz? 

Mr. Lammot du Pont. I think so. I do not know that thev were 
all there in 1919. 

Mr. Raushenbush. We find them getting together in 1919. 

Mr. Lammot du Pont. I think it is quite likely. 

Mr. Raushenbush. While this business was going on, of showing 
the country the importance of the chemical industry in warfare, 
which most of us agree is of great importance — we divide, seem- 
ingly, Dr. Sparre, only on the degree to which it is important 

Dr. Sparre. No; I disagree with another statement. 

Mr. Raushenbush. On that particular point? 

Dr. Sparre. No; not on that particular point. 

Mr. Raushenbush. We will come back to that in just a moment. 

At the moment, when you were showing the country here that it 
was very important to take over the control of the chemical 
monopoly, to take it away from Germany and get a well-developed 
chemical industry in this country, you were dealing with the Ger- 
mans over there, and that sentence which I asked you to read would 
throw some light on it, would it not? 

Mr. Lammot du Pont. Which sentence do you mean? 

Mr. Raushenbush. I mean this one, toward the end of the second 
paragraph, on the second page, which states [reading] 

It may be that the I. G.— 

that is the German dye trust — 

may decide to deal as a unit in the United States with either National, 
Grasselli, or ourselves. At any rate you can see the importance of ever- 
lastingly turning the regulatory screw in America both as to control of 
imports and future protective legislation. 

Now, as I understand it, the idea is that that letter says that the 
Germans must know that you have control of the situation in this 
counry, and that they cannot expect to use the export market, be- 
cause you can prevent them in cloing that and that it is therefore 
important to — 

everlastingly turn the regulatory screw in America both as to control of imports 
and future protective legislation. 

At the same time the big tariff campaign was going on. This was 
one of the results of that campaign that brought the Germans to 
terms? 



2410 MUNITIONS INDUSTRY 

Mr. Lammot du Pont, It was what was sought over there. 

Mr. Eaushenbush. It was intended to bring the Germans to- 
terms ? 

Mr. Lammot du Pont. Yes ; to keep them out. 

Mr. Raushenbush. In that connection, in the same document there 
are minutes of a meeting held November 20, 21, and 22 at the Baur 
au Lac Hotel. Zurich, Switzerland, in which the representatives of 
the Badische Co. had an indigo plant to be converted into a mustard- 
gas plant, according to Dr. Hale, inside of an hour. 

Mr. Lammot du Pont. Not an indigo plant. 

Mr. Raushenbush. He referred to it as having an indigo process,, 
didn't he? 

Mr. Lammot du Pont. Only a part of the plant. 

Mr. Raushenbush. They had a much bigger plant, of course. 

Mr. Lammot du Pont. I am not a chemist, but I do not think, 
indigo and mustard gas would relate to the same thing at all. 

Mr. Raushenbush. I do not want to be f ormalistic about this ; Dr. 
Hale describes in detail that matter, but I skipped the description. 
But let us take, for example, indigo, and he talks about how it is 
processed, the making of chlorine gas, and so on, and he says that 
with Germany drawn into war this entire plant could be converted 
into a mustard-gas plant in less than an hour's time. 

Mr. Lammot du Pont. I said I thought that was an exaggeration. 

Mr. Raushenbush. Yes; you did at the time. 

Mr. Lammot du Pont. Yes. 

Mr. Raushenbush. Now, coming to this negotiation you were hav- 
ing with the Germans at the time — that memorandum of the minutes 
I would like to enter as an exhibit with the proper number. 

(The minutes referred to were marked " Exhibit No. 920 " and are 
included in the appendix on p. 2573.) 

Mr. Raushenbush. It is proposed here to form a world corpora - 
tion — what they call a world company — with this German company. 
Isn't that about it? They reserve the German market for them- 
selves, and they say the French market is tied up by the French, but 
you will have about the rest of the world on that. Isn't that about 
an accurate outline of what this process was ? 

Mr. Lammot du Pont. I do not see that. 

Mr. Raushenbush. That is on the first page there [reading] : 

The world company should have the whole world as its market, except as 
follows : 

(a) France with whom the Badische Co. already have made a contract which 
is limited to the manufacture and sale only in France, her colonies, and pro- 
tectorates. It is understood that should the French fail to carry out their 
plans these territories should be included in those assigned to the world 
company. 

(6) The Badische Co. shall be granted an exclusive territory in which to 
exploit the process, Germany and the territory known as "Austria-Hungary." 

And certain further rights in Europe. And then you seem to have 
the rest of the world there, according to this tentative plan. 

Mr. Lammot du Pont. The paragraph numbered 1 there says it is 
possible to do that. 

Mr. Raushenbush. Yes. And then you go on to describe what 
that company would be if that plan went through. 

Mr. Lammot du Pont. It was all possible. 



MUNITIONS INDUSTRY 2411 

Mr. Ratjshenbush. Yes ; it was all possible. The point is not the 
detail here, Mr. du Pont. What I am trying to get at is that tbere 
were fairly serious negotiations going on at the time. 

Mr. Lammot du Pont. At that stage they were all possibilities. 

Mr. Raushenbush. Yes. Here was a new situation the world was 
in. Germany had had the chemical monopoly, had shown it up very 
■expressly in a military way during the war, and the chemical com- 
panies in the rest of the world were interested in either utilizing their 
processes or their chemists or their markets, isn't that true ? There is 
nothing unusual about it. All I am trying to get is an agreement 
on that. 

JNIr. Lammot du Pont. No. The only point I wanted to make is 
that they were discussing possibilities. 

Mr. Raushenbush. Yes. This did not go through. 

Mr. Lammot du Pont. No. 

Mr. Raushenbush. Mr. Sparre, did you want to interrupt to tell 
>me where I made a mistake a little while ago? 

Dr. Sparre. I said I disagreed with the statement that the dis- 
armament would be a farce unless tlie chemical industry were under 
control. 

Mr. Raushenbush. Would you raise your voice, please ? 

Dr. Sparre. Do you want me to repeat it? 

Mr. Raushenbush. No ; but would you just raise your voice from 
now on? 

Dr. Sparre. All right. That was my only disagreement. That 
was a statement I made. 

Mr. Raushenbush. You disagreed with' what was said here about 
the disarmament being a farce unless the chemical industry were 
under control? 

Dr. Sparre. Yes. I think that is an exaggeration. I don't think 
there is the slightest foundation for it. I don't think that it has 
any connection with disarmament. 

Mr. Raushenbush. You don't think it has any connection with 
disarmament? 

Dr. Sparre. The commercial chemical industry. 

Mr. Raushenbush. Did you see any material put out by chemical 
companies, the American dye industry, when they made their case 
at the time ? Or was that put out over your opposition ? 

Dr. Sparre. No; I do not disagree with anything else said, only 
that one statement. 

Mr. Raushenbush. I certainly thought in those days when they 
were trying to protect their newly won industry against the rest 
of the world, it was right in line with the disarmament question. 
It is either concerned with the armament question or the disarma- 
ment question, is it not? There isn't much doubt about that, is 
■there? 

Dr. Sparre. No; I think it is a commercial industry. 

Mr. Raushenbush. Then why did you write a year ago that " the 
industry is to be considered especially because of its importance to 
national defense " ? 

Dr. Sparre. It is important to national defense; yes. I don't 
have any disagreement with that. 

Mr. Raushenbush. National defense being then either disarma- 
.ment or armament. It is either way you do it. It is in the middle 



2412 MUNITIONS INDUSTRY 

of the aniiainent question rather than the disarnient question. It 
is very important, is it not ? I believe we agree on that. 

Dr. Sparre. Certainly it is very important; yes. There is no dis- 
agreement on that. 

Mr. Raushenbush. Coming back to this outline, here is another 
letter dated January 12, 1920, which will be offered as an exhibit. 

(The extract of letter referred to was marked " Exhibit No. 921 " 
and is included in the appendix on page 2574.) 

Mr. Raushenbush. That is an extract from a letter dat^d January 
12, 1920, from Mr. Berg, describing a further conference between the 
English and the Germans and the Belgians in Aachen, in Germany,. 
January 12, 1920, in which the English and the Belgians and ap- 
parently the French — French members of the Solvay Company — are 
also trying to negotiate with the Germans, and the head of the 
German group has said he has already made an arrangement Avith 
the du Pont Co. to tie up with them, if thej^ can agree. 

Mr. Lammot du Pont. On what subject was that, Mr. Raushen- 
bush ? 

Mr, Raushenbush. Do you want me to go through the whole 
letter? 

Mr. Lammot du Pont. No. I think the subject was mentioned in: 
the fifth paragraph. 

Mr. Raushenbush. Of the second page? 

Mr. Lammot du Pont. The first page, where it says, " World ex- 
ploitation of the ammonia process." 

Mr. Raushenbush. I don't seem to find that. 

Mr. Lammot du Pont. It is the fifth paragraph on the first page. 

Mr. Raushenbush. Oh, yes. " World exploitation of the ammonia 
process is concerned." 

It says [reading] : 

The Badisclie has, as you know, been communicating with Brunner Mend 
for quite some time and he believed the Badische should see them alone and 
inform them in a general way about our arrangement as far as the world 
exploitation of the ammonia process is concerned. 

Did the Badische have other processes which were particularly 
interesting to you in a chemical way at that time ? 

Mr. Lammot du Pont. Why, yes; they had a very large number 
of processes. 

Mr. Raushenbush. It was one of the leading chemical companies 
of Germany; was it not? 

Mr. Lammot du Pont. Yes. 

Mr. Raushenbush. It was only in that connection that I wanted to^ 
bring that out. 

Mr. Lammot du Pont. Incidentally, that previous report, I think^ 
refers to the ammonia process also. 

Mr. Raushenbush. Now we come back to Washington about this 
time in 1920, and on January 22, 1920, we have a letter from Mr. 
Poucher to Mr. Irenee du Pont. 

(The letter referred to was marked "Exhibit No, 922" and is 
included in the appendix on p. 257G.)^ 

Mr. Pierre du Pont. Mr, Chairman, I think it is unfortunate that 
Mr, Irenee du Pont was excused today. That is a part that requires 
his presence. 

I •' Exhibit No. 922" was referred to further in Part XII, p. 2774. 



MUNITIONS INDUSTRY 2413 

Mr. Raushenbush. Who? 

Mr. Pierre du Pont. Mr. Irenee dii Pont. 

Mr. Raushenbush. That is right. 

Mr. Pierre du Pont. He was at that time the president and he 
would have at his fingers' ends things that I do not know anything 
about, and I doubt if my brother Lammot is familiar with it. 

Mr. Lammot du Pont. I am just pinch hitting. 

Mr. Pierre du Pont. Could we pass to another part of it and let 
that go until he returns? 

Mr. Raushenbush. See if you can help identify events there. 
Were you still president of the company there in 1920, Mr. du Pont? 

Mr. Pierre du Pont. No. 

Mr. Raushenbush. Not in 1920? 

Mr. Pierre du Pont. No. I had nothing to do with this part of 
it and I am totally unfamiliar with it, except as it comes to me by 
reading the documents for the first time. 

Mr. Raushenbush. It is a matter describing the fight here inWash- 
ington. It says, " Situation clearer and better today." Can you 
identify " Martin " and " the major " and " Culbertson "? Mr. Wes- 
ton, you were active in all this? 

Mr. Weston. Yes. That was 15 years ago, but I cannot think who 
Martin is or the major. 

Mr. Raushenbush. You have seen all of this correspondence re- 
cently, haven't you? 

Mr. Weston. Yes; and I have tried to remember a lot of it, but 
have been only partially successful. 

Mr. Lammot du Pont. The only one I recall there is Culbertson. 
He was a Senator at the time. 

Mr. Raushenbush. He was a Senator? 

Mr. Lammot du Pont. Yes. 

Mr. Raushenbush. And Wood, do you recognize as John P. Wood, 
the Congressman? 

Mr. Weston. Where did he figure? I don't recognize the name. 

Mr. Raushenbush. He was in Congress. Perhaps you can get it 
from this. 

Situation clearer and better tmlay. 

Martin and the major are liard at it. The plan is to push and keep Wood 
in the background ; that is, beliind Culbertson. Martin and the major are to 
fight it out with Culbertson by agreement witli Senator Curtis. 

They will take anything from Culbertson that will help embargo and nothing 
that will hurt. 

It is not that so much as the next paragraph that I am interested 
in: 

The major will likely propose that, as this is a measure touching national 
defense ; the Commission should be headed by General Siebert to give it the 
flavor of defense rather than tariff. 

Does anybody place the major in that story? 

Mr. Weston. I cannot. 

Mr. Raushenbush. The only point there was that here was a defi- 
nite attempt to give, I suppose, the Embargo Commission a flavor of 
defense rather than of tariff. That is the only purpose. 

Mr. Weston. Culbertson was a member of the Tariff Commission^ 
wasn't he? 



2414 MUNITIONS INDUSTRY 

Mr. Pierre du Pont. I do not recall that. 

Mr. Kaushenbush. That is the only purpose for which that is 
introduced. 

Mr. Weston. No; that does not mean anything to me. The only 
major I can think of was a Major Sylvester. That is bringing in 
another dead man, but I don't think he had anything to do with that. 

Mr. Kaushenbush. Mr. Weston, are you " C. K. W." ? 

Mr. Weston. Yes. 

Mr .Kaushenbush. I have here a letter signed by you, addressed 
to Mr. Kust, of the Koppers Co. in Pittsburgh, November 10, 1919. 

(The letter referred to was marked " Exhibit No. 923 " and is 
included in the appendix on p. 2577.) 

Mr. Kaushenbush. That refers to a Col. John P. Wood. Is that 
the man referred to in the earlier letter ? 

Mr. Weston. Yes; Twenty-second and Spring Garden. John P. 
Wood was, I think, head of a large textile industry in Philadelphia. 

Mr. Kaushenbush. Yes. 

Mr. Weston. That " Twenty-second and Spring Garden " rather 
identifies it. 

Mr, Kaushenbush. Yes; it does. Then you were asking the sup- 
port of the Koppers group in Pittsburgh, with Mr. Grundy in 
Pennsylvania to help you in this matter, w^eren't you ? 

Mr. Weston. Yes. 

Mr. Kaushenbush. Then there is another letter which shows some- 
what the same sort of thing, and again may I point out that I per- 
sonally feel that when an industry wants to get something it operates 
in certain wa3^s, and one cannot at long distance pass too much judg- 
ment on it, and I am not attempting that, but here is a letter dated 
March 23, 1920, addressed to Mr. Choate and signed by Mr. Poucher, 
which deals with this same business. 

(The letter referred to was marked " Exhibit No. 924 " and is 
included in the appendix on p. 2577.) 

Mr. Kaushenbush, Will you look at that, Mr. du Pont, if you can ? 
It deals with this opposition of the textile industry to your bill and 
shows the rather interesting way one of your men attempted, it 
seems, to influence the textile industry. I refer to the last para- 
graph on the first page, beginning " Incidentally, Mr. Hobbs." Can 
anybody identify Mr. Hobbs, Mr. Franklin W, Hobbs? 

Mr. Lammot du Pont. He was a man interested in textiles in New 
England ; I think in Providence. 

Mr. Kaushenbush (reading) : 

Incidentally, Mr. Hobbs called Mr. Woods' attention to the movement under 
way by the Department of Justice, to investigate the textile industry on the 
charge of undue profiteering. At any rate, Mr. Wood decided to call this meet- 
ing. Mr. Hobbs tells me he made a statement along the lines of Mr. Hobbs' 
letter. This was followed by some remarks by Mr. Auerbach, to the effect that 
in his opinion these mills should all support the bill. 

It would seem to be a little use of well, perhaps, inside information 
from the Department of Justice in the matter. Does anybody know 
anything about that transaction at all? Don't you remember, Mr. 
Weston ? 

Mr. Weston. Let me check it again. I have not noticed this. 

Mr. Kaushenbush. I realize we are at some handicap by the ab- 
sence of Mr. Irenee du Pont, but he was excused. 



MUNITIONS INDUSTRY 2415 

Mr. Weston. Where is that reference to the Department of 
Justice ? 

Mr. Eaushenbush. The last paragraph. 

Mr. Weston. No ; I cannot throw any light on that. 

Mr. Rausitenbush. You do not identif}^ that in any way? 

Mr. Weston. No, it does not register with me at all. 

Mr. Raushenbush. We come to another letter dated February 3, 
1920, from your agent, Mr. Berg, over in France to the du Pont Co. 

(The letter referred to was marked " Exhibit No. 925 " and is 
included in the appendix on p. 2578.)^ 

Mr. Raushenbush. In the second paragraph on the second page of 
this letter, the Germans seemed to realize that you are doing what 
seems to be working against them over in this country. There isn't 
much question about that point, is there ? Dr. Herty was in on that, 
apparently. Now, did this scrap, Mr. du Pont or Mr. Swint, or as 
far as anybody remembers here, did this business of your raising 
the tariff against the Germans sort of put an end for awhile to 
your negotiations with them about these various things ? Was there 
the feeling that they would not particularly deal with you on their 
processes and patents as the result of this? 

Mr. Lammot du Pont. That paragraph seems to indicate that. 

Mr. Raushenbush. I mean, what is your general experience and 
memory on that thing? How about it? 

Mr. Swint. i was not connected with this sort of work at that 
time. 

Mr. Raushenbush. Was there a lapse in connection with your 
securing this? 

Mr. Lammot du Pont. We never did get it. 

Mr. Raushenbush. On any arrangements at all? 

Mr. Lammot du Pont. Not on this ammonia job. 

Mr. Raushenbush. No, but didn't it affect the German companies 
generally ? 

Mr. Lammot du Pont. I do not think it did. but I do not recall 
how it happened. 

Mr. Raushenbush. I do not want to particularly go into it, but we 
have some other letters about it. 

Now, coming back to the Congress of the United States, it would 
seem that Mr. Irenee du Pont had taken the fight down to Congress 
himself. Was he then the president of the company, Mr. Pierre 
du Pont? 

Mr. Pierre du Pont. Yes, sir. 

Mr. Raushenbush. When did he take it over ? 

Mr. Pierre du Pont. In 1919. 

Mr. Raushenbush. That exhibit needs some identification, per- 
haps, and we had better wait until he comes back on that. Let me 
take that up later. I will withdraw that for a moment. 

At the same time that you were making this fight in the Con- 
gress for your legislation, your protection, is it not true that you 
had a man in Paris who was actively engaged in publicity work over 
there in trying to get dispatches sent from both Paris and London 
to make our people in this country feel that we absolutely had to 

1 " Exhibit No. 935 " was referred to further in Part XII, p. 2756. 



2416 MUNITIONS INDUSTRY 

have this protection for our dye industry or your dye industry as a 
war measure ? Do you remember that, Mr. Weston ? 

Mr. Weston. Yes. 

Mr. Raushenbush. Will you tell us a little about that ? Here is a 
letter from Mr. Raleigh written from Paris to you January 25, 1921, 
which will be the next exhibit number. 

(The letter referred to was marked "Exhibit No. 926" and is 
included in the appendix on p. 2579.) 

Mr. Weston. What is the name ? 

Mr. Raltshenbush. Mr. Raleigh, addressed to Mr. Weston. 

Mr. Weston. Yes. 

Mr. Raushenbush. I call your attention to paragraph 3, as to the 
matter of control of the press. He speaks of having arranged cer- 
tain articles to come out in France. He goes and talks with some 
prominent people there and gets news stories which seem to be 
calculated to have a very definite effect on public opinion here. 

Mr. Weston. That was the object of the visit over there. The 
visit over there was to try to off-set the very rabid German propa- 
ganda which was coming over here, I think, at that time — this is 
back in what? 

Mr. Raushenbush. In 1921. 

Mr. Weston. At that time the question of reparation dyes was 
under consideration. I think we were still officially at war with 
Germany at that time. I don't remember just when we signed the 
treaty. When was it? Anyway, the question of reparation dyes 
was a very live topic. There were a number of American chemists 
and people interested in the industry over there, and we were very 
anxious at this end, our D^^e Institute committee, to offset what we 
thought were the unfair and untrue stories that were coming from 
abroad. I went over there to try to get in touch with the news 
sources and put the American newspaper correspondents in touch 
with the sources of information. Mr. Raleigh was an old American 
newspaper acquaintance of mine, and when I left I left him in 
charge of that work. His work principally was to keep the news 
going from the American sources over there rather than from the 
German sources which we had been getting. 

Mr. Raushenbush. You speak of the — 

Public Ledger syndicate and the Chicago Tribune syndicate papers are to be 
supplied with a story I have arranged which will point out that the French 
Government, upon confidential information from its investigators in Germany 
regarding a coming great German dump of goods, will further increase its co- 
efficient tariff rates on dyestuffs, chemicals, etc. The stories will point out that 
France will increase the coefficients not only to safeguard French industry but 
also to prevent further unemployment. 

You go on, then, with other letters addressed to your department, 
filed by them, Mr. Poucher, and others, particularly January 5, 1920, 
to cite the headlines in the British papers, " Britain foresees gas 
war." 

That will be offered as an exhibit. 

(The document referred to was marked " Exhibit No. 927 " and 
is included in the appendix on p. 2580.)^ 

1 " Exhibit No. 027" was referred to further in I'art XII, p. 2759. 



MUNITIONS INDUSTRY 2417 

Mr. Raushenbush. That headline continues : 

New legislation will shut out dyestuffs and enable plants to be built which 
can be converted into poison-gas factories. 

You cite further stories from the British papers : 

Dye plants, by a slight change, can be readily converted into war plants for 
the manufacture of poison gas. 

Then you take credit on January 15. 1921, for a story in the Bos- 
ton Transcript, dated from London. "" Britain fore-^ees <ias warfare ", 
a story by Wythe Williams from Paris about German dye plots 
against tlie United States; the Evening Bulletin of Philadelphia, 
dispatch dated from London; and the Public Ledger, a dispatch 
dated from Paris. '" Germany sets dye trade trap." 

That will be offered as another exhibit. 

(The memorandum referred to was marked " Exhibit No. 928 ", 
and is included in the appendix on p. 2851.^ 

Mr. Weston. I do not remember the details of that, but all of 
that was part of a campaign that we were conducting for the up- 
building of the American dye industry and to offset, as I said before, 
the things that were coming out of Germany that I thought were 
inimical to our own industry. 

Mr. Raushenbush. And you had the men in Paris who were writ- 
ing articles for the Paris editions of the New York Herald and Chi- 
cago Tribune writing under assitmed names; is that right? 

Mr. Weston. Yes. I think that was Ben Raleigh. Ben Raleigh 
was the European representative of the Whaley-Eaton News Serv- 
ice, and Ben was doing this entirely outside of his Whaley-Eaton 
connection, and he did not want to do it under his own name. 

Mr. Raushenbush. He was writing under the name of Guy Martin 
for publication purposes? 

Mr. Weston. I do not recall the name, but if that is the name 
that is given in the letter, that is it. 

Mr. Raushenbush. I will offer as an exhibit, dated April 28, 1921, 
letter from the publicity manager to Mr. Meade, dealing with that 
«tory. 

(The letter referred to was marked " Exhibit No. 929 ", and is in- 
cluded in the appendix on p. 2581.) 

Mr. Raushenbush. Now, isn't this true — this is not your chemical 
company we want to got into, but the others — is it not true that 
you thought the situation was important enough so that you had 
to send a man over to Europe to keep the pot boiling, not only in 
Paris but in London, with dispatches that would be calculated to 
make the American people see the importance of favoring your par- 
ticular industry ? 

Mr. AVeston. That is exactly what we were after. 

Mr. Raushenbush. That is exactly what you were after and 
exactly what you were doing. 

Mr. Westox. Yes. 

Mr. Raushenbush. Just to show you were not the only ones here, 
I want to offer an exhibit dated June 14, 1922, which indicates — 
again, you received this from the Whaley-Eaton Service — that some 

1 " Exhibit No. 928 " was referred to further in part XII, p. 2760. 



2418 MUNITIONS INDUSTRY 

of your competitors in the chemical industry were over negotiating 
with the Germans, 

(The letter referred to was marked "Exhibit No. 930", and is 
included in the appendix on p. 2582.) 

Mr. Raushenbush. Mr. du Pont, would you recognize that letter 
at all? Do you recognize which of your competitors were over 
there, referred to in those negotiations? 

Mr. Weston. I don't know. 

Mr. Lammot du Pont. No, I do not recognize them at all. 

Mr. Raushenbush. Isn't there anj^body here, outside of Mr, Irenee 
du Pont, more closely connected with the whole tariff and dye busi- 
ness at that time? Your competitors were apparently over there,, 
and, according to this, they were using three United States Con- 
gressmen to help them in their negotiations. Don't you remember 
who those people were? It must have been some company of some 
importance. 

Mr, Lammot du Pont, This refers to competitors. 

Mr. Weston. This, I take it, Mr. Raushenbush, is a quotation from 
the Whaley-Eaton Service, which is one of these Washington news 
services, 

Mr. Raushenbush. A cable from Paris. 

Mr. Weston. Sent along as a matter of information. That would 
be my guess on that, without knowing anything at all about it. 

Mr. Raushenbush. Your staff has all this correspondence some- 
w^here in the back of the room, I am sure, but, as I remember it 
from the rest of the papers which we did not take, one of your com- 
petitors had this particular Congressman mentioned in the third 
line helping them in connection with the negotiations with the Ger- 
mans at the time. Now we find out he had two other Congressmen 
associated with him, which makes three, and what I am trying to 
get at is what company that was that was so interested in getting 
in on this German dye industry. 

Mr. Pierre du Pont. Weren't they all interested, all of the manu- 
facturers in the chemical industry? 

Mr. Weston. All except those who had German connections. They 
were not interested in this American Dye Institute. That was Metz 
and some others. I forget who. 

Mr. Pierre du Pont. Weren't all of the members of the Dye In- 
stitute active in this question? 

Mr. Weston. All the members? 

Mr. Pierre du Pont. Yes, 

Mr. Weston. Very active. 

Mr. Pierre du Pont. Haven't you a list of those members? 

Mr. Weston, No; I have not. 

Mr. Pierre du Pont. Haven't you a list of the members of the 
Dye Institute? I think that would be quite complete. 

Mr. Raushenbush. I don't think we have that here, as I recall it. 

Mr. Weston. It included all of the American dye and chemical 
manufacturers, except the few who had German connections sur- 
viving their pre-war control of the industry in this country. There 
are not many of them. 

Mr. Raushenbush. Wliat I am getting at is this: Some of you 
must have known what your competitors were trying to do over 



MUNITIONS INDUSTRY 2419 

there in Germany. Either they were trying to sign up with the 
Germans on some of these patents and processes at the time when 
the Germans were antagonistic to you because of tariff activities, 
■or else they were trying something else. 

Mr. Weston. I am sure, without knowing names, that there were 
no competitors in this thing, that all of the American dye and chem- 
ical interests worked together in this movement, and that the only 
competitors were the few with German connections wdio were not 
members of the institute. 

Mr. Raushenbush. Who would those be? 

Mr. Pierre du Pont, I think at that time all of the German pat- 
•ents were in this Cliemical Foundation. You see, the United States 
Government took the whole thing over, and it was placed in the 
hands of the Chemical Foundation, so the Germans were powerless 
to negotiate their patents with anyone. 

Mr. Lammot du Pont. And those patents were available to every 
American manufacturer. 

Mr. Raushenbush. The processes were still open, weren't they? 
I mean, you were negotiating with them about this ammonia process 
liere a little while ago. 

Mr. Pierre du Pont. That was not a part of the dye industry. 

Mr. SwiNT. I do not believe there were any patents valid at that 
time. I am not sure. 

Mr. Raushenbush. But there were processes of considerable 
importance. 

Mr. SwiNT. Yes. 

Mr. Raushenbush. I do not think the distinction you made there 
changes the subject? 

Mr. Pierre du Pont. You are quite right in that. 

Mr. Raushenbush. Here is something I do not want to stress too 
much, but apparently the Germans had enough so that rather lead- 
ing American Congressmen carried on negotiations for somebody 
who I recall from your file was one of your competitors, and now 
we find he has two others, who are rather important Congressmen, 
associated with him. All I am trying to show is not what your 
company was doing, but what competitive companies were doing, 
and I wanted to see if somebody from your correspondence or file 
could find what that transaction was or what the name of that 
•company was. 

Mr. Lammot du Pont. I don't think there is anybody could state 
that, unless it is Irenee, and I don't know whether he would be 
able to. 

Mr. Pierre du Pont. Cannot we mark that for something to 
investigate? We may be able to find out. 

Mr, SwiNT. Mr, Raushenbush, I would like to correct that state- 
ment about the question of patents, I recall now there were several 
patents on ammonia that were still in force at that time. There 
was a long series of them and some of them had expired and some not. 

activities of AMERICAN DYE INDUSTRY IN OPPOSING ATTEMPTS TO 
CONTROL THE CHEMICAL WARFARE BUSINESS IN 192 2 

Mr. Raushenbush. In view of the absence of so many members, 
when we arranged our schedule we did not realize, or I did not 



2420 MUNITIONS INDUSTRY 

realize personally, that Mr. Irenee du Pont would not be here. I 
think we would like to wait until his return before proceeding with 
all of this. But I do want to ask Mr. Weston, who is here, just a 
few more questions about things at this time, Mr. Weston, I want 
to show you an exhibit dated September 22, 1921, which will be 
offered. 

(The letter referred to was marked " Exhibit No. 931 " and is 
included in the appendix on p. 2582.)^ 

Mr. Raushenbush. In this letter you wrote to Mr. P. H. Whaley 
of the AVhaley-Eaton Service: 

My Dear Whaley: You know, of course, that the chemical industry will 
figure very largely in the coming Disarmament Conference. The Chemical 
Warfare Service will, of course, be consulte<l. It may interest you, as a piece 
of news, to learn that the chemical industry as a whole will be represented 
through advisers to be appointed to help the American delegation solve its 
problems. The names of several distinguished chemists are now under con- 
sideration at the White House and announcement of the appointment of rep- 
resentatives of the chemical industry probal:)ly will be made very soon. 

For your private information, the President has received favorably the 
suggestion that Dr. Charles H. Herty and Dr. Edgar Fahs Smyth, former 
provost of the University of Pennsylvania and president of the American 
Chemical Society, be named as advisere. 

Could you identify Dr. Herty for us, Mr. Weston ? 

Mr. Weston. Dr. Herty is one of the outstanding chemists of the 
country. Dr. Herty is one of three who tonight is receiving high 
honors from the Chemical Alliance in New York. That is where 
Mr. Irenee du Pont has gone to present those honors to Dr. Herty, 
Mr. Poucher, and Francis P. Garvin. Dr. Herty has been one of 
the outstanding chemists of the country. Dr. Smith was a very 
famous and Avell-known chemist and former provost of the University 
of Pennsylvania, as it says here. 

Mr. Raushenbush. Was not Dr. Herty involved in your negotia- 
tion with the Germans? Had he not been in Europe for you? 

Mr. Weston. Dr. Herty went to Europe for the Dyes Institute. 

Mr. Raushenbush. For the Dyes Institute ? 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. But he was actively interested in your dealings 
with the Germans at these various meetings, was he not? 

Mr. Weston. He was actively interested in our activities here. 
I do not know that he had anything to do with the Germans here. 

Mr. Raushenbush. It seems to me that we ran into him a few 
moments ago. 

Mr. Weston. He was a Dyes Institute man. 

Mr. Raushenbush. And you contribute, in turn, to the Dyes Insti- 
tute? 

Mr. Weston. We were a part of the organization. 

Mr. Raushenbush. Then we come to something which took place 
on November 9, 1921, and I show you this letter from the Whaley- 
Eaton Service to Mr. Frank Byrne, which I wnll ask to be appro- 
priately nnmbered. 

(The letter referred to was marked " Exhibit No. 932 " and is in- 
cluded in the appendix on p. 2582.)^ 

Mr. Raushenbush. Was Mr. Byrne in your department? 

1 " Exliibit No. 931 " was referred to further in Part XII, p. 2755. 
^"Exhibit No. 932" was referred to further in Part XII, p. 2756. 



MUNITIONS INDUSTRY 2421 

Mr. Weston. Frank Bj'rne is my assistant. 

Mr. Raushenbush. That letter states [reading] : 

Referring to your telephone inquiry in regard to the members of the French 
delegation experts on chemical disarmament^ — 

This was approaching the 1922 Chemical Disarmament Conference 
here in Washington, was it not? 

Our own information, as carried in our last week's foreign letter, came by 
cable, which mentioned the names of these two gentlemen as Mayer and 
Moren. On inquiry at the State Department, we find that M. Andre Mayer 
is in Washington with the French delegation, but no M. Moren. 

Then the letter goes on to state this, to which I call your attention : 

We tliink it very unlikely that we will he able to get any of the details of 
the plan for chemical disarmament from these gentlemen, but we will do our 
best. 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. Do I take it from that, that yon were trying to 
sound out the members of the French disarmament delegation at that 
time ? 

Mr. Weston. I have tried to refresh my memory on this, and, as I 
recall it, the Whalen-Eaton Service was a Washinglon news service, 
and they sent out the announcement that these gentlemen were com- 
ing over from Paris, as they say here in their foreign letter, and my 
department asked the Whaley-Eaton Service if they had any more 
information or if they could get any information to supplement their 
news announcement. That is the reply. 

Mr. Raushenbush. The reply is that, '' We think it very unlikely 
that we will be able to get any of the details of the plan for chemical 
disarmament from these gentlemen, but we will do our best." 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. Now, that, together with an exhibit dated No- 
vember 25, 1921, which you wrote to Mr. Poucher, is interesting. 
I will offer that last letter for appropriate number. 

(The letter referred to was marked " Exhibit No. 933 ", and is in- 
cluded in the appendix on p. 2583.)^ 

Mr. Raushenbush. That letter reads : 

I am informed through the Washington " grapevine " that the British dele- 
gation to the Limitation of Armaments Conference has a plan to submit con- 
cerning the chemical industry which embotlies these points — 

That again is a disarmament conference or a limitation of arma- 
ments and the chemical industry is coming into it, is it not? 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. And you were informed through the " Wash- 
ington grapevine " about what the British delegation has. Could we 
stop for a minute and find out just exactly whom you had down here 
in Washington at that time ? 

Mr. Weston. We had down here a large delegation and^ the 
American Dyes Institute continued on the job. We had headquar- 
ters established here, with a secretary. I suppose there was probably 
at all times a half dozen or more representatives of the industry who 
were here seeking all kinds of information bearing on this subject. 
That is probably the " grapevine." I do not know. 

1 " Exhibit No. 933 " was referred to further in Part XII, p. 2757. 



2422 MUNITIONS INDUSTRY 

Mr. Raushenbush. Could you mention some of the names of the 
people Avho were most active for you at that time down here ? What 
is this Washington " grapevine ? " 

Mr. Westox. I was just saying that. 

Mr. Raushenbush. You mentioned the institute, and so forth. 
Can you give me the names of all of these people ? 

Mr. Weston. You will have to get the names from the Dyes Insti- 
tute; get the membership of the Dyes Institute and check up the 
names. 

Mr. Raushenbush. The names of the members of the Dyes Insti- 
tute would go all over the country and be located there. 

Mr. Westox. Yes, sir. 

Mr. Raushenbush. Who was in Washington operating here at that 
time ? 

Mr. Weston. Tiiere was a representative from nearly every com- 
pany which was doAvn here. I think all the Dyes Institute member- 
ship had representatives here. We were here, and National Analine 
had men here, and Calco Chemical Co. had men here, and the Dow 
Chemical Co. were here, and the Monsanto Chemical Co. That is 
about as far as I remember offhand. 

Mr. Raushenbush. I wanted a list of the representatives of the 
companies and the names of the people who were active down here 
just before this 1922 Disarmament Conference, when the Gas Con- 
vention came up. There was an attempt to control the chemical- 
warfare business in 1922? 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. And I am asking the specific and detailed list 
of all the people representing the chemical industry who were down 
here and actively interested in opposing that. 

Mr. Weston. I guess, to get a real answer to that, we will have 
to get the membership of the dyes industry, because I remember 
only a few individuals, and it would not be fair to name a few people 
when there were probably 20 here. 

Mr. Raushenbush. Perhaps when Mr. Irenee du Pont comes back, 
he will be prepared to answer that. 

I want to finish this one exhibit which I have already introduced, 
the letter of November 25, 1921, that you wrote to Mr. Poucher. 
You state [reading] : 

I am informed through the Washington " grapevine " that the British dele- 
gation to the Limitation of Armaments Conference has a plan to submit con- 
cerning the chemical industry which embodies these points: 

First, to outlaw the use of poison gas in warfare and to outlaw as far as 
possible, anything of a dangerous chemical nature. 

Second, failing to secure drastic action (as they expect to fail) to limit the 
use of chemicals as much as possible. 

I will repeat that : 

Second, failing to secure drastic action (as they expect to fail) to limit the 
use of chemicals as much as possible. 

That is important, in a way, and I do not know which of you can 
answer this best, but here you know what the British delegation 
is going to try and do, and what it knows it cannot go ahead and do, 
and we want to know what sources you had on that. Were you told 
by Nobel about that, about what the British delegation would try 
and what it would fail to go ahead and get done? 



MUNITIONS INDUSTRY 2423 

Mr. Weston. No ; I cannot throw any light on that. 

Mr. Raushenbush. Can any of the other gentlemen sitting here? 

Mr, Lamont du Pont. I certainly cannot. 

Mr. Weston. These reports, Mr. Raushenbush, reports of that sort 
to Mr. Poucher, were the summary of information which was coming 
to me, as one of the representatives of the du Pont Co. on that Dyes 
Institute Committee, and probably represents — I say probably 
because I do not know definitely at this date — probably represents 
the summary of the news and gossip tliat we had all along the line, 
where everybody was trying to keep their ears open for information. 

Mr. Raushenbush. The British were still over there and had not 
come over here yet, and had not said anything, and you were passing 
around information, and I am asking for definite information, which 
is of very great interest, in the chemical industry. 

There is a sort of logic to this questioning, Mr. Weston. You 
started off with a proposition by some of your people, that as long 
as there was chemical control by Germany, or, no chemical control 
of that situation, disarmament would be a farce. Now we are get- 
ting back again to 1922, to discuss control of chemical warfare, and 
find that the British delegation is planning to propose to outlaw the 
use of poison gas, and expecting to fail in it. 

Mr. Weston. Yes, sir. 

Mr. Raushenbush. And somewhere in those 2 or 3 years the whole 
argument for the control of the chemical industry as a means of dis- 
armament has shifted and changed ; and the third proposition is also 
one which is very interesting to the chemical industry : 

Third, to put the chemical industries of the various nations under the control 
of the governments. 

Those were the three propositions which you heard about, and I 
was asking for definite information on how you knew about these 
things and I was going to ask about how all that affected you. 

Mr. Weston. I cannot give you an answer to that, and have no 
real information. 

Mr. Raushenbush. Mr. Chairman, in view of the fact that this 
outline draft was prepared for use in the examination of Mr. Irenee 
du Pont, I suggest that we adjourn now. 

Senator Vandenberg. The committee will stand recessed until 10 
o'clock tomorrow morning. 

(Thereupon, the committee recessed at 3 : 45 p. m., until tomorrow 
morning at 10 o'clock, Friday, Dec. 7, 1934.) 



83876- 



INVESTmATION OF MUNITIONS INDUSTRY 



FRIDAY, DECEMBER 7, 1934 

United States Senate, 

Special Committee to 
Investigate the Munitions Industry, 

Washington^ D. C. 

The hearing was resumed at 10 a. m. in the Finance Committee 
Room, Senate Office Building, pursuant to the taking of recess, 
Senator Gerald P. Nye presiding. 

Present: Senators Nye (chairman), Vandenberg, Barbour, George, 
Clark, Pope. 

Present also : Stephen Raushenbush, secretary to the committee. 

FURTHER TESTIMONY OF IRENEE BIT PONT, LAMMOT DU PONT, 
A. FELIX DU PONT, K. K. V. CASEY, AND F. SPARRE 

sale or interchange of military in\'entions and secret processes 

(The witnesses were previously duly sworn by the chairman.) 

The Chairman. Let the committee be in order. 

Senator Vandenberg, you may proceed. 

Senator Vandenberg. Mr. Chairman, before taking up the evi- 
dence this morning, I want to say that I neglected last evening to in- 
sert in the record a newspaper statement made by Mr. Julius Klein, 
former Assistant Secretary of Commerce, respecting the Department 
of Commerce conference. I think as a matter of information that it 
should be printed in the record at this point. 

(The document referred to was marked "Exhibit No. 934" and 
is included in the appendix on p. 2583.) 

Senator Vandenberg. Now, Mr. Chairman, we want to inquire 
this morning rather briefly into the problem of the sale or inter- 
change of new military inventions and secret processes as between 
American and foreign companies in connection with these inter- 
national munitions contracts. 

May I ask you, Mr. Felix du Pont, and I believe you were at the 
head of this section of the du Pont busine^s, is it an inevitable part 
of foreign selling that upon occasion there must be an interchange of 
inventions and information respecting new processes ? 

Mr. A. Felix du Pont. I do not think so ; no. 

Senator Vandenberg, It is a substantial part of your relationship 
over the years with your European colleagues ; is it not ? 

Mr. A. Felix du Pont. In military business ; no. It has been in 
the past. 

2425 



2426 MUNITIONS INDUSTRY 

Senator Vandenberg. I am speaking of the past. 

Mr. A. Felix du Pont. That is quite a while ago, quite a good 
many years ago. I cannot give the exact number. 

Senator Vandenberg. Of course, in whatever degree it is a neces- 
sity, we confront a rather serious problem, because in effect we would 
be paying for the upkeep of a commercial industry at the expense 
of the military preparedness of our own country. At any rate, it 
is that phase of the matter that it seems to the committee important 
that some information should be available on. 

Mr. A. Felix du Pont. Senator, it is quite evident from what we 
have done that we find it was not necessary, because we stopped ex- 
changing new military secrets years ago. 

Senator Vandenberg. Let us see to what extent the situation has 
existed, and to what extent it still does or could exist. Certainly it 
has been a fundamental principle in the export policy of your com- 
pany to work in close cooperation with I. C. I., has it not? 

Mr. A. Felix du Pont. That is true ; yes. 

Senator Vandenberg. You still believe in the desirability of that 
arrangement, do you not? 

Mr. A. Felix du Pont. As regards the chemical industry gener- 
ally, exclusive of military business. 

Senator Vandenberg. You now definitely exclude the military 
phase from your response? 

Mr. A. Felix du Pont. Yes, sir. 

Senator Vandenberg. If there has been a change in your policy in 
this aspect, is it the result of difficulties which you have confronted 
in the past, difficulties with the Government itself? 

Mr. A. Felix du Pont. No, sir. 

Senator Vandenberg. Do you recall your trip to England in the 
spring of 1923, during which you arranged for the licensing of the 
Nobel Co., which is now the I. C. I., on your patents for improved 
military rifle powder? 

Mr. A. Feux du Pont. Yes; I remember it fairly well. 

Senator Vandenberg. Was this improved military rifle powder, 
which will be referred to hereafter as I. M. R. powder — was that de- 
velopment a pretty important one? 

Mr. A. Felix du Pont. Yes; it was. 

Senator Vandenberg. I want to read the first exhibit this morn- 
ing, which will be given its appropriate number, 935. It is a cable- 
gram addressed to Mr. Felix du Pont while he was in London at- 
tending this conference with the Nobel Co., and sent to him from 
the Wilmington office. 

(The cablegram referred to was marked " Exhibit No. 935 " and 
appears in full in the text.) 

Senator Vandenberg (reading) : 

Referring to your telegram of June 5 executive committee May 2, by resolu- 
tion, decided that if Nobel Industries was granted exclusive license (to) manu- 
facture I. M. R. powder for European country (ies) our sale would be so re- 
stricted that we would be driven out (of) tliat business. Executive committee 
recommended to finance committee that Nobel Indu>:trifs be granted nonexclu- 
sive license to manufacture I. M. R. powder for nominal consideration of £1. 
On May 8 finance committee concurred and by resolution authorized you to 
offer Nobel Industries in London nonexclusive license for nominal considera 
tion of £1. There have been no further action. 



MUNITIONS INDUSTRY 2427 

This offer of these important militar}^ powders to the Nobel Co. 
came about in the ordinary course of affairs under the 1920 agree- 
ment between the two companies, did it not? 

Mr. A. Felix du Pont. I think so. 

Senator Vandenberg. I suppose the man who would be most fa- 
miliar with your foreign powder arrangements would be Colonel 
Taylor, would it not? 

Mr. A. Felix du Pont. With our foreign powder arrangements? 
It was his business to sell in Europe and to get his orders from the 
home office. 

Senator Vandenberg. And to keep you advised respecting the 
general situation ? 

Mr. A. Felix du Pont. Yes. 

Dr. Sparre. Senator, I believe I know as much as anybody, if not 
more than anybody, about the foreign patent business. 

Senator Vandenberg. I will be very glad to remember that, Dr. 
Sparre, as we proceed. 

Mr. Casey. Senator. I believe I am perhaps more familiar with 
the details of this whole thing. 

Senator Vandenberg. I am delighted that we have so much expert 
testimony available this morning. We certainly ought to be able to 
get all the facts. 

Now, referring back to the fact that Colonel Taylor is representing 
you upon the Continent at this time, and having in mind the confer- 
ence which you, Mr. Felix du Pont, are having in London with Nobel 
respecting the license for I. M. R. powder, I call your attention to one 
paragraph in Colonel Taylor's letter of June 9, 1923, which I do not 
as yet offer as an exhibit, but which I would be glad to have you 
refer to, being Colonel Ta^dor's letter of June 9, 1923, to Major 
Casey. 

I read the second paragraph : 

There seems to be no doubt that military patents are included in our agree- 
ment with the English and that the only exceptions are in case of objections 
on the part of our Government or delay of 12 months on the part of the 
English to say whether or not they desire to acquire these patents. 

For at least the first 3 years of the agreement your legal depart- 
ment offered all patents, including military patents, automatically 
to Nobel, did you not? 

Mr. A. Felix du Pont. I am not quite sure, Mr. Senator, about 
the dates there, and I would like to be sure of that. 

Senator Vandenberg. Let us proceed in the preliminary stages 
without attempting to define the dates, because it is nonessential. 
In the preliminary stages of your contract with Nobel, it was the 
opinion of your legal department that you were bound to give them 
the advantage of all this information, including military informa- 
tion, was it not? 

Mr. A. Felix du Pont. There was a period during our agreement 
with I. C. I., or its predecessor, in which we did exchange military 
patents and agreements. 

Senator Vandenberg. Precisely. 

Mr. A. Felix du Pont. Always subject to the Government. 

Mr. Casey. Senator Vandenberg 

Senator Vandenberg. Yes, sir, Mr. Casey. 



2428 MUNITIONS INDUSTRY 

Mr. Casey. I think it is in our own files that no proposition, even 
though the legal aspect might make it clear, that no proposition 
involving a military powder Avas to be even offered to I. C. I. or Nobel 
without first being submitted to military sales, and Government ob- 
jection was always a bar to anything being offered. 

Senator Vandenberg. And you never offered anything to which 
the Government objected? 

Mr. Casey. No; in this particular case we were in a very awkward 
spot. When this proposition came up, I canvassed and found that 
the Ordnance Department of the Army objected. 

Senator Vandenberg. Will you permit me to come into this thing 
with some consecutive attention to the exhibits, Major, and I will be 
more than happy to let you discuss them serially as we proceed. I 
am establishing for the moment simply the initial proposition. 

Mr. Casey. Yes, sir. 

Senator Vandenberg. That in these original stages of your con- 
nection with Nobel, the predecessor of I. C. I., your arrangement did 
include the exchange of military processes. 

Mr. Casey. Yes, sir. 

Mr. Lammot du Pont. Subject to governmental objection, how- 
ever, Senator. 

Senator Vandenberg. You mean, in no instance did you ever over- 
ride governmental objection? 

Mr. Casey. No. 

Mr. Lammot du Pont. I think not. 

Senator Vandenberg. All right, we will come to that in a moment. 

Now I want to read just one sentence from the next letter, dated 
June 26, 1923. I am reading from the fourth paragraph of Major 
Casey's letter to Colonel Taylor under date of June 26, 1923, the 
following : 

"We learned some time back that the legal department automatically would 
refer patents to the Nobel Co. as a matter of routine. 

This simply confirms the preliminary status. 

Mr. Casey. Will you go on with the rest of the sentence. Senator? 

Senator Vandenberg. I would be very happy to : 

We effectively stopped this practice by letters of Mr. A Felix du Pont, dated 
April 26, 1923, copies of which are attached, so we believe we will have no 
fnrther trouble in this connection. 

Is there anything else you want me to read ? 

Mr. Casey. No, I think that is enough. 

Senator Vandenberg. Did any memljer of the smokeless powder 
department object to the licensing of the Briti<h on I. M. K. powders? 
Perhaps Major Casey could answer it bettor than anybody else. 

Mr. Casey. I did. 

Senator Vandenberg. You objected? 

Mr. Casey. Yes, sir. 

Senator Vandenberg. Did not Colonel Taylor object? 

Mr. Casey. Yes. 

Senator Vandenberg. Why was Colonel Taylor so concerned about 
the granting of this particular Nobel license? 

Mr. Casey. Perhaps the reason was a little different from mine. 
He was afraid that if they got the license to make this powder, that 



MUNITIONS INDUSTRY 2429 

he would then run into competition on exactly the same powder that 
we were trying to sell. 

Senator Vandenberg. Precisely. 

Mr. Casey. My objection was entirely different. 

Senator Vandenberg. Before we go to yourself, let us confirm 
Colonel Taylor's objection. I am referring to Colonel Taylor's 
letter dated July 12, 1923, addressed to Major Casey, from which 
I read the first paragraph, as follows [reading] : 

I wish to acknowledge receipt — 

And so forth. 

I see that with regard to our company, you have succeeded in gaining our 
point and I feel sure that if the War Department understood what was going 
on, they would object to any concessions on our part. 

What does he refer to when he says, " if the War Department 
understood what was going on " ? 

Mr. Casey. The answer to that is this : The War Department was 
interested in seeing that the du Pont Co. kept facilities alive and 
the " know-how " for the manufacture of military propellants and 
explosives. The only way to do that at that time, with practically 
no Government orders, was by foreign sales. If the type of powder 
we were making was to be offered all over the world in direct com- 
petition with ours, one of the objectives of the War Department 
might be inter f erred with, that is, we might not be making the prod- 
ucts, and that is ail they were interested in. That is what is meant 
by that statement. 

Senator Vandenberg. Colonel Taylor's further reasoning, which 
probably should be submitted for the record, because it is very lucid, 
being contained in the original letter of June 9, 1929, which was the 
second letter which we had this morning. I think I will read from 
the second page, beginning 8 or 10 sentences from the top. Colonel 
Taylor is now discussing this proposed release of I. M. R. informa- 
tion to Nobel's : 

The British foreign-sales organization for military explosives consists entirely 
of a Mr. Smith, who lives at Vienna, and who is also charged with conducting 
the negotiations between the British and the Tchecoslovak Explosives, Ltd., and 
one of the members of their London oflSce who handles correspondence on con- 
tinental military sales. Before the war the British had an agreement with 
Rothweiler, handled all their sales, all their military business on the continent. 
The British kept out and I believe divided the profits with Rothweiler. The 
man in charge of Rothweiler sales on the continent was Herr Philip, at pres- 
ent managing director of the Nobel Dynamite of Vienna and holder of 16 per- 
cent of the sales in Czechoslovak Explosives, Ltd. He is the most experienced 
continental military salesman in the old German organization. 

What is the " old German organization ? " 

Mr. Casey. That I do not know. 

Senator Vandenberg (continuing with the letter) : 

The Czechoslovak Explosives, Ltd., is a company In which the shares are 
held : 52 percent check ; 16 percent Nobel British ; 16 percent Herr Philip — 

what nationality would that be ? 
Mr. Casey. Which one? 

Senator Vandenberg. The third one here, Herr Philip. 
Mr. Casey. He is the man I just mentioned, is he not? 
Senator Vandenberg. Yes, sir. 



2430 MUNITIONS INDUSTRY 

Mr. Casey. I do not know his nationality. 
Senator Vandenberg (reading) : 
Sixteen percent Societe Centrale de Dynamite. 

Is that French ? 

Mr. Casey. The name sounds like it. I am not familiar with all 
these foreign firms. 

Senator Vandenberg (reading) : 

This last factory lias tlie monopoly of exportation, importation of explosives 
in Czechoslovakia and they are building a factory with the idea that it will be 
large enough to supply all the continent and take on to itself the old military 
explosive business formerly held by the Germans. This factory is largely under 
British control and the Mr. Smith above mentioned is the person to whom this 
control is handled. I believe it is the British intention that all continental 
military business shall go to this Czechoslovak Explosive, Ltd., who have in 
their territory continental Europe. I believe the British themselves will make 
no attempt to sell directly on the continent as they have not a personnel com- 
petent for this work and expect to have this thing handled entirely from Czecho- 
slovakia. I also believe that due to the fact that the Balkan states are gradu- 
ally changing nitroglycerine powders to nitrocellulose powders they are induced 
by the Czechoslovak Explosive, Ltd., to undertake the manufacture of nitro- 
cellulose powder. 

Now why do the British want us to cede them the patents for I. M. R.? 
Either to show the Czechoslovaks how to make our powder or to manufacture 
powder under our patents to be sold by the Czechoslovak organization or to keep 
us out of Europe so as not to interfere with the development of the Czechoslovak 
Co. I believe this to be the key of the whole matter. 

So that Colonel Taylor was seriously concerned over the possi- 
bility that the prospects of the I. M. R. powder formula might get 
into the hands of a Czechoslovakian company, run by " the most 
experienced continental military salesman in the old German 
organization " with a disadvantage to your company ? 

Mr. Casey. Yes, sir. 

Senator Vandenberg. Do you know of any other reasons that 
Colonel Taylor might have had, or any other reasons which you 
might have had, for thinking that this would be an unfortunate 
arrangement ? 

Mr. Casey. Beyond the viewpoint of Taylor's as affecting sales in 
Europe, where he was giving quite considerable thought to this being 
an attempt to force us out of Europe, there was really a great deal 
of objection on the part of European manufacturers, in view of the 
reputation which du Pont had made during the war. He also nat- 
urally concurred in my objections. 

Now my objections, it later on developed, did not hold very much 
weight in one respect, and that was as far as England was concerned, 
but I objected to giving anything out to which there was Government 
objection. 

Here is the situation which developed 

Senator Vandenberg. The situation will develop as we proceed, 
and suppose you address your discussion to it as we proceed with the 
exhibits. 

Mr. Casey. All right. Senator. 

Senator Vandenberg. You were about to say, no doubt, that you 
had consulted the War and Navy Departments with regard to 
licensing the production of these powders. 

Mr. Casey. Not the Navy Department. The War Department is 
the only one interested in small arms. 



MUNITIONS INDUSTRY 2431 

Senator Vandenbekg. You did consult the War Department. 

Who was Mr. Henning? 

Mr. Casey. He was technical director of military sales. 

Senator Vandenbekg. I want to read from Mr. Henning's letter of 
June 21, 1923, without offering the letter as an exhibit, because there 
are some sections of it which it is not necessary to enter in the 
record. 

I will read the first sentence, with some deletions. This is Mr. 
Henning, your assistant director of military sales, reporting upon 
his conference with the War Department in Washington (reading) : 

1. Discussed the following subjects with officers and representatives of the 
Ordnance Department 

1. Ordnance Department policy with respect to supplying information to 
British on du Pont I. M. R. powder. 

Talked this over briefly with Major Hardigg and Dr. C. G. Storm, simply 
setting forth the early history and more recent facts. In the absence of General 
Williams the subject was referred to General Peirce for decision, who called 
General Ruggles and Major Wilhelm in for conference. Major Hardigg and 
Wilhelm stated the case to General Peirce, it being their concensus of opinion 
that it was a subject of considerable importance, and in which the Bureau of 
Ordnance, Navy, was also interested. Following recent precedent, it was their 
suggestion that no information be given. This comes about partly by reason of 
the action of the British in refusing to give the Ordnance Department any 
information on subjects in which the British Navy is interested. * * * 
General Peirce first inquired carefully as to the use and status of du Pont 
I, M. R. powder as a service propellant. 

General Peirce stated that it was their policy to carefully consider giving us 
every assistance and encouragement for staying in the production of military 
explosives. Hence he did not want to handicap us in any development work 
that would aid us. It was the decision, however, that the Ordnance Depart- 
ment could not sanction our giving information to tic British at this time, on 
our service propellent for ammunition intended for aircraft armament. Gen- 
eral Peirce was of the opinion that Admiral McVey would take a more positive 
stand on this subject. 

As a matter of courtesy to the Bureau of Ordnance, I discussed the conference 
briefly with Commander Courts. As expected, the Bureau of Ordnance takes 
a more positive stand on this subject. 

Now, simply to confirm the attitude of the Government 

Senator Clark. Do I understand from this that you informed the 
Government that unless you were permitted to sell your secret proc- 
esses to another government, that you were going out of the business ? 

Mr. Casey. I do not see any indication of that whatsoever, Senator. 

Senator Vandenbekg. I think this trends in a different direction, 
Senator, which will appear shortly. 

Now, I want to confirm the attitude of the Government respecting 
the release of this new and secret militarj'^ powder process to the 
British, or to aiiy other foreign country. 

Dr. Spakre. Senator, pardon nie, but it was not secret. I am 
sorry to interrupt you, but you have used the word " secret " so often 
that I have to call your attention to the fact that it was not secret. 
Pardon me if I may explain the situation at this point, because it is 
very important. 

Senator Vandenbekg. Yes, sir. 

Dr. Spakre, During the war, that is, after the United States 
entered the war in 1917, and during the war period, we were under 
instructions from the administration to give to the allied countries 
all our information of any military value ; as a matter of fact, every- 
thing which we possessed. 



2432 MUNITIONS INDUSTRY 

Senator Vandenberg. That is during the war ? 

Dr. Spakre. And we gave to the allied munitions departnients, 
and so forth, everything that we had. For instance, I myself was 
sent abroad on a military commission appointed by the Chief of 
Ordnance. As a member of that commission I went, together with 
Army officers and others, and inspected British military factories, 
and we exchanged information with the British munitions depart- 
ment. At the conclusion of that visit I went to France and in- 
spected all the French powder works, shell works, and so forth, and 
all the information which I collected was then transmitted to the 
Chief of Ordnance. The I. M. R. information was given to the 
allied governments. There is no secret about it. They got all our 
information under instructions from our own administration. 

Senator Vandenberg. If they knew all about it, what is all this 
about ? 

Dr. Sparre. That is what I wanted to tell you. This appears like 
it was a secret thing, but there is no secret about it. 

Mr. Irenee du Pont. They had a patent on it. 

Dr. Sparre. There were some patents. 

Senator Vandenberg. Do you mean to say the British could manu- 
facture the I. M. R. powder without your consent? 

Dr. Sparre. They had gotten blueprints of suitable plans, com- 
plete specifications, all information about the thing. The only thing 
which we had left would be such foreign patents as there might be, 
but they did not amount to much, did not amount to very much, be- 
cause the patent situation was not as satisfactory^ in foreign coun- 
tries as it was in our own country. I do not think that those patents 
were of any substantial value. But, in any event, there was no secret 
about it, the complete information was given. 

Senator Vandenberg. Apparently the release of this privilege 
which involved a very serious question with respect to your rela- 
tionships with Nobel also in your judgment involved your relation- 
ship with the United States Government in 1923. 

Dr. Sparre. Surely. 

Senator Vandenberg. So let us follow through and see to what 
extent our relationship is involved. 

Dr. Sparre. Yes, but. Senator, please don't hold it secret informa- 
tion. 

Senator Vandenberg. All right. I will use the exact language of 
our own War Department in describing the situation, and I will use 
it in the next exhibit, which is a letter of June 27, 1923, from W. S. 
Pierce, Acting Chief of Ordnance, to the military sales division of 
the du Pont Co. at "Wilmington : 

It is the understanding of tliis office tliat you are in receipt of requests from 
foreign sources for detailed information concei-ning the technical process in- 
volved in the manufacture of your improved military rifle powders. 

In view of the fact that powders of this type are employed in certain stand- 
ard service ammunition used not only by the United States Army but also by 
the Navy and Marine Corps, the Ordnance Department believes that the 
methods involved in manufacture should be regarded as confidential military 
information. 

So at least the Chief of Ordnance of the United States Army 
thought there was something in connection with I. M. R. powder that 
you could protect if you wanted to. 



MUNITIONS INDUSTRY 2433 

Dr. Sparre. We have given all of the information to the Board. 

Senator Vandenberg. All right. We are proceeding with the rec- 
ord, and there is an amazing lot of important attention being given 
to an inconsequential thing, if it is inconsequential, it seems to me. 
At any rate, let us continue to establish the facts. 

I refer to the next exhibit. In this instance, it is of sufficient im- 
portance so that you even hear from the Navy in connection with it, 
which is unusual in your contacts, so that evidently from the view- 
point of our own Government, there was something of relative mag- 
nitude involved, rather than anything else. I read the next exhibit, 
which will be properly marked. 

(The memorandum referred to was marked " Exhibit No. 936 " 
and appears in full in the text.) 

Senator Vandenberg (reading) : 

MEMORANUUit 

To : Chief of Ordnance, War Department. Washington. D. C. 
Subject : Agreement with tlie Du Pont Co. regarding improved military rifle 
powder. 

The Bureau of Ordnance concurs in the belief of the Ordnance Department, 
expressed in its letter of June 27, 1923, to the Du Pont Co., that the technical 
processes and the methods of manufacture of improved military rifle powders 
should be regarded as confidential military Information. 

Chas. B. B. McVay, Jr., 

Chief of Btireau. 

So as the matter stands up to date on the face of these exhibits, 
you gave the Nobel Co., did you not, the right to manufacture a 
powder which was the standard propellant in both branches of the 
United States service for almost all types of rifle and aircraft am- 
munition, and did so over the objections of both the War and Navy 
Departments? 

Mr. Casey. Senator, you assured me a few moments ago that you 
Avould develop this thing gradually. At that time I tried to tell you 
the story. Now you are not developing it gradually if you make the 
statement at that point 

Senator Vandenbp:rg. I do not want to prejudice it, Major. I am 
onlji' seeking the facts. 

Mr. Casey. I do not believe you do. Senator. 

Senator Vandeni5erg. You mean which? That you do not think 
I am trying to prejudge it or trying to get the facts? 

Mr. Casey. No ; I want to give you the facts. 

Senator Vandenberg. Now, let us see whether or not the exhibits 
will not permit you to develop the thing chronologically. It is only 
facts that I want, Major. 

Mr. Casey. I appreciate that, Senator. By the way. Senator, in 
order to bring you up to date 

Senator Vandenberg. What do you mean by up to date ? 

Mr. Casey. By what is going to follow, may I give you the early 
history of the I. M. R. powder? 

Senator Vandenberg. If you consider it pertinent. 

Mr. Casey. I think it is. 

Senator Vandenberg. All right. 

Mr. Casey. I. M. R. powder was developed after about 10 or 15 
years research, I would say, either in the latter part of 1913 or early 



2434 MUNITIONS INDUSTRY 

in 1914. The first powder of that type that we made was to fit 
certain modifications that Admiral Bedbeder, who at that time was 
head of the Argentine Naval Mission in New York, wanted. He 
w^as considering certain charges in the Argentine Mauser rifle, and 
in order to give him what he required in direct competition with 
the German progressive rifle powder, this powder, as the result of 
15 years experimental work, was found to oe the only powder suit- 
able for the purpose. 

At about that time we had already started an erosion test — when 
I say we, I mean the Government and ourselves — to determine in 
connection with the high velocity 30-06 rifle, the different types 
of powder, and their relative erosive effect, and in that test they 
used cordite, exite, and I think the French powder, some Koln- 
Kottweiler, vrhich was imported in this country by the Government, 
and called Chilworth, because it was bought through the Chilworth 
Co. in England. We had also some Argentine powder, and I think 
some Brazilian powder. 

Those powders were being put through the test at Springfield 
Arsenal. In the meantime, after the tests had actually started, this 
I. M. E,. powder came along, so even though the poAvder was not 
suitable to the Springfield rifle, being too slow burning, we re- 
quested the Government to allow that powder to also enter the 
test. As I say, it was not suited in the particular granulation to 
the Springfield rifle. 

That is the early development. If it had not been for developing 
that powder, w^e would not have been able to fill the requirements for 
the British and Russian and certain other rifles. It was not needed 
for the French rifle. This was after the European war broke. 

In the meantime, the Government, because of ballistic character- 
istics of the 30-06 cartridge, did not need that powder. It was not 
until after the United States had entered the war that they discovered 
for special ammunition, such as tracer and incendiary the regular 
pyro D.G. 30-caliber powder, which was the regular standard U.S. 
powder, could not be used, and I believe the Government throughout 
the entire period of the war only bought possibly in the neighborhood 
of 2 or 3 or 4 million pounds of this I.M.R. powder. That was the 
only place they used it. 

In the meantime, the allied Governments, England and Russia, 
were both using it in tremendous quantities. That is the only type 
of rifle powder they bought from us. That was the situation at that 
time. As Dr. Sparre has just explained to you, we were required to 
give all of the information regarding the manufacture of this powder 
to the British. 

Senator Vandenburg. This is, during the war? 

Mr. Casey. This is, during the war. In the meantime, a plant was 
actually being built. You may remember that Mr. Irenee du Pont 
referred at a previous hearing to the fact that they discovered instead 
of importing raw material and making their own powder it was 
better to import the powder because of the tonnage factor. There 
was the situation when we came along after the war. 

In the meantime, experimental work had been started in 1917 at 
the Bordenbrook Reservoir outside of Springfield to try and get a 
bullet and a combination of bullet and case that would ffive them a 



MUNITIONS INDUSTRY 2435 

more effective ammunition. It was discovered that the tables in the 
bhie book of the Springfield rifle giving an extreme range of 5,100 
yards were simply paper figures; that the extreme range of the 
Springfield rifle was around 3,500 to 3,600 yards. 

At the command of the commanding officer there I went up to 
assistant Major Wilhelm at the Reservoir, to help solve this problem. 
That was in connection with the boat-tail bullet which the Swiss had 
at Camp Perry in 1913 and which excited a great deal of comment 
among the competing teams during those matches. 

So an attempt was made in the early time of Bordenbrook Reser- 
voir to see if we could not develop a boat-tail bullet along the lines 
of the Swiss, because it was found that the Swiss bullet at that time, 
even fired in our own case, would outrange ours almost 2 to 1. 

This work was intensely interesting, to such an extent that they 
then moved down to Florida to continue the work, and that work was 
then being continued along the beaches at Daytona and Miami and 
later on when the Infantry School at Benning was established the 
work continued there. 

Even then at that time and for a couple of years after the war it 
was not still the service propellant. It was not until they found it 
possible to make a satisfactory boat-tail bullet in this country, that 
they found they were up against another obstacle. They were only 
buying this I. M. R. powder from us in small quantities, five or ten 
thousand pounds at a time, which means very expensive production. 
We also found that the Infantry Board which was continually in 
session at Camp Benning considered they would not be able to get 
the desired velocity the}' wanted, the reason being price, that they had 
the old pyro D. G. 30 caliber, which had cost them probably during 
the war, 50 or 60 cents a pound, and, of course, this powder was cost- 
ing them 90 cents a pound. So I went to General Williams and I 
said: 

It seems to me a serious problem of design is being interfered with, because of 
an unnatural position on price. 

Senator Vandenberg. What year was this ? 
Mr. Casey. This is in that period of 1921 and 1922. 
Senator Vandenberg. Yes. 

Mr. Casey. The Infantry school was formally opened in the fall 
of 1920, so that will give you an idea of when this occurred. 
Senator Vandenberg. All right. 
Mr. Casey. So I said to General Williams : 

We haven't the slit^litest idea on a peace-time production basis what this 
powder is apt to cost, but we believe if you will give us an order for 100,000 
pounds, to let us make a run, we will take a chance and sell it to you for 70 cents 
a pound. 

That changed the picture. The result was that it was then 
adopted, around 1921 or 1922, in connection with the boat-tail bullet. 
But in the meantime Russia and England knew all about it. They 
had bought millions and millions of pounds of it for their service 
cartridges during the war. 

Now, that will bring you approximately up to date. 

Senator Vandenberg. All right. Now, why did Mr. Henning go 
to the War Department in June 1923 to inquire whether the Ameri- 
can Government had any objections to your arrangement with Nobel? 



2436 MUNITIONS INDUSTRY 

Mr. Casey. To tell you perfectly frankly, Senator, because I ob- 
jected. 

Senator Vandenberg. And I assume that when he made this in- 
quiry from the War Department it was on the theory that if the War 
Department said it did object 

Mr. Casey. That Ave would not have to turn it over. 

Senator Vandenberg. That you would observe the War Depart- 
ment's viewpoint? 

Mr. Casey. Yes. 

Senator Vandenberg. Did 3^our company observe the War Depart- 
ment's viewpoint? 

Mr, Casey. Now, if you will i:;o ahead you will find out what 
happened. 

Senator Vandenberg. I am going ahead, but, as a matter of fact, 
it did not observe the War Department's viewpoint ; isn't that so ? 

Mr. Casey. You are asking me to go ahead. Now, let us move 
ahead. Senator. 

Senator Vandenberg. I think that is a fair observation. We will 
move ahead together. 

Mr. Casey. All right. 

Senator Vandenberg. Now, we are in this position, before we move 
ahead, so let us start at the same point. Your representative has. 
been to the War Department to find out whether the American Gov- 
ernment has any objection to your licensing Nobel in respect to 
I, M. E.. powder. The War Department has not only notified your 
Mr. Henning, and he has reported to you their objections, but in 
addition, you have the written word of the Acting Chief of Ordnance 
of the United States and you have the written word of Admiral 
McVay, Chief of Bureau of the Navj^^ Department, that there is em- 
phatic objection on the part of the United States Government to this 
arrangement. 

Mr. Casey. Right. 

Senator Vandenberg. That is the point at which we noAv take up 
the trail. 

Mr. Casey. At that point; yes. 

Senator Vandenberg. This decision by the War Department evi- 
dently confirms Colonel Taylor's prophecy of Jul}' 12, 1923, when he 
wrote you from Paris, as I have previously read : 

I see that with regard to our company you have succeeded in saining our 
point, and I feel sure that if the War Department understood \\])a{ was going 
on, they would ohject to any concessions on our part. 

Mr. Casey. I think I have already answered that, Senator. 

Senator Vandenberg. Yes, And evidently the War Department 
did understand what was going on, 

Mr, Casey, Yes ; I think we told them pretty thoroughly. 

Senator Vandenberg, You told them, and then they told you 
something. 

Mr. Casey. Naturally, 

Senator Vandenberg, Did this feeling of apprehension with re- 
gard to exchanges of technical information with Nobel continue ? 

Mr. Casey. If you let me anticipate the same as you are doing, all 
right, we will just move along then. This is the only case that ever 
came up. 



MUNITIONS INDUSTRY 2437 

Senator Vandenberg. Well, we will take the exhibit. We will 
take Major Casey's letter addressed to Mr. Felix du Pont, general 
manager, on April 14, 1924. I read at the moment only the fifth 
paragraph, in which Major Casey is recommending: 

That no agreement be made with Nobel whereby we will refrain from en- 
deavoring to sell military products in any foreign country. 

Mr. Casey. Which paragraph is that? 

Senator Vandenberg. It is marked " number 4." 

Mr. Casey. I thought you said 5, Senator. 

Senator Vandenberg. It is the fifth paragraph, but it is num- 
bered 4. 

Mr. Casey. Yes. 

Senator Vandenberg. Now, on the second page we find your rea- 
sons, Major Casey, and I will read those. 

Mr. Casey. Senator, wouldn't it be probably advisable to really 
read the whole thing? 

Senator Vandenberg. I will be very glad to, if you desire. You 
mean the entire letter? 

Mr. Casey. Yes. 

Senator Vandenberg. All right. This is Major Casey writing to 
General Manager Felix du Pont under date of April 14, 1924, on the 
subject of military sales in foreign countries [reading] : 

After liaving made a very careful analysis of all the data in our files on the 
Nobel agreement, and a thorough study of compelition which we have experi- 
enced in foreign countries, particularly in Europe during the past 3 years, I feel 
that it is in order for me to present to you my recommendations, to which I 
hope you will give due consideration in discussing military business with Nobel 
ofiiciais. My recommendations are as follows : 

1. That military propellants and explosives be specifically exempted from the 
patents and secret-process agreement in the same way as in the case of the 
South American pool agreement. 

2. That the temporai-y arrangement regarding Argentine and other South 
American military business be terminated as of July 1, 1924. 

3. That the arrangement for joint construction of plants in foreign countries 
for military material be discontinued. 

4. Tliat no agreement be made with Nobel whereby we will refrain from en- 
deavoring to sell militai-y products in any foreign country. 

5. That no agreements be entered into with any manufacturer for the ex- 
change of information on military propellants or explosives. 

6. That no information be exchanged concerning prices of military propellants 
or explosives and that no division of profits be made on military business. 

I might interrupt to say that I think these are fairly sensible recom- 
mendations, Major. 

Mr, Casey. Well, they were made, anyway. 
Senator Vandenberg (reading) : 

My reasons for making the above recommendations are as follows : 
Our competitors in Europe on military business are German, Italian, and 
French interests, tlie most successful competitors being the Germans. If we 
were to refrain from soliciting military business abroad, we would leave the 
field fi'ee for a German, French, and Italian monopoly, because Great Britain's 
position in European politics is such that an English concern would find it very 
difficult to secure business. It is very doubtful as to whether Nobel could hold 
the customers wliich we have gotten to date among the European nations. Our 
success in securing business is mainly due to the fact that we are an American 
concern whose products enjoy an excellent i-epntation. In Europe, the prestige 
of the name dn Pont was estalili'slied through onr military-powder manufacture 
during the late war. nnd it is only natural that we are looked upon as a 
source of suiiply. inwticularly by European states which do not manuf actum 
their own requirements. 



2438 MUNITIONS INDUSTRY 

Now, I want to emphasize the next two paragraphs, which are the 
ones I started to read and which are pertinent to my line of inquiry 
[reading] : 

We cannot act in good faith with om* Government if we contract to exchange 
information on military propellaut.s with a foreign concern. Both the Army and 
Navy have indicated that they are desirous of keeping secret development work 
which we may do for them. If we were to agree to exchange information with 
any foreign firm and at the same time accept help in selling powder abroad 
from our own Army and Navy, we would create a condition which would at 
some time or other bring discredit upon us. 

It is probable that in the next few years Congress will fully investigate all 
war contracts and particularly the construction of Old Hickory. Sucli an 
investigation will bring about the scrutiny of our military sales in general. 
If Congress were to ascertain that the Army and Navy both helped du Pont in 
securing military business from abroad and if it could be shown that the 
du Pont Co. had a working agi'eement with a foreign powder manufacturer, 
the conclusion could be drawn that the du Pont Co. was acting in bad faith 
with our own Government. Congress would have an opporunity to brand us 
as traitors. 

We have been successful in securing military business in foreign countries 
without a price-fixing agreement with any of our competitors. We have fre- 
quently been able to secure business although our quotations were higher than 
competitors. This was probable due to the fact th;it the customer decided to 
develop a source of military supply in America and our prestige and reputation 
enabled us to get the business. Even with unfavorable foreign -exchange rates 
we are competing with foreign concerns on newly made powder. When the 
exchange rates improve we will undoubtedly be placed in a more favorable 
position. Therefore, in competing for foreign business, success will come to 
the firm which can make the best product and which enjoys the best reputa- 
tion. The neutrality of America in European politics, and America as an 
abundant supply of raw materials are factors which enable an American concern 
to secure foreign military business. 

Now, referring back to the two middle paragraphs on this second 
page, it is the expression of your opinion that it would not be an 
act of good faith for you to accept cooperation from the Government 
of the United States in the promotion of your sales; and you have 
had that cooperation, have you not, very generously ? 

Mr. Casey. Yes. 

Senator Vandenberg. It was your opinion that you could not be 
in that contact with the Government and at the same time be per- 
mitting the foreign use of your military processes ? 

Mr. Casey. No; that is a fine point there. Senator. Don't think 
that I am quibbling. It is not a question of permitting manufacture, 
but a question of exchanging information. 

Senator Barbour. What would be the nature of the information? 
Wouldn't it be the matter of processes? 

Mr. Casey. Yes. 

Senator Vandenberg. That is the point. 

Mr. Casey. Because we will come to that question of manufacture 
later. 

Senator Vandenberg. Yes, we are coming to that. It is summed 
up in your sentence: 

If Congress were to ascertain that the Army and Navy both helped du Pont in 
.securing military business from abroad, and if it could be shown that du Pont 
Co. had a working agreement with a foreign powder manufacturer, the con- 
clusion could bo drawn that the du Pont Co. was acting in bad faith with our 
own Government. 

That sums up your feeling on the matter? 
Mr. Casey. Yqs. 



MUNITIONS INDUSTRY 2439 

Senator Vandenberg. Was this recommendation put into effect? 

Mr. Casey. This recommendation was submitted to my chief. I 
believe this recommendation had a great deal to do with the modifi- 
cation of the agreement which took place and was eventually signed 
on January 1, 1926. 

Senator Vandenberg. Now, this memorandum 

Mr. Casey. Not completely, however. 

Senator Vandenberg. This memorandum is dated April 14, 1924. 

Mr. Casey. Yes. 

Senator Vandenberg. You did make an agreement, did you not, in 
London, in November 1925, 18 months later, an agreement to co- 
operate on military sales — I mean your company made it — in spite of 
your recommendations and in spite of the opposition of the military 
sales division? 

Mr. Casey. We made some sort of an agreement. I think that 
discussion finally resulted in the agreement of 1926, did it not? 

Senator Vandenberg. The agreement of November 1925 ? 

Mr. Casey. Well, that was not a signed agreement, was it? Is it 
not a memorandum of discussion? 

Mr. Raushenbush. You operated under it, didn't you ? 

Mr. Casey. Yes ; without waiting for the signature.s. 

Senator Vandenberg. It was an operating memorandum. 

Mr. Casey. Yes. 

Senator Vandenberg. Let me read from this memorandum. This 
is a memorandum 18 months later. It may be offered as an exhibit 
and marked. 

(The memorandum referred to was marked " Exhibit No. 937 " and 
is included in the appendix on p. 2584.) 

Senator Vandenberg (reading) : 

Attached hereto is memorandum on " du Pont-Nobel Corporation, Sales of 
Military Propellant Powders and Explosives", which is the present agreement 
between the du Pont Co. and the Nobel Interests concerning military sales to 
goveniments other than the United States and Great Britain. 

A brief summary on how it came into being is timely. For some years past 
an accord has existed regarding foreign sales of commercial explosives, but 
all documents covering this accord specifically excepted military sales, as for 
example, that of January 1, 1920. 

This was largely due to the fact that du Pont felt that any accord on 
military sales would tend to disturb their relations with the United States Gov- 
ernment, which relations had been carefully cultivated for over a century. 

Which is a reexpression of that same general policy of the du Pont 
Co.? 
Mr. Casey. Yes. 
Senator Vandenberg (reading) : 

How Nobel felt in this regard is not known to us, but probably the Cordite 
factories at Waltham Abbey, Holton Heath, and Auruvankadu (India) occupy 
a relatively larger place in the British propellant supply than do the American 
equivalents, so that the relations of Nobel with the British Government are 
possibly not as intimate as du Font's with the United States Government. 

It is your observation that that is a fair assessment of the rela- 
tive relations between du Pout's and the United States Government 
and Nobel's and the Government of Great Britain? 

Mr. Casey. At least it was at that time. 

83876—35 — prll 4 



2440 MUNITIONS INDUSTRY 

Senator Vandenberg. Continuing the reading: 

The military sales divisiou of the du Pont Co. is charged with sales to aud 
contact with the United States War and Navy Departments, and our constant 
acquaintance with the officials of these Departments gives the members of the 
military sales division a knowledge of opinion in Washington that is never 
written and seldom spoken. It is the unanimous belief of the military sales 
division that any agreement on military sales with an alien firm will materially 
hurt our relations with the United States Government, if indeed such agree- 
ment will not eventually conflict with Article XIV (d) Ordnance Contract 

What is the ordnance contract? 

Mr. Casey. I think that is a paragraph in ordnance contracts. 
Senator Vakdenberg, I quote from the paragraph in the ordnance 
contract. [Reading :] 

No contractor having in hand work of a military character which the Ord- 
nance Department may designate as confidential shall permit any foreign officer 
or other foreigner not in the contractor's employ to visit portions of the plant 
where stich work is in process, nor shall the contractor give to such person 
any specific information concerning such work without the authority of the 
Chief of Ordnance, nor shall any alien in the contractor's employ be engaged 
on or permitted to examine such parts of the work as the Ordnance Depart- 
ment may specifically designate as confidential. 

That is the end of the quotation from the contract. [Reading:] 

Notwithstanding this belief, an agreement to cooperate with Nobel on mili- 
tary sales was signed in London in November 1925, whereby du Pont was 
given priority of sales on nitrocellulose powders and Nobel given priority on 
TNT and nitroglycerin powders. 

Now, the statement is that notwithstanding this belief an agree- 
ment was made. I assume it is a fair interpretation to say that the 
document itself thus confesses that tlie agreement is in hostility to 
the belief. 

Mr. Casey. To my belief. 

Senator Vandenberg. Yes; and was it your belief that it was also 
in hostilit}^ to the du Pont formula for dealing with the Government 
of the United States? 

^ Mr. Casey. No ; I don't think so. Perhaps at this time I was try- 
ing to stress my point and I was bringing every bit of pressure I 
possibly could, even perhaps to the extent of slight exaggeration. 
I would say exaggeration, perhaps, in the language. 

Senator Vandenberg. Let us proceed with this exhibit. I drop 
doAvn to the final paragraph on page 2, the same page from which I 
was reading: 

The following has developed : On the 1,000-ton Polish order, Nobel's quota 
would liave been 300 tons, but the Polish Government declined to split the order 
and. in general, it may be assumed that this attitude will be followed by other 
govern inei lis. 

Befcre I sjjeak of that in detail, this general agreement did finally 
obligate you to guarantee to Xobel WO tons of nitrocellulose powder 
business on tl\e continent every year, didn't it? 

Mr. Casey. It did not obligate us. 

Senator Vandenberg. What was the point? 

Mr. Casey. The point was tliis : That I. C. I., Nobel, or E. T. L., 
whatever the name Avas at that time, stated that they Avanted to keep 
alive that know-how to n)anrifacture the nitrocellulose powder which 
tliev had been workinji on durinir tb.e war to a certain extent. 



MUNITIONS INDUSTRY 2441 

Therefore, they said that they would like to have a certain amount 
of business each year, but not in excess of 300 tons, as that was the 
limit of their capacity, and all they wanted to do was to keep alive 
the " know-how ", without expanding their plant. Therefore, it pro- 
vided for not in excess of 300 tons. 

Senator Vandenberg. You operated under this agreement for a 
number of years after this, did 3'ou not? 

Mr. Casey. Yes. 

Senator Vandenberg. In 1927 Colonel Taylor wrote you 

Mr. Casey. Senator, will you pardon me? 

Senator Vandenberg. Yes. 

Mr. Casey. Would you mind reading all of the first paragraph on 
page 3, the first paragraph at the top of the page beginning "At 
a meeting held in London." 

Senator Vandenberg. I will read anything you want read 
[reading] : 

At a meeting held in London on October 11, 1927, it was stated by a Nobel 
representative that Ardeer must have orders for nitrocellulose powders in 
order to gain experience and keep the plant force employed, which indicates 
that the difficulties still exist in perfecting a nitrocellulose powder and pro- 
ducing it at a cost sufficiently low to compete with other firms. 

Do you want me to read some more? 

Mr. Casey. No, I think if I can look at the date of this document, 
it was certainly after 1927, I think that will have some relation 
later on. 

Senator Vandenberg. Perhaps we are coming to it. Major. 

Mr. Casey. You notice, Senator, though, that even in 1927 they 
were still having diflSculties in making powder of that type. 

Senator Vandenberg. Yes; I realize that. 

Mr. Casey. It was some time after 1927. 

Senator Vandenberg. In 1927. on November 16, Colonel Taylor 
wrote you from Paris concerning certain difficulties which the nor- 
mal functioning of the agreement had brought about. 

Now, I want to read from this letter, from page 3. It is a very 
lengthy letter, and the entire letter will be marked as an exhibit. 

(The letter referred to was marked " Exhibit No. 938 ", and is 
included in the appendix on p. 2585.) 

Senator Vandenberg. On page 3, starting with paragraph 17, 
Colonel Taylor, your European representative, writing to Mr. Casey 
says : 

However, it is now very easy to project one's self into the future and foresee 
that certain military difficulties are about to arise. These difficulties are 
about to develop in specific cases : 

The first case is the question of Poland. We are looking forward to con- 
siderable business fi-om Poland, and hoping that it will come in the form 
of additional quantities to the present contract, which if it takes place, would 
obligate us under the agi'eement. to endeavor to pass a certnin quantity of 
this contract to Nobel, specifically 300 tons of powder. It is evident to me, 
however, that without our assistance. Nobel cannot manufacture in accordance 
with the specifications and we will either have to show Nobel how to manu- 
facture this powder by sending men to Ardeer, or he will have to take Nobel's 
men to America to work them in on this matter. 

Are we now discussing the powder on which the War Department 
objected to your releasing information? 



2442 MUNITIONS INDUSTRY 

Mr. Casey. Not entirely, because a good deal of the powder was 
cannon powder of the regular straight nitrocellulose type. 

Senator Vandenberg. Is there some of the powder in the type we 
are now discussing, of the type on which the War Department ob- 
jected to your releasing information? 

Mr. Casey. Yes, I think it was ; some I.M.R. 

Senator Vandenberg. Some was I.M.R. ? 

Mr. Casey. Yes. 

Senator Vandenberg (reading) : 

The second case is the question in Belgium where, for every commercial 
reason, it would appear reasonable to place the business expected from the 
Fabrique Natiunale on Nobel's, and where Nobel is about to undertake studies 
to meet the requirements. In this case, unless I give Nobel's the results of 
the studies made by us for the Fabrique Nationale, and give them certain 
assistance, which knowledge I have acquired through efforts of the du Pont 
Co., they will have trouble in meeting these requirements. 

Thirdly, in the question of powder for the 13.2 mm Hotchkiss machine gun, 
the question comes up why should they not furnish powder to Kynoch, if they 
can make it, as Kynocli is their own factory, and here again, in order to enable 
Ardeer to make this powder, we will eventually have to give them some 
assistance. 

So, it would appear that, in order to fullfil your quota obligations 
to Nobel, you would be forced to give them information to enable 
them to manufacture a number of different types of powder, would 
it not? 

Mr. Casj:y. That is what Taylor thought, looking into the future 
was, perhaps, apt to happen. 

Senator Vandenberg. Yes : and that included, in whatever degree 
it involved them, it included these powders which the War Depart- 
ment had put their prohibition? 

Mr. Casey. Yes. 

Senator Vandenberg. This is in 1927? 

Mr. Casey. Yes; in 1927. 

Senator Vandenberg. Now, did the 1927 contract Avith Poland for 
1,000 tons go through? 

Mr. Casey, Yes ; and du Pont filled it all. 

Senator Vandenberg. Did you promise to show Nobel how to make 
the powder which Poland required under this contract so that they 
could fill their quota under the agreement? 

Mr. Casey. We did not. 

Now, Senator Vandenberg, would you mind letting me now go 
back to fill in the gap ? 

Senator Vandenberg. Just a minute, on this particular point. I 
want to refer to the next letter which will be marked as an exhibit. 

(The letter referred to was marked " Exhibit No. 939 ", and is 
included in the appendix on page 2589.) 

Senator Vakdenberg. This is a letter to Colonel Taylor from 
W. H. O'Gorman, assistant director. Was he your assistant, Major? 

Mr. Casey. Right. 

Senator Vandenberg. He was assistant director to Major Casey, 
which letter is dated January 10, 1928, and I want to refer to the 
second page, the paragraph marked with the numeral 4. [Reading :] 

We do not intend to furnish technical information to Nobel on any rifle or 
cannon powder which we have in the past made up or may make up for 



MUNITIONS INDUSTRY 2443 

European governments. The sole exception to this is in the case of Poland 
where we have promised, and are willing to show the Nobel representative the 
manufacture of rifle and cannon powder on the Polish contract. 

Does that change your answer to my question as to whether you 
made a promise to release this information? 

Mr. Casey. We did not. 

Senator Vandenberg. Now, this information that you promised 
to release to the Nobel representative in the case of Poland, did that 
involve this I. M. R. powder in any degree? 

Mr. Casey. But, we made no promise to release it to Nobel. 

Senator Vandexrfjjo. What does this mean when you say [read- 
ing] : 

The sole exception to this is in the case of Poland where we have promised 
and are willing to show the Nobel representative the manufacture of rifle and 
cannon powder on the Polish contract? 

Mr. Casey. That may be in the letter, but we still want to fill in 
that gap. Senator. Otherwise, this paragraph does not stand out as 
it should. If you will permit me, I would like to tell you the story. 

Senator Vandenberg. All right; then we will come back to this 
paragraph. 

Mr. Casey. After this Government's objection, previously referred 
to, of 1923, our position became ridiculous to such an extent that our 
people accused Henning and myself of deliberately trjdng to block 
the proposition, which was simply this : Nobel had the information 
on the manufacture of this powder which was given to all British 
manufacturers at that time during the war, but if Nobel made any 
of that powder they would be promptly running up against our 
patents, which would possibly lead to a lawsuit. The final result 
of all this was that Mr. Felix du Pont and myself went down to 
General Williams, and explained to him that, really, what Nobel 
wanted, and all we expected to give them was a non-exclusive license, 
so that they could make powder in England, which would absolve 
them from the danger of a lawsuit on our part because of a violation 
of our patent. While they had all the knowledge as to making it, 
they had never been licensed to make that powder. 

Now, the fact also remains that no further information was given 
to Nobel's on any improvements we made on I. M. R. powder, other 
than they had in the original developments as they existed during 
the war. Therefore, when you read this paragraph, if Nobel's had 
been able to supply to Poland a certain portion of the contract, if 
Poland were willing, and Poland wanted to supply the type of 
powder which was manufactured during the war, which England 
and Russia could, and when you say Russia you must include the 
Poles as part of Russia, they knew what the Russian powder was-r- 
then we might assist them in making the type of powder that they 
were making, or trying to make during the war, but on no further 
development. I think that clears the picture a little differently. 
It makes the set-up appear a little different. 

Senator Vandenberg. It makes it appear a little different, yet the 
thing I am trying to discover, and which, I confess, leaves me in 
some perplexity is this : Back in 1923 you were asking the War De- 
partment of the ITnited Statues whether it had any objection to this 
relationship with Nobel's in respect to I. M. R. powder. 



2444 MUNITIONS INDUSTRY 

Mr. Casey. Right. 

Senator Vandenberg. Obviously because there must be some in- 
formation involved which is wanted abroad as a result of your 
release. You are consistently proceed! n<2; on the theory that you 
want to do everything the War Department asks you to do. 

Mr. Casey. Right. 

Senator Vandenbekg. The War Department asks you. and the 
Navy Department asks you not to proceed with your arrangement. 

Mr. Casey. That is right. 

Senator Vandenberg. And you do proceed with the arrangement 
in spite of tliose objections. In a conference which you yourselves 
sought with the governmental authorities as late as 1928, you are 
asserting your willingness to continue to violate this request from 
the War Department in some degree in respect to this Polish order, 
it seems to me. Am I mistaken about that? 

Mr. Casey. Do you think that is really a fair statement. Senator? 
I know from my contact with you that you want to be absolutely 
fair. 

Senator Vandenberg. I think you are correct about that. 

Mr. Casey. Now, I have just tried to indicate to you that here was 
something they had complete information on. They have that to 
the extent, not only of the information we gave them, but that our 
own Ordnance Department people gave them. 

Senator Vandenberg. Didn't they have that before you sent Hen- 
ning up to the War Department to find out if the War Department 
had objection to this? 

Mr. Casey. Who? 

Senator Vandenberg. Henning. 

Mr. Casey. Yes; they did. 

Senator Vandenberg. Why did vou send Henning over to the War 
Department? 

Mr. Casey. I wanted to block it. 

Senator Vandenberg. You agreed with the W^ar Department's 
viewpoint ? 

Mr. Casey. I wanted to prevent any further improvements reach- 
ing Nobel's. They had the type of powder existing during the war, 
and I wanted to prevent any further improvements, improvements 
had to be made in that powder, reaching them. What they would 
have gotten would not have been the I. M. R. powder we supplied 
to the United States. 

Senator Vandenberg. Now, let us both be perfectly fair and frank 
about this.^ Is it not a fact that the relations of the du Pont Co. 
with Nobel's did violate in spirit, if not in letter, the regulations of 
the War and Navy Departments as asserted to you in 1923 in connec- 
tion with your relations with Nobel's ? 

Mr. Casey. I do not think so, Senatoi-, and I am trying to be frank 
about it, too, because when Mr. Felix du Pont and myself explained 
to General Williams that it was simply a question of authorizing 
legally their right to make the powder "which they already had in- 
formation on. That is us far as the matter went, and General Wil- 
liams said they did have the information, I know it — General 
Williams talking said, " I know they have the information." 

We said this is simply a question of legallj^ giving them the right 
without danger of a lawsuit, to make something the information on 



MUNITIONS INDUSTRY 2445 

which they already have. To this day, I do not believe Nobel's 
has ever been able to make that powder. So that shows we have 
not helped them. 

Mr. Lammot du Pont. Senator, I think that Major Casey has 
missed your point, and for that reason has not cleared up your 
mind on it. 

Senator Vandenberg. No ; he has not cleared up my mind. 

Mr. Lammot du Pont. The United States Government did not 
object to the relations between du Pont and Nobel, or between du 
Pont and I. C. I. They objected to the giving of information on 
that powder. 

Senator Vandenbekg. That is my understanding, and it is also 
my understanding that you did give information in spite of the 
objection. 

Mr. Casey. No; no information, Senator. 

Senator Vandenberg. What did you give? 

Mr. Casey. The right to manufacture. 

Senator Vandenberg. Wasn't it the right to manufacture which, 
necessarily, involved the information that the War Department and 
the Navy Department were telling you to keep confidential? 

Mr. Casey. This was information that Nobel already had. 

Senator George. Do you mean, Major Casey, that you were agree- 
ing to license a developed process, developed during the war, that 
they already had, isn't that your meaning? 

Mr. Casey. Exactly. 

Mr. A. Felix du Pont. The conversations with the War Depart- 
ment that Major Casey mentioned occurred quite a while ago, and 
I want to say that I remember very distinctly the conversation that 
we had with General Williams, in which General Williams said : 

It is all right for you to give them the right to manufacture that powder, 
which they knew liow to make during the war. 

Senator Vandenberg. Is there anything in writing which you have 
ever received from the Bureau of Ordnance, or the Chief of the 
Bureau of the Navy Department, which mentions in any way the 
memorandum of June 27, 1923? 

Mr. Casey. Which one is that? 

Senator Vandenberg. That is the memorandum in which the 
chief of the War Department says: 

In view of the fact that powders of this type are employed in certain 
standard service ammunition used not only by the United States Army but 
by the Navy and Marine Corps, the Ordnance Department believes that the 
methods involved in the manufacture should be regarded as confidential mili- 
tary information. 

Mr. Casey. And so they were. 

Senator Vandenberg. Has that ever been mentioned in any way 
in writing? 

Mr. Casey. It did not have to be, because we gave them no infor- 
mation over what they originally had. Therefore we absolutely 
lived up to the request of the Chief of the Bureau of Ordnance and 
Chief of Ordnance of the Army. We gave them no information. 

Senator Vandenberg. What kind of I. M. R. powder was it that 
you were going to permit Nobel to manufacture and sell to Poland 
in 1928, many years later? Is that the old stuff? 



2446 MUNITIONS INDUSTRY 

Mr. Casey. The old stuff. 

Senator Vandenberg. Without any of the new developments 
later? 

Mr. Casey. No. 

Senator Vandenberg. Now, let us consider the flashless nonhygro- 
scopic powder. A large portion of the powder furnished on this 
Polish contract was this F.N.H. type, which you developed for the 
War Department? 

Mr. Casey. A large part? 

Senator Vandenberg. Yes. 

Mr. Casey. I do not think we supplied any. 

Senator Vandenberg. You do not think there is any F.N.H. pow- 
der that has been involved in these foreign sales ? 

Mr. Casey. No. When you talk about F. N. H., and when our 
powder began to be known around the world. We were approached 
by I.C.I, for the know-how. Our answer was obvious. There is a 
little situation that always comes up, and that is this, it might be that 
the United States ordnance, either Army or Navy might want to use 
that. So, therefore, we simply said to I.C.I., if you want this infor- 
mation, you put in your request through the military attache and 
the British Embassy. They will in turn deliver it through channels 
down to the Ordnance Department, and if the Ordnance Department 
is agreeable and we are agreeable to this, we will transmit the infor- 
mation back through the Ordnance Department. 

Now, the reason that I make that statement is this : It is a com- 
mon practice among governments if one country has certain infor- 
mation, they will use that to trade with another nation for some- 
thing of military importance that they may have, and so we wanted 
to find out in such cases whether or not this was of any use to the 
United States Government to assist them in getting any further 
information. 

Senator Vandenberg. In connection with the Polish order, the 
reason it failed was because the Polish Government refused to com- 
plete the order in the fashion suggested, was it not ? 

Mr. Casey. That was one reason, yet we anticipated that in the 
beginning, because if I wanted du Pont powder I would say, " I 
want du Pont to make it and not somebody else." 

I have here, and I do not know whether it is complete or not, a 
list of patents on I.M.R. powder. One is dated, without going into 
the serial number, July 29, 1916. That is the year it was filed. 

Another was British application June 9, 1917, and another August 
17, 1916. British application, June 9, 191T. Another, August 17, 
1916, and British application June 9, 1917. Another July 14, 1916, 
and British application June 9, 1917. 

All of these patents except no. 1313459 — all of those except the 
last had been given to the British during the war. All information 
in connection with it is covered by those patents, and the right to use 
them on account of the war. 

Now, it was simply legalizing the right to operate under those 
patents. That is involved in this whole proposition. 

Now, as to the number of patents since that time, I do not know 
how many there are, but I.C.I, has no information, and there is no 
intent on our part to give that information. Further than that. 



MUNITIONS INDUSTRY 2447 

when we got these instructions from the Chief of the Bureau of Ord- 
nance, and the Chief of Ordnance of the Army, we lived up to them 
and gave tliem no further information than on the basis of the first 
patent, what they ah^eady had. 

Senator Vandenberg. Anything subsequently sold is the old stuff? 

Mr. Casey. What? 

Senator Vandenberg. Anything subsequently sold is the old stuff, 
sold under this arrangement? 

Mr. Casey. Yes; but to my knowledge they have never sold a 
pound. They have not been able to make it. 

Senator Vandenberg. We will proceed. 

Mr. Lammot dtj Pont. Senator, before you proceed, you asked a 
while ago whether there was any modification of the War Depart- 
ment's position. 

Senator Vandenberg. Yes. 

Mr. Lammot du Pont. On the memorandum of 1923, I have here 
a memorandum which indicates that there was a modification, and I 
would like to read it. 

Senator Vandenberg. I think you should read it. 

Mr. Lammot du Pont. I think it is part of the chronology. This 
is a letter from Mr. Henning of April 29, 1924, which is, of course, 
Mr. Henning's version of what we agreed to. I will just read one 
extract, and then, if you would like to, you can have the whole 
communication on it. [Reading:] 

Even before seeing our letter. General Ruggles had dictated an endorsement 
relating to the military attache's cable, stating that it was vastly more impor- 
tant to encourage du Pont in the manufacture of propellants for military use, 
than to endeavor to protect secrets relating to the manufacture. 

This is referring to I.M.R. powder. 

Senator Vandenberg. I am glad you read it. I think I am com- 
ing to something of that same character, Mr. du Pont. 

Mr. Casey. Before we quit these patents, may I say that these 
patents have lapsed. 

Senator Vandenberg. I refer now to Mr. O'Gorman's letter of 
March 10, 1928, to Colonel Taylor, in which the close cooperation on 
military products is reaffirmed. 

(The letter referred to was marked " Exhibit No. 940 ", and is 
included in the appendix on page 2590.) 

Senator Vandenberg. I want to read this letter addressed to 
Colonel Taylor, signed by Mr. O'Gorman, who is Major Casey's 
assistant. 

Senator George. What is the date of that letter ? 

Senator Vandenberg. March 10, 1928. The title of it is " Con- 
ference with Nobel Officials." [Reading:] 

1. On March 9 a conference took place between Nobel and du Pont officials 
on matters appertaining to sales of military products of both companies. We 
have not as yet been furnished with a copy of the minutes of the conference, 
but the following as reported by Major Casey is a summary of recommenda- 
tions : 

(a) A 10-year agreement between Nobel and du Pont covering military sales 
in Europe be entered into as more or less of a continuation of the 1925 agree- 
ment. 

(6) It was explained to Nobel that our Paris office is not in a position to 
furnish technical information, and therefore all technical problems should be 
referred to Wilmington. We offered Nobel our facilities at Brandywine Labora- 



2448 MUNITIONS INDUSTRY 

tory for the development of nitrocellulose rifle powders for British Army car- 
tridges. We suggested that Brandywine would welcome visits of Nobel technical 
men, and we would undertake to develop nitrocellulose rifle powders to fulfill 
the British requirements, provided Nobel would furnish us with guns and 
components to be used in ballistic tests. The development would then be turned 
over to Nobel and. If necessary, we would send a man to Ardeer to assist in 
the manufacture of nitrocellulose rifle powder for the British Government. 
All technical information passed on to Nobel would be on the basis of Nobel 
agreeing to consider same as confidential, and under no condition divulge it to 
subsidiary or other companies in which Nobel may have part ov/nership or 
some other interest. 

To what extent would that involve the release of what we might 
term " military secrets " ? 

Mr. Casey. None whatsoever. One of the powders which had the 
greatest sale was I.M.R, 18, which was developed during the war 
for the British cartridge. As I have stated before, Nobel had never 
been able to make a satisfactory copy of that powder, although they 
had all the information. They were trjdng to induce the British 
Government to drop the use of cordite with its highly corrosive 
qualities, and use a progressive burning powder, which they felt they 
could make. This whole proposition here is that we felt we could 
assist them in making the old powder that was made during the war, 
I.M.R.-18, because it was ideally suited to the British cartridge, and 
there had been no change in the British cartridge, it was the old 303 
mark 7. 

Senator Barbour. Major, I am wondering if that assistance which 
you speak of is not the fulfillment of a promise that I remember 
being mentioned in one of the other letters. 

Mr. Casey. You mean about help? 

Senator Barbour. About help. 

Mr. Casey. In regard to information which they already had? 

Senator Barbour. Yes. I think there has been a little confusion 
in our minds in regard to a promise which was made, which appeared 
in connection with your arrangements with the Department and a 
nonfulfillment of it. 

Mr. Casey. Yes, sir. 

Mr. Irenee du Pont. Mr. Chairman 

Senator Vandenberg. Yes, Mr. du Pont. 

Mr. Irenee du Pont. I would like to ask if you have taken from 
the files the original copy of the patents, which it seems to me is the 
most important part of this controversy. I do not know what it 
contains. 

Senator Vandenberg. If it is available, it might be entered, but 
it is so technical that it seems to me that the interpretation of the 
situation made by your own officials is thoroughly competent. 

Mr. Irenee du Pont. It seems to me that the first-hand testimony 
of the actual contract ought to be the thing which governs, rather 
than somebody's interpretation. 

Senator Vandenberg. Let it be entered at any time you want to 
furnish it as an exhibit. Nevertheless, I disagree with you that these 
particular exhibits are not thoroughly pertinent and competent and 
material. 

This conference in 1928 was a conference relating to the sale of 
military products, was it not? 

Mr. Casey. Right. 



MUNITIONS INDUSTRY 2449 

Senator Vandenberg. And it is renewing a thoroughly intimate 
and close relationship, a sort of a reciprocal cooperation, between 
you and Nobel, is it not? 

Mr. Casey. No. This is a suggestion to renew a selling arrange- 
ment. The 1925 agreement did not include patents or secret proc- 
esses. They had been specifically excluded. 

Senator Vandenberg. You are suggesting the visit of Nobel's tech- 
nical man and complete hospitality in the matter and everything. 

Mr. Casey. As I just explained this, they had still not been able 
to manufacture the same powder on which they had information 
during the war, which was developed for the British cartridge at that 
time, and they were trying to get the British Government to adopt a 
nitrocellulose powder instead of cordite. To date, they have not 
succeeded. 

Senator George. Then Major Casey, we are to infer, or to under- 
stand, that they did not take advantage of this suggestion or offer? 
They did not send their technical experts ? 

Mr. Casey. They did, but you have got to take into consideration 
the typical British viewpoint. They sent over two men. One was 
an old long-range rifle shot, with whom I had been acquainted a 
number of years, F. W. Jones, and the other man was a doctor from 
Scotland by the name of Stickland. Those men came over and here 
is as far as they got : The very minute we began discussing the pow- 
der which we made for the British Government, their first attitude 
was, " You do not know how to make it." That is as far as we got. 
Every bit of the talk we had with them after that they tried to show 
us we were " all wet ", the answer being that if we were, they would 
now be able to produce the powder, and when they were given the 
opportunity during the war period to see how the powder was made, 
they would not have anything to do with it, and they did not know 
anything about making the powder. I was at the Ardeer plant in 
1925, and I saw them with German machinery which they had gotten 
from the German plants right after the war — I think there was a 
general distribution of it — I saw them trying to make German 
powder, and likewise on some of the German equipment they were 
trying to make our powder, and when they tried to make powder on 
a guillotine press, like a paper press, I could understand how they 
would not be able to make our type of powder, unless they changed. 
You cannot change the British nature. 

Senator Vandenberg. You have a great deal more technical knowl- 
edge about the manufacture of powder than most of the countries to 
which you sell, have you not? 

Mr. Casey. I would not say that, no ; but I think we have had more 
practical experience. You know that technical knowledge is one 
thing and application is another thing. Two experts may have equal 
technical knowledge but the actual " know-how " or operation as to 
the question of distinction between them is bad. 

Senator Vandenberg. This technical capacity, let us say, which 
you possess, becomes 

Mr. Casey. Technical and operating capacity. 

Senator Vandenberg. Technical and operating capacity which 
you possess becomes of considerable sales use, does it not, in the 
course of your foreign contacts? 

Mr. Casey. If we did not have it, we could not sell. 



2450 MUNITIONS INDUSTRY 

Senator Vandenberg. Precisely. 

Mr. Casey. Senator, I would say that in selling to a foreign 
country we have repeatedly run up against this situation : In spite 
of the fact they say " the powder is good, but not as good as we 
can make ", this being the foreign country, and " we like it ", then 
they start in to tell you that you are making it the wrong way. 
You always run up against that situation. The fact of the matter 
is : In the case of one country, to whom we never sold, they had 
a term in their own specifications which really meant unless you 
were able to get the water from the Danube Kiver you could not 
fulfill the specification — and we did not have a pipe line. That 
country was Rumania. After the war the same representatives 
who were here during the war came over, and the net result of that 
was — after being told that we still did not Iniow how to make 
powder and they did not want our powder — they wanted their 
own — yet on actual test their own did not show up as well as ours — 
and the net result of the proposition was an expense account for 
furnishing lemonade on all occasions to the representatives — and 
it was lemonade. 

Senator Vandenberg. As a statement of your company's policy 
with respect to the use of technical and operating capacity in sales 
promotion, let me read into the record the final two paragraphs 
of the letter of W. H. O'Gorman, who was Major Casey's assistant 
director, addressed to Colonel Taylor in Paris on December 12, 1927, 
which I will offer for appropriate number. 

(The letter referred to was marked " Exhibit No. 941 " and is 
included in the appendix on p. 2591.) 

Senator Clark, That reads : 

The matter of furnishing technical assistance to foreign governments or 
foreign plants is one which comes up quite often. In general, our policy is 
not to answer the question until we have some indication as to whether 
the giving of technical assistance will result in a large order or orders. If it 
is necessary to answer the question as to the giving of technical assistance 
before any information can be had as to whether the foreign government will 
agree to give us a percentage of its powder requirements over a period of 
years, we think our position should be as follows : 

The du Pont Co. will furnish technical assistance on powder manufacture, 
providing we can be guaranteed orders for a definite quantity of powder 
per annum over a period of 10 years. Of course, our decision will be based 
upon the quantity of powder which we will be permitted to manufacture 
for the customer over the specified period. 

Is that a fair statement of the attitude of the company? 

Mr, Casey. Yes, sir; but, Senator, before you leave that, realize 
this: O'Gorman is writing to our own man. Colonel Taylor, and 
while it is not expressed here, as I have stated repeatedly, we do not 
have to explain policies to our own people every minute. It stands 
without any further comment that that is also predicated upon 
Government permission and approval. 

EUROPEAN countries AIM FOR INDEPENDENCE IN POWDER SUPPLY 

Senator Vandenberg. This whole phase is further discussed in con- 
siderable more detail in Colonel Taylor's letter to Major Casey under 
date of March 3, 1930, which will be marked appropriately. 

(The letter referred to was marked " Exhibit No. 942 " and ap- 
pears in full in the text.) 



MUNITIONS INDUSTRY 2451 

Senator Vandenberg. I am now approaching another phase of the 
matter, which is of exceeding interest to me. I read : 

In the European countries where the joint sales of du Pont and Imperial 
Chemical Industries material are conducted by the Paris office, our prospects are 
limited to getting a few orders based on mobilization plans which we have 
stimulated. 

May I interrupt to inquire in how many different countries du 
Pont and I. C. I. conduct joint sales? 

Mr. Casey. At this time we were handling sales practically for 
both companies. We did not think they knew how to sell. 

The Chairman. That was in 1930? 

Mr. Casey. That was in 1930. 

Senator Vandenberg. To what extent? You mean all over the 
world ? 

Mr. Casey. No, no; this was Europe we were talking about. 

Senator Vandenberg. All over Europe? 

Mr. Casey. Yes, sir; including Turkey, I believe, and Persia. 

Senator Vandenberg (reading) : 

In the European countries where the joint sales of du Pont and Imperial 
Chemical Industries material are conducted by the Paris office, our prospects 
are limited to getting a few orders based on mobilization plans which we have 
stimulated. 

What does that mean ? How do they stimulate mobilization plans ? 

Mr. Casey. You do not stimulate the plans. I believe this was 
brought out in the previous hearing: Every nation has a mobiliza- 
tion plan. The trouble with nearly all these nations was that they 
were trying to fulfill the program called for by the mobilization plan 
but did not have the money with which to do it. Further than that, 
in the different branches requiring material, each one would try to 
get priority for his particular kind of equipment. In other words, 
there might be a certain amount of money available in that country 
for mobilization. The quartermaster would come along and say, 
"Yes; I must have this for canteens." They might want escort 
wagons, they might want trucks, tractors, or something of that sort. 
The Ordnance Department might want guns, they might want 
powder, they might want small arms, so that there was continually 
a fight in every country" as to who was going to get the right to spend 
the amount of money available on their mobilization scheme. That 
is what they were referring to here. 

Senator Vandenberg. Let me read the next sentence [reading] : 

We have such prospects in Poland, Holland, Finland, Esthonia, Latvia. 

In other words, in Poland, Holland, Finland, Esthonia, and Latvia 
you had prospects for getting a few orders based on 

Mr. Casey. Mobilization plans. 

Senator Vandenberg. Which you had stimulated. 

Mr. Casey. We have not stimulated the plan. We were trying 
to stimulate them to buy the powder on their mobilization program. 

Senator Vandenberg. They have the progTam and you are try- 
ing to stimulate them to get powder to carry out the program. 

Mr. Casey. To get our powder, which would be natural. You must 
realize also. Senator, if they buy guns and no ammunition, the guns 
are no use. 

Senator Vandenberg. Certainly not as deadly. 



2452 MUNITIONS INDUSTRY 

Mr. Casey. If they buy powder and do not buy the ammunition 
at the same time, or the components making up the ammunition, 
the powder is of no use. In every case, they have got to keep a 
balanced program. If they decide to buy guns, it generally means, 
if they use all the money for guns, they probably have to wait until 
the next year to buy ammunition. There is a time element in there. 
It may be that the guns take longer to produce than their am- 
munition, 2 or 3 years, and they say, " We will order the guns this 
year and the next year or the second year following we will have 
the ammunition for the guns." 

Senator Vandenberg. Wlierever they have a mobilization plan as 
a matter of business procedure you see if you can sell the stuff ? 

Mr. Casey. We try to secure some of it for our material. 
Senator Vandenberg. You try to turn that from a paper plan 
into an actual plan, wherever you find this situation existing? 

Mr. Casey. I vrould not say that. We try to get our part of the 
money which they have available. Senator, to say that we can in- 
fluence a foreign government as to its policy, I think it is self-evi- 
dent that such a thing is impossible. They have a policy and we 
have nothing to do with their polic}-, nor could we in any way pos- 
sibly have. They would not take us into their confidence. 

The fact of the matter is, I might add, that at the previous hear- 
ing I stated when we firet started or attempted foreign sales, which, 
with two exceptions before the war, was not begun until after the 
war, we found we were like children in the wilderness, and the 
first contract which we had was from an extremely friendly country 
to this country, and where they had actually started their pur- 
chasing in this countr}'^ through a purchasing commission on Fortieth 
Street in New York City, and it was several years afterward before 
we finally got a contract. 

Now, Colonel Taylor, who, when this thing started, was not in 
military service, when he began going around to the different gov- 
ermnents, the door was shut in his face. It was not until they 
began to realize that he would not leave that he was able to get 
by the outer door. The foreigners will come to this country and 
be surprised as to how easily they can get in to see people. Over 
there you cannot. They may keep you waiting in an anteroom 
for days, and when they finally let you get into the inside, you are 
ready to say, at least, " They are now ready to consider us as a 
possible source of supply." 

If the members of this committee think that this is a matter of 
just going some place and selling munitions, and that we have some- 
thing to say and they jump at it, they are very much mistaken. 

Senator Vandenberg. The committee has no such idea. 

Mr. Casey. If you would like to have first-hand information, I 
would like to put you on the job. 

Senator Vandenberg. From my observation of the methods em- 
ployed, I wouhl prefer to stay in the Senate. 

Mr. Casey. I will say this : I do not know what you get as a Sena- 
tor, but you ai'e certainly better off. 

Senator Vandenberg. (reading) : 

We have such prospects in Poland, Holland, Finland, Esthonia, Latvia, 
and based on your stimulation of their own mobilization plan? 



MUNITIONS INDUSTRY 2453 

Mr. Casey. That is true. 

Senator Vandenberg. They set up the plan and then your sales- 
men proceed to tell them that their plan is no good so long as it is 
just a plan on paper? 

Mr, Casey. No, On their mobilization plan — we have never seen 
an actual plan in any country — they have plans for powder, guns, 
ammunition, high explosives, and we say, " Why not buy some from 
us?" 

Senator Vandenberg. What good is it on paper ? 

Mr. Casey. What good is it on paper ? 

Senator Vandenberg. If they have a gun and no powder, what 
good is it? 

Mr. Casey, To make an ornament for some city. 

Senator Vandenberg. I will continue reading that letter [reading 
" Exhibit No. 942 "] : 

We may get one order from each of these countries, and there may be no 
more. The current business is gradually being well taken care of by local 
factories. 

However, the current production of the local factories is not entirely satis- 
factory. They are calling for help, and it might appear that the best chance 
we have of getting orders in the future would be to help them in their powder- 
factory plans. 

It is the ambition of every European country to build a local factory, or to im- 
prove the quality of their production, where factories already exist. The pro- 
duction, in existing factories, of a poor quality at high costs has not dis- 
couraged in the least the ambition of the country operating the factory, nor 
caused any hesitation on the part of other countries not owning factories in 
considering the erection of a factory of their own. 

The intention of each country is to produce in their local factory the type 
of powder that the government adopts as standard, or to adopt as standard the 
type of powder they can produce. 

In the territory directed by Imperial Chemical Industries, they have decided 
that their chances of business are so small that their only profit can be found 
in conjunction with assistance given to local factories. 

They are now negotiating various factory schemes in Bulgaria, Rumania, 
Turkey, and Yugoslavia. 

In the case of the powder factory in Turkey, Imi^erlal Chemical Industries 
have definitely arranged with Koln-Rottweil, Gute-Hoffnungs-Hutte, and 
Golzern-Grimma to supply the technical assistance. 

The Germans have been discussing for a long time with the Turks regarding 
the erection of a factory, and Imperial Chemical Industries decided that In 
order to get the job they would have to take the Germans in, which they did 
without consulting us, although they keep us informed at all times of what is 
going on. 

What does he mean by taking the Germans in? Have you any 
idea? 

Mr. Casey. I am not sure that my memory is very good on it, but 
I think that they had talked of taking in the" Germans in the erection 
of a powder mill in another country. 

Senator Vandenberg. Does that mean a German investment or 
does that mean the purchase of material in Germany? 

Mr. Casey. No; it meant a German investment. 

Senator Vandenberg. I read: 

It is believed that in our territory we should give consideration to this matter 
for the following reasons : 

(a) We have been approached several times by each of our customers to 
assist them in building a factory or in improving their present production. 

(&) When it becomes known that Bulgaria, Rumania, Turkey, and Yugo- 
slavia are being assisted by Imperial Chemical Industries and the Germans in 



2454 MUNITIONS INDUSTRY 

the production of a military powder, other countries will become more enthusias- 
tic about production in their own country. 

(c) If we continue to turn a deaf ear to our customers' requests for assistance 
in their predominant ambition, they will seek assistance either from Germany 
or from Bofors. 

(d) Two existing government factories in Europe, 1 in Turkey and 1 in 
Finland, produce the German type of powder. 

(e) The Gei-man type of powder is entirely satisfactory in Europe, and 
fulfills present-day requirements. 

(f) The du Pont type of powder is not produced by any local government 
factory in Europe. 

(g) It would be a great asset if the du Pont type of powder would be 
adopted as standard in some of the European countries, and produced there. 

(h) In order to adopt du Pont powder as a standard type, the interested 
country must be able to produce it. 

We recommend that: 

(a) The Paris office be authorized to negotiate the sale of "know how" for 
the production of such du Pont rifle and cannon powder granulations as cus- 
tomers may adopt as standard. 

(6) Definite proposals be submitted to Poland for F.N.H. powder and pyro- 
cannon powder, and to Holland for cannon and rifle powders. 

Very truly yours, 

William N. Taylob. 

Now, if this analysis of the European situation is correct, it would 
appear that no European country intends to remain dependent upon 
a foreign country for its powder supply, if it can possibly help it. 
That is a fair interpretation, is it? 

Mr. Casey. Eight. 

Senator Vandenberg. So that this means that you face the predic- 
ament of the ultimate disappearance of your European market, when- 
ever they achieve powder independence of their own, does it not? 

Mr. Casey. Eight. 

Senator Vandenberg. You apparently recognized this fact in 1925, 
as long ago as 1925, and I am very much interested in the memoran- 
dum of a meeting held at Nobel House on November 9, 1925, which 
is offered for appropriate number. 

(The memorandum referred to was marked " Exhibit No. 943 " and 
is included in the appendix on p. 2592.) 

Senator Clark. I read from this memorandum : 

President: Mr. Ir^nee du Pont, Maj. K. K. V. Casey, Col. W. N. Taylor, Mr. 
A. G. Major. 

The discussion evidenced that the du Pont representatives accept our theory 
that eventually : (1) European countries will be self-supplying and/or (2) draw 
their supplies from countries more logically situated (geographically) than the 
U.S.A. and that jointly du Pont and ourselves should adopt the policy of afford- 
ing technical assistance to European countries wishing to erect factories in re- 
turn for a fee and the guarantee of jiowder orders to us during the erection 
period. 

So that as early as 1925 you quite generally recognized the fact 
that your European market would dry up witli respect to American 
sales ? 

Mr. Casey. Yes, sir. 

Senator Vandenberg. And that therefore apparently the only pro- 
gressive outlet for the time being was through cooperation in the 
creation of these independent producing units in their various foreign 
countries, and you would get as much out of it incidentally by way 
of temporary orders and fees as you could? 

Mr. Casey. As a matter of interest, Senator, nothing ever came of 
any of it. 



MUNITIONS INDUSTRY 2455 

Senator Vandenberg. None of these plans have ever succeeded ? 

Mr. Casey. Not a bit. In connection with this letter of Colonel 
Taylor's of March 3, 1930, you may not have drawn the reply from 
my files. On account of my voice, I would like to have somebody 
else read this. This is the reply from O'Gorman, which is in reply 
to letter T-1862. Will somebody else read it? 

Senator Vandenberg. Will you read it, Mr. Raushenbush ? 

This is a complete confirmation, is it not? 

Mr. Casey. Of his general idea. 

Senator Vandenberg. Of his general idea. Perhaps it will suflfice 
if we enter it in the record at this time, without taking the time to 
read it, unless you want to have it read. 

Mr. Casey. I do not think there is any need. 

Senator Vandenberg. All right, let it be entered. 

(The letter referred to was marked " Exhibit No. 944 ", and is 
included in the appendix on p. 2593.) 

Mr. Casey. In connection with all these European factories we 
are beginning to talk about around this period, I would like to read 
an extract from a letter of Colonel Taylor's dated September 5, 
1932. 

Senator Vandenberg. Yes, sir. 

Mr. Casey. He says: 

The result was that in 1925 all the projects for building local factories 
were pushed and a great many new ones developed. The net result of the 
threat of this convention was, I am told, that over 300 building projects 
were considered before January, 1926. 

A great number of projects which might otherwise have died have succeeded 
in becoming realities. 

Such as in Tinland, Latvia, Zagadore * * * also some 40 factories in 
Poland for other materials, 6 in Yugoslavia including powder plant, rebuild- 
ing of i)owder factory in Roumania, 4 factories built in Turkey, and an at- 
tempt to start a series of factories in Greece, reconstruction of arsenals in 
Spain, government assistance to powder factory of Minden in Holland, and 
the decision by Italy that the Italian army would only buy from Italian 
factories. 

That is the result of the Geneva Conference in 1925. 

In referring to the date of January, 192G, I think that date is 
important when you realize when the convention was held. 

Senator Vandenberg. Mr. Chairman, I think I can conclude on 
this matter in about 15 minutes. 

Referring now to this method of procedure of sales, I call at- 
tention to the Polish proposal made some time subsequent to 1924, 
and I call attention to the next exhibit, which will be given an ap- 
propriate number, which is cable No. 184. 

(The cablegram referred to was marked " Exhibit No. 945 ", and 
appears in full in the text.) 

Senator Vandenberg. This is a cable from Mr. A. Felix du Pont, 
on April 25, 1924, and reads : 

Cable No. 184. 

Negotiations with Poland powder plant proposition requires instructions 
in manufacture flake I.M.R. powder. Ask Chief of Ordnance, Army, for per- 
mission in writing to give these instructions and telegraph result. 

Is that the I.M.R. powder that was described in the previous 
testimony ? 

83876 — 35 — pt 11 5 



2456 MUNITIONS INDUSTRY 

Mr. Casey. No ; flake powder was a type of powder we made on a 
few occasions similar to, the powder made by the German company 
Koln-Rottweiler, but made in a different way because we have not 
their equipment. 

Senator Vandenberg. It has no relation to the I.M.R. powder that 
the War Department declined to let you release? 

Mr. Casey. No more relation than our I.M.R. powder had to 
earlier forms of progressive-burning powders in Europe. 

Senator Vandenberg. I do not know what that is. Your answer 
is there is no relation here? 

Mr. Casey. I do not want to make a flat statement that there is 
no relation, because all progressive-burning rifle powders work on 
one principle; that is, a deterrent on the outside of the powder to 
move the pressure curve down the barrel rather than have it at the 
breech. That is the principle of a progressive-burning rifle powder. 

Senator Vandenberg. The answer is in the next exhibit, which will 
be marked. 

(The document referred to was marked "Exhibit No. 946", and 
appears in full in the text.) 

Senator Vandenberg. It is a cable to Mr. A. Felix du Pont on 
April 29, 1924: 

[Felix Cable No. 97] 

Refer to your telegram no. 184, have letter in hand from Chief of Ordnance 
authorizing us to assist and instruct Poland in manufacture of flake rifle 
powder and other military powders are mailing to you today copy of letter. 

In other words, the Chief of Ordnance authorizes you to assist 
in the construction of this powder factory in Poland ? 

Mr. Casey. Yes. 

Senator Vandenberg. And to use your flake I.M.R. powder 
processes in that connection? 

Mr. Casey. Yes. - 

Senator Vandenberg. And the alloy of our own War Depart- 
ment in this same connection is emphasized in this same trans- 
action, not only by the authority given you by the Chief of Ord- 
nance but also by a sentence which I will read from the next 
exhibit, which is C. I. B. Henning's report under date of April 29, 
1924. from Washington. 

(The report referred to was marked " Exhibit No. 947 ", and is 
included in the appendix on p. 2593.) 

Senator Vandenberg. In which he says : 

The flake rifle powder situation was emphasized, and apparent contra- 
dictions were cleared up. 

Perhaps these contradictions were the same things that confused 
me regarding I. M. R. powder [reading] : 

Even before seeing our letter, General Ruggles had dictated an endorsement, 
relating to the military attache's cable, stating that it was vastly more im- 
portant to encourage the du Pont Co. to continue in the manufacui'e of 
propellants for military use, than to endeavor to protect secrets relating to 
the manufacture. 

Who was General Ruggles at this time ? 
Mr. Casey. Assistant Chief of Ordnance. 

Senator Vandenberg. This is the same General Ruggles who later 
was a United States delegate to the Geneva Conference in 1925? 



MUNITIONS INDUSTRY 2457 

Mr. Casey. Yes. 

Senator Vandenberg. General Euggles is quoted as asserting the 
policy of the United States Government that it is vastly more im- 
portant to encourage the du Pont Co. to continue in the manufac- 
ture of propellants for military use than to endeavor to protect 
secrets relating to the manufacture. And the personification of this 
opinion is the fact that they at the moment permitted you to make 
this arrangement with Poland. 

Mr. Casey. To try to make. 

Senator Vandenberg. To try to make this arrangement with 
Poland. 

Mr. Casey. There is an awful difference there, Senator. 

Senator Vandenberg. I suppose there is. I found that out by the 
cross-examination. 

Mr. Irenee du Pont. You asked some time ago whether the pro- 
hibition on the giving of the secrets of the I. M. R. powder had ever 
been reversed in writing. At that time it was a rather unsatisfactory 
answer. I think this does answer that the letter was written. 

Senator Vandenberg. But this refers to I. M. R. flake powder. 

Mr. Irenee du Pont. Yes ; and other military powders. 

Senator Vandenberg. Do you think that includes I. M. R.. flake ? 

Mr. Irenee du Pont. I do not know. This includes the manufac- 
ture of flake rifle powder and other military powders. 

Senator Vandenberg. Do you read that as a reversal of the atti- 
tude? 

Mr. Irenee du Pont. It sounds like it. I know nothing about it, 
but I just wanted to call your attention to it. 

Mr. Casey. Senator, I think I can explain why General Ruggles 
took that position. We made an arrangement with General Williams, 
as Chief of Ordnance, in 1919, and it was based on this : I had just 
heard the rumor in Wilmington that the directors of the company 
were considering going out of the powder business. They had a great 
many reasons why. There was the Government with the two finest 
powder plants in the world. Old Hickory and Nitro. There were 
tremendous stocks of powder left over from the war. It did not 
seem feasible, nor possible, that there would be any further occasion, 
for some years to come at least, for us to be in the powder business. 
When I heard that I simply said to General Williams, " This is what 
is being talked of ", and that started a letter from General Williams, 
which resulted in an agreement of September 25. Now, I think you 
will find — Mr. Raushenbush, you pulled all that. 

Mr. Raushenbush. Yes; we have all that. 

Mr. Casey. You have all that? 

Mr. Raushenbush. Yes. 

Mr. Casey. I believe those letters should be read into the record 
at this time. 

Mr. Raushenbush. At the proper time they will be. 

Mr. Casey. Then, if they will be put in the record, let me just give 
you an idea of what it means. General Williams said he thought it 
would be a serious blow to the national defense if the du Pont Co., 
with its vast reservoir of technical information and know-how, were 
to lose interest in the production of military propellants particularly, 
and likewise the possible effect it might have on the national defense 
in time of emergency. 



2458 MUisriTioNS industry 

At that time, as the result of experiences during the war, the result 
of the report of the Westervelt Board, there were something like 
two hundred and seventy-five odd problems to be solved in con- 
nection with military propellants and explosives. 

As a result of that we said, " Well, we will try it. We will con- 
tinue going." At the same time General Williams said he, however, 
could not promise to give us any business, but he hoped we would 
stick by the crowd. The fact of the matter remains that we did not 
get any business from the Government, and then only in very small 
quantities, for several years to come. 

I think a little prior to this date of 1924, or it may have been at 
the same time or slightly after, I know there was a newspaper article 
that said something about du Pont going out of the powder business, 
and Irenee du Pont received a letter from General Williams hoping 
that that rumor was incorrect and asking him if we would still not 
continue in the game. 

Now, from our own viewpoint in the entire smokeless powder 
department, we never knew at any time, in spite of this arrangement 
whereby they would see the proposition probably so far in the 
future, but what we might all be out of jobs. 

So you can readily see, in view of the fact that improvements in 
material of this type are taking place daily, that they considered it 
was more important to keep us in the game, because if you gave 
information under such an arrangement as suggested here this year, 
the whole thing might be radically changed by something that took 
place in the course of the next year. 

Senator Vandenberg. So we find ourselves in this position: The 
instrumentalities of defense are constantly improving from day to 
day. 

Mr. Casey. Yes. 

Senator Vandenberg. And as rapidly as we make improvements 
over here, these improvements presumably giving us an advantage 
in our defense, we are in the anomolous position of being forced to 
let the other fellows have the advantages which we had obtained for 
ourselves, in order to keep our munitions manufacturers going, so 
that we can take advantage of the same progressive steps? 

Mr. Casey. Well, I don't know. I think that is stating it a little 
crudely. 

Senator Vandenberg. I think it is worse than crude. If you can 
state it any plainer, I wish you would. But you get my idea. 

Mr. Irenee du Pont. Isn't that true. Senator, in practically every 
technical manufacturing process? Take the automobile manufac- 
turners, when they bring out new ideas, they are passed on to the 
other fellows. 

Senator Vandenberg. Yes; but there is a vast difference there. 
T suppose the automobile is a dangerous weapon under some cir- 
3umstances, but there is no analogy, as I view the situation — and I 
do not mean to enter any personal opinions in this testimony, but 
you have raised the point — I don't think there is any analogy be- 
tween private cars, in the normal sense, and the munitions trade, 
because the making of private cars involves only a commercial 
aspect, whereas the munitions trade involves the life, and the trade 
of the country indirectly, and the physical life and death of its 



MUNITIONS INDUSTRY 2459 

people. So you cannot consider them in parallels. It seems to me 
we now have the amazing proposition that as an abstract proposi- 
tion wlien the United States perfects a new advantage in the art of 
self-defense, we must sooner or later impart that knowledge to all 
the rest of the nations of the earth, which must include our potential 
enemies against whom we are attempting to set up our defense in 
prospect. We must impart this advantageous information to our 
potential enemies, or our private munitions manufacturers in the 
United States will be unable to continue to arm us with this ad- 
vantageous thing. It seems to me that that is the proposition which 
we confront. 

The Chairman. Doesn't it come to this in just a word : That we 
must arm the world under this practice, so that we can have the 
capacity to take care of ourselves in an emergency, when and if the 
world decides to use our devices against us ? I don't think there is 
a more thorough argument against the private manufacturer of 
munitions than that one to which you have just directed yourself, 
Senator. 

Mr. Caset. Senator Nye, a military secret is a secret for only 
about 2 years. 

The Chairman. Less than that very often, is it not? 

Mr. Casey. No; I am saying a government secret like you talk 
about is a secret for only about 2 years, because just as soon as tests 
are made it does not take long for the thing to drift around. 

The Chairman. How do you account for the drifting around? 

Mr. Casey. Does not our Government maintain and every other 
foreign government maintain military and naval attaches? 

The Chairman. Yes. 

Mr. Casey. What is their job? 

The Chairman. You think that that is their job? 

Mr. Casey. I ask you the question, what is their job ? 

The Chairman. I do not know. What is their job ? 

Mr. Casey. To get information. 

The Chairman. You think they are the ones who get the infor- 
mation and convey it back home ? 

Mr. Casey. That has nothing whatsover to do with private manu- 
facture. 

Senator Vandenberg. I had a number of other exhibits which I 
was going to introduce bearing upon your negotiations with the 
Dutch Government and with the Belgian Government, in each in- 
stance simply typifying this same general situation which we ap- 
parently now confront, namely, that in return for technical assistance 
in establishing their own munitions institutions, if you are given 
interim orders that are adequate, you are perfectly willing to set 
them up in business. 

Mr. Casey. Don't say we are. 

Senator Vandenberg, Who shall I say is willing to set them up 
in business? 

Mr. Casey. Say the Government is walling to have us do it, pro- 
vided we get production. The Government has absolutely no in- 
terest 

Senator Vandenberg. Exactly. 

Mr. Casey. In our building a plant in a foreign country. 



2460 MUNITIONS INDUSTRY 

Senator Vandenberg. I understand. I am simply coming to this 
conclusion : If this thing then is carried to its ultimate conclusion 
and your prophecies are correct, it is only a matter of a short time 
when you will have, assuming that the system works as you expect 
it to work, when you will have or somebody else will have assisted 
all of these foreign countries to become self-dependent in respect to 
these supplies and you will be out of the export business. 

Mr. Casey. There is no doubt of that last part. 

Senator Vandenberg. That is the ultimate result of the forces 
that are at work, if they work as you contemplated they would work. 

Mr. Casey. Let me remind you. Senator, there, that it is self- 
evident from these reports of Taylor's, that what they wanted assist- 
ance on was in reality on improving their own type of powder. 
France took enormous quantities of our powder during the war, but 
they have never made, as far as I know, a bit of that powder since. 
They still believe in their own type of powder. That will apply 
throughout Europe. The fact remains, as stated, that there is not 
one nation in Europe making the du Pont type of powder, even 
though they were given the information to make certain types of 
powder during the war. 

Senator Vandenberg. But the thing I am trying abstractly to 
establish is that the American export business in powder, if not al- 
ready at an end, will be at an end just as soon as this self-sustaining 
manufacturing activity has been concluded in the other countries. 

Mr. Casey. I think so. 

Senator Vandenberg. And it is the policy of your company now 
to contribute to the making of these countries self-sustaining? 

Mr. Casey. No. 

Senator Vandenberg. Oh, yes. You are perfectly willing to give 
them technical assistance in establishing their own factories, so long 
as you have the interim orders for powder. 

Mr. Casey. I don't think that is quite a fair statement. 

Senator Vandenberg. I want it to be fair. What is the statement? 

Mr. Casey. Here is the summary of the situation, put up by Tay- 
lor, the way tlie future looks to him. He has shovrn that the Geneva 
Conference of 1925 resulted in this tremendous expansion in all 
Europe, where they all began to realize if that did not take effect 
then ultimately it would be at the place where every nation would 
have to be self-supporting, as far as plants were concerned. 

There is this distinction, however, that certain nations, in spite of 
the fact they have their own plants, would still be dependent on 
imports to operate those plants. For instance, how many nations of 
the world produce cotton? And cotton is the very backbone of 
powder. How many nations would have to import fuel, whether it 
is in the form of coal or oil? How many nations would have to 
import toluol for the manufacture of TNT ? 

That is why in a great many cases this race for putting up their 
own plants went into effect as the result of the Geneva Conference. 
In a great many cases in these nations a powder plant was the last 
thing in the world they would want, because when they actually 
needed material in time of war they would be up aganist the same 
problem that England faced in the World War, the question of 
tonnage. It is better to use every bit of tonnage you have to import 



MUNITIONS INDUSTRY 2461 

something you can use rather than to use from 9 to 15 times that 
tonnage in order to then have a net result of 1 ton. 

Senator Vandenberg. I think we are through for this morning. 

The Chairman. The committee will be in recess until 1 : 30. 

(At 12 : 15 p.m. the committee recessed to 1 : 30 p.m. of the same 
day.) 

AFTERNOON SESSION 

(The committee reconvened at 1 : 30 p.m.) 

TESTIMONY OF K. K. V. CASEY, lEENEE DTJ PONT, LAMMOT DU 
PONT, W. R. SWINT, A. FELIX DU PONT, AND DR. FIN SPAERE— 
Resumed 

EXCHANGE OF TECHNICAL INFORMATION BY MUNITIONS COMPANIES 

The Chairman. The committee will be in order. 

Mr. Casey. Senator Nye 

The Chairman. Just a moment, please. The committee is having 
to announce that by reason of the illness of Senator Clark it is not 
going to be possible for the committee to go on with the intended 
program of this afternoon. Except for a little finishing up on the 
case that Senator Vandenberg had in hand this morning and such 
statements as the Chair understands witnesses wish to make, the com- 
mittee will recess until Monday very early this afternoon. 

Senator Vandenberg. Major Casey, just one further exhibit. In 
respect to this question of the interchange of information, and 
whether or not it involves military processes, I show you a letter 
from C. A. Woodbury, director. Who is Mr. Woodbury? 

Mr. Casey. He is chemical director of the explosives department, 
of which I loiow very little. 

(The letter referred to was marked " Exhibit No. 948 ", and is 
included in the appendix on p. 2594.) 

Senator Vandenberg. This is Director Woodbury writing under 
date of November 10, 1933, to Mr. W. R. Swint, director, foreign 
relations department, and dealing, as it states, with du Pont LCI. 
patents and processes agreement. I read : 

In answer tO' the questions contained in your letter of November 2: 
1. We have received no valuable assistance from I.C.I, on new products or 
new processes, but have had valuable assistance along the line of improvements 
in existing processes in two instances: (a) In the process for refining TNT 
and (6) the complete process for manufacturing tetryl. 

Are not TNT and tetryl military instrumentalities ? 
^ Mr. Casey. Partly so, but tetryl has a tremendous use in peace 
time in blasting caps. 

Senator Vandenberg. How about TNT ? 

Mr. Casey. That is also used in the manufacture of Cordeau Bick- 
ford and likewise used in certain commercial explosives. 

Senator Vandenberg. It is primarily a war explosive, is it? 

Mr. Casey. Not in the sense used here, because the question of war 
explosives is a question of melting point. In other words, you may 
have a TNT with a very low melting point which will have no use 
whatever for military purposes. I am talking now, understand, on 



2462 MUNITIONS INDUSTRY 

something that is really out of my bailiwick. I think somebody 
else ought to handle this proposition. 

Senator Vandenberg. I am not sure but what I am. doing the 
same thing, Major. 

Mr. Casey. I might make statements which are absolutely incor- 
rect. All I was giving you was just my own understanding. 

Senator Vandenberg. I was struck as I read this with the im- 
pression that this would indicate an exchange either of information 
directly relating to military propellants 

Mr. Casey. Not propellants. High explosives. 

Senator Vandeberg. Explosives, or, at least, to explosives that 
have had a major military purpose and use. Am I wrong about 
that? 

Mr. Casey. Wouldn't it be better to have somebody else answer 
that? 

Mr. SwiNT. I am the man to whom this communication was 
addressed. 

Senator Vandenberg. You were sworn yesterday? 

Mr. SwiNT. Yes. 

Senator Vandenberg. Wliat is the answer to that question, then? 

Mr. SwiNT. The answer is no, Wliile these explosives are used 
in military explosives, in peace time they are not used for military 
purposes and they have a very large use in ordinary industrial 
explosives. 

Senator Vandenberg. What explosives are exclusively military? 
Any? 

Mr. SwiNT. I suppose some of the military propellants would not 
have any use in industrial explosives or as industrial explosives. 

Senator Vandenberg. Would it be fair to say that an exchange 
of information regarding nonmilitarj^ explosives in peace time would 
exchange information which would become of value in war time? 
Is that a fair statement? 

Mr. SwiNT. That is a fair statement to the same extent that ex- 
changing information on all other commodities applies. 

Mr, Vandenberg. I understand, but whether the analogy is justi- 
fied is a matter of argument, and we will not argue it. I am simply 
asking the general question: The exchange of information regard- 
ing explosives that are peace-time explosives in peace time, could be 
of value, could it not, in war time? 

Mr. SwiNT. Yes; with that same qualification. 

Senator Vandenberg. Now, Dr. Sparre, you said this morning in 
the recess that there w^as some comment you wanted to offer sup- 
plementary to your testimony this morning. 

Dr. Sparre, Yes. 

Senator Vandenberg. We would be very glad to have you say 
what you wanted to say. 

Dr. Sparre. Just a few comments to supplement Major Casey's 
statements in regard to I. M. R. especially. 

I think the first idea in regard to that type of powder came up in 
1905, but no use was made of it. It was an incomplete invention, if 
you call it that. 

We obtained information from Germany in 1908 and 1909 in re- 
gard to their types of improved military powder, namely, the flake 



MUNITIONS INDUSTKY 2463 

powder which Major Casey referred to. That information we re- 
ceived and we paid for it, and we gave no information to the 
Germans. We inspected their factory, but we gave them no informa- 
tion, because they were not interested in the standard types of 
military powder which we manufactured. 

During the war when I went over with the military mission, there 
had already preceded me to England the Mr. Henning referred to 
in the testimony heretofore, who was our ballistics engineer, as well 
as a man very well versed in all branches of military powder manu- 
facture. The officials of the British Munitions Commission compli- 
mented Mr. Henning very highly for the complete cooperation he 
gave them, at the orders of the American Chief of Ordnance. When 
1 came over there they mentioned it to me. He was nominally my 
subordinate at that time. 

There had already preceded me over there Mr. Jackson, a construc- 
tion engineer, and the orders from the Chief of Ordnance were to 
construct plants in accordance with our practice. I gave some in- 
formation as well. Therefore, they had complete information, both 
from a construction standpoint, a ballistics standpoint, and every- 
thing else, in regard to the manufacture of our I.M.R. powder and 
the state of the art at that time. The only thing which they had 
not at that time were the licenses under patents, but during the war 
time we did not pay any attention to patent rights. But there was 
absolutely no military information given to the British or French or 
anybody else that I know of except under orders from the American 
administration. 

Now, I visited foreign powder factories several times during the 
years I have been with the company. I have never given any mili- 
tary information to anybody that I know of. I never heard of any- 
body giving any military information. I just do not see how such 
a statement can be made. I have been with du Pont for 31 years 
and never heard of it. I was in charge of the Central Laboratory 
for the du Pont Co. for many years. I have been for many years 
in their development department. It is a mystery to me how the 
statement can be made. 

Of course, this is an art which very few people understand. This 
art is not taught in colleges or universities. You have got to be in 
the industry to understand it. There is a considerable overlapping 
of military explosives and commercial explosives, as far as the 
fundamentals are concerned. By that I mean, that is largely as far 
as economics are concerned. 

Now, when you mention TNT, the valuable information there of 
which we now talk about is whether we can cut the cost of manufac- 
ture a quarter of a cent a pound, or something of that sort. When 
we come to the military use of TNT, you require a very high degree 
of purity in order to be acceptable to the military authorities. I do 
not know that we ever exchanged information on that type of TNT, 
but only on the type which is used in commercial explosives, which 
is of lower degree purity. 

Of course, during the war I saw the manufacture in both France 
and England of the military type of TNT, and w^e got complete 
knowledge of their manufacture of TNT during the war, and I 
dare say they got our information, too; but, as a matter of fact, 



2464 MUNITIONS INDUSTRY 

we got the TNT information from the British and the French. We 
did not manufacture TNT until we got the information from the 
British and the Germans before the war. It was an unknown manu- 
facture to us. We acquired that knowledge and we paid for it. We 
have acquired a great deal of military information from the other 
companies and paid for it. I do not know of any information which 
we have given them. I would like to have pointed out to me what 
information it is. The statement has been made that we have sold 
military secrets. You know more about military secrets than I do if 
you can make that statement. I will ask you to please tell me what 
it is. I never heard of it. 

The Chairman. I see what you are worrying about. What I am 
wondering about is whether there is any such thing as a military 
secret. I do not know that we have run into one yet. 

Dr. Sparre. I certainly think there are military secrets. There 
is no doubt about it. 

Senator Vandenberg. Are there any military secrets, Doctor, when 
we find General Ruggles stating to your representative that he is 
perfectly willing to part with any so-called " improved and tempo- 
rary secret processes " that the Government possesses, so long as it is 
necessary to keep the du Pont Co. in business. 

Mr. Irenee dtt Pont. That only referred to military powder. 

Dr. Sparre. That is not a military secret. 

Senator Vandenberg. Is not a military powder, if it is a progres- 
sive, improved thing, a distinct military secret? 

Dr. Sparre. Yes; but we did not give out any information in 
regard to the type of military powder which the United States 
Government uses. We have to remember that the Brazilians make 
military powder of the same general type; the Germans do: it is 
made in the Scandinavian countries. They make the particular 
type of powder which we call surface coated powder. We call it 
I.M.R. It is a type of powder which is manufactured in many, 
many countries. We manufacture that powder of a certain gran- 
ulation. We have our way of doing it. The Germans have 
a flake type. We have it in the form of small tubes. We have a 
different coating agent. The Germans have a coating agent. We 
do not use their coating agent. These may be classified as military 
secrets, but we did not give the information away. 

As Major Casey explained, we offered to sell or did sell — ^I have 
forgotten which — flake improved powder. That was the German 
type of powder which we made. It was not the American type, as 
standardized by the United States Government. 

Senator Vandenberg. What were the military explosives or mili- 
tary propellents upon which information was exchanged with Nobel 
in the early twenties, when your legal department was insisting 
that you had to give them everything you had? What military 
information did they get at that time, if any? 

Mr. Irenee du Pont. I want to correct your statement that the 
legal department insisted that we had to give them everything we 
had. That was subject to Government approval. That contract 
which was drawn up in 1914 and carried over, I think, to some- 
thing like 1925 or 1923, specifically stated that it was subject entirely 
to Government approval. 



MUNITIONS INDUSTRY 2465 

Dr. Sparre. Let me give an example, Senator Vandenberg. You 
asked the question, "What is an exclusively military explosive?" I 
will just cite an example that comes to my mind. That is gun cotton 
as used in naval torpedoes. I do not know that it has any commercial 
application. We do not manufacture it. We could not give informa- 
tion on it if we did not know anything about it. 

Now, to show the misunderstanding about these things, I want to 
refer, for instance, to some testimony which Mr. Raushenbush intro- 
duced. He referred to certain sales of technical information in re- 
gard to nitric-acid plants which we had sold to different countries. 
We have given that same information to several American companies 
and to several European companies. But, furthermore, we published 
complete information about the principles, about the construction, 
even photographs of the plant in Industrial and Engineering Chem- 
istry in November 1927, in Canadian Chemistry and Metallurgy in 
November 1930, and in the Journal of Industrial and Engineering 
Chemistry in August 1931. 

Those are publications which are found in all technical labora- 
tories the world over. 

How that can be called a military secret I do not know. In the 
first place it is a commercial product. There is not 2 percent, I 
don't believe, of nitric acid which is used in the manufacture of 
military explosives, except in time of war that percentage goes up. 
But today 98 percent, about, of nitric acid is used for purely commer- 
cial things. 

Furthermore, the information was all published. Wliatever patents 
we could take out were in accordance with American patent practice 
also published. In the first place, it is not military, and in the second 
place it is not secret. 

Now, Senator Vandenberg, you also will realize this: That the 
American statutes encourage the taking out of patents, because if an 
inventor does not cover this invention by a patent he runs the risk 
of losing the entire value of his invention. In accordance with the 
statutes, the inventor is compelled to submit a full, complete, precise 
statement of his invention, involving such a complete disclosure that 
anyone skilled in the art can duplicate the invention and duplicate the 
product and practice the invention. 

When the American Patent Office accepts that invention as patent- 
able, the Patent Office publishes that information in the United' States 
Patent Gazette, which is available in practically all of the libraries 
over the world, and I know from personal experience that all of the 
chemical companies over the world take regularly that Patent Gazette. 
For 10 cents you can get a complete copy of the patent. Further- 
more, anyone, whether he be an American citizen or a foreigner, at 
negligible expense, writing into the Patent Office and asking for a 
complete copy of the correspondence between the inventor and the 
Patent Office, can obtain it, and all of the letters going out for a 
period of years disclosing the thing completely are available for 
practically nothing to competitors and anybody "else. 

It is certainly an act of common sense for an inventor to apply for 
a patent in foreign countries, because the Patent Office published in- 
formation makes a gift of it to anybody. If there are enemy coun- 
tries, as you suggest, Senator Nye,* they can get the information for 



2466 MUNITIONS INDUSTRY 

nothing. Why should not an American inventor apply for a patent 
in foreign countries? If it is an enemy country, at least you make 
the enemy pay for it. But, as you suggested, it Avas not even paid for. 
How can an American inventor or an American Corporation be criti- 
cized for doing that thing which is merely complying with the 
American statutes. 

I have been in this business for 31 years, and I have been dealing 
with literally thousands of patents. I suppose over my desk I 
handle annually between one and two thousand suggestions of new 
developments, and I never yet found any other way of handling it 
than we are doing. 

Senator Nye, if you know of a better way, I will be thankful to 
learn it, because it would give me great help in handling this busi- 
ness; and yet it is a very serious accusation which you have made 
against this company, I take it to heart personally, because it is my 
business to handle these things and I do not know of any better way 
to handle them. 

The Chairman. Perhaps we quibble over the word " secret " too 
much. It seems to me that it does not matter what we call it. 
The facts are that there is taking place daj"^ after day the sale of 
what is, if not a military secret, a military advantage, that is ours 
here in America, by reason of the ownership or production of a thing 
which enters into national defense. It seems to me that is the thing 
we are primarily concerned with. You ask what to do about it. 
Very frankly, I am uncertain in my own mind what we can do 
about it. 

Dr. Sparre. Let me make one suggestion. 

The Chairman. But the further we move along in this study I 
am very frank to say, the more thoroughly convinced I become that 
the business of providing the national defense as relates to the pri- 
mary things entering into national defense ought to be a government 
owned and government controlled thing altogether. I do not like 
the idea in toto — it is an exceedingly difficult thing to work out — but 
you have asked me the question, and I am answering you, not for 
the committee, but only for myself. It seems to me the sooner we 
cease this practice of arming all the world so we can have capacity 
to fight the world with when the world turns on us with those things 
we have sold them, the better off we will be. 

QUESTION OF CONTROL OF CHEMICAL, INDUSTRY IN RELATION TO 
DISARMAMENT 

Mr. Casey. Senator Nj^e, you said a little while ago you would 
give me permission to introchice into the record a report which was 
in our files but which was not taken. It has to do with the question 
of this morning's and likewise the present subject. I would like to 
read it. 

The Chairman. Yes. 

Mr. Casey. It is dated January 13, 1933, and is a memorandum 
from Colonel Simons : 

Colonel Taylor in his T-2554 of December 28, 1932, forwards his annual 
report, and comments on European conditions in general, not only as regards 
the business outlook, but also as regards the political and military aspects. 



MUNITIONS INDUSTRY 2467 

His comment on disarmament is of sucli interest and importance that I extract 
it for your attention as follows : 

" In view of the very great effect in Europe of the convention covering the 
limitation of the traffic of arms, signed at Geneva in 1925 but not ratified, in 
accelerating the construction of government factories in Europe, the ofti(,'e has 
been very much concerned as to what might be the result of the present dis- 
cussion at Geneva. 

" There is no need to describe the visible result of this conference as this has 
been well covered by the press ; but we have been trying to find out what the 
real effect would be. 

" It is the opinion of the military manufacturers that no limitation will be 
put on government manufacture ; for example, in France, there are 300,000 
people employed in the government arsenals, and nearly all these men vote 
for the socialist deputies ; therefore, while the socialist deputies with their 
liberal doctrines cry for disarmament, any attempts on the part of the 
French War Department to close down the government factories are bitterly 
opposed by these same deputies on the basis that it would throw voters out 
of work. In many other countries the same situation exists, and whenever 
there has been a tendency on the part of the military administration to reduce 
governmental manufacture, it has been always opposed by the Labor deputies 
on the basis that it would put men out of work. 

" It is, therefore, generally believed that there will be no limitation to govern- 
mental manufacture. The only thing which will be acceptable to the politicians 
is limitation on private manufacture ; and it is further supposed that in case of 
further limitation on private manufactui'e, that the present private factories, 
such as Hotchkiss in France and Bofors in Sweden, will be immediately trans- 
formed into governmental arsenals and continued as before. It is also sup- 
posed that no limitation will be put on the delivery of arms from one govern- 
ment to a friendly government; hence there will be some export business from 
the government factories. 

" The net result of this conference so far has been the tendency on the part 
of the governments to develop governmental manufacturers and to spend their 
money at home. 

" There is also a tendency, which does not affect the armament business, for 
the military advisers to devise suggestions destined to obtain military advan- 
tages for their respective countries. One of the motives back of the French 
proposal, that all countries should establish a conscription is to upset the pres- 
ent German system of handling their Reichswehr. The Reichswehr is limited to 
100,000 men of 12 years' enlistment and it would appear reasonable to suppose 
that there should be at present a number of soldiers around the ages of 33 or 
34 ; the fact is that when one meets a soldier of the Reichswehr he is a young 
man in the early twenties, and it is pretty well accepted that there are several 
men available under the same name and hence training much larger number of 
men than permitted. The French feel that this is a more dangerous system 
than general conscription. Both the French and German proposals for disarma- 
ment are simply jockeying to get a favorable situation." 

In view of the newspaper reports that the Swedish Government has taken 
steps to nationalize Bofors and in view of the reports in today's paper of the 
larger exports from France by Hotchkiss and by Schneider, it would appear that 
the proposed American embargo on munitions is simply a method of destroying 
American competition and turning over a free field to continental competitors. 

Aiken Simons. 

Now, incidentally, at the previous hearing there was considerable 
to-do about a report of Colonel Simons dated January 17, 1933. where 
he went around and saw a Major Brown and he saw General Moseley 
and he tried to see Secretary Payne and others, and he also went to 
the Bureau of Ordnance, but this is the memorandum that Colonel 
Simons took around, and you can readily see that, not as inferred at 
the previous hearing, that it had something to do with trying to 
block or interfere with the disarmament conference, but it was simply 
giving what our people thought was the tendency in Europe. 

I would like to have that made thoroughly clear. I would like to 
have that put in the record. 



2468 MUNITIONS INDUSTRY 

The Chairman. Did you read the entire thing? 

Mr. Casey. The entire thing. 

Mr. Raushenbush. Of course, Major, you have been reading this, 
offering it, and it has been accepted, and it is in a way your exhibit, 
which you ascribe to the situation. Both you and Dr. Sparre refer 
to evidence brought in in September. It is quite simple for each one 
of you to remember all of your testimony, but we, on the other hand, 
are supposed to remember the testimony of 50 people. So it is diffi- 
cult, without the books in front of us to go back and recall exactly 
what was said. I think later on we will come into some of the points 
Dr. Sparre made. For instance, about the amount of peace-time ma- 
terial that can be war-time material, I think we will accept at first 
blush without question your statement that in peace there is very little 
war-time material, but that in war it gets to be war material. There 
is nothing startling about that one way or the other. 

The point made, as I remember it, roughly, in September, was 
that these were also war possibilities, and it was brought out again 
yesterday that immediately after the war your own people were 
saying that the disarmament would be a farce unless that huge 
arsenal of I.G. was either destroyed or scattered around the world. 

If you wish, we can let that argument go for a few days. 

Dr. Sparre. I wish you would not let it go. I made yesterday an 
incomplete statement, for reasons which I will tell you, and I wish 
now to take this opportunity, since you brought it up, to complete 
my statement of yesterday, which I think is of importance, certainly 
to us. 

Mr. Raushenbush. Will you just let me finish with Major Casey's 
memorandum for a moment. It is only a brief comment, and then I 
am through with that. 

Senator Vandenberg. It seems to me the whole thing is coming 
back now into the specific field of exhibits, and we have none of our 
exhibits here, and we are not prepared to go ahead this afternoon. 
I think perhaps we better postpone the discussion of these cases. 

The Chairman. We are going to move directly into that field 
Monday, Doctor. 

Dr. Sparre. The reason why I mention it now is this: That my 
testimony is incomplete and I think your committee should have my 
complete statement before you start the next hearing on this subject. 
It won't take me long to put it in, because I wrote it out to be sure it 
would go very quickly. 

Mr. Raushenbush. Why don't you file it. Dr. Sparre, with what- 
ever exhibits you have from your own files to back it up, and then we 
can study it and have it before us until Monday ? 

Dr. Sparre. Mr. Raushenbush, you know how it is. We have been 
asked to tell the truth and the whole truth, and I do not like the idea 
of being asked to tell a part truth, because I know in these questions 
a part trutli is worse than nothing at all, and I would like to tell the 
whole truth. If you don't want that, I will keep quiet. 

The Chairman. The only thought is that we are leading into some- 
thing which is bound to stretch out this afternoon, how long no one 
knows, on a ground we will have to go over again Monday, when 
Senator Clark, who is in charge of that particular matter, will be 
here. Why don't you malce that statement then? 



MUNITIONS INDUSTRY 2469 

Mr. Lammot du Pont, May I call your attention to the fact that 
Dr. Sparre was testifying earlier today and he was interrupted by a 
member of your Committee and was not allowed to continue. You 
surely will not deny him the privilege of reading that statement. 

The Chairman. I suppose if it is in connection with testimony 
that was being offered this morning — I am not aware of the incident 
myself. 

Dr. Sparre. No ; this is in connection with testimony of yesterday 
afternoon. 

Mr. Raushenbush. It was not this morning. It was yesterday. 

Dr. Sparre. But we adjourned very early and I gave an incom- 
plete statement. 

Mr. Raushenbush. I did not realize at the time that is was incom- 
plete. 

Dr. Sparre. It was. 

Senator Vandenberg. Do you feel, Dr. Sparre, that it would be 
an injustice to postpone your statement until Monday? 

Dr. Sparre. I would say there, if you give me the opportunity to 
start out with the statement at the next hearing, before anything 
else is said or done about that situation, I will be satisfied. 

Senator Vandenberg. I think that is preferable, because I would 
like to have Senator Clark here, who is in charge of that phase of it. 

Mr. Irenee du Pont. But, Mr. Chairman, the continuity of the 
thing is lost. I would like to hear the rest of it. I cannot see why 
so early in the afternoon we should not hear the rest of the statement. 

Senator Vandenberg. You are familiar with the statement, aren't 
you? 

Mr. Irenee du Pont. No ; I am not. I do not know a thing about 
it. I just got back from New York this morning. 

Senator Vandenberg. I am perfectly willing to sit here, if you feel 
it is unfair to you not to proceed. I decline to plead guilty to an 
accusation of that character. 

Mr. Irenee du Pont. Thank you. 

Senator Vandenberg. Go ahead, Dr. Sparre. 

Dr. Sparre. Mr. Raushenbush, at yesterrlay afternoon's session, 
submitted among other papers a copy of a communication relative to 
disarmament conferences to the effect that " Disarmament is a farce 
while Germany retains organic chemical monopolies." A little later 
Mr. Raushenbush suggested that " the whole question of control of 
the chemical industry was really a very important one to the whole 
question of disarmament." 

Those are two totally different statements. One deals with the 
German monopoly which handicaps other countries and the mon- 
opoly confined to the organic chemical industry. That has nothing 
to do with the general chemical industry. It is a totally different 
thing to talk about the German monopoly before the war and another 
thing to talk about the domestic American chemical industry. 

Mr. Raushenbush asked whether the du Pont representatives before 
the Senate committee were in accord with such a proposition. I re- 
plied that I was not in accord with it. I did not elaborate on the 
subject at the time, as I did not want to interrupt Mr. Raushenbush 
in his presentation of a number of documents for the record, expect- 
ing that an opportunity would be given to me to explain my position 



2470 MUNITIONS INDUSTRY 

after Mr. Raiishenbush had presented his case. The matter is of 
such vital importance to the American chemical industry, however, 
that I would like to present the reasons for my opinion now. 

Ever since the outbreak of the world war I have been convinced 
that there is a very close connection between preparedness and the 
chemical industry. There is, however, an important distinction be- 
tween chemicals and munitions. The chemical industry is important 
in war; it is also enormously important in time of peace. Munitions, 
on the other hand, serve no purpose in peace time except as a matter 
of military preparedness. 

To prove the correctness of the assertion that Government control 
of the chemical industry would have to be a part of any disarma- 
ment agreement Mr. Eaushenbush referred to a statement by Dr. 
Hale, an eminent chemist mentioned in one of the documents, to the 
effect that an indigo factory could be converted within an hour's 
time into a plant capable of manufacturing poisonous gas for war 
purposes. 

Granting that Dr. Hale's statement is correct, it must be under- 
stood that in times of peace such a factory would produce only indigo 
and would not produce any war gas whatever. Even in the event 
of war the demand for indigo for commercial purposes would con- 
tinue, and it would, therefore, be desirable to leave the indigo plant 
unchanged and build a new plant designed entirely for military pur- 
poses. This would only be possible if the country were prepared 
with reserve supplies of war gas, so that time would be available for 
the construction of the new plant. The existing indigo factory and 
its personnel would then offer the advantage of serving as a model 
for the war-gas plant which could be constructed more quickly and 
more efficiently and would have a trained personnel immediately 
available for its operation. 

Under these conditions there would seem to be no reason to put the 
indigo plants during peace times under the type of Government con- 
trol that has been suggested for munitions. 

The same statement would apply to the chemical industry as a 
whole. The manufacture of chemicals is essentially a commercial 
operation with only a negligible portion of its output used for mili- 
tary products in time of peace. I do not believe that anyone will 
dispute the fact that the progress of American industrv today is very 
largely based upon chemical research. To say that because the 
chemical industry is important in war it should therefore be placed 
under the control suggested for armaments is like saying that the pro- 
duction of wheat or steel or any other basic product of great im- 
portance in war should be similarly subject to armament regulation. 

As a further illustration, permit me to point out that gimcotton as 
used m naval torpedoes is manufactured to the extent of between 60 
and 70 percent of its weight from cotton, and smokeless powder is 
manufactured to the extent of between 50 and 60 percent of its weight 
from cotton, which is one of the important reasons why cotton was 
contraband in the late war. Yet the percentage of the American 
cotton production which is consumed during peace times in the manu- 
facture of military munitions is negligible, though during times of 
war it becomes an important factor If the chemical industry were 
to be placed under Government control in connection with disarma- 



MUNITIONS INDUSTRY 2471 

ment regulations there is just as much, if not more, reason for placing 
farms producing cotton and the entire cotton textile industry under 
Government control during peace times. 

I can, therefore, only reiterate my refusal yesterday to accept Mr. 
Raushenbush's suggestion that we are in agreement with the state- 
ment that disarmament would be a farce unless the chemical industry 
is placed under Government control. I am convinced that these two 
questions have nothing to do with each other. On the other hand, if 
disarmament regulations are put into effect they will, of course, 
include military munitions and that would include any existing plants 
and equipment suitable for the manufacture of war gases and not in 
use for other purposes. 

Mr. Raushenbush. Mr. Chairman, may I question him on that ? 

The Chairman. I think since the statement has been read, the 
member of the committee or Mr. Raushenbush, if you would like to, 
may question the witness upon the statement, and now is the time 
to do it. 

Mr. Raushenbush. Mr. Chairman, we hope to get into this thing a 
little more in detail later on Monday. On the face of it, there is 
nothing in Dr. Sparre's statement that was not made clear by him 
yesterday, as far as I understood his position. Dr. Sparre says on 
the first page of this statement that since the beginning of the war, 
the outbreak, he had been convinced that there was a very close con- 
nection between preparedness and the chemical industry. That was 
one of the points that we were making yesterday. 

We also made the point that a good many of the people either 
directly in the employ of the company or operating through one of 
the institutes to which the company was contributing the American 
Dye Institute, I believe, were making a case for protection, which is 
natural, to young industries, on the ground that the chemical indus- 
try was very important in the whole question. First, it was put on 
the question of disarmament and then, later, it was put under the 
heading of armament, as I remember it. 

The point that the chemical industry is enormously important in 
time of peace is very obvious, and would be accepted without any 
question at all. 

The assertion on the second page that the government control of 
the chemical industry would have to be part of any disarmament 
agreement, was simply taken, and I am sure Dr. Sparre will admit 
that the question on that was without any conclusion — was simply 
taken from the records of the company's people at the time. They 
were the ones who made the argument as to the conversion of an 
indigo plant into a plant capable of manufacturing poison gas was 
within an hour's time. 

Dr. Sparre, at this point, draws a distinction between the organic 
chemical industry and the nonorganic. I think not only you, but 
anyone else, will agree with me about the war-time importance of the 
organic chemical industry. I know not enough about the rest of the 
chemical industry to speak of its war-time experience. What would 
you consider theBadische Aniline & Soda Fabrik? Would you con- 
sider them in the organic group ? 

Dr. Sparre. That is organic. 

Mr. Raushenbush. That comes under that discussion. 

83876— 35— PT 11 6 



2472 MUNITIONS INDUSTRY 

Dr. Sparre. That comes under that, Doctor, because it involves 
really a specialized knowledge of all of the organic chemical indus- 
try, whereas, take sulphuric acid, and nitric acid, or something like 
that, they are inorganic and the United States has always had a 
large industry in the general chemical field, and when the war broke 
out there was no difficulty about it. There was only one inorganic 
chemical that we did not have in sufficient quantity, and that was 
nitrogen. At first, the United States relied upon Chile for nitrate 
of soda, and that was its source of supply at that time. The ques- 
tion of nitrogen is no longer an important one. 

Mr. Raushenbush. I understand that. 

Dr. Sparre. For instance, at the outbreak of the war, the coke 
business only recovered about 15 percent of the byproduct ammonia. 

Mr. Raushenbush. You did admit just a moment ago, and I 
thought we were in general agreement on that, that the organic 
chemical industry was of importance to the war. 

Dr. Sparre. Yes. 

Mr. Raushenbush. You are now saying that it is a little less im- 
portant than when we were dependent upon Chilean nitrate for our 
supply ? 

Dr. Sparre. The only inorganic chemical that was important when 
the war broke out was Chilean nitrate. 

Mr. Raushenbush. Will you enlighten my ignorance on that one 
subject. When speaking a moment ago you seemed to set sulphuric 
acid and things like that in the inorganic group. 

Dr. Sparre. - That is right. 

Mr. Raushenbush. Then your distinction was, admitting the or- 
ganic chemical industry meant the heavy nitrates, and so forth 

Dr. Sparre. No; that is inorganic. Let me give you an example 
of that. 

Mr. Raushenbush. Yes ; I wish you would, Doctor. 

Dr. Sparre. When the war broke out, we continued our manufac- 
ture of smokeless powder, but we had to manufacture largely in- 
creased amounts of smokeless powder. Take, for instance, diphenyl- 
amine, that is an organic chemical pure and simple, made only in that 
industry. When the war broke out it was not made in the United 
States. It is made from anilin. We did not have plants of that 
part of the organic chemical industry. One job we had to tackle 
in 1914 was how to get diphenylamine for our smokeless powder. 

Mr. Raushenbush. If you will allow me to continue with the 
analysis of the statement made, I ask you on these two questions, 
indigo and diphenylamine are on the organic side? 

Dr. Sparre, Yes. sir. 

Mr. Raushenbush, And sulphuric acid is inorganic? 

Dr. Sparre. That is right. 

Mr. Raushenbush, You made the distinction, then, in your state- 
ment that while you admitted rather freely that the organic chem- 
ical industry was of enormous importance in armament in time of 
war, you were a little more doubtful, Avere you not, about the in- 
organic side, the rest of the chemical industry? 

Dr, Sparre. You did not get me right there. 

Mr. Raushenbush. All right. 

Dr. Sparre. I said at the outbreak of the war we could handle our 
inorganic situation, because we had increased our production enor- 



MUNITIONS UsTDUSTRY 2473 

mously, the resources of the country, and the knowledge within the 
country permitted that. 

Mr. Raushenbush. Yes. 

Dr. Sparre. On the other hand, the organic industry was so limited 
in its use, and so limited in its manufacture that the country was 
handicapped in the organic field. On the other hand, Germany had 
pretty nearly a monopoly in that field. That is the way we drew a 
distinction between the organic industry at the outbreak of the war, 
in which Germany had almost a monopoly. 

Mr. Raushenbush. Yes. 

Dr. Sparre. The moment we establish an organic industry here, 
we are in a far better position than in 1914. 

Mr. Raushenbush. You go with me far more completely than I 
thought you did. You say, then, in war time that both organic and 
inorganic chemistry are important to the successful handling of a 
war? 

Dr. Sparre. Yes; but isn't the same thing true of steel, cotton, or 
everything else ? 

Mr. Raushenbush. Add to that the statement about this is going 
to be a chemical age, and I believe those statements are of enormous 
importance to the progress of the chemical industry, perhaps a little 
bit above steel. But that is a matter we can go into later. 

Then, on the second page you take up the proposition that it must 
be understood that in times of peace such a factory would produce 
only indigo and would not produce any war gas whatever. You 
do not know what the Badische factory is doing. 

Dr. Sparre. When the war broke out between the European coun- 
tries we found it desirable to build new plants rather than rebuild 
old factories ; it was more economical. 

Mr. Raushenbush. It was Dr. Hale who offered that proposition 
that an indigo plant could be converted inside of an hour into a 
mustard-gas plant. You do not say that cannot be done ? 

Dr. Sparre. No. 

Mr. Raushenbush. If a country were wise enough to build up a 
supply of mustard gas it would not use that same plant for the 
making of gas in time of war ? 

Dr. Sparre. It would be more economical to build a plant, rather 
than to convert the old one. 

Mr. Raushenbush. On the supposition that the country had piled 
up a supply ahead of time, when we come to time of war they are 
supposed to have jDiled up a supply ahead of time. In that event 
we have the proposition of Dr. Hale's still stand as a possibility ? 

Dr. Sparre. I think Dr. Hale's suggestion is intended to illustrate 
the organic chemical industry. I do not believe anybody would want 
to convert an indigo factory into a gas factory. It is more economi- 
cal to build a new one than to convert an old one. That has been 
the experience, you see, Dr. Raushenbush. 

Mr. Raushenbush. It is mister. 

Dr. Sparre. Our experience is that we save both time and money 
by going ahead and doing the right thing right away, rather than 
patching up an old one. That is our war experience. 

Mr. Raushenbush. Our country is a little longer distant away 
from the others, and these continental countries might operate 
differently. 



2474 MUNITIONS INDUSTRY 

I think on that proposition of the indigo factory it has been ana- 
lyzed into what it boils down into. Your statement that the manu- 
facture of chemicals in peace time is a commercial operation is with- 
out doubt true. It is like saying anything in peace time is a 
peace-time matter to a large extent, and we had considerable argu- 
ment here the other day about the question of whether or not certain 
powders could be used for sporting powders and other purposes. In 
the rest of the statement it simply goes on to make the point that all 
of these things like cotton and steel can be and are decidedly war 
materials under certain circumstances. I do not think we would 
question that at all. What you were doing was stating in the words 
of your own people that disarmament involved the chemical indus- 
try and armament involved it, also. 

Now, if you are going to get the chemical industry out of the whole 
question of arms, you are doing something more than these so-called 
" disarmament conferences " have done. They perhaps have not 
been able to function as freely as they should. 

Dr. Spaere. I think the chemical industry should be in the same 
class as the steel industry or any other industry. Why single out 
the chemical industry, because, after all, the steel industry in times 
of war is far more important than the chemical industry. 

Mr. Raushenbush. If it is believed that the chemical industry and 
the poison-gas industry is going to be a big industry in the next 
war, then that is testimony we ought to hear from the War Depart- 
ment officials, whether or not they consider the chemical and poi- 
son-gas industries and others along this line more important than 
steel or cotton. 

The Chairman. All of which the committee is planning for during 
the course of its studies. 

Mr. Irenee du Pont. President Wilson repeated his statements 
three times to Congress on that. [Reading:] 

President Wilson said in a message to Congress May 20, 1919, and repeated 
in two other messages December 2, 1919, and December 7, 1920 : 

" Nevertheless, there are parts of our tariff system which need prompt at- 
tention. The experiences of the war have made it plain that in some cases 
too great reliance on foreign supply is dangerous, and that in determining 
certain parts of our tariff policy domestic considerations must be borne in 
mind which are political as well as economic. Among the industries to which 
special consideration should be given is that of the manufacture of dyestuffs 
and related chemicals. Our complete dependence upon German supplies before 
the war made the interruption of trade a cause of exceptional economic 
disturbance. The close relation between the manufacture of dyestuffs, on 
the one hand, and of explosives and poisonous gases, on the other, moreover, 
has given the industry an exceptional signiticance and value. Although the 
United States will gladly and unhesitatingly join in the program of interna- 
tional disarmament, it will, nevertheless, be a policy of obvious prudence to 
make certain of the successful maintenance of many strong and well-equipped 
chemical plants. The German chemical industry, with which we will be 
brought into competition was and may well be again, a thoroughly knit mono- 
poly capable of exercising a competition of a peculiarly insidious and dangerous 
kind." 

Now, Mr. Wilson had the king's English at his command, if any- 
body had it, and I think that that is expressed very clearly. It in 
some way suggests your idea that this is a peculiarly important in- 
dustry. That w^as the basis of this quotation that has been referred 
to so much about disarmament " is a farce." 



I 



MUNITIONS INDUSTEY 2475 

Mr. Raushenbusii. Without going into it further, you were not 
present yesterday afternoon when the interest of the company in the 
proposals of the British delegation to the 1922 Washington Con- 
ference were brought out, the interest not only of the British but 
also of the French and Italians, and what their proposals would be 
about the use of gas in warfare. They seemed to corroborate some 
tilings that Mr. Irenee du Pont is expressing here. 

Mr. Irenee du Pont. Mr. Wilson, not Irenee du Pont. 

Mr. Raushenbush. I really was drawing a distinction. Mr. Irenee 
du Pont was expressing and agreeing in the phrase after he read this 
quotation, that this industry is vitally interested in any regulations 
imposed upon the chemical industry, because the chemical industry 
is, as this very conference showed, by taking it up as part of the dis- 
armament program of the world. Those exhibits are of course avail- 
able for your study later. 

Senator Vandenberg. I think we might as well recess now. 

Mr. Garvan. Mr, Chairman, may I ask a question ? 

The Chairman. In view of the fact that you are going to appear 
as a witness could that not be deferred until later ? 

Mr. Garvan. I am not going to make a statement. I just wanted 
to ask permission to appear as a witness. 

The Chairman. You are going to have that permission ; you may 
be sure of that. 

Mr. Casey. Mr. Chairman, may I make one further statement? 

The Chairman. Mr. Casey. 

Mr. Casey. In connection with the report which was just read, I 
think there is one thing that does stand out as a result of that infor- 
mation, and that is this : That if this committee is trying to find out 
a means of achieving disarmament, it certainly clearly indicates that 
if there are government plants all over the world where they have 
the same situation, it probably may result that then any efforts in- 
stead of reducing government manufacture, and achieving your 
objective, will have just the opposite effect. 

The Chairman. That is a matter of argument. 

The committee will stand in recess until 10 o'clock Monday 
morning. 

(Thereupon the hearing recessed until 10 a. m. Monday, Decem- 
ber 10, 1934.) 



INVESTIGATION OF MUNITIONS INDUSTRY 



MONDAY, DECEMBER 10, 1934 

United States Senate, 

Special Committee to 
Investigate the Munitions Industry, 

Washington^ D. G. 

The hearing was resumed at 10 a. m. in the Finance Committee 
room, Senate Office Building, pursuant to the taking of recess, Sena- 
tor Gerald P. Nye presiding. 

Present: Senators Nye (chairman), Clark, Pope, and Barbour. 

Present also: Stephen Kaushenbush, secretary to the committee, 
and Robert Wohlforth, assistant to the secretary. 

The Chairman. The committee will be in order. 

The committee would like to hear this morning Mr. Beebe, Mr. 
Monaghan, and Mr. Felix du Pont. 

FURTHER TESTIMONY OF F. J. MONAGHAN, H. F. BEEBE, A. FELIX 
DU PONT, LAMMOT DU PONT, AND K. K. V. CASEY 

methods of doing business — BALKAN STATES 

(The witnesses were previously sworn by the chairman.) 

The Chairman. Mr. du Pont, the record at the moment rather 
clearly establishes your belief that there is necessity for foreign sales 
of powder and munitions generally in order to keep our own powder 
plants and munitions factories ready for an emergency should it 
arise. I take it that that is your opinion, is it not? 

Mr. A. Felix du Pont. Yes. 

The Chairman. For the purpose of making clear the record again, 
just what is your connection with the du Pont factory ? 

Mr. A. Felix du Pont. I am general manager of the smokeless- 
powder department and one of the vice presidents of the company. 

The Chairman. We want this morning to raise a few questions 
relative to the social cost of these foreign sales and foreign negotia- 
tions. We would like to know, of course, what price the nations of 
the world pay to keep our American plants in the state of readiness 
or unreadiness to prepare for the next war; and when we concern 
ourselves with bribery of foreign officials we are not concerning our- 
selves so much with the bribery itself as we are with the thought of 
what it leads to. 

Surely, where a company bribes — at home or abroad, it matters 
not — there must be builded in the mind of that business that is en- 
gaged in that bribery a feeling, a spirit of contempt, for any country 
that must be approached in that manner in order to get the busi- 

2477 



2478 MUNITIONS INDUSTRY 

ness and, where, as is true or seems to be true, all munition companies 
the world over are getting their business in a country through meth- 
ods involving bribery, there must be contempt toward that country 
or of that country on the part of all of the companies doing business 
there. 

Don't you think that these methods that are found, so-called, " nec- 
essary " rob administrations of governments of any feeling of moral 
independence ? Don't you feel that that is the case ? 

Mr. A. Felix du Pont, I think you raise a very complicated ques- 
tion there. Senator Nye, The customs of different countries are 
so entirely different that it is quite difficult to dispose of the question 
in any very few words. 

For instance, while I have not traveled in the Orient, except in 
a very limited way, all that I have heard about it is that the methods 
used in the way of bribery are quite different from what they are in 
this country, and certain things that are frowned upon in this coun- 
try and perhaps done in a different way are the natural course of 
trade and trade competition in those other countries. 

I believe that bribery of a certain kind is used in most of the 
countries of the Orient in all walks of commercial life. It is no 
different in the munitions business than it is in any other commercial 
business. It is accepted; not talked about very much; but people 
in competition in those countries simply could not possibly carry 
on their trade if the customs of the country were not adhered to. 

The Chairman. But it has a tendency at one and the same time to 
break down moral fiber, doesn't it? Representatives of a country 
that are in any way involved in programs of bribery, the receiving 
of bribes, are not apt to make the best kind of representatives at a 
disarmament conference, for example, are they? 

Mr. A. Felix du Pont. They are the kind of people who are of 
their own set. The either doing or not doing what they accept as 
the way of doing in their country would have no weight with them 
whatsoever. 

The Chairman. If I had been in times past the recipient of any 
bribe for any favor I had performed, for example, for your industry, 
or even though I had received campaign contributions, do you think 
it would be fair for me to try to give representation that was square 
serving on a committee such as this, investigating the industry? 

Mr. A, Felix du Pont. Now j^ou are speaking of the United 
States. 

The Chairman. I am speaking of that only. 

Mr. A. Felix du Pont. Yes. 

The Chairman. That we may better put ourselves in the shoes of 
those we are dealing with in other lands. 

Senator Clark. In any country, Mr. du Pont, if a public official 
would accept a bribe for the letting of a public contract, it is very 
plain he would let the public contract to the highest bidder, irre- 
spective of the public interest or the interest of his country at all; 
isn't that so? 

The Chairman. We will not press for an answer there. It was not 
propounded for an answer, to be franli with you. But I am coming 
back to the question we originally opened with : What is the price of 
keeping American plants, munitions plants, ready for functioning 



MUWITIOISrS INDUSTRY 2479 

in time of emergency, by proceeding abroad, as we are proceeding, 
to sell our wares in other lands? 

I will admit, in starting, that there is another question in the back 
of my mind. The question is this : Why have disarmament confer- 
ences been the repeated failures that they have been? Have they 
failed because the friends or beneficiaries of the private munitions 
people were in the delegations ? Until every country in the world, it 
seems to me, has brought out the facts, as we are trying to bring them 
out here, we probably never will know the exact and proper answer to 
that question. 

You have already said that you believed in the desirability of for- 
eign trade in order to keep our plants ready for that emergency 
which none of us hope is going to arise, but which may arise. You 
have been engaged in an intensive campaign, have j^ou not, Mr. 
du Pont, selling powder all over the world ? 

Mr. A. Felix du Pont. Yes, but the records show, I think, that it 
has been rather an unsuccessful campaign. All of our efforts or the 
greater part of our efforts, as the testimony has brought out here, 
the most of the efforts that we were making came to naught. 

The Chairman. Are you still striving for that trade ? 

Mr. A. Felix du Pont. Yes. 

The Chairman. As diligently as ever you did? 

Mr. A. Felix du Pont. We have found in so many places that we 
were not successful that we have practically given up attempting to 
sell through certain channels which have been pretty well exhausted, 
so that I suppose we might say that the campaign is not as intensive 
as it was. 

The Chairman. To what do you attribute your failure to win that 
larger field that you might at one time hope for ? 

Mr. A. Felix du Pont. European competition. 

The Chairman. Competition in the ordinary sense or the particu- 
lar kind of competition that you have to meet there ? 

Mr. A. Felix du Pont. In the ordinary sense. 

The Chairman. Do you find practices engaged in in order to ac- 
complish sales abroad rather distasteful? 

Mr. A. Felix du Pont. I might say yes to that. The record shows 
that we have attempted to make sales in certain countries and under 
certain conditions where we finally discovered that the methods re- 
quired were distasteful and we abandoned our efforts. 

The Chairman. Their practices in many instances are really 
reprehensible, judged by ordinary business standards, are they not? 

Mr. A. Felix du Pont, Judged by our standards, yes, but in the 
ordinary course of competition of trade in certain countries, I believe 
they are not different from effort in the introduction or attempt to 
sell any other kind of commercial product. 

The Chairman. You are doing some business in the Balkans? 

Mr. A. Felix du Pont. At present, I think not. 

The Chairman. None? 

Mr. A. Felix du Pont. I think not. 

The Chairman. Are you armed with agents in the Balkans who 
are striving to sell? 

Mr. A, Felix du Pont. Yes, we have some. 

The Chairman. As many or less than you have had at other 
times ? 



2480 MUNITIONS INDUSTRY 

Mr. A. Felix du Pont. There are about as many. You see, these 
agents do not receive any salary. They simply report to us when 
they think they can make a sale. 

The Chairman. When did you first institute sales efforts in the 
Balkans ? 

Mr. A. Felix du Pont. I cannot remember exactly the year, but 
it was around 1923, I believe, or 1922. 

The Chairman. After the World War? 

Mr. A. Felix du Pont. Yes. 

The Chairman. We have before us a letter written to Mr. Casey 
by your European representative, William N. Taylor, which is 
offered as " Exhibit No. 948." 

(The letter referred to was marked " Exhibit No. 948% " and is 
Included in the appendix on p. 2595.) 

The Chairman. This letter, Mr. du Pont, is dated October 10, 1922, 
and its general nature seems to indicate that this was about the first 
approach that was made to the Balkan market for your powder. I 
want to read in part that letter. 

Have you been previously aware of this letter? 

Mr. A. Felix du Pont. Yes. 

The Chairman. You are conversant with it? 

Mr. A, Felix du Pont. Yes. 

The Chairman. Was it called to your attention 

Mr. A. Felix du Pont. I have not read it for a good while, 
Senator. 

The Chairman. Was it called to your attention at the time that it 
was sent? 

Mr. A. Felix du Pont. At the time it was sent, I think so. I think 
I read it at the time it was received by my office. 

The Chairman. Mr. Taylor points out in this letter that there are, 
after his study, certain essentials in the traffic carried on in the 
Balkan countries which are going to have to be met if the du Ponts 
are going to attract any of that business. 

In the Balkans I ran across a situation so entirely different from anything 
we liave in America that I am writing this in addition to my letter no. 36 
to try to give you a picture of tlie situation there. 

We want to sell powder in the Balkans and powder can he sold to the 
Balkans, but the method of straight selling for what they need and getting 
paid for it will not work. If you draw a line from Trieste to Warsaw and 
go east of that line, you find the business and financial conditions run on a 
set of rules entirely their own, and if we can't conform to the situation, we 
won't be able to get any business. There, the ordinary business ethics are 
entirely different from ours and people have no knowledge of ours, they don't 
know what our business ethics mean. Their financial methods and the methods 
of raising money from their Governments are also entirely different from ours. 

In the first place, the country is constituted of a great mass of peasants 
who work in the field and cannot read nor write. Until comparatively recently 
the Governments were absolute monarchies run by a group of people around 
the monarch who, by every means which they could imagine, extracted money 
from the peasants without any idea of what we might call a national instinct 
or any idea of being fair or doing good to the peasant — on the contrary ! 
Generally in these countries are several groups of such people and all political 
agitation is simply a fight between these different groups to get their hands 
on the spoils. The great western European powers have attempted to force 
upon these people the western ideas of government and eithics and the result 
has been merely a complication of their primitive methods. They begin by 
collecting all the taxes they can, then they purchase things for the Govern- 
ment and all of them collect all the graft they can in every way out of these 



MUNITIONS INDUSTRY 2481 

purchases. They don't much care what they pay so long as they get the 
graft, which is their main object. Internal politics consist of disputing over 
the graft — external politics consist in developing complications which permit 
them to spend or collect more Government money. The idea of doing anything 
for the good of the country has never been translated into their language. 

Mr. du Pont, would not that rather indicate that there was 
a byproduct to what Mr. Taylor referred to as the internal graft, 
and that that byproduct was war, which afforded a larger oppor- 
tunitj'^for graft? Was that his meaning, do you think? 

Mr. A. Felix du Pont. I don't know. And I will say this : That 
this letter was written 12 years ago. Colonel Taylor was setting out 
to do something entirely new. 

The Chairman. This was his first approach to that market? 

Mr. A. Felix du Pont. This was his first approach in that general 
line of work. He had only been on it a short time, he had been on 
ordinary commercial business before this. 

Senator Clark. You mean that that is the first time Taylor ever 
recognized the necessity of bribing public officials to get contracts? 

Mr. A. Felix du Pont. I don't know. I could not say that ; but 
I do think that with the experience that Colonel Taylor has had, if 
he read that letter over now he would not subscribe to his own 
remarks entirely. 

Senator Clark. You mean, he would not be quite so thin-skinned 
as he was then? 

Mr. A. Felix du Pont. No ; I do not mean that at all. I think 
he would be a little more charitable in his views of other people, and 
that would temper his judgment in regard to it. 

The Chairman. You mean that his experience 'has equipped him 
to know that this is quite the ordinary thing in the Balkans? 

Mr. A. Felix du Pont. I think that 

The Chairman. That he is rather resigned to it? 

Mr. A. Felix du Pont. No. I think he would feel now that his 
very strong accusations that he makes in this paper or in this letter 
are not warranted. 

Mr. Raushenbush. Has he ever told you so ? 

Mr. A. Felix du Pont. No ; but the tone of his letters at various 
times and his conversations indicate a change in thought on that. 

Mr. Raushenbush. If there are any letters we missed, Mr. du 
Pont, in which he reverses himself and said that that situation is 
changed, we would be glad to have them submitted. 

Mr. A. Felix du Pont. I do not think you could find it in any 
direct statement, Mr. Raushenbush. You would simply find that 
he does not believe all he hears when he goes into a country. He 
apparently got with people who told him how perfectly frightful 
their practices are and he found out that after all they were a good 
deal like most people ; they were not quite so dishonest as he indicates 
in this letter. 

The Chairman. Let us read from the letter [reading] : 

For instance, the idea of issuing an internal Government loan, selling it to 
the people, has never occurred to them and could not be done. When they 
want an internal loan they get together the rich merchants and Jews and 
say "You will lend the Government some money or we put you in jail; if 
you do lend the Government money, we will let you in on the profits for 15 
or 20 percent." A merchant is successful when he knows how to distribute 
the graft and get away with part of the profits. 



2482 MUNITIONS INDUSTRY 

If you go clown to that country with something to sell and expect to find 
fair competition on prices and quality, you will be very much deceived — 
there is no such thing. People who traded the most with those countries 
and are most successful are the English and Germans. How do they do It? 
Let us take Vickers for example. It is impossible for Vickers, with their 
British stockholders and their English business ethics, to play this game 
directly. So they use the intermediary of a man like Sir Basil ZaharofC 
who is the most important of his class, who acts about as follows : He gets 
a price from Vickers with a discount of 40 or 50 percent. He goes to the 
countrj^ and he says : " You need so much material, I'll provide you with this 
whole lot and give you so much graft and I'll lend you the money t8 buy it 
with." Then he will go to a local banker or merchant and he'll say this: 
" "We will make a loan through Mr. So-and-so to the Government, and this 
loan will bring you a very large interest and we will give so much commission 
to the Minister of Finance " and he'll promise to collect enough taxes to 
pay this loan and he does not get the commission until the loan is paid back. 
He gets his money from these various people. The Government pays Vickers 
the full amount less the discount which goes to some intermediary. In time 
the Government collects taxes, pays back the people who made the loan, and 
all the people in the game pluck up the profits. He has now made an arrange- 
ment of this type for refilling the Greek Army. If we want to sell down 
there, we will have to do somewhat the same thing. We will have to go to 
the Government and say " We can furnish you with a variety of materials, 
large orders, which will make a big enough smn to be interesting. We will 
cover fixed ammunition, powder, rifles, and cannons, shoes, uniforms, etc., and 
we will help to arrange a loan to permit you to pay for this." We can then 
go to a local bank and say " Now you must arrange a loan to the Govern- 
ment to pay for this material on which you will get a large i)ercentage." 
This bank will get up a private loan promising large interests to the sub- 
scribers, subject to a purchase of material to our combination. 

Now, Mr. du Pont, this story here, to the effect that the people 
who traded the most with those countries and are most successful 
are the English and Germans, is this generally known to the trade, 
the munitions trade? 

Mr. A. Felix du Pont. Is what generally known ? 

The Chairman. That the Germans and the British were the most 
successful in that field. 

Mr. A. Felix du Pont. I suppose it was. 

The Chairman. Do you know whether the British Government 
had knowledge of Vickers' activities in that field? 

Mr. A. Felix du Pont. No ; I do not know. 

The Chairman. I read on from Mr. Taylor's letter [reading] : 

In order to work this we must work through an American bank who will 
act as an intermediary between us and a local bank and must be able to do 
its share in raising the loan among the rich Nationals of the country to 
which we sell, who are residents in America. If we could find a bank who 
knew how to do this, we should get up an expedition to go to those countries, 
consisting of representatives of the bank, technical men from the Bethlehem 
Steel, a small-arms company, an ammunition company, and sit on the job 
until we could negotiate. 

How much sitting on the job has there been, Mr. du Pont, to make 
such an arrangement? 

Mr. A. Felix du Pont. There has not been any following out of 
that method which he thought at that time was the necessary way 
to go about the business. 

Mr. Lammot du Pont. And, Mr. Chairman, Mr. Felix du Pont is 
of course speaking for the smokeless-powder department. I would 
like to speak for the company as a whole, the smokeless-powder de- 
partment, the explosives department, and all the others. 

The Chairman. Splendid. 



MUNITIONS INDUSTRY 2483 

Mr. Lammot du Pont. We have not done business with the State 
in question on any such basis as described as necessary by Colonel 
Taylor. 

Mr. Casey. I can add to that, Senator Nye, if you will pardon me, 
but I promptly wrote back to Colonel Taylor that we could not do 
business that way, but would do business the way we always had 
done, on a cash basis. Further than that, I might add when the 
letter was presented by Mr. Felix du Pont to the executive commit- 
tee, a resolution was promptly put into effect prohibiting such 
practice. 

The Chairman. Since that time, 1922, I expect there has been 
some change in that field by reason of the building of powder plants. 

Mr. Lammot du Pont, I do not know as to that. Senator. 

The Chairman. Does not I. C. I. have its powder plants there? 

Mr. Lammot du Pont. I do not know that. 

The Chairman. And Nobel? 

Mr. Lammot du Pont. I do not know that. 

The Chairman. Mr. Felix du Pont, do you have any knowledge 
of what companies are operating plants in the Balkans at the 
present time ? 

Mr. A. Felix du Pont. No ; I do not know. 

The Chairman. Mr. Casey? 

Mr. Casey. The only thing I know is that it was brought out the 
other day that there was a connection with a Czechoslovakian pow- 
der factory, but that is not strictly in the Balkans. That is a little to 
the west of the Balkans. That is the only place I know of. 

The Chairman. That they had bought an interest in those plants ? 

Mr. Casey. That was a commercial explosives factory, which also 
had military. 

The Chairman. You have no knowledge, beyond what was devel- 
oped here the other day, on that score ? 

Mr. Casey. None at all. 

The Chairman. It was that knowledge which prompted me to ask 
the question. 

Mr. Casey. We have made practically no effort in the Balkans, 
because, whether this situation is true or not as described by Colonel 
Taylor, it is very evident that we did not seem to get to first base 
trying to do any business there. Whether that was the reason or 
not, I do not know, but the fact remains we have not sold them 
anything. 

The Chairman. I read on in Mr. Taylor's letter, leaving out two 
paragraphs from where I left off [reading] : 

Selling a combined lot of ordnance and taking in hand the creation of a loan 
would have the best chance of success ; sales to Vickers or Schneider have 
the second best chance of succeeding, and an attempt to sell powder directly 
to these Governments the least chance of succeeding. 

Was any one of these proposals considered by the officers at the 
time that this suggestion was received ? 

Mr. Casey. No. I might add to that, in the case of Schneider 
it would have been almost impossible to have sold them because they 
got their powder from the French powder monopoly, a Government 
proposition. 



2484 MUNITIONS INDUSTRY 

The Chairman. I read on. [Reading:] 

I know this sounds like a story from the Arabian Nights and will probably 
be digested with diflaculty at Wilmington, but it is as clear an exposure of the 
situation in the Balkans as I am able to make. Please think this over and 
tell me which line you wish me to pursue. If you don't feel like going into 
a loan of this kind, and don't know any bankers who would undertake it, it 
is possible that our best mode of operation would be this : That our agents in 
these countries do the best they can toward little sales and have me put in my 
time on the big munition companies in the western European countries. So 
far I have put all my efforts on straight selling to these countries, and I expect 
to get some results, but I don't believe that that method is going to bring us 
anything very big. I think, from what I saw in the Orient, that there are 
very great chances in favor of a war in the Near East and one must include 
the Balkans as being part of the Near East. 

This is in 1922 that this is being written. 
Senator Pope. Does Mr. Taylor work on a salary basis ? 
Mr. A. Felix du Pont. He works on a salary basis. 
The Chairman (continuing reading) : 

Those savage people don't know how to live without war and robberies. 
They have in the past been helped on a certain line of good conduct by fear 
of the military action of the great powers. Before the Anglo-Turkish incident 
there was still in the Orient a great fear of the western powers but the fact 
that both the French and the English refused to fight Kemal and are going 
to permit him to enter Europe, has given a tremendous blow to the European 
prestige in that part of the country. All the people are absolutely astonished. 
I saw Turks, Bulgarians, Greeks, and Serbians, and with one accord they say 
that the great powers are done for, that they are afraid to fight and add 
" We don't have to obey them any more." 

To maintain European prestige in those countries there was nothing to do 
but fight the Turks but as neither the French nor the British Governments 
felt it possible to ask their people to go to war, they simply have had to/ 
accept a tremendous moral defeat. The result will be that all those near 
eastern people will feel that the time has come to throw off the government 
of the great powers and if it does not lead to one enormous war, it will lead 
to a great number of small ones. 

It would appear that Mr. Taylor had the picture pretty well in 
hand, because it was only shortly after he had written that the Turk- 
ish trouble developed, and indicates that he had been talking to pretty 
good authority. 

Mr. A. Felix du Pont. He was over there studying the situation, 
and I suppose he learned what was pretty commonly known over 
there. 

The Chairman (continuing reading) : 

If we want to sell military powder to these people, we have got to hit on the 
proper plan and get busy in a concentrated way. All these people will prob- 
ably buy fixed ammunition, and it looks to me as if a powder factory had a 
fairly small chance of selling directly to these countries. But the sales to these 
countries should be made by the big munitions people and perhaps our best 
plan is to concentrate all our efforts on these munition firms. 

How are you selling in the Balkans at the present time ? Direct or 
not? 

Mr. A. Felix du Pont. We are not selling. 

The Chairman. You are not selling anything at the present time? 

Mr. A. Felix du Pont. No. 

The Chairman. What is the situation since 1922? 

Mr. A. Felix du Pont. Since 1922 we had agents, but they were 
unable to procure any sales which amounted to anything. 

Mr. Casey. I think my previous statement covered that. I think 
I said we found our methods were apparently unsuccessful. 



MUNITIONS INDUSTRY 2485 

Mr. Raushenbush. Who got the sales, Mr. du Pont ? 

Mr. A. Felix du Pont. I do not know. 

Mr. Raushenbush. Who made the sales, Mr. Casey ? 

Mr. Casey. I do not know. We have a list of them but they were 
made by different people, if they were made. 

Senator Pope. But you did sell some small orders? 

Mr. Casey. No, sir; none at all. 

Mr. A. Felix du Pont. I suppose Greece is in the Balkans. We 
made one sale to Greece. 

Mr. Casey. We made that in our regular fashion. 

Mr. Lammot du Pont. Mr. Chairman, you have read this letter in 
its entirety, and I would like to point out it is evident from the lan- 
guage that Colonel Taylor used that he expected this story to be re- 
pulsive to the company management. He refers to it as being diffi- 
cult to digest in Wilmington. The whole tone of his letter implies 
that he was repelled by the conditions which he found in the Balkans 
and he expected the company's management to be equally repelled. 
Major Casey has pointed out, and I have tried to, that that repulsion 
was a fact. The particular letter in question was brought to the at- 
tention of the executive committee and was discussed with Mr. Felix 
du Pont and Major Casey, and a resolution was formally passed by 
the executive committee. If I may, I would like to read that reso- 
lution. 

The Chairman. If you would like to insert it in the record, and 
have it with you, the committee would be glad to receive it. If it is 
not very extended, you might read it. 

Mr. Lammot du Pont. This is an extract from the minutes of a 
meeting on November 15, 1922, of the executive committee. The sub- 
ject is " Sales in the Balkans." [Reading :] ^ 

Letter was received from Mr. A. Felix du Pont, general manager, smokeless- 
powder department, dated November 7, 1922 (No. 8418), enclosing copy of 
letter from Col. Wm. N. Taylor in connection with the above subject. Mr. 
du Pont and also Maj. K. K. V. Casey, of the smokeless-powder department, 
joined the meeting, and after full discussion, it was moved and unanimously 
carried that the aboA^e-mentioned letters be accepted and ordered filed, and 
that the smokeless-powder department be advised it is the desire of the 
executive committee that this company should not pay commissions directly 
or indirectly to Government officials, employees, or agents. 

The wish of the executive committee in a matter of that kind is 
equivalent to a ruling. 

The Chairman. What was the date of that action ? 

Mr. Lammot du Pont. This extract is November 15, 1922, and 
refers to this particular letter. 

The Chairman. Does Mr. Taylor represent your associates in the 
I. C. I. in any particular? 

Mr. Lammot du Pont. Under the joint selling arrangement 
Colonel Taylor did represent and sell for the I. C. I. 

Mr. Casey. Not at that time. 

Mr. Lammot du Pont. Not at that time. 

The Chairman. Not at that time ? 

Mr. Casey. The fact of the matter is that the selling arrangement 
which was entered into later did not mean Taylor's actions in the 
Balkans. That was handled by I. C. I. We never took over the 

1 Entered as "Exhibit No. 959" (see p. 2312). 



2486 MUNITIONS INDUSTEY 

whole proposition until the arrangement, I believe, of 1932, was it 
not? Yes. 

Mr. Raushenbush. Do Vickers use I. C. I. powder ? 

Mr. Casey. Vickers? 

Mr. Rausiienbush. Yes, sir. 

Mr. Casey. I could not tell you. I know we have heard of them 
getting powder from Coopal and others. 

Mr. Raushenbush. The letter seems to be largely a commentary 
on Vickers actions there, and I was curious as to whether I. C. I. 
furnished them the powder in question. 

The Chairman. You do not know whether they did ? 

Mr. Casey. No; we really know practically nothing of Vickers 
activities, one way or the other. 

Mr. Lammot du Pont. I think I would like to point out again, 
Mr. Chairman, that in a letter of this kind from Colonel Taylor to 
his department, that the statements made in there are not endorsed, 
let me say, by the company. 

The Chairman. I think that is quite evident from your minutes. 
Nevertheless, we have here rather a clear situation, it seems to me, 
the report of a situation, which finds itself engaged in the sale of 
munitions of war, quite ready to participate in the game of stirring 
up the hatreds and suspicions and fears of the people in those 
countries, all to the end that there might be profit flowing to the 
munitions industry. 

Mr. Lammot du Pont. That may be inferred from Colonel 
Taylor's letter, Mr. Chairman, but that does not make it a fact. 

Senator Clark. It seems to me that the letter at least is very 
illuminating, as being the report of an acute and trained observer, 
irrespective of the attitude of the du Pont Co. 

Mr. A Felix du Pont. I disagree with you there. Senator Clark, 
that he was a trained observer. He was going out into what was, 
to him, virgin territory; and when a person goes to those countries 
they meet with all kinds of peojDle and talk with them, and the in- 
formation received from that kind of people is, I think, rather more 
likely to be incorrect than correct. 

Senator Clark. How long had Colonel Taylor been in your em- 
ploy, Mr. du Pont? 

Mr. A, Felix du Pont. He had been in our employ in a com- 
mercial way for, oh, I think, 5 or 6 years before that. 

Senator Clark. He had been stationed in Europe, had he not? 

Mr. A. Felix du Pont. Almost entirely in France. 

Senator Clark. And he had written you voluminous reports as to 
conditions in different countries? 

Mr. A Felix du Pont. I think not. 

Senator Clark. We have had a great many in evidence here. 

Mr. A Felix du Pont. Prior to 1922? 

Senator Clark. Some were prior to 1922 and some were subsequent 
to 1922. 

Mr. A. Felix du Pont. I think very few of them were before 1922. 

Senator Clark. Colonel Taylor is still in your employ? 

Mr. A. Felix du Pont. Yes. 

Senator Clark. You did not discharge him as a result of this 
communication ? 



MUNITIONS INDUSTRY 2487 

Mr. A. Felix du Pont. Certainly not ; because he was simply writ- 
ing his findings. 

The Chaikman. Now, according to the findings, Sir Basil Zahar- 
off was outbidding the Greeks at that time. Do you know whether 
or not that was true? 

Mr. A. Felix du Pont. I do not know. We never had any con- 
tact with Sir Basil Zaharoff whatever. 

The Chairman. It was at this time that the French were outbid- 
ding Kemal's Turkish Army. I was wondering if you might have 
any knowledge of the activities of the sales at that particular time. 

Mr. A. Felix du Pont. No. 

The Chairman. The du Ponts had no knowledge at that time? 

Mr. Casey. None whatever. 

Mr. Lammot du Pont. Not to my knowledge. 

Mr. Casey. The only thing we got was from the newspapers. 

The Chairman. All this was just prior to the Turkish-Greek War, 
and it would appear that the British were arming the Greeks for 
50 percent commission and the French were arming Turkey. In the 
light of that experience and in the light of the profit which flowed, 
I wonder if there could be really much occasion to be wondering why 
there was a conference in 1925 which resulted in anything but failure. 

Surely the British and French munitions makers, in the light of 
what they had done in Turkey and in Greece at that time, would not 
want any agreement entered into which might restrict what they 
were doing in those fields, I am sure. 

Mr. Lammot du Pont. Senator, we have no right to state what the 
manufacturers of munitions in Europe have done or said. We know 
that we had no part in the disarmament conferences. Is it not fair 
to assume that they had no part either ? It is true some of our news- 
paper reports and some of the information which Colonel Taylor 
picked up would indicate otherwise. We have no assurance whatever 
that the information Colonel Taylor picked up was authentic or 
true. 

The Chairman. You mean in connection with that 1925 confer- 
ence ? 

Mr. Lammot du Pont. Yes, sir; or any other conference. 

The Chairman. Is it not true that your company did participate 
in the conferences that were held prior to the departure of the 
American delegation to the Geneva Conference? 

Mr. Lammot du Pont. We participated in a conference called 
by the Department of Commerce at the request of the Department of 
State, but we did not 

The Chairman. I am going to deny very emphaticallv here this 
morning that that was at the request of the Department of State. 

Mr. Lammot du Pont. I was referring to the telegram which was 
read into the record. 

Senator Pope. ^Vhat telegram? 

Mr. Lammot du Pont. I think there was a telegram read into 
the record to that effect. 

The Chairman. That was a press dispatch. 

Senator Clark. You w^ere referring to the press dispatch wdiich 
Senator Vandenberg read? 

Mr. Lammot du Pont. It was a telegram. 

83876— 35— PT 11 7 



2488 MUNITIONS INDUSTRY 

Senator Clark. It was a newspaper flimsy. He was reading a 
statement made by Mr. Hoover to the press. 

Mr. Lammot du Pont. It was a telegram. 

Senator Clark. Not the one which Senator Vandenberg read into 
the record. It was a United Press flimsy. 

Mr. Lammot du Pont. I might have been in error. It looked like 
a telegram to me. 

The Chairman. Mr. Felix du Pont, as relates to your contacts, 
is the acceptance of graft confined to the Balkan countries, or does 
it prevail in other territories in which your company is selling 
powder ? 

Mr. Lammot du Pont. Senator, might I interrupt a moment, to 
finish the answer which was interrupted by this question, as to the 
telegram ? 

The Chairman. Yes. 

Mr. Lammot du Pont. We did not participate in the Geneva 
Conference. That was a statement which I wished to make. I think 
that your question inferred that we had. We had not participated in 
it. 

The Chairman. No; but you did participate in the conferences 
which were held here? 

Mr. Lammot du Pont. At the request of the Government. 

The Chairman. All right, let us put it that way. 

Mr. Lammot du Pont. At the invitation of the Government. 

The Chairman. The conferences called by agencies of the Gov- 
ernment. You did participate in those? 

Mr. Lammot du Pont. Yes, sir. 

The Chairman. At which v/ere present the representatives of the 
munitions industry, secretaries, and delegates who had been named 
to the Geneva Conference? 

Mr. Lammont du Pont. I am not sure that the delegates were 
present. 

The Chairman. I think the record is very clear on that. 

Mr. Lammot du Pont. The conference called by the Department 
of Commerce, to which we were invited, the first such conference, 
the delegates were not present. 

The Chairman. At the first one? 

Mr. Lammot du Pont. You will recall that a committee was aj3- 
pointed to meet later when the delegates could be present? 

The Chairman. But a second conference was held? 

Mr. Lammot du Pont. Yes, sir. 

The Chairman. At which they were present, these men who had 
been delegated to the Geneva Conference. 

Mr. Lammot du Pont. Yes, sir. 

The Chairman. Now, Mr. du Pont, these practices which Colonel 
Taylor has led us to believe were necessary to resort to in the 
Balkans, are those practices confined alone to the Balkans? 

Mr. A. Felix du Pont. No; I think in speaking of it a short while 
ago I said then I believed that those practices in general trade in the 
Orient, meaning the whole Near East and Far East, that they are 
looked upon differently from the way tliey are in this counti\y, and 
I have been told are necessary in order to carry on trade in those 
countries. 



MUNITIONS INDUSTRY 2489 

METHODS OF DOING BUSINESS POLAND 

The Chairman. Who is William H. OXiorman? 

Mr. A. Felix du Pont. He was the assistant director of sales of 
my department. He is now dead. He was assistant to Casey. 

The Chairman. I would like to ask as to the meaning of this 
letter addressed by Colonel Taylor to Mr. William H. O'Gorman, 
dated January 18, 1928, in connection with your negotiations in 
Poland [reading] : 

I am now working on a proposal to help Zaiorzdon, in return for which 
we are to get 300 tons a year for 12 years. Thei-e is one aspect of this 
negotiation on which I must know exactly where I stand, and that is, in 
order to get this we will have to pay 7 percent commission, of which 2 percent 
must be paid in its entirety the day of the signing of the contract. If I can 
promise this, I have a good chance of getting away with this order. Cable 
me firm answer. 

Sincerely yours, 

William X. Taylor. 

That will be offered as " Exhibit No. 949." 

(The letter referred to Avas marked " Exhibit No. 949 " and ap- 
pears in full in the text.) 

The Chairman. What is the meaning of that, Mr. du Pont? 

Mr. A. Felix du Pont. I do not know. 

The Chairman. Did Mr. O'Gorman consult you at the time? 

Mr. A. Felix du Pont. I do not remember if he did. I do want 
to mention, however, that this is one of those sales propositions that 
never came through. Is not that correct ? 

The Chairman. Whether or not it came through, vou gave your 
consent to it, did you not '{ 

Mr. Ratjshenbush. What was Major Casey's answer to your 
question ? 

The Chairman. Had he directed a question to Major Casey? 

Mr. Casey. It is a question of the date. 

Mr. A. Felix du Pont. Three hundred tons a vear for 12 years. 

Mr. Casey, No; that never came through. Zarorzdon was the 
Polish powder plant. 

The Chairman. What was the thought there involving the neces- 
sity of paying 2 percent of this commission, of this 7-percent com- 
mission, on the day of the signing of the contract? 

Mr. Casey. That is because the agent, a man by the name of 
Klawe, said he could not possibly get along with a 5-percent commis- 
sion, and other expenses of his office, the financial adviser he had to 
use, and that he was put to considerable expense because he had to 
pay this fellow who was his financial backer. 

Senator Clark. He had to pay that 2 percent on the whole 12-vear 
contract ? '' 

Mr. Casey. Yes, sir; because the banker was through when the 
deal was terminated. 

Senator Clark. The banker was not taking any chances. 

Mr. Casey You bet your life he was not. Not if he was a banker. 
He wanted that 2 percent. In other words, he had to pay this 2 per- 
cent CO the banker, and I felt it was only fair to him that we should 
anticipate his commission to the extent of 2 percent, so that he could 
get rid of that oblijration. 



2490 MUNITIONS INDUSTRY 

The ChzVirman. I offer as an exhibit a letter dated February 3, 
1928, addressed to Colonel Taylor by Mr. O'Gorman, which will be 
" Exhibit No. 950." 

(The letter referied to was marked " Exhibit No. 950 " and is 
included in the appendix on p. 2597.) 

The Chairman. I read from it [reading] : 

You may be sure in the event that you conclude a deal along the lines indi- 
cated in your letter of January IS, that I will promptly remit by cable the 
amount involved to pay the 2 percent commission, so that there will be no delay. 

Mr. Casey. I think that matter has pretty well been covered, the 
reason for that immediate payment. 

The Chairman. That contract did not ever materialize. However, 
an exactly similar arrangement had previously been negotiated, had 
it not? 

Mr. Casey. About the same time we got a contract from Poland 
for a thousand tons, somewhere around 1927 or 1928. 

The Chairman. I offer " Exhibit No. 951 ", which is a letter to 
Colonel Taylor by Mr. O'Gorman, under date of July 3, 1928. 

(The letter referred to was marked " Exhibit No. 951 ", and is in- 
cluded in the appendix on p. 2597.) 

I read from it [reading] : 

In regard to advance of 2 percent on agent's commission on new order, this 
matter can be handled exactly the same as we did on the 1,000-ton conti'act so 
that the money will be available upon receipt of telegraphic advices from you. 
You may rely upon me to personally take care of this matter so that the funds 
will be placed to Mr. Klawe's credit within 48 hours after receipt of telegraphic 
advices from you. 

Now, the question, who was Mr. Klawe? 

Mr. Casey. He was our agent in Warsaw. 

The Chairman. Two percent involves in this particular contract 
a sum of about $30,000. Is it customary, Mr. Felix du Pont, to 
advance such sums to j^our agents on the day contracts are signed, 
when the prospects for payment are so far in the future? Is that 
a customary practice? 

Mr. A. Felix du Pont. No; I do not think it is. I think those 
things are judged according to the conditions when they are brought 
up. 

The Chairman. Wliat induced you to make an exception, then, or 
to make that advance in this particular case? 

Mr. A. Felix du Pont. Just on the information we had, we 
thought we would do as Colonel Taylor recommended. 

The Chairman. Is it not likely that Mr. Klawe had to pay some 
key man before this contract could be finally entered into ? 

Mr. Casey. Senator Nye, I do not think so. I would like to give 
you an illustration of our contact with the Polish inspectors that 
came over here in connection with the thousand-ton contract. 

In order to avoid the slightest semblance of any irregularity on 
their part, they would not accept from us an invitation, " Let's go 
down and have lunch." They would say. " Yes, if you will have 
lunch with me tomorrow." 

That was their attitude all the way through. And they not only 
took that attitude, but we felt they were sometimes leaning over 
backwards to avoid any accusation, whatsoever, that they accepted 
any favors of any sort from us that they did not promptly return. 



MUNITIONS INDUSTRY 2491 

With that atmosphere. I do not see where there is the slightest 
idea that we could possibly have had that there was going to be any- 
thing in the slightest degree irregular. 

Senator Claek. Who paid the expenses of that Polish commission, 
Major? 

Mr. Casey. They did; the Polish Government. 

The Chairman. You do not think that the payment of this com- 
mission involved the necessity of Mr. Klawe's paying others before 
the deal could be finally put through ? 

Mr. Casey. I do not believe so. 

Mr. Lammot du Pont. Mr. Chairman, you will recall that the 
resolution of the executive committee addressed to the smokeless- 
powder department was earlier than this proposed contract. The 
smokeless-powder department was well aware of the attitude of the 
executive committee. They knew that a contract of this size would 
have to come to the attention of the executive committee. It was 
entirely unreasonable that they should have had in mind any pro- 
vision of the kind that you suggest. 

The Chairman. I offer now " Exhibit No. 952 ", a letter dated 
May 20, 1930, by Mr. O'Gorman to the Parlin plant, industrial fin- 
ishes division, export department. Evidently Mr. J. H. Frechen of 
that department had made inquiry concerning this particular deal. 
He says [reading] : 

In reply to your letter of May 14 and contirming our telephone conversation 
on the above subject, we are slart to advise tliat Mr. Klawe has been agent for 
the military sales division in Poland for the past 6 years, during which time he 
was successful in obtaining for us orders from the Polish Government for large 
Quantities of smokeless powder. Some of the sales were made on a cash basis, 
others on credit extending ovei- a year and a half, and on the last contract, 
which was for 1.000 tons of powder, payments extended over a 3-year period. 

I jump over the next paragraph [reading] : 

Mr. Klawe's commission on the above-mentioned contract was 7 percent or 
approximately $126,000. Upon signing of the contract, even before we received 
the Polish notes, we made iin advance pavment of commission to Mr. Kin we of 

.$30,000. 

He got his 2 percent even before the deal was finally closed? 

Mr. Lammot du Pont. No, sir ; that is not correct. 

(The letter referied to was marked '* Exhibit No. 952 ", and is 
included in the appendix on p. 2598.) 

Mr. Casey. No; before we got the first notes. 

The Chairman. Even l^efore the notes were signed? 

Mr. Casey. Yes; but not before the deal was closed. 

Mr. Lammot du Pont. He does not say before the notes wej?e 
signed, either, Mr. Chairman. It says before we received the Polish 
notes. 

The Chairman. I see. 

Then Ave go to the last paragraph on that page [reading] : 

In dealing with the Polish Government you are rattier fortunate to have Mr, 
Klawe as agent as he is a man who is very well connected and thoroughly un- 
derstands what must be done in order to secure business. He is very trust- 
worthy, and I suggest that you follow his advices so far as the obtaining of 
Polish Government business is concerned. 

What are Mr. Klawe's connections, referred to here? 
Mr. Casey. He is looked on in Poland as a man of unusually high 
standing, and, by the very nature of things, he is accepted as a man 



2492 MUNITIONS INDUSTRY 

of intej^rity, and therefore a man that the Government feels they 
can deal with. I consider that we were fortunate in getting him as 
our agent. 

Senator Pope. Outside of his agency for you, what was his busi- 
ness, his general profession ? 

Mr. Casey. I think Mr. Brad way can answer that, because he has 
met Klavfe and has had dinner with him. 

The Chairman. Please come forward, Mr. Bradway. 

Mr. Bradway, have you been sworn ? 

Mr. Bradway. No. 

TESTIMONY OF F. W. BRADWAY 

m 

(The witness was duly sworn by the chairman.) 

The Chairman. The question has been asked and the point has 
been made that you perhaps could tell us more about Mr. Klawe, your 
representative in Poland, than anyone else could. What do you 
know of him? 

Mr. Bradway. He is a mechanical engineer, as I recall it, and he 
had had to do with the construction of several manufacturing build- 
ings in both Warsaw and in St. Petersburg — that was prior to the 
war, in St. Petersburg — and he had a sort of a small factory there 
where he refinished automobiles. In general he was quite highly 
respected by the people in Warsaw. 

Senator Pope. What is your present position? 

Mr. Bradway. I am assistant general manager of the smokeless- 
powder department. 

Senator Pope. Of the du Pont Co.? 

Mr. Bradway. Yes; smokeless-powder department. 

The Chairman. Is it the custom to pay as much as 7 percent com- 
mission on that business in Poland ? 

Mr. A. Felix du Pont. I think that the amount of the commission 
is in a general way dependent upon the question of whether you have 
to find an agent who can do the job for you and get the orders for 
you. If you cannot do it yourself, you get an agent who can, and the 
question of whether you can do it or not yourself very much decides 
the amount of the commission the agent gets. 

The Chairman. Have you had to pay higher rates, higher commis- 
sions than that in connection with any of your sales ? 

Mr. A. Felix du Pont. I could not answer that. I am not sure. 

The Chairman. Mr. Casey? 

Mr. Casey. I think 7 percent would represent a little higher than 
average. There may have been exceptions to that, but you must re- 
alize this : The payment of a commission to an agent is very much 
more economical from our viewpoint than for us to establish a branch 
office for the sale of military material in any country. I think it does 
not take very much thought to realize that. 

Senator Clark. In other words, you do not have to pay any perma- 
nent overhead or salaries? 

Mr. Casey. Yes. 

It is necessary that somebody be there all the time. It is not like a 
commercial proposition, where there might be a broadcast that they 
are going to build a bridge, and everybody can rush there to see that 
they have a chance to bid. You never know at what moment any 



MUNITIONS INDCrSTRY 2493 

government may decide, " Well, now, this is the time we ought to buy 
something." So the man who is right there on the job, practically, 
you might say, almost in the capacity of being a branch office, except 
we have no control over him, is much cheaper to have. In other 
words, if we had to do business throughout the world or try to do 
business by having branch offices, we would probably be in the busi- 
ness about one year and quit. It would be costing us too much. 

Mr. Raushenbush. Have you ever paid commissions higher thafi 
7 percent? 

Mr. Lammot du Pont. Mr. Chairman, I think I can answer that 
question from the standpoint of general business. 

The Chairman. Will you, whoever can answer it? 

Mr. Lammot du Pont. I would like to answer it from that stand- 
point. 

The Chairman. All right. 

Mr. Lammot du Pont. Certainly there is no fixed amount for a 
business commission. They run anywhere from one-eighth of 1 
percent, the usual brokerage in stock transactions, up to as high as 
30 or more percent in commercial goods selling. The ordinary com- 
mission for an automobile dealer agency is 25 percent. 

The Chairman. On the sale of powder, do you mean to say that 
you have paid commissions as high as 30 percent? 

Mr. Lammot du Pont. I do not think so ; no, sir. 

Mr. Casey. No. 

The Chairman. In what instances have you paid more than 7 
percent ? 

Mr. Casey. I think we may have paid or offered to pay at least 
10 percent, possibly 15. But you must realize this, that the ques- 
tion of how much commission depends to a great extent on the a^ent. 
Some agents will say, " We cannot afford to take this proposition 
on for any 5-percent basis, because the amount of business is going 
to be so small it will not even pay us to carry on negotiations." 

On the other hand, as to some other nation, it might be a case 
where the man would say, "Why, yes; 5 percent is all right with 
me. I will get by with that." 

So as to the question of saying there is any fixed agency price, 
that is entirely dependent on the type of man you get for agent and 
the nation he is selling to. 

There is another side. Senator. We naturally try to restrict the 
amount paid in commission, because whatever is paid in commission 
is added and above our base price, and therefore, any increase in 
commission means it puts our price that much higher, which makes 
it bad from the standpoint of competition. So we are on our part 
doing our best to keep the commission as low as possible, and at 
the same time the agent is doing his best to get the commission as 
high as possible. 

Senator Clark. How much would be the commission involved in 
this Polish contract that Senator Nye was talking about, 7 percent 
on 3,000 tons for 12 years? 

Mr. Casey. No ; on a thousand tons. 

Senator Clark. No; but the other proposition that I understand 
was never consummated. 

Mr. Casey. Oh, the other proposition ? You see, there would have 
been a 12-year contract, 300 tons a year. 



2494 MUNITIONS INDUSTRY 

Senator Clark. Three hundred or three thousand? 

Mr. Casey. Three hundred tons a year. We could not produce 
3,000 tons a year. 

Senator Clark. How much was involved ? I was just trying to get 
an idea of the size of the commission involved on that Major. 

Mr. Casey. You are asking me to do some mental gymnastics here. 

Senator Clark. I thought you would be familiar with the subject. 

Mr. Casey. No. We never went any further, to figure out what it 
would be. 

The Chairman. Mr. O'Gorman's figure on that was $1,846,000. 

Senator Clark. That was on the thousand tons. 

The Chairman. For your information, the total sales price of the 
thousand tons of smokeless powder amounted to $1,846,000. 

Mr. Casey. Yes. 

Senator Clark. You can figure the commission on that. 

The Chairman. That commission would figure $168,000. 

Mr. Raushenbush. Mr. Casey and Mr. Bradway, were there any 
other instances where an arrangement like this of a 2-percent com- 
mission or a definite part of a commission had to be paid on the very 
day the contract was signed ? 

Mr. Casey. I do not know that there was in this, particular case, 
you see. It involved credit, the credit to be, you might say, in the 
form of Polish notes. That required the services of a local banker 
who knew the situation as to the Polish method of finances. There- 
fore, this banker was put to a tremendous amount of work to investi- 
gate the whole thing before we were willing to accept those notes. 
We had to get some local banker's opinion. 

Mr. Raushenbush. Do you have any reports from Mr. Taylor re- 
ferring to that banker ? We do not seem to have run into them at all. 

Mr. Bradway, while Mr. Case}'^ is looking for that, can j^-ou answer 
from your memory on that matter: Were there ever any other in- 
stances where a part of the commission had to be paid on the very 
day of the signing of the contract? 

Mr. Bradway. I cannot recall that. 

Mr. Raushenbush. It was a somewhat unusual case. 

Mr. Casey. Mr. Raushenbush, it would not be at all out of the ordi- 
nary for a proposition of this sort, where the contract provided that 
the agent's commission is not paid until the notes had been paid, and 
not when the notes are received by us, but the notes have been paid. 
In the meantime, this thousand-ton proposition had been worked on 
for several years before it was finally brought to a conclusion. 

The Chairman. Did Klawe do the work? 

Mr. Casey. He did the work. 

Senator Clark. The 2 percent that had to be paid cash on the 
barrel head on the day of signing the contract did not have to do, 
if I recall it, with the thousand-ton transaction? 

Mr. Casey. It had to do with the thousand-ton likewise. 

Senator Clark. You had to pay the commission^ 

Mr. Casey. We had already paid it at the time this 12 years 
developed. 

Senator Clark. And this other one was to be based on the same? 

Mr. Casey. It was simply a duplication of it. 

You just take the position of an agent. Here he is getting a 
commission and nothing else. After he has done a certain amount 



MUNITIONS INDUSTRY 2495 

of work, some of these agents say, " I would like to have half my 
commission ", because after all, when the contract is signed you 
might say the agent's job is done, isn't that true? He has negotiated 
the contract to the extent of where our own man then can go in 
and sign. Now, really, his work is done. Except in this case, 
Klawe also had to help us in seeing that the notes that were called 
for under the terms of the contract were sent out at the proper 
tune. So he in reality had a continuing job. Whereas ordinarily 
an agent's or a salesman's job on a particular piece of business is 
completed when the contract is signed. In a great many cases you 
will find that agents are paid their commissions in full when a 
transaction is closed. 

Mr. Raushenbush. What cases do you mean, your company ? 

Mr. Casey. I mean the commercial business, in commercial busi- 
ness. 

Mr. Lammot du Pont. The usual architect's com.mission is paid 
one-third on completion of the plans. 

Senator Clark. That is because he has done a third of the work. 

Mr. Lammot du Pont. The agent had done his work in this 
powder case. 

Mr. Raushenbush. The reason for this line of questioning, Mr. 
Chairman, is that we had a good deal of these advance commissions 
in the case of another company, the Electric Boat Co., so I was 
interested in tracing them down. 

Mr. Casey. Mr. Raushenbush, you are questioning du Pont now, 
are you not, not another company? 

Mr. Raushenbush. We do not know whif this means, Mr. Casey. 

The Chairman. You do not have direct knowledge of having 
paid more than 7 percent for powder sales, do you ? 

Mr. Casey. No. I do not have any direct knowledge at the mo- 
ment. It may be that we did, but if so, it was on a very small piece 
of business. 

The Chairman. Is there any significance in the language which 
Mr. O'Gorman uses in this memorandum from Mr. Frechen, when 
he says of Mr. Klawe that — 

He is a man who is very well connected and thoroughly understands what 
must be done in order to secure business? 

Mr. Casey. I do not think there is the slightest bit of significance 
in that at all. You must realize that this was a letter being sent 
from one department to another department. 

Tlie Chairman. That is right. 

Mr. Casey. We felt that Klawe was a good man for us, and we 
were trying to make as good a case as possible for Klawe for this 
other department, because it had this advantage to us : If Klawe 
likewise had an agency for another branch of the company, then we 
would keep him more contented. 

We had from our agents requests such as, " Well, won't you give us 
a retainer, because we go along year after year, and no business." 
In some cases we have to pay a nominal sum, of $25, $50, or $100 a 
year, so that they will pay the expenses of keeping their files. They 
say, " Why, we do not got enough even to pay the expense of keep- 
ing our files up and our correspondence." 



2496 MUNITIONS INDUSTKY 

Senator Clakk. Klawe has been pretty well paid, Major. The 
commission on this one transaction of a thousand tons ran about 
one-hundred-and-eightj^-some thousand dollars. 

Mr. Casey. How many years has he worked ? 

Senator Clark. I do not know. 

Mr. Casey. That is the way you have to look at it. 

Senator Clark. That seems to be fair compensation. 

Mr. Casey. You take the amount of work he has done for a period 
of we will say 10 years, if you like, and he has gotten this order, 
which gave $180,000. 

Senator Clark. At that figure you are not going to the poorhouse. 

Mr. Casey. Let us admit that. But is not the man who does the 
work entitled to his reward? 

Senator Clark. Yes; but you were talking about his being dis- 
satisfied. I say he is doing pretty well. 

Mr. Casey. The fact remains that since that time we have not 
done any business with Poland. 

The Chairman. Prior to this 1928 sale, how long prior to that 
had Mr. Klawe been recognized as a representative in Poland? 

Mr. Casey. I could not say the exact date, but I would say at 
least 3 or 4 years and iDOssibly more. 

Mr. A. Felix du Pont. Senator Nye, there was no sale in 1928. 

The Chairman. 1927 was the sale. 

Mr. Bradway. He had been our agent for at least 3 or 4 years 
prior to that. 

Mr. Casey. Three or four years ; I am not quite sure. 

The Chairman. Can you say that Mr. Klawe negotiated this deal 
without the resort to any payment of graft ? 

Mr. Casey. I can never say that any man negotiates a deal and 
say that I know positively that he has not. That is beyond me. 

The Chairman. But it has not been made ? 

Mr. Casey. But there has not been the slightest knowledge on our 
part that any such thing was necessary, because in the first place, 
Klawe was looked on as a man of such integrity that we would not 
suspect it. 

The Chairman. That is not true as respects some other places or 
sales, is it? You do have knowledge that graft is necessary in con- 
nection with some sales? 

Mr. Casey. I would not even say that. We sometimes suspect, 
but that is a thing that we may be absolutely unjust about, suspi- 
cion. 

methods of doing business CHINA 

The Chairman. Did you not do more than suspect as relates to 
your negotiations in China? 

Mr. Casey. Then we found out. 

The Chairman. Then you found out? 

Mr. Casey. Yes. 

The Chairman. So it is not a matter of suspicion there ? 

Mr. Casey. No. I am trying to tell you to the best of my know- 
ledge how we look at these things. 

The Chairman. You have done considerable business, Mr. Casey, 
in China. 



MUNITIONS INDUSTRY 2497 

Mr. Casey. From the time of lifting the embargo I think over a 
period of 3 or 4 years, we did probably an average, I will sslj — what 
was it, about? 

Mr. Bradway. $800,000, total. 

Mr. Casey. $200,000 or $300,000 a year. 

The Chairman. In these negotiations in China and other dealings 
with a Colonel de Fremerj^ — who was De Fremery? 

Mr. Casey. De Fremery, as he came to our attention through Mr. 
Van Veen, who was our agent in Holland — he advised us that Mr. 
de Fremery was going over there to advise the Chinese Government 
on ordnance matters. 

The Chairman. He was originally from where? 

Mr. Casey. I understand from Holland. Whether he is a Hol- 
lander I do not know, but the name might indicate otherwise. 

The Chairman. I have before me excerpts from a letter written 
by Mr. O'Gorman to the circulation manager of the du Pont maga- 
zine, saying of Colonel de Fremery rhis : 

Colonel De Fremery is a Dutch ofBcor working uniler contract with the 
Chinese Government as an adviser. 

Mr. Casey. That is right. 

The Chairman. You understand him to be that. 

I offer " Exhibit No. 953 ", cable dated September 23, 1929, to Col. 
W. N. Taylor. 

(The letter referred to was marked " Exhibit No. 9o3 ", and appears 
in full in the text.) 

The Chairman. I read: 

Cable No. 660 : Following telegiam has been received from N. E. Bates : 
Would suggest v.e do not pay any other commissions except 7.5 percent Preston, 
Wills, DyestufCs, Wilmington, du Pont Dyestufit's Office, Shanghai, China, will 
advance all prices at plant 5 rerreiit for distribution as follows: 4 percent 
Chinese Army, Nanking; 1 percent Coi. de Fremery. N. E. Bates does not know 
of any good i-eason for payment commission by Col. W. N. Taylor. Unless there 
is good reason to contrary we will advise N. E. Bates to settle definitely on the 
basis quoted. 

Who can tell us the meaning of that? 

Mr. Casey. This \^as an arrangement made by Bates after he got 
over there in China. It was brought out the other day that we had 
severed our conneciion with I, V. Giliis. Because of the embargo in 
China we felt there was no chance for him, since we really had hung 
onto him year after year with the idea perhaps that the embargo 
might be lifted. I think that a few months after vre severed our 
connection with Giliis, the embargo was lifted. When we tried to 
get Giliis bacJv we found that he had made some other connection. 
The result was we were looking for a new method of getting into 
China, when this opportunity arose in Europe through Van Veen. 
The very first arrangement was that Van Veen insisted that he should 
have 8 percent, and out of that 8 percent he was going to take care 
of De Fremery. Then we later learned from the Chinese Govern- 
ment that they did not want to do business through intermediaries, 
that they Avanted to do busines direct. I think that came out the 
other day. 

We had in Shanghai an office of the dyestuffs department of the 
du Pont Co., so we asked Dr. NoeJting if he would take care of the 
matter for us. 



2498 MUNITIONS INDUSTRY 

Then we were up against this proposition : The dyestuffs depart- 
ment said, '• Yes, but this is going to cost us money." We were 
going to face the proposition of paying Van Veen 8 percent, which 
Look care of De Fremery, and also from the smokeless powder depart- 
ment paying into the dyestuffs department a certain amount, which 
all meant boosting our price. 

So when Bates got over there he found that De Fremery would 
be satisfied with 1 percent. The dyestuffs people thought that in 
order to pay them and have them break even on the handling of this 
Dusiness they required 7^2 percent. That is our own office. And 
when Bates said he could not see any occasion for payment of com- 
mission hj Taylor, he meant he could not see any reason why we 
should pay any commission whatsoever to Van Veen. So this ar- 
rangement then went into effect. The reason for putting aside 4 
percent was because we were — as brought out by Mr. Felix du Pont 
a few moments ago — practically told that that was an old Chinese 
custom. 

The Chairman. The 4 percent that was paid to the Chinese Army 
of Nanking, who was that paid to? 

^Ir. Casey. I do not know. I never did know until that other 
letter indicating by name a couple of officers, which was brought out 
at tJie hearing in September. 

The Chairman. But De Fremery, who was a Dutch officer working 
under contract with the Chinese Government as an adviser, also got 
a percentage? 

Mr. Casey. He got 1 percent. 

The Chairman. Have you paid commissions to other Chinese 
officers, army officers? 

Mr. Casey. Whatever was paid under this 4 percent; that is all 
I know of. I do not even really know whether the payments were 
made, to whom, or how, but the money at least was set aside by the 
budget. 

The Chairman. I offer " Exhibit No. 954 ", which is an excerpt 
from a letter dated December 27, 1929, to the circulation manager of 
the du Pont magazine by Mr. O'Gorman. That letter makes refer- 
ence to Dr. C. Y. Wang. 

(The letter referred to was marked " Exhibit No. 9.54 ", and is 
included in the appendix on page 2599.) 

I read : 

Dr. C. Y. "Wang is a chemical engineer in charge of dyestuiTs demonstration 
in our Shanghai office, hut since Dr. Wang is also engaged in military sales 
work, the du Pont Magazine would be of value to him, as he is In constant 
touch with government officials. 

Wliat is this we are hearing of more recent days concerning Dr. 
Wang's present predicament? 

Mr. Casey. Somebody else can probably tell the story better than 
I can on that. I just heard the rumor. 

The Chairman. Is it any more than rumor, this story that he has 
been arrested and is about to be executed? 

Mr. Casey. I could not tell you. Senator. 

Mr. Lammot dut Pont. I had not heard of that. Senator. C. Y. 
Wang is not in the company's employ and has not been for some 
time. 



MUNITIONS INDUSTRY 2499 

The Chairman. Since when? 
Mr. Lammot du Pont. I think since 1932. 

The Chairman. Is there anyone present who has heard anything 
more than mere rumor along that line ? 

Mr. Casey. I was just handed this memorandum and I am trying 
to make it out. This is evidently a message from the back of the 
room. It says here that he is going to be hung. 

The Chairman. Is there anyone here in connection with the du 
Pont industry, their attornys or others, who has any direct informa- 
tion concerning Dr. Wang's difficulties i There has been a very per- 
sisting story, emanating, I understand, from one of the counsel for 
the du Ponts, that that was tlie case. In any event, in light of the 
record that has been made, it would seem that if there be foundation 
for the story that is being told it seems rather unfair that Dr. Wang 
should be one or the only one punished for what we understand to be 
the occasion for his punishment. 

Is it a common occurrence, as you understand, Mr. Casey, in 
China, to pay these commissions to Chinese officers of the Army? 

]Mr. Casey. I have never been in China, so therefore, I have no 
iirst-hand information. But I recently read a book, "" Oil for the 
Lamps in China " — I imagine a great many of j^ou men have read 
that book — and all through it is this question of the squeeze. 

The Chairman. This question of the what? 

Mr. Casey. Of the squeeze. But in addition to that, I have 
heard from people who have been there that there has always been 
a custom of exchanging presents. In other words, when New Year's 
comes, or some otTier ceremonial occasion, people doing business 
with one another will exchange presents. 

Now, this, of course, is all hearsay. I understand that sometimes 
foreigners going over there trying to do business have been very 
much embarrassed by having a very handsome gift come to them, 
in the form of a piece of Chinese jade, or something of that sort, 
and they don't know what in the world to do with it. If they try 
to return it, they have made a deadly enemy of the man who has been 
a customer of theirs, and it is the customer buying from them who is 
giving the present to the man selling to him. But he will make a 
deadly enemy if he refuses that gift, so the man feels he cannot 
refuse the gift. 

The Chairman. Is the man buying sometimes made the recipient 
of a gift, a New Year's gift? 

Mr. Casey. He is very apt to be. Of course, that is hearsay, as 
I say. I have never been in China. 

The Chairman. I offer " Exhibit No. 955," a letter to Mr. O'Gor- 
man, unsigned, dated December 29, 1930. 

(The letter referred to was marked " Exhibit No. 955 ", and 
appears in full in the text.) 

The Chairman. I should like, first of all, to have identified the 
author of that letter. It is initialed J.W.S. 

Mr. Casey. J. W. Squirrel. 

The Chairman. Who is he? 

Mr. Casey. He is an assistant in LC.I.'s office in New York. 

The Chairman. Can you tell where the letter was written from? 

Mr. Casey. I imagine from New York. There is nothing here to 
indicate, however. 



2500 MUNITIONS INDUSTRY 

The Chairman. Oh, yes; it is indicated up at the top here. It 
is written from 19 West Forty-fourth Street, New York, December 

29 1930. 

This letter would make it appear, Mr. Casey, that your British 
friends, the I.C.I. , at least hint that you have obtamed business m 
China, 'and this in spite of price cutting by the Bofors, with the 
element of graft. Let us read the letter, " Exhibit No. 9o5 : 

In your letter of November 20 you advised that you had secured an order for 
rifle powder from the Chinese Government at the price of $2.10 per kilo, pre- 
sumablv c.i.f. Chinese port, against Bofors' quotation of $1.25 per kilo f.o.b. 
European port. You indicated that you secured the business on the basis of 
service and the quality of your product. We, of course, admit the possibihty 
of this argument being successful in some instances over lower competitive 
prices but the margin between the two figures given is so wide that we are 
wondering whether there were not some other considerations. For instance, we 
think that it is not at all unusual to have to give away large commissions in 
China in order to secure business. ^ ^ ^ , ^ i ■, 

Id the fdisenre of ordprs from the British Government, I.C.I, have to depend 
on getting business from other sources, in order to keep their factory employees 
up to the mark. They are not willingly following the prices established by 
Bofors, but they do not see how they can get business by any other means. In 
your case, of course, circumstances are different in that you receive large orders 
from the United States Government. 

Senator Pope. Who is this man ? 

Mr. Casey. Squirrel? 

Senator Pope. Yes. 

The Chairman. He is of the I.C.I. 

Senator Pope. An agent of the I.C.I. ? 

Mr. Casey. No ; he is one of their representatives in this country. 

Senator Pope. In this country? 

Mr. Casey. Yes. 

The Chairman. Mr. Casey, what is the deduction to be drawn 
from this letter? 

Mr. Casey. I think in the first place that SqunTel's deduction was 
incorrect, to the extent that it was trying to explain how we were able 
to sell when they were not. I am referring now to I.C.I. 

The Chairman. Yes. , , • <: 

Mr. Casey. That statement that we made the sale on the basis ot 
service and quality was absolutely correct. There was no such fig- 
ure as this Bofors' quotation. Now, you have got to take the dis- 
tinction there between c.i.f. and f .o.b., as referred to by Senator Clark 
the other day. I believe that Bofors' price c.i.f. would have been 
25 or 30 cents a kilo higher, on account of ocean freight and trans- 
portation. But ours represented a c.i.f. price. 

The Chairman. Even so, that would have left a difference ot 
about 80 cents. 

Mr. Casey. But that price that Squirrel refers to of Botors did 
not exist at the time we got the order. Now, what we understood 
was— and we afterwards heard it to be the fact— that every time 
Bofors heard we had gotten some business that they had not gotten, 
they would go to some official and say, " You were foolish to give 
them that business at that price. We would have given you that 
powder at a good deal less." Bofors was not selling powder at that 
time. Later on. when the world became a little chaotic on account 
of England going off the gold standard, our prices in dollars re- 
mained the same, but in comparison with European prices they were 



MUNITIONS INDUSTRY 2501 

way out of line. At one time we understood that Bof ors were offer- 
ing powder in China at $1,121/^ a kilo, but they could do that without 
lowering their price, on account of the exchange. 

The Chairman. Now, what part of your price that you obtained 
in connection with that order was for graft ? 

Mr. Casey. That 4 percent referred to, and that was all. 

The Chairman. In addition to the 4 percent, there were other re- 
wards, were there not, such as your New Year's presents plan that 
you just suggested? 

Mr. Casey. Anything tliat came there was in that 4 percent. 

The Chairman. Your director of sales for China recognized the 
necessity for gifts at New Year's, Chinese New Year's ? 

Mr. Casey. As I say, that was set aside for gifts or of whatever 
nature that might be, 

Mr. A. Felix du Pont. Senator Nye, might I state that you put in 
the record or called it our New Year's plan. We made it very clear 
that that is a Chinese New Year's plan. 

The Chairman. All right. 

I have before me a letter addressed to E. I. du Pont de Nemours & 
Co. by F. A. M. Noelting, director of sales for China, written Aug- 
ust 22, 1929, which I offer as " Exhibit No. 956." 

(The letter referred to was marked " Exhibit No, 956 " and is 
included in the appendix on p. 2599.) 

The Chairman, I will read only a sentence from it on page 2, 

Anyway, presents will have to be given to various parties at Cbina New Year's 
and the overprice we get can be nsed for this purpose. 

Mr. Casey, Doesn't that indicate just what I said? 

The Chairman, You think that is covered by the 4 percent ? 

Mr, Casey, Yes. In other words, there was nothing given in the 
nature of a New Year's present in addition to that 4 percent. If 
presents were given, that was deducted from the 4 percent. 

Now, I might add that at the time this proposition came in, this 
was an explanation as to why they wanted us to advance the price, 
to take care of that 4 percent. It was a question indicated in this 
letter that this was for New Year's presents. It was not until later 
that we got an indication that there was an actual cash transaction. 

I might at that point just bring out this : That the question as to 
the responsibility of approving of that action put me in a very awk- 
ward spot. This Shanghai office was the office of the dyestuff depart- 
ment, an entirely different department. When I later learned that 
this was a proposition which I felt violated the resolution of the exec- 
utive committee as of 1922, I said to myself, "Well, now, it may be 
that an exception is being made in the case of China." Yet that did 
not relieve me of the responsibility for reporting it. But I felt that 
I would be presumptuous to be reporting an incident relating to the 
action of some other department. But there was this phase, perhaixs, 
that likewise helped govern : That I knew if I ever did bring it to the 
attention of the executive committee they would say, " No more ; that 
is contrary to our policy." Therefore, I was anxious to make the 
sale, and figuring, as I said before, that it was an old Chinese custom 
and the fact it was another department, I did not mention it. But I 
am really responsible for at least particij^ating in the violation of a 
company policy, because I knew the executive committee would have 
said flat-footeclly, " No more business on that line." 



2502 MUNITIONS INDUSTRY 

Senator Pope. Did you take it up with any other department? 

Mr. Casey. No. 

Mr. Eaushenbush. When the executive committee found out about 
this, was there another resolution on the Chinese business ? 

Mr. Casey. When the executive committee found out about this, 
we were doing no business with China, on account of the exchange. 

Mr. Raushenbush. But you sold $800,000 worth, according to Mr. 
Bradway, in the last 2 years. 

Mr. Bradway. I didn't say that. 

Mr. Raushenbush. I will correct that. Since the embargo. 

Mr. Bradway. In 1931, 1 think, was our last sale to China. 

Mr. Raushenbush. How much has it been since 1929 ? 

Mr. Bradway. About $800,000. 

Mr. Raushenbush. That is what I was saying. 

Mr. Bradway. Yes ; but we haven't sold anything to them for 21/2 
years. 

Mr. Raushenbush. But since 1929 it has been $800,000 worth of 
business. 

Mr. Bradway. Yes. 

Mr. Raushenbush. You did not answer my question. Major. 
After the company found about this China business was there another 
executive committee resolution on the question of not paying such 
commissions ? 

Mr. Casey. I do not believe the executive committee ever learned 
of it until this year. 

Mr. Raushenbush. When they learned of it this year was there 
another resolution passed? 

Mr. Casey. I don't think it was necessary, but it was an error on 
my part. Whether it was a justified error or not is beside the point. 
I am the fellow who made the bull. 

The Chairman. Mr. Felix du Pont, in 1930 did you win a contract 
for the sale of 30 tons of TNT in China? 

Mr. A. Felix du Pont, I do not know. Do you know, Major? 

Mr. Casey. I have not got the materials here. 

The Chairman. Mr. Casey? 

Mr. Casey. I don't know. 

Mr. A. Felix du Pont. I have not got the detail. 

The Chairman. Do you have any knowledge of that, Mr. Brad- 
way? 

Mr. Bradway. No; I do not have the details. The $800,000 re- 
ferred to included TNT, I might add. 

Mr. Raushenbush, Yes. 

Mr, Bradway. It was not all smokeless powder. 

The Chairman. On various occasions, several occasions, at least, 
in cases of contracts with China for military material, these contracts 
had to be put through with the assistance of graft or bribes, or what- 
ever you are going to call it here. 

Mr. Casey. So we were assured. 

methods of doing business ARGENTINA 

The Chairman. Mr, Felix du Pont, was the Argentine Govern- 
ment a pretty good customer of the du Ponts for powder? 

Mr. A. Felix du Poxt. 1 would not call it a pretty good customer. 



MUNITIONS INDUSTRY 2503 

The Chairman. As foreign sales go, were they considered a good 
customer ? 

Mr. A. Felix du Pont. No. Covered over the years, taking the 
average per year, it was small. We would not consider the Argen- 
tine a good customer. 

The Chairman. Have you considered it a good prospect? 

Mr. A. Felix du Pont. No. We did at the time some years ago, 
but we were disappointed, I think. 

The Chairman. Do you recall who, in 1920 and 1921, was your 
representative selling powder in the Argentine? 

Mr. A. Felix du Pont. When? 

The Chairman. 1920 and 1921. 

Mr. A. Felix du Pont. No. 

The Chairman. Would mention of the name Adolph Lissner mean 
anything ? 

Mr. A. Felix du Pont. Yes. 

The Chairman. He was your representative there? 

Mr. A. Felix du Pont. Yes. 

Mr. Casey. He was our salesman. 

The Chairman. He was your salesman ? 

Mr. A. Felix du Pont. Yes; he was our salesman. He was work- 
ing under a salesman. 

The Chairman. No commission? 

Mr. A. Felix du Pont. No commission. 

The Chairman^ Outright salary? 

Mr. A. P^ELix du Pont. Yes. 

The Chairman. He was a regular employee, then, of your mili- 
tary-service division ? 

Mr. A. Felix du Pont. Yes. 

The Chairman. Who picked Mr. Lissner? 

Mr. A. Felix du Pont. Colonel Buckner, during the war. 

The Chairman. Who was Colonel Buckner. 

Mr. A. Felix du Pont. Colonel Buckner was the director of mili- 
tary sales during the war. I think he had Mr. Lissner before the 
war began — before the European war began. 

Mr. Casey. As an interpreter. 

Mr. A. Felix du Pont. Yes ; he had him as an interpreter. 

The Chairman. Are you familiar with his methods? 

Mr. A. Felix du Pont. No ; I don't think anybody is. 

The Chairman. He is no longer in your employ? 

Mr. A. Felix du Pont. No; he died. But he was discharged 
from the du Pont Co. before that. 

The Chairman. When did that discharge come? 

Mr. A. Felix du Pont. I do not remember the exact year. It was 
about 1921, 1920, or 1921, 1 believe. 

The Chairman. Did it arise out of complaints that were made 
concerning his methods in the Argentine ? 

Mr. A. Felix du Pont. Yes. 

The Chairman. I have before me a letter written by Mr. O'Gor- 
man concerning a trip he had made to Washington, which is offered 
as " Exhibit No. 957." 

(The letter referred to was marked " Exhibit No. 957 "" and is 
included in the appendix on p. 2601.) 

83876— SS— FT 11 8 



2504 MUNITIONS INDUSTRY 

The Chairman. On this memorandum we find Mr. O'Gorman 
notes [reading] : 

Called at the Department of Commerce regarding their letter of December 9 
concerning our negotiations in Argentine. Saw I\Ir. P. S. Smith and Mr. J. P. 
Bushnell. Mr. Bushuell is a former employee of the du Pont Export Co., who 
was a traveling salesman in IMexico and South America for the Export Co., 
Mr. Bushuell stated that he knew Mr. Lissner and therefore was interested 
in doing all he could for us. 

Wlien did Mr. Bushnell cease his connection with the du Pont Co. ? 

Mr. A. Felix du Pont. I do not know. 

Mr. Casey. I have not the slightest idea. 

Mr. A. Felix du Pont. It is a very long time ago. 

The Chairman. Do you know whether he is still in the Commerce 
Department? 

Mr. A. Felix du Pont. I do not know. 

The Chairman. This memorandum, of course, is dated December 
17, 1921. 

Mr. A. Felix du Pont. Yes. 

The Chairman. You have no knowledge of Mr. Bushnell's pres- 
ent connections, have you. 

Mr. A. Felix du Pont. No. 

The Chairman. Pie declares in his memorandum concerning being 
told of the methods which Lissner was employing down there in the 
Argentine, and then he reports as best he can from his memory, after 
reading a confidential and personal letter which was in the files of 
the Commerce Department. The letter in particular seems to have 
been dated October 27, 1921. Then reporting from his memory he 
says of this correspondence [reading] : 

The du Pont Co. has in Buenos Aires a German Jew named A. Lissner, who 
is negotiating with the Argentine Government for the sale of a quantity of 
powder which the du Pout Co. has on hand, due to the cancelation of a con- 
tract with the Italian Government. In a conversation with the Chief of Ord- 
nance he told me confidentially that Lissner was endeavoring to bribe Argentine 
officials by indiscriminately distributing funds through a middleman. The Chief 
of Ordnance, together with other Argentine officials, strongly resents Lissner's 
business methods, contending that Lissner came to Argentina with the idea that 
the Government officials were corrupt and that he could only obtain a contract 
by paying bribes. 

Was it this general complaint that led to Mr. Lissner's discharge? 

Mr. A. Felix du Pont. We had the general complaint, and we were 
forced to the conclusion that Lissner was not acting — or his methods 
were not — according to du Pont Co.'s methods, and it seemed to 
show up most particularly in his traveling-expense accounts. 

Senator Clark. How long did Lissner work for you, Mr. du Pont? 

Mr. A. Felix du Pont. He started in, I think, somewhere around 
1907. or 1908, and he was an interpreter, used to go around with mis- 
sions, government missions from the various countries, when they 
could not speak English. He R])oke a number of languages. He had 
a way of ingratiating himself with those people, who made us have 
an idea that he was quite valuable as an interpreter. 

The Chairman. I read further from Mr. O'Gorman's memoran- 
dum, the bottom paragraph on ]iage 2 : 

Both Mr. Smith and Mr. Bushnell felt that a great deal of the above report 
could be discounted, stating that Mr. White was a very high type of man. 
conscientious and painstiiking. The nioial conclusion which Mi-. White 



MUNITIONS INDUSTEY 2505 

attempted to draw attention to in his report, of course, is a high thought, 
but Mr. Smith stated that he spent 8 months last year in Buenos Aires and 
knew for a fact that the officials were corrupt and endeavored to obtain graft 
whenever possible. He ventured to sa.v that it was quite possible that the 
Chief of Ordnance was incensed becaiise Lissner had not conducted the business 
directly through him and, further, that it miglit be likely that he objected to 
Lissner's methods because he was not getting part of the graft. 

That is a general charge as relates to the situation in the Argentine, 
is it not? 

Mr. A. Felix du Pont. It is very general; yes, sir. 

Mr. Raushenbush. Mr. Chairman, may I point out that the ad- 
ministration referred to in this letter back in 1921 is not the admin- 
istration in power in the Argentine in these days, and the reflection 
on the officials at that time would certainly not apply to the officials 
iodny. 

Mr. Lammot du Pont. Mr. Chairman, I should also point out that 
this was not a matter that was covered by our own observations. 
This report is not a du Pont Co, report. 

The Chairman. No ; that is correct. 

Mr. A. Felix du Pont. I should like to point ont, too, Mr. Sena- 
tor, that in this case, the case of Lissner, he Avas not successful in 
negotiating the sale of a pound of powder in the Argentine. 

The Chairman. This being called to your attention is through the 
avenues of the Commerce Department of the United States Govern- 
ment. Mr. Smith, one of the spokesmen of the Commerce Depart- 
ment, Mr. O'Gorman reports, stated that — 

as far as the Department of Commerce was concerned, they merely felt it was 
their duty to report to us the fact that our representative had not been discreet 
in conducting negotiations. He stated that they knov,- perfectly well that the 
du Pont Co. would not permit a representative to negotiate along the lines 
described by the Charge d'Affaires, and whether his report be true or not, it 
was Mr. Smith's belief that Mr. Lissner must have been very indiscreet. 

You had knowledge of this from other sources as well, did you 
not? 

Mr. Casey. I think there was one other source of information that 
Mr. O'Gorman developed along the same general line. 

The Chairman. Mr. O'Gorman, it aj^pears, had a friend who had 
connections in the Argentine. 

Mr. Casey. There was something of that sort. 

The Chairman. He was visiting back here and went and called on 
Mr. O'Gorman and reported to him in a way that caused Mr. O'Gor- 
man to prepare a memorandum for Mr. A. Felix du Pont, which is 
introduced as " Exhibit No. 9o8." 

(The memorandum referred to Mas marked " Exhibit No. 958 " 
and is included in the appendix on p. 2602.) 

The Chairman. I read only two paragraphs from that letter, the 
tiiird paragraph first : 

During Mr. Lissnors fit'st trip to Avgontino in lit20, Mv. Valentine — 

He was the one who was bringing this report on his Ansit, from the 
Argentine — 

became acquainted with ]\Ir. Lissner by meeting him at tlie American Club. 
Mr. Lissner openly announced that he was down there to sell Argentine a quan- 
tity of Italian powder Avliieh he pevs»nally repurciint^ed from t'lo Italian Gov- 
ernment at 1 cent a pound and which we intended to resell to the Argentine 
Government at a price of 70 cents per pound. This fact was made public by 



2506 MUNITIONS INDUSTRY 

people who heard it and naturally, before very long the officials of the Gov- 
ernment knew the exact cost of this repui'chased powder and fought shy of 
buying it. In Mr. Valentine's opinion this is the real reason why the Argen- 
tine Goverenment did not contract with us for a quantity of Italian purchased 
powder. 

What was your outlay on this Italian powder, Mr. du Pont? 

Mr. A. Felix du Pont. I do not remember what the outlay was. 

Mr. Casey. At the close of the war there still remained at Carneys 
Point a quantity of powder which belonged to the Italian Govern- 
ment. 

Senator Clakk. That powder had been manufactured for the 
Italian Govermnent during the war? 

Mr. Casey. Yes. And they came to this conclusion : If you gen- 
tlemen will remember, immediately after the war, food was the all- 
important thing to send abroad. They stopped all shipments of 
munitions and used all of the tonnage for food. Now, here was this 
quantity of powder. The Italians figured that it might be several 
years before they would be allowed to ship that poAvder. They said 
if we would take it off of their hands, at any price, where it was, they 
would be very glad to let go of it. 

Now, the interesting point about that powder was that it was a 
powder of an unusual character in this respect : All powder made 
for the Italian Government had to be made to a constant weight 
of charge, the reason for that being apparently that their loading 
machines were of such a type that they could not adjust them to fit 
the change in weight of charge which might occur in normal prac- 
tice. You can understand that, I believe, Senator. 

Senator Clark. Yes. 

Mr. Casey. So we had a blend — a cross blend. It happened to be 
that this particular powder was ideally suited to the Argentine — the 
rifle powder I am speaking of now — was ideally suited to the Argen- 
tine 7.65 Mauser rifle. In 1918, Avhile we were still in the war, a 
Colonel Reyborn, attached to the Italian Embassy, came in to see 
Colonel Buckner one hot afternoon, I think, in August or September, 
about purchasing from us, when the war was over, a plant at a very 
cheap price, and he then explained to us what Argentine needed. 
Colonel Buckner's answer was : 

Well, when the war is over is time to talk. At the present time we only 
think of one thing, and that is helping the United States to win the war. 

Wlien the armistice occurred and things were clearing up there was 
a certain amount of contact between ourselves and the Argentine 
naval mission in this countr3\ 

I might say, to disgress for a moment, that the Argentine plant 
proposition started in 1918 and has never been closed since. I mean 
there has never anything happened since. 

At any rate, in this connection, here we had this powder and we 
thought that if the situation was as described by Colonel Reyborn, 
with the further realization that Argentine had bought practically 
all of its powder for the Army, at Teast, from Germany, and Ger- 
many as a source of supply was cut off, there was a possibility that 
this proposition might justify to our going to a considerable expense 
in traveling funds to try to sell Argentine some of this powder. 
The possibility was before we got through witli the sale of that 



MUNITIONS INDUSTRY 2507 

powder, where it cost us a cent a pound at the time we made the 
purchase, you add all of the traveling expenses of a trip to South 
America and stayino; there for a month and coming back again and, 
as it was, trip after trip, I think if today we had any of that powder 
left and sold it, it would be sold at a loss. 

But this letter, I think, or this report, indicates pretty well that if 
a man down there, not realizing that the powder he sold to the 
Argentine Government would probably in the end at that time have 
made us a very small profit, when he starts in blurting out things 
of this sort, it was self-evident at the time that he was not the type 
of man to represent any company. 

Senator Clark. Naturally, if he shot off his moutli to that effect 
it would not help the sale very much. 

Mr. Casey. I might give you a reason as to why Lissner was 
picked. As we stated before, Colonel Buckner took him in as an 
interpreter, because he knew suiiicient Spanish, and perhaps a smat- 
tering of Portuguese — I do not know — but at least he was able to 
converse with the different foreign representatives who came over 
with these missions during the war. After the war he was promptly 
transferred to the export company, which was started for com- 
mercial sales and in which military did not form a part, because 
they felt he might be of value to them in the export company. But 
when this purchase of powder was made from the Italians, the sug- 
gestion was made, Avho would be any better fitted, in view of his 
dealings with different foreign missions, than Lissner to effect the 
sale, so that we started Lissner down there. After about a year or 
probably less, he came back with what was termed an ad referendum 
contract. The contract meant that here was a contract signed but 
of no value until it had been approved by the Argentine Congress. 
There was a further clause in there that we had to sign the contract, 
and in signing the contract we were then agreeing to the specifica- 
tions code. In other words, we were to agree to the words in those 
specifications. We could not get a copy of the specifications, so 
that they wanted us to agree on this proposition. Now, the fact 
rernaineci that the contract was not really Avorth the paper it was 
written on, unless ratified by the Argentine Congress, so that as a 
result of that it was felt that he came back too soon, and that if he 
really had a contract, before he brought the contract to us he then 
had to have the book of conditions, which we could then go through 
and see if we were prepared to meet them, and, lastly, the thing 
should have been ratified by the Argentine Congress. So that he 
was home for a short time and was sent back, I think, probably the 
middle of 1921, when he was sent back, and then it was after" that 
time that we began to get these different reports which indicated 
there was something wrong. 

We sensed it, but were not sure. I mean, we felt that there must 
be something. When he came back, ]\Ir. Felix du Pont — in the 
meantime the company having gone through a reorganization from 
the functional system to the subjective system, where the different 
departments were then set up — and one of the first things Mr. Felix 
du Pont said to me, as soon as he took charge of both sales and 
operations, was, " Casey, I think the best thing we can do is to get 
rid of Lissner." That was even before we had these reports. 



2508 MUNITIONS INDUSTRY 

He said, " There is something I do not like." When we got the 
reports, the reason was obvious, and when he came back he was 
dismissed. 

Mr. A. Felix du Pont. I might say that this was the only sales 
mission Lissner was ever put on, and the reasons speak for them- 
selves. 

The Chairman. To use ordinary language, he Avas " just too 
raw ", was he not 'i 

Mr. A. Felix du Pont. Yes. 

Mr. Casey. I might add that we sent a man down there who was 
no salesman for the sole purpose of trying to correct the bad im- 
pression which we felt must have been left behind. 

The Chairman. Mr. O'Gorman made a note in his memorandum 
to the effect that Lissner resorted to open bribery methods to such 
an extent that the officials of the Government were afraid to deal 
with him and considered him irresponsible. In the sale of this 
powder in the post-war days there was a great deal of pressure, was 
there not, to accomplish sales of left-over supplies? 

Mr. Casey. No. This was our first attempt, and that was fol- 
lowed by another one with Poland. 

The Chairman, We have already dealt with that one, have "\ve 
not? 

Mr. Casey. That was newly made powder, but I am talking about 
an earlier sale which started in this countr3\ The negotiations 
stretched over 3 or 4 years, but that was a case where they knew 
they were buying a different type of powder. As I say, this Italian 
stuff was used for an entirely different purpose than that for Poland. 
The stuff which Ave had from the Italians would not have fitted 
the Polish guns. 

The Chairman. What constitutes your fields for foreign opera- 
tions ? 

Mr. Casey. At the present time ? 

The Chairman. Since the war, let us say. 

Mr. Casey. At one time we thought we had a pretty good field. 
I think, as stated in the memorandum which I Avrote to Mr. Felix 
du Pont, Avhich we offered the other day, that we felt, with the 
reputation du Pont powder had made during the war, we had a 
wonderful opportunity, especially due to the fact that Germany, 
who supplied all continental Europe with the possible exception 
of France, was not then a potential seller, and at this time we found 
that our original idea of a Avonderful market Avas all Avrong. 

The Chairman. Now your foreign market, strictly speaking, is 
confined to the Balkans, the Far East, and South America, is it not? 

Mr. Casey. We never had a market in the Balkans. 

The Chairman. You have sold some little orders there, have you 
not? 

Mr. Casey. A little in Greece. We had sold Greece before that. 
We sold Greece a small quantity in 1915, I think. 

The Chairman. Outside of these three classifications, do you have 
any foreign market at all? 

Mr. Casey. The European market at the present time, I would 
say, is practically limited, so far as we are concerned, anyway. 

Mr. Raushenbusii. Colonel Taylor keeps reporting on everj^ sin- 
gle country in Europe. 



MUNITIONS INDUSTRY 2509 

Mr. Casey. He is supposed to. 

Mr. Raushenbush. And he sells for I.C.I, as well as 3- ou ? 

Mr. Casey. Yes. He tries to sell, you mean. 

I might say the section around the North Sea really has been the 
only chance of doing much business; that is, Poland, Latvia, Fin- 
land, and those countries. 

The Chairman. Now, as respects the Balkans, the Far East, and 
South America, in all of them there seems to be an anticipation 
that bribery, graft, of some kind and size is necessary. 

Mr. Casey. Senator, we have heard that such things are necessary 
in all business in South America, but that is a rumor, but we have 
never had the slightest indication, so far as Poland, Latvia, Finland, 
and those countries are concerned, that any bribery is even con- 
sidered. 

Of course, there is this thing about those countries, that is prob- 
ably why they offered us the best market : They were new countries, 
set up, and with nothing to start from. 

The Chairman. In any event, confining it to those three classifi- 
cations, you do have a situation there that at least is very different 
from the one which you deal with, or which any business firm deals 
with, in dealing here at home? 

Mr. Casey. The question is reallj^ one of national viewpoint. 

The Chairman. That is it. 

Mr. Casey. You could take this situation in France: Owing to 
certain laws that were put into effect in the seventies, I believe, an 
employee of a company cannot be discharged except on 6 years' 
notice, and during the 6 years he had to be paid his salary, the result 
being that wherever they can they give their people nominal salaries 
and then in addition to that other compensation. Now, in the case 
of their purchasing agents — I am talking now of commercial busi- 
ness — now, in the case of their purchasing agents, we know of one 
case of a man representing a very large concern, who gets about 1,000 
francs a month, or did at the period I am talking about, or approxi- 
mately $40 a month. If you can imagine a high-class purchasing 
agent working for $40 a month, he must get some money some other 
place. Here is the way he gets it : A sale was made to this concern 
and, after the sale was finished, he said, "Where is my 4 percent? " 
So that our representative promptly went to the head of the firm 
and reported the incident. 

He said, "That is all right; that is what he gets, 4 percent." 

Then it was explained to him why he got it, and the simplification 
of the principle was this : that in case his services were discontinued, 
why, they had to pay him this 1,000 francs a month, or $40, for that 
6 years, and that when times were good and purchases increased, 
his compensation automatically increased with it. When their pur- 
chases were cut off, because times were getting bad, the thing took 
care of itself. 

There was another case — this time, I might say, not knowing this, 
we lost the 4 percent, because it was not provided for in the price — 
in another case, shortly after that, our representative thought, " Here, 
when I make the price, I better allow for 5 percent ", so that he made 
an allowance of 5 percent to take care of the purchasing represen- 
tative of the company being sold to. When the transaction was 



2510 MUNITIONS INDUSTRY 

completed, he went to this man and said, " Here is your 5 percent." 
He said, " No, I only get 3i/^ percent. That is the arrangement I 
have with my employers." 

He said, " We have set aside 5 percent on the price." 

" Return the balance to the company. I get 3i^ percent. That 
is my arrangement." 

You cannot call that graft. That is a business arrangement and 
their method of doing it. 

The Chairman. What would you call it here? 

Mr. Casey. We pay our purchasing agents. 

The Chairman. But what would we call it here, if they did the 
same thing? 

Mr. Casey. If we had a law to meet of the same sort, the chances 
are we would do the same thing. 

The Chairman. You mean to say that is permissible under the 
law over there? 

Mr. Casey. Yes. 

Mr. Lammot du Pont. Senator, your statement that our repre- 
sentatives find this graft situation to exist in Europe, the Far East, 
and South America is not correct. 

The Chairman. I said the Balkans, the Far East, and South 
America. 

Mr. Lammot du Pont. We did not find it to exist there. It was 
reported to us that it existed, but there was some question as to the 
validity of the reports. As Major Casey has testified, in the Far 
East he made a blunder in certain cases, and he referred to that as 
a blunder. I am not sure that is the word he used, but that is what 
he intimated. Such a thing was not found elsewhere. 

Mr. Casey. Senator, we promptly, without waiting for the action 
of the executive committee, instructed Taylor with regard to the 
Balkan situation, that we will have to try to do business in our 
regular way, on a cash basis. We would not attempt to set up any 
machinery for credit or payment of graft of any sort, the result 
being, with the exception of Greece, which has been done on a regu- 
lar basis through our agent there, whose name is Sapyras, we have 
not done any business. We have had one or two nibbles in Turkey, 
but have generally lost out in the adjudication. 

The Chairman. Where you found these practices to exist, it is 
nevertheless true that even a concern who tries to be as high-class 
and high-type as yours does was in a position where you would have 
to follow along certain lines to get business, would you not? 

Mr. A. Felix du Pont. No. 

Mr. Lammot du Pont. That is incorrect. 

Mr. Casey. The case of China is the one exception, and that, as 
I said before, is my error for not reporting. 

The Chairman. Is that business worth having? 

Mr. Casey. The small amount of business which we have been 
getting made me feel personally at the time that I should sacrifice 
it, especially in view of the fact that I would be put in position of 
reporting on or telling tales on another department. I was in an 
awkward spot, which does not let me out, however. 

The Chairman. In spite of the fact that these foreign sales are 
undertaken on the ground that we have got to have them in order to 



MUNITIONS INDUSTRY 2513 

maintain a capacity here at home to take care of our own needs, 
when and if we are drawn into war, then we have pretty nearly got 
to conclude that these practices, and our subscribing to them, are in 
the interest of our own national defense. 

Mr. Lammot du Pont. That is not a fair inference at all. 

The Chairman. Is it not a fair inference? 

Mr, Lammot du Pont. No ; I think not. 

The Chairman. Why is it not a fair inference ? 

Mr. Lammot du Pont. The fact that foreign business is felt to be 
necessary in order to support our proper national defense does not 
mean that any improper methods shall be used in getting that busi- 
ness, and we have never felt that it was necessary to use improper 
methods to get business. 

The Chairman. You would not say that that Chinese process was 
a proper method, would you? 

Mr. Lammot du Pont. That was a blunder, as Mr. Casey said. 

Senator, your men have been spending weeks going through our 
files, and they have not turned up a single case except this Chinese 
one you mentioned. 

Mr. Raushenbush. The Argentine powder factory. 

Mr. Lammot du Pont. There was no commission paid there to any 
representative of the Government. 

The Chairman. In the Argentine powder factory matter ? 

Mr. Lammot du Pont. The evidence did not show that. 

The Chairman. The evidence showed that it came awfully close 
to officials of the Argentine Government. 

Mr. Lammot du Pont. I do not think there was anj'^ closeness indi- 
cated. 

The Chairman. Did it not reach the family, at least? 

Mr. Lammot du Pont. That might have been. I do not know. 

The Chairman. Reach the family of an official of the Govern- 
ment? 

Now, Senator Barbour, I am finished. Do you want to start now 
or take a recess at this time and get a fresh start? 

Senator Barbour. That is entirely up to you, Mr. Chairman. We 
have been recessing, as a rule, around noon. I could not start very 
well. 

The Chairman. I would not want you to start and then have to 
stop at an inappropriate place. 

Senator Barbour. I suggest that we recess until 2 o'clock. 

The Chairman. The committee, then, will stand in recess until 
2 o'clock. 

(Thereupon, at 12: 15 p.m., a recess was taken until 2 p.m. of the 
same day.) \ 

Afternoon Session 

methods of doing business MEXICO 

(The hearing was resumed at 2 p.m.) 

The Chairman. The committee will be in order. 

Mr. Lammot du Pont. Mr. Chairman, before you start on a new 
line of inquiry, may I say something about this morning's testimony? 

I read into the record a resolution of our executive committee of 
November 15, 1922. I thought at the time it was being entered as 



2512 MUNITIONS INDUSTRY 

an exhibit. I believe that was not so, and I would like to ask that 
it be entered as an exhibit. This is a copy of it [handing document 
to the chairman]. 

The Chairman. You read it in its entirety, did you not? 

Mr. Lammot du Pont. Yes, sir. May I have it entered as an 
exhibit also? 

The Chairman. What is the purpose ? The reason I ask, Mr. du 
Pont, is that it would only be repetition. You read it in its entirety. 
Did you want it given a designation ? 

Mr. Lammot du Pont. Yes. 

The Chairman. As an exhibit? 

Mr. Lammot du Pont. Yes. 

The Chairman. Then the reporter can give it a number and let 
it be noted in connection with the testimony this morning that it is 
offered as " Exhibit No. 959." 

(The resolution referred to was marked " Exhibit No. 959 ", and 
appears in full in the text on p. 2485.) 

The Chairman. Senator Barbour. 

Senator Barbour. Mr. Monaghan, I will not attempt to make any 
preliminary observations in relation to these exhibits which I have 
been asked to study, because of what you have said at the beginning 
of your remarks this morning. It covers the same story. 

What I have in mind for the committee this afternoon refers back 
to other companies here in the United States and other countries. 
To make beginning at once, I have here a letter dated September 1, 
1930, from Heedles & Breidsprecher, Remington agents in Mexico. 
They speak of a large amount of contrabrand ammunition. I will 
just read this one paragraph: 

With reference to tlie metallic business we found a vex'y peculiar situation 
in Guadalajara. The writer saw more contrabands in this section of the coun- 
try than anywhere else, there is a fellow mth name of Godinez installed right 
in the market place, he has no permit to seU nor has he permit to import and 
yet he must have at least 100,000 metallics in stock. Most of it is Western 
ammunition which he gets from Nogales as contrabands and the balance is from 
Arms & Metal who sell this man metallics ■ 

" Metallics " are cartridges, by the way, are they not? 

Mr. Monaghan. Yes. 

Senator Barbour (continuing reading) : , 

at less than the cost laid down Guadalajara woiild be by regular importation. 
Arms & Metal is doing this to compete mth prices quoted to this man by 
Quintana and it will not take long until Quintana will make use of this con- 
fidential discount and will try to underbid Arms & Metal, etc, Roberto A. 
Gonzales of this city offered cal 25 auto, at Mex. .$70. a hundred to this man, 
and laid down costs of this cartridge is $92.30 Mex. a hundred and you realize 
that this also must be contrabands metallica. 

I want to explain, Mr. Chairman, that this gentleman who writes 
this letter is a Latin American, and his English or the translation 
of it does not lend itself to very ready reading. 

Mr. Monaghan, is this the general situation in the country? I 
refer now to the existance of contrabands. Is that a unique case, or 
is that a quite usual thing? 

Mr. Monaghan. I do not know what the general situation is; I 
imagine the way this man has described it. 



MUNITIONS INDUSTRY 2513 

Senator Barbour. You iinclerstand that I am very anxious to be 
frank with you and have you and the other witnesses frank with 
me. My position is this whole thing is to try to get as much informa- 
tion as I can. 

Mr. MoNAGHAN. Yes, sir. 

Senator Barbour. I am not subjecting you or others to implica- 
tions that you are not entitled to. The more help you can give us, 
I think the better and quicker we will go. I mean, if it is a fact 
that you know there is a great deal of contraband in existence ordina- 
rily, I think that is very helpful, and it does not bring any criticism 
on you at all, as I can see it. 

Mr. MoNAGHAN. All I can answer for. Senator, is what these 
people write. I have never been in Mexico myself to know what the 
real true situation is there, and I do not recall finding this letter in 
our file as having been pulled. It may have been, but I do not 
remember reading it over before. 

Senator Barbour. I guess there is no doubt of its being a proper 
document in that respect? 

Mr. MoNAGHAN. I believe so; yes. 

Senator Barbour. Because that is the only way we could get it. 

Now, Mr. Beebe, this letter mentions Western ammunition as being 
handled in this bootleg fashion. The Western Cartridge Co. now 
owns Winchester, as I understand it. 

Mr. Beebe. That is right, sir. 

Senator Barbour. I wonder if you have any knowledge of this 
question? In other words, I asked the same question of you that I 
just asked Mr. Monaghan. 

Mr. Beebe. Let us see, this was in 1930, was it not ? 

Senator Barbour. That is right, September 1, 1930. 

Mr. Beebe. The Western Cartridge Co. bought the assets of the 
Winchester Repeating Arms Co., I think, about December 1931. 
So that this is a situation about Western which I would be unable to 
answer. I should presume that any contraband that reached there 
might be materials bought from anybody in the United vStates and 
smuggled over, if there was such a case. 

Senator Barbour. To go on, in order to secure import permits for 
ammunition in Mexico, we understand that application must be made 
to the war department there, to the general in charge. Is that so? 

Mr. Monaghan. Yes, sir. 

Senator Barbour. It says in this same letter, on page 4, last para- 
graph, as follows : 

The general in charge of the war department, artillery depai'tment, has, 
however, not signed for the past 3 weelcs, and this in spite of the fact tiiat we 
have contributed with $200 oro nacional to make the general's life more pleasant 
and reform the new law on ammunition and arms, so with all contrabands, price 
underbidding of Arms & Metal and Quintana, permit affairs, etc., you will 
appreciate wliat joy it is to work for Remington Arms Co., Inc. 

(The letter refered to was marked " Exhibit No. 960 ", and is in- 
cluded in the appendix on page 2603.) 

Mr. Monaghan. Senator, on those things, I really believe that you 
know the situation of an agent working on commission, the letters 
they will write you telling you the hardships they undergo in getting 
business for you, the competition they meet, and how much money 
they have to spend. 



2514 MUNITIONS INDUSTRY 

The Chairman. Would they be alibiing to that extent as much 
if they Avere on commission as they would be if they were on a regu- 
lar salary? 

Mr. MoxAGHAN. It is hard to say just wliicli way it would be. 
In either case they would be telling their home office of the amount 
of work that they were doing and the difficulty of getting the business 
for you. 

Senator Barbour. Those methods are necessary? 

Mr. Monaghan. They are human nature, that is all. 

Senator Barbour. I mean, you do not sell unless those methods 
are followed? 

Mr. Monaghan. I did not mean that ; I mean in writing this type 
of letter. 

Senator Barbour. Oh, yes. 

Now, Mr. Monaghan, right there in the last paragraph of this 
letter, your agent asks for credit or cash for reimbursement of this 
payment to these Mexican generals, as I understand it, because he 
says: 

I forgot to mentiou that $200 which we kept at the office ready for War De- 
partment expenses were stolen tlie other day, so you better make the check 
or U.S.G. $240. 



Apparently he had this $240 handy here for the Mexican War De- 
partment, and it disappeared, so he asks you for twice that amount. 
What about that? Can you throw any light on it? 

Mr. Monaghan. I would like to say two things: First, now that 
I have gotten down to this part of the letter, I do remember seeing 
a copy of this, and know that we had a copy that was taken from our 
files. This point brings it to mind, because we got a laugh out of 
reading it again. 

I have looked into it, and there was not a cent paid to Heedles & 
Breidsprecher on the strength of this letter. I think the letter itself 
indicates the spirit in which it was written. 

Senator Barbour. He certainly was in an optimistic spirit. 

Mr. Monaghan, Well, he did not get it. 

Senator Barbour. No such payment was made? 

Mr. Monaghan. No, sir; not a cent. 

Senator Barbour. By yourselves, in answer to this call? 

Mr. Monaghan. Not a cent. 

Senator Barbour. You are quite sure of it? 

Mr. Monaghan. Absolutely. 

The Chairman. Mr. Davis, I believe you were sworn the other 
day. 

Mr. Davis. Yes. 

The Chairman. There are two other gentlemen whom I think 
have not been sworn, who may be participating in the examination, 
that will be sworn at this time. 

TESTIMONY OF C. K. DAVIS, H. F. BEEBE (RECALLED), W. U. 
REISINGER, AND E. E. HANDY 

(Mr. Reisinger and Mr. Handy were duly sworn by the chairman.) 
The Chairman. For the information of the committee, will you 
please give your name? 



MUNITIONS INDUSTRY 2515 

Mr. Reisinger. W. U. Reisinoer. 

The Chairman. And your connection? 

Mr. Reisingeb. Secretary and treasurer, Remington Arms Co. 

The Chairman. And yours? 

Mr. Handy. E. E. Handy, vice president, Remington Arms Co. 

Senator Barbour. On March 11, 1931, these same agents, the Mex- 
ican agents in Mexico, informed the company that the person in the 
War Department was apparently demanding more money. 

(The letter referred to was marked "Exhibit No. 961" and is in- 
cluded in the appendix on p. 2605.) 

Senator Barbour. I will read, if I may, the latter part of the third 
paragraph : 

We had a friend over there at the department that represented quite an 
investment for us — 

I do not know whether that is a significant statement or not. 

and he was supposed to stay on and the trouble maker go out at the end of last 
month, and the result was that the trouble maker held on and he went out. 

He was asking for 10 Mexican Cy.. per cartritlge and you can appreciate what 
that means, for revolvers he asked for ,$2 each. I have been taking him out 
and endeavoring to demonstrate w^here he was wrong and why and although 
it has taken a while I may be able to get somewhere -aitli him' this week. 

Is this a very general practice ? That is a very definite indication 
to me of a fixed price that had to be contributed with relation not 
only to shells, but also to revolvers, and that the man had to be 
bribed, to put it bluntly, or you not sell your ffoods. Is that a fair 
statement? I do not want to say anything that is not fair. 

Mr. Monaghan. No, sir; I do not think so. 

Senator Barbour. Can you throw some other light on it that will 
make a distinction there that Avill be a difference ? 

Mr. Monaghan. This letter goes back to March 11, 1931. We have 
a rather loose, perhaps, contract or agreement with Heedles & Breid- 
sprechor, entered into about 1927 or 1928, where they are to get 71/2 
percent commission or 10 percent commission, rather leaving it to 
our judgment or decision as to which they are to get. Many times 
when I receive letters like this, or read them, I say, " Oh, oh, one of 
those things again; that goes up to 10 percent, and here goes the 
argument for the 10 percent." 

Senator Barbour. I see. 

Mr. Beebe, there is no further light that you could throw on the 
situation in a general way? 

Mr. Beebe. None whatever. 

Senator Barbour. By the way, where I read only part of an ex- 
hibit and the witness has the whole exhibit before him, if he feels 
that something in addition should be read, it is only fair for him to 
make the request. We have so many letters here and they are so 
long that I have marked only certain passages myself. But that 
does not mean that other things can not be read if it is felt fair to 
read other things. 

Mr. Monaghan. Senator, there is one other thought perhaps you 
would like to have expressed here. That is. that all this business 
that is spoken of in this letter and the former one. is commercial 
ammunition, not military ammunition. We have not sold any mili- 
tary ammunition in our company to Mexico or anywhere near Mexico 



2516 MUNITIONS INDUSTRY 

where we knew it was destined to Mexico by the facts that developed, 
since 1929. In 1929, you recall, there was some trouble in Mexico 
at the beginning of the year. At that time we had a few sales, one 
in particular I have in mind, to the Governor of the State of Lower 
California. That and every other instance at that time was called 
to the attention of the United States Department of Stae. They 
were advised of the details of it, of items, and the quantities, because 
they were military items. We knew they were intended for military 
use. The item and the quantity of the item very clearlv indicated 
that. 

As I say, since that time we have not had any military sales to 
Mexico or near Mexico that I know of. 

Mr. Davis. Senator, in this connection it might be of interest to you 
know that more than 96 percent of our sales this year have been in 
sporting arms and ammunition, and for the past 10 years we have 
averaged only li^ percent sales to foreign and United States Govern- 
ments. Of the lyo percent two-thirds, or 1 percent, was to the United 
States Government. Sales amounted to one-half of 1 percent to 
foreign governments. 

Senator Barbour. When you speak of sporting arms and ammu- 
nition, do you refer to shot guns? 

Mr. Davis. Shot guns and rifles for hunting, .22 rifles and ammu- 
nition therefor. I might say that we have a full line of our guns 
down here, that we would like to show you any time you wish. 

Senator Barbour. We will speak about that afterwards. 

Senator Pope. What calibres do you regard as war guns? You 
sa}'^ a .22 rifle would be regarded as a sporting arm. Would a .32 
be regarded as sjDorting arms? What is your distinction there be- 
tween war material and sporting arms? 

Mr. Davis. The shot guns, of course, are 20 gauge, 16, and 12. 

Senator Pope. Yes. 

Mr. Davis. Then we have a .22 rifle. The range of a .22 rifle, 
Senator, is about 250 to 300 yards. That is the effective range. The 
effective range of a shot gun is about 100 yards, whereas military 
rifles are about 1,200 yards. I think that Mr. Hadley would give 
you a definition of the difference between sporting arms and military 
arms if you would like to have it. 

Senator Barbour. I have that fairly clearly in mind, Mr. Davis, 
so far as I am concerned, although I do think that in Central Amer- 
ica and South America, and at times in Mexico, there have been all 
kinds of arms used other than for just sporting purposes. I do not 
say that to refute what you say, but I do think that. 

Mr. Davis. I have no direct knowledge of that. 

The Chairman. You mean that in some cases shot guns would 
be used? 

Senator Barbour. Or any type of repeating rifle might be used. 

By the way, that is a very good statement you have made. I am 
glad you have made it. Would that also apply to the metallics? 
Do your shells fall in the same category as your small arms? 

Mr. Davis. Yes, sir. 

Senator Barbour. So far as sporting and military uses are con- 
cerned ? 

Mr. Davis. Yes, sir. 



MUNITIONS INDUSTRY 2517 

Senator Barboltr. The next exhibit is a letter dated March 21, 
1931, wherein the Remington agents in Mexico stated that the War 
Department official made a slip in that he issued a permit for Win- 
chester. I will read just a small part of that. 

Gonzalez also secured a permit for 1(J0,<.X)0 but tins was a slip up on our 
friend in the department, we both had an application in, that is Winchester 
as well as ourselves, and he permitted both to be issued at the same time but 
I think Gonzalez also will delay liis order. ' 

At that time, Gonzalez. I understand, Mr. Beebe. was vour ao-ent 
was he not ? ' - ^ ^ j 

Mr. Beebe. No. He was a dealer. 

Senator Barbour. A dealer, a customer of yours ? 

Mr. Beebe. A customer ; yes. 

Senator Barbour. The last paragraph in the same letter is 
interesting : 

We are cont^ulted for most of the " acuordos ", that is, to whom permits can 
be granted, delayed, canceled, refused, etc., and we hope it lasts for a while 
longer, because in about 6 months' time nothing but Kleenbore would be 
allowed. 

Mr. Monaghan. Senator, is not that the best example of what I 
said l3efore about these letters? Mr. Beebe could tell you that we 
certainly never did get all the business down there. 

Senator BARBOuit. Of course, the implication is, or could be— yet 
I do not believe in just implications— that by these commissions' if 
you want to stick to the word, you carj get the business, and without 
them 3'ou cannot. 

(The letter referred to was marked " Exhibit Xo. 962 " and is 
included in the appendix on page 2606.) ' 

Senator Barbour. The next exhibit is a letter of March 16 also 
from the Remington agency in Mexico. I will read some of' this 
It IS the last part of the first paragraph : 

The reason for this is that this company is getting a large quantity of 
metallics over the border without paying duty, Mr. Silva has a combination 
with a number of customhouse officials? Jn Ciudad Juarez 

However in order to import large quantities of metallics which is the 
intention ot Mr. Silva, he is going to send to our office several applications for 
permits which will cover a greater quantity of metallics than specified later on 
the permits, the permits simply cover up the whole affair and if he gets ir 
trouble he can make reference to these permits. As soon as I get to Mexico 
City I shall see that the War Department will grant those permit! and as s^ on 
as we have secured same you can expect quite larger orders from this client 

lou are undoubtedly aware of the fact that all of the arms and amniunition 
which you ship to this client is for sale into Mexico, he does not do any 

ciuTcfjutrb^iiilSi.^'^'^ '''''• '' '''' ^^- ""^^''^^ '^'^ ^-^-- thiLlr./iS 

?i^® Chairman. Hoav long have you employed this firm '? 

Mr. Monaghan. I think since 1927 or 1928. 

The Chairman. Are you still employing them? 

Mr. Monaghan. Yes, sir. 

Senator Barbour. In other words, the shipment to the border 
really ceases as far as the responsibility of the shipper is concerned, 
and after that it is no concern of the shipper or manufacturer what 
becomes of the cartridges? 

Mr. Monaghan In some respects if we followed the shipments 
through to completion we might be getting in trouble with the 
J^ederal Trade Commission. 



2518 MUNITIONS INDUSTRY 

Senator Barbour. I am just trying to show— I am not trying to 
name anybody— by this very method that you follow or have to fol- 
low, a great deal of your product could become contraband through 
no fault of your own. That is true, is it not? 

Mr. Handy. Yes, sir. 

Mr. MoNAGHAN. May I ask if you will read the last paragraph 
on the first page? 

Senator Barbour. Yes. [Reading:] 

I believe we never received any conmiission on the sales which yon make to 
this company althoug:h all of these sales cover goods for sale into IVIexico 
and for that reason yon sell this acconnt at export prices and ship from yonr 
export department and not domestic department and I would appreciate if 
you would kindly look up this matter and see that the commission which will 
be due to us will be taken care of. 

Mr. MoNAGHAN. Following receipt of that letter we gave Heedles 
& Breidsprecher a commission on the sales to the Mexican Hard- 
ware Co. AYe never have yet heard any more about how the Mex- 
ican Hardware is conducting their business. It indicated clearly 
why he stopped to see Mr. Silva and why we had this report. 

(The letter referred to was marked '' Exhibit No. 963 ", and is 
included in the appendix on page 2607.) 

Senator Barbour. It appears from a letter written to Remington 
dated November 13, 1929. by Fernandez, that bribery of a little 
higher order is customary in Guatemala. 

(The letter referred to was marked "Exhibit No. 964", and is 
included in the appendix on page 2607.) 

The Chairman. I should like to ask before you leave t^he case of 
this Mexican firm, you have said that this same firm is still in your 
employ ? 

Mr.'MoNAGiiAN. Heedles & Breidsprecher? 

The Chairman. Yes. 

Mr. MoNAGHAN. Yes, sir. 

The Chairman. Are you encountering continued experiences in 
what you call " padding " their expense accounts ? 

Mr. MoNAGHAN. They have no expense account of any kind with 
us. We ]3ay them a commission on the business. We have never 
paid Heedles & Breidsprecher a cent in any way to tie in with the 
statements that shoAv in some of these letters of the amount that 
they paid out to a general or the amount that was stolen from their 
safe, or anything like that. 

The Chairman. Why do they Avrite these letters to you if they 
laiow th("re isn't any chance of recovery? 

Mr. MoNAGHAN. Perhaps they just keep on trying. They don't 
get anything; that is sure. 

Mr. 'D.\^^s. Senator. I would like to say that it is not the policy 
of the Remington Arms Co. to obtain business by bribery or graft. 
If we cannot obtain it any other way, we don't want it. 

The CHAiR:srAN. And yet here are the letters coming to you report- 
ing to you wliat your agents, your folks, down there are doing, and 
yet you keep them as your agents. 

Mr. Davis. I know* nothing about this. This happened before I 
was connected with them. 

Mr. MoNAGHAN. You see, that was prior to du Point acquiring 
control of the Remington Arms Co., Senator. 



MUNITIONS INDUSTRY 2519 

Senator CiiARK. The same fellow is still representing you down 
there, isn't he? 

Mr. MoNAGHAN. Yes, he is, and I might tell you, too, that the 
activities of the agent down there are in shotgun cartridges or .22 
caliber cartridges, such as Mr. Davis described to you. They are 
entirely sporting items. They could not be used for any other pur- 
pose by the greatest stretch of the imagination. But they come un- 
der the War Department regulations and you have to get permits. 
I do not know it in detail, but I have had it reported to me that 
the rules and regulations that surround the importation and sale 
of those sporting items are similar to military supplies, and nat- 
urally Heedles & Breidsprecher are working with them in an at- 
tempt to differentiate between sporting items and any military items. 

Senator Clark. The only reason they included sporting ammuni- 
tion in the classification of the War Department is to simply throw 
the burden on the shipper to show it is not military ammunition? 

Mr. Monaghan. Yes; that is true, and yet in Mexico and in 
other countries they place those restrictions on us. They do not 
differentiate at any time. They keep those regulations on the .22's 
and on shotgun cartridges. You would be astonished to see some 
of the red tape we have to go through in making a shipment of 
sporting ammunition to any of the Latin American countries. 

The Chairman. Do you think this representation that was made 
of someone having stolen the money that was on hand to do some- 
thing with, that there was any occasion for such a report? Do you 
think it was stolen ? 

Mr. Monaghan. I don't know. 

The Chairman. I very clearly gathered, and I think the other 
members of the committee have, that you do not have a large trust 
in this firm. 

Mr. Monaghan. They are good agents. 

The Chairman. They are good agents, but you get a letter from 
them and you say, " Aha, another one of that kind of letters." 

Mr. Monaghan. Perhaps they are business men. They are not 
working on a salary. They are working on commission. 

The Chairman. You distrust their representations? 

Mr. Monaghan. No, sir. 

The Chairman. You distrust them? 

Mr. Monaghan. No. 

Senator Barbour. You didn't send them their $480 in that case? 

Mr. Monaghan. No, sir. 

Senator Barbour. So either you cheated them or you did not feel 
they were entitled to it. 

Mr. Monaghan. I don't say we cheated them. 

Senator Barbour. I say, you did either one or the other. If you 
trusted them you would send them the $480. 

Mr. Monaghan. I didn't feel they were entitled to it. 

Senator Barbour. They should not have asked for it. 

Mr. Monaghan. No. 

The Chairman. You have large faith in this firm ? 

Mr. Monaghan. Yes. 

The Chairman. Large trust in them? 

Mr. Monaghan. Yes. 

83876—35 — pt 11 9 



2520 MUNITIONS INDUSTBY 

The, Chairman. Irrespective of the representations made in their 
letters ? 

Mr. MoNAGHAN. Surely ; as I say, they are business men, working 
on commissions, and the more business they do the bigger their 
return. 

The Chairman. And however they may do the business, you get 
it? 

Mr. MoNAGHAN. I do not reach that same conclusion; I don't 
believe, the way you do, Senator. 

METHODS or DOING BUSINESS GUATEMALA 

Senator Barbour. I may revert again, if I may, to the letter I 
mentioned " Exhibit No. 964 ", dated November 13, by Fernandez, 
which I think will speak for itself. 

Senator Barbour. It refers to an order, and then he goes on to say : 

This subsecretary held the signing of same and finally did not sign. He is 
a very close friend of Salvador Koenigsberger, agent for Western and showed 
Salvador Koenigsberger the contract for the paltry sum of $100 and at the 
same time made a lot of noise, recommending that the order vs^as not legal 
because it was not submitted to public bidding, and at the same time attached 
to Van de Putte's contract, an offer from Western's agent, for the same quan- 
tities but for the amount of $15,066, Van de Putte's contract being for $18,000, 
The difference between your quotation and the amount appearing on the 
contract was to be divided among the Minister of War, etc., and Juan Van de 
Putte & Co. had already advanced to Gen. Juan Padilla the sum of $1,000 
on account of this order and another $4,000 for another contract effected for 
some leather kids and belts, for the national army. When this happened the 
Minister of War sent for all the papers and documents, and was going to put 
it through because they expected a clean-up in all departments, and naturally 
the order remained in status quo, although we retained the right-of-way, the 
Minister of War being morally obligated. 

Is that the way in which a little grease, as referred to in this 
letter, is handled, and business conducted in that way in that 
country ? 

I can read something else, on the second page of the same letter 
[reading] : 

He has been fighting like hell. He is a very close friend of General Padilla, 
the Minister of War, and this Minister of War is indebted to Winchester, 
because they give him a commission for ordering in all the permits Winchester 
ammunition. 

I suppose that means he has a commission for arranging the per- 
mits for Winchester, as another way of putting it. As I say, the 
wording is very difficult to read, with the continuity. 

You will recall that when Freddy — 

Who is Freddy ? 

Mr. MoNAGHAN. Koenigsberger. 

Senator Barbour (continuing reading) : 

You will recall that when Freddy arrived in New York he Imd quite a nice 
order for loaded shells and some cartridges. Both these orders were for 
Winchester, but Freddy gave you the order for the cartridges and he bought 
the loaded shells from Winchester, and when he arrived here the genei*al gave 
him hell for doing so, and he finally admitted to Freddy tliat he was " morally " 
interested in Winchester. The percentage of commission whicli they gave the 
INIinister of War I have been unable to find out, but I believe that I will secure 
this information before I leave. 



MUNITIONS INDUSTRY 2521 

Did you get that information from him in due course ? Did he find 
that out, do you know ? 

Mr. MoNAGHAN. I was reading ahead, taking the letter as a whole. 
Senator. I did not 

Senator Barbour. Well, after all, what we are really interested in 
is to what extent General Padilla is morally interested, and why. 
Mr. Beebe, can you give us any light on that, because it refers spe- 
cifically to Winchester in that case. 

Mr. Beebe. General Padilla was a friend of Elmslie Jonas, our 
salesman, as I understand it. 

The Chairman. Is that the Jonas who appeared before the com- 
mittee in September? 

Mr, Beebe, No. 

Senator Barbour. Is it his brother? 

Mr. Beebe. It is E. E. Jonas. 

Senator Barbour. Is it his brother? 

Mr. Beebe. It is his brother; yes. 

Mr. Raushenbush. Is the Jonas who appeared before us a Rem- 
ington salesman? 

Mr. Beebe. That is correct. 

Mr. Raushenbush. This Jonas is a Winchester salesman? 

Mr. Beebe. Yes. 

Senator Barbour. Well, you cannot throw any light on that, Mr„ 
Beebe? 

Mr. Beebe. No. 

Senator Barbour. It speaks very specifically of actual money that 
went to Government officials and speaks of you in connection with it ; 
that is, your company. 

Mr. Beebe. Yes. I think on that the best thing would be for yoii 
to ask Mr. Elmslie Jonas, who is here, to explain this. He was a 
friend of General Padilla before he ever came here, and it had to do 
with a purely commercial transaction, as I understand it. 

The Chairman. Mr. Jonas, come forward and be sworn. 

TESTIMONY OF EIMSLIE E. JONAS 

(The witness was duly sworn by the chairman.) 

The Chairman. Come forward a little further, Mr. Jonas. 

Senator Barbour. Mr. Jonas, will you run your eyes through that 
letter? 

The Chairman. Just a minute. Mr. Jonas, give the committee 
your full name. 

Mr. Jonas. Elmslie E. Jonas. 

The Chairman. Where is j'^our home, Mr. Jonas? 

Mr. Jonas. New York. 

The Chairman. You are a representative of what firm? 

Mr. Jonas. The Winchester Repeating Arms Co. and the Western 
Cartridge Co. at present. 

The Chairman. How long have you been such ? 

Mr. Jonas. Since 1920. 

What was the question. Senator ? 

The Chairman. He wants an explanation of that second and 
third paragraph, as to just what the meaning of it is and what the 
relationship involved there was. 



2522 MUNITIONS INDUSTRY 

Senator Barbour. To the end that we may find out, if we can, Mr. 
Jonas, the moral obligation that General Padilla feels toward Win- 
chester and how he got that state of mind. 

Mr. Jonas. I was a friend of General Padilla before he was the 
Minister of War, and when he became Minister of War he might 
have favored me by making it easy to get permits for the importa- 
tion of commercial ammunition. This particular case was a case 
where he wrote to me that the firm of Koenigsberger wanted to buy 
shotgun shells, and due to his so-called " friendship " he issued the 
permit in favor of Winchester. 

Senator Barbour Then in your case you get these permits simply 
on the basis of friendship. 

Mr. Jonas. Well he wrote to me at the time and suggested that I 
make him a present. I didn't do it then. 

Senator Clark. You didn't do it then ? 

Mr. Jonas. No; but on one trip to Guatemala I did make him a 
present. 

Senator Clark. How long was that after he suggested it ? 

Mr. Jonas. Oh, probably 6 months. 

Senator Clark. What did you give him ? 

Mr. Jonas. I gave him on one order $250. 

Senator Barbour. On one order ? 

Mr. Jonas. Yes. 

Senator Clark. He was a petty-larceny grafter, wasn't he? 

Mr. Jonas. Yes. 

The Chairman. You say one order? 

Mr. Jonas. Yes. 

The Chairman. Then you gave him on other orders? 

Mr. Jonas. I do not recall the amounts 

The Chairman. Or presents on other orders ? 

Mr. Jonas. But on practically all import permits on commercial 
ammunition, for importations to private firms, not military. 

The Chairman. How did you strike up a personal acquaintance 
with him? 

Mr. Jonas. For one thing, he was quite a hunter. I have been out 
on hunts with him. Formerly he was in charge of railroads. He 
was the Government supervisor of railroads and I knew him at that 
time. 

Senator Clark. Was it before or after you gave him the $250 that 
he wrote this letter as to being under moral obligations to the Win- 
chester Co. '2 

Mr. Jonas. I think it was before. I would not be positive of that. 

Senator Clark. You mean he wrote the letter before you gave him 
the $250? 

Mr. Jonas. Yes ; I believe it was. 

Senator Clark. What was the moral obligation he was under to 
Winchester ? 

Mr. Jonas. I think the word was not intended. I don't under- 
stand what he means by it. 

Senator Clark. I don't either. 

Senator Barbour. There is a great deal of the same sort of thing 
here, Mr. Chairman. I think we can go on. These instances of 
themselves, I am frank to admit, are not great, as I view it in one 



MUNITIONS INDUSTEY 2523 

sense, but taking it altogether they show a situation which I think 
warrants the time of our completing the picture. 

The Chairman. Yes. 

Mr. Jonas. I think, Senator, that is about the only instance in my 
experience where that actually has happened. It is one of the very, 
very few times. It is the only case that happened at that particular 
time with that particular party. I do not think it is general at all 
in our dealings with our agents or our customers. 

Mr. Beebe. May I make a further statement in regard to this? 
I would like to call attention to two things : First, that was made 
during the time of the existence of the old company, not the present 
company. 

Senator Barbour. Yes. 

Mr. Beebe. Furthermore, to clear up positively that that was to 
secure or in return for favoring Winchester in the way of a permit, 
but not on any Government business ; it was purely commercial busi- 
ness; shot, shells, and so forth. 

Senator Clark. It was a payment to a public official for perform- 
ing a public duty, was it not? 

Mr. Beebe. No. It was for switching the business from another 
concern to Winchester. 

Senator Clark. It was part of his business to issue the permits, 
was it not ? 

Mr. Beebe. Yes; to issue permits. 

Senator Clark. And he did receive a present or a bribe, as you 
please to call it, for performing a public duty. 

Senator Barbour. This was the Minister of War that was involved 
in this. It was not commercial. 

Mr. Beebe. No. I would like to amplify that, if you please, once 
more, to clear up this point that Senator Clark brings up. This is an 
order for commercial goods. It is a fact that the Minister of War 
had to issue a permit for the importation of commercial ammunition. 
What the Minister of War told Mr. Jonas was that what he did was to 
induce this man to change his order to Winchester and then he would 
issue the permit, and after he had done that wrote and told him what 
a good job he had done for him, and suggested it was worthj^ of some 
recognition. It was not done beforehand for switching the order, 
but for his good idea in changing the order to Winchester. 

Senator Clark. In other words, Mr. Jonas became an accessory 
after the fact instead of an accessory before the fact. 

Mr. Beebe. If you look at it that way, although he had no prom- 
ise, Senator, that he would get anything. 

The Chairman. What did you consider this present that you made, 
Mr. Jonas? 

Mr. Jonas. As a percentage. 

The Chairman. As a bribe at the time ? 

Mr. Jonas. No; I thought we would sell the ammunition at the 
regular export prices. He asked for it, and if I did not give him a 
present I did not expect that we would get permits in the future. 

The Chairman. Did they expect presents pretty generally? 

Mr. Jonas. This particular party did; not as a general thing 
around the countries; no. 

The Chairman. What record was made of the present you made 
to him ? 



2524 MUNITIONS INDUSTRY 

Mr. Jonas. I suppose I charged it up, just as it was, in my ex- 
penses as payment. I do not know just what happened. I did not 
pay it out of my own pocket. 

Senator Clark. Did you pay it in cash? 

Mr. Jonas. Paid it in cash ; yes. 

Senator Clark. Did you notify the company that you had made 
this payment? 

Mr. Jonas. I assume I did. I do not recall. 

Mr. Beebe. I think it was in his expenses. 

The Chairman. Mr, Beebe, you recall that it was reported? 

Mr. Beebe. It was reported; yes. 

Senator Clark. Do you recall what the company said, Mr. Jonas ? 

Mr. Jonas. What is that? 

Senator Clark. Do you remember what the company said when 
you reported to them that you had given this man a bribe of $250 ? 

Mr. Jonas. I would not call it a bribe. It was not a bribe at all. 
It was a present I gave him. 

Senator Clark. Given to a public official for performing a public 
act. 

Mr. Jonas. It happened to be he was a Government official. It had 
nothing to do with the Government's business, however. 

Senator Clark. It just happened to be he had the power to issue 
these permits and he would not issue them unless you got the busi- 
ness, and shortly after he made this transaction you gave him $250. 
What happened when you reported to the company that you gave 
him $250? 

Mr. Jonas. I do not recall what happened. 

Senator Clark. They didn't write to you and fire you for doing 
what they did not approve of? 

Mr. Jonas. I do not recall that at all. 

Senator Pope. Did you say that you gave other parties money ? 

Mr. Jonas. Probably small amounts. 

Senator Pope. At this time? 

Mr. Jonas. For other orders. 

Senator Pope. For other orders? 

Mr. Jonas. Yes. 

Senator Pope. Did you report that to the company at the time ? 

Mr. Jonas. I presume I did. 

Senator Clark. Are you still working for the company ? 

Mr. Jonas. Yes, sir. 

The Chairman. Mr. Jonas, I think you said this was the only case 
of the kind during your experience. 

Mr. Jonas. Paying for permits ; yes, I think so. 

The Chairman. Are you ready to swear that it was the only case ? 

Mr. Jonas. If I remember rightly; yes. If anything else is called 
to my attention, I will tell you. 

Mr. Raushenbush. Your question was very specific on permits, 
Mr. Chairman. The answer was on permits. 

The Chairman. Yes, on permits. Now, as respects the present 
Government, is that the only official you ever made a present to ? 

Mr. Jonas. I think, yes. 

The Chairman. You think yes? Don't you know? Can't you 
remember the presents given to public officials? 



MUNITIONS INDUSTRY 2525 

Mr. Jonas. I might have given them a rifle or some very trivial 
thing possibly, but "that doesn't amount to anything; nothing of any 
value to speak of, a very picayune item, if it were. 

The Chairman. This was the only monetary consideration? 

Mr. Jonas. Yes, I am sure it was. 

Senator Barbour. Keferring to Mr. Jonas, we have a letter of 
his — no, that is the brother. 

Senator Clark. Mr. Jonas, coming back to this $250, as a matter 
of fact, you gave him the $250 for issuing the permits, didn't you ? 

Mr. Jonas. So he would issue permits, yes. 

Senator Clark. You said you were afraid he would not issue any 
more permits if you did not give him a present for issuing the first 
batch. 

Mr. Jonas. That is right. 

METHODS OF DOING BUSINESS NICARAGUA 

Senator Barbour. I have a letter here from Frank Jonas, written 
from Nicaragua, and dated June 27. 

(The letter referred to was marked " Exhibit No. 965 " and is 
included in the appendix on p. 2609.) 

Senator Barbour. Is that Frank S. Jonas your brother ? 

Mr. Jonas. He is; yes. 

Senator Barbour. He is an employee of Remington? 

Mr. Jonas. I believe so. 

Mr. MoNAGHAN. Senator, before you pass up that other letter, it 
is in the record — there is an opinion there quoted about a $3,000 
advance necessary. 

Senator Barbour. What letter is that? 

Mr. MoNAGHAN. The one you just read, at the bottom of the 
second page, about Van Putte. 

Senator Barbour. Yes. 

Mr. MoNAGHAN. It says [reading] : 

To proceed with shipment order need $3,000 advance adding same to value 
of order, etc. 

We never advanced that money. 
Senator Barbour. You never did? 
Mr. MoNAGHAN. We never paid that money. 

Senator Barbour. Let me make another start at this " Exhibit No. 
965." This is June 27 [reading] : 

General Somoza had dinner with me last night, and he told me that he in- 
tended to equip the army with .45-caliber Colt automatic pistols as standard 
equipment. Gurueeta, of course, when he is here is pushing the Star pistol, 
so I suggest that you communicate with Mr. Nicols to write direct to General 
Somoza oifering to sell him direct. I would .suggest that in his quotation he 
should include a 10-percent commission for General Somoza. 

Now, is this customary? 

Mr. MoNAGHAN. No, sir; this is very unusual. 

Senator Barbour. Just a coincidence? 

Mr. MoNAGHAN. Absolutely not. There are two distinctions that 
J make of business in Nicaragua. One is the sales for the use of the 
army. The other is for sales to what they call the Guardia Nacional. 
The Guardia Nacional imports all of the commercial aimnunition 
and then sells it to the dealers there. It has nothing to do with 



2526 MUNITIONS INDUSTRY 

military items. This letter very plainly shows that the understand- 
ing with General Somoza is that the commission shall apply on 
orders for the Guardia Nacional, not on purchases of the Govern- 
ment for their own use. 

Senator Bakbour. But it does show that the general should get 
the 10-percent commission. 

Mr. MoNAGHAN. The second paragraph of that letter says [read- 
ing] : 

General Somoza has acceptetl this commission with the full knowledge of the 
President and it is not considered as graft but is considered as an extra pay- 
ment for the work he is doing here. 

The Chairman. I suppose that as long as the President knows 
about it, it is not graft. 

Mr. MoNAGHAN. Have I made it clear, Senator? 

Senator Barbour. Yes. 

Mr. MoNAGHAN. That these cartridges for the Guardia Nacional 
are commercial items, shotgun cartridges, .22's, revolver and pistol 
ammunition. 

The Chairman. Yes, I think you have. 

Senator Barbour. This national force you refer to, are those the 
ones the United States Marines trained ? 

Mr. MoNAGHAN. Yes, sir. 

Senator Barbour. While it has nothing to do with it directly, is 
this General Somoza the one who is believed or supposed to have 
executed Sandino? 

Mr. MoNAGHAN. I don't know. 

Senator Clark. What was the official function of the General, the 
one that got the 10 percent? Does that appear? 

Mr. MoNAGHAN. He was in charge of the Guardia Nacional. 

Senator Barbour. That would be like our militia, I suppose. 

Mr. MoNAGHAN. Partially, I suppose. 

METHODS OF DOING BUSINESS — BAHAMA ISLANDS 

Senator Barbour. In San Salvador the situation seems to be get- 
ting a little more acute, and I would like to read from page 2 of this 
letter of March 5 from Fernandez to the Remington Arms Co., a 
little way down from the beginning. 

(The letter referred to was marked " Exhibit No. 966 " and is in- 
cluded in the appendix on p. 2610.) 

Senator Barbour (reading) : 

The Treasurer, air. Joaquin Rodezno, is a " son of a so-and-so ", to put it 
mildly. I have been trying not to have another clash with him. He is a 
very good friend of Saul Garcia, Winchester representative, and he has been 
" greased " by Garcia, with the result that he is as mad as a " puppy " because 
I secured the business and he is trying to place everything in my path just 
to bother. 

Garcia is the Winchester representative and Garcia has greased 
this gentleman, the Treasurer; is that so? Do the Winchester people 
know anything about that? 

Mr. Beebe. No knowledge at all. He is our agent on a commission 
basis. 

Senator Barbour. The commi.ssion, of course, is the source from 
which the grease flows, is it not? 



MUNITIONS INDUSTRY 2527 

Mr. Beebe. If any flowed, it probably did come from there. I 
don't know where else it would come from. 

Senator Pope. Did he put it in his expense account? 

Mr. Beebe. He has no expense account. They are our local agents, 
working on a commission. 

Senator Clark. How much commission did you pay him? 

Mr. Beebe. It depends on the price we got for the order or the 
price at which he has been able to get the order. It has varied from 
5 to 15 percent. If we got a line of goods on which the profits were 
reasonable and he got the right price, we have at times given him 15 
percent. At other times it has been as low as 5 percent. 

The Chairman. Doesn't it amount to this, Mr. Beebe; that you 
engage your representatives on a commission basis down there and 
you tell them what you have got to have for your product, and any- 
thing they sell it for above that is theirs ? 

Mr. Beebe. To an extent, except we always have to have in mind 
the competition of other people, and that more or less in most cases 
prevents any abnormal price being received for the goods. 

Senator Barbour. Here is just a short bit in the third paragraph 
[reading] : 

This is one party I do not have to " grease ", but there are plenty in some 
other directions. For instance, Colonel Bara, Chief of the War Supply Depart- 
ment, wants 2 percent ; there is the buyer of the Republic Provendor General, he 
wants something, too ; and there is Mr. Armando Frenkel, who is working with 
me on this business, and there is me, too. 

That is interesting, because the term " grease " and the reference 
to a commission figure are analogous. 

Mr. MoNAGHAN. The next sentence there. Senator, I don't know 
whether you are going to read it, but 

Senator Barbour (reading) : 

That is why the 7^2 percent is not an enormous percentage, as you seem to 
think it is. 

The 71/2 percent is to be used as grease ? 

Mr. MoNAGHAN. You keep pinning them down, pinning them 
down, trying to reduce the rate of commission they are to get, and 
they are fighting trying to build up the rate of commission, and the 
higher the rate of commission is, the worse you are going to be in 
■competition with European concerns. Now, this is — well, this does 
refer to the 7-millimeter cartridge. 

Senator Barbour. Then a little further down — I want you to pick 
out what I don't read. We will never get through if we read all of 
this. [Reading] : 

He is a Mason and General Martinez is a Mason too, and it seems that Gen- 
eral Martinez when he was appointed last year Minister of War induced Mr. 
Frenkel to get some connection in the arms and ammunition line. 

There he says the Minister of War induced Mr. Frenkel to get some 
connection in the arms and ammunition line. 

Mr. MoNAGHAN. And I would like to say right there that Mr. 
Fernandez I do not believe is a Mason, so his references there do not 
have any bearing at all. 

Senator Barbour. Now, I offer next a letter from San Salvador 
to the Winchester Co., dated November 5, 1932. It is signed, I be- 
lieve, by " Garcia ", but I don't know. 



2528 MUNITIONS INDUSTRY 

(The letter referred to was marked " Exhibit No. 967 " and is in- 
cluded in the appendix on p. — .) 

Senator Barbour. The part I have in mind to read is this : 

As you will note, that order was reduced to 200,000 and placed at the price 
of $14.70 c. i. f. This is the same price that was quoted by the three competi- 
tors, from that country, and I was able to secure the order for you through 
the very efficient cooperation of Col. Ernesto Bara, Chief of the Department 
of War. 

So that here is one case where th^ price was right; and the fact 
that the gentleman in Salvador writes to the Winchester Repeating 
Arms Co. that at the same price he was able to get the business, and 
knew he was able to get the business because of the cooperation of 
the Chief of the Department of War, and it follows, I believe, that 
there is no comment necessary, unless you say it does not mean what 
it says. 

Mr. Beebe. No ; except this : That if he receives 20 cents a thou- 
sand, it means he could not have paid very much graft on the 200,000 
cartridges. That is about $40.00 commission for the transaction. 

Senator Barbour. That is one of the cases where you whittled 
it down as much as you could. 

Mr. Beebe. We had to quote a low price on this business in com- 
petition, and offered him only 20 cents a thousand ; and as a matter 
of fact, it is certain that that is a very small commission. 

Senator Barbour. I think it is. 

Mr. Beebe. If he paid anything to anybody else, he would not 
have made anything on the transaction. 

Senator Barbour. He speaks of the cooperation he received from 
the Chief of the Department of War. 

Mr. Beebe. There might be coopertion, but I do not think there 
is any indication there that he paid anytliing for it. 

Senator Barbour. There is plenty of indication in the other let- 
ters which build up to that, Mr. Beebe. 

Mr. Beebe. There may be. 

Senator Barbour. I do not want to go all over that again. 
(The letter referred to was marked " Exhibit No. 967 ", and is 
included in the appendix on p. 2611.) 

Senator Barbour. The next letter is dated March 5, 1932, where 
there is mention of more " grease ", as I recall it. I will offer that 
for appropriate number. 

(The letter referred to was marked " Exhibit No. 968 ", and is 
included in the appendix on p. 2612.) 

Senator Barbour. At the top of page 2 that letter states [read- 
ing] : 

On this order for 7-mm Mauser which I got the whole commission of 7^ 
percent is not for L. G. F. 

Who is L. G. F. ? 

Mr. MoNAGHAN. Luis G. Fernandez, 

Senator Barbour [reading] : 

As you probably know you have to " oil " or " grease " certain parties in 
order to get it through. Otherwise you are out of luck. 

Then, a little further down, the letter continues : 

You will be surprised to note how things are here now as far as the compe- 
tition is concerned. There are representatives from Czechoslovakia, Spain (two 
of them), Belgium, France, and Germany, plus Winchester, and little me. 



MUNITIONS INDUSTEY 2529' 

In Other words, it links up very directly, in my mind, with the 
necessity of having plenty of " grease " ready. [Reading :] 

Representatives have sprung up from the ground. As soon as I tliink it 
advisable to leave San Salvador I will fly to Honduras and go south passing 
through Costa Rica and to my final destination, Panama. I have not great 
hopes in Costa Rica as I believe that there is not much doing over there in the 
way of securing any military-cartiidge business. I might be wrong at that. 

Mr. MoNAGHAN, He was right. 

Senator Barbour. He did not get any ? 

Mr. MoNAGHAN. No, sir. 

The Chairman. Were his activities confined to the military-cart- 
ridge business? 

Mr. MoNAGHAN. The other day you were not here when I ex- 
plained that our principal activities in the export field are on com- 
mercial ammunition and not on military, and that is very clearly 
proved by the very small percentage of our business that is classi- 
fied properly as " military." I believe 94 percent of our export busi- 
ness over the last 10 years is commercial annnunition. 

The Chairman. This letter would lead one to believe that this 
agent was looking not for commercial business but was looking alone 
for military cartridge business. 

Mr. MoNAGHAN. These agents looking for commissions will ehase 
these rainbows, and we do have our difficulties keeping them in the 
profitable end of the business, which is the commercial end. They 
believe one big sale on the military 

The Chairman. Is the commercial end of the business as profit- 
able to the salesman as the military end ? 

Mr. Monaghan. It is more — if they would look at the profitable 
sale — more profitable. 

The Chairman. But they do not? 

Mr. Monaghan, The trouble is they are chasing rainbows, and 
that is the trouble, keeping them down to the regular routine of the 
commercial sale. 

The Chairman. Is it not proper to assume that they are finding 
the military business more profitable than they do the commercial 
business ? 

Mr. Monaghan. No, sir ; I do not think so. You can check up the 
military sales, all we made, such as with Fernandez, and find the 
commercial end far more remunerative than the other. They do not 
sit down and analyze it, but are intrigued by the military end of it 
and think they are effecting a big sale, a big deal. 

Senator Barbour. Mr. Monaghan, this business you referred to of 
representatives from Czechoslovakia, Spain, et cetera, is not that an 
unusual situation in such a small place? 

What do you speak of in connection with such things? We are 
wondering about the stimulation of sales, in other words. 

Mr. Monaghan. No, sir; I do not think so. They would be 
attracted bj^ the fact that there was a prospect of the countries buy- 
ing. In our own experience we would send s<inu'one to the market or 
direct our agents' attention to the business, through it having reached 
us first that that nation was in the market and Avanted to buy, rather 
than going around and trying to foist any ammunition on them. 

Senator Barbour. I was wondering Avhether the whole adminis- 
tration in a country under those circumstances could, not be cor- 
rupted, to put it baldly. Is not that likely to occur? 



2530 MUNITIONS INDIJSTEY 

Mr. MoNAGHAN. I do not believe it is; not under our method of 
doing business, at least. 

Senator Barbour. No; I do not attribute it to you people here. 
What I am trying to get at is, what is the situation there, and Avhat 
is the business all about? 

Mr. MoNAGHAN. Where you get as many people as this competing 
for business in a small country, such as we have before us, you have 
got to get the price down so low that there is not much in it for 
anybody, and particularly I mean the man that gets the order 
eventually. 

Senator Barbour. Here is a letter which may throw some light on 
this, and it may not. It is under date of April 25, 1932. to the 
Remington Arms Co., also being from Fernandez. I will offer that 
for appropriate number. 

(The letter referred to was marked "Exhibit No. 969" and is 
included in the appendix on p. 2613.) 

Senator Barbour. The first paragraph of that letter reads as 
follows : 

I wish to confiim my letter to you dated the 16th instant. You will probably 
have received the order for Rentas from Mr. Armando Frankel and probably 
you will have received advices from the bank that the outstnnding draft has 
been paid. As you perfectly know I sold that merchandise sometime last year, 
at the old list prices. There was an average of 10 percent for Mr. Lemus at 
that time, the Proveedor General del Gobierno. Since Mr. Lemus has been 
kicked out we do not liave to pay him up. 

In other words, as I gather this, when the order was placed, there 
was 10 percent in it for Mr. Lemus, and at that time he was the 
Proveedor General del Gobierno, but since that time he has got " the 
air ", as far as the position of Proveedor General del Gobierno is 
concerned, and he does not have to get the 10 percent. Is that right? 

Mr. MoNAGHAN. The original letter, I very clearly recall looking 
at the other day, and there was a notation in the right margin of it 
alongside the paragraph, " Nothing doing "; and he did not get any- 
thing because there was not any such understanding with anybody. 

Senator Barbour. It w^as not because he was kicked out? 

Mr. MoNAGHAN. No, sir; there was no understanding in any way 
with anyone down there getting 10 percent overage, commission, or 
anything else, on this order. 

Senator Barbour. On page no. 2 there is reference to a man by 
the name of Brooke [reading] : 

very wealthy and influential. He always gets permits because he advances 
money to public officials ; including the President himself. 

That is rather a startling statement. I know that you are not 
responsible for it, but did it surprise you when you got it, or did you 
make any inquiry about it, or did you take it as a matter of course? 

Mr. Monaghan. Ver}^ interesting reading. We never had any 
relation witli this Mr. Brooke other than the report Avhich you have 
read here, and never had anything more to do Avith him. 

The Chairman. Do you believe that this agent know^s what he is 
talking about? 

Senator Barbour. He seems to have many names in mind. 

The Chairman. I ask the question quite seriously : Do you think 
that this agent loiows what he is talking about when he reports 
what somebody else is doing? 



MUNITIONS INDUSTRY 2531 

Mr. MoNAGHAN. That is a pretty hard thing to do, to report on 
what somebody else is doing and report on all the facts, Senator? 
Do you not think so ? 

Senator Barbour. He is your source of information for these 
things ? 

Mr. Monaghan. The source of information for the point indicated 
in the letter. That is all. 

Mr. WoHLTORTH. Mr. Monaghan, you know Mr. Fernandez pretty 
well, do you not? 

Mr. Monaghan. Yes, sir. 

Mr. WoHLFORTH. You have pretty good trust in him, in the way 
he handled these business matters ? 

Mr. Monaghan. Mr. Fernandez is no longer with us, and has not 
been with us for a year and and some months. 

Senator Clark. How did he happen to quit ? 

Mr. Monaghan. We decided to make a change in the method of 
selling in the markets which he covered for us. 

Senator Barbour. Would that change, in your opinion, interest the 
committee ? 

Mr. Monaghan. No, sir ; I think not. 

Senator Barbour. To read on a bit in the letter [reading] : 

I asked Mr. Ochoa the Minister of War in a very diplomatic way wlio was 
the persona grata with him and the President for Government business and 
he sent me over to Mr. Cornelio Zamora of the firm of Zamora, Henriquez & 
Co. It seems that this firm is now doing all the Government business, and 
they split with the officials the commission and overages; etc. 

That is a very clear-cut and direct businesslike statement of just 
what is going on. 

Mr. Monaghan. We never had any business dealings through this 
firm of Zamora, Henriquez & Co. 

Senator Barbour. Do you really think that is a true statement ? 

Mr. Monaghan. We never had any business, and I do not know 
beyond this statement in the letter. 

Senator Barbour. Now we pass to another letter, Mr. Chairman, 
which I think illustrates to what lengths salesmen have to go in 
order to make sales. I will offer it as " Exhibit No. 970." 

(The letter referred to was marked "Exhibit No. 970" and is 
included in the appendix on p. 2614.) 

Senator Barbour. I am referring to a letter of April 7, 1932, also 
by Fernandez to the Remington Arms Co., and I will pass to the 
second page [reading] : 

The order was put through the consul of the National Guard, and has been 
decided, etc., etc. We only need the signature of General Llanos, the head of 
the Guardia Nacional. Yesterday we talked to him, and he informed us not 
to worry, as the order is ours. No matter what the competition say or holler. 
They are discounting 10 colones every month from each soldier of the Guardia 
(750), making a total of 7.500 colones every month to pay for the pistols and 
the ammunition. They are depositing these amounts in a bank in a joint 
account Armando Frankel-Guardia Nacional. You see. these pistols have to be 
shipped from Germany and the cartridges from New York. It does not matter 
how soon you will receive the order, as it will have to be held up at your 
office until Mr. Frankel advises you to ship, so that the cartridges would arrive 
more or less about the same time as the pistols. By the time that the pistols 
are ready there will be enough money in the bank to pay for the cartridge^, and 
Mr. Frankel will see to it that you get your monev "first, as he has agreed 
with me. 



2532 MUNITIONS INDUSTRY 

Now, it seems to me that I have never heard of a case wherein 
these poor soldiers themselves are fined in order to pay for an order 
of shells. Apparently there was money enough to buy the pistols but 
not money enough to buy the cartridges. 

Is this a new departure or has that been a common thing? Have 
any of you gentlemen heard of that before ? 

Mr. Beebe. I can say this: that I do not know whether it was 
when I was in Mexico, somebody talked with me about it, or whether 
there was some correspondence, but I understand that some of these 
officers have to buy their own pistols and their own cartridges, and 
they have not enough money to buy one outright and put up the 
money, but arrange to have so much taken out of their pay each 
month, which is done for other things in this country. 

Senator Barbour. That is, each soldier of the guard ? 

Mr. Beebe. I do not know whether the soldier has the pistols or 
not. 

Senator Barbour. What does 10 colones amount to in depreciated 
American money? 

Mr. Jonas. About $2. 

Senator Barbour. A moment ago wei mentioned the probable effect 
of this type of competition. Here is a letter of July 6, 1934, from 
F. S. Jonas to the Remington Arms Co., a very long letter, which I 
will offer for appropriate number. 

(The letter referred to was marked " Exhibit No. 971 " and is 
included in the appendix on p. 2616.) 

Senator Barbour. I will read the last paragraph first, if I may 
[reading] : 

The Salvador Government would not give me permission to take the sample 
rifle to Guatemala ; however, they consented to my taking it to the other 
Central American Republics, but I had to agree to return it, as it was shipped 
to them gratis and has been entered on the Government records. Evidently 
they are not on very friendly terms with Guatemala, and as soon as there is 
a rumor that Guatemala has made a purchase they do likewise. 

That refers, Mr. Chairman, to something that I mentioned, and 
undoubtedly others have mentioned at the very beginning of the 
hearing, about a sale in one instance immediately stimulating a sale 
in another instance. 

Is there any comment you would like to make on that? There are 
a number of other passages which I have marked in this letter. 

The Chairman. I suggest. Senator, if they have relation to this 
very important subject, that those passages be read in their entirety. 

Senator Barbour. It does not directly, Mr. Chairman. 

Mr. MoNAGiiAN. There were no sales made of that rifle. 

Senator Barbour. That is a 7-millimeter Remington, is it not? 

Mr. Monaghan. Yes, sir. It was some time ago, because our 
agent down there said they were interested in them, but there was 
no sale made to either Salvador or Guatemala. 

Mr. WoHLFORTH. You made sales to other countries of that same 
rifle down there, did you not? 

Mr. Monaghais'. We made a sale to Honduras. That was the first 
sale of a military rifle that we had made since the World War. 

Senator Barbour. That is the point I was really going to come to. 

The Chairman. What is the date of this? 



MUNITIONS INDUSTRY 2533 

Senator Barbour. The date of this is July 6, 1934, and the rifle 
was a single-shot rifle, was it not? 

Mr. MoNAGHAN. No, sir; it is a repeating five-shot bolt-action and 
not automatic. 

Senator Barbour. I guess that is what they mean by referring to 
it as single-shot once or twice in the letter. 

Now, on page 3, the third paragraph [reading] : 

This Government has a stock of over 3,000 new model 1901, 7-mm Remington 
single-shot rifles and 4,000 11-mm rifles. 

That is not the one? 

Mr. Mo^AGHAN. No, sir. That is an old rifle, the best I could find 
out from delving into memory and our records, probably purchased 
around 1900. 

Senator Barbour. In the next letter further light is shed, as I see 
it, on this competitive situation, and I am referring to a letter under 
date of July 3, 1934, attention of Mr. Monaghan, from F. S. Jonas 
again. I will offer that for appropriate number. 

(The letter referred to was marked " Exhibit No. 972 " and is in- 
cluded in the appendix on p. 2619.) 

Senator Barbour. I will read the last two paragraphs on page 1 
[reading] : 

They are very mucli interested in purchasing a 50-caliber Colt machine gun. 
I was not sure of the price, so quoted approximately $1,500. Please ask them 
to send me particulars and also prices on their 7-mm auto rifles. 

Automatic rifles, is that right? 

Mr. Monaghan. Yes, sir. 

Senator Barbour (continuing reading) : 

They want to standardize their ammunition to this caliber only. 

I am told that they have no money and then again it is said for army equip- 
ment, somehow or other, they are always able to raise the money. I have 
not learned of any large purchases they have made, except 150 reconditioned 
7-mm Maxims, which were purchased in Europe. 

It is rumored that the only way that this President can hold his job is 
through being well prepared, so I have hopes of the various rainbows coming 
through. 

We realize you are not responsible for that observation, or your 
company, but what interests the committee, as I see it, is the fact 
that he makes a report to you, and, whatever you want to say about 
the reports, they are humorous as well as interesting, and interesting 
as well as humorous, but he does say that the President can hold 
his position only " through being well-prepared, so I have hopes of 
the various rainbows coming through." 

The rainbows, I suppose, refer to a lot of " greased " orders? 

Mr. Monaghan. Orders, without the adjective. I would like 
to say also. Senator, on this matter of the Colt machine gun, we 
do not make it. Nothing was done about that. We spoke to Colt 
about it, and they stated at that time they had an agent down there, 
and any business that was done would be done through their agent. 

Senator Barbour. Mr. Davis, does your company deal in manu- 
factured machine guns at all ? 

Mr. Davis. No, sir. 

Senator Barbour. The next exhibit is a contract, and I do not 
believe there is any need to read the preamble, because it is the usual 



2534 MUNITIONS INDUSTRY 

preamble between a company and a government. The interesting 
thing about it, as I can see it, is what the contract calls for. 

I will offer that for apropriate number. 

(The contract referred to was marked " Exhibit No. 973 " and 
is included in the appendix on p. 2620.) 

Senator Barbour. I notice that there are — 

3,000 " Remington Enfield " rifles, model 1934, caliber 7 mm, without 
bayonets, but with sling straps, $26 per rifle, c.i.f. Amapala, total 

price $78,000' 

(Pencil note) caliber 7 mm. 

1,000,000 cartridges " Kleanbore Smokeless ", $23 per thousand, c.i.f. 
Amapala, total price 23, 000 

50,000 cartridge clips 7 mm, $10 per thousand c.i.f. Amapala, tdtal 

price 500 

200,000 cartridges, .45 caliber Colt automatic " Kleanbore Smokeless " 
for Thompson machine guns, $16 per thousand, c.i.f. Amapala, 
total price 3, 200- 

500 Thompson machine guns, 21-A, $140 each, f.o.b. New York, total 
price 7,000' 

Now, this is a contract with Remington, and it does cover machine 
guns. It is for machine guns which they sold but did not make. 
Is that the idea ? 

Mr. MoNAGHAN. Those guns were sold to the Government merely as 
a courtesy. The Government paid us the identical sum for those 
guns that we paid the Thompson people for them. It is one of the 
very unusual cases we have ever had of such a transaction. But here 
was Jonas down there negotiating this order. They asked him to 
put in the machine guns with the order at the same time, and we did 
so as a courtesy merely. We did not make a cent on them anyway. 

Senator Clark. Jonas also represents a gas company down there, 
does he not? 

Mr. MoNAGHAN. Yes, sir. 

Senator Clark. And they were the agents for the Thompson sub- 
machine guns? 

Mr. MoNAGHAN. Yes, sir. 

Mr. Davis. It is not my understanding that he represents anyone- 
but Remington. 

Senator Clark. He testified at the last hearing that he did. 

Mr. MoNAGHAN. After reading the testimony when he was here,, 
we did realize he did some work for the other company. We were 
not aware of that when he went on the mission. 

The Chairman. You were not aware that he was a representative 
of Federal Laboratories? 

Mr. MoNAGHAN. That he was to do anything for them in any way. 
He was on a salary trip for us and was not doing anything except 
work for us. 

Mr. Handy. That was our definite understanding with him. 

The Chairman. On this specific trip? 

Mr. MoNAGHAN. Also the trip before that, when he went down to- 
Brazil and Argentine for us on commercial business for those 
countries. 

The Chairman. Is he down there now? 

Mr. Monaghan. He is in Puerto Rico now. 

The Chairman. In whose employ is he now? 



MUNITIONS INDUSTRY 2535 

Mr. MoNAGHAN. In our employ. 

Senator Barbour. I do not want to split hairs, Mr. Chairman, but 
in the contract it states: 

Whereas Remington is a manufacturer of and dealer in arms and ammuni- 
tion of the type and kind referred to 

And so forth, and so forth, and Thompson machine guns is one of 
the items referred to in that categorly. Personally, I am willing to 
take your explanation of it, but in your preamble there it would, of 
course, be misleading for you to state that you are a manufacturer 
of guns. 

Mr. Monaghan. The wording of that contract followed the plac- 
ing of the order. That was the reason for the " dealer in." I 
IDointed out to the man drawing up the agreement up here that we 
were not manufacturers of these Thompson machine guns, and we 
only handled it as a courtesy for the Government. That was the 
reason for that wording going in there. We do not make a prac- 
tice, as I said before, of dealing in anj^thing except what we 
manufacture ourselves. 

Senator Barbour. Did you get the export license for the whole 
thing, Thompson guns and so forth? 

Mr. Moxaghax. Yes, sir. 

Senator Barbour. Was that explained at the time you got the 
license for the export ? 

Mr. Monaghan. I do not believe there was any question in the 
application form, where it was necessary to go into that detail. 

Senator Barbour. Mr. Chairman, here is another letter from Mr. 
Fernandez, dated June 10, 1931, which I offer for appropriate 
number. 

(The letter referred to was marked "Exhibit No. 974" and is in- 
cluded in the appendix on p. 2622.) 

Senator Barbour. That reads : 

Pursuant to the conversation I had with you upon my arrival to New York 2 
weeks ago, I wish to inform you that the extra 5 percent charged to take care 
of certain party in Tegucigalpa as agreed by the writer, part of the total 
amount of .$740.25 has already been paid up to Mr. Francisco Argueta of San 
Salvador. This Mr. Argueta received instructions to receive this amount from 
Coronel Villanueva or the party who was interested in Tegucigalpa. I effected 
a payment of $300 to Mr. Argueta in San Salvador, when you cabled me the 
$500. Before I left San Salvador I handed Mr. Argueta the amount of $150 
making it a total of $450. Two days ago I received the attached cable from 
Mr. Francisco Argueta (Chico) as everybody nicknames him, requesting of me 
to turn over some funds to a friend of his here in New York. Today I will 
hand this party here in New York the sum of $75 and as you have arranged 
that this amount be turned over to us, I wish to report that as soon as the 
balance of the amount is turned over to me, I will remit to Mr. Francisco 
Argueta a bank's check for the balance of $215.25, thus completing this 
transaction. 

I further state that this is my understanding that Mr. Argueta is a relative 
of residing in San Salvador of the party in Tegucigalpa, Honduras. 

What I want to show is that $500 was cabled to Fernandez, and 
with the additional amount of $240.25, $740.25 was paid to him for 
what, except to give to these different people who are cited here; 
and who were they? If that is not what it is, what does the trans- 
action cover? You have got the letter there. Do you know what 
it all means ? 

83876— 35— PT 11 10 



2536 MUNITIONS INDUSTRY 

Mr. MoNAGHAN. I would like to explain it. I have a very complete 
file on that, and if you will let me go into it, it will show you an 
entirely different picture than this letter, standing out by itself. 

Senator Barbour. That is just what we want to know about. By 
the way, I should have mentioned that this gentleman, whose name 
begins with V, is a colonel. However, you are going to tell us about 
it, and we would be glad to have you do so in your own way. 

Mr. WoHLFORTH. Mr. Monaghan, will you look for a letter dated 
April 20, 1931? 

Senator Barbour. Let me say again, Mr. Monaghan, that it was a 
letter dated April 20, written by yourself to Mr. Fernandez that we 
are interested in. Do you recall any such letter? 

Mr. Monaghan. I have heard from numerous sources about there 
being such a letter, but I cannot find it. I would like to say here 
that here is a letter from Fernandez with a rubber stamp on it that 
looks like April 20. It is April 29, if you will look closely; I 
believe that is the letter they mean. 

Mr. WoHLFORTH. That letter we refer to was the one dated April 
20 from you to Mr. Fernandez, and it was supposed to explain the 
contents of this letter under discussion. I do not know whether 
such a letter exists, but we heard about it. 

Mr. Monaghan. Would you give me some more information on it, 
and let me help you find that letter? 

Senator Barbour. Is Mr. Fernandez in New York now? 

Mr. Monaghan. I believe so; yes, sir. 

Senator Barbour. Have you been in communication with him 
recently ? 

Mr. Monaghan. Yes, sir. He called me up on the phone when the 
investigators of your committee called on him the first time. 

Senator Barbour. Did you refer to this particular letter that the 
investigators were trying to locate? 

Mr. Monaghan. He asked me to tell him what that letter was, 
that the investigators had asked about it, and he could not find it 
in his file. He said, " Will you look in yours ? " 

I said, « Yes, I will." 

I looked it up, and that is how I came across this letter here that 
looks as though it might be April 20 and had misled somebody, 
when on close inspection you will find it reads "April 29." He in- 
sisted there was such a letter of April 20, and I told him I could 
not find any, and he could not find it either. 

Mr. WoHLFORTH. Did Mr. Fernandez call you or did you call Mr. 
Fernandez ? 

Mr. Monaghan. Mr. Fernandez called me. He asked me what to 
do. I said, " There is only one thing you can do, it is the same thing 
we are doing, give the investigators everything you have and tell 
them everything you know." 

Mr. WoHLFORTH. Is that the substance of your conversation ? 

Mr. Monaghan. Yes, sir. 

Senator Barbour. To get back to this letter of the 10th, can you 
give us any more information with relation to these expenditures ? 

Mr. Monaghan. Yes, sir ; I think I can. There is quite a volumi- 
nous file on that order. We have a letter here to Fernandez dated 
April 29 : 

Since writing yon our other letters enclosed, we received yours, dated 
Toojnx'igalpa, dated April 25, with the order for the Honduras Government. 



I 



MUNITIONS INDUSTRY 2537 

You have a copy of that letter. This letter relates to the fact 
that " we are going to make a shipment within a few clays of a cer- 
tain part of that order ", and the money was received about that 
time, April 29. What I am pointing to is that this letter here of 
June 10 that you speak of, of the payment of $740, was subsequent 
to our having received the order from Fernandez, and the money 
being received or the credit being opened in the bank in New York — 
I forget which — covering that order. The letter of June 10, being 
subsequent to the whole transaction so far as the order and the pay- 
ments are concerned, was something that occurred after the sale had 
been completed, and was our first knowledge that there was any such 
sum involved as this $740. 

Senator Barbour. He says at the bottom of the letter there, at the 
■very end, " I received the sum of $740.25 in payments as noted." In 
'Other words, he got the money all right. 

Mr. MoNAGHAN. Yes, sir. It was paid to Mr. Fernandez. He said 
he paid it out in accordance with this letter here that he wrote out. 
So when we gave him the $740.25, we got his receipt for that money 
as noted on the bottom of the letter. 

Senator Babbour. Yes. 

Mr. WoHLFORTH. Did you give Mr. Fernandez instructions as to 
liow or to whom to pay that money? 

Mr. Monaghan. No, sir. The first indication or intimation we had 
'of any money such as this being paid out on this order was at the 
itime Mr. Fernandez came into our office and asked for this $740 and 
substantiated his request by this letter. We do not know, and did 
not then know who Col. Villa de Nueva is, whether he is a Kentucky 
colonel or a South American colonel. 

Mr. WoHLFORTH. You have seen the name before you saw it in 
this letter, have you not? 

Mr. Monaghan. No, sir; I did not. 

Senator Barbour. Is there anything further you want to ask about 
that? It simply is not at all clear to me. It is an amount which I 
think has gone to those different people. 

In the meantime we will get along, because we have a great many 
more exhibits. 

Mr. Monaghan. Senator, might I say there that we have never 
iiad any real information about what this letter is of April 20, on 
which so much stress seems to be placed. I do believe that it arose 
from that rubber stamp on there that looks like April 20, and is 
really April 29. Here is the letter of April 29. 

Senator Barbour. I know, of course, nothing about it at all, simply 
that that report comes to me from the investigators, that there was 
some discussion there and I wanted to run it down, because your 
explanation may be the true one, although the report, as I get it, was 
that there was a letter from you to Fernandez and not a letter from 
I^'ernandez to you. 

Mr. Monaghan. There was no such letter, Senator. 

METHODS or DOING BUSINESS — DOMINICAN REPUBmC 

Senator Barbour. We have the next letter, which is dated Decem- 
ber 22, from Mr, Monaghan to Mr. Norvell, who was then president 
•of the Remington Arms Co., I believe. 



2538 MUNITIONS INDUSTRY 

(The letter referred to was marked " Exhibit No. 975 ", and is in- 
cluded in the appendix on p. 2622.) 

Senator Barbour. It refers to a certain action taken by Mr. Mon- 
aghan relating to the stopping of a foreign order to the Dominican 
Republic. 

We have recently had an example of how the United States Department of 
State at Washington, D. C, can help us. 

Skipping the second paragraph, I will read the third : 

When we approached the State Department they admitted knowing some- 
thing of the deal but were glad to get the additional information we had ob- 
tained. They sent a copy of our letter giving the full facts to our minister 
at Santo Domingo. They are willing to shut their eyes to small graft on such 
transactions in Latin American countries but they felt this was going too far 
especially as the Dominican Republic still has a lot of unsettled American 
claims. Our agent, who knows nothing of our dealings with the State Depart- 
ment, which have to be strictly confidential, now reports the President of the 
Dominican Republic called for an investigation with the result the contract for 
the .303 rifles and cartridges has been canceled and the first installment is to 
be shipped back. Our chances of regaining the business are, therefore, very 
bright for the President has issued an order that in future all purchases are 
to be made direct from manufacturers. 

Is this the only cooperation of the kind that you received from 
our State Department, Mr. Monaghan, or have you gotten it before ? 
How much graft is the State Department willing to shut its eyes to ? 

Mr. Monaghan. This was a communication from me to the presi- 
dent of our company. 

Senator Barbour. To the president of the company ? 

Mr. Monaghan. To the president of our company. 

Senator Barbour. From you? 

Mr. Monaghan. And I did believe that we were doing something' 
worthwhile in attempting to get the business of the Dominican Re- 
public for newly manufactured arms or ammunition, which would 
help American workmen here, instead of selling the war stuff that 
was offered at this time by some concern in England or Germany, 
I forget which — England or Hamburg. 

Senator Barbour. England, I think. I think we have that. 

Mr. Monaghan. I am not sure. 

Senator Barbour. I am referring to the cooperation that you got 
from the State Department and their knowledge of graft, and their 
not minding it up to a certain point. 

Mr. Monaghan. Certainly it was not a State Department state- 
ment. It was an individual that I knew in the State Department. 
Perhaps we talked of it in passing, not as an official statement 
from him — certainly I did not consider it that way ; I went there, I 
believe, at the time to talk to him about Cuba, having been down 
there. I discussed things in Cuba, and discussed this matter of 
Santo Domingo. Naturally, in the course of such a conversation 
some little personal remark would slip out, which was responsible 
for this statement of mine. 

Senator Barbour. You make a very clear statement to your presi- 
dent in your letter. While I do not want to overemphasize this, it 
certainly gave me the impression that the State Department was cog- 
nizant that there had to be a certain amount of graft, and up to a 
certain point they had no objection to it. 



MUNITIONS INDUSTRY 2539 

Mr. MoNAGHAN. No ; I do not think that is the proper conclusion 
to draw from this letter of mine, because I have never had any such 
official statement from the State Department. 

Senator Barbour. There may be honest differences of opinion, but 
they, as the State Department — 

are willing to shut their eyes to small graft on such transactions in Latin 
American countries, but they felt that this was going too far. 

The Chairman. Whom do you contact in the State Department 
in matters of that kind? 

Mr. MoNAGHAN. On that occasion I think it was Mr. S. W. 
Morgan. 

The Chairman. That was back in 1928? 

Mr. Monaghan. 1928. 

Mr. WoHLFORTH. Mr. Monaghan, is this just a chance conversa- 
tion that you had about this Dominican order with the State Depart- 
ment? 

Mr, Monaghan. No. What I said was a chance remark, perhaps, 
of his, but it was not a chance talk with him of the thing. I related 
the facts to him in quite some detail, of this attempt to sell the war- 
time stocks from Europe. 

Senator Barbour. It is one thing in the statement you write, and 
in sense is another? 

Senator Clark. Wliat did you mean to say by that statement in 
the letter, Mr. Monaghan, if you did not mean to say what it sounds 
like, when you say : 

They are willing to shut their eyes to small graft on such transactions in 
Latin American countries but they felt this was going too far, especially as the 
Dominican Republic still has a lot of unsettled American claims. 

That seems to be a perfectly clear statement. If it does not mean 
what Senator Barbour said it meant, what does it mean? 

Mr. Monaghan. I certainly do not believe the State Department 
in any dealings I have had with them would indicate they would 
make such a bald official statement, that they would countenance any 
small graft. 

Senator Clark. You wrote this letter, did you not ? 

Mr. Monaghan. Yes, sir. 

Senator Clark. Just explain to the committee what you did mean 
when you said — 

They are willing to shut their eyes to small graft cm such transactions in 
Latin American countries, but they felt this was going too far. 

That does not seem to be susceptible of more than one interpre- 
tation. Just what did you mean by it? 

Mr. Monaghan, Perhaps the comparison of the thing. I believe 
at that time those rifles to the best of my memory were, oh, around 
$50 to $G0, say, and they were obtainable in Europe for about $10, 
which would make anyone laugh that knows anything of the business 
of selling manufactured items, to pay a price of $10 in one market 
and resell the same item in another for $50 or $60. 

Senator Clark. Did anybody in the State Department tell you 
that they were willing to shut their eyes to small graft on such 
transactions? 

Mr. Monaghan. I said I did not look at it as an official attitude 
of the State Department, no. 



2540 MUNITIONS INDUSTRY 

Senator Clark. Here is the whole paragraph again, Mr, 
Monaghan : 

When we approached the State Department they admitted knowins something 
of the deal but were glad to get tlie additional information we had obtained. 
They sent a copy of our letter giA'in;; the full facts to our ^Minister at Santo- 
Domingo. 

That was an official action of the State Department. 

They are willing to shut their eyes to small graft on such transacfons in 
Latin American countries but they felt this wasf going too far, especially as 
the Dominican Republic still has a lot of unsettled American claims. 

What was it that was going too far? 

Mr. Monaghan. Buying an item at one price, of $10, and selling it 
for $50 oi- $60. 

Senat(jr Clark. Did they give you any idea of the size of graft 
the3^ were willinj.'- to shut their eyes to, and where they drew the line 
when you ste|)])e<l over from the small graft category into the situ- 
ation where they were going too far? 

Mr. MoNAGH.' X. Perhaps when you go back and take that one 
little word " graft " there 

Senator Clark. That is a word of rather large significance, I think, 
in this transaction, Mr. Monaghan. It has not very many letters in 
it, but it is of considerable significance in what we are getting at. 

Mr. Monaghan. Perhaps the impression was more to the effect 
that if there were a commission, a small commission above that price 
of $10 for those rifles, they could not say anything, but when it be- 
came such an <>utrageous difference as from 10 to 50 or 60 dollars, 
certainly then it would not come into the class of commissions. 

Senator Clark. In other words, they are willing to condone petty 
larceny but not grand larceny? 

Mr. Monaghan. Oh, no; I "do not think that. 

Senator Clark. This apparently is another one of those instances 
such as we had tlie other day, Mr. Monaghan, wdiere you want to 
delete some of the words froin your oAvn letters. 

Mr. Monaghan. Every man when he writes a letter and reads 
it over again the next day would change it, he would not leave it in 
its entirety. 

Senator Barbour. Unless somebody else wants to pursue the same 
subject, that covers all of it. 

The Chairman. We are getting nowhere so fast on that I think 
that we might well leave it. 

Senator Barbour. That brings us to a letter of April 17 to Mr. 
Monaghan from Smith & Wesson. I offer it in evidence because it 
refers to the contribution made by the Remington Arms Co. to a 
political campaign in Santo Domingo. 

(The letter referred to was marked " Exhibit No. 976 "'. and 
appears in full in the text.) 

Senator Barbour (reading) : 

We are just in receipt of a wire from P>ro. Nicolas, reading: 
"Party asking campaign contribution $1,00(>, ready contribute $500. expect- 
ing secure balance from Eilis, Remington, Philadelphia, Fisch, and yourselves 
$100 each, cable acceptance to send sight draft. Thanks." 

The Chairman. To what country does it relate ? 
Mr. Monaghan. Dominican Republic. 



MUNITIONS INDUSTRY 2541 

Senator Barbour (reading) : 

Presumablj' you have had a similar message. 

Before replying we shouhl like to know what your reaction is to the some- 
what strange appeal. 

Hitherto we have spent nothing in advertising in Santo Domingo, and if 
Bro. Nicolas is lucky enough to put his money on the right horse, I should 
think that the proposed $100 investment should be a good one. In my varied 
associations with Latin Americans I have had some curious propositions, but 
never one to contribute to any political campaign fund. 

According to the last cables that I saw, they propose to run Morales, for- 
merly the Minister at Washington, for vice president, though at one time he 
was scheduled for the premier post. 

What are your latest advices? 

Whilst we haven't any $100 bills growing in the back yard, I am inclined to 
recommend that we make the contribution without delay. 

Please be good enough to reply by return mail, using the enclosed stamped- 
addressed envelope. 

You got this letter, Mr. Monaghan, from Mr. Bungey? 

Mr. Monaghan. Yes, sir. 

Senator Barbour. You recall the incident? 

Mr. Monaghan. Yes, sir; I do. 

Senator Barbour. What did you do about it? 

Mr. Monaghan. We were in the same position as he expresses it 
there — ^that this is the first time he has had any proposal to con- 
tribute to a political campaign fund. Dr. Morales, that he speaks 
of, the former Minister at Washington, some of us in the company 
knew personally. I did. We credited Mr. Nicolas' account 
with that $100 more as a personal matter than as a business one. 
Certainly we never expected a $100 contribution to get us very far. 

Senator Barbour. What do you mean b}' that, that you would 
have to come higher than that to be effective ? 

Mr. Monaghan. As I say, it was the first time we have had any 
occasion to contribute to a political campaign fund such as Nicolas 
proposes here, and he kept pressing us to make this contribution. 
We did do it. 

Senator Barbour. It is not a practice of munitions concerns to 
make political campaign contributions? 

Mr. Monaghan. No, sir; it is not. It is the only one that I 
know of. 

Senator Barbour. Mr. Davis, do you know of any other? 

Mr. Davis. I do not. I think this was before the acquisition of 
the Eemington Arms Co. by the du Pont Co. It is certainly not 
our policy to make any campaign contributions, either here or 
abroad. 

Senator Barbour. It is a fact the contribution was made. Mr. 
Chairman. And by the next exhibit, which is a letter from Nicolas 
under date of June 17, it seems that the candidate Morales was not 
elected. 

(The letter referred to was marked " Exhibit No. 977 ", and is 
included in the appendix on page 2623.) 

Senator Barbour (reading) : 

As per my letter of last mail, which you will surely receive together with this 
mail, as it could not be placed in the mails until after the steamer had left, 
you will be advised that the permit situation is the same, maybe worse at 
present because the Army is now after a few generals that took the mountains 
against the actual government. No permits will be issued to anybody while 
peace and tranquility are unstable. 



2542 MUNITIONS INDUSTRY 

Tiie reason for my mail not getting the last boat was that a few minutes after 
it was written, I was induced to hide l)y some friends who knew in advance 
that the order to imprison me had been given by Government ofBcials. On 
Wednesday noon, after communicating with the general, I gave myself up and 
was locked in Columbus place at the Torre del Homenajo, for 48 "hours, after 
which I was released. The reason for my prosecution has been given as " For 
being a friend of Dr. Morales and selling arms and ammunition to the revolu- 
tion." This chai-ge was made by some competitors interested in wiping me out 
of the map and taking any agencies away, both of wiiich things they will be 
unable to do. 

At the latter part of the next paragraph : 

I also informed him that I am no politician and that my business was to 
work and sell everybody that came in power, and that he will find me ready to 
cooperate with him to that end. 

Senator Pope. He bet on the wrong horse that time, did he not ? 

Mr. MoNAGHAN. I would like to sny this, Senator, that he did not 
sell any cartridges or arms of ours to any revolution down there that 
I know of. 

Mr. WoHLFORTH. Did Mr. Morales ever visit your factory in 
Bridgeport? 

Mr, MoNAGHAN. No, sir; I do not think he did. 

Mr. WoHLFORTH. You did not ever sell him direct? 

Mr. MoNAGHAN. No; we did not. 

Senator Barbour. In the next letter offered in evidence we have 
a breach of etiquette, according to the munitions companies' stand- 
ards, apparently. 

(The letter referred to was marked " Exhibit No. 978 ", and is 
included in the appendix on page 2623.) 

Senator Barbour. This letter is dated June 10, 1932, from Mr. 
Monaghan to Mr. Nicolas, and the committee after hearing the previ- 
ous testimony appreciates Mr. Monaghan's concern as expressed in 
the last paragraph. I think that is all we need read, unless Mr. 
Monaghan wants anything else. 

It is rather interesting to learn from your letter that Mr. Naramore is wear- 
ing the uniform of a captain of the United States Army. This, to say the least, 
is a serious breach of etiquette and perhaps a more serious charge could be 
brought. It is our understanding an officer of the Army is not supposed to wear 
the uniform except on active duty or state occasions. Certainly Mr. Naramoi-e 
is not entitled to wear the uniform when i-epresenting the Lyman Gunsight 
Corporation, which was the case when he was in Santa Domingo. 

The Chairman, "What was the occasion for that letter ? 

Mr. Monaghan. I understood Mr. Naramore was down there — I 
do not know the full details of it, he never told me — on some mis- 
sion for the Dominican Republic in the way of reloading cartridges. 
I did not believe, partly selfishly from a business standpoint, and 
also in the interests of the Government, that it was wise for a gov- 
ernment like that to try to reload ammunition, and eventually have 
cartridges that w^ould have excessive breech pressures, and in fact the 
qualities be so poor in every manner that they would not be suitable 
for use. 

The Chairman. Who was Naramore? 

Mr. Monaghan. He was employed l)y the Lyman Gunsight Cor- 
poration. 

The Chairman. Had he been in the service of the Army or the 
Navy? 



MUNITIONS INDUSTRY 2543 

Mr. MoNAGHAN. I do not know. 

The Chairman. How did he come into possession of a uniform of 
a captain of the United States Army ? 

Senator Barbour. That was the question that I had in mind. 

Mr, Monaghan. He is known as Captain Naramore. I believe it 
is Captain Naramore. 

Mr. Beebe. I understand so. 

Senator Clark. Do you happen to know% Mr. Monaghan, whether 
the Department has any regulation or order on the subject of muni- 
tions salesmen wearing Reserve officers' uniforms? 

Mr. Monaghan. What I stated that I have found out about it is 
all incorporated in that paragraph, that I did not believe it was 
proper for him to do so. 

Senator Clark. I do not think it was proper for him to do so, 
either, but so far as I have been able to find, there is no Army regu- 
lation or order of the AVar Department against it. At the last hear- 
ings here in September, we had one instance of a poison-gas concern 
which put out a very elaborate catalog with pictures of all of its 
principal officers in uniform as Reserve officers in the United States 
Army. The president of the company was in the habit of writing 
letters to South American countries offering to establish poison-gas 
plants for them and train a chemical w^arfare service, and of signing 
himself " Lieutenant colonel, U. S. A. Reserves." I was just wonder- 
ing if you have been able to find any regulation against such prac- 
tices as that. 

Senator Barbour. Are you through, Senator? 

Senator Clark. Yes. 

The Chairman. Did you investigate this matter any further? 

Mr. Monaghan. No, sir. 

METHODS of DOING BUSINESS COLOMBIA 

Senator Barbour. Leaving Central American republics for a 
moment, let us turn to South America, Remington sold Colombia 
a large order of ammunition in 1932, and this order was secured 
by your agent Restrepo. We understand that you had what your 
firm termed " unfortunate publicity " in connection with this order. 
Anyway, I will read from your letter to Mr. Roger L. Bracken of 
October 27, 1932. 

I am very glad to confirm the good news Restrepo sent yon. He is certainly 
doing a wonderful job for us and the way he is taking hold of things the last 
few months has simply been a revelation to me. I don't think I ever had a man 
in the foi'eign field who kept us so informed of the complete picture of things 
as they were happening. Yes. indeed, you were due for thanks in having 
trained him and recommended him to us. 

We had some unfortunate publicity in connection with the Colombian order 
and for that reason we are now doing mighty little talking about it, so we ask 
you to hold it confidential. 

(The letter referred to was marked "Exhibit No. 979", and is 
included in the appendix on p. 2624.) 

Senator Barbour. Now, what was the nature of that publicity arid 
what was there that you did not want to become public or otherwise,, 
to do anything or say anything, to help the committee understand 
the paragraph there, which might have a great deal of significance? 



2544 MUNITIONS INDUSTRY 

Mr. MoNAGHAN. We attempted at all times to keep confidential 
any orders that we received from a foreign government, and in some 
manner the New York Times published around that time the in- 
formation that we had received this order from Colombia for car- 
tridges, and there was quite a stir by Colombia about it getting out 
that way. They felt we should have held it more confidential. 

The Chairman. From whom do you keep those things confi- 
dential ? Everyone ? 

Mr. MoNAGHAN. The publicity that they objected to was that it 
was pul\lished in the press. 

The Chairman. How could you keep a thing like that secret? 
Surely the shipping records would show what you were shipping 
down there, wouldn't they? 

Mr. Monaghan. But it was not necessary perhaps for us to make 
the statement. I believe the president of our company made the 
statement that we had received this order. It was not kept confi- 
dential in every respect. The State Department knew of this order. 

Senator Barbour. As a matter of fact, the publicity to which you 
refer was simply ordinary newspaper publicity? 

Mr. Monaghan. Correct. 

Senator Barbour. And for trade reasons or otherwise you do not 
want any newspaper publicity? 

Mr. Monaghan. That is another reason ; we would not want our 
competitors to know about it. 

Senator Barbour. I say, you would not want them to know. 

Mr. Monaghan. No. 

Senator Barbour. I do not want to say the wrong thing, but you 
feel the munitions business should be kept as secret as possible, as far 
as the press is concerned, and the public ? Do you agree with that ? 

Mr. Monaghan. I believe our relations should be that way and the 
business we get should not necessarily be spread in the public press. 

Senator Barbour. I am not sajdng that I agree with you or dis- 
agree with you. 

Mr, Monaghan. That is our feeling. 

Senator Barbour. I just want to get clear the fact that that is the 
sort of thing you refer to. 

Mr. Monaghan. When it gets in the press it hurts not only the 
munitions business of this country, but it hurts all export business 
of this country. 

The Chairman. Is that why there comes from your industry so 
much objection to international plans for providing greater publicity 
for the traffic in arms ? 

Mr. Monaghan. I do not know of anyone in our companj^ who has 
ever objected to publicity in the international sense of ever}^ govern- 
ment participating in it, but that has not become an established fact 
as yet. If and when it does, certainly there would be no objections 
on our part to it, so far as I know. 

Senator Barbour. Here is a letter, Mr. Chairman, from Koger L. 
Bracken, export manager of Miller Falls Company, to George 
Rugge, dated October 25, 1932. 

(The letter referred to was marked " Exhibit No. 980 " and ap- 
pears in full in the text.) 

Senator Barbour. I read the first paragraph : 



MUNITIONS INDUSTRY 2545 

In a letter just received from our good friend, Resti*epo, I understand he has 
sent through to you a contract for $70,000, wliich is the result of a great deal 
of effort on his part and, I understand, at the outlay of some personal funds 
in lobbying work with certain Government departments. 

I will finish the letter : 

As I was responsible, in a sense, for getting your agency for Restrepo, I feel 
a personal satisfaction in getting this report from him. In these difficult days, 
such a conti-act I am confident must be exceedingly welcome and I um excep- 
tionally glad to note this evidence that Rep is apparently cashing in, and I 
hope he will continue to merit your confidence. 

With kindest personal regards, 
Cordially yours. 

Who is Millers Falls Co.? 

Mr. MoNAGHAN. Perhaps I can give you in a minute the whole 
story there. You see, this letter preceded the one you just read that 
I wrote. 

Senator Barbour. I see. 

Mr. MoNAGHAN. Mr. Restrepo had been employed by Millers Falls, 
New York, and then went to Colombia as their representative, and 
ours, and other companies, working on a commission basis. 

Senator Barbour. I see. That is October 25 and this is October 27. 

Mr. MoNAGHAN. Yes. 

The Chairman. Mr. Monaghan, did jou say that this letter of 
October 27, previously read, was an answer to this ? 

Mr. Monaghan. I believe so. Was it not, Senator ? 

Senator Barbour. Yes ; I think it is. 

Mr. Monaghan. This is October 25. The one read just previ- 
ously is the 27th. 

Senator Barbour. The 27th; yes. 

Mr. Monaghan. And it acknowledges the one on the 25th. 

The Chairman. You say nothing in your acknowledgment there 
of the suggestion that was made about Mr. Restrepo having made 
an outlay for lobbying work. Why did you avoid in your acknowl- 
edgment saying anything about that? 

Mr. Monaghan. I knew nothing of what he meant there. I never 
saw the letter to the Millers Falls Co. that he refere to. I never asked 
any questions. 

Senator Barbour. Did he get any money for any such purpose or 
was he reimbursed for anything in that connection? 

Mr. MoNAGi-iAN. On this contract here of the 3,000,000 cartridges 
he received his commission. He did not receive any money for out- 
lay of personal funds in lobby work. I know of none that he did. 

Senator Barbour. He speaks of it here. 

Mr. Monaghan. Well, I don't know what he wrote Bracken. 

Senator Barbour. But you are or were conversant with what he 
said in his letter. This is one of those cases where the letter reads 
perfectly clear, it seems to me, and yet we do not have the same 
understanding of it when we discuss it. 

Mr. Monaghan. No; I did not feel there was anything we owed 
him for any money that he should write to Millers Falls. If there 
was, he should write directly to us. 

Mr. WoHLFORTH. You mean, you did not know anything about 
what he was doing down there ? 

Mr. Monaghan. Mr. Wohlforth, I did know^ some things about 
what he was doing, because I went down there to Colombia in the 



2546 MUNITIONS INDUSTEY 

first part of 1933, and I did not find any evidence there of any lobby- 
ing work on his part. 

The Chairman. There was the highest order of approval of the 
man, of what he was doing down there, wasn't there ? 

Mr. MoNAGHAN. Yes. 

Senator Barbour. Now, go back a little. Here is a letter dated 
September 10, 1932, about the time the order was being negotiated 
and Colombia was in arms against Peru, which I offer for appropri- 
ate marking. 

(The letter referred to was marked " Exhibit No. 981 ",. and is in- 
cluded in the appendix on p. 2625.) 

Senator Barbour. I will read beginning with the third paragraph r 

Coroiiel Curios Padilla, about whom I wrote you some time ago, is a very close- 
friend of the writer as well as his family ; they live next door to my home.. 
This gentleman occupies now a high position in the Colombian Army and be- 
longs to the Estado Mayor del Ejercito. In the strictest confidence Coronel 
Padilla infoiined me the Government wants to buy at the present time 2 million 
cartridges and informed me about the quotation they have from Switzerland of 
$22. These cartridges are intended for part of the army that is being sent to> 
Puerto Leticia on the Amazon River, our frontier with Peru. 

Going to the bottom, to save time : 

However, ths Government is taking the necessary measures in order to pro- 
tect our national integrity. 

Coronel P;idi!la put me in contact with Coronel Adelrao A. Ruiz — ; 

And then, down further — 

Coronel Padilla is giving me his iull support in order to get the business 
and is keeping me confidentially informed of this matter. Indirectly I under- 
stand he wants a comniLssiun. however, I may be wrong and am keeping a 
very diidomatic attitude until further developments. This gentleman also 
informs me he is doing his best in order to induce this Government to buy 
40 million cartridges. 

Then at the wind-up he says : 

Kindly destroy same as this request was made to the writer by the War 
Department. 

Senator Clark. Who is that signed by, Senator? 

Mr. MoxAGHAN. Restrepo. 

Senator Barbour. That is from Restrepo to the Remington Arms 
Co., marked, " Confidential." 

Did this Government official receive any commission? 

Mr. MoNAGHAN. No, sir. 

Senator Barbour. I am w^ondering why he worked for so large 
an order all of a sudden without any hope of compensation. 

Mr. MoNAGHAN. There never transpired any such order Avith us 
for 40 million cartridges. The only order we received of a big 
item at one time was the 3 million, and I saw Colonel Padilla down 
there. I established the fact that he was a next door neighbor and 
friend of Restrepo. I also met Colonel Ruiz. I also was very pleas- 
antly surprised to learn when I got there that Colonel Padilla had 
visited our })lant some years before as a member of a Colombian 
commission that came up here, and he was ajipreciative, as he told 
me, of the courtesies that we showed him at our ])lant. He thought 
well of our ammunition, and being a friend of Restrepo naturally 
he would try to get him the business. 



MUNITIONS INDUSTRY 2547 

Senator Barbour. Well, I must say in this letter there seems to 
be some doubt about the necessity of a special commission, whereas 
in some of the others it has been a very direct statement. 

Going back further again, we have a letter of November 12, 1930, 
from Mr. Monaghan to Mr. Restrepo, which I will ask to have 
marked with the appropriate number. 

(The letter referred to was marked " Exhibit No. 982 " and is 
included in the appendix on p. 2626.) 

Senator Barbour. I read the third from the last paragraph on 
the second page : 

You will probably desire to bring every influence you can to bear to obtain 
this business for us, and as a suggestion we should like to mention that in 
some instances we have found it advisable to diplomatic;! lly ask the Minister 
of War or tlie person who will have the final say in placing the order who he 
would like to have us work witli as our agent. In other words, who is the 
intermediary to see and pay commission f(n- the business. Such commission, 
as we mentioned before, would have to be added to the prices we have given 
you. 

After giving these instructions, would it not seem to follow that 
your agent woidd pay to the Government official placing the order 
part of his commission? 

Mr. Monaghan. That is not the intention of that at all. Restrepo 
had never had any dealings on Government business and we were 
trying to tell him how to operate. The point was we did not want 
to have an agent for military business Avho was i)ersona non grata 
with the Minister of War or the people with whom he was dealing. 

Senator Barbour. You do not think then that the authority mak- 
ing the purchase got any graft? 

Mr. Monaghan. Pardon me? 

Senator Barbour. You do not think then that the authority who 
had the final say as far as the purchasing is concerned got any 
graft ? 

Mr. Monaghan. No, sir ; I do not. 

The Chairman, You had found in other proceedings that is was 
to your advantage to have someone who could stand between you 
and the minister of war, or whoever was buying the supplies, didn't 
you? 

Mr. Monaghan. The thought is there that we do not have enough 
business to econmically have our own salaried representatives in 
every market watching developments as they occur and the possi- 
bility of obtaining business, and we wanted someone who was es- 
tablished in that market operating on a commission basis and who 
could watch the situation and get the business for us, if possible. 

The Chairman. But you were finding it " advisable to diplo- 
matically ask the Minister of War or the person who would have 
the final say in placing the order whom he would like to have us 
work with as our agent." 

Mr. Monaghan. Correct. 

The Chairman. So you were leaving it to the Minister of War 
or to the agent of the Government who was buying the supplies 
to say whom your agent should be. 

Mr. Monaghan. Oh, no ; not that. 

The Chairman. Then what does that mean ? 



2548 MUNITIONS INDUSTET 

Mr. MoNAGHAN. It means that we wanted a man who could deal 
with the Minister of War and who the Minister of War had con- 
fidence in. 

The Chairman, Yes; but you are not even going to suggest who 
that agent might be. You are going to leave it to the Minister of 
War. 

Mr. Monaghan. At that time we did not know the available 
agents on military business in Bogota, Colombia. 

The Chaikman. And the Minister of War did, is that the idea? 

Mr. Monaghan. He would know the people through whom he 
had been purchasing material representing other companies. We 
did not want him to choose some man who was one of the outs 
instead of one of the ins. 

The Chairman. In your letter to Restrepo you go on and say : 

In other words, who is the intermediary to see and pay commission for 
the business V Such commission as we mentioned before would have to be 
added to the prices we have given you. 

Mr. Monaghan. It has gotten to be the general practice on any 
military business to establish the price that the manufacturer has 
to get and then allow the commission agent to add to that his com- 
mission, so as to stop the squabbling that would go on of stating a 
definite price that would include, say, some particular rate of 
commission. 

The Chairman. That is hardly the issue that was involved here, 
though. Here you are trying to ascertain or have ascertained who 
is the intermediary to have and pay a commission for the business, 
an intermediary who is going to be suggested or approved by the 
Minister of War. Now, does it mean just this: That in some in- 
stances 3^ou found a minister of war ready to do business, if and 
when he could have a cut in the commission that accrued to that 
sale, and you are suggesting here to Restrepo that he should find, 
diplomatically, who it was who would stand properly with the 
Minister of War and just what commission should be paid for the 
business, isn't that true ? 

Mr. Monaghan. No, sir; it does not read that way. 

The Chairman. Well, now, tell us what in the world this language 
means, then? I am going to read the entire paragraph: 

You will probably desire to bring every influence you can to bear to obtain 
this business for us. and as a suggestion we should like to mention that in some 
instances we have found it advisable to diplomatically ask the Minister of War 
or the person who will have the final say in placing the order, who he would 
like to have us work with as our agent. In otlier words, who is the inter- 
mediary to see and pay commission for the business. Such commission as we 
mentioned before would have to be added to tlie prices we have given you. 

What does that mean if it does not mean just exactly what it says? 

Mr. Monaghan. Let me explain to you what happened when I 
went down to Colombia myself. Restrepo got this military order 
for us, but we were not quite satisfied with him continuing as a mili- 
tary agent for us. In fact, his contract originally provided for him 
to act on commercial business and not on military. In this transac- 
tion, the way it developed, we did recognize him as the agent in the 
transaction. 

When I got to Bogota and talked with the Minister of War on 
various things, I found him one of the highest type men you could 



MUNITIONS INDUSTRY 2549 

meet anywhere, I found that Restrepo, for example, was not with 
that minister in power the right man to, in my opinion, transact any 
further business for us. I then obtained another agent, Samper, 
who socially was better connected to be able to talk properly with 
the Minister of War there than Restrepo was ; and in saying that I 
want to make very plain there was no thought, in getting Samper, 
that there was any payment beyond Samper to the Minister of War. 
When I made those arrangements with Samper I stated to him the 
base price that we would expect for our cartridges and left it to him 
to add any commission, if he could, to that, and had in mind, of 
course, a reasonable commission, and it has always been such on 
some small business we have obtained. 

The Chairman. Would Restrepo consent to any plan that might 
deprive him of his commission? 

Mr. MoNAGHAN. His contract with us was on commercial ammuni- 
tion and not on military. 

The Chairman. Did he never sell any military ammunition? 

Mr. MoNAGHAN. After that he did not. 

METHODS OF DOING BUSINESS — ARGENTINA 

Senator Barbour. The next exhibit is a letter from the Remington 
agents in Buenos Aires, Palmer & Co., dated August 22, 1933, which 
I will ask to have marked with the appropriate number. 

(The letter referred to was marked " Exhibit No. 983 " and is in- 
cluded in the appendix on p. 2627.) 

Senator Barbour. I would like to begin reading at the bottom of 
page 1. 

Rifle model 33 was formerly priced at $3.30 each. Mr. Werns would like to 
get this price on order 1193. If, however, this is impossible it is understood 
that you will bill at $3.80, which is the price according to list no. 14, that is to 
say, these rifles should be billed, at all events, at the prices prevailing before 
you sent your cable of the 19th, and this applies to the model 34 also. 

Now, this is the interesting part [continues reading] : 

With reference to the packing of the three model 34's in each shipment, please 
put them in boxes such as are used for the model 33, so that the customhouse 
inspector will not notice any difference at all in the boxes when the cases are 
opened. Furthermore, please put the boxes which contain the model 34's right 
in the center of the case, that is the center from side to side and also the center 
from top to bottom. If these instructions are all carefully followed it will be 
very bad luck indeed if the customhouse inspector discovers that there are 
some repeating rifles in this shipment. Mr. "Werns is not only anxious to save 
the additional duties on repeating rifles, but even more he wishes to avoid the 
delays incident to the entry of repeating caliber 22 rifles. Strictly speaking, 
repeating rifles of any caliber should not come into the country at all. 

Then, the last paragraph [reading] : 

In one of the paragraphs above we have been rather explicit about the pack- 
ing of the rifles for Mr. Werns and we have done so because of what happened 
in connection with a recent shipment for Gonzales & Russell. In our letter of 
June 6 we asked you to pack the caliber 44's in the center of the cases, and 
your letter of June 23 indicated that you understood just what was wanted. 
But apparently the man who actually did the packing did not understand it at 
all, because in each case or cases (we do not know at the moment how many 
there were) the small calibers have been put around the outside of the case 
from top to bottom and the 44's have been put in the center of the case also 
from top to bottom. The result is that as soon as the top of the case is lifted. 



2550 MUNITIONS INDUSTRY 

one sees immediately tlie caliber 44's, which is, of course, just what we wanted 
to avoid. The customhouse inspector immediately discovered that the case did 
not contain only small calibers and the large calibers have been seized. 

That is a letter, as I have said, from your agent in Buenos Aires 
to the Remington Arms Co. in Bridgeport, Conn. Now, can you 
explain why any such action as that is necessary? 

Mr. MoNAGHAN. They are not necessary and they are contrary to 
our policy. That was not handled by me. It was one of those rou- 
tine things that came in in the course of business. Those 33 and 34 
rifles are both .22-caliber boys' rifles. The 33 rifle is a single-shot 
.22-caliber rifle. The 34 is a repeating rifle of the same caliber. 

Senator Barbour. Is that bolt action or a pump gun ? 

Mr. MoNAGHAN. Both bolt action. They are the same in everj^ 
respect, except the 33 is a single shot and the 34 is a repeating type. 
The invoices on that transaction were made properly, as 34 repeat- 
ing rifles and not 33 single shot rifles. It is unfortunate that we did 
follow the instructions of the agent in packing the 34 rifles in the 33 
boxes. It is contrary to our policy, as I told you before, and I can 
let you have photostatic copies of the invoices, showing that they 
were billed correctly as 34 repeating rifles. In my experience with 
anything going through a customs, the invoice is the governing 
document rather than the method of packing. 

I am not trying in any way to excuse this. It is wrong. We do 
not do it and we have not been doing it. It is one of those things 
that Avent through in the ordinary course of business without being 
discovered. 

Senator Barbour. That is the only instance you know of or Mr. 
Davis knows of. 

Mr. Davis. Senator, this occurred about a month after I went with 
Remington. It is a slip and I do not condone any such action. 

Mr. WoHLFORTH. I wondcr who did? If you did not know about 
it, Mr. Monaghan, who did know about it? 

Mr. Monaghan. The letter was passed along to the members of 
the department. I don't know whether I saw it in passing or whether 
it was just passed along. Without any instructions of what to do 
with it or anything else, this clerk took it and as it was received by 
him without any advice at all, he thought it was all right to do this. 

Senator Barbour. You do not know whether he got any benefit in 
doing this ? 

Mr. Monaghan. I don't know. 

Mr. WoHLFORTH. You make the model 33 and 34 in larger caliber? 

Mr. Monaghan. No, sir; we do not. The .22 caliber rifle is the 
only caliber rifle that is made up in the 33 and 34 models. 

Mr. WoHLFORTH. What about the 44? 

Mr. Monaghan. The .44 caliber is not made by ujs in any rifle at 
the present time. 

METHODS OF DOING BUSINESS BRAZIL 

Senator Barbour. Now the next letter, dated October 21, 1929, is 
from Mr. Barata, Remington agent in Brazil, which I offer for 
appropriate marking. 

(The document referred to was marked "Exhibit No. 984 " and is 
included in the appendix on p. 2629.) 



MUNITIONS INDUSTRY 2551 

Senator Barbour. It a]ipears that a similar situation existed in 
that country to the one in Mexico. The letter speaks of a Christmas 
list and a monthly payment to a War Department employee. 

Mr. Chairman, the names are so difficult for me to recite, I will 
just simply say that the letter states: 

Last year Mr. Kuhlen distributed Christmas presents amounting to $300 
amongst liis friends. 

Then the names are listed there. 

The amounts spent on each person were as follows — 

Mr. MoNAGHAN. That is 150 milreis. In our figures it roughly 
means 5 or 7 cents to the milrei. 

Senator Barbour. There is a general, a captain, a colonel, a cap- 
tain, a major, a mister, a consul, a colonel, a captain, and a mister, 
and they range all the way from 150, 140, 140, 240, 240, 700, 300, 
150, 240, to 200 milreis apiece. 

Then the letter goes on to say, Mr. Chairman and gentlemen : 

The onlj' person who has been rendering us valuable services just now 
has been Mr. Araujo, of Rio. He has been giving me prompt information 
about the applications from our clients that arrive at the War Department. 
When I give an application to a client for signature, I immediately advise 
Araujo. He is on the lookout for it in Rio and puts it before the minister 
for dispatch as soon as it arrives at the War Department. 

If you are going to decide to discontinue the practice of giving Christmas 
presents to any Government officials from Rio as well as from S. Paulo, I 
think that you should make an exception in the case of Mr. Araujo. A 
Christmas gratification to him in addition to what he gets every month will 
act as an encouragement to his continuing to give us his good services In 
Rio. 

In other words, this party was on your pay roll with a number 
of other army men — at least they are officers of different rank — 
who received — what would 700 milreis amount to? About $400? 

Mr. Davis. $35 or $40. 

Senator Barbour. $35 or $40? 

Mr. MoNAGHAN. $35 or $40; yes. 

Mr. WoHLFORTH. May I state here. Senator, that we examined 
Mr. Barata's expense account and learned Mr. Araujo was receiv- 
ing 330 milreis per month for 14 months, beginning in 1929, and 
that Mr. Florambel received 2 months' payments. Is that correct? 

Mr. MoNAGHAN. That is correct. 

Senator Barbour. And his function was to give you prompt in- 
formation about the applications from clients that arrived at the 
War Department? 

Mr. MoNAGHAN. The function of it? 

Senator Barbour (reading) : 

When I give an application to a client for signature, I immediately advise 
Araujo. He is on the lookout for it in Rio and puts it before the Minister 
for dispatch as soon as it arrives at the War Department. 

Do you think he passed on any of the money? 

Mr, Monaghan. To the best of my knowledge, this Mr. Araujo 
he speaks of is one of the clerks in the War Department. As I 
said, this was all for commercial business. We have a large com- 
mercial business in Brazil. It is subject to the same restrictions 
as we spoke of in some other countries. Import licenses have to be 
obtained for rifle cartridges and shotgun cartridges, and all kinds 

83876— 35— PT 11 11 



2552 MUNITIONS INDUSTRY 

of red tape. After those permits are issued by the War Office, they 
are transmitted by cable or letter to the consul at point of shipment.. 
We have to go through the routine of applying to the consul in 
New York continually to learn if the permits have come in for the 
orders that we have received so as to tie them together. 

After we learn of the permits being in, we have to w^rite a letter 
to the consul outlining the shipments we are going to make against 
the license, present it to the steamship company, before they will 
issue a shipping permit. 

This man in the War Office was essential to us in getting the 
permits properly transmitted to the consul in New York and prop- 
erly itemized. Those items of cartridges are somewhat compli- 
cated in their description, many different items of them, and we felt 
it was worth our while really to pay this tip to the man in the War 
Department to see that it was properly followed. 

Senator Barbour. Unless there are some further questions, that, 
is all on that matter. 

The Chairman. Have you discontinued the practice of making 
Christmas gifts to these people? 

Mr. MoNAGHAN. I believe we have discontinued the Christmas 
gifts. The only man we have been making any payments to, I 
believe Mr. Wohl^orth will verify — having checked into it and ascer- 
tained — was Mr. Aran jo. 

Mr. WoHLFORTH. There is one other man, monthly payments for 2' 
months, Florambel. 

Mr. MoNAGiiAX. I do not know just who he is. but I imagine in the- 
same division of the War Office. 

The Chairman. The general practice of playing Santa Claus has 
been discontinued? 

Mr. Monaghan. There have been very few cases that I know of. 
This is one of them. 

Senator Barbour. Mr. Chairman, I am very glad to go on. I 
have got quite a few left, and I will do it as rapidly as I can. 

(At this point there ensued an informal discussion off the record 
after which the proceedings were resumed as follows:) 

Senator Barbour. I will go along as rapidly as I can, because L 
do not want to hold anybody, witnesses or otherwise. 

Next is a letter dated January 31, 1930. from Rugge to Barata, 
which I offer for appropriate number. 

(The letter referred to was marked "Exhibit No. 985" and is 
included in the appendix on p. 2630.) 

Senator Barbour. I will read the second paragraph of that letter ; 

Your letter dated January 7 confirms the cableg:ram you sent covering your 
visit to the Rio Embassy in conjunction witli tlie embargo and detained ship- 
ments. It is certainly good to note that there continues to be prospects of the 
Minister of War allowing the shipments held up to pass into the hands of the 
consignees and we hope that ere this letter reaches you something has been 
done in this regard. 

Those prospects with the Minister of War must have been fairly 
good, it seems to me, if you have a man in the Brazilian department, 
as you say, giving tips to watch things for you. 

Mr. Monaghan. No, sir; I do not believe from what I know, that 
(hat man would be able to do an3^thing for us in watching a situa- 
tion as mentioned here. This is after the permits have been issued 
and shipments have been made, some trouble may arise J own there, 



MUNITIONS INDUSTRY 2553 

local or temporary, and they immediately embargo everything, even 
the items which are in transit, and hold them in the customs house 
at the port of entry. Then it is a question of the Minister of War 
lifting that embargo, and I am quite sure that this clerk would not 
be of any assistance to us that way. 

Senator Bakbour. Do you have anybody who would be of assist- 
ance to you? 

Mr. MoNAGiiAN. No, sir. 

Senator Barbour. You have no connections in that respect? 

Mr. MoNAGiiAN. No, sir. 

Senator Barbour. Sometime in June 1930, Mr. Barata tried to do 
some business with the Brazilian Government and considered select- 
ing an intermediary. He wrote you on June 23, 1930, a letter, which 
I ask be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 986 " and is 
included in the appendix on p. 2630.) 

Senator Barbour. I will read from the bottom of the first page of 
that exhibit: 

I prel'erred, therefore, 8ome firm that has not ouly been selling to the Gov- 
ernment but that also has enough pull and power to obtain the Government's 
preference to a proposition it offers irrespective of how attractive other propo- 
sitions made by different concerns may look t^ the Government. I found this 
firm, one of the partners of whieli is Dr. tMrmiuo de Mello who is a son-in-law 
of President Washington Luiz. There are two other partners who are very 
well known in Government circles. The name of one of them is Dr. Max 
Leitao with whom I instituted friendship and dined together a couple of 
times. 

Now it was about this time, or shortly thereafter, that the Bra- 
zilian revolution of 1930 broke out, and one of the issues that brought 
about that uprising was the wholesale graft in the regime in power 
at the time. 

On page 2 of this same letter I would like to read a passage which 
reads in part as follows : 

He told me furthermore and confidentially that the business for the Euro- 
pean factories was obtained through intervention by their respective ambas- 
sadors. That the Italian Ambassador upon knowing what the price quoted 
by Nobel was went personally to the President of the Republic and obtained 
his consent to cutting down the share given to the British factory and giving 
a part of the order to the Italian factory. He also confirmed that the Ameri- 
can factory's bid was turned down. 

Can you tell us, any of you gentlemen — Mr. Monaghan particu- 
larly, or Mr. Beebe — if ambassadors act in this way as salesmen for 
munitions. 

Mr. Beebe. We have no positive information on the subject, but 
our agents at times have intimated that their governments assisted 
them in making sales. Just in what way. I do not know. 

Senator Barbour. Do you know anything about it, Mr. Mon- 
aghan ? 

Mr. Monaghax. To the same effect as Mr. Beebe has just said. 
That is all. 

Senator Barbour. On page 3 of this letter your agent Barata seems 
to think that Souza Sampaio & Cia., the firm which was selected 
to act as intermediary in his proposed business, is even more influ- 
ential than ambassadors, because in the third paragraph on the third 
page he says : 



2554 MUNITIONS INDUSTRY 

Witli the connections I have made I can assure you that no Government 
business shall be given in the future to any of our European competitors 
without our being given a break. I dare say that a firm as influential with the 
Government as Souze Sampaio & Cia., Ltda., can shut out any competitors 
having even Ambassadors as intermediaries. 

It was a pretty good connection, in other words, he was sug- 
gesting ? 

Mr. MoNAGHAN. I would say he was bragging, in any event, 
because he has never been successful in getting any military busi- 
ness for us in Brazil. 

Senator Barbour. He never got any business for you, Mr. 
Monaghan, and he never appointed any agent? 

Mr. Monaghan. Not at that time. It was only recently we got 
an agent to act on military business. By the way, I want to modify 
that a bit by saying in 1933, I believe it was, we did have a sale to 
the Federal Govermnent at Rio, through an agent we appointed on 
.50 caliber cartridges at that time, and it was not any of these firms 
he mentioned. 

Senator Barbour. With this company's position of force or power 
with the Government, why do you suppose that was the case? Do 
you suppose there was any graft there between them and the Gov- 
ernment in turn ? 

Mr. Monaghan. I do not know. 

Senator Barbour. I am not trying to say that you are a party to 
that, but I am trying honestly to find out whether there are link- 
ujis Avhich are detrimental and harmful, entirely aside from the 
problem which confronts anybody who has to sell munitions and 
I am convinced that there is a lot of graft down there, from the 
study which I have made since I have been on the committee. It 
is pretty evident. I think everybody feels that is really so. It is 
not that I am blaming the American manufacturer alone for that 
situation. I think he has got a situation he has got to face or keep 
out of the market, but we want to try and have the whole picture 
in the end here, gentlemen. That is my point of view on it, and 
anything you can do to help us on it, is just what we are after. 

Xow I Avould like to read from a letter of Mr. Monoghan to Mr. 
Barata, under date of August 8, 1930, which I offer for appropriate 
number. 

(The letter referred to was marked "Exhibit No. 987" and is 
included in the appendix on p. 2632.) 

Senator Barbour. That reads in part : 

We absolutely agree with you that in government business, the prime 
essential is to liave the right connection ; otherwise price, quality, or other 
considerations are of no avail. 

Fiuthermore, it is necessary to nurse these contracts from time to time ; 
but the extent of the time and money to be employed has to be gaged by 
the potentiiil business that might ensue. Before long you will no doubt know 
more on this score and in particular the prices we would have to quote in 
Older to obtain the business. Then we can tell if we can meet competition. 

Now you say yourself to your man in Brazil that price, quality, 
and other considerations are of no avail, and that it is essential to 
have the right connection. Now is that the proposition? Do you 
mean to say, if you can get the right indi"\ddual, that he, without 
any gratuities, or anything of the kind, is the fellow who can get 
the business? 



MUNITIONS INDUSTRY 2555 

Mr. MoNAGHAN. Oh, no. First off, in business dealings I think 
the most important factor is that of confidence in the man with wliom 
you are dealing. 

Senator Barbour. That is true. 

Mr. MoNAGHAN. And it follows from that that he won't liave any 
chance at all, they won't listen to him as to price, quality or any 
of those things, unless he is a man in whom you know 30U can have 
confidence for fulfillment of anything he enters into. 

The second part of that is again reminding him to keep away 
from these rainbows. I have had a number of occasions with Barata- 
chasing rainbows down there, and I wanted to keep him in the com- 
mercial business, which is the big part of our business, and wanted 
him to put his time on that instead of playing all around with these 
things. 

Senator Barbour. Mr. Chairman, we will go to the next exhibit, 
in which you, Mr. Monaghan — I think it is; the name is cut off at 
the bottom, but I am quite sure it is — give a little sales talk. Of 
course, at that time you did not know that the E. I. du Pont de 
Nemours Co. would interest themselves in you. I offer that letter 
for appropriate number. 

(The letter referred to was marked "Exhibit No. 988" and is 
included in the appendix on page 2633.) 

Senator Barbour. However, I will read some of that letter 
[reading] : 

We have to hui'i'.v in order to catch today's mail. The latest news we liave 
this moming is that the Brazilian Government resigned and the new people 
are in power. Wliat the developments are within the next few days remains 
to 'oe seen and no doubt we will have your cable advices as to prospects for 
business. 

Of course, the change in government is no absolute reason to our way of 
rhinking that there will be no further inquiries for Government supplies, but 
rather we are inclined to think the new Government will consider it necessary 
to replenish their stocks of cartridges and perhaps even build up the stocks 
beyond the point at which they were before the trouble. Of course, we are 
wondering what your status will be with the new Government, that is to say, 
if you will be accepted as a friend in view of your negotiations for attempting 
ro sell those formerly in power and we await with interest your advices on 
this point. 

Then, to skip to page 3, the letter continues [reading] : 

In all these negotiations for Government business, you as well as ourselves 
have been working up toward the top instead of the way some big companies 
do — from the top down. In other words, you find what you believe is a good 
intermediary and then try to reach the Minister of War or whoever else has 
authority in placing orders. The du Pont Co. makes it a practice of finding 
out who is the right man to work with, the Minister of War, the head of the 
Ordnance Department, or whoever else it may be, and then asks that authori- 
tative person who it is believed would be a good agent to apiK)int for negotia- 
tions. But again we want to say no details are to be arranged by you with 
an intermediary without our authority after we have received complete dfta 
from you. 

Now, that you and the du Pont Co. are one, you can sort of work 
both ends against the middle, because you begin at the bottom to 
start working up, and you report that they begin at the top and work 
down. 

Mr. Monaghan. If you will read the whole letter and tie it in 
with the letter before of Barata and the numerous people he is talk- 
ing about, who never reach any conclusion, " that man is good to 
work with ", " this man is good to work with ", " the other knows 



2556 MUNITIONS INDUSTRY 

how to go about the business; he is acceptable to the Government." 
I am trying to tell him how to stop this playing around so much and 
get a person who was acceptable to the Government. 

Senator Barbour. The interesting thing, as I read it — there is a 
lot in the letter here which I certainly am not avoiding because I feel 
it would help you if it were read — that certainly is not so. 

Mr. MoNAGHAN. This letter is giving him a calling down for the 
way he conducted his business, or attempted to conduct it, and got 
nowhere. 

Senator Barbour. Do you want all of it read? 

The Chairman, It will all be in the record. 

Mr. Monaghan. That is enough for me. 

Senator Barbour. I am not trying to avoid it, but it is a long let- 
ter and a lot of people want to get home. It brings out the point, 
however, that you made, very clearly : This man that you wrote to 
is finding a man at the bottom and working up from him, and then 
you go on and tell him what you feel is the du Pont procedure, 
which is the reverse, 

Mr. Monaghan. If you get the right man that way, he can be of 
much assistance to the War Department or Ordnance Department 
in the way of ballistics, which many of these nations do not have. 

Senator Barbour. The next letter is dated November 30, 1932, 
W'hich I feel is of considerable interest to the committee, and I 
would like to read the first two paragraphs. This is a private and 
confidential letter from you, Mr. Monaghan, to your man, Barata, 
that we have been talking about. 

I will offer it for appropriate number. 

(The letter referred to was marked " Exhibit No. 989 " and is in- 
cluded in the appendix on p. 2635.) 

Senator Barbour. I read : 

Since we received your letter saying the Government was going to close up 
the local ammunition factory in Sao Paulo, we have given a lot of thought to 
that situation, for we recognize it is a mighty important one to our interests. 
Wliat we are going to say to you in this letter we want treated strictly confi- 
dential. 

In the first place we want to tell you that nearly all the companies in this 
country and Europe wh.o would be benefited by having the local factory out of 
the way, agreed some time ago not to enter bids with Mr. Matarazzo for his 
company, for we all felt by standing off the factory would eventually fail. This 
is the reason we never turned a sympathetic ear to any of the overtures made 
through you for us to become interested in the purchase of the company. 

Now, when did the American munitions companies agree that this 
Brazilian munitions factory ^vould fail? Do you know when the 
agreement was arrived at? 

Mr. Monaghan, I never knew of any agreement directly with us 
on that proposition. I heard in Europe in 1929 that "Winchester had 
been apj^roached on the purchase of that factory. I never questioned 
Winchester at any time after that whether they were or not. But I 
understood the}^ were not going to do anything about it. In my 
opinion, at that time, at the time of that letter, all the ammunition 
companies were in such financial condition I did not believe they 
would be interested in paying any big money to purchase that 
factory there. 

Senator Barbour. Then you were not really quite right in telling 
him. Of wliat he would infer, as I would, in reading the letter, that 



MUNITIONS INDUSTRY 2557 

you knew that all the manufacturers were probably standin<»: off so 
that there would not be any bid and the thin^T would flop ? 

Mr. MoNAGHAN. That is not the true picture; no, sir. 

Senator Barbour. I will read paragraph 4, if I may [reading] : 

It might be that some incentive could be given tlie Government official who 
was responsible for the scrapping of the plant to see that he went througli with 
these plans. With all the ammunition factories practically broke nowadaj's, 
not much could be done in the way of paying worthwhile money, but we are 
thinking the result possibly could be accomplished if handled diplomatically, 
at a vei-y small cost. 

Now, is this a suggestion that your agent, or anyone, trj" to pro- 
hibit anybody or try to corrupt anybody ? 

Mr. Monaghan. No, sir; that letter was written by me without 
anyone in the company knowing that I wrote it. 

Later on — and I can give you the copies if you desire — I asked 
Barata if he had received it, and he said he never received the letter. 
He said, " Send me a copy of it." 

I said, " No, too much time has elapsed now. Just forget it." 

So that this letter, so far as I know, never reached Barata. 

Mr. WoiiLFORTH. Have you that letter with you? 

Mr. Monaghan. Yes, sir. Do you care to have it? 

Mr. WoHLFORTH. I would like to see it, if you have it. 

Senator Barbour. I will read it on to the finish, Mr. Chairman 
[reading] : 

What we want you to do is to watch this situation from every angle and add 
any propaganda you can with the proper Government officials to the end that 
the plant be scrapped. 

This is a rather sketchy plan we are presenting to you and you want to be 
careful you do not make any false moves. As a matter of fact you should do 
nothing where you would appear as a principal. First and foremost we want 
every bit of information from you as to what transpires and is intended in 
connection with this local plant. Your suggestions as to what could be done in 
furthering our interests in connection with this factory will be anxiously 
awaited by return air mail. 

Mr. Monaghan. I had a letter from Barata prior to writing this 
letter, saying that it was the thought — in fact, a good deal more 
than the thought — of the central government at Rio de Janeiro to 
close this Matarazzo ammunition plant near Sao Paulo because in 
the revolution, prior to this letter, the Matarazzo plant had sup- 
plied ammunition to the rebels at Sao Paulo. They made both 
types, both the military and the commercial. We felt that if they 
moved the military equipment to the Federal ammunition plant at 
Rio de Janeiro they would not have any interest in the equipment 
for the commercial ammunition. 

Senator Barbour. I see. 

Now, Mr. Chairman, I do not want to add anything in conclusion 
of my own, because I do not know that it is necessary or appropriate, 
but it seems to me that this whole story here which has to do with 
many instances which seem alike to me. although they may be de- 
j^cribed differently, are simply cases of where the American manu- 
facturer is helpless in the situation. He has got to indulge in these 
practices or he does not get any business. 

And, by the same token, the purchaser is interested first in it 
because of what he selfishly makes out of it. By the same token, 
again, it seems to me that the greater his purchases can be, the more 



2558 MUNITIONS INDUSTEY 

graft he makes, when we come back to the stimulation of munitions 
that has been mentioned time after time, and the part that the 
receiving of graft plays in that. 

I look upon it as being a problem in the situation more than what 
he is selling. 

Mr. MoNAGHAN. May I say, Senator, that I have traveled in some 
Latin American countries, some little time in China, and many other 
countries, and never in any of my business experience have I paid 
one cent of graft. 

The Chairman. Why do you countenance it on the part of any- 
one representing you? 

Mr. Monaghan. We do not. 

The Chairman. You have. 

Mr. Monaghan. Well — I do not know of any case. 

The Chairman. How? 

Mr. Monaghan. I do not know of any case. 

The Chairman. You have had reports made to you of what it was 
necessary to do. You have reason to know that those things were 
being done by your agents, have you not? 

Mr. Monaghan. No, sir. 

The Chairman. What prompted you to make the contribution to 
the campaign fund? 

Mr. Monaghan. I explained to you, and the record shows, it was 
more of a personal matter of friendship with Dr. Morales. 

The Chairman. In a letter of October 4, 1930, to Mr. Barata in 
Brazil, upon what authority did you undertake to declare as to what 
the policy of the du Pouts was in their sales of military supplies, 
Mr. Monaghan? 

Mr. Monaghan. Of working from the top, so as to find out the 
man who was persona grata to the authority, you mean? 

The Chairman. Yes. Your exact remark was this : 

The du Pont Co. makes it a practice of finding out wlio is the right man to 
work with, the Minister of War, the head of tlie Ordnance Department, or who- 
ever else it may be, and tlien asks that authoritative person who it believes 
would be a good agent to appoint for negotiations. 

Mr. Monaghan. I had known for a number of years various 
men in the du Pont organization, and naturally talked things over 
with them of mutual interest. I do not recall who in particular 
would be the author of such an idea. 

Senator Barbour. I might just mention, Mr. Chairman, if I may, 
that these exhibits that I presented have not all been numbered, but 
should be before another set comes into existence. 

The Chairman. The reporter will take care of that. 

The committee will recess until 10 o'clock tomorrow morning. 

(Thereupon, at 5 p.m., the hearing adjourned until tomorrow, 
Tuesday, Dec. 11, 1934, at 10 a.m.) 

This concludes that part of the testimony known as " Part XL 
Chemical Preparations Following the War and Interchange of 
Military Information." At this point the committee took up the 
question of " Relationship of the Munitions Makers to the Govern- 
ment and International Connections in the Chemical Industry." 
(See Part XII.) 



APPENDIX 

Exhibit No. 909 

[File : Publicity bureau. C. K. Weston. European correspondence! 

London, December JO, 1920. 
Mr. Charles A. Meiade. 

Vice President, E. I. du Pont dc 'Nemours d Co., 

Wilmington, Del., V. S. A. 

Dear Mr. Meade : My mission seems to be going fairly well ; I have met a 
number of our American newspaper correspondents, and have, I think, suc- 
ceeded in selling them our idea. One cannctt tell of course, until the results 
begin to appear in American newspapers. 

I am sending you clippings giving details of the debate in the House of 
Commons, along with other matter which I think is interesting. 

It appears that the vote does not end the matter for the bill goes auto- 
matically to a committee which, as far as I can understand, will discuss such 
changes as it thinks should be submitted on final passage. My understanding 
is that there will be no changes, and that the action on second reading is, 
in the natural course of parliamentary procedure, likely to stand throughout. 
This committee meets again on Monday, and I suppose will then finish up its 
work. 

I believe that the great strong point to be brought out by our friends in the 
United States Senate is, that with Japan, France, and England all protecting 
their dye industries, the United States is left as the only hojpe for the Ger- 
mans. They will, without doubt, concentrate over there and give us a par- 
ticularly hard fight. 

You will notice in the report of the debate and in the other clippings that 
the British bill had exactly the same kind of opposition as that with which 
we had to contend at Washington. The minority of the consumers raised the 
same cry about poor quality and insuflScient quantity. Their statements of 
so-called facts were as inaccurate as those made by the opposition to us. 

I shall remain here next week to see this bill through and to continue my 
efforts to stoke up the interest of those whom I came to see. 

The correspondents in Paris report to the offices here so it is apparent that 
if the men in London get the right angle it will be wonderfully helpful. 

In Paris I shall devote my energy very largely to bringing the correspondents 
in contact more closely with the American sources of news, at the same time 
trying to give them the proper angle so that they will appreciate the importance 
of the news. 

It is difficult to make a definite report on what I think I have accomplished 
here, but my feeling is that the work is well worth wiiile. 

If things continue to move along well I shall be able to leave here early in 
January. I hope to return on the Imperator which I think sails January 8. 

Will you advise Byrne of the contents of this letter, and pass along to him 
some of the clippings, so that lie too may keep informed and be ready to take 
such action as suggests itself from your end. 

Very truly yours. (S) C. K. Weston. 

W/DGO. 



Exhibit No. 910 

[File : Publicity bureau. C. K. Weston, European correspondence] 
[Draft] 

Wilmington, Del., Dec. 3, 1920. 
* Weston. 

Understand Signor Tittoni has raised League of Nations interest in national 
monopolies and their danger to world peace (Stop) Urge attention of 

* Pencil markings. 2559 



2560 MUNITIONS INDUSTEY 

League be drawn to clanger of I'esumption of German organic chemical ;infl 
dye monopoly (Stop) This is l»y far the most menacing and deserves im- 
mediate attention of League who might welcome American support on a 
chemical disarmament measure (Stop) You cannot destroy organic chemi- 
cal factories having peace functions but must ensure world redistribution 
*of organic chemical producing capacity by support of national protective 
legislation (Stop) This is a critical measure on which all disarmament 
schemes must stand or fall (Stop) Disaimament is a farce while Germany 
retains organic chemical monopolies (Stop) You can get full details in 
disarmament chapter or Major Lefebure's book now held by Whetmore, British 
Dyestuffs Corporation, Imperial House, Kingsway. He *has been cabled to 
confer (Stop) Suggest consult Lord Moulton on best means to obtain early 
consideration of this question by League (Slop) 



Exhibit No. 911 

[Moulton file] 

MEMORANDUM BY MAJOR LEFEBURE, DATED LONDON, FEBRUARY 1, 1921 

The chief points which I thinli we should both bear in mind in connection 
with dye legislation and disarmament questions are the following: 

I. Dye legislation promotes the redistribution of organic chemical capacity 
throughout the world. This move from Germany monopoly toward world 
equilibrium will not, as some of your press stated, perpetuate chemical warfare. 
It will remove the biggest incentive for its use ; that is, the monopoly of pro- 
duction. 

You will find the whole case stated in my memorandum which has been pub- 
lished in the Chemical and Metallurgical Engineering Journal for January 5th, 
1921. I left this statement as a straight uncorrected dictation with General 
Fries and Mr. Poucher, and apparently they have thought fit to give it publicity. 

II. Everything possible should be done in America to include in the treaty 
or in official disarmament discussions the conditions that the relevant clauses 
of the Treasy of Versailles shall be applied to that huge arsenal, the I. G. 

These clauses are as follows; 

((■) Article 168. 

This demands limitation of munitions and war material production to 
factories or works approved by the Allied and Associated powers. 

Numbers of plants in the German dye combine were either converted, adapted, 
or actually built for the production of poison gases or nitric acid for explosives. 
Article 168 gives us the right to restrict the number of these plants. As the 
use of poison gases in Germany is forl)idden by the treaty, Germany should 
not be allowed to retain any of those plants which were used for poison-gas 
production. There can be no other possible way of reading article 168 as far 
as the plants actually built for poison gases and war nitric acid are concerned. 
Article 168 refers to any war material whatever, an unqualified statement. 

(ii) Article 169. 

This requires that any special plant intended for the manufacture of war 
material, except such as may be recognized as necessary for equipping the 
authorized strength of the German Army, must be surrendered to be destroyed 
or rendered useless. 

In addition to certain specific poison gas plants a large proportion of the 
Haber process capacity should logically, be dealt with under this article of the 
treaty. 

What are the numerical facts of the ease? 

About four thousand tons per luonth of poison gas material were produced 
during 1918 by the German dye combine in converted or expanded dye plants. 
This enormous output represented about one-third of the pre-war German dye 
capacity, and covers a number of new plants built specifically for poison gas. 
To leave them untouched while article 169 exists is to admit that these plants 
represent authorized equipment for the German Army ! This is the anomalous 
but logical conclusion of the present situation. 

With regard to the Haber process, Germany has capacity of at least two 
hundred thousand tons of nitrogen in excess of all her pre-war needs. She 
either requires this for: — 

(ft) World monopoly. 



* Pencil markings. 



MUNITIONS INDUSTRY 2561 

If she acliieves this we are leaving her witli a criminal advantage in eventual 
explosives production, seeing that the dye and nitrating plants of the I. G. are 
all literally within a stone's throw of Oppan and Mersebourg. Germany has 
a complete and mighty arsenal left untouched by the Allies. 

(&) Actually contemplated militarif ^^e. 

Tlie Governnient support afforded to the Haber developments is consistent 
with the military use of the plants. Whatever its alternative peace time uses, 
this enormous excess Haber capacity is an exceedingly weighty military factor 
far in excess in quantity to the standard laid down in Article 169. 

(iii) Article 171. 

This forbids the manufactui'e of asphyxiating gases and analogous materials 
in Germany. 

The point arises as to the value of this denial to Germany of the right to- 
manufacture such substances. Obviously, in case of war, the country pos- 
sessing these factories and willing to use them for such purposes, could do so. 

But let us take the case of Germany. It may well be there, however, that 
the possibility of rapidly converting, unhampered forty thousand tons per annum 
of producing capacity (a low estimate of the German poison gas production by 
the I.G.) for the use of vital war chemicals would be an important factor in 
her decision to make war. 

It may he that by taking certain measures in peace regarding these potential 
arsenals, production of poison gases in war would be prevented because war 
itself would be prevented, and the need to produce would not arise. This is not 
in the least an unreasonable conclusion. Chemical warfare was rapidly develop- 
ing to meet the large number of technical and military situations which had 
formerly been met by the use of explosives. The League and treaty propose to 
limit the possibility to use explosives by actually destroying and limiting ex- 
plosives plants in Germany. It is therefore a fair conclusion that the unfettered 
use of this enormous capacity for filling shell and other devices with chemicals, 
alternative to explosives, the latter not being available, would be a serious factor 
in a decision of war. This advantage would be comparable with the possession 
of a large, rapidly mobilizable force or a large number of guns, or a fleet. 

(The I. G. itself produced 15.000 tons of explosives per month and can produce 
much more, however.) 

It is therefore important to consider what steps could be taken in peace to 
supervise these German plants in such a way that any undiscovered attempt to 
produce chemical munitions would be impossible ; in other words, to neutralize 
this inducement for war. In our opinion article 171 is almost valueless unless 
some control and inspection of these plants is arranged to ensure its execution. 
However unpalatable to Germany, such action is merely a logical conclusion of 
rheir abuse of the possession of this organic chemical world monopolv. 

(iv) Article 172. 

This obliges Germany to disclose the nature and mode of manufacture of all 
explosives, toxic substances, or other like chemical preparations used by them in 
war or prepared by them for the purpose of being so used. 

It may not be obvious, but it is nevertheless true that the full disclosure de- 
manded above would function as a measure of prohibition against the use of 
poison gas by Germany in any future war. A ]ioint which cannot be too strongly 
emphasized is the following : War chemicals lose a large chance of decisive use 
liy an enemy if one is aware of their nature and mode of preparation. Knowl- 
edge of these facts at once enables us to develop protective measures. This is 
the supreme lesson of the chemical move and counter move of the last war. 

Has Germany disclosed these secrets? It does not appear so. An analysis of 
her production of poison gas and use against us on the front reveals the signifi- 
cant fact that all the important discoveries and research decisions were made 
in time for production to commence in 1915, 1916, and in a few cases l9l7. This 
implies that a vast amount of research whose results never appeared on the 
front must have occurred subsequent to this, and these discoveries and informa- 
tion are infinitely more significant if left unexposed. 

We are not yet even in possession of full information on the manufacture of 
tliose substances whose plants the " Hartley Mission '" identified in 1919. vriiat 
detailed knowledge have we, for example, on tiie German production of carbon 
monoxide for phosgene, yet allied manufacturers stumbled at this and similar 
problems. Phosgene production was removed to Mersebourg, and the plant there 
must have embodied many improvements which we should know. 

We must demand the full execution of this article of the treaty. 



2562 MUNITIONS INDUSTRY 

Exhibit No. 912 

l[File, publicity bureau, Thomas R. Sbipp — Correspondence dyes. No date from 1921 filo i 

Memorandum 

Our present and proposed activities. 

For Mr. Atherton. 
From Mr. Braddock. 

I. Written publicity : 

In conducting this we have recourse to two media : 

A. Tliomas R. Sliipp & Company Iiandles news material and illustrated 

mats from Washington ; specializes on the country press and 
newspapers in smaller cities. 

B. Bronson Batchelor, Inc., works along the following lines : 

1. Special articles in New York daily and Sunday newspapers. 

2. Editorials to 1,025 newspapers, one in each city. 

3. Illustrated mats to selected newspapers, varying from 400 to 

1,025, according to circumstances. 

4. Special articles supplied through syndicates — illustriation : 

Herty full-page articles to 40 leading Sunday newspapers. 

5. Member of his staft" supplying special articles and telegraphic 

items re Finance Committee hearings, disarmament confer- 
ence, administration backing, etc. 

6. Supplies newspaper editors with statistical facts bearing on 

the relationship of the organic chemical industry to the 
public. 

7. Publishes Current Opinion, a 4-page newspaper comprised 

entirely of editorials upon the necessity of establishing a 
selective embargo for the protection of the American dyes 
industry. 

8. Conducts the Institute of American Business, which mails 

Current Opinion and other material to Senators, Con- 
gressmen, and selected editors. 

9. By daily conference learns latest situation and gives benefit of 

his judgment based on intimate knowledge of what we are 
doing. 

II. Speakers' publicity : Letters were sent to chambers of commerce, Rotary 

clubs, Kiwanis clubs, National and State conventions offering a speaker 
on this subject. Somewhat over 200 requests for a speaker were received. 
Using virtually all the time of — 

Dr. Charles T. Baylis, described on attached folder. 
Hon. Gilbert A. Currie, former Congressman. 

Dr. Elwood Hendrick, three times president of the Chemists Club. 
Together with frequent engagements for — 

Dr. William H. Hale Dr. William H. Hunter 

Dr. J. Merritt Matthews Dr. Charles S. Parsons 

Prof. H. G. Byers Dr. Charles E. Coates 

Prof. H. E. Simmons C. F. Williamson 

Dr. W. Lee Lewis F. G. Moses 

A. B. Carter Prof. H. K. Benson 

Dr. J. Howard Matthews 

We pay fee and expenses, varying from $40 to $100 each. Concentrating on 
Indiana, Ohio, Illinois, Pennsylvania, Iowa, New York, Wisconsin, with 
scattered engagements throughout the other States. Mr. Gleuzing and 
Mr. Schmitz, together with a stenographer and typist, are devoting entire 
time and a great deal of overtime to handling this speakers' bureau. 

III. Personal interviews : 

A. Virtually all of Mr. Abbott's time is required calling on big men like 

Mr. Firestone, Mr. Edison, Mr. Schwab, Mr. O'Reilly, Mr. Brisbane, 
and other leading business men. 

B. Mr. Weddell similai'ly is making and maintaining numerous con- 

tacts, such as the Associated Advertising Clubs, selected firms which 
sell materials and do business with some of the larger companies 
in the industry, etc. 
C. Mrs. Emmons is engaged in building up contacts with the women's 
organizations, particularly in the 7 States enumerated in a pre- 
ceeding paragraph. 



MUNITIONS INDUSTRY 



2563 



The object of all these contacts is : 

1. To educate individuals and organizations concerned with respect to 

the necessity of the dye embargo. 

2. To get them to send resolutions and personal letters to their Sena- 

tors and Congressmen. 

3. To get them to furnish interviews for newspapers, etc., etc. 

Note. — There are other activities arising daily which cannot be fore- 
seen and therefore cannot be enumerated in this outline. For illustration : 
This morning Stuart Godwin called on me to say that if we can supply 
Frederick J. Haskin, of Washington, who is the accredited representative 
of loO daily newspapers, some of them the largest in the United States, 
with 100,000 leaflets on our subject, Mr. Haskin will be glad to advertise 
the leaflet in his 130 newspapers and to mail these leaflets for us, mak- 
ing no charge either for the advertising, for the mailing, nor for any 
other expense connected with this. All we have to do is supply the leaflets 
and he will do the rest. 

Again, the Dye & Chemical Section of the "War Trade Board has sent 
an innocent-looking letter to certain dye manufacturers, telling about an 
application for an importation license by a certain mill. This kind of 
innocent-looking, dangerous activity must be handled. 

In view of the above, you will understand that this memorandum 
attempts to be only a skeleton outline of some of our more important 
activities. 

(S) Harold Braddock. 

Sept. 12, 1921. Harold Braddock. 





Exhibit No. 913 




American Dyes Institute: 




Chemical Alliance Inc.: 




1918. 


. $2,400.00 


1918 


550. 00 


1919 


. 13, 000. 00 


1919 


25.00 


1920 

1921 -. 


21 773 49 






10,100.00 


Total. 


575.00 


1922 


8, 167.70 






1923 


1,147.21 


T. R. Shipp Service: 

1922 


2, 500. 00 






Total 


56,588.40 










Total 


2, 500. 00 






Synthetic Organic Chemical Manufac- 
turers Association: 










Whaley-Eaton Service: 




1921 


250.00 


1919 


73.00 


1922 


14,050.00 


1920 


238. 15 


1923 


21, 966. 67 


1921 


238.50 


1924 


14, 687. 00 


1922 


485. 46 


1925 -- 


9,934.50 


1923 . 


305.00 






1924 


391.60 






Total... 


60, 888. 17 


1925 

Total 


343.00 


Manufacturing Chemists Association: 




2, 074. 61 


1918 

1919 


75.00 
384. 57 






John McNeeley: 




1920 


375. 00 


1921 


3, 033. 00 


1921 


375. 00 






1922... 


78.00 


Total. -_ 


3, 033. 00 


1923 


75 00 






1924 


375.00 


Benjamin Raleigh: 




1925 


75.00 


1921 

Total 

Sporting Arms & Ammunition Manu- 


100. 00. 


Total 


1,812.57 


100.00! 


Chemical Foundation: 






1920 


9, 570. 41 


facturers Association: 




1921 


16, 698. 72 


1926 


933. 33 


1922 


46, 986. 48 


1927 


5, 236. 02 


1923 


64,249.17 


1928 


5,000.04 


1924 


33, 454. 88 


1929 


3, 672. 45. 


1925 


81,503.23 


1930 


5, 158. 24. 






1931 . 


3, 263. 69 


Total 


252, 462. 89 


1932 


2, 713. 24 








1,316.72 
2, 298. 96 


American Chemical Society: 




1934 to date 11/20 


1918 


66.00 






1919. 


436.00 


Total 


29,592.69 


1920 


500.36 






1921 


226. 78 






1922 


1,068.80 






1923... 


492. 49 






1924 


1,409.64 






1925 


330.00 






Total 


4, 530. 07 





2564 MUNITIONS INDUSTRY 

Exhibit No. 914 
[E^le, Publicity Bureau, Lobby Inquiry — Legislation Dyes] 

* Ir^nee du Pont 
From P. S. du Pont. 

(Address given by Dr. Wm. J. Hale, of the Dow Chemical Company, Midland, 
-Michigan, before the Flint Rotary Club, Friday, December 16, 1921.) 

THE WAR AFTEK THE WAR 

Not until the middle of tlie nineteenth century do we find any real scientific 
advances in the field of industry. The Bessemer process for the production of 
steel inaugurated this period in the inorganic world ; simultaneously Perkin's 
synthesis of a natural dye, mauve, marked the advent of synthetic dyes in the 
organic \\orld. Discovery after discovery, invention after invention, aided and 
stimulated the progress of man thereafter. The Anglo-Saxon directed his atten- 
tion more particularly to the inorganic, whereas the Teuton devoted himself 
primarily to the organic, though in no sense relinquishing the other. Scientific 
progress was everywhere apparent, but the Germans were the only scientists to 
sense the importance of great detail. In this no more favored field can be 
conceived than organic chemistry, and thus by 1914 upwards of ten thousand 
synthetic dyes and one thousand synthetic medicinals had fallen to the credit of 
German endeavor. The Germans alone grasped the message of the future. It 
was verily the voice of the ages, reverberating through aeons of civilization : 
•• Chemistry is the industry of tlie terrestrial sphere — the only industry given to 
man. Inorganic chemistry is but a small part thereof, comprising less than the 
one one-hundredth part of the organic domain, and the latter is doubling itself 
every ten years. Organic chemistry dominates every man, woman, and child, 
every nation." Is it any wonder that the Germans devoted themselves with all 
vigor to the study of chemistry and especially to organic chemistry? Suffice it 
to say that in actual scientific attainments Germany far surpassed all the other 
civilized nations of the day. So far ahead was she that we seemed as mere 
pygmies in comparison. Though we called the Germans barbarians, it was we 
who were actually the barbarians in science, though in matters of business and 
morals " barbaric " is far too mild a term to describe German perversions. 

In the fall of 1913 Professor Haber sent word to the German war office that 
the Oppau plant for synthetic ammonia was in readiness. Germany had nothing 
more to fear from an English blockade against Chile saltpeter with an inde- 
pendent source of ammonia and consequent nitric acid at home. War soon 
followed, as you recall, and unforeseen hazards forced the Germans to fall back 
upon their lines of defense. 

On April 22, 1915, chemical warfare was first inti'oduced ; the Germans essayed 
to discharge chlorine into the Canadian trenches. Had the German Army been 
provided with masks and a plenteous supply of this chlorine, nothing could have 
stayed their speedy approach to Calais. After numerous gases had been em- 
ployed by the German Army, they finally threw over " mustard gas " against the 
English at Ypres on July 12, 1917. A kind fate seemed ever to smile on the 
Allies throughout the war. The Germans could not prepare more than 5 tons of 
mustard gas per day. Had they hoarded their supply for later use in limitless 
quantities what a different story would now be told. 

At the peace conference the fates at last smiled upon Germany. The Allies 
were here beset with many, many learned savants — men learned in all but the 
science of clii^mistry, by which and for which the war was really waged. The 
peace treaty was drawn up entirely from the standpoint of modern mediaevalism, 
or that period just preceding the advent of chemistry in the world of industry, 
and the result was appalling. Thus the " Bungle of Versailles " was given to 
man and passed forthwith into obsolete history. Its four points, from the stand- 
point of tlie future, may be characterized as follows : 

1. National hatre<ls engendered by silly apportionments of trivial territory. 

2. Germany financially crippled but stirred to industrial activities, such as 
will soon reinstate her in tiie position of world leader. 

3. Germany deprived of those useless adjuncts of a nation's pride— her bat- 
tleships — and thus saved from wasting her wealth on monstrosities of the 
future. 



Written in ink. 



MUNITIONS INDUSTRY 2565 

4. As a gift from the gods there was left to Germany all of the implements 
for future wars, and she was asked to develop tliem to her best ability. 

What a tirade on justice ! The " Bungle of Versailles " aims to create in 
Germany the greatest power for industry and for war on the face of the earth. 
Oh, that there might have been just a few level-headed business men of science 
in command at Versailles; men who knew not one damned thing about history 
or economics, not one blessed thing about the wishes of Hottentot or Hindu ! 

As matters now stand, what have we accomplished for the betterment of the 
world? We have wrecked thousands upon thousands of homes and there are 
some who wonder at the lack of confidence and diligence among us. Chemicals 
comprised twenty-seven percent of the munition shells used by Germany at the 
close of the war. The greatest German chemists today have already announced 
that chemicals will henceforth constitute Germany's mightiest weapon for future 
combat. We are at the very beginning of the great chemical and electrical age. 
Can you imagine the leaders of science willing for one single moment to relin- 
quish their prowess to legal advisors or diplomats when the honor and integrity 
of their respective countries are at stake ! 

In spite of this, our dreamers will tell you that chemical warfare is to be 
banned by civilized nations. You never heard a real American chemist inti- 
mate any such damned nonsense. He knows it is the future weapon for all 
wars from now henceforth. The type of man striving to relegate chemical 
warfare to antiquity is just that type who decried the use of gunpowder in 
place of spears. When we have the most effective weapon of all time, when 
we are made to realize that this weapon is the most humane ever introduced 
into war by man, and when we come to know that the nation most advanced 
scientifically is the nation who will have the greatest advantage, pray what 
kind of being is he who will have us revert to savagery, making of war a sort 
of huge slaughterhouse? 

The next war, which will come in its time, will be waged entirely with chemi- 
cals and high explosives, usually together. Combatants, as well as noncom- 
batants, will be supplied with suits of armor — a la Jules Verne's " Men from 
Mars "^the mask in itself will not suffice. The old-time military manoeuvers 
must give way to chemical discipline. Airships iind dirigibles will constitute 
our flying squadrons for offense and defense and our land armies for future 
struggles will be officered entirely by trained chemists. Together with the 
"Aery " and Army, we shall have need of the, fast cruisers of our Navy ; 
cruisers with airplane landings, and also submarines, no doubt similarly 
equipped. The aerial torpedo will have come into its own and be made the 
carrier of our poison gases. Our battleships are things of the past. Tlie 
Washington Conference now in session might just as well make the whole leap 
as only a part. Destroy all battleships. They are of absolutely no use what- 
soever either in offense or defense and it will be a godsend to man to be rid 
of such monstrosities. Their only possible use today is as scarecrows for 
smaller nations. Give me a spot well protected, such, for example, as the 
Dardanelles. Give me a couple dozen airships well equipped with high explo- 
sives and chemicals. Allow me a hundred or more aerists and I will defy the 
combined fleets of the world. Not one vessel could ever get close enough to us 
to do any material damage; we should not attempt to sink a single battleship. 
Why waste heavy ammunition when it is so simple a task to annihilate the 
crews ! 

Let us now turn our attention to Germany. Let us visit the Badische- 
Anilin und Soda-Fabrik at Ludwigshafen, and there note the manufacture of a 
single dye. Let us take, for example, indigo, where some 800,000 pounds per 
month constitute the output of one plant. Alcohol is passed over heated alu- 
mina, thus becoming completely dehydrated into ethylene. Tliis gas is then 
led into chlorine- water (or its equivalent) and the ethylene chlorohydrin thus 
resulting is concentrated to the desired strength, whereupon it is heated with 
aniline and the oily residue fused with caustic potash. From this fusion indigo 
is at once obtained by solution in water and oxidation by air. Were Germany 
to be drawn into war, this entire plant may l)e converted into a mustard gas 
plant in less than an hour's time. In place of the aniline in the indigo process 
above, a cheap chemical — sodium sulfide (obtained by the reduction of Glau- 
ber's salt with coke) — is substituted, and the homogeneous solution thus ob- 
tained is concentrated and treated in large tanks with hydrochloric acid. The 
oil product settling out at the bottom is the well-known mustard gas and may 
be drawn off at will. Truly this particular plant is a slumbering arsenal and 



2566 MUNITIONS INDUSTRY 

the greatest of its kind today. Had Germany won tlie war, do you think that 
she would have pennitted the du Pont powder plants or the Springfield arsenal 
to resume business? Would not any normal child be able to answer this ques- 
tion correctly? And yet our savants of Versailles could not understand! 

As with the indigo process, so with many other processes used in dye 
plants in Germany, each with a hidden terror for' her enemies. Those of U3 
who have studied the situation and have felt it our bounden duty to acquaint 
every true American with the conditions as they stand are constantly meeting 
with" men blind by nature and men so stubborn that reason itself seem to 
have left them, it is not for the chemical industry alone we plead. Far, 
far beyond lies our vision! And we pray in all sincerity for the awakening 
of this country to the importance of chemistry in every industry. From an 
agricultural country we have graduated into an industrial country. Indus- 
tries make for advancement of the Nation as Germany has so of en pro- 
claimed. An agricultural country can never wield an influence in international 
affairs. 

Upon the growth of our industries rests now or never the future great- 
ness of America. Ninety-seven percent of our manufacturing output is con- 
sumed in this country. Our agricultural products are, to a large extent, ex- 
ported, but now with our increased industrial capacity, as a result of war 
activities, why not turn tlie excess of cotton, of wheat, and of corn into finished 
products for our own consumption? It is this great opportunity for chemical 
endeavor that commands our immediate attention. We must develop chemi- 
cally if we are to attain that highest enlightenment destined for men. There 
is no other option. Men must think in terms of chemistry, whether they be 
engaged in agriculture, mining, or manufacture. This is the greatest lesson 
of the World War. 

Take, for example, the question of fertilizers. Enormous quantities are 
used in every State of the Union, and yet when we face the actual figures of 
ammonium sulfate unrecovered from the byproducts in the burning of coking 
coal in this country, we are amazed. For instance, in Michigan, $4,887,253 was 
paid in 1919 for commercial fertilizers and during that same year $1,080,300 
worth of ammonium sulfate was wasted in the burning of 1,385,000 tons of 
coking coal. Can we call this efiiciency? And yet more appalling still are 
those figures which represent the amount of benzene, toluene, xylene, and other 
products obtained from the coal tar itself, likewise wasted in this and all 
States. 

Atmospheric nitrogen is now employed by foreign countries in the manu- 
facture of fertilizers, though in this country we have scarcely passed the ex- 
perimental stage. The Muscle Shoals plant, erected at an enormous cost by 
the Government for the preparation of ammonia, is now idle — in fact, it never 
did function — and if ever our Government is to show its eflScient organization, 
not a moment, should pass till that plant is set into operation for the benefit 
of our lands. Henry Ford deserves highest conmiendation for his munificient 
offer to the Government to take over and operate the plant upon a practical 
basis, holding it in readiness for Government purposes in case of war. No 
other individual or pi-ivate organization has made, nor is likely to make, so 
flattering an offer to the Government as that announced by Henry Ford. We 
sincerely hope that our authorities will sense the importance of this plant to- 
the betterment of our lands and to the industries of the country in time of 
peace as well as in time of war. 

The dye industry, in particular, claims the interest of every true American. 
He realizes that here are untold possibilities for a marvelous future. Why 
should not America lead? Shall we again permit Germany to conquer the 
markets of the world in this field as in many others? Germany has once 
more established herself in many countries as the leader in this industry. 
Witness, for example, Mexico, where the German dyes are now again supplied 
in linutless quantity. For the establishment of the dye industry, it is absolutely 
necessary that we be given the strongest possible protection, such, for example, 
as may obtain from a dye embargo. Such an embargo was asked for as an 
additional clause to the Fordney tariff bill, but the "class legislation" bogy 
scared our Congressmen, as they feared a continual line of other class pro- 
tections. Our Congressmen, however, are for the most part lawyers and 
cannot see through chemical eyes. It is the bounden duty of all Americans who 
understand this subject to demcmstrate to our Congressmen the great need 
of building up our chemical industries. The protection of chemistry in this 



MUNITIONS INDUSTRY 2567 

country is clearly demonstrable as something far more important than the 
building of forts and fleets. " Class legislation " in this instance becomes 
translatable into " fundamental legislation." Many of you will wonder why 
we need any legislation beyond tliat protecting our general industries. Let 
us pause here to consider the cost of experimentation alone in the chemical, 
physical, and engineering fields. Witness, for example, the first commercial 
production of indigo in America. The first pound of synthetic indigo laid on 
the desk of the President of the Dow Chemical Company in December 1916 
cost our company upwards of $4.50,000. From that year, selling at .$1.25 per 
pound, the process has undergone constant and market improvement until 
today it is selling under forty cents per pound, favorable indeed with iirewar 
German prices. The manufacture of dyes calls for the highest mechanical 
skill and plant supervision in the field of organic chemistry and the various 
stops in these processes make up a complex surpassing that of any other in- 
dustry. 

If you believe in America, and if you believe that we can succeed without 
protection, then you are the men we need, and we shall ask you at once for 
several hundred thousand dollars to assist us in oiir endeavors. Do you think 
you are likely to contribute when you know that labor in Germany is paid at 
the rate of seventeen cents per day, whereas we must pay at least thirty cents 
per hour? Do you think you will contribute when you know that a chance of 
foreign dumping in this country is always at our door, and that the German 
importer is using every means he can to undersell American products? I know 
you will not take the risk. You have a right to a reasonable rate on your 
investments, and I don't blame you for this lar-k of confidence in your own 
Government. Has a German any lack of confidence in his Fatherland? No, 
indeed, his Fatherland protects him and guarantees to him, through the big 
cartels that the losses of one company shall be averaged with the gains of 
another and the profits equally distributed. Germany has the greatest system 
of protection the world haf^ ever known. When they see that an imported 
article interferes with their industries, they outlaw it. Thus the importation 
of rubber into Germany in the last six months has been decried and its further 
importation seriously handicapped. 

We need a protecting tariff, a tariff that is not based on fictitious foreign 
values, for such a tariff is no tariff at all. We must make up in some way for 
the difference in cost of production at home and abroad, especially now that for- 
eign cost of production is practically nil. To this end. Congressman Fordney 
has proposed the greatest scientific principle ever introduced into American 
tariff^ — that of the American valuation plan. It stands supreme as the guiding 
star to a bright American future, and Mr. Fordney desei*ves the praise of all 
true Americans for the steadfast stand he has taken in its defense. 

The German importer sees in the American valuation plan his death knell, 
and veritably it is so written. By every means, no matter how foul, has this 
dastardly type of fake American tried to infiuence our Congressmen. But we 
are proud to say that many of them are far too stalwart to succumb to the 
vicious sting of these German Gila monsters. The German importer is any- 
thing but ]iatriotic. He cares nothing for America and looks only to the profits 
which he can squeeze out of the American people. If he were a true American, 
would he not renounce his nefarious business and seek other more honorable 
pursuits? No. He prefers to remain the depraved and immoral reprobate that 
be is, and to work with might and main through retail merchants' associations, 
farm bureaus, and the like, to influence as many Congressmen as possible to 
delay the pas.sage of the tariff bill. What a contrast to this debased wretch 
is that prominent American. Charles Schwab. When the Washington confer- 
ence proclaimed that the battleship fleets would be reduced in number and 
that a ten-year holiday in ca])ital shipbuilding would be inaugurated, did you 
find this man, manager of one of the greatest shipbuilding yards in the world, 
bewailing his fate? No. He is a true American. Scarcely a day elapse<^l 
before he announced that he stood for disarmament and that his great ship- 
building yards would be turned to other pursuits. What more striking con- 
trast could we have between this man, Charles Schwab, the American, and such 
types as H. A. Metz, Kutroff. Pickard, and other German importers? 

The American industrialist must needs smile to himself and wonder what 
new foi-m of insanity has l)een evolved when he reads of those asinine state- 
ments of the so-called "international bankers." They see only through foreign 
8.S876 — 3.5— PT 11 12 



2568 MUNITIONS INDUSTRY 

glasses. They maintain tliat America must buy foreign products in order that 
our money shall revert to European c(juntries and thus make it p^wsible for 
them to pay off their indebteihiess to us. Why should American industries be 
completely annihilated in order for the foreign countries to pay this indebted- 
ness V Would it not be a wiser and more sane act for our Government to con- 
sider the indebtedness on Ihe other side and let us pay the indebtedness to them 
as a compromise? Let us devote this sum, so fast as paid in, to the upbuilding 
of devastated areas of Europe and the world. This is practically the sugges- 
tion m:ule by Mr. Frank A. Vanderlip, to which such praise is given. But has 
it never occurred to these international bankers that there are other things that 
one can purchase besides the products of American industry? Why not sell to 
us those millions of dollars' worth of South American bonds? Why not sell us 
tracts of land in the West Indies and thereabouts? Sell us anything under the 
heavens, but don't sell us what we are trying to make. I would that each 
international banker, in his sane moments, if such occur, might purchase a 
farm and raise products for the market and for his livelihood. What would he 
say when told that he must buy his potatoes and wheat, and such like, from 
foreigners? And yet that is exactly what he is asking the American indus- 
tries to do. I fear, even were he half-witted, he would refuse to consider any 
such dealings. 

All of the objections to the Fordney tariff bill, the embargo on dyes, and espe- 
cially to the American valuation plan come directly from the German importers. 
They are united against America and against all that America can become. 
There is not one single practical argument which they have ever raised that can 
stand up against the array of facts marshalled in favor of these measures. 

The influence which these debased German importers have been able to wield 
among our Congressmen is indeed disheartening to all true Americans, when we 
know that prosperity cannot return until the tariff is made a law and that there 
will be no chance of even a minor prosperity until that time. Is it not possible 
to awake Congress to the situation; to show them huw these German Gila 
monsters are endeavoring in every possible way to thwart the action of Con- 
gress? Are there not enough Congressmen of real red American blood able to 
force through that tariff, which nlone spells prosperity? Many have tried to 
fexplain this period of depression and show how it will slowly pass. Much of 
what is said may be true, but unless we have the tariff there can be no return 
for the betterment of American industries ; and unless we better the American 
industries today, their chances for growth are frightfully impaired. Indeed, 
many, many years of endeavor would be required ere they could hope to gain 
world sway against the industries of Germany and other countries, strong now 
and ever waxing stronger. 

We may talk of disarmament and peace, but there will be no peace until 
Germany is made to realize that America stands preeminent ; that our industries 
surpass their industries and those of all other countries. In this war after the 
war our battle cry must be " To hell with all German importers ! Down with 
every thing opposed to American industries ! " Let us have a tariff that protects 
Americans. Let us be sufficient unto ourselves so far as our heaven-given 
resources will permit. Why should we fear to cast out the German importer? 
Have we not destroyed the saloon keeper and his curse, many of whom were true 
Americans at heart? If we do not work to this end and our Congressmen do not 
realize the importance of industrial growth for our future greatness, there is 
only a limited future stretching out before us. 

As I now reflect upon my student days in Germany, I well recall that toast 
that my old professor so often proposed as we sat together on a summer after- 
noon in our favorite beer garden, " Hoch der Kaiser, Deutschland iiber AUes, 
Mohr Kraft den Demokraten der Vereinigten Staaten." I thought he referred 
more particularly to his son, a Democrat in Tennessee, but now I know that he 
meant, " Give the Democrats and German-Americans more power and a hold on 
free trade and America becomes the vassal of Germany." Our raw products will 
be exported to the Fathei-land and there converted into finished goods ; then re- 
turned to us that we agriculturalists, miners, and shepherds may eat and be 
clothed withal, and be happy in serving our beloved master, Deutschland ! 



MUNITIONS INDUSTRY 2569 



Exhibit No. 915 
[File, John H. McNeely] 



March 25, iy21. 



Mr. John H. MoNebly, 

101 District National Bank Bldff., Washington, D. C. 

Deiab Ma McNeely : I am returning the story received from you this morning 
with some changes in the introductory paragraph, which I hope you will approve. 

We are making every effort tn take this fight out of the held of mere tariff 
production to a new industry. You will noti<-e that the recent literature, includ- 
ing the articles in the book to which you refer, deals with the question of dis- 
armament. The clauses in the iieace treaty virtually require the destruction of 
plants in Germany. If this cannot be accomplished, then the next best thing is 
to have similar plants built here so that we may produce the new chemical war 
munitions to offset the production in an enemy country. 

It is, of course, a fact, and is quite apparent, that American dye manufacturers 
want to protect and develop their industry as a business proposition, Imt we 
want more than the ordinary tariff for the reason that this is an intricate indus- 
try and cannot be developed excei»t under unusual conditions. It really requires 
the absolute embargo of competitive products so that we can secure an income 
over the sale of these which will be suflBcient to pay for the development of the 
products which we have not yet learned to make. 

I think with the present unsettled condition of world affairs, and with Ger- 
many's attitude toward the peace treaty argiiments based on the question of 
disarmament are very much stronger than any others. 

I am asking the Dyes Institute for the list of plants which you want. Mean- 
while, I am sending you a letterhead of the Dyes Institute, which gives the 
location of some of these plants. 
Very truly yours, 

CKW/P Publicity Manager. 

Exhibit No. 916 

[File John H. McNeely] 

(From room 101, District National Bank Building — Release morning papers 

Tuesday, March 29) 

Washington, March 28. — Supporting the contention that if the American 
Nation is to be prepared and is to be safeguarded for future wars, development 
of an American coal-tar chemical industry is imperative, the American Dyes 
Institute has put out a book containing an elaborate exposition of the case for 
the American people and a plea for legislative assistance to develop the industry 
and permit it to take a position where it cannot be destroyed by competition 
from (iermany. The book has been issued '• to the American people." It has 
been sent in Washington to members of Congress and administration oflBcials, 
and is a notable addition to the arguments already made by the Chemical War- 
fare Service for protection from the renewal of munitions manufactured in the 
chemical plants of Germany. 

In addition to extracts from speeches in Congress last year urging passage 
of protective legislation, the book carries excerpts from writings of well-known 
authorities familiar with the industry here and abroad and with the importance 
of dyes in peace and war. It makes a strong case for the dyes and says that 
with an efficient dye-making industry no nation need fear disarmament, but 
without such an industry the disarmed nation would be at the mercy of any 
other dye-making nation in the world. It points out how quickly a nation with 
an adequate dye industry can expand it to make the gases with which Gennany 
almost won the war and which must figure so prominently in all future 
conflicts. 

" Chemical warfare ", says the book, " developing by leaps and bounds 
throughout the Great War, has assumed commanding importance. In the last 
of the fighting half the shells used were designed to distribute poison gases, 
while floods of noxious vapors were launched by means altogether independent 
of artillery. Chemical defense against these substances had become a first 



2570 



MUNITIONS INDUSTEY 



essential. By the same token, scientific advances in the way of discovery of 
new poisons, or new methods of applying old poisons, held out constant possi- 
bilities of instant and overwhelming victory. Already projectiles — not guns — 
had been developed which could be made in quantity in any tube works and 
which could put down oceans of gas at a range of a mile. The science was and 
is in its infancy, but already the chemists, to some extent without the aid of 
any existing weapon, and to an overpowering extent in conjunction with the 
older equipment, can provide an attack of hitherto unparalleled efficiency, while 
they alone can offer any adequate means of resistance." 

After discussing the need for dye chemists and dye chemical employees the 
book goes on to say : "Accordingly no nation can disarm to any serious extent 
unless it has such an industry. The equipment and the knowledge necessary 
cannot be improvised, nor even provided beforehand specially for war purposes, 
and kept, during peace, unused. Inactive plants deteriorate and indispensable 
trained employees cannot be kept available and the advance of science is so 
rapid that no anticipation of the Nation's needs can succeed. A scientist at 
work with only the simplest apparatus hidden away anywhere, at any time, 
may make discoveries which render all previous preparation worthless. Only 
the incessant intensive research constantly necessary in the dye industry can 
hope to keep up with the progress of the science. 

" Equipped as a complete dye industry equips a nation with facilities for 
immediate huge production of the needed substances, and with the men who 
have the necessary knowledge, no nation need fear to limit its guns, ships, 
planes, and tanks proportionately with other nations. To a nation not so 
equipped such a limitation would be suicide. In a disarmed world the dye- 
making countries will reign supreme. 

" Before the war there was but one such country. Germany supplied the 
world with dyes. In the war her dye works, without material changes, sup- 
plied many of her explosives, all her gases, and all the technique of her gas 
defense. While the Allies were expending years and tens of millions in build- 
ing plants and making experiments, she was producing as rapidly as she thought 
necessary. Had she realized her advantage and used gas at the outset as on the 
later scale, the Allies could never have resisted. A colossal power, fortunately 
but half understood, was in her hands, and in hers alone. 

" Today the United States and to some extent Great Britain are in a similar 
fortunate position. To be sure of maintaining it, the British have embargoed 
German dyes for 10 years. As long as we maintain our industry, and for not 
one moment longer, we can safely plan and attempt disarmament. If we lost 
our new dye industry we must either remain armed to the teeth or accept the 
certainty that we cannot resist an attack by any dye-making country." 



Exhibit No. 917 
PvMiGUy tweau expense, years 1916 to 1934. inclusive 



Year 


Total (exclud- 
ing products 
publicity) 


Products 
publicity 


Year 


Total (exclud- 
ing products 
publicity) 


Products 
publicity 


1916 


$9, 284. 34 
13, 238. 69 
21, 892. 79 
29, 724. 58 
31,698.34 
24, 378. 40 
18, 382. 83 
23, 423. 95 
26, 121. 66 
26, 536. 02 




1926 


$30, 355. 70 
34, 905. 93 

37. 203. 93 

32. 405. 94 
44, 042. 63 
33, 218. 85 
28, 648. 37 
29, 167. 45 

2 26, 004. 53 


1 $4, 512. 50 


1917 




1927 


22, 562. 50 


1918 




1928 


35, 591. 46 


1919 - -. 




1929 


53, 785. 39 


1920 




1930 


66, 134. 74 


1921 




1931 --- 


52, 630. 42 


1922 




1932-._ 


43,917.19 


1923 




1933 

1934.. 


49, 081. 69 


1924 




2 55, 608. 15 


1925 













1 2 months, November and December. 

2 10 months, January to October, inclusive. 



MUNITIOJiS INDUSTRY 2571 

Exhibit No. 918 

1918 and 1925 

American Dyes Institute $56, 588. 40 

Syutlietic Organic Cliemical Manufacturers Assn 60, 888. 17 

Manufacturing Ctieniists Association 1, 812. .57 

American Cliemical Society 4,530.07 

Chemical Alliance, Inc 57-5. 00 

T. R. Shipp Service 2,500.00 

John McNeeley 3, 0:J3. 00 

Benjamin Raleigh 100. 00 

Total 130, 027. 21 



Exhibit No. 919 

[File — 115] 

[ Copy ] 

Copy to: Mr. Iren^e du Pont, Mr. Lammot du Pont, Mr. R. R. M. Carpenter, 

Mr. W. C. Spruance, Mr. W. F. Harrington, Mr. J. P. Laffey, Mr. W. S. 

Carpenter, Jr. 

Paris, Nov. 29, 1919. 
JVIr. W. S. Carpentkk. Jr., V. P., 

E. I. du Pont de Nemours & Co., 

Wilmington, Del. 

Dear Walter: In view of Judge Laffey's sailing on November 30th, ahead 
01 the date on wliich Poucher and I leave, I am enclosing some papers vphieh 
-will supplement our cable advices and give you some material for discussion 
until we arrive in Wilmington about Christmas time. The reasons for our 
waiting until the Mauretania will be seen later on in this letter. 

Our cables numbered one to twenty-four give an accurate view of our ac- 
tivities since October. It may have seemed to you at times, in view of the 
expression in your cable #2, that undue time was spent upon matters relating 
to import regulation but all this lias been of the greatest help in bringing about 
at least a partial realization on the part of the Germans that the U.S. market 
is not free for them to use as they will. 

As soon after we return as possible we must determine just what we should 
say to the Alien Property Cust<xlian concerning our action in the ammonia 
matter which never would have been possible at all but for the Chemical 
Foundation. The sale of the German patents to the foundation has been a 
very startling thing to the Germans and this evidence of America's power has 
Obeen a great factor in making it possible to deal with them. 

I enclose the following papers which can be discussed at once though I 
shall of course try to have ready when I reach home, a detailed account of the 
moves leading up to the conference; 1st, a letter in German (written by Berg 
in Ludwigshafen) with a translation thereof. This letter while written by 
Berg to the Badische Co. in the form of a personal reason statement as to why 
the Badische Co. should cooperate with du Pont Co. is based on discussions of 
the matter with Berg before his departure for Germany; 2nd, the minutes of 
the conference as simimarized from his notes by Dr. Schwartz and a transla- 
tion into English by Dr. Kunz; 3rd, the minutes of the conference In English 
as summarized by Dr. Kunz who acted as our secretary and with Mr. Berg as 
interpreter. 

The plan is for each side, provided the general plan is ratified, to prepare 
a contract based on the general plan laid down, the final contract that is 
accepted by both sides probably being a composite of the two contracts sub- 
mitted respectively by Badische and du Pont. 

You will note that the minutes as written make no reference to dyes. This 
is for the reason that the agreement in the I.G. prohibits discussion without 
authority from the I.G. The full notes of the meeting, however, which are 
being worked up, give considerable infoiination as to the attitude on this 
side of the Badische business, but it was outside of the formal conferences 
that we learned Dr. Bohn was determined, if it was at all possible, to find a 



2572 MUNITIONS INDUSTRY 

way of direct cooperation with du Pont Co. in dyes. This is the internal 
problem referred to in cable #22. The size of the ammonia proposition so far 
exceeds the dye matter that it has seemed best not to attempt to push this 
affair too rapidly, as a successful ammonia arrangement certainly would lead 
at once to a dye exchange. 

The plan has been for Bosch and Duisberg to visit the U.S. early in the year, 
but I believe that Dr. Bosch is going to be inclined to go slowly in such a 
move and not to allow the I.G. to get him in a position where he might have 
unpleasant contact with official America. Dr. Bohn, of course, being a Swiss 
citizen could come to U.S. any time. Although hard pressed during the war 
he never surrendered his Swiss citizenship. It is perfectly clear that there 
are two contending forces in the Badische board. Apparently the sensible, 
modern division is led by Bohn-Bosch and realizing the economic situation is 
determined to make as good a deal as possible with America in order to get 
ahead. The other side probably responds to the attitude of Duisberg who 
apparently still believes he can bully the U.S. The Badische has recently 
reorganized and we shall have in due time a chart which Berg will get for 
us next month. Bosch is now president and while he and Bohn will not 
have an easy time with some of the other directors, I feel that they will have 
their way, particularly since Badische's position on account of the ammonia 
process is considerably better than that of the other members of the I.G. It 
may be that the I.G. may decide to deal as a unit in the U.S. with either 
National, Grasselli, or ourselves. At any rate you can see the importance of 
everlastingly turning the regulatory screw in America both as to control of 
imports and future protective legislation. 

I regret very much that Harry Stephenson has been agreed upon as the 
Textile Alliance representative. In view of our relations with Badische you 
can see how desirable it was that the men representing the Textile Alliance 
be drawn from the ranks of the consumers. However, we shall be able to 
give sufficient information to enable Stephenson to help the Alliance and not 
compromise us. We shall be glad to learn just the details as to what went 
wrong in the State Dept. and War Ti-ade Board that allowed the under- 
strappers at Ludwigshafen to boast to Herty and Fleisch that they were able 
to deal directly with their old agents. Heading this off was a fine piece of 
work on your side which unfortunately was not known by the Germans at our 
Zurich conference, and we thought it better to let them find it our rather 
than get it from us. I am afraid consumers are going to be disappointed in 
the quantity of dyes they can get cheaply under the reparation plan, but the 
next month will show what can be done. Poucher will have a conference with 
Stephenson before we go. We have Kunz in Paris today, but we want to 
keep him out of this end of the game from now on as he may be asked to go 
over to Ludwigshafen at any time. 

Our return to London is for two reasons. First, Lord Moulton and Turner 
showed us the new miniature Leverkusen at Dalton (Huddersfield) with the 
evident idea of impressing us with the value of the things Levinstein gouged 
out of the Bayer factory in the British section of the occupied territory. They 
have considerable no doubt, but I do not believe Great Britain is going to 
make a very great success in the industry and as our cable plainly stated 
we were against paying any more money for second-hand information. We ac- 
cordingly left the Levinstein matter hanging and will now see whether we can 
so arrange as to have the British Dyes assume the L. contract with some 
modifications. Otherwise we shall let it stand as it is. 

We also wanted to see Sir Harry McGowan, but will have to see Mitchell in 
his place, as we understand Sir Harry has gone to U.S. 

When we were in Paris we learned that Semet Solvay had been endeavoring 
to make connections with Badische. We were called upon by Mr. Brunner, Col. 
Pollit (technical man) and Mr. Gold of Brunner Mond & Co., who in a very 
inept fashion tried to find out just what we were doing. This was before we 
sent Berg into Germany to begin negotiations. They expressed belief in the 
necessity of making some kind of a deal with the Badische Co. if the process 
was to be instituted successfull.v — .stated that they understood we were negotiat- 
ing with Badische — were we, etc. They also used the name of the Explosives 
Trades, Ltd. in a fashion from which we might conclude that they had come to 
us by that route. The situation was, as you can see, decidedly embarrassing,, 
but I think we cleared the air by asking Mr. Brunner if he wanted us to cooper- 
ate with him in securing rights to the technical information. He shied at this 
and after a little talk agreed to return to Paris the next Wednesday (this was 



MUNITIONS INDUSTRY 2573 

Friday, Oct. 31) to discuss the situation. I had told them that we had reports 
on the situation but had no negotiations. I believed they were on a fishing 
excursion — felt sure I was trying to mislead them and would endeavor to 
connect with Badische direct without further word with us. Please note that 
they referred bravely to alliances when talking with us — I did not expect them 
to meet their engagement. They turned up neither on Wednesday nor Thurs- 
day, Nov. 5 and 6, and on Thursday evening Nov. 6 Berg left for Germany to 
arrange if possible for a conference. Poucher very properly was insistent on a 
sifting process to determine whether we would have to meet some of the old 
crowd who undoubtedly would be very antagonistic to him and us. 

We knew that negotiations were under way between Badische and the 
French Government but in what form we could not tell. When Berg left for 
Mannheim there was some uncertainty as to the whereabouts of Dr. Bosch as 
we knew that he was likely to be called to Paris by the French. Berg left a 
letter for him at the German legation. The result of this was that we were 
called up Sunday morning Nov. 9 by Mrs. Berg saying Dr. Bosch was at her 
house and would like very much to see us. Poucher, the judge, and I, of course, 
went out at once. We found Dr. B. a thick-set German savant, who naturally 
was a bit shy under the circumstances. He explained the French situation to 
us but did not want to sign up with them until he felt that he was not damag- 
ing his chance of a deal with us. We could see that it was really necessary 
for him to make this agreement and told him to go ahead. This is a feature 
of the situation to which some attention must be given though I am of the 
opinion that if we do this at all France will be buying synthetic sulfate before 
she makes it. The contract also has to be approved by the Senate and may 
fail there. 

It was agreed with Dr. Bosch to have the Zurich meeting if it could be 
arranged when he returned to Mannheim on the following Wednesday — Berg's 
good work on this helped with the result you have seen. Dr. Bosch confirmed 
my belief as to the action of the English whom he accused of very bad manners 
to say the least. When he was arranging to go to Zurich he had a telegram 
from Brunner asking that a conference be arranged for in Aachen. I suppose 
Bosch is now arranging for a conference with these people, whom he feels 
bound under the conditions to listen to, for sometime in December — I hope 
after we have sailed. As Brunner called upon us at Berg's oflSce I am sending 
Berg back to Germany (when Bosch sends him word) to be present with Bosch 
when meeting Brunner, Mond & Co. whom he will advise that their arrange- 
ment must be with the new company. I am, of course, anxious that there be 
no feeling on the part of the Explosives Trades Ltd. that they will liave no 
chance to share in a thing of this kind and if we can arrange things in England, 
as I believe we can, so that Brunner Mond if they are working with Explosives 
Trades Ltd. cannot lay the charge of poor faith at our door. We are certain 
of one thing however — we never had any intimation from either Explosives 
Trades or Brunner Mond that they were ready to share with us. 

This I think gives you the main situation which with the enclosures will put 
you in pretty good shape for discussion as soon as we retuni. Judge L. will 
proceed with contract preparation along the line of the conference as you may 
suggest — if the idea is approved as the result of your study of the nitrogen 
question. Personally I hope it will be approved as I think we have a chance 
now to do something really big in chemical work and particularly in the fer- 
tilizer industry. 

Faithfully yours, Chas. A. Meade. 

Exhibit No. 920 

Copy to: Mr. Irenee du Pont. Mr. Lammot du Pont. Mr. R. R. M. Carpenter, 
Mr. W. C. Spruance, Mr. W. F. Harrington, Mr. .T. P. Laffey, Mr. W. S. Car- 
penter, Ji\ 



(No date.) 



Our Wordings 



MINUTES OF A MEETING HELD NOVKMRER. 20. 21. 22, AH THE EAU1R AU LAO HOTEI , 

ZURICH, SWITZERLAND 

There were present : Dr. R. Bosch, Dr. R. Bohn, Dr. I. Schwarz, representing 
the Badische Anilin & Sodatabiic, Ludwi^schafen, Germany, referred to here- 
after as Badische Co., and Ch. A. Meade, M. R. Poucher, J. P. LafEey, Eysteni 



2574 MUNITIONS INDUSTRY 

Berg, E. C. Kunz, representing E. I. tlu Pout de Nem,ours Co., Wilmington, Del- 
aware, U. S. A., referred to hereafter as the du Pont Company. 

On the l)asis of a letter dated November 12th. 1919, addressed to the Badische 
Co., by Mr. Eysten Berg, in behalf of the du Pont Co., in which was ourlin^^d 
a plan for cooperation between the du Pont Co. and the Badische Co., for the 
world exploitation of the Bosch-Haber ammonia process, the following points 
were discussed and agreed upon as a basis of a final contract. 

(1) It was agreed that it is possible to form a comptiny for the world ex- 
ploitation of the Bosch-Haber process. 

(2) The world company should have the whole world as its market except 
as follows : 

(a) France with whom the Badische < 'o. already have made a contract 
which is limited to the manufacture and sale only in France, her colonies, 
and protectorates. It is understood that should the French fail to carry out 
their plans, these territories should be included in those assigned to the 
world company. 

(5) The Badische Co. shall be granted an exclusive territory in which to 
exploit the process, Germany and the territory known as Austria-Hungary in 
1913. 

It is understood that the Badische Co. shall have the right to sell in all 
^Europe the products of its plants at Oppau and Merseburg, Gennany, up to 
the equivalent of 300,0(X) tons of nitrogen until such a time as the consump- 
tion in the exclusive territory of the Badische Co. will absorb this production, 
when the Badische Co. sales are to be confined to its exclusive territory. 

The world company is to give if necessary a special license to England to be 
confined to the production of nitric acid for the needs of the British Isles, the 
returns from such license to be given entirely to the Badische Co. 

The Badische Co., stating that they have tentative negotiations with Japan 
for the process agree that these negotiations be held in susi)ense until proper 
action can be taken by the new world company. 

(3) Capital for the world company shall be furnished by the du Pont Co. 
and the du Pont Oo. shall manage the business. 

(4) Provided conditions warrant the initial capacity of the new company 
should be a plant for 100,000 tons nitrogen per year. The nitrogen produced 
by the new company is for conversion into nitrates, nitric acid, and similar 
compounds as well as fertilizers, by the processes developed in connection with 
the Bosch-Haber process by the Badische Co. 

Nitrogen products taken by the du Pont Co.< from the world company shall 
have the price fixed on the basis of the market pxice of sulfate of ammonia 
less the cost of conversion of ammonia into sulfate of ammonia. 

(5) The increase in production capacity shall be according to demands. A 
<?ertain minimum production shall be maintained. 

(6) The world company and the Badische Co. shall exchange free infor- 
mations and improvements made in the l)usiness covered by the contract. 

(7) A corporation is to be formed of which the Badische Co. is to receive 
'^% of the total stock issue in exchange for its information and its ex;- 
perience and the Badische Co. is to have representation on the board of the 
new company in proportion to its stock holding. 

In case the capital is increased the Badische Co. is always to receive a like 
proportion of free shares. Tlie capital to be increased as the production ca- 
pacity increases. The Badische Co., in case it wishes to dispose of its stock 
holding shall first make offer of such holding to the du Pont Co. 

(8) The du Pont Co. will undertake the plan construction of the world 
company at cost plus 10%. 



Exhibit No. 921 

EXTRACT OF LETTER FlJOil MR. HERO JANUARY 12, 11120 

Have just returned from Aachen, where I met Director Bosch, Director Smith, 
and Dr. Schwarz, of the Badische Company. 

The meeting with the English group (Brunner Mond and Solvay) took place 
yesterday afternoon at the Palast Hotel, in Aachen. 

Before the meeting I talked the situation over with Dr. Bosch, and we came 
to the conclusion that it was best that I should only appear at the meeting if 
the circumstances required it. 



MUNITIONS INDUSTRY 2575 

As the Badische CJompany and we have not signed a contract, Dr. Bosch 
thought it would be unwise if I took deal in the meeting, particularly while he 
was determined not to make any definite arrangement with the English at this 
time, but only wished to hear what they had to say. 

The Badische has, as you know, been communicating with Brunner Mond for 
quite some time, and he believed the Badische should see them alone and inform 
them in a general way about our arrangement as far as the world exploitation of 
the ammonia process is concerned. 

If I appeared in the meeting as the representative for the du Pont Company, 
the whole matter could end in a fight and be very disagreeable for the Badische, 
that had not advised the English about this matter before they came to Aachen. 

After considering the matter, I came to the conclusion that it was just as well 
that I did not participate in the meeting, particularly as I was on the spot, and 
Dr. Bosch furnished me all information about what was going on. 

A. The following is the result of the meeting at the Palast Hotel, Aachen, the 
11th of January 1920. The information received from Dr. Bosch and by 
looking through Dr. Schwarz's report of the meeting : 

Present : 

(1) From the Badische: Director Dr. Bosch, Director Smith (Commercial 
Director instead of Brunck), Dr. Sehwarz. 

(2) Of Brunner Mond Company: Roscol Brunner, Mr. Pollit, Mr. Gold, Mr. 
Aron. 

(3) Of the Solvay Company: Mr. Gielen, German Director of Semi Solvay in 
Bernburg, Mr. Jansson, Mr. Hannon, Mr. Tourniere, French Directors of Semi 
Solvay. 

Mr. Roscol Brunner, being the chief spokesman for Brunner Mond, gave the 
following explanation : 

The British Government has handed over to Brunner Mond and Solvay all 
their work and experimental plants on the synthesis of ammonia made in 
England during the war on the condition that this group shall arrange with 
the Badische to secure the Bosch-Haber process for Great Britain. For this 
reason they have approached the Badische for the purpose of buying the am- 
monia process. 

They wanted the process for the consumption of nitric acid and other chemical 
technical purposes for England, but the combination made with the Solvay 
Company made it desirable to secure the process for all purposes and for the 
whole world. Semi Solvay being established over the whole world and working 
in connection with the General Chemical Company in America would secure the 
best possible guarantees for a successful introduction of the process for the 
world market. 

Dr. BoscH. We have already made an arrangement with the du Pont Company 
for the exploitation of our process for the world. We have always gone out 
from the point of view, that we should be directly interested in such a proposi- 
tion. We are bound to the du Pont Company as far as the world is concerned 
and you will have to discuss this matter with them. 

As far as Britain is concerned we understand that you wish to secure the 
process for nitric acid and other technical purposes and we are ready to discuss 
this matter with you. 

We wish to limit this license to these purposes only. 

R. Bktjnnek. We must have the right not only for Great Britain but for at 
least the British Empire. We must also have the right to manufacture sulphate 
of ammonia for fertilizing purposes. 

We have already been in communication with the du Pont Company for the 
purpose of exploiting your process and we are through, " Explosives Trades " 
in close relations with the du Pont. 

IMr. PoLXJT. Have you met the du Pont Company's official representatives 
lately? 

Dr. Bosch. Yes; we have discussed matters with them. 

Mr. Jansson. As the matter stands we will then have to discus a world 
combination with the du Pont ; as Mr. Gold and myself intend to go to the U. S. 
on January 28, we shall see the du Ponts and discuss the matter with them. 

Mr. Gold. The best thing to do is to leave the whole proposition until we have 
talked the matter over with Du Pont, in order that we may come to an under- 
standing and avoid unnecessary competition. 

Dr. Bosch. I am ready to discuss the matter as far as Great Britain is con- 
cerned, but I leave it entirely to the Du Ponts to arrange as far as the world 
company is concerned. 



2576 MUNITIONS INDUSTRY 

I wish you to bear in mind that our process may not be as advantageous as 
you believe under the present difficult conditions. 

The plant cost will naturally be high now and we have also the competition 
with the Chile saltpeter and coke-oven fimnionia to reckon with. 

Under pre-war conditions our process is far ahead of any other competitor, 
but the conditions may have changed the prosperous outlook. This, I am, 
however, )iot able to judge, as I do not know the conditions in other countries. 

Mr. roi LIT. Leave that entirely to us. We know, perhaps, better the nitrogen 
situation at the present than you do. 

We have looked carefully into it and we are sure that there is no fear of 
competition from Chile saltpeter. We ai'e convinced that your process is the 
process, and by going hand in hand with the coke-oven ammonia people, we 
would be able to dominate the world market. 

We must in any case have the process for the British Empire and also for 
fertilizer purposes. 

Dr. Bosch. This can only be discussed after you have seen the Du Fonts in 
Wilmington. 

Mr. Brunnek. Then, we leave the matter open in such a way that we will 
see you after we have discussed the matter in Wilmington. 

The above covers in the big lines the discussion. The meeting was a short 
one. Dr. Bosch left the English and came to me and we discussed again the 
situation. We agreed that there was no reason for me to appear, as the English 
group is sending representatives to Wilmington, and you had not given me any 
authority to act on your behalf. 

The English i>eople do not know that I have been in Aa<:hen or the next room 
in the Palast Hotel, and I believe this way to handle the matter from my side 
was the best thing to do. 

Dr. Bosch requests me to tell you that if the English should say that he 
(Dr. Bosch) has agreed upon to give them full rights for the whole British 
Empire, also for fertilizer, this is not the case. Nothing definite has been 
arranged no memorandum has been exchanged. The whole was an informal 
discussion pending upon what kind of arrangement the English group may make 
with you in Wilmington. 

The outstanding points of the meeting are: 

(a) The English group claims they are working under direction of the Eng- 
lish Government. 

This is absolutely contradictory to the statement made by Lord Moulton to 
Mr. Mead. 

(b) The English group is convinced that the Badische's process is the best 
and wish to secure it for the whole world. 

(c) They insist upon at least to obtain license for the British Entpire not 
only for nitric acid and technical purposes but also for fertilizers. 

(d) They did not, and know still nothing about our meeting in Zurich. 
They do not know anything about our tentative agreement with exception 

of what Dr. Bosch told them, that the Badische is going to be Interested in 
the new company. 

(e) Brunner Mond claims near connection with Explosive Trade and through 
them with us. 

(f) Nothing has been decided upon; all is pending upon our standpoint and 
all further discussions have been postponed until Messrs. Gold and Jansson 
return from America and have talked with you. 



Exhibit No. 922 

[File 99] 

Waedman Pabk Hotel, 
Washington, D. C, January 22, 1920. 
iRtiatE DU Pont, Esq., 

Wilmmgton. 
Deab Mr. du Pont: Situation clearer and better today. 

Martin and tlie major are hard at it. The plan is to push and keep Wood in 
the background ; that is behind Culbertson. Martin and the major are to fight 
it out with Culbertson by agreement with Sen. Curtis. 

They will take anything from Culbertson that will help embargo and nothing 
that will hurt. 



MUNITIOlSrS IN^DUSTRY 2577 

The major will likely propose that as this is a measure touching " national 
defence", the Commission should be headed by Gen. Siebert to give it the 
flavor of defence rather than tariff, the other members to be one each from 
Treas., TarifE Board, dye makers and consumers. 

No call as yet from the Sub. Com. for the dye manufacturers. My guess 
is it will not come before next week but if it does I will phone you. 
Sincerely, 

POUCHEIR. 



Exhibit No. 923 

IPublicity Bureau momorandum fur information on il.ve tariff bill — legislation — rtyps) 

NOVEMBEK 10, 1919. 
* X7.1-1. 
Personal. 
Mr. H. B. Rust. 

The Coppers Ccmipany, Pittshurgh, Pa. 

Dear Sir: Our chemical department has started to get up the information 
which you asked, about the amount of coke oven byproducts which enter into 
the making of dyes. Their data will deal not only with the du Pont Com- 
pany but with the American dye industiy as a whole, and I hope to have it 
ready for you in a short time. 

Col. John P. Wood can be addressed at 22nd and Spring Garden Streets, 
Philadelphia, Pa. 

Mr. du Pont thinks that a word from you to Joseph R. Grundy of Bristol, 
Pa., would be very valuable to our organization. Mr. Grundy and Col. Wood 
are very closely allied, and Mr. Grundy is an important factor in the eastern 
part of the State. We are informed that he would be glad of recognition by 
interests in the western part of the State, and that if he could he shown that 
Pittsburgh and vicinity have a vital interest in the pending legislation he 
might withdraw nmch of his opposition, which is based on what he believes to 
be the sentiment of his own section. 

I would be glad to talk tliis over with you on the phone at your convenience. 
I understand that you will not l^e in Pittsburgh for some time, but if you are 
within phone call, either there or elsewhere, I would be glad to talk the matter 
>over with you. 

Very truly yours. . 

■CKW/MAP 

Exhibit No. 924 



[I'liblicity Bui'eau fllo : I'oucher. M. R. Corrospondpnce, dye] 

M.\KCH 23, 1920. 

File: 2763-MRP. 
Mr. Joseph H. Choate, Jr., 

60 Wall Street, New York Citi). 
My Deab, Me. Choate: I have lieen trying to get you on long distance this 
afternoon to tell you that I have just received a telegram from our mutual 
friend, Mr. Franklin W. Hobbs, of Boston, reading as follows : 

" I attended a conference on dyestuffs with several manufacturers, at Mr. 
Wood's office this morning. His counsel, Mr. Aurebach. was als'O present. I am 
confident that Mr. Wood is now ready to change his amendments so that they 
will meet Mr. Choate's approval. I am convinced Mr. Wood favors your bill. 
I am to meet Mr. Aurebach again tomorrow, Wednesday morning, for further 
conference." 

(Signed) Franklin W. Hobbs. 

Immediately upon receipt of this message. I got Mr. Hobbs on long distance, 
and he gave me the story of wliat took place at their meeting this morning. It 
appears that Mr. Hobbs took upon himself to write Mr. Wood a letter a few 



* Personal marking. 



2578 MUNITIONS INDUSTRY 

days ago, pointing out the danger of not only his own position but that of the 
entire textile industry in opposing this bill. 

Incidentally, Mr. Hobbs called Mr. Wood's attention to the movement under 
way by the Department of Justice to investigate the textile industry on the 
charge of undue profiteering. At any rate, Mr. Wood decided to call this meet- 
ing. Mr. Hobbs tells me he made a statement along the lines of Mr. Hobbs' 
letter. This was followed by some remarks by Mr. Auerbaeh, to the effect 
that in his opinion these mills should all support the bill. 

I told Mr. Hobbs that I thought the proper procedure would be for Mr. Auer- 
baeh to see you immediately upon his return from New York (either Thursday 
evening or Friday morning), and if the amendment proposed by him met with 
your approval, it could, with the consent of Mr. Wood, yourself, and Senator 
Watson, be brought up in conference ; provided, of course, that Mr. Wood with- 
draws the four amendments and so notifies Senator Watson. 

If we can get these four amendments out of the way by some arrangement 
with Mr. Auerbaeh, then the next step will be to get rid of the Moses amend- 
ments in the same manner, through the influence of Mr, Wood and Mr. Auer- 
baeh, if within the range of possibility. 

I am going back to Washington tonight and will be at the Wardman Park 
Hotel for the next few days. 

I repeated Mr. Hobbs' telegram to Judge (Jovington over the telephone; and 
the suggestion to take the Auerbaeh amendment, if acceptable, into conference 
instead of introducing it on the floor of the Senate comes from him. 
Yours very truly, 

(S) H. R. POUCHER. 

LPL 



Exhibit No. 925 

File— 115 
[Copy] 

41 Avenue de l'Opeba. 
Paris, Februari/ 3, 1920. 

Copy to: Mr. Irenee du Pont, Mr. Lammot du Pont, Mr. C. A. Meade, Mr. 

M. R. Poucher. 
Subject : Our negotiations with the Badische. 
Attention also : Messrs. Laffey, Mead, and Poucher. 
E. I. DU Pont db Nbmouks & Co., 

Development depa/rtment, Wilmington, Delaware. 

Dear Sirs : Referring to my letter of January 27tli on this subject, I beg to 
inform you that further interviews with as well Dr. Bosch as Dr. Duisberg 
in the big lines have conflnned the facts outlined in said lettei'. 

First, ammonia : The Germans did not come to any definite arrangements with 
the Solvay Company, as was expected. 

The fight is now between Solvay and the French Government. The former 
does not want to start any construction at the present but would prefer to wait 
sometime until conditions are more favorable for such large development. 

The French Government, however, demands the immediate construction of 
a relative large factory. 

The Solvay Company would prefer importation from Germany at the present 
and the beginning of the construction, say, next year. 

The contract with the Badische is therefore still in the hands of the Govern- 
ment, but all chances are for an arrangement between Solvay and Badische 
with the French Government as mediator. 

They will now probably wait until they have seen you, but you might bear 
in mind that they have made no definite arrangement with the Badische for 
France. 

As far as Bnniner Mond is concerned, the situation is as informed you in 
my letter of January 27. 

Second, dyes: The arrangement regarding dyes have l>eeu made with the 
French interest " Compagnie National de Matieres Colorantes." The arrange- 
ment is made in such a way that the French company, togetlier with the I.G., 
shall operate all former German dyestuff factories in France, the French being 
directly shareholders in these former exclusively German factories. The ar- 
rangement, so Dr. Bosch says, concerns only France and her colonies and has 
not in view any exportation to other parts of the world. 



MUNITIONS INDUSTRY 2579 

The Germans seem to be much pleased with the arrangement they have here 
and they may have in view some similar move in America. 

As well Duisberg as Bosch, both of whom I had out to dinner the other day, 
were furious on Dr. Herty, and Dr. Bosch declared that he would at once 
break off all negotiations with us if we have anything to do with the difficulties 
raised against the German dyes in America. We must understand, he said, 
that if we were negotiating with them both sides must be frank to each other 
and that we could not expect the Badische to go further in the started negoti- 
ations with us if they knew that behind their back make everything possible 
to hurt their interest in America and elsewhere as far as dyes are concerned. 

Dr. Duisberg said it was the only thing for them to do to try to go to 
America as soon as possible and that he could arrange to get permission to 
land. They would also visit Japan, the Japanese having invited tliem to come. 

The whole miscontent is due to the fact that the Germans have been of the 
opinion that Dr. Herty belongs to our company and that all measurements 
taken in America against the German dye interests originate from us. 

We parted as good friends, I being invited to Bosch and Duisberg the last 
evening they were here, and they are now convinced that as far as we are 
concerned we have paid fair play vis-S-vis them. 

I told Duisberg that he better not come to America just now but let Bosch 
go alone for the ammonia question. I do believe he will not sail at the same 
time as Dr. Bosch but come later with Mr. Weinberg. 

Bosch requested me to come to Ludwig-shafen before I sail ; and as I cabled 
you today, I intend to do so in the near future. 

It seems to me that I should postpone my trip to America nntil you have 
discussed the matter with Messrs. Gold and Jansson. No doubt you will have 
to communicate with Badische during or immediately after these discussions, 
and you may probably have suggestions to make Bosch that should come in his 
hands before the representatives for Mond and Solvay return. Consequently, 
I have taken passage on the Rotterdam, leaving Holland on February 27. 

I am sure you agree with this arrangement. 
Yours very truly, 

Etsten Bmui. 



Exhibit No. 926 
[File, Publicity Bureau, Whaley-Eaton Service] 

Pabis, (VI), 
3 Rub Benaparte, 

January 25, 1921. 
Mr. Charles K. Weston, 

Publicity Department, E. I. du Pont de Nemours & Co., 

Wilmington, Del., U. 8. A. 

Dear Mr. Weston : I have had three meetings with Dr. Chapin, as a result of 
which I have arrived at the most satisfactory arrangement I think possible, 
under present conditions, to make with him. He will not, cannot he says, talk 
officially. He therefore will not meet the newspapers at an arranged con- 
ference. He appears all tied up to silence ofiicially, but he will tip me off to 
I^eople he comes into contact with who know conditions and who are in a position 
to talk. He mentioned that he had information in his possession of vital im- 
portance to friends in New York, information, he said, which would prevent 
them severe money losses, but that he could not pass the information on under 
the present policy. 

I asked him who is responsible for such a policy when almost all Government 
agencies in Washington have by now established oflBcial publicity bureaus. He 
said Mr. Boyden, head of the Commission, was the man. I am arranging to have 
Dr. Chapin, with whom I am getting along famously in a personal way. intro- 
duce me to Mr. Boyden, to whom I am going to suggest the advisability and 
wisdom of loosening up on information, if not to the extent of putting out 
statements, at least to the extent of saying to correspondents who come for 
verification of information. " That is so " or " That is not so." If I can get such 
a system working here, tliere will be no trouble in having information which can 
be obtained from uuofiicial sources approved as correct officially, which will be 
sufficient for the puri>oses of the Paris correspondents. 



2580 MUNITIONS INDUSTRY 

The A. P. carried a cable on the substance of an interview I had with Professor 
Blondell, professor of economics and political science of the College of France, 
and I suppose you noted it in the cable despatches. The Public Ledger syndicate 
and the Chicago Tribune syndicate papers are to be supplied with a story I 
have arranged which will point out that the French Government, upon con- 
fidential information from its investigators in Germany regarding a coming 
great German dump of goods, will further increase its coefiicient tariff rates on 
dyestuffs, chemicals, etc. The stories will point out that France will increase 
the coefficients not only to safeguard French industry but also to prevent further 
unemployment due to Fi'ench production being stopped by a great stream of 
German goods. This will checkmate the German plans as far as France is con- 
cerned but will have the effect of concentrating Germany's attention on the 
United states, which alone of all the great countries has not acted to safeguard 
its dye industry. This story should bring out some editorials in the American 
press, and it might be possible to have it suggested to some of the newspapers 
that editorial treatment of the cable would be of public service. 

Dr. Jacoby, who is Dr. Chapin's associate, showed me yesterday a clipping 
from one of the Ledger syndicate newspapers. It was a cable dated January 7, 
and was the article you supplied. The clip had been sent him from America, and 
the last paragraph had been heavily blue-penciled as a mark of approval. 

I sent you a cable yesterday notifying you of the coming appearance of the 
stories for the P. L. syndicate and C. Tribune papers. I hope to get some more 
material over the A. P. wires shortly. 

I have made arrangements with Dr. Chapin and Captain Norris, who is a good 
fellow, to be tipped off promptly if Kail von Weinberg arrives in Paris. He 
would get in touch with either of these two men upon his arrival. I shall then 
attempt in an interview to get him to boast a little and to have three or four of, 
the other correspondents with me at the interview. 

Dr. Chapin says confidentially that he sent some information to a friend of 
yours, who, I believe, is Mr. Poucher, and that his action was objected to in the 
office here when it l)ecame known. He gives this as an illustration of how care- 
ful he has to be, although in full accord and entire sympathy with our purposes. 
Dr. Chapin went over all his difficulties tlioruughly when we had luncheon 
together yesterday. 

By the way, I suppose that an occasional luncheon, etc., in furtherance of the- 
project would not be objected to. but- I should like authorization. In this case 
Dr. Chapin paid for the lunch, but I want to be in a position to come back at 
him and the other people who we want to cultivate, including such men as 
Williams, of the P. L., Roberts, of the A. P., De.scheil, who is a good plugger, etc. 
Floyd Gibbons, of the Tribune, should be cultivated more closely, and you know 
how much can be done over a bite to eat and a drink. 

Carl Aekerman, who dropped into the Ledger Bureau while I was there, over 
on a short visit from London, requested me to remember" him to you. 

I shall have a new office next week, right at the Place de la Concorde. The 
address will be 8 rue Saint-Florentin, Paris (lor), off the Rue de Rivoli at the 
Place de la Concorde, just over the bridge from the Chamhre des Deputies and 
the French Foreign Office, and right up against all the hotels, ere. I am very- 
much pleased with it. 

Dr. Chapin and Col. Taylor and Mr. Chase ask me to remember them to you. 
Sincerely, 

(s) Ben K. Rat.eigh. 



Exhibit No. 927 

[File, Publicity Bureau, Poucher, M. R. ; correspondence, dyes] 

Boston, Mass., January J, 1920. 
F. D. Byrne, 

Pwbliciiy Department: 
I received a letter today from Mr. Weston from London, dated December 17th, 
together with some clippings from the London papers of various dates between 
December 3rd and 17th. I think we are beginning to see some results ; for 
example, the article in the Boston Transcript issued Dec. 31st, page 6, under 
this heading: 



MUNITIONS INDUSTRY 2581 

" Britain Foresees ' Gas ' War — New Legislation Will Shut Out Dyestuffs 
AND Enable Plants to be Built Which Can be Converted into Poison-Gas 
Factories 

'•London, December 31. — That poison gas will be the supreme -weapon in the 
next war is aeceptefl by the Go\ernnient. This is the inference drawn from 
the passage of the dyestuffs import regulations act, which prohiits the importa- 
tion of dyestuffs for the next ten years. During this period England will be 
enabled to build up her dye industry to a iwint of absolute dependence from 
the outside world. 

" Dye plants, by a slight change, can be readily converted into war plants 
for the manufacture of poison gas. When the World War began in 1914, 
England had very few dye works, but Germany was full of them. Hence the 
British had to build the factories for the making of poison gas, Avhile the 
Teutons had everything ready. The conversion of the numerous dye plants 
into ' gas ' plants was, pi-actically speaking, the work of only a few hours."' 

I notice that this heading follows very closely the one in the London Evening 
Standard of December 7th, reading : 

" Poison Gas and the Next War — Nations Experimenting Already — British 
Position — Gases in Warfare — Value of a Highly Devei^opbh) Chemical 
Industry " 

This is the right line and it must be pushed hard on this side. I suggest 
that you look out for any statements or reports from General Fries. They 
will, of course, be quite in line with the foregoing. 



MRP-F. 



Exhibit No. 928 

[Memorandum] 



M. R. POUCHER. 



January 15. 1921. 



To: C. K. Weston. 
From : F. J. Byrne. 

Recently there have appeared a number of dispatches in the American papers 
along the lines that are very desirable to us. These look to me as if they have 
been cabled to this country as a result of your visit to the other side. 

(1) The Boston Transcript of Dec. 31, 1920, carried a fine story on "Bricain 
Forsees Gas Warfare," dated from London. 

(2) The Wasliington Herald had a cable dispatch written by Wythe WilMams 
from Paris about German dye plots against the United States. This w;is taken 
up by the Manufacturers Record and made the subject of a splendid full-page 
editorial. 

(3) The Evening Bulletin of Philadelphia had a dispatch from London talk- 
ing .-ibout the importance of the British action passing the dye bill and irs 
relation to American affairs. 

(4) The Public Ledger of Jan. 8, 1921, had a dispatch from Paris about " Ger- 
many Sets Dye Trade Trap." 

These dispatches, of course, are syndicated in many cases to appear in 
different places throughout the country, so that the publicity on these four 
items I mentioned must have been very considerable. 

C. K. W. 



FJB/P. 



Exhibit No. 929 



* See me about this. 
FJB. 



April 28, 1921. 



To: Mr. C. A. Meade, room 9104. 
From: C. K. Weston. 

The inquiry which Dr. Koontz makes through Mr. Chase concerning the 
whereabouts of Mr. Guy Martin, and the articles which he wrote for the 
Paris editions of the New York Herald and the Chicago Tribune, throws an 
interesting sidelight on my visit to London and Paris. 



2582 MUNITIONS INDUSTRY 

You will recall that I sent you copies of these articles very recently. They 
were written by Mr. Ben A. Raleigh, an old newspaper acquaintance whom I 
left on guard in Paris. He assumed the name of Guy Martin for publication 
purposes. 

His Paris address is 8 Rue Saint-Florentin, Paris, and he is in constant 
touch with our Paris office. He as my agent will carry out any suggestion 
which Dr. Koontz or Mr. Chase may make. I am returning Mr. Chase's letter. 

Publicity Manager. 
CKW/P 

Exhibit No. 930 

[Copy to: C. K. Weston] 
Mr. M. R. PoucHEK, June) 14, 1922. 

Room 9120, Building: 
The following cable was received today by the Whaley-Eaton Service from its 
Paris correspondent : 

" Congressman Everett Sanders and Frederick Purnell associated with Britten 
Berlin negotiations." 

J. F. Btbne. 
FJB/AER. 

Note. — Both Sanders and Purnell are Congressmen from Indiana. 



Exhibit No. 931 September 22, 1921. 

Mr. P. H. WHAI.EIY, 

Whaley-Eaton Service, Munsey Building, Washington, D. C. 

My Dear Whalby: You know, of course, that the chemical industry will 
figure very largely in the coming disarmament conference. The Chemical War- 
fare Service will, of course, be consulted. It may interest you, as a piece of 
news, to learn that the chemical industry as a whole will be represented thi'ough 
advisers to be appointed to help the American delegation solve its problems. 
The names of several distinguished chemists are now under consideration at the 
White House, and announcement of the appointment of representatives of the 
chemical industry probably will be made very soon. 

For your private information, the President has received favorably the sug- 
gestion that Dr. Charles H. Herty and Dr. Edgar Fahs Smith, former provost 
of the University of Pennsylvania, and president of the American Chemical 
Society, be named as advisers. 

The Evening Journal, of Wilmington, is reprinting on its editorial page today 
the chemical story which the Manufacturers Record printed last week. 
Very truly yours, 

Managee Publicity Bureau. 
CKW/AER. 



Exhibit No. 932 

Whaley-Eaton Service, 
Washington, D. C, November 9, 1921. 
Mr. Frank Byrne, 

E. I. du Pont de Nemours <& Co., Wilmington. Delaware. 
Dbab Sib: Referring to your telephone inquiry in regard to the members of 
the French delegation experts on chemical disarmament : 

Our own information, as carried in our last week's foreign letter, came by 
cable, which mentioned the names of these two gentlemen as Mayer and Moren. 
On inquiry at the State Department we find that M. Andre Mayer is in Wash- 
ington with the French delegation, but no M. Moren. There is, however, a 
M. Moureu. It is our opinion that this last is unquestionably M. IMayer's asso- 
ciate and that the Moren in our cable was gai'bled. 

We think it very unlikely that we will be able to get any of the details of 
the plan for chemical disarmament from these gentlemen, but we will do our 
best. 

Very truly yours, Whaley-Eaton Service. 

By: (s) Harry Eaton. 
ho.w 



MUNITIONS INDUSTRY 2583 

ExHiHiT No. 933 

NOVBMBEK 25, 1921. 
Mr. M. R. PoucHER, 

Room 9120, Building: 
From : C. K. Weston. 

I am informed throush the Washington "grapevine" that the British dele- 
gation to the Limitation of Armament.s Conference has a plan to submit con- 
cerning tlie chemical industry which embodies these points : 

First, to outlaw the use of poison gas in warfare and to outlaw as far a? 
possible anything of a dangerous chemical nature ; 

Second, failing to secure drastic action (as they expect to fail) to limit the 
use of chemicals as much as possible; 

Third, to put the chemical industries of the various nations under the control 
of the governments. 

From the same source comes information that an economic confei'ence is a 
certainty and that Britain will suggest, among other things, that Germany be 
helped to reestablish her industries, particularly those which depend least on 
outside sources for their raw materials — meaning their chemical industries — 
and that England will be willing to assume the responsibility for control of 
this German industry by undertaking to supervise the distribution of German 
chemical products to the markets of the world. 

I understand that Sir Reginald McKenna, chairman of the board of the 
Midland and City Bank (?), is now or has been recently in this country in 
conference with leading American business and banking interests. 
CKW/AER. 



Exhibit No. 934 

statement by julius klein, former assistant secretary of co'm^[e»cb and 
diebctor of thel bureuvu of foreign and domestic commerce 

The Senate inquiry appears to me to present an incomplete version of the 
Commerce Department's discussions with American manufacturers of sporting 
arms in 1925. 

AVhen the State Department began preiiarations for the arms conference a 
draft of the projected treaty was released in Geneva. American manufacturers 
discerned at once that the text appeared to apply also to international peace 
commerce in sporting arms and ammunition and to industrial explosives. 
They protested to the State Department that such prohibitions threatened 
a damaging encroachment upon American commerce without in any way ad- 
vancing the real purpose of the Arms Limitation Conference. 

At the request of the Secretary of State, Mr. Hoover, then Secretary of 
Commerce, called a meeting of the principal American manufacturers of 
sjiorting arms and industrial explosives. This conference, held at the Depart- 
ment of Commerce on April 1, 1925, was devoted exclusively to a discussion 
of such changes in the text of the treaty as would free sporting arms and 
industrial explosives from the restrictions contemplated for military supplies. 

My own covering letter of April 2, transmitting the conclusions of the con- 
ference, ended with this paragraph : 

" Your attention is invited to the fact that the enclosed memorandum does 
not necessarily represent the views of the Department of Commerce, but 
merely those of one branch of the industry, and that the participation of 
the Department of Commerce is limited to the task of ascertaining and crys- 
tallizhig the views of the industry for tlie benefit of the Department of State 
and of the American delegates to the Geneva Conference." 

The whole purpose of the conference, and the only interest of the Commerce 
Dejiartment in the Discussions, was to distinguish between normal ]ieace-time 
connncrcial business in sporting equipment and industrial explosives on the 
one hand and military arms on the other; and to make certain that the legiti- 
mate peace commerce should be properly safeguarded in the treaty. 

A full report covering these discussions was transmitted to the State Depart- 
ment at the time. 

During his administration President Hoover, in messages to Congress and 
public addresses, urged ratification of the Geneva Arms Treaty no less than 
83876—35— PT 11 13 



2584 MUNITIONS INDUSTRY 

six times. As late as January 10, 1933, he sent a special message to Congress, 
again urging ratification of this treaty. In this message President Hoover 
said in part : 

" This convention has been adhered to by a large number of other important 
nations and is practically stopped through failure of the United States to adhere 
to it. Its ratification would contribute to the ends being sought by the entire 
world for the prevention and limitation of war. I earnestly urge that this 
convention should be ratified." 

Over a period of twenty years Mr. Hoover has been a conspicuous figure 
in the movement for the effective organization of the peace of the world. His 
vigorous advocacy of the Kellogg-Briand Pact, hisi unceasing effm-t for the suc- 
cess of the Naval Limitations Conferences his exposure of the jingo propa- 
ganda which once threatened the Geneva effort, his work for the universal 
acceptance of the doctrine of nonaggression, and his efforts to advance the 
entire limitation program- — all these are testimony to his sincere devotion to 
the cause of peace. 



("ExHrBiT No. 935" appears in text on p. 2426.) 



("Exhibit No. 936" appears in text on p. 2438.) 



Exhibit No. 937 

[File MS-80-A] 

* 135 Ms-8 

DU PONT-NOBEIL RELATIONS KEGARDING MILITARY SALES 

Attached hereto is memorandum on " du Pont-Nobel cooperation, sales of 
military propellant powders and explosives ", which is the present agreement 
between the du Pont Company «nd the Nobel interests concerning military sales 
to governments other than the United States and Great Britain. 

A brief summary on how it came into being is timely. For some years past 
an accord has existed regarding foreign sale.s of commercial explosives, but all 
documents covering this accord specifically excepted military sales, as, for 
example, (hat of January 1, 1920. 

This was largely due to the fact that du Pont felt that any accord on mili- 
tary sales would tend to disturb their relations with the United States Govern- 
ment, which relations had been carefully cultivated for over a century. 

How Nobel felt in this regard is not known to us, but probably the Cordite 
factories at Waltham Abbey, Holton Heath, and Auruvankadu (India) occupy 
a relatively larger place in the British propellant supply than do the American 
equivalents, so that the relations of Nobel with the British Government are 
possibly not so intimate as du Pont's with the United States Government. 

The military sales division of the du Pont Company is charged with sales to 
and contact with the U. S. War and Navy Departments, and our constant 
acquaintance with the ofiicials of these Departments gives the members of the 
military sales division a knowledge of opinion in Washington that is never 
written and seldom spoken. It is the unanimous belief of the military sales 
division that any agreement on military sales with an alien firm will materially 
hurt our relations with the United States Government, if, indeed, such agree- 
ment will not eventually conflict with article XIV (d), ordnance contract. 

" No contractor having in hand work of a military character which the Ord- 
nance Department may designate as confidential shall permit any foreign officer 
or other foreigner not in the contractor's employ to visit portions of the plant 
where such work is in process, nor shall the contractor give to such person 
any specific information concerning such work without the authority of the 
Chief of Ordnance, nor shall any alien in the contractor's employ be engaged 
on or permitted to examine such parts of the work as the Ordnance Department 
may specifically designate as confidential." 

Notwithstanding this belief, an agreement to cooperate with Nobel on mili- 
tary sales was signed in London in November 1925, whereby du Pont was given 
priority of sales on nitrocellulose powders and Nobel given priority on TNT 
and nitroglycerin powders. In general, this agreement was satisfactory, but 



MUNITIONS INDUSTRY 2585 

since Nobel was to have some of the nitrocellulose business and had not per- 
fected this type of powder or brought their manufacturing costs to a figure that 
could secure orders, it was not entirely satisfactory. 

Closer cooperation was agreed on under date of October 14, 1926, whereby 
du Pont from their Paris oflSce took charge of joint sales in northern and west- 
ern Europe and Nobel from their Vienna office took charge of the Balkans. 
Italy was left to Nobel ; no mention made of Spain or Portugal, which in effect 
left them to Nobel ; Hungary not mentioned ; and Germany left for future 
discussion. 

The following has developed : On the 1,000-ton Polish order Nobel's quota 
would have been 300 tons, but the Polish Government declined to split the 
order, and, in general, it may be assumed that this attitude will be followed by 
other governments. 

At a meeting held in London on October 11, 1927, it was stated by a Nobel 
representative that Ardeer must have orders for nitrocellulose powders in order 
to gain experience and keep the plant force employed, which indicates that tJie 
difliculties still exist in perfecting a nitrocellulose powder and producing it at 
a cost suflSciently low to compete with other firms. 

Frankly stated, the military sales division did not and does not desire this 
alliance, as our technical developments and production costs permit us to secure 
sufl5cient European business in competition with any or all manufacturers, 
and we feel that any such alliance causes apprehension in Washington, which 
is detrimental to the interests of the du Pont Co. 

This alliance further impedes our sales, since no government will allow an 
order to be filled from factories in two different countries, where with the 
greatest care and skill, differences in finished product must result. 

Although it is a delicate matter to discuss, the political situation of Great 
Britain in regard to continental powers must be given consideration, and it 
is believed that an American firm will have sales advantages, due to the de- 
tached position of the United States in reference to European politics and' 
political alliances. 

We believe also that our European representative and his local agents will 
be more successful in negotiations with the various governments than will their 
Nobel associates. 

To sum up, our objections to the existing Nobel agreement are : 

The detrimental effect on du Pont relations with the United States Govern- 
ment. 

The relative lack of nitrocellulose-powder development by Nobel and the 
relatively higher prices hamper sales. 

The impossibility of du Pont aiding Nobel to develop nitrocellulose powders 
without conflicting with the United States Army contracts. 

The impossibility of inducing foreign governments to permit orders to be 
filled partly from du Pont and partly from Nobel factories. 

The relatively greater skill of du Pont representatives, agents, and technical 
men in securing European orders. 

We consider- this information confidential. 

E. I. DU PoNT DB Nemours & Co.^ 
By K. K. V. Casey, 



Exhibit No. 938 
[Pile MS-80-A] 

16 Place Vendomb, Paris, 

Novemher 16, 1927. 
T-1012 
Major K. K. V. Casey, 

E. I. dxi, Pont de Nemours & Co., Wilmington, Delaware. 

(Cooperation with Nobel:) 

Dear Sir: 1. In accordance with tlie decision of the meeting held between the 
principals of the du Pont Company and Nobel Industries, Limited, on the 29th 
day of July 1926, an agreement was drawn up on the date of October 20th, 1926, 
which resulted in a joint sales agreement by which the du Pont office in Paris 
was to supervise the sales of certain territories on behalf of both companies and 



2586 MUNITIONS INDUSTRY 

the Nobel office in Vienna to supervise otlier territories on behalf of both 
companies. 

2. In accordance with the minutes of the meeting of July 29th, 1926, Mr. A. G. 
Major and myself were delegated to draw up the detailed arrangement. As an 
actual matter of fact, when we drew up tliis arrangement, the following ideas 
were in our minds : 

a. First, that there was no essential difference in the effort put upon sales 
between the du Pont Company and the Nobel Company. 

4. Secondly, that the quality of the products of the two companies was equally 
sellable. 

5. Thirdly, that the sale's prices were approximately the same. 

6. We took this attitude because neither of us had had any comparative 
experience of a real nature to permit us to presume anything different. 

7. However, we did understand that the matters might not worlx out exactly 
as we foresaw and that there might be some possible developments along this 
line, and therefore we put in a paragraph which said : 

8. " It is recognized tliat in actual practice the ([uotas may not be adhered 
to, and it is therefore suggested to the du Pout and Nobel management that, 
at the end of each year adjustment shall be made for services rendered in the 
event of one party obtaining an over-quota by the payment of some agreed 
amount per unit of oversales." 

9. Furthermore, it was provided : " When occasion demands Colonel Taylor 
is to be provided with technical assistance from Nobel necessitated by enquiries 
from his territory, whilst reciprocally Mr. Smith may call for technical assist- 
ance from Colonel Taylor where necessary." 

10. Furthtrmore: "Government objection or prohibition shall be a valid 
excuse on the part of either of the parties hereto to decline to make disclosure 
of information pertaining to products within the scope of this arrangement." 

11. And furthermore: " It is agreed that this arrangement shall not entail the 
exchange of costs." 

12. We have now been working under this agreement for a year and the 
situation has developed as follows : In endeavoring to sell Nobel goods in my 
territory there has not been any great difHculty in deciding in a reasonable 
manner as to which company shall bid on enquiry from any certain country 
and therefore on the basis of meeting the allocation mentioned in the contract, 
there seemed to be no great problem to be expected, as circumstances appear 
to dictate that in certain countries it is easier to sell Nobel material, due to 
political and psychological reasons, and in other countries it is more easy to sell 
du Pont material. Therefore, it first appeared as if the agreement would 
work out exactly as intended, but unfortunately political and psychological 
reasons are not the only things that sell powder, and therefore other considera- 
tions have come in, unforseen at the time the agreement was made and which 
may lead to certain complications. 

These are : First, that Nobel cannot sell as cheaply as du Pont. 

13. Secondly, that du Pont disposes of a greater history of experimental work, 
\vhich permits them to offer a greater variety of solutions of the problems 
presented than Nobel, and above all, permits them to answer these requirements 
more rapidly and with greater assurance of success. 

14. Therefore, one of my first studies in undertaking this sales' supervision 
for Nobel's was to try to improve their situation by giving them more complete 
information aliout the requirements than they had before, by getting their 
technical men In closer touch with the customer, by putting pressure on them 
to increase their experimental and research activities, which has been received 
with a mixed i-eaction : 

15. On one hand they resent rather strongly any criticism of their products, 
and on the other hand they are pleased to be put in closer contact with the 
proidems. 

16. It has also occasionally happened that where we have offered Nobel mate- 
ri;d we have lost the order, whereas we might have had a better chance of getting 
it if we had offered du Pont material. In each of the.se cases, liowever, it was 
a (luestion of iirice. not of quality. It is not. however, beyond the iiossibilities 
that Nobel would be willing to sell at the same prices as du Pont and hence 
correct this difficulty, so at the moment of writing this there appears to be no 
obstacles that cannot be corrected in time. 

17. How<'ver, it is now very easy to project oneself into the future nnd foresee 
lliijt certain more serious difficulties are about to arise. These difficulties are 
about to develop in specific cases : 



MUNITTONS INDUSTRY 2587 

18. The first case is the question of Poland: We are looking forward to cun- 
siderahle business from Pohind and hoping that it will come in the form (,f addi- 
tional quantities to the i)resent contract, which, if it takes place, would oltligate 
us, under the agreement, to endeavour to pass a certain quantity of this 
contract to Nobel, specifically 300 tons of powder. It is evident to me. however, 
that without our assistance Nobel can not manufacture in accordance with the 
specifications, and we will either have to show Nobel how to manufacture this 
powder by sending men to Ardeer or we will have to take Nobel's men to America 
to work them in on this matter. 

1J>. The second case is the question in Belgium, where, for every commercial 
reason, it would appear reasonable to place the business expected from the 
Fabrique Nationnle on Nobel's, and where Nobel is about to undertake studies 
to meet the requirements. In this case, unless I give Nobel's the results of the 
studies made by us for the Fabrique Nationale and give them certain assistance, 
which knowledge I have acquired through efforts of the du Pont Company, they 
will have trouble in meeting these reciulrements. 

20. Thirdly, in the question of powder for the 13.2 mm Hotchkiss machine gun, 
the question comes u]) why should they not furnish powder to Kynoch, if they 
can make it. as Kynoch is their own factory, and here again, in order to enable 
Ardeer to make this powder, we will eventually have to give them some 
assistance. 

21. Fourthly, if it would be possible to continue without giving Nol)el any 
direct assistance in manufacture from Wilmington's iiersonnol, in any case I 
.^hall have to give them, in order to sell their goods properly, a great deal of 
information regarding customers' desires, methods, and results, which has been 
acquired by me through working for the Du Pont Company and which is, there- 
fore, the property of du Pont. 

22. I can also foresee another complication : The experiences of the war have 
caused a very considerable change in the requirements demanded of powders, 
and Europe holds a quantity of unsolved problems. Ot all the p(!W(ler manu- 
facturers, the Du Pont Company is at present the most capable of solving those 
problems. This is being realizeil in Europe, and in the near future we are 
going to get our principal Inisiness presented to us along the following line-;: 

23. A country will say to us: "We have now adopted new guns and small 
arms, but we are not satisfied with the powder solution for this problem as 
presented by local factories. We will place a. large order for powder with you, 
provided you solve the problem and then show our local people how to make 
the powder. We must necessarily have you to show our local people liow to 
make it. as it is not possible for us to be dependent on our powder supply 
entirely from a foreign country; and therefore we cannot buy the ]M3wder from 
you, nor use your solution of the problem, unless it is a solutio.n which we can 
eventually produce ourselves." 

24. The problem will be presented in the above manner, and Du Pont is in 
a position to make considerable money by solving it iri the above manner. It 
appears to me that we have the technical exiierience to allow us to solve such 
problems and that we can in most cases show how to make the particular 
powder for the particular problem which they put up to us, without disclosing 
matters of great secrecy, not losing our lead in experimental work : in fact, the 
stimulus of solving these problems will increase our technical advance. 

25. This appears to me to be the immediate future of our work, and the 
present agreement which we have with Nobel is not adapted to this problem. 
I take it that under the present relations with Nobel we are obligated to show 
them anything we show to a continental country, and tliat we are obligated to 
place a part of these orders with them if possible; and, if this is not possible, 
we are obligated to shai-e profits with them. 

26. Suppose that the Paris office should be called upon to negotiate a contract 
along the above lines. Should I present the problem to both the Du Pont Com- 
pany and the Nobel Company at the same time, secure a duplicate set of in- 
formation and components, have both factories study the problem imlepend- 
ently, and have them comi.ete with eacli other for a technical solution? 

27. If this is to be done, the Paris office of the Du Pont Company, being the 
organ of transmission of information and questions, is bound to acquire thnmgh 
this activity an intimate kn(iwledge of the working of the two parties; it will 
be almost impossible for the Paris ofl^ice to decide which information belongs to 
which company and whether it is to be transmitted to one and not to the other. 
Furthermore, as experiments would go ahmg, it is inevitable that one company 
would succeed and the other fail, and that the .second time a situation like that 



2588 MUNITIONS INDUSTRY 

arose the weaker company would insist upon the other giving them the advan- 
tages of their experience, and immediately a very acute development of the 
problem on tlie exchange of information would arise. 

28. If I gave all the problems to the du Pont Company and none to the 
Nobel Company, there would be a legitimate objection. If I should give one 
problem to one company and one problem to the other, there would be a legiti- 
mate question as to my judgment as to which company I allocated the problem 
to. 

29. Therefore, in the development of our relationship with Nobel, the follow- 
ing questions will come up: 

* No. First, is the Paris office justified, in its efforts to sell Nobel goods, 
in giving Nobel the results of all the experience which it has acquired as 
representative of du Pont? 

30. Is the Paris office justified in deciding that a certain order should be 
placed with du Pont or Nobel, if the decision is to be made based on the 
ability of the given company to manufacture in accordance with the require- 
ments of the problems? 

31. Is the Paris office justified in negotiating a contract which requires the 
study of a new technical problem? 

32. If so, is the Paris office justified in saying that du Pont will take this 
problem because tliey can do it, and Nobel will not take up this problem because 
they cannot do it? 

33. Can the Paris office negotiate a contract for du Pont with a provision 
for giving the purchaser certain knowledge regarding the manufacture of 
powder, first offering this knowledge to Nobel, or without consulting Nobel? 

34. Is it correct, in order to avoid the development of the above type of 
problem, that the Paris office should abandon business where the question of 
a technical study is involved and confine itself to simply selling what might 
be described as the curi-ent manufacture of the two companies? 

35. I foresee that, within six months, every one of the above questions will 
come up and it appears to me that there is no provision for the solution of 
these questions in the contract under which the Paris office is working, and 
it appears evident that the Paris office is not competent to decide the above 
questions, and if the Paris office has no direction along which to work in view 
of the above, our business is going to be a great deal interfered with. 

36. As these questions will surely come up, it npi>ears to me that they should 
be foreseen and an agreement made with Nobel before the occasion arises, 
otherwise tlie Paris office will find itself in the position of taking responsibility 
of action on wliat are general company problems. I thing the Paris office 
should be given specific instructions as to its action in these cases. 

37. To possibly enlighten the discussion, I would like to give the following 
personal opinion : Our future business will probably be, in every case, in the 
form of a solution to a new ballistic problem and the business of selling what 
might be called the current production of the two companies is practically 
over, and as the agreement of the 20th of October 1926 was based upon the 
idea that the sales would be of current products, it seems to me that this 
agreement will no longer cover the situation. I further believe that the volume 
of business will be inevitably tied up with the obligation to teach the Euroi>ean 
customers how to produce, in their own country, the powder resulting from 
the solution of the problem. 

38. I further believe that it will be impossible from a sales point of view 
to successfully conduct the negotiations with du Pont and Nobel competing 
between themselves. I also believe that the number of cases in which du Pont 
will find a solution will be greater than the number of -ases in which Nobel 
will find a solution, but the technical knowledge of the Paris office is not suffi- 
cient for the Paris office to decide which company should study which problem. 

39. I further believe that the organization of the du Punt Company permits 
us to work along these lines and that our state of technical development would 
permit us to give a certain knowledge to the European factories without harm 
to ourselves, but that the state of development of the Nobel organization 
renders the solution of such problems much more difficult, longer, and less 
likely of success. The Paris office has not an intimate knowledge of the Nobel 
organization nor the possibilities of cooperation that it has with du Pont. 

40. Of the possible solutions, one would be a division of territories, certain 
territories to be only for du Pont to be free to do as they wish and other 



Pencil marking. 



MUNITIONS INDUSTRY 2589 

territories to be for Nobel to be free to do as they wish. This solution has 
disadvantages, as it means restricting du Font's activities on tlie Continent 
and also restricting Nobel's activities. The dissolution of our sales agree- 
ment of October 20tli, 1926, would certainly cause very active competition and 
probably bad feeling in the relations between the two companies. 

41. Giving the whole problem to du Pont on a profit-sharing basis with 
Nobel would probably not be accepted by them as satisfactory, although from 
the sales point of view, it would be the most workable. 

42. I see no happy solution of this question, but I am clear that these prob- 
lems will, in a very short time, become acute, and I hereby request instruc- 
tions. 

Vei"y truly yours, 

(S) William N. Taylok. 
WNTRB/ 



Exhibit No. 039 

[File :MS~S0-A. 135. MS-S. MS-208. D-1307] 

January 10, 1928. 
Col. W. N. Taylor, 

16 Place Vendome, Paris, France. 
Dear Sib : 1. Your letter T-1012, cooperation with Nobel. This letter con- 
tains reasons set forth in 42 paragraphs why cooperation with Nobel is not 
feasible. In replying to tlie various questions asked by you, we think that 
you are reading in tlie Nobel-du Pont agreement things which are not men- 
tioned. The agreement was one of cooperation on matters of sales in Euro- 
pean territory. If you limit your efforts for Nobel entirely to sales, we think 
your troubles would be few, but when you attempt to tell Nobel they are 
right or wrong on the quality of their products, or the necessity for Nobel to 
do development work in order to place themselves in position to successfully 
compete on military pov.der business, you naturally place Nobel on the defen- 
sive and they in turn seek to acquire from us the results of our development 
work. 

2. We feel that the Paris ofRce should pass on to Nobel Company all in- 
quiries for military powder and obtain from Nobel their minimum sales prices. 
It is our idea that the Paris office should function with Nobel in the same 
manner that you function with Wilmington on sales. Paris does not wire or 
write to Wilmington and tell us to do development work or research work 
before quoting prices on military powder. We do the development work long 
before quoting prices, and if Nobel does not see fit to follow such a procedure, 
perhaps they can achieve success along other lines. You should not consider 
that you personally are responsible for the quality of powder manufactured 
by Nobel. This is only true when we take a European order and allocate 
Nobel a portion of the powder for manufacture. In such a case the contract 
would be with the du Pont Company, regardless of where the powder might 
be manufactured, and the du Pont Company would be the loser in the event 
the product was not in accordnnce with the specifications. If the Paris oflSce 
should sul)mit prices on powder for Nobel and prices for du Pont on the 
same prospect, assuming that prices were exactly the same, the choice of 
placing the order would be entirely with the customer, and if you are unbiased 
in the matter, you would make no effort to take the business for du Pont or 
Nobel. The question of allocation can never be settled by you nor by us, as it 
is a matter which the purchaser must decide, and Nobel and du Pont have to 
be satisfied with that decision. Our experience in Poland has taught us that 
it is impracticable to assume that a large order can be divided on some agreed 
to basis between Nobel and du Pont. 

3. As long as you continue to function with Nobel on the basis of keeping 
tliem advised as to whether their product is good, poor, or indifferent, you will 
find trouble for yourself and us. You will recall when the writer was in' London 
that you cautioned Nobel how necessary it was to manufacture experimental 
samples and to pay strict attention to various items in the manufacture of nitro- 
cellulose powder in order that they would be in a position to manufacture a 
product of quality. The writer took the position that the specifications would 

• Pencil markings. 



2590 MUNITIONS INDUSTRY 

give the Nobel company what the customer desired in the way of quality, and 
that it was not the business of the salesman to take the responsibility of stress- 
ing certain features of the specifleatious. Fairther, that the peciflcations were 
drawn up so that the manufaciurer would know full well what the purchaser 
desired in the way of quality and the acceptance of the specifications by the 
contractor meant that he was fully aware of his obligations, and in quoting on 
a prospect, did so with the idea that he could fulfill the specifications 100%. 
This is the basis on which the Paris office functions with Wilmington and should 
be the procedure between Paris and London. 

4. We do not intend to furnish technical information to Nobel on any rifle or 
cannon powder which we have in the past made up or may make up for European 
governments. The sole exception to this is in the case of Poland, where we have 
promised and are willing to show the Nobel representative the manufacture of 
ritle and cannon powder on the Polish contract. 

5. Would it not be a good plan for you to announce to Nobel that from this 
date on you are concerned only with their prices on powder on prospects where 
you intend quoting for Nobel ; that on all prospects you contemplate submitting 
prices for Nobel-du Pont and would like our prices to be exactly the same? At 
the end of the year it is up to the officials of Nobel and du Pont to get together 
and make an allocation which will be satisfactory to all concerned. We feel 
that you are quite satisfied that you are in no position to make the allocation in 
question before bidding on a prospect, and if this is true, why not try to get the 
business for either Nobel or du Pont by an impartial method of quoting exactly 
the same price for the product of both concerns? This plan will undoubtedly 
lessen your troubles with Nobel. 

6. Of course, we shall discuss the Nobel agreement with Sir Henry MacGowan 
or other Nobel officials when they visit Wilmington in the near future. We be- 
lieve that our discussion will result in a working plan very similar to that out- 
linetl in this letter, as we feel it is the only satisfactory solution to the 
numerous questions set forth in your letter T-1012. 

7. Before replying to this, may we suggest that you await the arrival of Mr. 
Singer, who has on numerous occasions discussed the Nobel agreement with 
us, and he undoubtedly can furnish you with details and reasons for the 
conclusion drawn above. 

8. Your letter T-1012 certainly tells the story of the Nobel-du Pont military 
sales cooperation. We are glad that you wrote us in detail and gave us your 
very complete thoughts on all the items which have been and will continue to 
cause you discomfort and trouble. You may be sure that we will make an 
earnest effort to revise the agreement so that your work with Nobel in the 
future will be a pleasant task. This cannot be done as easily as it can be 
written, but if you will do your part, as suggested in this letter, we will do our 
utmost to bring about a satisfactory change. 

Very truly yours, 

W. H. O'GoKMAN, Asst. Director. 
WHO'G/h. 

Exhibit No. 940 

[ICI — Militar.v Powers. D-1.378] 

March 10, 1928. 
Conference with Nobel officials. 
Col. W. N. Taylor, 

16 Place Yen dome, Paris, France. 

Dear Sir: On March 9th, a conference took place between Nobel and du Pont 
officials on matters appertaining to sales of military products of both com- 
jianies. We have not as yet been furnished with a copy of the minutes of 
the conference, but the following as reported by Major Casey is a summary 
of recommendations : 

(f/) A 10-year agreement between Nobel and du Pont covering military sales 
in Europe be entered into as more or less of a continuation of the 1925 agree- 
ment.. 

{h) It was explained to Nobel that our Paris office is not in a position to 
furnish technical information, and thei'efore all technical problems should 
be referred to Wilmington. We offered Nobel our facilities at Brandywine 
Laboratory for the development of nitrocellulose rifle powders for British Army 
cartridges. We suggested that Brandywine would welcome visits of Nobel 



MUNITIONS INDUSTRY 2591 

techuicul meu, and we would undertake to develop nitrocellulose rifle powdersj 
to fulfill the British reiiuirenients, provided Nobel would furnish us with guns 
and components to be used in ballistic tests. The development would then be 
turned over to Nobel and, if necessary, we would send a man to Ardeer to 
assist in the manufacture of nitrocellulose rifle powder for the British Gov- 
ernment. AH technical infoi-mation passed on to Nobel would be on the 
basis of Nobel agreeing to consider same as confidential, and under no condi- 
tion divulge it to subsidiary or other companies in which Nobel may have part 
iiwnership of some other interest. 

(c) We advocated that the sale in South America of nulitary products of 
both du Pont and Nobel be under the jurisdiction of du P<jnt, Wilmingtcm. 

{(I) We recommended that our Paris office have complete charge of all 
European powder sales for Nobel and du Pont, and that the Vienna oflice of 
Nobel function under our Paris ofiit-e. 

Mr. Mitchell was not prepared to make a decision in this connection as he 
was without details and felt that the present arrangement functioned satis- 
factorily. He stated that upon his return to London he would communicate 
with Colonel Taylor for the purpose of having a conference in order to 
determine whether the recommended arrangement would be best for all 
concerned. 

2. Attached is memorandum which the writer prepared for the above-men- 
tioned conference, and which may be of service to you when you talk with 
Mr. Mitchell. 

3. We believe it is generally admitted among the Nobel executives that 
our military-sales organization is better equipped to handle foreign sales than 
is Nobel. It is with this thought that we recommended that all European 
sales for both com]ianies be handled through the Paris office. Mr. Mitchell 
no doubt desires to iliscuss this subject with Nobel London before he con- 
fers with youj It woidd therefore seem wise for you to prepare a memo- 
randum showing the advantages which may be gained through the adoption of 
our recommendation, and also to point out specific cases where business has 
bei'n taken by comiietitors because of the lack of unity of action on the part 
of du Pont and Nobel. 

4. From your cable #6";8 it aiipears that you can cite your pre.sent negotia- 
tions in Poland as an example of what both companies may lose through lack 
of unity of action. 



Very truly yours, 
WHO(G:N 



W. H. O'GoBMAN, Asst. DhTcffrr. 



Exhibit No. 941 

[Filo: MS-80-.\. D-l:!84] 

December 12, 1927. 
Col. W. N. Tayloe, 

16 Place Vendome, Pwris, France. 

Deab Sir: Your letter T-1009'— Prance— 13.2 m/m Hotchkiss. 

We appreciate that the adoption of the Hotchkiss 13.2 gun by France will 
undoubtedly bring about an embax'rassing situation for the French Powder Serv- 
ice. It must be fairly well known among the French that we have during the 
past two years manufactured a satisfactorj powder for this gun. We, of course, 
are perfectly willing to furnish France with her requirements of this powder but 
see absolutely no reason why we should even think about making arrangements 
for the manufacture of the powder in France or by the French Powder Service. 
Having in mind our conversation in Paris concerning the possibility of France 
adopting a multiperforated type of grain for larger guns, it seems reasonable 
that inmiediately after the cannon-powder samples will have been tested, you 
will have an opportunity of discussing in general the smokeless-powder situation 
with French War Department officials. At that time you undoubtedly can 
bring into the discussion the subject of powder for the 13.2 gun and offer to 
supply a trial lot of ten tons. It is logical to expect that the French War 
Department might purchase a trial lot even though it has been stated that the 
French Powder Service can produce a satisfactory propellent for the 13.2 gun. 

The proposition of giving or selling to France technical information which 
might permit the French Powder Service to manufacture 13.2 powder and per- 
haps powder of the multiperforated type is one which depends largely on 



2592 MUNITIONS INDUSTRY 

whether France might be willing to contract with us for a specific percentage of 
her annual requirements of smokeless powder. We know of no way by which 
a valuation could be placed upon technical assistance or information which we 
might furnish to the French Power Service. Therefore, it seems to us that it 
is a question of how many pounds of powder we can sell to France over a period 
of years in return for our technical assistance on the manufacture of nitro- 
cellulose-smokeless powder. Of course, if we enter into any agreement with the 
French Powder Service, it would be on the basis of that service furnishing the 
powder to France and France only. We would not permit them to manufacture 
our type of powder for any other foreign government. 

The matter of furnishing technical assistance to foreign governments or for- 
eign plants is one which comes up quite often. In general, our policy is not to 
answer the question until we have some indication as to whether the giving of 
technical assistance will result in a large order or orders. If it is necessary to 
answer the question as to the giving of technical assistance before any informa- 
tion can be had as to whether the foreign government will agree to give us a 
percentage of its powder requirements over a period of years, we think our 
position should be as follows : 

The du Pont Company will furnish technical assistance on powder manu- 
facture, providing we can be guaranteed orders for a definite quantity of powder 
per annum over a period of ten years. Of course, our decision will be based 
upon the quantity of powder which we will be permitted to manufacture for 
the customer over the specified period. 

Very truly yours, W. H. O'Gorman, Asst. Director. 

WHO'G/h. 

("Exhibit No. 942" appears in text on p. 24.i0.) 



Exhibit No. 943 
[File: MS-80-A] 

MEETING HELD AT NOBEL HOUSE ON 9TH NOVEMBER 102o 

Present : Mr. Irenee du Pont, Major K. K. V. Casey, Colonel W. N. Taylor, 
Mr. A. G. Major. 

The discussion evidenced that the du Pont representatives accept our. theory 
that eventually : (1) European countries will be selfsupplying and/or (2) draw 
their supplies from countries more logically situated (sieographically) than the 
U.S.A., and that jointly du Pont and ourselves should adopt the policy of 
affording technical assistance to European countries wishing to erect factories 
in return for a fee and the guarantee of powder orders to us during the erection 
period. 

Colonel Taylor suggested that Nobel's are more interested in having a financial 
interest in such propellant factories and taking their profits that way rather 
than through the supply of powder. He also expressed the view that we were 
not so free to collaborate with du Pont to the extent that might be necessary on 
account of our commitments in other directions. 

It was pointed out that so far we had only gone in for industrial explosives 
in this connection and our policy had been to avoid the propellant powder side, 
except where we were forced to adopt it, e.g., the Czechoslovakian Explosives 
Company. If, however, we were forced to enter the propellants field, we adopted 
the plan as outlined above by Colonel Tayloi*. 

Roth IMajor Casey and Colonel Taylor put forward for consideration the 
principle of N.G. powders for Nobel and N.C. powders for du Pont. In answer 
to this it was explained that this was not a proposition we could put up to our 
management as it seemed to us inequitable — any cooperation should be based on 
a proper division of the required supplies. 

A discussion followed concerning the extension of the Greek Powder C<mipany's 
plant to enable them to execute their contracts with their own government, and 
it was agreed to find a basis for joint working (this of course has since been 
effected ) . 

A general talk ensued on the formation of a pool in Europe embracing Nobel, 
du Pont, Bofors, and the Czechoslovak Company, but no decision was reached. 

3rd Januaby 1928. 



MUNITIONS INDUSTRY 2593 

Exhibit No. 944 

[File MS-80-A; MS-124] 
[D-2076] 

Prospects of future sales. May 21, 1930. 

Colonel W. N. Taylor, 

16 Place Vendome, Paris, France. 

Deab Sir: In your letters T-1862 and 1893 you summarized, in a general 
way, prospects of sale to various European countries. In paragraph three of 
your letter you enumerated various conditions under items " a " to " h ", 
inclusive, and in paragraph four you made two remmendations under captions 
" a " and " b." 

Your recommendations need no approval from this office as similar projects 
have come up for discussion many times during the last five years, and on 
each occasion we have approved the plan which you suggested. 

We are willing to sell our " Know How " providing by so doing we will make 
additional sales of smokeless powder. One basis on which to trade is for 
the firm to which we give the " Know How " to divide its smokeless powder 
business over the next ten-year period on a basis which would justify our 
giving to that concern or government the " Know How " and technical assist- 
ance on powder making. Tliis, in general, has been our policy and it can 
only be formulated into a si3ecific proiwsition in cases where we are fully 
aware of conditions in connection with the government factory or privately 
ownetl concern in Europe which may be producing powder for its government. 

If we are to succeed in making sales of military powders abroad, we un- 
doubtedly have to make connection with European government factories or 
powder companies in such countries that do not have government powder 
factories. 

Orders in Europe are few and far between and, at the present time, it 
cannot be said that our prospects are good other than on the sale of FNH 
powder to the Polish Government. It seems as though we should start at 
once to see what connections we can make and nnder what conditions we 
might be able to make a tie-up with factories in Europe. AVIiat we do in this 
connection depends mostly upon you and we expect to hear from you more 
specifically on the Coopal factory and also on the Muiden factory in Holland. 
Very truly yours, 

W. H. O'GoRMAN, xisst. Director. 
WHO'G : MH 



(" Exhibit No. 945 " appears in text on p. 245.5.) 



("Exhibit No. 946" appears in text on p. 2456.) 



Exhibit No. 947 

[File MS-IOO-R] 
Memo, for file. 

Report No-. 38-H, April 29, 1924 

Washington. Ai)ril 28, 192.'/. 

I. ordnance DEPT'. 

Left Aberdeen Proving Ground at 11 a. m. in order to be certain of getting in 
touch with Gen. Ruggles before he left for the afternoon. Met Major .J. K. 
Grain in the hallway just outside of Gen. Ruggles' oflice, who greeted me with a 
statement that I had come to find out if the Ordnance Dept. would sanction the 
du Pont Co. assisting the Polish Govt, in the manufacture of " IMR " powder, 
and this was based on cablegram from the European military attache's office in 
Paris. I advised that his question was apparently Itased on incomplete informa- 
tion, giving a misconception of the situation. I showed Major Grain our letter 
of April 26th addressed to the Chief of Ordnance, and proposed that we discuss 
the subject with Gen. Ruggles in detail. There was nut time to do this very 
thoroughly with Gen. Ruggles because of pending engagement of his in Col. 



2594 MUNITIONS INDUSTRY 

Ferguson's office to discuss " Muscle Shoals." However, discussion was guided 
along lines that indicated to Gen. Ruggles that it was very desirable tliat the 
work be undertaken as they stood to profit by it. The flake rifle powder situa- 
tion was emphasized, and apparent contradictions were cleared up. Even be- 
fore seeing our letter, Gen. Ruggles had dictated an endorsement relating to the 
military attache's cable, stating that it was vastly more important to encourage 
the du Pont Co. to continue in the manufacture of propellants for military use, 
than to endeavor to protect secrets relating to the manufacture. Major Grain 
dictated the letter of reply to us, based on instructions from Gen. Ruggles. 
There was no argument or hesitation in making the decision as to their attitude. 
Question did arise, however, as to tlie need of submitting this question to the 
Bureau of Ordnance of the Navy. I stated that I expected to see Capt. Hough, 
of the Division of Naval Intelligence, and would, as a matter of courtesy to the 
Navy Dept., mention the matter. Capt. Hough was absent from the oflSce on 
account of illness, hut the subject was discussed briefly with his assistant, 
Comdr. Galbraith, who had little comment to make, except that he would like 
copies of the correspondence, simply for record. 

II. NAVY DEPT. 

(o) Division of Naval Intelligence. — Discussed subject as noted above with 
Comdr. Galbraith. also the recent correspondence regarding Capt. Sugimato's 
letter, and Japanese visitors. No difference of opinion developed during this 
discussion. 

(&) Bureau of Ordnance. — Made further detailed arrangements with Comdr. 
Courts regarding tests of " Pyralin Containers", for 5" 51 cal. powder charges, 
to be made at Dahlgren Proving Ground on May 2d. 

Subject of safety and fire inspection of the Naval Depot at Lake Denmark, 
following similar inspection of Picatinny Arsenal, was mentioned, and Comdr. 
Courts took this subject up with Admiral Bloch. The latter concluded that it 
was not advisable to have such inspection made because there were no funds 
available to correct known defective conditions. 

C. I. B. Henning, 
CIBH:N (s) C. I. B. H. 



ExHiHiT No. 948 
[File 99-12-2] 



November 10. 19.33. 



du Pont-I. C. I. patents and processes agreement. 
Mr. W. R. SwiNT, 

Director Foreign Relations Department: 
In answer to the questions contained in your letter of November 2d : 
1. We have received no valuable assistance from I. C. I. on new products or 
new processes but have had valuable assistance along the line of improvements 
in exi.sting processes in two instances: (a) In the process for refining TNT, 
and (b) the complete process for manufacturing tetryl. Up until recently we 
have received very few suggestions or ideas for new lines of research or new 
approaches to existing research prol^lems. Over tiie past few years there has 
been a definite iraiJrovement in the practical nature of the work carried out by 
I. C. I. as affei'ting explosives. The commercial attitude seems to have been 
inserted more and more, and, at the present time, there is one problem on which 
they are working which has stinnilated thoughts along the same lines in cur 
minds, namely, the development of a practical method for providing safety 
sheaths for explosives to be iised in coal mines. Up until the present time our 
connections with I. C. I. have lieen chiefly of value in reference to improvement 
in existing pi'ocesses, and have been of very minor inipi rtance in connection 
with new products or new processes. There is no question but that the in- 
formation received from I. C. I. has been of a valuable nature, and the situation 
in this respect seems to be improving as time goes on. 

C. A. WoooBiTRY, Director. 
CAW : MKB 

Tlie above is an excerpt of letter to Mr. W. K. Swint, as shown in first 
paragraph. 



MUNITIONS INDUSTRY 2595 

Exhibit No. 948 1/2 

56 RUE DE Vatjgiraed, 

Paris, 6e., 
October 10, 1922. 
T-37. 

Siiles in the Balkans. 
Mr. K. K. V. Casey, 

E. 1. du Pont de Nemours, Wilmington, Del. 

In the Balkans I ran across a situation so entirely different from anything 
we have in America that I am writing this in addition to my letter no. 36' to 
try to give you a picture of the situation there. 

We want to sell powder in the Balkans and powder can be sold to the Balkans 
but the method of straight selling for what they need and getting paid for it 
will not work. If you draw a line from Ti'ieste t<> Warsaw and go east of that 
line, you find the business and tinancial conditions run on a set of rules entirely 
their own, and if we can't conform to the situation we won't be able to get any 
business. There the ordinary business ethics are entirely different from ours 
and people have no knowledge of ours, they don't know what our business 
ethics mean. Their financial methods and the methods of raising money from 
their goveriuuents are also entirely different from ours. 

In the first place, the country is constituted of a great mass of peasants who 
work in the fields and cannot read nor write. Until comparatively recently the 
governments were abs<dute monarchies run by a group of people around the 
monarch who, by every means whicli they could imagine, extracted money from 
the peasants without any idea of what we might call a national instinct or any 
idea of being fair or doing good to the peasant — on the contrary ! Generally in 
these countries are several groups of such people and all political agitation is 
simply a tight between these different groups to get their hands on the spoils. 
The great western European powers have attempted to force upon these people 
the western ideas of government and ethics and the result has been merely 
a complication of tlieir primitive methods. They begin by collecting all the 
taxes they can, then they purchase things for the government and all of them 
collect all the graft they can in every way out of these purchases. They don't 
much care what they pay so long as they get the graft, which is their main 
object. Internal politics consist of disputing over the graft — external politics 
consist in developing complications which permit them to spend or collect more 
government money. The idea of doing anything for the good of the country 
has never been translated into their language. 

For instance, the idea of issuing an internal government loan, selling it to 
the people, has never occurred to them and could not be done. When they 
want an internal loan they get together the rich merchants and Jews and say, 
" You will lend the government some money or we put you in jail ; if you do 
lend the government money, we will let you in on the profits for 15 or 20 
percent." A merchant is successful when he knows how to distribute the 
graft and get away with part of the profits. 

If you do down to that country with something to sell and expect to find 
fair competition on prices and quality, you will be very much deceived — ■ 
there is no such thing. People wh(> traded the most with those countries and 
are most successful are the English and Germans. How do they do it? Let 
us take Vickers for an example. It is impossible for Vickers, with their 
British stockholders and their English business ethics, to play this game di- 
rectly. So they use the intermediary of a man like Sir Basil Zaharoff, who 
is the most important of his class, who acts about as follows : He gets a 
price from Vickers with a discount of 40 or 50 percent. He goes to the country 
and he says, " You need so much material. I'll provide you with this whole 
lot and give you so much graft and I'll lend you the money to buy it with." 
Then he will go to a local banker or merchant and he'll say this, " We will 
make a loan through Mr. So-and-So to the government and this loan will bring 
you a very large interest and we will give so much commission to the Minister 
of Finance ", and he'll promise to collect enough taxes to pay this loan and he 
does not got the commission until the loan is paid back. He gets his money 
from these various people. The government pays Vickers the full amount 
less the discount which goes to some intermediary. In time the government 
collects taxes, pays back the people who made the' loan, and all the people in 
the game pocket the profits. He has now made an arrangement of this type 



2596 MUNITIONS INDUSTRY 

for refilling the Greek Army. If we want to sell down there we will have to 
do somewhat the same thing. We will have to go to the government and say 
" We can furnish you with a variety of materials, large orders, which will 
make a big enough sum to be interesting. We will cover fixed anununition, 
powder, rifles, and cannons, shoes, uniforms, etc., and we will help to 
arrange a loan to permit you to pay for this." We can then go to a local 
bank and say " Now you want to arrange a loan to the government to pay for 
this material on which you will get a large percentage." This bank will get 
up a private loan, promising large interests to the subscribers, subject to a 
purchase of material to our combination. 

In order to work this we must work through an American bank who will 
act as an intermediary between us and the local bank and must be able to do 
its share in raising the loan among the rich nationals of the country to which 
we sell, who are resi'lents in America. If we could find a bank who knew 
how to do this we should get up an expedition to go to those countries, con- 
sisting of representatives of the bank, technical men from the Bethlehem Steel, 
a small-arms company, an ammunition company, and sit on the job until we 
could negotiate. 

The most difficult problem in America would be to find a bank accustomed to 
this kind of operations. There are a great many such banks in England, par- 
ticularly the Anglo-Persian Bank, who does nothing else, but I doubt if we 
can count on the English banks to be interested in the purchase of material 
from America. The American bankers are not accustomed to this type of 
operation in the Balkan countries. I had a little talk with the Morgan 
people in Paris and they say they have no relations in those countries and 
that while such operations are done they are not organized to work in the 
Balkans. The Guaranty Trust Co. people think they might be able to do some- 
thing with regard to Greece but they both say that they think that it should 
be done through a Jewish bank. 

Any attempt to organize this by having an issue of the local Government 
bonds to be sold in America on the open market, is utterly impossible. If we 
want this business bad enough we could take the Government notes ourselves 
and we could arrange to have enough commission on the sales to be distributed 
to the right people and to be paid to the officials only after the Government 
has met his obligations to us, this commission being a sort of insurance on 
being paid. If we could do it ourselves we would save considerable money on 
commissions and would make our prices more reasonable and less open to public 
criticism. I think if we could take the Government notes in payment for the 
offer of a combined lot of materials to about $1,500,000 for Serbia and about 
$3,000,000 for Greece and would allow enough percentage to be distributed and 
get hold of a fairly trustworthy distributor, we could do considerable business 
in these countries. Otherwise I think our only chance of doing business is 
to sell a little powder to the people who are operating in that manner, which 
would mean instead of working in those countries attempting to sell to a 
Franco-Tchec group " Skoda & Co." or to the British group around Vickers. 

Selling a combined lot of ordnance and taking in hand the creation of a 
loan would have the best chance of success ; sales to Vickers or Schneider have 
the second best chance of succeeding, and an attempt to sell powder directly 
to these Governments the least chance of succeeding. 

I know this sounds lilce a story from the Arabian Nights and will probably 
be digested with difficulty at Wilmington, but it is as clear an exposure of 
the situation in the Balkans as I am able to make. Please think this over 
and tell me which line you wish me to pursue. If you don't feel like going 
into a loan of this kind, and don't know any bankers who would undertake 
it, it is possible that our best mode of operation would be this : That our 
agents in these countries do the best they can toward little sales and have 
me put my time on the big munition companies in the western European 
countries. So far I have put all my efforts on straight selling to these countries 
and I expect to get some results but I don't believe that that method is going 
to bring us anything very big. I think, from what I saw in the Orient, that 
there are very great chances in favor of a war in the Near East. And one 
must include the Balkans as being part of the Near East. Those savage people 
tlon't know how to live without w-ar and robberies. They have in the past 
been helped in a certain line of good conduct by fear of the military action 
of file great powers. Before the Anglo-Turkish incident there was still in 
the Orient a great fear of the eastern powers but the fact that both the French 
and the English refused to fight Kemal and are going to permit him to enter 



MUNITIONS INDUSTRY 2597 

Europe, has given a tremendous blow to the European prestige in tliat part 
of the country. All the people are absolutely astonished. I saw Turks, Bul- 
garians, Greeks, and Serbians, and with one accord they say that the great 
powers are done for, that they are afraid to fight and add " we don't have to 
obe.v them any more." 

To maintain European prestige in those coimtries there was nothing to do 
but fight the Turks but as neither the French nor the British Governments 
felt it possible to ask their people to go to war, they simply have had to ac- 
cept a tremendous moral defeat. The result will be that all those Near-Eastern 
people will feel that the time has come to throw off the government of the 
great powers and if it does not lead to one enormous war it will lead to a 
great number of small ones. 

If we want to sell military powder to these people we have got to hit on the 
proper plan and get busy in a concentrated way. All these people will prob- 
ably buy fixed ammunition and it looks to me as if a powder factory had a 
fairly small chance of selling directly to these countries. But the sales to these 
countries should be made by the big munition people and perhaps our best 
plan is to concentrate all our efforts on these munition firms. 

Please give me a directive. 

(s) William N. Taylor. 
WNT/Mg. 

("Exhibit No. 949" appears in text on p. 2489.) 



Exhibit No. 950 

[File MS-80-A] 

February 3, 192S. 
Personal. 
Col. W. N. Taylor, 

16 Place Vendome, Paris, France. 
Dear Taylor : In reply to your private and confidential letter of January 18, 
1928. designated " Letter A", I cabled you a reply as per my telegram no. 588, 
confirmation of which is attached. 

We will pay a cash discount of 2% at the signing of the contract, understand- 
ing that the 2% so paid is part of the regular 7% commission. Our payment, 
however, is predicated upon Polish payments for the 300 tons of powder being 
satisfactory to us and, of course, the price at which the powder is sold likewise 
being satisfactory. 

You may be sure in the event that you conclude a deal along the lines indi- 
cated in your letter of January 18th that I will promptly remit by cable the 
amount involved to pay the 2% commission, so that there will be no delay. 
With kindest regards and wishing the best of luck, I am, 
Sincerely yours, 

W. H. O'GoRMAN, Assf. Director. 
WHO'G/h. 

Exhibit No. 951 

[144— Polish Government. MS-80-A] 

July 3, 1928. 
D-1552. 
Col. W. N. Taylor, 

16 Place Veudomc, Paris, France. 
Deiar Sir: We acknowledge receipt of your cable no. 678 and confirm our 
reply no. 571, copies of both are attached. 

1. The news that you had actually begun negotiations on a new contract 
with Poland covering the sale of 1,200 tons of short-barrel rifle powder, was 
indeed gratifying. It is noted that your negotiations may be concluded within 
the next two months and that the conditions will be the same as the last 
contract. 

2. Because of price cutting on smokeless powder by competitors, you ask us to 
name the lowest price at which powder referred to above could be sold to 



2598 MUNITIONS INDUSTRY 

Poland. In our telegram 571, we advise that our lowest price would be 750 per 
pound f.o.b. our plant. Based on this price if the agent is to be paid a 7% 
commission, lie would receive 5i/40 per pound on our f.o.b. price. Wo assume 
that the freight and insurance charges would amount to 20 per pound so that 
the total c.i.f. price, including everything, would be 821/40 and we authorize 
you to name this price if conditions so warrant. 

3. In i-egard to advance of 2% on agent's commission on new order, this 
matter can be handled exactly the same as we did on the 1,000-ton contract 
so that the money will be available upon receipt of telegraphic advices from 
you. You may rely upon me to personally take care of this matter so that the 
funds will be placed to Mr. Klawe's credit within 48 hours after receipt of 
telegraphic advices from you. 

4. If the above arrangement does not meet with Mr. Klawe's approval, we 
could arrange to make Mr. Klawe an advance against his commission on the 
present 1,000-ton contract. Personally, I do not think the advance should be 
made until you are absolutely certain thnt the new 1.200-tou contract will be 
signed. This, however, is a matter of bookkeeping within the du Pont Company 
and you may proceed on the basis that the amount involved will be available 
in cash either at the signing of the contract or just prior to the date that 
the contract is scheduled to be signed. 

5. Under separate cover, I am writing you concerning new prices on smokeless 
powder. 

Yours very truly, 

W. H. O'GoRMAN, Asst. Director. 
WHOG : MHS 



Exhibit No. 952 
[144, Polish Gov't] 

May 20, 1930. 
Sale of aircraft finishes — Polish Government — Stefan Klawe. 
Parlin Plant, 

Industrial Finishes Division, Export Department, 
(Attention J. H. Frechen.) 

In reply to your letter of May 14th and confirming our telephone conversa- 
tion on the above subject, we are glad to advise that Mr. Klawe has been 
agent for the ^Military Sales Division in Poland for the past six years, during 
which time he was successful in obtaining for us orders from the Polish 
Government for large quantities of smokeless powder. Some of the sales 
were made on a cash basis, others on credit extending over a year and a half 
and on the last contract, which was for 1,000 tons of powder, ijayments ex- 
tended over a three-year period. 

For your confidential information the total sales price of the 1,000 tons 
of smokeless powder amoinited to $1,846,000. Poland agreed to pay this sum 
in twelve equal instalments, adding to each instalment a premium of 9% and 
interest at the rate of 6% annually. The Republic of Poland gave to us 
twelve treasury notes, note no. 1 being in the amount of approximately $108,000 
and note no. 12 approximately $204,000. The other ten notes ranged in face 
value between these figures. 

Mr. Klawe's commission on the above-mentioned contract was 7%, or ap- 
proximately $126,000. Upon signing of the contract, even before we i-eceived 
the Polish notes, we made an advance payment of commission to Mr. Klawe 
of $30,000. 

The Polish Government has met all of its obligations promptly and in a 
very satisfactory manner. We would have no hesitancy in extending credit 
to the Polish Government and, at the present time, we are negotiating for a 
larger contract than the (me referred to above. The prospective contract will 
be along the same credit lines as the last. 

In dealing with the Polish Government you are rather fortunate to have 
Mr. Klawe as agent, as he is a man who is very well connecteil and 
thoi-oughly understands what must be done in order to secure business. He 
is very trustworthy and I suggest that you follow his advices so far as the 
obtaining of Polish Government business is concerned. 

In regard to the inspection of nitrocellulose dopes, the order would probably 
be too small to justify the Polish Government sending a representative to this 



MUNITIONS INDUSTRY 2599 

country and you will therefore have to depend upon inspection in Warsaw or, 
if Klawe can arrange it, the writer feels that the U. S. Army would be glad 
to function as inspector for the Polish War Department. This is a matter 
which would have to be taken up by the Polish Lesation in Washington 
through tile State Department of the U. S. Government but the request would 
have to be initiated in Warsaw. 

W. n. O'GoKMAN, Asst. Director. 
WHO'G :MH 



("Exhibit No. D53 " appears in text on p. 2497.) 



Exhibit No. 954 

December 27, 1929. 
(Circulation MANAGiai, 

Du Pont Magazine. 

Dr. C. Y. Wang is a chemical engineer in charge of dyestuffs demonstration 
in our Shanghai office, but since Dr. Wang is al^o engaged in military sales 
work, the Du Pont Magazine would be of value to him. as he is in constant 
touch with Government officials. 

Col. de Fremery is a Dutch officer working under contract with the Chinese 
Government as an advisor, but we do not wish the title " technical advisor " 
to appear in the address. The other men mentioned are all members of the 
so-called " technical section " or technical committee in the ordnance department 
of the Chinese Army, and it is essential that each one receive a copy of the 
magazine. 

In the future we shall be mindful to follow your suggestions in keeping with 
the policies you have adopted, it being our desire to cooperate with you as much 
as possible. 

W. H. O'GORMAN, 

NEB/h Assistant Director. 

The above as per last three paragraphs of letter of above date to circulation 
manager. 

("Exhibit No. 955" appears in text on p. 2500.) 



Exhibit No. 956 

[Copy] 

Original noted by Major Casey and returned to dyestuffs department. 

(S) J. C. G.* 
private and confidential, 

Wilmington, Delaware, 

August 22, 1929. 
[No. SW-PC-177, August 2, 1!)2'J 
Kec'd : M.S.: Military E^plo.sives] 

File 34— Chinese Gov't. 
E. I. DU Pont de Nemours & Company, 
Dyestuffs department, sales dinision. 

This will acknowledge with thanks the receipt of your letters WS-PC-103, 
105, 106, and 121, all of which make very interesting reading; 121 particularly 
is important inasmuch as it gives very complete information on the respective 
qualities of powders nos. 17, 17 special. 25. and 25i/2- It came at a most op- 
portune moment as I am at present engaged in discussing a 30-ton powder 
contract with the Shanghai arsenal. 

Proving ground : The matter is in order and will be used for bargaining. 

Ballistic tests : No comments whatsoever are required : we now have the 
fullest data on hand. As a matter of interest, we might mention that 7.9 



Pencil notation. 

8:i87G— 35— PT 11 14 



2600 MUNITIONS INDUSTRY 

m/m pointed " S " bullets weighing 10 grams are used exclusively by the Chinese 
Army in a long-barrel rifle of Mauser type. 

Cannon powder : A form letter was received from Nanking this morning 
signed by an official of the ministry of war, requesting offers on cannon powder 
on the following characteristics : 

No. 1. 75 m/m 14 cal. mountain gun. Muzzle velocity, 280 meter seconds. 
Maximum pressure, 1,400 atmospheres. Weight of powder charge, 140 to 1.50 
grams. Weight of projectile, 5.3 kilograms. 

No. 2. 75 m/m 14 cal. field gun. Muzzle velocity, 510 meter seconds. Maxi- 
mum pressure, 2,700 atmospheres. Weight of powder charge, 430 to 440 grams. 
Weight of projectile, 6 kilograms. 

You cable dated July 29th, advising that you were sending cannon powder 
together with the rifle powder, came in very handy and we are going to follow 
up the matter. We trust that full information covering ballistic tests of this 
powder will reach here by an early mail. I regret to be unable to give you any 
further information on the subject as the mail is closing this afternoon. Col. 
de Fremery is back and I shall discuss the matter with him. 

Further contracts: I have been nei;()tiatiug for the last few days for a 30-ton 
Cfiutract of du Pont I.M.R., powder no. 25 with the Shanghai Arsenal. I have 
quoted them the price of g'old $2.30 c.i.f. Shanghai, shipment east coast. If 
shipment is made via the west coast, 100 extra per kilo will be charged. 
The terms are similar to the first contract, copy of wliich is now in your hands. 

In order to increase their interest in the matter, I have suggested that it 
liii.^ht be of mutual advantage to make a 50-ton contract now that they know 
from the tests of the Frankford Arsenal that our powder is satisfactory, in 
which case I would quote 2.26 (or 2.36) and not insist on a higher deposit 
witli the order. The matter has been referred to Nanking and will probably 
be settled next week. 

The German advisers have remained singularly quiet of late, ixjssibly on my 
hint that they were being spied upon by the Chinese authorities. Anyway, 
from further information I have been able to obtain through Chinese sources, 
all three of them are going to be transferred to various places in the interior, 
and there seems to be a very good chance of our now lieing free from inter- 
ference. I have also learned that the chief engineer of the arsenal, whose 
name is on the contract and with whom I have been negotiating, is considered 
to be absolutely square. Anyway, presents will have to be given to various 
parties at China New Year and tlie over price we get can be used for this 
purpose. Incidentally, we are spending a fortune on cable charges and I think 
that it is only right to charge all the traffic can bear. Later on if we discuss 
a 500-ton contract or so we can bring down our price to your figure of 2.18. 

We are accumulating a considerable amount of information, partly through 
Colonel de Fremery, partly through Chinese sources, and C. Y. Wang is giving 
me most excellent service in this connection. The new Nationalist Government 
is more or less controlled by returned students, and C. Y. is certain to find 
either former classmates or friends or relations of classmates of his wherever 
we go. 

Eight-ton contract : Enclosed herewith please find translation of your cable 
dated July 30th. Considering that the cabled advice to the arsenal was sent 
by your good selves and not by the Frankford Arsenal officials, and that we 
are negotiating a new contract, I found it more diplomatic not to ask our 
friends for the second quarter of our first contract. I shall do so when the 
original documents signed by the Frankford Arsenal come on hand. This 
means a month's loss of interest, but I tliink that just at present it is much 
safer to act as I have done as the Chinese offirials may very rightly point out 
that the information is coming from us. 

There is no time to giv^^^ you any further information as the mail is closing. 
As soon as anything develops I shall let you know by cable. 

Shanghai Dyestufps OmoE, 

(S) F. A. M. NOELTING, 

Director of sales for C'hUia. 



MTJNITIONS INDUSTRY 2601 

Exhibit No. 957 

[File: MS-IOO-C] 

Wilmington, Dei^awarei, 

December 11, 1921. 
Report of Trip to : Washington, D. C. December 16tli. 

Called at the Department of Commerce regarding their letter of December 
9th concerning onr negotiations in Argentine. Saw Mr. P. S. Smith and 
Mr. J. P. Bushnell. Mr. Bushnell is a former employe of the du Pont Export 
Company, who was a ti'aveling salesman in Mexico and South America for 
the Export Company. Mr. P)nshnell stated that he knew Mr. Lissner and 
therefore was interested in doing all he could for us. 

Mr. Smith stated that the information did not come through the representa- 
tive of his department in Buenos Aires, namely, Mr. Feely. Mr. Smith's 
letter to us was founded on a confidential report sent to him by the American 
Charge d'Affaires in Buenos Aires. I requested Mr. Smith to permit me to 
read the report but he stated that the department was not permitted to show 
confidential reports received from the various embassies. However, I told him 
that I felt there would bo something in the I'eport which would be of material 
aid to us in straightening out this matter, and he finally agreed to let me 
read it if I would consider it strictly confidential and personal. 

From my memory the following is the substance of the report : 

October 27, 1921. 

The du Pont Company has in Buenos Aires a German Jew named A. 
Lissner, who is negotiating with the Argentine Government for the sale of a 
quantity of powder which the du Pont Company has on hand, due to the can- 
cellation of a contract with the Italian Government. In a conversation with 
the Chief of Ordnance he told me confidentially that Lissner was endeavoring 
to bribe Argentine officials by indiscriminately distributing funds through a 
middle man. The Chief of Ordnance, together with other Argentine officials, 
strongly resents Lissner's business methods, contending that Lissner came to 
Argentine with the idea that tlie government officials were corrupt and that 
he could f>nly obtain a contract by paying bribes. Argentine does not like 
to do business with this type of a representative and therefore the Chief of 
Ordnance stated that the du Pont Company would not get the contract. 

The vice president of the Baldwin Locomotive Co. came here last year and 
made a vei-y good impression on the Argentine Cabinet, together with all 
Argentine officials. He succeeded in putting through a $14,000,000 contract 
for the supplying of locomotives, etc., and not one penny of graft was paid to 
anyone. American manufacturers would do well when negotiating \Aith 
Argentine to do so through an officer of their company or through some very 
high official. A vice president of an American corporation carries much more 
prestige with Argentine officials than does an ordinary representative. A vice 
president is generally a higher type of man, whose Inisiness methods are on 
a much higher plane and the Argentine Government feels complimented when 
an American corporation sends a higli official to conduct negotiations with 
them. 

While I do not personally know Mr. Lissner, it is rumored that he is fre- 
quently drunk and does not represent the true type of American busin.ess man. 
This last statement is given to you with reser\ation in that the writer has 
no proof of it being true. 

(signed) Francis White." 

Both Mr. Smith and Mr. Bushnell felt that a great deal of the above report 
could be discounted, stating that Mr. White was a very high typ<^> of man, 
conscientious and painstaking. The moral conclusion which Mr. White at- 
tempted to draw attention to in his report, of course, is a high thought, but 
Mr. Smith stated that he spent eight months last year in Buenos Aires and 
knew for a fact that the officials were corrupt and endeavored to obtain graft 
whenever possible. He ventured to say that it was quite possible that the 
Chief of Ordnance was incensed because Lissner had not conducted the busi- 
ness flirectly through him, and furfher, that it might be likely that he objected 
to Lissner's methods because he was not getting part of the graft. 

Mr. Smith agreed to cnble his representative, Mr. Feely, at once and instruct 
him to get in touch with Mr. Henuiug and to conduct in conjunction with 
Mr. Henning a thorough investigation of the case. I agreed to pay the cost 



2602 MUNITIONS INDUSTRY 

of a cablegram and Mr. Smith will send us an English translation of the cable 
he sends to Mr. Feely. 

Mr. Smith stated that as far as the Department of Commerce was concerned, 
they merely felt it was their duty to report to us the fact that our representa- 
tive had not been discreet in conducting negotiations. He stated that they knew 
perfectly well that the du Pont Company would not permit a representative 
to negotiate along the lines described by the Charge d'AftViires, and wliether 
his report be true or not, it was Mr. Smith's belief that Mr. Lissner must 
have been very indiscreet. 



W. H. O'GORMAN. 



WHO'G/h. 



Exhibit No. 958 
[File: MS-67] 

Memorandum for A. Felix du Pont. 

March 23, 1922. 

Mr. Joseph McCarthy, a personal friend of mine, has been in business in 
Buenos Aires for the last eight or nine years. At the present time he is 
South American manager of the Singer Sewing Machine Company. A busi- 
ness associate of Mr. McCarthy, Mr. Thomas D. Valentine, is on a visit to the 
States, and at present is living in New York City. Mr. McCarthy requested 
Mr. Valentine to call on me and inquire as to whether the Du Pont Company 
contemplated building a power factory in Argentina. 

I had the pleasure of talking with Mr. Valentine on March 20th while in 
New York, and I feel it my duty to pass along to you certain information and 
remarks regarding Mr. Lissner's performances and negotiations in Argentina. 
I might add that Mr. Valentine knows Mr. Lissner very well, having become 
acquainted with him upon Mr. Lissner's first trip to Buenos Aires. While some 
of Mr. Valentine's information and remarks are not new, I feel that since he 
is in no way interested or connected with this company, they are worth 
repeating to you. The story as told to me by Mr. Valentine can be summarized 
as follows : 

During Mr. Lissner's first trip to Argentina in 1920, Mr. Valentine became 
acquainted with Mr. Lissner by meeting him at the American Club. Mr. Liss- 
ner openly announced that he was down there to sell Argentina a quantity of 
Italian powder which he personally repurchased from the Italian Government 
at 1^ a pound and which we intended to resell to the Argentine Government 
at a price of 70f per i)ound. This fact was made public by people who heard 
it ; and naturally, before very long the officials of the Government knew the 
exact cost of this repurchased powder and fought shy of buying it. In Mr. 
Valentine's opinion, this is the real reason why the Argentine Government did 
not contract with us for a quantity of Italian-purchased powder. 

Secondly, Mr. Lissner at no time made any secret of his negotiations and 
often told the complete story while drinking with a party of friends at the 
various bars in Argentina. These friends consisted of the hangers-on around 
hotels and barrooms and were men of the type who had no social or business 
standing and were nothing more tlian news-gatherers, who did at the first 
opportunity repeat the entire stoi-y to people who could do the cause most harm. 
It therefore was not very long before the American business men, the American 
Chamber of Commerce, and the representative of the American Department of 
Commerce looked upon Lissner as the wrong type of individual to rejiresent 
an American concern such as the Du Pont Company. The American element, 
therefore, regretted that this company sent such a type as Lissner to Argentina. 
Mr. Valentine said that it was absolutely necessary to pay for any favors 
received at the hands of the Government and that graft was one of the essen- 
tials in the Government departments, but that Lissner res(n-ted to open bribery 
methods to such an extent that the officials in the Government were afraid to 
deal with him and considered him irresponsible. 

Mr. Valentine, in order to let me know that Lissner was prone to tell any 
and all phases of his business, recited the story as to Lissner's exiiense accounts 
on his first trip, and how the president of the firm authorized him to be paid 
$5,400 in excess of his fund, although the hea<l of the department, a man 
named Casey, refused to reimburse Lissner. 



MUNITIONS INDUSTRY 2603 

I might continue and add a great many details to this summary, but I do 
not deem it advisable or necessary. I am passing this on to you not as a 
slam against Lissner but as a veriflration of the details you already have 
concerning Llssner's actions, and further as an additional justification for your 
recent action concerning him. Personally I could never understand why 
Lissner did not succeed in selling at least some of the purchased powder, Init 
the explanation as set forth above seems to be a feasible reason as to his lack 
of success in this respect. 

I desire it to be strictly understood that I did not invite Mr. Valentine to 
comment on Lissner and that same was done voluntarily by Mr. Valentine 
during my conversation with him. I consider Mr. Valentine's comments to be 
the public opinion in Argentina regarding Mr. Lissner; and further, I sized 
him up to be a man who know what he was talking about and one who had 
no axe to grind, and therefore I feel that the information is worth repeating. 

Mr. Valentine will probably call on me in Wilmington at some future date; 
and if you are desirous of talking with him I shall be very glad to present 
him to you. 

W. H. OGORMAN. 

WHO'G/N 

( •• ExHiiUT No. 959 " appears in text on p. 2485. ) 



Exhibit No. 960 

Heedles & Bbeidsprbcher, 

Mexico, D. F. 
Date: September 1st, 1930. 
To: Remington Arms Co., Inc. 
Subject: Guadalajara. 

Although we know that Mr. Jonas, of Winchester, returned to U. S. A. 
last week without going to Guadalajara, the writer made a trip to Guada- 
lajara last week in order to investigate whether Winchester made any special 
offers there, specially to the Club Cinigetico which favored us with an important 
order last year. 

AVe are pleased to advise you that Winchester has not received any impor- 
tant business from this section of the country lately ; in fact, the Club Cinigetico 
has not ordered anything up to the present and should the club need an addi- 
tional supply of shot shells, etc.. you can be confident that we shall get the 
order. The club has been well satisfied with what you shipped the early 
part of this year, but conditions are bad and the members of the club are 
holding back witji money and besides there is still a lot of shot shells, etc., 
left from your shipment whicli will be distributed among the members of the 
club as soon as the shooting season starts. 

With reference to the metallic business we found a very peculiar situation 
in Guadalajara. Tlie writer saw more contrabands in this section of the 
country than anywhere else ; there is a fellow with name of Godinez installed 
right in the market place ; he has no permit to sell nor has he permit to import, 
and yet lie must have at least IDU.OOO metallics in stock. ]\Iost of it is western 
ammunition which lie gets from Negates as contrabands and the balance is from 
Arms & Metal who sell this man metallics at less than the cost laid down 
Guadalajara would be by regular importation. Arms & Metal is doing this to 
compete with prices cpioted to this man by Quintana, and it will not take long 
until Quintana will make use of tlieir confidential discount and will try to 
underbid Arms & Metal, etc. Uoberto A. Gonzales of this city offered cal. 
25 auto, at Mex. $70.00 a hundred to this man, and laid down costs of this 
cartridge is $92.30 Mex. a hundred and you realize that this also must be 
■contrabands metallica. (K course, the regular trade in Guadalajara is suffer- 
ing under this unnormal situa.tion and within time they trade will be forced 
to buy contraband or give up the sale of metallico cartridges. 

A similar situation seems to arise in Mexico City. Roberto A. Gonzalez seems 
to buy contraband metallics exclusively and told the writer yesterday that he 
would have printed a new price list underbidding all prices quoted by Quin- 
tana at about $3.U0 Mex. a hundred. 

Mr. Heedles undoubtedl.x told you that we are making every effort to have 
the Government realize this situation and reduce the duty, but it seems very 
doubtful whether our efforts in this direction will have any success ; the writer 



2604 MUNITIONS INDUSTRY 

is afraid within a short time this contraband affair will become a very serious 
handicap in the regular sale of our metallics. Guadalajara seems to be a very- 
good example of what is going to happen. Godinez maintains that he yet has 
not been able to buy any Kleanbore cartridges in Nogales. He said to the- 
writer that in Nogales he can buy western ammunition only and if lie would 
not look to the writer as a very dangerous person, perhaps it would be ad- 
visable to do some business with him, but under present circumstances it 
looks better to keep away from him. 

Luis Ramirez Zcnteno. — Attached find order #264 for this account which 
should be shipped together with the clients' pending orders. We beg to advise 
that we have applied for a special permit to cover this importation and hoi)e 
that same will reach you yet in time to make a combined shipment, if this 
is not possible, please ship the pending orders right away and let us know when 
this order is ready for shipment, later on the client perhaps allows us to add 
some shot shells in order to make a full shipment.^ 

Vda de Celio Ramirez kiucr. Tcstamcntaria Marizano Ramirez Jimenez, 
Callc Eje Poniente #352, Guadalajara, Jul. — This is a new account and we beg 
to enclose order #267 of this client, which kindly ship as soon us the cor- 
responding permit reaches you. We have applied for the permit and same will 
cover everything specified in the order. You will remember that some time agO' 
you received an inquiry from this account calling for 100,000 metallics, well, on 
account of the contrabando and low prices bidding of Quintana and Arms & 
Metal, he only can import the calibre shown on the order, too bad indeed. 
This is a responsible firm and the writer obtained very satisfactory references 
and in order to make our offer attractive to the client, we allowed for half 
of the amount of your invoice 60 days' sight and for the balance 90 days' sight 
net. The question arises whether we should sell metallics direct to such a 
client who is also client of Quintana. The writer believes that we should sell 
him direct since this is an established firm and would buy from Arms & 
Metal or contraband if we would not try to sell him direct, and then of course, 
he would not sell Kleanbore ammunition. Besides he has ordered rifles from 
us and look up the few rifles v.hich Quintana have bought from us. We trust 
that you will at once write to this account and acknowledge receipt of their 
order and advise them that shipment would be made at the terms specified as 
soon as the permit has reached you." 

Salvador Sanchez, of the firm Sanchez \i Rosalcs. Caile 12, # -}79, Gnadnlajara, 
Jal. — This is also a new account and you will remember that some time ago 
you received an inquiry from this man. The writer hesitated first to sell him 
direct in view of tlie fact that this man has not yet established a stove in town 
and according to his advice is going to establish an arm and ammunition store 
shortly.' 

However, the writer saw an order for metallics and rifles which was taken 
by Winchester and also an order for Colt revolvers. Mr. Sanchez also showed 
the writer the corresponding permits and in view of the fadt that he offered 
to pay half cash with order ;ind balance against sight draft with his first order, 
we of course, at once accepted and made up attached order #266. We have 
applied for the permit covering all items specified on this order and as soon 
as same has been received, we shall communicate with you. Mr. Sanchez will 
send you check covering about half of the amount of the order as soon as the 
permit has been recei^■ed and we suggest that you figure at once the exact cost 
of this order in order to enable us to ask him for the exact amount as soon as 
the permit has been received.* Ink Note. — Acknowledge receipt of this order 
direct to client. 

Selorzano Hermanes. — The writer also took an order for metallics from this 

account but same is being revised by the client at present and will be sent to 

you at a later date. 

War Department. — Since the writer returned from Guadalajara, the War 

Department finally issued new permit instructions which are as follows : 
1. A new general permit will be issued to all clients which had such a permit 

up to the present. This permit will be valid until December 31st, 1930, and will 

again cover all calibers of shot shells, escopetus, cai. 22 cartridges and cat. 22' 

rifles. 



^ This paragraph is in a circle (P. note). Ilalsey. 
' Ink note. — Suggest j'ou also got credit information. 
^ Note. — This paragraph is in a circle. 
* Also this paragraph. 



MUNITIONS INDtrSTRY 2605 

2. A special permit must be applied in eacli case of importation of metallic 
cartridges, pistols, etc. In other words, this special permit affair stays as it is 
right now. 

3. Our clients will be allowed to sell and ship within the country 5 pistols 
and 1,000 metallics without a special permit (at a time) ; sales of larger quan- 
tities of pistols and ammunition are subject to a special permit of the War 
Department. Our clients can freely sell escopetas, rifles cal. 22 and cal. 22 
and shot shell ammunition as before. 

4. In the future under no circumstances permits will be issued covering sales 
or importations of rifles and ammunition and pistols which develop a higher 
velocity of 500 meters per second. Such a permit can only be issued by the 
President of Republic. 

At a cost of Mex. $80.00 we are having all these new permits printed as cour- 
tesy for the War Department ; we further have applied for all our clients for 
these new permits, but you will appreciate that it will take considerable time 
until all these permits have been communicated to the foreign oflBce and hence 
to the consul, therefore we have applied for special permits covering pending 
order in the meantime so that shipment of these pending orders will not be 
delayed. 

The general in charge of the War Department, Artillery Dep., has, however, 
not signed for the past three weeks and this in spite of the fact that we have 
contributed with $200.00 oro nacional to make the general's life more pleasant 
and reform the new law on ammunition and arms, so with all contrabando, price 
under bidding of Arms & Metal and Quintane, permit affairs, etc., etc., you 
will appreciate what joy it is to work for Remington Arms Company, Inc.° 

Tour credit notes or better, said cash to cover $280.00 pesos Mex., will be 
appreciated. 

Yours very truly, 

(Signed) M. M. Veuicier, 

Heedles & Breidsprecher. 

Ink Note. — I forgot to mention that $200.00 which we kept at the office ready 
for War Dept. expenses, were stolen the other day, so you better make the 
check $480.00 or U. S. G. $240.00. Breid. 



Exhibit No. 961 

"A ' MX 

[(Stamped) Answered Mar. 16, 1931, G. Rugge] 

Heedles & Breidsprecher, 
Mexico, D. F., (Date) March J 1th, 1931. 
To Mr. Geo. Rugge, 

Remington Arms Co., Inc. 

Subject : 

Dear Geo. : Your letter of the 7th relative to orders from Sr. Guillermo 
Clements #314, A, #314B, and #315 has been received and we cK>uflrm our 
cable reply, advising you to ship this client in accordance with the regular 
terms, that is, three drafts, one-third sight, one-third thirty days, and balance 
60 days, with instructions to allow a discount of 2%. providing the full amount 
is paid upon presentation of drafts. Attach the documents to the draft. 

It is rather difficult to inform you as to the future because we really are 
upside down and nobody knows what next they are going to tliink of over at 
the War Department to disturb matters and make things more difficult for us. 
I certainly hope we do not have to go thru another month like the past one, as 
it was the worst we have had in six years, and that after taking into consid- 
erations revolutions, etc., we paid thru the nose last month all right. 

For the past ten days I have been giving considerable attention daily to the 
War Department better said, the person responsible for all of our grief, but 
he certainly is a tough egg and knows where he is. We had a friend over 
there at the Department that represented quite an investment for us, and he 
was supposed to stay on and the trouble maker go out at the end of last month, 
and the result was that the trouble maker held on and he went out. 



^ Ink Note. — Winchester underbidding. 



2606 MUNITIONS INDUSTRY 

He was asking for 1^ Mexican Cy., per cartridge and you can appreciate 
what tliat means, for revolvers lie asked for $2.00 each, I have heen taking 
him out and endeavoring to demonstrate where he was wrong and why and 
although it has taken a while I may be able to get somewhere with him this 
week. Some of the excuses he has given for turning down applications are 
really foolish but he is the boss and can make trouble for everybody. The 
clients are writing and telegraphing and we are making out applications, visits, 
etc., l)ut to no avail as $1,000 per 100,0(X> is a great deal of money and more 
to today. 

"Winchester have been after me to take up the matter jointly with theui l)ut 
I tliink it best to handle the situation between the clients and oui-selves, as it 
is only when they cannot do something themselves that they call on us. I 
might add they are up to their old tricks of offering terms and contidentials, 
with permits being turned down they cannot do much but we know two clients 
they have already approached. There may be something more pleasant to re- 
port in a couple of days as I have been with the fellow responsible for our 
trouble almost daily morning and evening and this morning was the first time 
I saw an opportunity to accomplish something but we shall not know definitely 
until the end of the week. 

Between exchange and conditions we are bad off down tliis and wliile we 
are not paying attention to anything but just continuing our traveling and 
everything else, just as though things were fine and dandy, orders are few and 
far between with everybody apparently firing help and cutting down expenses. 

Kind regards to everybody. 
Yours respectfully, 

(Signed) .Tosb:ph A. Hkedles. 



Exhibit No. 962 

[(Stamped) Answered Mar. 24, 1931. G. Paigge] 

Heedles & Bheidspkecheu, 
Mexico, D. F., (Date) March 21st, 1931. 
To Remington Arms Company, Inc. 
Subject : 

Quintana has secured a permit for 170,000 metallics for Winchester. This has 
happened as follows : They made a contract with Winchester last year for 
450,000 to secure a discount of 10% ; they did this with Jonas. From this amount 
was left the above balance and they have succeeded in liaving Wincliester 
continue to allow them the 10% and ship the above amount, that is, 170,000, 
at present prices, with of course, the 10% confidential'^ they allow tliem. 

In view of the the fact that the writer put over the de;il whereby we could 
continue to secure permits, or better said, do business, Majuregui asked whether 
we would ratlier have him hold off placing or soliciting the Winchester permit, 
but, as you can appreciate, he asked this with the object of preventing us from 
permitting the rest of our clients taking advantage of the ari'angemcnt and I 
told him we had no objections to his soliciting the permit as well as placing 
the order, so tliat we could cnutinue solicit orders from the rest of our friends, 
besides he will not need the Winchester goods in a hurry with our pending order. 

Gonzalez also secured a permit for 100,000, but this was a slip-up on our 
friend in the department, we both had an application in ; that is, Winchester as 
web as ourselves and he permitted both to be issued at the same time, but I 
think Gonzalez also will delay his order." 

The cut in duties has l)een put off once more, but I think we can get out the 
department recommendation for a cut by the end of the month and then all 
we have to contend with will be the Sec. of Treasury, but the department 
reconunendation as we shall see that it is made, should bring about sufficient 
pressure to secure a reduction in duties. 

We are consulted for most of tlie " acuerdos ", that is, to whom permits can 
be granted, dehiyed, canceled, refused etc., and we hope it lasts for a while longer, 
because in about six months time nothing but Kleanbore would be allowed. 
Yours respectfully, 

(Signed) Heedles ^: I>KHnDsi>i;ECHEi:. 



1 Note. — Underscored in pencil. 
* Pencil note. 



MUNITIONS INDUSTRY 2607 

Exhibit No. 963 

"A" MX 
[(Stamped) Answered Apr. 20, 1931, G. Rugge] 

HeHDLBS & BREaOSPRECHER, 

Date : El Paso, Texas, March 16, 1931. Mexico, D. F. 

To: Remington Arms Co., Inc. 

Subject: Mexico Hardware Co., P]l Paso, Texas, Ciudad Juarez, Chih. 

Dear Mr. Rugge: I called this morning on Mr. S. R. Silva, manager of the 
above-mentioned company and had a long talk witli him on the arms and am- 
munition business into Mexico. He showed me an invoice covering a sliipment 
of metallics which you made to this firm recently and also told me that he 
would send you a large order soon. Before I left Mexico City about three 
weeks ago, Enrique Gutierrez M. of Mexico City placed an order with this 
company for cal. 22 cartridges which this company offered to Gutierrez at 
lower prices c.i.f. Mexico City than they cost Gutierrez c.i.f. Vera Cruz, includ- 
ing duty. The rensnn for this is that this company is getting a large quantity of 
metallics over the border without paying duty. Mr. Silva has a combination 
with a number of custom house officials in Ciudad Juarez. 

However, in order to import large quantities of metallics, which is the inten- 
tion of Mr. Silva. he is going to send to our office several applications for special 
permits which will cover a greater quantity of metallics than specified later 
on the permits, the permits simply cover up the whole affair and if he gets in 
trouble he can make reference to these permits. As soon as I get to Mexico 
City I shall see that the War Department will grant these permits and as soon 
as we have secured same you can exjiect quite large orders from this client. 

Mr. Silva told me that your Mr. Heath. I believe this is the name of the 
gentleman, recently called on him and the company is now selling Remington 
arms and ammunition exclusively. 

You are undoubtedly aware of the fact that all of the arms and ammunition 
which you ship to this client is for sale into Mexico, he does not do any 
domestic business in this line, in fact he handles this business thru his Ciudad 
Juarez branch. 

I believe we never received any commission on the sales which you make to 
this company although all of these sales cover goods for sale into Mexico and 
for that reason you sell this account at export prices and shij* from your 
export department and not domestic department and I would appreciate if 
you kindly would look up this matter and see that the commission whi'h will 
be due to us will be taken care of. 

As mentioned above I promised to Mr. Silva to take care immediately of 
his permit affair at the War Department as soon as I return and I hope that 
once the permit question arranged, his orders will increase considerably. Please 
keep the information given above as to the contraband business this company 
is doing strictly confidential and do not mention anything of this in letters 
you send to our Mexico City office. 

The reason I write you about this is that I am in El Paso today and not 
in Mexican territory. 

Awaiting your comments and with the writer's personal regards also to friend 
Monaghan, we are, 

Respectfully yours, 

(Signed) MM. Vezuinni, 

Heedles & Breidsprbohek. 
cc Mexico City office. 

[(Stamped) Received Mar. 20, 1931, E^xport Department.] 



Exhibit No. 964 

["A- «U] 

Ju.AN Van de Putte & Co.. Sues. Almacen "El Cazador ", 

Guatemala, C. A.. November 13. 1929. 
(Dirrecion Cablegrafica : Cazador-Guatemala, Guatemala.) 
Remington Arms Co. Inc., 

29 Warren Street, New York City. 
(Attention of Mr. Geo. Rugge.) 
Gentlemen : I wish to confirm the cable I sent you today, which reads as 
follows; "Hold million order. Await instructions", and now I wish to 



2608 . MUNITIONS INDUSTRY 

acknowledge receipt of your wire reading thus : " Entire shipment in New York. 
Will hold. Hope no trouble. Regards, liugge." 

I regret very much that I was forced to send you the above-referred-to wire, 
but circumstances obliged me to. I am going to explain to you fully my 
motive. 

When I booked the order for the million rounds, and I sent you the cable 
advising you, the order had been approved by the Minister of War, the Detol 
General de Rentas, and it only had to be signed by the Minister of Finance, 
who gave instructions to the Subsecretary to do so, on account of his being 
ill in bed. This Subsecretary held the signing of same and tiually did not 
sign. He is a very close friend of Salvador Koenigsberger, agent for Western, 
and showed Salvador Koenigsberger the contract for the paltry sum of $100.00 
and at the same time made a lot of noise, recommending that the order was 
not legal because it was not submitted to public bidding, and at the same time 
attached to Van de Putte's contract an offer from Western's agent for the 
same quantities but for the amount of $15,066.00, Van de Putte's contract being 
for $18,000.00. The difference between your quotation and the amount appear- 
ing on the contract was to be divided among the Minister of War, etc., etc., 
and Juan Van de Putte & Co. had already advanced to General Juan Padilla 
the sum of $1,000.00 on account of this order and another $4,000.00 for an- 
other contract effected for some leather kids and belts for the National Army. 
When this happened the Minister of War sent for all the papers and docu- 
ments and was going to put it through because they expected a clean-up in all 
departments, and naturally the order remained in status quo, although we re- 
tained the right-of-way, the Minister of War being " morally obligated." 

The change in all departments took effect, and there is a cousin of the Presi- 
dent at the head of the Departamento de Kentas, contracts for ammunition 
to be sold to the patent holders. However, this change in this department has 
not affected us, but then Jonas arrived and he joined the parade. He has 
been fighting like hell. He is a very close friend of General Padilla, the 
Minister of War, and this Minister of War is indebted to Winchester, because 
they give him a commission for ordering in all the permits Winchester 
ammunition. You will recall that when Freddy arrived in New York he had 
cjuite a nice order for loaded shells and some cartridges. Both these orders 
were for Winchester, but Freddy gave you the order for the cartridges, and 
he bought the loaded shells from Winchester ; and when he arrived here the 
general gave him hell for doing so, and he Anally admitted to Freddy that 
he was " morally " interested in Winchester. The percentage of commission 
which they give the Minister of War I have been unable to find out, but I 
believe that I will secure this information before I leave. 

This morning I went with Mr. George Cordere with another contract for 
$18,000.00 to see Mr. Castaneda, the new man at the head of the Depto. de 
Rentas, and the contract specified Remington's ammunition and same was 
signed and then we went to the Minister of Finance, who also signed and 
gave instructions to the Subsecretary to notify the Minister of Foreign Rela- 
tions so that he can issue the instructions to the consul of Guatemala in New 
York to approve the consular invoice. So far everything is all right, but 
this new man wants $3,000.00 before he lets go the contract, promising that 
as long as he holds the job Remington will have the clear road through Juan 
Van de Putte Co. Naturally, Mr. Cordero accepted the conditions, but when 
we came back to the store Mr. Herman Topke, of Topke & Co., objected to 
advancing this sum (Topke & Co. owns Juan Van de Putte & Co.) because 
he does not want his books to show so much money advanced in commission, 
as the books are quarterly revised by Government officials. Now, both Mr. 
Cordero and myself were placed in an awful predicament. The contract 
signed and Mr. Castaneda could not be convinced that the money would be 
given him as soon as tlie cartridges arrived. Then Mr. Topke suggested that 
it was better if the $3,000.00 would appear on the invoice, and it was decided 
that I should communicate with you. In the meantime I sent you a wire to 
hold the shipment, because I do not know if you would be agreeable to their 
proposition. In view of the above, I sent you the following cable: 

"To proceed with shipment order need .$3,000.00 advance, adding same to 
value of order plus interest drawing, as stated, if agreeable. Wire funds 
Cazador. Latest development make it necessary, otherwise lose business. 
Advance required guaranteed. Recommend approval." 

Jonas knows all about it, and he has been red hot after Mr. Cordero to give 
him a chance to quote, but so far Mr. Cordero has stuck with us. He is placed 



MUNITIONS INDUSTRY 2609 

in awkward position, Mr. Topke refusing to advance tlie money and the 
other man wants his money in advance. Mr. Cordero hinted to Jonas if his 
company would be willing to accept the order at the same basis which I am 
outlining to you, and he answered in the affirmative. I am afraid if you do not 
want to advance the money that Mr. Cordero, in order to secure the contract, 
■will give the contract to Winchester. 

In the cable I recommended the approval, because I am quite sure of the 
solvency and seriousness of botli .Tuan van dp Putte and Topke & Co. I, at the 
same ti'me. besides getting the order signed for $16,100.00 instead of $12,100.00, 
will secure a letter guaranteeing the advance of $3,000.00 in the event that for 
an unforeseen circumstance the goods are not shipped. 

I am through with my work here, and I have been detained on account of 
this order and looking after your interests. If the order is not secured because 
you refuse to accept their proposition, I will be out of luck, because my ex- 
penses have been running just the same, and more. However, I always mix the 
sweet with rhe bitior, and if thr deal is not closed I will take my medicine; but 
you can rest assured that I have done everything possible to guard your 
interests, not letting go the order to another channel. 

I understand that Juan van de Putte sent you another cable confirming my 
cable and informing you that the advance is guaranteed by them. I told Mr. 
Cordero to charge both cables to Remington's account, to be deducted from your 
next invoice to them. 

I am attaching hereto an additional order for 100 M percussion caps, which 
you will be kind enough to ship in conjunction with the first shipment which you 
-will make to them. They are in dire need of these caps, as their stock is nearly 
depleted. 

I am planning to leave for New Orleans on the 21st inst., arriving at New 
York on the 27th instant, and trust that everything will be arranged satisfac- 
torily before I leave, and with my warmest regards, I am. 
Yours very sincerely, 

G. FE31NANDEZ. 



Exhibit No. 965 
[(Pencil note) Letter No. 31. "A"] 

Managua, DN., Nicabagua, 27 June, 193-'i. 

My Dear Frank : General Somoza had dinner wath me last night and he 
told me that he intended to equip the Army with .45 calibre Colt automatic 
pistols as standard equipment. Guruceta, of course, when he is here is push- 
ing the Star pistol, so I suggest that you communicate with Mister Nicols 
to write direct to General Somoza offering to sell him direct. I would suggest 
that in his quotation he should include a 10% commission for General Somoza. 

General Somoza has accepted this commission with the full knowledge of 
the president nnd it is not considered as graft but is considered as an extra 
pajmaent for the work he is doing here. If Colt would see the way clear to 
reserve 2i/^% commission for Ample it would be a good idea as he will push 
matters throiigh and attend to the details of opening credits, etc. 

I expect to have an answer from the General today on the various Remington 
items on which I have quoted him for the Government. 

The order for the Guardia Nacional has been reduced to approximately 
$1,900 — as the terms I granted they consider rather stiff. I saw copies of last 
Winchester order in which Guruceta allowed them 30% with the order and 
the remaining 70% at 90 days sight. The general believes that the Guardia 
Nacional should be able to dispose of $4,000 to $5,000 monthly on arms and 
ammunition [(Pencil note) in the dry .season] if we give the same terms as 
Winchester. Furthermore, he has agreed to give me all the ammunition 
and as much of the Army business as he can. They say there is no risk 
entailed on doing business with them on this basis as all money are deposited 
in the National Bank of Nicaragua as soon as they make their sales. They 
increase the price 10% to the dealers when they pay cash and 15% when 
credit is allowed. Of course, I realize that conditions change very rapidly in 
these coimtries so I am against going too deeply and it might be better to allow 
the competitors to get some of the business. 

Of course, on Government business, that is, business for the Army, the terms 
will be as follows : The Government will establish an irrevocable letter of 



2610 MUNITIONS INDUSTRY 

credit for the total amount of the order, providing for payment to be made in 
tlie following manner : 20% against delivery of shipping palmers to the Bank, 
of New York and monthly payments of 20% until the full liquidation of the 
order. This is the way in which they are paying the Auto-Ordnance Corpora- 
tion, Winchester, and other manufacturers, therefore, as long as the letter of 
credit is irrevocable there is no risk, except the risk of the National Bank of 
Nicaragua becoming insolvent, which is not probable from the reports I have- 
secured here. Their set-up is very sound. 
(Signed in ink) Sincerely, 

Fkank S. Jonas, 
Frank. 

[In ink] P. S. — Dry season means about 6 months of tlie year. Therefore- 
their purchases can amount to about 25 to 30 thousand. 



Exhibit No. 966 

["A"] 

San Salvador, March 5th, 1932. 
Reaiington Arms Co., Inc., 

29 Warroi Street, Neic York City, N. Y. 
(Attention of Mr. Geo. Rugge.) 

Wish to acknowledge receipt of your cable of last Saturday which reads as 
follows : 

" Quotations sent week-end cable, ten percent included. Carbines shotguns 
shipped, documents air-mail you." 

I also received your week-end letter quoting on the 580 M rounds of sporting 
ammunition as follows : 

" FAS New York eighty-one hundred sieventy-six dollars. La Libertad 
eighty-seven liundred sixty-seven dollars not including consul fees. Oui' 
revolver cartridges oil proof, also Kleanbore. Try get getter payment arrange- 
ment." 

I am working with Mr. Armando Frenkel on this business, as I informed you. 
Yesterday the quotation from his connection in Toronto arrived and much to 
my suriirise their quotation is much lower than ours. I will send by next week's 
mail copy of their letter quoting on the same quantity. Fortunate Mr. Frenkel 
will not present their bid. 

Re: Last payment on the government 7 m/in order. — Last Monday I received 
your cable as follows : 

" Balance mausers ready for shipment Friday. Has check been sentV If not, 
request cable remittance, answer immediately." 

I did not answer right away because I was in hopes to cable you that I was 
going to send the draft by air mail leaving Tuesday. However, since 10 days 
ago, I have been after the money, and only last Monday I succeeded in securing 
the receipt properly signed by General Martinez. Coronel Valdez. the minister ot 
war, and Dr. Molina, the minister of finance. I went immediately to the treas- 
ury but I met with bad luck. It happens that the money that was deposited 
with the Banco Agricola Commercial to cancel the last payment of the order 
was withdrawn by the treasurer and although both Mr. Rodolfo Duke and Mr. 
Antonio Vilanova the treasurer of the Consejo Civico had the assurance of the 
treasurer of the republic to cancel the last payment as soon as the receipt was 
properly signed, he did not want to do it on account of the exchange being so 
high. He promised to pay next Monday, the 8th. and I will immediately cable 
.vou to that effect. I did not want to take any chances and that is why I sent 
you the following cable : 

"Hold shipment following steamer." 

I do not kiuiw wlicther you know ah >ut tie exchange here. It fluctuates 
up or down every day. F(>w days ago the rate of exchange was 257 colones 
for $100.00. The normal rate is two for one. Now it has come down to 24;i. 
You can appreciate how something like tliis effects any business transaction. 
However, the nonpayment of the last installment of the order has nothing to- 
do with the exchange at all. I know all the do]ie. The treasurer, IMr. Joaquin 
Rodezno, is a "son of a so-and-so", to put it mililly. T have been trying not 
to have another clash with him. He is a very goo<l friend of Saul Garcia.. 



MUNITIONS INDUSTRY 2611 

Winchester representative, and he has heeu " greased " by Garcia, with the 
result that he is as mad as a " puppy " because I secured the business, and 
he is trying to place everything in my path just to bother. I liad a sort of 
an argument with him in trout of Mr. Dulve. and I finally had the upper 
hand. The document which I have signed by the parties which I mentioned 
in another jiaragraph is a bona fide legalized document, and as far as securing 
the money is jierlectly safe. I did not want to trouble General Martinez 
about it, but if he does not come rUjross next Monday I will have to resort 
to this measure. At any rate, I feel quite confident that I will send you 
the money during the next few days and will cable you to effect shipment 
as soon as the drafts is in my possession. 

Re: Carbines and shotf/iins. — I i-ecelved the document covering the sliipment 
through Pts. Barries, and I have been informed that they are due here early 
next week. I trust that I will be able to secure some nice business for both 
these items and some "Riot shot shells." I will keep you posted on this 
business. 

Re: Neir quotation on the 7 m/ni Mauser Cartridges. — I have already written 
you that I have found your quotation lower than the previous one. I have 
thought it best not to present same until I get tlie final payment of the 
previous order. There is a lot of competition on this item. They will prob- 
ably buy 3 million rounds. As I told you before, the Consejo Civice is 
going to have the control of the buying and paying, but the War Dept. will 
instruct them what they want. I am very much enthused because the Treas- 
urer, Mr. Antonio Vilanova is a very honest and good friend of mine. I am 
very close to his brothers, Jimmy and Alberto and Frank. This is one party 
I do not have to " grease ". but there are plenty in some other directions. 
For instance, Colonel Bara, Chief of the War Supply Dept., wants 2%. 
There is the buyer of tbe Republic Provendor General. He wants something 
too and there is Mr. Armando Frenkel who is working with me on this busi- 
ness and there is me too. That is why the 7-1/2% is not an enormous per- 
centage as you seem to think it is. As I cannot remain here indefinitely and 
as we need some reliable person to take care of the business I believe honestly 
that I have made the best connection there is in town in Mr. A. Frenkel. He 
sells to the Government a lot of goods and certainly knows the ropes too. He 
sold to the Government 100 Swiss-made machine guns and 150 M rounds 
of m/m cartridges for same. He is a Mason, and General Martinez is a 
Mason, too. and it seems that General Martinez when he was appointed last 
year Minister of War induced Mr. Frenkel to get some connection in the arms 
and ammunition line. I am including herewith original letter signed by Mr. 
Frenkel. and as you will note, the final confirmation has come from you, so 
thei-e is not a commitment on my part. You are the one to decide if Mr. 
Frenkel is going to work with us or not. For your particular infomiation 
Dupont wrote to him offering their representation without him asking for it, and 
he is working with mo on the Government business not taking into consideration 
that Canadian firm of which I have written you about. 

As soon as you receive this letter I wish you would send me by air mail a 
check to my favor for the sum of $300.00 (three hundred dollars), which you 
will please charge to my account. 

With nothing further .iust at present, and hoping that I will have some 
good news for you during the course of the next week, I am. 
Yours very truly, 

L. G. Fernandez. 



ExHiBiiT No. 007 

J. Saul Garcia. 
Apartado Postal No. 23, 
San Salvador. El Salvador, C. A., Tslovemher 5, 1932. 

WiNOHESTEH REPEATING AkMS COMPANY, 

'New Haven. Conn., U. S. A. 

Gentlemen : Attached I am pleased to send you note from the ministry of 
war, so that once you have read it you will return it to me for my files. 

As you will note, that order was reduced to 200,000 and placed at the price 
of $14.70 c. i. f. This is the same price that was quoted by the three com- 
petitors from that country, and I was able to secure the order for you thru 
the very efficient cooperation of Colonel Ernesto Biira, chief of the <lei;artment 
of war. 



2612 MUNITIONS INDUSTRY 

Regarding the commission of 20 cents offered by you, and wliicli is now 
reduced, I would state tliat I have offered it to a person who was very influ- 
ential in securing this business for you, and, as I have told you in previous 
correspondence, I am not interested in making any profit on tliis transaction,, 
and, on the contrary, the cable, correspondence, and other charges will be for 
my account, and my only gain is that I have secured this order for you in spite 
of the fact that Remington was intensely, and this is a source of great 
satisfaction to me. 

As there will be no more time this week to carry thru the arrangements to 
get the % mentioned in the contract, I trust to do this during the coming week. 

As regards tlie manner of packing which they have specified, it appears to me 
to be very costly. Therefore, it would be best that you write me a letter 
acknowledging receipt of the order and, at the same time, telling me that the 
price quoted does not include packing in tin-lined cases, and that, therefore,, 
you will ship the goods well packed in standard cases. 

The order from the Proveedor del Gobierno for you will be delivered to me,, 
and I will send it to you by the next air mail. 
Yours, 

Garcia. 

JMS— 11-10-32. 



Exhibit No. 968 

["A"] 

Hotel Ntnevo Mundo, 
San Salvador, C. A., March 5, 1932. 
REiMiNaxoN Arms Co., Inc., 

29 Warreti Street, New York City. 
(Attention of Mr. George Rugge.) 

Gentlemen : I wish to acknowledge receipt of your letter of the 16th ultimo, 
in connection witli various cables exchanged between us pertaining to the 
second remittance of $11,533.00. 

I also liave for acknowledgment your letter of the 17th of Feb. in which you 
confirm my cable to advising that the draft sent was for the same amount and 
that the last payment was guaranteed by the Banco Agricola Commercial. 

Your letter of the 17th of February confirm your cable in which you advised 
me that you were shipping three hundred thousand rounds and to hurry permit 
for my order for rifles and shotguns. 

Your letter Feb. 19th brought the documents covering your shipment on the 
steamship Santa Elisa, and acknowledge receipt of the remittance of $11,533.00. 

I was not surprised at all about the information you give me in your letter of 
the 19th relative to the permit for the carbines and the shotgun. I do appre- 
ciate all the trouble you went through at that end, and if I must be frank I had 
a hell of a lot of trouble trying to have the Ministerio de Relacioues in this city 
sent tlie cable to the consul at that end. Fortunately you finally got through 
the shipment which is expected here sometime early next week. 

I agree with you that during these general unfavorable conditions throughout 
the world " half a loaf " is better than none. It is also interesting to know that 
I and Mr. Expenses will derive an amount that is not far away from your profit. 
It is also of great interest to me to note that the unpleasant fellow " Mr. 
Overhead " is much in evidence. I might add that this same fellow is still 
very much with me. Communications, hotel, incidentals, etc., etc., are vei-y 
much the same around this neck of the woods. I do not wish you to assume 
that I am selfish in this respect. I will give you an. idea of how I came out 
on the Guatemalan order which I would have not brought up, but to prove to 
you my sincere standhig with you. It cost me, round trip to Guatemala by 
plane, $45.00 and 10 days which I spent there at the rate of $6.00, not counting 
some extras, $60.00'. There you have a figure of $105.00. Now, you will please 
check up what commission I will derive from this transaction and you wiil see 
how much is left for me as a way of profit, and then I w'as taking the chance of 
securing the business or not. Fortunately I was able to secure it. On normal 
conditions I would have been able to procure some business for the other lines 
which I represent. However, this is not the case. I only got an order for 
Pexto which does not amount over $200.00, leaving a profit for myself of some 
odd $12.00. Now you see, Mr. Rugge, that the same fellow is around with me, 
" Mr. Overhead ", and please do not forget that I am holding the bag. 



MUNITIONS INDUSTRY 2613 

On this order for 7 m/ni mauser which I got the whole commission of 7%% 
is not for L.G.F. As you probably know you liave to "oil" or "grease'" 
certain parties in order get it through. Otherwise you are out of luck. Nat- 
urally, I would like to make a little bit for myself, otherwise I will go straight 
and drown myself in the river. I will not discuss this point with you any 
more and I will not go bothering with your quotations, until I have the pleasure 
of being back in N. Y., when again I will take this matter up with you. 

I also wish to acknowledge receipt of your letter quoting me on 7 m/m mauser 
cartridges on both 1 million and 2 million rounds, F. A. y. and c.i.f. La 
Libertad. I noted that your quotation is lower than the previous one. I have 
not taken this new quotation with the powers that be until I have concluded the 
present transaction. I will take this matter further up. 

In your letter of the 20th you confirm the commission of 7^/^% on further 
potential government business on 7 m/m cartridges c.i.f. La Libertad and advise 
that in the event that a much lower price is necessary to secure the order, to 
keep you advised of the developments by cable and that you will cooperate 
with me to that end. 

I have been told that Elmslie Jonas is already in Panama and that he will 
arrive here by the end of the present month. You will be surprised to note 
how things are here now as far as the competition is concerned. There are 
representatives from Czechoslovakia, Spain (2 of them), Belgium, France, and 
Germany, plus Winchester, and little me. Representatives have sprung up 
from the ground. As soon as I think it advisable to leave San Salvador I will 
fly to Honduras and go south passing through Costa Rica and to my final 
destination, Panama. I have not great hopes in Costa Rica as I believe that 
there is not much doing over there in the way of securing any military 
cartridge business. I might be wrong at that. 

I also received your letter of the 23rd of Feb., contents of which I have duly 
noted. I do really appreciate that my efforts have been considered as splendid 
by you and I am looking forward to your cooperation with me. I also wish to 
acknowledge receipt of the letterheads which came under separate cover. 

I also have for acknowledgement your two letters of February 24th in con- 
nection with your quotation for .45 automatic and .44 Win. It is true that this 
government has some Thompson's machine guns. 

With my warmest regards, I am, 
Yours very truly, 

L. G. Fernandez. 



Exhibit No. 969 

L"A"] 

Tegucigalpa, Honduras, April 25, 1932. 
Remington Arms Co., Inc., 

29 Warren Street, New York City. 
(Attention of Mr. George Rugge.) 

Gentlemen : I wish to confirm my letter to you dated the 16th instant. You 
will probably have received the order for Rentas from Mr. Armando Frankel 
and probably you will have received advices from the bank that the outstanding 
draft has been paid. As you perfectly know I sold that merchandise sometime 
last year, at the old list prices. There was an average of 10% for Mr. Lemus at 
that time the Proveedor General del Gobierno. Since Mr. Lemus has been 
kicked out we do not have to pay him up. You will discount from this 
average your percentage for the interest figured at 6% per annum ; and the 
balance we will split up. I wi,ll take this matter when I return and will 
explain to you all I went through with this collection. 

Attached you will please find order no. 132 for account of Bazar Union — 
Messrs, Agurtia y Mendoza ; of this city. These people are rated Al. Please 
do not fail to send them samples of the " Kleanshave " razor blades and 
quotations, I wish also to advise you to send samples of the " Kleanshave " 
razor blades to the following firms : 

Messrs. Felix Olivella e Hijo, San Salvador, El Salvador, C. A. 

(Quote on 60m blades.) 

Messrs. C. Bernheim & Co., San Salvador, El Salvador, C. A. 

Send these samples by first-class mail, otherwise they will not reach desti- 
nation. 



2614 MUNITIONS INDUSTEY 

You will also find attached hereto receipt from the cable office covering 
my last cable to you, in the amount of $2.60 which you will please credit to 
my account. 

I am enclosing herewith a sheet of paper with the signature of Jose M. 
Ocho V. the Minister of War and Mr. J. A. Santos P, the Sub-Secretary of 
War. I promised that you would send them by reg. parcel post, one each pen 
knives with their signatures. Please take care of this request. 

I have been quite busy since I arrived here and the chances are that we 
will get some very attractive business from this territory. It is too bad that 
the President cancelled all the permits for sporting ammunition and revolvers; 
otherwise I would haxe cleaned up here. All our clients, Rossner, Koencke, 
Sierke, Rafael Quan, Santos Soto, wanted to place orders with me. 

Tegucigalpa. 

I am trying to manipulate a very nice business through another source. I 
believe that jou already know how the permits are gotten here. There is a 
man here by the name of Miguel Brooke, very wealthy and influential. He 
always gets permits because he advances money to public officials ; including 
the President himself. He is working with the chief of police for an order for 
500 M rounds of revolver ammunition and 200 S & W revolvers. Today I will 
know definitely if I will book this order. 

Just before I left San Salvador I called on Huber & Co., and Mr. Huber 
talked to me of how influential they were here in Tegucigalpa, etc., etc. He 
asked me to write them a letter, sort of temporary agreement, which I did. 
You will find a copy of this letter attached hereto, which does not mean a 
tlarntHl thing. Immediately upon my arrival here in five minutes I convinced 
myself of how little these people could help us. On the contrary, they would 
do us some harm if we hook up with them. I have not gone over to see them 
after the first day I arrived. Please do not pay any attention to Huber & Co. 
I asked Mr. Ochoa, the Minister of War. in a very diplomatic way who was 
the persona grata with him and the President for Government l)usiness and 
he sent me over to Mr. Cornelio Zamora. of the firm of Zamora, Henriquez &, Co. 
It seems that this firm is now doing all the Government business, and they split 
with the officials the commission and overages, etc. This Government is in need 
of some ammunition, but the Ministerio de la Guerra will not have money until 
the month of August. I talked to the President, the Minister of War, and the 
Sub-Secretary of War with this fellow Zamora, and we convinced them that 
they should write up the order now for what they want and when they have 
the money Zamora will get the money and send it to us and instruct us to ship. 
Today is Monday, and Mr. Santos, the Sub-Secretary of War, promised to work 
with me in the morning ; but he did not show up. It happens that yesterday 
I went on a picnic with him and he got plastered. Probably he has a hog over 
today, but I trust that I will see him this afternoon. I do hope that before I 
leave I will be able to have in my possession the pro-forma order. I am writing 
up an agreement similar to the one I wrote for Mr. Frankel with the firm of 
Zamora, Henriquez & Co. 

I have booked passage on the place leaving here Wednesday morning for 
Nicaragua. I have already given instructions to the firm of Borghi B Daglio 
& Co. to forward my mail there, and I am in hopes that during the next few 
days I will have news from you in Nicaragua. 

in the meantime with my kindest regards to all, I am. 
Yours very truly, 

L. G. Fernandez. 



Exhibit No. 970 

t"A"l 

San Salvador, Ai)ril 7, 1932. 
Remington Arms Co., Inc., 

29 Warroi Street, Ncic York Citij. 
(Attention of Mr. George Rugge.) 
Gbntt.embn : I wish to acknowledge receipt of your letter of March 29'th en- 
closing receipt from the Equita))le Life. etc. etc. Tlianks a lot for all your 
trouble. I liave taken due note of niy debt to you and when I get back I will 
probably settle it with you at " Mitcliels." 

I have taken due note of all your interesting comments of your letter and I 
can appreciate how things are over tiiere. Let me tell you. George, things are 



MUNITIONS INDUSTRY 2615 

pretty rotten, even in Denmark. I do sincerely liope that old man depression 
will go to hell and damn quick, too. If he insists to be around any longer I will 
probably take a job as a street cleaner, as selling apples over there is out of 
fashion now, I presume. 

Too bad about Frank Jonas. I believe him to be a very able man and I am 
quite sure that he will eventually secure something interesting. You will prob- 
ably know by this time that Elraslie Jonas arrived here a few days ago. Indeed, 
it will be of great interest to you to know about his activities. I have a lot to 
tell you and I am going to commence. If I pass up any information right now 
later on I will pass them on to you either personally or by writing. Ehnslie has 
traveled quite fast from Panama up here. He stopped at San Jose, but could 
not do a thing over there. Then he stopped in Managua for a few days during 
Holy Week and he was able to sell some flashlights. He did not go to Teguci- 
galpa at all. He has been raising hell here witli his agent Saul Garcia on ac- 
count of my taking the order for the million rounds 7 m/m and if it were not 
for the fact that this Government still owes Winchester about $6,000.00 and 
Garcia can help collect this amount for them, he will kick Garcia about exactly 
one thousand feet from the representation. He has been unable to secure any 
orders from the trade here and as you probably have taken note I have booked 
all the orders that were to be gotten, even with Jonas right here. You see, I 
do not wish to pat myself on the shoulder but I will be hanged if Jonas or any- 
body else woukl get an order away from me from the commercial trade here. 
With me it is a personal thing more so than anything else, not overlooking the 
fact that I sell the best ammunition manufactured in the world. No kidding. 
Kleanbore Oilproof and what have you. He went around to Felix Olivella and 
offered him a special discount of 7%% if he would stock Western. Felix, who 
by the way is a very close friend of mine, called me over the phone inmiediately 
to put me wise. He informed Jonas that even if he offered him a bigger per- 
centage he would not change from Remington as Fernandez was selling this 
particular brand and that any confidential discount that he might offer him " le 
venia muy flajo " (would fit him loose — translated literally). In other words, 
he just informed him that he would not be interested at all. Naturally Jonas 
upon his arrival got ail the information from his agent here about everything 
that was going around. The order for the 45 and the order for the Adrainis- 
tracion de Rentas. Mr. Frenkel and I have been after the order for the 45 and 
we had the business. Then before Jonas arrived they quoted lower, as I have 
already informed you. It has been a great thing that you authorized me to book 
the order at the lower price of .$24.50 GIF, including our commission, otherwise 
we would have been out of luck. Mr. Gurozeta, the agent for the " Star " Span- 
ish pistol, resides in Guatemala and he left a party by the name of J. D. Mendez 
as his subagent here. Not to bore you any more, Mr. Frenkel quoted on the 
" Star " pistol to the Guardia Nacional. from his agent in Hamburg, Mr. Lach- 
mann, and he got the business. When Jonas arrived they had a meeting at the 
hotel between this fellow Mendez, Garcia, his agent, and himself and they sent a 
telegram to this Mr. Guruzet and he arrived here yesterday. It was a good 
thing that this fellow arrived as he was very pleased that Mr. Frenkel got the 
order for the 750 pistols and naturally we got the ammunition order. It has 
been clinched. The order was put through the consul of the National Guard 
and has been decided, etc. etc. We only need the signature of General Llanos 
the head of the Guardia Nacional. Yesterday we talked to him and he informed 
us not to worry as the order is ours. No matter what the competition say or 
holler. They are discounting 10 colones every month from each soldier of the 
Guardia (750) making a total of 7,500 colones every month to pay for the pistols 
and the ammunition. They are depositing this amount in a bank in a joint 
account Armando Frenkel -Guardia Nacional. You see these pistols have to be 
shipped from Germany and the cartridges from New York. It does not matter 
how soon you will receive the order as it will have to be held up at your office 
until Mr. Frenkel advises you to ship so that the cartridges would arrive more 
or less about the same time as tlie pistols. By the time that the pistols are ready 
there will be enough money in the bank to pa.v for the cartridges and Mr. Frenkel 
will see to it that you get your money first as he has agreed with mp. That 
is. you will have the money in your possession before you ship the cartridges. 
The order fo)' the Guardia will be for 112,500 rounds of ammunition and for the 
Ministerio de la Guerra will be for 21 M rounds, making a total just at present 
cf 1331/! M rounds. There is an additional order for Guardia of 199' M of 45 
after they i*eceive the pistols and ammunition and you can rest assured that this 
s;:JS76 — .•'..■i— PT 1 1 1 .- 



2616 MUNITIONS INDUSTRY 

additional order will come our way. I am enclosing herewith the order for 
the Ministerio de la Guerra for the 21 M and I do hope that before long I will 
send you the order for Guardia Nacional. You are not to ship this order for 
the Ministerio de la Guerra until Mr. Frenkel advises you. 

Now, since Elmslie has not been able to book any* orders from the trade here 
and he lost out on the orders for the 45 he is as mad as hell. Yesterday at the 
hotel he told me that he was going to secure the order for the Administracion 
de Rentas for the 580 M rounds even if he had to quote below cost. That is a 
hell of a broad statement to make but you can appreciate what I am up against. 
Last Sunday I tried to convince him that we should quote the same prices and 
to split the order so that everybody would be satisfied. He did not want to agree 
and on Monday he delivered bis quotation to Mr. Tomas Molina, de Minister of 
Finance, and later on I delivered my quotation. Dr. Molina is going to decide 
and be will give the order to the lowest bidder. He expects to decide either 
tomorrow or next Monday. You will know all al)out it pretty soon. You told 
me that I am perfectly capable of taking care of myself but with these odds I 
do not believe that anybody would have a chance. If we lose the business it 
will not be on account of Mr. Frenkel's or my ability, but it will be due to the 
fact that Jonas is sore and will try to secure the business at any cost, even jeop- 
ardizing future business as far as prices is concerned. He will establish a per- 
cent as far as low prices is concerned and it will take a hell of a time to restore 
the prices so that everybody could get a decent profit. I explained to him all 
these points but he is stubborn and did not want to listen to reason. He wants 
to show the new Co. that even with all the competition he ai'rived and he secured 
the business. It is a question of pride with him more so than anything else. 

I also received your letter relative to the business for carbines for Guatemala. 
That same day Saturday last. I sent the original letter I received from you to 
Mr. Isidore Berkowitz, of the firm of F. Koenigsberger & Co. I was going to send 
a sample of the carbine, one which I have in my room, but the Air-Plane Co. did 
not accept it, being against the regulations of the company to carry any arms or 
ammunition. You will hear direct from F. Koenigsberger & Co. I also wrote to 
them by that same mail. They will probably get busy on it before Elmslie gets 
over there. 



Yours very truly. 



L. G. Fernandez. 



Exhibit No. 971 

["A", Letter no. o-S] 

San Salvador, Julu 6th, WS//. 
Remington Arms Co., 

Bridgeport, Conn. 
(Attention of Mr. Frank Monaghan.) 

Da\B Sirs: I arrived here on Tuesday the 3rd. 

Together with Josephs, Frankels nephew, we visited the trade and am en- 
closing three small orders. The recent floods have effected business and it 
makes it very difiicult inducing a customer to puix-hase anything at all. 

Snrs. C. Bernheim & Co. : This is a fair-sized department store, who carry 
our arms and ammunition exclusively. Ov.-ing to the restrictions and hard 
times, their piu-chases now are very small. Credit good. 

Snr. Antonio Bou : A general store who handle our line exclusively. They 
have an order on tlie way, so cou^d only interest them in our rifles. Carry 
our 22 cal. ammunition, shotgun shells, and a few 22-caliber rifles. Gof>d credit. 

Snrs. Borghi E. Daglio & Co. : Largest and wealthiest hardware store in Sal- 
vador. Handle our line exclusively, but owing to J-estrictions and poor business 
have curtailed their purchases considerably. Received a small order for am- 
munition. Credit excellent. 

Snrs. Mugdan & Co.: This is a large hardware store, who are exclusive Win- 
chester distributors. They carry their flashliirhts. 22-caliber riuimunition, 22- 
caliber rifles, and shotgun shells. As they have the exclusive snle of Winchester 
and the information that they did not purchase enough to split the business, I 
did not press too hard for an order. Creilit good. 

Sr. Felix Alive.'la: A large hardware store who handle our line exclusively. 
Claim they have an order in transit i;nd owing to conditions could not see their 
way clear to place a further order. Credit very good. 



MUNITIONS INDUSTRY 2617 

Snrs. Sagrera & Co. : A small hardware store who handles at present our line 
exclusively. Did have some ranger civtridges iu but from ;ill appearance-, they- 
had been there for years. Claim.s to have an order in transit, so could get 
nothing. Credit questionable. 

Snrs. Carlos A. Schmidt »& Co. : Not in, so could do nothing. 

Snrs. Roberto Soundy & Co. : Very small hardware store. Has Winchester 
advertising, but carries our line exclusively. Sold practically all of his last 
order, but as elections are coming on, claims he is afraid to put in a stock, as in 
case of trouble the government will take over all of his stulf. Fair credit. 

Please take the other lirms off of your trade list, as they are out of business or 
do not deal in the line any more. 

I called on Colonel Ernesta Bara. who does all of the purchasing for the 
Salvadore Army, and his opinion of Joseph was nil. Th:it evening we had 
dinner together and he frankly stated that whenever he could evade it he would 
do no business with Iheui. Later in the evening he became quite excited about 
both Frankel and Josephs, cursing their ancestry from the beginning of time. It 
appears that there is not much friendship lost between these two parties. The 
Government purchased from Frankel in 1932 47 7m/m Solothurn field machine 
guns and 500 — 9 m/m submachine rifles, and one million Steyer 9 m/m car- 
tridges for same. Evidently Col. Bara did not get his proper share, and his 
opinion was formed. He now recommends Dada, Dada & Co., speaking most 
highly of them. Frankel, of course, speaks very disparagingly of Dada, Dada, 
claiming that they had Iwught Bara, hence their friendship. He did admit, how- 
ever, that he had also paid Bara ; but undoubtedly Dada had given him more. 
It is such a small place and there is so much jealousy that everyone knocks 
the other fellow. 

I called on the Anglo Bank, and their report on Dada was not favorable, 
but the Banco Agricola or the Banco de Reserve could not speak too highly of 
them, so take your choice. Dada now has a contract drawn up with the Gov- 
ernment on a deal he is closing with the Madison gun manufactured by the 
A/S Dan^k RekylrifSe syndikat of Copenhagen for 200 Madsen machine rifles 
at one hundred and thirteen pounds each, which includes extra barrels for each 
gun and accessories of all kinds for the gun. I am bi'inging you a catalog. This 
company had a Colonel Walter MacKesson out here for the past two months 
demonstrating this gun. and he has given the agency to Dada Dada. The terms 
on which the deal was closed was one-third cash, one-third in eighteen months, 
and balance in eighteen moutlis. Of course, the last two payments are covered 
with a bank guarantee. I met Mr. Vorley, of the Imperial Chemical Industries, 
Ltd., of London, and he informed me that he knew MacKesson, who is an officer 
in the German Army, and that their firm work very closely with the Madsen 
Co.* Whenever a sale of machine guns are sold, they quote an ammunition 
through them. He claims to have closed a big deal in Peru with this same 
firm. On MacKesson's instructions, Dada quoted the Government £4-8-6 per M 
for two million 7 m/m cartridges in clips. Now that Vorley, of the Imperial 
Chemicals has arrived, he is supposed to have given his agency to anotlier party 
and Dada is going to withdraw his quotation, as he claims to control the situa- 
tion, and frankly I believe from the way Bara treats him he certainly is in a 
fine position. He now wants to put in a quotation for us ; that is, Remington^ 
for the following specifications : 

2,000.000, 7 m/m cartridges, pointed. 

100,000, 45 cal. Colt auto. 

lOO.OuO, 3S •' " 

100,000, 38 " S. & W. Special Klennbore & Black. 

I have explained to Dada our position with Frenkel, and told him that I could 
do nothing until I had written to you on the subject. I have suggested that 
in case you would not agree to this, you might be interested in permitting hira 
to quote on Peters. In any event. Colonel Bara says there is no particular 
hurry about quoting, as an order will not be placed for the next three or four 
months. 

The Departmenf of Renta handles the commercial business and as onr 
ammunition is preferred in this market, I can see no I'eason why Frenkel splits 
with Winchester's Agency, except that he follows the line of least resistance, 
Dada feels certain that he would have difficulty, as the line is not known in 
the trade. We will have time to t;^lk the matter over thoroughly upon my 
return, so there is no use going into further details. 

* Pencil note: Frank, is this true? — EH. 



2618 MUNITIONS INDUSTRY 

This Government has a stock of over 3,000 new Model 1901 7 m/m Remington 
single shot rifles and 4,000 11 m/m rifles. I learned that Huber liad securetl 
a sample of these rifles and had proposed to Colonel Bara that if he would 
permit him to sell these to Honduras, he would replace them with two Spanish 
Mauser rifles lor every three Remington rifles sold. I asked Bara what guar- 
antee had Huber to put up and he told me that it was agreed that Huber 
would tirst deliver the Mauser rifles, before they would deliver their Reming- 
tons. I, therefore, suggested that if a deal like that is feasible and I could sell 
the rifles to the Honduran Government at $25.00 each and they opened credit for 
an amount equivalent to our price for 3,000 new Remington Enfield rifles that 
we could handle the deal. In that case he said, he would deliver the rifles to 
Honduras the moment we instructed him to do so, as he would have confidence 
in us delivering the new rifles to him. Upon my return to Tegucigalpa, I am 
taking our rifle and if I cannot interest them, I will propose the single shot 
deal. I went out to inspect a couple of cases of these rifles and they are in 
perfect condition, just as they were when shipped from the factory. 

Colonel Bara as well as others who have seen our rifle think that it is too 
heavy and want a rifle the same size as the Mauser. The Mauser they showed 
me weighed 8 and four-fifth pounds, while ours weighed 9 and % pounds, that 
is without the bayonet. The length of the barrel of the Mauser measures 23 
inches and the overall measurement is 42 inches. This is the size rifle that 
they wanted in Cuba, Panama, Costa Rica, and Honduras. 

The last order for 7 m/m cartridges, quantity three million was purchased 
from a German factory Karlsruher Industrie Werke Berlin. According to 
Frankel, the price was $19.00 CIF according to Dada it was sold in gold and 
they cost landed about $25.00. This price included clips and tin lined. 

This morning the Minister of War as^ked me to ship him one model 25A 
standard rifle .32 cal. Winchester and 500 cartridges for same. Have suggested 
to Dada that he place the order thru' Baltic, as I do not know of any other 
way it can be handled. Dada always has shipments coming through and it 
could be included. 

Tariffs : Owing to Germany's action in embargoing coffee or only accepting as 
much as the particular country purchases from them, it has caused quite some 
excitement in this country, as practically their entire crop of coffee is shipped 
to Germany. Salvador has therefore fixed the tariff laws into three categories, 
namely, a minimum, a medium, and a maximum tariff. A minimum tariff is to 
be apiilied to countries importing large quantities of coffee, a medium tariff, 
which means 15% higher than the minimum to be applied to countries, whose 
purchases of Salvador coffee i-epresent 25% or more of their exports to Salvador. 
A maximum of 200% more than the minimum tariff to countries who import 
less than 25% of their exports to Salvador. This they say means that the Gov- 
ernment will place as many orders, as they can with Germany, as they are their 
biggest customer for coffee. This probably will effect our ammunition sales to 
this country. It will hit the Japanese, as they have been dumping millions of 
dollars worth of goods here and they import nothing from Salvador. This 
tariff, of course, does not effect countries like the U. S. A. with a favored-nation 
treaty. 

I received your cable this morning, reading as follows : 

" Cable itinerary regards " to which I replied : 

" Guatemala 8th, Tegucigalpa 15th, Managua 18th, San Jose 21st, Havanna 
28th." 
and received your cable this afternoon, reading as follows : 

"Writing Panama, Guatemala, Tegucigalpa." 

The National City Bank are correspondents of the Salvador Bank, so you 
should be able to get references from them on Dada. 

The Salvador Government would not give me permission to take the sample 
rifle to Guatemala, however they consented to my taking it to the other Central 
American republics, but I had to agree to return it, as it was shipped to them 
gratis and has been entered on the Government records. Evidently they are not 
on very friendly terms with Guatemala and as soon as there is a rumor that 
Guatemala has made a purchase, they do likewise. I was quite surprised at 
their army and public oflScials. They appear very efficient and everything is 
well run. 

Yours very truly, 

(Signed) F. S. Jonas. 



MUNITIONS INDUSTRY 2619 

EXHB^IT No. 972 

[Letter ><'o. oS] 

Tegucigalpa, Honduras, July 3id, 193Ji. 
Remington Arms Co.. 

Bridgeport, Conn. 
(Attention of Mr. Frank Monaghan.) 

Dear Sirs : I spent five clays in Honduras and am returning ttiere on my 
way back, because tbey are true to form and anytliing tbey can do today, they 
invariably leave for next month, except a^-cepting a luncheon or a dinner. 

The president was the first man on whom I called and he appeared most 
pleased to see me, informing me that the order for the parts, in accordance 
with your letter of June 7th, had been placed. He then informed me that he 
was very much interested in placing an order for single-shot, seven-millimeter 
rifle?, and a further order for ammunition and instructed, me to see the 
minister of war. Dr. Gnlvez. I wasted two days before I could reach him, as 
he has been Icept busy on relief work, due to the flood. 

After I finally did meet this man, he told me that the crcler hud not as yet 
been placed, as they had calculated on a sum, half of the amount of which we 
]iad advised it would cost. After several conferences \\ ith his generals, he 
told me he would arrange to open n credit in a few days. The final result was 
that he would do so upon my return from Guatemala and he would have 
everything ready. 

I tried to interest them in our new r fle. but they insisted that I quote them 
ftn a single shot 7 m/m. similar model 1901 you sold them. They have, how- 
ever, asked me l)ring them the sample repeating rifle which we have in Sal- 
vador, which I intend to do upon my return. If I recall I think you told me 
that tb.e single-shot rifle would cost about .$25.00 each, so I quoted them 
accordingly, so am herewith attaching copy of a letter they requested me to 
submit. They speak of buying ten thousand rifles, but wnnted me to quote on 
one thousand. I told them that I would do so, but I did not think that you 
would accept an order for le.ss than three thousand. You will note that I 
have not quoted a c.i.f. price on the rifles, as I do not know whether you can 
accept the business, if we get it at that price. Please write me by air mail to 
Tegucigalpa, quoting me firm prices on all the articles I hnve quoted. 

They are very much interested in pu'-chasing a fifty caliber Colt machine 
gun. I was not sure of the price, so quoted approximately ,$1,500.00. Please 
ask them to send me parti cuhirs and also prices on their seven m/m auto 
rifles. They want to standardize their ammunition to this caliber only. 

I am told that they have no money, and then again it is said for army 
equipment. someliOAv or otiier, they nre always able to raise the money. I 
have not learned of any large purchases they have made, except 150 re- 
conditioned 7 m/m Maxims, which were purchased in Europe. 

It is rumored that the only way that this president can hold his job Is 
through being well pi'pp;ired, so I have hopes of the various rainbows coming 
through. 

I expect to be back in Tegucigalpa inside of twelve to fourteen days. 

With reference to commei-cial business, as you know mnrs'hal law prevails, 
so nothing is being done. They expect to lift it shortly and I think from the 
way they talk, it vill put under Govei'nment control and probably sell to one 
distributor for th;^ entire country. 

I therefore Ionised around for a possible distributor and would recommend 
the firm of Walter Bros. They are an English outfit, considerable capital, and 
have been established in Honduras for the past twenty years. They have 
branches in San Pedro on the coast and their head office is in Tegucigalpa. 
They represeiit various American and English firms, carry stocks and also take 
indent ordei's on commis.sion. I suggested the possibility of taking on the 
Remington line and they appeared quite interested, if tliey are able to work 
it with the Government. I think they have a very good chance as they do 
considerable Government business, as they represent the American Bank Note 
Company and up to recently the General Motors. They have now switched 
to the Reo line. In a conversation with the subsecretary of state, Gen'l Pinedo, 
I asked him to advise me who would be a good agent and he immediately 
suggested Walter Bros. Will give you full details upon my return. 

The president told me that they did not want to work thru an agent on 
their Government business, but suggested if we decided to do so, he would like 



2620 MUNITIONS INDUSTRY 

to recommend his nephew-in-law, Mr. Grave de Peralta. I have evaded this, 
so as to leave us in a positioa in case of competition, but I called on Mr. 
Peralta and told him that upon my return, we might be able to do something 
with the Peters line. 

They are not in the market at present for any revolver ammunition, as some 
was purchased from Peters, thru whom I was unable to find out. 

I did not write to Zaiiioii-a Henriquez cancelling; the agency as the firm 
has failed and I felt that if I did write to them they may think there is 
some pending business and want to horn in. 

I received your letter of 21st ulto. addressed to Tegucigalpa and note your 
remarks regarding Mexico. I am glad you feel that way, as I think it is 
absolutely necessary that I return by the same route and pick up the business 
that has been promised to me. I note in this morning's paper that the Govt. 
in Washington has placed an embargo on arms to Cuba, so I am wondering 
what it will all mean eventually. Don't they realize that Europe will continue 
to ship and they will get all of the business? 
Yours very truly, 

(Signed) F. S. Jonas. 

P. S. — Have .iu-st arrived in Salvador. Met Gomez for a few minutes. He 
is having dinner with me tonight. No time for further news as there is 
only a minute to catch the plane. 



BxHiiiiT No. 973 
["A"] 

Articles of agreement eJitered into on the I'i ' day of August, A. D. 1934, 
between the Government of the Republic of Honduras, acting through its repre- 
sentative. Dr. I\onan Bogran, Consul General at New York, hereinafter referred 
to as the " Government ". and Remington Arms Company, Inc., a corporation of 
the Stati of Delaware, United States of America, liereinafter referred to as 
Remington. 

Witnessetli: 

"Whereas Remington is a manufacturer of and dealer in arms and ammimi- 
tion of the type and kind hereafter referred to and. 

Whereas the Government desires to purchase said arms and ammunition from 
Remington in the amount, at the prices and upon the terms and conditions 
hereafter set forth, 

Now, therefore, the Government and Remington have agreed and by these 
presents do agree with each other as follows: 

First. Remington agrees to sell and deliver to the Government, and the 
Government agrees to purchase and accept from Remington, the following arms 
and ammunition at the prices set oposite each item thereof and upon the terms 
and conditions hereinafter set forth : 

3,000 " Remington Enfield " rifles. Model 1934, caliber 7 m/m, 
without bayonets, but with sling straps. $26.00 per ritle. c. i. f. 
Amapala, total price $78, 000. 00 

1,000,000 cartridges caliber ^ 7 m/m " Kleanbore Smokeless ". 

$23.00 per thousand, c. i. f. Amapala, total price 23,000.00 

.50,000 cartridges clips 7 m/m $10.00 per thousand, c. i. f. 

Amapala, total price .lOO. 00 

200,000 cartridges, 45-caliber Colt automatic " Kleanbore Smoke- 
less " for Thompson machine guns, $16.00 per thousand, c. i. f. 
Amapala, total price 3, 200. 00 

50 Thompson machine guns, 21-A, $140.00 each, f. o. b. New 

York, total price 7,000.00 

$111, 700. 00 

Second. In addition to the price of t!ie arms and ammunition referred to in 
the price of the arms and ammunition referred to in the last preceding para- 
graph, the GovernnKHit shall pay to Remington the amount of any consular taxes 
or other charges which may be paid by Remington in order to accomplish de- 
livery: it being understood and agreed that with the exception of the Thompson 

* Pencil note. 



MUNITIONS INDUSTRY 2621 

machine guns, the above prices include cost, insurance, and freight, and that 
with respect to said Thompson macliine guns, the Government shall pay to 
Remington all freight and insurance charges arising out of the shipment of 
said guns from New York to Amapala. 

Third. At or before the execution of this agreement, the Government shall 
establish an irrevocable credit in favor of Remington v?ith the National City 
Bank of Nevv' I'ork in an amount sufficient lo cover the price of said arms and 
ammunition, together with all costs and charges arising out of the shipment of 
the same ; it being estimated that said costs and charges shall be approximately 
five thousand dollars ($5,000.00), and it is understood and agreed that the total 
amount of sucii credit, upon the execution of this agreement, shall be one hun- 
dred and sixteen thousand seven hundred dollars ($116,700.00). 

Fourth. As and when shipments are made by Remington, pursuant to the 
terms and conditions of this agreement, Remingion shall present to tlie Na- 
tional City Bank of New York the following documents covering each shipment: 

Three copies of the bills of lading. 

Consular invoice. 

Invoices for the merchandise in triplicate, including freight, insui-ance, 

and consular charges. 
^ Certificate of insurance. 

and upon presentation of the foregoing documents with respect to any ship- 
ment, the said National City Bank shall be and it is hereby duly authorized to 
pay to Remington the amount of such invoices covering the price of the 
merchandise, freight, insurance, and consular charges from the credit above 
referi'ed to. 

Fifth. Remington agrees that all invoices covering shipments hereunder shall 
show the value of such shipments, f. o. b. New York, and that separate invoices 
shall be rendered showing the cost of insurance, freight, and consular charges. 

Sixth. Shipments of the arms and ammunition referred to in this agreement 
shall be made by Remington from New York as follows : 

Rifles: 500 within four months, and approximately 1,000 each month 
thereafter. 

Cartridges, 7 m/m : Approximately 200,000 \ it bin two weeks, and approxi- 
mately 200,000 each week thereafter. 

Cartridges. 45-caliber Colt automatic : 200,000 within two weeks. 

Cartridge clips : 50,000 within three weeks. 

Thompson machine guns within two weeks. 

Seventh. The foregoing arms and ammunition shall be consigned by Reming- 
ington to the Ministerio de Guerra, Marina, y Aviaciou, and the shipping cases 
containing the same shall be marked as follows : 

Ministerio db Guerra, Marina, y Aviacton 
TEGUOiGArj>A via Amapala 

It being understood further that the insurance to be procured by Remington 
shall cover and include all risks to Amapala, Honduras. 

Eighth. It is the intention hereof, and the Government agrees, that notwith- 
standing the amount of the credit hereinabove referred to, to be placed in the 
National City Bank of New York in favor of Remington, Remington shall be 
reimbursed by the Government and paid any amount by which said credit shall 
be insufficient to cover any lawful charges arising out of the shipment of said 
arms and ammunition in accordance with the terms of this agreement. 

In witness whereof the Government, by Dr. Ronan Bogram, Consul General 
at New York, and Remington, by its duly authorized representative, have caused 
this agreement to be executed on the 16 * day of August, A. D. 1934. 

Government of the Republic of Honduras, 

By . 

Remington Arms Company, Inc., 

By , * Vice President. 

Attest : 



* Pencil note. 



2622 MUNITIONS INDUSTRY 

Exhibit No. 974 

["A"] 

Luis G. Feknandeiz, 
Remington Arms Co., Inc., 'Netc York City, June 10, 1931. 

29 Wan en Street, New York City. 
(Attention Mr. Geo. Eugge.) 
Gentlemen: Pursuant to the conversation I had with you upon my arrival 
to New York two weeks ago, I wish to infoiin you tliat the extra five percent 
charged to take care of certain party in Tegucigalpa, as agreed by the writer, 
part of the total amount of $740.25 has already been paid up to Mr. Francisco 
Argueta, of San Salvador. This Mr. Argueta received instructions to receive 
this amount from Coronel Villanueva, or the party who was interested in 
Tegucigalpa. I effected a payment of $800.00 to Mr. Argueta in San Salvador, 
when you cabled me the $500.00. Before I left San Salvador I handed Mr. 
Argueta the amount of $1.50.00, making it a total of $450.00. Two days ago 
I received the attached cable from Mr. Francisco Argueta (Chico), as every- 
body nickname him, requesting of me to turn over some funds to a friend 
of his here in New York. Today I will hand this party here in New York the 
sum of $75.00 ; and, as you have arranged that this amount be turned over to 
us, I wish to report that as soon as the balance of the amount is turned over 
to me, I will remit to Mr. Francisco Argueta a bank's check for the balance 
of $215.25, thus completing this transaction. 

I further state that this is my understanding, that Mr. Argueta is a relative 
of, residing in San Salvador,^ of the party in Tegucigalpa, Honduras. 
Yours very truly, 

L. G. Fkbnandez. 

Confirm $500 cabled Fernandez, San Salvador, Apr. 20/31. 

240 25 

• ■„' paid by check to his order 6/11/31. 

I received the amount of $740.25 in payments as noted herein. 

L. G. Fernandez. 



Exhibit No. 975 

"A" DR 

Mr. S. NoRVELL, President, Dkcembeb 22, 1928. 

25 Broadnay: 

We have recently had an example of how the U.S. Department of State at 
Washington, D.C., can help us. 

In 1927 we had some nice business fi-om the Dominican Republic for 30/06 
Springfield cartridges, but tliis year those in charge of the purchasing for that 
Government made arrangements with a German concern to purchase .303 
British rifles and cartridges for same. The rifles and cartridges were supposed 
to be new, and a unit price was set of $77.00 for each rifle, with a thousand 
cartridges. Our agent viewed the sample rifle, gave us the serial number, and 
we had our London office investigate. It was found the rifles were all second- 
hand war material and the cartridgesi were quite old, being purchased in Great 
Britain by tlie German concern at $12.00 each for the rifles and about the same 
price per thousand for the cartridges. Of course, the idea was to leave a big 
margin of graft for the Government people. 

When we approached the State Department they admitted knowing something 
of the deal, but were glad to get the additional information we had obtained. 
They sent a copy of our letter, giving the full facts to our Minister at Santo 
Domingo. They are willing to shut their eyes to small graft on such trans- 
actions in Latin American countries, but they felt this was going too far, 
especially asi the Dominican Republic still has a lot of unsettled American 
claims. Our agent, who knows nothing of our dealings with the State Depart- 
ment, which have to be strictly confidential, now reports the President of the 
Dominican Republic called for an investigation, with tlie result the contract for 
the .303 rifies and cartridges has been canceled, and the first installment is to 
be shipped back. Our chances of regaining the business are, therefore, very 
bright, for the President has issued an order that in future all purchases are 
to be made direct from manufacturers. 

(Signed) Monaghan. 

rjM N 



MUNITIONS INDUSTRY 2623 

("Exhibit No. 976" appears in text on p. 2540.) 



Exhibit No. 977 

[Representante de Manutactureros] 

Lots E. Nicolas, 
Caixb Colon No. 38, Apartado No. 231, 
Santo Domingo, Republica Dominicana, June lltli, 1930. 
Cables Nicolas, Todos los Cotiges, Codiges Privados, Telefono No. 1262. 
T§E Remington Arms Co., Inc., 

29 Wairen Street, New York City, U. S. A. 

Dear Sirs: I have the pleasure to acknowledge receipt of your kind letter 
dated June 10th, contents of which have been duly noted. I am glad that the 
situation has been cleared to your satisfaction and that of all concerned. 

As per my letter of last mail, which you will surely receive together with 
this mail, as it could not be placed in the mails until after the steamer had left, 
you will be advised that the permit situation is the same, maybe worse at 
present, because the Army is now after a few generals that took the mountains 
against the actual Government. No permits will be issued to anybody while 
peace and tranquility are unstable. 

The reason for my mail not getting the last boat was that a few minutes after 
it was written I was induced to hide by some friends who knew in advance that 
the order to imprison me had been given by Goverument officials. On Wednesday 
noon, after communicating with the general, I gave myself up and was locked 
in Columbus place at the Torre del Homenajo for 48 hours, after which I was 
released. The reason for my prosecution has been given as " For being a friend 
of Dr. Morales and selling arms and ammunition to the revolution." This charge 
was made by some competitors intei'ested in wiping me out of the map and 
taking my agencies away, both of which things they will be unable to do. 

I took advantage of this opportunity to celebrate my interview, which I re- 
ported in my last letter to you, with General Trujillo, who understood my posi- 
tion and assured me that nothing will happen to me in the future, and that as 
soon as conditions in the country warranted the extension of permits they will 
be granted, and that meanwhile no permits will be issued to anybody. I also 
informed him that I am no politician, and that my business was to work and 
sell everybody that came in power, and that he will find me ready to cooperate 
with him to that end. 

I understand that conditions will S(ym be normal and that our activities will 
be resumed. Meanwhile I will be in my post, doing everything possible to com- 
plete the transactions now pending. With kind regards to all, I remain, 
Yours sincerely, 

Ltjis E. Nicolas. 



Exhibit No. 978 

"A" DR 
Remington Arms Compant, Inc., 

Brill ffeport, June 10. 1932. 
Mr. Luis E. Nicolas, 

Apartado 231, Santo Domingo, D. R. 
Delus Sib: We acknowledge your letter of June 1 in respect to Mr. Naramore 
and his scheme of reloading cartridges for the Government. This subject was 
also covered by part of one of your letters of May 31. 

You ask thtit we make up a detailed comparison of the cost of i-eloading car- 
tridges as against purchasing the fully loaded cartridges. This is a rather 
difficult thing to do and give the proper effect to all factors which go into reload- 
ing cartridges. Even after you get through with such a comparison, it is far 
from giving a true picture, for the mere comparative costs do not reflect the loss 
sustained in ammunition going bad when reloaded by people outside the factory. 
Then, of the gi-eatest importance is the element of safety. Without the proper 
ballistic instruments for measuring breech pressure, velocity, etc., one can never 
be certain the ammunition is not dangerous to use. 



2624 MUNITIONS INDUSTRY 

We had an example recently in Peru of someone reloading cartridges which 
would have a salutary effect in warning against tliis method. The cartridges 
which were reloaded in Peru were sent to us for testing, and the first thing we 
did was to try them for breech pressures. We found tliey developed a breech 
pressure of 58,000 pounds to the square inch, whereas the maximum we would 
allow in our manufacture is 48,000 pounds to the square inch. This increased 
pressure was sufficient to endanger the life of the shooter. When loading powder 
one can never tell by merely weighing or measuring the powder the pressure it 
will develop, and the only way this can be determined is through the use of 
chronographs and pressure guns. Such ballistic equipment, as you well know, 
is very expensive and requires the services of a real ballistic engineer. Such a 
man commands a very high salary. This factor alone would increase the cost of 
reloading cartridges in Santo Domingo to such an extent as to make the reloaded 
product more expensive than to purchase from us. 

There is another very important factor in reloading cartridges and that is 
such cartridges cannot be stored for an indefinite period and expected to be 
capable of use. Reloading machinery does not properly seal the bullet in the 
shell or seat the primer in such a way as to prevent moisture, oil, or other ele- 
ments attacking the powder or priming mixture. When loaded at the factory, 
these precautions are always watched closely. Take, for example, our revolver 
and pistol cartridges : As you know, these are oilproofed by shellacking the 
primer and using asphaltum in the mouth of the shell to insure against oil from 
the arm attacking the powder or priming mixture. This cannot be done when 
cartridges are reloaded. 

There are two very important elements in primers for reloading purposes. 
They have to be both nonmercuric and noncorrosive. Our primers are both non- 
mercuric and noncorrosive. Our competitors, Winchester, supply a nonmercuric 
and also a noncorrosive primer, but they have no one primer which embodies 
both these necessary features. Their priming mixture is not comparable with 
our Kleanbore priming, and, in fact, they have found it necessary in some of 
their primers to increase the size because their mixture was not as effective 
as ours, requiring that they load a greater amount of priming mixture in the 
primer. 

When all is said and done, there is only one real primer in this market and 
that is the Kleanbore primer, of which fact you are well aware. The tests we 
make to insure our cartridges being able to withstand heat and humidity for a 
great period of time have clearly proved the secret of the success of our product 
is that our Kleanbore primer and priming mixture are superior in every respect 
to the product of our competitors. As you know, Kleanbore priming is patented 
and cannot be duplicated. 

We should be very glad to have you watch this matter of reloading very 
closely, advising us what Mr. Naramore did during his stay in Santo Domingo. 
We imagine you are not going to find it very difficult to convince the Govern- 
ment they are adopting a very dangerous policy in considering the reloading of 
ammunition. 

It is rather interesting to learn from your letter that Mr. Naramore is wear- 
ing the uniform of a captain of the United States Army. This, to say the least, 
is a serious breach of etiquette and perhaps a more serious charge could be 
brought. It is our understanding an officer of the Army is not supposed to wear 
the uniform except on active duty or state occasions. Certainly Mr. Naramore 
is not entitled to wear the uniform when representing the Lyman Gunsight 
Corporations, which was the case when he was in Santo Domingo. 

With kindest regards, 
Yours very truly, 

FJMN 



Manager Foreign Department. 



Exhibit No. 979 

"A" 
OcTOBEK 27, 1932. 
Mr. Roger L. Bbaokein, 

Export Manager Millers Falls Company, 

Greenfield, Mass. 
Dear Roge3i: Geo. Rugge has sent me from 20 Wan-en Street your letter of 
October 25. I have thought of you mauy times, especially since we had to move 



MUNITIONS INDUSTRY 2625 

to Bridgeport, for I felt we could sympathize with one another. Why don't you 
stop off some time on your way to the big town? 

I am very glad to confirm the good news Restrepo sent you. He is certainly 
doing a wonderful job for us, and the way he is taking hold of things the last few 
months has simply been a revelation to me. I don't think I ever had a man in 
the foreign field who kept us so informed of the complete picture of things as 
they were happening. Yes, indeed, you were due for thanks in having trained 
him and recommended him to us. 

AVe had some unfortunate publicity in connection with the Colombian order, 
and for that reason we are now doing mighty little talking about it, so we ask 
you to hold it confidential. 
Kindest regards. 
Yours sincerely, 

Remington Arms Company, Inc., 
f. j. monaghan, 

Manager Foreign Dept. 
F.JMN 



("Exhibit No. 980" appears in text on p. 2544.) 



Exhibit No. 981 

[Air mail- — Confidential] 

HEaiNAN Restkepo, 
Bogota, Heptemher 10th, 1932. 
Remington Arms Company, Inc., 

Bridgeport, Conn., U.S.A. 
(Atten. Mr. F. J. Monaghan.) 

Dear Sirs : I wish to confirm my cable dated the 7th inst. requesting your 
quotation on 2 million seven milimeter mauser cartridges for the Colombian 
Government. In this sams cable I informed you that European competition is 
of $22.00 per thousand. 

In doe course I received your cable reply dated the 8th inst. informing me 
to meet the European mauser price. 

Coronel Carlos Padilla, about whom I wrote you sometime ago, is a very 
close friend of the writer, as well as his family. They live next door to 
my home. This gentleman occupies now a high position in the Colombian 
Army and belongs to the Estado Mayor del Ejercito. In the strictest confidence 
Coronel Padilla informed me the Government wants to buy at the present 
lime 2 million cartridges and inforihed me about the quotation they have 
from Switzerland of $22.00. These cartridges are intended for part of the 
Army that is being sent to Puerto Leticia on the Amazon River, our frontier 
with Peru — Puerto Leticia has just been taken by Peruvian insurgents but not 
in any way connected with the Government of Peru with whom this Govern- 
ment enjoys cordial relations. This matter is being treated in the Colombian 
and Peruvian Congress in secret conferences. However, this Government is 
taking the necessary measures in order to protect our national integrity. 

Coronel Padilla put me in contact with Coronel Adelmo A. Ruiz, Chief of the 
Armament and Ammunition Dept. of the War Dept. with whom I had a very 
long talk relative to your products, quality, guaranty, etc. Coronel Ruiz is 
having today a conference with the Minister of War relative to this purchase 
and will give me a definite answer next Monday morning. Coronel Ruiz has 
also asked me to obtain your quotations in the following material for the 
Curtiss aeroplanes the Government bought sometime ago : 

90,000 metal clips for aircraft machine guns (red). 

90,000 Eslavones metalicos para ametralladoras Aereas. 

Quotations on different types of bombs for same aeroplanes. 

I do not know if you manufacture the just-mentioned material, and hope 
you will be able to give me this information. 

Coronel Padilla is giving me his full support in order to get the business 
and is keeping me confidentially informed of this matter. Indirectly, I under- 
stand he wants a commission ; however, I may be wrong and am keeping a very 
diplomatic attitude until further developments This gentleman also informs 
me he is doing his best in order to induce this Government to buy 40 million 
cartridges. 



2626 MUNITIONS INDUSTRY 

At this moment I cannot give you any furtlier information, but will do so 
after my interview next Monday. Anyway, you can rest assured that I am 
doing my utmost to get this business and that my connections are of the best. 
After you take note of the contents of this letter, which you will treat in a 
most confidential way, kindly destroy same, as this request was made to 
the writer by the War Dept. 
Cordially yours, 

(Signed) Hebnan Restbepo. 



Exhibit No. 982 

NOVEMBEB 12. 1930. 

Mr. Herman Restbepo, 

Bogota, Colombia: 

We duly received your letter of October 16th, and it was quite encouraging 
to learn that Genl. Angel wishes prices on 7 m/m pointed cartridges, on which 
action will be taken toward the end of this year. 

We are well acquainled with the 7 m/m Mauser pointed cartridge which the 
Colombian Government requires, as we operate very closely with the du Pont 
Company, who had their Government business representative visit the cartridge 
factory in Bogota two years ago (Mr. N. E. Bates), and consequently we are 
in a position to meet the requirements of the Government in al! ballistic details. 
You mentioned an initial velocity of S.50 meters, which we can meet, but, of 
course, there is always a tolerance, and we presume it will be approximately 
plus or minus 10 meters. 

The powder we would supply would be du Pont I.M.R. powder, which the 
Government is familiar with. The primer would be our Kleanbore type, which 
eliminates rusting, pittiug, and corrosion of the rifle bore, and this is an advan- 
tage which the Government will readily recognize as compared with the old 
types. We shall be glad to supply a bullet jacket of either cupro nickel or 
gilding metal, whichever is preferred, and we presume it will be the latter. 

The cartridges will be packed 2— to 'he carton and 10,000 cartridges to the 
wooden case, each such case to be lined with tar paper. However, if the Co- 
lombian Government desired, we would supply tin-lined cases, for which there 
would be an extra charge of 75t* per thousand in addition to the prices men- 
tioned hereafter. 

All manufacture and inspection would l»o in accordance with the Remington 
stand;, rds. 

Now we come to th»' question of price. The prices we are going to mention 
are net to us F.A.S. New York; and if any coniniissions have to be paid to 
intermediaries in Bogota whom you might find would be helpful in obtaining 
this business, the price will have to be increased by the amount of such com- 
missions. Furthermore, the prices are based on present market prices of such 
materials as lead and copper : and in the event of any violent fluctuation in 
such prices, our price would have to be changed accordingly. It i? miehty diflS- 
cult to sit here in New York and name a price schedule without knowing the 
full picture in Bogota, but we shall have to give you some basis on which to 
work and then let you use your best .ludgment in submitting them. 

Our price net to us f.o.b. New York for 1,000.000 cartridges is $27.00 per 
thousand; .$26,.50 per thousand for 2,000.000; $26.00 per thousand for 3.000.000. 
As we stated above, there will be an additional charge of 750 per thousand 
if tin lining is required. 

Deliveries would be 300,000 two weeks after receipt of order, 200,000 three 
weeks following, and 200,000 weekly thereafter. These deliveries would be in- 
creased somewhat in the event of an order for 3.000,000 being placed. The 
initial delivery of 300,000 in two weeks would be dependent on business that 
may come to us in the meantime from other markets, but in any event we 
would commence deliveries of 2(X),000 at least five weeks after receipt of order 
with the same quantity weekly thereaftei-. 

You mentioned the government will probably receive quotations from <ither 
manufacturers in Europe and here, and certainly we do not want to lose this 
business because of some small difference in price and we are relying on you to 
learn of bona fide quotations made by others to the end that we will be afforded 
an opportunity of making any slight adjustment that may be necessary to 



MUNITIONS INDUSTRY 2627 

assure the busiuess reaching ns. So far as American manufacturers are con- 
cerned, we are quite sure the prices nientioned will he the lowest, but this 
may not he entirely true with European competition. However, in the latter 
case you know European manufacturers promise many things which tliey do 
not fulfill, both in deliveries and quality, and you can stress these points. 

You will probably desii-e to bring every influence you can to bear to obtain 
this business for us, and as a suggestion we should like to mention that in some 
instances we have found it advisable to diplomatically ask the Minister of 
War or the person who will have the final say in placing the order, who he 
would like to have us work with as our agent. In other words, who is the 
intermediary to see and pay commission for the business. Such commission 
as we mentioned before, would have to be added to the prices we have given 
you. 

The prices we have quoted are quite the lowest we have ever entered on 
7 mm cartridges, for we are extremely anxious to obtain this order and have 
sacrificed profit. However, you will have to be reimbursed for your work in 
event of the order being placed, and the prices contemplate a small commission 
for you ; but we ask that you leave the amount for determination when the 
business assumes a more definite aspect. 

We eagerly await your further advices, and with kindest regards we remain, 

F. J. MoNAGHAN, Export Manager. 
FJM 
JM 

Exhibit No. 983 

Palmer & Company, 

570 — Moreno — 574, 
Buenos Aires, August 22nd, 1933. 
Remington Aems Co., Inc., 

Bridgeport, Conn., U. S. A. 
DuAR Sirs: This will confirm the exchange of cables with you as follows: 
Yours of the 19th : " Effective orders dated after August twentieth, twenty-two 
caliber cartridges increased ten percent, firearms caliber 
twenty-two percent, firearms all other calibers and gauges 
fifteen percent. Advise customers." 
Yours of the 19 : " 22 meaning is not clear ; 10% over list 14 or merely elimi- 
nating 10% recently allowed." 
Yours of the 21st: "Fourteen list of twenty-two reinstated without discount 
or confidential." 
From all of this we understand that on caliber .22 cartridges we have to sell 
strictly in accordance with list no. 14, no longer offering the 10% discount 
which has recently been allowed. We understand further than on .22 calil>er 
rifles we are to advance the prices of list no. 14, £"0%, and we are to advance 
15% the prices of all other rifles and of all shotguns. As you have said nothing 
about cartridges larger than cal. 22, we take it that list no. 14 applies to such 
cartridges with the 10% confidential which has heretofore been allowed on 
certain items. 

Immediately upon receipt of your first cable we got in touch with our cus- 
tomers and we have pleasure in sending you by this air mail 4 orders, that is 
our orders nos. 1193, 1194, 1195, and 1196. 

Order no. 1193 is i-eally for Mr. Werns. but he has arranged for Mr. Redaelli 
to receive the goods for him so as to cut down the incidental charges. So far 
as you are concerned, order no. 1193 is to be shipped and invoiced to Mr. 
Redaelli and it is unnecessary to put Mr. Werns' name on any document or on 
any case. 

Rifle model 33 was formerly pi'iced at $3.30 each. Mr. Werns would like to 
get this price on order 1193 ; if, however, this is impossible it is understood 
that you will bill at $3.80, which is the price according to list no. 14, that is to 
say these rifles should be billed at all events at the prices prevailing before 
you sent your cable of the 19th. and this applies to the model 34 also. With 
reference to the packing of the 3 model 34's in each shipment, please put them 
in boxes such as are used for the model 33, so that the Custom House inspector 



2628 MUNITIONS INDUSTRY 

will not notice any difference at all in the boxes when the cases are opened. 
Furthermore, please put the boxes which contain the model 34's right in the 
center of the case, that is the center from side to side and also the center from 
top to bottom. If these instructions are all carefully followed it will be very 
bad luck indeed if the Custom House inspector discovers that there are some 
repeating rifles in this shipment. Mr. Werus is not only anxious to save the 
additional duties on repeating rifles, but even more he wishes to avoid the de- 
lays incident to the entry of repeating caliber .22 rifles. Strictly speaking, 
repeating rifles of any caliber should not come into the country at all but 
single shot 22's can come in. 

Order no. 1194 requires no si)ecial comment, it being understood, of course, 
that you will give the 10% which was allowed before you sent us your recent 
cable. 

Order no. 1195 requires no special comment either, except that it is subject 
to the same condition. Please note, however, that when drawing on Gonzalez 
& Russel for this shipment you should deduct the credit of $13. — U. S., which 
you promised to give them in your letter of August 11th, 1932. We are quite 
sure that this credit has not been deducted from any draft up to the present 
time. 

Order no. 119G. You will note that this order is for Liprandi, De Eoni & 
Scholberg of Montevideo. This, of course, brings up again the question of 
payment and credit. Our suggestion, is, therefore, that you hold order 1196 
for a few days, as Mr. Liprandi has promised an additional order for other 
sizes. This we will probably receive tomorrow or the next day. Consequently, 
on the 25th we expect to v^'rite you again by air mail and at that time we will 
answer your letter of the 9th iust. about Liprandi's payments and at the 
same time take up order no. 1196 and the additional order which we expect 
to receive. It is understood, however, that if order 1196 is finally accepted 
by you it will be billed to Liprandi at the prices of list no. 14, but we will get 
the discount of 10, 10 »& '2%, which we have been receiving lately on Liprandi's 
business. 

You will have noted that we have sent you by last air mail an order for 
800,000 22's for Kirschbaum. This was, of course, mailed before we received 
your first cable. 

In one of the paragraphs above we have been rather explicit about the pack- 
ing of the rifles for Mr. Werns and we have done so because of what happened 
in connection with a recent shipment for Gonzalez & Rossell. In our letter 
of June 6th we asked yon to pack the caliber .44's in the center of the cases 
and your letter uf June 23rd indicated that you understood just what was 
wanted. But, apparently the man who actually did the packing did not under- 
stand it at all because in each case or cases (v.'e do not know at the moment 
how many there were) the small calibres have been put around the oufsiile of 
the case from top to bottom and the 44's have been put in the center of the 
case also from top to bottom. The result is that as soon as the top of the case 
is lifted one sees immediately the caliber 44's, which is, of course, just what 
we wanted to avoid. The Custom House inspector immediately discovered that 
the case did not contain only small calibers and the large calibers have been 
seized. Gonzales & Rossell say they will have to abandon them. So far they 
not made any very urgent claim on you, seeming to think for some reason 
that they did not explain their desires very well. If we were in their place 
we would certainly not take such a charitable view of the situation and we do 
not think that you would either. In any event, we will let the matter rest 
for the present and if the customer brings it up again we will advise you. In 
the meantime, however, it would be well to take up this incident with your 
packer to avoid repetition of it in the future. 
Very truly yours, 

pp. Pai-mer & Company, 
(Signed) Thueston V. V. Ely. 

TVVE.HS 



MUNITIONS INDUSTRY 2629 

Exhibit No. 984 

"A" 

Otto Kuhlen, Unico Representante Para of Biasil, da Remington Arms Com- 
panj', Inc., New York, 29 Warren Street, a Maior Fabrica do Mundo de 
Armas-Minicoes-Cutelarias. Telephone : 2-4106-Caixa Postal 495 

Marca Registrada — Remington, UMC 

Sao Paulo, 21 de October de 1929. 
Trav. do Coramercio, 2 — 1. candar. 
Remington — reg. U. S. Pat. Off. End. telegraphico, Remac ; codicos 
Usados, Bentley ; A. BC. Sth ed. Boi-ges 

[Answered Nov. S, IQilQ. G. Rugge] 

Mr. George Rugge, 

General Export Manager Remington Arms Compo/ny, Inc., 
29 Warren Street, Neio York City. 

Deiae ]Me. Kugge : Regarding office rent, you know that some time ago the 
late Mr. Kuhlen advised you that he had arranged with the landlord to reduce 
the rent from Rs 650$000 to Rs 500$0<]0, but I do not know whether or not you 
are aware of the fact that there was not any reduction because the space rented 
for the company's offices comprises the two large front rooms and the small side 
room, and since Mr. Kuhlen occupied the small room for his private cutlery 
business he paitl a separate rent of Rs 150$000 for it and charged the Co. only 
Rs 500$00O for the two large rooms. Now, the small room has been vacant since 
Mr. Kuhlen died, and, as I have no use for it, I have arx-anged with the landlord 
to take it over, and, as he does not seem to be able to rent it to somebody else, 
he proposed to let me have the two front rooms for Rs 550$0OO, or, then, I would 
have to keep everything at the rent Mr. Kuhlen contracted ; i. e., Rs 650$000. I 
decided that it is best to pay Rs 550$00O for the rooms I occupy and let the small 
one go. Therefore the rent to be paid at the end of this month will be Rs 
550$000. 

I want to suggest to you that as soon as everything is settled you permit the 
changing of this office to more suitable and cheaper quarters. There are plenty 
of offices for rent in modern buildings centrally located which can be rented 
much cheaper ; I say for about Rs 300$000 or less. I know that you will send 
me your instructions in due time regarding this matter. 

The Christmas season is approaching. I had better ask you now for advices 
as to what to do in regards to giving presents to the Government officials who are 
rendering us services in connection with permits. 

Last year Mr. Kuhlen distributed Christmas presents amounting to $300.00 
amongst his friends of the Regiao Militar in S. Paulo and Mr. Bispo de Araujo, 
Consul Florambel, Col. Lapagesse, and a Capt. Scares, of Rio. Mr. Moura, of 
J. J. F. & Cia. also received a present. 

The amounts spent on eacli person were as follows : 

General Hastimphile Rs 150$000 

Capt. Tores Homom 140$ 

Colonel Rezond? 140$ 

Capt. Cuisserat 240$ 

Major Moreira 240$ 

Mr. Bspo de Araujo 700$ 

Consul Florambel 300$ 

Col. Lapagesse _ 150$ 

Capt. Soares 240$ 

Mr. Moura 200$ 

Since the new permit regulation has gone into effect it has not been neces- 
sary for this office to utilize the services of the officers of the local Regiao 
Militar. Our local clients now deliver their own applications and when neces- 
sary they go themselves to the regiao for any information or favor they may 
need. As everything in connection with permits has proceeded normally I have 
not yet had the opportunity to ask for any favors from these local military 
authorities. 

The only person who has been rendering us valuable services just now has 
been Mr. Araujo, of Rio. He has been giving me prompt information about the 
applications from our clients that arrive at the war dept. When I give an 



2630 MUNITIONS INDUSTRY 

application to a client for signnture I immediately advise Aran jo. He is on 
the lookout for it in Rio and puts it liefore the minister for dispatch as soon 
as it arrives at the war dept. 

If you are going to decide to discontinue the practice of giving Christmas 
presents to any government officials from Rio as well as from S. Paulo, I 
think you should make an exception in the case of Mr. Araujo. A Christmas 
gratification to him in addition to what he gets every month will act as an 
encouragement to his continuing to give us his good services in Rio. 

After all, the discontinuance of this practice, with the exception named, may 
be the best thing to do. We are not any longer dealing with these i)eople 
direct in connection with permits, so they may hot accept anything from us, 
but from the clients who no doubt will not forget them. Besides, these people 
were Mr. Kuhlen's personal friends and he needed their friendship for the 
reason that applications for permits were filed from this office. Now that 
their friend has died and. the permit regulation has changed they may not 
expect anything. 

However, the decision about this matter will be entirely up to you, and I 
know that you are not going even to give the matter much thought, but that 
you alread.v have in mind .iust what to do. Please, advise me in due time in 
connection with this matter. 
Very truly yours, 

A. M. Barata. 



Exhibit No. 985 

January 31. 1930. 
Mr. A. M. Barata, 

Caiwa Pofital ^95, Sao Paulo. Brazil. 
Dear Mr. Barata : Your letter dated January 4th covers certain expenses 
you outlaid during the holiday season and we approve all the items of this na- 
ture shown on your statement for the month of December. It is quite all right 
to give the Christmas bonification to Mrs. Felice and hope she is quite satisfied 
with the gift. Glad to note that Mr. Moura and Capt. T. H. were delighted 
with what you presented to them. Keep up the good work to have our operating 
expenses as low as possible. 

Your letter dated January 7th confirms the cablegram you sent covering your 
visit to the Rio Embassy in con.iunction with the embargo and detained ship- 
ments. It is certainly good to note that there continues to be prospects of the 
Minister of "War allowing the shipments held up to pass into the hands of the 
consignees and we hope that ere this letter reaches you something as been done 
in this regard. 

Just as soon as you have completed your investigation into the report that 
shipments to the Amazon District will again be permitted and your detained 
shipments be released, please let us hear from you. We are perfectly satisfied 
with your trip to Rio. 
Yours very truly, 

Remington Arms Company. Inc., 
Geo. RiTGGE. Genl. Expoj't Manafrer. 
GRN 



Exhibit No. 986 

[A. M. Barata. representante Remington Arms Company Tno.. Sao I'aulo, Brazil. Teleph. 
Central 4106. Caixa Postal 495] 

" Reniiiiiztoi! " Armas. Municoes e Cutelarias. 

.sV/o Paulo, June 23, 1930. 

[Ponril nolf- -Ans. S/G/^.O — M.] 

Remington Arms Company. Inc., 

29 Warren S! reet. Ncv' York Vitii. 

Gentlemen: In a previous letter T havp informed you that I was leaving 
for Rio on the Sth iiistant for the imrnrso of also investigating about the Gov- 
ernment husinesis to which you refeircd in your letters da*e<l May 9th and 16th. 

The interest on the ))art of the present Governnient to i>urchase 7 ni/ni car- 
tridges abroad is not recent. The iiearest time since which the Government 



MUNITIONS INDUSTRY 2631 

has first contemplated that purchase is about one year ago. Although there are 
stories to the effect that such purchas^e has been decided upon since a longer 
time, we cannot err to accept as the real truth that the decision was made in 
the early part of 1929. Such intention on the part of the Government was first 
known at that time, and from that date began the activities of the sellers to 
secure tlie Government business. All this I know from information gathered 
up in the office of the American commercial attach^ in Rio and from individual 
army officers whom I know in Ilio and who could post me with positiveness 
on the case. 

Knowing, in fact, that the Government had been even from such a long date 
interested in the purchase of 7 m/m cartridges from abroad, I immediately put 
into execution my plans to find the right sort of connection with the Govern- 
ment. From what I investigated I did not consider Messrs. L. Figueira & Cia 
a good medium for my case. Mr. Forman, of the Coll Company, informed me 
that he has been depending on them for over six months to get orders from the 
Government without any concrete results, and I was also informed that they 
have not been able to do"^ anything in the way of getting business for the repre- 
sentative of the Curtis-Wright Export Corp., of New York, although through 
other mediums the French have sold airplanes to tlie Government. 

I preferred, therefore, some firm that has not only been selling to the Gov- 
ernment but that has also enough pull and power to obtain the Government's 
preference to a proposition it offers irrespective of how attractive other propo- 
sitions made by different concerns may look to the Government. I found this 
firm, one of the partners of which is Dr. Firmino de Mello, who is son-in-law 
of President Washington Luiz. There are two other partners who are very 
well known in Government circles. The name of one of them is Dr. Max 
Leitao, with whom I instituted friendship and dined together a couple of times^ 

Dr. de Mello, in our first interview, told me right away that he knew about 
this business. He evidently had heard it commented upon by high officials. He 
had an idea that orders from 7-m/m cartridges had been placed abroad, in Eng- 
land, Italy, Austria, and with the Fabrica Nacional of Sao Paulo. He knew that 
such orders had been placed some time ago. He was not sure that all the Gov- 
ernment requirements for such cartridges had been filled. He would find it out 
for me. He knew further than an American concern had offered a bid. I men- 
tioned the name of the Western Cartridge Company ; he remembered it, but he 
stated that this concern did not get an order. A question of prices, he added. 
He spoke about the claim made by Western that their cartridges were the best 
on account of the bullet jackets being of a very soft metal composition which 
would cause the prolongation of the life of the rifle barrel. A bullet jacket of 
such composition could never injure the rifling of the bore in tlie barrel because 
it being so soft it did not offer much pressure upon the rifling. He remembered 
the term Lubaley by which Western called these cartridges. Mr. de Mello 
knew everything and I wondered whether he had ever been approached by some- 
body interested in getting through him this Government business. As we con- 
tinued to talk he revealed to me that the Companhia Imperial Industrias 
Chimicas do Brazil, Ltda., Nobel's Brazilian subsidiary, had some time ago 
approached him to work for them on this deal on a split commission basis. His 
firm, the name of which is Souza Sampaio & Cia., Ltda., Rio, refused the propo- 
sition because it only works for full commission, therefore it works only direct 
with principals. No wonder, then, that Dr. de Mello was so fully acquainted 
with the matter about which I approached his firm. 

Of course, the only thing left for me to do was to ask him to investigate for 
me whether in fact the entire order had been placed in Europe, and give me a 
confirmation on all his above statements. 

I had to wait quite a few days for his reply. In the meantime I kept on calling 
on them to cement my friendship with the partners of the firm. Finally he 
reported to me that Nobel wiis the British concern that got a part of the business, 
the balance havmg been divided up between an Austrian and an Italian factory, 
the names of wLich he could not remember, and the Fabrica Nacional in Sao 
Paulo. He told me, furthermore and confidentially, that the business for the 
European factories was obtained through intervention by their respective ambas- 
sadors. That the Italian ambassador, upon knowing what the price quoted by 
Nobel was, went personally to the President of theRepublic and obtained his 
consent to cutting down the share given to the British factory and giving a part 
of the order to the Italian factory. He also confirmed that the American 
factory's bid was turned down. 
83876— 35— PT 11 16 



2632 MUNITIONS INDUSTRY 

Knowing all the facts of the case which I could know through Mr. de Mello's 
firm, I asked them to be on the lookout for me for future Government require- 
ments, which they promised to do, and added that in future occasions they would 
act as intermediaries for me. They have all the facilities in the world to get 
business from the Brazilian Gov't, which is easy to understand. Dr. Mello 
assured me that in the future our company would not miss the chance of making 
a bid, and that it might not be very long before the Gov't required more ammuni- 
tion for the army. By the way, he was not sure about the quantity purchased 
in this instance, but the figures you gave me in your letter seemed to him to be 
exaggerated. Besides my conversations with Dr. de Mello, the President's son- 
in-law, I had many separate talks with the partner. Dr. Max Leitao, who 
assured me of all his cooperation in future cases. 

The person who put me in contact with Messrs. Souza Sampaio & Cia., Ltd., is 
a civil engineer of high prestige in social and commercial circles of Rio. His 
name is Clovis da Norbrega, and he is an old friend of mine. He is a cousin of 
the Governor of the State of Rio Grande do Norte. He introduced me to 
various congressmen from his State and promised to do everything he possibly 
could for me in Rio. 

My stay in Rio this time was longer than in previous occasions, but it was 
not useless insofar as our future interests are concerned. With the connec- 
tions I have made I can assure you that no Government business shall be given 
in the future to any of our European competitors without our being given a 
break. I dare say that a firm as influential with the Government as Souza 
Sampaio & Cia., Ltda., can shut out any comi>etitors having even ambassadors 
as intermediaries. 

I could not obtain from Dr. de Mello the prices quoted by the Euroi^ean 
factories, but I am going to find a way of getting this information, which is 
very important for us to know so as to enable us to determine whether we 
could have competed with the other factories for this business. I will also 
endeavour to find out the exact quantities ordered from each factory. Of 
course, it should be appreciated that Dr. de Mello would not feel inclined to 
ask the Minister of Vv'ar or some other high official for too many details which 
these officials might not wish to impart to him just because he is the President's 
son-in-law. He would have to be discreet in his endeavours to do me a favor. 

My comprehension of the reason why this matter was never brought to my 
attention during the time I have been in charge of this office, and to the 
attention of Mr. Kuhlen since early last year or even before that until the 
days he began to feel ill, is based on the fact that this oflice has never had 
a firm like the one I have now arranged to be on the look-out for future Gov- 
ei'nmeut business for us. Such a connection is essential if we want to get 
Government business in this country, and it should be also considered advisable 
that the representative take one or two days run to Rio every two mouths at 
the most to make personal investigations in that direction. And who knows 
that it has been for these reasons that for many years, in fact as far as I 
lemember since the time I have been with the company, we have never sold 
anything to the Brazilian Government, except in 1920 or 1921, at which time 
we sold some Colt pistol cartridges to the Brazilian Navy. I believe I am 
not wrong on this statement, however you may wish to do me the favor of 
informing me v>hether I am or not. 

I trust that you will find that I am giving you satisfactory information on 
the investigation I have made in Rio about this Government business, and if 
there is anything else that you wish to know about the matter which I have 
not reported fully and clearly please let me know, so that I may satisfy you. 
Naturally, I regret that our company was not favored with a share of this 
Government business. 



Yours very truly. 



(Signed) A. M. Babata. 



Exhibit No. 987 

["A" BR] 

August 8, 1930. 
Mr. A. M. Bar AT A, 
Sao Paulo, Brazil. 
We duly received your splendid report of June 23rd on the subject of govern- 
ment business. You are to be congratulated on the clarity and conciseness of 
the manner in which you have presented us with the facts and your deductions 



MUNITIONS INDUSTRY 2633 

therefrom, followed by your preliminary steps to insure our having the pi-oper 
contact for the future. 

We absolutely agi-ee with 5'ou that in government business, the prime essen- 
tial is to have the right connection ; otherwise price, quality, or other con- 
siderations are of no avail. 

Furthermore, it is necessary to nurse these contacts from time to time ; 
but the extent of the time and money to be employed has to be gauged by 
the potential business that might ensue. Before long you will no doubt know 
more on this score and in particular the prices we would have to quote in 
order to obtain the business. Then we can tell if we can meet competition. 

The fact we are now ready to manufacture Tracer ammunition in 7 m/m, 
7.65 m/m or similar rifle cartridges, will be a big advantage to you. You know 
we maniifacture armor-piercing cartridges, for the 50 calibre Colt giui, and 
we are the only manufacturers in this country. Nobels also make them and 
perhaps some continental manufacturers, but Colt's has told use our product 
is vastly superior to any competitor. You will be glad to know we are pre- 
pared to supply Tracer type of bullet in this 50 calibre. Colt predicts tlie 
business in this arm will grow at very rapid strides, and no doubt Mr. Forman 
is pushing its sale. It is used for antiaircraft work and against tanks. 

You are quite right. We have never received any Brazilian Government 
business, although we had many inquiries for prices from Mr. Kuhlen, but 
nothing ever came of them. 

Awaiting your further reports with keen interest, we remain, with kindest 
regards, 

F. J. MoNAGHAN, Export Manager. 

F.M— JM 



Exhibit No. 988 

Remington Arms Company, Inc., 

October 24, 1930. 
Mr. A. M. Babata, 

Caixa Postal J/QS Sao Paulo, Brazil. 

We have to hurry in order to catch today's mail. The latest news we have 
this morning is that the Brazilian Government resigned and the new people 
are in power. What the developments are within the next few days remains 
to be seen and no doubt we will have your cable advices as to the prospects 
for business. 

Of course the change in government is no absolute reason to our way of 
thinking that there will be no further inquiries for government supplies, but 
rather we are inclined to think the new government will consider it necessary 
to replenish their stocks of cartridges, and perhaps even build up the stocks 
beyond the point at which they were before the trouble. Of course we are 
wondering what your status will be with the new Government, that is to say, 
if you will be accepted as a friend in view of your negotiations for attempt- 
ing to sell those formerly in power and we await with interest your advices 
on this point. The same thought holds good in respect to Figueira & Co. 
Will they be the right people for the future? 

Now for the most important subject of this communication. All week we 
have been exasperated beyond words at the absence of definite advices from 
you by which you understood what we were doing and the instructions we 
were giving you. Here is the picture as far as we can give it to you quickly 
of the position in which we were placed. The Brazilian naval attache in 
Washington, Mr. J. C. Aguirre, has always, and this means for years past, 
done his buying through a man in New York and for good and sufficient 
reasons at the present moment we do not want to give you his name. The 
quotations are made to Commander Aguirre in the name of the manufacturer 
and a commission is included for the man in New York. We found our com- 
petitors in this country were quoting through this channel and, therefore, it 
was obligatory for us to place our quotations through this channel, because 
we know this channel was not adding as much for commission as your inter- 
mediary. You know in previous communications we have called your attention 
to the fact that we believed the commission of 15% was entirely too much. 

When we gave our quotation to Commander Aguirre we realized that you 
not having had much experience with these government transactions might 



2634 MUNITIONS INDUSTRY 

have in some way left us liable for commission to Figueira & Co. in the event 
of an order reaching us through Washington and yet Figueira & Co. have 
absolutely nothing to do with influencing the order to us. Whether they 
influenced it or not we certainly could not pay commission to two people. 

Where you appoint a man as your agent and do not do it in the proper way, 
he can claim commission no matter through what channel the order reaches 
the manufacturer, and therefore, we always keep this in mind and make our 
arrangements to protect against such a happening. The best way to accom- 
plish this is to quote the intermediary as a principal ; in other words, when 
we give Figueira & Co. a quotation, that means he has to buy the goods from 
us at the price we give him less the 15% or whatever other commission may 
be decided upon. The same holds true when we give a quotation to Com- 
mander Agniirre through his agent here. We are always careful in confirm- 
ing any of these quotations not to leave any loopholes for people to take 
advantage of. 

Information reached us through more than one channel that Figueira & Co. 
were working for practically every American ammunition manufacturer, and 
reports we have had on them from people whom we know are to the effect 
that Figueira & Co., while well placed with the government that was, have to 
be watched very closely, as they are tricky. 

In one of your cables you told us the inquiry from the American commercial 
attache was instigated by F. & Co. Maybe you are right ; but a couple of 
other ammunition manufacturers were told by their representative in Kio that 
they instigated the inquiry through the commercial attache, so you can use 
your own imagination as to how much truth there is to tl^s story. 

When we cabled you that inquiries were reaching us through various chan- 
nels, we really had in mind only one which we would recognize, and that is 
the Brazilian naval attache ; and our cable was intended, as it clearly read, to 
make sure you had not involved us so we would have to pay commission to 
F. & Co. in the event of an order reaching us through Commander Agiiirre, 
You did not answer our question, but instead you cabled in defense of F. & Co. 
and absolutely evaded our question, which you must not do in future. At the 
same time you probably inspired the cable we received from F. & Co. they sent 
the same day, saying they were working in cooperation with you. 

The day before yesterday we cabled you our only quotation was to the Wash- 
ington attache through his agent, and, of course, we meant the Brizilian naval 
attach^. This was in reply to your cable to advise you confidentially the 
names of others making inquiries. At the same time we cabled F. & Co., but 
did not mention the word agent ; and yet in the cable received today from F. & 
Co. they asked us the name of the Washington attache and the agent, indicating 
you showed them your cable. We certainly expectetl a cable from you ac- 
konwledging this cable we sent you, for we told you to cable acknowledgment, 
yet yon have not done so. Today we answered Figueira's cable by cabling them, 
" We quoted Brizilian naval attache." We did not want them to know there 
is any agent involved, and we are going to refrain from saying so directly to 
them. 

Early this week we received an inquiry from Commander Aguirre for 200,000 
.308 British pointed cartridges for machine gnus, and we quoted him, receiving 
his order two days ago, which is now in course of preparation ; and, even in 
spite of Ihe change in government, we understand the order is to go through. 
Of course, this is confidential information for you. 

This morning we received a cable from Figueira asking for prices on 100,000 
.303 Britisli pointed, and we cabled them $36.00 per thousand ci. i. f., which 
includes 15%, as they requested. For your confidential information the price 
Aguirre quoted the Government was $34.00 per 1,000. 

The prices Aguirre gave the Government on 7 m/m are about $1.00 per 
1,000 lower than what Figueira quoted the Government. These are two con- 
crete examples, substantiating our belief that 15% was too high. 

You can recognize you have left us completely in the dark as to what yow 
were doing with F. & Co. and we can imagine they left you the same way 
until they found we had another channel when they immediately awoke as 
evidenced by their cables to us. 

The situation as we see it now is quite complicated and being without any 
definite advances from you that your negotiations with Figueira & Co. have 
not left us open to claim from them in the event of business through Washing- 
ton on 7 m/m"s, wo beilive the present is the proper time to conclude and 
finalize all your negotiations up to the present time with Figueria and start 



MUNITIONS INDUSTRY 2635 

•everything with a clean slate. The change in Government will make this 
possible. If you believe there is any way that you have left us open to claim 
or the least chance of it, and even if you do not think so, we believe it will be 
well for you to close all negotiations with Figueira and repoen them afresh. 
Furthermore, you are not authorized to make any arrangements for us with 
any intermediary without all the details being submitted to us in advance. 

Yesterday we received your cable telling us the commercial attach^ was 
cabling the Commerce Department to ascertain from the War Department 
here whether they used gilding metal or Lubaloy. The cable has not yet 
arrived, but when it does you may be sure the answer you want will be sent 
and it will be the truth — namely. Gilding metal. Even the Commerce Depart- 
ment at "Washington laughs about this Lubaloy for they know Figueira was 
saturated with a lot of Western's propaganda. 

In all these negotiations for Government business, you as well as ourselves 
have been working up toward the top instead of the way some big companies 
do — from the top down. In other words, you find what you believe is a 
good intermediary and then try to reach the Minister of War or whoever else 
has authority in placing orders. The du Pont Company makes it a practice 
of finding out who is the right man to work with, the Minister of War, the 
Head of the Ordnance Department, or whoever else it may be, and then asks 
that authoritative person who it believes would be a good agent to appoint for 
negotiations. But again we want to say no details are to be arranged by 
you with an intermediary without our authority after we have received 
complete data from you. 

Mr. Rugge just mentioned that perhaps Sant' Anna will be acquainted 
with the new powers and it may be well for you to seek his cooperation. 

In hurrying to catch this mail we have not the time nor inclination to 
couch this letter in any but plain unvarnished English, and, as a matter of 
fact, that is perhaps the best way to give you the picture of things as they 
are disturbing or have been disturbing us all week. 

17:)plng you are well, we are 

, Export Manager. 



Exhibit No. 989 

Remington Abms Company, Inc., 

Bridgeport, November 30, 1932. 
Personal and confidential. 
Mr. A. M. Barata, 

Itajtiba Hotel, Rio de Janeiro, Brazil. 

Dear Sir: Since we received your letter saying the Government was going 
to close up the local ammunition factory in Sao Paulo, we have given a lot of 
thought to that situation, for we recognize it is a mighty important one to 
our interests. What we are going to say to you in this letter we want 
treated strictly confidential. 

In the first place we want to tell you that nearly all the companies in this 
country and Europe, who would be benefited by having the local factory out of 
the way, agreed some time ago not to enter bids with Mr. Matarazzo for 
his company, for we all felt by standing off the factory would eventually faiL 
This is the reason we never turned a sympathetic ear to any of the overtures 
made through you for us to become interested in the purchase of the company. 

What we would like most to see is the Government take over the factory 
and scrap machinery, especially that part intended for the manufacture 
of revolver and pistol ammunition and shot-gun cartridges. If the Government 
continues in their present intention of closing the plant, we would want to 
do everything possible to see that the Government oflScials responsible for 
the closing of the plant went through with their plans and actually had the 
machinery scrapped. For the Government people to allow the machinery to 
come into the hands of any new group might result, as it did before, in the 
equipment being used to the detriment of the Government. 

It might be that some incentive could be given the Government official who 
was responsible for the scrapping of the plant to see that he went through 
with these plans. With all the ammunition factories practically broke now- 
adays, not much could be done in the way of paying worthwhile money, but we 



2636 MUNITIONS INDUSTRY 

are tlunking the result possibly could be accomplished if handled diplouiatically, 
at a very small cost. 

One thing is certain, we do not want to see this machinery get into the 
hands of some other group who would be relieved of all the indebtedness 
of the present company and thereby be in a better position to bid with us 
than is the present company, for the statement you sent us of their financial 
status we consider a very poor one. 

What we want you to do is to watch this situation from every angle and 
add any propaganda you can with the proper Government oflBcials to the 
end that the plant be scrapped. 

This is a rather sketchy plan we are presenting to you and you want to be 
careful you do not make any false moves. As a matter of fact you should 
do nothing where you would appear as a principal. First and foremost, we 
want every bit of information from you as to what transpires and is intended 
in connection with this local plant. Your suggestions as to what could be done 
in furthering our interests in connection with this factory will be anxiously 
awaited by return air mail. 

In watching the situation you have to be careful to see that none of our 
competitors make any moves to purchase the equipment of the local plant. 
Yours very truly, 



Manager, Foreign Department. 



MUNITIONS INDUSTRY 



HEARINGS 

BHFORB THB 

SPECIAL COMMIHEB 

INVESTIGATING THE MUNITIONS INDUSTRY 

UNITED STATES SENATE 

SEVENTY-THIED CONGRESS 

PDRSDANT TO 

S. Res. 206 

A RESOLUTION TO MAKE CERTAIN INVESTIGATIONS 

CONCERNING THE MANUFACTURE AND SALE 

OF ARMS AND OTHER WAR MUNITIONS 



PART 12 

DECEMBER 11 AND 12, 1934 



RELATIONSHIP OF MUNITIONS MAKERS 
TO THE GOVERNMENT 



INTERNATIONAL CONNECTIONS IN THE 
CHEMICAL INDUSTRY 



Printed for the use of the 
Special Committee Investigating the Munitions Industry 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASfflNGTON : 1935 



MUNITIONS INDUSTRY 

r 

HEARINGS 

BEFORE THE 

SPECIAL COMMITTEE 
raVESTIGATING THE MUNITIONS INDUSTRY 
• UNITED STATES SENATE 

SEVENTY-THIRD CONGRESS 

PURSUANT TO 

S. Res. 206 

A RESOLUTION TO MAKE CERTAIN INVESTIGATIONS 

CONCERNING THE MANUFACTURE AND SALE 

OF ARMS AND OTHER WAR MUNITIONS 



PART 12 

DECEMBER 11 AND 12, 1934 



RELATIONSHIP OF MUNITIONS MAKERS 
. TO THE GOVERNMENT 



INTERNATIONAL CONNECTIONS IN THE 
CHEMICAL INDUSTRY 



Printed for the use of the 
Special Committee Investigating the Munitions Industry 




UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1935 



\ / 

*Atl¥A«\> COLLfsr U^BAHY 
fifCElVfO THROUGH THI 

flUKlAU ^0« RE2tARCH IN 
MUNICiPAi tiJirVEBNMENT 

1^37 



X?' 



SPECIAL COMMITTEE INVESTIGATING THE MUNITIONS INDUSTRY 

GERALD P. NYE, North Dakota, Ohairman 

WALTER F. GEORGE, Georgia ARTHUR H. VANDENBERG, Michigan 

BENNETT CHAMP CLARK, Missouri W. WARREN BARBOUR, New Jersey 

HOMER T. BONE, Washington 
JAMES P. POPE, Idaho 

Stephen Rabshenbush, Secretary 
Alger Hiss, Legal Assistant 



CONTENTS 



Testimony of — • Page 

Beebe, H. F., manager foreign department, Winchester Repeating 

Arms Co 2735-2742 

Bradway, F. W., assistant general manager, smokeless-powder depart- 
ment, E. I. du Pont de Nemours & Co 2681-2716-2805 

Casey, K. K. V., director of sales, smokeless-powder department, 

E. I. du Pont de Nemours & Co 2638, 2640, 2645, 2652, 2654, 2669, 

2683, 2688, 2692, 2698, 2706, 2715, 2718, 2728, 2732, 2744, 2747 
du Pont, Iren^e, vice chairman of board of directors, E. I. du Pont de 

Nemours & Co 2639, 2643, 

2651, 2654, 2688, 2709, 2730, 2741, 2754, 2766, 2781, 2784, 2806 

du Pont, Lammot, president E. I. du Pont de Nemours & Co 2641, 

2653, 2668, 2684, 2689, 2705, 2707, 2717, 2727, 2732, 2734, 2740, 
2746, 2752, 2766, 2782, 2786, 2793, 2799, 2803, 2808, 2815. 
du Pont, Pierre S., chairman of board of directors, E. I. du Pont de 

Nemours & Co 2712-2819 

Sparre, Dr. Fin, director development department, E. I. du Pont de 

Nemours & Co 2699-2711 

Swint, W. R., director foreign-relations department, E. I. du Pont de 

Nemours & Co 2784-2788, 2791-2794, 2802-2808 

Relations of United States Army and Navy officers with munitiong makers. 2644 

Business with the United States Government 2661 

Relations of du Pont Co. with the State Department 2672-2683 

Submergence of Government powder under water at Old Hickory 2679 

Influence of munitions companies on the policies of Government 2691 

Use of United States Government guns for commercial demonstrations. ._ 2700 

National policy regarding munitions shipments to foreign countries 2706 

Attitude of du Pont Co. toward embargoes and legislation regarding em- 
bargoes 2717 

Question of international disarmament in 1922 and its relation to the chem- 
ical industry 2754 

International connections in the chemical industry 2781 

m 



INVESTIGATION OF MUNITIONS INDUSTRY 



TUESDAY, DECEMBEB 11, 1934 

United States Senate, 

Special Committee to 
Investigate the Munitions Industry, 

Washington^ t). G. 
The hearing was resumed a 10 a.m. in the Finance Committee 
Eoom, Senate OflSice Building, pursuant to the taking of recess,, 
Senator Gerald P. Nye presiding. 
Present: Senators Nye (chairman), Barbour, Clark, and Pope. 
Present also: Stephen Raushenbush, secretary to the committee. 

At this point the committee concluded that part of the testimony 
which is incorporated in Part XI of these hearings, " Chemical 
Preparation following the War and Interchange of Military In- 
formation." 

The Chairman. The committee will be in order. 
Senator Clark desires on the stand this morning Mr. Casey and 
either or both Mr. Irene© du Pont and Mr. Lammot du Pont. 

TESTIMONY OF IRENEE DU PONT, LAMMOT DU PONT, AND 

K. K. V. CASEY 

Senator Clark. Gentlemen, I desire this morning to examine 
somewhat briefly into the question of the relations of private muni- 
tion companies to the United States Government, particularly the 
War and Navy Departments. I will first read a letter from Mr. 
Phellis, general director of sales, to Mr. Irenee du Pont, president, 
room 9042, building, dated November 26, 1919, which I ask to have 
marked with the appropriate number. 

(The letter referred to was marked " Exhibit No. 990 " and ap- 
pears in full in the text.) 

Senator Clark. That letter reads : 

Subject : Nobel agreement. 

Before leaving today Mr. Pickard asked that we send you copy of the at- 
tached letter from Maj. K. K. V. Casey for your information. 

C. W. Phexllis. General Director of Sales. 

I also desire to read extracts from a letter, which I will be glad 
to read any other parts in, which you gentlemen desire read, but I 
will read the parts I consider important, being a letter dated Novem- 
ber 25, 1919 ; that is, memorandum to Mr. F. W. Pickard, vice presi- 
dent, signed by Major Casey, director of sales. 

(The letter referred to was marked " Exhibit No. 991 " and is 
included in the appendix on p. 2820.) * 

2637 



2638 MUNITIONS INDUSTRY 

I think this letter may have been used in Senator Vandenberg's 
examination the other day, although I was not here. 
Mr. Casey. Not this one, Senator. 
Senator Clark. I read : 

As I understand the situation, we are contemplating entering into an 
agreement witli tlie Explosives Trade Limited — 

The Explosives Trades Ltd., Major, was one of the component 
parts of what is noAv I. C. I., was it not? 
Mr. Casey. Yes, sir. 
Senator Clark [continuing reading] : 

on a division of profits from the sales of military and commercial products in 
South America and elsewhere. I am not familiar with the purpose in back of 
this arrangement, but assume that the idea is that it will result in a better 
percentage of profit by the elimination of competition ; that is the only reason 
I can imagine. 

Personally, I cannot see whereby we will be the gainers by any arrangement 
we can make with Nobel. The du Pont Co. today is preeminently the leading 
manufacturer of explosives in the world and with a record for satisfactory 
production that has never been equalled. This fact is known not only by the 
Allies, but has been thoroughly appreciated by the Central Powers as well as 
the neutral nations. Therefore, we have a prestige second to none, which will 
not be materially strengthened by the above-mentioned arrangement. As far 
as prestige is concerned, we will be given more than we receive. 

If it is expected that this arrangement will enable us to control the market 
in South America to our mutual advantage, I think we are working on a false 
hypothesis. South American countries, with the exception of their navies, are 
armed and equipped with German-made small arms, and with German and 
French field artillery. There may be a few English guns for Cordite in some 
of the coast defenses, but my understanding is that the majority of these guns 
are Krupp, which practically indicates that the only English powder used is 
powder that is sold for use on English-built warships. 

England has succeeded for some years in impressing nations where guns built 
for nitroglycerin powder have been supplied that they will work satisfactorily 
with nitroglycerin ix)wder only, that tins notion has been shown to be er- 
roneous, and now it is a relatively small matter to prove to the satisfaction 
of interested people that nitrocellulose powders can be made that will give 
equal satisfaction in guns of the so-called " nitroglycerin " type. 

The competition that we have to fear is that of the German, French, and 
Italian, but principally German, and unless there is something with which I 
am not familiar I cannot see in what way any arrangement we make with 
Nobel will protect us against this competition. In fact, even in the case of 
the Engli.sh-made guns, if the nation should insist on using nitroglycerin 
powder, we are still unprotected by reason of Italian competition. Therefore, 
as I see it, we will be making an arrangement whereby instead of dividing a 
fair profit which division will net us more, we will in reality be in an arrange- 
ment where the division of profit will be materially lessened by reason of 
the fact that we still have the competition of Germany, France, and Italy 
to meet. 

Will you explain what that arrangement was for the manufacture 
of nitroglycerin powder and nitrocellulose powder so that we can 
understand it, and just state what the arrangement was about. 

Mr. Casey. Du Pont was looked upon as a nitrocellulose powder 
manufacturer. 

Senator Clark. Do you manufacture nitroglycerin powder? 

Mr. Casey. No. 

Senator Clark. Not at all? 

Mr. Casey. "We did a little shotgun powder business, whereas the 
English have always been looked upon as nitroglycerin powder 
manufacturers. 



MUNITIONS INDUSTRY 2639 

Senator Clark. This letter refers to " military propellants." 

Mr. Casey. That is all I am talking about. 

Senator Clark. In the statement on page 2 which I just read you 
say that you fear German competition. This letter was written in 
1919. Did you understand at that time, in 1919, that Germany was 
making and ex]3orting military propellants? 

Mr. Casey. No ; but I thought there was a possibility that at any 
time they might be allowed to. 

Senator Clark. In other words, you thought there might be a 
modification of the Versailles Treaty, which you had to take into 
contemplation in the agreement which you might make with Nobel ? 

Mr. Casey. Correct. 

Senator Clark. I will read further in that letter [reading] : 

The above indicates the practical side, but there is another angle which in 
my mind is more important, and that is, that by making an arrangement to 
divide profits on siales of military explosives, we are inviting the attack of 
unfriendly people and miickrakers. No matter how clean the arrangement may 
be, it is bound to be misconstrued. We will be accused of exchanging Govern- 
ment information with England. Our explanation that this is but a selling 
arrangement will not alter the fact that in order to divide profits, those profits 
are based on some cost. That cost will be stated to be the United States Gov- 
ernment cost. Therefore we will be informing England as to what it isi costing 
the United States to manufacture its powder. We will also be accused of 
informing England as to the quantity of powder for military purposes made 
in the United States, how much is exported, and how much the United States 
has. 

Major, those objections were very valid, were they not? If this 
agreement had been made there would have been a very valid objec- 
tion that it did disclose information based on cost, and that in order 
to determine the basis it would be necessary to disclose the United 
States Government cost? 

Mr. Casey. As I said, that is what we would be accused of. 

Senator Clark. You could have been accused of it very justly? 

Mr. Irenee du Pont. No, sir. 

Senator Clark. Why not? 

Mr. Irenee du Pont. Because the cost of Government powder 
might be very different than the cost of powder shipped down there. 
You take the cost of Government powder provided in 1918 to the 
United States, and it certainly had no relation to any powder we ever 
made before. 

Senator Clark. You do not mean the cost, but the selling price? 

Mr. Irenee du Pont. Both. They were both way below what was 
ever manufactured before. 

Senator Clark. It did not cost you less to manufacture? 

Mr. Irenee du Pont. It cost us less to manufacture and it was 
sold for less. 

Senator Clark. It cost you less to manufacture ? 

Mr. Irenee du Pont. It cost us less to manufacture than ever 
before. 

Senator Clark. It did not cost you less to manufacture powder 
for the United States Goverinnent than before? 

Mr. Irenee du Pont. It certainly did, because we were in larger 
production. 

Senator Clark. In the manufacture of powder in 1918, of com- 
parable kind, it did not cost you any less to manufacture the powder 



2640 MUNITIONS INDUSTRY 

you furnished to the United States Government than the powder you 
furnished to any other government during that period? 

Mr. Irenee du Pont. It is here in the record, that is, the records 
are here to show it exactly, and I believe it was less, because of the 
larger volume of manufacture, and also we began getting materials 
at lower cost after the United States went into the war. 

Senator Clark. But if you manufactured during the period 1918 — 
did you manufacture exclusively for the United States Government 
after we got into the war, or did you start to manufacture to some 
extent for the Allies ? 

Mr. Irenee du Pont. We manufactured for the Allies the orders 
we had uncompleted. 

Senator Clark. That is what I say. If you manufactured the 
same powder, in the same factory, or a similar kind, and sold some 
to the United States and some to the Allies, it did not cost you less 
to manufacture for the United States than the Allies? 

Mr. Irenee du Pont. It might have. 

Senator Clark. That is the point I am making, Mr. du Pont. 

Mr. Irenee du Pont. At any rate, the exact cost of manufactur- 
ing powder cannot be known, but the approximate cost must be 
known. The approximate cost of manufacture must be known to the 
Nobel people as well as to us. The approximate cost of manufacture, 
whether it costs 55 cents or 53 cents, would be utterly immaterial. 

Senator Clark. But in setting up your cost base, is not Major 
Casey's suggestion here well taken, that the cost would be what is 
the United States Government cost? 

Mr. Irenee du Pont. I do not think that is necessarily so. 

Senator Clark. Therefore it would be informing England as to 
what it cost the United States to manufacture it. 

Mr. Irenee du Pont. I think the cost of a lot of powder sold in 
South America would be very different than what it cost in the 
United States. 

Senator Clark. Major Casey goes on [reading] : 

In spite of the fact that on interchange of information on patents, military 
explosives are specifically exempted, we will be attacked with the statement 
that by informing them of the sales and the costs on which the profits are 
based, that we cannot avoid informing them regarding compositions. 

Is that objection not well taken? 

Mr. Casey. That is again on the same premise. We can be ac- 
cused of a lot of things. 

Senator Clark. I understand you can be accused of a lot of things, 
but I am asking your opinion whether you could be fairly accused. 
This was an intercompany memorandum. I understand you said 
you could be accused of it. What I am trying to find out now is 
whether it is your opinion that you could have been accused of it 
with justice. 

Mr. Casey. I am trying at this time to make the strongest case 
that I possibly can. 

Senator Clark. I understand. 

Mr. Casey. To something to which I objected personally. 

Senator Clark. What was your opinion as to the justice of those 
accusations which might be made? 

Mr. Casey. I think I have stated pretty clearly, Senator, that they 
might be just or unjust. 



MUNITIONS INDUSTRY 2641 

Senator Clark. I understand you said they might be just or un- 
just, but I am trying to find out your opinion as to whether they 
would be just or unjust. You are an expert on the subject, and I 
know you have an opinion as to whether they were just or unjust. 

Mr. Casey. I felt most of them would have been unjust, but we 
were still open to attack. 

Senator Clark. As a matter of fact, your present arrangement 
with I. C. I., while it is termed a " selling arrangement ", does pro- 
vide for a division of the profits and would be open to the same 
objections that you raise there, would it not? 

Mr. Casey. Not on the basis that I was fearful of at this time. 
That is because any division of profits is a variable proposition, de- 
pending on the particular transaction. 

The fact of the matter is, that after we have added selling expense, 
travel expense, and so forth, we do not have a profit, in a great 
many cases. 

Senator Clark. Nevertheless, the division takes place on the divi- 
sion of cost, and your suggestion here that this agreement which was 
under discussion would be subject to the attack that it was based on 
cost, which would be taking the United States Government cost and 
would disclose the volume and also the composition, would apply 
as much to the existing agreement with I.C.I, as it would to this 
agreement, would it not. Major? "Without going into the question as 
to whether the attack is just or unjust, whatever you said about this 
agreement might as fairly be said about your existing agreement 
with I.C.I. ? Is that not true? 

Mr. Casey. Except for the facts being different. As I said before, 
I was afraid an arrangement would be entered into. I was not fa- 
miliar with the contemplated arrangement, and I was afraid an 
arrangement might be entered into where there would be a division 
of the profits based on our plant costs. 

Now, as the matter stands today, as I have just explained, there 
is no such animal. It is simply the result of a year's costs. We have 
probably gotten the net return after all expenses have been included 
of a certain amount, and it bears no relation to the cost, and nobody 
could possibly take that figure and say " the powder cost them so 
much." There is the distinction. 

Senator Clark. Major, the agreement provides for a division of 
profits, does it not ? 

Mr. Casey. Yes. 

Mr. Lammot du Pont. No ; the agreement does not provide for it. 

Senator Clark. What does it provide? 

Mr. Lammot du Pont. Costs. 

Senator Clark. Profits are necessarily based on costs, are thev not, 
Mr. du Pont? 

Mr. Lammot du Pont. I did not hear your statement. 

Senator Clark. It is impossible to have any determination of 
profit in any commercial enterprice and not have a determination 
of the cost, is it not, Major? 

Mr. Casey. It may sound to you like a fine distinction, but what 
I was trying to avoid at that time, in my own opinion, waB any 
arrangement whereby it would be based on our cost at the mill, 
which is really what we would term equivalent to Government cost. 



2642 MUNITIONS INDUSTRY 

On the other hand, under the present arrangement we know what 
our own figures are, what the mill cost is, and then we have to add 
to that every item of expense which we have been put to during the 
period in which that powder was sold. The result is, on a number of 
occasions where over our mill cost we might show a profit, the net 
result will be an actual loss because of the small quantity involved 
and the selling expenses and everything else which goes on all the 
time. 

Senator Clark. Major, do I understand under this existing agree- 
ment with I. C. I., when you go to settle with them, you would just 
set up your cost figure as a flat figure, as a flat cost, without breaking 
it down into your mill cost or anything else ? 

Mr. Casey. There is one feature of that thing which has not been 
brought out, and that is this : At the time we had the discussion with 
Mitchell we said : " There is one thing we want distinctly under- 
stood. There is going to be no break-down as to where we get our 
final figures. That is one thing we will not agree to. Unless you are 
willing to accept our figures as to what we say the powder costs us 
at the end of a year's period of transaction, we will not enter into 
the agreement." 

Senator Clark. So that under the agreement you do not break 
down the cost? 

Mr. Casey. We refused to give the data. 

Senator Cl^vrk. And refused to give any information on mill cost ? 

Mr. Casey. And unless they are willing to accept our figures and 
we are willing to accept theirs on the same evidence, there is none 
applied. 

Senator Clark. That is, under the agreement you have no break- 
down of the figures ? 

Mr. Casey. We absolutely refused to do it. 

Mr. Lammot du Pont. I think. Senator, the present agreement 
will speak for itself, but it is my understanding that it does not refer 
to costs, but it refers to profits, and the profit figures are to be 
accepted without break-down. It is not a break-down of cost, but a 
break-down of profit. 

Senator Clark. It is impossible to figure profit without figuring 
costs. Profit is the difference between the selling price and cost. 

Mr. Lammot du Pont. You understand it means that it is not 
breaking down cost, that it is a question of breaking down profits, 
and Ave do not have to break-down our profits. 

Senator Clark. If yon do not break-down your costs, I can see that 
Major Casey's explanation of the difference between the contract 
which he is discussing here and the contract with I.C.I, is a valid 
distinction. 

Now, Major, I will read further from the same letter [reading] : 

In addition, the attack made on us in Harper's Weekly 

Mr. Casey. Have you not skipped one paragraph ? 

Senator Clark. I read that, but I will read it again [reading] : 

In spite of the fact that on interchange of information on patents, military 
explosives 

I was just asking you about that. 

Mr. Casey. I do not think you finished the paragraph. 



MUNITIONS INDUSTRY 2643 

Senator Clark (continuing reading) : 

* * * military explosives are siiecifically exempted, we will be attacked with 
the statement that by informing them of the sales and the costs on which the 
profits are based, that we cannot avoid informing them regarding compositions. 
This arrangement will give Representatives in Congress just the ammunition 
they are looking for to attack us. and we will be accused of bein.cj traitors; 
of giving away Government secrets, etc. All we have to do is to look over 
the hearings on the different appropriation bills to realize what thin ice we 
would be on. 

In addition, the attack made on us in Harper's Weekly in 1914 is still pretty 
fresii in our minds, and we still hear of this occasionally. 

What is that, Major? 

Mr. Casey. That is the attack by a man named Post, where he ac- 
cused the company of giving Government information to Germany. 

Senator Clark. You mean the du Pont Co. as distinguished from 
munition makers in general ? 

Mr. Casey. Yes; and, as I understand it, he referred to a case 
where the United States Navy needed brown prismatic powder. 

At the request of the Secretary of the Navy I believe Mr. Alfred 
I. du Pont went to Germany and made an arrangement whereby we 
would get the " know-how " of brown prismatic powder. 

Senator Clark. You mean get it from Germany ? 

Mr. Casey. I mean get it from Germany. In connection with that, 
of course, we had to agree, which was approved by the Secretary 
of the Navy, to let them have information which we might develop 
in connection with this same powder. That was a part of the agree- 
ment, and the only agreement on which the Germans would let us 
have the information. 

Senator Clark. That was the Harper's Weekly article to which 
3^ou referred? 

Mr. Casey. Yes, sir. 

Senator Clark (reading) : 

The testimony and exhibits at the time of the du Pont dissolution suit, the 
testimony and exhibits at the time of the Post-du Pont libel suit, are con- 
clusive evidence of the risk we are running. 

What was the Post libel suit? 

Mr. Casey. That was a libel suit growing out of the Harper's 
Weekly article. 

Senator Clark. Who was the Post involved ? 

Mr. Casey. He was the man who wrote the article. 

Senator Clark. Did j^ou sue him for libel? 

Mr. Casey. Yes, sir. 

Senator Clark. What was the judgment? 

Mr. Casey. Somebody else can tell j^ou. 

Senator Clark. Do you know. Mr. du Pont? 

Mr. Lammot du Pont. No, sir. 

Mr. Irenee du Pont. ;Mr. Pierre du Pont can tell you. I think 
we won it. 

Senator Clark. Did you get judgment from Post? 

Mr. Pierre du Pokt. I have no recollection of it. 

Senator Clark. I think some of you would remember it if you 
liad won the suit. [Reading:] 

In that case there was this difference: When we were accused of inter- 
changing information with Germany on account of the arrangement we had 
with the Rhenish-Westphalian Co., this agreement had been made at the 
request of the Secretary of the Navy. 



2644 MUNITIONS INDUSTRY 

Is that the arrangement which you just referred to, Major? 
Mr. Casey. Yes, sir. 

Senator Clark. That is the reason I was reading this, to show 
what the arrangement was. [Continuing reading:] 

The arrangement which we are contemplating at the present time has no 
such foundation and, I am sure, would not be loolied on with favor by the 
officials of the Army or Navy. Furthermore, I fear that such an arrangement 
as we are contemphiting would jeopardize our present friendly relations with 
the Army and Navy, for their representatives would hesitate about taking us 
into their confidence for fear that the information would reach England. 

Was this arrangement made with Nobel at that time. Major? 

Mr. Casey. There was an arrangement, but some of our objections 
were observed, but I do not know exactly to what extent. 

Senator Clark. Which ones were observed? 

Mr. Casey. The interchange of information was definitely out, 
because there was a saving clause in that agreement about Govern- 
ment objection being a valid objection, and there was always Gov- 
ernment objection. I think that was brought out the other day. 

You did not read the last paragraph, and I do not know whether 
it is important or not. 

Mr. Irenee du Pont. I think you are getting confused between 
the exchange of information agreement and the South American 
agency agreement, are you not? 

Mr. Casey. No. 

Mr. Irenee du Pont. This was a proposed agency agreement. 

Mr. Casey. This was the agreement which I understand was being 
contemplated at the time with I.C.I. 

Senator Clark. I would be glad to have you read the last one, if 
you want. 

Mr. Lammot du Pont. I have got the information, Senator, with 
regard to the Post libel suit. Major Casey's recollection, evidently, 
was not quite correct. 

Post wrote the article in Harper's Weekly. One of our men criti- 
cized the article and referred to it as libelous. Post sued the du 
Pont Co. for that statement, and the judge instructed the jury to 
find that in fact the article w^as libelous, so that the company's posi- 
tion was vindicated. 

relations of united states army and navy officers with munitions 

makers 

Senator Clark. I see. I now read a letter dated May IT, 1922, 
which I will ask to be marked appropriately. 

(The letter referred to was marked " Exhibit No. 992 " and is 
included in the appendix on p. 2821.) 

Senator Clark. This is a memorandum from W. H. O'Gorman, 
assistant director, a memorandum of his trip to Washington on May 
16, 1922 [reading] : 

Called on Major O'Leary, small-arms division, regarding purchase from 
Frankford Arsenal of 160,000 cupro nickel bullet envelops, lead plugs, and sur- 
rated plugs for incendiary ammunition. Major O'Leary iiad received a letter 
from Major Whelen on this subject. He stated that it was not regular proced- 
ure to sell material which was being held in reserve, but due to the fact that we 
needed the components in a hurry, he would oblige us and would at once notify 
Frankford Arsenal to make the sale under the conditions outlined in Major 
Wheien's letter of May 15. 



MUNITIONS INDUSTRY 2645 

Who is Major Whelen? 

Mr. Casey. Major Whelen at that time — I may not be absokitely 
right, but I think he was either on the technical staff on small-arms 
matters or in the ammunition division. 

Senator Clark. He was in the Army at that time ? 

Mr. Casey. Yes, sir. 

Senator Clark. I was trying to find out whether he was your 
representative, or in the Army. 

Mr. Casey. No, sir. 

Senator Clark (reading) : 

Major O'Leary also stated that we could obtain the material ou Thursday, 
May 18. 

Now, when Major O'Leary said that it was not regular procedure 
to sell material which is being held in reserve, he really meant there 
was no authority in law for permitting it, did he not? 

Mr. Casey. No; there was authority in law to sell. 

Senator Clark. Out of the reserve stock? 

Mr. Casey. Provided it was going to be replaced and replaced 
very soon. But this thing was a proposition which looked like good 
business, if we might have difficulty in getting these component ma- 
terials. As it turned out afterwards, we found we had no difficulty in 
getting the components from other sources, so that nothing happened 
from this thing. 

Senator Clark. These bullets were to be taken out of the reserve 
stock which the Government had, were they not? 

Mr. Casey. I think so. That was the intention. It was an Eng- 
lish bullet. 

Senator Clark. They were incendiary bullets? 

Mr. Casey. Yes, sir. 

Senator Clark. Do you know what government they were to be 
sold to? 

Mr. Casey. I think this sounds very much like Japan. 

Senator Clark. I call your attention to a tabulation of foreign 
business from the armistice to December 31, 1933, not including 
United States business, taken from the files. I find that in one item, 
Japan, incendiary cartridges, quantity, 100,000; total, $22,750. 

(The tabulation referred to was marked " Exhibit No. 993 " and is 
included in the appendix on p. 2822.) 

Senator Clark. Would that indicate to your mind. Major, on that 
that part of this material you Avere trying to get from the United 
States Government was for sale to Japan? 

Mr. Casey. That Japanese incident is very interesting. They 
came to us and wanted to get 150,000 rounds of .303 British in- 
cendiary ammunition. The first statement I made was, "Why do 
you come to us for a British cartridge with a British bullet^ the 
Buckingham bullet? " The answer was that du Pont had made such 
a splendid reputation in the loading of both tracer and incendiary 
bullets during the war that that is what they told me. 

They were advised we were not ammunition manufacturers. We 
Avould have to get the components from outside. In our search for 
components we thought it was possible that Frankford arsenal might 
have some components for the .303 British. If they did not hc-Tve, 
it might be possible to utilize certain of those components by re- 
forming and swedging to raise the diameter of the bullet "from 



2646 MUNITIONS INDUSTRY 

.308 to .311. But, as I say, before the discussion had hardly ended, 
we found we were able to get the components not only for the 
ammunition but for the bullets from another source without any 
difficulty. 

Senator Clark. Your sales charge shows that you sold 240,000 
rounds of that ammunition. Did any part of that come from the 
United States Government? 

Mr. Casey. None of it. 

Senator Clark. Because you found another place you could buy it? 

Mr. Casey. Yes. 

Senator Clark. But you had made arrangements with the United 
States Government to supply you 160,000 rounds from their reserve 
stock ? 

Mr. Casey. If we could use it, they were willing to help us to 
tide over this proposition. 

Senator Clark. Was the United States Government apprised that 
that was for sale to a foreign government? 

Mr. Casey. Oh, yes. 

Senator Clark. To Japan? 

Mr. Casey. Yes. The fact of the matter was, when the}^ realized 
that Japan could have gone right to England and have probably 
gotten this ammunition out of stock, they were very glad to see 
American manufacturers get the business. 

Senator Clark. I will read you fui'ther from this memorandum 
of Mr. O'Gorman's, " Exhibit No. 992 ", recounting his trip to Wash- 
ington May 17, 1922. Beginning with the second paragraph at the 
top of the second page. Major : 

Called on General Humphrey and asked him what he knew about Mr. A. W. 
Randall. 

AVlio is General Humphrey? 

Mr. Casey. General Humphrey was a retired quartermaster gen- 
eral of the Army, who went with Colonel Buckner on some special 
Avork around about somewhere between 1908 and 1912, I am not 
quite sure ; but he had been retired at that time. When I took over 
Colonel Buckner's work after the Avar, I still had General Humphrey 
on a nominal retainer. Therefore, when there was occasion to find 
out what connection this Captain Randall had with the Polish 
Government, or whether he knew them or not, I got hold of General 
Plumphrey and asked him if he could not find out. 

Senator Clark. Mr. du Pont, have you a list, or could you make 
us a list, of the former Army and naval officers that have been 
employed by the du Pont Co. since the war? 

Mr. Irenee du Pont. We certainly could. 

Senator Clark. I come across the names of captains, majors, col- 
onels, and generals here. Would you make us a list for the record 
of just how many former Army officers you have employed? 

Mr. Casey. Senator, by that you mean regular officers, do you not ? 

Senator Clark. Yes; I do; of course. 

Mr. Casey. I think we could almost recite that. 

There was General Humphrey^ — he is the first one I know of — 
formerly Quartermaster General, who, I think, retired because of 
the age limit, 64 years. He came with us in a period — I am not quite 
sure of the exact date. Then when we got into large production, in 



MUNITIONS INDUSTRY 2647 

the early stages of the World War, and required a little better super- 
vision, a man of executive ability to handle commissary and welfare 
work, we got Maj. Kobert E. Wood, who had been with General 
Goethals down in the Panama Canal Zone. He then took over this 
welfare work at Carneys Point. He was only with us a short time 
when he left to go with the Barber Asphalt Co. From that he went 
into the service. I believe he eventually became Quartermaster Gen- 
eral of the A. E. F. He is now president of Sears Roebuck. 

He w^as succeeded when he left by Maj. Frank O. Whitlock. He 
had likewise been with General Goethals in the Panama Canal. He 
continued on that welfare work until his services with the company 
ceased, around 1920 or 1921, somewhere in there. 

The only other Army, Navy, or Marine officer we had was Maj. 
L. W. T. Waller, Jr. He had resigned from the Marine Corps and 
had started in a business of his own, supplying rust-preventative 
compounds, gun-cleaner materials, and so forth, under the name of 
Conversion Products Corporation. 

When we first started our attempt really to make a study of game- 
conservation work, because of Major Waller's interest as a sports- 
man and his knowledge of shotgun conditions and the use of the 
shotgun in hunting game — and naturally with that goes the question 
of the entire study of wildlife — he took on this work and continued 
from about 1928 until possibly 1932. I think that was the end of 
that service. 

That represents four officers. None of those men had any connec- 
tion whatsoever with military work, unless you would call the service 
of Wood and Whitlock on commissary and welfare work in connec- 
tion with military production. 

Senator Clark. I remember General Rice. Was he not in your 
employ for a while? 

Mr. Casey. General Rice was another story. 

Senator Clark. He was formerly Chief of Ordnance? 

Mr. Casey. He was former Chief of Ordnance: that is, of the 
A. E. F. 

Senator Clark. Yes. 

Mr. Casey. I think we brought out the other day that Colonel 
Taylor had urged on us to try to get 

Senator Clark. Was Colonel Taylor an Army officer or was that 
a courtesy title ? 

Mr. Casey. National Army. He went to Plattsburg. I think at 
the armistice he was still at Fort Sill, commanding officer of the 
Nineteenth Field Artillery, and also acting as instructor in field artil- 
lery. But he kept urging us to let him have a man who was techni- 
cally equipped to discuss the question of gun design, because we were 
running against that problem in trying to fit our powder to guns, 
especially where these different nations wanted to increase their 
velocity. 

So I went to General Williams and asked him if he knew where 
there was such a man. He said, " Have you considered General 
Rice?" General Rice by this time had retired. I said, "No", I 
had not considered General Rice, because I never thought for a 
moment he would consider it. 

He said, " I do not suppose the remuneration can be very great, 
but I think you would find this, that while General Rice has retired 



2648 MUNITIONS INDUSTRY 

from the Army, at the same time he still has a tremendous interest 
in all their problems." 

So I got in touch with General Rice, and I must say frankly to 
my surprise he said, " I would be tickled to death to do that, because 
it will just keep me going on it." 

So General Rice went to Europe. He could not operate in this 
country. He had absolutely no connection with any negotiations 
we had with the United States Government because of the clause 
in the retired pay. 

Senator Clark. I understand that. 

Mr. Casey. He was only used on the other side as a technical 
adviser. I think that has been brought out. 

Senator Clark. How about Colonel Simons? 

Mr. Casey. Colonel Simons had been with the du Pont Co. a 
great many years ago in black powder. He was an engineer, like- 
wise. He left us and went with the U. S. Finishing Co., at Provi- 
dence. I believe while there he joined the Rhode Island Guard, and 
he went overseas with the Twenty-sixth Division in the Artillery. 
He went over there and because of the fact that he knew several lan- 
guages, they grabbed him and put him on the staff as a liasion 
officer. 

When he came back — I did not know Simons very well ; I simply 
had, you might say, a bowing acquaintance. But you may remember 
yesterday this incident was brought up of an unsatisfactory repre- 
sentative in South America. So I got Simons on, because he is a 
gentleman, to send him down to South America to try to undo some 
of the results that were left there by reason of the previous agent. 
Now, you cannot call him an Army officer. 

Senator Clark. I was inquiring. I did not know whether he was 
regular or not. 

Mr. Casey. You may say I am one. I saw it in the paper the 
other day I was one. 

Question (from the press). Wliat are you? 

Mr. Casey. I enlisted in the Seventy-first New York in the Span- 
ish-American War and served through it as a private. I have been 
in the National Guard ever since. I was on the Mexican border 
as a battalion commander of infantry. My regiment was converted 
into field artillery. There were only two battalions provided for 
at that time, and I was out. 

Senator Clark. I do not blame an infantryman for getting out of 
the artillery. I will put in with you on that. 

Mr. Casey. Then we check on one thing. 

Senator Clark. Captain Gillis was also a naval officer, was he 
not? 

Mr. Casey. Yes. He was an ex-naval officer, retired, as I stated 
the other day, but you could not call him a du Pont man, he was so 
finely divided between 

Senator Clark. According to your statement he was divided up 
into a great many parts, but he evidently put in a good deal of time 
on du Pont business, as shown by the correspondence. 

Mr. Casey. Senator, in the correspondence there were a great many 
of the paragraphs, especially his references to the political situation 
and such things, that were common to all his letters, that he sent 
to every concern he represented. 



MUNITIONS INDUSTRY 2649' 

Senator Clark. I will go on with this letter. 

The Chairman. Have you finished reciting those? 

Mr. Casey. If there are any others, I do not believe I know of 
them, and I do not believe you do. 

Mr. Irenee du Pont. There was another group. 

Senator Clark. The title of Colonel Buckner, was that a courtesy 
title? 

Mr. Casey. He was a full-fledged Kentucky colonel, from Owens- 
boro, Kentucky. 

Senator Clark. That was just a Kentucky colonel, was it? 

Mr, Casey. Yes. 

Senator Clark. That was before the days of the present Governor 
of Kentucky, though, was it not? 

Mr. Casey. Yes. He qualified, by the way. He met every re- 
quirement that was expected of a Kentucky colonel. 

Senator Clark (reading from " Exhibit No. 992 ") : 

Called on General Humphrey and asked him what he knew about Mr. A. W. 
Randall. Told General Humphrey that Mr. Randall mentioned his name during 
a conversation and further stated that he, Mr. Randall, was very well con- 
nected with the Polish Government. General Humphrey reported that he knew 
Captain Randall very well in a business way; that Captain Randall was for- 
merly chief of transportation for the Polish Mission in this country, and as 
General Humphrey supplied boats and arranged for transportation of materials 
purchased by the Polish Mission from the United States Government, he came 
in contact with Captain Randall a great deal. 

General Humphrey called up the counselor of the Polish Embassy and in- 
quired as to whether Captain Randall had any connection with them ; also as- 
to what they thought of him. I was permitted to listen to counselor's reply — 

That would indicate on an extension phone — 

in which he stated that he had not seen Randall in 8 or 9 months but thought 
very well of him. General Humphrey, however, believes that a Maj. C. S. 
Marsden, purchasing agent for the Polish Mission, would be of greater help to 
us in negotiating a sale of military iwwder to Poland. He further stated that 
it was quite likely that he himself could negotiate the deal through the Polish 
Embassy, where he is very well thought of and highly regarded. 

At that time, Major, if I understand you correctly. General Hum- 
phrey was on the pay roll of the du Pont Co. 

Mr. Casey. Yes. 

Senator Clark, Do you recall anything about this transaction,. 
Major? It is signed by Mr. O'Gorman. 

Mr, Casey, Yes. 

Senator Clark. He was your assistant, was he not, Major? 

Mr, Casey. Yes. Capt. W. E. Witsil, who had been my assistant 
from 1914 and then had left to go into the service, was in the inspec- 
tion division of the Ordnance Department, on the small arms. When 
he came back he promptly resumed his old duties. Therefore I sent 
him down to contact this man Marsden. 

Senator Clark. First let me understand you. This Capt. A. W. 
Randall approached you with a view to representing you in negotia- 
tion with Poland, did he ? 

Mr. Casey. I believe he did. 

Senator Clark. In other words, he was not at this time connected 
Avith the Polish Government ? 

Mr, Casey. No. 

83876 — 35— PT 12 2 



2650 MUNITIONS INDUSTRY 

Senator Clark. He had been connected with the Polish Gov- 
ernment, but was at this time approaching you witii a view to rep- 
resenting you, and also investigating his standing with the Polish 
Government ? 

Mr. Casey. Yes. 

Senator Clark. That is what this letter would indicate. 

Mr. Casey. Yes; that is right. 

Senator Clark. I am not familiar with the facts except as shown 
in the letter. 

Mr. Casey. So Captain Witsil contacted Major Marsden, who I 
believe was a National Army officer, but he had been either assigned 
or picked up by the newly established Polish Government to advise 
them on a great many matters in connection with the formation of 
a national defense. So after contacting Marsden, Marsden then 
said 

Senator Clark. This letter speaks of him as purchasing agent for 
the Polish Commission. Was he purchasing agent for the Polish 
Commission at that time, do you know? 

Mr. Casey. I do not believe so. That may have been so, but I do 
not believe that was the fact, because we were referred to a Dr. 
Arkt, who was head of the Polish Purchasing Commission, 'which 
at that time was established on West Fortieth Street, just opposite 
the public library, in one of those old private houses. So, therefore, 
from that time on all our contact was with this Dr. Arkt and an 
associate of his whose name I cannot remember at the time. 

Senator Clark. What did General Humphrey do? [Reading:] 

He furt'acr stated that it was quite likely that lie himself could negotiate the 
deal through the Polish Embassy, where he is very well thought of and highly 
regarded. 

Mr. Casey. He did not do anything further. 

Senator Clark. He did not do anything further ? 

Mr. Casey. No; just as soon as we had the contact, we thought 
we could handle it, you see. General Humphrey was pretty well 
along in years then. He was 64 when he retired around 1910, we 
will say, so he was probably 74 at this time. 

Senator Clark. He volunteered to handle the thing, but you did 
not accept his offer. That was the proposition, was it. Major? 

Mr. Casey. That is right. 

Senator Clark. I now call your attention to a memorandum signed 
by Mr. C. I. B. Henning, on August 18, 1922, of a visit to officers 
of Bethlehem Steel Co., August 16. 

(The memorandum referred to was marked " Exhibit No. 994 ", 
and is included in the appendix on p. 2823.) 

Senator Clark. Major, I believe it has been testified here who 
Mr. Henning was, but it has slipped my mind. What was his 
official connection? 

Mr. Casey. He had two jobs. One was assistant director of sales. 
Later on he became technical director of smokeless powder sales. 

Senator Clark. What was he in 1922? 

Mr. Casey. He was assistant director. 

Senator Clark. This was a report of a visit to officers of Bethle- 
hem Steel Co., August 16. [Reading:] 

Discussed the following subjects with Messrs. Struble, Tioe, Mixsell, and 
Froelich. 



MUNITIONS INDITSTRY 2651 

I call your attention to paragraph 4. [Reading :] 

Nothing new in Brazilian developments, except that as the battleship Mary- 
land, and posRibly also the Nevada will be in the harbor of Rio de Janeiro at 
the time of the exposition to represent the United States, the Bethlehem Steel 
Co. is supplying the officers of the Maryland with data on Bethlehem Steel guns 
and armament for appropriate use. We will endeavor to determine to what 
extent this suggestion might be followed to our advantage, it behig primarily 
a question of personalities, etc. 

Major, do you understand that the " appropriate use " of the infor- 
mation referred to was to use it in selling Bethlehem Steel Co. 
products ? 

Mr. Casey. I would imagine that; that is, not by having them 
sell it, but having them know sufficient about it so that if they are 
asked : " What do you think of Bethlehem products " 

Senator Clark, In other words, to use the personnel of the United 
States Navy as peddlers for Bethlehem Steel guns ? 

Mr. Casey. I do not know what their arrangement with them 
was. 

Senator Clark. What do you understand by Henning's sugges- 
tion? [Reading:] 

AVe will endeavor to determine to what extent this suggestion mi2:ht be 
followed to our advantage, it being primarily a question of personalities, etc. 

Mr. Casey. Whatever his suggestion was, it was not acted on. 

Senator Clark. Was not acted on? 

Mr. Casey. No. 

Senator Clark. Do you know to what extent it was acted on in the 
interests of the Bethlehem Co.? 

Mr. Casey. I have not the slightest idea. 

Senator Clark. You never heard any more about it? 

Mr. Casey. No. 

Senator, I have some data here which might assist you. 

Senator Clark. Just a .minute, Major. This statement, " We will 
endeavor to determine to what extent this suggestion might be fol- 
lowed to our advantage ", would certainly indicate that so far as one 
of your rather prominent employees, Mr. Henning, was concerned, 
he had no compunction against using naval officers as salesmen for 
munitions, but it was simply a question of contacting the right man, 
was it not? 

Mr, Casey. You must realize 

Senator Clark, You took that to be his viewpoint in this memo- 
randum ? 

Mr. Casey. Yes. 

Mr. Irenee du Pont, I do not think he asked that they be used as 
salesmen at all. I think it is education. You want to crack up your 
product to everybody. 

Senator Clark. Advance agents, Mr. du Pont. They were not 
actually, probably, going to close the transaction, but the officers of 
the United States Navy were clearly being educated by the Bethle- 
hem Steel Co. as to guns and armament, the phrase here is " for 
appropriate use." That was certainly to act as advance agents for 
the real salesmen who come along and close the deal, was it not? 

Mr. Irenee du Pont. I do not know what " advance ajrent " is, but 
if you mean putting out some good advertising matter for the excel- 
lence of our wares, we are not a bit backward in doing that. I would 
like to get you in the same idea. 



2652 MUNITIONS INDUSTRY 

Senator Clark. You will have a very hard time doing that, Mr. 
dii Pont, I assure you. 

Mr. Casey. Senator, just as a matter of information for the record, 
Gen. Charles F. Humphrey was employed January 1, 1908. He was 
off the salary roll June 4, 1926, when he died. 

Senator Clark. He held on pretty well. 

Mr. Casey. He did. 

Maj. Kobert E. Wood was employed July 30, 1915, resigned 
November 7, 1915. That was, I stated, to go with the Barber 
Asphalt Co. 

Maj. Frank O. Whitlock succeeded Wood; employed November 1, 
1915, off salary roll June 30, 1921. 

Our recollection, from this memorandum, is that both Wood and 
Whittock came from the Panama Canal Zone, which I had already 
stated. 

Mr. Raushenbush. How about this Captain Witsil you were re- 
ferring to a minute ago ? Is he employed, too ? 

Mr. Casey. He was my man. He went into the National Army as 
an ordnance officer on inspection. 

Mr. Raushenbush. That completes the list of Army officers? 

Mr. Casey. Yes ; he is now with the Remington Co. 

Senator Clark. I was interested primarily, Major, in getting a 
list of Regular Army officers. 

Mr. Casey. Yes. 

Mr. Irenee du Pont. There were several others, like Witsil, that 
left our company to go into the war. A number of those came back 
at the end of the war. 

Senator Clark. I was primarily interested in the Regular service. 

Mr. Irenee du Pont. That is what I thought you were. 

Senator Clark. Because, of course, men who were temporarily 
in the Army or the Navy might go into any business when they left. 
I was primarily interested in getting at the Regular Army. 

I will call your attention to a letter from Mr. A. Felix du Pont, 
of the smokeless-powder department, to the executive committee. 
In this letter I myself have deleted the names of the countries men- 
tioned and substituted for the names the terms " Country A" and 
" Country B '•. for reasons which will appear from the context. 

This memorandum is headed " Promotion of Military Sales in 
Country A." 

(The letter referred to was marked " Exhibit No. 995 ", and 
appears in full in the text.) 

Senator Clark (reading) : 

During the winter we were called upon by Lieut. Col. J. H. Mackie, who 
is at present head of the Canadian relief work. He had been in Country A 
for some months and at that time was also a member of the Canadian Par- 
liament. He is a man of very considerable experience, both commercial and 
political. During the war he secured the Country A contracts for the Canadian 
Car & Foundry Co., also the contracts for rifles for Westinghouse, Remington, 
and Winchester, the total business amounting to some $80,000,000. During the 
war he was in charge of the proving ground in Canada for the Canadian Car 
& Foundry Co. 

Colonel Mackie suggested to us that there exists a demand in Country 
A for military powder and as he was going there he would serve us if we 
wished him to do so. We looked into this matter very carefully and discussed 
it with Colonel McCabe, recently in charge of Military Intelligence. Colonel 
McCabe could see no objection to our dealing with Country A if we wanted to 



MUNITIONS INDUSTRY 2653 

and used the following argument : That Country A will buy munitions if she 
needs them, therefore there is no reason why manufacturers in this country 
should not sell to Country A. From tlie military standpoint the business has 
this value, that if Country A is going to obtain munitions somewhere, by 
obtaining them from the United States our Army learns how much and 
what kind of powder she is buying and by deduction is in a position to obtain 
a considerable amount of information of military value. The advantage 
in dealing with potential enemies in order to obtain information is recognized 
by both branches of the military service and in discussing a similar condition 
in connection with Country B, Admiral Long, recently in charge of Naval 
Intelligence, advised Major Casey that the same condition applied to that 
country. 

For the above reasons we are convinced that it is not undesirable to sell 
powder to Country A for political or moral reasons and the most important 
disadvantage that we must guard ourselves against very carefully will be 
in the matter of making contracts that will assure payment. We think it 
wise also not to incur the displeasure of some of our other customers by 
letting it be known that we are selling or attempting to sell to Covuitry A. In 
order to protect ourselves we have made the following arrangement with 
Colonel Mackie : We pay half of his expenses on this trip to Country A and 
he promotes sales of powder in his own name, the powder being shipped to 
Country A from Canada. We believe that should the occasion arise from 
making such shipments, they can be made to advantage through the C.X.L. 

What was the C.X.L. ? 
Mr. Casey. Canadian Explosives, Ltd. 

Senator Clark. You had an arrangement with them for shipping 
under their name when occasion demanded? 
Mr. Casey. To meet this situation. 
Senator Clark (reading) : 

Colonel Mackie has talked with Mr. McMasters, with whom he is well ac- 
quainted, and Mr. McMasters is desirous of giving him every assistance. With 
regard to inspection, Mr. McMasters advised that if it seemed advisable, a 
Country A inspector could come to Canada and be sent from C.X.L. to inspect 
the powder. 

(Signed) A. Femx du Pont, 

Mr. Lammot du Pont. Senator, that is not a complete letter. There 
has been a deletion from that. 

Senator Clark. I suppose there is, Mr. du Pont. This is all that 
was furnished me. 

Mr. Lammot du Pont. Might we see the complete letter, to know 
what that deletion consists of? 

Senator Clark. Do you have that, Mr. Raushenbush ? 

Mr. Raushenbush. We have it somewhere, but in the deletion to 
leave out the names of those countries we had the whole letter copied. 
I do not think anything of significance was left out. 

Mr. Lammot du Pont. There is a row of dots in that that indi- 
cated to me something was left out. 

Senator Clark. That was simply in order to leave out the names 
of the countries, Mr, du Pont, We would have no objection on 
earth to showing the whole letter. 

Mr. Casey. July 14, 1923. 

Senator Clark. Do both branches of the military service still rec- 
ognize the advantage of private munitions manufacturers in this 
country dealing with potential enemies of the United States? 

Mr. Casey. I have not approached them on the subject recently, 
but the last time I did that was still their attitude. 

Senator Clark, That was the policy the last time you were in- 
formed about it. 



2654 MUNITIONS INDUSTRY 

Mr. du Pont, in your opinion, does the knowledge from a military 
standpoint of the character of powder purchased by our potential 
enemies and such information concerning their guns as this knowl- 
edge produces outweigh the disadvantage from the standpoint of 
our Government of having our potential enemies fully stocked with 
the very latest type of powder ? 

Mr. Irenee du Pont. I would certainly depend upon our military 
arm for an answer to that question. I would not know. 

Senator Clark. You would not attempt to give an opinion about 
that? 

Mr. Irenee du Pont. Certainly not. 

Senator Clark. Is it possible lor these countries purchasing pow- 
der, we will say according to your latest formula, Mr. du Pont, to 
analyze that powder and determine your formula ? 

Mr. Irenee du Pont. I did not get the question. 

Senator Clark. I say, I am asking you from a chemical or me- 
chanical standpoint, as I assume it is a mixed question, is it pos- 
sible— we will assume a case in which you manufacture powder 
according to a secret formula of your own which may not be in the 
possession of a foreign nation or anybody except yourselves — is it 
possible for a foreign government by purchasing a quantity of that 
powder to have it analyzed and determine the components and the 
process by which you have manufactured it? 

Mr. Irenee du Pont. I am quite sure they could determine its 
composition. Whether they could duplicate it or not, I think de- 
pends on their skill in manufacturing powder. But that is reall}'^ 
a question you should not ask me. I am not a technical powder 
maker. 

Senator Clark. I understand you are not a technical powder 
maker, Mr. du Pont, but you are thoroughly familiar with the whole 
situation, and you have had the most expert technical advice through 
a long career in the manufacture of powder; therefore you are in a 
good position to answer the question. 

Mr. Irenee du Pont. From past experience I should think that 
if the du Pont Co. received a sample of powder they could come 
pretty close to duplicating it. 

Senator Clark, That would be true, assuming a high degree of 
expertness in the powder business, if a foreign powder expert received 
a quantity of your powder? 

Mr. Irenee du Pont. I could not say that, whether that would be 
true or not. 

Mr. Casey. Senator, I might say this, that if the powder has been 
patented, a nation buying that powder might want to buy it because 
of what they have observed in the patent applications of which they 
have a copy, and probably can get all the transactions as Dr. Sparre 
explained the other day. Therefore, the patent would enable them 
to know what to look for. 

Senator Clark. I understand that, Major, that when a process or 
an invention or anything else is once patented in a foreign country, 
and a foreign government wants to use it, you are absolutely helpless 
to protect yourself against that. 

Mr. Casey. Yes. 

Senator Clark. I had assumed from the testimony that has been 
put in the record here that certain of your formulas were not pat- 



MUNITIONS INDUSTRY 2655 

ented, but were held secret in your own plant. I was inquiring- as 
to whether in a case of a formula which had not been registered or 
patented in a foreign country, they could determine your process by 
an analysis of the powder. 

Mr. Casey. They could not determine the process. They might be 
able to determine approximately the composition with a reasonable 
degree of accuracy, but not the process. 

Senator Clark. An expert powder maker would probably be able 
to take the composition and hit on the process, wouldn't he, Major? 

Mr. Casey. He might hit on the process, not necessarily the same 
one. Now, in a great many of these more modern powders, Senator, 
a process ma}^ mean one thing to a certain man. He may attempt to 
duplicate or make the powder by that process and may get certain 
results. If he knew that there was another process, he might get 
the real answer. It is the " know how " that is so important, and 
the "know how " is very difficult to even write down. It is a matter 
of what you might call plant practice. 

Senator Clark. I understand that. Major, but there are expert 
powder manufacturers with the " know how " in foreign countries 
as well as the du Pont Co. in this country. 

Mr. Casey. Oh, yes. In fact, they all believe they are very much 
better than we are. 

Senator Clark. I understand you do not agree with that con- 
clusion, but nevertheless it is entirely probable that by taking a 
quantity of your powder, inen who are versed in the art would be 
able to duplicate the powder, 

Mr. Casey. They would be able to to a certain extent; yes. Now, 
of course. Senator, before a powder has ever reached the stage where 
a foreign government would even be interested, by that time it is in 
the category where the existence of such a powder is no longer a 
secret. That is what I tried to state the other day. I want to make 
the distinction between secret and " know how." I said there was 
no such thing as a secret after 2 years. Other countries may know 
there is in existence something mysterious or they may know a 
certain item is in existence and they want to find out about it. 

Senator Clark. That is w^hat I am trying to get at. Major; the 
effect of this whole trade, as to whether it does disclose to foreign 
countries the latest developments of the manufacture of powder or, 
for that matter, the manufacture of guns or any other military 
equipment. 

Mr. Casey. To go a step further, we will assume, which has noth- 
ing to do with this case incidentally, but we will just take a hypo- 
thetical case, that a certain nation wanted to buy a certain quantity 
of powder which you might say was the latest development we had 
for the United States Government. Let us assume for the sake of 
the argument that part of it has been patented, part of it is secret 
process. Then we take this proposition, and we put it right squarely 
up to the Federal Government, what do you think would be the 
advantages and the disadvantages of us selling them this powder ? " 
Then it is for them to decide. 

Senator Clark. I understand that, and that is exactly what I am 
trying to get at, Major, what the effect of decisions that have been 
made may be. 



.2656 MUjsriTioisrs industry 

Mr. Casey. We have never had a case come up where it repre- 
sented a final decision. Did you get that, Senator? 

Senator Clark. No. 

Mr. Casey. I say, we have never had a case come up parallel to 
this hypothetical case where there was a final decision, so the thing 
has never occurred. But I would like to give you an illustration of 
what the Government that we contact — and by that I mean the Army 
and the Navy — have asked us tO' do, and on one occasion which is 
very recent. I will not mention the type of powder except to say it 
is a small-arms powder. 

I was requested by the small-arms division of the ammunition 
branch if du Pont would, if requested by the Government, refuse to 
sell that powder even to our American loading companies, if they 
asked us to. I said. '" AVell, that is putting us in a very awkward spot." 
In the first place, before du Pont purchased Remington, even then 
the loading companies, if they did have a foreign order, did not 
want us to know for whom that ammunition was intended, because 
they were afraid that we might in turn advise the other loading com- 
panies; then they would have competition. But since we have bought 
Remington the situation in that respect is worse. They naturally 
feel, if it happened to be some other company than Remington, that 
if they told us for whom it was intended, then they would say, 
■"Well, Remington will know this within a few hours." 

So I gave the answer to the officer, " It seems to me your propo- 
sition is to get after the loading company and ask them not to ship, 
if you request it. But we will do our part. When we get the in- 
quiry for that type of powder, we will let you know that a certain 
company has given an inquiry, but we cannot attempt to tell our 
<;ustomer that because of a request we are not going to let them have 
the stuff, because the answer would be that they would then go to 
another powder company and not get the same powder, but they 
would get a powder that would solve the problem." 

Senator Clark. You simply mean by that. Major, that you can 
•disclose your own business to the Government, but you cannot dis- 
close that of somebody else? 

Mr. Casey. Exactly. 

Senator Clark. That is entirely natural. 

Mr. Casey. In this particular case of Mackie, what we were offer- 
ing was exactly the same kind of powder that we had furnished 
Russia in the war, and it was a powder that was in stock at the time 
we were offering it to Mackie at a low price. 

Senator Clark. By the v;ay, Mr. du Pont, I am informed that 
the paragraph vrhich Avas deleted from that letter which I just read 
had to do with some expressions of private opinion from Mr. Mackie 
as to the character of the people of one of the nations mentioned. 
We would be very glad to put it in the record if it is desired. 

Mr. Lammot du Pont. I have read that paragraph which has 
been deleted, and it seems to be of no imjiortance. 

Senator Clark. We will be glad to put it in tlie record if you 
want it. 

Mr. Lammot du Pont. It seems to me to be of no consequence. 

Senator Clark. Now, I call your attention to a memorandum for 
Mr. Felix du Pont, dated March 26, 1924, which indicates a similar 



MUNITIONS INDUSTRY 



2657 



attitude of mind on the part of the Navy Department, which I will 
offer for appropriate number. . , -r. i i v at c^ao ^^ 

(The memorandum referred to was marked ' li,xhiDit JNo. \)\)b y 
and is included in the appendix on p. 2824.) 

Senator Clark. It is headed, "Assistance from Navy Department 
in connection with sales to foreign governments." 

In December 1923, during an inteiTiew with Admiral Block, of the Navy- 
Department, I was informed that the Bureau of Ordnance, Navy, would da 
everything within its power to assist us in making sales to foreign goveniments. 

Dropping down to the last paragraph : 

This is a good example of cooperation on the Navy's part, and we believe 
it is worth while to make the facts of the case known to the executive 
committee. 

I call vour attention to a letter dated July 24- 



Mr. Irenee du Pont. Before you leave this, Mr. Senator, I should 
like to read from the National Defense Act a paragraph which refers- 
to just that kind of assistance, which I think is quit€ apropos. 

This is page 18 [reading] : 

COGNATE ACTS 

That the President of the United States be, and hereby is, authorized, upon 
application from the foreign governments concerned, and whenever in his dis- 
cretion the public interests render such a course advisable, to detail officers 
and enlisted men of the United States Army, Navy, and Marine Corps to assist 
the governments of the Republics of North America, Central America, and 
South America, and of the Republics of Cuba, Haiti, and Santo Domingo, in 
militai*j- and naval matters: Provided, That the officers and enlisted men so 
detailed be, and they are hereby, authorized to accept from the government to 
which detailed offices and such compensation and emolumentsi thereunto ap- 
pertaining as may be first approved by the Secretary of War or by the Sec- 
retary of the Navy, as the case may be: Promded furiher. That while so 
detailed such officers and enlisted men shall receive, in addition to the com- 
pensation and emoluments allowed them by such governments, the pay and 
allowances whereto entitled in the United States Army, Navy, and Marine 
Corps, and sihall be allowed the same credit for longevity, retirement, and for 
all other purposes that they would receive if they were serving with the forces 
of the United States. 

Senator Clark. I am thoroughly familiar with that provision, Mr. 
du Pont. We have had occasion to examine somewhat into that 
heretofore in these hearings. 

It was under that provision of the National Defense Act, I believe, 
that the United States Government loaned Peru a naval mission^ 
which in the course of its services to Peru, while they were receiving, 
I believe, $8,000 apiece from the Peruvian Government in addition 
to their pay as American naval officers, recommended the purchase 
by Peru of certain submarines manufactured by an American com- 
pany. Then shortly thereafter the potential enemy of Peru, to wit, 
Colombia, felt that it was necessary for it to prepare its national 
defense against those submarines which had been furnished them 
under the advice of the American Naval Mission; and the United 
States Government then loaned to Colombia another naval officer, 
who recommended and specified certain guns manufactured by an- 
other American concern as a defense against the submarines which 
had been previously sold to Peru. 



2658 MUNITIONS INDUSTRY 

It does not seem to me that those provisions for military and naval 
missions or for the loan of American Army or Naval officers has 
anything to do with the thing which I just said. This says : 

In December 19'23, during an interview with Admiral Blocb of the Navy De- 
partment, I was informed that the Bureau of Ordnance, Navy, would do every- 
thing within its power to assist us in making sales to foreign governments. 

Tills is a good example of cooperation on the Navy's part, and we believe it 
■'S worth while to make the facts of the case known to the executive committee. 

Now, I understand that provision of the statute which you just 
read. It does not say anything about the bureaus of the Army and 
Navy actually engaging in assistance in the sale of muntions, and I 
do not find anything in that statute that justifies any such conduct 
on the part of the Army or the Navy. 

Mr. Casey. Senator, we are not attempting to interpret whatever 
interpretations they may get from that act. 

Senator Clark. I understand that. Major, but Mr. du Pont read 
that into the record as though it was apropos, and I am simply re- 
cording ni}^ opinion that it is not at all apropos to such action as this 
on the part of the Navy Department. 

Mr. Rausiienbush. Major Casey, have any Army or Navy officers 
used t]iat act to interpret their actions to you ? 

Mr. Casey. That I do not loiow. 

]Mr. Raushexbush. You have not gotten that as authority from 
the Army and the Navy, however, have you ? 

Mr. Casey. In every instance where there has been such occasion 
it has always been under the direct authority of the Secretary of the 
Navy or the Secretary of War. 

Mr. Raushenbush. And vou have not had any reference to that 
act? 

Mr. Casey. No; they do not refer to any act. They simply say, 
" By power vested in me," or whatever the proper language is. We 
cannot go any higher than that. 

Mr. Raushenbush. Is it your idea that that act 

Mr. Casey. I am not attempting to make any interpretations. 

Mr. Raushenbush. But it is yours, though, Mr. du Pont? 

Mr. Irenee du Pont. I have been wondering since last night what 
the authority is. 

Senator Clark. I have been wondering too, Mr. du Pont. 

Mr. Irenee du Pont. It must be there, or they would not do it. 

Senator Clark. I know many departments do many things not 
authorized by law. I did not mean to interrupt you, Mr. du Pont. 
Excuse me. 

Mr. Irenee du Pont. I don't know where we left off. 

Senator Clark. Now, Major, I am absolutely not certain that we 
are talking about the same thing. Let me ask you this question : I 
understand you to say that both branches of the United States mili- 
tary service, that is, the Arm}^ Intelligence, Military Intelligence, and 
Naval Intelligence, so far as you know from your last information, 
take the position that it is good policy on the part of the United 
States to sell munitions made in the United States to potential 
enemies of the country? 

Mr. Casey. On the basis that, in the first place, it gives business to 
this country. That is one thing. 



MUNITIONS INDUSTRY 2659 

Senator Clark. That is the reason set out in Mr. Felix du Font's 
memorandnm. 

Mr. Casey. Yes. Secondly, it gives us the advantage of knowing 
at least part of what they are buying and what guns it is intended 
for. Third, it also gives us knowledge of certain guns which we may 
have no knowledge of before. In other words, in order to sell the 
powder you must have what are termed the gun constants. Do I 
make that clear? 

Senator Clark. But it is the policy of the Government that it is 
good policy from a Government standpoint for American munitions 
makers to sell munitions to potential enemies of the United States. 

Mr. Casey. That is from my last information. 

Mr. Raushenbush. Major, just in passing, before we get off that, 
would you care to identify, from your knowledge of the letter just 
read a moment ago, that the countries marked by this committee as 
A and B, whose names were deleted, have generally been considered 
by some groups in this country as potential enemies of the country ? 

Mr. Casey. Regarding country A I would say no. 

Mr, Raushenbush. Not even in 1922 or 1923, when that letter was 
written ? 

Mr. Casey. No. There might have been a difference of opinion 
as to the methods of our former government, but not the present 
government. In the case of country B, the less said about it the 
better. 

Mr. Raushenbush. That was my own idea in deleting it. 

Senator Clark. Now, I call your attention to a memorandum dated 
July 24, 1924, from Major Casey to F. W. Bradway, which I will 
ask to have marked with the appropriate exhibit number. 

(The memorandum referred to was marked " Exhibit No. 997 ", 
and is included in the appendix on p. 2824.) 

Senator Clark. F. W. Bradway was the man Avho was here yester- 
day? 

Mr. Casey. Yes. He is now assistant general manager. He was 
at that time director of manufacture. 

Senator Clark. From this letter I notice that the former head of 
the ordnance service, General Rice, who was your representative in 
Paris at that time, I believe, had given a letter to a Polish military 
officer, requesting the Ordnance Department of the Army to show 
him some very important plans and contracts. I will read from the 
last paragraph on the page : 

The program which they desire for this officer is as follows : When he arrives 
ill America, he will go directly to Wilmington and present himself to Major 
Casey. I have given him a letter of introduction. He will also have a letter 
from General Rice to an officer in the Ordnance Department in which General 
Rice will request the Ordnance Department to show him our various schemes 
of mohilizing the powder industries, what contracts our Government make.s 
with powder industries, and have him visit the Government arsenals. 

Did you consider that that was conducive to the Government's 
interests to have the Government's secret plans for mobilizing the 
powder industry of the country in the event of war disclosed to a 
representative of a foreign power ? 

Mr. Casey. Don't you think that that is a matter that is up to the 
Government to decide ? 



2660 MUNITIONS INDUSTRY 

Senator Clark. Yes; I do, Major; but I am trying to get at the 
attitude of the former Chief of Ordnance of the United States Army, 
who was at that time your representative. 

Mr. Casey. Take the country at that time, Poland, starting from 
zero, with a famous concert pianist at the head of the Government, 
Paderewski. The United States at that time were doing all they 
could to see that Poland got on its feet before something happened 
to it, and at that time there was absolute fear that before anything 
got going the Bolsheviks would have them bottled up. That was 
proven a few years after that when the war between Poland and the 
Bolsheviks took place. If it had not been for the assistance the 
United States gave them, there would not have been a Poland today, 
I do not believe. 

Senator Clark. Then, you do think that General Rice was pro- 
ceeding in the proper manner in requesting the United States Gov- 
ernment to disclose their secret mobilization plans to the representa- 
tive of a foreign power ? 

Mr. Casey. He was making a request. 

Senator Clark. Was that done ? 

Mr. Casey. That I do not know. We never knew what the United 
States Government did. 

Senator Clark. What did you do about it, Major? I will say that 
I think you proceeded with more discretion than General Rice did, 
because you said — no; I assume this is Colonel Taylor — at the top 
of page 2 : 

I trust you will be able to arrange a suitable program for him 90 that he 
will get general information and not learn the things you don't want him to 
know and that he will get some idea of how the powder business should be 
conducted and contracts and so forth should be made. I believe that it will 
be a good thing for us to have an opportunity to educate him and the proper 
method of doing business in America, as this officer's functions in Poland will 
be a check on the activities of the other people which we have to deal mth. 

Now, Colonel Ta3dor's attitude seems to have been that it was a 
good thing to show this Polish officer enough to make him think 
that du Pont powder was better than anybody else's, without letting 
him actually find out how to make it. 

Mr. Casey. Don't you think. Senator, there is a very vital distinc- 
tion between the two letters? One was a letter of introduction 
handed to the man who was going to take that letter, and that man 
was allowed to read that letter. It is certainly a cinch if that letter 
that this Polish officer had contained the language that Colonel 
Taylor wrote to us, he would not have been very enthusiastic about 
coming. 

Senator Clark. I understand, but the difference was that Colonel 
Taylor wrote his letter to you and General Rice wrote his letter 
to the Ordnance Department of the Army, in which he requested 
them to show our various schemes for mobilizing the powder in- 
dustry, what contracts our Government made with the powder in- 
dustrj'^, and have him visit the Government arsenals. While Colonel 
Taylor may have tipped you off privately, there is nothing to show 
that the Government was tipped off privately, and here was a re- 
quest from the former chief of ordnance of the United States Army 
to a man who i)robably had been his subordinate when he w^as chief 
of ordnance, requesting him that this examination be made and 
also to disclose all our private contracts. 



MUNITIONS INDUSTRY 2661 

Mr. Casey. But remember this: The Government does not need 
to be tipped off. They know where they are. They have got their 
feet on the ground. Now, what happened 

Senator Clark. What did happen? 

Mr. Casey (continuing). When they were willing to have an 
officer visit our plant? That officer came with a letter from the 
Ordnance Department saying, " We would appreciate it if you have 
no objection to showing him the manufacture of powder, but then 
we get another letter which does not quite say that. 

Senator Clark. It is your idea, then, that General Eice was just 
giving this Pole the run-around ? 

Mr. Casey. He was giving him a sales talk. 

Senator Clark. We have heard a good deal about sales talks here 
the last week. 

Mr. Casey. Maybe we will make salesmen out of you fellows yet. 

Senator Clark. Not for munitions. 

business with the UNITED STATES GOVERNMENT 

Senator Clark. Now I call your attention to a memorandum from 
Mr. C. I. B. Henning, headed — I will have to get one of you gentle- 
men to pronounce tliis for me 

Mr. Casey. Diphenylamine. 

Senator Clark. " Diphenylamine, Ordnance Department, Wash- 
ington, D. C, November 17, 1924 ", which I will ask to be marked 
with the appropriate exhibit number. 

(The memorandum referred to was marked " Exhibit No. 998 " 
and appears in full in the text.) 

Senator Clark. I will read from this memorandum : 

On suggestion of Major Casey, made hurried trip to Washington and dis- 
cussed with Gen. C. C. Williams and his executive assistant, Maj. C. T. Harris, 
arrangements by which the du Pont Co. might secure such portion of the stock 
of diphenylamine as held in reserve by the Ordnance Department. Their total 
stock is approximately 67,000 pounds in storage at Pica tinny Arsenal. It is 
partly of du Pont manufacture and complies with the specifications of the 
Ordnance Department as set forth in their pamphlet no. 450 governing the 
manufacture of smokeless powder for cannon. These specifications are not 
quite as stringent as those set forth in the small blue advertising folder of 
the dyestuffs department. Copy of this letter was presented with the sugges- 
tion that the Ordnance Department might profit through the " I'econditioning " 
of their stock of diphenylamine. 

The important point to l)e emphasized in this memorandum is that General 
Williams immediately stated that it was his desire to do anything in his 
po\\er which would assist the du Pout Co., that he was very appreciative of 
the spirit of cooperation extended by Major Casey, and that, although there 
was grave doubt in his mind as to the readiness by which the legal require- 
ments of the transaction might be complied with, he would immediately instruct 
Maj. C. T. Harris to find a way by which the transaction could be carried out. 

So that General Williams, although there was very grave doubt in 
his mind as to the legality of the transaction, instructed his sub- 
ordinate, Major Harris, to find a way by which the transaction 
could be carried out. 

It has been your observation, hasn't it. Major, that when a general 
instructs a major to find a way to do something, the major is apt not 
to be too meticulous as to the law on the subject? 

Mr. Casey. He may give those instructions and find out after- 
ward that it cannot be done. But let me tell you about this 
matter 



2662 MUNITIONS INDUSTRY 

Senator Clark. Just let me finish this memorandum : 

I wished to obtain the maximum proportion of their diphenylamine jjrac- 
licuble and mentioned 50,000 pounds. Major Han is tlKaiuht it well to reduce 
this to 40,000 iwunds, in order to avoid criticism ot' undue depletion of their 
stock. I mentioned 3 months as the time for return, but Major Harris thought 
it well to increase this to 120 days. Major Harris inunediately endeavored 
to get in touch with the division of the Ordnance Department handling legal 
details of contracts, but these ofBcers had all gone for the day. Some discus- 
sion was then held regarding details of arrangements. It was not considered 
practicable for the Ordnance Department to offer any of the diphenylamine 
tor sale, inasmuch as it is really all needed. I pointed out that there is a 
certain precedent set in that the Ordnance Department has offered the various 
contractors materials on hand for reconditioning, and particularly, that it has 
come to our knowledge that Frankford Arsenal has by this means obtained new 
supplies of cups for cartridge cases-, primers, etc. General AVilliams thought 
that he was justified in recommending the transjiction because the diphenyla- 
mine which they would obtain would comply with specifications somewhat 
more stringent than those under which the diphenylamine now on hand was 
accepted. This point is emphasized for the dyestuffs department, with the 
suggestion that we should not accept the reserve supply of the Ordnance 
Department's diphenylamine unless we have reasonaule expectations of being 
able to tleliver diphenylamine complying sti'ictly and thoroughly v.'ith the 
specifications as set forth in their advertising literature. When we are pre- 
pared to make return of diphenylanune the inspectors at Picatinny Arsenal 
will pay particular attention to this. Major Harris, after consulting the legal 
experts of the Ordnance Department, will ha\e prepared a contract for recon- 
ditioning probably 40,000 pounds of diphenylamine. We v>ill pay all trans- 
jiortation costs and handling charges and mav receive as compensation for 
this work $1.00. 

Major, that was a subterfuge about reconditioning the diphenyl- 
amine, was it not? 

Mr. Casey. It might have been a legal subterfuge. 

Senator Clakk. In otlier words, General Williams had already 
expressed his desire to do it, although he had very grave doubts, legal 
doubts, about it, and instructed his subordinate to find a way in which 
to do it, and then Avhen it came to finding a way in which to do it, 
some suggestion Avas made about sale and they said they could not 
do that because the diphenylamine in the reserve stock was really 
all needed by the Government, and then this other matter about 
reconditioning Avas suggested as getting around the law. Isn't that 
the situation.? 

Mr. Casey. That is what the memorandum says. 

Senator Clark. That is exactly what the situation was. 

Mr. Casey. Yes. 

Senator Clark. Now, you want to make an explanation, Major 
Casey ? 

Mr. Casey. What really happened was this: W. F. Harrington, 
who at that time was general manager of the dyestuffs department, 
came to me one day and said that they had had a fire and they needed 
some diphenylamine, which is, of course, extensively used, and in 
fact used more in the dye than any other place. 

Senator Clark. It is also used in the manufacture of smokeless 
powder. 

Mr. Casey. About one-half of 1 percent. 

Senator Clark. As a stabilizer. 

Mr. Casey. As a stabilizer. And he wanted to know if it was 
possible to take care of the situation if we could borrow that from 
the Government. I said, " No ; such a thing is impossible." He said, 
" Could you effect a trade with them ? " I said, " No. The only ar- 



MUNITIONS INDUSTRY 2663' 

rangeinent you can ever make with the Government is this : In any 
transaction you take up, whether it is the modification of an exist- 
ing contract or otherwise, the Government will not agree unless by 
doing so they gain. They must have something to show as a gain." 

Harrington said, " They are going to gain by this, because the 
diphenylamine made according to the specifications at the time it 
was made which the Government has now is of a much lower grade 
than the stuff we are now making.-' That is why this question of 
the blue book containing the specifications for the better grade of 
diphenylamine has been referred to several times. 

Therefore, General Williams — I can see his viewpoint — felt this 
way : That while this is a reserve stock, that reserve stock, even under 
Avar-time conditions, would have taken an awfully long time to use 
up, 60,000 pounds. You can simply take one-half of 1 percent. But 
in addition to that 

Senator Clark. Major Harris said it was really needed by the 
Government. 

Mr. Casey. What is that ? 

Senator Barbour. This memorandum states that Major Harris said 
it was really needed by the Government. 

Mr. Casey. Because it was part of their program of reserve. In 
other words, they could not dispose of it and not replace it. 

Senator Clark. This memorandum does not indicate that this 
diphenylamine that the Government had w^as of a much lower grade 
than the other. He said it complied with the ordnance specifications. 
He said, " These specifications ai-e not quite as stringent as those 
set forth in the small blue adiVertising folder of "the dyestuffs 
department." 

In other words, it would not make much difference or it would not 
be much different. 

Is it not a fact, reading from this memorandum, that as far -as 
General Williams was concerned, the question of reconditioning was 
not raised with him? He just said, " I want to do it, and I have 
some grave doubts about it ", and turned around to his subordinate 
and said, " Find a way to do it." When the subordinate talked to 
Mr. Henning they first brought up the question of sale, and Harris 
said, " We would not sell it because it is actually needed by the Gov- 
ernment ", and then as an afterthought, apparently, Mr. Henning 
suggested this subterfuge of reconditioning as a way of getting 
around the law. 

It appears that there was a desire on your part to increase the 
amount of diphenylamine. 

Mr. Casey. We wanted to get as much as they were willing to let 
us have. 

Senator Clark. I call your attention to a memorandum from Mr. 
Henning, dated November 20, 1924, which was 3 days later than the 
one I just read, which I will offer to be marked with the appropriate 
exhibit number. 

(The memorandum referred to was marked " Exhibit No. 999 " 
and is included in the appendix on p. 2825.) 

Senator Clark. This memorandum says : 

Referring to memorandum no. 105, dated November 18, and following up ttie 
unfinished featuies of this, trip was made to Washington to negotiate details 
by which we would obtain the diphenylamine, also to increase the amount, if 
possible. Maj. C. T. Harris had given Maj. P. J. O'Shaughnessy instructions 



2664 MUNITIONS INDUSTRY 

to have a contract prepared acceptable to us, but at the same time complying 
with Ordnance Deiartment procedure and the laws of Congress rela mg o 
Tontracts for ordnance material. Major O'Shaughnessy's first move was to 
CO suit the ammunition division as to their wishes, and especially the matter 
of detail ol specifications. C. G. Storm handled this matter tor the ammunition 
division and inasmuch as this subject had been previously discussed with Dr. 
Stoim on Monday, November 17, he was not inclined to make any trouble. 
Mr. Casey. Would you mind reading the next paragraph, 

Senator? , ^ r-r. t n 

Senator Clark. I would be glad to. [Reading :J 

As a follow-up of this discussion, it will be desirable to send to the ammunition 
division aS for the attention of Dr. Storm, report ««. investigations carried 
out by the experimental station a number of years ago, indicating the effect of 
fmnurities in diphenylamine when used for stabilizing cannon powder Also 
Twrn be in order to consider further revisions of the specifications for di- 
phe^y amine, taking advantage of the fact that we are now enabled to jnanu- 
facture a pure product because of our experience in the manufacture of 
Snhenylam?ne as an intermediate in preparing dyestuffs. The particular point 
fs that th? Ordnance Department specifications contain no requirement as to 
he percentage of dfphenylamine in the product supplied, depending upon van- 
nnt nhvsical tests such as melting point and the tests for certain impurities. 

Su'^rSmmercill siic^^^^^ that the diphenylamine offered will con- 

tain atTe^S 99.5 percent diphenylamine. Major O'Shaughnessy would like to 
have made use of the new specifications for reworked diphenylamine as a 3us- 
?mcat?on for the Contract for "reworking", but we convinced him that the 
time necessary to prepare and have approved new specifications was such that 
it was impracticable to do this. 

All of this correspondence would indicate a very extraordinary 
desire on the part of all officers concerned to please the du Pont Co. 
and find some legal subterfuge or excuse for makmg this transac- 

*' mV^Casey. Senator, do you not think they were justified in trying 
to do that, because of the fact that they have always found the du 
PontCo. ready and willing to do anything of that sort ^ 

Senator aARK. If you ask my opinion, which is not so important, 
I do not think the War Department was justified m depleting it^ 
stock of essential ingredients for its powder to the extent of letting 
so of 60,000 pounds of what they had. Have you ever known of 
Iny case in your lonff experience, Major, m which tlie head ot a 
department, or a branch of the War Department or Navy Depart- 
ment just simply issued orders to a subordinate to do something 

of this sort? , , ,, , 

Mr. Casey. I cannot think of another one at t^e inoment 
Mr Irenee du Pont. Senator, bear in mmd that 67,000 pounds 
represents 2 years' supply of diphenylamine for the Army It is 
not a working supply, but a reserve supply, and it is important that 

'^'JnatOT CLAR^^That was an afterthought and a subterfuge for 

* Mr^IplNEE DU Pont. Sixty-seven thousand pounds of diphenyla- 
mine will make 12,000,000 pounds of powder, and I think the 
Government plants make only 4,000,000 a year. , , . , 
The Chairman. But assume that an emergency had arisen i 
Mr Irenee du Pont. They could not make 12,000,000 pounds of 
Dowder before we had the diphenylamine back to them. 

Mr. Casey. We would have had the diphenylamine back long 
before they could use it. 



MUNITIONS INDUSTRY 2665 

Senator Clark, Let us read the context [reading] : 

The contract prepared for reworking 60,000 pounds of diphenylumine and as 
eventually obtained, follows tlio laws of our " standard contract " as used in 
the supply of smokeless powder to the Ordnance Department. The provisions 
of the contract are made as simple as possible and require no bond for the 
performance. 

So that the Government was loaning the du Pont Co. the most of 
its reserve supply without any bond for performance. [Continues 
reading :] 

Further, article VI relating to liquidated damages has been deleted and the 
date of delivery was made very liberal, that of March 31, 1925. We have 
arranged to have deliveries at Raritan Arsenal, and this point has to us the 
advantage of involving lower transportation costs than delivery to Picatinny 
Arsenal. 

So that in addition to finding a way to do it, the officials of the 
War Department seemed disposed to be just as lenient as they pos- 
sibly could on the matter, not requiring a bond for performance, or 
any provision for liquidated damages, such as is usually contained 
in such contracts. 

Mr. Casey. No; not always. 

Senator Clark. Your own man said, Major, that he took the stand- 
ard contract which is used with the Government, and deleted these 
provisions from it. 

Mr. Casey. The standard contract provides both a bond and liqui- 
dated damages, but there is any number of cases where the Govern- 
ment says, "We do not want the liquidated damages in here because 
in a great many cases the liquidated-damages clause may require a 
higher price to safeguard it." 

Senator Clark. Your representative, Mr. Henning, apparently 
thought it was of sufficient importance, because he set it out. He 
says : 

The contract prepared for reworking 60,000 pounds of dipheuylamiue and as 
eventually obtained, follows the laws of our " standard contract " as used in 
the supply of smokeless powder to the Ordance Department. The provisions 
of the contract are made as simple as possible and require no bond for the 
performance. Further, article VI relating to liquidated damages has been 
deleted and the date of delivery was made very liberal, that of March 31, 1925. 
We have arranged to have deliveries at Raritan Arsenal, and this point has 
to us the advantage of involving lower transportation costs than delivery to 
Picatinny Arsenal. 

He evidently thought it was of sufficient importance to put a 
feather in his cap about the good contract he had been able to 
negotiate. 

Mr. Casey. Wait a minute. Let us take into account personalities. 
Henning was a technical man. Whenever a technical man makes a 
report, he feels he is duty boimd to save himself to report every 
blessed thing. 

On the question of Raritan, there is a proposition there : The Gov- 
ernment would prefer to have a part of their diphenylamine stock 
at Raritan, but that would have meant using some of their funds for 
transportation. 

Another thing you meet by the contract is instead of their paying 
for the transportation of their own diphenylamine from Picatinny 
to Raritan they also got us to move the diphenylamine w^here they 
preferred to have it. 

83876 — 3.5— PT 12 3 



2666 MUNITIONS INDUSTRY 

Senator Clark. Now I call your attention to a night letter signed 
by Major Casey, directed to Maj. N. F, Ramsey at Picatinny Ar- 
senal. He was the commanding officer in charge ? 

Mr. Casey. He was the commanding officer in charge. 

Senator Clark (reading) : 

Our tnick will call at arsenal Thursday for load of diphenylamine. Will 
you please deliver approximately 10,000 pounds, in accordance with our agree- 
ment with Ordnance Department? Letter giving shipping instructions for 
balance of approximately 50,000 pounds follows. 

(Signed) K. K. V. Casey. 

So that you actually did take delivery of the diphenylamine? 

Mr. Casey. Yes; and the Government took delivery of diphenyl- 
amine with 99.5 of diphenylamine in it. 

Senator Clark. That letter may be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 1000 " and is 
included in the appendix on p. 2826.) 

Senator Clark. I call your attention to a very strange communi- 
cation, it seems to me. Major, about which I would like to find out 
the meaning [reading] : 

confidentxajl memo fob major casey 

November 20, 1924. 
Diphenylamine. Negotiations with Ordnance Department, 
signed by Mr. Henning. 

I will offer that for appropriate number. 

(The memorandum referred to was marked " Exhibit No. 1001 " 
and appears in full in the text.) 
Senator Clark [reading] : 

Referring to memorandum H-105 and 106 on the above subject, and to our 
conversation this afternoon, we have anticipated that further developments on 
this subject, especially those which may be brought about by the competitors 
of the du Pont Co. endeavoring to sell diphenylamine of foreign manufacture 
in this market, also the possible interest which American dyestuffs manufac- 
turers might have in the transaction, should lead us to take steps to protect 
ourselves, as well as the Ordnance Department, from criticism. I thought it 
well, therefore, in discussing the subject freely with Maj. P. J. O'Shaughnessy, 
to state briefly the relation between American supply and our import laws, stat- 
ing specifically that if Mr. H. A. Metz were able to establish that there was 
no American manufacture of diphenylamine that he should be able to sell for- 
eign-made diphenylamine in this coimtry without the purchaser paying the 40 
percent ad valorem import duty. This statement came appropriately after a 
considerable general discussion of the importance to the Ordnance Department 
and to American defense of affording protection to American manufacture of 
dyestuffs. The Ordnance Department is apparently thoroughly appreciative of 
the importance of chemical industry in general to their plans for national 
defense. It was further stated that we recognize, and that they probably also 
recognize, that certain un-American interests are quite active in this countiy in 
breaking down the success and efficiency of the American dyestuffs industry, 
and that it might be anticipated that if any activities developed in tliis country 
in criticism of our action or of the Ordnance Department that they might be 
expected to originate with some such person as Mr. Herman A. Metz. 

Mr. Metz was formerly comptroller of the city of New York and 
a former Member of Congress ? 

Mr. Casey. I believe so, but I am not sure. I believe plenty of 
our people know who he is in connection with the dye industry. 

Senator Clark. I do not know his connection with the dye indus- 
try, but I know Metz and knew him in Congress. 



MUNITIONS INDUSTRY 



2667 



What do you understand is meant by that memorandum? Do you 
get the impression, which is apparently conveyed by this^ memo- 
randum, that you were manufacturing diphenylamine, and that any 
importer who competes with you would have to pay a tarilt, and that 
was the only purpose of the manufacture of diphenylamine '{ 

Mr. Casey. Oh, no. Before the war I do not believe there was any 
diphenylamine made in this country. When we got into big pro- 
duction we had to devise a way to make diphenylamine. It was one 
of our big problems. Here is the close of the war. One of the 
important things from the standpoint of the United States Govern- 
ment was a source of supply in connection with the things needed in 
connection with the manufacture of all the important components, 
Diphenylamine was one of them. 

Now, if foreigners were able to come in here and put us out of the 
business, it would have affected the national defense. 

Senator Clark. What did you understand by Mr. Henning going 
down and talking to this major in the War Department and explain- 
ing to him that if there was any criticism of this loan of the Govern- 
ment's reserve stock of diphenylamine, it would come from a man. 
named Metz because of his tariff views? 

Mr. Casey. Do you not think. Senator, that we are interested in 
the integrity of this country as well as anybody else, and we are 
duty bound to inform the proper officer of what we thought might go 
on, if there was an opportunity given to help un-American interests, 
as we thought? 

Senator Clark. Apparently the thing about which you were in- 
forming the War Department was that unless they loaned you their 
reserve stock of diphenylamine, somebody else might use it as an 
argument for taking off the tariff on diphenylamine. 

Mr. Casey. Do j^ou not think there is a sequence of dates there? 

Senator Clark. What is the sequence of dates? 

Mr. Casey. Was not this after the agreement was made? 

Mr. Irenee du Pont. About the same time. 

Mr. Casey. Or about the same time ? 

Senator Cij^rk. It was the day before the memorandum. 

Mr. Casey. Before the first memorandum, was it? 

Senator Clark. It was the same day, both dated November 20, 
1924. 

Mr. Casey. Which one? 

Senator Clark. The one which I just read, in which he boasted of 
the contract secured, dated November 20, 1924, and, in addition to 
that, he wrote you this confidential memorandum in which he told 
you he had explained to Major O'Shaughnessy that if there was any 
criticism of this deal, it would come from un-American sources who 
were interested in breaking down the tariff. 

Mr. Casey. Senator, would you not have done the same? 

Senator Clark. How is that? 

Mr. Casey. Would you not have done the same, if you felt there 
was an un-American influence attacking our integrity?* 

Senator Clark. You think that anybody who desires to import 
into this country in competition with your products is un-American. 

Mr. Casey. Oh, no ; I would not say "that. I say that any importa- 
tion of material which will put out of business an American manu- 



2668 MUNITIONS INDUSTRY 

factuier of an essential component, involving the national defense, 
that that is an un-American activity. 

Senator Clark. Yes; but, Major, what this memorandum indi- 
cates is that this man was down there negotiating a contract, the 
provisions of which were of doubtful legality, and in which it had 
been necessary to beat the devil around the stump by getting at the 
reconditioning theory as an excuse, and an agent down there turns 
around to the man who negotiated this very lenient contract and 
says, himself, that if anybody criticizes the loaning of the United 
States' reserve stock of diphenylamine, it will be from un-American 
interests. 

Mr. Casey. Do you not think the purpose is clear ? 

Senator Clark. I do, and I want to know if you agree with me? 

Mr. Casey. Major O'Shaughnessy was not the negotiator but the 
legal representative. 

Senator Clark. He was preparing the contract? 

Mr. Casey. Yes; he was preparing the details of the contract. 

Senator Clark. Now, as a matter of fact. Major, you stated when 
you took the diphenylamine it was of poor qualit}^ and it was in 
poor condition and of varying qualities? 

Mr. Casey. That is what I understand. The Government was 
really a distinct gainer by that transaction. 

Senator Clark. And it afforded them an additional excuse after 
the fact for the transaction? 

Mr. Lammot du Pont. Senator, I do not think you are quite fair 
in referring to that as an excuse. It was a reason. 

Senator Clark. Mr. du Pont, the correspondence very clearly 
shows it was an excuse. Long before the question of reconditioning 
was ever mentioned by anyone, and before any such excuse was ever 
conceived of. General Williams said he was very doubtful of the 
legality of it, but said to his subordinate to go find a way to do it, 
and he then found a way to do something which was of doubtful 
legality, and, after two or three attempts, they hit on the recondi- 
tioning as an excuse. 

Mr. Lammot du Pont. They found it a reason for it. 

Senator Clark. After they had been ordered to make a contract, 
they found a reason for it. They found an additional reason for it. 

Mr. Lammot du Pont. Correct. The reason was a better reason 
than they first thought. 

Senator Clark. Apparently General Williams did not know any 
way when he ordered Harris to try to find a way to make the 
contract. 

Mr. Lammot du Pont. I do not think that that is a fair statement. 
Senator. You do not know what was in General Williams' mind. 

Senator Clark. All I have is Henning's statement, 

Mr. Lammot du Pont. That may not be all he had in his mind. 

Senatoi- Clark. He stated it was of very doubtful legality, and 
told Harris to find a way to do it. 

Then comes along a memorandum dated November 21, 1924, from 
Mr. Henning, which I will offer for appropriate number. 

(The memorandum referred to was marked " Exhibit No. 1002 " 
and appears in full in the text.) 



MUNITIONS INDUSTRY 2669 

Senator Clark. That reads: 
Report No. 107-H-1924, Picatinny Arsenal, November 21, 1924. 

The following subjects were discussed with Major Ramsey and Miles : 

" 1. Diphenylamiue. • Refining ' of 60,000 pounds. 

" Endeavored to ascertain in detail the origin, quality, condition of pack- 
ages, etc. The stuck of diphenlyamine on hand at the arsenal is all stored in 
building no. 218. It has not been carefully segregated as to lot numbers or 
origin. It stands on the arsenal records as consisting mostly of General Chem- 
ical Co.'s ' Lot No. 112.' It was shipped during the war to the Hercules 
Powder Co. at Kenvil on requisition no. HHK 879, and afterwards disposed 
of as surplus, being transferred to Picatinny Arsenal. Some few of the wooden 
barrels in which it is packed have tags indicating that it came from the 
General Chemical Co.'s ' Baker & Adamson Works ' at Easton, Pa. Many of 
the wooden barrels are in poor condition, having inadequate hoops, and unless 
considerable care is taken In recording both gross and net weights received, 
there is a good chance for argument over the weight received. Many barrels 
are marked ' 250 ll>s.' although there is obvious variation in size and weight. 

" The diphenylamine if? of a buff or brown color, possil)ly due to oxidation 
from storage in poor containers. Barium nitrate is now stored on top of some 
of the barrels, hence it would not be surprising if there were contamination 
from this source. The laboratory analyses are not conclusive as to the quality 
of the product, although mostly indicating that the diphenylamine does not 
strictly comply with the requirements of the Ordnance Department specifica- 
tions. Thesie deficiencies are color; insoluble content, and color of sulphuric 
acid solution. I have requested Picatinny Arsenal to write a letter transmitting 
to us copies of their laboratory tests ; also I advised Major Ramsey that it was 
desired to place on record the fact that their stock of diiilieuylamine did not 
comi)ly with specifications, was poorly packed, and in need of refining, and that 
this record might be needed to avoid criticism in the future. Major F. H. 
Miles accompanied the writer to the building in which the diphenylamiue was 
stored, and assisted in the inspection, also search for laboratory records. At 
the first opportunity the information gained was passed on to Wilmington by 
telephone, on account of its possible effect on plans for handling the details of 
transportation, refining, etc." 

Major, that would indicate that the Government — the War Depart- 
ment — had been very careless in its handling of its reserve stock of 
diphenylamine, would it not ? 

Mr. Casey. I would not say so. It came from the Hercules Pow'der 
Co. and had been transshipped as surplus, and the Lord only knows 
whether or not the barrels may have been broken, or something of 
the sort. 

Senator Clark. I understand that, Major, but the fact that it was 
reserve, if the reserve was to be of any effect, it ought to be just as 
good as that in actual use, ought it not, and your own technical man, 
Mr. Henning, states that they were storing barium nitrate on top 
of some of the barrels, and that it was likely contamination would 
resitlt from that source, and his whole description of the thing would 
indicate to anj^ lay mind such as mine that the Government liad been 
very careless in its taking care of the reserve stock. 

Mr. Casey. Senator, I would not want to criticize, not knowing the 
situation. 

Senator Clark. I can understand, since you do business with the 
War Department you might not be as free in your expression of 
opinion as you might otherwise. 

Mr. Casey. Leave that out. I think that is not an indication of 
criticism. 

Senator Clark. That was a confidential memorandum to you ? 



2670 MUNITIONS INDUSTRY 

Mr. Casey. That is not confidential. But there may have been 
instances at such time that in moving stuff all around the country 
they could not exercise the care they would in ordinary times, in 
ordinary transportation in time of peace. 

Senator Clark. It would seem to me from Henning's memorandum 
that the Government at some previous time had accepted diphenyla- 
mine as either short in weight or it did not meet the specifications. 

Mr. Casey. That I do not know. 

Senator Clark. That would seem to be the inference from the 
memorandum. 

Mr. Casey. It might be possible as a result of our experience with 
inspectors. 

Mr. Lammot du Pont. Senator, I agree with Major Casey that 
this is not a proof of carelessness, and I would also like to point 
out that this was an additional reason after the fact. 

Senator Clark. I am not disputing that. It may be that the deal 
turned out to the advantage of the Government. I have not dis- 
puted that at any time. The Government got its diphenylamine 
back, I understand, before any emergency developed which might 
have required it, but the essential feature in the whole transaction 
is, it was stated by General Williams, without any qualifications 
whatever, to be of doubtful legality, yet he ordered it carried out. 

Just to close up this transaction, I offer for the record a letter 
from the War Department, signed by Major O'Shaughnessy, ad- 
dressed to the du Pont Co., dated December 22, 1924. 

(The letter referred to was marked " Exhibit No. 1003 " and 
appears in full in the text.) 

Senator Clark. That reads : 

I am transmitting herewith, for your files, your number of the contract, 
fully executed, entered into with you under date November 19, 1924, covering 
reworking of 60,000 pounds of diphenylamine located at the Picatinny Arsenal. 
For the Chief of Ordnance: 
Respectfully, 

P. J. O'Shaughnessy. 

Now, I call your attention. Major, to a memorandum dated 
December 4, 1924, which I will offer for appropriate number. 

(The memorandum referred to was marked " Exhibit No. 1004 " 
and appears in full in the text.) 

Senator Clark. First, let me call your attention to the letter 
which I just read — " Exhibit No. 1003." It is very short, and I will 
read it again : 

I am transmitting herewith, for your files, your number of the contract, 
fully executed, entered into with you under date November 19, 1924, covering 
reworking of G0,000 pounds of diphenylamine located at the Picatinny Arsenal. 

Now, from reading the files of the War Department, it would not 
ho possible to determine what the nature of this contract was, 
would it? 

Mr. Casey. That I do not know. 

Senator Clark. That letter does not indicate what the contract 
was. 

Mr, Casey, The letter might not indicate it. 

Senator Clark, The letter says it was a contract for recondition- 
ing. As a matter of fact, it was a loan of the powder to you, to be 
returned by a different grade of ingredient. That is what the con- 



? 



MUNITIONS INDUSTRY 2671 

tract really was, the Government really loaning you 60,000 pounds, 
and you returning 60,000 pounds of a grade that would conform 
to a more stringent specification? 

Mr. Casey. Right. 

Senator Clark. Now I read you another memorandum, signed 
by the dyestuffs department, by Mr. G. T. Barnhill, Jr., dated 
December 4, 1924, memorandum for the explosives department, atten- 
tion W. S. Lynch, headed " Diphenylamine " [reading " Exhibit No. 
1004 "] : 

The du Pont Co., under a contract negotiated through the military sales 
division, has arranged to borrow 00,000' pounds of diphenylamine from the 
United States Government at Picatlnny Ai-senal ; 50,000 pounds of the di- 
phenylamine is now en route to Repauno to he reworked and the other 10,000 
pounds has been delivered to the dye works and will not be reworked. As I 
undersitand the contract, the entire quantity of 60,000 pounds is to be returned 
to Picatinny Arsenal at a date specified in the contract. 

There have been no internal arrangements made for accounting in connection 
with this transaction, and since the replacement will be made from Repauno, 
it would seem proper for dye works to send an order to the explosives depart- 
ment for 10,000 pounds of diphenylamine to be billed at the present transfer 
price of 45 cents per pound. 

If this procedure is satisfactory, please advis»e. 

Now, do you know whether that method was carried out, Major? 

Mr. Casey. That I do not know. You see, that was not a trans- 
action in which we were in any way involved. We simply got a copy 
of the letter. 

Senator Clakk. Do you know, Mr. du Pont? 

Mr. Lammot du Pont. No. 

Senator Clark. The point I make is, if that procedure were fol- 
lowed, suggested by Mr. Barnhill, then your own account books 
would not show the real nature of this transaction. 

Mr. Casey. That may be the case. I do not Imow, Senator. 

Senator Clark. Do you have any other instances of that sort, 
Major, where transactions were entered into which would not show 
in your accounts? 

Mr. Casey. I do not think so. I cannot think of any. It might 
be, but I do not know. 

I can say this: That there would not be anything of that sort 
unless it were to the advantage of the Government. 

Mr. Lammot du Pont. Senator, it might be pertinent to mention 
that this matter of reworking military supplies is not unusual at all. 
Most of my powder experience has been in black powder, and it was 
a very usual thing for the Government to send the du Pont Co. 
black powder to be reworked. 

Senator Clark. I understand that. 

Mr. Lammot du Pont. May I continue a moment ? 

Senator Clark. Excuse me. 

Mr. Lammot du Pont. The practice in reworking that was that 
practically never does the same poAvder go back which you receive. 
Literally it was impossible to do so. And it is a perfectly well- 
recognized fact that when the powder is reworked, the actual pound- 
age which we returned was not that which we received. 

Senator Clark. I can perfectly well understand that, Iklr. du 
Pont. The actual point of this transaction which impressed itself on 
my mmd was not as to whether it worked to the benefit of the Gov- 
ernment. I can very readily understand that in the ordinary course 



2672 MUNITIONS INDUSTRY 

the Government might have s(jme powder, or any other ingredient 
of war, which might have deteriorated and needed to be worked 
over, and might take bids from suppliers of that particular munition, 
or that a man who was engaged in that business or a representative 
of a company engaged in that busiriess might go to the War Depart- 
ment and say, '' You have got some diplienylamine over there which 
has been here a long time, and we have improved the process, im- 
proved the quality, and why do you not let us work that over? " 

That is one thing. But for a company which is engaged in private 
business for their own purposes, not for purposes of the Government 
but for their own purposes, to go to the Chief of Ordnance and say, 
" We need most of your reserve supply of diplienylamine ", and for 
him to say, " I have very grave doubt about the legality for it, but 
I will tell my subordinate, Major Harris, to go find a way to do 
it ", that, to my mind, is the outstanding and essential feature of 
this transaction in the matter of ordinary routine of the Government 
wanting some powder reconditioned. 

Mr. Casey. Senator, I am willing to bet dollars to doughnuts that 
if you had been Chief of Ordnance at the same time, you would have 
done the same thing. 

Senator Clark. I am willing to bet dollars to doughnuts I would 
not have done anything of the kind. 

RELATIONS OF DU PONT CO. WITH THE STATE DEPARTMENT 

Senator Clark. I call attention to a memorandum dated May 3, 
1932, memorandum to Maj. K. K. V. Casey, signed by Colonel Simons, 
which I oifer for appropriate number. 

(The memorandum referred to was marked " Exhibit No, 1005 " 
and appears in full in the text.) 

Senator Clark (reading) : 

On my visit to Washington on Friday. April 2t), I called on Capt. William 
Baggaley, Office of Naval Intelligence, and handed him a copy of the correspond- 
ence between the Mitsubishi Co. of Japan, and I. CI. wherein it developed that 
the Japanese were trying to buy a du Pout mechanical dipper from the above 
British firm, and had been informed that it was not available. 

Senator Clark. What is the mechanical dipper? 
Mr. Casey. That is a dipper used in the process of manufacturing 
nitrocellulose ; is it not, Mr. Bradway ? 
Mr. Bradway. Yes. 
Senator Clark (reading) : 

This enabled me to develop the point of view of Naval Intelligence on the 
sale of munitions or luunition-producing machinery to the Japanese. The atti- 
tude of the Navy Department has not changed and they still believe it not 
only permissible, but desirable, for American firms to sell such material and 
equipment to the Japanese, basing their judgment on the fact that the .Japanese 
will undoubtedly purchase what they desire anyhow, and that it is desirable for 
America to secure the business and the Navy to be informed of the amount and 
nature of the purchases, which information would be lacking if purchases were 
made in Europe. 

It would not disclose anything as to the nature and amount of the 
purchases for the Japanese to have a mechanical dipper, would it? 

Mr. Casey. No; but a mechanical dipper represents a certain, 
capacity in powder. 

Senator Clark (reading) : 

Later on I called at the Office of Assistant Chief of StafC G-2— 



MUNITIONS INDUSTRY 2673 

That is Military Intelligence? 

Mr. Casey. Yes. 

Senator Clark (continuing reading) : 

•and similarly discussed the situation witli Majors Wilson, Marley, and Kroner, 
-with substantially the same results, that is to say, that the Army sees no objec- 
tion whatsoever to our dealing with Japan. 

My conversations with all of these oflBcers were confidential. They under- 
stand, of course, that I report my actions to my superiors, but at the same time 
they should not be embarrassed by the information herein contained reaching 
the'state Department, especially since I had requested them not to report these 
conversations to the State Department. 

Mr. Casey. You left out one sentence. 

Senator Clark. I left out one sentence. I will be glad to read it. 

Mr. Casey. I wish you would. 

Senator Clark (reading) : 

It was here stated that the announced policy of the State Department was 
not to hamper in any way trade with Japan, since any embargo would be 
regarded as an unfriendly act and tend to render more difficult the already 
delicate situation in the Orient. 

Then he goes on to the paragraph which I just read, which I will 
read again: 

My conversations with all of these officers were confidential. They under- 
stand, of course, that I report my actions to my superiors, but at the same 
time they should not be embarrassed by the information herein contained 
reaching the State Department, especially since I had requested them not 
to report these conversations to the State Department. 

Major, how does that square with the testimony we had here last 
week, that you never did anything about the sale of munitions with- 
out the permission of the State Department? 

Mr. Casey. I do not think I said that. 

Senator Clark. We had that repeatedly stated in connection 
with 

Mr. Casey. I said where there was an embargo. 

Senator Clark. Where there was an embargo? 

Mr. Casey. Now, here is the point 

Senator Clark. In other words, here you, through your represent- 
ative, are actively seeking to prevent the State Department, which 
has control of our foreign relations, from learning of the conversa- 
tions that you had with the War and Navy Departments. 

Mr. Casey. Within the last 6 months I was told this right in the 
State Department by a man I know pretty well. He said : " Casey, 
I wish you fellows would not come to us when you have a propo- 
sition to sell to a foreign government and ask us if we can give 
you permission. We have no right to either approve or disapprove 
of anjr such action unless there is an embargo, when it is then our job. 
When you come to us and ask us for permission, we have to go to 
work and simply say we cannot give you permission, nor can we dis- 
approve of the shipment: but it only embarrasses us to have those 
questions asked." 

Senator Clark, Why would it embarrass the officers of the Mili- 
tary and Naval Intelligence with whom Colonel Simons had had his 
conversations for that information to reach the State Department? 

Mr. Casey. That I do not know. 



2674 MUNITIONS INDUSTRY 

Senator Clark (reading) : 

My conversations with all of these oflScers were confidential. They under- 
stand, of course, that I report my actions to my superiors, but at the same 
time they should not be embarrassed by the information herein contained 
reaching the State Department. 

That very clearly shows a definite effort to keep that information 
away from the State Department, which has control of our foreign 
affairs, and that is conclusively proven by the last part of the sen- 
tence, " especially since I had requested them " — that is, the du 
Pont representative had requested the Military and Naval Intelli- 
gence " not to report these conversations to the State Department." 
Yet they dealt with matters that might be of the most vital impor- 
tance to our foreign relations. 

Mr. Casey. Has not the position of the State Department been 
stated in the previous paragraph? 

Senator Clark. It was stated what the impression was that tha 
Military Intelligence had. But why, then, was it necessary for 
Colonel Simons to warn you against that information reaching the 
State Department, and stating that it would be an embarrassment to 
the Military and Naval Intelligence, and then stating that he had 
advised them not to report any of that information to the State 
Department ? 

Mr. Caset. Senator, I cannot speak for either the Military or 
Naval Intelligence as to their reason. 

Senator Clark. I am getting at Colonel Simon's recommendation 
to you. He was your representative. 

The Chairman. Major Casey, the date involved here is quite 
closely related to the Manchukuo controversy. Is there any rela- 
tionship at all there ? 

Mr. Casey. That I could not tell you. You see, this inquiry did 
not come to us. It came to LCI. 

Senator Clark. Yes; but the question of the discussion of policy 
was between your representative and Military and Naval Intelligence. 

Mr. Casey. That is perfectly correct. 

Senator Clark. I am not talking about where the inquiry came 
from. The point I am making is this, that a representative of the 
du Pont Co. went down and conferred with Military and Naval In- 
telligence on a question of policy which might conceivably have 
involved the United States in war. 

Mr. Casey. I do not see that. 

Senator Clark. And specifically requested them not to convey that 
information to the State Department. 

Mr. Lammot du Pont. Senator, I think it is clear from this 
letter that the proposition had not reached a stage where it was 
important that it should be communicated to the State Department. 

Senator Clark. I am not asking as to why it was important it 
should be communicated to the State Department, I am asking why 
it is important it should not be, whicli this memorandum clearly 
indicates was the desire. 

Mr. Lammot du Pont. There were good reasons at that time why 
it should not be conununicated. 

Senator Clark. Do you know what they were ? 

Mr. Casey. No ; they were Military and Naval Intelligence reasons. 

Senator Clark. Do you know what the reasons were, Mr. du Pont? 

Mr. Lammot du Pont. I do not know. 



MUNITIONS INDUSTRY 2675 

Mr. Raushenbush. Senator, may I point out that the inquiry had 
been addressed to the I.C'.L, and Mitsubishi had been informed that 
the dipper was not available there, so the negotiations did come back 
to this country and to this company. 

Mr. Lammot du Pont. I understand the shipment was not made. 

Senator Clark. Just on this question of relations with the State 
Department I desire to drop back to another matter briefly. I call 
your attention to a letter dated March 15, 1926. This is the one of 
which you said you did not have a copy. 

Mr. Raushenbush. No ; we do not have that, I am afraid. 

Senator Clark. Well, I will come back to that in a minute. I 
will pass that for a moment. 

Mr. du Pont, is the du Pont Co. receiving benefits of any P.W.A. 
money at the present time ? 

Mr. Lammot du Pont. Not that I know of ; I think not. 

Senator Clark. In contracts from the Navy? 

Mr. Casey. I think we are, Lammot. I think there was a Navy 
contract last year for some powder. 

Mr. Lammot du Pont. Have we got the benefits of P.W.A. money ? 

Mr. Casey. They said it was P.W.A. money, because there were 
certain provisions in the contract which applied to the P.W.A. situa- 
tion. 

Mr. Lammot du Pont. Mr. Casey is better informed that I am. I 
did not know it. 

Senator Clark. I call your attention to a memorandum dated Jan- 
uary 12, 1924, from Major Casey, headed "Washington, D. C, 
January 11, 1934." 

" Saw General Tschappat " — he is the Assistant Chief of Ord- 
nance, is he not? 

Mr. Casey. Chief of Ordnance right now. 

Senator Clark. He was Assistant Chief at this time ? 

(The letter referred to was marked " Exhibit No. 1006 '' and is 
included in the appendix on p. 2826.) 

Mr. Casey. Yes ; General Hof was then Chief of Ordnance. 

Senator Clark (reading) : 

Saw General Techappat, who advised me that while they had had nothing 
definite regarding the Public Works money for the fiscal year 1935, that they 
were relying on the promise the President had made to The Assistant Secretary 
of War, Woodring, where he agi-eed to allot the Ordnance Department 
$6,000,000 per year for 2 years in order to enable them to continue with their 
ammunition projects. 

Mr. Casey. They got that. I believe it was urged by Secretary 
Perkins in order that they could keep their personnel at Picatinny 
Arsenal employed ; otherwise they might have had to shut down. 

Senator Clark. How much of it did you get, Major; do you 
know? 

Mr. Casey. We may have gotten a couple of hundred thousand 
dollars out of it, something of that sort. I do not know. 

Mr. Lammot du Pont. Senator, I am confused on this matter. If 
we got any benefit of P.W.A. money, it must have been from the sale 
of goods which were paid for. 

Senator Clark. Yes ; I assume that is true. 

Mr. Lammot du Pont. We cannot tell where customers get their 
money. 



2676 MUNITIONS INDUSTRY 

Senator Clark. Apparently you knew. You may not have known 
personally, but it was within the knowledge of officials of your 
company. 

Mr. Lammot du Pont. We may have been told. 

Mr. Casey. I think in the case of the Army, I do not have any 
recollection at the moment that there were any provisions in the con- 
tracts we made with them directly referring to provisions of the 
P.W.A. We did have that with the Navy, however. 

Senator Clark. That was my understanding, Major. I have never 
been informed that you had any contracts with the Army involving 
P.W.A. funds, but you did have contracts with the Navy. 

Mr. Casey. Yes. 

Senator Clark. Which involved the use of allotments of P.W.A. 
funds. 

Mr, Casey. And therefore there were certain additional provisions 
put in the contracts to cover that situation. 

By the way, Senator, you may remember my referring to an inci- 
dent a little while ago. The next paragraph brings that out, on 
the first page. 

Senator Clark. What is that? 

Mr. Casey. This is the letter of January 12 from which you just 
read ; the last paragraph on the first page. 

Senator Clark. Yes. I am just coming to that now, Major. I 
will ask you about it: 

Had quite a discussion with Majoi- Borden 

Who is Major Borden? 

Mr, Casey, In charge of the small arms and anti-aircraft section 
of the Ammimition Division of the Ordnance Department, 
Senator Clark (reading) : 

Had quite a discussion witli Major Borden on the general topic of the sales 
of ])owder to foreign countries. Major Borden stated that they knew the 
position du Pont would take in such matters in case they should request 
that material not be supplied to a certain power but he asked if we would 
be willing to go a step further and refuse to supply material to a manufacturer 
of ammunition who in turn might be offering it to a foreign power where they 
were anxious to prevent this foreign power from getting ammunition. I soon 
gathered from Major Borden that he had in mind particularly .50 caliber 
powder and while he did not mention Cuba it was clear that he was referring 
to the shipment by the Remington Arms Co. of 100,000 rounds of .50 caliber 
ammunition. Major Borden advised me that the money for the purchase of 
150,000 

It says " pounds " ; " rounds " in one place, and *' poimds " in 
another. 

Mr. Casey. One is powder and the other is rounds of ammunition. 
Senator Clark (reading) : 

150,000 pounds of .30 caliber powder had come about in this manner. After 
setting aside all the money secured from the Public Works last year they 
discovered they would have a slight sun^lus and, therefore, it was decided that 
rather than turn this money back to the Treasury they would utilize the 
surplus to buy what material they could for the next fiscal year's consumption, 
I discussed generalities with Colonel Wesson and Major Zornig. 

Mr, Casey, That is the incident I referred to a little while ago. 

Senator Clark, Yes. 

Mr. Rausiienbush. Major, in testifying about orders from the 
Army, were they or were they not accompanied with the special 
P.W.A, provisions that accompanied the Navy orders? 



MUNITIONS INDUSTRIE 2677 

Mr. Casey. I do not think they were. 

Xow, I am not going to take an oath to that effect, because I want 
to be sure when I make a positive " Yes " statement. But I really 
do not think they were. But we do know in the case of the Navy we 
had definite P.W.A. requirements to meet. 

Mr. Kaushenbush. Let us get it straight: 

Are you under the impression that some of these other orders 
recently were from P.W.A. funds, as the letter seems to indicate ? 

Mr. Casey. I do not think they were, because we did not have 
those provisions. 

Mr. Eaushenbush. And you are not quite sure about the pro- 
visions ? 

Mr. Casey. I am not sure at all. 

Mr. Raushenbush. Would Mr. Bradway or somebody else be able 
to testify there on that point? 

Mr. Casey. We can find out; if the matter is of sufficient impor- 
tance, we can find out. We would have to get in touch with Wil- 
mington. 

Mr. Raushenbush. You testified further a moment ago about how 
it happened that some of those P.W.A. funds were allocated to the 
War Department, and stated that Miss Perkins, the Secretary of 
Labor, I take it, had asked that that be done. 

Mr. Casey. Of course, I have no first-hand information. 

Mr. Raushenbush. You testified to it, it seemed, very positively, 
and then wanted to check where your information came from on that 
point. 

Mr. Casey. That is simply what I was told. 

Mr. Raushenbush. Who told you on that 'i 

Mr. Casey. Somebody in the Ordnance Department. I could not 
tell you that. 

Mr. Raushenbush. Somebody in the Ordnance Department? 

Mr. Casey. Yes. 

Mr. Raushenbush. That is ail I had. Senator. 

Senator Clark. I call your attention to a memorandum dated May 
22, 1931, from Colonel Simons to Mr. T. R. Hanley, legal department. 

(The letter referred to was marked " Exhibit No. 1007 " and is 
included in the appendix on page 2827.) 

Senator Clark (reading) : 

lu reference to negotiations now being conducted between t!ie du Pont 
Ammonia Corporation and a national or a foreign friendly government, I do 
not see any necessity at the present time of notifying either the United States 
State Department or ]VIilitary or Naval Intelligence in view of the fact that the 
negotiations are confidential from a commercial standpoint. 

A transaction of that sort might be partly commercial and partly 
military ? 

Mr. Casey. This was considered, at the time at least that this 
letter was written, as a strictly commercial proposition. 

Senator Clark. And you did not feel it was necessary under such 
circumstances of transport of an essential munition to consult either 
the Navy or War Departments ? 

Mr. Casey. It was not looked on as an essential munition, nor is it 
looked on as that today. 

Senator Clark. Ammonia? 

Mr. Casey. No. It is pretty far-fetched. You have to go through 
a number of processes, but let some chemist talk about that. 



2678 MUNITIONS INDUSTRY 

Senator Clark. I am not a chemist. I am not going to undertake 
to examine you on chemistry. 

I always understood that ammonia in time of war was a very 
important ingredient of several munitions. 

Mr. Casey. You realize, Senator, that in spite of the fact that we 
bent over backward in keeping Military and Naval Intelligence in- 
formed on everything, here was a case where we felt that at that 
time it was unadvised. Later on we told them all about it, when the 
transaction took place. It did take place, did it not? Or was that 
hydrogen ? 

Mr. Irenee du Pont. I do not know what it is they are talking 
about. It is after my time. 

Mr. Lammot du Pont. It is not clear from this letter. 

Mr. Casey. I am not sure which it was. 

The last paragraph of that sentence explains why it was not com- 
municated to ONI and MID. 

Senator Clark. You mean the last paragraph ? 

Mr. Casey. Yes. 

Senator Clark. This says: 

"While I am firmly convinced that any information given to Military Intelli- 
gence or Naval Intelligence would be regarded and held as confidential, in view 
of the delicacy of the negotiations at the present time, I believe that no mention 
should be made until the other party of this negotiation has so arranged their 
affairs as to render the dissemination of the news as harmless. 

Mr. Casey. So you can see it was not a question of keeping it from 
them, but only for that particular moment. 

Senator Clark. That would be fully as true of the military sale of 
munitions as anything else would? 

Mr. Casey. If it was military we would have gone to them the very 
first minute we had the first nibble. 

Mr. Raushenbush. It is military to the extent they refer to your 
department, is it not. Major? Yours is the military sales? 

Mr. Casey. No ; it was not referred to our department. We learned 
of it, and there you are. 

Mr. Raushenbush. This is a memorandum from " Military Sales." 

Mr. Casey. Oh, yes. 

Mr. Raushenbush. To the legal department. 

Mr. Casey. That is for their information. 

Mr. Raushenbush. The fact that it came to you, the only point 
I am making is that even at this date it was recognized as having 
some military significance. 

Mr. Casey. I do not think so. If anybody was ^oing to contact 
the Government, we would be the ones. It is a possibility, however, 
that somebody might have asked us what would be the attitude 

Senator Clark. Is Colonel Simons in your department? 

Mr. Casey. Yes. 

Senator Clark. That memorandum is signed by Colonel Simons? 

Mr. Casey. Yes. 

Senator Clark. Would that not indicate that it was a matter 
having to do with military affairs? 

Mr. Casey. I do not know what originally brought this letter up. 
It may have been that Tom Hanley requested of Simons, " What do 
they think about this in Washington? 



MUNITIONS INDUSTRY 2679 

SUBMERGENCE OF GOVERNMENT POWDER UNDER WATER AT OLD HICKORY 

Senator C!lakk. Major, do you know how much powder was left 
over in the hands of the Government at the end of the war? 

Mr. Casey. I have a rough idea. 

Senator Clark. It was at least 15,000,000 pounds ? 

Mr. Casey. Oh, no ; more than that. 

Senator Clark. I say, it was at least 15,000,000? 

Mr. Casey. At least; that is enough for the purpose, I guess. 

Senator Clark. I call your attention to a letter from Colonel 
Simons to Mr. W. H. O'Gorman at 16 Place Vendome, Paris, the 
second paragraph from the bottom : 

Major Casey was in Washington yesterday and was told that an inspector 
general has been appointed to look into the matter of putting the powder 
under water at Old Hickoi-y. This oflScer, Col. Louis J. Van Schaick. of the 
Inspector General's Department, was put on the job by General Summerall 
and not by the Secretary of War as we had previously understood. 

Col. Van Schaick is an Infantry officer who knows little or nothing about 
powder, and is looking into the question as to whether the Ordnance Depart- 
ment was not culpable in putting the powder under water. He has also asked 
several officers if they own du Ponl stock, etc., so that the investigation 
appears to take the nature of persecution rather than inquiry. 

(The letter referred to wa.^ marked "' Exhibit No. 1008 ", and is 
included in the appendix on p. 2828.) 

Senator Clark. What is that Old Hickorv business, Major? That 
has come ud here : several of these letter's refer to that. 

Mr. Casey. I will tell you liriefly what that indicates: It had 
been learned that France had put a terrific qviantity of ]:)owder left 
over from the war under water. They put it in the glacial lakes in 
the Pyrenees, where the water was very cold. They seemed to be 
convinced in France that that was a splendid way to keep this powder 
from deterioration, which it probably would undergo through natural 
storage conditions. It might then be available for an emergency, a 
powder which could be taken out of water, dried, and promptly 
used. Remember that " promptly used." So the United States Gov- 
ernment, I presume, naturally looked into the matter; we had 
reported all we had learned about the French experience, which was 
not very much. They felt, " Well, here we have a quantity of pow- 
der. We had better try this same thing." They did not have money 
to transport the powder to the northern part of the country. 

Senator Clark. The War Department, was it ? 

Mr. Casey. The War Department. They did not have the money 
to transport the powder to the northern part of the country, so there- 
fore they decided they would try this proposition, using some of the 
old tanks at Old Hickory, which, of course, is a little warmer than 
the Pyrenees. 

Senator Clark. Where is Old Hickory? 

Mr. Casey. Near Nashville. 

I think about this time it was discovered that the powder was 
not remaining in the condition it was hoped, and we had learned 
that apparently the Secretary of War decided he had better investi- 
gate this proposition. 

Senator Clark. How much powder did you put under water, 
Major, do you know? 



2680 MUNITIONS INDUSTKY 

Mr. Casey. That I do not know ; at least 15,000^000 pounds. 

Senator Clark. All they had ? 

Mr. Casey. Oh, no. 

Senator Clark. You mean they just took 15.000,000? 

Mr. Casey. I think they just took 15,000,000. There may have 
been more than that under water, but it was about that quantity. 
That is near enough for the purpose. So it was at the time, that 
this memorandum was written w^e had learned that instead of it 
being the Secretary of War who had Colonel Van Schaick on the 
job making an inspection, as I understood it,, he was from the In- 
spector General's Department. It was in reality General Summerall, 
Chief of Staff. 

Senator Clark. Had the War Department done that on your 
advice, Major? 

Mr. Casey. I do not believe so. We give them all the informa- 
tion w^e get. 

Senator Clark. Why would they be investigating you in connec- 
tion with it, then? I notice in a letter that was put in the record 
here a day or two ago — I believe you had written the letter — you 
referred to the unpleasant publicity growing out of the Old Hickory 
incident. 

Mr. Casey. I do not know what that particular incident referred 
to, but in this case here, because we had given them certain infor- 
mation we had learned, Colonel Van Schaick, I guess, as an inspector 
general, felt that he could not say his investigation was complete 
unless he came after us. 

Senator Clark. Do you consider it persecution for an officer from 
the Inspector General's Department conducting an investigation of 
that sort to inquire whether officers own du Pont stock? 

Mr. Casey. We do not say that. 

Senator Clark. Colonel Simons says it. 

Mr. Casey. No ; but the point is 

Senator Clark. He says : 

Colonel Van Schaick is an Infantry officer, who knows little or nothing about 
powder and is looking into the question as to whether the Ordnance Depart- 
ment was not culpable in putting the powder under water. He has also asked 
several officers if they own du Pont stock, etc., so that the investigation appears 
to take the nature of persecution rather than an inquiry. 

Those questions seem to me to be entirely proper questions. I was 
trying to find out what you understood was in Colonel Simons' 
mind. 

Mr. Casey. It looked at the time as if it was a question of trying 
to find a goat. 

Senator Clark. Do you consider it an improper question for an 
inspector general to ask whether certain officers own du Pont stock? 

Mr. Casey. I do not think it was at all improper. In fact, I think 
it was a good thing he did ask the question. 

Senator Clark. You do not agree w^ith Colonel Simons, then, that 
it was persecution? 

Mr. Casey. I do not agree with everything Colonel Simons says. 

Senator Clark. I understand. I am trying to find out what part 
of Colonel Simons' remarks you do agi'ee with. Since we cannot 
liave Colonel Simons here, I want to find out tlie impression tliese 
connnunications made on vou. 



MUNITIONS INDUSTRY 2681 

Mr. Casey. In all this correspondence j^ou have to take into con- 
sideration the peculiar characteristics of the man writing the letter. 

Senator Clark. I understand that, and since we do not have 
Colonel Simons here, I am trying to find out from you, knowing 
Colonel Simons very well, just what was in his mind. 

Mr. Casey. I am trying to tell you tlie best I can. 

Senator Clark. Do you know whether all the 15,000,000 pounds 
that they put under water deteriorated? Were you informed about 
that? 

Mr. Casey. I think it got to the point it was not longer satisfactory 
as powder, was not that it? Is not that right? 

Mr. Bradway. Some of it was and some of it Avas not. But the 
larger calibers were still satisfactory. 

Senator Clark. Do you know about the proportion of it? 

Mr. Bradway. No; I do not remember. 

Senator Clark. In other words, you do not remember what pro- 
portion of the 15,000,000 was spoiled and what was not? 

Mr. Raushenbush. Senator, may I ask a question ? 

Senator Clark. Yes. 

Mr. Raushenbush. Was this powder that had been manufactured 
at the Old Hickory plant? 

Mr. Casey. I think it was. 

Mr. Bradway. No. 

Mr. Casey. No, no; shipped from other places, was it not? 

Mr. Bradway. After the war the Government shipped into Old 
Hickory a great deal of powder from various parts of the country 
where it had been manufactured, and this happened to be 15,000,000 
pounds of that quantity. It was not their whole reserve stock by anj^ 
means. 

Mr. Raushenbush. Are you pretty sure about that 15,000,000 
figure? We were in some doubt about it a minute ago. Was it 
about 15,000,000 that was put under water? 

Mr. Bradway. About 15,000,000 pounds. 

Mr. Casey. They have always referred to a certain quantity 
of powder, including 15,000,000 under water. That is near enough, 

Mr. Bradway. That was only a part of their reserve stock, I 
understand. 

Mr. Raushenbush. About how much did that powder cost the 
Government, how much a pound? Do you remember the Old 
Hickory cost? 

Mr. Bradway. I do not believe that this was powder that was 
manufactured at Old Hickory, but I suppose 45 or 46 cents. 

Mr. Casey. I think that would be about an average. 

Mr. Bradway. The cost at Old Hickory? That was not the cost 
at Old Hickory as I recall it. 

Mr. Raushenbush. No; I do not want testimony on that. I am 
trying to get an average of what that powder cost the Government. 

Mr. Bradway. I should say if you said it cost them 45 cents or 
46 cents 

Mr. Casey. On the average. 

Mr. Raushenbush. On the average? 

Mr. Bradway. Somewhere between 40 and 50 cents. 

83876— ;!o—px 12 4 



2682 MUNITIONS INDUSTRY 

Mr. Raushenbush. That is about $7,000,000 worth of powder; is 
that right? 

Mr. Bradwat. About that; when it was new. 

Mr. Raushenbush. When it was new. And they put that 
$7,000,000 under water, and it deteriorated ? 

Mr. Irenee du Pont. Remember, it is 11 years old at this time, 
and the life of powder is supposed to be not over what? About 15? 

Mr. Bradway. About 16 years old. 

Senator Clark. What did they do with that? 

Mr. Casey. I think they have disposed of about half of it. They 
did find some people who were able to use it for solvent solutions, 
lacquers, coating of textiles, and tilings of that sort. 

Mr. Bradway. Understand that this putting that powder under 
water was not the cause for its apparently having decomposed or 
started decomposition. Powder manufactured during the war stored 
ordinarily also decomposes. They endeavored to safeguard that by 
putting it under water. It is a question of opinion whether at the 
time when they brought it up to the du Pont Co. — we did not know 
a whole lot about it, and we gave it as our opinion, as I recall, that if 
powder were placed under water, any traces of decomposition would 
probably stop; but that we did not consider it a very good idea, 
because after a long period of time, depending on the condition of 
the storage — that is, the temperature of the water and the changing 
of the water, and so forth — we did not consider over a long period 
of time it was a good practice, because the powder when it was taken 
out would have to be used right away. It was really for an 
emergency. 

Senator Clark. Do you know anything about the result of the 
French experiment? 

Mr. Casey. It is still there. 

Senator Clark. Still in the water? 

Mr. Bradway. Oh, yes; it is still in the water. 

Mr. Casey. But they have different water. 

I was just advised it is a standard practice. The Western Cart- 
ridge Co. have a considerable quantity of powder stored under 
water; I think at Newburgh they have a large quantity. 

Mr. Bradway. We have stored powder under water that we were 
going to use for other purposes, but we have stored powder under 
water. We use it for lacquers and solutions and other things, a 
certain percentage. 

Senator Clark. Not for munitions after you get it out of the 
water, unless you use it immediately; is that the theory? 

Mr. Bradway. That is what we suppose. There is no experience 
on that yet. 

Senator Clark. In other words, you do not know till somebody 
tries to use that powder that has been under water ? 

Mr, Casey. The French had the first experience on a large scale. 

Senator, in connection with that, when General Hof first suc- 
ceeded General Williams as chief of ordnance and he came across 
this FNH powder proposition, which was new to him, he said to me 
one day, " Casej'', joii have just upset our entire schedule. Here for 
years we have been predicating our question of reserve ammunition 
on powder with an expected life on the average of about 15 years. 



MUNITIONS INDUSTRY 2683 

Now, you have given us a powder that may last over 100 years. 
What are we going to do about it?" 

That is what the new powder probably represents. 

Senator Clark. What did he do about it? 

Mr. Casey. The idea that powder would last so long was just 
inconceivable to him, but that is what the new powder means. We 
do not say 100 years. 

Mr. Bradway. No ; you have no right to say it will last 100 years. 

Mr. Casey. But that is the way we approached the problem. 

Senator Clark. You cannot say that until you get to be 140 vears 
old. 

Mr, Casey. I can tell you some day about it. 

RELATIONS OP DU PONT CO. WITH THE STATE DEPARTMENT 

Senator Clark. I hope we will both be here at that time. 

Coming back to the question of the possibility of arming possible 
enemies, I will call your attention to a letter dated August 22, 1928, 
addressed to Col. W. N. Taylor, 16 Place Vendome, Paris, France. 

(The letter referred to was marked as " Exhibit No. 1009 ", and 
appears in full in the text.) 

Senator Clark (reading) : 

Replying to your letter T-1351 of August 9 in wliicli you inquire if we can 
sell powder and explosives to H.I.H. in Holland 

Who is H.I.H., one of those Dutch names? 

Mr. Casey. One of those Dutch names. That is enough. 

Senator Clark (reading) : 

which will be loaded in ammunition eventually destined for Russia. 

Discreet inquiries with the War Department in Washington indicate that 
they believe there is no legal or ethical bar to our negotiating this business. 

On a previous occasion we were permitted to see a staff memorandum which 
stated in part as follows : 

" There are no restrictions imposed by the United States Government on 
trade with Russia or with the Soviet regime. Individuals and corporations 
carrying on such trade, however, do so upon their own responsibility. 

" The State Department, however, views with disfavor trade with Soviet 
Russia in arms and munitions of war and has so informed several American 
firms who have asked their advice concerning such trade." 

In view of the above you are at full liberty to conduct such negotiations as 
may, in your judgment seem advisable, bearing in mind that it is not expedi- 
ent that the State Department be consulted in any way directly or indirectly. 
Very truly yours, 

W. H. O'GoEMAN, Assistant Director. 

Mr. Casey. That is another letter written to our own man. 

Senator Clark. Yes, but it certainly indicates a very outspoken 
desire to keep the State Department from finding out anything about 
it, doesn't it? 

Mr. Casey. The last paragraph would indicate that. Of course 
at that time, 1928, the memorandum that Simmons referred to in 
this letter which you are quoting was a memorandum which I under- 
stand was written several years before that, when tlie attitude of the 
State Department was different. 

Senator Clark. Yes, I understand, but, Major 

Mr. Casey. Their attitude changed in 1925, which was brought 
out the other dav. 



2684 MUNITIONS INDUSTRY 

Senator Clark. In 1928 we had not recognized Russia and there 
was very strong sentiment in this country against doing so. 
Mr. Casey. Yes. 
Senator Clark. And this refers to that memorandum and states: 

•' The State Dopurtment, however, views with disfavor trade with Soviet 
Russia in arms jind nnmitions of war and has .so informed several American 
firms wlio liave aslied tlieir advice concerning such trade." 

In view of the above .vou are at full liberty to conduct such negotiations as 
may, in your judgment, seem advisable, bearing in mind that it is not expedi- 
ent that the State Department be consulted in any way, directly or indirectly. 

Mr. Casey. The net result was that nothing came of it, and I do 
not believe 

Senator Clark. I understand, but wdiat I am interested in is the 
fact that you were willing and anxious to make this deal without 
any information to the State Department. 

Mr. Lammot du Pont. Senator, it does not say that. 

Senator Clark. Although you had been informed that the State 
Department had viewed such trade with disfavor. 

Mr. Casey. So the memorandum says. 

Mr. Lammot du Pont. Senator, you stated that incorrectly. It 
does not say that we were ready to make that deal. Colonel Taylor 
was authorized to negotiate. 

Senator Clark. You are not paying a man to stay in Europe and 
negotiate just to have him have the fun of negotiating for j'ou? 

Mr. Lammot du Pont. No, sir ; but when he is in the process of 
negotiating w^e may call it off at any time. 

Senator Clark (reading) : 

In view of the above you are at full liberty to conduct such negotiations as 
may, in yonr judgment, seem advisable, beariuj^ in mind that it is not expe- 
dient that the State Department be consulted in any way, directly or indirectly. 

Mr. Lammot du Pont. Now, as Major Casey says, Colonel Taylor 
understood perfectly well that we would not close that deal without 
the State Department's knowledge. 

Senator Clark. It certainly does not appear in the letter. 

Mr. Lammot du Pont. It does not appear there, but Major Casey 
explained that Colonel Taylor knows that is the policy. 

Mr. Casey. He is our man. 

The Chairsian. Are we to understand that in all matters of that 
kind, where negotiations were called for, j^ou would not finally enter 
into any contract or any arrangement or agreement, without the 
consent of the State Department? 

Mr. Lamjiot du Pont. I won't say the consent. Not without their 
knowledge. As Major Casey has said before, they do not give their 
consent. 

Mr. Casey. Unless there is an embargo. Then they may give 
consent or they may not. But unless there is an embargo, as I stated 
before, they say we really embarrass them by asking them the 
question. 

Senator Clark. You were on occasion willing to go ahead with 
these deals, irrespective of the attitude of the State Department? 

Mr. Casey. We may start the negotiations. 

Senator Clark. I mean, go ahead with it irrespective of their 
attitude. 

Mr. Lammot du Pont. No, sir ; not on military matters. 



\ 



MUNITIONS INDUSTRY 2685 

Senator Clark. I call your attention then to an exhibit that we 
had here a minute ago, a letter dated March 15, 1926, addressed to 
Aiken Simons, which I will ask to have marked the appropriate 
exhibit number. 

(The letter was marked " Exhibit No. 1010 ", and appears in full 
in the text.) 

Senator Clark. This letter is numbered 26 and if you have not got 
a copy I will be glad to read it to you. 

Mr. Lammot du Pont. Yes. 

Senator Clark. This says: 

Major Strong, of War Plans, came to me the other day and asked me if I had 
any information of the Poles nefiotiatin^ with American firms for the erection 
of chemical-warfare munitions plants in Poland. I had no such information. 
Further information indicates tliat the du Pont Co. was one of the American 
firms approached. I suppose, of course, you gave this information to the 
Chemical Warfare Service. 

Had you given the information to the Chemical Warfare Service? 

Mr. Casey. I think so. 

Senator Clark (continuing reading) : 

It would put us in a very strong position when the Geneva protocol comes 
up in Con,L';ress if we could definitely prove that the Poles are negotiating with 
our people for the erection of these plants. 

Do you know why it would put the General Staff in a very strong 
position with Congress? 

Mr. Casey. I have not the .slightest idea. 
Senator Clark (reading) : 

I would like to take this matter up with the Commerce Department and 
have them use their machinery to locate any American plnnt which might be 
considering the erection of chemical plants in Poland, but in view of the 
fact that your information is usually given confidentially, I do not feel free to 
inform the Commerce Department (Mr. Concannon) of the source of our 
information. On your next trip to Washington I would like very much to .go 
over with you and see Mr. Concannon, and for you to tell him the wh( le story. 
He would then go ahead and use all the machinery of the Commerce Depart- 
ment to locate the American firms who may be interested in this proposition. 

I presume you will be down this week, and, in case I am not here, Colonel 
Stone is thoroughly infonned on this whole affair, and I will ask you to take 
it up with him. 

Sincerely yours, 

Lhigh, 

l. f.' j. ze31bee, 
Major, General Staff. 

Then, on March 27, 1926, in the same connection, I have here a 
letter signed by Dwight F. Davis, Secretary of War, addressed to 
your smokeless-powder department, which I will ask to have marked 
appropriately. 

(The letter referred to was marked " Exhibit No. 1011 " and ap- 
pears in full in the text.) 

Senator Clark. This reads: 

Receipt is acknowledged of your confidential letter of March 16 pertaining to 
the proposed establishment of a chemical warfare plant in Poland. I note 
that you do not believe that the du Pont Co. sliould undertake work of this 
sort for a foreign government without llie written assent of the War Depart- 
ment. Since this is a matter which the Department of State must determine, 
I have submitted an extract of your letter to that Department (copy attached). 
and no doubt you will hear from that Department in a reasonable time. 

I appreciate your brhiging this matter to my attention. 
Sincerely yours. 

Dwight F. Davis, Secretary of War. 



2686 MUNITIONS INDUSTRY 

Then a copy of his letter of the same date to the Secretary of 
State, which I will ask to have marked appropriately. 

(The letter referred to was marked " Exhibit No. 1012 " and 
appears in full in the text.) 

Senator Clark. This reads: 

The Honorable The Secrktaky of State. 

Dear Mr. Secretary: The following extract is taken from a letter dated 
March 16, 1926, from the E. I. du Pout de Nemours & Co., smokeless powder 
department, military sales division, Wilmington, Del., addressed to the Secre- 
tary of War : 

" For your confidential information, we wish to advise that we are in receipt 
of communication from the Polish War Department in which it is requested 
that we submit a proposal on the establishment of a chemical Avarfare gas 
plant in Poland. We are attaching an extract from letter dated January 9, 
signed by the Chief of Army Administration, Republic of Poland. 

" We believe the du Pont Co. should not undertake work of this sort for a 
foreign government except on the written assent of the Secretary of War, 
stating that the project has the approval of the War Department, * * *." 

The extract from the letter of January 9 from Poland furnished by the 
du Pont Co. is appended. 

Since this is believed to be a State Department matter it is submitted to you, 
and the du Pont Co. has been so advised. 

I will appreciate very much any infonnation you may be able to furnish 
me as to the action of the State Department in this matter. 
Sincerely yours, 

DwiGHT F. Davis, Secretary of War. 

So that we have the matter broiiglit to the attention of the Secre- 
tary of War in a confidential letter from the du Pont Co. and the 
du Pont Co. advised by the Secretary of War that the matter was 
outside his control and properly within the control of the State 
Department. 

If yon gentlemen have not been furnished copies of these letters 
we will see that you get them. 

Mr. Lammot du Pont. Thank you. 

Senator Cl.vrk. We now come down to a letter dated April 12, 
192G, addressed to Col, W. N. Taylor at Paris, and signed by Major 
Casey, which I will also ask to have marked with the appropriate 
exhibit number. 

(The letter referred to was marked " Exhibit No. 1013 " and is 
included in the appendix on p. 2828.) 

Senator Clark. This letter addressed to Colonel Taylor reads : 

Attached please find confirmation of our cable no. 330. You will note that 
we have decided to let Major de Lanoy quote direct to Poland through Mr. 
Klawe on the chemical warfare project. 

Who was Major de Lanoy? 

Mr. Casey. Major de Lanoy was a private in the same regiment I 
was in 1898. He went out with the Seventy-first Regiment during 
the war. He was detached from that and later went with the 
Chemical Warfare and I believe was stationed likewise at Edgewood 
Arsenal when that was established. He then resigned, and was the 
first man to start making these tear-gas grenades for police depart- 
ments. He was not very successful with them, however, but at any 
rate he started, and when this inquiry for a chemical-warfare propo- 
sition came from Poland it was not a thing that du Pont either 
wanted or was prepared to handle, so we simply turned the matter 
over to de Lanoy for such action as he saw fit, stating that we would 



MUNITIONS INDUSTRY 2687 

advise he get in touch with our agent Klawe in Warsaw as the man 
who might be able to assist him. But it is a matter that we had 
nothing further to do with. 
Senator Clark (reading on) : 

It is quite essential for you to kuow the company's attitude toward this 
project, and we will therefore give you the details as follows : 

When the inquiry was first received from the Polish War Department we con- 
sulted Major de Lanoy and asked him to prepare a detailed proposal for sub- 
mission to Poland, either directly by him or by the du Pont Co., in which latter 
case deLanoy was to act as our technical adviser. We also referred the matter 
to our dyestufCs department and asked them to prepare a proposal. Our dye- 
stuffs department decided that we were not in possession of complete technical 
details which would enable us to handle the Polish warfare project, and that 
unless we could secure the complete cooperation of the United States Ordnance 
Department, particularly the Chemical Warfare Section, it would be useless for 
us to undertake the construction of the chemical warfare plant. 

That was because you did not have sufficient technical knowledge 
to proceed without the information that the War Department had? 
Mr. Casey. That was one reason. 

Senator Clark. I mean that is the reason assigned there. 
Mr. Casey. Yes; so far. 
Senator Clark (continuing) : 

To obtain the cooperation of the War Department we addressed the Secretary 
of War, who in turn submitted our question to the State Department. After 
many weeks we received a reply from the State Department which was quite 
evasive and left us in the same position that we were when the Polish inquiry 
was received. We decided that we could not get a firm assurance of coopera- 
tion from the War Department because of the position taken by the State 
Department and thought it best to let Major de Lanoy proceed and submit his 
proposal. 

In other words, it is not only a question of submission but of coop- 
eration from the War Department and their technical staff? 
Mr. Casey. Yes. 
Senator Clark (reading on) : 

We have addressed the Polish War Department on this subject, with copy 
of letter to you, also copy to Mr. Klawe. 

Major de Lanoy is willing to let Mr. Klawe act as his agent in this matter 
and has included in his price a commission of 5 percent for Mr. Klawe. Major 
de Lanoy will send his proposal to Mr. Klawe, who inturn will present it to the 
Polish War Department in de Lanoy's name. Major de Lanoy will write Mr. 
Klawe in detail and we will keep you posted on developments from this end. 
If de Lanoy is awarded a contract, we will receive no connnission. 

You would have supplied him with some materials, wouldn't you, 
Major? 

Mr. Casey. I don't think so. We might have supplied him with 
some minor things. 

Senator Clark. This goes on: 

The matter will be handled entirely by de Lanoy and Klawe. We cannot 
afford to arouse the criticism of the State Department, because you are familiar 
with the position they take on chemical-warfare gases. If we were in possession 
of complete technical details which would enable us to construct and operate 
the proposed chemical warfare plant, we would undertake the project regardless 
of the attitude taken by the State Department. 

Major, that seems at variance with your statements that you would 
not proceed without the permission of the State Department. 
Mr. Casey. Yes. 



2688 MUNITIONS INDUSTRY 

Mr. Irenee uu Pont. Without their Ivtiowledge, not permission. 

Senator Clark. I asked him if he would proceed against the 
objections of the State Department, and he said, " No." 

Mr. Irenee du Pont. But the State Department did not object. 

Senator Clark. I understand, Mr. du Pont, but here he says that 
the reason shown previously in this memorandum for not proceeding 
with the negotiation was that you were not in possession of suffi- 
cient technical information to do it, without that deficiency being 
helped out by technical information from the technical staff of the 
War Department, and then he goes on : 

If we were in possession of complete technical details which would enable 
us to construct and operate the proposed chemical warfare plant, we would 
undertake the project regardless of the attitude taken by the State Department. 

Mr. Irenee du Pont. Well, their attitude was noncommittal. 

Senator Clark. I understand. 

Mr. Casey. Senator, there is another angle to this. Poland by 
this time had begun to rel}^ on us. We did not want to make them 
feel that we were unwilling to undertake the job that they thought 
we could do. Further than that, with the evasive reply from the 
State Department, we did not w^ant to go back to them and embarrass 
the State Department by saying that the State Department objects, 
because the Polish Embassy would pretty certainly get after the 
State Department. That was what was meant by the previous 
statement of mine. 

Senator Clark. But what you said was that if you were able to 
do it from the standpoint of technical preparation, you would go 
ahead regardless of the State Department. 

Mr. Casey. All right. That w^ould enable the Dej)artment to take 
our letter and show it to the Poles. 

Senator Clark. That is some more sales talk, is it? 

Mr. Casey. Yes; sales talk. 

Senator Clark. Major de Lanoy seemed to learn some technical 
trade expressions from this investigation, if nothing else. 

Major de Lanoy seems to be in this position, and we are sure no criticism 
will be directed against him for technical services which he may render to 
the Polish Government. 

We regret the delay, etc. 

Mr. Casey. I believe that instead of the job being done in a short 
time it took about twice as long as expected. 

Mr. Raushenbush. It was done by Major de Lanoy, was it not? 

Mr. Casey. We had nothing whatever to do with it. 

Mr. Raushenbush. Didn't you sell him some material? 

Mr. Casey. I don't think we sold him any material. We did 
assist him in getting some equipment from other manufacturers, 
because he had nobody in this country to represent hiuL I did that 
purely out of my own friendship with de Lanoy. 

Senator Clark. There is one iettei- here which I should have put 
in previous to the one that I just read, which I will ask to have 
marked with the next exhibit number. 

(The letter referred to was marked '' Exhibit No. 1014 ", and is 
included in the appendix on p. 2829.) 



MUNITIONS INDUSTRY 2689 

Senator Clark. This is dated April 5, 1926; and to make the 
record complete, I will read that also. It is a lettei- from Major 
Casey to Col. W^ N, Taylor in Paris. 

We acknowledge receipt of your cable no. 412 and confirm our reply no. .329. 

Chemical Warfare Plant — Poland. 

As soon as we received the letter from the Polish War Department requesting 
us to submit a proposal on the installation of a chemical-warfare factory in 
Poland, we conferred with Major de Lanoy and turned the matter over to 
him. He in turn has worked up a detailed proposal which has been in our 
hands for several weeks. The project was fully disciissed with our dyestuffs 
department and it was decided, from a policy standpoint, that the du Pont 
Co. would not bid on the project unless we received a complete authoriza- 
tion from the War Department. We accordingly addressed the War Department 
and asked them to state their position in connection with the inquiry. The 
War Department in turn submitted the matter to the State Department and 
no decision has been received from the State Department as yet. In the 
event that the State Department takes the attitude that we should not bid. we 
will turn the matter over to Major de Lanoy. who will immediately submit a 
proposal. He will forward the proposal to Mr. Klawe and Klawe can act 
in his behalf. 

We have had several cablegrams from Mr. Klawe on this subject and replied 
to him, stating that the proposal would go forward about March 15th. This 
occurred, liowever, befoi'e the policy of the du Pont Co. had been detei'- 
mined. The submission of the project to the War Department has greatly 
delayed forwarding the proposal in question. It is hoped, however, that a 
decision will be reached before the end of this week, in which event a proposal 
will go forward either from du Pont or from de Lanoy. 

I just read that for the purpose of completing the record. 
Mr. Casey. That practically confirms what I stated. 
The Chairman. Is this a convenient place to stop, Senator? 
Senator Clark. Yes; this is a convenient place to quit. 
The Chairman. Let the committee be in recess then until 2 o'clock. 
(Whereupon, at 12. 48 p. m. the committee recessed to 2 p. m. of 
the same day.) 

afternoon session 

The hearing was resumed at 2 p. m., pursuant to the taking of 
the recess. 

The Chairman. The committee will be in order. 

Mr. Lammot du Pont. Mr. Chairman, may I interject something? 

At the close of the session a letter was put in evidence from the 
Secretary of War stating that he was referring to the State De- 
partment this complaint of the construction of a chemical war- 
fare gas plant in Poland, and that no doubt we should hear from the 
State Department in due course. I thought at the time that the reply 
of the State Department, the letter from the State Department to us, 
had been put in evidence, but I find that that is not so. 

I would like to read that letter into the record. Your secretary 
has a copy of it. 

The Chairman. Very well. 

Mr. Lammot du Pont. And enter it into the record. 

The Chairman. You may read it. 

Mr. Lammot du Pont. It is not a very long letter, a page and a 
half. This is from the Department of State, dated April 8, 1926, 
addressed to the du Pont Co. [Reading " Exhibit No. 1015 " :] 

The Department has received, under date of March 27, an extract from your 
letter to the Secretary of War of March 16 with reference to the request 
which you have received from the Polish War Department for the establishment 



2690 MUNITIONS INDUSTRY 

of a chemical warfare gas plant in Poland. In this letter you state that in your 
opinion this worli should not be undertaken without the consent of the War 
Department. 

In referring your inquiry to this Department the Secretary of War stated 
that he believed this to be a matter for the Department of State and indicated 
that you had been so advised. 

It is not the practice of this Department to undertake to intervene in private 
business transactions of the character covered by your letter or to give or to 
withhold assent. It is possible that in referring the matter to the War 
Department you had in mind that American representatives have signed agree- 
ments with respect to the prohibition of the use in time of war of poisonous 
gases ; provisions of this character being included in a treaty signed at Washing- 
ton on February 6, 1922, and in a protocol signed at Geneva June 17, 1925. 
While it would appear that these instruments would have only an indirect 
bearing upon the proposal which has been submitted to you, even if such 
treaties had been ratified, the treaty and protocol in question are not now in 
effect since ratifications have not been deposited. 

In conclusion it may be stated that it has been the policy of this Govern- 
ment to favor international agreements for the prohibition of the use of poison- 
ous or noxious gases in time of war. 

I am, sirs, your obedient servant, 

(Signed) Frank B. Kellogg. 

The Chairman. What is the date, Mr. du Pont? 

Mr. Lammot du Pont. This is dated April 8, 1926, and refers to 
the letter of March 27, from the War Department to the State 
Department. 

The Chairman. Do yon consider the letter rather evasive? 

Mr. Lammot du Pont. Who, me? 

The Chairman. Yes. 

Mr. Lammot du Pont. Yes; I do. [Heading:] 

It is not the practice of this Department to undertake to intervene in private 
business transactions of the character covered by your letter or to give or to 
withhold assent. 

That, in the vernacular, means, to me, " ducking the question." 
Senator Clark. And it was on the basis of your considering it 
evasive that Major Casey 4 days later wrote Colonel Taylor and said : 

If we were in possession of complete technical details which would enable us 
to construct and operate the proposed chemical warfare plant, we would 
undertake the project regardless of the attitude taken by the State 
Department. 

Mr. Lammot du Pont. That is not the explanation which Major 
Casey gave, I believe. 

Senator Clark. Major Casey speaks in this same letter, which was 
entered as " Exhibit No. 1013 ", 4 days after the receipt of the 
Secretarj^ of State's letter, written to obtain the cooperation and 
not permission, which is an essentially different matter, to obtain 
the cooperation of the War Department : 

To obtain the cooperation of the War Department we addressed the Secretary 
of War, who in turn submitted our question to the State Department. After 
many weeks we received a reply from the State Department which was quite 
evasive and left lis in the same position that we were when the Polish inquiry 
was received. 

Then, in the same letter, he continues : 

If we were in possession of complete technical details which would enable 
us to construct and operate the proposed chemical-warfare plant, we would 
undertake the project regardless of the attitude taken by the State 
Department. 



MUNITIONS INDUSTRY 2691 

Mr, Lammot du Pont. You will remember that Major Casey 
explained that that letter was worded with the probable object or 
probable eventuality that it would be shown to the Polish authorities. 

Senator Clakk. Yes; I understand that. 

Mr. Lammot du Pont. It was worded so as not to offend the Poles. 

Senator Clark. But the situation was that what you were appar- 
ently after was not only the permission but the technical knowledge 
and cooperation of the War Department. Major Casey put in this 
letter, in so many words, that — 

We could not carry out tiie coutract, if we get it, without the cooijeration 
•of the War Department. 

Mr. Lammot du Pont. So the letter states. 

Senator Clakk. Not the letter of the Secretary of War. The 
letter from Major Casey to Colonel Taylor states it. 

Mr. Lammot du Pont. Yes, sir. 

Mr. Casey. Does not the later letter clear it up ? 

Senator Clark. Then j^ou say that you regard the letter of the 
Secretar}" i!s too evasive; and then you say, if you were expected to 
go ahead and carry out the contract, you would do it regardless of 
the State Department. 

Mr. Irenee du Pont. Not regardless of the State Department 
but regardless of the attitude of the State Department, being non- 
commital; their attitude being noncommital, we would disregard it. 

Senator Clark (reading) : 

If we were in possession of complete technical details which would enable 
us to construct and operate the proposed chemical-warfare plant, we would 
undertake the project regardless of the attitude taken by the State Department. 

Mr. Irenee du Pont. What is the attitude taken by the State 
Department ? Noncommital. 

Senator Clark. I understand you are going into it regardless of 
what their attitude might be. 

Mr. Irenee du Pont. It does not say that. 

Senator Clark. That is the inference to be drawn : " We are going 
to do it regardless of the attitude of the State Department." 

Mr. Irenee du Pont. We have the attitude of the State Depart- 
ment. 

Mr. Lammot du Pont. Senator, has the State Department letter 
been assigned a number? 

Senator Clark. That may be marked with the appropriate 
number. 

(The letter referred to was marked " Exhibit No. 1015 " and 
appears in full in the text on p. 2689.) 

influence of munitions companies on the policies of governments 

Senator Clark. The other day there was some discussion came 
up between Senator Vandenberg and some of you gentlemen as to 
the possible influence, or influence, of munition companies on the 
policies of governments. In that connection I desire to offer for 
appropriate number the letter of May 2, 1928, to Major Casey from 
William N. Taylor, by Fred G. Singer. 

(The letter referred to was marked " Exhibit No. 1016 " and 
appears in full in the text.) 



2692 MUNITIONS INDUSTRY 

Senator Clark. That is headed " Status of Negotiations," [Read- 
ing "Exhibit No. 1016":] 

Poland. — For the moment, powder sales are held up on account of the diplo- 
matic action of the Swedish Government. We are doing all we can to get 
counterpressure put on by the British Government. 

Do you know what Colonel Taylor was doing to get counterpres- 
sure put on by the British Government? 

Mr. Casey. I do not know anything he did, but notify I.C.I. 
of the apparent action taken by the Swedish Government. 

Senator Clark. You do not know what he meant when he said: 

We are doing all we can to get counterpressure put on !)y the British 
Government. 

Mr. Casey. All I know is what he said. 

Senator Clark. Do you not have any further information on 
that? 

Mr. Casey. No. 

Mr. Rausiienbusii. Do you not remember the Bofors interest in 
Sweden putting pressure on Sweden? 

Mr. Casey. So we heard. 

Senator Clark. I offer for appropriate number a memorandum by 
Colonel Simons dated October 5, 1926, headed " S-44 Washington — 
September 30, 1925." 

The letter referred to was marked " Exhibit No. 1017 " and 
appears in full in the text.) 

Senator Clark. I direct your particular attention to the last para- 
graph on page 2, Major [reading] : 

Called on Major Burns of the Office of the Assistant Secretary of War, in 
reference to the article prepared with the assistance of the du Pont Co. for 
publication in some popular magazine. Major Burns looked up this matter and 
reported that the article had been passed on by General Williams as satisfac- 
tory and had then gone to the various branches of the General Staff who 
returned it to General Williams with full approval of all except one passage 
of three or four lines which the General Staff regarded as controversial and 
to be revised or omitted. When this revision is made, it is expected that the 
article will be published over General Williams' signature. 

It indicates that you were actually preparing articles for the Chief 
of Ordnance of the United States Army to sign. Does not that pretty 
well reflect the relationship between the War Department and the 
du Pont Co. ? 

Mr. Casey. Would you mind if I read the entire letter? 

Senator Clark. Not at all. [Reading " Exhibit No. 1017 " :] 

Called on Colonel Pegram who advised me that the matter of the small arms 
targets sent by the Canadian Government as a present to the United States 
Government had at last been straightened out. These targets had been sent to 
Rock Island Arsenal where a thorough study was made of them, the general 
result being that they were considered an infringement of the Aiken patents 
and very much inferior mechanically to the Aiken design. However, a courteous 
letter will be sent to the Canadian Government through the channels of the 
British Ambassador at Washington. 

Were you concerned about these targets. Major? 

Mr. Casey. Only to this extent : I t<jok up a rifle team to Canada in 
1924, and in watching their operation I got the Dominion of Canada 
Rifle Association to agree to send down for examination by our 
people that form of target. 



MUNITIONS INDUSTRY 2693 

Senator Clark. It is not material [continuing reading] : 

I also learned from other sources that the State Department had consented 
in principle to the visit of a military mission from Holland to buy munitions 
in this country, it being a known fact that the Hollanders are very much 
dissatisfied with the treatment they are receiving from the French and 
British munitiims manuiacturers. The personnel and time of arrival of this 
mission has not yet been announced. 

It was also learned on excellent authority that a decided change of policy 
in the publication of military secrets has been inaugurated by the War 
Department. 

Do you know what that was ? 

Mr. Casey, No; I do not. 

Senator Clark. It affected you, disclosures by the War Depart- 
ment of military secrets? 

Mr. Casey. I do not think it had anything to do with that. 

Senator Clark. This change in military policies had nothing to 
do with you? 

Mr. Casey. No. 

Senator Clark (continuing reading:) 

Called on Major O'Shaughnessy of the Ordnance Department in reference 
to my visit to Old Hickory. Major O'Shaughnessy informed me that it would 
be impossible for Captain Fidlar to accompany me, since his presence was 
urgently needed in Washipgton at a meeting of the district chiefs. Major 
O'Shaughnessy provided me with a letter of introduction to Sergeant Larsen 
who is in charge of the so-called " ordnance reserve depot " at Old Hickory. 
It was also learned that a bid of $15,000 was expected from a New York 
dealer for the powder-making machinery advertised for sale. 

Do you know why the War Department would be telling the 
du Pont Co. what sort of bids would be received for the powder- 
making machine at Old Hickory? 

Mr. Casey. I have not the slightest idea. 

Senator Clark. What was Colonel Simons doing at Old Hickory ? 
Do you know ? 

Mr. Casey. I think he was going down there to inspect some ma- 
chinery offered there for sale. 

Senator Clark (reading) : 

Called on General Joyes who discussed with me a list of thesis subjects 
appropriate for graduating students in the colleges where there is an ordnance 
R. O. T. C. The list prepared by General Joyes impressed me as extremely 
good in that it brought about a study of subjects of equal importance to the 
Ordnance Department and value to the student in question. General Joyes 
also called my attention to an article published in French which he is having 
translated. This article is A Lecture Delivered on the 29th of February 1920 
on the Manufacture of Powders and Explosives, by M. I'Heure. This is a 
pamphlet of 64 pages printed in Paris by Librairie de I'Enseignement Technique. 

Called on Dr. Storm, who seemed to be very much concerned about the 
difficulty of securing possession of the tracings covering the design and layout 
of the smokeless powder plant at Old Hickory. 

Do you know what that was? 

Mr. Casey. No ; I do not. 

Senator Clark. It is ncit material [continuing reading] : 

Called on Major Bums, of the Office of The Assistant Secretary of War, in 
reference to the article prepared with the assistant of the du Pout Co. for pub- 
lication in some popular magazine. Major Burns looked up this matter and 
reported that the article had been passed on by General Williams as satisfactory 
and had then gone to the various branches of the General Staff who returned 
it to General Williams with full approval of all except one passage of three 



2694 MUNITIONS INDUSTRY 

or four lines which tlie General Staff regarded as controversial and to be 
revised or omitted. When this revision is made, it is expected that the article 
will be published over General Williams' signature. 

Mr. Caset. I think I recollect that incident. This was in con- 
nection with an effort on the part of Major Burns to get General 
Williams to write an article for the Saturday Evening Post on the 
general problem of national defense. General Williams said he did 
not have the time ; that if an article was prepared that he was satisfied 
with he would put his name to it. 

Burns did not have the time to prepare such an article on account 
of his job in the Office of Assistant Secretary of War. The result 
was that Mr. Byrnes in our company, I think, prepared the article, 
or one was submitted. After this letter was written it was decided 
that probably the article had better not be published, so that it was 
never published. 

Senator Cl-\ek. The only point I am getting at, Major, is that 
it does show the very close relationship between your company and 
the War Department for you to be preparing, through your own per- 
sonnel, articles to receive the signature of the Chief of Ordnance of 
the United States Army. 

Mr. Casey. But realize this: Before he put his name to it, he 
would have to be fairly satisfied. 

Senator Clark. He would read it over, I understand. 

The Chairman. Senator Clark, will you pardon us long enough 
so that there may be offered for the record a letter which is dated 
today, December 11, 1934, to the committee, by Leo Kohn, who has 
been mentioned in connection with the testimony here? I shall 
read the letter and offer it for the record [reading] : 

At the end of September 1934 my attention was called to an article appearing 
in the New York American of September 15 reporting a session of your com- 
mittee of September 14. A letter of one Col. William N. Taylor, Paris repre- 
sentative of E. I. du Pont de Nemours & Co., addressed to Maj. K. K. "V. Casey^ 
was read. Your exliibit No. 507. 

In this letter one Leo Kohn, of 90 West Street, New York City, was men- 
tioned ; furtlier, one James Magnus & Co., of Hamburg, Germany, was men- 
tioned. 

I am the Leo Kohn, of 90 West Street, New York City, and my brother, Karl 
A. Kohn, is the owner of James Magnus & Co., of Hamburg, Germany, 

I have communicated with my brother regarding Colonel Taylor's letter, ex- 
hibit no. 507. Neither he nor I have ever been directly or indirectly connected 
in the remotest sense with anything that has to do with ammunitions, guns, etc. 

Colonel Taylor, I charge, has deliberately lied in this letter about my brother 
and myself, and I would ask you to permit me to testify before your committee. 

I wish to add that I also communicated with Mr, A. Felix du Pont and 
received a very unsatisfactory reply. I have this letter with me, as well as 
the correspondence with my brother. 

Thanking you for your cooperation, I am. 
Very truly yours, 

Leo Kohn. 

(The letter referred to was marked "Exhibit No. 1018" and 
appears in full in the text.) 

Senator Clark. Major Casey, to go back to that exhibit again, did 
the du Pont Co. bid on the powder machinerv advertised for sale at 
Old Hickory? 

Mr. Casey. Yes. 

Senator Clark, Do you remember how much they bid ? 



MUNITIONS INDUSTRY 2695 

Mr. Casey. I think probably more than double the price here men- 
tioned. But that probably was in the nature of a proceeding such; 
as this. As we understood it, the Government had to get off the 
property at Old Hickory. It had been sold to the Nashville indus- 
trial Corporation or some such company. They had a lot of powder- 
making machinery and they were very anxious to have someone take- 
the machinery. 

They asked us if we would not undertake to purchase this ma- 
chinery so as to hold it, with the understanding that if we did get an 
opportunity to dispose of it and took it up with them they would 
then decide as to whether or not there was sufficient balance left so 
that we would be justified in disposing of it. 

Therefore we put in a bid on this machinery. 

Senator Claek. Do you know how much the bid was, Major ? 

Mr. Casey. I have not got the exact amount. 

Senator Clark. Have you got it in your records ? 

Mr. Casey. Yes, sir. 

Senator Clakk. Will you look it up and supply it for us ? ^ 

Mr. Casey. Certainly. The result was that we did take the ma- 
chinery, and, I think, with the exception of one piece of machinery, 
it is all in this country today. 

Senator Clakk. I am not interested in where it is located today. 
I am interested in the question as to whether it is not bad practice 
for the War Department to be telling one prospective bidder a bid 
they expect from another prospective bidder. 

Mr. Casey. The only point is this: The other bidder would bid 
on it as junk. We are bidding on the basis of holding that machin- 
ery intact. Their bid, or any junk dealer's bid, would have no influ- 
ence on the purpose we were trying to assist the War Department in 
doing. 

Senator Clark. That is the reason they told you what bids were 
expected. 

Mr. Casey. That may be ; I do not know. 

Senator Clark. I call your attention to a letter dated January 
26, 1929, signed by C. I. B. Henning, technical director, addressed to 
Dr. C. M. Stine, chemical director, which I otfer for appropriate 
number. 

(The letter referred to was marked " Exhibit No. 1019 " and is 
included in the appendix on p. 2830.) 

Senator Clark. That is headed " Cooperation with Chemical War- 
fare Service." [Reading:] 

Confirming informal discussion with you yesterday, there are a number of 

reasons why our contact with the Chemical Warfare Service should follow 
principles similar to our contact with the Ordnance Department, United States 
Army, and Bureau of Ordnance, United States Navy. We recognize the essen- 
tial difference that for the present there is prospectively little to sell to Chem- 
ical Warfare ; also that the company's developments in fundamental research 
are of such a character that the writer, for instance, is not a competent judge 
of what is and what is not important to the other industries with which this 
department is not connected ; and hence our suggestion that individuals in the 
chemical department and the company's laboratories be careful to refer all 



1 On March 29, 1935, the du Pont Co. informed the committee that the purchase 
price of the Old Hickory machinery amounted to .$15,000. The purchase of necessary 
land, buildings, and incidental expenses tor the storage of the machinery amounted to 
$14,500. 



2696 MUNITIONS INDUSTRY 

these questions to you personally before passing information on direct to indi- 
viduals from Edgewood Arsenal or Chemical Warfare Service's officers in 
Washington. 

It is also appropriate to review a little of the past history of this subject. 
In February 1924 question was raised as to our assisting Dr. Rossi, an im- 
portant Italian chemical manufacturer, witli technical advice in the erection 
and putting into operation of a plant in Italy for the manufacture of war gases 
for the Italian Government. Mr. Ir§n6e du Pont wrote General Fries under 
date of February 4, 1924, stating, " We believe the du Pont Co. should not 
undertake work of this sort for a foreign government except on the written 
request of the Secretary of War stating that it is done in the interest of the 
United States Government and, in the present case, authorizing the Chemical 
Warfare Department to give us such assistance as they feel is justifiable to 
aid us in properly doing the work, in return for which this company will keep 
the Chemical Warfare Department iiostt-d with such information as we may 
obtain." No answer was forthcoming from General Fries for some time, and 
on December 2, Mr. Irenee du Pont and Mr. A. Felix du Pont attended a meet- 
ing in the office of the Secretary of War, at which were present Assistant 
Secretary of War Davis, General Williams, Chief of Ordnance, and Colonel 
Ferguson. It was found that after the matter was explained to Secretary of 
War Weeks, he was entirely in sympathy with the proposition and promptly 
arranged for an interview with the President. The entire party, with the 
exception of Colonel Ferguson, put this matter up to Mr. Coolidge, who promptly 
grasped the basic principles and in a few words stated what practically 
amounted to the " munitions policy." 

What was that policy ? 

Mr. Casey. The policy is a pretty long proposition. 

Senator Clabk. It says President Coolidge stated it " in a few 
words." 

Mr. Casey. I believe President Coolidge could probably do that, 
but the munitions policy was pretty well described by General Wil- 
liams in a speech he made, which was printed in the Army Ordnance 
Magazine several years before that. 

Senator Clark. Can you give us the essentials of the munitions 
policy ? 

Mr. Casey. I could not. I am not Coolidge. 

Senator Clark. You must know what the general policy was re- 
ferred to in the interdepartmental correspondence of your own com- 
pany. 

Mr, Casey. It was not really the correspondence of our company. 

Senator Clark. I say, the interdepartmental correspondence of 
your own company. This is an interdepartmental memorandum. 

Mr. Casey. It was establishing the function of the Ordnance De- 
partment on its munitions policy and program to conform with the 
principles of the National Defense Act of 1916, as amended, and such 
an extract was read this morning, in which are described the duties 
of The Assistant Secretary of War. 

Now, we have that here, and it might be read into the record. 
Have you got that [addressing associate] ? 

Senator Clark. Did the policy approve selling a poison-gas plant 
to the Italian Government or not? 

Mr. Casey, I do not think there is anything in the policy there 
except 

Senator Clark. That is what these gentlemen were over to the 
White House about, is it not? 

Mr. Casey. Wait a minute — except the policy enunciating the 
principle of necessity of maintaining as much as possible the interest 
of private industry as a reserve for production in time of war. 



MUNITIONS INDUSTKY 2697 

Senator Clark. These gentlemen were over there on a particular 
proposition about selling a gas plant to Italy. Do you not know 
what the decision was ? I will read the next paragraph, which may 
clear it up in your mind [reading] : 

Nothing has ever been done in connection with the Italian proposition, but 
the above facts are given you as a guide for action in any similar problem that 
may arise in the future. 

Now, was there any objection to selling a poison-gas plant to Italy? 

Mr. Casey. I was not present at the meeting. 

Senator Clark. You Imow the result of the negotiations. 

Mr. Casey. Nothing ever happened. 

Senator Clark. I understand ; but what was the policy laid down 
at this meeting ? 

Mr. Casey. I was not present. I do not know. This was in an- 
other department entirely. 

Senator Clark. You were familiar with such matters, were you 
not, Major? 

Mr. Casey. If I attempted to keep myself familiar with every- 
thing that went on in the company, I would not have time 

Senator Clark. If you do not know, I will take your word for it, 
but I wanted to know if you knew the policy laid down with regard 
to selling poison-gas plants to foreign countries. 

Mr. Casey. I do not know. Senator, could we introduce into the 
record 

Senator Clark. Mr. Irenee du Pont, were you at that meeting at 
the White House ? 

Mr. Irenee du Pont. This letter says so. 

Senator Clark. Can you tell us what this policy so briefly enun- 
ciated by President Coolidge was? 

Mr. Irenee du Pont. I certainly cannot. 

Senator Clark. Do you know whether he gave you an O. K. on 
selling this poison-gas factory to Italy? 

Mr. Irenee du Pont. I am rather mystified, because the funny 
part is I have not the least recollection of the meeting. 

Senator Clark. Mr. Felix du Pont, were you at the meeting at the 
White House? 

Mr. A. Felix du Pont. No. The only thing I recollect is having 
been at the meeting in the White House when the smokeless-powder 
matter was discussed. 

Senator Clark. Did you ever hear President Coolidge very briefly 
enunciate a munitions policy? 

Mr. A. Felix du Pont. No. 

Mr. Casey. Senator, could we have this paragraph read into the 
record from the national defense act? 

Senator Clark. If it is material. 

Mr. Casey. It is. It is a very short one. 

Mr. Lammot du Pont. It is on page 22, section 5-A. [Beading :] 

Hereafter, in addition to such other duties as may be assigned him by the 
Secretary of War, The Assistant Secretaiy of War, under the direction of the 
Secretary of War, shall be charged with supervision of the procurement of all 
military supplies and other business of the War Department pertaining thereto 
and the assurance of adequate provision for the mobilization of material and 
industrial organizations essential to war-time needs. The Assistant Secretary 
of War shall receive a salary of $10,000 per annum. There shall be detailed to 
83876— 35— PT 12 5 



2698 MUNITIONS INDUSTEY 

the office of The Assistant Secretary of War from the branches engaged in pro- 
curement such number of officers and civilian employees as may be authorized 
by regulations approved by the Secretary of War. The offices of Second Assist- 
ant Secretary of War and Third Assistant Secretary of War are hereby 
abolished. 

Senator Claek. That is very interesting, but it certainly does not 
say anjrthing about The Assistant Secretary of War acting as a 
salesman of munitions. 

I now read excerpts as per the first and last two paragraphs from 
a letter dated February 4, 1929, from Major Casey to the command- 
ing officer. Edge wood Arsenal, Edge wood, Mr., headed, " Cooperation 
in Experimental Work." 

(The excerpts referred to were marked " Exhibit No. 1020 "', and 
appear in full in the text.) 

Senator Clark (reading) : 

Attention of Major Alexander Wilson. 

Referring to discussion held in your office during the recent visit of Dr. C. M. 
Stine, Lt. Col. Aiken Simons, and C. I. B. Henning, the military sales division 
is expected by the various departments of the du Pont Co., and to a considerable 
extent by its associate companies, to serve as the contact organization in all 
matters pertaining to military use of this company's products. In order to 
make this contact more effective, we discussed various phases of your past 
experience. Without going too much into detail, there are several pending 
items on which we desire to advise and in turn to receive your suggestions. 

Major Prentiss of his own initiative discussed — 

Who is Major Prentiss, Major? 

Mr. Casey. I imagine he is connected with Edgewood Arsenal. 

Senator Clark. In other words, he is an Army officer? 

Mr. Casey. I think so. 

Senator Clark (reading) : 

Major Prentiss of his own initiative discussed a somewhat more formal 
interchange of information between the Chemical Warfare Service and the 
du Pont Co., stating that on his next trip to Washington there might be some 
advantage in ascertaining the views of General Fries on this subject. It is 
our desire to be a help in making our contact with you as efficient as possible. 
Owing to the complexity of our own organization, it is necessary that some one 
division be responsible for contacts of this nature. 

This letter is written with the intention not of emphasizing unduly the imme- 
diate problems presented, but to obtain from you suggestions as to how, from 
your viewpoint, we can function most efficiently. 

In connection with that, I will read a letter from Major Prentiss 
to Col. Aiken Simons. 

(The letter referred to was marked " Exhibit No. 1021 ", and 
appears in full in the text.) 

Senator Clark. Tliis is headed " Chemical Warfare Service, Edge- 
wood Arsenal, Office of the Technical Director.'' [Reading:] 

Edgewood, Md., April 24, 1929. 
Col. Aiken Simons, du Pont Co., 

Wilmington, Del. 
Dear Colonel Simons : Replying to your letter of April 22, in which you 
advise me that Dr. Stine has not yet returned to Wilmington and is not ex- 
pected for several days, and upon his return will undoubtedly be extremely 
busy for some time, I may say that the matter which I wished to discuss with 
Dr. Stine was the general "modus operandi" of the exchange of information 
which we discussed upon the occasion of your last visit to this arsenal. As 
you will recall, the chief's office did not think it feasible for us to exchange 
technical reports but did feel that information might be freely exchanged 
by personal conference. It is for the purpose of laying down some regular pro- 
cedure to effect this exchange of information that I particularly desire to see 



MUNITIONS INDUSTRY 2699 

Dr. Stine, and I doubt very nnich if anyone else will be in a iwsition to act for 
Dr. Stine in this matter, as it is a rather unusual one. 

Under the circumstances I would suggest that you advise me of the earliest 
convenient date at which Dr. Stine could see me to talk over this matter, and 
I will be glad to arrange my visit accordingly. 
Sincerely yours, 

A. M. Prentiss, 
Major, C. W. 8., Technical Director. 

If you sell a war-gas factory to a foreign country it might very 
well be that with the system of interchange of information between 
yourselves and the Chemical Warfare Service some of the informa- 
tion in the Chemical Warfare Service will be passed along to the pur- 
chaser, will it not? 

Mr. Casey. I think that would be a natural result, because I 
stated in that previous memorandum where the conference with Pres- 
ident Coolidge came in, it was clearly stated there that we would not 
take any action unless requested by the Government. 

Senator Clark. I am glad to see somebody's memory coming back 
about the matter of that conference at the White House. 

Mr. Casey. I had not,been to the White House on that matter, but 
I say in the memorandum they make that very selfsame statement. 

Senator Clark. There is no question about the fact that if you are 
in the process of interchanging information with the Chemical War- 
fare Service, and you sell a war-gas factory to a foreign government, 
which you install for them and undertake to teach them to operate, 
it is almost inevitable some of this information which you acquired 
in this interchange with the Chemical Warfare Service will be passed 
on to the purchaser. 

Mr. Casey. It is self-evident from that previous memorandum that 
we could not do it unless the United States Government wanted us 
to do it and gave us the information. 

Senator Clark. I understand that, but that is the fact, is it not, 
Major? 

Mr. Casey. It is the fact; yes. 

Senator Clark. You recognize it in that memorandum to which 
you are referring? 

The Chairman. What is the difference between exchanging tech- 
nical reports and freely exchanging this information by personal 
conference ? 

Mr. Casey. I think the answer is this. I cannot speak for either 
Prentiss or Stine, but our work was in connection with the general 
chemical research work on inorganic chemicals. Is not that right, 
Doctor ? 

Dr. Sparre. Organic. 

Mr. Casey. Organic and inorganic, both, for that matter. The 
other day I think it was brought out that there is a point up to which 
you might say both dyes, pharmaceuticals, photographic material, 
and so forth, and explosives or gases may be brought, that you woukl 
call the main trunk of the tree. When you reach that point, then 
they branch off on the one hand into the line of commercial ma- 
terial such as dyes and other materials of that type, or on the other 
hand they may branch off into high explosive material or related 
materials. 

Because of our fundamental research, there was no doubt in the 
world that we could communicate to them considerable information 



2700 MUNITIONS INDUSTRY 

that would permit them to go from the main branch of the tree into 
the line of research they were following. We were not following 
any research work along the line that interested Edgewood Arsened 
or the Chemical Warfare Service. 

USE or UNITED STATES GOVERNMENT GUNS FOR COMMERCIAL 
DEMONSTRATIONS 

Senator Clark. Now, Major, when you sell a powder to a foreign 
government, you have to give a demonstration of the powder, do 
you not, ordinarily? 

Mr. Casey. In a great many cases, yes ; others not. 

Senator Clark. It is the ordinary custom? 

Mr. Casey. If it is something new, yes. 

Senator Clark. I now call your attention to a letter from Colonel 
Taylor to Major Casey, dated June 3, 1930, which I offer for appro- 
priate number. 

(The letter referred to was marked " Exhibit No. 1022 ", and 
appears in full in the text.) 

Senator Clark (reading) : * 

F. N. H. Powder — Holland. 

Dear Sir: The Dutch Government advises that it is impossible for them to 
borrow a gun from any European Government using the French 75-mm field gun. 

Regarding obtaining a gun from the United States Government we had a 
conversation with Colonel Wesson about this matter. 

Who is Colonel Wesson? 

Mr. Casey. He is an ordnance officer. I think at that time he was 
stationed in London. 

Senator Clark (reading) : 

We had a conversation with Colonel Wesson about this matter, and he be- 
lieves that this occasion had never arisen before, and thinks it would certainly 
be refused so as not to create a precedence. Colonel Wesson believes, however, 
that it would be possible for our company to borrow a gun from the United 
States Government for a certain length of time by taking full responsibility for 
wear and tear and for its return. Our company could then send it to Holland 
to be fired for tests and returned. 

It seems to me desirable to make every effort to obtain this gun in this way, 
as we know the powder acts all right in it, and as it will give a good impression 
of our powder. We have warned the Dutch Government that fitting their guns 
may be very difl^cult, but they want to see the powder presented under the best 
conditions. 

I believe it impossible to get a gun in Europe except by buying one from 
Schneider. The Fabrique Nationale of Li^ge, Belgium, do not make artillery. 

As we would particularly like for Mr. Bradway to be present at the F. N. H. 
trials in Holland, we advised you of the above by our cable No. 845, hoping 
that you can arrange to send the gun and 40 made-up rounds to Holland early 
enough for firings to be made in Holland before Mr, Bradway returns to 
America. 

You actually got this gun, did you. Major? 

Mr. Casey. I believe we did. The gun in question was by that 
time an obsolete type in the United States as to design. 

Senator Clark. It was still in service in the War Department? 

Mr. Casey. Oh, yes; it is still in service, but it is an obsolete 
design. In other words, as fast as they can get the money for the 
new designs, they will have that. 

Senator Clark. I call your attention to another memorandum, to 
the traffic department, signed by W. H. O'Gorman, assistant director, 
dated September 8, 1930. 



MUNITIONS INDUSTRY 2701 

(The letter referred to was marked "Exhibit No. 1023'', and 
appears in full in the text.) 
Senator Clark (reading) : 

Shipment of gun and ammunition to Holland. 

This is directed to Mr. O. E. Pyle. 

In connection with prospective sale of du Pont F. N. H. cannon powder to 
the Holland Government, we have borrowed a 75-mm gun, model 1917, from 
the United States Government, which we propose to ship to Holland together 
with 40 rounds of ammunition. The gun and ammunition are being shipped 
for firing tests in Holland and we desire to make immediate booking to cover. 

We do not think it is advisable to make shipment of the items mentioned in 
the name of the du Pont Co., and consequently would ask that you arrange to 
have the matter handled by one of your export brokers making shipment, if 
possible, in their name. 

Why did you not desire to have it shipped in the name of the du 
Pont Co. ? 

Mr. Casey. There was some reason at the time; I have forgotten 
what it was; whether it was because we did not want to have the 
name " du Pont " tied up with a gun or what, I do not know, because 
we did not make the guns. 

Senator Clark (reading) : 

We are attaching copy of memorandum indicating the specifications of the 
gun and spare parts, which will be included, together with the value of each 
item. In the first instance we were of the opinion that the gun should be dis- 
mantled for shipment. However, Aberdeen Proving Ground recommended that 
it be shipped intact, and this recommendation was adopted. The gun has been 
securely crated, the weights and dimensions of the crate being as follows : 
Length, 13 feet 8 inches ; width, 6 feet 8 inches ; height, 5 feet 4 inches ; gross 
weight, 3,900 pounds. This gross weight includes weight of gun and carriage, 
which is 2,887 pounds, and weight of tools, accessories, and crate, which is 
1,013 pounds. 

We have not received actual weights and dimensions of the cases containing 
the 40 rounds of ammunition. However, we know that each round will eon- 
tain 26.6 ounces of smokeless powder and will have a proof slug weighing 
approximately 15.96 pounds. From this you will note that there is only 
approximately 66i/^ pounds of smokeless powder involved. This ammunition 
will be equipped with primers. The packing cases in which the ammunition 
will be shipped will be approximately 9 inches by 9 inches by 26 inches, there 
being 4 rounds included in each box. 

We have executed a bond in favor of the Government, in the amount of 
$8,500, covering the return of the gun in question within a period of 1 year. 
In view of this, it is important that shipment be arranged immediately. Since 
the gun is now on hand at Aberdeen Proving Ground, Aberdeen, Md., it would 
be convenient to ship from Philadelphia, if possible. However, in the event 
this cannot be arranged and shipment can be made more promptly from New 
York, please arrange to make the booking accordingly. Your Mr. Grubb has 
quoted us a trucking rate of $40 to Philadelphia and $60 to New York. Leager's 
O. K. Transfer, Wilmington, Del., moved this gun from Raritan Arsenal, 
Metuchen, N. J., to Aberdeen, and the quotation mentioned was submitted by 
this same company. 

Please let us hear from you immediately regarding this matter. 

This is another instance, is it not, Major, where it is not intended 
for the War Department files to show the actual transaction ? 

Mr. Casey. You mean in the way the gun was borrowed? 

Senator Clark. Yes. 

Let me read you another letter from yourself to the Chief of Ord- 
nance, United States Army, dated June 25, 1930. 

(The letter referred to was marked " Exhibit No. 1024 " and is 
included in the appendix on p. 2832.) 



2702 MUNITIONS INDUSTRY 

Senator Clark (reading) : 

Chief of Ordnance, United States Army, 

Munitions Building, Washington, D. C. 
Deiar Sir: Under authority contained in section 123