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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 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 4 

SEPTEMBER 10, 11, AND 12, 1934 
CURTISS-WRIGHT EXPORT CORPORATION 



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




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
8387a WASHINGTON : 1934 



MUNITIONS INDUSTRY 

HEARINGS 

BEFORE THE 

SPECIAL COMMITTEE 

INVESTIGATING 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 4 

SEPTEMBER 10, 11, AND 12, 1934 
CURTISS-WRIGHT EXPORT CORPORATION 



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



*(%■ 






UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASHINGTON : 1934 



tm 13 1935 



/ijsM 






SPECIAL COMMITTEE INVESTIGATING THE MUNITIONS INDUSTRY 

GERALD P. NYE, North Dakota, Chairman 
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 Raushenbush^ Secretary 

n 



CtMirged to credit acct 
«ith SupL of Documents 



CONTENTS 



Testimony of — Page 

AUard, J. S., president Curtiss-Wright Export Corporation. 691, 721, 276, 799 

Hotclikiss, Henry G., counsel Curtiss-Wright companies 692, 721 

Webster, Clarence W., sales representative of Latin-American 

Curtiss-Wright products 704, 721, 767, 799 

Corporate organization of Curtiss-Wright companies 691 

Sales of military materials 695 

Severity and nature of competition faced in foreign markets 706 

Commissions paid in connection with foreign sales 723 

Relations with foreign officials 738 

Negotiations in Mexico 754 

Activities in countries engaged in war or fearful of war 767 

Curtiss-Wright Co.'s attitude toward embargoes 807 

Relations with officials and departments of United States Government 812 

War and Navy Departments aid in foreign sales of aircraft 828 

m 



INVESTIGATION OF MUNITIONS INDUSTRY 



MONDAY, SEPTEMBER 10, 1934 

United States Senate, 
Special Committee to Investigate 

THE Munitions Industry, 

Washington, D. C. 
The hearing was resumed at 10 a. m. in the caucus room, Senate 
Office Building, pursuant to taking of recess, Senator Gerald P. Nye 
presiding. 

Present: Senators Nye (chairman), George, Clark, Bone, Pope, 
and Vanclenberg. 
Also present : Alger Hiss, investigator. 

TESTIMONY OF JOHN S. ALLARD 

(The witness was duly sworn by the Chairman.) 

The Chairman. Your full name, please. 

Mr. Allard. John S. Allard. 

The Chairman. A^Hiat is your connection with the Curtiss-Wright 
Export Corporation ? 

Mr. Allard. I am president. 

The Chairman. For the information of those present, Mr. Hiss, 
one of the committee's staff, will proceed with the examination of Mr. 
Allard. Proceed, Hr. Hiss. 

CORPORATE organization OF CURTISS-^\TtIGHT COMPANIES 

Mr. Hiss. Mr. Allard, as I understand it, the Curtiss-Wright 
Export Corporation, of which you are president, is the selling agent 
for foreign sales of the Curtiss-Wright Companies, engaged in the 
manufacture of airplanes and airplane engines, is that correct? 

Mr. Allard. That is correct. 

Mr. Hiss. The principal subsidiaries of the Curtiss-Wright Cor- 
poration, which is the parent of your company, are the Curtiss 
Airplane & Motor Co. of Buffalo, which manufactures planes, is that 
correct ? 

Mr. Allard. That is correct. 

Mr. Hiss. The Wright Aeronautical Corporation of Paterson, 
New Jersey, which manufactures engines? 

Mr. Allard. That is correct. 

Mr. Hiss. The Curtiss-Wright Airplane Co., of St. Louis, which 
manufactures planes ? 

Mr. Allard. That is correct. 

691 



692 MUNITIONS INDUSTRY 

Mr. Hiss. The Curtiss -Wright Airports Corporation which owns 
a series of airports and runs subsidiary corporations? 

Mr. Allard. That is correct. 

Mr. Hiss. The Curtiss-Caproni Corporation which has a plant in 
Baltimore which has been rented to the General Aviation Corpora- 
tion at the present time? 

Mr. Allard. It has been up to the present time. I think they are 
through now. 

i\Ir. Hiss. Then, in addition, the Keystone Aircraft Corporation 
of Bristol, Pa., which is at present shut down ; is that correct? 

Mr. Allard. That is correct. 

Mr. Hiss. What interest does your company consider, or do the 
Curtiss-Wright Companies consider, as the major stockholder of the 
parent corporation, the Curtiss-Wright Corporation? 

Mr. Allard. I have no idea who the major stockholders are. 

]Mr. Hiss. The committee was furnished with a list of the Curtiss- 
Wright Co.'s stockholders, that is of those having over 5,000 shares, 
the majority of whom are brokerage houses carrying stock for 
customers. 

Mr. Allard. That is right. 

Mr. Hiss. We made inquiries of those brokerage houses, asking 
for whom they held stock and we found that Mr. Richard F. Hoyt, 
who is chairman of the board of the parent corporation, the Curtiss- 
Wright Corporation ? 

Mr. Allard. That is right. 

Mr. Hiss. Holds some 28,000 of the class A stock. Will you 
explain to the committee which of the two classes of stock of the 
parent corporation is the voting stock, the common or the class A? 

Mr. Allard. I honestly don't know. I think class A, but I will 
have to check that and furnish the information. 

Mr. Hiss. Is there someone here who can furnish that informa- 
tion ? 

Mr. Allard. I think, Mr. Hotchkiss. 

Mr. Hotchkiss. I will be glad to furnish you the certificates on 
that. It is common and class A stock. 

The Chairman. Why don't you sit right here, Mr. Hotchkiss, and 
if Mr. Allard cannot give the information, you may be prepared to 
give it for him. 

TESTIMONY OF HENRY G. HOTCHKISS 

(The witness was duly sworn by the chairman.) 

The Chairman. Give the reporter your full name, please. 

Mr. Hotchkiss. My full name is Heniy G. Hotchkiss. 

The Chairman. And your connection with the Curtiss-Wright 
Co.? 

Mr. Hotchkiss. Counsel. 

Mr. Hiss. Mr. Hotchkiss, you say that both class A and the com- 
mon stock of the Curtiss-Wright Co., the parent corporation, have 
voting rights ? 

Mr. Hotchkiss. Yes, sir. 

Senator Bone. Do they have equal voting rights ? 

Mr. Hotchkiss. Yes ; one vote to each share. 



MUNITIONS INDUSTRY 693 

Mr. Hiss. Mr. Allard, if this statement is correct, that Richard F. 
Hoyt owns 28,107 shares of class A stock ; that Mr. Hugh D. Auchin- 
closs owns 20,000 shares of common stock and 5,000 shares of class A 
stock; that Mr. Donald E. McLennan holds 25,204 shares of common 
stock and 5,601 shares of class A stock; that there is one addi- 
tional shareholder holding approximately 25,000 shares, and that 
is Mr. H. Harrison Smith, who holds 24,611 shares of the class A 
stock; that the other shareholders all hold 15,000 or less shares, 
and the great majority hold considerably less, with the exception of 
one shareholder, Mr. John Sanderson, who holds, on behalf of the 
Sperry Corporation, 365,951 shares of the common stock and 98,132 
shares of class A stock; then that is the largest block of stock, and 
seems, in view of the wide-spread holdings of the rest of the stock, 
to represent a controlling interest. Do you consider that the Sperry 
Corporation's holdings in the Curtiss-Wright Co. are a controlling 
interest?^ 

Mr. Allard. No ; I should say not, not in any sense of the word. 

Mr. Hiss. I would like to call your attention to some of the direc- 
tors who are on the Curtiss-Wright Corporation board and also on 
the Sperry Corporation board. Mr. G. N. Armsby, who is chairman 
of the board of directors of the Sperry Corporation, is a member of 
the board of directors of the Curtiss-Wright Corporation and all of 
the subsidiaries. 

Mr. Allard. I know he is of most of the subsidiaries of the parent 
corporation, but I do not know whether he is on all of them or not. 

Mr. Hiss. Mr. T. A. Morgan, who is president of the parent cor- 
poration, is also president of the Sperry Corporation, is he not? 

Mr. Allard. That is correct. 

Mr. Hiss. I have a chart, Mr. Chairman, I think may be helpful 
on this question of control, which I would like to ask the witness a 
few questions about. I think probably it is wisest to set it there. 
That chart, Mr. Allard, is supposed to represent the interest of 
the General Motors Corporation in various airplane manufacturing 
companies. 

The Chairman. Mr. Hiss, before you start in on that, I would 
suggest that the exhibit be offered for the record. 

Mr. Hiss. I would like to have this chart offered as an Exhibit 
for the record. 

(The chart referred to was marked " Exhibit No. 268 ", and 
appears in the appendix facing p. 859.) 

Mr. Hiss. You will notice, Mr. Allard, that the du Pont Co., 
through a wholly owned subsidiary of the du Pont Co., has a 28 
percent interest in the General Motors Co. stock. That appears in 
the 1933 annual report of the du Pont Co. The General Motors 
Corporation, in turn, has 48 percent of the stock of the General 
Aviation Corporation. General Aviation Coi-poration and General 
Motors Corporation together own 52 percent of the stock of North 
American Aviation. All of the stock of the Sperry Corporation 
has been distributed to trustees under a voting-trust agreement and 
the certificates of the voting-trust agreement have been distributed 
to the stockholders of the North American Co., which means that 



^ The list of stockholders in Curtiss-Wright was marked " Exhibit No. 26S-A" and 
is on flle with the committee. 



694 MUNITIONS INDUSTRY 

the stockholders of North American Aviation control the Sperry 
Corporation through the voting trust. Is that correct? 

Mr, Allard. As you stated it; yes. 

Mr. Hiss. The Sperry Corporation, as I stated before, owns 
365,951 shares of the Curtiss-Wright parent corporation, which is 
shown to the right of this chart, which has been made an exhibit. 

Mr. Allard. Yes. 

Senator Bone. Is that control? 

Mr. Allard. No, sir. 

Mr. Hiss. Mr. Allard thinks that is not a controlling interest, and 
I pointed out that the president of the Sperry Corporation, T. A. 
Morgan, is also the president of the Curtiss-Wright Corporation, and 
that G. N. Armsby, the chairman of the Sperry board, is also on 
the Curtiss-Wright board. 

Now, Mr. Allard, Mr. Armsby, who is on the board of the Curtiss- 
Wright parent corporation, has been or is now a director of the 
North American Aviation. Mr. J. C. Cowdin, who is a member 
of the board of directors of the Curtiss-Wright Corporation and 
many of its subsidiaries, has also at one time or another been on 
the board of the North American Aviation. 

Mr. E. A. Pierce, who is a member of the Curtiss-Wright parent 
corporation board, is on the board of directors of the North Ameri- 
can Co. 

Mr. Allard. No, sir. 

Mr. Hiss. He has been until recently? 

Mr. Allard. Not to my knowledge. 

Mr. Hiss. Mr. J. C. Willson is a member of the board of the 
Curtiss-Wright Corporation ? 

Mr. Allard. Yes. 

Mr. Hiss. He has, according to the Black committee, at one time 
or other been a member of the board of directors of the North Amer- 
ican Aviation also? 

Mr. Allard. Yes, sir. 

Mr. Hiss. I would like to call the attention of the committee to 
the Douglas Aircraft Co., which also makes planes — 25 percent of its 
stock is held by North American Corporation. The Douglas Air- 
craft Company you consider one of your competitors, Mr. Allard? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Mr. J. C. Cowdin is also a member of the board of direc- 
tors of the Douglas Corporation, according to Moody's, and he is a 
director of the Curtiss-Wright Corporation. 

Mr. HoTCHKiss. Mr. Chairman, might I say with reference to the 
Exhibit which has been offered as No. 268, if you do not mind, it 
appears from the outline there that the North American Aviation, 
Inc., as such owns stock in the parent corporation as such. I simply 
want that understood, and I want the examiner, Mr. Hiss, to under- 
stand that the stock of the Sperry Corporation has been distributed 
by certificates to the stockholders of North American Corporation. 

Mr. Hiss. To the stockholders of North American, which controls 
the Sperry Corporation through a trust arrangement ? 

Mr. HoTCHKiss. That is correct. 

Mr. Hiss. Of the stock of the North American Corporation, 52 
percent is owned by General Motors and General Aircraft. 

Mr. HoTCHKiss. I have no knowledge of that. 



MUNITIONS INDUSTRY 695 

SALES OF MILITARY MATERIAL 

Mr. Hiss. Mr. Allard, as to the Curtiss-Wright Go's sales through 
your companies of airplane engines and equipment, they are all 
primarily for military purposes, are they not? 

Mr. Allard. The majority of them; yes. 

Mr. Hiss. For example, from figures furnished the committee by 
your company, it appears that during the period 1932 to April 30, 
1934, out of a total number of planes sold by your company, number- 
ing 179, only 8 are listed by your company as commercial planes. 
Two of those are listed as being sold in 1933 to Germany and they 
are described as HaAvks. What type of plane is the Hawk? 

Mr. Allard. That is a single-seat plane that can be used for acro- 
batic purposes, stunting, and is probably the best plane in the world 
for that ])urpose. used by Al Williams and Jimmy Doolittle, and 
people like that, for acrobatic purposes. 

Mr. Hiss. You sell it primarily to governments as a pursuit plane ? 

Mr. Allard. Not with the same type of equipment and construc- 
tion, as a pursuit plane. 

Mr. Hiss. In what way do the two planes your company has re- 
ferred to as Hawks differ in construction from the Hawk planes 
you sell as pursuit planes? 

Mr. Allard. The absolute lack of any military equipment or ar- 
rangement for military equipment. 

Mr. Hiss. Could that be added, or was there any fundamental 
difference in the underlying structure? 

Mr. Allard. Considerable difference. It could be. after a great 
deal of expense in sending it back to the factory here, added if 
necessary, but it could not be done in the field. 

Mr. Hiss. Is it not true that a great many commercial planes are 
convertible into military-purpose planes? 

Mr. Allard. I believe any commercial plane can be used for mili- 
tary purposes, but not as efficiently, necessarily. 

Mr. Hiss. I should like to call your attention to a letter dated 
]\Iarch 23, 193-4, from your company's agents in Mexico — Watson, 
Phillips & Cia. You will see in the third paragraph there that the 
letter says : 

We note that we are allowed the agency solely for military airplanes and 
engines, and that no mention is made of civil machines. Although it is 
scarcely likely that we may obtain an order for civil airplanes, we presume 
you will have no objection to our soliciting same, should opportunity offer. 

That is correct as far as your company is concerned that your 
agencies abroad are primarily interested in making sales of military 
planes and that the market is primarily a military market? 

]\Ir. Allard. I state this, that the market is primarily a military 
market but our agencies have both the right where it is possible to 
give the right to one outfit, to sell both commercial and military. In 
this particular instance we had another man selling commercial 
planes in Mexico. 

Mr. Hiss. I offer this letter as " Exhibit No. 269," 

(The letter referred to was marked " Exhibit No. 269 ", and is 
included in the appendix on p. 859.) 



696 MUNITIONS INDUSTRY 

The Chairman. Would an inquiry of Mr. Allard at this time be 
out of order? 

Mr. Hiss. Certainly not. 

The Chairman. Mr. Allard, you spoke of planes being poten- 
tiall}?^ for war use. 

Mr. Allard. Yes, sir. 

The Chairman. We are to understand from that, are we, that to 
some degi'ee, however great or however small, but to some degree 
nevertheless, all of these planes that are engaged in air-mail service 
could be utilized in time of war for war purposes? 

Mr. Allard. Yes; that is purely an opinion of mine that they 
could. 

The Chairman. Are there divergent opinions in the industry on 
that subject? 

Mr. Allard. I do not know, I am sure. 

Mr. Hiss. I would like also to call attention to a letter written 
last February, 1934, addressed to you, from Mr. Bruce Leighton, 
signed " Bruce ", I judge that is Mr. Bruce Leighton ? 

Mr. Allard. That is right. 

Mr. Hiss. Mr. Leighton is vice president of your company? 

Mr. Allard. That is correct. 

Mr. Hiss. And is your European sales representative? 

Mr. Allard. Yes; at the present time. 

Mr. Hiss. On the second page of this letter, which refers to sales 
of European planes in general, that is, planes in Europe, Mr. 
Leighton says : 

When you sell airplanes in Europe you deol with governments. You are 
dealing in military equipment, which is invariably and popularly looked upon 
as vital to the personal safety of every individual. 

Then he adds: 

Remember that in Europe civil air transports are usually looked upon as 
military planes in disguise. 

Then he repeats at a later part of the letter bringing out the same 
point, where he says : 

What are the sales arguments to keep Condors there? 

They are one of the largest planes j^our company builds ? 
Mr. Allard. That is right. 

Mr. Hiss. And they are used for large bombers, as well as trans- 
port planes? 

Mr. Allard. Yes. 

Mr. Hiss. Continuing, the letter says : 

What are the sales arguments to keep Condors in the picture in the face 
of certain Douglas competition and existing United competition? 

That is United Aircraft Co. ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. And then he continues : 

Both of which have materially higher specifications to offer and hence appeal 
to the military elements strongly. (Don't forget that European transport 
planes are in reality considered merely as bombers in disguise). 

The Chairman. I suggest we would expedite matters considerably 
if you would make it clear that each letter you introduce is to be 
an exhibit and whether it is to be made a part of the record or not. 



MUNITIONS INDUSTRY 697 

Mr. Hiss. It has been my intention in all of these copies handed 
to the witness, that they shall actually go in the record unless the 
committee decides otherwise. 

The Chairman. Very well, the reporter will understand that. 

Mr. Hiss. I offer the 'letter referred to as " Exhibit No. 270." 

(The letter referred to was marked " Exhibit No. 270 ", and is 
included in the appendix on p. 860.) 

Mr. Hiss. Mr. Allard, your company has, I believe, one employee 
referred to as an "armament engineer": is that correct? 

Mr. Allard. No ; that is not correct. 

Mr. Hiss. I show you a letter dated May 29. 1934, from Mr, 
Hewlett to Mr. Escobar, which letter I offer in evidence. 

(The letter referred to was marked '" Exhibit No. 271 ", and is 
included in the appendix on p. 865.) 

Mr. Hiss. Is the Mr. Hewlett who signed that letter an officer of 
the corporation? 

Mr. Allard. No; he is an employee. 

Mr. Hiss. The letter is addressed to Mr. Roberto Escobar, and he 
is, I believe. Consul General of Colombia, in New York. 

Mr. Allard. I think he is. I am not sure of the country, but I 
believe that is it. 

Mr. Hiss. You will notice that in the first paragraph it refers 
to the installation of the Driggs 37 mm airplane gun on a Hawk 
plane, and Mr. Trimbach, your armament engineer has submitted a 
report. 

Mr. Allard. Mr. Trimbach is an emploj'ee of the Curtiss Airplane 
& Motor Co. and not of the Export Co. I misunderstood j^our ques- 
tion when I answered the Export Co. has no such officer. 

Mr. Hiss. May I call attention to a letter dated March 31, 1934, 
which I offer in evidence. 

(The letter referred to was marked " Exhibit No. 272 ", and is 
included in the appendix on p. 866.) 

Mr. Hiss. This letter, "Exhibit No. 272", appears to be from 
William J. Crosswell ; he is an employee of your company ? 

Mr. Allard. No; he is an employee of the Curtiss Airplane & 
Motor Co. 

Mr. Hiss. The letter is written to Mr. Hewlett who is an employee 
of your company, I believe? 

Mr. Allard. Yes. 

Mr. Hiss. In the course of the letter Mr. Crosswell refers to a 
discussion with Lt. Comdr. Hugh Sease — he is an officer of the 
United States Navy ? 

Mr. Allard. I do not know Commander Sease, whether he is an 
active officer or retired. 

Mr. Hiss. In this letter he refers to a new light machine gun which 
has been developed and Mr. Crosswell says to Mr. Hewlett in this 
letter addressed to " Dear Parm " the following [reading] : 

While he was talking it occurred to me that perhaps it would be good to have 
the dope on this gun in case we should ever wish to build a flying arsenal for 
export sale with say six guns forward which we could do more readily with 
a smaller gun. 

Your company is continually experimenting with new types of 
military planes? 

Mr. Allard. No; I would not say our company was. 



698 MUNITIONS INDUSTRY 

Mr, Hiss. I befr your pardon, the Curtiss-Wright operating com- 
panies, the manufacturing companies. 

Mr. Allard. The manufacturing companies, undoubtedly; yes. 

Mr. Hiss. I show you a letter dated February 25, 1932, from Mr. 
Goulding who signed himself as vice president of the Curtiss-Wright 
Export Corporation. 

Mr. Allard. That is correct. 

Mr. Hiss. I offer this letter in evidence. 

(The letter referred to was marked "Exhibit No. 273", and is 
included in the appendix on p. 867.) 

Mr. Hiss. In this letter Mr. Goulding made this statement with 
reference to a Keystone bomber — the Keystone bomber was a large 
bomber which you made in those days? 

Mr. Allard. Yes, sir ; at the Keystone plant in Bristol. 

Mr. Hiss. The statement is as follows [reading] : 

This plane powered with a Cyclone engine is used extensively by the United 
States Army Air Corps, and we are just eompletius at our factory at Bristol, 
Pa., a large contract of these planes for the United States Army. This plane 
can carry over two thousand pounds of bombs and is, therefore, a formidable 
offensive weapon. 

The Chairman. We suggest, Mr. Hiss, as you go along, for the 
benefit of the record that you identify the exhibit before quoting any 
of it to the witness. 

Mr. Hiss. In addition to making planes you sold equipment or 
iirmament for many of the planes; that is correct, is it not? 

Mr. Allard. That is correct. 

Mr. Hiss. Does your company not also sell munitions, as agent for 
other companies, which munitions are not an actual part of the 
planes you sell ? 

Mr. Allard. Well, yes; we sell bombs and machine-gun bullets as 
a part of the equipment. The gun is no good without the ammuni- 
tion and the bomb racks in the airplane are no good without the 
bombs. 

Mr. Hiss. The Intercontinent Co. referred to in this correspond- 
ence has what relation to your company or the parent company? 

Mr. Allard. The only connection it has with the Export Co. is 
our agent for sales in China. 

Mr. Hiss. It is your agent for sales in China ? 

Mr. Allard. Yes. 

Mr. Hiss. Seventy-four percent of its stock is held by the Sperry 
Corporation ? 

Mr. Allard. I do not know that to be a fact, 

Mr. Hiss. That is the statement from Moody's Manual. 

Mr, Allard, Yes, 

Mr. Hiss. Your company, according to a letter in your files, has 
since Januar}^ 6, 1933. been the agent for the Remington Co. 

Mr. Allard. I do not know that to ])e a fact. 

Mr. Hiss. I show you a letter dated March 4, 1933, written by 
Curtiss-Wright Exi)ort Corporation, by Owen Shannon, which letter 
I offer as an exhibit, 

(The letter referred to was marked " Exhibit No. 274 ". and is in- 
cluded in the appendix on p. 868.) 



MUNITIONS INDUSTRY 699 

Mr. Hiss. Was Mr. Shannon at that time an official of the corpo- 
ration ? 

Mr. Allard. No ; an employee. 

Mr. Hiss. The letter is written to Mr. E. J. Faucett. Was Mr. 
Faiicett your company's representative in Peru at that time? 

Mr. Allard. I do not recall whether he was an actual representa- 
tive, but he may have been at that time. Mr. Faucett has been a 
representative for us. 

Mr. Hiss. In this letter you tell Mr. Faucett you will send him by 
the next air mail complete prices on all sizes of loaded and unloaded 
bombs, cartridges, and so forth, and that perhaps he could get the 
Peru Government to place a substantial order for such equipment to 
be sent on such special sailing. That would be in addition to any 
complement of bombs you sold? 

iNIr. Allard. Yes; I do not mean to imply that we sell bombs as 
part of the complement of the airplanes, but they are airplane bombs 
and airplane cartridges. 

Mr. Hiss. I call your attention to this letter dated January 6, 1933, 
taken from the files of your company, signed by F. J. Monaghan 
of the Remington Arms Co. to Mr. Pawley who was then with the 
Curtiss-Wright Corporation, and I believe he is the president of the 
Intercontinent Aviation Corporation ? 

Mr. Allard. Yes. 

Mr. Hiss. I offer this letter in evidence. 

(The letter referred to was marked " Exhibit No. 275 ", and ap- 
pears in the appendix on p. 868.) 

Mr. Hiss. You w^ill see that letter says [reading] : 

We confirm our conversation with you today in respect to the ideas you 
discussed on behalf of your company to represent us in the sale of our military 
rifles and ammunition to the Chinese Government. 

Mr. Allard. That is right. 

Mr. Hiss. Military rifles are not a part of a plane equipment? 

Mr. Allard. Not at all. 

Mr, Hiss. In January your company was representing the Rem- 
ington Co. for material not used as equipment for planes? 

Mr. Allard. That is right. 

Mr. Hiss. Now, your company has purchased bombs from the Fed- 
eral Laboratories Co. and from the Lake Erie Chemical Co.; has 
it not? 

Mr. Allard. Yes. 

Mr. Hiss. On August 6, 1932, the Federal Laboratories Co. noti- 
fied your company that if you bought muzzle-loaded rifled mortars 
from the Lake Erie Co. you would be violating the patents of the 
Federal Laboratories Co., if you sold rifled mortars. 

Mr. Allard. I do not know. 

Mr. Hiss. Have you carried out negotiations looking to their sale ? 

Mr. Allard. We may have been requested to make quotations ; but 
referring back to your previous question, you asked whether we had 
sold any other than aviation equipment. I should say we have made 
quotations on other equipment, but have not consummated sales. 

Mr. Hiss. I am pretty sure that you have made sales. 

I show you a letter dated August 13, 1932, Mr. Allard, from 
the Federal Laboratories, Inc., to Mr. Shannon, whom you have 



700 MUNITIONS INDUSTRY 

identified as an employee of your compaii}^, which gives your com- 
pany the exchisive representation on smoke-screen and gas attach- 
ments for airplanes and on aerial bombs in Argentina, Colombia, 
Chile, Ecuador. Panama, and Turkey; that is, the products of the 
Federal Laboratories. 

(The letter referred to was marked "Exhibit No. 276" and is 
included in the appendix on p. 869.) 

Mr. Hiss. This " Exhibit No. 276 ", Avhich I have called to your 
attention, came from the files of the Federal Laboratories Co., did 
it not ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. And was sent to your company 'i 

Mr. Allard. Yes, sir. 

Mr. Hiss. Is that agreement in force? 

Mr. Allard. I do not know. I frankly do not know. 

Mr. Hiss. Can you find out? 

Mr. HoTCHKiss. Suppose we check our records and find out. Do 
you want that produced ? 

Mr. Hiss. Yes, sir.' 

Has your company ever made any sales or any negotiations for 
flame throwers ; that is, liquid fire ? 

Mr. Allard. Not to my knowledge ; no. 

]Mr. Hiss. Here is a letter under date of March 9, 1932, from the 
Federal Laboratories, Inc., signed apparently by the president, 
bearing the initials J.W.Y., which I believe refers to Mr. John 
W. Young, of the Federal Laboratories Co., addressed to the Curtiss- 
"Wriizht Export Corporation, attention of Mr. Shannon. 

Mr. Allard. That is right. 

Mv. Hiss. That letter will be " Exhibit No. 277." 

(The letter referred to was marked "Exhibit No. 277" and is 
included in the appendix on p. 869.) 

Mr. Hiss. That letter, exhibit no. 277, reads as follows : 

lipplying to your letter of February 23 relative to flamethrower, please 
be advised that inasmuch as we have only had one inquiry for this from 
Turkey, we prefer making flame throwers only on request. We do not 
believe there would be a popular demand for the product sufiicieDt to warrant 
our developing it and pushing it as we have our other products. 

Mr. Allard. I should think not. 

Senator Bone. Is there a popular demand, Mr. Allard, for war 
products? Of any kind? 

Mr. Allard. I would not say that there was for any kind of war 
products. 

Senator Bone. How could you throw flames from an airplane? 

Mr. Allard. I have not any idea. I never heard of a flame 
thrower from an airplane. The only flame thrower I heard of 
was in the last World War. 

Mr. Hiss. Has your firm had quotations on tanks? 

Mr. Allard. I do not know. The records would show that. 



1 111 rp^ponse to tlio abnvp rpqiiest. Mr. Alhird informed the committee on Nov. 3. 1934, 
as follows : " Tile Export Co. dirt not sign tlie agreement from Federal Laboratories 
dated Aug. 13. 1932 (Exhibit No. 27C), or a subsequent agreement submitted to the 
Eximrt <'o. However, the Export Co. did have an understanding with Federal Lab- 
orarories in 19:;2 that the Export Co. was to handle Federal Laboratories' smoke-screen 
efinipuiPiit in Argentina. The Export Co. sold two of these to the Argentine Govern- 
ment for I'xperinuMital purposes. 



MUNITIONS INDUSTRY 701 

Mr. Hiss. Just to refresh your memory, here is a letter of Octo- 
ber 1, 1932, written to Mr. J. W. Young of the Federal Labora- 
tories, Inc., Pittsburgh, Pa., signed by Curtiss- Wright Export 
Corporation, by Mr. Owen Shannon, which I will offer as " Exhibit 
No. 278." 

(The letter referred to was marked '' Exhibit No. 278.") 
Mr. Hiss. That letter, '' Exhibit No. 278 ", reads as follows : 

Dear Mb. Young : I was very much surprised when I telephoned your 
office this morning to find that you had returned to Pittsburgh without- 
leaving a message for me regarding the tank. 

I was even more surprised when I talked with the Bolivian consul and he 
told me confidentially he had already been quoted a price of $34,000 on this 
particular tank. 

I would appreciate your telephoning me Monday morning just what we 
can do about offering this or any other tanks to Bolivia. 

Mr. Allard. The letter speaks for itself. 

Mr. Hiss. Does your company represent the Colt Fire Arms Co. 
for the sale of any firearms as a part of planes or not as a com- 
ponent part of planes sold by yourself? 

Mr. Allaed. No; I do not think so. 

Mr. Hiss. To refresh your memory, I call your attention to a 
letter of February 23, 1933, from Mr. Goulding, of your company, 
to Mr. F. C. Nichols, who I believe is a vice president of the Colt 
Patent Fire Arms Manufacturing Co. [handing paper to witness], 

Mr. Allard. Yes, sir. 

(The letter referred to was marked " Exhibit No. 279 " and is 
included in the appendix on p. 870.) 

Mr. Hiss. That letter reads in part as follows : 

We have been i;ctively, through our China representative, pushing the sale 
of our equipment in the Canton section, with the result that we now have, 
and are holding subject to the issuance of export license, an order for ten 
of your guns. This would, I think, convince you of the active steps we are 
taking to develop sales for your products in China. 

Mr. Allard. I think that refers to airplane guns, ten guns. 
Mr. Hiss (reading). 

You appreciate, I believe, 
the letter goes on to state, 

the disadvantage of several people offering the same customer the same article. 
It always leads to confusion on the part of the customer, with the result 
that some one else usually gets the business. We hope, therefore, that you will 
in the future work through us exclusively in China. 

Mr. Allard. Correct; on airplane equipment. 

Senator Pope. What position does Mr. Goulding hold ? 

Mr. Allard. Vice president of the Export Co. 

Senator Bone. Do you know what concern owns the Colt Patent 
Fire Arms Manufacturing Co. 

Mr. Allard. No ; I do not. 

Senator Bone. The stock control is vested in some one of the 
bigger companies, is it not? 

Mr. Allard. Not to my knowledge. I do not know anything 
about it. 

The Chairman. Do we have any information, Mr. Hiss, as to the 
ownership of the Colt Co. 



702 MUNITIONS INDUSTRY 

Mr. Hiss. No, we have not. As to the Remington Co., as to which 
a prior letter was put in, the record shows that the Cnrtiss-Wnght 
Export Co. is their agent in China, and we do have information 
that they are one of the subsidiaries of the du Pont Co. 

The Ohairman. It is the view or impression of those here around 
the tabk^ that the DuPonts are very heavy OAvners of Colt. 

Mr. Hiss. I have no information at the present time. 

Also on this question of vour relations with the Colt Co. I intro- 
duce a letter of October 21, 1932, from Mr. Nichols, who signs himself 
as a vice president of the Colt's Patent Fire Arms Manufacturing 
Co., addressed to the Curtiss-Wnght Export Corporation, attention 
of Mr. O. A. Shannon. That will be " Exhibit No. 280." 

(The letter referred to was marked " Exhibit No. 280 " and is 
included in the appendix on p. 870.) 

Mr. Hiss. That letter reads in part as follows : 

As to your offering the arms referred to, you are at liberty to negotiate 
in Peru knd Bolivia, Turkey after Jan. 15, 1933, and regarding China and 
Japan, we cannot at this writing include these markets, l)ut should anything 
transpire whereby our joint interests would be served through your offering 
quotations, if you will duly notify us in advance we wall endeavor to afford 
you every assistance and protection possible. 

Then the next paragraph, you will note, particularly, reads as 

follows : 

On any business you might obtain from the governments named, w'e would 
allow you a confidential commission of 5 percent; this of course does not 
include aircraft guns to be mounted on your planes; regarding which you 
already enjoy a confidential arrangement. 

Mr. Allard. Yes, sir. 

Mr. Hiss. I judge from that that your company represents the 
Colt Co. or has a commission understanding. 

Mr. Allard. That is correct. It is not an agency agreement, as 
I understood your question. 

Mr. Hiss. But you have a commission understanding? 

Mr. Allard. That is correct. 

Mr. Hiss. That you may represent them ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. And if you do sell any of their equipment, other than for 
planes, you receive a confidential commission? 

Mr. Allard. That is correct. 

Senator Pope. Just what is the position of Mr. Shannon in your 
company? Just what does he do? 

Mr. Allard. Formerly he was office manager, general clerk in the 
office with the Export Co., up until he left the Export Co. 

Senator Pope. Apparently all these letters relating to military 
matters are addressed to Mr. Shannon. Why is that? 

Mr. Allard. Because most of the correspondence cleared through 
him. He made a great many of the contacts ; the people saw him, who 
would come in to try to get some information, and possibly Avhen I 
might not be in the office or anyone else. 

Mr. Hiss. On the same subject, there is a letter of October 27, 1932, 
from Mr. Goulding, addressed to the Automobile Tire & Tractor Co. 
at Istanbul, Turkey. Are they your representatives in Turkey? 

Mr. Allard. They are. 



MUNITIONS INDUSTRY 703 

Mr. Hiss. It is directed "Attention : Ahmet Emin Bey." Is he an 
official of that firm? 

Mr. Allard. He is. 

Mr. Hiss. Mr. Ahmet Emin Bey's name was mentioned in Mr. 
Drifjgs' testimony the other day, and was identified as being in one 
of the photographs taken on board the cruiser Raleigh., and there 
was testimony that the Automobile Tire & Tractor Co. has repre- 
sented munition concerns in general. Do you know anything about 
their representation of other companies than yours? 

Mr. Allard. I know they represent the Goodyear Tire & Rubber 
Co., and I think Chrj^sler and Dodge products, motor cars, and they 
have a store in Turkey which I have been in, with radios and all sorts 
of automobile accessories. 

Mr. Hiss. You do not know of any other munition firms which they 
represent ? 

Mr. Allard. No, I do not believe I do. They represent Colt. 

Mr. Hiss. Do you know Mr. Ahmet Emin Bey when you see him 
[handing, photograph to witness] ? ' 

Mr. Allard. Very well. 

Mr. Hiss. Will you see if you can identify him there? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Which one is he? 

]\Ir. Allard. This one right here [indicating on photograph]. 

Mr. Hiss. That was taken in 1928, at which time he w^as repre- 
senting the Driggs Co. 

The Chairman. That is what we were talking to Mr. Driggs about. 

Mr. Hiss. This letter to Mr. Ahmet Emin Bey will be " Exhibit 
No. 281." 

(The letter referred to was marked " Exhibit No. 281 " and is in- 
cluded in the appendix on p. 871.) 

Mr. Hiss. That letter in the fourth paragraph reads as follows 
[reading] : 

Turkey is beiiis released from Viekers arrangements with Colt as of .January 
1, 1933, so that we will he free to quote you on any inquiries for their equip- 
ment which you can develop on and after that date. 

Mr. Allard. Right. 

Mr. Hiss. That is the arrangement, I assume, which is referred to 
in Mr. Nichols' letter, in the preceding exhibit. 

Mr. Allard. That is right. 

Mr. Hiss. That you could get in Turkey after a certain date in 
January 1933. 

Mr. Allard. Yes, sir. 

Mr. Hiss. In other words, your company took the place of the 
Vickers Co. as the Colt representative in Turkey? 

Mr. Allard. I do not know that Vickers was the Colt representa- 
tive in Turkey at any time. My recollection is that Vickers sold 
their own goods and had an exclusive territory down there. I do 
not know whether they represented Colt. 

Mr. Hiss. This particular paragraph which I have read before, 
Mr. Allard, says : 

Turkey is being released from Vickers arrangements with Colt as of .January 
1, 1933, so that we will be free to quote * * * after that date. 
83876 — 34— PT 4 2 



704 MUNITIONS INDUSTRY 

Mr. Allard. That is correct, but, as I said, I think the arrange- 
ment was that Vickers were selling their own guns under an arrange- 
ment with Colt, and Colt kept out of the territory. I do not think 
Vickers ever sold Colt guns. 

Mr. Hiss. Has your company ever sold any police equipment, tear 
gas, and things of that sort? 

Mr. Allard. It is possible that we have sold police equipment, 
tear gas. I do not know. 

Mr. Hiss. I show you a letter dated November 3, 1933, signed by 
" Owen ", which I judge is Mr. Shannon. [Handing paper to 
witness.] 

Mr. Allard. Yes, sir. 

Mr. Hiss. Addressed to Mr. C. W. Webster, who at that time 
represented your company in South America. Is not that correct? 

Mr. Allard. That is right. 

Mr. Hiss. That will be " Exhibit Xo. 282." 

(The letter referred to was marked " Exhibit No. 282 "' and is 
included in the appendix on p. 872.) 

Mr. Hiss. On the second page of that letter Mr. Webster says: 

Cable me what you do with Gaudara and I can start sending them data and 
prices on some of the misceUaneous equipment. 

Gandara was a firm representing your company in Argentina? 

Mr. Allard. No, I never heard the name " Gandara " before. I 
do not know it. I woidcl like to retract that statement. I have 
heard the name, but I can not identify Gandara. 

Mr. Hiss. I wonder if we can not ask Mr. Webster if he knows. 

Mr. Allard. Mr. Webster is here, if he knows. 

The Chairman. Mr. Webster, will you come forward and take the 
oath ? 

Mr. Webster. Yes, sir. 

The Chairman. Mr. Webster, pull up one of the chairs and give 
the reporter your full name. 

Mr. Webster. Clarence W. Webster. 

TESTIMONY OF CLARENCE W. WEBSTER 

(The witness was duly sworn by the chairman.) 

The Chairman. What is your connection with the Export 
Corporation ? 

Mr. Webster. Distributor for Latin America. 

Mr. Hiss. Mr. Webster, the question was whether Gandara, who 
is referred to in a letter written Mr. Shannon to you on November 3, 
1933, is a representative of the Export Co. in South America, and, 
if so, would you please identify the country ? 

Mr. Webster. That is Argentina. 

Mr. Hiss. And they did at one time represent the Export Co. in 
Argentina ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Mr. Webster, Mr. Shannon in that letter goes on to 
state [reading] : 

My idea would be, if they are to purchase from us and resell to the 
govenuneiit — 



MUNITIONS INDUSTRY 705 

That is Gandara to purchase from the Curtiss-Wright Export 

'Co.— 

to give them prices that would net you ten percent at least, and wherever pos- 
sible, as much more as I find it will stand in comparison to prices they could 
get direct from manutacturers or others such as Air Associates, etc. 

Find out just wliat they are doing on bombs and police gas equipment and, 
perhaps, we can chisel in on it here as I understand the Argentine police have 
bought large quantities of that kind of stuff. 

Was there any sale of any police gas? 

Mr. Webster. No, sir, -we never attempted to sell anything of that 
nature. 

Mr. Hiss. Does your company represent the Sperry Gyroscope Co. 
in any foreign territories, Sir. Allard? 

Mr. Allard. I believe we do. 

Mr. Hiss. Is it correct that you represent them in Brazil, Uruguay, 
Paraguay, Ecuador. Colombia, Venezuela, Mexico, Siam, Peru, Chile, 
Bolivia, and Central America ? 

Mr. Allard. May I ask Mr. Webster to answer the question? I 
■cannot answer it, Mr. Hiss, accurately, without checking in the files. 
We have at some time or other represented them. Whether we are 
representing them in all of those countries now is another thing. 

Senator Bone. The Sperry Co. makes fire-control apparatus do 
they not? 

Mr. Allard. Yes, sir; and also they make aeronautical instru- 
ments, directorial gyros, and instruments used in aviation, airplanes. 

Senator Bone. They manufacture blind-flying apparatus? 

Mr. Allard. Yes, sir ; they are the originators of that. 

Mr. Hiss. Your company does represent them in several countries ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. The Sperry Co. has also developed and marketed a fire- 
control apparatus for antiaircraft equipment? 

Mr. Allard. Yes, sir. 

Mr. Hiss. As well as for naval batteries and so forth? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Does that mean, therefore, that your company would 
be interested in the promotion and sale of antiaircraft equipment 
as well as of aircraft? 

Mr. Allard. I would have to refresh mj^ memory again from the 
records as to what the Sperry Gyroscope Co. allows us to sell. I 
think it is all aeronautical instruments and not antiaircraft or fire- 
control equipment. 

Mr. Hiss. I call your attention to a letter dated December 8, 1933, 
written to Mr. Joaquin Samper H, at Bogota, Colombia, and signed 
by Mr. Goulding. That will be " Exhibit No. 283." 

(The letter referred to was marked " Exhibit No. 283 " and is 
included in the appendix on p. 873.) 

Mr. Hiss. Does Mr. Samper represent, or did he on December 8, 
1933, represent the Export Co. in Bogota ? 

Mr. Allard. His company, Urueta & Samper, did and do. 

Mr. Hiss. On page 2 of the letter you will note the following 
[reading] : 

Yesterday I had the opportunity of meeting General Angel, Chief of Staff, 
who was here briefly following a trip to Europe. With him was General 
"Cortes who, I understand, is the ranking Colombian general, stationed tern- 



706 MUNITIONS INDUSTRY 

porarily in the le.iration in Wasliin^'toii as military advisdr. General Angel 
seems interested only in aviation in a general way so that we did not discuss 
any of the more technical or detailed features at present involved. He was, 
however, very interested in antiaircraft defense, and Mr. Miranda, together 
with Commander Strong, explained the Sperry fire control and the necessity 
for this defense, which he readily admitted and it is probable that following 
his return to Colombia he will push for several antiaircraft batteries complete 
with Sperry fire control to make them effective. These are, of course, expensive 
installations, but in my opinion there is no cpiestion but that Colombia, in the 
event of hostilities, should have this protection, particularly at the port of 
Buenaventura. We would, of cour.se, like to see this Inisiness developed in 
view of our connections with the Sperry Co. and look to you to further this 
business. 

Mr. Allard. Yes, sir. 

Senator Pope. Who wrote that letter? 

Mr. Hiss. It was written by Mr. Goiilcling. the vice president of 
the Ciirtiss- Wright Export Corporation, in connection with your 
company's connection with Sperry, which is referred to by Mr. 
Goulding in this letter by simply stating : " In view of our con- 
nections with the Sperry Co.", Avhich company in certain countries 
you represent as agent. 

Mr. Allard. That is right. 

Mr. Hiss. I would like to call your attention to a telegram dated 
May 2, 1933, from Mr. T. A. Morgan, the president of the parent 
company, to Mr. Pawley in Shanghai, which will be " Exhibit 
No. 284."" 

(The telegram referred to was marked " Exhibit No. 284 " and 
is included in the appendix on p. 875.) 

Mr. Hiss. The latter states [reading] : 

New company has been formed, Sperry Corporation, T. A. Morgan president, 
John Sanderson vice president, which holds Sperry Gyroscope Co., Ford 
Instrument Co., Intercontinent Aviation, Inc., Curtiss-Wright Corporation 
shares formerly owned by North American Aviation. 

SEVERITY AND NATURE OF COMPETITION FACED IN FOREIGN MARKETS 

Mr. Webster, you were formerly president and a director of the 
Curtiss-Wright Export Corporation. Is that correct? 

Mr. Webster. Yes, sir. 

Mr. Hiss. And you resigned in June 1933 ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. At which time your relationship with the company 
was what? 

Mr. Webster. Distributor for Latin America. 

Mr. Hiss. You have the exclusive sales representation of the Latin 
American Curtiss-Wright products? 

Mr. Webster. That is right. 

Mr. Hiss. Will you please explain to the committee just how you 
function with respect to the Curtiss-Wright companies? Do you 
purchase from them? 

Mr. Webster. I purchase from Export at a definite price and then 
deal with agents in Latin America. 

Mr. Hiss. Does the Export Co. make advances to you for your 
expenses? 

Mr. Webster. When necessary, up to a certain amount. 



MUNITIONS INDUSTRY 707 

Mr. Hiss. And those are to cover the expenses of your sales 
or<?anization ? 

Mr, Webster. Yes, sir. 

Mr. Hiss. How large an organization do you have, Mr. Webster? 

Mr. Webster. In addition to myself there are, I believe, five. 

Mr. Hiss. Could you just give their names so that we will have 
them identified later? 

Mr. Webster. Mr. Owen Shannon 

Mr, Hiss, He is no longer a member of the Export Co,? 

Mr, Webster. No ; he is an employee of mine. 

Mr. Hiss. He was formerl}'^ an employee of the Export Co.? 

Mr. Webster. He was formerly an employee of the Export Co. 
This is the New York office organization. There is Mr. Owen 
Shannon, Mr. John Shannon, Albert Mulady, and then in South 
America there is Mr. Richard Pierrot in Argentina. 

Senator Bone. What is his official position down there? 

Mr. Webster. Prior to his connection with me? 

Senator Bone. Did he have any connection with the Government? 

Mr. Webster. Yes; prior to that he was American trade commis- 
sioner in Rio, in Brazil. 

Then we have another man b}^ the name of Travis, Clifton Travis. 

Mr. Hiss. Was he formerly an employee of the Export Co. before 
he became associated with you ? 

Mr. Webster. No, sir ; he did not go out as such. 

Mr. Hiss. Did he not go out as a sales representative for the 
Export Co. and as a pilot? 

Mr. Allard. He did at times. He was on our pay roll from time 
to time on special missions, 

Mr. Webster. At the jiresent time he is on the west coast of South 
America, I believe in Lima. 

Mr. Hiss. Are the selling costs of your organization rather large, 
Mr. Webster? 

Mr. Webster, I should not say they are unusually large, 

Mr, Hiss, Just what do those expenses consist of? 

Mr, Webster, Salaries, traveling expenses, 

Mr, Hiss, Could you state the salaries of the five men which you 
have named as ^^our assistants? 

Mr, Webster, I could not. I could check up on it and let you 
know. I could not tell you exactly, now. 

Mr. Hiss. I would like to state for the record here, for your in- 
formation, that the Export Co. has furnished the committee a state- 
ment that for the 7 months ending December 31, 1933, the advances 
of the Export Co. to your organization for expenses totalled $55,- 
599.66, and that your own personal drawings during that period 
of time were an additional $11,221.32. 

The Chairman. Was that on an expense account or was the 
$11,000 plus inclusive of salary? 

Mr, AVebster. I could not say, sir. Whatever the record shows, 

Mr. Hiss, It was advances for expenses and his personal draw- 
ing account. Do you have a fixed salary from the Export Co.? 

Mr. Webster. No. 

Mr. Allard. May I say something there, Mr. Hiss ? 

Mr. Hiss. Certainly. 



708 MUNITIONS INDUSTRY 

Mr. Allard. That information for the 7 months furnished the- 
committee is all the money advanced to Mr. Webster for his organi- 
zation. It is not just traveling expenses and that, but it is salaries 
and office expenses, et cetera. 

Mr. Hiss. The expenses of your organization are supposed to be 
met by the difference between the price at which you buy from the 
Export Co. and the price at which you resell ? 

Mr. Webster. That is correct. 

Mr. Hiss. Prior to your becoming a distributor for the company,, 
and while you were president, were you in general familiar with 
the foreign sales of the Export Co. ? 

Mr. Webster. In a general way. I devoted most of my time to 
Latin America. 

Mr. Hiss. So that for some time you have been engaged in the 
Latin American export field? 

Mr. Webster. Yes, sir. 

Mr. Hiss. In that field have you found that in selling military 
planes and whatever munitions your company may have sold, as 
was indicated by Mr. Allard's testimony, the Export Co. was and 
still is faced with competition from such people as Vickers in 
Great Britain, Junkers in Germany, Schneider in France, and 
Skoda in Czechoslovakia, and other armament and airplane manu- 
facturers ? 

Mr. Webster. Other aircraft manufacturers. I would not say 
armament. I do not believe we have ever encountered any com- 
petition from Skoda. We have not dealt in a similar line of ma- 
terial that Skoda sells. Ours is strictly aircraft equipment and 
accessories that go with aircraft. 

Mr. Hiss. In December of 1933 a letter written to your com- 
pany refers to the fact that the Curtiss prices in Peru for bombs 
were still higher than the Vickers prices. Would that refer to 
bombs sold for general use? 

Mr. Webster. No. That is aircraft bombs. 

Mr. Hiss. But bombs sold apart from specific units of planes^ 
sold by your company? 

Mr. Webster. Yes; it might possibly be. 

Mr. Hiss. You would say in general that the competition in 
South America and in the world field is severe in the aircraft 
business, would you? 

Mr. Webster. Yes, sir; I would. 

Mr. Hiss. Have you found that your competitors, because of 
the severity of that competition, are sometimes forced to resort 
to what you might consider unfair tactics. 

Mr. Webster. We believe that that has been done. Just what 
would you refer to as unfair tactics? 

Mr. Hiss. May I call your attention to a letter of July 25, 1933,. 
signed by Jerry Clark? I will offer this letter in evidence as 
" Exhibit No. 285." 

(The letter referred to was marked " Exhibit No. 285 " and is 
included in the appendix on p. 876.) 

Mr. Hiss. Can j-ou identify Mr. Jerry Clark? This is on the let- 
terhead of the Intercontinent Aviation, Inc. ? 

Mr. Webster. I believe Jerry Clark at one time was an employee 
of Export. He is now in China. 



MUNITIONS INDUSTRY 709 

Mr. Hiss. It is on the letterhead of the Intercontinent Aviation 
Co., which we have discussed before, which is controlled by the 
Sperr}^ Corporation, in Shanghai and is addressed to Mr. Goulding. 

Mr, Webster. This is in connection with China, is it not? 

Mr. Hiss. Yes. 

Mr. Webster. That is after I left the Export organization. This 
letter is July 25, 1933. I was no longer an officer of the Export 
Corporation at the time this letter was written. 

Mr. Hiss. If Mr. Allard wishes to answer this particular question, 
on page 2 of this letter I refer you to the first complete paragraph 
which reads as follows: 

I just found out yesterday that Dr. H. H. Kung, the present no. 1, was 
informed by the Italian air attache that the CurtiS'S Hawk was an old dis- 
carded Caproni design. I understand that this perturbed Dr. Kung to quite 
an extent. This is an illustration of one of the various difficulties encoun 
tered by agents here. The whole thing is dirty business and intrigue. 

The reference to Dr. H. H. Kung, the present no. 1, is a reference 
to Chinese aviation circles. 

Mr. Allard. That is right. 

Mr. Hiss. The reference to the Caproni design is a reference to 
the Caproni Italian plane ? 

Mr. Allard. That is true. 

Mr. Hiss. Then in the third complete paragraph, referring to a 
Fiat pursuit ship he says : 

I am hoping that we will get a chance to have a competitive demonstra- 
tion between this ship and the Hawk, but I don't think the Italians will want 
to play. They are a dirty cut-throat bunch of business iieople and do not 
hesitate to knock our equipment at every possible opportunity. 

Have you found, Mr. Allard or Mr. Webster, that your competi- 
tion is cut-throat and that the matter of selling airplanes is dirty 
business and intrigue? 

Mr. Allard. I do not think I would describe the competition in 
those words. 

Mr. Hiss. May I call your attention also to the next sentence 
which says : 

I am glad to say that it has not been necessary for us to resort to this 
practice as the statement of facts is all that is necessary in regard to the 
Italian equipment now on hand. 

If the competition had been severer, do you think it would have 
been necessary for your company to resort to that kind of com- 
petition ? 

Mr. Allard. We never have and never will as long as I am 
president of the company. 

Senator Pope. Who wrote that letter? 

Mr. Hiss. Jerry Clark, who is identified as a former employee 
of the company. Is he still an employee of the Curtiss Co.? 

Mr. Allard. Xo, sir; he is not. 

Mr. Hiss. Was he on July 25, 1933 ? 

Mr. Allard. No, sir. 

Mr. Hiss. He was not? 

Mr. Allard. No, sir. 

Mr. Hiss. Why was he so interested in the sale of the Hawk, 
if he was not an employee at that time ? 



710 MUNITIONS INDUSTRY 

Mr. Allard. Being an American, and a member of the American 
Aviation Mission that was emphn'ed by the Chinese Government 
to instruct the Chinese in the air operations and aviation in general, 
naturally he was trying to have American ])roducts sold in prefer- 
ence to Italian. 

Mr. Hiss. P^ven though he was not an employee of your company? 

Mr. Allard. That is right; having at one time been an employee. 

Senator Bone. What were his connections with the Government 
at that time? 

JSIr, Allard. Do you mean the Chinese Government ? 

Senator Bone. No; our Government. 

Mr. Allard. None whatsoever; none that I know of. 

Senator Bone. What was this mission to which you refer? 

Mr. Allard. The Chinese Government asked, I believe, the De- 
partment of Commerce here, to select a group of American aviation 
people to come over to China on the Chinese Government's pay roll 
at their expense, to organize a Chinese Air Force. That is the 
National Government, the Nanking Government. Clark was a mem- 
ber of that. There were five or six Americans chosen; not service 
people. 

Senator Bone. Did this man come out of civilian walks of life? 

Mr. Allard. He had been in the Navy. I do not know what his 
history background is. He had at one tinue been in the Nav}^, I 
know that. 

Senator Pope. What Navy? 

Mr. Allard. The United States Nav3^ He was a naval aviator. 

Mr. Hiss. At the time that he wrote this letter he was then in 
the employ of the Chinese Government? 

Mr. Allard. I believe that is correct; yes, according to the date. 

Mr. Hiss. Mr. Webster, I show you a letter dated October 19, 1933, 
addressed to Mr. Allard. It seems to be an interoffice communica- 
tion and I will offer it as " Exhibit No. 286.'' 

(The communication referred to was marked " Exhibit No. 286 " 
and is included in the appendix on p. 877.) 

Mr. Hiss. This refers to a report received from you regarding 
the situation in Peru. The report is signed by Mr. Shannon. The 
first paragraph quoted from your report refers to the situation in 
Peru and is as follows : 

Tlie British have been very active and have a very clever man on the job 
here, who has managed to grease certain officials in order to put across sales. 
They have sold 6 Fairey Gordons with Panther engines and 6 Fairey Fox 
single .seaters with Rolls-Kestrel engines. 

Who produces the Fairey plane? 

:Mr. Webster. That is the Fairey Co. in England. 

The Chairman. Who is the writer of this? 

Mr. Hiss. This is Mr. Webster's report being quoted by Mr. Shan- 
non in an interoffice memoi-andum to Allard. 

Senator Bone. What company did this clever gentleman represent? 

Mr. Wehster. The Fairey Co. in England. I might say, Mr. 
Chairman, that I have no actual proof of such a thing, but it was 
my opinion that that is what happened. 

The Chairman. You are not reciting anything that is new to 
us, because I think we have not yet laid our hands on any transaction 



MUNITIONS INDUSTRY 711 

in certain countries that have not had somewhere in it a men- 
tioned necessity of having to grease the way. 

Senator Pope. From Sir Basil on down or up. 

The Chairman. Yes; or up. 

Senator Bone. I would be constrained to believe it would be 
" up ", from now on; 

Mr. Hiss. Continuing with this same communication, further on, 
it says : 

The officers wbo put through the first 12 British planes have been sent to 
England to take care of inspection, etc. 

That means the Peruvian officers? 
Mr. Webster. Yes, sir. 
Mr. Hiss (continuing) : 

* * * have been sent to England to take care of the inspection, etc., and 
all went over well heeled with " commission " money. 

You mean those officers had received commissions? 

Mr. Webster. That was my impression. 

Mr. Hiss. From the Fairey Co. ? 

Mr. Webster. Evidently from the Fairey Co. 

Mr. Hiss. I show you a letter of October 20, 1933, which I will 
ask to have marked " Exhibit No. 287." 

(The letter referred to was marked " Exhibit No. 287 " and is 
included in the appendix on p. 878.) 

Mr. Hiss. 'This letter is addressed "Dear Dan." 

That refers probably to Mr. Tobin, who was then in Peru? 

Mr. Webster. Yes, sir. 

Mr. Hiss. This letter does not bear a signature. I wonder if you 
will read it and see if you can identify it. I am under the impres- 
sion that it was probably written by you. 

Senator Pope. If I may refer to the last previous letter, with refer- 
ence to " commission " and the officers being well heeled, I notice that 
you put quotation marks around " commission ". 

Mr. Webster. Yes, that meant commissions to the officers. 

Mr. Hiss. Can you identify the writer of that letter, Mr. Webster ? 

Mr. Webster. I believe I wrote that letter. I am quite sure I 
did. 

Mr. Hiss. I call your attention to the last paragraph. The prior 
lettej- was in October, October 19, the one referring to the Fairey 
Co. This is dated October 20. This says : 

For your information we had a long talk with Romano this after- 
noon * * * 

Who is Romano? 

Mr. Webster. Romano was the material officer of the Peruvian 
Naval Air corps. 

Mr. Hiss (continuing reading) : 

* * * and looked over the contract for the six Fairey, 2-place observation 
jobs, which is the last contract signed. We were under the impression that 
they ordered single-seat pursuit planes but this is not correct. It was six 
2-place jobs. The contract price in dollars was $33,000 each and a little more 
than $7,000 per set for pontoons. This makes the entire job about $10,000 
more per unit than our Falcon. It would do no harm to mention figures to 
the Minister, but of course do not say where you got your information from. 



712 MUNITIONS INDUSTRY 

Was the Falcon a 2-place observation machine ? 

Mr. Webster. Yes. 

Mr. Hiss. Which was competitive with these Fairey planes? 

Mr. Webster. Yes. 

Mr. Hiss. Was there any reason why the Peruvian Government 
would have preferred the Fairey at $7,000 more per plane. 

Mr. Webster. Unless they were better satisfied with it than with 
our ship. 

Mr. Hiss. On a comparison of performance, how did the two ships 
show up? 

JNIr. Webster. Our performance I would say — the performance 
of the Falcon was superior to the Fairey job. 

Mr. Hiss. This letter goes on. 

It would do no harm to mention figures to the Minister 

That is the Minister of Peru in Charge of Aviation ? 
]Mr. Webster. The Minister of Marine. 
Mr. Hiss (continuing) : 

* * * but of course do not say where you got your information from. It 
sounds like highway robbery to me and someone collected at least $100,000 
on the contract as " commission." 

Can you explain the kind of commission they are referring to 
there ? 

Mr. Webster. I am afraid it was a sort of underhanded com- 
mission, paying a commission to officers being not the usual kind 
of commission. 

Mr. Hiss. This letter also puts " commission " in quotation marks. 

Mr. Webster. Yes, sir. 

Mr. Hiss. You mean an officer's commission rather than an or- 
dinary agent's commission? 

Mr. Webster. Yes. 

Senator Pope. Were these officers in active service at the time? 

Mr. Webster. I believe they were. 

Mr. Hiss. As another example of the kind of competition your 
companies face, I show you a letter of September IT, 1932, which 
I will ask to be marked as " Exhibit No. 2188." 

(The letter referred to was marked "Exhibit No. 288", and is 
included in the appendix on p. 878.) 

Mr. Hiss. This letter is from Ahmet Emin. That is the Ahmet 
Eniin Bey whom Mr. AUard has identified. The letter is addressed 
to Mr. T. Morgan, president of the Curtiss-Wright Corporation. 
He is the president of the Parent Corporation is he not ? 

Mr. Webster. Yes. 

Mr. Hiss. In this letter the statement is made that — 

From such distance, a delay may easily be attributed to lack of means. You 
may rest assured that for any financial engagement taken for aviation matters, 
the money does not only exist theoretically in the budget, but is actually 
deposited in cash at the bank. Statements to the contrary are only spread by 
competitors who hope to scare away American competitors from the Turkish 
market. A clear example of this was recently delivered by Vickers Arm'strong. 

The latter persuaded the Colt people that it would be unsafe for them "to 
do business in Turkey, and that themselves did not care to arrange for a 
Browning demonstration in Turkey, because they did not care to solicit business 
there, having a great deal of money outstanding. The business mentioned 
in this connection was the sale of 48 machine guns, making a total of about 



MUNITIONS INDUSTRY 713 

•$25,(100. Within a few weeks of this statement, Vi<"kers Armstrong obtained 
after most strenuous efforts, an order of eight Supermarine seaplanes of $600,000 
to be paid half in pounds sterling, half in Turkish pounds. * * * 

These supermarine airplanes are made by the Vickers Company, 
Mr. Webster. They are made by Armstrong, I think. 
Mr. Hiss. Which is affiliated with the Vickers interests? 
Mr. Webster. I am not sure. It is a British firm. 
Mr. Hiss. This letter says : 

This proves that Vickers-Armstrong which has a permanent factory branch 
in Ankara and has an exact knowledge * * *. 

That is a city in Turkey? 

Mr. Allard. Yes. That is the capital. 

Mr. Hiss (continuing) : 

* * * and has an exact knowledge of local conditions considers safe to do 
business for its own account, but does not hesitate to use unclean methods to 
deceive American competitors and keep them away from the m'arket. 

Have you had severe competition from American competitors also ? 

Mr. Webster. I think Mr. Allard can answer that better than I 
can. He was handling that particular territory at the time. 

Mr. Allard. You mean as a general thing, Mr. Hiss ? 

Mr. Hiss. Yes. 

Mr. Allard. A general practice throughout the world? 

Mr. Hiss. Yes. 

Mr. Allard. We have had severe competition ; yes. 

Mr. Hiss. Who is your strongest American competitor ? 

Mr. Allard. I would say United Aircraft were. 

Mr. Hiss. In size, how does that company compare with Curtiss- 
Wrio;ht Corporation? 

]V^. Allard. I do not know. Do you mean in capital set-up ? 

Mr. Hiss. In actual turn-over of products. 

Mr. Allard. I think we run along pretty closely together. They 
probably sell a little more than we do one year and we a little more 
than they do in the other. 

Mr. Hiss. How do these two companies, the Curtiss companies 
•considered as one unit and the United companies considered as 
another unit, compare in bulk with European countries? 

Mr. Allard. With European companies in the export field, you 
mean ? 

Mr. Hiss. Yes. 

Mr. Allard, I think we are much larger than any other European 
manufacturer at the present time, but it has taken us some 10 or 12 
years to get up to that point. 

Mr. Hiss. Your tw^o companies or these two companies constitute 
the largest aviation companies in the export field, you would say? 

Mr. Allard. Throughout the world? 

Mr. Hiss. Those two groups of companies; yes? 

Mr. Allard. Yes. 

Mr. Hiss. The two American companies? 

Mr. Allard. That is right. 

Mr. Hiss. I have here a letter dated Februarv 5, 1931, from Mr. 
Allard to Mr. Burclette S. Wright, which I will offer as " Exhibit 
No. 289." 

(The letter referred to was marked " Exhibit No. 289 " and is 
included in the appendix on p. 880.) 



714 MUNITIONS INDUSTRY 

Mr. Hiss. Mr. Biirdette S. Wright was vice president of the 
parent company ? 

Mr. Allard. That is right. 

Mr. Hiss. And a director of the Export Co.? 

Mr, Allard. I do not think he is now. He may have been at 
that time — just a minute. He is not a director of the Export 
Co. now. 

Mr. Hiss. This letter says in part: 

Thanks for yours of the 3d with attached copy of letter to Leighton Rogers 
on the subject of the cable to be sent to Osborn Watson about Cyclone tests*. 
Also thanks for the dope about Love's reaction to whatever statements Major 
Hall is making. 

Can you identify Mr. Love? 

Mr. Allard. Mr. Love was the president of the United Aircraft 
Export. 

Mr. Hiss. Corresponding to your position with the Curtiss Co.? 
Mr. AiiLARD. Correct. 
Mr. Hiss (repeating) : 

Love's reaction to whatever statements Major Hall is making. 

Who is Major Hall? 

Mr. Allard. He was the European representative of the Export 
Co. at that time. 

Mr. Hiss. Curtiss Export? 

Mr. Allard. Yes, sir. 

Mr. Hiss (continuing reading) : 

Needless to say, I do not believe Hall's statements are at all radical or 
unethical, as all cables and correspondence that he has had with the Finnish 
officials in which he had discussed 182'0-E's have been based entirely upon in- 
formation furnished direct from the Wright Co. or from this office. Love 
has been made to stop his unethical tactics of running down competitive- 
products, and I think this is just a sample of a method he is pursuing to 
meet real competition. 

What unethical tactics did Mr. Love adopt? 

Mr. Allard. As I recall it at that time that I wrote this letter- 
to Burdette S. Wright, Mr. Love was making statements that Avere- 
not true about the financial condition of the Curtiss-Wright Export 
Co. and about the products themselves, making statements that they 
were not used by various large users of aeronautical engines through- 
out the world. 

Mr. Hiss. Will you look at this next document, Avhich is dated 
March 30, 1932, and which I will ask to have marked "Exhibit 
No. 290." 

(The document referred to was marked " Exhibit No. 290 " and 
is included in the appendix on p. 880.) 

Mr. Hiss. This is a telegram addressed to Aeroexco. That is the 
cable address of the Export Co. ? 

Mr. Allard. Yes. 

Mr. Hiss. It is from Melvin Hall, whom you have already iden- 
tified, and says on the second page that Turkey has acted in good 
faith on our — that is, the Export Co.'s — behalf and are accei)ting 
our — that is, the Export Co.'s — statement regarding Curtiss Hawk 
one-place Cyclone engine ignoring official information United States 
Government to the contrary in addition to foul intrigue of our 
competitors and especially United Aircraft & Transport. 



MUNITIONS INDUSTRY 715 

Now, at one time, I think in the year 1930, your company sent 
ii tour of planes for exhibition purposes throughout Europe; is 
that correct? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Do you know whether Mr. Love was present at or soon 
after these exhibitions that your company put on? 

Mr. Allard. I understand that he was. I was not present on that 
tour. 

Mr. Hiss. Do you know why Mr. Love followed your tour? 

Mr. Allard. No ; I do not know why. 

Mr. Hiss. Did you get any reports of what Mr. Love did or said 
while following that tour ? 

Mr. Allard. Possibly, but they would be in the files if there were 
jiny reports. 

Mr. Hiss. Do you remember any reports? 

Mr. Allard. I do not remember any written report on it. 

Mr. Hiss. May I just refresh your recollection with a telegram 
from the files of your company dated June 3, 1930, signed Melvin 
Hall, which I will offer as " Exhibit No. 291." 

(The telegram referred to was marked " Exhibit No. 291 " and is 
included in the appendix on p. 881.) 

Mr. Hiss. This says : 

Love tactics following us with insidious derogatory comment obsolete equip- 
ment impossible dispose of in America 

Does that mean that Mr. Love was following the Curtiss tour and 
saying that the planes displayed were obsolete ? 

Mr. Allard. Apparently. 

Mr. Hiss. What kind of planes were being shown on that tour? 

Mr. Allard. Hawk and Falcon and Fledgling. 

Mr. Hiss. What model in point of time? Were they up-to-date 
models ? 

Mr. Allard. Yes. They were the latest models released by the 
Government, the United States Government, the Army and Navy, 
for export sales. 

Mr. Hiss. Were they obsolete in any commercial sense? 

Mr. Allard. No. 

Mr. Hiss. They were the best products available that you then had ? 

Mr. Allard. Absolutely. 

Senator Bone. Could they be said to have been obsolete in any 
'degree in a military sense ? 

Mr. Allard. They could be as far as our Army and Navy were 
■concerned, because those products are not released for export until 
something better has been developed and adopted by our Army and 
Navy. 

Senator Bone. What form would this obsolescence take — the ele- 
ment of speed? 

Mr. Allard. Oh, yes; speed, weight, general characteristics, rate 
of climb, altitude, ceilings, and militar}^ performance in general. 

Senator Pope. In all those respects you felt that these planes were 
the best that there were ? 

Mr. Allard. They were the best that we could offer at the time; 
yes, sir. 



716 MUNITIONS INDUSTRY 

Mr. Hiss. I have a letter here dated October 1(5, 1933. signed W. D. 
Pawlev, from Shanghai, addressed to Mr. Morgan, Avhich I will offer 
as " Exhibit No. 292." 

(The letter referred to was marked " Exhibit No. 292 " and is in- 
cluded in the api)endix on p. 881.) 

Mr. Hiss. This encloses a statement which can be marked sepa- 
rately as " Exhibit No. 293.'* 

(The statement referred to was marked " Exhibit No. 293 ", and 
is included in the appendix on p. 882.) 

Mr. Hiss. The statement reads: 

Today Bill Brookes stopped in to see if I had heard from you ; he told me 
the Chinese in Chinatown had a lot of cash tliey were going to send to China, 
but when the treaty with Japan was signed they got peeved and didn't send it. 
He also told me that the Curtiss planes Jimmy Doolittle went over there with 
were the same old crates they tried to sell China last year. The only dif- 
ference was a coat of paint and other motors and they are another year old. 
If you run into them, watch out. They are supposed to be awful 

That is enclosed in the letter from Mr. Pawley to Mr. Morgan and 
Mr. Pawley explains that by saying that this was received by a Mr. 
Keavney who is an ex-aviator and that he received a letter from his 
wife making the statements just read and that the contents of this 
letter were immediately transmitted to Carl Nahmmacher, United's 
agent. That is the United Aircraft? 

Mr. Allard. Yes. 

Mr. Hiss. And this " Exhibit No. 292 " says that he has passed it 
around to everyone in Shanghai interested in aircraft with the story 
that the man who received the letter was stopping at the Metropole 
Hotel and could furnish definite proof that the ships sold to the 
Chinese were old equipment. 

Do you remember the planes that were sent at this time with Major 
Doolittle? 

Mr. Allard. Very well. 

Mr. Hiss. What model were they ? 

Mr. Allard. They were the type, what we called the Type-1 
Hawk, which is the Cyclone Hawk as released by the Army and 
Navy at that time for export sale. 

Mr. Hiss. A pursuit plane? 

Mr. Allard. A pursuit plane. 

Mr. Hiss. Were they, as the letter to Mr. Keavney said, " Planes 
that you tried to sell to China the year before " ? 

Mr. Allard. Absolutely not. The planes were built on this order. 

Mr. Hiss. Did the United representatives make any inquiry so far 
as you know of your company to find out whether this letter which 
Mr. Pawley says they spread around Shanghai was correct or not? 

Mr. Allard. Not to my knowledge ; no. 

Senator Pope. So far as you know, did they do anything about 
correcting that impression ? 

Mr. Allard. So far as I know they did not; no. Unfortunately, 
Carl Nahmmacher is now dead. He was killed in an aviation acci- 
dent out there. 

Mr. Hiss, Did your company attempt to approach United and ask 
them to stop spreading such stories? 

Mr. Allard. Yes. 

Mr. Hiss. Did you have any success? 

Mr, Allard. I do not know ; it is hard to tell. 



MUNITIONS INDUSTRY 717 

Senator Bone. When developing some new principle in aerial 
navigation that can be applied to an airplane, how do you protect 
yourselves to keep other companies from using it? 

Mr. Allard. a new principle of aviation? 

Senator Bone. Some new principle in the ship itself that can 
be incorporated in the structure of the ship or its engine; how do 
you protect yourselves against others using it? 

Mr. Allard. May I ask Mr. Hotchkiss about that ? I think there 
is an organization into which all patents are pooled for manu- 
facturers. 

Mr. Hotchkiss. Aircraft patents; yes. 

Senator Bone. Then, after the manner of the automobile com- 
panies, you pool the patents? 

Mr. Hotchkiss. Aircraft patents, Senator. 

Senator Bone. Yes. 

Mr. Hotchkiss. Patents are also taken out on engines, but they 
do not fall in this cross-license agreement. 

Senator Bone. So that in reality, in this country the aircraft 
companies have a policy whereby they pool all their patents on air- 
plane construction and all are free to use that new device, if they 
wish. 

Mr. Hotchkiss. All those who are members of the Manufac- 
turers' Aircraft Association. 

Senator Bone. Would that include all the major companies? 

Mr. Hotchkiss. I think it does, substantially all. 

Senator Bone. Those patents are protected by filing in the 
United States Patent Office^ 

Mr. Hotchkiss. That is so. 

Senator Bone. They are matters of public records. 

Mr. Hotchkiss. That is so. 

Senator Bone. Is there anything to prevent me as a private 
citizen from going down there and looking over those records? 

Mr. Hotchkiss. The patents, themselves? 

Senator Bone. Yes. 

Mr. Hotchkiss. None whatever. 

Senator Bone. So that as a practical proposition there is no 
concealment possible in a patent, is there ? 

Mr. Hotchkiss. Not in a patent, certainly not. 

Senator Bone. That is what I mean. So that if any foreign 
power wanted to see what was new in the way of airplane construc- 
tion, all in the world they would have to do would be to have 
some American attorney or draftsman go down there and look 
over the particular design. 

Mr. Webster. Or buy an airplane. 

Senator Bone. Yes ; or buy one of the late planes. 

Mr. Hiss. Mr. Allard, Mr. T. A. Morgan, the president of the 
Curtiss-Wright Co. is also president of the Aeronautical Chamber 
of Commerce. 

Mr. Allard. That is correct; yes. 

Mr. Hiss. And he is also on the executive committee of the St. 
Louis Post of the Army Ordnance Association. 

Mr. Allard. I do not know that to be a fact. 

Mr. Hiss. That is so stated in the Army ordnance record. 



718 MUNITIONS INDUSTRY 

j\lr. Allard. I did not know that. 

Mr. Hiss. I have had phiced before you a document, which I will 
offer as " Exhibit No. 294." 

(The document referred to was marked " Exhibit No. 294 " and 
is included in the appendix on p. 882.) 

Mr. Hiss. The document is headed " Situation Summary— Turkey " 
and is dated February 27, 1933. Referring to a Mr. Selahetin Bey, 
an official of the Turkish Government, Mr. Hall says : 

It is quite evident that he receives his anti-C.W. inforiuatiou 

That is Curtiss Wright? 

Mr. Allard. Yes. 

Mr. Hiss (reading) : 
information from Hamilton of United 

Mr. Hamilton is the European representative of the United Air- 
craft. 

Mr. Allard. He has been in Europe. I do not know that he is 
the European representative. 

Mr. Hiss (reading) : 

and it was told Emen Bey a few days ago by Hanidi that Selahetin had a 
definite " arrangement " with United. This ties in with the statement to 
Gillespie 

Can you identify Gillespie? 

Mr. Allard. Gillespie is the American commercial attache at 
Istanbul. 

Mr. Hiss (reading) : 

by the United mechanic Butterfield that though they hadn't been able to do 
much for themselves in Turkey they at least had queered C.W.'s game here 
permanently. 

Have you had any reason to believe that United, when they could 
not make a sale, were interested in preventing your company from 
making the sale? 

Mr. Allard. I think that speaks for itself, Mr. Hiss. 

Mr. Hiss. Have you any information indicating that what this 
says is incorrect? 

Mr. Allard. No. 

Mr. Hiss (continuing reading) : 

What the " arrangement " may be is problematical 

That is the arrangement with Selahetin and Mr. Hamilton is 
problematical. 

possibly promise of a good commission on all United engines sold to power 
Selahetin's ships 

That means United engines sold to the Turkish Government? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Then Mr. Selahetin Bey, a Turkish official, would be 
receiving a commission, according to this. 

Mr, Allard. Yes. I do not think Selahetin Bey was a Turkish 
official. I think he was an engineer, as I recall it. 

Mr. Hiss. He was not a Turkish official? 

Mr. Allard. No; I do not think he was; a government employee, 
an engineer. 



MUNITIONS INDUSTRY 719 

Mr. Hiss (continuing reading) : 

But at all events it would appear from this letter that United are persisting 
with their destructive policy of endeavoring to turn C-W business in Europe 
when they, themselves, cannot get it, to the hands of the French, Poles, or, 
indeed, anyone else. 

Senator Bone, May I ask one other question? 

I am referring now to this question of patents. Do you file these 
patents, or do tliese companies that pool their patents file them in all 
foreign countries to protect their j^atent rights ? 

Mr. HoTCHKiss. I cannot answer that definitely. I think under 
the cross-license agreement there is no such obligation. In certain 
instances, of course, I know the patents are also filed in the foreign 
country. 

Senator Bone. If you did not file your patents there and claim 
protection of the laws of those nations any firm over there might very 
readily manufacture your plane without any interference from you ? 

Mr. HoTCHKiss. That is true. I say I do not know as to what the 
practice of all the companies is. I know in one case one company 
that I am most familiar with filed them in all the important countries 
for their protection. 

Senator Bone. That is the general practice, not confined to airplane 
companies because naturally any concern that wants to protect its 
product will claim a patent in a foreign country. 

Mr. HoTCHKiss. That is correct. 

Mr. Hiss. Mr. Allard, I want to refer you to one more document, 
a letter of June 4, 1930, which I will ask to have marked " Exhibit 
No. 295." 

(The letter referred to was marked " Exhibit No. 295 " and is 
included in the appendix on p. 885.) 

Mr. Hiss. This is a letter from Randolph Cautley and is a report 
marked " confidential." 

Can you identify Randolph Cautley? 

Mr. Allard. He was an employee of Wright Aeronautical Co. at 
one time. I do not know what position he held, I think it was in 
sales or advertising. 

Mr. Hiss. The subject is Wright-engines business in Jugoslavia 
and in the fifth paragraph Mr. Cautley says : 

Tlie immediate order for 180 Whirlwinds has 

Whirlwinds are Wright aeronautical engines? 
Mr. Allard. Yes. 
Mr. Hiss (reading) : 

The immediate order for 180 Whirlwinds has evaporated into thin, hot air. 
Jugoslavia will insist on going through the motions at least of taking a manu- 
facturing license before ordering any such quantity. This does not mean that 
the 18,0 cannot eventually be resuscitated. Conditions change, depending upon 
who gets the graft and how much. For example, Lorraine and Potez, Salmson 
and Hauriot 

Are they all French companies? 
Mr. Allard. Yes. 
Mr, Hiss (reading) : 

were first in the field here and cleaned up for a while. Now it is Gnome Rhone 
and Breguet sitting on top, with Renault coming up and Lorraine going down. 
83876 — 34— PT 4 3 



720 MUNITIONS INDUSTRY 

Those are all French companies? 

Mr. Allard. Yes. 

Mr. Hiss. The reference to conditions, it depending on who gets 
the graft and how much, plus the reference that it does not mean 
that the order for 180 Whirlwinds cannot eventually be resusci- 
tated — those two follow each other, does that mean that Mr. Cautley 
thought that by the use of graft he could secure a contract for 180 
Wright engines? 

Mr. Allard. I do not know what Mr. Cautley thought of this. 
It was his idea. 

Mr. Hiss. Did your company approve any such method of doing 
business ? 

Mr. Allard. No. 

Mr. Hiss. That is all, Mr. Chairman. 

The Chairman. Gentlemen, we will ask you to return here at 10 
o'clock in the morning, to which time we will stand in recess. 

(Whereupon at 5 p.m., the committee took a recess until Tuesday, 
September 11, 1934, at 10 a.m.) 



INVESTIGATION OF MUNITIONS INDUSTEY 



TUESDAY, SEPTEMBEB 11, 1934 

United States Senate, 
Special Committee to In^t:stigate 

the Munitions Industry, 

Washington, D.C. 
The hearing was resumed at 10 a.m., pursuant to the taking of 
recess. Senator Gerald P. Nye presiding. 

Present: Senators Nye (chairman), Pope, George. 
Also present : Alger Hiss, investigator. 

The Chairman. The committee will be in order. Mr. Hiss, you 
may proceed. 

FURTHER TESTIMONY OF J. S. ALLARD, HENRY G. HOTCHKISS, 
AND CLARENCE W. WEBSTER 

Mr. Hotchkiss. Mr. Chairman, I wonder if I may at this point 
refer to the chart which we spoke about ^^esterday, and certain of 
the testimony which I have examined and which I think does not 
give a correct picture as I understand it. If I may, I would like to 
clear that up. 

The Chairman. Surely. 

Mr. Hotchkiss. The Sperry Corporation was formed in April 
1933. All of its stock was delivered to North American Aviation, 
Inc., shown on that chart above, in exchange for the stock of Sperry 
Gyroscope Co., Ford Instrument Co., and approximately 5 percent 
of the Curtiss-Wright stock owned by the North American and the 
stock of Intercontinent Aviation. 

Now at the time when that exchange was made General Motors 
had no stock interest whatever in North American, neither General 
Motors nor General Aviation Corporation. 

The Chairman. Prior to that time? 

Mr. Hotchkiss. At the time when this exchange which I am 
speaking of was made. Following that. North American Aviation 
delivered to its some 25,000 stockholders voting-trust certificates rep- 
resenting all of the stock of the Sperry Corporation. Now, none of 
the 25,000 stockholders at that time included either General Motors 
Corporation or General Aviation Corporation. 

The result was, then, that Sperry Corporation owned the com- 
panies that I have mentioned — Sperry Gyroscope Co., Ford Instru- 
ment Co., Intercontinent Aviation, and approximately 5 percent of 
stock interest in Curtiss-Wright. 

Subsequent to that transaction it is my information that General 
Aviation Corporation and General Motors Corporation acquired a 
stock interest in North American Aviation. 

721 



722 MUNITIONS INDUSTRY 

Senator Pope. How long subsequently ? 

Mr. HoTCHKiss. I do not know how lonj; after that, but North 
American Aviation, in which the General Motors and the General 
Aviation Corporation acquired an interest, was one which had trans- 
portation interests which they had retained. Eastern Air Transport 
was one of the principal ones, I think, not shown there. 

Mr. Hiss. Mr. Hotchkiss, are you saying that the North American 
stockholders represented as holding 52 percent of its stock, i.e., Gen- 
eral Aviation and General Motors, do not hold any of the voting 
trust certificates of the Sperry Corporation ? 

Mr. Hotchkiss. Let me make this clear ; They issued out the vot- 
ing trust certificates of the Sperry Co., I believe, in the nature of a 
stock dividend to the stockholders. That was a certificate of Sperry 
and a certificate of North American. Now, at that time General 
Motors and General Aviation were not, as I am informed, stock- 
holders of North American, and therefore did not receive the stock 
dividend of the Sperry Corporation. 

Now, subsequently, when General Motors acquired a stock interest 
in North American it was after the stock dividend to which I have 
referred, and did not, therefore, carry with it, in the nature of 
things, the voting trust certificate of the Sperry Corporation. 

Mr. Hiss. In other words, you are saying that General Motors 
Corporation and General Aviation Corporation have not acquired 
any of the voting trust certificates of the Sperry Corporation? 

Mr. Hotchkiss. I do not know whether they have acquired any 
voting trust certificates in the open market. I simply want to 
point out that they did not acquire them in connection with the 
formation of the Sperry Corpoj-ation in the major reorganization at 
that time. 

Mr. Hiss. I should like again to call the committee's attention, 
Mr. Chairman, to the directors of the Curtiss-Wright Corporation 
and of the Sperry Corporation, who are also on the General Aviation 
or the North American Aviation. Mr. Hoyt, who is on the board of 
directors of the Curtiss-Wright, parent corporation, and of several 
of the subsidiaries, is also a director of the Bendix Aviation, which 
is shown over there on the chart, in which General Motors has a 
25-percent interest. 

The Chairman. The point, Mr. Hiss, is that the control exercised 
here is as largely through interlocking directorates as it is through 
stock ownership. 

Mr. Hiss. That is correct. 

Senator Pope. One question here. It appears that whatever may 
have been the condition at the time to which you refer, the Gen- 
eral Aviation Corporation owns 43 percent plus and General Motors 
8 percent plus, making a total of 52 percent. Now is it the condi- 
tion that this stock now owned by General Aviation and General 
Motors does not possess voting power so that they can control the 
affairs ? 

Mr. Hotchkiss. No; I am afraid I have not made that clear. 
That stock, to which you refer, under the North American Avia- 
tion block, is, as I understand it. North American stock having 
full voting rights. 
Senator Pope. Yes. 



MUNITIONS INDUSTRY 723 

Mr. HoTCHKiss. But it does not include and does not so state 
any of the voting trust certificates of the Sperry Corporation. 

Mr. Hiss. I think the way to clear that up is to ask General 
Aviation Corporation and General Motors Corporation specifically 
whether, when they acquired stock in North American, they also 
acquired any of the voting trust certificates of the North Anierican 
Aviation. " Exhibit No. 296 " is a letter dated April 6, 1934, bearing 
the initials J. S. A., Mr. AUard's initials. 

Mr. Allard. That is right. 

Mr. Hiss (continuing). Addressed to Mr. Leighton. 

(The letter referred to was marked "Exhibit No. 296", and is 
included in the appendix on p. 886.) 

Mr. Hiss. You will recall that yesterday the witnesses stated 
that the Curtiss-Wright Export Co., which is the foreign selling 
agency for the Curtiss-Wright group, sold military planes and also 
sold munitions apart from various planes which they sold. The 
statement was made that the munitions sold to date all were con- 
nected with aviation, although the testimony showed that the 
Curtiss-Wright Export Co. has received quotations and has nego- 
tiated for various munition products not usable in connection with 
aviation. For example, there was a bid for tanks and various other 
articles of munitions. 

This letter of April 6, 1934, reads as follows [reading] : 
To : Mr. B. G. Leighton. 

Dear Bruce: Mr. B. C. Goss, who is prosdent of the U.S. Ordnance Engi- 
neers, Inc., who manufacture chemical warfare munitions, has been approached 
by an individual in Istanbul in connection ^^■ith the possible sale of chemical 
munitions to the Turkish Government and, more recently, with a plan which 
this Turk has submitted to Mr. Goss for U.S. Ordnance Engineers, Inc., to 
build a chemical munitions plant in Turkey. 

Mr. Goss is very much interested in the proposition, and, incidentally, he 
tells me it is the only way that Turkey can have successful chemical warfare 
equipment — by building a factory. 

Mr. Goss is planning on going to Turkey in the very near future, probably 
sailing within the next week or two, and may, possibly, sail with me. How- 
ever, in the event that we do not arrive together, I am writing him a letter 
of introduction to you and have suggested that he get in touch with you before 
he gets in touch with anyone else in Turkey, i^o that you can give him the 
benefit of your experience and advice, and see if there is any way in which 
Curtiss-Wright can participate on a commission basis in his projected business 
with Turkey. Obviously, we do not want to be involved in any financing or 
anything else, but merely to get a commission for the assistance which you 
will give him. 

It is true, is it not, Mr. Allard, that the Curtiss-Wright Export 
Corporation, having a widely flung world selling organization which 
deals with the military departments of various governments, is avail- 
able for the sale of munitions on a commission basis, whenever it is 
profitable to the company? 

Mr. Allard. That is correct. 

COMMISSIONS PAID IN CONNECTION WITH FOREIGN SALES 

Mr. Hiss. Yesterday it was also developed that, for in.stance, Cur- 
tiss competes both with European companies and the United Aircraft 
group, an American group of companies which resorted to what wa.s 
characterized yesterday as " unfair tactics ", and the Curtiss com- 
petitors indulge in what Mr. Webster referred to in quotations as 



724 MUNITIONS INDUSTRY 

" commissions " to various agents, and Mr. Allard stated that his 
company, so long as he was president and so long as he had been 
connected with it — which is 6 years, Mr. Allard ? 

Mr. xVllard. Correct. 

Mr. Hiss (continuing). Had not engaged in any such practices. 

Mr. Allard, do you remember a Mr. Gordon B. Enders? 

Mr. Allard. In China? 

Mr. Hiss. In connection with China; yes, sir. 

Mr. Allard. Yes; I do. 

Mr. Hiss. Did Mr. Enders approach your company for some kind 
of business? 

Mr. Allard. I do not remember. I would have to refresh my 
memorv, if you have something there. 

Mr. Hiss. This will be " Exhibit No. 297." It is a letter of July 21, 
1930, signed "Jack." That is you, Mr. Allard? 

Mr. Allard. That is right. 

Mr. Hiss. It is addressed to Mr. Burdette S. Wright, who is a 
vice president of the parent corporation in Washington. 

(The letter referred to was marked " Exhibit No. 297 " and is 
included in the appendix on p. 886.) 

Mr. Hiss. That letter reads as follows [reading] : 

Thanks for yours of the 17th regarding Mr. Gordon B. Enders and E. F. 
Baskey. The information is most interesting, and, while I realize that the 
ethics of the transaction are very questionable, from all I gather most Chinese 
business is iniethical, and I still think that I would like to have had a chance 
at the Chinese business that Enders apparently had in his hand. 

This, of course, is not official, but it is confidential between you and me. 
I do think that if Enders had come in here with cash to buy a lot of aviation 
equipment to be sent to China and the State Department gave us approval, I 
would not care much who Enders was as long as I got the cash, and the State 
Department approved the shipment of the aeroplanes. Under present condi- 
tions we did not get a chance to contact with him ; therefore, we can stick up 
our noses in the air and say that we prefer not to associate with men of his 
calibre, but the truth of the matter is, I wish we had gotten the order. 

Do you remember what that business was ? 

Mr. Allard. I have not any idea what the details of the business 
were. We did not get the business, obviously. 

Mr. Hiss. Mr. Webster, you were engaged in selling in South 
America and are, I assume, familiar with the business transactions 
which your company has carried on in Bolivia. 

Mr. Webster. Yes, sir. 

Mr. Hiss. Do you remember a Mr. Cueto Pozo ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Was he an agent of the Export Co. ? 

Mr. Webster. Yes, sir ; he was, for a short time. 

Mr. Hiss. Did the Export Co. pay him any commissions? 

Mr. AVehster. Yes; they did. 

Mr. Hiss. Was he at the same time an employee of the Bolivian 
Government ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Was he discharged by the Bolivian Government when 
they discovered that he was receiving commissions from the Curtiss- 
WrightCo.? 

Mr. Webster. I believe that he was either asked to resign or did 
resign when Ave were advised that the Government did not wish to 



MUNITIONS INDUSTEY 725 

have anyone in their employ act as agents for any manufacturing 
company. 

Mr. Hiss. Wliat was his position with the Bolivian Government, 
Mr. Webster? 

Mr. Webster. I am not exactly sure. I could not tell you ex- 
actly what his position was. It was a minor position. 

Mr. Hiss. Was he in the Foreign Office of the Bolivian Govern- 
ment? 

Mr. Webster. I believe it was some connection with the Foreign 
Office. 

Mr. Hiss. " Exhibit No. 298 " is a letter of March 24, 1933, to Mr. 
Webster, signed " Cliff." Is that Mr. Travis? 

Mr. Webster. Tliat is Mr. Travis. 

Mr. Hiss. Who at that time was an employee of the Export Co. ? 

Mr. Webster. Yes; he was an employee of the Export Corpora- 
tion. 

(The letter referred to was marked " Exhibit No. 298 " and is in- 
cluded in the appendix on p. 887.) 

Mr. Hiss. This letter contains the following statement by Mr. 
Travis with reference to Cueto Pozo: 

I got a look at some documents yesterday that bear authority, and although 
they were confidential, I took some notes, Cueto files the following information 
regarding himself and his business : 

Importer of manufactured articles ; exporter of national articles ; agent of 
foreign manufacturers ; languages — English, Spanish, French. * * * ; organi- 
zation — private; business done on own account on commission basis. 

* * * Commercial references — Bell & Howell, Chicago ; Curtiss-Wrigbt 
Export ; Mack Motor Truck Corporation, N.Y. ; * * * Bellanca Aircraft, 
New Castle, Del. 

There was no references from any of the commercial firms mentioned, but 
the two banks here were requested to send in their recommendations and we 
find the following : 

Banco Central — Feb. 25, 1933 : " Mr. Cueto Pozo has an agency to act occa- 
sionally for Curtiss Airplanes on a commission basis. At the time of taking 
this agency Mr. Cueto Pozo was in the Ministry of Foreign Affairs. In order 
to safeguard Government money he was discharged from the position in the 
Ministry of Foreign Affairs. As a private person he does not own any real 
estate, nor does he have any money. At present there is a commission ap- 
pointed by the Government to investigate concerning the sales of airplanes and 
trucks to the Government and establish whether Mr. Cueto Pozo and others 
have been unduly zealous in their private dealings with the Government." 

Mr. Webster. Have you finished with that, Mr. Hiss? 

Mr. Hiss. That is all. Do you want to make a statement on it? 

Mr. Webster. I would like to explain that at the time we made a 
connection with Mr. Cueto Pozo it was with the knowledge of the 
Government, and in conversation after I arrived in La Paz — we en- 
gaged Mr. Cueto Pozo before we had met him. We engaged him 
more or less by mail or cable. He said that he was in a position to 
represent us there and we made a temporary arrangement with him. 
Later, when I arrived in Bolivia, I found, in talking with Govern- 
ment officials, that it was not their desire to have an employee of 
the Government act as an agent for manufacturers. Therefore, we 
severed our connections with Mr. Cueto Pozo. He was paid a cer- 
tain commission because we had an agreement with him, and then his 
services were terminated. 

Mr. Hiss. At the time that you had this arrangement with him, 
did you know that he was an employee of the Bolivian Government ? 



726 MUNITIONS INDUSTRY 

Mr. Webster. Oh, yes ; and it was more or less ^Yith the approval 
of, that is, the Government knew he was acting for us because he 
handled the representatives there. 

Mr. Hiss. Did the Export Corporation also employ an agent in 
Bolivia whose name was Pancho Echenique? 

Mr. Webster. We did not employ Mr. Echenique. Mr. Echenique, 
who was a Chilean national and who was well known in Bolivia, 
went to Bolivia at his own expense, and after arriving in Bolivia 
cabled us that he was in a position to handle certain business, which 
was apparently pending, and we told Mr. Echenique if he was respon- 
sible for handling any business there for us, that we would take 
care of him on a commission basis. He was not an employee of the 
company. 

Mr. Hiss. Was he an employee of the Bolivian Government at the 
time? 

Mr. Webster. No, sir. 

Mr. Hiss. May I call your attention to " Exhibit No. 299 ", being a 
letter dated February 9, 1933, from yourself, Mr. Webster, to Mr. 
Echenique? 

Mr. Webster. Do you know where that was written from ? 

Mr. Hiss. No; I am afraid I do not. That is all that appears 
in your files. Probably from South America. 

Mr. Webster. I think so ; yes, sir. 

(The letter referred to was marked " Exhibit No. 299 " and is in- 
cluded in the appendix on p. 888.) 

Mr. Hiss. That letter reads as follows, in part [reading] : 

The Bolivian Government business has been handled and controlled entirely 
by Mr. Lopez, comptroller general, * * * 

Was he comptroller general of Bolivia ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. And in charge of the purchases ? 

Mr. Webster. No; he was not in charge of purchases. He was 
comptroller general, and in that way all contracts passed through 
his hands and payment was authorized through the comptroller's 
office. 

Mr. Hiss. He had charge of certifying to payment on Government 
contracts ? 

Mr, Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

and when I was in La Paz, he was very much upset and concerned because of 
the fact that we had been dealing through an agent and paying a commission 
on tlie business. He insisted that all business be handled directly between the 
Government and ourselves, and that no commissions would be permitted by the 
Government. He took immediate steps to discharge from Government service 
Mr. Cueto Pozo, and deducted from our bills the commissions which were 
supposed to have been paid. * * * 

I told you when I was in Santiago that I would do the best I could for you 
but that it was impossible for me to name a definite amount and this arrange- 
ment will have to stand until we have concluded our business dealings with tlie 
Government. 

The reason for your not being able to pay Mr. Echenique ; that is, 
to enter into an agreement with Mr. Echenique as to commissions, was 
because Mr. Lopez was opposed to the Bolivian Government dealing 
through an agent? 



MUNITIONS INDUSTRY 727 

Mr. Webster. Not necessarily. It was because we had not yet 
terminated, or rather arranged, a settlement with Mr. Cueto Pozo. 
We did not know what expense we would be forced to pay in order 
to terminate our contract or arrangement with Mr. Cueto Pozo. 

Mr. Hiss. You wrote this letter in 1933, Mr. Webster, and you state 
that " he ", Mr. Lopez, " insisted that all business be handled directly 
between the Government and ourselves, and that no commissions 
would be permitted by the Government." 

Mr. Webster. That is correct. 

Mr. Hiss. Is that the reason? 

Mr. Webster. That is partially the reason ; yes, sir. The fact that 
the situation was somewhat unsettled and we could not make an 
arrangement with the agent for the commissions. 

Mr. Hiss. What is the name of the firm in Bolivia that represents 
the export company, the permanent agent in Bolivia ? 

Mr, Webster. Webster & Ashton. 

Mr. Hiss. Do you pay them a commission ? Does the export com- 
pany pay them a commission on sales ? 

Mr. Webster. Either a commission or a definite set amount on 
certain contracts ; not always on a commission basis. 

Mr. Hiss. I offer as " Exhibit No. 300 " a letter of March 29, 1933, 
signed " Cliff." That is Mr. Travis. The letter is to Mr. Webster. 

(The letter referred to was marked " Exhibit No. 300 ", and is in- 
cluded in the appendix on p. 888.) 

Mr. Hiss (reading) : 

There is a flnli here in La Paz, Webster & Ashton, formerly Webster & Finni- 
gan, Casilla 144, that is a local business outfit with a branch in Oruro. They 
have the agency for International Harvester Export and have done considerable 
business with the Bolivian Government in trucks. They carry on national busi- 
ness as well. They want the agency for us in Bolivia and I have thoroughly 
looked up the standing of the firm, find it O.K., have talked with the American 
Minister, Feely, and have known both Webster and Ashton personally since my 
first arrival here. Lopez called me in to talk it over and informed me that 
the Government was willing to do business with an accredited firm but not with 
an individual, and that they were willing to pay a reasonable commission on 
business with us for the convenience of having some one here at all times. 

Did Mr. Lopez have any interest in the firm of Webster & Ashton, 
which he recommended ? 

Mr. Webster. To my knowledge he has no interest. I have heard 
it said that he was a partner with Webster & Ashton on possibly 
not their entire business, but in a gmall manufacturing company 
which they had there; and I believe this was even prior to the 
trouble, or the war then between Bolivia and Paraguay. To my 
personal knowledge I do not know whether he is a partner of Web- 
ster & Ashton. I have heard it said that he is. 

Mr. Hiss. May I call your attention to a further part of this letter 
which says : 

There is one thing that comes to my attention with regard to this, although 
I believe everything is above board and on the level. Lopez is in with Webster 
& Ashton on a hat factory and a retail clothing and furniture business here 
and it is extremely difficult in view of the control board to get dollars for the 
necessary imports for their business. Having an agency for American goods 
would enable them to carry their commission in dollars in New York. There 
may be some kind of a combination between the parties but the thing as put 
up to me sounds O.K. and on the level. 



728 MUNITIONS INDUSTEY 

Mr. Webster. Also in the next sentence he says, " Feely thinlis 
it is square." Feely was the American Minister. 

Mr. Hiss. That is correct. The next sentence is, "Feely thinks 
it is square." 

I will offer as " Exhibit No. 301 " a letter from Mr. Travis, signed 
" Cliff ", to Mr. Webster, from Bolivia, dated September 21, 1933. 

(The letter referred to was marked " Exhibit No. 301 " and is in- 
cluded in the appendix on p. 890.) 

Mr. Hiss (reading) : 

Regarding the commission to be paid Activos, * * * 

Is that the cable name of Webster & Ashton ? 
Mr. Webster. That i^ correct. 
Mr. Hiss (continues reading) : 

* * * I cabled that my recommendation was 5 percent of the total amount of 
the last order. That would be 5 percent of $97,180.00, or nearly $5,000.00 As you 
know, that order was put through by me some time ago but Activos were 
darned helpful on the final details of the deal and were entirely responsible 
for getting the money in cash ; something that no one else without their con- 
tacts and influence could have done so easily, if at all. For your own in- 
formation, Lopez is, and has been for some time, a silent partner of Activos, 
and is interested to quite an extent in the agency and their textile and hat 
factories. That is not common knowledge but it makes it necessary to play 
ball with the tall friend. * * * 

By the " tall friend " he had reference to Mr. Lopez ? 
Mr. Webster. Yes. 
Mr. Hiss (reading) : 

* * * as he is the deciding factor in all purchases — more so than the Presi- 
dent himself. Do not mistake me — Loijez is one of the few honest men in this 
country, and although he has a personal interest in the sale of Curtiss planes 
and equipment, he would not let the order go through unless the stuff was 
entirely satisfactory. Let me give you some extremely confidential dope that I 
picked up, no matter where, but it was in writing : 

1. Jorge Zalles, vice pres. of Grace & Co., used the Cueto affair as a lever 
to try to influence Lopez through the New York consul to eliminate Curtiss 
and take up United Aircraft through Grace. They told Lopez that they could 
supply Hawks at $23,000 and Ospreys at $17,000. 

2. When the last three planes (that have just been delivered) were on order 
the purchase was nearly cancelled because of interference of the Kundt-Bilbao 
combination * * *." 

Were they Germans connected with the Bolivian Government ? 

Mr. Webster. Kundt was General Kundt, in command of the 
Bolivian Army. 

Mr. Hiss. Was he a German? 

Mr. Webster. And Bilbao is a native Bolivian pilot who was 
recently killed — about 3 weeks ago. 

Mr. Hiss (continues reading) : 

* * * through the Minister of "War, Hertzog, to the President. Except for 
Lopez and the pilots (as well as my visit here at the time to straighten out 
the complaints), the order would have been cancelled and the business given 
to United Aircraft and Fokker. 

3. Due to Lopez and Activos we were able to arrange full payment on the 
last order through irrevocable credit. The President's instructions were to 
make payment in the same form as before — 35 percent only after planes were 
tested and delivered. 

4. Lopez has been offered 10 percent on planes and 20 percent on spares if 
he will help swing the business to Fokker. Vickers made him the same offer. 
(I have told Activos that we cannot pay more than a flat 5 percent on all 
Curtiss business at the present quotations.) 



MUNITIONS INDUSTRY 729 

5. Lopez and Activos have practically assured our future by combatting the 
competition, although they could have cleaned up by putting in United or 
Vickers. 

6. Colonel Williams, American fiscal agent for Bolivia, has told the Govern- 
ment that United is much bigger than Curtiss. I can't quite see where that 
comes in nor whei'e it fits into the picture. 

Colonel Williams was an American representative in Bolivia ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. And an officer employed by Bolivia ? 

Mr. Webster. An officer, I believe, emploj^ed in Bolivia. I do not 
know just what the arrangements were. 

Senator Pope. Was he also employed by the United States 
Government? 

Mr. Webster. I do not believe so, Senator. I think he was an 
American employed by the Bolivian Government as a fiscal agent — 
to assist them in their financial affairs. 

The Chairman. Was it a case of a loan of this agent by our Gov- 
ernment to Bolivia ? 

Mr. Webster. I do not know, sir. 

Mr. Hiss. Had he formerly been in the State Department of the 
United States? 

Mr. Webster. I do not know. I have never met Colonel Williams ; 
I do not know who he is. 

The Chairman. Mr. Hiss, has the full name of Mr. Lopez been 
given, or does the record just carry him as Lopez? 

Mr. Hiss. Just as Lopez. Can you give his full name, Mr. 
Webster ? 

Mr. Webster. I do not know his full name. It is very easily ob- 
tained, but I could not tell you off hand. 

Mr. Hiss (continuing with this letter) : 

So in view of the strong combination working in our behalf. I think we 
should allow the 5 percent on the last order in order to keep the machinery 
well oiled. Our prices can stand it, although our selling costs have been 
rather high. Spare parts selling at list should make a fair margin for us, 
and I understand that the Osprey carries a fair margin at $18,000 with 10 per- 
cent allowed for conunission. (I should know more about the internal work- 
ings of that side of the game if I am to be of maximum value to the company.) 
We have never had a chance to get together for a good old instru^-tive critique 
in the year that I have been with the company, and I am looking forward with 
much enthusiasm to our meeting in Lima next month. Naturally, I want to 
put out everything I've got for you and there are a few dark corners — dark 
as far as I am concerned — that I would like to get an inside glimpse of. 

I don't know whether I have mentioned it before, but be careful what dope 
50U put out to Decker. 

Who is Decker? 

Mr. Webster. Decker is the consul general in New York. 

Mr. Hiss (continuing reading) : 

Contact Activos before quoting any prices to anyone and get together with 
them. They are on the up and up, but I know the situation here well enough 
to tell you to do this. There is a hell of a lot of intrigue down here, and an 
unwise word to Decker might start a lot of unpleasantness for us. You know 
the game, so you understand the situation. 

I offer as " Exhibit No. 302 " a letter dated May 23, 1933, from 
Owen Shannon to Captain Travis in Bolivia. 

(The letter referred to was marked " Exhibit No. 302 " and is in- 
cluded in the appendix on p. 892.) 



730 MUNITIONS INDUSTRY 

Mr. Hiss (reading) : 
The Consul General here — a good old scout named Decker * ♦ * 

That is the Consul General of Bolivia in New York? 

Mr. Webster. Yes. 

Mr. Hiss (continues reading) : 

* * * keeps on asking us what they are doing with the Hawks and Ospreys — 
we keep telling him we don't know, as you never discuss their activities in your 
letters, whicli is just as well because I am sure anything we told him would 
be cabled down to La Paz prompto. He seems to have a mania for saving 
the Government money and passing everything he hears on to them. 

Did Mr. Lopez also have a mania for saving the Bolivian Govern- 
ment money, Mr. Webster ? 

Mr. Webster. I believe he did; yes. 

Mr. Hiss. Would you say that the desire on the part of a govern- 
ment official to save his government money was a inania ? 

Mr. Webster. Pardon me, what is that question? 

Mr. Hiss. Would you say the desire on the part of a government 
oiRcial to save the government money was a mania? 

Mr. Webster. I would not exactly call it a mania ; no, sir. 

Mr. Hiss. Mr. Shannon did. 

Mr. Webster. I do not believe I would express it that way. 

Mr. Hiss. I offer as " Exhibit No. 303 " a letter dated May 30, 1933, 
signed by " Cliff ", that is Mr. Travis, to " Dear Web." That is 
yourself, Mr. Webster? 

Mr. Webster. Yes, sir. 

(The letter referred to was marked " Exhibit No. 303 ", and is 
included in the appendix on p. 892.) 

Mr. Hiss (reading) : 

I have already informed Ashton that, in view of the fact that the present 
pending order was negotiated by myself and that no commission was included 
in the quotations, he will not be entitled to much, if anything, on the deal. 
Naturally, he will have to be given something as well as a couple of others. 

* « « 

Did others have to receive commissions besides your regular agent? 
Was that the situation in Bolivia, Mr. Webster? 

Mr. Webster. I am not sure, but I assume possibly that Webster 
& Ashton took care of other people. I do not know of my personal 
knowledge, but I assume that they did take care of other people. 

Mr. Hiss. What kind of other people, Mr. Webster? 

Mr. Webster. Well, possibly people with a .greater technical 
knowledge than they had of aviation. Webster & Ashton were not 
entirely familiar — in fact, they were not familiar at all, you might 
sa}', with the technical part of airplanes ; and I believe it would be 
necessary at times for them to employ others who could discuss the 
technical parts of airplanes. 

The Chairman. Might thej, by any chance, have been agents of 
the Government, officials of the Government? 

Mr. Websi'er. They could have, sir. But I could not state for 
sure. 

The Chairman. I think it has been said here repeatedly that your 
company did not ai:)prove ? 

Mr. Webster, We do not approve of that, sir; no. But we cannot 
very well control the acts of our agents at all times. They may do 
something: we do not know of. 



MUNITIONS INDUSTRY 731 

The Chairman. Is there of record, any place, a scolding by your 
company officials of agents who have been known to employ these 
methods ? 

Mr. Webster. I do not know that there is any record, Senator; 
but I know that in many of our conversations we have made it plain 
that we do not like to do that thing, if it is possible. It involves 
unpleasantness sometimes. 

The Chairman. Your policy is one of employing, in many in- 
stances, men who have connections with the Government. Can that 
be said to be true ? 

Mr. Webster. Yes, sir ; that is correct. That is, men employed by 
the Government, Mr. Chairman? 

The Chairman. Yes. 

Mr. Webster. There are very few instances where we have em- 
ployed or taken anybody on, who are employed by governments. 

The Chairman. How can we put two and two together and say 
that while you employ, in instances, this kind of help, yet you do 
not approve? 

Mr. Webster. Sometimes it is necessary to employ people who 
know the country and the customs to handle our affairs there. 

The Chairman. If you were to employ an admiral, or if you 
were to pay commissions to an admiral, or to a general, or to some- 
one connected with the War or Navy Departments to help persuade 
the Government to enter into a contract, that would be helpful to 
vour company, would you call that a commission ? 

Mr. Webster. That would be a very polite word for it, Mr. 
Chairman. 

The Chairman. In fact, it would be bribery, would it not? 

Mr. Webster. It would. It is a rather harsh word, but it would 
be, strictly speaking. 

The Chairman. Why do you call it by any other name than 
that, when you resort to that method in other countries? 

]\Ir. Webster. It is a nicer Avay of putting it. Senator. 

Senator Pope. In the statement made by Mr. Travis in the letter 
which has been referred to, he puts it this way : 

I think we should allow the 5 percent ou the last order in order to keep 
the machinery well oiled. 

Mr. Webster. That is expressing it a different way. 

Senator Pope. That was a letter received by you from him? 

Mr. Webster. Yes. 

Senator Pope. Do you recall in your reply that you made any 
reference to that statement? 

Mr. Webster. I do not believe so. I do not recollect it. 

I might state in connection with Mr. Lopez, it is my understand- 
ing that Mr. Lopez, for several years, a number of years, had been 
interested in commercial line of business with Webster & Ashton and 
possibly before he assumed his official position with the Govern- 
ment. My experience has been that Mr. Lopez is a very fine type of 
man. 

Mr. Hiss. You, at the time of this correspondence, were president 
of the Export Co., were you not, Mr. Webster? 

Mr. Webster. At this time; yes. 

Mr. Hiss. Prior to June 1933? 

Mr. Webster. Yes. 



732 MUNITIONS INDUSTRY 

Mr, Hiss. And Mr. Travis recommended Webster & Ashton be 
made your agents, in part at least on the ground that Mr. Lopez 
favored that particular firm. 

Mr. Webster. Yes, sir. It is quite logical, if they were purchas- 
ing from us, that we should have somebody there at all times to 
represent our interests and form a closer contact. In fact, the con- 
nection with Webster & Ashton was discussed with the American 
Minister there and the American Minister recommended Webster & 
Ashton. 

Mr. Hiss. Mr. Lopez also specifically recommended Webster & 
Ashton, did he not? 

Mr. Webster. I think so; I am not sure. I think Mr. Travis 
refers to it in one of his letters. 

Mr. Hiss. That is correct — in an exhibit that has been introduced. 
In the postscript to " Exhibit No. 303 ", from which we were reading, 
the letter of May 30, 1933, Mr. Travis says : 

Just got notice from the President through Lopez that the Bolivian Consul 
in N.y. cabled that Hawks and Osyreys be secured for 23,000 and 17,000, respec- 
tively. I cabled the office today about it. Sure threw a wrench in the ma- 
chinery and raised Hell in general. May spoil our business but will do all I 
can to save the situation and our prices. 

Does that mean that the consul general had gotten the direct 
quotation in New York from the Curtiss group ? 

Mr. Webster. No, sir. Apparently somebody had told him that 
he could purchase at a cheaper price, which was not so. 

Mr. Hiss. If the Bolivian Government had dealt directly with 
your company, could they have secured Hawks and Ospreys at a 
cheaper price than they did secure them through Webster & Ashton ? 

Mr. Webster. I do not believe they could, sir, because it would 
have been necessary then to maintain our own people in Bolivia to 
handle our business. 

Mr. Hiss. I offer as " Exhibit No. 304 " a letter dated November 6, 
1933, from Mr. Shannon to J. A. B. Smith and Mr. J. S. Allard. 

Mr. Smith is an officer of the Export Co. ? 

Mr, Allard, No. 

Mr. Hiss. Is he a director of the Export Co. ? 

Mr. Allard. Yes ; he is treasurer of the parent company. 

Mr. Hiss. This letter quotes a letter received from Mr. Webster 
in regard to Bolivia. 

(The letter referred to was marked " Exhibit No. 304 " and is 
included in the appendix on p. 894.) 

Mr. Hiss. This letter says in regard to Bolivia as follows : 

Here the situation is also very interesting. I have had one long joint session 
with the Minister of Finance, Lopez, the Minister of War, and the Minister of 
Transportation, and another one is scheduled for 6 o'clock tonight. My one 
great job is to sell from three to 10 Condors. The matter has been talked over 
with the President, and it looks very favorable. The Minister of War and 
the Chief of Staff is leaving tomorrow for the Chaco. to be gone a week or two, 
and they are taking down all the specifications, photographs, and drawings to 
discuss with General Kundt. The one big problem will be the financing, and 
we are to go into that this evening. The order may be split up to satisfy 
Gen. Kundt and the Lloyd Boliviano Company, and possibly three out of the 
10 ships may have to go to Junkers, although our performance, etc., is better. 

Any price I quote will include 5% for Ashton & Webster, and in this connec- 
tion we will allow them the 5% on past sales. It seems highly advisable as 
Lopez who is the President's right arm, is a silent partner of the company. His 



MUNITIONS INDUSTEY 733 

attitude now is entirely different than it was a year ago and hie is sure pushing 
our stuff. 

Mr. Webster, I might say in that connection that the inference 
I believe you are drawing is that Mr. Lopez was favoring us because 
of his connection witli Webster & Asliton. In this connection I 
might say that I am quite convinced that Mr. Lopez was favoring 
us because of the service and the performance that we were able to 
give with that material. We kept two of our men down there — a 
service man and a pilot — representatives of ours, in order to see 
that our material did give good service. They were entirely satisfied 
with the performance of our planes. They had had some very unsat- 
isfactory experiences with other types and I think they were entirely 
satisfied with ours. I think that is the reason Mr. Lopez was in 
favor of our equipment. 

Senator Pope. I should like to refer back to exhibit 301, at the top 
of the first page where it says : 

Shorty is going to tlie Chaco next Friday to loolc tilings over to give some 
much needed instructions to the mechanics. 

Who was Shorty? 

Mr. Webster. That is a mechanic, Mr. Harry Berger, a service 
mechanic of ours, in South America. 

Senator Pope. That was during the time of the hostilities between 
Paraguay and Bolivia? 

Mr. Webster. Yes, sir. It says instructions, but what he refers 
to there is how to take care properly of those engines and not to 
burn them up. It was necessary to use very high-test gasoline and 
they had had some engine trouble due to overheating, etc. They had 
not been using the proper gasoline. It was in our own protection, 
to see that our own equipment was operating properly. You know, 
you can burn an engine up very quickly if you do not take care 
of it. 

Senator Pope. You did not consider the element of neutrality there 
at that time? 

Mr. Webster. No, sir. I really do not think that is involved there. 
This is one of our mechanics, on our own payroll, simply correcting 
a possible fault in one of our engines. 

Mr. Hiss. Mr. Allard, your company has sold planes to the Swiss- 
air, a Swiss commercial transport company? 

Mr. Allard. That is correct. 

Mr. Hiss. Do you know Mr. Zimmermann of that company? 

Mr. Allard. I have met him in this country. 

Mr. Hiss. What is his connection with that company? 

Mr. Allard. I understand he is managing director of Swissair. 

Mr. Hiss. Has your company ever paid Mr. Zimmermann, manag- 
ing director of Swissair, a commission on sales? 

Mr. Allard. I believe we have; commercial sales. 

Mr. Hiss. I offer as " Exhibits No. 305 and No. 306 " two letters, 
one of January 4, 1932, and one of January 26. 1933. 

(The letter of Jan. 4, 1932, was marked "Exhibit No. 305", and 
is included in the appendix on p. 894.) 

(The letter of Jan. 26, 1933, was marked " Exhibit No. 306 ", and 
IS included in the appendix on p. 895.) 

Mr. Hiss. We can take up both these exhibits at the same time. 
In ' Exhibit No. 305 ", a letter from Philip Shepley, dated January 



734 MUNITIONS INDUSTRY 

4, 1932— Mr. Shepley was an employee of the Curtiss-Wright Export 

Co., stationed in Europe at that time? 
Mr. Allard. No; in New York. 
Mr. Hiss. This is to Mr. Allard, and it says: 
I understand verbally from Mr. Goulding that * * * 

He was an official of the Export Co.? 
Mr. Allard. Yes. 
Mr. Hiss (reading) : 

* * * that from now on we are to reserve a o-percent commission for Mr. 
Zimmermann on all purchases by Swissair both for their own use as well as 
for resale. 

To whom did the Swissair Co. resell? 

Mr. Allard. Possibly to other transport companies. 

Mr. Hiss. To transport companies in Switzerland? 

Mr. Allard. Or individuals; I imagine so. 

Mr. Hiss. Do you know of any other Swiss transport companies? 

Mr. Webster. I do not know offhand; no. 

Mr. Hiss (continuing reading) : 

I am not sure, however, how Mr. Zimmermann wants this handled — whether 
confidentially or otherwise. When you find this out in your conversations with 
him, please let me know. 

Do you know how it was handled? 

Mr. Allard. No; I do not. I think it is a matter of record on 
our books. 

Mr. Hiss. " Exhibit No. 306 ", which is dated January 26, 1933, is 
from Mr. Goulding to Mr. Woodling. 

Who is Mr. Woodling? 

Mr. Allard. He was an emploj^ee of the Export Co., a book- 
keeper. 

Mr. Hiss. It is headed " Switzerland — Commissions." It reads : 

A special, confidential arrangement has been made with Mr. B. Zimmermann 
to pay him a commission of five percent of the list price on all Curtiss-Wright 
engines or spart parts sold in Switzerland. 

That means to any company in Switzerland; any purchaser? 

Mr. Allard. Yes, sir. 

Mr. Hiss (continuing reading) : 

This commission is to be five percent on the list price on such sales. 

While I am paying Mr. Zimmerman, in cash, commission to which he is 
entitled on sales order no. 1902, invoice #2946, namely, $76.99, because he 
happens to be in this country at the present time, the regular procedure which 
I have arranged with him is to send bankers drafts drawn to the order of B. 
Zimmerman, and addressed to him at his home address. * * * 

Mr. Allard. That is correct. 

Mr. Hiss. Not to his official address? 

Mr. Allard. That is correct. 

Mr. Hiss. Do you approve paying commissions to directors of 
companies purchasing from you, Mr. Allard? 

Mr. Allard. Under certain circumstances; yes. 

Mr. Hiss. Do you not consider that it is a director's duty to dis- 
close all commissions to his company? 

Mr. Allard. I do not know what the laws or business practice^ 
are as to firms in foreign countries. 



MUNITIONS INDUSTRY 735 

Mr. Hiss. Did you inquire before you entered into a confidential 
arrangement with Mr. Zimmermann ? 

Mr. Allard. No. Mr. Zimmermann was the top man in his com- 
pany and requested that. It seemed perfectly in order. 

Mr. Hiss. Has your company done busines3 in Greece, Mr. Allard ? 

Mr. Allard. I do not recall any orders — possibly one airplane, 
one commercial airplane; maybe some odds and ends of smaller 
things. 

Mr. Hiss. Have you a permanent agency in Greece? 

Mr. Allard. I believe we have. 

Mr. Hiss. Do you remember the name of it? 

Mr. Allard. No ; but I would recognize it if I heard it. 

Mr. Hiss. Is it the Societe Financiere at Technique de Grece. 

Mr. Allard. I believe that is it. 

Mr. Hiss. And is Mr. Artemis Denaxas an official of that com- 
pany ? 

Mr. Allard. I believe he is. 

Mr. Hiss. I offer as " Exhibit No. 307 " a letter of August 22, 1933, 
by Mr. Artemis Denaxas to Mr. Goulding, vice president of the 
Curtiss-Wright Export Corporation. 

(The letter referred to was marked " Exhibit No. 307 ".) 

Mr. Hiss. That letter reads : 

Referring to the copies of correspondence we have sent yo\i and by which 
we tried to give you an idea of the possibilities of doing some business here, 
I am happy today to be able to communicate to you a very important but strictly 
confidential infonnation. 

I have succeeded to persuade the Air Minister through a common friend to 
give his preference to your material. 

As, however, he did not like to commit himself with a corporation like ours 
we decided the following : 

You should address by return of mail a letter to the Societe Financiere et 
Technique de Grece 10, Metropole Street and write them that on all orders of 
your material you will allow a commission of 5 percent. 

At the same time you write to me a private letter saying that on all orders 
of your material either through the Societe Financiere et Technique de Grece 
or direct by the Greek Government you will allow me a commission of 5 percent. 

I shall transfer this letter to the friend of the Minister in order to guarantee 
him that he shall get his profits without this transaction being disclosed to 
thirds. 

Please therefore be kind enough to let us have by return of mail the above 
two letters. 

Was any such agreement ever entered into with your agent in 
Greece ? 

Mr. Allard. I do not know. The files would show it if there 
were. 

Mr. Hiss. They are still your agents at the present time, the Societe 
Financiere et Technique de Grece? 

Mr. Allard. I believe the}^ are ; yes. 

Mr. Hiss. To refresh your memory, I might call your attention to a 
letter of November 14, 1933, in which you are quoted by Mr. Emory 
Flynn — an employee of the Export Co. 

Mr. Allard. Yes. 

Senator Pope. Does that mean, Mr. Hiss, that this secret commis- 
sion was to be paid to the Air Minister of Greece ? 

Mr. Hiss. Either to him or to his friend. It is not clear from 
the letter. 

83876 — 34— pt4 4 



736 MUNITIONS INDUSTRY 

Mr. Allard. It is not quite clear. It is not known to us, as a mat- 
ter of fact. It probably was paid to the friend or would have been 
had we made a sale. We never made any sale. 

Mr. Hiss. You have made no sale^ 

Mr. Allard. No. 

Mr. Hiss. Did your company inquire whether this commission 
would go to the Minister or to a friend ? 

Mr. Allard. Not to my knowledge ; no. 

Mr. Hiss. Has your company done business in San Salvador, Cen- 
tral America? 

Mr. Allard. I think so. 

Mr. Hiss. Do you know who your resident agents are there? 

Mr. Allard. I could not tell you, offhand ; no. 

Mr. Hiss. I offer as " Exhibit No. 308 " a letter dated May 6, 1933, 
from Dada-Dada & Co. to Curtiss-Wright Export Corporation; and 
I offer as " Exhibit No. 309 " a letter dated May 13, 1933, signed 
" Dada-Dada & Co.", addressed to Curtiss-Wright Export Corpo- 
ration, 

(The letter dated May 6, 1933, was marked " Exhibit No. 308 " ; 
and the letter dated May 13, 1933, was marked " Exhibit No. 309 " ; 
both letters are included in the appendix on pp. 895, 896.) 

Mr. Hiss. In the leter, " Exhibit No. 308 ", Mr. George M. Dada, 
the writer of the letter, says : 

In answer to your cablegram of May 3rd, we have cabled you on May 4th 
as follows : 'Quote nineteen thousand f.o.b. factory — full payment New York. 
Writing." 

And then the letter proceeds : 

Due to so many offers from other manufacturers, we are working hard, and 
we offered commission to different intermediaries in this business. This is why 
we asked you to quote the price given above, as more than 70% of our own 
commission and discount will be distributed to intermediaries. 

And in " Exhibit No. 309 ", the letter dated May 13, 1933, and 
directed to the kind attention of Mr. Owen Shannon, the writer says : 

Confidential : To get such order we had to use many intermediaries and 
friends to whom we are to pay a commission, consequently about 75% 



of our commission will be paid out to intermediaries, but we do not care for 
that if we get the order. We know that this first order will bring us many 
more orders in the near future. 

What intermediaries were Dada-Dada & Co. having to pay to 
secure business in San Salvador? 

Mr. Webster. We assume in this particular case, inasmuch as 
Dada-Dada & Co. were not familiar with aircraft, they would have 
to employ someone of technical training or experience in order to 
handle that business intelligently. 

Mr, Hiss. Is that what an intermediary is, a technical adviser ? 

Mr. Webster. It could be. 

Mr. Hiss. Do you think in this letter an intermediary means a 
technical adviser? 

Mr. Webster. I think it would be in this case, because I know 
Dada-Dada & Co. were not at all familiar with aircraft. 

Mr. Hiss. You referred earlier to the commissions which Webster 
& Ashton, your agents in Bolivia, said they would have to pay. Do 
you also think the commissions they had to pay were for technical 
advisers rather than to governmental employees? 



MUNITIONS INDUSTRY 737 

Mr. Webster. I know that they must have paid something for tech- 
nical advice. Whether they paid it to others or not, I do not know, 
but I know they must have paid for technical assistance. 

Mr. Hiss. Would you think if they were paying for technical 
assistance there would be any reason for them to fail to disclose or 
attempt to keep confidential the names of persons who were giving 
the technical advice? 

Mr. Webster. I should not think it would be necessary. 

Mr. Hiss. Senator Pope suggests that from the letter of May 13, 
1933, which I believe is " Exhibit No. 309 ", the following extract 
should also be read into the record, to wit : 

As you see, we liave to pay all charges for freight, insurance, etcetera; the 
commission left will not even cover our efforts, as we have to pay so much for 
intermediaries. 

I offer as Exhibits 310, 311, and 312 the following letters and 
cablegrams ; as " Exhibit No. 310 ", cablegram from La Paz dated 
September 26, 1933, sent by Activos to the Export Co. ; as " Exhibit 
No. 311" a letter signed "Webster & Ashton dated September 27, 
1933, addressed to Curtiss-Wright Export Corporation : and as " Ex- 
hibit No. 312 " a cablegram from the Export Corporation addressed 
to Activos, La Paz, dated September 29, 1933. 

(The documents referred to were, respectively, marked " Exhibit 
No. 310 ", " Exhibit No. 311 ", and " Exhibit No. 312 ", and are in- 
cluded in the appendix on pp. 896, 897.) 

Mr. Hiss. " Exhibit No. 310 ", the cablegram dated September 26, 
1933, reads as follows: 

Please deposit Anglo South American Trust Company order of Luis Tver 
Vergara four thousand five hundred dollars without mentioning our name. 
Confirm. 

" Exhibit No. 311 ", the letter dated September 27, 1933, confirm- 
ing the cable, is signed by Webster & Ashton, I take it, as it is signed 
" W. & A." 

Mr. Webster. Yes, sir. 

Mr. Allard. Yes, sir. 

Mr. Hiss. In this letter, " Exhibit No. 311 ", appears the following 
statement : 

This sum of $4,500 — USC, will go against our commission of 5% on the 2 
Hawks and 1 Osprey, plus $31,180.04 worth of spares, as per arrangement 
with Captain Travis. 

You will no doubt have noted that we do not wish to appear, and it would 
also be a good thing if you do not appear either. 

Why did you think, Mr. Webster, it would be a good thing if the 
company's name and your name should not appear in any payment to 
a technical adviser ? 

Mr. Webster. I have not the slightest idea. I know at the time 
they requested us to deposit this amount, and apparently there are 
a cable or two missing in between the one of September 26 and the 
one of September 29, in which we told them that we did not wish 
to make any such transaction without their written authority, and I 
think that is the reason they confirmed it in writing. I believe the 
reason for paying this deposit was on account of some of their busi- 
ness. It is very difficult at times in South American countries to get 
dollar exchange, and business people are very anxious in those 
countries to be able to get dollar exchange. 



738 MUNITIONS INDUSTRY 

Mr, Hiss. Does your company frequently make payments to your 
agents under such circumstances as these, without knowing where the 
commissions will have to go? 

Mr. Webster. Yes, sir. They were entitled to this money, the 
money belonged to them, and if they cabled us and told us to pay it 
to some bank or some person, there is no reason why we should not 
pay it, because the funds belonged to them. 

Mr. Hiss. Faucett and Tobin in Peru represented your company on 
a commission basis? 

Mr. Webster. Yes, sir. 

Mr. Hiss. I offer as " Exhibit No. 313 " a letter dated October 27,. 
1933, from Mr. Shannon to Mr. Allard. 

(The letter referred to was marked "Exhibit No. 313'" and is 
included in the appendix on p. 897.) 

Mr. Hiss. In this letter, " Exhibit No. 313 ", the writer quotes a 
report from Web ; that is Mr. Webster ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. I read from the report which is quoted in this letter, as 
follows : 

Have given them a price of $26,400 witliout armament, f.o.b. New York — for 
tlie standard landplaue, $28,500 each for the same ship with armament c.i.f. 
Callao — for the Falcon attack withont armament, $26,900 f.o.b. New York and 
$30,000 with armament c.i.f. Callao. These prices include 5 percent for Faucett 
and Tobin. 

Tobin has been interested in handling your sales ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Eeading further, the letter says : 

I deliberately increased the price of pontoons to $4,900 per set f.o.b. New 
York and $5,400 c.i.f. Callao, as they will require them, and it will provide 
funds to pay additional " commissions " which will undoubtedly be necessary. 
This is the way the Fairey Company handled their last business. They held 
the complete ship down in price and raised the price of floats, it is not so 
noticeable. 

You stated yesterday that the Fairey Co., " has managed to grease " 
certain gentlemen. In this letter, which is quoting a report from 
you, Mr. Webster, you say that you needed additional money for 
additional commissions, and you quote the word " commissions ", 
which wall undoubtedly be necessary. 

Mr. Webster. Tobin and Faucett told me they would have to go to 
considerable expense in setting up and assembling the planes, and 
they also had to pay commissions to others on that job. 

RELATIONS WITH FOREIGN OFFICIALS 

Mr. Hiss. In addition to the commissions which your company 
had to pay, has your company found it advisable to establish friendly 
relations with officials of foreign governments with which you do 
business ? 

Mr. Webster. How do you mean, " friendly relations "? 

Mr. Hiss. Have you had officials of foreign governments visit your 
plant, and have you entertained them, and have you made it a point 
for your agents to be on personal and friendly relations with them? 

Mr. Webster. Naturally they do that in any line of business. I 
know we have been entertained very well in their country, and if they 
come up here, I would naturally expect to return the courtes}-. 



MUNITIONS INDUSTRY 739 

Mr. Hiss. Do you also have your friendships primarily with those 
who are most influential in procuring orders ? 

Mr. Webster. Not necessarily, but they are mostly my friends, 
-engaged in airship work. 

Mr. Hiss. Kather business than personal friends? 

Mr. Webster. Yes; most of my friends in South America have 
originated with business people. 

Mr. Hiss. I offer as " Exhibit No. 314 " a letter dated April 16, 
1934, addressed by " P. A. H." to Mr. Crosswell. 

(The letter referred to was marked " Exhibit No. 314 ", and is 
included in the appendix on p. 898.) 

Mr. Hiss. This letter, " Exhibit No. 314 ", is written by " P. A. H.", 
that is Mr. Hewlett? 

Mr. Allard. That is correct. 

Mr. Hiss. I read from this letter, " Exhibit No. 314 ", the follow- 
ing paragraph : 

I was very pleased to note that you had such an interesting discussion with 
Olano at Pensacola and that he was so friendly to you, as I feel that Olano 
will at a later date be a real asset to us in securing business from the Colombian 
Government. 

Mr. Olano was formerly Consul General of Colombia in New York? 

Mr. Ajllard. That is my understanding. 

Mr. Hiss. He was trained at Pensacola as a flyer? 

Mr. Allard. I believe so. 

Mr. Hiss. Your company was influential in getting him trained 
there ? 

Mr, Allard. I do not know whether we were asked to render any 
assistance. If we had been asked to help get him trained there, we 
would have done what we could. 

Mr. Hiss. He is now director of aviation in Colombia? 

Mr. Webster. I do not know whether he is or not, now. 

Mr. Hiss. He was so appointed in August 1934. 

Mr. Webster. Then he is. 

Mr. Hiss. I offer " Exhibit No. 315 ", a letter dated May 29, 1934, 
from Philip Shepley to Mr. William A. Reeks. 

(The letter referred to was marked "Exhibit No. 315" and is 
included in the appendix on p. 899.) 

Mr. Hiss. Mr. William Reeks is in the employ of the Export Co. ? 

Mr. Allard. No; Reeks is in the employ of the Wright Aero- 
nautical. 

Mr. Hiss. That is the engine company ? 

Mr. Allard. That is right. 

Mr. Hiss. I read from this letter as follows : 

Referring to your letter of May 23rd, introducing young Lt. Rodriguez. 
* * * I had quite a long talk with him last Friday, in the course of which 
he told me that he had been up here about six months and had been through the 
Curtiss Flying School Course at Valley Stream. 

Did the Curtiss Co. maintain a flying course for training pilots? 
Mr. Allard. We did at one time, but not at this date. He had 
been there previously when that school was running. 
Mr. Hiss. Reading further from the letter, it says : 

His uncle at present holds an important position on the Colombian air force 
staff and is a close friend of the man who is slated to be the next President 
•of Colombia. If things work out as expected, his uncle will be the next 



740 MUNITIONS INDUSTRY 

Minister of War, and young Rodriguez as a result of his instruction and 
knowledge of aviation secured during his present visit should hold a fairly 
important position. I don't know, naturally, how true this all is, but I pass 
it on to you for what it is worth and suggest that it would be worth while 
to show this fellow some special consideration while he is at the Wright 
factory. 

Senator Pope. Do you know whether that was done? 

Mr. Allard. I believe he visited the Wright factory and looked 
at it. Special consideration in that connection, if I might say, 
would be courtesy in seeing he was" properly taken around. 

Mr. Hiss. I offer as," Exhibit No. 316 " a letter from Mr. Webster 
to Capt. C. K. Travis, dated July 25, 1933. 

(The letter referred to is marked " Exhibit No. 316 ", and is in- 
cluded in the appendix on p. 899.) 

Mr. Hiss. I read from this letter, " Exhibit No. 316 ", as follows : 

I am sorry that Melgar did not take over the job of inspector general of 
aviation of Peru, but, possibly, as military attache in Chile he can still be of 
considerable service. 

Mr. Melgar was an employee of the Peruvian Government? 

Mr. Webster. Yes; Captain Melgar at this particular time, I 
think, was an attache there in Bolivia or Chile, I am not sure. He 
was formerly chief of the Peruvian army air corps, and he was one 
of the few really efficient aircraft officers. 

Mr. Hiss. I read further from this same letter as follows: 

If the government intends to put in a foreigner, and possibly, an American, 
in charge of aviation, who do they have in mind. I certainly hope that Grove 
does not go back in Peru. Why not apply for the job yourself and see if we 
cannot work out a situation whereby we could all profit by it. 

What did you have in mind, Mr. Webster, by that sentence? 

Mr. Webster. In an advisory way I thought an intelligent Ameri- 
can could accomplish a great deal down there in giving them effi- 
cient aircraft data. The Peruvian Government had in service about 
16 or 18 different kinds of aircraft, and standardization of service 
would help their upkeep and efficiency. 

Mr. Hiss. And your compaii}^ would have profited by this? 

Mr. Webster. We may have sold more equipment, and at the same 
time Peru would have profited by having a standardized air corps. 

Mr. Hiss. How would Captain Travis profit? 

Mr. Webster. He had formerly been emplo3'ed as chief pilot for 
the Peruvian Government. 

Mr. Hiss. I say how could he have profited by this arrangement, 
by becoming the Peruvian chief of aviation ? 

Mr. Webster. His salary probably would have been more than we 
could have paid him. 

Mr. Hiss. That was your only interest in Mr. Travis taking that 
particular job? 

Mr. Webster. Yes; because at the time it looked as if we would 
have to let Travis go, as business seemed to be rather poor. 

Mr. Hiss. He is still one of the men on your staff ? 

Mr. Webster. He is still employed by us ; yes. 

Mr. Hiss. Now, reading further in this letter, you say, Mr. 
Webster : 

On second thought, however, perhaps this woi;ld not be such a good idea ; 
but think it over and let me have your suggestionf^. The ideal situation, of 
course, would be to start and steer such a selection in the right direction, and, 



MUNITIONS INDUSTRY 741 

with your connections and friemlships in Peru, you might suggest one or two 
men when you return there. 

Does your company attempt to select people for foreign positions 
who will be favorably inclined toward your products ? 

Mr. Webster. If we could get a combination of an efficient man 
who would serve, for instance, the Peruvian Government in an effi- 
cient way and at the same time select equipment, and providing our 
equipment was up to specifications and better than the others, it 
would make a good business combination. 

Mr. Hiss. Your company is interested in seeing those officials 
proj^erly serve the foreign government? 

Mr. Webster. Yes; because it serves us also. If you purchase 
intelligently, naturally you are going to be well satisfied with the 
equipment you get. 

Senator Pope. Mr. Hiss just read this sentence: 

On second thouglit, liowever, perhaps this would not be such a good idea, 
but think it over and let me have your suggestions. 

What raised the question in your mind at that time? 

Mr. Webster. I probably had some idea at that time, but I do 
not recall it now. That was more than a year ago. 

Senator Pope. However, he could be disclosed as your agent? 

Mr. AVebster. Everybody knew Travis had been employed by 
us, and had been previously employed by the Peruvian Government, 
and he was well known. There would be no attempt in concealing 
anything, he is too well known, and his opinions well known. 

Senator Pope. The reaction to the fact he was your representative 
might not reflect to your credit. Is that your thought? 

Mr. Webster. No; I thought possibly he would not wish to stay 
in Peru any longer. He had been there a good many j^ears and I 
did not know what he might want to do. I do not know what idea 
I had at that time. 

Mr. Hiss. I offer as " Exhibit No. 317 " a letter dated January 19, 
1934, signed " Jerry ", addressed to Mr. C. W. Webster. 

(The letter referred to was marked " Exhibit No. 317 ", and is 
included in the appendix on p. 901.) 

Mr. Hiss. This letter, " Exhibit No. 317 ", signed by Jerry; that is 
Mr. Van Wagner, in charge of your factory at Chile ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. I read from this letter as follows : 

Complying with your wishes to keep you in touch with things at this end, 
I thought much colild be gained from Marcial Arredondo, so invited him and 
his wife (nee Matilda, Merino's old secretary) out to the place for dinner last 
evening. 

Merino was formerly chief of the air corps in Chile ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Reading further from this letter, it says : 

We had a long talk over everything in general, and especially on the possi- 
bility and probability of the Government purchasing new equipment. Marcial 
confirmed Alessandri's public statement that the Government intends raising' 
funds in the near future for this object, but stated he could not tell when this 
would be. 

Is the Alessandri there referred to the President? 
Mr. Webster. Yes, sir. 



742 MUNITIONS INDUSTRY 

Mr. Hiss. I read further from the letter as follows : 

Marcial told me quite frankly that Araeena bas his eyes set first of all on 
training planes, and he has it in his head to buy Avros. 

What position did Araeena hold ? 

Mr. Webster. Araeena at that time was, and is, chief of the air 
corps. He replaced Merino, 

Mr. Hiss. The letter further says : 

With regard to the purchase of other equipment, Marcial said he will do 
everything in his power to see we are taken into consideration. Marcial bas 
a very big say in the matter so long as be is sitting next to the President and 
is the right-hand man of Arcena. He promised to let us know in plenty of 
time or sidetrack the prospective purchase of other planes. 

Yesterday there was some testimony of the United Aircraft Co. 
attempting to sidetrack the purchase of Curtiss planes, and it now 
appears that your company might have been interested in side- 
tracking the purchase of other planes. 

Mr. Webster. No, sir; you did not finish that sentence, which 
would explain that statement. 

Mr. Hiss. Let me finish it. It says : 

or sidetrack the prospective purchase of other planes, if possible, and if neces- 
sary suggest an open competition, such as in 1929, before placing any orders. 

Mr. Webster. In that connection, what he apparently had in mind 
was to more or less postpone the purchase until we were able to get 
down there and compete with the others in the event of a com- 
petition. 

Mr. Hiss. You will notice he just says — 

If necessary suggest an open competition, 

Mr. Webster. He knew I was familiar with the situation and did 
not go into the details. As a matter of fact that has developed and 
there is a demonstration plane being shipped down there now for 
competition. In fact, a great many of those countries, including 
Chile, purchase on performance, and in order to satisfy themselves 
they ask the manufacturers to send a demonstration plane to those 
countries to be demonstrated before they make a selection. 

Mr. Hiss. Then, this letter continues as follows : 

With Marcial watching out for us on the inside, I think it best not to rush 
Araeena too much, as Marcial claims be is the go-between for Araeena and the 
President and lie has to be consulted first so will be able to talk with Araeena 
about our equipment and lead him right. 

Has your company also done business in the Argentine ? 

Mr. Webster. Have you finished with this one here ? 

Mr. Hiss. Yes. Has your company also done business in the 
Argentine ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Can you identify for the record Captain Zar, of the 
Argentine ? 

Mr. Webster. Yes; Captain Zar is chief of naval aviation of 
Argentina. 

Mr, Hiss. Can you identify Colonel Zuloaga ? 

Mr. Webster. Yes; he is chief of army aviation of Argentina. 

Mr. Hiss, Has your company's relations with those two officers 
been very friendly ? 

Mr. Webster. Yes, sir. 



MUNITIONS INDUSTRY 743 

Mr. Hiss. They are boosters of Curtiss products, would you Scay ? 

Mr. Webster. Yes; Captain Zar was trained in the American 
Navy and Colonel Zuloaga was military attache in Washington for 
some time, and they are thoroughly familiar with American prod- 
ucts, and in that way they possibly leaned toward American products, 
with which they are familiar. 

Senator Pope. How long, about, was he with the American Navy ? 

Mr. Webster. He received his training at Pensacola, I think it 
was, during the war, but I am not sure. 

Senator Pope. Do you know whether he served in the Navy after 
the war? 

Mr. Webster. You mean the American Navy? 

Senator Pope. Yes. 

Mr. Webster. No; he simply went to Pensacola as a student and 
received the regular course in aviation that the American officers 
receive at Pensacola. 

Mr. Hiss. I offer now as " Exhibit No. 318 " a letter of date March 
21, 1932, from C. W. Webster to Mr. B. S. Wright. 

(The letter referred to is marked " Exhibit No. 318 " and is in- 
cluded in the appendix on p. 901.) 

Mr. Hiss. Mr. Webster, I read from this letter as follows : 

I still feel that Zar will not recommend that a mission be sent to the States, 
although it is advisable to watch this possibility very closely. Zar is a very 
intimate friend of ours and wishes to purchase only Curtiss-Wright equipment 
and is playing his cards accordingly. He feels that if he sends a mission to 
the States possibly complications might develop through the recommendations 
of any officers he sends, and his desire is to control things himself as much as 
possible. 

Mr. Webster, you said a few minutes ago that the purchase of avia- 
tion equipment was on the basis of performance? 

Mr. Webster. Yes, sir. 

Mr. Hiss. If so, why would Captain Zar be worried about the 
recommendations of any mission sent to this country? 

Mr. Webster. Possiblv he felt he was better qualified to judge of 
equipment than other officers. 

Mr. Hiss. Even though they were watching the performance in 
this country and he was not? 

Mr. Webster. It might be. 

Mr. Hiss. I offer as " Exhibit No. 319 " a letter dated February 23, 
1932. also from Mr. Webster to Mr. B. S. Wright. 

(The letter referred to was marked " Exhibit No. 319 " and is 
included in the appendix on p. 902.) 

]\Ir. Hiss. I now read from this letter, " Exhibit No. 319 ", as 
follows : 

I now have a more complete and accurate picture of the proposed Argentine 
Naval Mission and I am inclined to believe that the entire agitation was started 
by Commander Jordan, U. S. Naval attache in Buenos Aires, in misinterpreting^ 
a conversation with Captain Zar, chief of Argentine Naval Aviation. 

It seems that some time ago Captain Zar and Commander .Jordan met and 
Zar mentioned that his budget for 1932 would permit him to buy a certain num- 
ber of new ships and that they would be of U. S. make. Jordan asked which 
make and, as Captain Zar didn't wish to tell him he was negotiating directly 
with us and, on the other hand, didn't care to say he didn't know what he 
wanted, he told Jordan he planned to ask the U. S. Navy to give him advice 
when the propter time came. It seems Commander Jordan immediately com- 
municated with the U. S. Navy in Washington informing them that the Argen- 
tine Navy would send some of its men to the U. S. to solicit the advice of the 



744 MUNITIONS INDUSTRY 

U. S. Navy in the matter of purchases. Ciiptain Zar, in discussing tlie situation 
with us, claims that he now realizes he made a mistake in mentioning the 
matter to Jordan because if Washington gives the matter any publicity our 
British competitors will possibly get busy and make it a little harder for us on 
account of their lower prices. Captain Zar is one of our most intimate friends 
and when the time comes to purchase equipment he will buy from Curtiss- 
Wright insofar as he is able to do so. His budget this year allows him only 
about $250,000 for new equipment which he figures is about enough for eight 
Helldivers or similar ships, but the cash will not be available for 4 or o months. 

We will receive an order for two engines and spares and possibly three 
sets of smoke-screen apparatus, but the complete airplanes will not be ordered 
for some little time. 

I am giving you this picture of the situation for your confidential informa- 
tion and I believe we should let the matter drop insofar as Washington is 
concerned. Our contacts with Zar are of such an intimate nature that we 
have nothing to fear from other competitors, unless something very radical 
iiappens. It was Zar's intention to keep the entire matter quiet and get his 
purchase through for us before any other manufacturer heard of it but unfor- 
tunately he made a chance remark to Jordan which opened up the entire 
subject. 

Does that letter seem to you consistent with your statement that 
aircraft is sold only on a performance basis? 

Mr. Webster. Absolutely, sir. We have a demonstration of it 
right in Argentina. 

Mr. Hiss. Does this letter not say that Captain Zar Avas anxious 
not to have a competitor know about the proposed purchases so that 
they would be unable to demonstrate? 

Mr. Webster. They have been demonstrated down there. The 
manufacturers are demonstrating in Argentina, both European and 
American manufacturers. There is no secret about that, and that 
is the only wav vou can sell aircraft these days. 

Mr. Hiss. "'Exhibit No. 320" is a letter dated July 18, 1933 

The Chairman. Before you leave that, I would like to have my 
own mind a little clearer than it is with respect to the exhibit which 
was just offered. Referring to the matter of representatives of the 
Argentine Navy being sent to the United States where they would 
solicit the advice of the United States Navy in the matter of pur- 
chase, is that a policy which is pretty generally pursued? 

Mr. Webster. Yes, sir. 

The Chairman. That South American naval authorities do have 
access to the American Navy and their advice as respects purchase 
of planes and other material? 

Mr. Webster. That has been done, sir ; yes, sir. 

The Chairman. There was nothing unusual, then, about that 
particular proposal? 

Mr. Webster. No, sir; none whatever. 

The Chairman. All right. 

Mr. Hiss. '' Exhibit No. 320 " is a letter dated July 18, 1933, from 
Mr. Webster to Capt. C. K. Travis in Bolivia. 

(The letter referred to was marked " Exhibit No. 320 " and is 
included in the appendix on p. 903.) 

Mr. Hiss. That letter reads in part as follows [reading] : 

Immediately upon your arrival you should contact Colonel Zuloaga and 
•Captain Zar. 

That means his arrival in the Argentine? 
Mr. Webster. Yes, sir. 



MUNITIONS INDUSTRY 745 

Mr. Hiss (continuing reading) : 

Colonel Zuloaga is Director General of Aeronautics and Chief of the Army 
Airport, and Captain Zar is Chief of Naval Aviation. 

Mr. Webster. Pardon me, that is a typographical error ; Chief of 
the Army Air Corps. 

Mr. Hiss. Correct the exhibit, please. 
(The exhibit was accordingly corrected.) 
Mr. Hiss (continuing reading) : 

Arrange if possible to dispatch the ship to El Palamar, the Army Air 
Station. 

The arrano-ement is in connection with the Argentine Falcon for 
which your company is negotiating 5 
Mr. Webster. Yes, sir. 
Mr. Hiss (reading) : 

Work through Zuloaga and Zar and follow their suggestions. In a recent 
letter from Zar he suggested that we first get the plane to Palamar and pos- 
sibly later transferring over to Puerto Indio, the Naval Landing Station. 

Mr. Webster. Naval Land Station. 
Mr. Hiss. You might correct that, too. 
(Exhibit corrected.) 
Mr. Hiss (reading) : 

* * * Our object, naturally, is to sell the Falcon to the Argentine Gov- 
ernment and, in due course, arrange a contract for them to purcliase the man- 
ufacturing rights to construct this plane for the Government at Cordoba. All 
of these arrangements will be handled by Leon — 

Will you identify Mr. Leon ? 

Mr. Webster. Mr. Leon is a former employee of the Export Co. 
and a former employee of mine. He is no longer with us. He left 
because of ill health. He represented us in Argentina for a great 
many years as resident manager there. 

Mr. Hiss. Was he discharged by your company? 

Mr. Webster. No, sir. 

Mr. Hiss. Left because of ill health? 

Mr. Webster. Left because of ill health. 

Mr. Hiss. He was in good standing at the time he left? 

Mr. Webster. Oh, yes. 

Mr. Hiss (continuing reading) : 

when he arrived there, probably around the 15th of September. His relations 
with Zuloaga and Zar are very intimate, so do not attempt to sell but merely 
handle the plane for the time being and put on your show and the necessary 
demonstration. When Leon arrives he will probably take you into his confi- 
dence and give you a line on our set-up. so do nothing that will interfere with 
the negotiations which Leon and myself have already started. 

Did Mr. Leon ever take you into his confidence about the Argen- 
tine negotiations? 

Mr. Webster. Yes, sir. 

Mr. Hiss. What did you have in mind when you stated that he 
would take him " into his confidence ", referring to Leon ? What did 
you expect him to try to do when he arrived with regard to your 
relations with Zuloaga and Zar? 

Mr. Webster. It was not entirely with relation to Zuloaga and 
Zar, but the Army Air Corps in Argentina is a very large organiza- 
tion. Many of its personnel have been trained in European coun- 



746 MUNITIONS INDUSTRY 

tries, and they are more or less pro-European in their ideas, and at 
times a little prejudice will creep into it. So that I presume Leon: 
wished to steer Mr. Travis and let him know who were pro-European, 
and who were more or less open-minded on the subject. 
Mr. Hiss. In this letter, Mr. Webster, you also said : 

In selling this Falcon to Peru, please handle this, if possible, in the same 
manner as the other Falcon and Hawk we sold. The payment to be made tO' 
me personally and not to the company, as I have certain commissions that will 
have to be paid. 

Do you remember what commissions they were ? 

Mr. Webster. I believe it was to Mr. Dan Tobin. In fact, it was- 
Dan Tobin. 

Mr. Hiss. Your negotiations in the Argentine were very compli- 
cated, were they? It was a delicate matter? 

Mr. Webster. No; I would not say they were delicate or compli- 
cated. It was a hard selling job, but it was not complicated. There 
was a lot of hard work to it. 

Mr. Hiss. At the top of the third page of this letter you state 
[reading] : 

In asking you to lay off all sales negotiations, please do not feel that we do 
not believe you capable of handling them, but Leon has spent so much time in 
Argentina and knows his contacts so well and intimately, that I believe we 
should not upset them in any way. I know that you will appreciate this- 
situation. 

Mr. Webster. Mr. Leon had been in Argentina as our resident 
manager there for 14 or 15 years and was naturally very well ac- 
quainted. Mr. Travis, I believe, had never been to the Argentine- 
before. Mr. Leon was planning to return to Argentina in order to 
pick up that work, but unfortunately his health would not permit 
it and he did not go back, and for that reason I wished Travis to 
wait for Leon to get back. 

Mr. Hiss. I now introduce " Exhibits No. 321 and No. 322 ", the first 
being a letter dated January 19, 1934, from Mr. Owen Shannon, of the- 
Curtiss-Wright Export Corporation, to Mr. C. W. Webster, and it 
encloses an unsigned memorandum dated January 17, 1934, which 
Mr. Shannon says is a copy of a letter from Lawrence. That is Mr.. 
Leon? 

Mr. Webster. Mr. Leon. 

(The letter and memorandum referred to were marked " Exhibits- 
No. 321 and No. 322 " and are included in the appendix on p. 905.) 

Mr. Hiss. The enclosed memorandum states (reading) : 

Your letter came a couple of hours after our telephone conversation. By all. 
means do your best to get Mason to go down at once. 

Mason was an employee of the company? 

Mr. Webster. Mason was an employe of the Wright Aeronautical 
Co. whom we were thinking of sending to South America as my own 
representative. 

Mr. Hiss (continuing reading) : 

Hewlett may be a better man, but if this boy is a salesman and is loyal, his 
knowledge of Spanish will take him farther. He will not have much to do for- 
a few months, but that will give him a chance to get acquainted, and Zu — 

That is Zuloaga ? 

Mr. Webster. That is Zuloaga. 



MUNITIONS INDUSTRY 747 

Mr. Hiss (continuing reading) : 

is liappier when somebody from the office is near at hand. Somebody has to 
be there to be on the inside of things, or the business goes elsewhere. Tliose 
fellows detest writing me, with good reasons * * *, 

Why did they detest writing? 

Mr. Webster. I do not know. I did not write this letter. I do 
not know what Leon had in mind. I presume they did not wish to 
go to the trouble of writing. 

Mr. Hiss. You do not think it was because they did not wish to 
put themselves down on record? 

Mr. Webster. I do not know what the reason would be. 

Mr. Hiss (continuing reading) : 

and are getting tired of being told that I'll soon be back, with the result that I 
am gradually getting out of touch with the real situation. Men in the various 
departments are changed periodically and new friends must be constantly made. 
I feel pretty bad about all this, but as explained in another letter I can not 
leave the family in the shape it is, and to go for a few weeks now and come 
back would be just a waste of money. 
Trouble from W. was to be expected. 

Can you identify Mr. W ? 

Mr. Webster. Mr. Lee Wade. 

Mr. Hiss. Whom did he represent at that time ? 

Mr. Webster. Mr. Wade is more or less a free lance aeronautical 
salesman. I believe he represents the Consolidated Co. in Buffalo 
among others. I do not know. I believe he is selling second-hand 
airplanes down there, more or less free lance. 

Mr. Hiss (continuing reading) : 

He is paying L's expenses and L does all he can for him. 

Can you identify L. ? 

Mr. Webster. That is an Argentine oiRcer up here, and I cannot 
recall his name, but I think it begins with " L ", and I think that is 
what he refers to^ 

Mr. Hiss. Can it be Captain Leporace? 

Mr. Webster. Yes ; it could be. I think that is the name. 

Mr. Hiss. Artemis Denaxas is with the Societe Financiere et Tech- 
nique de Grece S.A., your agents in Greece. Is that correct, Mr 
A^llard? 

Mr. Allard. Yes, sir. 

Mr. Hiss. He has no connection with the Government of Greece ? 

Mr. Allard. None that I know of at all, sir. He is a commercial 
man. 

Mr. Hiss (continuing reading) : 

Trouble from W. was to be expected. 

" W " was a salesman on his own account for airplane equipment? 
Mr. Webster. Yes ; and I think represented the Consolidated Air- 
craft Co. 

Mr. Hiss. Represented the Consolidated Aircraft Co.? 
Mr. Webster. I think so. 
Mr. Hiss (continuing reading) : 

He is paying L.'s expenses. 

which you think means Captain Leporace? 
Mr. Webster. Yes, sir. 



748 MUNITIONS INDUSTRY 

Mr. Hiss (continuing reading) : 
and L. does all he cau for him. L. has done a lot for Za 

That refers to Captain Zar, does it not? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 
on one occasion and Za arranged this spree for L. and is giving him free hand. 

Then it continues: 

Very likely this man will be in Za's place thre^ or four years from now 
when both are due for promotion. He and his brother owe me a few favors of 
more than ten years' standing and I am in position to make any arrangements 
with him to counteract W's influence — 

Wade's— 

once we are all together. Just now he is not answering my letters, which, I 
suspect, fell in W's hands. 

That means Wade's. 

With your letter also came the one I was expecting from Ta. 

Can you identif y " Ta " ? 

Mr. Webster. I think that is Taravella. 

Mr. Hiss. Who is he? 

Mr. Webster. Mr. Taravella is a civilian engineer, employed by the 
Argentine Government in a Government factory at Cordoba, Argen- 
tine. 

Mr. Hiss. Has he been in this country also? 

^h\ Webster. Yes, sir ; he was stationed at our factory for about 
2 years. 

Mr. Hiss. As an inspector? 

Mr. Webster. As an inspector and engineer in the selection of cer- 
tain factory equipment for the Government factory for the produc- 
tion of Wright engines in Argentina. 

Mr. Hiss (reading) : 

I had asked him to write the real reason for changing their minds about 
the Falcon and Hawk license. He says that while Travis' demonstration was 
pretty good, it was not good enough to convince everybody. That is one rea- 
son. The others are curtailment of appropriations and the necessity of the 
engineering stafC to get busy and do something of their own or explain what 
they were doing in Europe when they were sent there to study for five years. 
He says that neither my presence nor Web's — 

that is you, Mr. Webster? 
Mr. Webster. Yes, sir. 
Mr. Hiss (continuing reading) . 

can for the moment rush orders, and tliat the only thing which could overcome 
all these obstacles at once would be for the " Jingos " advocating preparedness 
to get the upper hand or for me to resort to the " old maneuver." 

Do you know what he means when he saj^s to resort to the " old 
maneuver " ? 

Mr. Webster. No, sir; I have been trying to think what it could 
be, and the only thing I can think of is to go over the heads of some 
people who had more say in the matter. That is the only interpre- 
tation I could put on that. 

Mr. Hiss (continuing reading) : 

He meany the trick we turned in 1931 when we sold the engine license. 



MUNITIONS INDUSTRY 74^ 

Do you remember the circumstances of the trick you turned in 
1931 when you sold the engine license? 

Mr. Webster. Yes, sir. At that time we even went to the Presi- 
dent there in order to have our engine receive proper or sincere 
attention. At that time they were manufacturing in Argentina, in 
the government factory, the French engine, and that contract with 
the French was canceled and a contract was made with us for the 
manufacture of our engines in Argentina. 

Mr. Hiss. Perhaps this will help, Mr. Webster; that is, the next 
sentence of the memorandum, which states : 

Unfortunately, tliis is not possible with the present set-up in the War Depart- 
ment, the key man being one of the very few not amenable to anything of 
that kind. 

What does that mean in relation to going over somebody's head^ 
Mr. Webster ? 

Mr. Webster. I would say that would bear it out. I should think 
going over somebody's head would naturally cause some ill feeling 
down there. 

Mr. Hiss. You do not think it is a reference to the " commissions " 
which you have referred to before ? 

Mr. Webster. In this case, I do not think it is, sir. 

Mr. Hiss (reading) : 

But he is due for retirement this year. * * * Web already knows who the 
men are, and should be the only one to handle commissions when the time 
comes. 

You were expecting that some commissions would be necessary? 

Mr. Webster. Yes, sir; you see when Mr. Leon left down there, 
it left us more or less without a representative, without a contact 
there. We were later forced to make, a local contact with Gandara 
& Co., and I made that contract last winter when I went down 
there, and arranged to pay them a commission in order to handle our 
local contracts. 

Mr. Hiss (reading) : 

Mason, if he goes down there, should not be entrusted with anything of 
this kind until he has been there six months at least and has proven that 
he can handle the business. It would be a mighty good idea if you went 
through the files and took out all letters mentioning names and commissions. 

The Chairman. Who was that letter from? 

Mr. Hiss. From Mr. Lawrence Leon, at that time a representative 
of the Export Co., which Mr. Shannon encloses in a letter to Mr. 
Webster. 

Mr. Allard. Pardon me, Mr. Hiss. He was not a representative 
of the Export Co., but with Mr. Webster. 

Mr. Hiss. On Mr. Webster's staff, selling? 

Mr. Allard. Yes, sir. 

Mr. Hiss. He had formerly been a representative of the Export Co. ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Mr. Shannon sent this to you, as he stated in his letter, 
" Exhibit No. 322 ", thinking to be of help to you. What do you 
think Leon meant by stating : 

It would be a mighty good idea if you went through the files and took 
out all letters mentioning names and commissions. 



750 MUNITIONS INDUSTRY 

Mr. Webster. At times the government wishes to deal directly 
with manufacturers, and our particular predicament in the Argen- 
tine at the time was that we had to have somebody down there, 
and we did not have anybody down there, and the reason for 
making a contact is that the Argentine Government has always pre- 
ferred to deal direct with the factories. In fact, for a number of 
years they maintained a permanent Argentine Naval Mission — 
commission — here in the United States, quite a large staff, in order 
to deal directly for purchases. 

The Chairman. How much of the material relating to names and 
commissions has been taken from the files? 

Mr. Webster. To my knowledge there has been none taken out. 
I did not exactly feel that it was necessary. It was his suggestion, 
but I did not feel it was necessary. 

Mr. Hiss. " Exhibit No. 323 " is a letter from Mr. Owen Shannon 
to Mr. J. S. Allard under date of September 25, 1933, regarding the 
Brazilian Mission. 

(The letter referred to was marked " Exhibit No. 323 " and is in- 
cluded in the appendix on p. 906.) 

Mr. Hiss. The mission is where? 

Mr. Allard. Brazil Mission. 

Mr, Hiss. To where was it addressed? 

Mr. Allard. Aeronautical Co. 

Mr. Hiss. The engine company? 

Mr. Allard. Yes, sir. 

Mr. Hiss. That letter reads as follows: 

You will be interested in the following quotation from a letter received from 
our Brazil agents today : 

" We are pleased to say that we have had occasion to talk at length with 
Major Oliveira and Captain Mollo since their return from the United 
States, * * * " 

Were they members of a mission sent by Brazil to the United 
States ? 
Mr. Webster. Yes, sir. 
Mr. Allard. They were, 
Mr. Hiss (continuing reading) : 

" and that they are highly gratified with all they saw and very much appreci- 
ated all the courtesies lavished upon them by your company. 

" We may confidentially advise you that the reports which have been sub- 
mitted by the mission to the Minister of War are highly satisfactory to your 
organization and likely therefore to yield good results." 

Do you think, Mr. Allard, or Mr. Webster, that the " courtesies 
lavished " upon foreign missions in this country have an3'thing to do 
with the rejDorts which they later render being " highly satisfac- 
tory " to your organization ? 

Mr. Allard. I do not approve the word " lavished ", because we 
have not lavished any attention. That is a Latin-American way of 
making a statement. I think unquestionably that the attention thot 
we paid to them, the things which we showed them, the demonstra- 
tions of ships, certainly had been a contributing factor in their selec- 
tion and recommendations which they made. 

Senator Pope. And the entertainment? 

Mr. Allard. Yes. It is quite a natural thing to be courteous to 
visitors here. 

Senator Pope. Yes, sir. 



MUNITIONS INDUSTRY 751 

Mr. Hiss. I am reading now from " Exhibit No. 294 ", put in evi- 
dence yesterday, and which is a report by Melvin Hall, at that time a 
representative of the Export Co., on conditions in Turkey, dated 
February 27, 1933. [Keading:] 

Hikmet Bey, a young engineer educated in America, has only moderate in- 
fluence as yet, but is clever enough to assist us fully to build him up to talse 
over Kayseri eventually, and is undoubtedly a strong asset in his present 
capacity. 

Does that refer to a factory in Turkey operated under a license 
from your company? 

Mr. Allabd. No, sir ; it was the Turkish national factory. 

Mr. Hiss. Did the Wright Aeronautical Co. give them a license? 

Mr. Allard. No, sir; our planes only. 

Mr. Hiss. That is what I wanted to bring out. 

" Exhibit No. 324 " is a memorandum to Mr. Cramer from Mr. 
Allard. Is that correct, Mr. Allard ? 

Mr. Allard. Yes, sir. 

(The memorandum referred to was marked " Exhibit No. 324 " and 
is included in the appendix on p. 906.) 

Mr. Hiss. Is Mr. Pawley a director of the Export Co. ? 

Mr. Allard. That is right. 

Mr. Hiss. And is also president of the Intercontinent Aviation, 
which is a selling agency in China? 

Mr. Allard. That is right. 

Mr. Hiss (reading) : 

Mr. Pawley stated in a recent letter, or cable, that he had a fund of about 
$2,000 to take care of the entertainment of General Wong and his party from 
Canton. 

They were touring this country in the last few months; that is, as 
of May 10, 1934? 

Mr. Allard. Yes, sir; just about that time. 

Mr. Hiss. They were seeking to buy aviation equipment? 

Mr. Allard. No; I do not think so; they were inspecting all avia- 
tion, connnercial airlines, and factories. 

Mr. Hiss (continuing reading) : 

During their visit to this country they were entertained by the following: 
Mr. Buchanan in San Francisco — 

Do you know who Mr. Buchanan is? 

Mr, Allard. Mr. Buchanan is the manager of the airport outside 
San Francisco, the Alameda Airport, 
Mr. Hiss (reading) : 

Mr. Moseley in Los Angeles — 

AVho is he? 

Mr. Allard. Manager of our airport at L03 Angeles, Grand Cen- 
tral. 

Mr. Hiss. Does he manage that? 

Mr. Allard. I think he, Mr. Buchanan, was a port accountant and 
the airport was closed and he was more or less a watchman, 

Mr. Hiss. But an employee of the Curtiss group? 

Mr. Allard. Yes, sir ; at that time he was. 

Mr. Hiss (reading) : 

Ralph Damon in St. Louis * * * 
83876— 34— PT 4 5 



752 MUNITIONS INDUSTRY 

Who is he? 

Mr. Allard. President of the Curti^s-Wright Airplane Co., in 
St. Louis. 
Mr. Hiss (reading) : 

Buffalo * * * 

The plane company in Buffalo is the Curtis Airplane & Motor? 
Mr. Allard. Yes, sir. 

Mr. Hiss. Patterson is the Wright Aeronautical Engine Corpora- 
tion? 
Mr. Allard. Yes, sir. 
Mr. Hiss (reading) : 

and the New York office group, mainly Mr. Dooley. 

Who is Mr. Dooley? 

Mr. Allard. Mr. Dooley was an employee for this group, who 
was later taken over by Export and is now in China, and happened 
to be here at that time and had the job of entertaining thege people. 

Mr. Hiss (reading) : 

I wish you would get together the expense accounts from these various 
organizations and submit them to Mr. Sanderson of Intercontinent so that we 
can be reimbursed for these expenses. 

Mr. Allard. Correct. 

Mr. Hiss. The expenses of entertaining foreign visitors are some- 
times rather large, are they? 

Mr. Allard. It depends on what you mean by " large." I think 
the total expenses of these five or six men were over $2,000. That 
is for a couple of months' time here and paying air transportation 
and railroad transportation. 

Mr. Hiss, Mr. Webster, there are a considerable number of former 
American officers who are now with foreign governments, are there 
not? Is not that correct? 

Mr. Webster. I do not know how many former officers are with 
foreign governments, Mr. Hiss. 

Mr. Hiss. Do you know a Commander Jordan in Bolivia? 

Mr. AVebster. No. It is pronounced in English " Jordan." 

Mr. Hiss. He is not a former American officer ? 

Mr. Webster. No, gir; he is a Bolivian. It is an English name, 
but there are a great many English and Irish down there, but it is 
pronounced differently. He is a native Bolivian. 

Mr. Hiss. Commander Strong is an American ? 

Mr. Webster. I believe so. 

Mr. Hiss. I think his name was mentioned previously in the 
committee hearings. 

Mr. Webster. Yes, sir ; he is an American. 

Mr. Hiss. Commander Strong used to inspect, or used to be a 
United States Navy inspector at the Keystone factory, did he not? 

Mr. Allard. I have heard that, but I do not know it. It was 
before my time. 

Mr. Hiss. The Navy has regular inspectors at the factories in the 
United States with which they do business ? 

Mr. Allard. That is correct. 

Mr. Hiss. From which it procures planes? 

Mr. Allard. Yes. sir. 



MUXITTOKS INDUSTRY 753 

Mr. Hiss. Incidentally, your company's relations with Colonel 
Jordan have always been very friendly, have they not ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. I am reading a letter dated September 13, 1933, being a 
letter from Mr. Travis to Mr. C. W. Webster, which reads, in part, 
as follows : 

Lopez told me in a confidential and friendly chat yesterday that if it hadn't 
been for Jordan and two or three others that he named, that the last order 
for planes would have been canceled and tbat our competitors would have been 
given a chance. 

Do you know what Colonel Jordan's present position is ? 

Mr. Webster. He is chief of the air corps in Bolivia at the present 
time. If you would like to have me explain that, for a great many 
years aircraft or aviation in Bolivia had been more or less domi- 
nated by the Germans and their air-line operations, and, naturally, 
there are a lot of Germans still there, a number of German people 
still there in connection with aviation, and there was a very strong 
leaning toward German equipment ; because he had flown both types, 
he preferred the American types, and for that reason he wished 
American equipment. 

Mr. Hiss. " Exhibit No. 325 " will be a letter dated April 21, 1934, 
from J. Samper, on the letterhead of Urueta & Samper, who are the 
Export Co.'s agents in Colombia? 

Mr. Allard. They are. 

Mr. Hiss. That is addressed to Mr. W. F. Goulding, vice president 
Curtiss-Wright Export Corporation. 

(The letter referred to was marked " Exhibit No. 325 " and is 
included in the appendix on p. 907.) 

Mr. Hiss. That letter reads, in part, as follows : 

Through my good friendship with Gomm. Strong I will be able to meet not 

only Mr. Trunk — 

Who is Mr. Trunk, Mr. Webster? 

Mr. Allard. May I answer that, because I am familiar with 
Colombia ? 

Mr. Hiss. Yes, sir. 

Mr. Allard. Trunk headed up a group of pilots and mechanics 
for Colombia some time this year from this country. I know Trunk 
only by having seen him. He did it on his own. He is not identified 
with our company. 

Mr. Hiss. The letter states further: 

I will be able to meet not only Mr. Trunk, but most of the important men 
that may have come with him. I have enjoyed the confidence and friendship 
of Conini. Strong, practically since his arrival, and in spite of his complete and 
unbreakable reserve as far as military matters are concerned, I have been able 
to ascertain that he is not in the least antagonistic to your products. He is 
really an excellent man. To my understanding he will be placed by the 
Ministry as actual head of the aviation activities in this country ♦ * *_ 

Has that come about? 

Mr. Allard. I think it has; yes. 

Mr. Hiss [reading] : 

I am confident that once he knows all about the German competition and 
antagonism to all foreign influence other than theirs, he will take measures to 
stop their career. 



754 MUNITIONS INDUSTRY 

Quite naturally, an American officer would be more fara^iliar with 
American equipment and w^ould be favorable to American equip- 
ment ? 

Mr. Allard, Certainly. 

Mr. Hiss [reading] : 

1 have just received from Irvin — 

Does that mean the Irving Parachute or Airchute Co. ? 

Mr. Allard. I believe so. 

Mr. Hiss. J\Iy information is that Mr. J. C. Willson is a director 
of the Curtiss-Wright parent company. Is that correct? 

Mr. Allard. Yes, sir. 

Mr. Hiss. He is also a director of the Irving Airchute Co. 

Mr. Allard. I do not know it for a fact, but I have heard that. 

Mr. Hiss. Does your company represent the Ir\T.ng Aircliute Co. 
in a great many countries? 

Mr. Allard. In a great many countries ; not all countries. 

Mr. Hiss [reading] : 

I have just received from Irvin — 

which means Irving I am pretty sure — 

some scarfs to distribute among the pilots here. I am afraid that the propa- 
ganda was sent too late, because I was Informed definitely that the Govern- 
ment had ordered the consul to place orders with our competitors (Switlik) 
for tlie parachutes they are in need of. Since I had to pay something like 20 
pesos duty on these scarfs, I will ask you to request from Irvin to deposit in 
my account, as usual, the corresponding sum in dollars. I am sending them the 
corresponding vouchers. 

NEGOTIATIONS IN MEXICO 

Mr. AVebster, are you familiar with your company's business in 
Mexico ? 

Mr. Webster. Yes, sir; in a way, but not entirely familiar with 
it. I think I can answer your questions. 

Mr. Hiss. Mr. Leon also handled some of the negotiations ? 

Mr. Webster. Mr. Leon made one trip into Mexico while he 
was out on the coast for his health. He was close by and we sug- 
gested that he might combine a business trip and go into Mexico, 
and also possibly find a place which was more healthful for him. 

Mr. Hiss. Can you identify Colonel Aguilar? I will show you 
a copy of an interoffice memorandum under date of December 5, 
1930, from J. S. Allard to Mr. Burdette S. Wright, subject: Mexico. 

Mr. Allard. I think I would know more about that. 

(The memorandum referred to was marked " Exhibit No. 326 ", 
and is included in the appendix on p. 908.) 

Mr. Hiss. What is his position and what position did he hold 
in 1930? 

Mr. Allard. I believe he was the Mexican military attache here. 

Mr. Hiss. In Washington ? 

Mr. Allard. In Washington. 

Mr. Hiss. Can you also identify General Azcarate? 

Mr. Allard. General Azcarate was or may have been the chief of 
a"\Tation, or at least the head of a division in it, and operated a 
factory in Mexico City, airplane factory of his own. 



MUNITIONS INDUSTRY 755 

Mr. Hiss. Mr. Allard, do you think there was anything unusual 
about your Mexican negotiations? Did they differ from your 
ordinary negotiations in other countries? 

Mr. Allaed. I should not say so; no. 

Mr. Hiss. As I have said " Exhibit No. 326 " is a letter of December 
5, 1930, from Mr. Allard to Burdette S. Wright, a vice president 
of the Curtiss-Wright parent corporation. That reads in jjart as 
follows [reading] : 

I realize fully that Colonel A.!j;uilar is not doins all his sales promotion work 
for us as a kinclly gesture, and I would welcome the opportunity of talking: with 
him, inasmuch as we have no repi'eseutative in Mexico, on the subject of his 
suggesting some representative througli whom he could get his compensation 
for the work he is doing for us. 

Were you proposing, Mr. Allard, to pay Colonel Aguilar, the 
Mexican military attache, compensation from your company 4 years 
ago? 

Mr. Allard. I do not think it was to be done when he was still 
military attache. He was leaving here and going back as a private 
citizen to Mexico. I know that to be the fact. 

Mr. Hiss [reading] : 

And, incidentally, if he does suggest somebody, I would not hesitate in 
telling him to plan on getting his compensation through that party rather than 
direct from us, as I do not think it is good ball for us to show the payment 
of any commission on any sales to anyone other than our authorized 
distributors. 

Mr. Allard. That is correct. 

Mr. Hiss. Will you explain that? 

Mr. Allard. Because we could not pay him; he was not sufficiently 
set up as a business man to be our authorized distributor down there. 
We later appointed, or at that time had Watson & Phillips, a busi- 
ness house which had been in business there 75 years, I think. 

Mr. Hiss. That was not because he was an official of the Mexican 
Government ? 

Mr. Allard. No. 

Mr. Hiss. This is dated in 1930. 

Mr. Allard. Yes, sir. 

Mr. Hiss. Is he not still connected with the Mexican Government? 

Mr. Allard. Insofar as I know, he is not. 

Senator Pope. Do you know he is or not? 

Mr. Allard. No ; I do not know whether he is or not at the present 
time, but at that time in December 1930, he was quitting as military 
attache, going back to Mexico and retiring' to private life. 

Mr. Hiss. May I refresh your recollection by calling your attention 
to a letter of November 29, 1933, addressed to you signed by Robert 
L. Earle, who is in your Washington office here? 

Mr. Allard. That is right. 

Mr. Hiss. I will offer that letter as " Exhibit No. 327." 

(The letter referred to was marked " Exhibit No. 327 " and 
is included in the appendix on p. 908.) 

Mr. Hiss. On page 3, Mr. Earle says — and this letter is a report 
of a recent trip by Mr. Earle to Mexico and the date of it is Novem- 
ber 29, 1933 

Mr. Allard, That is correct. 



756 MUNITIONS INDUSTRY 

Mr. Hiss (reading letter) : 

General Aguilar claims that he is to be the next Chief of Aviation, but since 
he has made this claim during the four years that I have known him, it is 
difficult to put a great deal of stock in his assertions. Add to this the fact 
that he is now being punished by assignment to u relatively unimportant post 
for the publishing of a pamphlet in Washington casting discredit on the Mexican 
Minister of Finance, for which act he was recalled. * * * 

Does it appear from that that General Aguilar had been in Wash- 
ington, where Mr. Earle was, for several years after 1930? 

Mr. Allard. I do not know. 

Mr. Hiss. May I ask Mr. Earle, who is present? 

Mr. Earle. General Aguilar I first knew about 4 years ago when 
he was here as a colonel. He did return to Mexico. He resigned 
from the Army. But by some stroke he got to be the general in the 
Mexican Army and then he returned to Washington as military 
attache. As my letter indicated, his recall to Mexico was brought 
about because of this pamphlet that he wrote. Then shortly after 
that he resigned again from the Mexican Army and is now a private 
civilian. 

Mr. Hiss. Do you know the date of his first resignation as some- 
where around December 1930, Mr. Earle? 

Mr. Eakle. No; I do not. 

Mr. Hiss. But you think he did resign? 

Mr. Earle. That is what I was told when I was in Mexico; yes, 
sir. But he had gotten out of the Army and then he had gotten in 
again. 

Mr. Hiss. Who are your representatives in Mexico at the present 
time ? 

Mr. Allard. Watson & Phillips. 

Mr. Hiss. Do you remember for what reason you gave them your 
agency? 

Mr. Webster. It was at the recommendation of Mr. Leon after Mr, 
Leon had visited Mexico and had selected them. I believe he also 
consulted the American commercial attache and various business 
houses and selected Watson & Phillips. 

Mr. Hiss. Did your company believe that they were influential in 
swinging Government orders? 

Mr. Webster. I would not say influential. They were a very good 
business house and naturally it was necessary to have a good busi- 
ness organization to look after your business. 

Mr. Hiss. I will offer as " Exhibit No. 328 ;' a letter dated June 13, 
1933, from Charles Cunningham, commercial attache of the De- 
partment of Commerce stationed in Mexico, to the Curtiss-Wright 
Export Corporation. 

(Tlie letter referred to was marked " Exhibit No. 328 " and is 
included in the appendix on p. 912.) 

Mr. Hiss. The letter reads: 

For some time we have been in touch with Watson Phillips & Co., Avenida 
Uruguay 103, Mexico City, with respect to their representing you in the pos- 
sible sale of military airplanes to the Mexican Government. As a matter of 
fact, we contributed considerably towards interesting them in your planes as 
their representative has come repeatedly to our office and talked over with us 
the possible American representations available and for the purposes now under 
consideration we strongly urged the possibilities of your Hawk type of machines. 



MUNITIONS INDUSTRY 757 

That is the pursuit type? 

Mr. Allard. Single-seater pursuit. 

Mr. Hiss (continuing reading letter) : 

We are now confidentially advised that the Mexican Government, military 
department, is contemplating the purchase of anywhere from three to ten 
planes of the pursuit type, the requirements of which might be satisfactorily 
met by the Hawk pursuit type. 

The Watson Phillips representative called on us this morning and showed 
your letter of June 9th. This firm feels that for the business that they have in 
mind, your letter is not sufficiently clear on the matter of protecting them 
in case they make a sale for you. You are undoubtedly aware of the manner 
in which purchases of aeronautic equipment are sometimes made by foreign 
governments, and it is a reasonable desire on their part to be protected in full 
in the matter of commission to themselves sufficiently large to enable them to 
meet all requirements. 

What requirements in Mexico ayouIcI Watson, Phillips be faced 
with? 

Mr. Webster. I think more or less the same requirements as other 
representatives in the way of technical advice and assistance. Wat- 
son, Phillips undoubtedly do not know — I know that they are not 
familiar with aircraft. 

Mr. Hiss. Have the commercial attaches of the Department of 
Commerce been helpful to you in the sale of military planes? 

Mr. Webster. In a great many cases ; yes, sir. They have worked 
with us and we have worked with them in all countries, as I believe 
according to their instructions. 

Mr. Hiss. The date of " Exhibit No. 328 " is June 13. On June 5, 
just to refresh your memory. Brigadier General Azcarate, who was 
head of the President's military staff at that time asked you for a 
direct quotation on a Wright plane. On June 13, Mr. Cunningham 
recommended to you Watson, Phillips in the letter which is " Exhibit 
No. 328." 

On June 21 you wrote to Watson, Phillips telling them that you had 
been in direct communication with the aviation officials of the Mexi- 
can Government and therefore you did not wish to have a 
representative. 

On June 29, 1933, Watson, Phillips replied to you and this letter 
I offer in evidence as " Exhibit No. 329." 

(The letter referred to was marked "Exhibit No. 329" and is 
included in the appendix on p. 912.) 

Mr. Hiss. This letter is as follows in part : 

Naturally if you wish to work this matter directly we can only w'sh you 
every success, but we venture to say that unless you have a representative here 
familiar with the politics of the matter and with influential connections your 
chances of obtaining orders are very slender, more especially as the Boeing is 
being pushed very hard and in all probability will now obtain the order as 
there is no other hard opposition. We may say also that a representative of 
the Lockheed is now in this city from their factory in Burbank, Cal., but even 
he will not get far unless he connects with someone who can put him in touch 
with the right parties. 

We regret your decision in this matter, more especially as we had already 
taken up this matter in the highest quarters, but naturally you cannot expect 
us to continue our labours unless we can be sure of some protection and also 
be in a position to quote. 

On June 30, the day after this letter from Watson, Phillips, Gen- 
eral Azcarate notified you in regard to your quotation to him, which 
letter I offer as " Exhibit No. 330." 

(The letter referred to was marked " Exhibit No. 330.") 



758 MUNITIONS INDUSTRY 

Mr. Hiss. This letter, " Exhibit No. 330 ", reads : 

Curtiss-Wbight Export Corp., 

27 West 57th St., New York, N.Y. 
Gentlemen : I am pleased to refer to your letter dated the 26tli instant, 
advising you that the Mexican Government cannot consider the purchase of any 
planes right now, but we will be glad to receive the information that you 
offer to send, for which reas(Ui I don't believe it necessary that your agent 
come here. We will be glad to hold your offer for whenever the opportunity 
presents itself. 

With nothing further, I am, very truly yours, 

Juan F. Azcarate, 

Brl(/. General, Engineer. 

Do you think there was any connection between your refusing to 
accept Watson, Phillips' request that they be your agents and Gen- 
eral Azcarate's notifying you shortly after that he had asked for a 
quotation that they were not in the market for planes? 

Mr. Allard. No; I do not. No sale was ever made down there. 

Mr. Hiss. I offer as " Exhibit No. 331 " a letter from Mr. Earle to 
Mr. Goulding dated July 21, 1933. 

(The letter referred to Avas marked " Exhibit No. 331.") 

Mr. Hiss. In this letter Mr. Earle states that : 

General Aguilar advises that he has information to the effect that the Mexi- 
can Government is definitely going to buy six Cyclone Hawks from us. 

The interesting part of the situation is that he is now trying to claim some 
credit for having influenced General Azcarate in this purchase from us, and I 
know he is going to try to high-pressure vis into making some gre:^t concession 
to him on a commercial airplane for himself. I have told him that I will go to 
see him on Monday. This is going to be an interesting situation to handle, and 
I plan to simply tell him that I will put the facts up to you for consideration. 
That will give us a little breathing spell and time to think up a good answer 
that will not entail any loss to ourselves and at the same time will appease 
him. 

I offer as " Exhibit No. 332 " a letter dated July 24, 1933. from Mr. 
Shannon to Mr. Lawrence Leon which enclo-sed a copy of a letter 
from Watson, Phillips, which letter has already been put in evidence 
as " Exhibit No. 329." 

(The letter referred to was marked " Exhibit No. 332 " and is 
included in the appendix on p. 913.) 

Mr. Hiss. This letter states in part as follows : 

We have not replied to them further. 

We understand from another source here that Azcarate always wants to be 
taken care of, but is very careful aliout it and works through some third party. 
Up to now we have not been able to find out who this party is. 

We have not api)ointed any agents for military sales in Mexico, so we could 
be free to deal witli whomever we found was Azcarate's man. 

The prices we quoted could provide for a commission of 5 percent to Azcarate 
or an agent. 

Mr. Allard, was your company willing to pay to Azcarate, a Mexi- 
can official, a 5-percent commission on the sale of military planes to 
Mexico? 

Mr. Allard. Mr. Webster would better answer that; while it was 
his company, it was not ours. 

Mr. Webster. Conditions in Mexico were a little different. Azca- 
rate still was, I believe, employed by the Mexican Government, but 
at the same time was operating a private airplane factory and selling 
airplanes to the Mexican Government. There was no reason, if he 
was operating a factory of his own and selling planes to the Govern- 



MUNITIONS INDUSTRY " 759 

ment while he was chief of the air corps, why we should not have 
worked this way with him. There was nothing secretive about it. 

Senator Pope. There is no reason why you should not pay him 
that commission through a third party ? 

Mr. Webster. I should think in that case there was no reason why 
we should not, if he made a profit while still an officer in the Gov- 
ernment, manufacturino; airplanes for the Mexican Government. 
The Government paid him a commission, and there was no reason 
why we should not do the same thing. 

Mr. Hiss. Would you disclose that commission to the Govern- 
ment ? 

Mr. Webster. I do not see any reason why we should not. 

Mr. Hiss. In your contracts with foreign governments, do you 
customarily report to them the commissions that have been paid on 
sales ? 

Mr, Webster. If they request it. 

Mr. Hiss. Is it frequently requested ? 

Mr. Webster. At times ; yes. 

Mr. Hiss. I offer as " Exhibit No. 333 " a letter dated August 5, 
1933, from Mexico, written by Lawrence, who is Mr. Leon, to '* Dear 
Web ", who is Mr. Webster. 

(The letter referred to was marked "Exhibit No. 333" and is 
included in the appendix on p. 913.) 

Mr. Hiss. After receiving the letter of July 24, " Exhibit No. 332 ", 
Mr. Leon had notified Watson, Phillips that they were authorized 
to represent the Export Corporation in carrying on negotiations with 
Mexico. Mr. Leon's letter is as follows. The letter is dated August 
5, 1933. 

Here is the situation : First of all, I found at Palacio Nacional that a request 
was forwarded a mouth or so ago to Washington, thru the Mexican Embassy 
for permission to send six flying officers to one of our pursuit fields to receive 
some training in the event that Boeing or Curtiss shi^^s were purcliased (this 
is how General Aguilar in Washington heard tliat his Government was about 
to buy pursuit equipment and made advances to Bob Earl and probably also to 
United). It seems that our Government turned down the request, and this 
people feel very peeved about it, knowing that many foreign oflicers have been 
trained at U.S. Army fields. Azcarate spoke very frankly to me, stating that a 
contract with Boeing, which was all ready for signatures, was cancelled by 
order of the President * * *." 

You will remember that on Jime 30, just one month and a few 
days before General Azcarate had notified you, just after you had 
told Watson, Phillips that you did not want a deal with them, that 
the Mexican Government cannot consider the purchase of any planes 
right now, although this letter states that there was at that time, a 
month prior to August 5, a contract all ready for signature with the 
Boeing Co., which is a subsidiary of United Aircraft, one of your 
competitors. 

Mr. Webster. No contract was ever placed, by the way. 

Mr. Hiss. Continuing with this letter, Azcarate stated that the 
contract was canceled by order of the President — 

* * * and it has been decided that this equipment shall be purchased any- 
where but in the States. He also said that inquiries have been already dis- 
patched to England and Italy for sending the men there as well as purchasing 
the ships there. 

I, naturally, told Azcarate that if he had spoken to us about it we would 
Jiave solved the problem by either getting the necessary permission from our 



760 MUNITIOlsrS INDUSTRY 

War Department or by having the six men bruslied up on fast ships at some of 
our own fields, but he insists that the men must go to a military school. 

Did your company think it would have had no difficulty in secur- 
ing War Department permission for Mexican officers to be trained in 
the Army at Army fields? 

Mr. Webster. I think possibly Mr. Leon was not in as close touch 
with the situation as he thought he was. He did know that some of- 
ficers have been trained at Army flying fields in America on many 
occasions, and he possibly thought that it could be done again. But 
I do not believe that he was in as close touch with the situation as 
he thought he was at that time. 

Mr. Hiss. Your own company had trained men in flying pursuit 
ships in the past? 

Mr. Webstee. No. We have never trained men in flying pursuit 
ships. We have trained them in flying, but not in pursuit ships. 

Mr. Hiss, Would the training that they receive enable them to 
handle pursuit ships? 

Mr. Webster, Yes ; I would say so, if they had the proper training 
for that work. 

Mr. Hiss. This goes on to say that — 

Azcarate is out for Boeing, and he only inquired about our price in order 
to show that they are higher than Boeing quotations. He told me the higher 
performance is not necessary, as Mexico is not going to fight the United States. 
He is not interested in the Osprey and wants to standardize on P. & W. engines 
because they already have sixty of them on hand. 

These difliculties can be surmounted. My problem was to contact and 
interest another man with as much influence, and this I did through "Watson, 
Phillips Co. Our man in the Presidencia now is Col. Rodriguez Familiar, a 
very close friend of the President and his prot6g6. There will be a lot of 
squabbling, but I believe the colonel will have his way in a few weeks' time. 
I have never seen any country where graft is so freely taken for granted. 

Watson, Phillips & Co. is the oldest British firm in Mexico having been in 
business over a hundred years. They are very active and the financial rating 
is high. I looked up two other firms, but was not as favorably impressed. 
We need not fear their being partial toward British products; they have been 
too long in this country, and will favor whoever gives them a better deal. 

Referring to Watson, Phillips further he says : 

It is mainly on account of their connection at the National Palace that I 
wrote them the letter, copy of which is enclosed. 

That is the letter of August 3, appointing them as agents. 

It is an agreement that can easily be terminated by simply writing them 
another letter, if we want to do so at any time. 

Further on in the letter he says : 

Besides the six Hawks, sixteen engines are needed, and the technical staff 
at the shops are working on a report showing all the reasons why a change 
from a P. & W. to 

That is Pratt & Whitney? 

Mr. Webster. Yes. 

Mr. Hiss (continuing reading) : 

to Wright should be made. I promised a Dodge sedan to the chief engineer 
in charge of the shops if he is successful in switching this initial order to us. 

Did the company or did you ever rebuke Mr. Leon for such a 
promise ? 



MUiSriTIONS INDUSTRY 761 

Mr. Webster. I believe I did so, personally. Mr. Leon had no au- 
thority to make such an offer, and no Dodge sedan was ever given. 
I am quite sure that we would not have done so. 

Mr. Hiss. You never got the order finally? 

Mr. Webster. No order w^as every placed except for a few training 
planes. 

Mr. Hiss. He says further : 

Naturally, all expenses connected with sales must be borne by them * * * 

That is Watson, Phillips? 
Mr. Webster. Yes. 
Mr. Hiss (continuing) : 

except this particular gift to the factory engineer, if the deal goes through, on 
account of the fact that Watson, Phillips would not make any money on the six 
Hawks, as 5 percent is barely enough to pay all rake offs and the price cannot 
be increased, we have quoted $24,000 to Azcarate. There is a chance that 
Azcarate will be kicked out soon, though, in which case things will change quite 
a bit. 

This country has been neglected and I wish I could remain here a few months. 

The last part of this exhibit is : 

According to my cable, this letter should be air-mailed from here, but I have 
changed my mind ; too dangerous not only on account of its contents but also 
because in order to avoid a lot of red tape and a deposit of $250 at point of 
entry, I came as a tourist instead of as a business man. If I were caught, it 
would be an expensive affair, so I thought a couple of days' delay are pref- 
erable to taking the risk. 

I will offer as " Exhibit No. 334 " a letter addressed to the Export 
Corporation from Watson, Phillips in Mexico dated August 23, 1933. 

(The letter referred to was marked " Exhibit No. 334 " and is in- 
cluded in the appendix on p. 915.) 

Mr. Hiss. This letter says : 

The Aviation Department has made an official report to the Presidencia on 
the various planes offered for the purpose — Boeing, Bristol, and Curtiss. This 
report has been seen by our representative and is distinctly favorable to your 
machines. 

Do you think Mr. Leon's promise of a Dodge sedan had anything 
to do with this report being f avorabkj Mr. Webster ? 

Mr. Webster. No; this speaks of airplanes. 

Mr. Hiss. You do not think he made any similar promise in re- 
gard to a report on airplanes ? 

]\Ir. Webster. I am quite sure he did not. 

Mr. Hiss. Watson, Phillips also requested you: 

Should you by any chance receive any further direct communications in re- 
gard to prices we earnestly request you state that you have been obliged to 
revise your original quotation, either on account of rise in price of material or 
due to our intervention as agents, and support this figure. This has been done 
for reasons which you will doubtless appreciate, and we can assure you that 
same will in no way prejudice your chances of obtaining the order, on the 
contrary. 

We also have to inform you that Colonel Lezama, Assistant Chief of the Air 
Department, expects to be in Tulsa, Okla., within approximately one week to 
receive the Fleet planes * * ♦. 

Those are made by the Consolidated Co.? 
Mr. Webster. Yes ; training planes. 



762 MUNITIONS INDUSTRY 

Mr. Hiss (continuing reading) : 

* * * recently purchased by the Flying School. This would be a good 
opportunity for you to interview this gentleman and submit any additional 
information that you may deem advisable, but we would impress upon you 
that this should be done in a discreet manner, and without any advertising, 
as Mr. Lezama does not wish it to appear that he is favoring any particular 
make of plane. 

I will offer as " Exhibit No. 335 " a letter from Mr. H. O. Claywell 
to the Export Corporation, attention of Mr. Shannon. 

(The letter referred to was marked "Exhibit No. 335 " and is in- 
cluded in the appendix on p. 916.) 

Mr. Hiss. Do you know who Mr. Claywell is, Mr. Allard? 

Mr. Allard. I think he is a private individual who lives out in 
the Middle "West some place. He has approached us several times 
concerning commercial and military planes. 

Mr. Hiss. This letter is from Mexico and reads in part as follows : 

I congratulate you upon your representative wlio actually is not a conmier- 
cial one at present, but one of the very highest Government authorities and 
a very expert one, a splendid gentleman, and an excellent friend of mine. 

Do you know to whom that reference is ? 

Mr. Allard. I have not any idea who that is; no, sir. 

Mr. Hiss. Do you think it could be the man to whom Mr. Leon 
referred to in his letter as Col. Rodriguez Familiar? 

Mr. Webster. I think he is referring to Watson, Phillips. He 
says " our representative " there. 

Mr. Hiss. They could not be described as a commercial one but one 
of the very highest governmental authorities. 

Mr. Allard. I do not know whom he refers to. 

Mr. Hiss. I offer as "Exhibit No. 336" a letter from Watson, 
Phillips to Robert L. Earle dated October 28, 1933. 

(The letter referred to was marked " Exhibit No. 336 " and is in- 
cluded in the appendix on p. 917.) 

Mr. Hiss. They say in this letter : 

The most important point at this moment is the " financial " end. According 
to your company's letter of Sept. 7th the price of $24,000 still stands good and 
for important deals in the future with the same department, and otlier reasons, 
please ask your director to kindly cable us confirming that you maintain above- 
mentioned price for tlus deal. For various reasons we have to ask you if you 
could increase our commission on the aliove amount from .5 to 10 percent; 
because in this case we could perhaps obtain the sales contract inunediately. 
If possible our sales pi-ice to the Government of $26,000 should be maintained 
as this is of utmost importance. Delivery should be as soon as possible and 
the money for this deal is already set aside. 

Please take great care that no news about this proposition should reach Mr. 
Azcarate. If he should inquire alwut certain moves in Mexico, please keep 
him in suspense as this matter must be kept secret until everything has been 
definitely decided. 

In dealing M'ith governments is it customary for your company 
to keej) the negotiations secret from certain of the high officials? 

Mr. Webster. No, sir. 

The Chairman. Mr. Hiss, have you developed what the present 
connection of this man Azcarate is? 

Mr. Hiss. General Azcarate was at the time of these negotiations 
Chief of the President's Military Commission, Military Staff in 
Mexico. Is that correct? 



MUNITION'S INDUSTRY 763 

Mr. Allard. I do not know it to be a fact. I do not know what 
his position was. 

Senator Pope. That has been developed. 

The Chairman. Yes; that is already developed. But what is his 
occupation at the present time? 

Mr. Hiss. "Exhibit No. 327" of November 29, 1933, says that 
General Azcarate was chief of the President's staff and is now mili- 
tary attache in Washington. 

Mr. Webster. Is he here now ? 

Mr. Hiss. Mr. Earle would probably know. 

Mr. Earle. Yes. 

Mr. Hiss. Mr. Earle says he is now military attache in Washing- 
ton. That particular contract that you were then negotiating never 
went through, is that correct? 

Mr. Allard. That is correct. 

Mr. Hiss. I will offer as " Exhibit No. 337 " a letter dated March 2, 
1934, from Watson-Phillips to the Export Corporation. 

(The letter referred to was marked "Exhibit No. 337 '" and is in- 
cluded in the appendix on p. 917.) 

Mr. Hiss. This letter reads : 

A special commission which was very busy at the Aviation Department for 
the last few weeks in making a close study of conditions and movements dur- 
ing 1933, just finished tlieir study and a new program, together with new ideas 
about this department, are under consideration. 

We were informed confidentially of the exact position in this matter, and also 
were asked confidentially to make out a certain report, which will be modified 
after we have given same in according to the conditions and possibilities to the 
department. An entirely new arrangement and system will be established. 
The Talleres del Departamento de Aviacion will be taken over by a new man- 
agement and transformed into a factory, similar to the one which Genl. 
Azcarate <uice had in Mexico. The civil as well as military aviation construc- 
tion program will be taken into consideration, but the Military Aviation De- 
partment will furnish only the funds necessary for construction, repairs, up- 
keep of planes for this department. We can tell you that Mr. Calles jun. him- 
self is active in this work already and that his father might be the main 
stockholder and perhaps director of the new company. 

Mr. Hiss. In this letter I find this further statement : 

In asking for further quotations on armament, state the factory prices, includ- 
ing 10 percent commission, but do not mention the amount of commission in 
future letters. 

The governments frequently do not know the amount of commis- 
sion your agents receive? 

Mr. Webster. They do not know unless they request- the informa- 
tion. 

Mr. JHiss. Eef erring again now to " Exhibit No. 327 " letter dated 
November 29, 1933, from Robert L. Earle to J. S. Allard, being a 
report of a recent trip to Mexico City, I find this statement : 

The situation now is approximately as follows : With the transfer of General 
Azcarate to Washington, his influence over purchases by the Government is 
apparently at an end and one of the most serious obstacles to Curtiss-Wright 
progress removed. It will be remembered that he has an interest in the 
factory that built Vought Corsairs under license, and since has done a great 
deal to push the purchase of Boeing fighters. After he was forced to change 
his attitude in favor of Curtiss Hawks recently he tried to give the impression 
that he was out of patience with Boeing for having unexpectedly increased 



764 MUNITIONS INDUSTRY 

their prices, but he can hardly be counted on as a loyal Curtiss-Wright 
supporter. 

With General Rodriguez Familiar as the new chief of the presidential staff, 
it appears that we may expect to receive very favorable consideration. During 
a very satisfactory conference with him, he expressed admiration of our equip- 
ment, and nyreed entirely with my statement to the effect that the Mexican 
Government could not afford fighters having performance inferi(jr to the Hawk, 
when so many governments have already adopted it as standard equipment. 
From all indications, Watson Phillips have arrived at a satisfactory under- 
standing with him regarding methods of handling the financial phases of the 
contracts, although he, of course, has nothing to do with the actual drawing 
«p of same. He is a relative of President Rodriguez, to whom Watson Pliillips 
3ias access through a firm of lawyers. 

General Ruiz, who is the Chief of Aviation, leaves matters of technical recom- 
anendation and conferences with representatives of mnnufacturers almost 
»eui irely up to Colonel Lezama, his subchief . In leaving us to Colonel Lezama 
he said that he would back up whatever plan of action we arrived at. 

Colonel Lezama, who was trained at Brooks and Kelly Field, is very favor- 
able toward us. He said that with General Azcarate now out of the way 
the course ahead would be comparatively clear, and that he would do all he 
could to push the purchase of Curtiss-Wright equipment. He has direct access 
to General Rodriguez, and it was he, in fact, who arranged for the conference 
which Mr. Huebner and I had with general. Lezama and Rodriguez F. appear 
to be in accord and in close touch with each other concerning all negotiations 
for aircraft. 

Colonel Gustavo Leon, who has been designated to make a nonstop flight 
from Mexico City to Buenos Aires, has apparently full latitude in choosing his 
airplane in which to make the flight, such purchase to be paid for, of course, 
by the Government. He was at flrst interested in the Lockheed, but Watson 
Phillips have swung him over to a preference for the Northrop, on the assump- 
tion that we would be able to arrange for handling this type for the Northrop 
Company. Leon seems so disposed to take the recommendation of Watson 
Phillips concerning type of ship (probably due considerably to certain flnancial 
arrangements) that I seriously doubt if the builder of a suitable type airplane 
will be able to sell it there unless the deal is handled through this flrm. 

General Aguilar claims that he is to be the next chief of aviation, but since 
he has made this claim during the four years that I have known him, it is 
difficult to put a great deal of stock in his assertions. Add to this the fact 
that he is now being punished by assignment to a relatively unimportant post 
for the publishing of a pamphlet in Washington casting discredit on the Mexicaji 
Minister of Finance, for which act he was recalled, and his stor.y seems even 
less plausible. He insists that the transfer of General Azcarate to Washing- 
ton does not mean that any of his influence is lost, but I see no reason to 
believe this. I purposely avoided calling on Aguilar until the last day, as I 
wished to make it only a courtesy call. Watson Phillips may find it necessary 
to play along with him to a limited extent for the reason that through his 
presence in the Intendencia, which is the contracting division of the War De- 
partment, even though his post is not of importance, he might be able to 
seriously delay the signing of contracts, were he so disposed. 

Mr. Ponce de Leon, an engineer in the Navy Department, has the task of 
working up the design of gear necessary for the carrying and handling of a 
seaplane on the deck of one of the six vessels being constructed for the Mexican 
Navy by a shipyard in Spain. One or two seaplanes will be purchased for these 
experiments, and the selection of type will be up to him to a considerable 
extent, as its use will depend on the ability of space and gear on the vessel to 
handle it. He and others in the Navy Department have pretty much crystal- 
lized their thoughts on an airplane of not more than 250 h.p. I recommended 
the Fledgling if they must stay in such a low horsepower class, but do not see 
any particular advantage to this, if a plane more compact and not appreciably 
heavier can be offered. They were considering the use of a catapult, only to 
enable a plane to be launched when the water is too rough for take-off from 
the suface. I recommended against trying to design a catapult, for much ex- 
perimentation is necessary before a satisfactory one can be developed, and it 
is not possible to obtain design information from the U.S. Navy as this is 
confidential information. I pointed out that a sea too rough for taking off 



MUNITIONS INDUSTKY 765 

would be dangerous to land in anyway, and recommended that they confine 
themselves to hoisting a seaplane over the side for water take-offs. I believe 
this idea will be followed, and I have agreed to obtain information concerning 
necessary clearances between wings and the ships' hull, and length of hoists 
to allow for rolls. I hope that we can avoid having to design export ships for 
catapulting for the time being at least. Our Osprey as a seaplane should be 
a suitable plane if the catapulting idea is abandoned. 

Possible business : 

1. There are immediate plans for the development of a pursuit squadron, 
starting with six airplanes. The money that was set aside for this purpose 
several months ago was used for other purposes, to meet an emergency of 
some sort in a different branch of the Army. They are now endeavoring to 
dig up enough for a 25% deposit on six Hawks, with the idea of providing the 
remainder from appropriations for the first half of 1934, which money when 
and if ai^propriated would become available after January 1st of 1934.' They 
seem convinced that the Hawk is the ship they want, and since proponents of 
Boeings seems to be out of the way, it appears quite certain that ours is 
first choice. 

One thing which helped interest in the Hawk was the word given by Law- 
rence Leon to the effect that we would give them a license to manufacture 
Hawks without any charge for same. There are some who do not believe that 
they can keep abreast of developments if they manufacture themselves, be- 
cause of the time required to get new planes into production as the types 
advance. Since the total number they would build would be comparatively 
small, this view seems reasonable. With General Azcarate gone there will 
probably be less pushing for manufacturing rights. I recommended that they 
consider only completely manufactured planes for this year, all to be built in 
Buffalo, and that a license, if desired, could be discussed after delivery of 
these. 

Since returning to this country I have heard that President Rodriguez was 
financially interested in the factory venture which General Azcarate pro- 
moted, in which the Corsairs were built, and that through it he lost quite a 
bit of money. If this is true, he might favor a proposition for further manu- 
facturing in that factory if it held promise of helping him get back some of his 
losses. If the idea of manufacturing in Mexico were to be entertained, it 
would, of course, be necessary for us to send someone to Mexico City to discuss 
it and work out contractual arrangements. 

Has your company carried on any negotiations as to licensing the 
Mexican factory? 

Mr. Allard. Yes ; we have had negotiations along that line, but it 
has not developed into anything, to my knowledge. 

Mr. Hiss. Reading further, the letter says : 

It might be desirable for an executive of the Export Co. to make one or two 
trips to Mexico City during the next six to eight months, at which time it 
might be well to try to talk with the President himself, to be sure that he is 
in sympathy with us and is satisfied with the way our affairs there are being 
handled. He seems to be involved in all aircraft purchases. 

The Chairman. Coming back to this man Zar, was he not in fact 
an agent for your corporation? 

Mr. Webster. No, sir; never. 

The Chairman. One cannot follow through the vast amount of 
correspondence we have been through here this morning without be- 
ing impressed that he was something more than an official connected 
with his own Government. You never paid him a commission? 

Mr. Webster. Absolutely, not, sir. 

The Chairman. You never paid him any return of any kind 
for his good will and service to the corporation ? 

Mr. Webster. No, sir; none whatever. Captain Zar is a very 
fine type of gentleman. He spent a great many years in the United 



766 MUNITIONS INDUSTRY 

States, was trained in the United States Navy, and has a great 
many friends in the United States Navy. As a matter of fact, his 
wife is an American girl and he is very American in his thoughts. 

The Chairman. Before recessing the Chair furnishes for the 
record telegrams received during the morning from Ruth Nichols 
and Amelia Earhart. These telegrams come as a result, I take it, 
of testimony that was taken yesterday, in which Mr. Miranda 
in a letter was undertaking to sell to some South American authority 
the knowledge of very strong background in the United States and 
other connections with important people in the flying industry. It 
was clearly a propaganda letter, a salesman's letter selling his com- 
pany to probable southern customers. 

Miss Nichols' telegram is from Rye, N.Y., and is as follows: 

Senator Nye, 

Chairman U.S. Senate Anns Inccstiaatiun.s Coniiiiittee, 

The Vauitol, Washington, D.C. 

I am exceedingly sluckecl to learn from tonight's newspapers that in Senate 
investigation of arms shipment to South America, there was revealed today a 
letter written by Mr. A. J. Miranda, Jr., including my name along with others 
in a state of highly dangerous and misleading import to the cause of peace to 
which I am so extensively interested, both by belief and Quaker heritage. 

Since at no time have I ever had dealings with Mr. Miranda, or any one 
else in armament negotiations, and for the sake of peace to which I have 
been actively working in plans for specific methods of preventing war, I hereby 
urgently and respectfully request that the Nye committee demand an ex- 
planation from Mr. Miranda as to the meaning of his statement that he found 
me among other women fliers " useful in the pursuit of business ", and in ad- 
dition requesting a clear, true declaration from him that I have never had 
any connection with the armament matters being discussed by him in the 
Senate investigation. 

Ruth Nichols. 

The telegram from Miss Earhart is from New York, and is as 
follows : 

Senator Geeald P. Nye, 

Chairman Senate Munitions Investigating Com'mittee. 
In reference to Miranda's letter introduced before your committee yester- 
day and his statement he is " intimately acquainted " with me and that I 
have been " most useful in the pursuit of business ", please know I do not 
recall ever having met Miranda and in no way have I ever been wittingly 
" useful " to him. I am emphatically opposed to all that has to do with war 
and activities of munition makers and genuinely hope your committee may 
curb their devious activities. My attorney investigating Miranda's totally un- 
justified and damaging use of my name. Looking towards redress if possible. 

AME3LIA Earhart. 

Senator Bone. Mr. Chairman, as I recall, the only reference to 
both of these ladies w^as to the effect they flew a certain type of plane, 
that they regarded it as a very fine plane. I do not recall any 
attempt to utilize them in connection with acquiring business or 
utilizing their names. 

The Chairman. I think I recall a letter in which Mr. Miranda did 
declare that these people, along with other prominent fliers, had 
been very useful to them. 

With that the committee will be in recess until 2 o'clock. 

(Thereupon the committee took a recess until 2 p.m.) 



MUNITIONS INDUSTRY 767 

AFTERNOON SESSION 

(The hearing was resumed at 3 : 10 p.m. pursuant to the taking of 
recess. ) 

TESTIMONY OF J. S. ALLARD AND CLARENCE W. WEBSTER— 

Resumed 

ACTIVITIES IN COUNTRIES ENGAGED IN WAR OR FEARFUL OF WAR 

The Chairman. Mr. Hiss, proceed. 

Mr. Hiss. Mr. Webster, in view of the fact that your company 
sells primarily military planes, is it or is it not a fact that when 
wars are going on or threatening, your company does more business 
than in peace times? 

Mr. Webster. Well, I would guess that possibly we did a little 
more. I do not think we would do much more in times of war. For 
instance, I am speaking now of Latin America. That is primarily 
the territory I am personally interested in. If you strike an average, 
I do not think it would be more, Mr. Hiss. I would have to check 
the records, though; that is, over an extended period, to take an 
average. 

Mr. Hiss. The war involving the Chaco territory which is shown 
on the map between Paraguay and Bolivia, the Chaco territory run- 
ning down in through there [indicating on map] with Paraguay 
there [indicating] and Bolivia there [indicating], has been going 
on in actual force since 1932 and is still continuing; is not that 
correct ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Your company's sales of planes as reported to the com- 
mittee show that the country of Bolivia in 1932 and 1933 purchased 
a total of 24 planes from your company. 

Between the countries of Colombia and Peru there has been a dis- 
pute involving the Leticia Territory, lying in through there [indi- 
cating] with Colombia there and Peru there [indicating on map]. 

There has been intermittent fighting, or there was, during 1932 
and 1933. 

On May 24, 1934, a treaty was finally signed by both nations. 

During 1932, 1933, and up to April of 1934, according to the infor- 
mation your company has furnished the committee, a total of 50 
airplanes was sold to Colombia. During that same period, 1932 and 
1933, 4 planes, 1 of which was listed as a commercial plane, was 
sold to Peru; 3 were sold in 1933, all 3 of those being military planes. 

Mr. Allard, have any planes been sold to Peru in 1934? 

Mr. Allard. Not to my knowledge ; I do not think so. 

Mr. Webster. I do not recall. In 1934 ? I do not think so. 

I would have to check on that. 

Mr.. Hiss. In the year 1933 you sold to China, according to your 
records a total of 54 planes. 

In Argentina, in 1932, you sold 10 military planes and 2 com- 
mercial planes. 

83876 — 34— PT 4 6 



768 MUNITIONS INDUSTEY 

During 1932 and 1933 your competitors, the United Aircraft Cor- 
poration, according to the information they have furnished the com- 
mittee, sold 12 military planes to Argentina. 

Mr. Webster. Argentina builds a good many of its own airplanes 
at the Cordova Factory. They buy some engines and build the 
planes in some cases and in others they build their own planes. 
That is, if you are striking a comparison between one country that 
is at peace and another that is at war. 

Mr. Hiss. No. In fact, I understand that Argentina and Chile — 
well, Chile has its own factory at Los Cerrillos. 

Mr. Webster. That factory belongs to the Curtiss Co. in Chile. 

Mr. Hiss. That does not appear as sales by the factory. Do they 
appear as sales of the Curtiss Co. ? 

Mr. Webster. It would; yes. But the factory in Chile is closed. 

Senator Pope. How long has it been closed ? 

Mr. Webster. I think more than a year. 

Mr. Allard. About 2 years. 

Mr. Webster. About 2 years; yes. 

Mr. Hiss. Has your company any contracts now under way with 
Bolivia for delivery of planes in 1934? 

Mr. Webster. One contract was partially shipped; but owing to 
the embargo the balance is held up. 

Mr. Hiss. Do you know how many planes were shipped in 1934? 

Mr. Webster. I could not tell you offhand. 

Mr. Hiss. A memorandum in your files states that as of July 21, 
1934, there were 2 pursuit planes, 3 observation planes, and 4 bombers 
under contract and partly paid for. Do you know how many of 
those have actually been released? 

Mr. Webster. Five of them were released and shipped and four 
are still held up. 

Mr. Hiss. Under the embargo? 

Mr. Webster. Under the embargo. 

Mr. Hiss. In no other country than those mentioned has your com- 
pany, so far as your records show, as submitted to the committee, 
other than Turkey, where 19 planes were sold in 1932 — sold more 
than 5 planes, I believe? 

Mr. Allard. If the records show that, that is correct. 

Mr. Webster. I would have to look up the records; I cannot tell 
you offhand. 

Mr. Hiss. I will offer as " Exhibit No. 338 " a letter of December 
27, 1933, from Frank Sheridan Jonas to Mr. Shannon, of the Curtiss- 
Wright Aviation Corporation. 

(The letter referred to was marked " Exhibit No. 338 " and is in- 
cluded in the appendix on p. 918.) 

Mr. Hiss. Can you identify Mr. Jonas? 

Mr. Webster. Mr. Jonas is employed by, and represents, the Rem- 
ington Arms Co., and I think also the Winchester Co., in South 
America. 

Mr. Hiss. His brother represents Winchester, does he not? 

Mr. Webster. That is possibly correct. I know he did represent 
Winchester. I think now it is only Remington ; yes. 

Mr. Hiss. Does not Mr. Jonas also represent the Federal Labora- 
tories Co.? 



MUNITIONS INDUSTRY 769 

Mr. Webster. I know he did at one time. Whether he' does now 
or not, I do not know. 

Mr. Hiss. The second paragraph of this letter reads as follows : 

The Paraguay and Bolivia fracas appears to be coming to a termination, 
so business from that end is probably finished. We certainly are in one hell 
of a business, where a fellow has to wish for troulile so as to make a living, 
the only consolation being, liowever, that if we don't get the business someone 
else will. It would be a terrible state of affairs if my conscience started to 
bother me now. 

The Chairman. Whose letter is that? 

Mr. Hiss. That is a letter to Mr. Shannon of the Export Co. 
from Mr. Jonas representing the Remington Arms Co. and the Fed- 
eral Laboratories Co. 

The Chairman. What is Mr. Shannon's connection with the 
airways ? 

Mr. Hiss. Mr. Shannon has been identified as a former employee 
of the Aviation Corporation, now on Mr. Webster's staff, which is 
the selling organization in South America. 

Mr. Allard. If you will pardon me, it is not the Aviation Cor- 
poration, but the Export Corporation. 

The Chairman. Has Mr. Shannon any connection at all now, or 
has he had with the Pan-American Airways? 

Mr. Webster. No; he never has. 

Mr. Allard. Never, to my knowledge. 

Mr. Webster. There is another Shannon with the Pan-American- 
Grace Airways. 

Mr. Allard. They are not the same. 

Mr. Webster. There was no relationship of any sort whatsoever. 

The Chairman. Thank you. That is what we were trying to 
determine. 

I should like to ask the witness frankly, in the light of the expe- 
rience that you have had for years, in the light of the experience 
that is generally known now that all competitors have, it is " a hell 
of a business ", is it not, to use Mr. Jonas' language ? 

Mr. Webster. Well, in what way do you mean. Senator ? 

The Chairman. I mean, in the foreign field, where you are so 
directly in competition with other manufacturers? 

Mr. Webster. I would not say that because we are in competition 
makes it a hell of a business. I think it makes it rather interesting 
to have competition. 

The Chairman. But the kind of competition that has been shown ; 
I cannot conceive that any American would relish that kind of com- 
petition, the necessity of having to engage in the kind of practices 
that are engaged in to get the business. 

Do you really say that you delight in the kind of competition that 
you have? 

Mr. Webster. I would not say I delight in that kind of competi- 
tion. Senator, but I would like competition in any line of business 
that I was in. I should think it would be more interesting to have 
competition. 

The Chairman. Coming to Mr. Jonas' direct point, the fact 
that trouble and bloodshed and warfare are necessary to the richest 
profit of your business, are you quite ready to agree that that is, as 
he expresses it, " a hell of a business " ? 



770 MUNITIONS INDUSTRY 

Mr. WtBSTER. Mr. Jonas is not in the same line of business we 
are in. 

The Chairman. I understand. 

Mr. Webster. He is speaking of his own business, not of my 
business. 

The Chairman. You are all making things that enter into the 
same general activity. 

Mr. Webster. Well, we manufacture the same airplanes for the 
United States Government. 

The Chairman, Surely; but does he not manufacture and is he 
not selling one and all alike? 

Mr. Webster. Well, I do not know whom Mr. Jonas sells to for 
Remington. I know that he is in South America. I do not believe 
he sells to the United States Government. We sell the same ma- 
terial — that is when it is released to foreign governments — we sell 
the same material to foreign governments that we sell to the United 
States Government and I do not think it is a hell of a business to 
be in, dealing with the United States Government. 

The Chairman. Very well. 

Mr. Hiss. I offer as '' Exhibit No. 339 " a letter dated December 12, 
1933, from Samper, the Export Co.'s representative in Bogota, Co- 
lombia, to Mr. Goulding, vice president of the Export Corporation, 

(The letter referred to was marked "Exhibit No. 339'' and is 
included in the appendix on p. 919.) 

Mr. Hiss, This letter reads in part: 

Thank yoii, indeed, for the information contained in your letter No. 345 of 
the 5tli inst., and for tlie enclosures received therewith. These we have read 
with extreme interest and pleasure, for it is evident that efforts to convince 
the Government of the need and advisahility of making immediate additions 
to our air force have been effective. The likelihood of failure of the Rio 
conference has aided us considerably in this endeavor. 

Do you knoAv what the Rio conference was, Mr. Allard ? 

Mr. Allard. No ; I do not. 

Mr. Hiss. Just about this time, December 1933, a conference was 
held in Rio de Janeiro among various of the South American coun- 
tries looking to a cessation of the Chaco hostilities. Is it not true 
that a failure of a peace conference at that time would have aided 
your agents in persuading the governments that they should make 
immediate additions to their air forces ? 

Mr. All.\rd. I do not think that is what Mr. Samper refers to 
here. I think he means the possibility of the failure of the confer- 
ence would make the government continue with its national-defense 
program, 

Mr. Hiss. I offer as " Exhibit No. 340 " a letter dated May 20, 1934, 
signed by William J, Crosswell and addressed to " Dear Parm." 

(The letter referred to was marked " Exhibit No. 340 " and is in- 
cluded in the appendix on p. 920.) 

Mr. Hiss. William Crosswell was an agent for the Export Cor- 
poration ? 

Mr. AiJLARD. No. He is a pilot and lie was with the Curtiss Air- 
plane & Motor Co. 

Mr. Hiss. That is the Buffalo company ? 

Mr. Allard. Correct. 



MUNITIONS INDUSTEY 771 

Air. Hiss. The letter is addressed to Dear Parm. which is Mr. 
He^Ylett, of the Export Co.? 
]\[r. Allard. That is right. 
Mr. Hiss. This letter reads, in the third paragraph : 

The minister had to rush back to Bogota because of the progress made at 
the peace conference. Last night's Bogota paper stated that an agreement had 
actually been signetl, and as nearly as I can gather from other sources, the 
report "is authentic. It therefore looks as tho there is no call for the purchase 
of more airplanes at this time. 

Do vou not think from this statement of Mr. Crosswell's that it 
was his opinion that peace between Paraguay and Bolivia would 
mean the lessening of the purchases from your company, Mr. Allard ? 

Mr. Allard. That is probably his thought in the matter, if it is in 
there. 

Mr. Hiss (reading) : 

I have done quite a bit of talking about the value of the demonstrations over 
Barranquilla and Cartagena from the viewpoints of satisfying the people as 
to where their taxes have gone. I have also tried to paint a picture to the 
;\Iinister's aid of the value of such a demonstration over Bogota. If these 
people can become airminded enough they will be willing to appropriate enough 
money to take care of the air force which will, of course, work out ultimately 
to the mutual benefit of Curtiss and Colombia. 

Mr. Hiss. I offer as " Exhibit No. 341 " a letter dated July 28, 1933, 
to Captain Travis from Owen Shannon. 

(The letter referred to was marked "Exhibit No. 341 ", and is in- 
cluded in the appendix on p. 922.) 

Mr. Hiss. Captain Travis at this time was on your staff, Mr. Web- 
ster, was he not ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Beading from this letter, " Exhibit No. 341 " : 

We noted that there are good prospects of another order for six to nine planes 
and sure hope that this comes through soon. As a matter of fact, I was talking 
with the consul general, Decker, today and he is firmly convinced that the scrap 
down tiiere will be over within the next month, and in that event we dinibt 
very much if they will purchase any more of the Hawks or Ospreys. 

Mr. Hiss. I offer in evidence as " Exhibit No. 342 ", a letter dated 
August 14, 1933, from C. W. Webster, to C. K. Travis. 

(The letter referred to was marked " Exhibit No. 342 ", and is in- 
cluded in the appendix on p. 923.) 

Mr. Hiss. You say in this letter, Mr. Webster: 

If Webster & Ashton are able to work fast enough they may be able to get 
the additional 9 or 16 planes closed liefore the war ends. 

Webster & Ashton referred to in this letter are your agent in 
Bogota. Colombia? 

Mr. Webster. No; in Bolivia. 

Mr. Hiss. That is correct, Bolivia. You say further in this letter : 

The consul general in New York seems to feel quite certain that the mess will 
be cleaned up within a month. I certainly hope we will be able to get some 
more business before this happens. 

I offer as " Exhibit No. 343 ", a letter dated September 13, 1933, 
from Cliff to Mr. Webster. 

(The letter referred to was marked " Exhibit No. 343 ", and is in- 
cluded in the appendix on p. 923.) 



772 MUNITIONS INDUSTRY 

Mr. Hiss. I note this letter, " Exhibit No. 343 ", is signed " Cliff " ; 
that is Captain Travis? 

Mr. Webster. That is correct. 

Mr. Hiss. The letter proceeds as follows : 

The war will probably last for months yet according to the looks of things. 
It will all depend upon how long Paraguay can keep going. At any rate, the 
Government is financing the war for another six months and making provisions 
for a year. They have made arrangements for a loan of Bs. 30,000,000 which 
they will receive in a very few days, and arrangements for an additional loan 
of Bs. 25,000,000 if needed. 

What is that ; "what do the}^ mean there ? 

Mr. Webster. That is Bolivianas, v^diich is the national Liirrency. 

Mr. Hiss. Then the letter reads further : 

Just how much of that will be converted into foreign currency I have not 
been able to find out, but I presume that the greater part will go for war 
materials and planes. They can and will use their credit for internal purchases 
and army pay roll. 

Then, at the bottom of page 3, the letter continues : 

We cannot neglect Bolivia : they are our best customers at the present time. 
A small country but they have come across with nearly half a million dollars 
in the past year and are good for quite a bit more if the war lasts. 

The Chairman. Mr. Webster, on the face of these facts or asser- 
tions, there was large advantage accruing to you and your people 
through any prolonging of the conflict, was there not ? 

Mr. Webster. It meant additional sales. 

The Chairman. Sufficient to engender a desire, if you could do it, 
to pull the strings to prolong it? 

Mr. Webster. No, sir ; I Avould not say that. 

The Chairman. I am glad to hear you say that. 

Mr. Hiss. I offer as " Exhibit No. 344 " a letter bearing date Febru- 
ary 15, 1933, from J. V. Van Wagner to Mr. C. W. AVebster. 

(The letter referred to was marked " Exhibit No. 344 ", and is in- 
cluded in the appendix on p. 926.) 

Mr. Hiss. Mr. J. V. Van Wagner, who signed this letter, was the 
manager of the Curtiss plant in Chile; is that correct? 

Mr. Webster. That is correct. 

Mr. Hiss. I read from this letter as follows : 

As matters now stand it would seem very dlfiicult for us to get an offer for 
the European Hawk. 

That was a plane belonging to the Export Co, in Holland i 
Mr. Allard. Yes ; that is correct. 
Mr. Hiss. The letter reads further : 

There is no hope whatever of the Chilean Government acquiring this machine, 
and the only way I think you could dispose of it would be your dealing direct 
with other countries at S. America at present engaged in warfare. 

I offer next as " Exhibit No. 345 " a letter dated May 15, 1933, from 
Mr. Webster, addressed to J. V. Van Wagner. 

(The letter referred to was marked " Exhibit No. 345 " and is in- 
cluded in the appendix on p. 927.) 

Mr. Hiss. Mr. Webster, in this letter you instructed Mr. Van Wag- 
ner as follows : 

During this period of political unrest all over South Americn. circulate as 
much as you can among oflScers and people in an effort to obtain information 



MUXITIONS INDUSTRY 773 

pertinent to our business situation wtiich may effect sales and shipments in all 
of the Soutli American countries. 

Mr. Webster. Yes. 

Mr. Hiss. I offer as " Exhibit No. 346 " a letter dated April 7, 1934, 
from Bruce G. Leighton to Mr. T. A. Morgan. 

(The letter referred to was marked " Exhibit No. 346 " and is in- 
cluded in the appendix on p. 928.) 

Mr. Hiss. This letter, " Exhibit No. 346 ", is addressed to Mr. T. A. 
Morgan, who is president of the parent corporation, Mr. Allard? 

Mr. Allard. Yes ; that is right. 

Mr. Hiss. The letter is from Mr. B. G. Leighton, who was the 
European Export representative? 

Mr. Allard. That is right. 

Mr. Hiss. I read from this letter as follows : 

Here are some important factors which must be kept in mind, as of great 
possible influence on affairs out here. 

That is, bearing on your general affairs ? 

Mr. Allard. No; I think on our affairs out there, and not in 
general. 

Mr. Hiss. The letter then proceeds : 

A few days ago Mussolini made a speech in Italy in which he talked very 
frankly about his views regarding Italy's future lying in Asia and Africa. It 
probably didn't create any stir at home — you may not even have noticed it. 
But you can believe that it has caused a great stir out here. The Turkish 
Ambassador has called on El Duce to ask him " What do you mean, Asia, etc.?" 
El Duce, of course, replied that he didn't mean Turkey. And on the surface all 
is quiet. But if you know anything at all of the background of Italy's aspira- 
tions in Turkey — tangible evidence of which lies always at Turkey's front door 
in the form of the Italian-mandated islands — you can well believe that these 
last utterances of El Duce's have made a most profound impression, which 
mere diplomatic assurances will not dispel. 

And under the surface there is every evidence of a determination to see that 
no stone is left unturned to see that Turkey's defenses are in shape. And avia- 
tion defenses are receiving the most serious attention of the big shots in the 
Government. 

The machine-gun episode for Hawks is just one indication. When I cabled 
you the other day that we have been asked to consider this one as a national 
emergency, I can assure you that I wasn't kidding. They're in deadly earnest 
about this. 

In 1932 your company sold 19 planes to Turkey? 

Mr. Allard. Yes, sir. 

Mr. Hiss. When was the license of the Kayseri factory entered 
into? 

Mr. Allard. At that time. 

Mr. Hiss. They are now manufacturing planes and engines? 

Mr. Allard. No ; they are not doing either at the present. 

Mr. Hiss. They have a license to manufacture them? 

Mr. Allard. Of a sort; yes, sir. 

Mr. Hiss. Have you not found, Mr. Webster, that in making pur- 
chases for war purposes governments are better able to acquire funds 
than at other times for other purchases? 

Mr. Webster. You mean during a state of war? 

Mr. Hiss. Yes ; or during a threatened state of war. 

Mr. Webster. No ; I would not say so, Mr. Hiss. 

Mr. Hiss. Let me phrase the question this way : When war is going 
on or is threatened, haven't you found that countries are able to 



774 MUNITIONS INDUSTRY 

secure fiiiicLs for the purchase of niateriiil necessary to carry on the 
war more easily than they have been able to acquire funds at other 
times for ])eaceful ]5urposes? 

Mr. Webster. I would not say so, Mr. Hiss; no. It has been our 
experience with other countries that are not in a state of war that 
they purchase and secure the funds, because they pay in cash. We 
do not extend credit. 

Mr. Hiss. Will you refer to this letter which I now show you, being 
a letter of January 31, 1933, which will be '' Exhibit No. 347 "? 

(The letter referred to was marked " Exhibit No. 347 " and is in- 
cluded in the aj^pendix on p. 929.) 

Mr. Hiss. " Exhibit No. 347 " is a letter which you wrote to Mr. 
Travis, and at that time j^ou said : 

The situiition at Cliaco is liable to blow vip any time, and if it does, the 
natural move for the Bolivian Government to make, and in view of their past 
performance, would l)e to default on any payments that are due. Therefore, 
let's hold tlieni to their contracted payments. If the show does not end this 
cominii' summer, they naturally will have to have additional equipment. I 
realize that the Government is about broke at the present time, but they gen- 
erally And the funds for munitions v,'hen necessary. 

Mr. Webster. I was speaking; of Bolivia in that present case. 

Mr. Hiss. You do believe the Bolivian Government is better able 
to secure funds for munitions than it is for other purposes? 

Mr. Webster. No; I would not say that. Naturally, in case of 
emergency, if they require certain equipment, they have to find the 
funds in order to purchase it, and if they have to have the equip- 
ment they will find the funds. 

Mr. Hiss. And is war a technical case of emergency? 

Mr. AVebster. Yes. 

Mr. Hiss. Then, on the outbreak of war, is it not true that the 
country can find funds for war purchases more easily than it can 
for other purposes? 

Mr. Wp:bster. It would not be necessary perhaps to have that 
much equipment in peace time, and in this case that is true. We have 
a great many contracts with other countries that are not at war, 
and they always pay for their equipment. 

INIr. Hiss. I 'offer' as '' Exhibit No. 348 '^ a letter dated February 8, 
1933, from Mr. Webster to Captain Travis. 

(The letter referred to is marked " Exhibit No. 348 " and is in- 
cluded in the appendix on p. 930.) 

Mr. Hiss. In this letter I quote the following: 

I am firmly convinced tlirough personal conservation, while in Buenos Aires, 
that moral and tinancial suitport is coming and will continue from Argentine 
on behalf of Paraguay, and Bolivia will be required to find similar support 
either tlirough the Standard Oil Co. or through wealthy nationals, such as 
Patino, 

Who is Mr. Patino ? 

Mr. Webster. Mr. Patino is at the head of the Patino Co., which 
is a tin company and a very large company. 
Mr. Hiss. They own tin mines? 
Mr. Webster. Yes, sir. 
Mr. Hiss. I continue reading from this letter : 

whose business and financial interests are at stake. I am still of the opinion 
that before these two "comic opera wars" are finished in the north and south 



MUXITIUXS INDUSTRY 775 

that practically all of South America will be iiivolvod — so watch your step and 
play your cards accordingly. 

Mr. Webstek. Mr. Hiss, my comments in connection with, for in- 
stance, the Standard Oil Co., are merely my own comments, my own 
impressions. I have nothing except my observation to base that 
statement on. 

Mr. Hiss. It wag your opinion at that time that Standard Oil 
would assist Bolivia? 

Mr. Webster I thought possibly they might assist them. That is 
the impression. 

Tlie Chairman, You have nothing to base that statement on? 

Mr. Webster. No ; I have nothing to ba.se the statement on. 

Mr. Hiss. They have interests in Bolivia? 

Mr. Webster. They have very large interests in Bolivia. 

Senator Pope. Did you read the excerpt from the first paragraph 
of that letter Mr. Hiss? 

Mr. Hiss. No ; I did not read it. But I will read it as follows : 

Although you say tliere is an apparent scarcity of Government funds, I 
still believe that Bolivia will be required to i)urchase additional aircraft equip- 
ment, and the dollars will he found somewhere when required. In my opinion, 
the real activity is just hegiiming, not only in the Chaco, but around Leticia 
as well. National pride and stul)l)orness will not permit these countries to 
quit until they blow up through absolute bankruptcy, and while the show is 
going on, it is our job as distributors of munitions to get our share. If we 
don't someone else will. 

Senator Bone. Mr. Webster, what is the extent of the Standard 
Oil Co. operations in Bolivia ? 

Mr. Webster. Senator, I could not tell you to what extent they 
do operate. I know they are down there quite extensively. 

Senator Bone. Do they operate under their own namef 

Mr. Webster. I do not believe that branch of the Standard Oil ig 
called the Standard Oil. It may l)e West India Oil. 

Senator Bone. It is a Standard Oil affiliate? 

Mr, Webster. Yes; it is a Standard Oil affiliate, nevertheless. 

Senator Bone, Are any of their properties located in the Chaco 



reffion 



Mr, Webster. I believe it is just outside of Chaco, not in Chaco, 
but north of Chaco, 

Senator Bone. Do you know to what extent the oil company may 
have interested itself in the political disturbance down there? 

Mr. Webster. No, sir. 

Senator Bone, You evidently had in your mind gome definite 
thought that these wars would cause the ultimate collapse of those 
countries if the fighting was prolonged. 

Mr, Webster. It will cause the collapse of any country to carry on 
a war very long. 

Senator Bone. I understand that. It would be inevitable, if 
they kept on bu^dng extensive munitions of war, that would cause 
the collapse, if they went into the operations sufficientl3^ 

Mr. Webster, Yes ; if they bought enough. 

Senator Pope, Do you know which Standard Oil this was? 

Mr, Webster, I do not know, sir. 

Senator Pope, You do not know whether it would be the Stand- 
ard Oil of Indiana? 



776 MUNITIONS INDUSTRY 

Mr. Webster. I don't know whether the West India goes down 
that far or not, but it is one of the subsidiaries of tlie Standard Oil. 

Senator Bone. There is one other question, do they hold conces- 
sions from the Bolivian Government, or did they have oil resources? 

Mr. Webster. I believe the Standard Oil had some concessions 
in Chaco, but to what extent I do not know. 

Senator Pope. To what extent are they developed, have they oil 
wells down there? 

Mr. Webster. Yes ; they have drilled wells down there. 

Mr. Hiss. I offer as " Exhibit No. 349 " a letter dated October 26, 
1933, from Mr. Webster, addressed to " Owen." 

(The letter referred to is marked " Exhibit No. 349 ", and is in- 
cluded in the appendix on p. 931.) 

Mr. Hiss. That letter is addressed to Mr. Shannon, when it says 

Dear Owen. 

Mr. Webster. Yes, sir. 

Mr. Hiss. I read from the last paragraph as follows: 

Hope we can come to some kind of agreement as there is plenty of business 
here. Lopez told me tonight frankly and confidentially that Bolivia had no 
intention of making peace until they got what they were after and, if neces- 
sary, the entire Patino company could back their stand. Will be waiting 
for J.A.B.'s opinion. 

Senator Pope. What companj^ is that? 

Mr. Hiss. That has been identified by Mr. Webster as being a tin 
company owning large tin mines in Bolivia. 

Is that a Bolivian company, Mr. Webster, or does it have its 
control outside? 

Mr. Webster, I believe it is a Bolivian company. 

Mr. Hiss. Mr. Webster, did you ever have reason to believe that 
Patino was supplying funds to the Bolivian Government in order 
to carry on the war? 

Mr. Webster. I heard Mr. Patino had personally loaned the 
Bolivian Government funds. 

Mr. Hiss. I offer as " Exhibit No. 350 " a letter signed Pierrot, ad- 
dressed to " Dear Leon ", and dated April 20, 1933. 

(The letter referred to is marked " Exhibit No. 350 ", and is in- 
cluded in the appendix on p. 932.) 

Mr. Hiss. Pierrot who signs this letter is A. Ogden Pierrot, 
who is now on your staff? 

Mr. Webster. Yes, sir. 

Mr. Hiss. On April 20, 1933, when this letter was written to Mr. 
Leon, do you know what his position was, or was he then on your 
staff? 

Mr. Webster. If I can glance over this letter, I probably can 
tell you. Mr. Pierrot was then United States Trade Commissioner 
in Rio. 

Mr. Hiss. In this letter, " Exhibit No. 350 ", the statement is made : 

The Government is, for some reason that I have not figured out, in a great 
hurry to acquire that number of amphibians, and I know that they are 
giving preference to Loening. They are also thinking of Douglas. 

That refers to the Douglas Co. ? 
Mr. Webster. Yes, sir. 



MUlSTITIOlSrS INDUSTRY 777 

Mr. Hiss. I read further from the same letter, as follows : 

That latter comiiany has a representative here who is about as effective as 
yours. I am definitely informed that Loenings are wanted, and in all prob- 
al)ility you will be hearing of this through Castro Lopez. 

I realize that Web is not losing sight of the financial end of things. To my 
mind, that is one of the most important, and I can say that I feel certain 
that if exchange is given to anyone in Brazil it will be given to suppliers of 
the Government, and of all classes of suppliers, those handing war materials 
-come first in the present set-up. If dollar credits are not available in advance, 
then suffi'ient milreis to enable you to buy your exchange in the bootleg mar- 
ket will be given. That's where it would be well for you or some other 
representative to be on the job. 

They were your agents at that time ? 

Mr. Webster. At that time they represented us in Brazil. 

Mr. Hiss. I read further from this letter, as follows : 

So far as I know he had not even gotten wise to the business yet. The 
•clique that makes the purchases does not feel that it can do itself justice by 
dealing with them. 

Mr. Webster. Mr. Hiss, that particular reference to the finan- 
'Cial end of things means the conversion of milreis, or obtaining 
dollars in exchange. Dollar exchange was very difficult to obtain in 
Brazil at that time on the things purchased down there, and the 
agent would be compelled to find these dollars, because the Govern- 
ment was only paying milreis. 

Mr. Hiss. I was really interested in the statement that, " those 
handling war materials come first in the present set-up." 

Mr. Webster. Yes, sir. 

Mr. Hiss. On March 18, 1933, Mr. W. H. Smyth wrote from Bel- 
grade to Mr. Melvin Hall who was then the representative of the 
Export Co., and I offer this letter as " Exhibit No. 851."' 

(The letter referred to was marked " Exhibit No. 351 " and is in- 
cluded in the appendix on p. 933.) 

Mr. Hiss. Mr. Melvin Hall was then the representative of the 
Export Co. ? 

Mr. Allard. Yes; that is right. 

Mr. Hiss. A reference is made in this letter, " Exhil)it No. 351 ", 
to possible sales in Yugoslavia, and the letter says : 

Even if the French should secure the general order for motors and planes, 
I believe we should be able to sell at least a few motors to the Air Force on 
the basis tliat if and when a war breaks, the Curtiss-Wright Co. will be one 
of the first in the position to give them quick delivery on date, and it will be 
well for them to have some practice on these motors so as to know what to 
expect from these planes. 

I understand that Mr. Gould of the Pratt & Whitney Co., has been here for 
the past week working hard on the air force. 

Now, Mr. Allard, do you remember any correspondence your com- 
pany had with a Dr. Warnshuis? 

Mr. Allard. No ; I do not. 

Mr. Hiss. I offer as " Exhibit No. 352 " a letter from the Curtiss- 
Wright Export Corporation to Dr. A. L. Warnshuis, dated February 
"20 1932. 

(The letter referred to was marked " Exhibit No. 352.") 

Mr. Hiss. Perhaps, Mr. Allard, this letter, "Exhibit No. 352", 
which is addressed to Dr. A. L. Warnshuis of the International 
Missionary Council, being written by W. F. Goulding, vice president 



778 MUNITIONS INDUSTRY 

of the Ciirtiss-Wright Export Corporation, will help refresh your 
recollection. 

In the letter, " Exhibit No. 352 ", Mr. Gouldino; says : 

Your name has been suggested to us as the man most conversant with 
existing conditions in China. We have heard of various movements initiated 
by Chinese residents in this country, and have observed published announce- 
ments that they are organizing groups for the purchase of aircraft to be sent 
to Cliina for use there. 

As we are one of tlie largest suppliers of aircraft in this country, we are 
naturally anxious to get in touch with, the leaders of such movements and to 
ascertain whether or not it is a fact that steps are being taken by Chinese 
residents in this country to furnish aircraft for use in China. 

We should appreciate very much any information or assistance you can give 
us along these lines, and the writer will telephone you on Tuesday, February 
23d, and ascertain if you are agreeable to discussing this matter with him. 

Do you know whether information was received from Dr. Warn- 
shuis as to the persons interested in the purchase of aircraft in 
China ? 

Mr. Allard. No ; I do not. This is the first time I ever heard of 
him. 

Mr. Hiss. On February 24, 1932, 4 days after that, your company 
received a communication from one Harry S. Jue, of Worcester, 
Mass., of the Chinese Patriotic Association of Schenectady, N.Y. 

And on February 25, 1932, Mr. Goulding wrote to a Dr. Tehyi 
Hsieh, Chinese Trade Bureau of Boston, Mass. 

On February 25, 1932, Mr. Webster wrote to Mr. Leon in Buenos 
Aires referring to the possibility of Chinese patriotic associations 
raising money to buy planes to be sent to China. 

Mr. Webster in his letter says : 

Thought the Chinese colony in Buenos Aires might be doing the same thing 
and it might be worth while looking into the situation and seeing if by any 
chance we could sell a few airplanes for that purpose. 

On February 26, Mr. Martin wrote to Mr. Goulding and said : 

As I understand it, these ships are to be bought and paid for in this country 
by a corporation that is as yet to be formed. This corporation is to be made 
up of wealthy Chinese and American citizens. Dr. Hsieh mentioned a Chester 
I. Campbell as possibly one of the members. This Che.ster I. Camiibell is head 
of one of the leading advertising firms and also puts on expositions of different 
kinds in the Mechanics Building in Boston. Dr. Hsieh also mentioned that the 
Atlantic National Bank of Boston would have some interest in this. 

On March 11, 1932, there was a telegram from Bartlett in Cali- 
fornia to Curtiss-Wright Export Co., New York. Can you identify 
Bartlett ? 

Mr. Allard. He was an employee of a flying field or Airport 
Service Co. at an airport in California, but I do not know which. 

Mr. Hiss. The telegram reads as follows : 

Large fund contributed by San Francisco Chinese controlled by various fac- 
tions and tongs. We working very closely and confidentially with them and 
recent arrivals from China reputedly representing the nationalists. 

Senator Pope. Who was it wrote that letter? 

Mr. Hiss. The last was a telegram from Bartlett in California to 
the Export Co, 

Senator Pope. Did you say he was employed by your company? 

Mr. Allard. No; he was an employee of one of the subsidiaries 
that ran an airport out there. 



MUNITIONS INDUSTRY 779 

Mr. Hiss. In 1933 you sold China 54 airplanes, of which 50 were 
pursuit and 4 training planes and they were all military planes. 

Mr. Allard. That is right. 

Mr. Hiss. Did you, or anyone in your company think there was 
anything incongruous about writing a missionary for the names of 
people interested in buying military planes in China ? 

Mr. Allard. Probably not. May I explain, we have had a great 
many letters along the same lines'^from Chinese organizations, and 
no sales have ever been made under these conditions. A great many 
Chinese born in America or living in America have gotten together 
a great many times and discussed the possibility of their buying an 
airplane and sending it back to China as a patriotic gift from them. 
That is the background of this whole business. 

Mr, Hiss. Has your company ever sold planes to one country 
engaged in a war, and notified the other side of the sale ? 

Mr. Allard. Not to my knowledge ; no, sir. 

Mr. Hiss. Have you ever said to one country that another country 
has been acquiring planes from you? 

Mr. Allard. That would have to be answered by the man who 
was doing the selling. I never have personally. 

Mr. Hiss. Would your company be opposed to that as a matter of 
policy ? 

Mr. Allard. Notifying one countiy what another country was 
buying ? 

Mr. Hiss. Yes. 

Mr. Allard. I think conditions would control that a great deal. 
It would depend upon the relations with the country. 

Mr. Hiss. I offer in evidence as " Exhibit No. 353 '' a letter dated 
February 17, 1932, from the Curtiss-Wright Export Corporation, 
signed by Melvin Hall, to A. B. Mercantile, Helsingfors, Finland. 

(The letter referred to is marked " Exhibit No. 353 " and is in- 
cluded in the appendix on p. 933.) 

Mr. Hiss. That letter, " Exhibit No. 353 ", was addressed to your 
representative at Helsingfors, Finland? 

Mr. Allard. Yes. 

Mr. Hiss. This letter, " Exhibit No. 353 ", reads as follows : 

We are pleased to advise you for your information that the Lithuanian 
Ministry of Defense has ordered from us five (.5) Cliallenger engines for in- 
stallation in their training planes. We believe that you will desire to communi- 
cate this information to the Finnish Ministry of Defense. 

We would also advise you confidentially that the Turkish Government has 
pas.sed an order to us for twenty-four (24) Curtiss-Hawk single-seater pursuit 
planes with Cyclone engines, six (6) Fledgling training planes with Whirlwind 
engines, together with a quantity of spare engines. This information is not 
for publication and is to be communicated by you only in a confidential manner, 
should you deem it desirable to inform the Ministry to this elfect. 

What is your opinion as to the effect of such information con- 
veyed to one country as to the purchases by other coimtries, nearby 
or neighboring? 

Mr. Allard. Take Lithuania. We are engaged in Finland in the 
sale of Challenger engines, engines I believe in the training planes, 
which was not a military plane but really a training plane. I 
imagine, although I cannot verify it, but I think the records will 



780 MUNITIONS INDUSTRY 

show that was public information in the case of Lithuania at the time. 
In the case of the sale of the Turkish Hawks, that was public infor- 
mation and published in all the newspapers in the world. I do not 
know why Hall used the wording he did in his letter except prob- 
ably to show or to indicate to the agent up there he was giving him 
something very secret, but it was out and did not do any harm or 
could not do any harm. 

Mr. Hiss. What, in your opinion, would be the harm in notifying 
one government of the planes of another government ? 

Mr. Allard. In this instance it was done to secure an order to be 
placed for the engine — that is, the Finnish Government. 

Mr. Hiss. There is natural competition between governments as 
to their military planes? 

Mr. Allard. No; I do not think so in this case. This was en- 
fcirel}^ too far removed from Turkey to be of any such connection. 

Mr. Hiss. Finland and Lithuania are not so far removed. 

Mr. Allard. That is perfectly right, but that was a training plane, 
with public information. 

Mr. Hiss. Training planes are used to train pilots for war planes, 
are they not? 

Mr. Allard. As well as commercial planes. 

Mr. Hiss. Do the Finnish Government and the Ministry of De- 
fense train pilots for commercial planes? 

Mr. Allard. I do not know that now. A great many governments 
train their own pilots. 

Mr. Hiss. In " Exhibit No. 348 ", already introduced, the letter 
from Mr. Webster to Mr. Travis, the following statement is made : 

While in Peru, and as soon as convenient, give me a frank picture of the 
Peruvian situation, and do what you can to assist Faucett in closing addi- 
tional business there. For your confidential information, their friends to the 
extreme north are still purchasing heavily. 

Who would " their friends to the extreme north " be ? 
Mr. Webster. That would be Colombia. 
Mr. Hiss (continuing reading) : 

You might use this in your official conversations but in a very careful and 
diplomatic manner. 

In 1933 your company sold 29 planes to Colombia. In 1933 Co- 
lombia and Peru were engaged in a dispute about the Leticia terri- 
tory^, during which clashes broke out at various times. On Febru- 
ary 14, 1933, there was a clash between the two forces, and this letter 
was written on February 10 of the same year, 1933. Do you think 
that by notifying Peru of the purchases made from you by Colombia, 
you would tend to get Peru to increase the purchase of military 
planes from your company, Mr. Webster? 

Mr. Webster. Not necessarily. There was no secret up and down 
the west coast of South America as to what the other countries had. 
They are all very familiar with the conditions, and they are all sent 
on the same steamships, and all came through the Canal, and it is 
public ])roperty as to what they were purchasing. There was no 
secret about it. 

Senator Pope. Why should the language be used in a letter " for 
your confidential information "? 



MUNITIONS INDUSTRY 781 

Mr. Webster. For his own information. Telling our representa- 
tive, our employee there, telling him what business relations we are 
having. 

Senator Pope. If it was public property and published generally, 
why should it be so confidential ? 

Mr. Webster. It should not have been in confidence at all. All 
those planes were shipped out of New York City, and there was no 
reason why any person should not go down and find out what ship- 
ments were being made. 

Senator Pope. Then you go further and state : 

You might use this in your oflScial conversations, but in a very careful and 
diplomatic manner. 

Mr. Webster. Yes ; I do not think he referred there to any pub- 
licity in newspapers. But there is no secret at all about what the 
countries down there were buying. 

Mr. Hiss. Again, in " Exhibit No. 355 ", which is a letter dated 
February 9, 1933, from Mr. Webster to Mr. Faucett, you say to him, 
Mr. Webster, the following [reading] : 

Please remember that no spare engines have yet been purchased for the 
Hawks, so please bring a little pressure to bear on the air corps officials and 
on Mr. Pardo * * *. 

Mr. Pardo was chairman of a voluntary committee? 
Mr. Webster. A civilian committee ; yes, sir. 

Mr. Hiss. Getting aircraft and donating them to the Peruvian 
Government ? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

and see if this business cannot be concluded in the near future. For your 
confidential information you might diplomatically inform interested parties 
that your neighbor to the extreme north is still purchasing in large quantities. 
Do not overlook such items as bombs, ammunition, machine guns equipment, 
etc. 

(The letter referred to was marked " Exhibit No. 355 " and is 
included in the appendix on p. 934.)^ 

Mr. Hiss. " Exhibit No. 356 " is a letter of November 1, 1933, from 
Mr. Goulding to Samper, the Curtiss-Wright representative in 
Bogota, Colombia. Is that right? 

Mr. Webster. Yes, sir. 

(The letter referred to was marked " Exhibit No. 356 " and is 
included in the appendix on p. 935.) 

Mr. Hiss. That letter reads in part as follows [reading] : 

Meanwhile I think you should concentrate your efforts in endeavoring to 
get further orders for Hawks and Falcons, as we feel that the Colombia Gov- 
ernment, now that they have made such a splendid advance in building up 
an air force, should not permit these efforts to lag. There is no telling when 
they will need a very strong air force. 

Then the letter further states : 

According to Lieutenant Gonzales, the current opinion in Colombia is that 
the negotiations with Peru will come to naught, in which case Colombia will 
again be forced with the necessity of a, strong air force. We know, as a mat- 
ter of fact, that Peru has not been idle in adding to their equipment, and 
unless Colombia maintains and increases their air force which they have now 
started, they will lose the advantage which they now have. 



1 There was no exhibit marked " No. 354." 



782 MUNITIONS INDUSTRY 

In other words, in this case you had ah^eady notified Peru of 
Colombian purchases, and now you were notifying Colombia of 
Peruvian purchases ? 

Mr. Allard. We notified the agent in Peru ; that is correct. 

Mr. Hiss. " Exhibit No. 357 " is a letter of December 16, 1933, from 
Mr. Tobin, who was then associated with Faucett as a representa- 
tive in Lima, Peru ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. And is addressed to Mr. Owen Shannon. 

(The letter referred to was marked "Exhibit No, 357" and is 
included in the appendix on p. 936.) 

Mr. Hiss. That letter reads in part as follows [reading] : 

The Peruvians apparently have just received a good burning on the Fairey 
Fox. This ship at sea level cannot catch up with our old Stinsons, with the 
Stinson cruising at 1,750 r.p.m., and the Faii'ey running wide open. I'm thinking 
the Colombians will liave a few good chuckles witli their new Falcons at all 
altitudes under 15,000 feet and in all probability at the high altitudes as well. 
These things are being pointed out to all the officers not concerned with the 
purchase of the English and French equipment. 

Was it a policy of your company to point out to the various gov- 
ernments that the planes which you had sold to their opponents were 
superior in performance to some of the planes they were buying 
from other countries, and that, therefore, they should buy from 
you to get planes of at least equally good performance ? 

Mr. Allard. This is a statement of a representative or agent 
down there. 

Mr. Hiss. Did your company ever disavow this statement? 

Mr. Allard. Not to my knowledge. I think that is common, 
ordinary sales practice ? 

Mr. Hiss. You do? 

Mr. Allard. Yes, sir. 

Mr. Hiss. " Exhibit No. 358 " is a telegram of March 15, 1934, from 
Mr. Webster to Mr. Tobin in Lima, Peru. 

(The telegram referred to was marked " Exhibit No. 358 " and is 
included in the appendix on p. 937.) 

Mr. Hiss. That telegram reads in part as follows [reading] : 

Confidentially, your competitors have just placed order 23 additional Falcons, 
15 Hawks, but no deposit yet. Strongly recommend Peru make deposit imme- 
diately additional Hawks Falcons for delivery priority. Your present schedule 
ends May 28, but starting May 14 can deliver two additional airplanes each 
week until June 1, then four each week until July i * * *. 

Mr. Webster, by this you were recommending to your agent in 
Peru that there was an order which had been placed by the country 
with which they were still having a dispute, and Peru could, by 
making an immediate deposit, secure priority on delivery? 

Mr. Webster. They could continue the contract they already had 
in effect and go on with that contract on products in order to get 
quick delivery. 

Mr. Hiss. During this period of 1932 and 1933 you were profiting 
by the dispute between Peru and Colombia, in that you were selling 
both sides, when both sides were attempting to increase their mili- 
tary aviation equipment? 



MUNITIONS INDUSTKY 783 

Mr. Webster. We sold to both Peru and Colombia; j^es, sir.^ In 
that connection, Mr. Hiss, we have never taken sides and have striven 
to be neutral, and have never lined up or taken sides with any par- 
ticular country. 

Mr. Hiss. " Exhibit No. 359 " is a letter of May 3, 1933, from Mr. 
Shannon to Mr. Travis. 

(The letter referred to was marked " Exhibit No. 359 " and is 
included in the appendix on p. 938.) 

Mr. Hiss. That letter reads in part as follows [reading] : 

During the past few days the New York papers have carried stories of the 
Bolivian planes bombing some of the Paraguanian rail centers with considerable 
success. We are glad to see they are at last making some real use of their 
planes and hope their success will convince them of the advantages they would 
gain by getting more of the Hawks and Ospreys. 

" Exhibit No. 360 " is a letter of February 10, 1933, from Mr. 
Webster to Mr. Leon, who was then in Buenos Aires, Argentina. 

(The letter referred to was marked " Exhibit No. 360 " and is in- 
cluded in the appendix on p. 939.) 

Mr. Hiss. That letter reads in part as follows [reading] : 

Newspapers the last few days have been carrying stories about the pending 
and probably political and revolutionary upheaval in Uruguay. 

I believe it would do no harm to slide over to Montevideo as soon as con- 
venient and contact the proper officials in an effort to promote the sale of air- 
craft or any class of munitions. 

That is, Montevideo is the capital of Uruguay ? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

Also, in this connection, do you think it advisable to make a personal contact 
with Paraguayan Government officials in Asuncion? 

I know that this is a rotten trip to make up the river, but it seems to me 
that the Bolivia-Paraguay trouble has not yet reached its peak and the con- 
ditions instead of becoming better are gradually getting worse. If such is the 
case, it will be absolutely necessary for Paraguay to find the money for the 
purchase of aircraft and other munitions. If we are able to sell them anything, 
we will have to work very carefully and quietly, and possibly work through 
you, as an individual, as the Bolivian Government would naturally raise " merry 
hell " if they believed that we were dealing with their enemies. 

Mr. Webster, I thought you said that the sales of the various gov- 
ernments were common property in South America. 

Mr. Webster. No; I did not make that statement, Mr. Hiss. I 
made that statement as to Peru and Colombia. 

Mr. Hiss. As to Bolivia and Paraguay it was not common knowl- 
edge? 

Mr. Webster. No, sir ; not that I know of. 

Mr. Hiss. " Exhibit No. 361 " is a letter of May 17, 1933, signed 
•'Cliff." That is Mr. Travis? 

Mr. Webster. Yes, sir. 



^At the time of the above testimony neither Mr. Webster nor Mr. AUard knew 
whether the March 1934 Peruvian negotiations had resulted in the sale of any planes. 
In response to a request of the committee, Mr. Allard notified the committee on Novem- 
ber 3, 1934, that from January 1 to September 30, 1934, the Export Co. shipped the 
following materials to Peru : In May, 1 Rambler — no armament ; in June, 3 Hawks — 
2 guns each and bomb racks ; in June and July, 9 Falcons — 2 gtms each and bomb 
racks ; in August, 4 Travelairs — no armament ; in August, plane spares. Motor spares 
and miscellaneous parts were shipped throughout this period. These shipments totaled 
$553,752.80. 

83876— 34— PT 4 7 



784 MUNITIONS INDUSTRY 

Mr. Hiss. Addressed to Mr. Shannon. 

(The letter referred to was marked " Exhibit No, 361 " and is in- 
cluded in the appendix on p. 939.) 
Mr. Hiss. That reads in part as folloAvs [reading] : 

You are quite right in assuming that the Bolivians are making good use of 
our planes in bombing. They have created a real menace to the Paraguayans, 
as well as a deep fear. The Chief of Operations in the Chaco (Air Corps) 
has been urging the Government for several weeks to buy six more Ospreys 
and three additional Hawks and the decision now, after having passed all the 
minor departments and the general staff, rests with General Kundt, commander 
in chief of field operations. As I wrote Web, I expect a definite answer from 
the Government late this week or early next week. Slowness and red tape is 
still the order of the day here. There also might be a chance to sell some 
Travelair bombers. 

Travelair bombers are commercial planes, are they not? 

Mr. Allard. Yes, sir; they are. 

Mr. Hiss. Which are not usually sold for military purposes? 

Mr. Allard. Not to my knowledge. 

Mr. Hiss (continuing reading) : 

Some of the " Brass Hats " who are in positions of power here, although they 
know nothing whatever of aviation, seem to think that the answer to the whole 
situation is a flock of 4,000-pound bombers. Tlie remark was made that the 
Ospreys and Hawks were toys because they only carried some 460 pounds of 
bombs. That, of course, is the natural reaction of these people after all of 
these bombing expeditions with really good results. They have gone bomb- 
miiaded. 

As regards bombs and cartridges, Europe has that pretty well sewed up as 
they can offer them at much lower prices than we possibly could on account 
of the exchange and cheaper labor. 

" Exhibit No. 362 " is a letter of February 14, 1933, from James H. 
Spencer to Mr. Webster. 

(The letter referred to was marked " Exhibit No. 362 " and is 
included in the appendix on p. 940.) 

Mr. Hiss. Mr. Webster, what was the connection between the Cur- 
tiss-Wright Export Corporation and Mr. Spencer? 

Mr. Webster. None whatever. 

Mr. Hiss. The letter reads in part as follows : 

Paraguay, with whom I have been dealing thro' tb.e Minister here in Santiago, 
and also thro' an ofiicial of the same Government in Buenos Aires, have 
shown an interest in at least the " Hawk " that is here. They made a counter 
offer for this machine equipped with armament and bomb racks, but the 
offer was so ridiculously low that Jerry told me that it was no use even to 
consult you. * * * 

On the other hand, Bolivia, with whom I was negotiating, showed an inter- 
est, and the Bolivian Minister here did quite a lot of cabling over the subject. 

Then Echenique started negotiations at a lower figure — with the result that 
my early work was lost. As I now understand the situation, Bolivia will buy 
if Chile will concede the permit to fly these two machines to La Paz. 

The difficulty of more than one person dealing on this kind of business is 
obvious, and Governments will not go very far with any intermediary unless 
he can show proper credentials. In the present case, it was one of lower price 
and a desire to buy two planes so that they should not go to the enemy, 

Mr. Spencer was authorized to gell for your account if he was 
able to sell this particular plane ? 

Mr. AVebster. No, sir. There should be another letter, Mr. Hiss, 
to go with this, a letter from me to Mr. Spencer, dealing with Mr. 
Spencer, that he had no authority whatever to negotiate sales there. 



MUNITIONS INDUSTRY 785 

Mr. Hiss. I know, but I have not seen that. Did Mr. Echenique 
have any authority to negotiate at that time ? 

Mr. Webster. No, sir. 

Senator Pope. Was the purpose of that letter really to ,sell planes 
for you? 

Mr. Webster. It was an etiort on the part of Mr. Spencer to ap- 
parently start selling and make some negotiations. He had no au- 
thority whatever to represent us and did not represent us, and was 
so notified, but apparently the second letter that goes with this is 
not in your records. 

Senator Pope. Who was Mr. Spencer? What is his business? 

Mr. Webster. He is a member of the firm of Spencer & Waters 
of Santiago, Chile. At one time, a number of years ago, Mr. Spen- 
cer did represent the Curtiss Co., but we made other arrangements 
later on. This letter should have no bearing whatsoever on our 
situation, as he has no connection whatever, and had no authority 
to write such a letter and negotiate for us. 

Mr. Hiss. " Exhibit No. 344 ", already in the record, is a letter to 
Mr. Webster, dated February 15, 1933, from Van Wagner, who was 
the manager of the factory in Chile. Is that correct? 
Mr. Webster. Yes, sir. 
Mr. Hiss (reading) : 

Senor M. Cruchaga, the Foreign Minister — and who, at the same time, lias 
been acting minister of national defense — presided recently at an antiwar meet- 
ing held in Mendoza with the Argentine authorities, the object being to try and 
induce Bolivia and Paraguay to cease hostilities and go to arbitration. It was 
also agreed that neither Chile or the Argentine would lend any assistance to 
either country with arms or munitions. So, iu a nutshell, we can see why it 
has been so difficult to dispose of the Falcon and Hawk to Bolivia or Paraguay. 

At that time those were two planes which the Export Co. owned in 
South America, which they were trying to sell? 
Mr. Webster. Yes, sir; they were used planes. 
Mr. Hiss (reading) : 

I do not know from whom Pancho 

That is Echenique? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

obtained permission, and only yesterday we received notice passed down from 
the Foreign Minister that on no account must the Falcon and Hawk leave the 
factory. 

That is the Chilean factory? 

JNTr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

The only way to get these ships out is for an agreement to be made between 
the Bolivian and Chilean Ministers, and I am anxious to know what news 
Pancho will give us tomorrow. 

At the same time Jim Spencer is still working on selling the machines to 
Paraguay, but apparently he is meeting with more difficulties than Pancho. 

Do you remember the date of the letter in which you notified Spen- 
cer that he was to discontinue? 

Mr. Webster. No, sir ; but it should have been on or shortly after 
the letter arrived in New York. 

Mr. Hiss. Did you also notify Mr. Van Wagner to that effect? 



786 MUNITIONS INDUSTRY 

Mr. Webster. I am not sure that I did or not, but it seems quite 
likely that I did. 

Mr. Hiss (continuing reading) : 

We cannot do any more than we have already done to dispose of the Falcon 
and Hawk, and you must not lose sight of the fact that Chile represents herself 
as a peace-making nation and has promised not to provide or assist in provid- 
ing war material to any of the belligerent S. American countries. 

* * * As matters now stand it would seem very diflBcult for us to get an 
order for the European Hawk. 

That is the one in Holland, already mentioned ? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

There is no hope whatever of the Chilean Government acquiring this ma- 
chine, and the only way I think you could dispose of it would be your dealing 
direct with other countries at S. America at present engaged in warfare. 

Then there is another reference to Mr. Spencer, as follows: 

Jim Spencer has been trying to get an offer from the other side, but noth- 
ing has come of it. 

I note what you write about Jim Spencer and quite appreciate your atti- 
tude before dealing direct with him. In conversation the other day, he told 
me he had received your letter, so I did not make any comment on what you 
vprote me. 

Do you remember what you had written him ? 

Mr. Webster. Apparently it was along the lines of m}^ letter to 
Mr. Spencer. 

Mr. Hiss. Did you tell Mr. Spencer if he arranged a sale, you 
would not sell the machine? 

Mr. Webster. I told him that he had no authority whatever to 
deal and to stop negotiating. 

Mr. Hiss. If he had come to you with a particular offer, would 
your company have turned him down? 

Mr. Webster. I do not know, sir. We would have to wait until 
the time came and see what conditions were then. 

Mr. Hiss (continuing reading) : 

The whole trouble in trying to make deals of this nature is that there is 
excessive graft to contend with. The Bolivian and Paraguayan Ministers know 
of our offer and yet they prefer dealing through agents. They both know 
our figure and the agent's figure, so you can imagine who has to take a share 
between tlie sale and purchase prices. Jim — 

that is Spencer — 

has been working the deal for Bolivia and Paraguay through the Argentine. 
His figures are the same as Pancho's — 

that is Echenique? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

and he knows perfectly well that his commission is included in anything he 
can get over $15,000. If he could make $1,000 on each plane for himself, 
I think he would be lucky. The other $2,000 would be paid to the other 
intermediaries. 

Mr. Webster. I might add there, Mr. Hiss, that many times in- 
dividuals of this type as they see an opportunity of selling some- 
thing and making something out of it, they are very quick to take 
advantage of it. Neither Mr. Echenique nor Mr. Spencer had 



MUNITIONS INDUSTRY 787 

authority to sell airplanes for us at that time. In other words, 
they were free-lancing. 

Mr. Hiss. May I call your attention to " Exhibit No. 363 " 

Senator Pope. Who was your representative at that time? 

Mr. Webster. In what place, Senator? 

Senator Pope. In Santiago. 

Mr. Webster. Santiago, Chile? 

Senator Pope. Yes, sir. 

Mr. Webster. What was the date of that letter, Senator? 

Senator Pope. February 15, 1933. 

Mr. Webster. I believe the only man we had there at the time 
was Mr. Van Wagner. 

Senator Pope. Did he have any authority to employ other agents 
or assistants? 

Mr. Webster. No, sir. 

Senator Pope. So that his reference to " intermediaries " did not 
have any particular reference to any agents recognized by you ? 

Mr. Webster. No, sir. We had instructed him to try to dispose 
of the two planes which we had on our hands there, and that appar- 
ently is what he was doing. 

Mr. Hiss. As " Exhibit No. 363 " I offer a letter dated March 15, 
1933, from Van Wagner to you, Mr. Webster, from which I wish 
to read. 

(The letter referred to was marked " Exhibit No. 363 " and is 
included in the appendix on p. 941.) 

Mr. Hiss. That letter reads in part as follows : 

We cabled you on the 13th that the Peruvian Ambassador demanded imme- 
diate action with regard to delivery of the Hawk and Falcon, and the following 
day received your cable: "O.K. delivery." 

Were those two planes finally sold to Peru ? 

Mr. Webster. There was a Hawk and Falcon sold to Peru. 

Mr. Hiss (continuing reading) : 

From this message we understood that the $36.000 — held by the Chase Na- 
tional Bank — had been placed to your credit without restrictions. 

Now, the whole trouble is in getting permission to fly the ships out of the 
country. * * * wilh the present action taken by the Chilean Foreign Min- 
ister to foment peace in S. America, he cannot possibly give his consent to 
allow war material to leave Chile, especially to a country engaged in warfare. 

Did your company regard his actions for peace as " fomenting 
peace ", Mr. Webster ? 

Mr. Webster. I do not believe so. That is an expression Mr. Van 
Wagner used. I do not believe I would have used that expression. 

Mr. Hiss. Were the Hawk and Falcon ever released so that they 
were able to go to Peru ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. In spite of the " fomenting of peace " ? 

Mr. Webster. Yes, sir. 

Senator Bone. Do you think that munition firms generally would 
regard that as a sort of antisocial activity ? 

Mr. Webster. I would not doubt it a bit, sir. 

Mr. Hiss. " Exhibit No. 364 " is a letter of March 30, 1933, from 
Mr. Webster to Mr. Van Wagner. 

(The letter referred to was marked " Exhibit No. 364 " and is 
included in the appendix on p. 942.) 



788 MUNITIONS INDUSTRY 

Mr. Hiss. That letter reads in part as follows: 

Was glad to bear that the Hawk and Falcon got away safely and with 
oflScial permission. 

Again please remember to refrain in all of your letters sent to this office 
from mentioning the name of Orsini. You can always refer to him as " Jones." 

Who was Orsini, Mr. Webster? 

Mr. Webster. Orsini was an officer in the Brazilian Government, 
Brazilian Army Air Corps, who had been going under the name of 
" Jones " in South America at the time I met him. 

Mr. Hiss. Was he an official engaged in purchasing planes on be- 
half of the Brazilian Government? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Did your company make any sales through Mr. Orsini? 

Mr. Webster. Yes, sir; but not at the time that we knew Mr. 
Orsini's name was Orsini. We sold him under the name of " Mr. 
Jones." That is the reason I put it in quotations. 

Mr. Hiss. Why did you at this time want to refer to him as 
" Jones " and not " Orsini " in letters sent to the New York office ? 

Mr. Webster. There had been quite a bit of discussion about a 
certain transaction which we had in South America. Some planes 
which I had sold Mr. Orsini, whom I knew as Mr. " Jones " in 
Buenos Aires and in Santiago, Chile, it later turned out that Mr. 
Jones was Lieutenant Orsini, who had gone over to the rebels during 
the Sao Paulo Brazilian revolution, and referred to himself as a 
Paraguayan, when he purchased this equipment in Argentina and 
Chile. There was so much fuss about the matter that I did not 
want to stir it up again, and I told Mr. Van Wagner to refrain from 
mentioning Mr. Orsini because we did not want to hear any more 
about it. 

Mr. Hiss. Did you not say that any correspondence about Orsini 
could be sent to your home and not to the office ? 

Mr. Webster. I believe I did mention that. From time to time 
I had correspondence sent to my home because I found it necessary 
to remain at home over a long period of time at that period. 

Mr. Hiss. You said awhile ago that Mr. Echenique did not have 
any authority to act on behalf of your company, did you not? 

Mr. Webster. No, sir; he did not. 

Mr. Hiss. In this letter, " Exhibit No. 364 ", you say : 

Also do not converse with anyone regarding sales of machines or equipment 
going to other countries or any transaction concerning them. As mentioned in 
my previous letter, conditions are becoming very acute and I do not wish 
our files to contain anything with a bearing on this business. You can always 
send any necessary letters to my home and thereby keep them out of our 
files. 

Mr. Webster. I believe I referred to Mr. Orsini there. 
Mr. Hiss (continuing reading) : 

It is perfectly all right for Pancho — 

That is Echenique? 

Mr. Webster. Yes, sir. 
Mr. Hiss (continuing) : 

to mess around with things providing his activities and statements do not 
conflict with our present arrangements in other countries. 



MUNITIONS INDUSTRY 789 

Does not this mean that Echeniqiie could bring in business on a 
commission basis to you, but he could not represent you officially? 

Mr. Webster. He could not represent us in countries where we had 
regularly established agents. 

Mr. Hiss. In this same letter, on the last page, you say as follows 
[reading] : 

Do not forget that we still have available Conqueror Hav^-k in Holland. 

That meant a Hawk with a Conqueror engine ? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

You might mention that to your friend, the Ambassador — 

Is that the Peruvian Ambassador that was referred to previously ? 

Mr. Webster. I think that is the Peruvian Ambassador; yes, sir. 

Mr. Hiss (continuing reading) : 

but iu all correspondence regarding this particular individual and subsequent 
sales, I believe It advisable to carry on your correspondence with me per- 
sonally instead of running it through the office in case of possible future per- 
cussions. If you were able to secure the release of the Hawk and Falcon going 
to Peru, it is assumed that additional permission could be obtained for other 
operations. Get onto this job immediately and let me have all the information 
obtainable and what we could possibly ex-pect in the way of Chilean Govern- 
ment cooperation or in the way of cooperation from individuals. 

That means in getting the planes for Peru? 

Mr. Webster. Getting permission to fly from Chile to Peru. 

Mr. Hiss (continuing reading) : 

In one of your last cables you state that the Hawk and Falcon were deliv- 
ered without armament. What happened to the material in the tail of the 
Falcon ? 

Was armament stored in the tail of the Falcon? 

Mr. Webster. It was placed there for safe-keeping at the time we 
stored it. It was there, being stored, and we put it in the tail of the 
ship so that it would not be stolen. 

Mr. Hiss. Did Colombia protest about your sale of equipment to 
Peru? 

Mr. Webster. Not to my knowledge, sir. 

Mr. Hiss. " Exhibit No. 365 " is a letter to Mr. Goulding from 
Mr. Samper. 

Mr. Allard. Yes, sir. 

(The letter referred to was marked " Exhibit No. 365 " and is 
included in the appendix on p. 944.) 

Mr. Hiss. Mr. Samper was in the field, representing your com- 
pany in Bogota, Colombia? 

Mr. Allard. Yes, sir. 

Mr. Hiss. In that letter the writer states in part as follows : 

Whereas I can appreciate your viewpoint regarding your policy of not 
restricting sales to any one country in a certain geographical division, you can 
likewise understand that the position taken by the directors of your firm to sell 
to Colombia's potential enemy has greatly jeopardized future sales possibilities 
to this country. I have, of course, expended every effort to counteract the 
unfavorable impression created at the ministry when they received the infor- 
mation, but what the result will be over an extended i)eriod of time only time 
can tell. 



790 MUNITIONS INDUSTRY 

Did your company at the same time sell another plane to Peru 
which was in the possession of a Captain Wooten, United States 
military attache in Chile? 

Mr. Webster. No, sir ; that plane was given to Peru. It had been 
used considerably and was in rather poor shape, and the Peruvian 
Government requested that we make them a gift of it, which we did. 

The Chairman. Was not that a rather unusual request for a gov- 
ernment to make ? 

Mr. Webster. No, sir. 

Mr. Allard. It was an old, worn-out plane. 

Mr. Webster. They would probably use it more or less for prac- 
tice work, instructions, and so forth. 

Mr. Hiss. I offer as " Exhibit No. 366 " a letter dated May 6, 1933, 
to Mr. Webster from J. V. Van Wagner, Santiago, Chile. 

(The letter referred to was marked " Exhibit No. 366 " and is in- 
cluded in the appendix on p. 945.) 

Mr. Hiss. This letter states : 

In my letter of 29th April I wrote about a visit we had from Mr. Bofil, who 
was interested in buying six planes, with armaments, for Peru. We have had 
another visit from Mr. Bofil, and he showed us a letter he had received from 
the Peruvian commercial agent in Valparaiso, which proves that the Peruvian 
Government is actually interested in acquiring six airplanes as soon as possible. 
According to Mr. Bofil, the commercial agent has more power in these ques- 
tions than the Ambassador, as he is responsible for the purchase of material 
and produce for the Peruvian Army. We advised Mr. Bofil that we could 
not do anything in the matter and it would be necessary to make some arrange- 
ment with the Chilean Government if Peru wanted six planes urgently. 

Was that because planes made at the Chilean factory were under 
contract to Chile ? 

Mr. Webster. No, sir ; not at that time. 

Mr. Hiss. Why would an arrangement have to be made with the 
Chilean Government? 

Mr. Webster. This particular situation, Mr. Hiss, I never did un- 
derstand. Mr. Bofil I never heard of. Mr. Bofil had no author- 
ity — I checked on that in Peru — to do any purchasing for the Peru- 
vian Government. Nothing ever materialized from this, and I am 
inclined to believe that Mr. Bofil was misrepresenting facts to our 
representative in Chile. 

Mr. Hiss. Later on in that paragraph the statement is made : 

It seems that Mr. Bofil is well known in the Government and has been at 
work trying to get the Air Corps to dispose of the three last machines repaired 
in the factory and three others undei-going repair. The Director of Material 
was sent out yesterday by Aracena to talk the matter * * *^ 

He was the Director of Aviation in Chile ? 

Mr. Webster. Yes, sir, 

Mr. Hiss (continuing reading) : 

* * * to talk the matter over with us, and the idea is for us to take over 
the six planes — in a figurative way — and for us to sell them to Peru. The Air 
Corps will fix the price, and the money will be placed to your credit in New 
York. This money will then be utilized in buying modern equipment for Chile. 
Everything looks pretty hopeful and the Air Corps are anxious that the 
business results. 

So that apparently Chile was willing to go through with a deal if 
Mr. Bonfil had had proper authority from Peru? 

Mr. Webster. I do not think so. I do not think that this had 
the sanction of the Government. I think whoever Mr. Bofil talked 



MUNITIONS INDUSTKY 791 

to in the Chilean Government had no authority whatever to speak 
for the Government. Nothing whatever materialized. We had no 
advice from either the Chilean Government or the Peruvian Govern- 
ment to bear out the statement^ of Mr. Bofil. 

Mr. Hiss. How were you able to secure a release of Captain 
Wooten's plane so that you were able to make a gift of it to Peru, 
Mr. Webster? 

Mr. Webster. We asked official permission from the Chilean Gov- 
ernment to fly that plane to Peru. 

Mr. Hiss. Was that plane the property of the United States Gov- 
ernment ? 

Mr, Webster. No, sir ; it was our property. We purchased it from 
the United States Government. 

Mr. Hiss. It was the property of the United States Government 
while Captain Wooten had it; is that correct? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Who had furnished it to Captain Wooten? 

Mr. Webster. It was ordered by the United States Army Air 
Corps to Chile for the private U3e of Captain Wooten, who was 
military attache. 

Mr. Hiss. You then purchased that from the United States Gov- 
ernment and made a present of it to Peru ? 

Mr. Webster. Yes, sir. At the time we purchased it, we had no 
idea of making a gift of it to the Peruvian Government. It was 
left on the United States' hands in Chile and they did not want to 
go to the expense of shipping it back to the States ; it was more or 
less of an obsolete airplane anyway. 

Senator Pope. Do you remember how much you paid the Govern- 
ment for that plane? 

Mr. Webster. I think it was about $5,500 or $6,000, somewhere 
along that line. I could not tell you exactly. 

Senator Pope. And you made a gift of that to the Government? 

Mr. Webster. We had flown it ourselves considerably before it 
was turned over to the Peruvian Government, We used it more for 
a taxi ship there, to go up and down the coast, to get around quickly 
for our own business operations. 

Mr. Hiss, I offer as " Exhibit No. 367 " a letter dated the 29th of 
April 1933 from Santiago, Chile, to Mr. Webster. 

(The letter was marked " Exhibit No. 367 ", and is included in 
the appendix on p. 946.) 

Mr. Hiss. This letter is from Mr. Van Wagner to Mr. Webster 
and it says : 

We cabled you this morning that Captain Wooten is still without news from 
Washington about the ship being taken over by us, and we hope instructions 
will be cabled him in this respect at any moment, so that we can proceed to 
take out the U.S. Army signs and paint on the new registration number. 

The United States Army signs were painted out and this ship was 
then given by you to the Peruvian Government ? 

Mr, Webster. Not until some time later, Mr, Hiss, I believe that 
plane was on our hands almost a year. We had been using it our- 
selves. We purchased the ship to use ourselves as a taxi plane to 
get around South America. 



792 MUNITIONS INDUSTRY 

Mr. Hiss. But at the time you were getting the Army to turn 
it over to you, were you not attempting then to sell it to Peru a,s this 
correspondence indicates ? 

Mr. Webster. I do not recall whether we offered it for sale or not. 
The record will speak for itself. 

Mr. Hiss. This letter, " Exhibit No. 367 ", says : 

Outside Aracena and the Paraguayan Minister, no one else other than the 
Peruvian Ambassador should have known that Captain Wooten's plane was 
for sale. 

You were attempting at that time to sell it then ? 

Mr. Webster. Apparently we were attempting to sell it, but we 
did not and had it on our hands for about a year and used it our- 
selves and then later on presented it to the Peruvian Government 
for instruction work. 

Mr. Hiss. In that same connection I offer as " Exhibit No. 368 " a 
letter dated March 28, 1933, to Mr. Van Wagner from Mr. Webster. 

(The letter referred to was marked " Exhibit No. 368 " and is in- 
cluded in the appendix on p. 947.) 

Mr. Hiss. In this letter you say : 

If you have not already done so, please advise immediately by cable to my 
personal address any developments in connection with Wooten's Falcon. I 
prefer to bury this transaction as much as possible as far as the office goes in 
order to prevent any possible adverse publicity. 

The situation involving Peru is becoming very acute and is liable to be more 
so in the very near future. It looks to me like an embargo. 

The Chairman. Mr. Webster, in the matter that I want to examine 
you briefly upon, it is first necessary to lay a little foundation in 
history. If it has not already been made a part of the record it will 
be that the sales of the Export Corporation to the Federal Govern- 
ment of Brazil in 1932 amounted to $35,900. That consisted of 
miscellaneous material and did not include any planes. Is that 
precisely the case, as you recollect it now? 

Mr. Webster. I believe it is. Senator. I would have to check it to 
be certain about it. 

The Chairman. In September of that year, 1932, is it true that 
the United States Navy had with the United Aircraft Corporation 
an order for 29 or 30 planes ? 

Mr. Webster. The IJnited Aircraft? 

The Chairman. Yes. 

Mr. Webster. I could not tell you. 

The Chairman. You could not testify as to that? 

Mr. Webster. No, sir. 

The Chairman. It will then be made a matter of record later on 
that such an order had been placed by the United States Navy; and 
that the Navy gave the United Aircraft Corporation permission to 
lay aside the work they were doing for the Na\^ in order that they 
could fulfill contracts that were very pressing with the Government 
of Brazil; that Brazil was demanding unusually quick deliveries 
and they could not be fulfilled if the United States Government 
insisted upon the fulfillment of its contract. 

On May 25 of 1932, rioting began in Sao Paulo in Brazil. 

On June 11 of that year a genuine revolt broke out there at Sao 
Paulo, with the army, so it has been charged, aiding the revo- 
lutionists. 



MUNITIONS INDUSTRY 793 

There appears to have been quite continuous fighting throughout 
the months of July and September and the revolution continued on 
up into sometime in November. 

On November 4, the Brazilian Government after the revolution, 
seized certain planes from the revolutionists. 

On November 4, 1932, Castro Lopez, who was the Export Corpo- 
ration's agent in Rio, wrote you a letter which is offered as " Exhibit 
No. 369." 

(The letter referred to was marked " Exhibit No. 369 " and is in- 
cluded in the appendix on p. 947.) 

The Chairman. This letter is to the effect that among the planes 
seized from the Sao Paulo government after the revolution were seven 
Falcons believed to have been smuggled by way of Argentine. The 
ministry of war, according to this letter, iDelieved that during your 
stay in Buenos Aires you were instrumental in getting the Falcons to 
Sao Paulo. 

What can you tell us of that, what knowledge do you have of 
any such transaction? 

Mr. Webster. In the late summer or fall of that year I was in 
Buenos Aires and this Mr. Orsini, or Lieutenant Orsini, whom I 
mentioned a short time ago, was presented to me by several people 
there, and in company with another man who was introduced to 
me as Mr. Jones and the other man as a Mr. Jackson or Johnson — 
I have forgotten which — and as representatives of the Paraguayan 
Government. 

They inquired if we had any airplanes for delivery — any air- 
planes in South America for quick delivery. I told them that 
we had no complete planes, but some that were partially fabricated 
in our Chilean factory that had been ordered by the Chilean Gov- 
ernment, but the Government was unable to pay for them and the 
plant had been closed. 

A price was established, fixed, on those planes, and they were 
sold to them. 

Subsequently stories appeared in the Asuncion Paraguayan's 
newspaper to the effect that the Paraguayan Government had pur- 
chased 10 airplanes from the Curtiss factory in Santiago, Chile. 
Those airplanes were delivered to Mr. Johnson and to Mr. Jackson, 
who later turned them over to Orsini and his friends. They were 
delivered at our factory in Santiago. They took delivery of them 
at the factor}^, and their own pilots flew them out of Chile. 

So far as we know they were flown to Paraguay until later on 
it developed that they were flown into South Brazil, into Sao 
Paulo. 

At the time the sale was made we believed we had been selling 
to a representative of the Paraguayan Government. 

The Chairman. In this letter of November 4 to you by Lopez 
the opening paragraph makes reference to your departure for the 
south — " Since your departure for the south." Where did this letter 
finally reach j^ou? 

Mr. Webster. I believe it reached me in New York. It is dated 
November 4, and I believe I had returned to New York by that time. 

The Chairman. In keeping in part with what you have been tell- 
ing us, I offer as " Exhibit No. 370 " a letter dated January 21, 1933, 
addressed to Mr. S. Sampaio by Mr. Webster. 



794 MUNITIONS INDUSTRY 

(The letter referred was marked " Exhibit No. 370 " and is in- 
cluded in the appendix on p. 948.) 

The Chairman. In this letter, Mr. Webster, you wrote that — 
by the way, who is Sampaio? 

Mr. Webster. Sampaio is now our agent in Brazil. At that 
time, in 1933, he was not our agent. He has since been made our 
agent in Brazil. 

The Chairman. At that time he was consul general of Brazil in 
New York, was he not? 

Mr. Webster. That is probably a different Sampaio, I am sorry. 
We have an agent by the name of Sampaio in Brazil. Apparently 
this is the Sampaio who is the consul general in New York ; yes, sir. 

The Chairman, You wrote in this letter of January 21, relative to 
planes sold to the Santiago factory and later found in Brazil 
that the entire transaction had been closed. 

Mr. Webster. Yes, sir. 

The Chairman. The language was — — 

* * * I wish to advise you that this entire transaction lias been definitely 
closed, no material is left undelivered, and all funds paid to us have been 
entirely used. 

Mr. Webster. Yes, sir. 

The Chairman. I offer as " Exhibit No. 371 " a letter dated Janu- 
ary 23, 1933, by Sampaio to Mr. Webster, which is an acknowledg- 
ment of your letter of the 21st. 

(The letter referred to was marked " Exhibit No. 371 ", and is 
included in the appendix on p. 948.) 

Tlie Chairman. This letter requests confirmation of your oral 
statement that the planes numbering 11 were delivered and funds 
paid about the end of September 1932 or just before the end of the 
Sao Paulo revolution. Is that correct? 

Mr. Webster. I believe so. I know they w^ere all paid for before 
they were delivered. 

The Chairman. That settlement came positively before the end of 
the revolution? 

Mr. Webster. Oh, absolutely; yes, sir. In fact, no material was 
delivered until it was paid for. In fact, it was paid for in advance. 

The Chairman. I should like to offer as " Exhibit No. 372 " a letter 
dated January 28, 1933, from Mr. Webster to Mr. Sampaio. 

(The letter referred to was marked " Exhibit No. 372 ", and is 
included in the appendix on p. 949.) 

The Chairman. This letter was sent to the consul general of Brazil 
in New York and relates to a conversation regarding airplanes that 
were sold in Buenos Aires and delivered at your factory in Santiago, 
which it was stated eventually found their way into Brazil. The 
machines, according to this letter, had been delivered and payments 
made by the end of September 1932 which was before the end of the 
revolution. Is that the purport of the letter, Mr. Webster? 

Mr. Webster. Yes, sir. I might exj)lain this, perhaps it will make 
it a little more clear to you. Senator. The Brazilian consul general, 
Mr. Sampaio, in New York, called at our office following my return 
to New York to inquire into that transaction, and I explained the 
entire situation to him. He asked me if all the material had been 
delivered that had been paid for, or whether we still had funds in 
our possession which he claimed would naturally revert to the Fed- 



MUNITIONS INDUSTRY 795 

eral Government. But all the material had been delivered and we 
had no funds left. In fact, we were paid at the time the material 
was delivered. That was the reason for that letter. He simply 
wished me to go on record so that he could send that to his govern- 
ment. 

The Chairman. I understand. Was the Chilean Government 
aware of the destination of these nine Falcons? 

Mr. Webster. I do not believe so. I had nothing whatever to do 
with the delivery of the planes. 

The Chairman. To get these Falcons from Chile over to Sao 
Paulo, over what territory would they have to go ? 

Mr. Webster. They would have to fly across Chile, over the Andes, 
across the Argentine, across Paraguay, and into Brazil. 

The Chairman. To whom was the plane given to which yom 
referred a while ago as having been given to a government ? What 
government was that? 

Mr. Webster. That was the Peruvian Government. 

The Chairman. Is it not a fact that Paraguay was given one 
plane for the privilege of permitting a landing of these planes in 
Paraguay ? 

Mr. Webster. Not to my knowledge. I know that one plane — 
I afterwards heard that one plane had had a forced landing. This 
came out sometime later, that one of those planes was forced down 
in Paraguay and was more or less taken over by the Paraguayan 
Government. That is merely hearsay, I think. That is gossip. 

The Chairman. You have not any authentic information on that? 

Mr. Webster. No, sir. I know that there was a Falcon, one of 
this same type of planes, in Paraguay, because they purchased, or 
rather asked for prices — I do not know that they did purchase — on 
spare parts for that type of airplane, and I know that we had never 
sold Paraguay that type. 

The Chairman. Chile accomplished a release from its contract 
with you about that time, did it not ? 

Mr. Webster. Yes, sir. In order to sell those airplanes, it was 
necessary to receive a release from the Chilean Government. These 
airplanes had been contracted for by the Chilean Government to be 
fabricated in Chile. But a little later they ran into financial diffi- 
culties ; they were not able to carry out the contract, and the factory 
was closed. We still had certain funds in our possession which had 
been paid as a deposit on those airplanes. So that it was necessary 
for us to arrange with the Chilean Government to sell those airplanes 
to another customer and in return refund to Chile the sums that had 
been paid against them as a deposit. 

The Chairman. Did you pay Chile any consideration for this 
release ? 

Mr. Webster. I believe they received the money, the advance pay- 
ment which they had made to us, and I believe also that they 
received somewhere in the neighborhood of — I think it was a sliding 
scale of from $3,000 down per airplane. 

The Chairman. Per plane? 

Mr. Webster. Yes. 

The Chairman. So that a figure of about $32,000 might cover the 
entire transaction? 



796 MUNITIONS INDUSTRY 

Mr. Webster. I am not sure as to the exact amount. I am not 
in the accounting division. 

The Chairman. Coming back to this thought that the Paraguayan 
Goverimient had been given a plane for permitting a landing of 
these ] lanes in Paraguay — 

Mr. Webster (interposing). I doubt that that is so, Senator, 
because I remember reading later on clippings that were sent to me 
in a Buenos Aires newspaper saying that the plane had been forced 
down and taken over by the Paraguayan Government; and that the 
pilot had been imprisoned for a few days. That is merely hearsay. 
So I doubt very much whether that plane was actually given to the 
Paraguayan Government. 

The Chairman. The committee has in its possession a report on 
this particular plane that it believes to be very authentic. It will 
want this report to be known as " Exhibit No. 373 ', but it will not be 
offered for the record, at least at this time. 

(The report referred to was marked for identification " Exhibit 
No. 373.") 

The Cpiairman. Mr. Webster, I offer now as " Exhibit No. 374" a 
letter dated May 13, 1933, to Mr. Van Wagner from Mr. Webster. 

(The letter referred to was marked " Exhibit No. 374 ", and is 
included in the appendix on p. 949.) 

The Chairman. In this letter — again will you say who Mr. Van 
Wagner is or was ? 

Mr. Webster. Mr. Van Wagner is or was the factory manager of 
our plant in Santiago, Chile. He is still in Santiago, but the plant is 
inoperative at the present time. 

The Chairman. You are making inquiry of him in this letter 
concerning a reputed inquiry for used planes. That is the general 
reference of the letter, is it not, Mr. Webster ? 

Mr. Webster. Yes. sir. 

The Chairman. You say in this letter that the price mentioned is 
too high for any sale to be possible, and you say further that the 
Chilean officials must be thinking of the deal last summer and fall 
" when we cleaned out the Los Cerrillos factory." 

What was that deal ? 

Mr. Webster. That was the 10 ships that we sold out of the 
Santiago factory and which the Chilean Government made on that 
sliding scale from $3,000 per plane down. 

The Chairman. Mr. Webster, would a continuous flight from 
Chile to Sao Paulo be possible? 

Mr. Webster. No, sir ; not with that type of plane. 

The Chairman. They would have to land somewhere between those 
two points? 

Mr. Webster. Yes, sir. 

The Chairman. You understand that the fleet did land in 
Paraguay ? 

Mr. Webster. No ; I do not, sir. 

The Chairman. You have not understood that to be the case? 

Mr. Webster. No, sir. I have heard that one plane had a forced 
landing in Paraguay. 

The Chairman. There is another story to the effect that they were 
all landed there and all but one took off and went on to Sao Paulo. 



MUNITIONS INDUSTRY 797 

Mr. Webster. I doubt it very much, sir. I am not sure, but I doubt 
it very much from what I know of conditions in the country there. 
The Chairman. On February 28, 1933, you, Mr. Webster, wrote 
to Salvador Sanfuentes. This letter deals quite at length with the 
commission paid him for the sale of 10 Falcons. In the letter it is 
stated that the original contract was for 40 planes, and 20 of them 
were to be Falcons; that only 10 Falcons were ever delivered and 
paid for ; that later an opportunity was had for selling 5 Falcons to 
another customer, and subsequently the remaining 5 to the same 
customer; that the arrangement for disposing of these 10 Falcons 
involved the cancellation of the remaining 10 on order for the Chilean 
Government and also the cancellation of the 20 additional machines 
specified in the original contract. The letter then says it was neces- 
sary to pay the Chilean Government a commission of $3,000 on each 
of the 10 Falcons. In a summary of this letter you say Curtiss- 
Wright lost $32,000 on the contract, and you say also that one-third 
of the payment on that contract was returned to the Chilean Gov- 
ernment at the time the contract was canceled. 

The letter also refers to the purchase of armaments by Chile and 
the resale to another customer at exactly cost price. 

Was this all part of the same transaction? 

Mr. Webster. Yes; that was all a part of the same transaction. 
He speaks of the 40 planes, and that was a part of the planes con- 
tracted for by the Chilean Government as an inducement for us to 
construct the factory there in Chile. There was one contract for 20 
planes and another additional contract for 20, which we had placed 
before the first planes were fabricated. The second planes were not 
delivered, and the contract was canceled, so we closed the factory 
and it has been closed ever since. These 10 planes which were sold 
to Mr. Orsini were the 10 left on our hands partially fabricated. 

The Chairman. You say it was your understanding that only one 
of those planes had landed in Paraguay ? 

Mr. Webster. That is my understanding, and that was a forced 
landing. I may be wrong, but that is the rumor and the stories I 
had picked up as I passed through there. 

The Chairman. Where did you understand they did land? 

Mr. Webster. I do not know; it would be very difficult indeed 
to get those planes over there. 

The Chairman. It would be quite impossible to get them over 
there in one hop ? 

Mr. Webster. It is impossible. 

The Chairman. It could not be done ? 

Mr. Webster. No ; it could not be done. 

The Chairman. So they had to stop somewhere ? 

Mr. Webster. They had to stop at least twice. Their gasoline 
and fuel supply would not be sufficient, and they would have to stop 
twice, I should say. 

The Chairman. It would be a fairer assumption, if there were two 
landings, one was in Paraguay and the other had to be in Argentine ? 

Mr. Webster. That is right. 

The Chairman. Mr. Webster, who was that other customer to 
whom the five Falcons were sold? 

Mr. Webster. That same one, sir. 



798 MUNITIONS INDUSTRY 

The Chairman. The same one? 

Mr. Webster. Yes; there were 5 sold at first, then an additional 
arrangement made for the remaining 5, so that I believe it was 10 in 
all sold. 

The Chairman. In this letter of February 28, " Exhibit No. 375 ",I 
find this language at the top of the page numbered 2, in the first 
paragraph : 

The other matter of 20 percent commission on armament sold to us by Chile 
is entirely out of order as our customer refused to pay us a higher price than 
that quoted by the Chilean Government, and this armament was delivered by 
us to our customer at exactly cost price. This money was retained by Curtiss 
and applied against the Chilean debt to Curtiss-Wright. This arrangement 
assisted us in delivering the spares which were on order, and on which you are 
entitled to your 5 percent commission. 

You have no comment to offer on that? 

Mr. Webster. No ; I was waiting for you to ask the question. This 
refers to that same customer. 

Mr. Hiss. That refers to the equipment for those planes? 

Mr. Webster. Yes. 

Mr. Hiss. You sold all the munitions? 

Mr. Webster. We had shipped down for the Chilean Government 
machine guns to go on their own planes, and we were shy a few 
machine guns, and in order to assist us the Chilean Government 
sold us a few guns and we turned them over and credited the Chilean 
Government with the amount covering that. 

(The letter referred to was marked " Exhibit No. 375 " and is in- 
cluded in the appendix on p. 951.) 

The Chairman. The committee will now recess until 10 o'clock 
tomorrow morning. 

(The committee thereupon took a recess until tomorrow, Wednes- 
day, Sept. 12, 1934, at 10 a.m.) 



INVESTIGATION OF MUNITIONS INDUSTRY 



WEDNESDAY, SEPTEMBER 12, 1934 

United States Senate, 
Special Committee to Investigate the Munitions Industry, 

Washington, D.G. 

The hearing was resumed at 10 a.m., pursuant to the taking of 
recess, Senator Gerald P. Nye (chairman) presiding. 

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

Also present: Stephen Kaushenbush, secretary, and Alger Hiss, 
investigator. 

The Chairman. The committee will be in order. Mr. Hiss, you 
may proceed. 

FURTHER TESTIMONY OF J. S. ALLARD AND CLARENCE W. 

WEBSTER 

Mr. Hiss. Mr. AUard, in the course of selling to countries that 
were either actually engaged in war or on the eve of hostilities, has 
your company ever furnished pilots to train army pilots for the 
countries at war, or have you furnished mechanics to countries at 
war or to repair planes purchased from you and actually used in 
war? 

Mr. Allard. We have furnished mechanics to repair airplanes in 
use. To my knowledge we have never furnished any pilots to train. 

Mr. Hiss. Do you know whether it is customary for South Amer- 
ican countries to request aid and cooperation of airplane companies 
when they — that is, the countries — are engaged in war? Have you 
ever heard of any cases of that sort ? 

Mr. Allard. Requested manufacturers for cooperation? 

Mr. Hiss. Manufacturers or flying companies, operating com- 
panies ? 

Mr. Allard. No ; I do not know of any cases of that kind. 

Mr. Hiss. I would like to ask this next question of you, Mr. 
Webster. I offer as " Exhibit No. 376 " a letter of May 19, 1933 
signed " Slim." That is Mr. Faucett in Peru, Mr. Webster ? 

Mr. Webster. Yes, sir. 

(The letter referred to was marked " Exhibit No. 376 " and is 
included in the appendix on p. 952.) 

Mr. Hiss. The fourth paragraph says — 

I suppose you know that all our planes * * * 

That refers to the Faucett Airline, does it not ? 
Mr. Webster. Yes, sir. 

83876— 34— PT 4 8 799 



800 MUNITIONS INDUSTRY 

Mr. Hiss (continues reading) : 

are on the other side of the " hill '\ * * * 

Does that mean the Andes? 
Mr. Webster. Yes, sir. 
Mr. Hiss (continuing) : 

* * * Dan and Red, also * * *. 

That refers to two of his pilots ? 
Mr. Webster. Yes, sir. 
Mr. Hiss (continuing) : 

The Government stopped our coast service on the 21st of April, and Dan, 
Red, and Pinillos went over on Sunday, 23rd April, in Nos. 4, 2, and 6 * * *. 

That refers to phines in the company's operation ? 
Mr. Webster. Yes, sir. 
Mr. Hiss (continuing) : 

* * * and I took No. 8 over on 4th May. We are just now finishing 
No. 5, and it will have to go, too, unless the war should be called ofC soon. 
Dan and Red are with the Government now. 

Did you not understand from that letter that Mr. Faucett felt it 
advisable, or at any event did send some of his planes to help out in 
Peruvian military maneuvers? 

Mr. Webster. I would like to explain that. Mr. Faucett's company 
is a Peruvian corporation. It is not an American corporation. 

Mr. Hiss. Do you know whether the capital investment is Ameri- 
can or Peruvian? 

Mr. Webster. I am not certain. I know there is some American 
capital. I know it was originally a Peruvian corporation, financed 
entirely by Peruvian capital. I believe there is some American 
capital in it now, but to what extent I am not sure. Also, I have 
been told that the Peruvian Government took over and pressed into 
service certain of Faucett's ships. That is what I am told. We have 
no connection with the Faucett company. 

Mr. Hiss. I realize that. I was not trying to indicate otherwise. 
Does not this language indicate to you also that Faucett's pilots were 
pressed into service? 

Mr. Webster. Pressed into service to fly Faucett's ships, as I would 
gather from this letter. 

Mr. Hiss. To fly Faucett's ships to the other side of the Andes, or 
in Government service? 

Mr. Webster. I do not know whether they were in Government 
service. 

Mr. Hiss. The last sentence of that paragraph says — 

Dan and Red are with the Government now. 

That rather sounds as though they are actually in the Government 
service. 

Mr. Webster. That I do not know, sir. It sounds to me that those 
pilots were used to ferry those ships over the hill. 

Mr. Hiss. Do you know who Mr. Donnelly was? He was one of 
the employees in the factory in Los Cerrillos. Was he a mechanic? 

Mr. Webster. A former mechanic no longer in our employ. 



MUNITIONS INDUSTRY 801 

Mr. Hiss. On August 22, 1933, Mr. Van Wagner wrote to you that 
Donnelly was in the Chaco. I offer this letter as " Exhibit No. 377." 

(The 'letter referred to was marked "Exhibit No. 377", and is 
included in the appendix on p. 953.) 

Mr. Hiss. This says in the second paragraph : 

Donnelly is in the Chaco and I have not had any news from him since he 
left. I still have his checks so cannot get a signed receipt for them until he 
comes back. 

Do you know what Donnelly was doing in the Chaco area? 

Mr. Webster. I believe he was employed by the Bolivian Govern- 
ment to repair a gas tank. Donnelly was not in our employ at the 
time the Bolivian Government asked him to come up there. 

Mr. Hiss. But apparently your company still owed him checks for 
past services? 

Mr. Webster. I am not sure whether they are checks from us or 
checks from some other source. I have no idea what Mr. Van 
Wagner referred to — what checks he referred to. 

Mr. Hiss. He is reporting to you; this letter is to you from Mr. 
Van Wagner, dated August 22, 1933. 

Mr. Webster. I assume that they were the balance of any salarj', or 
back salary that he might have coming to him. There is a rule in 
the Chilean Government that employers must hold a certain percent 
of their employees' salaries and those to a certain percentage must 
be paid into the Government, and when that employee leaves that 
company, he obtains that back salary. It is in the nature of an 
employees' insurance. 

Mr.'Hiss. Who was Mr. Berger? 

Mr. Webster. Mr. Berger is our mechanic — our field service man. 

Mr. Hiss. " Exhibit No. 301 ", already in evidence, a letter of 
September 21, 1933, from Travis in Bolivia to Mr. Webster says — 

Shorty— 

That means Berger? 
Mr. Webster. Yes, sir. 
Mr. Hiss (reading) : 

* * * is going to the Chaco next Friday to look things over and give some 
much needed instructions to the mechanics. This was requested by the pilots, 
and I left it up to Shorty as to whether he would go or not. He can be of 
great help there for a couple of weeks, both to us and to the pilots and 
mechanics. 

On September 21, 1933, the Bolivian-Paraguayan hostilities, 
known as the " Chaco War ", were going on, and they are still con- 
tinuing ? 

Mr. Webster. Yes. I would like to explain again, Mr. Hiss, as 
I believe I told you yesterday, that the instructions referred to there 
are simply as to how to operate those engines. 

Mr. Hiss. "Exhibit No. 349 ", already a part of the record, which 
is a letter from Mr. Webster to Mr. Shannon — the letter having been 
written from Bolivia on October 26, 1933 — says : 

Am writing this letter at midnight. Just came in from dinner after a late 
session with Lopez and the Minister of War. Our plans have somewhat 
changed. Cliff, * * *_ 



802 MUNITIONS INDUSTRY 

That is Mr. Travis? 
Mr. Webster. Yes, sir. 
Mr. Hiss. Who was a pilot? 
Mr. Webster. Yes, sir. 

Mr. Hiss. A former Army pilot, was he not ? 

Mr. Webster. I believe he was trained in the American Army a 
number of years ago. 
Mr. Hiss (reading) : 

* * * instead of going along with us tomorrow is leaving for the 
Chaco on Saturday with the Minister of War and the Chief of StafE for a con- 
ference with General Kundt and aviation officials at the front. Lopez and the 
Minister suggested that Cliff fly down there with thera, and the job is so im- 
portant that we decided that if necessary we would have to delay the Argen- 
tine business. 

That letter indicates, does it not, that your company was doing 
business on the actual scene of warfare ? 

Mr. Webster. No, sir. They were having some trouble with the 
planes there and Travis went down there to see what the trouble was. 

Mr. Hiss. Was not this with reference to a possible acquisition of 
planes ? The fourth sentence of this paragraph says : 

The Government wishes to acquire ten large bombing planes, and it is a 
choice between Junkers and ourselves. Lopez and the Minister suggested that 
Cliff fly down there with them, and the job is so important that we decided 
that if necessary we would have to delay the Argentine business. 

Mr. Webster. Apparently that letter does infer that. It was my 
present impression that it was to go down on trouble shooting. 

Mr. Hiss. Who was Mr. Brewton? 

Mr. Webster. He is also a service engineer, a service man, from 
the Wright Aeronautical Co. 

Mr. Hiss. I offer as " Exhibit No. 3?8 " a letter dated November 8, 
1933, to Mr. J. A. B. Smith, from Mr. Shannon. 

(The letter referred to was marked " Exhibit No. 378 ■', and is in- 
cluded in the appendix on p. 954.) 

Mr. Hiss. J. A. B. Smith is an official of the Export Corporation ? 

Mr. Allard. No. Mr. Smith is the treasurer of the parent 
company. 

Mr. Hiss. With a copy to Mr. Allard. On page 3, referring to 
the first complete paragraph, the letter says : 

Harvey Brewton Is here and have spent much time with him. He expects 
to leave on Sunday's plane to Bolivia and will also probably go down into 
the Chaco. Shorty Berger is also down there and additional spares, including 
engines, will undoubtedly be purchased. 

Mr. Webster. Mr. Hiss, if you will permit me to say so, that does 
not necessarily mean that they were down there selling. Mr. 
Brewton has nothing whatever to do with sales. He is a mechanic. 
He was down there trouble-shooting, as we did before. 

Mr. Hiss. Earlier I asked Mr. Allard if you had not given in- 
structions on the actual scene of hostilities to foreign mechanics, or 
if you had not made repairs; and Mr. Allard, as I remember his 
answer, said that he thought you had only made repairs of ships 
you had already sold. This was an indication that the men were 
on the scene and that, taken in connection with some of the previous 
letters introduced this morning, they were giving instructions to^ 
mechanics as well as actually repairing machines. 



MUNITIONS INDUSTRY 803 

Mr. Allard. Mr. Hiss, those are entirely instructions in the opera- 
tion which would come under the category of service, repairs. If 
a man is ruining an engine by improper knowledge of how to operate 
it, it would save the expense of having to service it, if we told him 
how to operate it properly ; that is all. 

Mr. Hiss. Then you do agree that your company gives service 
directions as well as makes trouble-shooting repairs. 

Mr. Allard. Absolutely. 

Mr. Webster, Yes, indeed. 

Mr. Hiss. At the actual scene of warfare? 

Mr. Allard. If necessary ; yes, sir. 

Mr. Webster. This was not at the actual scene of warfare, Mr. 
Hiss. 

Mr. Hiss. In the Chaco ? 

Mr. Webster. It was in the Chaco, but not at the actual scene of 
warfare. This was back at some supply base. 

Mr. Hiss. Do you think it was the air base for the Chaco region? 

Mr. Webster. No; I believe probably it was the overhaul base, 
repair base. 

Mr. Hiss. It was the major repair base for the Bolivian Air 
Corps, was it not ? 

Mr. Webster. I do not know whether it was the major base. It 
was some base. It was not at the actual scene. 

Mr. Hiss. The base used for the Chaco dispute ? 

Mr. Webster. Probably. 

Mr. Hiss. I offer as " Exhibit No. 379 " a letter dated December 15, 
1933, signed "Tony." That is Mr. Ashton, of Webster & Ashton? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Your agents in Bolivia ? 

Mr. Webster. Yes, sir. , 

Mr. Hiss. This letter is to Mr. Webster. 

(The letter referred to was marked " Exhibit No. 379 " and is 
included in the appendix on p. 956.) 

Mr, Hiss. Eeferring to the last paragraph in the letter : 

Travis's presence in the Chaco is most important, as the pilots are very 
friendly indeed toward him and he is very discreet in his ways. Brewton 
(that is the mechanic), with his knowledge, of course, is also very valuable, 
so between the two some excellent work must have been done, 

Mr, Webster. That is in overcoming the difficulties they were hav- 
mg at the time in the operation of the engines, 

Mr, Hiss, Have you ever supplied flight instructions to officers 
who you expected would use those instructions in warfare — officers 
of foreign governments ? 

Mr, Webster, Just how do you mean? Do you mean we might 
give instructions today and 5 years from now those officers would 
be used in warfare? 

Mr. Hiss. Do 3^011 give gunnery instructions, for example? 

Mr. Webster. No, sir. 

Mr. Hiss, Mr, Allard, may I call 3'^our attention to a telegram 
from vou to Mr. Burdette S. Wright dated November 24, 1931, 
which I will offer as " Exhibit No. 380," 

(The telegram referred to was marked " Exhibit No. 380.") 



804 MUNITIONS INDUSTRY 

Mr. Hiss. This Exhibit " No. 380 " says : 

Would there be any governmental objection our giving flight training, includ- 
ing some gunnery, to American-born Cliinese. 

J. S. AliARD. 

Mr. Allard. That is correct. At that time we were giving flight 
training in the flying service, wliich was discontinued some 2 years 
ago or a year and a half ago at least. 

Mr. Hiss. And that included gunnery training? 

Mr. Allard. No. It did not. We were asking if we could include 
gunnery training at that time. 

Mr. Hiss. You did not include gunnery training? 

Mr. Allard. No, sir. 

Mr. Hiss. Have you ever supplied personnel as recruiting officials 
for a foreign government? Have you ever had requests from foreign 
governments that your company recommend pilots or mechanics ? 

Mr. Allard. AVe may have had requests. I think the files would 
disclose that. We probably have had requests. 

Mr. Webster. Yes. 

Mr. Hiss. Has your company ever complied with any of those 
requests ? 

Mr. Allard. We have possibly recommended mechanical personnel. 

Mr. Hiss. Have you ever had an agreement with a foreign country 
whereby you were under obligation to furnish expert instructions in 
the handling of planes either from the mechanical end or the flying 
end during any period of time after the purchase of planes from 
your company? 

Mr. Allard. Never on the flying end that I know of. We have 
had — we have supplied or recommended to the governments not 
on our pay roll, personnel to work in factories. 

Mr. Hiss. I offer as " Exhibit No. 381 " af letter from Mr. Goulding, 
vice president of the Export Corporation to Mr. Roberto Escobar, 
acting Consul General in New York for Colombia. 

(The letter referred to was marked " Exhibit No. 381 '' and is 
included in the appendix on p. 958.) 

Mr. Hiss. The first paragraph of the letter, Mr. Allard, says : 

You know from copy of agreement which I handed you that we had agreed 
to furnish and recommend certain personnel to go to Culombia. The agree- 
ment I have reference to is one dated January 31. 1934, under whicli we 
were to furnish an expert in the flying of Condor planes, to accompany the 
planes to Colombia and remain there for a period not to exceed three months 
to give instruction at the school fields in the handling of the Condor planes. 

On page two, the last paragraph, is — 

One of our St. Louis mechanics seems especially interested in making this 
trip. His name is George Clark, who formerly made trips for us to Latin 
American countries. He is a very expert mechanic and has a very pleasing 
personality, speaks Spanish, and in addition to his aircraft mechanical knowl- 
edge, is an expert on armament. 

An aviator or a mechanic who is an expert on armament is more 
valuable to your company for such services than one without that 
knowledge ? 

Mr. Allard. Not to our company ; possibly to the customer. 

Mr. Hiss. " Exhibit No. 378 ", which has already been made a part 
of the record, November 8, 1933, from Mr. Shannon to Mr, Smith, 



MUNITIONS INDUSTBY 805 

page 2, in the middle of the first complete paragraph, the fourth 

sentence, reads : 

I was also asked to secure about eisht good Army bombing pilots who might 
be available and out of jobs aud looking for a little excitement and money to 
come down with the ships and go to work in the Chaco for the Government. 

I offer as " Exhibit No. 382 " a letter dated March 30, 1934, from 
Mr. Webster to Mr. Anthony Ashton, of Webster & Ashton, Bolivia. 

(The letter referred to was marked " Exhibit No. 382 " and is 
inchided in the appendix on p. 959.) 

Mr. Hiss. Reading from page 2, under the heading " Pilots ", in 
" Exhibit No. 382 " : 

While in La Paz I offered my own services gratis, and as a friendly gesture, 
to handle the delivery of the Condors. I also agreed, at the request of the Gov- 
ernment, to secure some pilots who would remain in Bolivia and handle them 
in service. 

Those Condors were sold for what purpose, Mr. Webster ? 

Mr. Webster. They were transport planes and bombing planes. 

Mr. Hiss. They could be used as large bombing planes, and were 
so sold by your company ? 

Mr. Webster. Yes, sir. 

Mr. Allard. But they were never delivered. 

Mr. Webster. No; they were never delivered. I might add, Mr. 
Hiss, that when it was called to my attention it was entirely out of 
order to supply pilots or assist in engaging pilots for Bolivia, we 
immediately notified the Bolivian Government it was impossible to 
do that, and the entire matter was called off. 

Mr. Hiss. Did you ever employ pilots for Colombia ? 

Mr. Webster. No, sir. 

Mr. Hiss. " Exhibit No. 383 ", which I offer in evidence, is a letter 
from Mr. Crosswell to " Dear Parin." 

(The letter referred to was marked " Exhibit No. 383 " and is 
included in the appendix on p. 961.) 

Mr. Hiss. The letter, " Exhibit No. 383 ", is dated April 25, 1934, 
and is addressed to " Dear Farm." That is Mr. Hewlett? 

Mr. Allard. Yes. 

Mr. Hiss. Beginning with the second paragraph of this letter, I 
read as follows : 

I spent last week end in Cartegena with Comm. Strong and the American 
pilots and mechanics who have recently arrived, 24 pilots and approximately 
the same number of mechanics. Comm. Strong is in a little hot water, and it 
is mostly in his interest that I am writing this letter. 

Commander Strong referred to was a former American naval 
officer who was at that time adviser to the Government of Colombia ? 
Mr. Allard. So I understand. 
Mr. Hiss. Reading further from this letter, it says : 

It seems that Comm. Strong left the States with the understanding that 
pilots were to be recruited who are willi»g to tight, if necessary, and instruct 
Colombian students otlierwise. Contracts were drawn up accordingly, and 
everyone was very happy until the press got wind of the movement. The State 
Department then had to take official cognizance to which they were forced to 
react negatively in order to maintain a strict neutrality in South America. 
The pilots were told that passports would not be issued with the figbting clause 
in their contract, and that should they engage in actual military combat after 
arriving here, the consuls would be instructed to take up their passports and 



806 MUNITIONS INDUSTRY 

they would automatically lose their citizenship. A new contract was therefore 
drawn up, with the permission of Bogota, which eliminated tlie fighting clause. 
It seems that Comm. Strong was not consulted regarding this new contract, 
and it was his understanding and intention all along that these pilots imme- 
diately organize as a fighting squadron and begin training as such at Cartagena. 

When Comm. Strong met the pilots and was informed of the above happen- 
ings he asked for an immediate decision as to which of the two contracts they 
intended to keep, letting them know that he would not compromise. If they 
intend to instruct only, they will fly only training planes, and vice versa, if they 
intend to fight. They unanimously decided to stick by the second contract — 
in other words, instruct only. 

Comm. Strong is quite incensed as a result of their decision, and I presume 
that he is sincere in giving the impression that he didn't know of the second 
contract. At any rate, he wants to take immeditae steps to get other pilots 
down here who are willing to fight. He indicated to me that he will be in hot 
water with the war minister, who also thought this group would function as a 
fighting unit (as to who gave the permission for the second contract in Bogota, 
Quien sabe?) I therefore told him that I would give you all the dope in order 
that you may help recruit new pilots if you so desire. He thought that Ralph 
Damon could interest the Naval Reserve unit at St. Louis, as some of these 
fellows had previously indicated a willingness to go in for flying of this sort. 
Please understand, however, that there is no obligation whatever for any 
action on the part of the Curtiss Co. He wanted you all to know just as 
another agent, so to speak, for contacting the type of pilot who is desirable. 

The Ralph Damon referred to was then the president of the Air- 
plane Co. in St. Louis? 

Mr. Allard. That is correct. 

Mr. Hiss. Reading further, the letter says : 

He wants men with military flight training (or naval) who have been trained 
in dive bombing and airplane gunnery. A high type of individual is necessary 
in order that Colombia may have the best impression possible of Americans, 
which impression will be reflected by their use of American goods and equip- 
ment. 

Did your company ever recommend any pilots for Commander 
Strong 'i 

Mr. Allakd. Absolutely not. 

Mr. Hiss. Has your company ever recommended any pilots to be 
sent to China as instructors to the Chinese ? 

Mr. Allard. Not to my knowledge, Mr. Hiss. 

Mr. Hess. I offer " Exhibit No. 384 ", being a letter to Mr. Robert 
L. Earle from the Intercontinent Aviation, Inc., dated February 6, 
1934. 

(The letter referred to was marked " Exhibit No. 384 ", and is 
included in the apendix on p. 952.) 

Mr. Hiss. Mr. Robert Earle was a representative of the Curtiss- 
"Wright Corporation in Washington, D.C.? 

Mr. Allard. Yes. 

Mr. Hiss. The Intercontinent Aviation, Inc., was the Curtiss 
group selling agency in China? 

Mr. Allard. Yes. 

Mr. Hiss. Reading from this letter, " Exhibit No. 384 ", it says : 

Jack Allard has asked me to write and see if you could obtain from the 
Army a list of about 25 recent graduates of Kelley Field, together with their 
service records, from which we could pick a number of them for ferrying air- 
planes to a foreign country with the possibility that they might obtain employ- 
ment with that foreign government. 

We understand that a number of Kelley graduates have been discharged 
recently and these are the men to whom we refer. 

There exists an opening for a man in China to act as machine-gun instructor, 
who may also be selected from this list. 



MUNITIONS INDUSTRY 807 

Mr. Hiss. I offer " Exhibit No. 385 ", which is a letter from the 
Intercontinent Aviation, Inc., to Mr. Kobert L. Earle, Washington, 
D.C., dated February 13, 1934. 

(The letter referred to was marked " Exhibit No. 385 " and is 
included in the appendix on p. 963.) 

Mr. Hiss. I read from this letter, as follows : 

I talked with Mr. Allard regarding the specifications for pilots and he 
advised that he does not wish to disclose any information regarding what 
countries the pilots are to go to. He wishes you to obtain the names of 
pursuit, bombardment, attack, and observation pilots who are interested in 
going to a foreign country and a specification from them as to what country 
they would like to go. 

From time to time we have occasion to send men out and we would like to 
have in our files information concerning a number of such pilots. 

We also suggest that you approach the Navy on this subject and obtain a list 
of Navy-traine^d pilots who may be available for such work as we at times have 
occasion to send out airplanes on floats. 

I would suggest that you have Lt. HoUidge write us fully giving complete in- 
formation as to himself with references whom we may contact and that you 
supply us with as much information as you can concerning him in connection 
with the position of machine-gun instructor in China. 

"We are not sure that this position is still open, but it will pay about 800 Hong- 
kong dollars a month and should afford an opportunity for an Army-trained 
man to continue his work along military lines. 

Who was Lieutenant Hollidge? 

Mr. Allard. I haven't any information whatever. 

CURTISS-WRIGHT COMPANY'S ATTITUDE TOWARD EMBARGOES 

Mr. Hiss. Mr. Allard or Mr. Webster, has your company opposed 
embargoes on shipments of military equipment? 

Mr. Allard. Opposed them, in what way? 

Mr. Hiss. When they have been suggested or proposed or con- 
sidered in Congress or by other countries with which your company 
deals, has your company opposed them? 

Mr. Allard. Not to my knowledge ; no. 

Mr. Hiss. Does your company believe in the policy of embargoes 
on military equipment? 

Mr. Allard. I think that is rather a difficult question for me to 
answer at this time. We believe in the policy, dictates, and laws of 
this Government or any other government under whose jurisdiction 
we might be operating. 

Mr. Hiss. In your sales to various South American countries have 
there been occasions when you understood that one country with 
whom you dealt did not wish you to sell to another country, and in 
order to avoid that you have transshipped your material so that it 
was invoiced to one country and actually transshipped to another ? 

Mr. Allard. Not to my knowledge ; no. 

Mr. Hiss. " Exhibit No. 378 ", already a part of the record, from 
Mr. Shannon to Mr. Smith, with a copy to Allard, in the last part of 
the last paragraph, reads : 

As I told you before, Peru expects to mix things again with Colombia. In 
this connection, if there is trouble on the part of Colombia objecting to us 
selling Peru, we can make a deal whereby the material would be intended for 
the Bolivian Government and shipped along with their orders to Mollendo. 

MoUendo is in Peru? 
Mr. Webster. Yes, sir. 



808 MUNITIONS INDUSTRY 

Mr, Hiss. Reading further it says : 

Bolivia and Peru are working very closely together. Cliile has now lifted 
the ban on shipments to Arica for Bolivia and is asking for the business 
through her ports, but Lopez told me that he did not wish to hurt Peru's 
feelings and although it was more difficult to ship through Mollendo, he 
intended to play ball with Peru. 

Wasn't that a case of a plan to make transshipments in case one 
country disapproved of your selling to another country ? 

Mr. Allard. I think it is merely a statement. It is not any plan, 
and was never considered as such. 

Mr. Hiss. I offer " Exhibit No. 386 ", which is a letter from Mr. 
Webster to Mr. Van Wagner, dated April 27, 1933. 

(The letter referred to was marked " Exhibit No. 386 " and is 
included in the appendix on p. 963.) 

Mr. Hiss. I read from this letter, " Exhibit No. 386 ", as follows : 

The Grace Company, owing to considerable pressure from the Colombian Gov- 
ernment,^ has refused to accept shipments consigned to the Peruvian Government 
or to Faucett, which makes it necessary to ship to the Canal for reshipment on 
British or Italian vessels. 

Faucett was your agent in Peru ? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Eeading further, the letter says : 

The thought occurred to us that we might circumvent the difficulty by ship- 
ping to Arica and reshipping from there to Callao. 

Callao is a port in Peru? 
Mr. Webster. Yes- 
Mr. Hiss. Reading again from this paragraph, the letter says: 

Inasmuch as the Chilean Government has closed the port of Arica to Bolivia, 
it is possible that they will take similar action with Peru. I would suggest 
that you take this matter up with Dias Lira and see if permission can be 
obtained to go into Arica and then come back up north to Callao. 

Dias Lira was a lawyer in Chile ? 

Mr. Webster. Yes. That action on the part of the Grace Co. was 
purely their own action, inasmuch as they had large interests in Co- 
lombia, and the Colombian Government simply requested them not 
to carry shipments to those ports. 

Mr. Hiss. Your company, Mr. Allard, owns how many plants 
abroad which can produce planes or engines ? 

Mr. Allard. The Export Co. does not own any. The Curtiss- 
Wright Corporation has one in Chile and a part interest in one in 

China. Those are the only two plants. 

Mr. Hiss. Have you any interest in the Argentine or Brazilian 
factories ? 

Mr. Allard. None whatsoever. 

Mr. Hiss. In the event of an embargo such as the embargo now in 
effect, Avould you feel free to manufacture military planes in the 
Ohilean factory or in the Chinese factory, although the Government 
had forbidden the sale within the United States ? 

Mr. Allard. I do not know, Mr. Hiss. That is a policy that would 
«ome up at the time such a problem presented itself. It never has 
come up and we have never given it any consideration. 



1 Mr. Allard later informed the committee tliat the Curtiss-Wriglvt Export Corporation 
•does own the plant in Chile. 



MUNITIONS INDUSTRY 809 

Mr. Hiss. There is at present an embargo in Paraguay and 
Bolivia? 

Mr. Allard. Yes. 

Mr. Hiss. Would your company observe any embargo in Chile, 
where your factory is located? 

Mr. Allard. Yes ; we could not do anything else. 

Mr. Hiss. "Exhibit No. 364" is a letter dated March 30, 1933, 
from Mr. Webster to Mr. Van Wagner, and I read from that letter as 
follows : 

Another matter which I wish you would take up immediately and possibly 
through Diaz Lira is the question involving the possible manufacture in the 
Santiago plant of airplanes intended for other South American countries. 
This is in view of a possible embargo on the part of the League of Nations 
and the United States Government. In other words, would we be permitted 
to ship material into Chile for assembly and fabrication for such countries as 
Colombia, Ecuador, Peru, Bolivia, etc.? 

I offer as " Exhibit No. 387 " a letter dated April 20, 1933, from 
Javier Diaz Lira to Mr. Van Wagner. 

(The letter referred to was marked "Exhibit No. 387", and is 
included in the appendix on p. 964.) 

Mr. Hiss. From this letter, " Exhibit No. 387 ", I read the fol- 
lowing : 

After a number of conversations that I have had with several officials, I 
want to confirm to you what I mentioned in my letter of the 10th inst., to 
the effect that there is not any difficulty, as respects the Government of Chile, 
in the Curtiss Company extending its activities of building planes ftn- sale 
and exportation to other countries. There is no regulation, neither in the 
law nor in the contract, which resulted in the setting up of the factory in 
Chile that might prevent that activity of the company which you represent. 

On the Government's part, the initiative of the factory is considered not only 
with acceptance but even with evident pleasure, I have today discussed this 
matter fully with Mr. Diego Aracena, Chief of the Air Force, who told me 
that he accepted with enthusiasm the notice that the factory would intensify 
its work and production of airplanes for sale in Chile or in foreign markets. 

Mr. Webster. Would you mind reading the rest of that paragraph, 
Mr. Hiss? 

Mr. Hiss. Following the words "or in foreign markets?" 

Mr. Webster. Yes. 

Mr. Hiss. Certainly. It reads as follows : 

and, knowing the importance and benefit that this would mean to the country 
and to the advantages that would also accrue to the National Air Force, he 
would support all protection with reference thereto before the Government. 

Mr. Webster. It was the desire of the Chilean Government to 
create a national airplane or aviation industry in Chile the same as 
in many other countries. 

Mr. Hiss. Has your company in any way attempted to evade em- 
bargoes or restrictions on military planes by labeling the packing 
cases by other names than the actual names of the planes? 

Mr. Allard. I do not think any packing cases have the names of 
planes on them. 

Mr. Hiss. What discloses the nature of the shipment, the shipping 
documents ? 

Mr. Allard. Yes ; the shipping documents. 



810 MUNITIOITS INDUSTRY 

Mr. Hiss. I offer " Exhibit No. 388 ", which is a letter dated April 
15, 1933, from the Curtiss-Wright Corporation by S. J. Abelow to 
Faucett in Lima, Pern. 

(The letter referred to was marked " Exhibit No. 388 ". and is 
included in the appendix on p. 964.) 

Mr, Hiss. Who is S. J. Abelow by whom this letter is signed ? 

Mr. Allard. He is a clerk. 

Mr. Hiss. In the employ of the Export Co. ? 

Mr. Allard. Yes. 

Mr. Hiss. I read from this letter, " Exhibit No. 388 ", as follows : 

We ju8t received advice by teleplione from the Barr Shipping Corp., our 
forwarding agents, tliat the Grace Line notified them tliey would be unable to 
accept any shipments consigned to you that moved on their steamers via a 
Colombian port. Evidently the Grace Line is taking a strong hand due to the 
fact tliat they have been subject to considerable pressure on the part of 
Colombian Government authorities in carrying material of a military nature. 
Our information is that the Colombian Government knows you are buying 
material for the Government of Peru, and consequently is making every effort 
to prevent such material from reaching Peru. 

And then in the last paragraph the letter reads : 

We could declare the material by other terms on the bill of lading so as 
to throw the steamship company off the track; e.g., we could declare engine 
parts as " internal combustion parts " ; " spark plugs " ; other aeroplane parts 
could likewise be changed ; e.g., " steel tubing " in place of aeroplane parts ; 
" lacquer " instead of " dope ", etc, etc. 

Dope, what is that ; is that lacquer ? 
Mr. Allard. It is lacquer; yes. 
Mr. Hiss (reading) : 

We suggest you act on this immediately and give us the name of your 
forwarders by cable, referring specifically to this letter number for our 
guidance. 

Mr. Webster, I have never seen that letter before, and I do not 
think anything of that nature was ever done, Mr. Hiss, 

Mr. Hiss. I offer " Exhibit No. 389 ", which is a letter dated March 
12, 1934, from Walter J. Decker, Consul General of Bolivia, to Mr. 
Webster. 

(The letter referred to was marked " Exhibit No. 389.") 

Mr. Hiss. I read from this letter, " Exhibit No. 389 ", as follows : 

I beg to inform you that as per instructions which I have received from 
La Paz, it is my Government's desire to avoid showing completely, in the 
cases and the documents covering them, the real content of all shipments of 
war material. 

To this effect I take the liberty of requesting your kind cooperation iii 
issuing strict instinactions to all concerned to the following effect : 

(1st) That in all shipments made by your firm for the Government of Bolivia 
the cases must have only the words " handle with care ", outside of the ordinary 
shipping marks, without having any trade names or any other marks or words 
that may in any way reveal the real contents of the shipment involved. 

(2nd) That both the bill of lading and the consular invoice must each show 
the following as the content of each shipment : 

MATEEIAL FOR THE GO\"ERNMENT OF BOLIVIA 

While the commercial invoice and packing list must be made up in the usual 
manner, giving full particulars regarding the contents, prices, etc. This will, in 
no way at all interfere with the respective classification necessary for freight- 
rate purposes, which is to be filed separately to the steamship line. 



MUNITIONS INDUSTRY 811 

Hoping that you will follow these instructions closely and awaiting your 
I'eply to the effect that you are in complete accord with the contents of this 
communication, I beg to remain. 
Yours very truly, 

(Sgd.) Walter J. Decker, 

Consul General of Bolivia. 

Mr. Webster. There is nothing unusual or out of order in so 
marking packing cases. As a matter of fact, we usually only mark 
them by numbers and by letter. 

The Chairman. Is it not a violation of law to deceive in these 
foreign shipments? 

Mr. Webster. You are not deceiving. Your invoices show the 
exact material, and it is just the marking on the outside of the cases. 

The Chairman. What can our very efficient Commerce Depart- 
ment do in its effort to ascertain correctly and closely what our 
exports are, if that is not required? 

Mr. Allard. I do not know what the Department does. 

The Chairman. They cannot do that. 

Mr. Allard. Oh, yes; they can. There must be ways of their 
checking up, because they have been doing it for years. 

Mr. Webster. All of your papers must show exactly what the 
shipment is. 

The Chairman. The records of the Commerce Department reveal 
the contents of shipments abroad, and they must be all inclusive ? 

Mr. Webster. Yes. 

The Chairman. They do not know there are ways of getting 
around it. 

Mr. Allard. Speaking from our business alone, with which I am 
only acquainted, there is absolutely a check. 

The Chapman. They are without a check? 

Mr, Allard. No; they have an absolute check, they have a very 
definite check. 

Mr. Hiss. Mr. Allard, has your company ever used any of the 
methods described in these letters, such as transshipments, or mis- 
labeling of materials or any of the other things we have just been 
through in the last three or four letters, in an attempt to evade an 
embargo of the United States Government ? 

Mr. Allard. No, sir. 

Mr. Hiss. Did your company enter into a contract with the Gov- 
ernment of China in anticipation of an embargo on shipments of 
military planes to China ? 

Mr. Allard. No, sir. 

Mr. Hiss, I offer " Exhibit No, 390 ", which is a telegraphic mes- 
sage from the China Co., Shanghai, China, to the Export Co. 

(The telegraphic message referred to was marked " Exhibit No. 
390 ", and is included in the appendix on p. 965.) 

Mr, Hiss. The China Co. is your representative? 

Mr, Allard. Yes, 

Mr. Hiss. Reading from this message I find the following: 

About 1 to 2 months ago I suggested Minister of Finance enter (s) (into) 
contract (s) acquiring large number (s) (of) military airplane (s) as protec- 
tion against possible American embargo (upon) stop. 

Minister of Finance have signed contract (with) Intercontinent Aviation, 
Inc.. March 29th, 



812 MUNITIONS INDUSTRY 

You sold through the Intercontinent Co. in China ? 

Mr. Allard. That is right, 

Mr. Hiss. I read further from the message, as follows : 

For 96 military airplane (s) subject to cancellation 15 clays' notice either 
party (ies) (to). 

Is that not rather an unusual provision in any contract? 

Mr. Allard. No ; depending oi> the contract. 

Mr. Hiss. No description of planes. Is that unusual? 

Mr. Allard. No. 

Mr. Hiss. No prices; is that not unusual? 

Mr. Allard. No. 

Mr. Hiss. No delivery date mentioned; is that not unusual? 

Mr. Allard. No; not ■when you are negotiating the contract. 

Mr. Hiss. I read further from the message : 

Please notify Department of State of tliis conti'act stating that Chinese 
Government aviation expert (s) to decide about on tyiDe (s) at a later date. 
No publicity of any kind must not be given this matter as Minister of Finance 
exceedingly anxious (to) transaction not to be known anyone except Depart- 
ment of State official (s). 

It must be understood that this is not purchase (s) agreement (s) and is a 
contract (s) (for) for the purpose (s) (of) protecting government against 
embargo (upon) this contract give us moral advantage (s) over competitor (s). 

You do not consider that arrangement was an attempt to evade 
a possible embargo by the United States Government on shipments of 
military planes? 

Mr. Allard. It very definitely states there this is not a purchase 
agreement, but the contract was never accepted by us or considered 
in any way. That is a statement made by an agent telling about a 
contract they entered into. The record will definitely show we 
referred the matter right back to them, telling them we were not 
interested. 

Mr. Hiss. This letter says the contract was signed by the Inter- 
continent Aviation. 

Mr. Allard. Yes. 

Mr. Hiss. Their only connection with your companjr is the}- are 
a selling agency? 

Mr. Allard. That is right. 

Mr. Hiss. They are also controlled by the Sperry Corporation, are 
they not ? 

Mr. Allard. That is right. 

relations with officials and departments of united states 

government 

Mr. Hiss. Earlier in your testimony you referred to the severity 
of competition in perfecting sales of military planes abroad. In the 
course of that competition, have you found that foreign aviation 
companies have received the support of their respective governments 
in perfecting sales? 

Mr. Allard. Very definitely ; very completely. 

Mr. Hiss. I offer " Exhibit No. '391 ", which is a letter to Mr. 
Allard of date July 8, 1930, signed Avith the initials " R. P. F." 

(The letter referred to was marked " Exhibit No. 391 ". and is. 
included in the appendix on p. 966.) 



MUNITIONS INDUSTRY 813 

Mr. Hiss. The initials " R. P. F.", is that Mr. Farnsworth? 

Mr. Allaed. Yes. 

Mr. Hiss. He was at that time an employee of the Export Co. ? 

Mr. Allard. That is right. 

Mr. Hiss. I read from this " Exhibit No. 391 ", as follows : 

The following is a more or less complete outline of the conversation Mr. 
Farnsworth had with Fowler Barker this afternoon. Undoubtedly you are 
cognizant of all these facts, hut it will do no harm certainly to jot them 
down. 

Fowler Barker was with the Department of Commerce at that 
time ? 

Mr. Allard. Yes. 

Mr. Hiss. Reading further, the letter states : 

It seems that Mr. Young recently received rather lengthy reports from the 
commercial attache at Buenos Aires and Montevideo expressing their apprehen- 
sion over strong European aeronautical competition. There is to be a British 
aircraft carrier in a River Plate around December 21st, carrying about 20 
assorted airplanes of English manufacture. Italy has stationed De Pinedo as 
air attache in Buenos Aires and is evidently making a strong bid for business. 
The French position was greatly strengthened by the recent trans-Atlantic 
flight carrying mail to South America. 

There evidently was a consultation between Captain Fleming, our military 
attache for Argentina and Uruguay, and the two commercial attaches in these 
countries, and Leigh Wade, who as you know, is down there representing the 
Consolidated people. 

That is the Consolidated Aircraft Corporation ? 

Mr. Allard. From Buffalo; yes. 

Mr. Hiss. Then the letter reads further : 

This conference resulted in the determination to attempt to arrange some 
sort of a demonstration from the United States to counteract the European 
activities. The Department of Commerce will possibly interview the leaders 
of the aircraft industry here and see what their attitude would be toward send- 
ing a group of planes to South America, possibly some of those participating in 
the National Air Tour this year. It is thought possible that if the manufac- 
turers so desire, a delegation of them will interview Secretary Ingalls and gain 
his consent for the use of one of our carriers to transport the planes to South 
America, citing the action of the British as a precedent. Undoubtedly this 
demonstration if ever made tangible would visit the international aeronautical 
exhibition to be held at Montevideo during the first half of February 1931. 

That is Secretaiy Ingalls, who was Assistant Secretary of Air, he 
is referring to ? 

Mr. Allard. For the Navy; yes. 

Mr. Hiss. Assistant Secretary of the Navy for Air ? 

Mr. Allard. Yes. 

Mr. Hiss, When he refers to one of the carriers, he means one of 
the plane transports? 

Mr. Allard. Yes. 

Mr. Hiss. The letter then reads further: 

I am quite sure that this idea has not been broached to any of our com- 
petitors and nothing may ever come of it, but in the event that something does 
materialize we Avill at least have had a little bit of warning. 

Do you know whether Mr. Inefalls was ever aiDDroached on that 
matter ? 

Mr. Allard. I believe he was, but I do not remember definitely 
whether he was. 

Mr. Hiss. Do you remember whether he was sympathetic to it ? 

Mr. Allard. No. 



814 MUNITIONS INDUSTRY 

Mr. Hiss. I offer " Exhibit No. 392 ", which is a letter dated 
September 29, 1930, from Mr. Wright to Mr. Allard. 

(The letter was marked " Exhibit No. 392 ", and is included in the 
appendix on p. 96G.) 

Mr. Hiss. In this letter there is the following [reading] : 

I was in Mr. Ingalls' office this morning and his office urged that we push in 
every way possible the completion of the arranging for the carrier to go to 
South America. Comdr. Moulton believes that we must take the matter up 
with the White House by possibly a head of the Aeronautical Chamber of Com- 
merce. I know that you are handling the matter as representative of theirs, 
together with the help of the Department of Commerce. It looks as though I 
may be out of town Wednesday of this week at Dayton, but I am hoping that 
I may be able to delay the trip until Thursday in order to be here when you 
are here on Wednesday. 

I offer as " Exhibit No. 393 " a letter dated October 7, 1930, from 
Mr. Allard to Mr. B. S. Wright. 

(The letter referred to was marked " Exhibit No. 393 ", and is 
included in the appendix on p. 967.) 

Mr. Hiss. This letter, " Exhibit No. 393 ", is on the subject of naval 
carrier to South America, and says [reading] : 

Thanks for yours of October 3rd on this subject, and as a result, Leigh 
Rogers and I are today drafting the letter for Fred Rentschler to present to 
Mr. Hoover. 

Mr, Leighton Rogers was then Director of the Bureau of Foreign 
and Domestic Commerce in charge of the Aeronautics Division? 

Mr. Allard. Yes. 

Mr. Hiss. Mr. Fred Rentschler referred to was an ojfficial of United 
Aircraft ? 

Mr. Allard. Yes; I think the reference to him there is as presi- 
dent of the Aeronautical Chamber. 

Mr. Hiss. He was then president of the Aeronautical Chamber, 
of which Mr. T. A. Morgan is now president ? 

Mr. Allard. That is right. 

Mr. Hiss. Will you identify Mr. Merino? I think he has been 
identified before, however. 

Mr. Allard. Mr. Webster will have to do that. 

Mr. Webster. What date was that? 

Mr. Hiss. 1931. 

Mr. AVebster. I believe at that time Arturo Merino was chief of 
aircraft of Chile. 

Mr. Hiss. " Exhibit No. 394 " is a letter from Mr. Webster to Mr. 
Burdette S. Wright, dated March 11, 1931. 

(The letter referred to was marked "Exhibit No. 394", and is 
included in the appendix on p. 967.) 

Mr. Hiss. That letter reads in part as follows : 

In line with my telephone conversation this morning, Comandante Arturo 
Merino B., subsecretario of the interior for aviation, is the chief of all Chilean 
aviation — aimy, navy, and civilian. He is the biggest foreign customer we 
have, and is entirely responsible for all our business in Chile. 

During the recent visit of the Prince of Wales to Chile, the Prince per- 
sonally invited Merino to visit him this spring, which invitation was accepted. 
His original plan was to proceed to England first, and then visit the United 
States, but we have persuaded him to visit the United States first in order to 
witness the Air Corps manoeuvres during May. He has agreed to this pro- 
gram providing an ofiicial invitation is extended to him by the U.S. Government 
through the War Department as a foreign obsers'er. 



MUNITIONS INDUSTRY 815 

Tliis means a great deal to us, as Merino has never been out of his own 
country and lias always been partial to European rcfetliods and materials 
until we began to supply him with equipment a few years ago. It is up to us 
to lean over backward in selling Merino American ideas, methods, and equip- 
ment, and upon his arrival here we are arranging an elaborate and extensive 
program calling for visits to various airports in this country. If possible, 
we would like to have you arrange for permission to visit various Army and 
Navy stations and have him meet the Army and Navy Secretaries, and, 
if possible. President Hoover. This seems advisable and necessary in order 
to off-set the efforts of the Prince of Wales. 

* * * In order to further emphasize the importance of making these 
arrangements for Comandante Merino I should mention that we have at 
present orders amounting to $1,-00,000 for the Chilean Government with an- 
other million or million and a half ready to be closed within the next month 
or so. 

Has your company ever borrowed from the United States Army 
pilots to help in demonstrating your planes abroad ? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Have you found that they have been helpful in making 
sales ? 

Mr. Allard. Certainly — in making sales ? 

Mr. Hiss. In your making sales ? 

Mr. Allard. Yes; as demonstrators, surely. 

Mr. Hiss. Were they in active service at the time or had they 
retired from the Army ? 

Mr. Allard. In most cases that I am familiar with they were in 
active service on leave, approved by the Secretary of War and 
Chief of the Air Corps. 

Mr. Hiss. And you arranged for the leave, requested their leave? 

Mr. Allard. We assisted them in requesting the leave. 

Mr. Hiss. " Exhibit No. 395 " is a letter of August 12, 1930, from 
Burdette S. Wright to Mr. Allard. 

(The letter referred to was marked " Exhibit No. 395 ", and is 
included in the appendix on p. 968.) 

Mr. Hiss. That letter reads in part as follows : 

Colonel Foy of the Military Intelligence Division called Farnsworth to his 
office this morning and showed him some correspondence received from Major 
Emer Yeager, military attache at the American Embassy, Warsaw, Poland. 
Major Yeager, among other things, said that the performance of our pilots, 
planes, and motors made a profound impression in Bucharaest and Rumania. 
He happened to be standing by the side of the chief of Rumanian aviation in 
Bucharest while Doolittle was doing his stuff. The chief apparently ex- 
pected the wings to drop off the Hawk at any moment during a power dive 
and had never seen anything at all like Doolittle's performance. 

In Warsaw, Captain Cannon — 

That was an American officer? 

Ml. Allard. That is right; on this tour. 

Mr. Hiss (continuing reading) : 

seems to have carried off the honors with his superb handling of the Fledgling. 
He apparently put it through completely its paces, leaving a firmly seated 
conviction of the stability, steadiness, and remarkable performance of the 
plane. As one Pole expressed it, he made it do everything but dance. All in 
all, the officials, including French and British attaches, wei-e deeply impressed 
with the power of the motors and the strength of the ships. 

Another dis^iatch deals with the jealousy of the French and English aroused 
by this flight. Shortly after oiu- demonstration was finished. France made an 
official flight with high ranking officers to Warsaw and Baltic countries. 

This trip was made very secretly and with a minimum of publicity. Major 
Y^eager tells of a flight of British airplanes to twelve Balkan and Scandinavian 
83876— .34— PT 4 9 



816 MUNITIONS INDUSTRY 

countries to be made in September. Tliis is supposed to be merely an ofl5cial 
flight of the Royal Air Force, but Major Yeager learned from reliable source 
that it was definitely planned to offset any good impressions of American 
aviation made by our Curtiss-Wright tour. 

In addition to borrowing pilots from the Army for demonstration 
purposes, has your company found that other governmental depart- 
ments or institutions have been helpful in promoting the sale of 
aircraft abroad? 

Mr. Allard. Very definitely. 

Mr. Hiss. " Exhibit No. 396 " is a letter from Helsingfors, Fin- 
land, dated February 18, 1931, signed by Melvin Hall, vice president 
of the Export Corporation, to the American Charge cl'Affaires at the 
American Legation at Helsingfors. 

(The letter referred to was marked " Exhibit No. 396 ", and is 
included in the appendix on p. 968.) 

Mr. Hiss. That letter reads in the third paragraph as follows 
[reading] : 

I have warning, however, that the decision may be influenced by political 
considerations, and I have good reason to believe that the Gnome et Rhone 
Company (French) are bringing considerable pressure to bear in an effort to 
secure this business for their "Jupiter " or " Mercury " engine which they build 
under license from the Bristol Aeroplane Co. (British). This pressaire is of a 
nature which reflects little credit on the business ethics of the Gnome et Rhone 
Co. The Finnish Air Force possesses a certain quantity of Gnome et Rhone 
" Jupiters " and I believe that some fourteen of these engines are now in the 
Gnome et Rhone factory near Paris for overhaul. The company apparently 
agreed to carry out this ovei'haul free of cost, but once having received the 
motors they appear now to be using them as a lever, coupled with threats of 
making difficulties in future with respect to spare parts for the other 
"Jupiters " in Finnish hands, to force the Finns to divert their projected order 
for new motors to Gnome et Rhone. 

Then the letter continues [reading] : 

Our European competitors are undoubtedly using both economic and political 
arguments against American manufacturers, and liave succeeded in convincing 
certain of the Finnish officials in high authority that America is out of the 
question, or at least not dependable, for geographical and political reasons, as 
a suitable source of supply for military equipment. I believe their arguments 
fundamentally unsound and have attempted to combat them in my communica- 
tion to the Minister of Defence. 

It has been suggested to me, and quite strongly, that it would be very helpful 
if the American Legation should use its good offices in this instance to combat 
this propaganda of our European competitors and accredited representatives of 
their respective governments. Confidentially, I may mention that Col. Vuori, 
Chief of the Finnish Air Force, who has stated frankly that he favors the 
" Cyclone " advised me last night that it would do a vast amount of good if the 
Charge d'Affaires could talk personally with the Foreign Minister, the Finance 
Minister, the Defence Minister, and possibly the Minister of Commerce, on the 
politico-economic situation as it may affect the subject of this memorandum, 
stressing especially the fact that the United States would be a dependable and 
rapid source of supply for Finland under all conditions that might conceivably 
arise. It may be that certain of the grounds for such a contention that I have 
advanced in my communication to the Minister of Defence will meet with your 
concurrence. 

It is possible that trade arguments will also be advanced against us, which 
would seem answei'able in view of America's friendly relations with Finland, 
the recent decision of our Treasury Department respecting "dumping" and the 
vast amounts of money loaned to Finland by the United States and potentially 
available for future loans. 

" Exhibit No. 397 " is a memorandum to Mr. Thomas A. Morgan, 
dated June 19, 1934. That was after this committee had begun its 
investigations, was it not? 



MUNITIONS INDUSTRY 817 

Mr. Allard. What was the date ? 

Mr. Hiss. This bears the date of the 19th of June 1934, and we 
began the 1st of June. 

Mr. Allard. It must have been ; yes, sir. 

Mr. Hiss. Mr. Morgan is president of the Curtiss-Wright, parent 
corporation, and president of the Aeronautical Chamber of Com- 
merce ? 

Mr. Allard. Right. 

Mr. Hiss. Do you know whether this memorandum was ever pre- 
sented to anybody in the Government ? 

Mr. Allard. Not to my knowledge. 

Mr. Hiss. Do you know, Mr. Webster? 

Mr. Webster. No. I do not know what the memorandum is. 

Mr. Hiss. It is headed •' Importance of the export market to the 
aviation industry." 

(The memorandum referred to was marked "' Exhibit No. 397 " 
and is included in the appendix on p. 969.) 

Mr. Hiss. One of our investigators was informed that Mr. Morgan 
left a copy of the memorandum with the President and discussed 
the matter with him. 

Mr. Allard. If Mr. Morgan made that statement, it is probably 
correct. I have no personal knowledge of it. 

Mr. Hiss. With further reference to Major Doolittle, who was 
referred to as one of the flyers, the Army flyers, do you remember 
whether Major Doolittle was on the recent board that Newton D. 
Baker headed up, which recommended an increase in the procure- 
ment of Army airplanes ? 

Mr. Allard. Yes, sir ; he was. 

Mr. Hiss, And he is very definitely interested in increasing the 
number of planes that the United States Government possesses ? 

Mr. Allard. I do not know what the report states. 

Mr. Hiss. The report recommended an increase. 

Mr. Allard. If it does, he was an endorser of that. 

Mr. Hiss. On page 3 of this memorandum, paragraph numbered 8, 
the committee has been informed that that paragraph was discussed 
by Mr. Morgan with the President, and it, I assume, represents your 
company's views of the importance of export business for the aircraft 
industry ? 

Mr. Allard. I think it does. 

Ar. Hiss. Paragraph numbered 8, the second sentence, reads as 
follows [reading] : 

In 1933 over one-third of the entire production of aeronautical products was 
shipped to foreign countries. Aeronautical exports were larger in 1933 than, 
any other year in aviation history. The important part played by exports ia 
relation to our total production is due not only to the sales-promotion efforts 
and the high quality of our products but is also due to the cooperation the 
industry has received from the commercial attaches and other United States 
Government representatives located in foreign countries. Those figures are of 
even greater importance when it is realized that American aircraft available 
for export is in the obsolescent stage and that it must compete with foreign 
products which are released for export in manv cases after oassing the 
experimental stage. 

What do you think Mr. Morgan meant by that ? 
Mr. Allard. Mr. Lodwick ? 



818 MUNITIONS INDUSTRY 

Mr. Hiss. Yes; Mr. Lodwick. What do you think Mr. Lodwick 
meant by that in his memorandum to Mr. Morgan? 

Mr. Allard. Simply that the aircraft, engines, and accessories 
which are released by the Army and Navy for sale to foreign coun- 
tries are more or less in an obsolescent stage, so far as the United 
States Government products are concerned. 

Mr. Hiss. But you find that they are sufficiently recent models so 
far as foreign competition is concerned to enable your company to 
compete successfully abroad? 

Mr. Allard. Not all instances. It is getting more and more diffi- 
cult and foreign governments are releasing later models than our 
Government releases. 

Mr. Hiss (continuing reading) : 

Foreign countries have likewise assisted their commercial companies in de- 
veloping business by sending their naval aviation units to foreign countries to 
demonstrate their latest types of flying equipment. An example of this was 
the visit i>f the British Navy to Turkey in 1929, and the flight of 35 Savoia 
Marchetti torpedo and bombing planes from Italy to Athens, Constantinople, 
Varna, and Odessa, in June 1929. 

The relations of your company with the Department of Commerce 
have always been very friendly. Is that not correct, Mr, Allard ? 

Mr. Allard. I hope so. 

Mr. Hiss. " Exhibit No. 398 " is a letter of December 10, 1929, 
written by Mr. Burdette S. Wright, a vice president of the parent 
company and a director of the Export Co. to Mr. Leighton W. 
Rogers, Chief of the Aeronautics Trade Division 

Mr. Allard. He is not a director of the Export Co. 

Mr. Hiss. Is he an officer of the Export Co. ? 

Mr. Allard, No, sir. 

Mr. Hiss. To Mr. Leighton W. Rogers, Chief of the Aeronautics 
Trade Division, Bureau of Foreign and Domestic Commerce, Wash- 
ington, D.C, 

(The letter referred to was marked " Exhibit No. 398 " and is in- 
cluded in the appendix on p. 973.) 

Mr. Hiss. That letter states [reading] : 

Dear Mr. Rogers: The Cui-tiss Aeroplane Export Corporation has recently 
consummated contracts for the sale of military pursuit airplanes to the Dutch 
East Indies and to the Siamese Government. These ccmtracts have finally 
been obtained after several months of work through the combined efforts of 
our representatives and those of the Bureau of Foreign and Domestic Commerce. 

We wish you to know how much we appreciate the splendid cooperation of 
your Division and of the Bureau and of the assistance given by your men in 
the field and your office in Washington. It is very probable that the contracts 
might not have been obtained had it not been for the service which your organi- 
zation was able to extend, as, of course, there are certain angles of situations 
and information which can be obtained by an official representative of the 
United States Government, which wcmld be impossible for a private individual 
to gain. 

I certainly hope that the relations between this company and your Division 
may always remain as happy as they have been in the past and that you will 
continue to allow us the privilege of calling upon you for assistance in the 
furtherance of our foreign business, not only in the countries where you have 
already assisted us but, I hope, also in more extensive fields included in our 
future program of expansion. I can see where the assistance you might be 
able to give us in newer fields which we have not yet reached, could be of even 
greater service to us than in those where we have already carried on negotia- 
tions, as, of course, making the initial step in new territory is the most diffi- 
cult part, unless contacts have already been established r.head of us and we 
are able to use them for guidance. 



MUNITIONS INDUSTRY 819 

Would it be fair to say that the Department of Commerce has 
supplied you with additional foreign agents abroad in the sale of 
aircraft, Mr. Allard? 

Mr. AxLARD. Not at all. 

Mr. Hill. "Exhibit No. 399 " is a letter of December 30, 1929, 
bearing the initials " R. L. E." That is Mr. Earle? 

Mr. Allard. Yes, 

Mr. Hiss. Addressed to Mr. J. S. Allard. 

(The letter referred to was marked '' Exhibit No. 399 ■•.) 

Mr. Hiss. That letter reads as follows : 

Durin,^ my visit to New Yorli several weel^s ago we were discussing tlie best 
method of sending out export catalogs to the American foreign offices. I dis- 
cussed this with Leigh Rogers the otlier day and he says that the Bureau of 
Foreign and Domestic Commerce will be very glad to send these through in 
their official pouches to the Commerce Department offices abroad. Where there 
are no Commerce offices, but consular or other offices of the State Department 
are located, that he will have them transmitted to the State Department to be 
placed in their official pouches. 

Leigh feels that this will be much safer than sending them direct, as in some 
countries catalogs in going in are held for payment of duties which would 
either hold them up for some period of time or obviate any chance of them being 
delivered at all. All of these may be sent directly to his office if you wish 
but addressed to the various offices for which they are intended and he will 
see that they get into the proper channels. 

" Exhibit No. 400 " is a letter of January 31, 1930, from Burdette S. 
Wright, an officer of the parent corporation, to Mr. Leighton W. 
Rogers. 

(The letter referred to w'as marked *' Exhibit No. 400 *" and is 
included in the appendix on p. 973.) 

Mr. Hiss. The third paragraph of that letter reads as follows : 

i\Iy company has expressed its appreciation in no uncertain terms of the 
assistance which it has received from the Department of Commerce and in 
sales problems, especially exports, from the Aeronautics Trade Division. As 
an example, your aeronautics specialist in South America was instrumental 
last year in paving the way for, and in the consummation of, a sale for six 
of our airplanes in Brazil — a market from which we have not received any 
business for years. Such contributions to marketing constitute aid of original 
and outstanding value. 

Because of the strong competition offered by European aircraft manufac- 
turers in the Far East, the embargo against United States aircraft in Australia 
(which it has been impossible to have lifted through diplomatic channels and 
by correspondence) and the missionary work which .should be done at this 
time in the Far East in general — 

That is missionary work in the sale of munitions? 
Mr. Allard. For aircraft, I suppose. 
Mr. Hiss (continuing reading) : 

we are naturally very much interested in having an impartial observer for 
the aeronautics industry cover those territories in the same manner in which 
South America has been covered by your Bureau. The time is particularly 
opportune to have a qualified aeronautics man visit Australia, New Zealand, 
and, if possible, South Africa. The Chinese market needs attention, particu- 
larly because of the price competition offered by European makers. 

We have known for some time that the Department was asking Congress 
for funds to enable it to carry on and extend this foreign field work for the 
aeronautics industry, and this letter is being written to ask you about the 
status of that request for appropriations. Frankly, the company wants the 
assistance which these appropriations will bring into being. 

Your company is in favor of increasing the appropriations for 
maintaining commercial attaches abroad, Mr. Allard? 



820 MUNiTioisrs industry 

Mr. Allied. We were at that time. 

jNIr. Hiss. Has your policy changed since that time ? 

Mr. Allard. I do not think so; no. 

Mr. Hiss. " Exhibit No. 401 " is a letter from Mr. Leighton W. 
Rogers, on the letterhead of the Department of Commerce, dated 
May 12, 1933, to Mr. Webster, marked " Confidential." 

(The letter referred to was marked " Exhibit No. 401 " and is 
included in the appendix on p. 974.) 

Mr. Hiss. That letter, in part, reads as follows : 

Kindly refer to my letter of April 14, about the visit of the Brazilian Army 
air-service officers who arrived yesterday on the " Southern Cross." It would 
l)e impolitic, I believe, to mention the proposition mentioned below to the 
JBrazilian group now here. 

In connection with their visit, I note from correspondence from our Rio de 
Janeiro office that Captain Henrique Dyott Fontenelle was not included in the 
mission and, according to our office, was the principal advocate of Brazil's 
purchase and virtual standardization upon American aeronautics equipment. 

The Rio de Janeiro office suggested that some American manufacturers or 
group of them might desire to pay Fontenelle's way to this country, taking 
advantage of the present low steamship rates. (First-class round-trip passages 
from liio de Janeiro to Chicago and return now available for about $250.00, such 
round-trip passages being good for a period of six months in connection with 
the Century of Progress Exposition at Chicago.) 

It is understood that Captain Fontenelle can arrange to make the trip, insofar 
as leave from his duties is concerned. This man has been placed in charge of 
the organization of the observation group of the army. 

I quote from a report dated April 13 from Mr. Pierrot, and am pleased to 
attach the statement referred to therein — 

He was the commercial attache in Rio? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

I have just secured a copy of the recommendations made by Fontenelle 
during the first two weeks of the revolution, when the War Dept. was in a 
quandary as to what type of equipment to purchase, and when a tremendous 
amount of pressure was being brought upon War Dept. officials by French 
and British manufacturers to buy their equipment. This translation of Fonte- 
nelle's report is of particular interest in substantiating the statements I made 
in my letter to the effect that he, more than any other single flying officer, had 
been responsible for the purchases of the large number of American planes 
acquired by the army during the latter months of the revolution. 

I am passing this suggestion on to you without any recommendation on my 
part, as well as to other United States manufacturers likely to be interested 
and who have been active in the Brazilian market. 

The Chairman. Mr. Hiss, what was the date of the suggested 
request for a squadron of planes or an airplane carrier going south? 

Mr. Hiss. That was in September 1930. " Exhibit No. 402 " is a 
letter of February 18, 1931, from Mr. Osborn S. Watson, commercial 
attache, to Mr. Dickson, charge d'affaires. 

(The memorandum referred to was marked " Exhibit No. 402 " 
and is included in the appendix on p. 975.) 

Mr. Hiss. " Exhibit No. 403 " is a letter of March 24, 1931, from 
Mr. Leighton W. Rogers to Mr. Allard. The memorandum that has 
been marked " Exhibit No. 402 ", as will be noted, was enclosed in 
the letter, " Exhibit No. 403." 

(The letter referred to was marked " Exhibit No. 403 " and is 
included in the appendix on p. 976.) 

Mr. Hiss. The first paragraph of Mr. Watson's report to Mr. 
Dickson, the charge d'affaires, reads as follows : 



MUNITIOlSrS IISTDUSTRY 821 

Referring to previous conversations on the subject of the pending purchase 
■of aeronautical equipment by the Finnisli Air Corps, for which they have 
appropriations totalling approximately FMKs 60,000,000 (residue from 1930 
to 1931 new allowances), the immediate purchase of 10 airplane engines, 
possibly 18, at around $6,500 each, which has been debated for a number of 
months is, according to my latest information, to be decided on within a week 
or ten days. * * * 

This present engine order is of considerable importance to American aero- 
nautical manufacturers ; it represents the first order of any importance for 
engines for military use to be made available to American manufacturers 
in as advantageous a prospect, it is definitely the first order for airplane 
engines which American manufacturers have had as good a chance to get 
in Finland ; if this order goes to America, it opens up very good prospects for 
future business in Finland, and would very much strengthen the chance for 
doing business in surrounding countries in the Baltic States and Scandinavia. 
One of the American companies, the Curtiss-Wright Export Corporation, has 
devoted considerable time and money in following up this opportunity, which 
I uncovered in October 1929 ; in June of last year they sent a demonstrating 
mission of three airplanes to Finland at large expense and since then have 
had three highly paid men visit Finland for varying lengths of time. The 
United Aircraft Export Corporation have also sent one man to Finland in 
connection with this matter, having shown an active interest in it some months 
after Curtiss-Wright had earnestly taken it up. 

In view of the apparent political sentiment in the Government here against 
the purchase of American engines, even though the technical board in the 
general staff prefer the American engines, I believe that it would be of con- 
siderable assistance if certain Government officials who might have a say in 
the final decision could be informed of the facts in the matter, as to Amer- 
ican deliveries, etc. 

" Exhibit No. 404 " is an excerpt from a report to the Director of 
the Bureau of Foreign and Domestic Commerce, attention Mr. Leigh- 
ton W. Rogers, which was enclosed in a letter of April 7, 1933, from 
Leighton W. Rogers, Chief Aeronautics Trade Division, to Mr. Wil- 
liam Goulding, vice president Curtiss-Wright Export Corporation. 

(The report referred to was marked " Exhibit No. 404 ", and is 
included in the appendix on p. 976.) 

Mr. Hiss. The letter of April 7, 1933, from Mr. Rogers to Mr. 
Goulding will be " Exhibit No. 405." 

(The letter referred to was marked " Exhibit No. 405.") 

Mr. Hiss. " Exhibit No. 405 " reads as follows : 

You may find of interest and value the attached copy of a letter dated 
Febnaary 23 from Conunercial Attach^ "Watson, at Helsingfors. 
Needless to say the attached is strictly confidential. 

The report from Mr. Watson, " Exhibit No. 404 ", reads in part as 
follows : 

In connection with this Czechoslovak purchase, even though it was a propo- 
sition of a kind of barter, the very fact that the Finns bought from the Czechs 
instead of from the English makes me believe to a certain extent that all of 
this official pressure by the English is not as effective as it might be. I have 
heard the sentiment voiced recently that perhaps this oflacial pressure propo- 
sition has gone a little too far up here. I sincerely trust that this is the case. 
A few days ago at a dinner the secretary of the legation was talking to Mr. 
Ryti, the governor of the Bank of Finland, about Finnish Government pur- 
chases, and Mr. Ryti categorically stated that it was a Finnish Government 
policy to buy the best things they could at the cheapest price, regardless of 
political considerations. This sounds rather funny to me in the face of some 
recent Finnish Government purchases from England, but I am taking a spark 
of hope from this Czechoslovak order. I expect our two big companies at 
home, who really have spent a considerable amount of money up here in 
Finland, are more or less inclined at this time to let this particular small 
territory ride for the time being. They have not had anybody up here at all 



822 MUNITIONS INDUSTRY 

since I came back. Both of them have very good agents, but I do not think 
that pressure from headquarters from time to time is a very salutary thing. 

I suppose he means '' I do think."' 
Mr. Allard. I think so ; yes, sir. 
Mr. Hiss (continuing reading) : 

I certainly hope that it may be possible within the not too distant future for 
some sort of cooperation to be brought about between the American aircraft 
firms who do a good deal of export, as referred to in Mr. Warner's article about 
which I wrote you a few days ago, so that we may then be able to take off 
our coats and dive right into the middle of these Government orders. 

Do you still think that the commercial attaches did not act as 
agents for your own company, when they took off their coats and 
dove into orders? 

Mr. Allard. No, sir; I think they were doing their duties at that 
time. 

The Chairman. The Exhibit would indicate that they not only 
dove in but dove into the middle of it. 

Mr. Allard. Right. 

Mr. Hiss. It was good diving. " Exhibit No. 406 " is a letter from 
Leighton W. Rogers, Chief Aeronautics Trade Division, Department 
of Commerce, to Mr. C. W. Webster, marked " Confidential ", dated 
March 12, 1932. 

(The letter referred to was marked " Exhibit No. 406 " and is in- 
cluded in the appendix on p. 977.) 

Mr. Hiss (reading) : 

As you may have already heard, there is an aviation mission on the west 
coast from Canton which arrived in Seattle on March 8. It consists of Briga- 
dier General Woo G. Garr, commander of the iSecond Squadron of the Canton 
Aviation Bureau, and Colonel S. K. Yee, director of the Cantonese Intelligence 
Bureau. These officers are representing General Chang Wei Jung, commander 
of the Canton Aviation Bureau, whom you will recall as former chief of tlie 
Nationalist Air Force at Nanking. According to Trade Connnissioner Edward 
P. Howard * * * 

He was stationed in Shanghai, was he not? 
Mr. Allard. He was. 

Mr. Hiss. And he is now representing the Douglas Aircraft 
Company ? 
Mr. Allard. That is correct. 
Mr. Hiss (continuing reading) : 

* * * they came to inspect aircraft factories and advise the San Fran- 
cisco Chinese regarding airplane purchases for presentation to China. 

I could not advise you of their presence in the United States before, since I 
was requested not to from China. For obvious reasons I urge your keeping the 
information contained in this letter in strict confidence. Under no circum- 
stances should any publicity be given out about the mission. 

I understand that the two officers arrived from Seattle at San Francisco 
yesterday, where they will stay for approximately 2 weeks. They will then 
proceed to Los Angeles, Chicago, Detroit, Washington, New York, and Boston. 
I shall endeavor to arrange it so that they will visit Buffalo. 

That is where your plane-manufacturing company is located? 

Mr. Allard. Yes, sir. 

Mr. Hiss. Turning to the last paragraph. 

You can get in touch with the mission through our Mr. Wesley Ash, district 
manager, United States Bureau of Foreign and Domestic Commerce, at 310 
Customhouse, San Francisco. In doing so please make no mention of the fact 
that I suggested this action. 



MUNITIONS INDUSTRY 823 

Mr. Rogers is now executive vice president of the Aeronautical 
Chamber of Commerce, is he not? 

Mr. Allard. He is. 

Mr. Hiss. I will offer as " Exhibit No. 407 " a letter dated Decem- 
ber 3, 1931, from Mr. Goulding to Mr. Hewlett regarding Finland. 

(The letter referred to was marked " Exhibit No. 407 ".) 

Mr. Hiss. The letter reads: 

Mr. Osborn Watson, American commercial attache, Helsingfors, Finland, is 
now in this country on a brief leave. He plans to be in Buffalo on December 
9th for the purpose of visiting j'our plant. I have asked him to telephone you 
upon his arrival and that you will see that he is taken care of. 

Mr. Watson is a very fine chap personally, and has been of great service to 
us endeavoring to sell aeronautical equipment in Finland. We finally succeeded 
in placing a number of Cyclone engines in operation there. We have hopes of 
developing this further to include aircraft. Mr. Watson is especially interested 
in aeronautics. 

Anything you can do for Mr. Watson will be greatly appreciated. 

I will now offer as " Exhibit No. 408 " a letter dated February 21, 
1933, from Mr. Goulding to Mr. MacGowan, acting commercial 
attache, Bogota, Colombia. 

(The letter referred to was marked " Exhibit No. 408 " and is 
included in the appendix on p. 978.) 

Mr. Hiss. Mr. MacGowan is now in the export business in New 
York, connected with a former official of the Colombian Govern- 
ment, is he not ? 

Mr. Allard. Is he ? I do not know. 

Mr. Hiss. The letter reads : 

Deab Mb. MacGowan : I want to acknowledge receipt of your letter of 
February 1st and extend our appreciation of the great assistance we can always 
get from your office. 

The Department in Washington advised us that they had a cable from you 
asking us to submit information on the planes that we are able to offer. As 
we have already passed this information, by cable, to Joaquin Samper * * *, 

He was your representative in Bogota ? 
Mr. Allard. And is still ; yes. 
Mr. Hiss (reading) : 

* * * and knowing his close contact with you, I have simply cabled you in 
reply that he has all the necessary information. 

I will now offer as " Exhibit No. 409 " a letter dated May 23, 1932, 
from Melvin Hall in Paris to Julian E. Gillespie, American com- 
mercial attache, Istanbul, Turkey. 

(The letter referred to was marked " Exhibit No. 409 " and is 
included in the appendix on p. 978.) 

Mr. Hiss. The letter reads : 

Dear Jtjliein : The attached copy of a letter to the Secretary of Commerce, 
which I am enclosing for your information, is self-explanatory, 

I am indeed appreciative of the cooperation which we have received from the 
Department of Commerce and particularly from yourself. Your assistance 
and wise counsel have been invaluable ; and when I say that we are counting 
greatly upon your good advice and collaboration in our future dealings with 
the Turkish Government, you know what I mean. 

I will now offer as " Exhibit No. 410 " a letter dated May 11, 1933, 
to Mr. Gillespie from Mr. Allard. 

(The letter referred to was marked " Exhibit No. 410 " and is in- 
cluded in the appendix on p. 979.) 



824 MUNITIONS INDUSTRY 

Mr. Hiss. I am referring to the second paragraph on the first page, 
the last sentence thereof [reading] : 

Your courtesy in letting nie use your office as you did * * *. 

You were in Istanbul for a while ? 
Mr. Allard. I was there 3 months ; yes. 
Mr. Hiss [reading] : 

* * * will always be remembered and your good nature and sound judgment 
and assistance to me in our discussions of my many problems were priceless. 
Yesterday I x'eceived your cable about the Kayseri situation * * *. 

That was the Turkish manufacturing plant? 
Mr. Allard. That is right. 

Mr. Hiss. To which you gave a license for the manufacturf; of 
planes ? 

Mr. Allard. Yes. 
Mr. Hiss (reading) : 

* * * and I am grateful for your thoughtfulness in sending it to me. 
When you send such cables or incur any expense on Curtiss business, will you 
please collect the costs from Bob Farnsworth. There is no reason in the world 
why your office should stand these expenses, and I want your definite promise 
that you will collect them from Bob. 

I have the complete approval of the board of directors to replace Capt. Coon 
at the factory and to send out the necessary personnel to step up production to 
completely satisfy the Turkish Government. Today I am interviewing Bob 
Simon, who has liad a vast amount of experience in factory management with 
Fairchild, Berliner-Joyce, and ourselves. He has been highly recommended by 
Ted Wright, of our Buffalo plant, and if my interview with him satisfies me, he 
will probably be the man we will send out, and you may rest assured that we 
are working just as fast as it is humanly possible, and will get him out there 
on the earliest boat. Substantially, my plan is to do as I told you when we 
discussed this problem in your office. 

You discussed your sales operations in Turkey thoroughly with 
Mr. Gillespie? 

Mr. Allard. Yes. This particular thing refers to the operation of 
the American personnel who were on the pay roll of the Turkish 
Government. 

Mr. Hiss. I am referring to the last 2 or 3 sentences now of 
the last paragraph, which read : 

The best dope I can get on the situation in the future for Department of 
Commerce is that even though the Department's activities in foreign fields are 
curtailed, the good men, such as yourself, will be retained on the job under 
either the State Department or the Consular Service, or in some manner, and 
I am sure that nobody will replace you in the matter of value to the Govern- 
ment. Don't worry. We all hope for the best, and you may rest assured that 
you have some great boosters working for you here. 

The Chairman. Who was Mr. Farnsworth? 

Mr. Hiss. Mr. Farnsworth was a representative of the Curtiss Co. 
This letter was written to Mr. Gillespie, the American commercial 
attache. 

The Chairman. Farnsworth was their representative where? 

Mr. Hiss. At one time in Washington and later in Turkey ; is that 
correct ? 

Mr. Allard. That is correct; yes, sir. 

Senator Pope. Did he comply with your request here and collect 
the costs from Farnsworth,? 

Mr. Allard. Yes ; he did. 



MUNITIONS INDUSTRY 825 

Senator Pope. About what would that amount, or what did that 
amount to? 

Mr. Allard. It might have been 10 Turkish pounds for a cable- 
gram, which woukl be, roughly, $4 or $5, American. They are all 
small amounts. 

Senator Pope. Did he observe that strictly with reference to all 
expenses that he incurred in assisting you in your business? 

Mr. Allaed. I could not say, Senator, as to that. I do not know 
how many expenses he incurred. But he did submit from time ta 
time some items or I paid him personally when I was there, if a 
cablegram was sent; or if I used his stenographer, I would pa}' her^ 
They were small amounts. 

Mr. Hiss. But none the less, as indicated in a previous exhibit,, 
your company was interested in further appropriations for the work 
of the commercial attaches. 

Mr. Allard. Certainly. 

The Chairman. Mr. Webster. I w^ant to go back to " Exhibit No. 
392 ", which was your letter to Mr. Allard, you writing from Wash- 
ington to him in New York, saying: 

I was in Mr. Ingalls' oflBce this morning and his oflBce urged that we push 
in every way possible the completion of the arranging for the carrier to go to 
South America. 

Mr. Webster. That is not my letter, Mr. Chairman. 

Mr. Hiss. Is it Burdette S. Wright ? 

The Chairman. That is what it is; yes. Then. Mr. Allard. I will 
ask you, perhaps you can answer this question. Was this arrange- 
ment made to send a carrier to South America ? 

Mr. Allard. No, sir. 

The Chairman. It was not sent? 

Mr. Allard. Never sent; no, sir. 

The Chairman. You are, of course, aware of the fact that a car- 
rier is in South America now ? 

Mr. Allard. I have heard there is one that went down there on a 
shakedown cruise. 

The Chairman. And is now in Rio ? 

Mr, Allard. Yes. 

The Chairman. Have you had any hand in bringing about the 
designation of that carrier for that trip ? 

Mr. Allard. Absolutely not. I just learned it in the last week. 

The Chairman. I should like for a moment to refer to " Exhibit 
No. 394 " which was Mr. Webster's letter to Mr. Wright concerning 
the contemplated business of Commander Merino of Chile. In this 
case, Mr, Webster, you were appealing for an effort to be extended 
to accomplish a worthwhile reception for Commander Merino when 
he came, were you not? 

Mr. Webster. Yes, sir. 

The Chairman. You were suggesting that an arrangement be made 
for permission to be extended to him to visit A'arious army and navy 
stations ? 

Mr. Webster. Yes, sir. 

The Chairman. And you wanted arrangements made for him to 
meet the Army and Navy Secretaries and, if possible. President 
Hoover, himself ? 

Mr. Webster, Yes, sir. 



826 MUNITIONS INDUSTRY 

The Chairman. Was this arrangement made? Did he come? 

Mr. Webster. He did visit Washington. I do not think — I am 
quite sure that he did not get to see President Hoover, but he met a 
great many officials in the Army and Navy Air Services. 

The Chairman. Did he visit the Army and Navy stations? 

Mr. Webster. He visited a number of them. I do not know that 
he visited all of them. 

The Chairman. This you thought at the time was advisable and 
necessary in order to offset the efforts of the Prince of Wales? 

Mr. Webster. Partially so, yes, sir; and also to repay the many 
courtesies that Commandante Merino and the Chilean Government 
officials had extended to American Army and Navy officials in Chile. 

The Chairman. Does not this all tend very strongly to make it 
appear that in the business of selling to South American countries 
arms and war supplies, it has become a battle between the heads of 
governments primarily ? 

Mr. Webster. By heads of governments, do you mean a battle 
among the heads of one particular government? 

The Chairman. No: a battle between the heads of different gov- 
ernments. 

Mr. Webster. I would not say so, sir; I do not believe so. 

The Chairman. Here was the Prince of Wales on a goodwill tour 
in South America. He had gone to Chile and had made a very 
strong impression. Inviting Commandante Merino to come to Brit- 
ain and be his guest there naturally would have a tendency to dis- 
tract Merino from the North American market? 

Mr. Webster. It might be so construed, Senator. But the Prince 
of Wales was very nicely entertained and courteously entertained in 
Chile and this was simply the return of an invitation to come and 
visit England. 

The Chairman. But there was a danger that all of this was going 
to have an effect upon trade. 

Mr. Webster. Possibly so; yes, sir. 

The Chairman. And the English makers of planes might get into 
a market that you had come to get a pretty large percentage of? 

Mr. Webster. Possibly so. 

The Chairman. So that there was every advantage to be looked 
forward to in having American officials here when Merino came here 
and be as nice to him as the Prince of Wales might have been when 
he vrent to Britain, as he planned to do. 

Mr. Webster. Possibly so; yes, sir. 

The Chairman. So to that extent we do find agencies of the gov- 
ernment fighting for these orders for munitions, do we not? 

Mr. Webster. We find agencies of the government — yes — trying 
to sell the products of their respective countries. 

The Chairman. That is right. 

Mr. Hiss. Mr. AUard, as a practical matter, do you not frequently 
find that men who have served as commercial attaches or trade com- 
missioners abroad have established such valuable contacts with for- 
eign governments and with foreign purchasers in general that you 
frequently are glad to have them become employees of your com- 
pany ? 

Mr. Allard. I would not say it was a common practice, by a long 
shot. 



MUNITIONS INDUSTRY 827 

Mr. Hiss. How about the other aircraft companies in general? 

Mr. Allard. I do not know. I know of one. 

Mr. Hiss. Mr. Howard who was formerly in Shanghai is now 
representing the Douglas Aircraft Co. out there. 

Mr. Allard. That is correct. That is the only one I know of. 

Mr. Hiss. Mr. Carleton Jackson, formerl}^ at Rio. is now a repre- 
sentative of the Sperry Corporation? 

Mr. Allard. I do not think he is a representative. He is doing 
some work for a lot of different manufacturers in this country. 

Mr. Hiss. According to the files you say he is a representative. 

Mr. Allard. Is that so ? 

Mr. Webster. He is really not a representative. 

Mr. Hiss. Mr. Pierrot, A. Ogden Pierrot, who was formerly com- 
mercial attache in Rio is now on your payroll. Mr. Webster, is he not? 

Mr. Webster. Yes, sir. 

Mr. Hiss. " Exhibit No. 350 " already in evidence is a letter of 
April 20, 1933, from Pierrot to Leon. 

Mr. Webster. That is correct. 

Mr. Hiss. This reads : 

Thanks for your cable. Sorry things turned out as they did, but possibly 
I can be of use to you even though I am not on the payroll. 

Mr. Pierrot was of aid to you even though he was not on the 
Curtiss-Wright pay roll at that time ? 

Mr. Webster. Yes, sir ; he was trade commissioner. 
Mr. Hiss (reading) : 

The thing I'm most interested in now is the matter of representation. Your 
cable gives me the impression that you are not interested in improving the 
quality and efficiency of your representation here. If that is the case, I'm 
afraid you are making a great mistake, for there is a fine order in the air 
and I should like to see you get it — and if I were with you I'd hope to share 
to a small degree in the profit. 

Mr. Hiss. I offer as " Exhibit No. 411 " a letter of April 20. 1933, 
addressed to Mr. Webster from Pierrot. 

(The letter referred to was marked " Exhibit Xo. 411 " and is in- 
cluded in the appendix on p. 980.) 

Mr. Hiss. Mr. Pierrot was not at that time an employee of yours? 

Mr. Webster. No, sir. 

Mr. Hiss (reading) : 

Had Leon's cable this morning, and want to tell you that I appreciate Leon 
having thought of me, and that I realize that conditions are not such now 
as to justify you in adding to the expense of your organization. 

I have intended writing to you for some time, that is, for the past two 
weeks, in connection with your representation here. You've got to get 
a good outfit with the best possible government connections. Don't lay off 
this market now in the hope that there will be another mixup which will 
put the ins out. Even if that occurs, it is no reason why you should sit by 
and see chances for business go by the boards. There is considerable talk 
right now, and some degree of certainty, that there is gtnug to be some more 
buying by the Government. 

In connection with the use of Army flyers' help in a demonstra- 
tion of your planes, in addition to Captain Cannon, who was men- 
tioned as part of the European tour, Lt. James E. Parker was also 
on that tour, was he not? 

]SIr. Allard. That is right. 



828 MUNITIONS INDUSTRY 

Mr. Hiss. And Lieutenant Doolittle, who is now, I believe, Major 
Doolittle, has been on other tours for your company? 

Mr. Allard. Yes, sir. 

Mr. Hiss. He toured in South America, did he not? 

Mr. Allard. That is correct. 

Mr. Hiss. And also in China? 

Mr. Allard. Yes, sir. But not as an officer of the Air Corps. He 
is with the Shell Co. 

Mr. Hiss. He has now resigned? 

Mr. Allard. Yes, sir. 

Mr. Hiss. But at the time he made the trip to Europe he was a 
member of the United States Army, was he not? 

Mr. Allard. I think he was. 

Mr. Webster. He was not in the Army when he went to Europe. 

Mr. Allard. He was with the Shell Co. 

Mr. Hiss. How about when he made the trip to South America? 

Mr. Webster. He was in the Army at that time, when he went to 
South America. He was not in the Army when he went to Europe. 

Mr. Hiss. Lieutenant Doolittle or Major Doolittle has been help- 
ful in the sale of aviation equipment since he left the Army, as well 
as Avhile he made these good-will tours; is not that correct? 

Mr. Allard. That is correct. 

The Chairman. This is the same Major Doolittle who has served 
on the so-called " Baker Board " ? 

Mr. Allard, That is correct. 

Mr. Hiss. I offer as " Exhibit No. 412 " a memorandum dated July 
1, 1929, from B. S. W.— that is Burdette S. Wright— to Mr. Kussell. 

(The memorandum referred to was marked "Exhibit No. 412",) 

Mr. Hiss. Who is Mr. Russell? 

Mr. Allard, Mr. Russell at that time was vice president of the 
Curtiss Airplane & Motor Co. ; that is, in 1929. 

Mr. Hiss. That is the engine factory? 

Mr. Allard. No. That is the airplane factory in Garden City at 
that time. 

Mr. Hiss (reading " Exhibit No. 412 ") : 

I saw Steve Early, Washinnton representative of the Paramount News Reel 
people, and he is working on the procuring of a Curtiss Hawk from the Army 
for Doolittle to make some acrobatic pictures over New York City. 

Early has obtained authority for the Army to send a plane from Boiling 
Field to New York to be turned over to Doolittle there. In view of the fact 
that we may be able to get the caption " Curtiss Hawk " it would be well to 
have some one get in touch with Jimmie in this matter. 

The Chairman. What is the date of that? 

Mr. Hiss. July 1, 1929. Of course, any news-reel picture of a 
Curtiss Hawk with Major Doolittle stunting it would be very good 
for publicity. 

Mr. Allard. It certainly would. 

WAR and navy departments AID IN FOREIGN SALES OF AIRCRAFT 

Mr. Hiss. Is it not the official policy of the War and Naval De- 
partments to encourage the American aircraft industry in the devel- 
opment of foreign business? 

Mr. Allard. I believe it is so stated. 



MUNITIONS INDUSTRY 829 

Mr. Hiss. I offer as " Exhibit No. 413 " an official memorandum of 
the Navy Department, Bureau of Aeronautics, dated August 5, 1933. 

(The memorandum referred to was marked " Exhibit No. 413 " and 
is inchided in the appendix on p. 981.) 

Mr. Hiss. In paragraph numbered 3, under the heading " Policy ", 
there is this language : 

The War and Navy Departments will encourage the American aeronautical 
industry in developing foreign business and assist in such development so far 
as consistent vpith national policy and the needs of the national defense. 

Have you found that the American Navy or Army officials, when 
traveling in Europe, have spoken favorabl}' of American military 
equipment ? 

Mr. Allard. I have no way of knowing what they have done, 
unless we have been so advised in correspondence. 

Mr. Hiss. I will offer as " Exhibit No. 414 " a letter of October 12, 
1932, to Mr. F. C. Nichols from Mr. Goulding, vice president of the 
Export Corporation. 

(The letter referred to was marked " Exhibit No. 414 " and is in- 
cluded in the appendix on p. 983.) 

Mr. Hiss. Mr. Nichols is with the Colt's Patent Fire Arms Manu- 
facturing Co. The last paragraph of this letter reads : 

In another letter which I have just received from Mr. Farnsworth, * * * 

Mr. Farnsworth was a representative of your company ? 
Mr. Allard. Yes, sir. 
Mr. Hiss (reading) : 

* * * he refers particularly to the recent visit of General MacArthur to 
Turkey, and the fact that General MacArthur was received with great pomp 
and enthusiasm by the Turkish dignitaries. Naturally, the general was made 
familiar with the business which we are carrying on with the Turkish authori- 
ties, and, apparently, he talked up American military equipment to the skies 
in discussions which he had with the Turkish general staff. Bob Farnsworth 
says that for safety sake, he is not putting down in black and white what was 
said, but I rather gather that your equipment and ours did not suffer from 
lack of praise.^ 

The equipment to which he refers is Colt's equipment, which 
would be machine guns and rapid-fire guns in general ? 
Mr. Allard. Yes, sir. 
Mr, Hiss. Revolvers and automatic rifles ? 

Mr. Allard. I do not know the list of products that they make. 
Mr. Hiss. He finishes the letter with — 

This, of course, is for your confidential information. 

Mr. Webster, can you explain the background of your sales efforts 
in Guatemala, Central America? 

Mr. Webster. I did not personally handle Guatemala. 

Mr. Hiss. I offer as " Exhibit No. 415 " a letter of May 28, 1934, 
from Owen Shannon to Mr. Hewlett. 

(The letter referred to was marked " Exhibit No. 415 " and is in- 
cluded in the appendix on p. 983.) 



1 On Sept. 13, 1934, Gen. Douglas MacArthur wrote a letter to the committee, denying 
the above allegations of Mr. Goulding. This letter was read into the record of the 
morning of Sept. 13, 1934, and appears in part V. 



830 MUNITIONS INDUSTRY 

Mr. Hiss. This states in the second paragraph : 

We have no agent in Guatemala but make all of our contacts through 
General John A. Considine, who is a major in the United States Army, loaned 
to the Guatemala Government. 

Major Considine suggests that it would be more satisfactory for us to deal 
directly with the Government through him rather than attempt to deal through 
any local agent, as his recommendations are followed by the President in the 
purchase of all types of military equipment. 

Mr. Webster. Mr. Hiss, I do not believe Major Considine is now 
in the United States Army, although I am not sure. I think he is a 
retired Army officer employed by the Guatemalan Government. I 
am not certain about that. That is my impression, 

Mr. Hiss. So far as you know, he is very favorable to American 
equipment ? 

Mr. Webster. Yes. 

The Chairman. Mr. Hiss, this letter of October 12, by Goulding 
to Mr. Nichols, concerning General MacArthur's visit to Turkey 
makes reference to this : 

In another letter which I have just received from Mr. Farnsworth * * *, 

Is that other letter in evidence ? 

Mr. Hiss. We have found no copy of that letter; no, sir. 

The Chairman. Mr. Webster, how generally is it true that Army 
and Navy officers are playing the part that General MacArthur 
seems to have plaj^ed there in Turkey, the part pretty nearlj^ of a 
salesman, which is what is very closely what it looks like? 

Mr. Webster. I have had very little experience in that particular 
line. Senator. That is not my particular territory and I am not 
familiar with it. 

The Chairman. It makes one begin to wonder whether the Army 
and Navy are just organizations of salesmen for private industry, 
paid by the American Government. 

Mr, Hiss. I am referring now to a document which I will offer 
in evidence as " Exhibit No. 416 ", which is a letter of February 3, 
1932, to Mr. Lawrence Leon from Mr. Webster. 

(The letter referred to was marked " Exhibit No, 416 " and is in- 
cluded in the appendix on p. 984.) 

Mr. Hiss. This letter reads : 

For your information, I enclose hei'ewith a letter which I wrote Burdette 
Wright, who is in charge of our Washington office, in regard to the assignment 
of a U.S. naval officer to accompany the two Argentine naval officers who, we 
understand, will shortly arrive here for the purpose of selecting and purchasing 
aircraft equipment. 

We are proceeding very cautiously in Washington and believe that when the 
request is made to our naval intelligence, if it is not already made, we can 
more or less guide their choice and see that an officer is selected who would 
most properly fit the job. 

I noAv offer as " Exhibit No. 417 " a letter, referring to the same 
subject, being dated January 29, 1932, from Mr, Webster to Mr. 
Burdette S. Wright. 

(The letter referred to ^vas marked " Exhibit No. 417".) 

Mr, Hiss. This letter reads : 

I learned today through a confidential source from a friend who is attached 
to the Diplomatic Service in Buenos Aires that Captain Zar, head of tlie 
Argentine naval aviation, has requested our Navy Department, through naval 
intelligence, for permission to send two Argentine naval offif-ei's fi-oni the Air 



MUNITIONS INDUSTRY 831 

Corps to the United States and have assigned to tliem on their arrival an 
officer of the American Naval Air Service for the purpose of advice and assist- 
ance in selecting new airplane equipment for the Argentine Navy. This in- 
formation is supposed to be very confidential. Our Argentine office also knows 
of this request and in a very short time will have the names of the two officers 
who will visit the United States. 

Inasmuch as our information came to us confidentially from naval intelli- 
gence, it may be rather embarrassing to approach them unless we say we 
received the information from Buenos Aires. The reason for the secrecy on 
the part of the Argentine Navy is the fact that they wish to sidestep, if pos- 
sible, receiving quotations from British manufacturers. Their desire is to 
purchase American equipment, but inasmuch as British prices would be at 
least one-third below ours due to the difference in exchange, if these quotations 
are received from England, it would be difficult for the Argentine naval officers 
to approve American prices. 

It occurred to me that you could in some way start preliminary work leading 
toward the proper selection of the American naval officer to be assigned to the 
job. I am passing along this information to you for your suggestions. 

Regardless of what make of airplanes is selected, our engines will undoubt- 
edly be used owing to our recent engine license contract with the Argentine 
Government, but we naturally should like to secure the airplane business as well. 
Captain Zar is a very intimate friend of ours and would prefer Curtiss-Wright 
airplanes to any others, but he must proceed cautiously so as not to encounter 
criticism after the selection is made. Please let me have your suggestions at 
your early convenience. 

I offer as " Exhibit No. 418 " a letter of June 12, 1933, from Mr. 
Shannon to Mr. Earle. 

(The letter referred to was marked " Exhibit No. 418 " and is in- 
cluded in the appendix on p. 985.) 

Mr. Hiss. It reads : 

We are informed that a Major A. R. Harris has been acting as U.S. military 
attache to the legations in all five Central American Republics and Panama. 

If this is so, it would probably be very much worth while for you to see him 
and load him up with Curtiss-Wright dope, catalogs, and so forth. If he is to 
be in New York before his return south, we would like to have an opportunity 
to see him. 

Of these six countries, we believe we have fairly good agents in Panama and 
Salvador, both of whicli have bought Curtiss-Wright equipment. By the way, 
we just received an order from Salvador last week for three Ospreys, which, 
we understand, is the first military equipment purchased by them. 

We understand Guatemala, Honduras, and Nicaragua are contemplating 
purchasing planes as soon as they have funds, and as you already know, 
Honduras is planning to buy two or three ships now. 

It is, therefore, important that we use every possible channel to put Curtiss- 
Wright planes across to all of these countries and Major Harris might prove 
helpful. 

Have the military attaches of the United States proved helpful in 
putting Curtiss-Wright planes across ? 

Mr. Webster. Yes, sir; in putting all types of American planes 
across. 

Mr. Hiss. I offer as " Exhibit No. 419 " a letter dated May 23, 
193'3, from Burdette S. Wright to Mr. Webster. 

(The letter referred to was marked " Exhibit No. 419 ".) 

Mr. Hiss. This letter reads : 

Have just returned from having lunch with Major John Weeks of the Cavalry, 
who is going down to Chile as military attache. He is a bachelor and I know 
that you can give him some real good dope on Chile. 

He is leaving Washington the night of May 30, arriving in New York the 

next morning, and sailing on June 2. This should give him two nights in New 

York. I have told him that you would like to entertain him one night. He 

said that he might have to go out with friends one night, but would probably 

8:!S76— 34— PT 4 10 



832 MUNITIONS INDUSTRY 

stay at the Pennsylvania Hotel. We can arrange the details of your meeting 
him in New York a little later just before he leaves Washington. If he cannot 
get together with you at night, he will want to see you some time during the 
day on May 31 or June 1. I hope that this time will be convenient to you. If 
you are going to be away those days, you might want to come to Washington 
and see him, but I think it would be pretty good ball to entertain him in New 
York if convenient. 

He seems to be a live, wide-awake chap and is extremely interested in the 
background in regard to Chilean aviation and our work there and what our 
plans are for the future. 

Senator Pope. Did you entertain him? 

Mr. Webstee. No; I did not meet him here at all. I met him at 
Santiago, Chile, sometime later. 

Mr. Hiss. Has your company been able to secure for your foreign 
customers the service of American military officers in inspecting 
planes sold to foreign governments by you? 

Mr. Allard. The company itself has not been able to. We have 
assisted the legations of the specific foreign governments by supple- 
menting their requests and acknowledging their willingness to have 
such inspections made. 

Mr. Hiss. Have you ever had any difficulty in aiding the legation 
in securing such requests? 

Mr. Allard. I think at one time we did. 

Mr. Hiss. Do you find that difficult at the present time? 

Mr. Allard. As a matter of fact, we refrain from it at the present 
time and leave it entirely up to the embassies or legations. 

Mr. Hiss. I offer as " Exhibit No. 420 " a letter dated May 23, 
1934, to the Curtiss-Wright Export Corporation from William A. 
Reeks. 

(The letter referred to was marked " Exhibit No. 420 " and is 
included in the appendix on p. 985.) ' 

Mr. Hiss. The last page, paragraph marked 7 reads : 

If the Argentines desire U.S. Army inspection of their Cyclones when being 
built at our plant, this can be arranged by getting in touch with us, and we 
will contact the Army inspector now stationed here at our plant, who will 
arrange the matter. The Army inspector has been contacted and we have been 
given assurance that he will be able to arrange this. 

This letter is from Mr. William A. Reeks, of the engine company, 
in Paterson to the Export Corporation with copies to Mr. Chapline, 
Mr. Lucas, Mr. Kennedy, Mr. Colvin, and Mr. Shepley. 

They are all officers of one or the other of the Curtiss companies. 

Mr. Allard. They are all with the Wright Aeronautical except 
Shepley. Shepley is with the Export Corporation. I might say 
there, Mr. Hiss, if I may, that I do not know what the policy is with 
the individual manufacturing units. I was referring merely to the 
Export Co. 

Mr. Hiss (reading) : 

The inspection he will give the Argentine engines will be identical with the 
inspection he customarily makes for the U.S. Army and will include full inspec- 
tion right through manufacturing, through testing, and to shipping. The 
Argentines will be required to pay the Army inspector the following for the 
inspection : Cyclone geared, $125.00 per engine ; Whirlwind 250 direct, $100.00 
per engine. 

The following will apply to generators and starters: Per generator, $5.00; 
per starter, $5.00. 

Will you please also inform us on this point as to whether or not the Argen- 
tines are interested. In most respects such an arrangement as outlined above 



MUNITIONS INDUSTRY 833 

will be to the best advantage of the Argentines if they require other inspection 
than ours. It would undoubtedly cost them much less than if they had their 
own inspector on the job and they will have the assurance of the U.S. Army 
inspector, who is stationed at our plant and who is entirely familiar with 
our engines. 

Mr. Hiss. Paragraph 8 reads : 

If the Argentines so desire, arrangements can be made so that the U.S. 
Army inspector certifies the shipping documents to the effect that the engines 
being shipped are the same as those which A.T.C. has been granted for the 
type in question. 

Mr. Hiss. I read further: 

It is not definite whether the U.S. Army or U.S. Navy would issue any 
written statement to the effect that they are or had bought certain materials. 
However, we believe we can supply you with copies of statements issued by 
the Aeronautical Chamber of Commerce, giving the Army and Navy contract 
awards and showing contract numbers of same. 

Have yon been able to secure letters of recommendation from the 
Army or the Navy, Mr. Webster? 

Mr. Webster. No recommendations particularly, but referring to 
their use of certain of the products. 

Mr. Hiss. Do the Army and the Navy help the engine and plane 
companies bear the cost of development of new planes or new engines. 
Mr. Allard? 

Mr. Allard. I am not at all familiar with the contracting with 
the Army and Navy on domestic purchases. 

Mr. Hiss. Do they furnish technical assistance in connection with 
the development of planes and engines? 

Mr. Allard. Do the Army and Navy furnish technical assistance ? 

Mr. Hiss. Yes. 

Mr. Allard. That is clearly in the same category. 

Mr. Hiss. I am referring to a letter dated in October 1932, in your 
files and not a part of the record, in reference to an attack plane 
which Mr. Webster states was developed by the Curtiss-Wright Co. 
in conjunction with the United States Navy and Army Air Corps 
which was used for ground attack on troops, trenches, etc. ; and in the 
same letter Mr. Webster refers to a special gun mount developed by 
the Curtiss-Wright Co. in cooperation with and for the Army Air 
Corps. 

And I further read from " Exhibit No. 271 ", which has heretofore 
been put in the record, being a letter to Consul General Escobar 
from Mr. Hewlett referring to certain complications appearing in 
the report by Mr. Trimbach who has heretofore been identified as an 
armament engineer, he says: 

And further, since we have a very limited knowledge of sight installation 
previously made it is recommended that we should discourage applying this 
gun to our airplanes until after our own Government has proven them worth 
while. 

That would indicate that the use and experiments by the Govern- 
ment of experimental planes and engines does help you bear part 
of the cost of development, and that they also furnish technical aid, 
as indicated by Mr. Webster's letter from which I read, and that they 
also furnish assistance in trying them out in actual service ? 

Mr. Webster. I think it is a part of the normal function of the 
plane that has been developed to have somebody try it out in actual 



834 MUNITIONS INDUSTRY 

service. It is not saving us any expense, because we would not build 
a. plane for one particular item. 

Mr. Hiss. But the tryer in your case is either the United States 
Army or the United States Navy? 

Mr. Webster. Naturally, because any product we sell on export 
has to be approved by them before we can sell it. 

Mr. Hiss. Is it not also a fact that the business which the Curtiss 
Co. does with the United States Army and Navy is really essential 
for the existence of the company? 

Mr. Webster. Certainly. 

Mr. Hiss. That constitutes a major portion of your business, I 
believe. In the hearings before the Subcommittee on Aeronautics of 
the House Military Affairs Committee which were held last spring, 
at pages 799 and 800, it appears that the total sales of the Aero- 
nautical Co., that is the engine company, from 1922 to 1933, inclusive 
were $18,000,000 to the Army and $25,000,000 to the Navy, and 
all others $22,000,000, so that the Army and Navy constituted ap- 
proximately two-thirds of your total business? 

Mr. Allard. Yes. 

Mr. Hiss. Is it not also true that in the last ie^y years the majority 
of your non-United States military sales have been in the foreign 
market? 

Mr. Allard. Yes. 

Mr. Hiss. At this same place in the hearings referred to it appeal's 
your total sales in 1931, other than sales to the United States Gov- 
ernment, were listed as $2,500,000, foreign sales, $1,500,000 ; for 1932. 
total sales, $1,600,000, foreign sales, $1,000,000; in 1933, the total 
was $1,800,000, and the foreign was $1,100,000. 

In the report of these same hearings at page 1040 is shown a list 
of the major aircraft activities and that the Navy engines were pur- 
chased during the years 1927 to 1933 from one or two companies, 
the Wright Aeronautical and the Pratt-Whitney. 

Do you know whether the United States Government buys any 
substantial quantities from any other engine company ? 

Mr. Allard. I do not know. The records would show that. 

Mr. Hiss. Do you know whether the prices of the Wright Engine 
Co. on its sales to the Army or the Navy are higher than on its sales 
to other customers? 

Mr. Allard. I do not know. The Army and Navy audits, I think 
should show that. 

Mr. Hiss. Statements filed at this same hearing I have referred 
to at pages 799 and 800 show during the years 1920 to 1933 the profit 
on the Army sales was 9.27 percent, the profit on the Navy sales was 
14.83 percent, and the profit on all other sales was only 5.81 percent. 

In 1925 the engine sales to the Navy netted a profit of 31.88 per- 
cent, according to the record submitted by the company; the sales 
to the Army netted a profit of 93 percent. In 1926 the Navy profits 
were 21 percent; in 1927 the Navy profits were 29 percent; in 1928 
the Navy profits were 44 percent, and the Army 31 percent; in 1929 
the Navy profit was 30 percent; and in 1933 the Army profit was 
18 percent. 

Similarly, with the Curtiss Airplane & Motor Co., in the same 
hearing at page 1104 it is shown that the total sales for 1928 to 1933, 
inclusive, were $4,900,000 to tlie Navy and $9,900,000 to the ±^ rmy, 



MUNITIONS INDUSTRY 835 

and only $5,800,000 to all others. In other words, more than two- 
thirds of the Curtiss Airplane & Motor Co. business was sold to the 
United States Government. 

In that connection do you knoAV whether your company has ever 
sold planes or engines to foreign governments at any cheaper price 
than the same planes or engines were being sold to the United States 
Government ? 

Mr. Allard. No; not to my knowledge. 

Mr. Hiss. Will you supply the committee with an analysis of the 
sales to the Army and Navy currently and of the different types of 
sales to foreign countries of the same types as the sales to the United 
States Government and at the same time, and also what prices were 
paid by your company to its sources of supply, both in the case of 
engines and in the case of planes, from both companies ? 

Mr. Allard. We will. 

Mr. Hiss. It is the announced policy of the Army and Navy to 
limit the export of new designs in the field of aviation to those 
designs which are a year old or something of that sort ? 

Mr. Allard. I do not know the age of the designs, but they have 
to be released by the Army and the Navy. 

Mr. Hiss. You have to have permission and release in any event? 

Mr. Allard. That is right. 

Mr. Hiss. Have you found any difficulty in getting releases when 
you needed them ? Have you had difficulty in getting releases when 
A^ou had an order ? 

Mr. x\llard. Not when we had an order, but we have when we 
wanted to negotiate to meet competition. 

Mr. Hiss. Assuming a foreign country comes to you and says, 
^' We would like to buy a substantial number of planes ", which at 
that time are on the restricted list of the Army or the Navy, have 
you experienced any difficulty in securing releases where the order is 
substantial ? 

Mr. Allard. Yes ; I think we have. 

Mr. Hiss. Would that not be in conflict with the policy of the 
Army and the Navy to encourage exports? 

Mr. Allard. No; it would not, because it might be of the very 
latest product that had not been produced in quantity. 

Mr. Hiss. Haven't you experienced some difficulty in disposing of 
what Mr. Morgan describes as obsolescent equipment, and therefore 
you must attempt to secure releases as promptly as possible ? 

IVTt* Attard jlGs 

Mr. Hiss. I offer as "Exhibit No. 421 " a letter dated April 23, 
1934, addressed to Inspector General of Aviation of Peru. 

(The letter referred to was marked " Exhibit No. 421 " and is in- 
cluded in the appendix on p. 988.) 

Mr. Hiss. This letter, " Exhibit No. 421 ", does not bear any sig- 
nature, and I wonder if you can identify that, Mr. Allard? 

Mr. Allard. I cannot. 

Mr. Hiss. This letter states : 

We also wish to submit herewith a proposal for the latest type of Curtiss 
attack plane, known as the " U.S. Army model A-12." Complete specifications 
and photographs are attached. 

This plane is the most modern fighting unit of its type ever developed and 
Jias been furnished only to the U.S. Army Air Corps. Providing we have a con- 



836 MUNITIONS INDUSTRY 

tract for at least 10 planes, we will be able to secure permissiou from the 
U.S. Government to build it for Peru. The selling price for 10 planes GIF 
Callao, equipt with 5 niachine guns and bomb racks, is $48,950 each and $6,500 
eacli additional for the pontoon equipment. 

We believe we can secure prompt permission from the U.S. Government to 
accept a contract from Peru and depending upon this we could probably deliver 
the first machine in Buffalo within 90 days and continue at the rate of one 
plane each 10 days thereafter. 

Is it not a fact that the Army and the Navy policy has been that 
in order to encourage export abroad, that if you get an order for a 
sufficiently large quantity, they look with great favor upon releas- 
ing it ? 

Mr. Allard. I would not say so, Mr. Hiss; no. In this particular 
instance I do not know who wrote this letter, but I don't think he 
knew Avhat he was talking about, whoever he was, in saying we could 
secure permission. We would try to secure permission. 

Mr. Hiss. I offer as " Exhibit No. 422 " a letter from Mr. Burdette 
S. Wright to Mr. Allard, dated February 4, 1931. 

(The letter referred to was marked " Exhibit No. 422.") 

Mr. Hiss. The Bob Farnsworth referred to in this letter, " Ex- 
hibit No. 422 ", was then in Washington as an employee of the 
Export Co. ? 

Mr. Allard. Yes. 

Mr. Hiss. This letter, " Exhibit No. 422 ", reads as follows : 

Bob Farnsworth was assured informally this morning, by the Office of the 
Chief of Air Corps, that hereafter, as a general rule, the Army Air Corps would 
look with favor upon requests for the exporting of military aircraft imme- 
diately after production is started upon such aircraft. For various reasons at 
present they do not desire to change the wording of the policy and will let the 
matter rest as it is and decide each case upon its own mex'its. 

I think this came directly from General Foulois, head of the Plane Division, 
and in the future we will not be handicapped by the one year in service stipula- 
tion except in very rare instances. At all events, I think we are entirely justi- 
fied in having Melvin Hall and other members of the Export Corporation start 
preliminary negotiations upon any and all types of aircraft that we are produc- 
ing or about to go into production on. However, I think that permission will 
undoubtedly be withheld to export new-type production planes to France. Italy, 
England, and possibly Japan. 

Mr. Hiss. I offer as " Exhibit No. 423 ", a letter dated October 16, 
1931, from Mr. Burdette S. Wright to Mr. W. F. Goulding. 

(The letter referred to was marked " Exhibit No. 423 ", and is 
included in the appendix on p. 988.) 

Mr. Hiss. I read from this letter as follows : 

I understand there are about five or six undelivered 02C-l's coming through 
at Buffalo for the Navy. 

Is that the Osprey? 

Mr. Allard. No; I think that is the Navy type observation plane 
from Buffalo. 

Mr. Hiss. The letter further reads : 

As I wired you, Comdr. Dillon is very much against our taking these ships 
but I have talked to him and know that we will not lose his friendship should 
we go over his head. 

Doesn't this indicate, in addition to the other, the cooperation you 
have received from the Army and Navy, that if you are actually in 
production on a Navy contract you can at times secure a release from 
the Navy contract and divert the planes or engines in production to 



MUNITIONS INDUSTRY 837 

a foreign contract, through the cooperation of the Navy or the 
Army ? 

Mr. Allard. It has never been clone to my knowledge, but we have 
asked if it could be done in several instances. 

Mr. Hiss. You remember yesterday Senator Nye referred to the 
diversion of 29 planes then under contract with the Boeing Co. and 
another subsidiary the United Aircraft, which were sold to the Bra- 
zilian Government on release of the United States Navy? 

Mr. Allard. Yes, sir. 

Mr. Hiss. That has never occurred in your case? 

Mr. Allard. No, sir ; it has not. 

Mr. Hiss. Eeading further from this letter, " Exhibit No. 423 ", it 
says: 

Capt. Cook, the Assistant Chief of tlie Bureau of Aeronautics of tlie Navy 
Department, told me that if it was urgent lie would certainly look with favor 
on helping us out. 

Referring back to the policy of the Navy with respect to export 
restrictions, I now offer as " Exhibit No. 424 ", a letter dated Feb- 
ruary 19, 1933, directed to Capt. Hamdi Bey by Melvin Hall. 

(The letter referred to was marked " Exhibit No. 424 " and is 
included in the appendix on p. 989.) 

Mr. Hiss. Capt. Hamdi Bey, to whom this letter is directed, was 
connected with the technical section. Ministry of National Defense 
of Turkey, and Melvin Hall was an emploj^^ee of the Export Co.? 

Mr. Allard. Yes. 

Mr. Hiss. I read from this letter, " Exhibit No. 424 ", as follows : 

I enclose a photograph herewith for your information of the Martin bomber 
which is known as the B-907. 

That is made by Glenn Martin Co. of Baltimore ? 

Mr. Allard. Yes. 

Mr. Hiss. The letter continues : 

This plane is still on the secret list of the United States Army and conse- 
quently we have not available any detailed performance figures. Should the 
Government of Turkey be seriously interested in this or any other of the 
latest types of American bombing planes, we believe that it will be possible 
to secure release by the United States Army on special application. 

Mr. Allard. May I make a statement there ? 

Mr. Hiss. Yes, sir. 

Mr. Allard. Melvin Hall is a salesman and he has often made 
statements in an endeavor to sell, and they are not always accurate 
statements. 

Mr. Hiss. Is Mr. Goulding a salesman, or is he an operating officer? 

Mr. Allard. No ; he is a salesman and vice president. 

Mr. Hiss. Would you say all of the officials of the Export Cor- 
poration are salesmen? 

Mr. Allard. I should. 

Mr. Hiss. Including yourself ? 

Mr. Allard. I might be flattered in that. 

Mr. Hiss. I offer as " Exhibit No. 425 " a letter dated February 23, 
1932, addressed to Ralph S. Damon from W. F. Goulding. 

(The letter referred to was marked " Exhibit No. 425 ", and is 
included in the appendix on p. 990.) 



838 MUNITIONS INDUSTRY 

Mr. Hiss. On the subject of Keystone bombers, this letter says 
[reading] : 

With respect to deliveries, we uuderstand that you can furnish the first 
plane within sixty (60) days, two planes per week for the ensuing four weeks, 
and three each week thereafter. Furthermore, if release of any of the planes 
which you are now completing for the Army is accomplished, that you would 
be in a position to give us the first one of these planes in forty (40) days. 

Mr. Allard. That is correct. It never was done, though. 

The Chairman. It was not done ? 

Mr. Allard. No, sir. 

Mr. Hiss. In connection with the release of the Boeing planes, your 
company received some criticism as to why j^ou could not furnish 
quick delivery. I think you Mr. Webster were then president of 
the company? 

Mr. Webster. I don't recall it. 

Mr. Hiss. I offer as " Exhibit No. 426 " a letter dated October 3, 
1932, from W. F. Goulding to Mr. Burdette S. Wright. 

(The letter referred to was marked " Exhibit No. 426 ", and is 
included in the appendix on p. 990.) 

Mr. Hiss. I quote from this letter as follows : 

Of course, it is embarrassing to answer questions as to why United secured 
this Bi-azilian business. I think probably the best answer is as you have 
given it, to tho effect that United was able to get release on U.S. Government 
contracts to give the best deliveries. 

Another matter is the question of financing. Apparently United was able 
to work this out to their satisfaction, but how it was done I am not entirely 
aware. As a matter of fact, I think it was worked out in connection with the 
Farm Board's coffee, but you don't need to tell people this if they don't know it. 

Do 3^ou know, Mr. Webster, how that financing was worked out? 

Mr. Webster. No; I do not, sir. 

Mr. Hiss. I offer as " Exhibit No. 427 " a letter from Mr. Goulding 
to Mr. Guy Vaughan of date October 3, 1932. 

(The letter referred to was markecl "Exhibit No. 427", and is 
included in the appendix on p. 991.) 

Mr. Hiss. This letter is on the same subject, and I quote from it 
as follows : 

You, no doubt, realize that United had under construction for the Govern- 
ment a number of Corsairs and Boeings which the Navy released to permit 
them to offer excellent deliveries to Brazil. Unfortunately, Curtiss-Wright 
had no Government contracts which could be diverted for such prompt de- 
liveries. The fact remains, however, that United, having taken this Brazil 
business, is not in as good a position to give deliveries on other orders for 
other countries as we are. 

Would there be any reason for Mr. Goulding to be using salesman's 
language there? 

Mr. Allard. No. 

Mr. Hiss. Does that indicate that it was difficult to secure releases 
from the Government on these contracts? 

Mr. Allard. I do not know that it indicates it was difficult or 
not, but we could try. 

Mr. Hiss. The sentence I call your attention to is [reading] : 

Curtiss-Wright had no Government contracts which could be diverted for 
such prompt deliveries. 

Mr. Allard. I know that is his language, but we had no ships 
under contract for the Army that we could endeavor to get diverted. 



MUNITIONS INDUSTRY 839 

Mr. Hiss. Have you or 3^our corporation actually borrowed from 
the Army or the 'Nsl\j property to help you fill foreign orders for 
military planes or equipment? 

Mr. Allard. Yes ; not aircraft as such. 

Mr. Hiss. Do 3'ou remember in January 1933, whether your com- 
pany borrowed any fljang suits for Cuban pilots, from the Army 
or the Navy ? 

Mr. Allard. I do not know whether we borrowed them, or whether 
the Cubans did themselves. The}' were out at Mitchel Field in the 
winter and needed the flying suits, and they borrowed them for 
the trip to Cuba and return, I think that is right. 

Mr. Hiss. I offer as " Exhibit No. 428 " a letter dated January 7. 

1933, from Mr. Carrington to Mr. Hewlett. 

(The letter referred to was marked " Exhibit No. 428 ''. and is 
included in the appendix on p. 991.) 

Mr. Hiss. In this letter it states that four pilots will be here 
Monday and will probably go to Buffalo Tuesday to fly ships away; 
and then it quotes a telegram, in which the statement is made 
[reading] : 

I ask you to do the necessary with Aimy or Navy for four winter flying 
suits which will be returned to them iinni'ediately. 

Then Mr. Carrington saj^s to Mr. Hewlett : 

You will know what to do about the flying suits. 

Did your company not actually borrow the flying suits? 

Mr. Allard. No; I think we called up the flying field and asked 
them if they could lend these suits to the pilots, that they were 
Cuban pilots, and it is the courteous thing to do that. 

Mr. Hiss. I offer as " Exhibit No. 429 " a letter dated February 7, 

1934. from Kobert L. Earle to Lt. H. E. Regan. 

(The letter referred to was marked " Exhibit No. 429 ", and is 
included in the appendix on p. 992.) 
Mr. Hiss. I quote from this letter as follows : 

When talking with you yesterday concerning the need for propellers to meet 
deliveries on a certain foreign contract, I thought that three 2-bladed propellers 
would take care of the situation. However, I have since found that our export 
Falcons do not use the same propeller as the export Hawks and therefore we 
really need a total of six instead of three. 

Then there appears a description of the specific propellers and the 
letter continues [reading] : 

The need for these propellers is occasioned by our having negotiations with 
a certain foreign government for a number of airplanes which must be delivered 
within a short period of time. The delivery of the first three Hawks and the 
first three Falcons, both of which are powered by direct-drive Cyclone engines, 
must be earlier than we are able to obtain deliveries on propellers. We have 
contacted all propeller manufacturers and find tliat Hamilton-Standard can 
give us the best deliveries, but even these will not be early enough to meet our 
needs for the first three Hawks and the first three Falcons referred to above. 
Inasmuch as the entire contract is contingent upon our meeting the delivery 
requirements of the customer, we are exceedingly anxious to somehow make 
arrangements to obtain these propellers within the required time. 

It would therefore be greatly appreciated if the Bureau of Aeronautics could 
arrange to loan us three each of the two types of propellers described above, 
upon our guarantee to replace them in the very near future. We would desire 
to take delivery on the two-bladed propellers within the next two weeks and 
will guarantee replacement of them by not later than the first week in April. 



840 MUNITIONS INDUSTRY 

The threp-bliided propellers will be needed before the middle of March, aud we 
would guarantee replacement of them by the middle of April. 

It is presumed that arrangements could be made to have the replacement 
propellers inspected by the Navy inspector at the Hamilton-Standard Co. as 
they are built. 

The Bureau's kind consideration in arranging for the loan to us of the above 
six propellers will be sincerely appreciated. 

Do you know whether that loan was ever consummated? 

Mr. Allard. I think it was. I do not know whether we got all of 
the propellers, but I think we got some. 

Mr. Hiss. And the Hawks and Falcons to which they were to be 
attached are military planes? 

Mr. Allard. That is correct. 

Mr. Hiss. Have you ever purchased surplus munitions from the 
United States War De]:»artment or United States Navy Department? 

Mr. Allard. I do not know of any, but the record will show if we 
have. 

Mr. Hiss. Have you ever attempted to, or been interested in doing 
that? 

Mr. Allard. If we had had a request from a customer for material 
known as surplus material, we probably have asked for quotations 
on it. 

Mr. Hiss. I offer as " Exhibit No. 430 " a letter dated September 
10, 1929, addressed to Hon. F. Trubee Davison, Assistant Secretary 
of War for Aeronautics, Washington, D.C. 

(The letter referred to was marked " Exhibit No. 430 ". and is 
included in the appendix on p. 992.) 

Mr. Hiss. It does not appear who wrote this letter, " Exhibit No. 
430 ", but it was found in the Washington file of your company. This 
letter requests that authority be granted by the War Department 
for the sale of the following material to the Curtiss- Aeroplane 
Export Corporation, it being understood the same is on hand in the 
Ordnance Department, to wit : 24 Lewis flexible machine guns, model 
1918, 72 ammunition pans or magazines, 12 carriers for 6 magazines, 
24 deflectors for shells for Lewis guns, 24 extension-charging han- 
dles, 2 fillers for magazines, 2 handles for magazine loading. 

And similarly requested authority for the sale of the following 
equipment, which it is understood is available in the Air Corps, at 
Wilbur Wright Field, to wit: 12 Duplex Lewis mount type G--2, 
12 double trigger control type H, 12 double gun brace type OA-259, 
12 scarf ring mounts, 12 ring sights for flexible Lewis, 12 wind vane 
sights for flexible Lewis. 

Mr. Allard. You will notice those Lewis guns were model 1918, 
and I imagine that is war surplus. 

Mr. Hiss. I offer as " Exhibit No. 431 " a letter dated January 21, 
1930, addressed to Mr. Burdette S. Wright, and signed F. Trubee 
Davison, Assistant Secretary of War. 

(The letter referred to was marked " Exhibit No. 431 ", and is 
included in the appendix on p. 993.) 

Mr. Hiss. This letter shows that the previous letter, " Exhibit No. 
430 ", was apparently written by Mr. Burdette S. Wright, and I now 
read from " Exhibit No. 431 " as follows : 

With reference to your letter of September 10, 1929, relative to the sale 
of certain Air Corps aud ordnance material to the Curtiss Aeroplane Export 



MUNITIONS INDUSTRY 841 

Corporation, it has been finally determined that the items listed are in excess 
of prospective War Department needs in the quantities enumerated. 

Before the transaction is consummated, however, it will be necessary for 
you to obtain the approval of the State Department as to the exportation of 
the property in question for the purpose mentioned. 

Do you know whether that approval was ever secured? 

Mr. Allard, If the purchase was made, the approval was secured 
from the State Department, but I do not think it was ever sold. 

Mr. Hiss. I offer as " Exhibit No. 432 " a letter dated October 30, 
1930, from J. S. Allard to Burdette S. Wright. 

(The letter referred to was marked " Exhibit No. 432 ", and is in- 
cluded in the appendix on p. 993.) 

Mr. Hiss. I read from " Exhibit No. 432 ", as follows : 

Thanks for yours of the 29th on the above subject and also on the subject 
of how certain munitions of war can be declared surplus, and whether or not 
commercial firms can buy such equipment and resell it to foreign countries 
at a profit. 

It would certainly be nice if it develops that we can buy bombs from the 
"War Department and sell them again at a profit to an approved foreign 
government. 

Do you know whether at present you can buy surplus material 
from the United States War Department? 

Mr. Allard. I do not know. 

Mr. Hiss. Do you know, Mr. Webster? 

Mr. Webster. No, sir ; I do not know. 

Mr. Hiss. Do you know whether you have bought any in recent 
months ? 

Mr. Allard. No. 

Mr. Hiss. Did you receive any official notice as to whether that was 
stopped ? 

Mr. Allard. I do not know that, but the record will show, I sup- 
pose. 

Mr. Hiss. I oiEfer in evidence as " Exhibit No. 433 " a letter dated 
April 11, 1933, from Burdette S. Wright, to Mr. C. W. Webster. 

(The letter referred to was marked " Exhibit No. 433 ".) 

Mr. Hiss. I read the letter, " Exhibit No. 433 ", as follows : 

Due to the establishments of military training for the unemployed, the Secre- 
tary of War has suspended all sales of surplus material by the War Depart- 
ment, as they are now short of equipment for this purpose. 

It is not known just when this ban will be lifted, but we have been advised 
that possibly Silverman Brothers, 594 Broadway, New York City, might have 
some former surplus material on hand which they might sell to your friends. 

Mr. Hiss. Mr. Allard, I asked you a few minutes back whether 
you had been able to secure endorsements from Army or Navy 
officials of your products. I do not exactly remember what 3^our 
reply was to that question. May I repeat it ? 

Mr. Allard. I think I said that I did not consider them endorse- 
ments. We receive statements from certain Army and Navy offi- 
cials with reference either to the number or type of ship and engine 
in question, which have been purchased as to what their experience 
with them is. 

Mr. Hiss. There is no doubt that the prestige of the United States 
Army or Navy does carry weight, particularly in South American 
countries ? 

Mr. Allard. All over the world. 



842 MUNITIONS INDUSTRY 

Mr. Hiss. Therefore a letter of recommendation from the ArmT 
or Navy Avould be very helpful in making sales ? 

Mr. Allard. Any statement of fact. 

Mr. Hiss. Mr. Webster, in referring to anj^ letter from the Army 
or Navy as to the value or quality of your products, you objected 
to reference to them as being recommendations, did you not? 

Mr. Webster. Yes, sir ; I believe it is contrary to the policy of the 
Army or Navy to recommend. They simply state, " We are using 
this in service." They never recommend. 

Mr. Hiss. " Exhibit No. 434 ", Mr. Webster, is a letter which you 
wrote to Mr. Burdette S. Wright, on March 31, 1933. 

(The letter referred to was marked " Exhibit No. 434 " and is 
included in the appendix on p. 994.) 

Mr. Hiss. That letter in the last two paragraphs reads as follows : 

We are also negotiation^ 

I guess that means negotiating — 

for eight or ten Cyclone Falcons for the Argentine Navy to replace Vouglit 
" Corsairs " now in service. 

The " Corsairs " are made by the United Aircraft group ? 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

We are up against a serious obstacle in that the Falcon has never been in. 
U.S. naval service, except the Marine Corps and the Argentine Navy will not 
accept equipment not having been used or specified by the U.S. Navy. 

It is the desire of Capttiin Zar, Chief of Naval Aviation, to use the Falcon 
or any other suitable and capable Curtiss Wright plane in preference to United 
Aircraft equipment but we must provide him with all possible data and con- 
versation in support of his ultimate selection of our material. Will you, 
therefore, kindly supply me as quickly as possible as much information as 
you can in support of this idea. For instance : How many Falcons were used 
by the Marine Corps ofBcials to supplement our sales arguments? 

Using your own language, Mr. Webster. 

Mr. Webster. Yes, sir. 

Mr. Hiss (continuing reading) : 

Also how many Falcons used by the Army and their written reaction as to- 
their service and efficiency. 

On April 6, 1933, a letter was sent by Mr. Burdette S. Wright ad- 
dressed to the Secretary of the Navy, apparently in accordance 
with your letter of March 31, Mr. Webster, "Exhibit No. 434."' 
That will be " Exhibit No. 435." 

(The letter referred to was marked " Exhibit No. 435 " and is 
included in the appendix on p. 995.) 

Mr. Hiss. That letter reads in part as follows : 

In connection with possible sale of aircraft to South American countries, we 
have received a request that we obtain from the Navy Department and from 
the War Department a statement of the experience these two departments 
have had with the Curtiss Falcon type of airplane in service. The question* 
involved include: 

(«) The number of planes of this general type purchased to date. 

(&) The type of missions they have been engaged on such as observation, 
attack, and light bombing. 

(c) The experience with this type of construction from maintenance and- 
overhaul standpoint. 

(d) Statements that the plane has been adopted as a service type and has 
rendered good service. 



MUNITIONS INDUSTRY 843 

We would more than appreciate a short statement along the above lines 
which we could forward to our agents for them to use in connection with 
the possibility of obtaining contracts on this type of airplane. 

Any assistance that the Navy Department can give us in this regard will 
be of great advantage. 

" Exhibit No. 436 " is a letter from Capt. A. B. Cook, Acting Chief 
of Bureau of Aeronautics of the Nav}', to Mr, Wright, Mr. Burdette 
S. Wright. 

(The letter referred to was marked '* Exhibit No. 436 " and is 
included in the appendix on p. 995.) 

Mr. Hiss. The letter reads in part as follows [reading] : 

The Secretary of the Navy has referred to this office your letter of April 6, 
and accordingly the following information is furnished — 

And then follows a rather detailed statement on the use of Curtiss 
planes [reading] : 

(a) Four OG-l's and 21 OG-2's were delivered between .January and May 
1928 : there are at present seven of these operating with aircraft Squadrons 
WCEF, San Diego, Calif. 

(&) Seven of these planes were used in Nicaragua from February 1928 to 
June 1931 on observation, ground attack, and light bombing missions ; nine 
were used in China on ol»servation missions; this type has been used in the 
United States for observation and attack training ; individual planes of this 
type have been used for aerial photography. 

(0) The following notes apply to the type of construction, maintenance, and 
overhaul : 

(1) Trouble was experienced with the fuselage cross brace at the forward 
landing-gear fitting. This brace has to be reenforced with steel. 

(2) The webs from the tail skid assembly all pulled out and had to be 
replaced with steel. 

(3) The wing fittings in the center section had to be reenforced. 

(4) After the above changes were made overhaul and maintenance condi- 
tions were excellent ; many of these planes were flown 700 hours between over- 
hauls ; engines and parts needing attention were easily accessible. 

(5) The following observations may be of interest: 

(fl) One plane which had been submerged in salt water for 36 hours was 
corroded so badly that it had to be surveyed. 

(6) Longerons struck by bullets were shattered by the impact, there being 
considerable tearing around the bullet hole. 

(c) These planes were originally designed to be powered by the D-^-2 
water-cooled engine ; when the P. & W. Wasp was installed a great deal 
of trouble was encountered with fixed gun fittings. 

((i) This plane was used for several years as a Marine Corps observation 
plane and as such rendered excellent service. The long cruising range was a 
particularly advantageous characteristic. 

Mr. Hiss. " Exhibit No. 437 " is a letter which Mr. Webster wrote 
to Mr. Burdette S. Wright, referred to the letter just read. " Exhibit 
:N'o. 436." The date of that letter is May 5, 1933. 

(The letter referred to was marked " Exhibit No. 437 " and is 
included in the appendix on p. 996.) 
Mr. Hiss. Mr. Webster in that letter says in part as follows : 

With further reference to the letter from the Navy Department (Capt. 
Cook) would it be possible to go back at the Bureau with the explanation 
that the letter requested was for the purpose of assisting us in competing 
against foreign aircraft manufacturers, especially the British, who are making 
a very definite effort to crash into the Argentine territory. 

We have the inside track on this business and Captain Zar, chief of naval 
aviation, who was trained at Pensacola and who is anxious to see the Falcon 
installed in the Argentine Navy, is requesting us to supply him with some- 
thing to back up his action should he be able to place this business with us. 



844 MUNITIONS INDUSTRY 

This partiC'Ular information regarding Zar, ot course, is confidential and is 
intended for you, and should not be passed along to the Navy, but if the 
Bureau could reword their letter eliminating the objectional features, it 
would serve our purpose. 

Objectionable features, is meant, I guess. 

Using their present letter as a basis, the following suggestion taken from 
Capt. Cook's own letter would help us a great deal. Please bear in mind and 
impress upon the Bureau that it has been the policy of the Argentine Navy 
to use only such ships as are standard or have been used by the navies of 
the countries from which they purchase. 

You then quote a proposed letter for the Bureau to write as 
follows : 

The Secretary of the Navy has referred to this oflBce your letter of April 6, 
and accordingly the following information is furnished : 

Curtiss Falcons have been used since 1928 in Nicaragua and China observa- 
tion, ground attack, and light bombing missions and in the United States for 
ground attack and observation training and aerial photography. After a few 
changes made in the early types, overhaul and maintenance conditions were 
excellent, many of the planes having flown 700 hours between overhauls. 

Mr. Webster, I call your attention to the fact that " Exhibit No. 
436 ", Captain Cook's letter to Burdette S. Wright, on which you 
say you based this proposed reply lists " observation, ground attack, 
and light bombing missions " in Nicaragua but not China, where 
it refers only to observation missions. In the proposed letter which 
you sent to Mr. Wright you have changed that so that you suggest 
that the Navy say that the — 

Curtiss Falcons have been used since 1928 in Nicaragua and China on obser- 
vation, ground attack, and light bombing missions * * *. 

Mr. Webster. I think that is probably a typographical error, but 
it does not make any difference. 

Mr. Hiss. I do not believe there has been any attack work in 
China. 

Mr. Webster. It is just an error. 

Mr. Hiss. You will note also that you say, "After a few changes 
made in the early types ", and the wording of the Navy was, "After 
the above changes were made " ; and there is no reference to early 
types. 

Mr. Webster. Yes, sir. 

Mr. Hiss. You further state in the letter to Mr. Wright [reading] : 

It is highly important that we get such a letter and it seems to us that the 
Navy would be perfectly justified in writing such a letter to assist us in over- 
coming foreign competition and establishing American aircraft in Argentine 
naval service. 

" Exhibit No. 438 " is a letter from E. J. King, rear admiral, 
United States Navy, and Chief of the Bureau of Aeronautics, ad- 
dressed to Mr. Burdette S. Wright, under date of June 28, 1933, 
which is after your letter, " Exhibit No. 437." 

(The letter referred to was marked " Exhibit 438 ".) 

Mr. Hiss. That letter states [reading] : 

My Dkar Mr. Wright : The Secretary of the Navy has referred to this oflSce 
your letter of April 6th, and accordingly the following information is furnished : 

Curtiss Falcons have been used since 1928 in Nicaragua and China on 
observation, ground attack, and light bombing missions, 

The Navy made the same typographical error you made, Mr. 
Webster. 



MUNITIONS INDUSTRY 845 

Mr. Webster. Yes, sir; I probably went off on that. 
Mr. Hiss (continuing reading) : 

and in the United States for ground attack and observation training and 
aerial photograpliy. After a few changes in the early types — 

the Navy was adoj)ting your language instead of saying "After the 
above changes — " 

[Reading] : 

overhaul and maintenance conditions were excellent, many of the planes having 
flown 700 hours between overhauls. 

That is signed " E. J. King." 

That is identical with the language which you proposed? 
Mr. Webster. Yes, sir. 

Mr. Hiss. ^' Exhibit No. 439 " is a letter from Burdette S. Wright 
to Mr. Webster, under date of June 29, 1933. 

(The letter referred to was marked " Exhibit No. 439 ".) 
Mr. Hiss. That letter reads as follows: 

I am very sorry that it took us so long to get a new letter for you from the 
Navy on the services of Curtiss Falcons. 

Attached hereto is a new letter which states the Navy's success with these 
airplanes in the manner which you desire. 

Would you not say, Mr. Webster, that that did constitute a letter 
of reconmiendation actually written by your company for the Navy 
simply to adopt? 

Mr. Webster. Yes; it might possibly be considered as a letter of 
recommendation. 

Mr. Hiss. " Exhibit No. 440 " is a letter of February 5, 1932, from 
Mr. Burdette S. Wright to Mr. Allard. 

(The letter referred to was marked "Exhibit No. 440" and is 
included in the appendix on p. 997.) 

Mr. Hiss. That letter reads in part as follows : 

I am attaching hereto a letter signed by Admiral Moffett replying to my 
letter in which I requested information on the 02C-1 airplanes in connection 
with our interest in selling to the Dominican Republic. 

This is not a very elaborate statement, but represents what was linally 
decided upon after they had ■writteti two or three different samples. This 
can be used as an official letter in connection with the Export Co.'s efforts 
to sell to the Dominican Republic. 

Admiral Moffett's letter, " Exhibit No. 441 " does not bear date, 
being on the letterhead of the Navy Department, Bureau of Aero- 
nautics, and being addressed to the Curtiss Aeroplane & Motor Co. 
That is the aeroplane company in Buffalo? 

Mr. Allard. Right. 

(The letter referred to was marked " Exhibit No. 441 ".) 

Mr. Hiss. " Exhibit No. 441 " reads as follows : 

In reply to your letter of recent date you are advised that about eighty of 
your model 02C-1 airplanes are being used as observation planes in the Marine 
Corps and in the training of aviators in the Naval Reserve Force. 

I am pleased to be able to inform you that favorable reports have been re- 
ceived from the foregoing activities concerning the service utility of this model. 

In regard to the policy of restriction, can you remember any time 
when not only have you been successful in securing release of restric- 
tion to the extent indicated by the evidence, but when you have 
actually asked the Navy to impose a restriction because it was con- 



346 MUNITIONS INDUSTRY 

venient to 3^our business interest, and so have used the restriction to 
your aid rather than to your hindrance? 

Mr. Allard. I do not recall off-hand. 

Mr. Hiss. May I call your attention to a letter of July 19, 1933, 
which will be " Exhibit No. 442 ", which is a letter to Mr. Earle from 
Mr. Hewlett, with a copy to Mr. Goulding? 

(The letter referred to was marked '' Exhibit No. 442 " and is 
included in the appendix on p. 997.) 

Mr. Hiss. That letter reads in part as follows : 

At the present time there is stationed at Consolidated Aircraft, inspecting 
some trainers which are being built for Mexico, a Capt. David Chagoya Rodri- 
guy of the Mexican Air Corps, who has requested permission to visit our plant 
at the earliest possible opportunity. Captain Chagoya is not particularly 
interested in anything outside of training activities, however, in view of the 
fact that the Mexican Government at this time has under consideration the 
purchase of a number of Pursuit airplanes, on which the Export Company has 
been negotiating and the further fact that he is interested in our Hawks I 
believe a special effort should be made to secure permission for this visit. 

In tiie above connection, you will recall that we were turned down by the 
Naval Intelligence Division and the U.S. Air Corps some time ago due to a 
letter which we had written — 

That is the company — 

reflecting upon the fact that we had on our production floor, certain Army 
and Navy experimental jobs, which we did not consider it desirable for for- 
eigners to view. However, since that time these experimental jobs have all 
been removed within the experimental department, with the exception of the 
A-12 production job and this has not proceeded to the point that, within the 
next 15 days, there should be any objection by the Air Corps for anyone to see 
same, as practically all the parts built up are in detail and are located in 
our feeder shops and in reality no one could see anything worth while or of 
such interest to allow them to copy. At the time we wrote this letter, you 
recall, — 

That must be the letter on which the Navy and the Air Corps 
based their refusal 

Mr. Allard. Yes, sir. 

Mr. Hiss, (continuing reading) : 

that same was considered desirable inasmuch as certain Japanese oflieers de- 
sired to visit the plant and we were building numerous planes for the Chinese. 

Then the next to the last paragraph reads as follows : 

However, recently we have secured permission from our Government allow- 
ing General Chang Hung Wan of the Chinese Army to visit our plant which 
permission was signed by Lt. Col. Nelsen and we therefore feel that by regu- 
lated contact you can, without doubt, secure permission for this Mexican. 

In view of the condition that he is interesited in making an immediate trip 
to the plant it would be appreciated if you will advise me by wire as to the 
results of your contact with the Intelligence bureau. 

In other cases you have been able to secure permission for foreign 
buyers to inspect planes in production at your plant, with a fair de- 
gree of regularity, have you not, when you so desired it, Mr. Allard ? 

Mr. Allard. I think when it met with the policies of the Govern- 
ment we have always been able to get that done. A great many of 
them have been turned down. 

Mr. Hiss. " Exhibit No. 443 " is a letter from Mr. J. A. B. Smith to 
Mr. B. S. Wright, dated January 29, 1932. 

(The letter referred to was marked '' Exhibit No. 443 " and is 
included in the appendix on p. 998.) 



MUNITIONS INDUSTRY 847 

Mr. Hiss. That letter reads in full as follows : 

I understand from Mr. Webster that two Argentine Navy ofBcers are being 
sent to this country to look over aviation materials and that we were named 
by the Navy Intelligence to have a Navy officer designated to accompany 
them to this country. 

If you will look into this and let me know the name of some Navy flyer 
who is friendly to our equipment and who would be acceptable to the Bureau 
of Aeronautics, I think I can get Captain Ellis, who is head of the Navy 
Intelligence, to ask for the particular officer whom you might pick out. 

In the memorandum to Mr. Morgan, which is " Exhibit No. 397 ", 
already introduced in evidence, the memorandum being dated June 
19, 1934, written after the present investigation of this committee 
began, there is a statement which reads as follows : 

The greater the number of countries purchasing our airplanes and engines, 
the greater our knowledge of the potentiality of their air force. Our pilots, 
mechanics, and salesmen procure very valuable knowledge of flying conditions, 
terrain, available landing flelds in foreign countries, which would be of great 
military value in case of an emergency. 

Is it not true, Mr. Allard, that it is very important for j-our com- 
pany to maintain, and that your company does have, as a seller of 
military equipment, a confidential relationship with your foreign 
customers ? 

Mr. Allard. Just how do you mean, Mr. Hiss ? 

Mr. Hiss. Do you not consider that military strength and military 
secrets are of a confidential nature, and if your companj^ should 
learn of any of them in the course of its business, it would want to 
retain and not disclose the information, on the ground that it was 
confidential. Is not that correct? 

Mr. Allard. Yes; certainly. 

Mr. Hiss. Therefore, this statement in the memorandum to Mr. 
Morgan, which we understood Mr. Morgan discussed with President 
Roosevelt — 

The greater the number of countries purchasing our airplanes and engines, 
the greater our knowledge of the potentiality of their air force. Our pilots, 
mechanics, and salesmen procure very valuable knowledge of flying conditions, 
terrain, available landing fields in foreign countries, which would be of great 
military value in case of an emergency — 

is rather an exaggerated statement? You would regard such in- 
formation as confidential and would not turn it over to the United 
States Government ? 

Mr. Allard. Certainly not. That states that the pilots, mechan- 
ics, and salesmen gather this information for themselves, and I 
certainly would not hesitate to turn over to my Government here 
any information that it wanted, that I thought would be of any 
value to them. That is why I joined the Army. 

The Chairman. Would you volunteer the information? 

]\Ir. Allard. To the Army ? 

The Chairman. Yes, sir. 

Mr. Allard. Yes, six ; confidentially, certainly. I think it is a 
duty, a patriotic duty. 

]Mr. Hiss. Now I call your attention, in this connection, to " Ex- 
hibit No. 444", being a "letter under date of May 24, 1934, that is 

8387G— 34— pt4 11 



84S MUNITIONS INDUSTRY 

this past May, from Mr. Robert L. Earle to you, Mr. Allard, witli a 
copy to Mr. Hewlett. 

(The letter referred to was marked " Exhibit No. 4^4 " and is 
included in the appendix on p. 999.) 

Mr. Hiss. That letter reads as follows : 

When talking to Capt. Kenney, the working Air Corps representative on the 
Joint Aeronautical Board, today, he said that, while we do not have to do it, 
he thought as a matter of courtesy we should sulimit copies of all contracts and 
agreements with foreign governments to the .Joint Aeronautical Board in 
order that they might know that the interests of the United States Govern- 
ment were being safeguarded, insofar as concerned military secrets. He said 
that this would help a lot when they were considering whether or not they 
should permit foreigners to visit our plants, in that if they knew we had a 
contract or agreement with the government represented it would expedite and 
possibly insure favorable action. 

We told Capt- Kenney we knew nothing about our practice in matters of 
this kind but would be glad to forward his suggestions to you. The matter 
was called to Capt. Kenney's mind when talking about a couple of Rumanian 
inspectors and he would also like to know if we have a contract or an agi'ee- 
ment with that country. 

" Exhibit No. 445 " is a letter of June 25, 1934, last June, from you, 
Mr. Allard, to Mr. Robert L. Earle. 

(The letter referred to was marked " Exhibit No, 445 " and is 
included in the appendix on ]). 999,) 

Mr. Hiss, That letter reads in part as follows [reading] : 

I have delayed answering your letter of May 24th on the subject above men- 
tioned — OC-712 — as I wanted to check into the matter very carefully. It is 
my opinion that our business does not permit of our furnishing copies of 
contracts and agreements with foreign governments. As a matter of fact, 
many times our business is done witliout any written contract or agreement. 
However, as you know, the interests of the U.S. Government are very well safe- 
guarded as we do not sell at export any equipment not released by the U.S. 
Government services. 

But you have had very little difficulty in securing release of Gov- 
ernment planes. Do you agree to that? 

Mr. Allard. How? 

Mr. Hiss. I say, you have not had much difficulty in getting Gov- 
ernment models released for export, have you ? 

Mr. Allard. When one was ready to be released. 

Mr. Hiss. The letter states further as follows [reading] : 

I shall be very happy to show the .Joint Aeronautical Board, at any time, 
just wliat business we have done in the past, wliich will bear this out, but it 
must be borne in mind that our business with foreign governments is strictly 
confidential as it is obvious that one government is not interested in having 
other governments know all of the details of the business. 

Mr, Allard. That is true. 

]Mr. Hiss. Is it not also true, Mr. Allard, that in order to meet 
foreign competition your company is continually urging the Navy 
and the Air Corps to release their latest developments? 

Mr. Allard. Certainly. 

Mr. Hiss. So that you can sell them abroad? 

Mr. Allard. Certainly. 

Mr. Hiss. But j^ou have been careful when you may have re- 
leased information that the Anu}^ and Navy had specifically au- 
thorized its release? 

]Mr. Allard. Information? 

Mr. Hiss. With respect to development of planes or engines. 



MUNITIONS INDUSTRY 849 

Mr. Allard. Yes, sir. 

Mr. Hiss. May I call your attention to a letter of March l-t, 1931, 
" Exhibit No. 446 ", from Mr. Robert P. Farnsworth to Mr. C. W. 
Webster. 

(The letter referred to was marked " Exhibit No. 446 " and is in- 
cluded in the appendix on p. 1000.) 

Mr. Hiss. That letter reads [reading] : 

Del\r Web : I have been able to secure for you " G-1 ". " G-2 ", " G-3 ", 
and " G-4 " plans for the Air Corps exercises of 1931. This information is 
definitely not for publication, was secured by me in the face of a definite 
order prohibiting its issuance, and I beg you to be very careful in the manner 
in which you give this information to Merino. 

He was then a Chilean aviation official? 

Mr. Webster. Yes, sir. 

Mr. Hiss. Mr. Farnsworth in this letter continues [reading] : 

There are no particular military secrets contained therein and I know that 
if there were the War Department would not object to Chile's knowing them, 
but the point is they would prefer to give this to Chile themselves rather 
than through another agency such as us. Please keep tight hold on these four 
pamphlets and bring them back with you when you return. 

IMr. Webster. They were given to them by the United States 
Government. 

Mr. Hiss. For this use? 

Mr. Webster. Yes, sir; during the public maneuvers here, 

Mr. Hiss. These were given to Mr. Farnsworth by the United 
States Government? 

Ml". Webster. No; given to Chile. 

Mr. Hiss. At the time Mr. Farnsworth had given you these, 
which you had apparently requested, the United States Government 
had not given them to Chile? 

Mr. Allard. No; but they were definitely not released for press 
publication. It was the itinerary. 

Mr. WEBsTEii. That means press publication and not turning over 
to Chile. 

Mr. Hiss. He says: 

This information is definitely not for publication, was secured by me in the 
face of a definite order prohibiting its issuance, * * *, 

]Mr. Allard. I think he means its press issuance. 

Mr. Hiss. You do not think that means its issuance to him ? 

Mr. Allard. No, sir ; not to Farnsworth. 

Mr, Webster. That is newspaper publication. 

INIr. Hiss. I think the letter speaks for itself. 

On August 24, 1933, " Exhibit No. 447 ", Mr. Allard, you wrote a 
letter to Mr. Leighton in Europe. 

(The letter referred to was marked "Exhibit No. 447" and is 
included in the appendix on p. 1000.) 

Mr. Hiss. This is a long letter and over on page 5, at the top of 
the page, you state : 

On my way back from the west coast, I stopped at Buffalo and spent about 
3 hours with Burdette Wright. Ted was out. 

That is Ted Wright? 
Mr. Allard. Yes. 



850 MUNITIONS INDUSTRY 

Mr. Hiss (continuing reading) : 

"We discussed hoAV to get the information to you in view of the American 
Government's present very rigid attitude on the release of information on 
new and experimental aircraft. There is a new espionage act in the United 
States which has caused the Army and Navy to become all the more definite 
and determined in preventing information from getting out on these planes. 
We can't give out any information on the YO-40, the A-12, the FllC-3, or 
the Fll-C-1. I know how important it is to you that you have information 
on the results of tests on these ships so that you can quote on a Turkish plane 
of high performance. Our position with both the Army and Navy is such that 
we are not justitled in pushing them any further. It is downright dangerous ; 
and I don't think it would do any good, and it might do some harm, for you 
to go direct to Admiral King or anybody else. 

As I said in a previous letter to you, I believe you can read through ambigu- 
ous remarks, so here goes. Janes All the Worlds Aircraft has published some 
data on the YO-40. 

That is other than the ones as referred to by you ? 

Mr. Allaed. Correct. 

Mr. Hiss (continuing reading) : 

Information already published on the A-S is pretty good, and you know 
what a different motor installation might do. I have already told you how 
much retractible undercarriage adds to rdrplane performance. A 14-cyIiuder 
motor for small planes of around 200 ni.p.b. can be expected to improve per- 
formance from 3 to 6 miles per hour, as compared with equivalent horse- 
power from a Cyclone. When you get back from this trip you will have a 
better idea of what you will require in the future under similar circum- 
stances, and I think we can load up your mind and ov;r inside vest pocket 
with enough dope so that the situations can be handled. They are doing 
everything possible in Buffalo to complete flight tests on the demonstrator 
Hawk with 4-barrel carburetor — 

At that time the 4-barrel carburetor could not be released for 
export ? 

Mr, Allard. Yes, sir ; it could. It was on commercial planes. It 
is on all the Douglas planes.^ 

Mr. Hiss (continuing reading) : 

but there was a hitch in the program due to the Navy's borrowing the only 
4-barrel we had, and we are just receiving from Wright a replacement. On 
the Douglas transport the use of the 4-barrel carburetor as compared to the 
2-barrel added about 30 horsepower per motor. Every new single-motored 
or bi-motored transport I have seen recently has retractible landing gear and 
controllable pitch propellers, which I am told add from 3 to 10 miles per 
hour to the top speed. 

Mr. Hiss. This retractible landing gear was a new development? 
Mr. Allard. No; not particularly new. It was a recent develop- 
ment. 

Mr. Hiss. And the controllable pitch propellers were new? 
Mr. Allard, Yes, sir; but released for export. 
Mr. Hiss. Then you state [reading] : 

Do you get it? It's almost like a code. 

In the original letter that appears in capitals. 
Mr. Allard, That is correct. 

]Mr. Hiss. What did you mean by that, Mr. Allard? 
Mr. Allard. I will explain the whole two paragraphs, if I may. 
It was definitely our policy not to release any information, and I 



i(" Exhibit Nos. 449 A to E, inclusive", in reference to above were introduced in 
hearinss of Sept. 17 (see part VI), and are included in the appendix of this volume on 
pp. 1010, 1011, and 1012.) 



MUNITIONS INDUSTRY 851 

refused to do it, to Mr. Leighton, on the ships which are specified 
in my letter. I had just returned from Turkey myself and Leighton 
had replaced me over there, and I knew what Leighton was up 
against, and he was asking for the information on these airplanes, 
if such information had been released by the Army and Navy, so 
that he could take as an engineer and aeronautical man and compute 
what performance he could give the Turkish Government on the 
then existing type of aircraft they had in service over what we had 
sold them some 2 years previously. 

I knew that he did not need the information which he was asking 
for. I knew what information he needed and proceeded to give it 
to him. That information, for example, was on the Hawk air- 
plane, of which Turkey had 24. He wanted to add a retractible 
landing gear, which anybody could do. That was published, and 
those retractible landing gears were used on all airplanes. Practi- 
cally all commercial airplanes have them. 

He wanted to know what the performance was on the FllC-3 
airplane, because among other features it had a retractible landing 
gear. 

I gave him the information that a retractible undercarriage would 
add 3 to 10 miles per hour to the performance of the airplane, which 
would have stei^pecl up the performance of the Turkish Hawks by 3 
to 10 miles per hour. I did not give him any information on the 
construction or type, details of general performance characteristics 
on the FllC-3 or the FllC-1, which he was asking for. 

On this YO-40, that was published, which I stated here in the 
letter, in Janes All the World Aircraft, the information released 
by the Air Corps, which was public, and the same thing with the 
A-8, a liquid-cooled engine. He wanted to know the difference in 
performance between an airplane equipped with a liquid-cooled en- 
gine, which was the Falcon, which at that time we were trying to 
sell Turkey, but they wanted an air-cooled engine in the airplane, 
because there were air-cooled engines throughout in the Hawks 
which they purchased from us. 

So that I gave the information I stated, and he already knew 
what an air-cooled different engine installation would do to an air- 
plane, and in dictating this, as one officer to another officer in a 
company, in a jocular way, I said, " It's almost like a code " and 
" Do you get it? " It was a perfectly innocent remark or a normal 
statement in talking to Leighton. There was absolutely no infor- 
mation given in this in any way, shape, or manner. No engineer, 
no pilot — I have been flying for 17 years myself and it is impossible 
to get the performance on any of the airplanes on which information 
was not already released by the Air Corps from that paragraph of 
my letter. 

Mr. Kaushenbush. Mr. AUard, why did you not simply tell him 
how many miles per hour the plane could do with all those changes? 

Mr. Allard. Because I did not know what other characteristics 
he was going to have to combat in Turkey. That is, whether they 
wanted changes in gas tanks or other items. I was telling him that 
with a retractible landing gear, which could be put on the airplane, 
that he would add 3 to 10 miles per hour. 

Mr. Hiss. One other line of inquiry, Mr. Allard, which I would 
like to take up in this connection : Has the art of dive bombing been 



852 MUNITIONS INDUSTRY 

a fairly recent development on the part of the United States Army 
and the United States Navy? 

Mr. Allard. I do not think so. I think that is referred to in 
those letters of Admiral King and Admiral Moffett. 

Mr. Hiss. I do not think so. 

Mr. Allard. Dive bombing? 

Mr. Hiss. We will look back. 

Mr. Allard. I do not know. It goes back to the Hell Diver air- 
plane, around which the moving picture was made several years 
ago. 

Mr. Hiss. Here is Admiral Moffett's letter, " Exhibit No. 441 " 
[handing paper to witness]. 

Mr. Allard. I think it was Admiral King's letter. 

Mr. Hiss. You mean the one which was written after Mr. Web- 
ster's ? 

Mr. Allard. The one which was written before or after. 

Mr. Hiss. There is Cook's letter and there is King's letter [hand- 
ing papers to witness]. Not dive bombing. 

Mr. Allard. Not dive bombing. 

Mr. Hiss. Has the Navy permitted dive-bombing tactics to be 
sent abroad by American aviation companies who happened to be 
familiar with those tactics? 

Mr. Allard. I do not know. 

Mr. Hiss. " Exhibit No. 448 " i^ a letter dated October 8, 1932, 
from Mr. Robert L. Earle to Mr. A. B. Carrington, of the Export Co. 

(The letter referred to was marked " Exhibit No. 448 ", and is 
included in the appendix on p. 1004.) 

jMr. Hiss. That letter reads in part as follows [reading] : 

It will not be possible to offer any dissertation in detail on the metlidd 
employed by the Navy in dive bombing for, as we have advised the Export 
Ccnipany before, the Navy considers this information as confidential and will 
not permit it to be passed out. The following statement, however, may serve 
your purposes : 

" Single-seater and two-seater airplanes in use by the U.S. Army and Navy 
are not constructed to enable bomb sights to be used for the dropping of 
bombs while in horizontal flight. It is impossible to locate such a siglit where 
a pilot or his gunner could effectively employ this instrument with the needed 
degree of accuracy. For this reason, such sights are used only in large, sIo\yer 
airplanes especially constructed for this type of bombing. 

" Both branches of the American service have found that greater accuracy 
can be obtained in the placing of bombs of comparatively small size such as 
used with single-seater and two-seater airplanes by the releasing of these 
bombs while in a dive. In the dropping of bombs in this method the pilot 
uses tlie same sight which he employs in connection with fixed guns. He 
simply aims the airplane itself at the target, drops his bomb or bombs while 
the airplane is in a dive, then pulls out and resumes normal flying. It is for 
this reason that airplanes constructed for the U.S. Army and Navy are built 
to withstand considerable diving but do not make provision for the installa- 
tion of bomb sights of the type used in horizontal bombing." 

Mr. Earle further says : 

The above is simply my own statement of the bombing methods employed 
but I hope it will suit your purposes. 

That was in 1932. 

Mr. Allard. Yes, sir. 

Mr. Hiss. Were the officials of the Export Co. in Europe advised 
at that time that the details of dive bombing should not be made 
public ? 



MUNITIONS INDUSTEY 853 

Mr. Allard. I do not think they were advised that, unless the 
question came up for some specific purpose. 

Mr. Hiss. On January 18, 1934, Mr. Allard, you wrote a letter to 
Mr. Leighton, which will be marked " Exhibit No. 449." 

(The letter referred to was marked " Exhibit No. 449 " and is 
included in the appendix on p. 100").) 

Mr. Hiss. On page 2 of that letter, the third paragraph, you state 
as follows [reading] : 

On the subject of dive bombing, — 

This was written January 1934, whereas Mr. Earle's letter was 
1932. 

Mr. Allard. Yes, sir. 

Mr. Hiss (reading) : 

On the subject of dive bombing which j'ou refer to in your letter of Decem- 
ber 12th, and which is apparent in copies of your proposals to the Government 
on new business, this is a matter that is most delicate by nature. You refer 
specifically in your protocol to the Ministry of Defense on the Kiiyseri factory 
project, under the heading "Test Flights of the Planes," page 6, as follows: 
" Diving bomb tests will be included this time In the oflBcial tests." We have 
been nosing around in the Bureau in Washington, discreetly, and find that 
they hold as most strictly confidential their dive-bombing tactics and procedure, 
and they frown upon our even mentioning dive bombing in connection with 
the Hawks or any other airplane to any foreign powers. It is absolutely 
unwise and unethical at this time, and probably for some time to come, for 
us to indicate in any way that we know anything about the technique and 
tactics of dive bombing and to include such tests in ofiicial tests, or to have 
any pilot demonstrate or instruct in dive bombing, would be just about the 
w(»rst thing that could be done at this time. I can see no objection to your 
referring to dive bombing in conversation, but you should plead absolute 
ignorance as to the technique employed or why or how we can use dive bomb- 
ing in our services here. If any Navy officials, or any of the Navy officers now 
located in Turkey, or who might visit there, or replace the present officers, 
should get hold of any proposal from us in which we refer to dive bombing, 
it would snap right back to Washington and I am afraid it would seriously 
react against our Navy relations which are too good now here to upset in any 
way. I know you can appreciate this and I also know that you will take the 
necessary steps to remove from present negotiations any reference to dive 
bombing, and keep the mention of them out of any formal contracts or even 
proposals. / cannot stress the importance of this too much. 

I realize that you are fighting against European competition that seems 
to have airplanes that are a little faster than ours. However, I know that 
you also know of all the sales arguments against the extra speed and, par- 
ticularly, how they obtain it in foreign equipment. It is done at a definite 
sacrifice on the life of the engine and, probably, the airplane ; it is done at 
a sacrifice of maneuverability and military load ; and if those features in the 
Hawk do not offset a few kilometers difference in speed, plus the fact that the 
ship will withstand power dives of high velocity and stand a punishing to 
which this type has been subject for years in our services at home, I do not 
know how you can compete. 

It may be all right for Bob — • 

That is Farnsworth? 

Mr. Allard. Yes. 

Mr. Hiss (continuing reading) : 

To put on a dive bombing show to show the strength of the airplanes, but to 
refer in contract to dive bombing, or endeavor to teach dive bombing, is what 
I am cautioning against doing. 

Senator Bone. Mr. Allard, can you tell us what percentage of your 
Curtiss-Wright business, in dollars and cents, is done with the United 
States Government, in both military planes and those used in other 
services ? 



854 MUNITIONS INDUSTRY 

Mr. Allabd. I cannot off-hand. The records have been furnished 
the committee, and have been gone into this morning. 

Senator Bone. Do the studies wliich were put in the record indi- 
cate what percentage of the business, in dollars and cents, has been 
done with other governments? 

Mr. Allard. Exports? Yes, sir. 

The Chairman. Off-hand, what percentage of your total business 
is with the United States Government? 

Mr. Allard. I think it was about 66% percent. 

Mr. Hiss. About two thirds. 

Mr. Allard. Yes, sir. 

Mr. Hiss. And of the other business, the majority in recent 5^ears 
has been foreign sales, of which the majority has been with foreign 
governments. Is not that correct? 

Mr. Allard. Yes, sir ; by far. 

The Chairman. Mr. Allard, do you know Major Doolittle very 
well? 

Mr. Allard. Yes, sir ; I served with him during the war. 

The Chairman. What position does he occupy? Do you know? 

Mr. Allard. Yes, sir; he is manager of the aviation department 
of the Shell Oil Co., headquartering in St. Louis. 

The Chairman. Is he in any way connected with the procurement 
division of the Army at Chicago ? 

Mr. Allard. Not to my knowledge. I do not know, sir. 

Mr. Hiss. Mr. Allard, do you know how many officials of your 
company are former Army or Navy officers, or have been in the 
Army Reserve Corps or the Naval Reserve? 

Mr. Allard. I do not know how many, but it could easily be 
found out. We can get that. 

Mr. Hiss. You yourself served as a pilot? 

Mr. Allard. Correct, during the war. 

Mr. Hiss. And Captain Travis was a former Army pilot, was he 
not? 

Mr. Allard. So I understand. 

Mr. Hiss. And Major Doolittle was helpful in demonstrating. 
Major Melvin Hall, formerly with your company, was an Army 
aviator during the war, was he not? 

Mr. Allard. I understand he was aide to General Mitchell during 
the war. 

Mr. Hiss. Captain S. C. Coon, who was at the Turkish factory at 
one time, was a former Army or Navy man ? 

Mr. Allard. I know he was an Army man during the war. 

Mr. Hiss, Mr. Theodore Wright was a former Army man or 
Navy man, was he ? 

Mr. Allard. I do not know, but I can find out easily. 

Mr. Hiss. Mr. Leighton was a former lieutenant commander, was 
he not? 

Mr. Allard. Of the Navy. 

Mr. Hiss. Mr. Chapline of Wright Aeronautical was a former 
Army officer? 

Mr. Allard. No, Navy officer. 

Mr. Hiss. In the hearings before the Subcommittee on Aero- 
nautics of the Committee on Naval Affairs of the House of Repre- 



MUNITIONS INDUSTRY 855 

sentatives, at page 600, there is a list of men who are now employed 
by aviation companies who were formerly in the United States Navy. 

Keferring to the Eclipse Co., which is a part of the General Mo- 
tors group, we find Lt. Comdr. C. H. Havil ; and Lt. Jens Soucek. 

General Aviation had Lt. C. H. Schildhauer. 

Could you furnish the committee with a list of all the officers, 
former Navy or Army officers, including Reserve Corps, of both 
the Army and Navy, that is, in any capacity in the Army or Navy, 
who are now with the company and what their duties are ? ^ 

Mr. Allard. Take the officer and employee list of the company 
at the present time? 

Mr, Hiss. Yes, sir. 

Senator Bone. Do you consider that your company is an enter- 
prising one? 

Mr. Allard. I hope so, yes, sir. 

Senator Bone. And that it is applying to aviation the very latest 
features of aerial navigation? 

Mr. Allard. I should say so, yes, sir. 

Senator Bone. Is there any doubt in your mind as to that? 

Mr. Allard. Not as a pilot. 

Senator Bone. From the mechanical side, do you think your com- 
pany and other aviation concerns in this country are applying the 
very latest principles? 

Mr. Allard. I certainly do. 

Senator Bone. I take it your company and other companies have 
research work going on all the time? 

Mr. Allard. Yes, sir. 

Senator Bone. So that you are attempting to keep abreast of all 
the changes made? 

Mr. Allard. We are attempting to keep abreast of all the changes 
made. 

Senator Bone. And that information is made available to the 
Government ? 

Mr. Allard. Yes, sir. 

Senator Bone. Would you say that the United States Govern- 
ment, then, has the very latest word in efficiency of planes that, 
it is building and will build? 

Mr. Allard. At the present time and under present conditions of 
appropriation and so forth, yes, sir. 

Mr. Hiss. Mr. Allard, in the memorandum previously referred 
to and marked " Exhibit No. 3'97 ", the memorandum of June 19, 
1934, from Mr. Albert I. Lodwick, who was an employee of the 
parent corporation 

Mr. Allard. Yes, sir. 

Mr. Hiss (continuing). To Mr. Thomas A. Morgan, the president 
of the Curtiss-Wright parent company, who was also the president 
of the Aeronautical Chamber of Commerce 

Mr. Allard. Yes, sir. 

Mr. Hiss. And who, according to the records of the Army Ord- 
nance Association is or has been a member of the executive commit- 
tee of the St. Louis post of that association^on the last page of 



^ The above-requested list was furnished to the committee by Mr. Allard and is included 
in the appendix on p. 1013. 



856 MUNITIONS INDUSTRY 

this memorandum, which one of our investigators is informed was 
discussed by Mr. Morgan with President Roosevelt in June, after 
this committee was formed, the following appears : 

Congressional investigations, embargoes, pacifistic talk, and propaganda will 
doubtless cause some of our present customers to buy abroad due to the 
uncertainty of delivery and tbe uncertainty of obtaining spare parts in tne 
future. The greater the volume of aviation business in this country, the 
better our national defense. 

Your company does not look upon embargoes or peace talk or 
congressional investigations with favor? 

Mr. Allard. Yes, certainly. If all the powers in the world will 
join in them ; but there is no good for us to put on an embargo or 
talk peace and let this business go to foreign competitors and give 
them the business. 

Senator Bone. How do you suppose that the world could arrive at 
a state of mind where it can begin to discuss peace, unless peace 
is talked? 

Mr. Allard. It has been talked for centuries, has it not. Senator? 
Senator Bone. Would your company suppress all discussions on 
the desirability of peace? 

Mr. Allard. No; I do not think that I am in a position to say 

what my company would think of a subject as great as that now. 

Senator Bone. There was some reference during the course of 

the hearing to " fomenting peace ", and I believe you made some 

observations upon that. 

Mr. Allard. Yes, sir. 

Senator Bone. How would you, Mr. Allard, find a way to bring 
about a different attitude of mind among the nations of the earth 
except by talking peace ? Could you suggest any other way ? 
Mr. Allard. No ; I do not think so. 

Senator Bone, It is part of our duty to inquire into the whole 
picture, and I am wondering if you can suggest any way by which 
the world can finally get rid of some of the things which confront 
us except by discussing the desirability of peace, 

Mr, Allard, That has gone on for centuries, has it not, for a 
great many years? 

Senator Bone. I understand, and murder has gone on for cen- 
turies, but we still have laws with respect to it, and larceny has gone 
on for centuries, but we still have laws with respect to it. We do not 
find ourselves confronted with a sense of frustration in dealing with 
these things, but still continue the laws on the statute books, 
Mr, Allard. Certainly, 

Senator Bone. Would you suggest that we abandon all efforts to 
have peace? 

Mr. Allard. Oh, no; obviously not. 

Senator Bone, To what extent would you suppress that sort of 
thing? I do not mean that in an odious sense, but I mean to turn 
it down, 

Mr. Allard. I think, Senator, that it is entirely too great a sub- 
ject for me. It is beyond my comprehension to give any solution 
to it. The great world powers have been trying for years to get a 
solution to this problem, and I certainly am not equipped to give 
any judgment on it now, I wish I could. 



MUNITIONS INDUSTRY 857 

The Chairman. How seriously do you feel that the great world 
powers have undertaken this task? 

Mr. Allard. I only hope that they have, Mr. Chairman. I would 
not have any way of knowing how seriously they do it. I am not 
close enough to the powers to know. 

Senator Bone. I take it that you, as a private citizen and as a 
business man, would not want to see the world engaged in another 
such thing as occurred between 1914 and 1918? 

Mr. Allard. I certainly would not. 

Senator Bone. What do you think might happen to western 
civilization in the event another conflict of that kind ensued, con- 
sidering the financial and economic conditiong we have in the world 
today ? 

Mr. Allard. I would not care to see that happen. Senator. 

Senator Bone. We are not asking you to deliver a lecture or any- 
thing of the kind. 

Mr. Allard. I hope not. 

Senator Bone. But what do you think might happen to western 
civilization in the event that the world got embroiled in another 
conflict of that kind? 

Mr. Allard. Frankly, I do not know. I do not think any one 
could forecast what happened to us prior to the war. I certainly 
know I did not have any idea what would happen. I would not 
attempt to guess. 

Senator Bone. Were you astounded by what did happen? 

Mr. Allard. Probably I was a little too young to be astounded 
by it at the time, sir. 

The Chairman. Do you think the world could stand another con- 
flict of that land ? 

Mr. Allard. I do not know. 

The Chairman. There is a doubt in your mind, is there not, and 
you are wondering, as others of us are, whether the world could 
withstand another conflict like that of 15 years ago ? 

Mr. Allard. Yes, sir ; that is correct. 

Senator Bone. You would be fearful of the economic and political 
changes that would be brought about by a war of that kind ? 

Mr. Allard. Yes; probably. 

Senator Bone. Why do you not say it would be? You say it 
would probably be. 

Mr. Allard. I do not know that that is the only thing I would 
be fearful of. There are a lot of other things besides political and 
economic things to consider in a world conflict. I do not know 
what would happen. I do not know what this world would look 
like. 

Senator Pope. Do you think the activities of the munitions makers, 
such as disclosed here, with the assistance of Government officials in 
Europe, and even in America, are promoting peace or a peaceful 
attitude among the nations ? 

Mr. Allard. I do not think it is hurting peace, Senator, until 
all the world powers get together and establish some definite basis 
of world peace. They have been talking of it for years, but the 
mere sale of munitions or aircraft by us or anybody else is not 
detracting from the possibility of peace. 



858 MUNITIONS INDUSTRY 

Senator Pope. Do you think that all the facts which have been 
brought out at this hearing, as to the intrigue indulged in, par- 
ticularly by the European countries, in South America and in 
Europe, is having no effect at all, so far as promoting a peaceful 
attitude in the world is concerned ? 

Mr. Allard. Not unless all the powers of the world get together 
and stop it. One stopping it is not going to answer the problem. 

The Chairman. Mr. Allard, if I am not mistaken, it was Lord 
Cecil, who has been in pretty constant attendance upon these dis- 
armament conferences and peace conclaves, who declared that a 
very ominous factor entering into all the negotiations had been 
the influence of the munitions makers the world over. Now, that 
being the case, are you not ready to concede that the munition makers 
perhaps are taking a larger hand in opposition to understandings 
than we might wish to have ? 

Mr. Allard. I do not think I can answer that, Senator. 

The Chairman. Perhaps I should not expect you to. 

Mr. Allard. I would have to think it over. 

The Chairman. But the attitude, such as I attributed to Lord 
Cecil, is an attitude not at all unlike that our own American emis- 
saries bring back as being things standing in the way of under- 
standings. 

Gentlemen, you will understand yourselves to be excused, and 
the committee will reconvene at 2 : 15 o'clock. 

(Witnesses excused.) 

(Thereupon, at 1 : 20 p.m., the committee took a recess until 
2 : 15 p.m.) 

This concludes the record of the Curtiss-Wright Export Corpora- 
tion. The committee at this point took up the case of the E. I. 
du Pont de Nemours & Co., which is printed in part V. 



DU PONT - GENERAL MOTORS 
AIRCRAFT MANUFACTURING INTERESTS 



ALLISON ENGINEERINC 
DIVISION 

U1A 0WNSA93tTS 
(fWWACTURES AVIATION 
CNSINES, BEARINGS, SUPER- 
aoRSCWS.CTC IWIANAPOIIS) 



DU PONT CO. 

2a05'/< 0FG.M.C0t1- 
MCN STOCK HELD BY 
WHOLLY OWNCPSUBSIOARY 



GENERAL 

MOTORS 

CORPORATION 



BDffilX 4/IATION 
CORP. 

fWLDNGi OPERATING CO) 
G.M.C. OWNS 15% 



BENDIX 

PRODUCTS 

CORPORATION 



BCNOK-ECUPS 
OF CANADA. LTa 

MANUFACTURE &5*LE 



ECLIPSE 
AVWTION CORP 

[ASTOIMNCE.N J. 

MANUrACTURES 

ENGINES.STARTERS. 

AND CENERATORS 



BENDIX BRAKE Ca 

rlAdUFACTURES BRAKE3 

SOUTH BEND, IND. 

100% 



BENOIX-CavOREY 
BRAKE TFSTrR.INC 

SHOP EOUIPMEMT 



BENDIX-STROfaDK 
CAMUKETORCa 

(WRBUKEFORS) lOOV. 



;(XMItt« AIRCRAFT CO. 

; (PLANES) NORTH 
I AMERICAN AVIATION OWNS 
'•ISf. (89,062 SHARES) 



ECLip«e 

HACHINE ca 

fLMiRA, N r 

(STARTER DRI.'E. 

BRAKES) 

100 V. 



CCNERALAMATION 

CORR (HOLDING) 
AFFILIATED WITH i.HC 
S.N.C OWNS A»M%, CiJia 



NORTH AHCRICAN 
MMTiOH. INC 

GCNl AVIATI0N0WN9 *i2tV 
G.MC OWtiS 67<X 



JULIAN p. 
FDETrASOMlMa 

BALTO MD 



PIONEER 
MSTRUMENT CA 

(BENDIX AVIATION CORP 
OVHS lOOX COMMON 
STOCK -WRIOUS I35urs 
PREF. STOCK STILL 
OUTSTANDING APRIL 
|9M)*/IATI0N INSTRU- 
MENTS, ETC BROOKLYN 



BCWnLLA 
riASNCTO CO. 

BENDIX AVIATION (a»P 

(^vrtHS lOOXMV/ATION 

ELECTRIC 4 IGNITION 

APPARATUS 



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WE»TBi6HDU3£ { 

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BENDIX AVIATION SIU \ 

WtSTINGHOUSE A«- ; 

eRAnE CO «» I 



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CORP. 

I JOINT CONTDOL WITH 
(STANDARD OIL COiail 
^LUBRICATION EOUIP- 
;MfNT CHICAGaiLLi 



BRACe-KLCSUmCM 

VACUUM POWER eRA)(ES 

AND AUrOMATIC 
CLUTCH CONTROLI 



BRAtnSASOHliWC 

(PIONEER INSTRUMENT 

CO CWNS 100 X) 

SClENTinc INSTRUMtNTS 

BROOKLYN 



CENERAL AMATKW 

ruNurACTURMC ca 

100% 

CQWCRCIALA MILITARY 
PLANES. BALTIMORE: 



AIRCRAFT CORP. 

100 j; 

MILITARY AIRCRAFT 
BALTIMORE 



CONDOR CORR 

100 X 

(investment 
corporation; 



SPERRT CORP. 

I/ILL STOCIf DISTRIBUTCO 
VOTING TRUST CERTiriCATES 
TO NORTH AMERCAN STOCK- 
HOtJIERS OF RECORD ALJ&. r7.33 



noODY'SISM 
ri DUPONT n NEMOURS 
ANNUAL REPORT FX)? S33 



STRRTfiYROSCaPECO. 

EROOIfLYN N Y lOOV. 
1=IRO-COI1PASS, GYRO- 
STABILIZER , GUN-FIRE 
CONTROL tTC. 



8PERRY GYROSCOPE 
ca LTD. 

IEN6LAND1 
SPERffY GYROSCOPE 
CO OWNS 100% 



FOROMSTRMCMTCa 

LONG ISLAND CITY 
l(X>S; RAN6E-KfEPER5 
ANTlAlfiCRAFE flBE-CON- 
TROL MECHANISMS ETC 



WTERCONTMMr 
ilMT)ON.INC 

SHARES ouremDw-ngm 
sPDwrcofiPovrtis- i7*isia 
vazx . pieuc - sBfloo 



COnRAMA cc 
AMAOON FAUCETr.<A 



UWUI MKIirCORR 

SFtWlfCDW.OKKIBfli 
CUSSA(I,I47,<»I OUT- 
STANDUGJCIlSSlCOftlON 
itTlOfil? (WTSryWDING) 



MmONEXPlXWrnOMBK 

miOOX "DEWLOPS AMTON 

IKPUSTRY.COnftRaAL 
REPRESENTATIVE FDflEISN 
CO(«TRIES. SEVERAL CORR 
rt#T;TS.,A»W>I.A«ES . ETC." 



■i. (Face p. 859.) 



APPENDIX 
EXHIBITS 



("Exhibit No. 268" appears on facing page) 



" Exhibit No. 26S-A" is a list of stockholders in Cnrtiss-Wright and is on file 
with the committee. (See p. 693.) 

Exhibit No. 269 

[Copy] 

Watson, Phillips & Cia. Sues., S. En. C, 

AvBNiDA Uruguay No. 103 Apartado Postal 67, 

Mexico, D.F., March 23rd, 193'f. 

agency agreement 

Cltitiss Wright Corporation, 

R.C.A. Building, 30 Rockefeller Plaza, iNeio York City. 

Dear Sirs: We duly received your letter of the 15th of January, with whicli 
you enclosed copy of your sales agent agreement, and regret having left this 
matter pending for so long, but we expected to discuss the points which we wish 
to bring up now, with one of your representatives upon his visit to the country, 
which at that time we believed would take place in the near future. 

We believe the agreement appears to be quite suitable, and the only points 
which we shall draw your attention to, are the following : 

We note that we are allowed the agency solely for military airplanes and 
engines, and that no mention is made of civil machines. Although it is scarcely 
likely tl.;u we uiay cbtain an order fur e'vil tiirplaiio ■■. Vv-e presume you will 
have no objection to our soliciting same, should opportunity offer. 

We note that we are merely named in the agreement as " Soliciting sales 
agents ", and that we may not act in any more official capacity than is outlined 
in the agreement, which we believe might rather restrict us in our representa- 
tions liefore Government departments in case of necessity, as if we are considered 
b.v them your official representatives, they will properly expect us to be in a 
posiiion to make definite offers and close contracts on your behalf, for indeed, 
as you know these matters are indefinitely delayed whilst negotiations are in 
course, but it is always the case when the Government officials make a decision, 
they wish everything to be done with extreme rapidity, and having to refer 
mat ers back to you, might be prejudicial to your interests and ours. 

Glause 3. We note the conditions with regard to the payment of commissions, 
and believe that this clause should be amplified to provide for some form of 
commission to be payable to us on orders for machines to be delivered in 
Mexico, which may be placed direct with you in the United States. The possi- 
bility of such orders may be remote, but we feel that due to our friendship with 
the officials of the aviation lines here in Mexico, and the propaganda which we 
have made on .vour behalf, this may ultimately result in planes "being bought in 
the United States by these airways, and we believe that in that case, we should 
be entitled to some remuneration. 

Our comments with regard to our position as repi'esentatives of yours as 
above, specially refers to our ability to collect on your behalf down payments 
which may be made by the Government, as unless we are in a position to do 
this, you will readily appreciate that any other form of payment may be prej- 
udicial to your interests, as we are always particularly careful to see that 

859 



860 MUNITIONS INDUSTRY 

before we acc( pt any Govornnieiit orders, we have received part payment in 
casti before submitting the order. We would be glad to have your advices in 
this connection in due course. 

As we are informing you under a separate letter, the Government holidays 
commence today and last to the end of this month, consequently all negotiations 
must remain i)ending until that time. This is jtarticularly unfortunate, as it 
only means further delay, but we really believe that in the near future some- 
thing definite will be forthcoming as the Government simply must have new 
motors and jilanes, and it is certain that these will be ordered l)efore this term 
of office has passed ; consequently matters may come to a head in time in the 
month of April. 

We are assured that our connection with the various departments are satis- 
factory, and that if anything is to be ordered it will be from your firm, it is 
only that the delay is very depressing. 

Awaiting your advices in connection with this matter with much interest, we 
remain 

(Signed) Watson, Phillips & Cia. 
CHEP/tvz. 



Exhibit No. 270 

[Copy] 

Ankara, Fcbruanj 20th, WS.'f. 
Mr. J. S. Allaed, 

Curtlss-W right E.rport Corp., RCA BuiMitig, 

30 Rockefeller Plaza, Neio Yo7'k. 

Dear .Tack : This letter is in follow-up of exchange of cablegrams regarding 
Caldwell — yours of 16 February asking if I felt situation justified additional 
help in Europe, and my reply of Feb. 17, saying, " Think it advisable have 
additional permanent European representation for some time in view of 
developments." I suggest you hold Caldwell in Europe until receipt of 
letter. 

This letter is a sort of review of lengthy correspondent we have had in the 
past on the general subject. Before writing this letter I have reread much of 
that correspondence. I don't ask you to take the time to do the same thing, 
because it is long, but I do particularly ask you to read again the latter part 
of my long general letter addressed to Tom Morgan on October 2Gth, and my 
recent general letter of February 14th — mailed two days before receipt of your 
Febr. 16th cable. 

I have been out here for nearly eight mrnths. Although I've spent most of 
my time in Turkey I haven't for a moment forgotten that Turkey is after all 
only a part of the larger general European job. I believe that my contacts with 
otlier parts of Europe plus the flow of information correspondence that has 
been forwarded me regarding affairs elsewhere in Europe, has kept my per- 
spective fairly straight. Bill Kennedy's recent trip here has given me side 
lights which serve to fill in the blank spaces in the picture — particularly the 
K. L. M. story. I have had plenty of opportunity to talk with i)eople who have 
intimate dealings in other countries in Europe. 

Everything I have seen, read, and heard, seems to justify a conclusion that 
our experience in Turkey isn't just a special isolated case, but that it may be 
looked upon as a problem typical of airplane sales in Europe. With certain 
variations in detail to meet special local conditions, our experiences in Turkey 
may be taken as a point of departure on which to build our European sales 
policy (excepting such countries as England, France, Italy, and Germany, 
which a»'e industrialized producing countries and where licensing is our only 
possibiliiy). 

If that hypothesis is even half correct it means that we've got to be prepared 
to make more permanent contacts, and to spend more time in those countries 
where we're looking for business. And that means more people on the job on 
a permanent assignment basis. 

Right here I would like to set down briefly a number of conclusions that have 
been forming in my mind while I've been sweating over this job — and con- 
stantly champing at the bit because of my complete inability to break loose 
from Turkey to run down the numerous interesting possibilities for business 
that are continually being reported all over Europe. 



MUNITIONS INDUSTRY 861 

I. When you sell airplanes in Europe you deal with governments. You 
are dealing in military equipment, which is invariably and popularly looked 
upon as vital to the personal safety of every individual. (Remember that in 
Europe civil air transports are usually looked upon as military planes in dis- 
guise.) The basic problem in Europe isn't so different from the problem of 
dealing with our own Government at home as one would at first suppose. 
There are differences in details but tlie underlying basic requirements and 
general strategy are remarkably similar when you get down to final cases. In 
Europe you're dealing with twenty-odd governments, each one of which is as 
fussy as the one Government we deal with at home. 

II. Occasional visits to the big shots at the top side stir up a measure of 
passing interest, but in the final analysis they don't do a whole lot of good 
unless they are backed up by everlasting hammering at the rank and file, 
through personal contacts with subordinate section chiefs, and on down through 
the pilots and mechanics in the operating units. If the operating personnel 
don't like your stuff, the big shots on the top side rarely, if ever, have the nerve 
to buy it. 

III. Palm persuasion is a far less potent factor than it is reputed to be. In 
certain cases in some countries it helps somewhat in getting a favorable hear- 
ing, but it is far less general than one would suppose. Competition is too 
keen, and gossip too searching, for the art of palmistry to thrive. There have 
been a lot of political heads chopped off because of it, and it is becoming 
constantly less popular. 

IV. Personal acquaintances and friendships — and the confidence and good 
will growing out of them, are as potent a factor in Europe as they are at home. 
The only difference is that it takes longer to establish them in Europe than in 
America, first because of differences in language, and second because the 
average European is less given to accepting strangers on faith than is the 
American. 

V. The competition is at least as keen, and it is more varied, in Europe than 
in America. Political conditions are far less stable, changes in assignments of 
personnel to important positions of responsibility and authority are far more 
frequent and sudden. That means that you must always be prepared to see 
the work of months badly battered and suddenly in need of major overhaul. 
The wider and more varied is your acquaintanceship the less you are likely 
to be disturbed by such changes. (I have, for example, just received word from 
Greece that their whole aviation program has been at a standstill as result 
of a sudden change in the Minister of Aviation and sweeping changes in the 
entire headquarters staff.) 

VI. Due to the very nature of the product, and the general conditions under 
which it operates, the airplane sales job is largely a " sales engineering " jot), 
which requires an intimate knowledge of the technical features of our product, 
at least a fair acquaintance with the technical features of the competitors 
products, and a fair acquaintanceship with general strategic and tactical prob- 
lems. Further, because there usually enters the problem of local manufacture 
(see my letter of October 26th) you've got to have at least a general acquaint- 
ance with manufacturing principles. If there are any agents available who 
have the required technical qualifications I have yet to hear of them. De- 
naxas and Admiral Gerondas in Athens are the nearest approach I've foiuid 
yet, but they fall far short of full qualification. Your agent can act as your 
general contact, he can keep you acquainted with the general situation, see 
that you meet the people worth seeing, do your translating and interpreting, 
help with banking connections, etc., but he can't sell your goods nor negotiate 
your contracts. When it comes to primari/ selling (I except miscellaneous 
spare parts and accessories which follow inevitably in the wake of primary 
sales) you've got to have a direct representative of the home organization on 
the ground. And that direct representative has goit to know his stuff, because 
he's hivariably up against the best selling organizations in Europe who have 
their home organization near at hand, and demonstrators available. In this 
connection it is well to remember that the best agents (that is those who have 
the best connections) are those who carry a number of lines. No agent who 
is worth his salt can afford to handle your line as a specialty— at least until 
you've become firmly enough established to assure a continuing flow of profit- 
able business. Therefore your agents need constant punching by personal visits 
to keep them on their toes. 

VII. It follows inevitably from the foregoing that to hook orders, in Europe 
you've got to have pretty complete direct representation on the ground — at 



862 MUNITIONS INDUSTRY 

least until you've become firmly established. Without such representation 
you'll get lots of nibbles and occasional hot inquiries, and spend a lot of money 
sending cables and mailing literature, but you'll book lew orders for profitable 
business. You can't sell aircraft in Europe by correspondence or through de- 
tached agents. 

VIII. Due to the very rapid pace of technical and tactical development in 
aviation, it follows from VI that your representatives in the field must have 
frequent personal contacts with progress at home, through personal visits to 
the factory organizations where they can see what is going on, and learn what 
our own people are thinking about. Of equal importance is that the factory 
organizations must have first hand personal reports from the field regarding 
what is going on. Correspondence is a very unsatisfactory medium for such 
interchange of ideas. No representatives should be left out in the field for 
more than a year. He gets too far behind, and when he gets too far behind he 
just can't hold up his end when it comes to the knock-down drag-out fight, into 
which all sales in Europe apparently develop before you walk out with a signed 
contract. (In that respect the situation in Europe doesn't seem to be any 
different from that at home. I gather that the Douglas episode wasn't any 
bed of roses. When I get too discouraged at delays and difficulties involved 
in this Turkish battle I console myself with the recollection that the Douglas 
battle started nearly a year before I left for Turkey.) 

IX. One man can't begin to cover all of Europe effectively, no half of it. 
Europe isn't very large in point of distances, but it is a whale of a big territory 
in term of time and convenience of communication. It has some twenty-seven 
governments in it, in the majority of which are potential markets that we are 
trying to reach. Each government considers itself just as important, and each 
is just as fussy and at least as red-tape ridden, as is our own Government. A 
representative just can't " drop in " on Ankara from Paris. It's a fovir-day 
journey, each way. It takes just about as long, costs about as much, and is a 
lot less convenient to " drop in " on Oslo from Ankara as it is to " drop in " on 
Oslo from New York. " Sizing up " a situation comes closer to being a two- 
months' job than two days. 

X. And, finally, successful selling requires demonstration. Our European 
competitors use demonstrators. I don't know of any airplane sales in Europe 
that haven't been preceded by demonstrations, either by taking the product to 
the customer, or bringing the customer to the product. (Let's not forget that 
in our Turkish sales we did both.) 

I'm convinced that If we're going to do a job in Europe we've got to do a 
good job. If we don't do a good job, we're going to keep on answering cables, 
mailing reams of literature, spending a lot for rail fare and hotel bills and 
sundries, getting all hot and bothered about new prospects that are cimtinu- 
ously cropping up (more often than not at widely separate points), but in the 
end booking few I'eal orders. 

I don't know that there is paying business to be had in Europe, but I believe 
there is. I believe that the prospects are at least good enough to warrant 
absorbing the expense of putting some additional help in the field for sufficient 
time and under the required conditions to make a really thorough investigation 
of the whole territory, so that we can lay out a coordinated plan based on 
knowledge of cold facts rather than on rumors or enthusiastic agents' reports 
(v>hich are likely to be half baked and biased, for obvious reasons). 

Tuere's no news in that for you, of course. Realizing it, you started out a 
year ago to make a personal investigation ; and spent about four months in 
Turkey. I started out last summer with a nicely planned itinerary and with 
the same objective, but I haven't got much further than you did — in nearly 
eight months. You sent Morrie Caldwell out for a short visit. He's had to 
stick three months, but so far as I have lea-ned the Norway and Persia deal>> 
have got only so far as to the drawing of preliminary proposals. That's rio 
fault of Morrie's I am sure. It's just another instance of the same old story. 
I'm morally certain that no worth-while business can be concluded in Europe 
in less than three months, or if the man on the job relaxes his presence for 
an instiint before the signatures are on the dotted line, and advance payments 
are in hand. If we're not ready to see .these various things through to the very 
end regardless of advance itineraries, I'm convinced that we'll be better off 
in the long run not to start on them in the fi-.st place. That's why I've stuck 
close to Ankara in spite of holidays, Greece, Beograd, Bucaresti, and all the 
rest, and its why I believe I ought to continue to stick until the job is exactly 
1007o finished. Once that's done, I'll be only too happy to light out for other 



MUNITIONS INDUSTRY 863 

parts. If we do less than a finished job, about all our promotional work ac- 
complishes is to build up a market for some European competitor to snatch 
away from us at the last minute. 

While I'm on this subject of what constitutes a finished job, I'd like to jot 
down a brief summary of tlie position in Turkey, which will, I believe, be well 
consolidated if we can get this new Kayseri project definitely closed up. 

We have Curtiss-Wright products in the two leading air bases in Turkey, 
which means continuing avenues of contact. We have one pilot in each of those 
air bases acting in the capacity of instructor in advanced formation flying, blind 
flying, etc., and from all reports they are doing excellent work and building 
prestige for Curtiss-Wright among all the operating pers(5nuel and making 
lasting friendship and contacts. These pilots, incidentally, are on the Turkish 
pay roll and are costing us nothing. Joe Gody is looked up to and cordially 
respected and liked by the entire maintenance force at Eskisehir, and we have 
now sent him down to Izmir to dig in there. Hunter and his crew at Kayseri 
have gained the complete respect and admiration of the entire manufacturing 
and engineering personnel of the Turkish Air Force and have established a 
wide circle of acquaintances and friends that is of inestimable and lasting value. 
Bob Farnsworth has formed a circle of personal acquaintances and firm friend- 
ships all along the line that is equally invaluable. I have been fortunate 
enough to be able to establish personal relations on a plane of evident mutual 
confidence and trust with the highest authorities in the Government. There 
are four specially selected Tiu-kish leading mechanics now in America in the 
hands of Curtiss-Wright. (They've cost us a lot of headaches, to be sure, and 
it was a bull that they got there, but there they are ; and their presence can. 
be, and should be, seized upon to impress the mechanics with the merits of 
Curtiss-Wright and of American methods; the training and iniloctrination we 
give them during their year in our organization at home can be made an inval- 
uable asset in future activities here.) There are four selected Turkish pilots 
in America now for a year's tactical training in the U. S. Army, another point of 
contact open to us for firmly establishing the Curtiss-Wriirht idea in the minds 
of men who will doubtless be very infiuential in Turkish air activities in future 
years. 

We have established the complete groundwork for establishing Curtiss- 
Wright in a position of high prestige throughout the whole structure of the 
Turkish Air Forces, and of the Government — a position which is not duplicated 
by any competitor and which cannot be duplicated short of at least two years of 
careful and costly effort. Basically our potential position in Turkey today is 
excellent. It remains only to close this present pending contract to definitely 
perpetuate (and strengthen) that position for at least a year to come. 

With this contract lor keeping Kaiseri occupied the rest of this year closed, 
our preferential position in Turkey will carry on and improve steadily on a 
self-supporting basis from sheer inertia. This contract is like the final coat of 
paint on a carefully built and expensive house. With it the house will last ; 
without it we'll have to face continuing bills for repairs so long as we elect to 
stay in it. 

I repeat that if we are to do this job in Europe at all it must be a good job, 
and that means more personal contact and more permanently assigned personnel 
on the European territory. 

We've already tacitly admitted that, without fully realizing it, in sending out 
various " temporary " assignments — Caldwell on the Persian and Norway job ; 
Kennedy to KLM (a special job, but this trip was extended to additional neces- 
sary contracts) ; my special trip of two years ago; Arthur Nutt's special trip; 
your special trip ; Guy Vaughn's special trip. Each one of these special trips 
results in reports of this or that lead, this or that prospect encountered that 
" ought to be followed up, I couldn't do it because I hadn't time." Either these 
unanimous reports are cock-eyed or else we don't do as much and as continuous 
contacting as we should. Somebody ought to have followed up the old matter 
of Wasp-Cyclone replacements in KLM. Somebcdy ought to follow up the 
Hensley lead in Rumania. Somebody ought to be following the Athens situa- 
tion right this minute ; somebody ought to be following the situation in Beograd 
and LOT in Warsaw, etc., etc. But just who? And how? 

I haven't dared leave Turkey for reasons with which you are fully familiar. 
Bob couldn't leave, with all the mess at Eskisehir and Kayseri to clean up. 
His presence here has been indispensable during the preparation of detailed 
specifications and contract provis.ons for the new project. His experience and 
detailed knowledge of tl:e local situation have been invaluable. 

83876—34 — PT 4 12 



864 MUNITIONS INDUSTRY 

Bob has ideal attributes for handling general European contract work. He 
has brains, personality, sound business sense, guts — everything you could pos- 
sibly ask for, but he is (through no fault of his own) greatly lacking in the 
essential element of complete familiarity with the internal workings of the 
producing organization. Paterson, Buffalo, and St. Louis are qu^te unfamiliar 
to h;m, as are all their products of the past couple of years. Bob's place now 
is back home for an intensive tie-in with the working organization. Give him 
three to six months there and you can put him up against anything in Europe 
on hio own. Without that background he is under a heavy handicap. He 
has been away from hcmie now more than 2 years. It is neither fair to him, 
nor in the interest of Curtiss-Wright that we should delay his return longer. 
I don't need to tell you that he needs a trip home, or that C.W. needs to have 
him take a trip i < me. You'll be glad to receive news that he is about to get 
it. As I have said before, up until now I couldn't have got along without 
him here. But with the last of the IS Hawks accepted, Bruce Buckley or 
Sam Irwin available to fill in the gap on Fledgeing and Kayseri Hawk tests, 
the new specifications, contract drawn, I've given him instructions to pull 
up stakes and start home within the next 10 days. He'll be on his way before 
this letter reaches you. 

It is not alone for the purpose of rounding out Bob's experience that I 
feel it necessary to have him go home now. Bob will learn a heap from Pater- 
son, and Buffalo, and St. Louis, but I venture the assertion that P.B. and 
St.L. have also a good bit to learn from the boy who has been through the 
mill en this end. You'll be tempted to hold him in the New York oflice. 
Please don't. Get him out to the factories, regardless. 

With Bob going back there is certainly more than enough to keep both 
Morrie and me busy in Europe. Please don't forget that I've been out eight 
months now, that I'm beginning to lose my familiarity with what's going 
on at home. Sometime before very long I've got to be getting back there for at 
least a br:ef visit, for there are all sorts of things that I've got to catch up on 
that can't be handled otherwise than through personal contact. Retractable 
gear Hawk. Shrike. Airline dope for the projected Turkish project. Cargo 
slaips for Greece. (What are the sales arguments to keep Condors in the 
picture in the face of certain Douglas competition and existing United com- 
petition), both of which have materially higher specifications to offer and hence 
appeal to the military elements strongly (don't forget that European trans- 
port planes are in reality considered merely as bombers in disguise). I should 
get up to Italy, France, and England to see all this new military stuff thnt 
we've been hearing so much about. (Mecid Bey told me today of reports they 
have received of a 430-km Hanriot single seater in France for example). 
What's going on in Russia, Gei'many, and Poland? I'ou may know all about 
these things back home, but that doesn't help me to answer embarrassing 
questions out here. And if I go on up into western Europe for any length 
of time now who's going to co\er the various interesting loads that are crying 
to be covered in the Balkans? And if this airline project goes through in 
Turkey (and it seems as likely to as any other interesting prospect that I 
know of in Europe) who is going to run that show? 

I'll not continue longer on this line. I hope I've said enough to make it 
quite plain that if all these various reports and inquiries that we've been 
receiving from all over Europe are worth any attention at all, they are worth 
serious investigation. And if we are to investigate them seriously I repeat 
my conviction that we've got to have more people permanently assigned to 
Europe than we now have. 

I'm not recommending a big organization. I'm not even recommending a 
European office, though I recognize the merits of Morrie's arguments in this 
regard. I'm frank to say I don't know enough aliout it yet. But I am 
recommending that you definitely and permanently assign Morrie to th s 
European job, and direct him to rei)ort to me for instructions. My first move 
will be to meet him somewhere and compare observations, experience, and 
opinions, lay out a tentative definite plan of action, and send It along to yoii 
for check and revision. 

I believe there's business to be had in Europe, profitable business, but it is 
going to require a lot of careful work, hard scratching, and patience, to 
get it. 

AVe can't get it by "temporary" flying trips to Europe. We've got to keep 
everlastingly at it, with permanently assigned personnel. We need Morrie in 
Europe for an indefinite period, and we need Bob Farnsworth back as soon 
as he's caught up with goings on at home. 



MUNITIONS INDUSTRY 865 

For reasons which I have explained at length in my letter of February 14, 
I l)elieve now is a favorable opportunity to dig into the European market, and 
I believe the extra help and a couple of demonstrators will justify their 
expense. 

Sincerely, 

(Signed) Bruce, 

Bruce Leighton. 

P.S. — I have been over all these matters with Bob repeatedly and at length. 
We are in full agreement. I'm mailing a copy of this and my letter of Febru- 
ary 14 direct to Morrie, for his study and comment. 



Exhibit No. 271 



May 29th, 1934. 



Mr. Roberto Escobar, 

New Weston Hotel, ^9th Street & 3Iadison Avenue, 

New York City. 
Dear Mr. Escobar: In accordance with your request for a statement as to 
the installation of the Driggs 37 mm gun in Hawk and Falcon airplanes, re- 
sultant from. Mr. Driggs' trip to Buffalo, I have had this matter up with our 
armament enghieer, Mr. Trimbacb, who has submitted a report as covering 
his contacts with Mr. Driggs, extracts from which follow : 

" Mr. L. L. Driggs, of the Driggs Ordnance Engineering Co., 19 West 47th 
St., New York, visited our plant on May 10th to discuss the possibilities of In- 
stalling subject gun in the Hawk and Falcon airplanes for Colombia. 

" Characteristics of the gun as obtained verbally from Mr. Driggs are as 
follows : 

Inches 

Over-all length M. 8 

Length of receiver 33 

Length of barrel 31. 8 

Over-all height 7% 

Center of barrel from bottom of gun 2. 5 

Width of receiver from center line to R.H. side for 30 rd. magazine. 4 

Width of receiver from center line to L.H. side for 30 rd. magazine 8 

C.G. location from aft end of gun 22% 

Clearance required below receiver for operation of action 6 

Clearance required below receiver for magazine, 10 rds. deep 18 

Location of front wall of magazine from front end of receiver 6 

Fore and aft length of magazine clearances symmetrical about 

center line of gun 4 

Weight of gun lbs 94 

Weight of loaded magazine (30 rds.) do 50 

Weight of loaded magazine (10 rds.) do 16 

Recoil aft load do___ 1.200 

Speed of gun shots per miu 100 

Control (remote), Bowdenite cable and casing. 

Recoil movement of barrel and action 8 

" From the above characteristics a brief investigation revealed the fol- 
lowing : 

"Fixed Gun, Hawk Winri. — The only logical installation for the Hawk 
would lie one of these guns in the upper wing center section clearing the 
propeller disc. 

" In order to accomplish this installation it is necessary to increase the 
beam spacing, add considerable reinforcements, and possibly restrict the air- 
plane's performance due to the increase in gross weight. 

The niiigazine for a wing gun being of 30-round capacity would extend 
below the wing 18" pcross an area of 8" which would result in a large blind 
sppce for the pilot's vision. The gun could be mounted above the panel which 
still gives an objectionable blind space. 

The installing, loading, and general servicing of a gun of this size in an 
upper panel will be quite difficult and may result in damaging the panel due 
to the personnel's normal awkwardness. 



866 MUNITIONS INDUSTRY 

FIXBID GUN FALCON WING 

The logical installation for the Falcon would be the same as that recom- 
mentled for the Hawk except that two guns would be used. 

The accomplishment would necessitate : Adding considerable reinforcement 
and restrict the airplanes' performance due to the increase in gross weight. 
It, likewise, being assumed that the .30 cal. wing guns in the lower panels 
would be eliminated and only the synchronized .30 cal. be retained. Unless 
the upper and lower wing guns are carried as alternate loads. 

The magazine arrangement would result in the same objections as that 
described above under the Hawk due to the wing section being of the same 
depth. 

The installing, servicing, etc., falls in the same category as the Hawk. 

Mr. Driggs informed us of the omission of the provisions for ground gun 
adjustment stating that the gun could be mounted fixed parallel to the center 
line of the airplane, which means that the line of sight would be set at nn angle 
with respect to the line of flight in order to have the lines of sight and fire 
converge at the desired range. This will require the pilot to yaw the ship 
to 'the right or left as the case may be. If two guns are used the sight should 
also be " parallel " with the guns which means that with the guns spread out. 
as in wing installation accurate firing will be almost impossible. 

FLEXIBLE GUN 

The installation of this gun for flexible use on the Falcon results in prac- 
tically the same conditions as those described in previous correspondence on 
37 mm flexible guns. 

In view of the above complications which must be dealt with to arrive at 
satisfactory installations of these guns and further since we have very limited 
knowledge on satisfactory installations previously made, it is recommended 
that from a development cost standpoint we should discourage applying this 
gun to our airplanes until after oiir own government has proven them worth- 
while. 

Trusting that the above information meets with your requirements and. 
requesting that you hold this report as strictly confidential, we are 
Vei-y truly yours, 

CuRTiss- Wright Export Corporation. 
P. A. Hewlett. 
PAH*B 



Exhibit No. 272 

Hotel Columbus, Miami, Fla., March SI, 193Jt. 

Dear Farm : My discussion with Lieut. Comnr. Hugh Sease this morning 
brought out that some time ago a number of United States naval aviation 
officers tried to interest the Bureau Ordnance in an Italian machine gun which 
they thought more suitable to fighters or pursuit planes. The gun is about 
.45 cal., weighs only 9 lbs., has a considerably reduced range from the Brown- 
ing but was accurate within approx. 300 yards, the ammunition weighs con- 
5:iderably less than the Browning ammunitions and occupies a considerably 
smaller space. He thinks quite a weight saving possible by use of this gun 
and recommended that m'anufacturers investigate the gun with the view to 
possibly inducing the Bureau Ordnance to adopt it for fighters. 

While be was talking it occurred to me that perhaps it would be good to have 
the dope on this gun in case we should ever wish to build a flying arsemil 
for export sale with say six guns forward which we could do more readily with 
a smaller gun. 

He didn't know the name of the manufacturer but thought it the standard 
Italian Air Force gun for fighters. I am just passing this dope along in case 
you might wish to ask some European exp;irt company representative to get the 
iowdiiwn or even handle it yourself by correspondence. 

Best regards and please don't fill up the Buffalo plant with Colombians be- 
cause I will be good and ready to see Americans when I return. 
Sincerely, 

(Sgd.) William J. Crosswexl. 



MUNITIONS INDUSTRY 867 

Exhibit No. 273 

February 25, 1932. 
Dr. Tehyi Hsibh, 

Cliiiiesc Trade Bureau, 75 Federal Street, Boston, Mass. 

Dear Mr. Hsieh : We have your letter of February 24th and are very pleased 
indeed to enclose herewith certain descriptive matter and photographs of 
certain of the planes which we manufacture and which we believe will be of 
particular interest to you for the purpose which you have in mind. 

We would point out that we build planes of all types and categories Imt 
believe that the ones described in the attached data will be the most suitable 
for your consideration. We should be very pleased indeed to have you sub- 
mit these to the Nationalist League headquarters of the U.S.A., or would be 
very glad to communicate directly with them if you will inform us where they 
may be reached. 

The data which we are enclosing consists of the following: Characteristic 
sheet EX-C-4B and photograph of the Curtiss Hawk powered with G50 horse- 
power Cyclone engine. This plane is a high performance, single-seater fightpr 
as constructed for the United States Army and Navy. We reconmiend this plane 
with the Wright Cyclone engine, because the Chinese Nationalist Government 
already has in operation a considerable number of these Cyclone engines and 
it is, therefore, desirable that any further equipment destined to China should 
use engines of this type in oider to facilitate maintenance problems. This 
Hawk plane can be had with other power plants, notably the Curtiss Conqueror 
engine, which installation is the type which we have recently furnished the 
United States Army. We have just completed a contract of forty-six of these 
Hawks and are now delivering them to the United States Army, so that you 
may be sure that this Curtiss Hawk is the very last word in the single-seater 
pursuit plane category. 

Enclosed herewith is general description of our speeding observation air- 
plane. This description, together with the characteristics and performance 
of this plane, will give you a good general idea of this plane which 
we can offer at a most attractive price. The photograph attached shows two 
of these planes which we recently built up and delivered to the Government 
of the Republic of Panama. This plane is especially suitable for observation 
work and light bombardment and, I believe, should be of particular interest 
lor shipment to China. 

We are also enclosing characteristic sheet and photograph of our Keystone 
bomber. This plane, powered with a Cyclone engine, is used extensively by the 
United States Army Air Corps, and we are just completing at our factory at 
Bristol, Pa., a large contract of these planes for the United States Army. This 
plane can carry over 2,000 pounds of bombs, and is, therefore, a formidable 
offensive weapon. 

Naturally, a plane of this size is somewhat expensive, but its cost is incom- 
parable with the damage it can do with its heavy load of bombs. 

We are also enclosing characteristic sheet EX-D- covering the Curtiss Hell- 
diver with G50 horsepower Cyclone engine. This is the plane which is used 
largely by the United States Navy and Marine Corps for observation and light 
bombardment. The attached 3-view drawing of this plane will give you an idea 
of the general appearance of this plane, which is a 2-seater with two forward 
firing guns usually controlled by the pilot from the front cockpit, and a flexible 
gun installed in the rear cockpit and operated by the observer in the rear cock- 
pit. Bombs may be carried suspended under the lower wing. 

We are also enclosing photograph and characteristic sheet covering the Curtiss 
Fledgling, powered with a Wright Whirlwind engine. This is the training 
plane which is used extensively by the United States Navy and which our 
Flying Service is using in large quantities in their flying schools throughout this 
country. We have a considerable quantity of these Fledglings now in operation 
at our schools, and it occurs to us that you might be interested in considering 
the purchase of a number of these used planes for immediate delivery at a very 
low price. This would be entirely suitable for the training of pilots and 
observers. 

The four planes submitted cover the four main categories of flight training, 
pursuit, 2-seater observation, and flghter and the large type of bombardment. 
Planes in each of these categories are necessary for a full, rounded air force, 
but for the situation as it now exists in China we would recommend special 
consideration to the single-seater pursuit plane, whose chief use is defensive in 



868 MUNITIONS INDUSTRY 

the destruction of enemy aircraft. Witlacut planes of this type in considerable 
quantities no successful air operation can be conducted. 

We also recommend for special consideration the Speedwing light observation 
plane, whose outstanding performance and high degi'ee of maneuverability 
make it especially desirable for observation and bombardment missions and 
use against troops ou the ground. 

Please let us know if you desire any further information and whether or 
not we can get in touch directly with the Nationalist League headquarters. 

We are advised by our flying-service base in East Boston that their Mr. 
Martin has been in touch with you, and we have asked him to talk with you to 
find out if you would like to arrange an appointment to see the writer and 
discuss in more detail the possible purchase of this military equipment. 

We trust to have your early advices in connection with this matter. 
Very truly yours, 

CuRTiss Weight Export Corporation, 
F. W. GouLDiNG, Vice President. 

WFG/f. 

End. 



Exhibit No. 274 

March 4, 1933. 
#193 
Via air mail. 
Mr. E. J. Faucett, 

Conipania de Aviaoion Faucett, S.A., Apartado 1^29, 

Lima, Peru. 
Dear Mr. Faucett : Referring to our cable of today, confirmation copy of which 
is enclosed. 

We can arrange for a special steamer to sail from New York on or about six 
weeks' notice, at a cost of from $10,000 to $12,000 for the trip to Callaco. They 
require six weeks' notice in order to get additional cargo. 

The 200 each 50- and 80-kilo bombs would gross about 39 tons and the steam- 
ship company would be willing to take 10 to 15 tons more bombs or other mate- 
rials for the same cost of 10,000 to 12,000 dollars for the special trip. 

If only the 400 bombs were shipped it would seem the c.i.f. cost would be 
$25.00 to $30.00 each, but if the quantity was increased, it would materially 
reduce the cost per bomb, or if other materials were shipped at the same time 
It would absorb some of the cost. 

We will send you by next air mail complete prices, etc., on all sizes of loaded 
and unloaded bombs and cartridges, etc., and perhaps you could get the Peru 
Government to place a substantial order for such equipment to be sent on such a 
special sailing. 

Please let us know by return air mail what the prospects are of getting early 
orders for bombs and ammunition, etc. 
Yours very truly, 

Curtiss-Wright Export Corporation, 
Owen Shannon. 



Exhibit No. 275 

Remington Arms Company, Inc., 
Bridgeport, Conn., January 6, 1933. 
Mr. W. D. Pawley, 

CUrtiss-W right Export Corporation, 27 West 57th Street, 

Neio Yark City. 

Dear Mr. Pawley : We confirm our conversation with you today in respect to 
the ideas you discussed on behalf of your company to represent us in the sale of 
our military rifles and ammunition to the Chinese Government. 

It is understood that for the present this is only a tentative arrangement 
to enable you to determine the possibilities of business with the Chinese Govern- 
ment, and in the event progress satisfactory to you and ourselves is accom- 
plished, we are to conclude exclusive arrangements with your company for a 
period of say one or two years. 



MUNITIONS INDUSrUY 869 

While you are iu Cliiua representiug your company we ^Yill refer to you auy 
inquiries we may receive for military supplies, and we understand you will 
consider our rifles aud ammunition exclusively in any negotiations you conduct 
for sucli material. 

It is understood for the present we will not be responsible for auy salary to 
you or expenses on your part. The occasion may arise where expenses by you 
on our behalf would be justified, in which event you would obtain our agree- 
ment beforehand. 

We agree to quote you the lowest prices we would accord anyone for Chinese 
military business, and these prices are to be net to us without any deduction for 
commission, etc. We understand it is your intention to add to these prices 
such profit for your company as you deem" advisable. 

It is understood that no orders are to be binding on us until they are accepted 
by us. As we explained to you the prices we intend applying to any inquiries 
you have will be so low as to preclude any credit risk. Consequently, the 
minimum terms we would require would be 50 percent cash with order and 50 
percent irrevocable credit in New York payable against shipping documents. 

As you are aware, Messrs. S. J. David & Co., Shanghai, operate for us in 
China on sporting-goods business and sales to police forces, which is not to be 
construed as military business. Our arrangements with S. J. David & Co. for 
such busines are to continue uninterrupted. Undoubtedly Mr. E. A. Sykes, 
manager of that company, will be glad to extend you every cooperation. 
Yours very truly, 

Remington Arms Company, Inc., 
f. j. monaghan. 



Exhibit No. 27G 

August 13, 1932. 
Mr. Owen A. Shannon, 

Vurtiss-Wright Exijort Corporation, 

27 West 57th Street, New York, N.Y. 
My Dear Mr. Shannon : Confirnnng our understanding reached in your ofiice, 
we are granting to you the exclusive representation on smoke screen and gas 
attachments for airplanes and on aerial bombs in the following countries : 
Argentina, Chile, Colombia, Equador, Panama, and Turkey. 
It is understood and agreed that all inquiries for this type of equipment will 
be referred to you and that you will promptly put forth every effort to promote 
the sale and use of this equipment in the above-nametl countries. 

We agree to pay you a commission or discount of twenty percent (20%) 
from our standard list prices for these products. 

It is understood and agreed that you will not, during the course of this 
agreement, represent or sell, directly or indirectly, any other products in com- 
])etition with our products above named, either in this territory or in terri- 
tories where you have nonexclusive sales rights. 

This agreement shall continue for a period of one year unless canceled by 
either party. It may only be canceled upon ninety (90) days' notice in writing, 
given by one party to the other. 
Very sincerely yours, 

Fedekal Laboratories, Inc., 
By John W. Young, President. 
Accepted : 

CuRTiss- Wright Export Corporation. 



Exhibit No. 277 

March 9, 1932. 
Cubtiss-Wright Export Corp.. 

27 W. 57th Street, New York, N.Y. 
(Attention Mr. O. A. Shannon.) 
Dear Mr. Shannon : Replying to your letter of February 23rd relative to 
flame thrower, please be advised that inasmuch as we have only had one 
inquiry for this from Turkey, we prefer making flame throwers only on request. 



870 MUNITIONS INDUSTRY 

We do not believe there would be a popular demand for the product suflBcient 
to warrant our developing it and pushing it as we have our other products. 
Yours very truly, 

Federal Laboratories, Inc., 
J. W. Y., President. 
JWY : AEH 



(" Exhibit No. 278 " appears in text on p. 701) 



Exhibit No. 279 

Febubary 23, 1933. 
Mr. F. C. Nichols, 

CoJPs Patent Fire Arms Manufacturing Co., Hartford, Conn. 

Dear Mb. Nichols : Mr. Shannon has shown me your letter to bim of Feb- 
ruary 20th, in connection with the China situation. 

I can fully appreciate how you may be somewhat confused with respect to 
the arrangements which you entered into tentatively with IMr. Pawley. I am 
somewhat confused myself, but I do know that our interests are his interests, 
and when he referred to his company, he undoubtedly referred to the company 
which we operate and through which all of our Chinese sales are handled. 

We feel it would be less confusing if this Chinese situation were handled just 
as we plan to handle the Turkish situation, namely, exclusive sales rights be 
vested in the Curtiss-Wright Corporation and we, in turn, would give the China 
operating company the exclusive sales right. 

We feel, as you know, bearing the expense of sending out to Shanghai a Hawk 
plane for demonstration purposes, and for which you have kindly agreed to loan 
us the armament equipment so that we might also demonstrate it. This will 
pretty well take care of the Shanghai-Nanking district. 

We have been actively, through our China representative, pushing the sale 
of our equipment in the Canton section, with the result that we now have, and 
are holding subject to the issuance of export license, an order for 10 of your 
guns. This would, I think convince you of the active steps we are taking to 
develop sales for your products in China. 

You appreciate, I believe, the disadvantages of several people offering the 
same customer the same article. It always leads to confusion on the part of 
the customer, with the result that someone else usually gets the business. We 
hope, therefore, that you will in the future work through us exclusively in 
China. 

By copy of this letter, I am asking Mr. Shannon to follow up the matter of 
D. M. Kable & Co. which he had taken up with you. 
Very truly yours, 

Curttss-Wright Export Corporation, 
W. F. GouLDiNG, Vice President. 

c/c Mr. Shannon. 



Exhibit No. 280 

Colt's Patent Fire Arms Manufactlring Co., 

Hartford, Conn., Oct. 21, 1932. 
Curtiss Wright Export Corp., 

27 W. 51th St., New York. 
(Att. Mr. O. A. Shannon.) 

Gentlemen : Referring to Mr. Shannon's telephone conversation with us 
yesterday, and his request that we mail a price list of machine guns, machine 
rifles, and other equipment, as illustrated and described in catalogue of which 
a number were sent you a few days ago, we have no printed price lists of 
such material. In fact, unless we are satisfied that a government is actually in 
the market, we are extremely cautious about filling quotations to be used for 
future reference and which in turn might be brought to the observation of our 
competitors. 

Such a policy also obviates complications which might ensue as a result of 
price changes, alterations, improvements, etc. 



MUNITIONS INDUSTRY 871 

AVe enclose quotations now in effect wliicli, of necessity, are subject to change 
without notice. 

As to your offering the arms referred to, you are at liberty to negotiate 
in Peru "and Bolivia, Turkey after Jan. 15, 1033, and regarding China and 
Japan, we cannot at this wu-iting include these markets, but should anything 
transpire whereby our joint interests would be served through your offering 
quctaticns, if you will duly notify us in advance we will endeavor to afford 
you every assistance and protection possible. 

On any business you might obtain from the governments named, we would 
allow you a confidential commission of 5% ; this, of course, does not include 
aircraft guns to be mounted on your planes, regarding which you already 
enjoy a confidential arrangement. 

Goods suitably packed for export f.o.b. cars. Hartford, Conn., with trans- 
portation charges allowed and prepaid to New York City. 

If this does not entirely cover the information you desire, and if the proposal 
outlined is in any way unsatisfactory, we would be glad to hear from Mr. 
Shannon and the writer will go to New York for conference WMth him. 
Very truly yours, 

Colt's Patent Fire Arms Mfg. Co., 
(Signed) F. C. Nichols, Vice President. 



Exhibit No. 281 

CuRTiss Wright Export Corporation, 

October 27, 1932. 
The Altomobile Tire & Tractor Company, 

Taxim Gardens, Istanbul, Turkey. 
(No. 12) Attention Ahmet Emin Bey.) 

Gentlemen : Under separate cover we are mailing you two complete cata- 
logues of Colt automatic machine guns and rifles, also two small leaflets cover- 
ing Colt automatic machine rifles. 

You recently wrote to the Colt Company indicating the possibility of sales 
in Turkey for this equipment, and we are happy to say that on and after 
January 1.5. 1933, we will lie in a position to offer you exclusive sales r'ghts for 
Turkey on all of the products of the Colt Company, provided that we can 
satisfy the Colt Company that you can obtain some business for this equipment 
in Turkey. 

The Colt Company has passed to us copy of their letter to you under date 
of October ISth. Tlie situation is that we have more or less assured the Colt 
Company that you can give them the best possible representation in Turkey, 
and. such being the case, they are willing to follow our recommendations in 
giving you the exclusive sales rights in Turkey. 

Turkey is being released from Vickers arrangements with Colt as of Janu- 
ary 1, 1933, so that we will be free to quote you on any inquiries for their 
equipment which you can develop on and after that date. 

The Colt Company does not have established prices on their equipment for 
foreign governments, but their prices are figured on each particular inquiry, 
so that we are not in a position at this time to quote you prices on the equip- 
ment specified in the catalogue. You must develop a specific inquiry for a 
specific quantity, and when you do this we will be pleased to submit a quota- 
tion. You should, at the same time, inform us the amount of commission which 
should be included for yourselves. 

For your general information, and to give you an approximate idea of prices, 
we would inform you as follows : 

Price 

Standard machine gun, rifie caliber, in the neighborhood of $750. OO 

50-caliber field gun, in the neighborhood of 1, 500. 00 

Light aircraft gun, in the neighborhood of 600. 00 

50-caliber aircraft gun, in the neighborhood of 1,200.00 

Automatic machine rifle, in the neighborhood of 300. 00 

Automatic machine rifle, monitor type, in the neighborhood of 350. 00 

These prices are merely indications and may be higher or lower on any 
inquiry which you may be able to submit. 

Please advise us further in connection with this machine-gun situation. If 
it is going to be necessary to conduct extensive and expensive demonstrations 



872 MUNITIONS INDUSTRY 

on Turkish soil, naturally these expenses will have to be included in any quota- 
tion on the quantity of guns that may be involved. 

Frankly, the Colt Company ^is intei-ested in cash business only. They have 
an outstanding product, fairly priced, and they are not interested in business 
which involves long credit risks and long-drawn and expensive negotiations. 
We ourselves will have to bear the burden of any terms whidli it may be 
necessary to extend the Turkish Government on purchases, and all of this must 
be taken into consideration in the prices to be quoted. We do not, therefore, 
wish to make any commitment wliatsoever with respect to prices except on a 
definite tender on which all terms and conditions are clearly specified in 
advance. 

Very truly yours, 

Curtiss-Wright Export Corporation, 
W. F, GouLDiNG, Vice President. 



Exhibit No. 282 

(Via air mail, no. 51) 

November 3, 1933. 
Mr. C. W. Webster, 

Paris Hotel, Buenos Aires, Argentina. 

Dear Web : Enclosed is letter of October 29th addressed to you by Jjeon, 
copy of which he sent direct to Jack Allard. 

Jack told me he had received the letter and is greatly disappointed that Leon 
finds it necessary to resign. 

I am also enclosing copy of a letter he wrote me regarding appointing 
Gandara and a copy of a letter I am today writing Gandara — copy of which I 
sent to Leon and about which he replied in his letters enclosed. 

I believe Leon is right in suggesting we close with Gandara quickly, particu- 
larly as Leon is not going back. Even if we have somebody else there like 
Travis, he could handle the complete planes, plane parts, and complete engines 
and engine parts, and would probably not have the time properly to follow up 
the purchases of miscellaneous materials and supplies. 

If you close with Gandara, I think the first thing he should do, and at once, 
is to prepare a list of the materials, accessories, supplies, etc., the purchasing 
department will require for 1934 and send it to us for prices. 

I think the best arrangement to make with Gandara would be to appoint him 
your exclusive agent on everything except planes and engines and plane and 
engine parts, also antiaircraft equipment. Possibly you would even want to 
appoint them our agent on everything, the same as Souza Sampaio and Webster 
& Ashton. However, if you only appoint them for miscellaneous equipment, if 
possible, it should be arranged so that we sell to them for dollars here and they 
resell to the Government in whatever manner they see fit. 

In one of their letters Gandara asked for prices on Pyle national lighting 
equipment. If you make them our agent, they must, of course, agree to make 
all purchases through us and cannot offer any competing equipment. 

If there is a lighting project being proposed, get them to send us complete 
details as outlined in the enclosed questionnaire, including a drawing of the 
field, etc., so we can have Sperry make up recommendations and quotation. 

Sperry are getting anxious about our not producing any business for them on 
lighting equipment and instruments, and unless we get some orders soon I am 
afraid they may insist on placing their representation direct with other agents. 

Gable me what you do with Gandara and I can start sending them data and 
prices of the miscellaneous equipment. 

My idea would be, if they are to purchase from us and resell to the Govern- 
ment, to give them prices that would net you 10 percent at least, and wherever 
possible, as much more as I find it will stand in comparison to prices they could 
get direct from manufacturers or others such as Air Associates, etc. 

Find out just what they are doing on bombs and police gas equipment and, 
perhaps, we can chisel in on it here, as I understand the Argentine police have 
bought large quantities of that kind of stuff. 

Incidentally, Fairchild sold direct to the Argentine Navy, through Lee Wade 
and Montgomery — an order for 12 camera guns for the Vought Corsairs United 
is now building for the Navy. This purchase I understand was made by 
Captain Leporace, the Argentine Naval Air Force ofiice who has been at Hart- 
ford during the building of the Corsairs. 



MUNITIONS INDUSTRY 873 

Leon told me to stay away from this officer — uot to bother him as he would 
get in touch with us when he was ready. Leon says he is a good friend of his 
and tliat Leporace is a fine fellow. However, as a result of our uot contacting 
him, Wade and Montgomery have had him in hand and I believe have sold 
him other equipment. I am writing Leon on this and presume he will now 
have us contact Leporace before he returns to the Argentine. 

I have arranged with Fairchild to give us 10 percent on the 12 guns — which, 
would be about as much as we could get if we sold direct — after deducting 
commissions. 

Owen. 

P.S. — ^When talking with Gandara be sure to mention to them that I reported 
I had had a number of conferences with their Mr. Campbell here. 

This is a favor to Campbell, who is a fine fellow. If possible, make it appear 
that Campbell had considerable to do with our making any arrangement with 
Gandara. Let me know what you quote on parachutes so I can advise Irving 
and try to get them to protect 3'our price. 

Owen. 



Exhibit No. 283 
#344 December Sth, 1933. 

Mr. Joaquin Samper H. 

TJntct d Samper, Apartado Postal #536, Bogota, Colombia. 

Dear Mr. Samper: Enclosed herewith, for your information, are copies of 
letters which we have addressed to the Colombian Consul in New York, one 
under date of December 6th quoting on materials necessary to convert the 
present Hawks now in Colombia to the electric .starter type instead of the hand 
type. This is a matter we had up before and I think we advised you of it at 
that time, in view of the fact that it had been reported to us that in operations 
in Colombia, particularly with seaplanes, the pilots found it extremely difficult 
to start their engines when they were away from a base and a mechanic was 
not readily available to use the hand starter. The sugi;estion of the ele'^'tric 
.starter, therefore, is to relieve this difficulty and make it thoroughly practical 
and easy to start the plane from the cockpit, as is possible in the Falcin. 

The same letter also quotes a price for the materials necessary to convert 
the present F-2 type Cyclones now being used in Colombia to the F-3 type, 
as the F-3 is a higher supercharged engine and permits higher performance 
at altitude. The desirability of making some conversions to this type h:is been 
discussed hevo with Mr. Escobar and Comdr. Strong and it is suggested that 
you discuss this with the authorities in Colombia and see if it is their wish 
to do this. 

I am enclosing herewith the latest Hawk and Falcon performance data, 
showing how the performance varies with the different type Cyclones. You 
will observe that maximum performance is obtainable with the F-3 engine, but 
it should be borne in mind that the performance below critical altitude and 
in take-off will not be as good with the F-3 as with the F-2. as due to the 
higher supercharge of the F-3 it is not possible to give full throttle operation 
in take-oft" as in the case with the F-2. 

The second letter, dated De; ember 6th, outluies our proposal in connection 
with Condor bombers in quantities of three, six, nine, and twelve. These are 
the quantities that have been discussed here as of probable interest, and I 
trust you will make every effort to see that the Colombian Government pur- 
chases a good quantity of these ships. 

We have, I think, written you very fully in connection with this plane 
before so that it is not necessary to repeat all of the details, but bear in mind 
that this plane represents the highest performance heavy bomber that can be 
purchased, and we think that this plane, both as a landplane and a seaplane, 
should be of inestimable value to the Colombia aviation and national defense. 

I am also enclosing for your information discussion of the advantages of 
large twin-float seaplanes as compared with large flying boats. This discussion 
has been prepared by Edo Aircraft Corporation, builders of the floats, and it 
applies partifularly to the twin float Condor installation which was made on 
Admiral Byrd's Condor for his South Polar expedition. In the next air mail 
I will send you a report of the flight tests on this particular Condor. 

The prices and deliveries which we have offered in the enclosed letter on 
the Condor are exceptionally good, and I think the letter covers the matter 
fully so that without further comment you will be thoroughly familiar with 



874 MUNITIONS i:ndustry 

the subject and will know the best lines to follow in building up a substantial 
order. 

I :un enclosing herewith copy of letter, dated December 7th, quoting on 
additional quantities of Hawks and Falcons. This was at the request of Mr. 
Escobar, and we have been requested to submit a proposal fur increased quan- 
tities. Needless to say we should like to get as substantial an order as pos- 
sible, and believe that the prices which we have quoted for these additional 
quantities are most attractive. We have not cabled you anything in connec- 
tion with this recent discussion as I understand they are to be kept most 
secret and confidential, and I understand that all the communications are 
being sent from Washington by special messenger as they do not wish to 
entrust any of this information by general mail or by cable. We must expect 
you, therefore, to use your discretion in connection with this information 
which we have passed along to you. At the same time we must place you in 
possession of the facts so that you can push matters from your end. 

Yesterday I had the opportunity of meeting General Angel, Chief of Staff, 
who was here briefly following a trip to Europe. With him was General 
Cortes, who, I understand, is the ranking Colombian general stationed tempo- 
rarily in the legation in Washington as military advisor. General Angel seems 
interested only in aviation in a general way, so that we did not discuss any of 
the more technical or detailed features at present involved. He was, however, 
very interested in antiaircraft defense, and Mr. Miranda, together with 
Comnulr. Strong, explained the Sperry fire control and the necessity for this 
defense, which he readily admitted, and it is probable that following his re- 
turn to Colombia he will push for several antiaircraft batteries complete with 
Sperry fire control to make them effective. These are, of course, expensive 
installations, but in my opinion there is no question but that Colombia, in the 
event of hostilities, should have this protection, particularly at the port of 
Buenaventura. We would, of course, like to see this business developed in 
view of our connections with the Sperry Company and look to you to further 
this business. 

You undoubtedly know from Mr. Miranda of his connection with a project 
of this kind, and I understand that although the Driggs Ordinance Company 
is now defunct that he has some connection with another concern to cover the 
manufactiu-e of the guns themselves, and that he has formed a company known 
as " The American Armament Corporation " to develop this business. 

I have also gotten some further information in connection with the 37 mm 
aircraft gun about which you asked me some time ago, and while I am not as 
yet convinced that this is suitable for installation in aircraft at present. I am 
having our engineers investigate the possibility as apparently Commdr. Strong 
is favorably disposed to the installation of these guns in at least some of the 
planes, the idea being to have it on a flexible mount for the gunner's cockpit 
in the Falcon and also possibly in the Condors. If such an installation is 
feasible from an engineering point of view, it may be advisable to agree with 
his desires in this connection. I shall advise you further in this connection 
as soon as possible. 

From the information which we have here, it is the desire of the Colombian 
Government to get some planes in the heavy bomber category, both of the 
petrol boat type, such as the Commodore as they previously purchased, and 
planes of the Condor type to be operated as landplanes and alternately as 
seaplanes. 

In addition to the Condor, they have proposed for the Bellanca Cyclone-pow- 
ered air bus converted to Bomber. This plane is, of course, a single engine 
plane and, for this reason alone, not comparable with the Condor, which can 
maintain flight on one engine alone if the other engine is disabled. However, 
the Bellaca, while its pei'formance is also inferior to the Condor, has certain 
features in its favor. It is a smaller plane than the Condor, having a wing 
span of 65 feet, length 42 ft. 7 in. and over-all height of 19 ft. As a seaplane 
Avith a crew of fourteen, giving a useful load of 5,287 lbs., it would have a 
gross weight of 11,087 lbs. Disposing of 200 gallons of gasoline, Avhich would 
give it a range of approximately 700 miles, it is claimed to have the ability to 
carry 2,720 lbs. of bombs and, with the F-3 Cyclone, to have a top speed of 
149 m.p.h. at 6,000 ft. and cruising speed of 130 m.p.h. With the fuel capacity 
increased to 300 gallons, giving a range of approximately 1,000' miles, based on 
the above load-carrying ability, it could carry in addition approximately 2,100 
lbs. of bombs. 



MUNITIONS INDUSTRY 875 

The Condor, with 540 gallons of fuel and bomb loading of over 2,000 lbs., 
rcughlj^ the same as the Bellanoa, has a range of 1,000 miles. To all intents and 
imrposes, therefore, with the 2,000 bomb loading, tlie Bellanca and the Condor 
w>iiild hare the same range. But the Condor has a higher performance both for 
maximum and cruising speeds, and in addition the added safety factor of two 
engines and its ability to maintain flight with either engine. 

We are having new performance data drawn up for the Condor using the 
controllable-pitch propellers which will materially improve the performances 
which have been sent to you. These are not as yet completed but they indicate 
a top speed at 7,000 ft. well in excess of 170 m.p.h. and cruising speed of 
about 150 m.p.h.. and ceiling about 23,000 ft. as compared to the ceiling for 
the Bellanca of 16,000 ft. 

The Condor is, of course, larger than the Bellanca, having a wing span of 
82 ft., length over-all of 48 ft. 7 in. I doubt very much whether the fact 
that the Bellanca is smaller is of any material importance, as undoubtedly 
as seaplanes they would be operated off of fairly wide rivers, and as landplanes 
they would be operated off regular airdromes, and the wing spin would be 
of no moment whatever in taking off fi'om an airdrome as a landplane. 

The higher performance of the Condor is of material importance in its 
favor. On the other hand, being a larger plane with two engines, it is un- 
doubtedly more costly than the Bellanca. I am having prepared an exact 
comparison of the Bellanca with the Condor, wliich Mr. Escobar has requested, 
and when this is finished I will send it to you. 

I tliink that the foregoing, together with the enclosures, and the additional 
performance data which we will send you shortly, will give you all of the infor- 
mation on the present negotiations and will permit you to materially assist the 
rapid closing of this business from your end. 

I have been informed here by the consul that Captain Uribe is no longer 
minister of war and that he has been replaced by Dr. Alfonso Araujo, formerly 
minister of public works who will also be temporarily in charge of public works. 
I further understand that Dr. Araujo is very favorably disposed towards 
American products. I trust that your connections with Dr. Arau.1o are as close 
as they were with the former minister of war. 
Yours very truly, 

Curtiss-Wright Export Corporation, 
(Signed) W. F. Goulding, Vice President. 



Exhibit No. 284 

[Copy] 

FILE COPY OF TEXEGRAPHIC MESSAGE 

To : Pawley Aviexplor, Shanghai, China. 
From: Aeroexco, New York. 

May 2, 1933. 
translation of coded cable 

Refer to your telegram of 2nd inst. We agree to special commission 
making minimum net Intercontinent Aviation, Inc., $21,793 if order is placed 
promptly ; production situation excellent. Substitution one Browning machine 
gun .50 cal., aircraft, net cost to us is $575 additional. New company has 
been formed, Sperry Corporation. T. A. Morgan, president ; John Sanderson, 
vice president ; which holds Sperry Gyroscope Company, Ford Instrument Com- 
pany. Intercontinent Aviation, Inc.. Curtiss-Wright Corporation shares formerly 
owned by North American Aviation. General IMotors Corporation now controls 
North American Aviation without the above-mentioned companies. T. B. Doe 
in North American Aviation. In view of the foregoing and present unset'Med 
status of Intercontinent Aviation we are unal)le to conclude agency agreement 
with you at present, therefore think it advisable for you to continue as at 
present. Best wishes. 

T. A. Morgan. 



876 MUNITIONS INDUSTRY 

Exhibit No. 285 

Intebcontinent Aviation, Inc., 

Milton House, 
Shanghai, July 25, 1933. 
Mr. Wm. F. GotJLDiNG, 

Ciirtiss-Wriffht Export Corporation, New York City. 

Dear, Biix: No doubt you have seen the several letters I have written to 
Owen Shannon and I have intended writing you for a long, time, but owing to 
the fact that directly before I left New York I had a long talk with Owen I 
consequently picked on him as my correspondent. 

I am certainly glad to hear of the large amount of business you are getting 
in South America and, incidentally, you aren't doing so badly over here. 

I wrote a long letter to Jack Allard directly after I heard of the contem- 
plated move to appoint Andersen Meyer your agent over here. I don't doubt 
but what you know the contents of this letter by now and I certainly hope it 
bad some weight in preventing this move provided it has not already gone 
through. It is very difiicut to explain all the reasons for my thinking that 
you would be much better off under the present arrangement than with a large 
company as agents. Any explanation that one makes in reference to things 
like that in China sound perfectly assinine at home, but I don't doubt that you 
can see the fallacy of having a large organization as a representative here, due 
to the fact that they are not able to wield their sympathies in quite as adroit 
a manner as a small organization. With constant changes of political favor 
this is an absolute necessity. In order to stay in the swim it is necessary to 
have someone continually on the ball. With a big company this would not be 
possible because of the lack of personal attention the job would receive. The 
British are an example of this. They tried the same form of representation, 
but immediately changed back to a small independent organization. I could 
go on for pages giving my reasons for thinking that a change would be 
disadvantageous. 

I understand that Ed. Howard, the ex Aviation Trade Commissioner from 
here, is going to New York and no doubt you will get a good slant on this from 
him. I don't believe there is anyone in China with a fraction of the knowledge 
of aviation sales promotion that is possessed by him. All hands would do well 
to lend a willing ear. 

I just found out yesterday that Dr. H. H. Kung, the present no. 1, was 
informed by the Italian air attache that the Curtiss Hawk was an old dis- 
carded Caproni design. I understand that this perturbed Dr. Kung to quite 
an extf'P'-. This is an illustr'^tion of ore c." the variouM diffinilties encountered 
by age.it.s here. ' The whole thing is dirty business and intrigue. 

I think it would be a good idea if you could send me a short resume of the 
original design and the consequent development of the Curtiss Hawk. I will 
send this on to Dr. Kung ; not apropos of the Italian statement but merely give 
it to him with the suugestion that he might be interested in the history of the 
devehipment of this ship. 

The Italians are demonstrating a Fiat pursuit ship in Shanghai today and 
I am up here as " look-see " man for the Americans. This ship is a biplane 
with a water-cooled engine known in .Tanes as the C. R. 30 ; 250 m.p.h. is 
claimed by the Italians for this ship, but if it will do over 200 I will eat it 
lock, stock, and barrel. I am hoping tliat we will get a chance to have a 
competitive demonstration between this ship and the Hawk hut I don't think 
tlie Italinns want to play. They are a dirty cut-throat bunch of Imsiness people 
and do not hesitate to knock our equipment at every possible opportunity. I 
am glad to say th;it it has not been necessary for us to resoit to this p'-iictice 
as the statement of facts is all that is necessary in regard to tlie Italian 
equipment now on hand. 

Mr. Engle of the Austin Hangar Company is now in Hangchow surveying the 
ground for the factory. I am certainly glad that it is going to be in the same 
place that I am. 

Y'ou would think that Curtiss Wright should have the whole aviation situa- 
tion in tlie palms of their hands with having sold all of these Hawks and the 
factory, but such is not the case. The Chinese have as little method and 
system about buying airplanes as they have in other respects and if they get 
a favorable presentation in some other country in my opinion and that of many 
others, they would as soon buy other equipment in spite of the fact that it 



MUNITIONS INDUSTRY 877 

entirely desysteinizes the whole air force. I won't go into a tirade on Chinese 
psychol(jgy but, believe me, it passes all understanding. 

We are hoping that Bill Pawley will be returning shortly to get on the job, 
as it looks as though there is the possibility of the purchase of additional equip- 
ment of observation or attack type. I saw to it that you got this infonnation 
by cable although I don't know what you have to offer in the high-speed obser- 
vation line except, the A-S attack, which I believe would create a favorable 
impression here. 

Uayless lias just returned from Canton and I have been talking with him. 
He told me the tragic tale of Ed Deeds who was killed recently in a Hawk. He 
was an eyewitness and said that Deeds was making slow passes over the field 
with power a la Jimmy Doolittle and the next thing anybody knew he had 
spun in. This was taken up by ail of your competitors which resulted in some 
very adverse criticism of the characteristics of the Hawk. I have done every- 
thing possible to show that this is entirely unfounded and have done everything 
in the Hawk that I am able lo do, which, although somewhat short of Doolittle's 
capabilities, is enougli to convince almost anyone of the excellent flying char- 
acteristics of the ship. 

The tirst five ships have arrived and I am going to start setting them up 
tomorrow. Bayless is coming down to give us a hand, although I might say, 
with becoming modesty that liis services are not essential, although they will be 
greatly appreciated. 1 liad my no. 1 American engine man take instructions ou 
the engine from liim. This came in very liandy. 

If there is any information that you think I might be able to furnish you I 
would be only too glad to do so and to cooperate in any way possible with you. 

I am on the way to the barber to have my pigtail trimmed. 

Please give my best regards to all hands and remember me to Mrs. Goulding. 
Sincerely yours, 

(Signed) Jeu{ry Clakk. 



Exhibit No. 286 

MK. WEBSTER'S REPORT 

New York, October 19, 1933. 

Mr. J. S. Allard : I am passing on to you the foUowing information received 
from Mr. Webster, legardiiig the situation in Peru: 

"The British liave been \ ery active and have a very clever man on the job 
here, wlio has maiu.ged to g^^ase certain officials in o/dcr to put across sales. 
They have sold six ' i^ airey Cordons ' with Panther engines antl six ' Fairey 
Fox ' single seaters with Rolls Kestrel engines. 

'• Faucetc has done practically nothing on sales." (Since writing this Mr. 
Webster has arranged with Faucett to engage Dan Tobin on military sales and 
pay him a salary out of his, Faucett's commissions.) 

" The Government is in the market for 12 more ships — Fairey are doing their 
utmost to sell the Fairey Fox, two-place, with ihe Rolls Kestrel engine. Their 
price is down to $2G,5U0 and they have us licked on performance at high alti- 
tudes. The Britisli have sold them on the idea that their fighting will have to 
be done at high altitudes. 

" The officeis who put through the first 12 British planes have been sent to 
England to take care of inspection, etc., and all went over well heeled with 
■ conunission ' money. 

"At the prices we have to get, it is impossible to handle this sort of thing — 
and our prices are still increasing. The prospect is not at all bright and the 
company will have to realize we cannot compete unless we get our prices down. 

" United are also after this business. 

" I have also quoted the police department here on two trainers. It is a new 
development that may lead to real business but is it a hell of a job trying to 
get our increased prices. 

" They don't give a rap about the N.R.A. or the reason why the United States 
Government is raising costs — they're interested only in what they have to pay. 
The argument that the dollar has decreased in value is no good — their big job 
is to get exchange down here and dollars are scarce and they have to pay a 
premium to get them. Don't give that as an argument — it only" makes everyone 
sore. Up in Bolivia — that is the reason they are not ordering in large q'uan- 



878 MUNITIONS INDUSTRY 

titles — but in threes and fours at a time — because they cannot get sufl3cient 
exchange. There is more business to be had and very soon, in Bolivia, and that 
is the reason I am anxious to get up there. 

"Again referring to the two Trainers, whicli we can probably sell to the 
police department here, our cost is $5,935, which makes the Trainer almost 
prohibitive in price compared to other ships. They are willing to pay around 
$5,000 c.i.f. Callao for a Trainer, and unless we can get somewhere around 
that price we will have to forget about the business. 

" Piciise explain to Mr. Smith, Mr. Allard, and Mr. Cramer that selling 
flying machines down here now with our increased costs is next to impossible. 

" The British are lowering prices and offering other inducements and going 
after this busip.ess to beat Hell. The factory will have to realize this and 
meet these conditions if they expect to continue in this market." 

Owen Shannon. 
OS.js 

Exhibit No. 287 
Custiss-Wright Export Corporation, 27 West 57th Street, New York 

Lima, Peru, October 20, 1933. 

Dear Dan : The last figures received from New York on the price of the 
Hawk land plane with full armament consisting of two guns and bomb rack 
is $26,000 c.i.f. Callao. Selling price of the pontoons c.i.f. Callao for the Hawk 
Is $3,8-50. If we ship them to Iquitos via Para, cost will be $200 additional, 
but I have no accurate information as to steamer sailings. 

"We can ship two Hawks within 45 days of order and two per week 
thereafter. 

By using the new barrell carburetor on the Cyclone engine and carrying 
144 gallons of gasoline, the high speed of the Hawk is 205 miles per hour at 
8,000 feet altitude. 201 miles at 12,000 feet, and 195 miles at 16,000 feet. 
Service ceiling is 23,800 feet and absolnte ceiling 25,000 feet. The cruising 
range at 8,000 feet is 700 miles. Play this up for a pursuit ship. 

The selling price of the Condor Bomber complete with armament, flyaway 
factory, is $63,500 each. We can complete the first ship at the factory in 
90 days from order. You have all the characteristics and other data. 

I will write you from La Paz giving prices on bombs which are quite in- 
volved. If Gilardi asks w'hy we have not reduced the price of the Hawk, you 
may tell him that we have done so but that our factory costs on material, 
etc., have been greatly increased ; therefore, instead of increasing the price of 
the ship to customers, we have maintained that price. 

For your information we had a long talk with Romano this afternoon and 
looked over the contract for the six Fairey, 2-place observation jobs, which is 
the last contract signed. We were under the impression that they ordered 
single-seat pursuit planes but this is not correct. It was 6 2-place jobs. 
The contract price in dollars was $33,000 each and a little more than $7,000 
per set for pontoons. This makes the entire job about $10,000 more per unit 
than our Falcon. It would do no harm to mention figures to the Minister, 
but of course do not say where you got your information from. It sounds 
like highway robbery to me and someone collected at least $100,000 on the 
contract as "commission." 

Best of luck old top and go to it. Keep in touch with me and let's see some 
business. 

Sincerely, 



Exhibit No. 288 

Sept. 17, 1932. 
Mr. T. Morgan, 

President Curtiss-Wright Corporation, J( Rue Chernowis, 

Paris. 
Dear Mr. Morgan : We feel extremely sorry that you have not extended a 
busines trip to Europe as far as Turkey, where an increasing amount of good, 
sound business may be expected for Curtiss-Wright and Sperry. You ai-e, of 
course, getting information on the local aspects of things here through as 
reliable assistants as Com. Leighton, Major Melviu Hall, and Mr. Farnsworth, 



MUNITIONS INDUSTRY 879 

Mr. Wite, Mr. Westervelt. Still, it would have been of great use to form a 
first-lmnd opinion of the matter, as you have the final responsibility of any 
decision. 

It is certainly true that your first actual experiences in Turkey are not 
encouraging. There is, to begin with, a huge amount of red tape and diffusion 
of authority. Secondly, there was a delay of payment in the first business 
transaction, which must be a discouraging experience in present times. How- 
ever, as Medjit Bey, the under secretary of aviation, has explained to Mr. Farns- 
worth, the delay is exceptional and due to the fact that the method of use of 
Aviation League money could not be decided for months at the beginning of 
the new financial year. The new budget itself was delayed. The method 
finally accepted will allow a prompt handling of payments. 

From such distance a delay may easily be attributed to lack of means. You 
may rest assured that for any financial engagement taken for aviation matters 
the money does not only exist theoretically in the budget but is actually de- 
posited in cash at the bank. Statements to the contrary are only spread by 
competitors, who hope to scare away American competitors from the Turkish 
market. A clear example of this was recently delivered by Vickers Armstrong. 

The latter persuaded the Colt people that it would be unsafe for them to do 
business in Turkey, and that themselves did not care to arrange for a Brown- 
ing demonstration in Turkey, because they did not care to solicit business there, 
having a great deal of money outstanding. The business mentioned in this con- 
nection was the sale of 48 machine guns, making a total of about $25,000. 
Within a few weeks of this statement, Vickers Ai-mstrong obtained, after most 
strenuous efforts, an order of eight supermarine seaplanes of $600,000, to be 
paid half in sterling, half in Turkish pounds. This proves that Vickers- 
Armstrong, which has a i)ermanent factory branch in Ankara and has an exact 
knowledge of local conditions, considers safe to do business for its own account, 
but does not hesitate to use unclean methods to deceive American competitors 
and keep them away from the market. 

The business actually obtnined by Curtiss-Wright up to the present is the 
following : 

18 Hawks manufactured in America 324. 000 

6 Hawks (materials and motors) 75,000 

6 Fledglings (materials and motors) 52,000 

Various equipment in connection with Hawks 22, 000 

6 months' rent for two Kingbirds 10, 000 

Spare parts for airlines 6,000 

Shop equipment for Kayseri 27,000 



516, 000 
The business expected for the next months is the following : 

3 300-hp. Wright motors for F 13 Junkers planes 12, 300 

40 180-hp. Wright motors for A 20 Junkers planes 120, 000 

3 radio sets for ground use and airplanes 30, 000 

Spare parts for Hawks and Cyclone 100, 000 

Spare parts for Fledglings and Whirlwind motors 20, 000 

Spare motors 30, 000 

Aerial photographic equipment 20,000 



332, 300 



A further order of 24 Hawks to be built in Kayseri may be expected as soon 
as planes manufactured in Kayseri prove a success. The airlines will also 
prove to be a source of continued business. 

We are afraid that the nature of the work we have to do is not fully appre- 
ciated in New York. European competitors, who consider American competi- 
tion as unrightful intruding into their established sphere, are doing evei'ything 
to render the task difficult. In addition to this, it needs a constant fight to 
sell a quality good in a market where price has been the dominating factor for 
the account of a manufacturer who does not see any reason to make the sacri- 
fices in procedure and terms cheerfully accepted by European countries. 

In order to be strong in this struggle we have associated to ourselves two 
other firms. 

Now. I must write you frankly about a difficulty we nve up against: 

When I wrote you on July 10, 1932, about applying half of the Curtiss com- 
missions due to us to our Sperry debt and to send us tha other half, as it con- 
83876— .34— PT 4 13 



880 MUNITIONS INDUSTRY 

stitutes the shares of the two firms we are associated with, I liear that you 
liave not received our request favorably, taking it surely for a demand of 
another fnvor. From this viewpoint you are perfectly right, because you have 
gone to the extreme limit in helping us in the Sperry matter so that troubling 
you for a further request in that connection would be more than unreasonable. 

Our request would appear in a different light, if it is viewed from the stand- 
point of business expediency on the one hand, lack of risk and trouble for 
Sperry on the other hand. 

Tlie two firms helping us in the Curtiss-Sperry business and spending con- 
stantly money, as we do, for it, would lose their initiative, if they don't get 
any commission after a certain business is settled and concluded. It is easy 
to i-ealize their stand of mind, when one thinks of four years' activity and 
expense, spent for Curtiss business. 

In spite of this situation, I could very well understand your standpoint of 
letting us fight out the difficulties, if the commissions expected from Curtiss 
just covered our Sperry debt. As a matter of fact, the commission expected 
from the accomplished business and from surely coming business lilje spare 
parts and motor orders would cover our debt to Sperry about three times. 
So the acceptance of the request about applying only 50% of the commissions 
becoming due to the Sperry debt would only mean a delay of a few months in 
the complete payment of the debt. As there is no risk and as the debt is sub- 
ject to 6% interest, Sperry would not run any disadvantage of showing this 
facility against the great advantage which the satisfying of our partners means 
for both the Curtiss and the Sperry business in our territory. 

Firmly hoping that you will decide to approve of the methods of procedure 
outlined in our letter of July 10th, of which we are enclosing a copy, 
Yours very sincerely, 

Ahmet Emin, 
AE/EH 
Enclosure. 



Exhibit No. 289 

finland — cy0l0ne3 — ^united 

Febeuary 5, 1931. 
J. S. Allaed, New York City. 
Mr. BuRDETTE S. "Weight, Washington, D.C. 

Dear Buedie: Thanks for yours of the 3rd with the attached copy of letter 
to Leighton Rogers on the subject of the cable to be sent to Osborn Watson 
about Cyclone tests. Also thanks for the dope about Love's reactioh to what- 
ever statements Major Hall is making. Needless to say, I do not believe Hall's 
statements are at all radical or unethical, as all cables and correspondence 
that he has had with the Finnish officials in which he had discussed 1820-E's 
have been based entirely upon information furnished direct from the Wright 
Company or from this office. Love has been made to stop his unethical tactics 
of running down competitive products, and I think this is just a sample of a 
method he is pursuing to meet real competition. 
Very truly yours, 

J. S. Aixard. 



Exhibit No. 290 

[Copy] 

FILE COPY OF TELEGRAPHIC MESSAGE 

To: Aeroexco. ]\Iarch 30, 1932. 

From : Melvin Hall, Ankara, Turkey. 
Thomas A. Morgan. 
(Personal.) 
In spite of bitter competition contract (s) for eighteen Curtiss Hawk one-place 
pursuit, Cyclone engine, ready for our signature, but all (of) special fund(s) 
local aviation association recently made subject to Turkish Government regula- 
tions, stipulating all payments foreign purchase (s) not more than 30% before 
their total acceptance (s) Turkey. Stop. According to our estimate (of) pres- 



MUNITIONS INDUSTRY 881 

ent terms will delay previously arranged payment on presentation of shipping 
documents Constantinople, Turkey, at a maximum of six weeks. Stop. 30% 
(of) payment in advance balance of payment(s) 70% in about six months after 
closing contract. Stop. Have tried hard to but cannot arrange (for) better 
terms. Stop. Under the circumstances no reason to believe are running a 
great risk; embassy of the same opinion. Stop. Fund(s) have been allotted 
in the bank covering payment but impossible to secure letter of credit negotiable 
instruments on account of Government regulations. Stop. Absolutely cei'tain 
can complete in .satisfactory manner, gold-dollars exchange, excluding all risks 
any fluctuation in exchange to cost not more (than) small interest charge. 
Stop. Turkey unquestionably has acted in good faith on our (my) behalf, are 
accepting according to our statement (of) (that) regarding Curtiss Hawk, one- 
place Cyclone engine, ignoring oflScial information U.S. Government to the 
contrary, in addition to foul intrigue our competitors and especially United, 
Aircraft & Transport, in addition to the foregoing paying higher price(s) $3,000 
per unit will not take advantage (of) attractive offer our competitors are 
quoting, for example pole(s) to take in full payment Turkish raw products.. 
Stop. Believe that all future sales Turkey impossible unless accept their 
terms. Stop. Believe that future business, European, influenced by success 
failure liere. Stop. After carefully considering the matter recommend that 
you accept. Stop. If you approve of will communicate further with detail (s) 
gold-dollars exchange. Stop. Awaiting your instructions. 

Melvin Hall. 

MF. 

cc. Messrs. Morgan, Allard, Webster, Goulding, Smith. 



Exhibit No. 291 

[Copy from carbon copy] 

From : Melvin Hall. Budapest, Rec, June 3, 1930. . A.A. 

To: Aeroexco. N 1 37 Budapest, 37 LCD, Aeroexco, N.Y. 

Retelhlove tactics followin-:; us with insidious derogatory comment obsolete 
equipment impossible dispose of in America, alleged financial difficulties cor- 
poration. States Army-Navy orders now hundred percent United equipment, 
etcetera. Report follows. 

MEIiVINHAL. 

Washington file : " European Tour-General." #535 



Exhibit No. 292 

Intercontinent A\^ATION, Inc., 
Hamilton House, Shanghai, October 16, i933. 
Mr. Thomas Morgan, 

29 West 57th Street, New York City. 

Dear Tom : Hugh Keavney, who signed the attached memorandum, is leaving 
for the States on today's boat. On June 6th he received a letter from his wife 
containing this message. I don't know who Bill Brookes is but he is reported 
to he a Buffalo Curtiss factory employee. It might be very interesting to have 
it checked to find dut just who he is and the reasons for his statements. 

Keavney came to China in .Tune for Paramount: lost his job and was left in 
China, supposedly stranded. He is an ex-aviator and supposed to be a very 
close friend of Casey Jones. I understand that Bill Goulding is acquainted with 
him and can probably tell you something about his past activities. The con- 
tents of this letter were immediately transmitted to Carl Nahmmacher, United's 
agent, who has passed it around to everyone in Shanghai interested in aircraft 
with the story that the man who received the letter was stopping at the 
Metropole Hotel and could furnish definite proof that the ships so'd to the 
Chinese were old equipment. 

I am running photographs of the China planes being constructed in the 
rotogravure section of next Sunday's paper with the statement that these ships 
were under construction during the months of June, July, and August 1933. 

I do not believe that any lasting damage has been done by this rumor, but 
combined with the trotfble we have been having and also the fact that five of 



882 MUNiTioisrs industry 

the Hawks have already cracked up at Hangchow, it certainly makes it tougli 
for us for a while. 

Things are moving along fair enough although I have nothing to report (o 
you so far on the factory developments. The Chinese Government is still 
considering the contract. I hope in the near future to be able to cable you 
some concrete news. 

With kind personal regards, I am 
Sincerely yours, 

(Sgd.) W. D. Pawley. 



Exhibit No. 293 

" Today Bill Brookes stopped in to see if I had heard from you ; he told me 
the Chinese in Chinatown had a lot of cash they were going to send to China, 
but when the treaty with Japan was signed they got peeved and didn't send 
it. He also told me that the Curtiss planes Jimmy Doolittle went over there 
with were the same old crates they tried to sell China last year. The only 
difference was a coat of paint and other motors and they are another year old. 
If you run into them, watch out. They are supposed to be awful. 

" If you can check the truthfulness of this story you might be able to get some 
thanks from the Government. Jimmy is thought to be studying a newer plane 
which resembles those in the shipment. Of course I have no way of checking 
this story of Bill's but I thought you ought to know anyway." 

This memorandum is an excerpt from a personal letter to me from my wife 
dated June 6th and is the only letter that I have received regarding Curtiss 
aviation equipment of any kind. 

(Sgd.) Hugh Kbavney. 



Exhibit No. 294 
situation summary, tubkefy sutflementary interim report personalities, 

FEB. 27, 1933 

Zekai Bey, Minister of National Defense, is believed at present to be well- 
disposed but extremely desirous of having something concrete to show in the 
way of results justifying the policy of his ministry in turning to America 
for military aeronautical equipment and technical cooperation. He is in- 
telligent but not entirely to be relied on. To meet his desires, which are by no 
means without reason, it appears most necessary to turn out the sample Fledg- 
ling at the earliest practicable moment. It should not be lost sight of that all 
representatives of competitive interests who may feel themselves adversely 
affected by the increasing collaboration of the ministry with C-W and the 
orders passed to C-W, band together and with their influential friends, deputies, 
newspaper editors, etc., and keep up a constant and heavy bombardment of 
the minister's position. 

The Prime Minister, Ismet Pasha, is an authority with whom we come less 
in direct contact. Nevertheless, he is strongly favorable to the principle of 
cooperation with America, very keen on the development of Turkish aviation, 
especially interested in the proposed Turkish airline to serve as a link in the 
international systems, and keeps himself well-informed on the progress of mat- 
ters connected with C-W cooperation. The rapid development of aircraft 
mnnufacture at Kayseri is for him, as for other Government leaders, a mat- 
ter of major national importance. This fact was perhaps not fully appre- 
j^'iated in New York when the technical cooperation contract was signed and 
Fledgling bill of materials urgently called for. Ismet Pasha's whole policy 
favors the C-W collaboration. If results are produced he can be counted on 
to be far more than slightly partial in C-W favor ; if not, he can become a 
relentless enemy. 

Ferzi Pasha, cliief of the general staff, is believed to be potentially friendly 
as long as C-W keeps its engagements with the ministry, delivers the perform- 
ances guaranteed, and produces results at Kayseri. He is d'sinterested in 
politir^s, desiring only to develop the strongest possible defense force with the 
resources at his disposal. He is sufficiently air-minded to build up his air 
force at t^^e expense of both the army and the navy. He has adopted certain 
Stan lard terms of purchase and acceptance to meet the special circumstance* 
in Turkey. From these terms, which European competitors have accepted, 



MUNITIONS INDUSTRY 883 

he is unwilling to depart. He is strong, impartial, and honest. He wishes 
Turkish military aircraft to be not inferior to the best in standard service for 
various purposes in any major country, but is unwilling to experiment with 
prototypes. He is very lieen to render his country self-sufficient in produc- 
tion of military aircraft as rapidly and completely as possible. For this reason 
he is apt to prove impatient of undue delays at Kayseri and more impressed by 
visible concrete results than by excuses or explanations. One of the features 
of the cooperation with C-W that appeals to him most is the fact that the 
political considerations and constant diplomatic pressure that would be in- 
volved in similar association with any major European manufacturer or 
group are missing. He has had unfortunate experiences with certain European 
contractors, notably Junkers and Gourdou, and is not likely to be tolerant 
of failure to produce results or to meet guarantees. On the other hand, if 
C-W delivers the goods, he can be counted on to be absolutely fair and not to 
be swerved by petty intrigues. 

Abdul Halik Bey, Minister of Finance and former Minister of National De- 
fense, is one of the most admirable characters in Turkey. Broad-minded, 
honest, reasonable, and far-sighted, he has succeeded under immense diffi- 
culties in producing one of the few balanced budgets in the world today. He 
recognizes and admits more freely than others the defects in the Turkish 
administrative systems and is definitely striving to overcome them. He is 
very friendly to C-W. Should there be a change in the cabinet involving 
the Ministry of National Defense, he is almost certain to be the next holder of 
that portfolio. A better selection for C-W interests could not be found. 
Saracoglu Sukru (Sarajoglou Shukri) Bey would probably replace him as 
Minister of Finance. Though a man less sound, less sincere, and less devoid of 
polities than Abdul Halik, Sukru Bey would be a favorable selection tor C-W. 

Col. Mecid Bey (Mejid Bey), former Under-Secretary for Aviation, is an 
artillery officer without profound knowledge of technical matters connected 
with aviation, and consequently apt to be influenced too much by the opinions 
of his technical aides. He is absolutely honest, sincere, hard-working, and 
well intentioued, if somewhat naive at times. He is particularly naive and 
difficult with respect to financial matters, which he doesn't in the least com- 
prehend. He can be very stubborn on occasions though generally indecisive, 
has an unfortunately acute memory for all statements, promises, and assurances 
made him at any time, is inclined to be suspicious, tries to drive hard bargains 
witli contractors without being a shrewd bargainer, and messes too nmch in 
detail which he doesn't clearly grasp. His personal character is above re- 
proach. After his present tour of duty with troops he will in all probability 
return as Under-Secretary for Aviation. Having had much to do with the 
formation of the program of technical cooperation with C-W he will undoubt- 
edly be friendly and heartily desirous of a successful outcome, though his 
hopes and expectations, especially involving the time element, are apt to run 
somewhat ahead of practicable realization. Balanced by the more practical 
mind of Maj. Ihsau Bey, liaison officer of the General Statt with the Under- 
Secretary's office and Technical Section of the Ministry, Mecid Boy can be 
really helpful to C-W interests. He hopes eventually to retire as Director- 
General of Civil Aviation. If the Ministry's latest proposal to C-W for the 
operation of the airline is mutually acceptable to C-W interests and the 
Turkish Govei'nment, there may not be any need for such an appointment. 

Capt. Hamdi Bey, the only active officer in the technical section at present, 
is a wholly inappropriate person for such a responsible position. Ill-informed, 
out-of-date, stubborn, and a slave to ritual, he is nevertheless a potential 
friend, and especially when handled by Hilmi Bey he can be extremely useful. 
He has an important voice in the selection of new types of aircraft and full 
authority in writing up the specifications. 

Lt. Col. Sefik (Shefik) Bey, is unquestionably sincerely friendly. He is one 
of the two most influential officers in the air force. At present commanding 
the regiment at Smyrna, he is somewhat removed from the C-W battle front 
but nonetheless is a very useful supporter in matters of policy. His visit to 
America and his marriage to the daughter of Fevzi Pasha constitute both 
very strong assets and distinct handicaps, the latter in laying him open to 
accusations of partiality towards C-W on account of the reception accorded 
him in America and possible " understandings ", and of favoritism through his 
relations with the Chief of Staff. For these reasons he keeps in the back- 
ground of C-W affairs as much as possible. 



gg4 MUNITIONS INDUSTRY 

Lt. Co. Celal (Jelal) Bey, commanding the regiment at Eskisehir, is the 
opposite number of Sefik Bey and the other most influential oflicer of the air 
force. He and Sefik graduated from the Siime class and have advanced 
together ever since. There is a very definite though hidden rivahy between 
the two. Celal Bey's opposition to OW in general is doubtless partly due to 
his jealousy of Sefik. Celal Bey absorbed in the course of his education in 
France a good deal tending to render him partial to French methods. French 
standards, and French equipment. He threw his influence in favor of Dewoi- 
tines against Hawks and remains consistent to his original reconnnendations. 
He is, probably without realizing it, strongly influ.mceil by Selahetin Bey, the 
civilian engineer who is the most outspiikenly anti-C-W man in Turkey. Celal 
Bey is kept well— though by no means always accurately — informed on all 
matters unfavorable to C-W, such as annual reports, statements showing 
losses, army and navy procurements not favorable to Curtiss (the recent 
big order for low-wing' Boeing pursuits will undoubtedly be strongly featured 
here against the Turkish Hawk program), liquidation of the flying service, 
closing down of subsidiary companies for lack of oi'ders, ci'ashes, and failures, 
etc. it is believed that "this niformation is furnished gratis by Hamilton of 
United through Selahetin Bey. Celal Bey statefl to Hilnii Bey, and probably 
is thoroughly convinced, that C-W sent a mission over here comprising a pur- 
suit plane which did not have sufficient performance to be of any interest to 
anyone. In a desperate attempt to produce an answer to the Boeing and to 
European pursuit planes, the E Cyclone-Hawk was offered but proved a 
failure and wasn't taken up by either the Army or Navy. In further despera- 
tion the F engine was substituted and the combiuation is mw being tried on 
the dog (Turkey). Its performances were not based on fact but on the desire 
to exceed the Dewoitine performances. It cannot and never will meet its 
guarantees. Celal Bey maintains, and probably with complete sincerity, that 
his only thought is to struggle for the welfare of Turkish aviation, for the 
mobilization and operation of which he will be responsible when the day of 
emergency arises (maybe he will in part, but certainly not alone). When he 
hears such stuff as the above, allegedly from responsible sources, constantly 
reiterated by his closest personal friend, it is not siirprising if it has some effect. 

C'^lal Bey is further influenced against C-W, in a minor way, because his 
pet recommendation to move the regiment to a new field about 4 miles away 
and separate it from the school was not supported by Hulse, on grounds of 
economy. Hulse was right and was so recognized by the ministry, but it has 
not sweetened Celal Bey's attitude. Celal Bey is also strongly opposed to the 
spending of any money of the Ministry of National Defense on airlines, though 
not opposed to airlines in principle if supported by some other ministry's 
budget. 

Selahetin Bey is the principal disturbing influence, though not the only one. 
Of pleasing personality, great conceit, and infinite audacity, he returned from 
a technical education in France (where he was at the bottom of his class) to 
build all the military aircraft for the Turkish Government. With specious 
arguments he convinced many people that it was foolish to go outside Turkey 
for aircraft when he could build in Turkey as well as C-W at a fraction the 
cost. His bitter opposition to everything C-W is based wholly on the fact 
that he recognizes in C-W the principal, if not only, obstacle to the realization 
of his schemes to get control of the production of military aircraft in Turkey. 
Without originality or real experience, his first effort was not successful, and 
his influence has greatly diminished except with his friend Celal Bey. He con- 
stitutes, however, a very annoying and troublesome element, and it is doubt- 
ful if anything can be done to change his character and fundamental attitude. 
He is not clever enough to realize that he would have had a vastly better 
chance to succeed in due course with his program for himself had he sup- 
ported C-W whole-heartedly and received C-W's support. It is quite evident 
that he receives his anti-C-W information from Hamilton of United, and it 
was told Emen Bey a few days ago by Hamdi that Selahetin had a definite 
" arrangement " with United. This ties in with the statement to Gillespie by 
the United mechanic Butterfield that though they hadn't been able to do much 
for themselves in Turkey they at least had queered C-W^'s game here perma- 
nently. What the " arrangement " may be is problematical — possibly promise 
of a good commission on all United engines sold to Selahetin's ships — but at 
all events, it would appear that United are persisting with their destructive 
policy of endeavoring to turn C-W business in Europe, when they themselves 
cannot get it, to the hands of French, Poles, or, indeed, anyone else. 



MUNITIONS INDUSTRY 885 

There are many other personalities involved in C-W affairs in Turkey, but 
the above-mentioned, except perhaps for Hikmet Bey at Kayseri, whom we 
count on to assist Coon and to put the C-W case across, are those whose influ- 
ence pro or con seems most likely to affect the immediate course of events. 
Hikmet Bey, a young engineer educated in America, has only moderate influ- 
ence as yet but is clever enough to assist us fully to build him up to take over 
Kayseri eventually and is undoubtedly a strong asset in his present capacity. 

(Signed) Melvin Hall. 

Exhibit No. 295 

iieport no. 2 cautley 

June 4, 1930. 
Confidential. 
Subject : Wright engines business in Jugoslavia. 

(1) In another report I will try to give you a little Jugoslav background. 
Suffice to say for the moment that you positively cannot believe anything that 
anyone tells you in Jugoslavia, unless you have remarkable talent for detecting 
truth among much falsehood. In Jugoslavia speech is used to conceal one's 
thoughts. 

(2) Drawing my own conclusions from talking with various kinds of plain, 
fancy, and acrobatic Jugoslav liars: 

(3) There is no immediate nor easy Wright engine business in Jugoslavia. 
That opportunity passed long ago. I have no time to conduct a post mortem. 

(4) We absolutely cannot do business in Jugoslavia without a duly accredited 
sales agent on the spot. Our present position, with Petrovich as our agent in 
the eyes of the Government, but totally unable to do any business for us, is the 
worst we could be in. It is an absolute stalemate. Petrovich could get us 
some business, I am quite sure. But Smyth will be much better. In order to 
make Smyth fully effective, Petrovich must be immediately and finally dis- 
credited in Jugoslavia. If he can then be of any assistance, Smyth will handle 
the situation on the spot and pay Petrovich whatever commission is necessary 
out Of his own commission. For this purpose, am enclosing rough drafts of 
two letters, one to the American Minister and one to Jugoslav Minister of War. 
Rush. These letters nmst be signed by an ofiicer of the company, president or 
vice president, and sent through just as quickly as possible. Send copies to 
C.W.X., Paris. Rush. When I cable you, follow them through with another 
pair of official letters stating that inasmuch as Mr. W. H. Smyth has been 
appointed representative of C.W.X. for Jugoslavia, he is the person empowered 
to represent Wright engines there. Rush. 

(5) The immediate order for 180 Whirlwinds has evaporated into thin, hot 
air. Jugoslavia will insist on going through the motions, at least, of taking a 
manufacturing license before ordering any such quantity. This does not mean 
that the 180 cannot eventually be resuscitated. Conditions change, depending 
upon who gets the graft and how much. For example, Lorraine and Potez, 
Salmson and Hauriot, were first in the field here and cleaned up for a while. 
Now it is Gnome Rhone and Breguet sitting on top, with Renault coming up 
and Lorraine going down. 

(6) Competition is enormously keen here considering the small volume of 
business (by our standards) available. For example. Gnome Rhone has prac- 
tically formed a company, erected a factory, and furnish a first-class factory 
manager for the sake of 50 engines a year. 

If we want to put up a fight for the sake of 50-60 engines a year maximum, 
the first thing to do is to loan the Jugoslav Government a new Whirlwind 300 — a 
good one — to be installed in a Fizir advanced training plane and tested for 3 to 
5 months. This is the only chance I can see at present to revive the interest 
of the army in Wright engines. 

If things are still as dull at home as they were when I left, it would be wise 
to take a chance on this one engine. I have been told that the Jugoslav 
Govenment never fails to buy an engine thus submitted for test unless it is 
absolutely no good. 

Randolph OAUTLEjy, 



886 MUNITIONS INDUSTRY 

Exhibit No. 296 

Cubtiss-Wkight Expokt Corporation, 

Neic York City, April 6. 1934. 
No. 105. 

Via S.S. Europa. 
To : Mr. B. G. Leighton, 

Ainerican Embassy, Ankara, Turkni. 

Dear Bruck: Mr. B. C. Goss, who is pi-esident of the U.S. Ordnance Engi- 
neers, Inc.. who manufacture chemical warfare munitions, has been approached 
by an individual in Istanbul in connection with the possible sale of chemical 
munitions to the Turkish Government and, more recently, with a plan which 
this Turk has submitted to Mr. Goss for U.S. Ordnance Engineers, Inc., to 
build a chemical munit ons plant in Turkey. 

Mr. Goss is very much interested in the proposition and, incidentally he tells 
me it is the only way that Turkey can have successful chemical warfare 
equipment- — by building a factory. 

Mr. Goss is planning on going to Turkey in the very near future, probably 
sailing within the next week or two and may, possibly, sail ^\■ith me. However, 
in the event that we do not arrive together, I am writing him a letter of intro- 
duction to you and have suggested that he get in touch with you before he 
gets in touch with anyone else in Turkey, so that you can give him the benefit 
of your experience and advice, and see if there is any way in which Curtiss- 
Wright can participate on a commission basis in his projected business with 
Turkey. Obviously, we do not want to be involved in any financing or anything 
else, but merely to get a commission for the assistance which you will give 
him. 

Sincerely yours, 



J.S.A. 

B.M.N. 

Enc. 



Exhibit No. 297 

[Copied from original] 

Cubtiss-Wright Export Corporation, 
27 West Fifty-seventh Street, New York, July 21, 1930. 
Mr. BuRDEfTTE S. Wright, 

501 Southern Bldff., Washington, B.C. 
Dear Burdie: Thanks for yours of the 17th regarding Mr. Gordon B. Enders 
and E. F. Baskey. The information is most interesting, and while I realize 
that the ethics of the transaction are very questionable, from all I gather 
most Chinese business is unethical and I still think that I would like to have 
had a chance at the Chinese business that Enders apparently had in his hand. 

This, of course, is not oflBcial, but it is confidential between you and me. 
I do think that if Enders had come in here with cash to buy a lot of aviation 
equipment to be sent to China and the State Department gave us approval I 
would not care much who Enders was as long as I got the cash and the State De- 
partment approved the shipment of the aeroplanes. Under present conditions 
we did not get a chance to contact with him, therefore we can stick up our 
noses in the air and say that we prefer not to associate with men of his calibre, 
but the truth of the matter is, I wish we had gotten the order. 
Sincerely yours, 

(Sgd.) Jack. 
J. S. AUard. 
BMN. 
Washington file : " China." 



MUNITIONS INDUSTRY 887 

i:xHiBiT No. 298 

La Paz, Bolria, March 24, 1933. 
Mr. C. W. Webstek, 

President Curtiss-Wright Export Corporation, 

27 West Fifty-seventh Street, New Yo)-k. 
DEL4.R Web: It is too early to report as yet on the situation of tlie Mollendo 
Hawks. I saw Lopez yesterday and save liim tlie ultimatum in writing and 
the total amount to be paid runs to a little over $i:6.400'.00, incluiling insur- 
ance, etc. I am going to see Lopez again this morning and will probably get 
some definite information as to what they will do. The aviation oflScials want 
the Hawks as soon as possible, and there will be a hell of a fight if the Gov- 
ernment wants to cancel them. They can get the money if they really need it, 
but the attitude here, as you know, is to let things run as long as possible 
without paying. 

Cueto is in Arica and has been there since before I left for Lima the last 
time. I have received a couple of very childish, threatening letters from him, 
and he will get my answer in Arica this morning. I am informed from reliable 
sources that Cueto went to Arica for his health, and the chances are that he 
will not be back, although I invited him up here to talk things over. I have 
made a few investigations but \\ill have to see several people yet to get a fair 
picture of the situation. It is quite likely that he will try to sue, and he also 
threatens that he will put the matter l)efore the various governments that we 
have been doing business with. I got a look at some documents yesterday that 
l)ear authority, and iilthough they were confidential I took some notes. Cueto 
files the following information regarding himself and his business : 

Importer of manufactured articles. 

Exporter of national articles. 

Agent of foreign manufacturers. 

Languages : English, Spanish, French. 

Countries : Europe, United States, Chile. 

Business done on own account on commission basis. 

organization : Private. 

Home ofiBce : La Paz. 

Branch office: Arica (to be established). 

Traveling salesmen employed, several. 

Commercial references: Bell & Howell, Chicago; Curtiss-Wright Export; 
Mack Motor Truck Corporation, New York ; Laboratories Francia Stgo, 
Chile, and Bellanca Aircraft, New Castle, Del. 

Agents for — same as above. 

Bank reference — any bank. 
There was no reference from any of the commercial firms mentioned, but the 
two banks here were requested to send in their recommendations and we find 
the following : 

Banco Central. Feb. 25th, 1933 : " Mr. Cueto Pozo has an agency to act occa- 
sionally for Curtiss Airplanes on a commission basis. At the time of taking 
this agency Mr. Cueto Pozo was in the Ministry of Foreign Affairs. In order 
to safeguard Government money he was discharged from the position in the 
Ministry of Foreign Affairs. As a private person he does not own any real 
estate, nor does he have money. At present there is a commission appointed 
by the Government to investigate concerning the sales of airplanes and trucks 
to the Government and establish whether Mr. Cueto Pozo and others have been 
unduly zealous in their private dealings with the Government." 

Banco Mercantil, February 23rd, 1933 : " Mr. Cueto Pozo is not a merchant. 
He has been deprived of the position he held in the Ministry of Foreign Affairs 
on account of being involved in the sale of airplanes to the Government. He 
does not have capital and does not meet his obligations." 

This may not be worth anything to you, but I am passing it on for your 
information and to give you an idea of the standing of Cueto in La Paz. 

The tail wheels and high skid for the Ospreys arrived O.K., but I will not 
have the opportunity of trying them out, as there are no planes left here in 
La Paz. Of the twelve Ospreys, they have six left. One Hawk is in the Chaco 
and seems to be all in one piece as yet, but the second Hawk has never left 
La Paz. Seems that they have no pilot available that they are willing to trust 
with the machine. Our dear friend. Major Vargas Guzman, has been trans- 
ferred to infantry and is due to leave for the Chaco soon. Col. Jordan is Jefe 
of the works and he is the one man that should have had the job since the 
beginning. 



»»5 MUNITIONS INDUSTRY 

Nothing more at present. Cannot give any more dope on the business here, 
as the mail goes out 10 : 00 this morning and I have an appointment witli 
Lopez at that hour. More on next mail. 

Best wishes and regards. Web. 



Sincerely, 



Cliff. 



Exhibit No. 299 

February 9, 1933. 

Mr. F. ECHENIQUB. 

P.O. box 3098, Los Cerrilos. 

Santiago, Chile. 

Dear Paxcho: Since my return I liave been doing considerable traveling and 
have spent very little time in the oflBce. 

I regret that I have not been able to write you fully regarding the Bolivian 
situation. I ex])hiined to Jerry one day on the telephone the difficulties we 
have had witli the Bolivian business and asked him to give you the information. 

The Bolivian Government business has been handled and controlled entirely 
by Mr. Lopez, comptroller general, and when I was in La Paz, he was very 
much upset and concerned because of the fact that we had been dealing 
through an agent and paying a commission on the business. He insisted that 
all business be handled directly between the Government and ourselves, and 
that no commissions would be permitted by the Government. He took imme- 
diate steps to discharge from Government service Mr. Cueto Pozo, and de- 
ducted from our bills the commissions which were supposed to have been paid. 
We have been unable to collect this extra amount and probably never will. He 
threatened to discontinue all business relations with us unless we agreed to 
this policy, and for that reason it is naturally impossible for me to make 
any arrangement with you at the present time for commissions. 

I told you when I was in Santiago that I would do the best I could for you 
but that it vv'as impossible for me to name a definite amount, and this arrange- 
ment will have to stand until we have concluded our business dealings with 
the Government. I am, naturally, very sorry that I can do nothing for you 
at this time, but you must appreciate the situation and permit it to continue 
until I am able to smooth matters over. 

In some way the Bolivian Government, through its intelligence service, 
learned of our dealings and prices with other countries and what commissions 
are normally allowed. Mr. Decker, the Bolivian consul in New York, has been 
very friendly towards us, and I am having luncheon with him today. 

I realize that everyone, ourselves and yourself included, are going through 
rather tough periods now, but there is nothing that I can do at the present 
time to help the situation. I probably will be starting for South America 
again within the next five or eight weeks, and possibly at that time I can 
more fully explain the situation and possibly do something for you. You must 
also realize. Pancho, that we went to considerable expense in paying your 
expenses from La Paz to New York and return to Chile, all of which, natu- 
rally, is charged against you on our books, and I can only repeat that you 
must rely upon our personal friendship to adjust this situation in some way 
as soon as possible. 

I am looking forAvard to seeing you again in the near future, and, in the 
meantime, my sincere good wishes to you and Mrs. Echenique, and the best 
of good luck. 

Cordially yours, 

C. W. WEJBSTEai. 



i 



Exhibit No. 300 

Cuetiss-Wright Export Corporation, 

La Paz. Bolivia, March 29. 193S. 
Mr. C. W. Webster, 

President, Curtiss-WrigM Export Corporation. 

21 West 57th Street, New York. 

DEIS.R Web;: I had an interview with Lopez (his morning with respect to 

Cueto and Pancho Echenique. Loi>ez says that the Government has never given 

Cueto a letter to the effect that they did not refuse to pay him a commission. 

Lopez is giving me a statement to that effect, and I hope to get it in time to 



MUNITIONS INDUSTRY 889 

enclose in this letter. As regards Pancho, Lopez doesn't even know him. and 
assures nie that Pancho never did a bit of business here and had nothing what- 
ever to do with any purchases made by Bolivia from us. He is also giving me a 
letter to that effect. 

Received a cable yesterday as^king what price Rogers quoted on parachutes. 
He quoted our price of $335 and turned in an order for 18 chutes, 12 of which 
were a part of the order I secured some time ago. They sure sent the money 
in a rush for the additional chutes. It might be interesting to know ihe reason. 
A short time before the order went through one of the pilots in the Chaco was 
shot down with an Osprey, and the observer, uninjured, jumped from the fall- 
ing plane wi1h the intention of landing in the Paraguay River. He hit the 
river all right, but as he jumped from 1,000 feet with no chute it was just too 
bad. So after a concrete example of what I have been telling them all along, 
they quickly decided that they urgently needed enough chutes to equip all 1he 
pilots. The 12 chutes shipped on the Barhara will arrive this week, maybe 
today. • That shipment was sent to Arica and had to be reshipped to Mollendo, 
hence the delay. 

At 1he ])respnt time there are only 5 of the 12 Ospreys in commission. Of the 
seven wrecked, five can be repaired when the spares arrive. One was a com- 
plete washout when the pilot landed on orders in a stump-infested field, and one 
was shot down by ground flre and burned on the crash. 

Col. Santalla is up from the Chaco and is plumb goofy over oTir planes. 
When the first Ospreys arrived in La Paz he was all against u« and was very 
skeptical of our equipment. At that time he had little to do with things and 
he didn't woiry me much. Now he has about 15 hours flying over the front 
and can't say enough in our favor. 

Am busy trying to push an order for more planes, and with Santalla, Jordan, 
and Ernst all on my side, I may get something done. 

Therp is a firm here in La Paz, "Webster & Ashton, formerly Webster & 
Finnegan, Cnsilla 144, that is a local business outfit with a branch in Oruro. 
They have the agency for International Harvester Export and have done consid- 
erable busines with the Bolivian Government in trucks. They carry on national 
business as well. They want the agency for us in Bolivia and I have thor- 
oughly looked up the stfin'ling of the firm, found it O.K.. have talked with the 
American Minister, Feely, and have known both Webster and Ashton person- 
ally since my first arrival here. Lopez called me In to talk it over and 
informed me that the Government was willing to do business with an accred- 
ited firm, but not with an individual, and that they were willing to pay a 
reasonable commission on business with us for the convenience of having 
.«omeone here at all times. Lopez suggested our placing an agency here for the 
convenience of the Government inasmuch as I will not be here permanently, 
and recommended Webster & Ashton. (I don't know what the hell is the 
matter with me; I haven't bad a drink all day and yet my fingers get all 
tangled up on this darned machine.) I am enclosing a letter from them. I 
don't know what effect the placing of an agency here would have on the claims 
of Cueto, but Lopez is all for it. There is one thing that comes to my attention 
with regard to this although I believe everything is aboveboard and on the 
level. Lopez is in witli Webster & Asliton on a hat f-^cto-y and a retail clothing 
and furniture business here and it is extremely difiicult, in view of the control 
board, to get dollars for the necessary imports for their business. Having an 
agency for American goods would enable them to carry their commissions in 
dollars in New York. There may be some kind of a combination between the 
parties, but the thing as put up to me sounds O.K. and on the level. Feely 
thinks it is square. Anyway, think it over and drop me a line, and it might 
be well to write to Webster & Ashton and see what you can find out. It is 
true that after I leave here it will be difl5cult for the Government to do quick 
business with us in spares, etc., with no representative here and no one to take 
care of their complaints or what not. Lopez also informs me that they intend 
to establish a ci-edit with an agent, if appointed, so that things can be shipped 
immediately without sending drafts through the bank for every amount as 
needed. I pointed out that he could just as well establish credit with us in 
New York, but he prefers to do it his way. 

I rnn a test 'n the Hawk here yesterday on take-off distance and with full 
load got into the air in 800 feet on a wet field. The best take-off on dry field 
is 4f»0 feet. It is considered nothing short of a miracle up here. 

More next week, Web ; best of luck and good wishes. 
Sincerely, 

(Sgd.) Cuff. 



890 MUNITIONS INDUSTRY 

Exhibit No. 301 

La Paz, Bolivia, Sept. 21, 1933. 
CWW #36 

Mr. C. W. WB3STEB, 

Curtiss-W right Export Corporation, 

21 West 57th Street, New York. 

Dear Web: I am proceeiling on to Lima today and will miil this letter iu 
Arica on my way through. There is absidutely nothing more that I can do 
here at the present time, and I may be able to be of some help in Lima. The 
supreme decree for three more Ospreys was signed yesterday, but it will be 
weeks before a regular contract is made out. That is customary here. Actives 
are arranging for payments, and that should go through in a week or ten 
days, although they are trying to get the 25% through immediately and theu 
go ahead with the balance as soon after as possible. Irrevocable credit will 
be arranged as before. As I told you in my cable of the 19th, the order for 
three Ospreys will be followed by an order later on for six more Ospreys and 
three Hawks. The Banco Central has already been notified that that amount 
of money will have to be planned on in the budget. In the meantime the 
Trainer deal is shelved. They are thinking, just thinking, of contracting sev- 
eral foreign pilots instead of wasting time training more of their own. They 
will undoubtedly be German pilots— due to Kundt. Webster & Ashton are 
sure live wires and we certainly made no mistake when we took them on. I 
had a chat with Minister Feely yesterday and his opinion is that taking them 
on was the best business that we have done yet. 

Regarding the commmission to be paid Activos, I cabled that my recom- 
mendation was 5% of the total amount of the last order. That would be 5% 
of $97,180.00, or nearly $5,000.00. As you know, that order was put through 
by me some time ago but Activos were darned helpful on the final details of 
the deal and were entirely responsible tor gett.ng the mon(>y in cash; something 
that no one else without their contracts and influence could have done so 
easily, if at all. For your own information, Lopez is, and has been for some 
time, a silent partner of Activos and is interested to quite an extent in the 
agency and their textile and hat factories. That is not common knowledge, 
but it makes it necessary to play ball with the tall friend, as he is the deciding 
factor in all purchases — more so than the President himself. Do not mistake 
me, Lopez is one of the few honest men in this country and although he has a 
personal interest in the sale of Curtiss planes and equipment he would not let 
the order go through unless the stuff was entirely satisfactory. Let me give 
you some extremely confidential dope that I picked up, no matter where, but 
it was in writing : 

1. Jorge Zalles, Vice Pres. of Grace & Co., used the Cueto affair as a lever to 
try to influence Lopez through the New York Consul to eliminate Curtiss and 
take up United Aircraft through Grace. They told Lopez that they could 
supply Hawks at $23,000 and Ospreys at $17,000. 

2. When the last three planes (that have just been delivered) were on order 
the purchase was nearly cancelled because of interference of the Kundt-Bilbuo 
combination — through Minister of War Hertzog — to the President. Except for 
Lopez and the pilots (as well as my visit here at the time to straighten out 
the complaints) the order would have been cancelled and the business given to 
United Aircraft and Fokker. 

3. Due to Lopez and Activos we were able to arrange full payment on the 
last order through irrevocable credit. The President's instructions were to 
make payment in the same form as before — 35% only after planes were tested 
and delivered. 

4. Lopez has been offered 10% on planes and 20% on spares if he will help 
swing the business to Fokker. Vickers made him the same offer. (I have 
told Activos that we cannot pay more than a flat 5% on all Curtiss business at 
the present quotations.) 

5. Lopez and Activos have practically assured our future by combatting the 
competition, although they could have cleaned up by putting in United or 
Vickers. 

6. Colonel Williams, American fiscal agent for Bolivia, has told the Govern- 
ment that United is much bigger than Curtiss. (I can't quite see where that 
comes in nor where it fits into the picture.) 



MUNITIONS INDUSTRY 891 

So in view of the stroug couibiuation working in our behalf, I think we 
should allow the 5% on the last order in order in keep the machinery well 
oiled. Our prices can stand it, although our selling costs have been rather 
high. Spare parts selling at list should make a fair margin for us, and I 
understand that the Osprey carries a fair margin at $18,000 with 10% allowed 
for commission. (I should know more about the internal workings of that side 
of the game if I am to be of maximum value to the company.) We have never 
hiul a chance to get together for a good old instructive critique in the year 
that 1 have been with the company, and I am looking forward with much 
enthusiasm to our meeting in Lima next month. Naturally, I want to put out 
everything I've got for you, and there are a few dark corners — dark as far 
as I am concerned — that I would like to get an inside glimpse of. 

I don't know whether I have mentioned it before, but be very careful what 
dope you put out to Decker. Contact Activos before quoting any prices to 
anyone and get together with them. They are on the up and up, but I know the 
situation here well enough to tell you to do this. There is a hell of a lot of 
intrigue down here, and an unwise word to Decker might start a lot of 
unpleasantness for us. You know the game, so you understand the situation. 

After the war, when the Government can spare a few mechanics, they may 
want to send three or four to the States to glean some information and train- 
ing at our factory. Think this over and see if we can fix something up for 
the boys. 

Tell Damon that the new tailskid on the Osprey is all right and that we can 
cut it to any height without any trouble. In spite of the kick that he put 
up about it when I first asked him to change it, it decreases the take-off run up 
here by a good lot and the landing speed, if increased at all, is so little increased 
as to be unnoticable. The actual take-off at La Paz was 6 seconds less than 
previously with the low skid. It will also keep the fuselage off the ground in 
ViUanumtes and Muncz, where the sand is so deep. Also pass the word along 
to the Buffalo factory that the gun synchronizers on the last Hawks were in 
working (Uder and saved us a hell of a lot of trouble. Things like that mean 
a lot to the field men and are appreciated. 

Shorty is going to the Chaco next Friday to look things over and give some 
much-needed instructions to the mechanics. This was requested by the pilots 
and I left it up to Shorty as to whether he would go or not. He can be of 
great help tliere for a couple of weeks both to us and to the pilots and mechan- 
ics. He will return here in t me to proceed directly to Buenos Aires by train 
before our arrival there. 

The invoice for the materials that were shipped up from Santiago several 
months ago was presented for payment and the amount passed. The cheek 
should be ready in a few days and will be sent directly to New York. The 
amount (of which I was never informed one way or the other) was $210.00' 
and Activos are adding ten percent for their trouble. In the future on a deal 
like that please instruct the office to let me have at least a copy of the invoice. 
I had no dope from them at all except to collect for the stuff. I got the in- 
ventory prices from Jerry after having received no instructions from the office 
in New York regarding prices, and added 10%, sent the list to Ashton for 
collection, and found out that he had already been sent an invoice. Needless 
to say, my prices did not agree with the others but on the same mail Ashton 
received the New York invoice and everybody was happy. Donnelly is leaving 
today for Santiago to pick up what materials he needs up here and will send 
me a list, or have Jerry sen:l it, of all the stuff he gets. That will reach me 
in Lima by air mall and I will send it on to New York immediately. They will 
fix the prices and mail the bill to Webster & Ashton direct with a copy to me. 
The invoice should include 10% commission' hut should not be noted as such 
on the invoice. The amount will be collected and sent to New York (or given to 
me to apply on expenses as previously) according to when it is collected. The 
ten i^rcent will be retained by our agents. 

Nothing more at present. Best of luck and a pleasant trip south. 
Sincerely, 

(Sgd.) Cliff. 



892 MUNITIONS INDUSTRY 

Exhibit No. 302 

[Copy] 
#108. 
Via air mail. 

May 23, 1933. 

Captain C. K. Travis, 

e/o American Consulate, La\ Paz, Bolivia. 

Dear Cliff: Did you receive the catalogues of the Faii'child Camera Gun 
and my letter of March 4th quoting prices, etc., on this equipment? 

Fairchild has given us temporary exclusive representation on this equipment 
in Bolivia and will only grant us exclusive sales rights if we develop some 
sales on it. They are now after us for a report on the prospect of some sales 
theie and we hope they are good, as we are convinced this gun and films will 
prove a good seller and particularly because of the repeat orders we will get 
-on the tilms. 

We have already sold thirty of these in China, eight in Columbia, four in 
Brazil, and expect orders shortly for two or three from both Salvador and 
Venezuela. 

I don't know whether Web told you already, but during the past two weeks 
we closed orders for nine Trainers, six Hawks, and six Falcons for Colombia, 
and another eighteen Hawks for China. 

It looks as if Salvador will buy three Ospreys and Venezuela three Ospreys 
or Falcons. It is too bad we are not getting anything from Peru except spare 
parts orders. I also hope Bolivia will come through soon for some more Hawks 
or Ospreys. 

Woody showed me the photos you sent him. Talking about beer — up to now 
it has not been so good here — no kick, does not average as much as 3%. 
Hov/ever, the New York State Commission has just ruled that the bottles must 
show the minimum percentage in the future and those breweries that do not 
put in the full 3.2 won't have any demand for their stuff — so it should be better 
soon. Web and I have a date with Bob Barr to go down to the S.S. Albert 
Ballin tomorrow night for some imported beer — we'll have one to your very 
good health. 

Web is still on the wagon — won't even take beer except on special occasions 
and then only a glass or two — but apparently it agrees with him as he has 
taken on quite a bit of weight. 

The consul general here — a good old scout named Decker — keeps on asking 
us what they are doing with the Hawks and Ospreys — we keep telling him we 
don't know, as you never discuss their activities in your letters, which is just 
as well because I am sure anything we told him would be cabled down to 
La Paz prompto. He seems to have a mania for saving the Government money 
and passing everything he hears on to them. 

Regards. 

Sincerely, 

(Signed) Owen Shannon. 
OS:D 



Exhibit No. 303 

[Copy] 

La Paz, Bolivia, May 30, 1933. 

Dear Web: Received your personal letter of the 11th yesterday along with 
the other letters and photographs of the new Falcon. Sure is some job and the 
performance is indeed surprising. 

The situation here seems imchanged as regards ports of entry to Bolivia. 
Chile declares one day that they will respect the port treaty with Bolivia and 
the next day decide to close shop. Shipments, however, are still coming 
through Arica. Nothing has been published regarding the Peruvian attitude 
but it seems as though Mollendo will be kept open and at the disposal of 
Bolivia. I will notify you immediately of any action taken by the resjiective 
Governments to close the ports to munitions. The embargo situation in the 
States seems to be getting serious according to the reports received by the 
press here. I am trying to get the Bolivian Government to sign up for all 



MUNITIONS INDUSTRY 893 

future needs before any action is talien in tlie States but it is a slow and 
difficult job. Definite decision has been made to order planes and spares to 
the amount of 2,000,000 bolivianos but the bank is having difficulty in getting 
the local currency transferred to dollars. They have enough now to order a 
couple of Hawks and 4 Ospreys and corresponding spares. That order should 
go through soon and I am trying at the same time to get the contract for the 
balance to be ordered as soon as money is available. Of course the big argu- 
ment in favor of that is the embargo situation as you have pointed out. 

Regarding the annex to your personal letter, I will try to give you a clear 
picture of the situation as regards the agency and quotations of equipment 
submitted to the Government so that you will be able to figure the thing out. 
Sure was white of you to bring up that suggestion to help me out and that is 
one of the many reasons why you will never have to worry about me letting 
you down. 

I liave already informed Ashton, that, in view of the fact that the present 
pending order was negotiated by myself and that no commission was included 
in the quotations, he will not be entitled to much, if anything, on the deal. 
Naturally he will have to be given something, as well as a couple of others, for 
what he lias done in helping the deal along and for his connections which will 
enable us to get our money when due. He is absolutely in accord with that 
program and will be satisfied with enough to settle some certain obligations 
which I could explain personally. He will be perfectly satisfied with 2 percent 
or less. 

The prices I quoted to the Government are in accordance with all previous 
prices with the 5-percent commission deducted. Ospreys at $18,000 and Hawks 
at $25,000, spares at list price as quoted in October less 5 percent, and Hawk 
spares at list price as quoted to me after the purchase of the Hawks. I am 
enclosing a copy of the list as submitted to the Government. You will notice 
that I quoted Ospreys with additional, or extra large gas tanks, at $.500 extra. 
There is plenty of room to enlarge the main tank and although it may be 
necessary to install a gas pump or wobble pump, it could easily be done. I 
found it necessary to do this to beat down cimipetition. They will probably 
order the standard Osprey anyway but the moral effect of knowing that the 
cniising range can be increased helps a lot. Thus the mind works. All in all, 
there should be plenty of margin on these prices, especially the Hawks and 
Hawk spares, to take care of the unusual selling expense. I will cable you at 
your private address in advance of notifying the office of the signing of the 
contracts. 

I am keeping in close contact with my inside connections and if it becomes 
necessary to arrange to get things through I will get busy and keep you fully 
informed by cable and letter. By the way, I have no code book and would 
appreciate your sending one down to me. Better mail it to Lima, as I expect 
to get out of here in 10 days of less. 

I have already started talking Falcon, but the price will probably not appeal 
to them, inasmuch as they are very satisfied with the Osprey and can get just 
as nnich out of them for $10,000 less than the Falcon. Naturally, the Falcon 
will perform much better at this altitude than the Osprey, but the plans of the 
general staff call for establishing a base for the Ospreys at Villamontes (sea 
level) after the war, and keeping the Hawks at La Paz. However, there may be 
a chance to place some Falcons up here. 

The aeet.vlene gas finally arrived from Santiago, so Donnelly will be through 
with his work here in time to leave on next Thursday's train for Arica. It 
may be possible that they will want him to come up here again in a month or 
s<) to fix up some other wrecks. They are tickled to death with his welding — • 
something they thought impossilije outside a factory. His coming up here has 
helped us a lot and has put the Hawks and Ospreys more in favor than ever. 

Best of luck, Web. and hope to see you soon where we can get those libsters 
and that draught beer you mentioned. 
Sincerely, 

(Signed) Cliff. 

P.S. Just got notice from the President through Lopez that the Bolivian 
consul in N.Y. cabled that Hawks and Ospreys could be secured for 23,000 and 
17,000, respectively. I cabled the office today about it. Sure threw a wrench 
ill the machinery and raised hell in general. May spoil our business, but will 
do all I can to save the situation and our prices. Sure am enjoying life up 
liere — not a dull moment. Saludos. 

C. 



894 MUNITIONS INDUSTRY 

ExHiiUT No. 304 

Curtiss-Wright Export Corporation, 

Ncic York City, November 6, 193S. 
To: Mr. J. A. B. Smith, Mr. J. S. Allard. 
(Mr. Webster.) 

The following is quoted from a letter received from Mr. Webster today : 

" Peru. — My last conversation with the inspector genei'al and the Minister 
of Marine, just before I left, was very pronusing, and they are considering 
about 10 Falcons and 5 Hawlcs but are not interested in Ospreys. They are 
also considering from one to three Condors with wheels and floats. They are 
also interested in camera guns and parachutes. The opinion exists that trouble 
will be renewed with Colombia. 

" Bolivia. — Here the situation is also very interesting. I have had one long 
joint session with the Minister of Finance, Lopez, the Minister of War, and 
the Minister of Transportation, and another one is scheduled for 6 o'clock to- 
night. My one great job is to sell from three to 10 Condors. The matter has 
been talked over with the President, and it looks very favorable. The Minister 
of War and the Cliief of Staff is leaving tomorrow for the Chaco to be gone 
a week or two, and they are taking down all the specifications, photogi'aphs, and 
drawings to discuss with General Kundt. The one big problem will be the 
financing, and we are to go into that this evening. The order may be split up 
to satisfy Gen. Kundt and the I>loyd Boliviano Company and possibly three out 
of the 10 ships may have to go to Junkers, although our performance, etc., is 
better. 

"Any price I quote will include 5% for Ashton & Webster, and in this connec- 
tion we will allow them the 5% on past sales. It seems highly advisable as 
Lopez, who is the President's right ami, is- a silent partner of the company. 
His attitude now is entii'ely different than it was a year ago, and he is sure 
pushing our stulf. 

" In connection with the possible sale of a large contract, involving around 
a million dollars, the Government wishes to know if we cai; grant terms, pro- 
viding the Banco Central guarantees payment. I have not yet seriously dis- 
cussed this idea, but possibly I will get more accurate information tonight. 
I told them that we naturally would do everything we could, but the matter 
would have to be discussed in New York. Such a contract would naturally 
require a number of weeks to work out, and by that time I will probably be 
back in New York, where I can do more good than here. Ashton & Webster 
are certainly live ones and very much on the ground and on the inside, and we 
could not possibly have done better in signing up with them. The other business 
of more Ospreys and Hawks will come along as a matter of course. They are 
absolutely sold on them from the President down to every pilot, and they told 
me they would naturally continue to use them. Orders will be placed just as 
fast as they can get exchange. 

" There have been persistent rumors of peace down here, but now they are 
generally and officially deuied." 

(Sgd.) O. S. 

Owen Shannon. 
OS.js 

Exhibit No. 30.') 

Curtiss-Wktght Export Corp. 

New York, January Jf, 1982. 

SWISS AIR PRICES 

Mr. J. S. Allard 

The price at which we sold three spare Cyclones to Swissair last January 
was an arbitrary figure not based on any particular discount from list, but 
fixed so as to fall in line with prices quoted to Fokker about the same time. 

Swissair paid for their standard R 1820 E Cyclones with radio shielding and 
less two magnetos $6,170 f.a.s. New York. On this basis tb.eir price for an E 
Cyclone with standard equipment only would have been $6,159.50 f.o.b. Pater- 
son. On our present schedule of discounts (i.e. with a 25% spread between 
list and low net) this would amount to slightly more than list less 15%. In 
other words, it falls STibstantially in line with our present engine dlscoupt 
(15%) to major airline operators. 



MUNITIONS INDUSTRY 895 

On accessories purchased with the three E Cyclones we allowed Swissair 
15% discount with the exception of one small item on which, for some un- 
known reason, they were allowed only 5%. Here again their 15% discount 
agrees with our present schedule on accessories to major airlines. 

On spare parts we have allowed Swissair 20% discount. Our present sched- 
ule allows a 15% discount to major airlines but this has been increased in some 
instances (namely KLM 40% and Scadta 20%) where no agent has been 
involved. 

I understand verbally from Mr. Goulding that from now on we are to 
reserve a 5% commission for Mr. Zimmermann on all purchases by Swissair 
both for their own use as well as for resale. I am not sure, however, how 
Mr. Zimmermann wants this handled — whether confidentially or otherwise. 
When you find this out in your conversation with him, please let me know. 

Philip Shepley, 
PS/jc 



Exhibit No. 306 

Curtiss-Wkight Export Corporation, 

January 26, 1933. 

SWITZERLAND COMMISSIONS 

Mr. P. Woodling: A special, confidential arrangement has been made with 
Mr. B. Zimmerman to pay him a commission of five percent (5%) of the list 
pi-ice on all Curtiss-Wright engines or spare parts sold in Switzerland. This 
commission is to be five percent (5%) on the list price on such sales. 

While I am paying Mr. Zimmermnn, in cash, commission to which he is 
entitled on sales order no. 1902, invoice #2946, namely, $76.99, because he 
happens to be in this country at the present time, the regular procedure which 
I have arranged with him is to send bankers drafts drawn to tJie order of B. 
Zimmerman, and addressed to him at his home address as follows : 

Mr. B. Zimmerman, 93 Breitenstein Str.. Zurich 6, Switzerland. 
WFG/f W. F. Goulding. 

("Exhibit No. SOT " appears in text on p. 735) 



Exhibit No. 308 

[Copy] 

Dada-Dada & Co. 
San Salvador, El Salvador, G.A., May 6th, 1933. 
Curtiss-Wrtght Export Corp.. 

27 West 51tn Street, Neio York City. 

Gentlemen : In answer to your cablegram of May 3rd, we have cabled you 
on May 4th, as follows : " Quote Nineteen Thousand f.o.b. factory — full payment 
New York. Writing." 

Our letter of April 26th was very clear : by same we asked you to please 
quote the Government $19,000 — for your 420 h.p. Osprey — price f.o.b. factory — 
payment cash in New York before shipment. 

Herewith we confirm our terms; please give to our Government the quota- 
tion of $19,000 — for the 420 h.p. Osprey. Insist upon cash payment in full in 
New York before shipment. 

From our side, as the Government wants term payment, we shall arrange 
with a local bank to effect payment to you cash, as soon as the business is 
concluded. The bank will then collect from the Government on term basis. 
We are already working on this subject and hope to be able to conclude the 
business very soon. 

Due to so many offers from other manufacturers, we are working hard, and 
we offered commission to different intermediaries in this business. This is 
why we asked you to quote the price given above, as more than 70%^ of our 
own commission and discount will be distributed to intermediaries. 

8,3876— 34— PT 4 14 



896 MUNITIONS INDUSTRY 

As soon as the business is concluded, we sliall immediately arrange to have 
a local bank pay you cash in New York before than shipment is effected. 
In the meantime, we remain 
Yours truly 

Dada-D!ada & Co. 
(Signed) Geo. M. Dada, 

Oeneral Manager. 



Exhibit No. 309 

[Copy] 

Dada-Dada & Co., 
San Salvador, El Salvador C.A., May 13, 1933. 
Cuktiss-Wright Export Corporation, 

27 West 57th Street, New York City. 
(Kind attention of Mr. Owen Shannon.) 

Dear Friends : Thank you for your kind letter of May 6th enclosing copy 
of letter remitted by you to Captain Juan Ramon Munes of the Salvadorean 
aviation. We have taken due note of everything and since some weeks we 
are putting forth all our efforts to get the order for the three military Ospreys 
for our Government. 

Our Government received many offers from different sources and some of 
these offers on a very satisfactory basis and easy terms of payments. However, 
we never get discouraged and we worked harder and harder, as we know that 
this first order will mean repeat orders for the near future not only for the 
Government of El Salvador but also for the other Central American Govern- 
ments. 

For your guidance, we enclose copy of a pro-forma contract made between 
the Government and the Bristol Aeroplane Company of England. You will 
note that they offer three years for payment. However through our influence 
and good friendship, as well as good relations with the Government oflicials, 
we are about to get the order and it is probable that in a few days we close 
the deal entirely. 

Confidential. — To get such order, we had to use many intermediaries and 
friends to whom we are to pay a commission ; consequently about 75% 
of our commission will be paid out to intermediaries ; but we do not care for 
that if we get the order. We know that this first order will bring us many 
more orders in the near future. 

Payment.— Following the conditions made to the Government by the Bristol 
Aeroplane Co., we have also extended to our Government two years for the 
payment. However, you have nothing to worry about these terms, as we will 
pay you full cash for the three airplanes ; our local bank will take care of the 
business. 

Price. — We had to quote our Government a price of $18,975 — for each com- 
plete Osprey, c.i.f. La Libertad port (El Salvador). As you see, we have to 
pay all charges for freight, insurance, et cetera ; the commission left will not 
even cover our efforts, as we have to pay so much for intermediaries. Any-* 
how if the Government requests again your quotation, please confirm our price 
of $18,975, but specify that this is f.o.b. or f.o. factory price, even if we quoted 
c.i.f. Just quote the same price but f.o. factory and specify that this is cash 
but that your representatives Dada-Dada & Co. will arrange for term pay- 
ment. Thanks you. 

In the meantime, we shall cable you the results. 
Yours truly 

Dada-Dada & Co. 



Exhibit No. 310 

[Copy] 

La Paz, September 26, 1933. 
AEROirxco. 

Neiv York: 
Please deposit Anglo South American Trust Company order of Luis Yver 
Vergara lour thousand five hundred dollars without mentioning our name. 
Confirm. 

ACTIVOS. 



MUNITIONS INDUSTRY 897 

Exhibit No. 311 

[Copy] 

Sept. 27, 1933. 
(Accounts.) 
Messrs. Cubtiss-Weight Export Corpokation, 

21 West 57th St., Neiv York. 
Dear Sirs : We confirm our cable of yesterday reading as follows : 
Please deposit Anglo South American Trust Company, four thousand five 
hundred dollars, order of Luis Yver Vergara, without mentioning our name. 
Confirm. Activos. 

We hope to hear tomorrow morning that the deposit has been made and at 

the same time we also asked Captain Travis to confirm this to you direct also. 

This sum of $4,500, U.S.C, will go against our commission of 5% on the 

2 Hawks and 1 Osprey, plus $31,180.04 worth of spares, as per arrangement 

with Captain Travis. 

You will no doubt have noted that we do not wish to appear and it would 
also be a good thing if you do not appear either. 

Thanking you for your usual kind attention to this matter, 
Yours very truly, 

(Signed) W. & A. 



Exhibit No. 312 
[Copy] 

SEa-TEMBER 29, 1933. 

Activos. 

La Paz, Bolivia. 
Depositing four thousand five hundred tomorrow morning Stop Deposit 
Ospreys not received. 

Aeroexco. 



Exhibit No. 313 

New York, October 27, 19S3. 
Mr. J. S. Allard, 

Peru. 

Web writes as follows : 

" Have finally come to a definite understanding with Faucett regarding Gov- 
ernment sales in Peru. For a time it looked as though it would be impossible 
and I finally told Faucett that we would have to make other connections. He 
was of the opinion that Travis was working on a commission (so he said) 
and was butting into his territory and going over his head. His arguments 
were quite childish and Tobin was ready to quit and take on our job if I 
couldn't get together with Slim. I finally cabled you that I had broken off 
negotiations and the next day Faucett calmed down and agreed to turn Tobin 
loose on the job and let him handle all Government business. He will remain 
with Faucett and the latter will split his commissions with Tobin. The per- 
centage of profit for Faucett will be determined on each sale. Faucett told 
me that he had delilierately stopped the machinery order until he found out 
just what Travis' status was. 

" I have seen the Minister of Marine several times. He is in command of 
all aviation. Was told that more equipment was required, but Faucett did 
not know about it. Have quoted on 12 Falcons with floats separately. Have 
given them a price of $26,400 without armament, f.o.b. New York, for the 
standard landplane, $28,500 each for the same ship with armament c.i.f. Callao, 
for the Falcon attack without armament, $26,900 f.o.b. New York, and $30,000 
with armament c.i.f. Callao. These prices include 5 percent for Faucett and 
Tobin. I deliberately increased the price of pontoons to $4,900 per set f.o.b. 
New York and $5,400 c.i.f. Callao, as they will require them and it will provide 
funds to pay additional " commissions " which will undoubtedly be neces.sary. 
This is the way the Fairey Company handled their last business. They held 
the complete ship down in price and raised the price of floats, it is not 
so noticeable. 



898 MUNITIONS INDUSTRY 

" I have another appointment this afternoon with the Minister of Marine and 
with the Inspector General and Chief of the Materiel Division. It will be 
necessary to leave here early Sunday morning for Bolivia and let Tobin follow 
the business through. Out at the army field they had 80 students and only 
three instruction machines so I will also quote on the trainers. Cabled you today 
for* price and I believe that factory can reduce the figures which Carrin'gton gave 
me. It seems so ridiculous to send out figures and then instruct us to cable if 
lower prices are necessary. Will also quote on Ospreys but I have no costs 
on separate floats. It is very probable that the present Inspector General 
of Aviation will be replaced within ten days or two weeks and in that case 
we will have a much better opportunity of doing some business. The present 
man is a weak sister. 

" There are all kinds of underground rumors around here about trouble 
starting again to the north but, of course, there is nothing oflicial. Bolivia 
plans to make one big push as soon as they can in an effort to stop their own 
trouble and for that reason will probably buy considerably more equipment.- 

OwEN Shannon. 
OS.js 

Exhibit No. 314 

CC sent % American Legation, 
Bogota, Colombia, S.A. 

APBir, 16th, 1934 (Dictated April 13th). 
Mr. Wm. J. Crossweix 
Hotel del Prado, 

Barranquilla, Colombia, S.A. 

Dp:ar Bitx: The last I heard from you was from Miami in a letter dated 
March 31st and I do hope this letter will find you in excellent health and really 
enjoying your trip to Colombia this time. 

Personally. I have been on the sick list for the past two weeks with gi'ippe 
and bronchitis and, therefore, would have been unable to take care of the mail, 
had any been received from you. 

I was very pleased to note that you had such an interesting discussion with 
Olano at Pensacola and that he was so friendly to you, as I feel that Olano 
will at a later date be a real asset to us in securing business from the Co- 
lombian Government. 

As to the factory situation, we are all of the opinion that we should " lay 
hands off " at the present time, as so far every one of oui* foreitai factories 
have been nothing but a headache and we do not feel that we ought to pro- 
pose such procedure as most of the foreign countries are more interested than 
it appears, in that sort of business, than they are in actually purchasing air- 
craft and you know we have a big factory in Buffalo which we must keep busy. 

I Iiave discussed the Venezuela situation with Mr. AVebster, as this is part 
of his official teri'itory, and he states that he has a very good representative 
• in that country but that he has never been able to do anything, due to the 
fact that they are not primarily interested at the present time in aircraft and do 
not have the money that Comm. Seese appears to think they have. Webster 
thought it would be foolish for you to spend the time and money to visit 
Venezuela, stating he intends to be in South America shortly himself and make 
the trip through all the countries and that he no doubt would hit Venezuela 
along with other open territory. 

As to the .N-12 airplane, we liave suggested, tb rough the consul here, the 
purchase of this type and as they are primarily interested in an airplane on 
floats at the pi-esent time and this airplane does not have the performance 
even of the Falcon under these conditions, we are rather at a loss in connec- 
tion with pushing such a deal, particularly when the costs of such a ship are 
comparatively excessive. 

BuQ'alo factory is certainly having its fun these days, as they hsive a strike 
on their hands whirh has now reached the proportions of daily riots and will, 
without doubt, retard delivery of the second lot of Hawks and Falcons aoing to 
Colombia. It is hoped now that this strike may be settled today and the men 
placed bPck on the job but as things stand at the present, we have about 100 
men working in the factory and you know what that means insofar as pro- 
duction is concerned. 



MUNITIONS INDUSTRY 899 

Outside of the above, there is no great amount of excitement, but I liupe 
you are finding plenty to do in tiie soutbland and will keep me advised as 
to — at least your good actions. 

Sincerely yours, 
PAH 
B 

Exhibit No. 315 

[Copy] 

Export 

Paterson, N.J., May 29, 193J,. 
Mr. William A. Reeks. 
CO : Mr. Hewlett. 
Mr. Chapllne. 
Mr. Gall. 

Lt. RODKIGUEZ, 

ColomMa. 
Referring to your letter of May 23rd, introducing young Lt. Rodriguez * * * 
I had quite a long talk with him last Friday, in the course of which he told 
me that he had been up here about six months and had been through the 
Curtiss Flying School course at Valley Stream, and was looking forward now 
to learning about engines at your service school. His uncle at present holds 
an important position on the Colombian air force staff, and is a close friend 
of the man who is slated to the next President of Colombia. If things work 
out as expected, his uncle will be the next Minister of War, and young 
Rodriguez as a result of his instruction and knowledge of aviation secured 
during his present visit should hold a fairly important position. I don't 
know, naturally, how true this all is, but I pass it on to you for what it ia 
worth and suggest that it would be worth while to show this fellow some 
special consideration while he is at the Wright factory. I gave him a complete 
set of our literature on airplanes and motors, and he seemed well pleased 
with his visit to this office. 

Philip Shepley. 
PS P 



Exhibit No. 316 

[Copy] 

July 25, 1933. 
•Captain C. K. Travis, 

Casilla lJi29, Lima, Peru. 

Dear Cliff : This is in reply to your no. 26 of July 16th. I am sending this 
to Lima with a copy to La Paz, as I am not sure of your time schedule. 

Apparently some of my letters to you have also gone astray as I previously 
explained that is was impossible for me to start south at this particular time, 
but will probably leave about the first of October. 

Regarding Donnely's salary and expenses on the Bolivian trip, I would 
personally like to see him realize some kind of a bonus for the trip but our 
company accounting department, as you know, is somewhat hard boiled along 
these lines so credit the full amount of $541.70 as paid to you by the Govern- 
ment to the company, but retain this amount and include it in your expense 
account. 

Another item which has not been settled to my knowledge, is the cost of the 
spare parts shipped down on that same job. Take this up with Webster and 
Ashton and see what you can do about collecting it. 

Regarding the Wooten Falton — my idea is to sell the entire outfit to the 
Peruvian Government, including the spares, which consist of an engine, landing 
gear complete, propeller, tail surfaces, and, I believe, a set of ailerons, which 
Peru undoubtedly can use. The chance of closing such a deal would be much 
better with the ship in Peru — that is, Lima. The have already attempted to buy 
the landing gear, but we turned them d')wn, and then they came direct ta 



900 MUNITIONS INDUSTRY 

us for a price on a landing gear from Lima by cable. You will have to use 
your own judgment in getting the plane up there, and I assume that you will 
pick it up in Santiago, fly it to La Paz and when you finish there, proceed on to 
Lima. Jerry can handle the shipping of the spares by steamer to Callaeo. I 
have previously written to you about the details on this particular transaction. 
This letter was sent to Lima. 

We cabled you the other day regarding Tony Fokker's cabled request for 
prices on twelve cyclones F-3 engines for six pursuit and six observation 
planes, which he is attempting to sell the Bolivian Government. It was neces- 
sary for us to quote Tony and now it is up to you to see that we get the entire 
business, including the planes. He attempted to do this same stunt with us 
in Argentina, but we managed to beat him to it. The situation was important 
enough to ask you to get back to La Paz as quickly as possible and look into 
this matter. 

I believe as you do that we can sell Falcons to Bolivia and it seems advisable 
that we demonstrate one there as quickly as possible. After you arrive in 
Buenos Aires, feel out Colonel Zuloaga on the idea of getting permission to 
demonstrate this job in La Paz. Bear in mind that Argentina is closely 
lined up with Paraguay and, naturally, is a little unfriendly towards Bolivia. 
Do nothing whatsoever to alter our good relations with the Argentine Govern- 
ment and bear in mind that we wish to sell this ship to Argentina along with 
a contract for the purchase of the manufacturing rights. 

We also wish to demonstrate this ship in Brazil, but Brazilian and Argen- 
tine relations have never been any too friendly and we may encounter obsta- 
cles. Do not press the matter with Zuloaga if he shows any antagonism to 
the idea. Argentina is our biggest customer and we must place them first of 
all. 

We have worked as rapidly as possible in getting you the list of prices 
on the machine sliip equipment for Peru. There really was a great amount 
of work attached to this project iiud Andy Carrington has done his best. I 
hope that your interrupted negotiations will not interfere with getting this 
business. 

I reiilize that Slim Faucett has not been of great help but bear in mind 
that we must retain Slim's personal and intimate friendship and keep him in 
good humor. Slim's pet baby is the air line and I know he devotes all of his 
time to it. Do what you can to keep him satisfied. 

I had a letter from him yesterday in which he mentioned that Jack Jen- 
nings was ready to solo, but due to insurance regulations it would be neces- 
sary for Jack to quit his job — and that he could not solo while he was employed 
by Faucett. This seems rather ridiculous to me and, naturally. I want to 
see Jack keep his job. So, when you get to Lima, look over the situation : 
talk with Faucett and write me frankly regarding it. 

I am sorry that Melgar did not take over the job of inspector general 
of aviation of Peru, but, possibly, as military attache in Chile he can still be 
of considerable service. If the government intends to put in a foreigner, and 
possibly, an American, in charge of aviation, who do they have in mind? 
I certainly hope that Grove does not go back in Peru. Why not apply for the 
job yourself and see if we cannot work out a situation whereby we could all 
profit by it. On second thought, however, perhaps this would not be such 
a good idea, but think it over and let me have your suggestions. The ideal 
situation, of course, would be to start and steer such a selection in the right 
direction and, with your connections and friendships in Peru, you might 
suggest one or two men when you return there. 

The list of equipment now o'>vued by the Government is certainly an 
interesting one and looks and soimds more like a museum than an air service. 

We thought we had Jack Hodgson lined up for the Salvador job but we 
have word today from Washington that the Government refusetl to release 
him. We are now trying to find someone else, but I cannot think of anyone 
at the present time. If young Don Kessler was not permanently hooked up 
with the Peruvian Air Service we might be able to use him as I presume, by 
this time, his Spanish is fairly good. 

There is no other information I can think of at this time. 

Good wishes and the best of luck. 
Sincerely, 

(Signed) C. W. Webster. 

CWW.JS. 



MUNITIONS INDUSTRY 901 

Exhibit No. 317 

19th January, 1934. 
Mr. C. M. Webster, 

New York. 

Deak Web : Complying with your wishes to keep you in touch with things 
at this end, I thought mucli could be gained from Marcial Arredondo, so invited 
him and his wife (nee Matilda, Merino's old secretary) out to the place for 
dinner last evening. We had a long talk over everything in general, and espe- 
cially on the possibility and probability of the Government purchasing new 
equipment. Marcial confirmed Alessandri's public statement that the Govern- 
ment intends raising funds in the near future for this object, but stated he 
could not tell when this would be. Marcial told me quite frankly that Aracena 
has his eyes set first of all on training planes, and he has it in his head to 
buy Avros, as it is claimed the new type Avro trainer is equipped for primary 
as well as advanced training, including gunnery and photographic work. In 
other words, all classes of training combined in one light plane. 

With regard to the purchase of other equipment, Marcial said he will da 
everything in his power to see we are taken into consideration. Marcial has 
a very big say in the matter so long as he is sitting next to the President, 
and is the right-hand man of Aracena. He promised to let us know in plenty 
of time, or side-track the prospective purchase of other planes, if possible, and 
if necessary suggest an open competition such as in 1929 before placing any 
orders. I personally think we can compete with' anything England or France 
have ever built. I therefore suggest you look up and see just what the U.S. 
Army is using for training purposes and send us the latest dope on all trainers, 
so that I can pass on any important information to Marcial and Aracena. We 
have here, of course, catalogues of the latest Curtiss-Wright trainer, but it 
seems that the Air Corps wants something more of a ship than this. 

With Marcial watching out for us on the inside, I think it best not to rush 
Aracena too much, as Marcial claims he is the go-between for Aracena and the 
President and he has to be consulted first, so will be able to talk with Aracena 
about our equipment and lead him right. 

Perhaps when the time comes for buying you will have to make some ar- 
rangement to have a Hawk and Falcon or other types shipped down for dem- 
onstration, and my idea would be to let Marcial do the flying with, say, Cliff 
standing by in case of need. 

The foregoing is just my idea of things, and maybe my suggestion is a little 
advanced at the present time, but then one never knows how the cat might 
jump. Please let me have your ideas or any other recommendations you may 
have to make. 

Trusting you are keeping well and with kindest regards to Mrs. Webster, 
Very truly yours, 

Jerry. 



Exhibit No. 318 

[Copied from original] 

CtJKTlSS-WRIGHT CORPORATION 

#11 

INTEROFFICE MEMURAXDUM 

From : Mr. C. W. Webster. Date : March 21, 1932. 

To : Mr. B. S. Wright. Place : New York. 

Subject : Argentina. Place : Washington, 

Export Division. 

Your memorandum and copy of letter from Fowler Barker regarding the 
Argentine naval mission coming to the United States were very interesting. 
Our Mr. Leon sailed from Buenos Aires for New York on Saturday, but intends 
to spend four or five days in Rio, and is due to arrive in New York about 
April 11th. 

I still feel that Zar will nut recommend that a mission be sent to the States, 
although it is advisable to watch this possibility very closely. Zar is a very 
intimate friend of ours, and wishes to purchase only Curtiss-Wright equipment. 



902 MUNITIONS INDUSTRY 

and is placing his cards accordingly. He feels that if he sends a mission to 
the States possibly complications might develop through the recommendations 
of any officers he sends, and his desire is to control things himself as much as 
possible. 

The Argentine naval budget was recently cut 400,000 pesos, which makes it 
impossible to purchase complete airplanes as he originally intended. He be- 
lieves he will lui\e sufiicient funds to pnrehDse Ki Cyclones to install in 8 
Super Marine Southampton flying boats, to replace 16 Lorraine-Dietrich engines, 
and, if necessary, he told us he would defray the expenses of one of our own 
engineers to B.A. to supervise the installation of these power plants. Leon is 
bringing with him complete blueprints of those boats lor our engineering 
department in Buffalo to figure the cost of new engine mounts. 

Captain Zar and Commander Jordan, United States naval attach^ in B.A., 
are very good friends, but nevertheless, Zar does )!(it wish to band out any more 
information than is necessary, and is making a determined effort to keep away 
from a situation which might call for competitive bids from other American 
manufacturers. While it is true that a number of Argentine naval officers lean 
toward British equipment, Zar has always advocated American equipment 
wherever possible. His early training was secured in the United States Navy 
at Pensacola, and he married a Pensacola girl, so that he is pro-American all the 
way through. 

I'll appreciate any more information you are able to obtain through the 
Aeronautics Trade Division. Our man Leon is purposely refraining from becom- 
ing intimate with the Naval Air attache or any of the American diplomatic 
staff in B.A., as we have the Argentine situation pretty well in hand, and we 
have found from past experience that the American diplomatic staff expects us 
to keep them advised as to all pro.iects on which we are working ; and when 
we have done this in the past it has invariably been quickly relayed to Wash- 
ington, and eventually finds its way into the hands of our competitors. 

Since selling the Argentine Government our license agreement on engines 
we have received every contract that has been placed for aircraft material. 
The only outside equipment purchased were the Moth training planes, and 
this project has gone so far that it was impossible to stop it, and besides we 
had no competing machines to offer. Our prospects for securing all business 
from the Argentine Government in the future are bright, and we have every 
reason to believe that in June, when the necessary funds are available, we 
will be able to close our airplane license agreement along the same lines as the 
engine license agi'eement. As soon as this is consummated we will have both 
the engine and airplane business in the Argentine more or less tied up for the 
next ten years. 

C. W. Webster. 

Washington file: "Argentine." 



Exhibit No. 319 
[Copied from original 1 

Cuktiss-Wright Corporation 

#9 

interoffice memorandxtm 

Export Dn'isiox. 
From : Mr. C. W. Webster. Date : Feb. 23. 1932. 

To : Mr. B. S. Wright. Place : New York. 

Subject: "Argentina". Place: Washington. 

In connection with your memorandum of Feb. 20th, I now have a more 
complete and accurate picture of the proposed Ai'gentine naval mission and 
I am inclined to believe that the entire agitation was started by Commander 
Jordan, U.S. naval attache in Buenos Aires, in misinterpreting a conversa- 
tion with Captain Zar, Chief of Argentine Naval Aviation. 

It seems that some time ago Captain Zar and Commander Jordan met and 
Zar mentioned that his budget for 1932 would permit him to buy a certain 
number of new ships and that they would be of' U.S. make. Jordan asked 
which make and, as Captain Zar didn't wish to tell him he was negotiating 
directly with us and on the other hand didn't care to say he didn't know 
what he wanted, he told Jordan he planned to ask the U.S. Navy to give 



MUNITIONS INDUSTRY 903 

him advice when the proper time came. It seems Commander Jordan imme- 
diately comnninicated with the U.S. Navy in AVashington informing them 
that the Argentine Navy would send some of its men to the U.S. to solicit 
the advice of the U.S. Navy in the matter of purchases. Captain Zar, in 
discussing the situation with us, claims that he now realizes he made a mis- 
take in mentioning the matter to Jordan, because if Washington gives the 
matter any publicity our British competitors will possibly get busy and make 
it a little harder for us on account cf their lower prices. Captain Zar is 
one of our most intimate friends and when the time comes to purchase equip- 
ment he will buy from Curtiss-Wright insofar as he is able to do so. His 
budget this year allows him only about $250,000 for new equipment, which he 
figures is about enough for eight Helldivers or similar ships but the cash 
will not be available for four or five months. 

We will receive an order for two engines and spares and possibly three 
sets of smoke screen apparatus but the complete airplanes will not l)e ordered 
for some little time. 

I am giving you this picture of the situation for your confidential informa- 
tion nnd I believe we should let the mutter drop insofar as AN'ashington is 
concerned. Our contacts with Zar are of such an intimate nature that we 
have nothing to fear from other competitors, unless something very radical 
happens. 

It was Znr's intention to keep the entire matter quiet and get his purchase 
through for us before any other manufacturer heard of it, but unfortunately 
he made a chance remark to Jordan which opened up the entire subject. 
je C. W. Webster. 

Washington file : "Argentine." 

Exhibit No. 320 

rCopy] 

July IS, 1933. 

Captain C. K. Travis, 

% Webster d Ashton, 

CasiUa l>,Ii. La Paz. Bolivia. 

Dear Cliff: I am addressing this letror to La Paz, hoping it \\ ill catch you 
there before you finish your present .iob and return to Lima. 

We received a cable this morning from Webster & Ashton advising us that 
a letter of credit for $98,500 had been established in the Chemical Bank here 
to cover the amount of the spares and the three planes on the last order. We 
have not yet checked with the bank to determine exactly the conditions of the 
credit, but we assume they are satisfact(n-y. 

According to Webster & Ashton's recent letters and cables, it appears that 
considerable more business is possible in the very near future. We certainly 
can use it. 

The two Hawks and one Osprey on the last order are going through the 
factory as per schedule and we anticipate no delay. 

The other day, Mr. Decker, the New York consul general of Bolivia, came 
into the ofiice with a cable from the Government instructing him to arrange 
for someone to inspect a number of tri-motor Fokkers and a large number of 
spare engines offered for sale by the American Airways in Chicago. 

I believe we convinced Mr. Decker that this would be a bad deal as the ships 
were built in 1029 and had had a hell of a lot of service. From the tone of his 
conversation I believe he will recommend to the Government that they give 
up the idea of buying second-hand equipment. Use your own diplomatic persua- 
sive powers to talk them out of the idea if you can. I believe they offered 
three ships and a large number of engines for $30,000, bu;t this is only the 
beginning of the expense. The ships would have to be completely overhauled, 
crated, and delivered to Bolivia, and before they got through it would cost 
them at least $75,000— instead of $30,000. 

The Argentine Falcon is due to leave the factory today and should be 
shipped from Now York on next Saturday, July 22nd, arriving in Bnenos 
Aires about the ninth or tenth of August. I am hoping that conditions in 
Bolivia and Peru v.'iil ad.just themselves satisfactorily and in time for you 
to be in B. A. when the Falcon gets there. We will order Shorty to proceed 
from Santiago to meet you there. 



904 MUNITIONS INDUSTRY 

Imiiiodiately uvon y nr a^'rival you slrul I c(>iita"t Tolnnel Zul- a.ua and 
Captain Zar. Colonel Zuloiia is divectcH- general of aeri nantics and chief 
of the Army air corps and Cniita'n Zar is cliief of nayal av ation. Arrange 
if possible to dispatch the ship to El Palamar, the Army air station. Work 
through Zuloaga and Zar and follow their suggestions. In a recent letter from 
Zar. he suggested that we first get the plane to Palamar and possibly later 
transferring oyer to Puerto Indio, the naval land station As in the case 
of the linited States Army and Navy, there is a certain amount (^f friendly 
rivalry between the Argentine Army and Navy services, so, watch your stop 
and proceed cautiously and diplomatically in handling youj' negotiations. 

Our object, naturally, is to sell the Falcon to the Argentine Government and, 
in due course, arrange a contract for them to purchase the manufacturing 
rights to construct this plane for the Government at Cordoba. All of these 
arrangements wnll be handled by Leon when he arrives there, probably around 
the fifteenth of September. His relations with Zuloaga and Zar are very 
intimate, so do not attempt to sell but merely handle the plane for the time 
being and put on your show and the necessary demonstration. When Leon 
arrives he will probably take you into his confidence ;ind give you a line on 
our set-up, so do nothing that will interfere with the negotiations which Leon 
and myself have already starteil. 

You will find that the International Petroleum Company has eighteen or 
twenty drums of 85 octane gasoline on hand for our use. You will draw this 
gasoline as you need it. I would suggest that the demonstration v/ork be 
done with 87 octane fuel — but the engine is .such that SO-octane fuel can be 
used later if necessary. This fuel can be purchased any tinse from the Inter- 
national Petroleum Company. 

If any questions are asked regarding the pi'ice of the Falcon, cable us and 
merely state that you will have to olUain the figures from the New York 
oflBce. 

I have ali-eady written you regarding Cajitain Wooden's D-12 Falcon in 
Santiago. We have purchased this from the Government and my intention is 
to have you pick it up in Santiago as soon as convenient and fly it to Lima. I 
believe that Jerry has already arranged this pennission with the Chile Govern- 
ment and you may have to also obtain permission from the Peruvian Gov- 
ernment to have it entered duty free. Follow this line with the statement 
that we wish to demonstrate it in Peru. There is a quantity of spares to go 
with it and which Jerry can ship by steamer to Callao. The Government has 
already requested Jerry to sell them the landing gear and other sjiares, but I 
have instructed him to hold them, as I would prefer to sell the entire outfit 
at a stipulated price. I gave you this information in a previous letter. 

In selling this Falcon to Peru, please handle this, if possible, in the same 
manner as the other Falcon and Hawk we sold. Payment to he made to me 
personally and not to the company, as I have certain commissions that will have 
to be paid. 

All of these contacts, which you are working now — Peru. Bolivia. Argentine, 
Chile — will, naturally, keep you pretty busy, and do not feel that I have for- 
gotten my South American geograjthy in asking you to cover this territory 
single-handed. However, there is work to be done, and I know you are capable 
of handling it. 

Owing to the serious illness of Leon's only boy. who is now in California 
with him, it will not be possible for him to reach Buenos Aires much before 
the middle of September, but he feels that if you can handle the demonstra- 
tion during the previous month, he can arrive, say, about the middle of Sep- 
tember, and pick up in plenty of time the necessary selling negotiations. 

In asking you to lay off all sales negotiations, plea.se do not feel that we do 
not believe you capable of handling them, but Leon has spent so much time 
in Argentina and knows his contacts so well and intimately, that I believe 
we should not upset them in any way. I know that you will appreciate this 
situation. 

We have three Ospreys to deliver to San Salvador, which you and Shorty 
will not be able to handle, as they will be going there about the .same time as 
the Bolivian ships and the Argentine demonstrator. I am attempting to get 
Jack Hodgson, who spent four years at the head of the Army Air Corps mission 
in Cuba, but I believe, unfortunately, that Jack has been transferred to a re- 
forestation camp in Massachusetts for six months. He has applied for a 
two and a half months leave of absence and I will probably know definitely 
tomorrow if he can make the grade. If we cannot get him it will be necessary 



MUNITIONS INDUSTRY 905 

to find someone else who speaks Spanish and is capable of handling the job. 
However, do not worry about this — we will take care of it. 

It was unfortunate that you had to leave Peru when you did, but the 
Bolivian job seemeil very important and you may have time to finish that 
and get back to Peru before it is necessary to go on to Buenos Aires. 

I had planned to meet you somewhere on the West Coast about the middle 
of this month, itnd also be with you in Buenos Aires, but certain other matters 
are coming to a head here in connection with our mutual friend, Mr. Jones, 
which I believe are important enough to keep me here for the time being. 
Perhaps around the first of October I will be able to leave and pick you up 
somewhere along the line. 

Please give my kindest regards to any of my friends that you may meet, and 
with the best of wishes and all good luck, I am. 
Sincerely yours, 

(Sgd.) C. W. Webstek. 
CWW.js 

Exhibit No. 321 

CuKTis Wright Export Corporation, 

tieio York, January 19, 1934- 
Mr. C. W. Webster, 

c/o Webster d Ashton, 

Casilla 144 La Paz, Bolivia. 
Dear Web : I thought I had better send you the enclosed copy of letter from 
Lawrence as there may be something in it that you should have. It will 
certainly be very unfortunate if we do not get the order for the tiiirty engines 
within the next thirty days — I finally succeeded in getting Guy Vaughan to 
agree to extend the old price for 30 days and I doubt very much if we can 
get any further extension after that. Also, the longer the order is held up, 
the more likelihood there is of it not coming through at all. 
" Ta " in the letter means our friend who was at Paterson. 
I do not think we will be able to get Mason as Mike Gordon tells me they 
have been swamped and they cannot possibly spare him. Mike is taking the 
matter up with several others in the Wright Company and they may have a 
recommendation to make in the near future. 

I will, of course, constantly advise you on this as I am fearful that unless 
we get somebody down there very soon all the good work Lawrence has done 
there during the past will have been offset and if we lose out there it will be 
just too bad. 

Owen Shannon. 



Exhibit No. 322 

[Copy] 

.January 17, 1934. 

Your letter came a couple of hours after our telephone conversation. By 
all means do your best to get Mason to go down at once. Hewlett may be a 
better man but if this boy is a salesman and is loyal, his knowledge of Spanish 
will take him farther. He will not have much to do for a few months but that 
will give him a chance to get acquainted, and Zu is happier when somebody 
from the office is near at hand. Somebody has to be there to be on the inside 
of things or the Inisiness goes elsewhere. Those fellows detest writing me, 
with good reasons, and are getting tired of being told that I'll soon be back, 
with the result that I am gradually getting out of touch with the real situation. 
Men in the various departments are changed periodically and new friends 
must be constantly macle. I feel pretty bad about all this, but as explained in 
another letter I cannot leave the family in the shape it is, and to go for a 
few weeks now and come back would be just a waste of money. 

Trouble from W was to be expected. He is paying L's expenses and L does 
all he can for him. L has done a lot for Za on one occasion and Za arranged 
this spree for L and is giving him free hand. Very likely this man will be 
in Za's place three or four years from now when both are due for promotion. 



906 MUNITIONS INDUSTRY 

He and his brother owe me a few favors of more than ten years' standing and I 
am in position to make any arranj;ements with him to counteract W's influence, 
once we are all together. Just now he is not answering my letters which. I 
suspect, fell in W's hands. 

With your letter also came the one I was expecting from Ta. I had asked 
him to write the real reason for changing their minds about the Falcon and 
Hawk licens(>. He says that while Travis' demonstration was pretty good it 
was not good enough to convince everybody. That is one reason. The others 
are curtailment of appropriations and the necessity of the engineering staff to 
get busy and do something of their own or explain what they were doing in 
Europe when they were sent there to study for five years. He says that 
neither my presence nor Web's can for the moment rush orders, and that the 
only thing which could overcome all these obstacles at once would be for the 
jingos advocating preparedness to get the upper hand or for me to resort to 
the " old maneuver." He means the trick we turned in 1931 when we sold 
the engine license. Unfortunately, this is not possible with the present set-up 
in the War Department, the key man being one of the very few not amenable 
to anything of that kind. But he is due for retirement this year. At the time 
Ta wrote they were about to decide about the order for twenty engines btit 
he doubts if it can be placed before three or four months. 

Web already knows who the men are and should be the only one to handle 
commissions when the time comes. Mason, if he goes down there, should not 
be entrusted with anything of this kind until he has been there six months at 
least and have proven that he can handle the business. It would be a mighty 
good idea if you went through the files and took out all lft«-ers mentioning 
names and commissions. 



Exhibit No. 323 

Ctjrtiss Wright Export Corporation, 

New York, September 25, 1933. 
Mr. J, S. Allard, 

Brazil Mission. 
You will be interested in the following quotation from a letter received 
from our Brazil agents today: 

" We are pleased to say that we have had occasion to talk at length with 
Major Oliveira and Captain Mello since their return from the United States, 
and that they are highly gratified with all they saw and very much appre- 
ciated all the courtesies lavished upon them by .votir company. 

" We may confidentially advise you that the reports which have been sub- 
mitted by the mission to the Minister of War, are highly satisfactory to your 
organization and likely therefore to yield good results." 

Owen Shannon. 



Exhibit No. 324 

New York, Mai) 10, 193',. 
Mr. E. S. Cramer. 

(Copy to Mr. J. Sanderson.) 

Mr. Pawley stated in a recent letter, or cable, that he had a fund of about 
$2,000.00 to "take care of the entertainment of General Wong and his party 
from Canton. During their visit to this country they were entertained by the 
following: Mr. Buchanan in San Francisco; Mr. Moseley in Los Angeles; 
Ralph Damon in St. Louis ; Buffalo, Paterson, and the New York office groui), 
mainly Mr. Dooley. 

I wish you would get together the expense accounts from these various 
organizations and submit them to Mr. Sanderson of Intercontinent so that 
we can be reimbursed for these expenses. 

JSA 
BMN 



MUNITIONS INDUSTRY 907 

Exhibit No. 325 

[Copy] 

Ukubta & Samper, 
Bogota, Colombia, 8.A., April 21, 1934. 
No. 47/507. 
Mr. W. F. GouLDiNG, 

Vioe President, Curtiss-Wright Export Corp., 

30 Rockefeller Plaza, New York, N.Y. 

Dear Mb. Goulding : I am in receipt, today, of your letter No. 375 of the 
16th instant, together with enclosures, for all of which I am very thankful. 

Both the situations of the Condor deliveries, and the machine guns from 
Colt, I hope will not bear at all on the Government to molest you on that 
account. They have been duly informed by me that there have been a series 
of strikes in all aii-plane factories in the States. They know too that the Con- 
solidated plant was also under the same circumstances, so they will have to 
recognize " force-majeure " as affecting the schedule of deliveries in the Janu- 
ary 31, contract. Should the consul make trouble for you please let me know 
to see if I can render my services with that aim. 

Mr. Love's visit to this city was of so little importance, that I overlooked 
the matter completely, and even forgot to inform you of his endeavors. All 
he accomplished was to create trouble for Dr. Triana, by presenting him with 
a Boeing model for his desk. They discussed an order for six Corsairs, but 
it was considered advisable to have only the Falcon and make the equipment 
uniform, then add a series of other types. I met Mr. Love and was very 
friendly with me. The agency they gave to Manuel Toro, and both he and 
Love asked me to cooperate with them, offering reciprocity should I need their 
help. I sincerely thunk them both. WTiile here. Love was after the Cuban 
pilots who have absolutely no bearing on the Government. As you may know 
by this time, they were all taken out of prison to come to Colombia, and have 
had no flying at all for the best part of eight months now. They will have to 
be trained here. One of them met death, as I told you in my last letter. 

Through my good friendship with Comm. Strong, I will be able to meet not 
only Mr. Trunk, but most of the important men that may have come with him. 
I have enjoyed the confidence and friendship of Comm. Strong, practically 
since his arrival, and in spite of his complete and unbreakable reserve as far 
as military matters are concerned, I have been able to ascertain that he is not 
in the least antagonistic to your products. He is really an excellent man. To 
my understanding he will be placed by the Ministry as actual head of the 
aviation activities in this country ; I am confident that once he knows all about 
the German competition and antagonism to all foreign influence other than 
theirs, he will take measures to stop their career. 

"With reference to the order for the spart parts and the electric starters, I 
can inform you that the ministry wired the consulate over .$37,000 for the 
initial payment on these two orders. You will please keep me informed, in 
order to see that all is done properly and quickly. 

I have just received from Irviu some scarfs to distribute among the pilots 
here. I am afraid that the propaganda was sent too late, because I was 
informed definitely that the Government had ordered the consul to place orders 
with our cumpetitors (Switlik), lor the parachutes they are in need of. 
Since I had to pay something like 20 pesos duties on these scarfs, I will ask 
you to request from Irviu to deposit iu my account, as usuaj, the correspond- 
ing sum in dollars. I ana sending them the corresponding vouchers. 

With reference to the pilots and mechanics. I have received a letter from 
Dr. Triana in which he informs me that tlie Jan. 31, 1931, contract covering 
these points was duly sanctioned by the executive on the 13th of this month 
and he requests me to ask you to immediate investigate the possibility of 
sending the mechanic down without delay. You will please inform what you 
do iu the matter. 

Next mail I will forward you a complete list of the equipment the Govern- 
ment has, and has ordered, which list you will keep for your private and 
strictly confidential files. 

"With best wishes I remain, 
Yours very truly, 

J. Samfeb. 



908 MUNITIONS INDUSTRY 

Exhibit No. 326 

[Copied from original] 

Curtiss-Wright Corporation. Interofhcb Memorandum 

From : J. S. AUard. Export division. 

To: Mr. Burdette S. Wriglit. Date: December 5, 1930. 

Subject : Mexico. Place : New York City. 

Place: Washington, D.C. 

With reference to yours of December 2d on the above subject, first let me- 
tell you tliat Mr. Ti;us is not going back to Mexico in our employ, as results- 
he has obtained so far have not justitied the expense of keeping a steady repre- 
sentative down there. I do not believe that it is any discredit to Titus but 
merely is a condition exis.ing in Mexico at this time. 

With reference to Colonel Aguilar's? statement to Mr. Farnsworth that Az- 
carate has some rather sizeable ordei's from South America, according to Titus 
this is not quite true because Azcarate is planning now on building hree small 
training planes in his own factory, and flying them down through Central 
America in an endeavor to drum up some business for them. Further, according 
to Titus, Azcarate's plane is just another plane and unless they are frightfully 
cheap, he i)rcbably won't have much luck selling them. 

I realize fully that Colonel Aguilar is not doing all his sales promotion work, 
for us as a kindly gesture and I would welcome the opportunity of talking 
with him. inasmuch as we have no representative in Mexico, on the subject of 
his suggesting some representative through whom he could get his compensa- 
tion for (he work he is doing for us. We really have quite a problem in Mexico 
both on sales and service. There are quite a few Wright motors in service 
in Mexico that require servicing, and. frankly, I would welcome some real 
suggestions from Colonel Aguilar as to v\'ho would make the best sales and 
service representatives for Curtiss-Wright in his native country. And, inci- 
dentally, if he does suggest somebody, I would not hesi ate in telling him to 
plan on getting his compensation through tliat party rather than direct from 
us, as I do not think it is a good ball for us to show the payment of any com- 
mission on any sales to anyone other than our authorized distributors. 

Please ask Bol) Farnsworth to let me know as far in advance as possible 
when he and Colonel Aguilar will be here and I will plan to give them both 
some time. 



Washington file: Mexico. 



(.sgd.) .1. S. Allari). 



Exhibit No. 327 

[Copy] 

Washington Office. 
ISleic York City. November 29, 1933. 
( Mexico : Report of recent contacts — prospects for business with Mexi- 
can Govei'nment. ) 
Mr. J. S. Ali.ard: This report is intended to outline briefly contacts made 
during my recent visit in Mexico City, present my impression of the effective- 
ness of our representation there, and to give an estimate of possibilities for 
the sale of Curtiss-Wright equijunent to the Government of Mexico. 

On October 19, 1933, I visited the oflaces of Watson, Phillips and Co. at Av. 
Uruguay 103. Mexico D.F., where I met its president, Mr. Chns. E. Phillips, 
Mr. Eric Hiiebner, and others. The firm, which is a trading company of 
British origin, has been in Mexico a little more than 100 years, t-eems well 
established and reputable, and represents a great variety of manufacturers 
and other companies, including a British shipyard, an artificial silk manu- 
facturer, two American insurance companies- — including Marsh & McLennan- — 
and two American aircraft firms, i.e., Curtiss-Wright and Stinson. Mr. Hu^b- 
ner, who is of Austrian birth and English citizenship, has bee i in Mexic i 
eleven years, speaks Sjianish fluently, and seems vei'y energetic, handles ; 
the aircraft and Speery Gyroscope contacts witli the government. With him . 
I visited and talked with .several officials, who received us very well. 



MUNITIONS INDUSTRY 909 

During the six days in Mexico City I had occasion to meet and talk with 
the following: 

General J. Azcarrate, at that time chief of the presidential staff and now 
military attache in Washington. 

General Rodriguez Familiar, now chief of the presidential staff, whose 
appointment was announced while I was there, to become effective November 1st. 

General Salvador S. Sanchez, subsecretary of the presidential staff. 

General Francisco J. Aguilar, until recently military attach^ in Washington, 
and now in the intendencia in the war department. 

General A. Ruiz, chief of aviation. 

Colonel A. Lezama, subchief of aviation. 

Colonel Gustavo G. Leon, commanding oflScer of the Second Aviation Regiment. 

Captain G. Villasana, director of shops. 

Lieut. R. Lezama, brother of Col. Lezama and an aviator, on duty in the 
Aviation Department. 

Mr. Ponce de Leon, the leading design engineer for surface ships in the Navy 
Department. 

The situation now is approximately as follows. With the transfer of 
General Azcarrate to Washington, his intluence over purchases by the Govern- 
ment is apparently at an end, and one of the most serious obstacles to Curtiss- 
Wright progress removed. It will be remembered that he has an interest in the 
factory that built Vought Corsairs under license, and since has done a great 
deal to push the purchase of Boeing lighters. After he was forced to change 
his attitude in favor of Curtiss Hawks recently, he tried to give the impression 
that he was out of patience with Boeing for having unexpectedly increased 
their prices, but he can hardly be counted on as a loyal Curtiss-Wright 
supporter. 

With General Rodriguez Familiar as the new chief of the presidential staff, 
it appears that we may expect to receive very favorable consideration. During 
a very satisfactory conference with him, he expressed admiration of our 
equipment and agreed entirely with my statement to the effect that the 
Mexican Government could not afford lighters having performance inferior 
to the Hawk when so many governments have already adopted it as standard 
equipment. From all indications Watson, Phillips have arrived at a satisfactory 
understanding with him regarding methods of handling the financial phases 
of the contracts, although he, of course, has nothing to do with the actual 
drawing up of same. He is a relative of President Rodriguez, to whom Watson, 
Phillips have access through a tirm of lawyers. 

General Ruiz, who is the chief of aviation, leaves matters of technical recom- 
mendation and conferences with representatives of manufacturers almost 
entirely up to Col. Lezama, his subchief. In leaving us to Col. Lezama, he 
said that he would back up whatever plan of action we arrived at. 

Colonel Lezama. who was trained at Brooks and Kelly Fields, is very favor- 
able toward us. He said that with General Azcarratte now out of the way, the 
course ahead would be comparatively clear, and that he would do all he could 
to push the purchase of Curtiss-Wright equipment. He has direct access to 
General Rodriguez, and it was he, in fact, who arranged for the conference 
which Mr. Huebner and I had with the general. Lezama and Rodriguez F. 
appear to be in accord and in close touch with each other concerning all 
negotiations for aircraft. 

Colonel Gustavo Leon, who has been designated to make a nonstop flight from 
Mexico City to Buenos Aires, has apparently full latitude in choosing the air- 
plane in which to make the flight, such purchase to be paid for, of course, 
by the Government. He was at first interested in the Lockheed, but Watson, 
Phillips have swung him over to a preference for the Northrop, on the assump- 
tion that we would be able to arrange for handling this type for the Northrop 
Company. Leon seems so disposed to take the recommendation of Watson, 
Phillips concerning type of ship (probably due considerably to certain financial 
arrangements), that I seriously doubt if the builder of a suitable type airplane 
will be able to sell it there unless the deal is handled through this firm. 

General Aguilar claims that he is to be the next chief of aviation, but 
since he has made this claim during the four years that I have known him. 
it is diflacult to put a great deal of stock in his assertions. Add to this the 
fact that he is now being punished by assignment to a relatively unimportant 
post for the publishing of a pamphlet in Washington casting discredit on the 
Mexican Minister of Finance, for which act he was recalled, and his story 



■910 MUNITIONS INDUSTRY 

seems even less plausible. He insists that the transfer of General Azcarratte 
to Washington does not mean that any of his influence is lost, but I see no 
reason to believe this. I purposely avoided calling on Aguilar until the last 
day, as I wished to make it only a courtesy call. Watson, Phillips may find 
it necessary to play along with him to a limited extent for the reason that 
through his presence in the intendencia, which is the contracting division of 
the War Department, even though his post is not of importance, he might 
be able to seriously delay the signing of contracts, were he so disposed. 

Mr. Ponce de Leon, an engineer in the Navy Department, has the task o£ 
VForking up the design of gear necessary for the carrying and handling of a 
seaplane on the deck of one of six vessels being constructed for the Mexican 
Navy, by a shipyard in Spain. One or two seaplanes will be purchased for 
these experiments, and the selection of type will be up to him to a considerable 
extent, as its use will depend on the ability of space and gear on the vessel 
to handle it. He and others in the Navy Department have pretty much crystal- 
ized their thoughts on an airplane of not more than 250 h.p. I recommended 
the Fledgling if they must stay in such a low-horsepower class, but do not see 
any particular advantage to this, if a plane more compact and not appreciably 
heavier can be offered. They were considering the use of a catapult, only to 
enable a plane to be launched when the water is too rough for take-off from 
the surface. I recommended against trying to design a catapult, for much 
experimentation is necessary before a satisfactory one can be developed, and 
it is not possible to obtain design information from the U.S. Navy as this is 
<:onfidential information. I pointed out that a sea too rough for taking off 
would be dangerous to land in anyway, and recommended that they confine 
themselves to hoisting a seaplane over the side for water take-offs. I believe 
this idea will be followed, and I have agreed to obtain information concerning 
necessary clearances between wings and the ships' hull, and length of hoists 
to allow for rolls. I hope that we can avoid having to design export ships 
for catapulting for the time being at least. Our Osprey as a seaplane should 
be a suitable plane if the catapulting idea is abandoned. 

POSSIBLE BUSINESS 

1. There are immediate plans for the development of a pursuit squadron, 
starting with six airplanes. The money that was set aside for this purpose 
several months ago was used for other purposes, to meet an emergency of 
some sort in a different branch of the army. They are now endeavoring to 
dig up enough for a 25% deposit on six Hawks, with the idea of providing the 
remainder from appropriations for the first half of 1934, which money when 
and if appropriated would become available after January 1st of 1934. They 
seem convinced that the Hawk is the ship they want and since proponents of 
Boeings seem to be out of the way, it appears quite certain that ours is first 
choice. 

One thing which helped interest in the Hawk was the word given by Law- 
rence Leon to the effect that we would give them a license to manufacture 
Hawks without any charge for same. There are some who do not believe that 
they can keep abreast of developments if they manufacture themselves, because 
of the time required to get new planes into production as the types advance. 
Since the total number they would build would be comparatively small, this 
view seems reasonable. With General Azcarratte gone there will probably 
be less pushing for manufacturing rights. I recommended that they consider 
only completely manufactured planes for this year, all to be built in Buffalo, 
and that a license, if desired, could be discussed after delivery of these. 

Since returning to this country I have heard that President Rodriguez 
was financially interested in the factory venture which General Azcarratte 
promoted, in which the Corsairs were built, and that through it he lost quite 
a bit of money. If this is true, he might favor a proposition for further manu- 
facturing in that factory, if it held promise of helping him get back some of 
his losses. If the idea of manufacturing in Mexico were to be entertained, 
it would of course be necessary for us to send someone to Mexico City to 
discuss it and work out contractural arrangements. 

2. Tho Aviation Department plans to ask Congress for money for eleven 
modern observation airplanes for next year. If such money comes through, 
our agents will make a drive to sell the Falcon. If the present apparent good 
feeling toward Curtiss-Wright continues, we should have at least as good a 
chance as anyone else, and probably better. 



MUNITIONS INDUSTRY 911 

3. There is talk of a troop transport for 25 or 30 people, but two transports 
carrying 15 soldiers each would serve their purposes as well, and the idea 
seemed acceptable to the few that I talked with about it. I don't believe 
there would be much difficulty in selling them on the greater flexibility in the 
use of two 15-passenger transports and the fact that if one should be involved 
in an accident, half of their investment would still be intact. They hope to 
get money for troop transport purchases out of next year's appropriations. 

4. Tlie new program also includes two ambulance planes. These, if pur- 
chased, would be comparatively small, single-engined cabin planes. Perhaps 
we could offer a couple of E.A.T.'s Kingbirds at prices too attractive to turn 
down. The Travel Air Six should be a desirable type also. 

5. There is some di!?cussion of a plane for coastal survey and photographic 
work. Whether this can be a land plane or whether it will have to be an 
amphibian will depend upon the major jobs selected for it. We will probably 
hear further from our agents on this. 

6. The Navy Department is interested in a seaplane for carrying on ship- 
board, as described previously. I think we should push the Osprey with floats. 
If a plane of this type is used, they will have to abandon the idea of a cata- 
pult, as it would be even more difficult to develop a catapult with a car suit- 
able for launching a twin-float seaplane than for a single-float type. 

7. Definite plans are being made for a nonstop flight to Buenos Aires by Col, 
Leon, as described previously. If we succeed in making arrangements with 
Douglas to sell a Northrop, there seems to be little doubt about making this 
sale. 

Since returning to Washington, I have discussed this with John Rogers of 
the Douglas Company, at which time I told him that the only chance to sell 
this plane is through our agents in Mexico City, and explained the reasons. He 
said he would pass it on to his company at once, and believed that it might 
change their attitude. He said that some time ago Douglas was dealing 
through an agent there, and President Rodriguez had asked that it be discon- 
tinued and that all future dealings be directly through him, and that this is 
undoubtedly the reason that Douglas refused to allow us to offer the Northrop. 
He thinks that with President Rodriguez now being satisfied to deal through 
an agent, especially with a new chief of presidential staff who is closer to him, 
that Douglas might permit us to go ahead. 

8. There is another independent nonstop-flight venture being fostered. This, 
I understand, will have to be financed mostly by funds outside of the Government 
itself. A young American engineer who calls himself Dr. Walther, and who 
is now in the employ of the Government, is working on the design of a ship 
for this flight. The ship would be designed and built right there, and the flight 
would be from Yucatan to Spain. General Azcarrate apparently has something 
to do with pushing the construction of this plane, but officers in the Aviation 
Department don't favor the idea. Walther plans on the use of a Wasp engine, 
but I talked Cyclone to him and he asked for installation drawings and i)er- 
formance information. The whole idea seems so poorly founded and lacking 
for general sympathy that I think it will die of its own weight, and with 
Azcarratte out of the country now, it has even less to support it. It hardly 
seems worth while for us to bother about. Walther was at one time employed 
by Curtiss and when I met him two or three years ago in Washington, he was 
with Vought. 

ENGINES 

The sale of engines will, for the most part, be contingent upon sale of air- 
planes, except that in all cases we will undoubtedly be able to sell spare engines 
along with the airplanes. 

The above summarizes my viewpoint of our possibilities in Mexico at the 
present time. It has been influenced considerably, of course, by the viewpoint 
of our agents there, and while I believe it to be accurate, there might be other 
forces at work, or attitudes existing in the minds of persons up to and including 
Ihe President, which would make it desirable for us to use other more direct 
forms of contact. However, I think that for the time being we should continue 
to allow our agents to handle the situation, and see what they can produce. 
Appropriations there are, as in many countries now, uncertain ; and until the 
money is actually set aside, it is impossible to obtain contracts. 

It might be desirable for an executive of the Export Company to make one 
or two trips to Mexico City during the next six to eight months, at which time 

.S:)876— 34— rr 4 1.5 



912 MUNITIONS INDUSTRY 

it might be well to try to tulk with the President himself, to be sure that he is 
in sympathy with us and is satisfied with the way our affairs there are being 
handled. He seems to be involved in all aircraft purchases. In the meantime 
I may see a bit more of General Azcarratte iu "Washington just for the purpose 
of picking up additional slants which might help us to visualize the situation, 
although I do not feel that we can accept his vie^Toint as an accurate estimate 
in itself. 

Very truly yours, 

(Signed) Robert L. Earle. 



Exhibit No. 328 

[Copy] 

Department of Commerce, 
Bureau of Foreign and Domestic Commerce, 

Aijartaclo 2007, Mexico, D.F., June 13, 1933. 
OflBce of the Commercial Attach^, 
Mexico City, Mexico 

(Confidential) 

Cuetiss-Wright Export Corp., 

27 West 57th St., New York. N.Y. 

Gentlemen : For some time we have been in touch with Watson, Phillips & 
Co. Avenida Uruguay 103, Mexico City, with respect to their representing you 
in the possible sale of military airplanes to the Mexican Government. As a 
matter of fact, we contributed considerably towards interesting them in your 
planes as their representative has come repeatedly to our office and talked 
over with us the possible American representations available and for the pur- 
poses now under consideration we strongly urged the possibilities of your Hawk 
type of machines. 

We are now confidentially advised that the Mexican Government, Military 
Department, is contemplating the purchase of anywhere from three to 10 planes 
of the pursuit type, the requirertfents of which might be satisfactorily met by 
the Hawk pursuit type. 

The Watson, Phillips representative called on us this morning and showed 
your letter of June 9th. This firm feels that for the business that they have 
in mind, your letter is not sufficiently clear on the matter of protecting them in 
case they make a sale for you. You are undoubtedly aware of the manner in 
which purchases of aeronautic equipment are some times made by foreign 
Governments, and it is a reasonable desire on their part to be protected in full 
in the matter of commission to themselves sufficiently large to enable them to 
meet all requirements. 

Watson, Phillips have already urged strongly your planes with the authori- 
ties here and it would be indeed unfortunate if after their preliminary work 
sonre other person with pretensions to influence in those circles which determine 
purchases reap the fruits of their efforts. 
Very truly yours, 

(Signed) Chas. H. Cunningham, 

Oommeroial Attach^. 



Exhibit No. 329 

[Copy] 

Watson, Phillips & Cia. Sues., S. en C., 
Avenida Uruguay No. 103, Apurtado Postal 07, 

Mexico, D.F., 29th June, 1933. 
Messrs. Curtiss-Wright Corporation, 

29 West 57th St., New York. 
Dear Sirs: W'p have to acknowledge receipt of your favor of the 21st inst. 
from whicli we note that as you have been in direct correspondence with the avi- 
ation officials of the Mexican Government during the past several months 
regarding their military airplane requirements and have supplied them direct 



MUNITIONS INDUSTRY 0^3 

with complete data together with prices, you do not feel inclined to enter into 
negotiations for representation in this country. 

Naturally if you wish to work this matter directly we can only wish you 
every success, but we venture to say that unless you have a rejiresentative hei'e 
familiar with the politics of the matter and with influential connections your 
chances of obtaining orders are very slender, more especially as the Boeing is 
beinj? pusheil very hard and in all probability will now obtain the order as 
their is no other hard opposition. We may say also that a representative of the 
Lockheed is now in this city from their factory in Burbank, Calif., but even he 
will not get far unless he connects with someone who can put him in touch 
with the right parties. 

We regret your decision in this matter, more especially as we had already 
taken up this matter in the highest quarters, but naturally you cannot expect 
us to continue our labours unless we can be sure of some protection and also 
be in a position to quote. We are therefore considering this matter as closed 
as far as your firm is concerned. 

Thanking you aLso for j'our quotation for the used plane, which lias not 
been accepted by our client, we remain. 

Yours very truly, 
CHEP/p (Signed) Watson, Phillips & Co. 



("Exhibit No. 3.W' appears in text on p. 758) 



("Exhibit No. 331" appears in text on p. T.">S) 



[VIA AlPt MAIL. #2.".4.1 



Exhibit No. 332 

July 24, Il>33. 



Mb. Lawrence Leon, 

63't Loicell Avenue, Palo Alto, (Jalifornin. 

Dbae Lawrence: Supplementing my other letter of today regarding Mexico. 

Mexico ordered seven or eight fleet trainers and one of their officers has been 
at the Consolidiited watching their construction. 

This officer told Hewlett that the order was secured for (."onsolidated by a 
Mr. D. Morgan Hackman, Pasco 156, Mexico City, and that he was in good 
position to get business from the Government. 

He also told Hewlett that Boeing had made a net bid direct to the Gov- 
ernment which iiad not been accepted. 

Also enclosed is copy of a letter from Watson, Phillips & Cia, which is 
self explanatory. We have not replied to them further. 

We understand from another source here that Azcarate always wants to 
be taken care of but is very careful aljout it and works through some third 
party. Up to now we have not been able to find out who this party is. 

We have not appointed any agents for military sales in Mexico so we could 
be free to deal with whomever we found was Azcarates' man. 

The prices we quoted could provide for a commission of 5% to Azcarate or an 
agent. 

However, before doing anything definite on this you had best check with us. 

Regards. 

Sincerely, 

Owen Shannon. 

Exhibit No. 333 

Curtiss-Wright p]xP0RT Corporation, 

27 West .57th Street, Netvv York, 

Mexico D.F., August 5, 19S.T. 
Dear Web: Here is the situation: First of all I found at Palacio Naci<jnul 
that a request was forwarded a month or so ago to Washington, thru the 
Mexican Embassy for permission to send six flying officers to one of our pursuit 



914 MUNITIONS INDUSTRY 

fields to receive some tiaiuing in the event that Boeing or Curtis ships were 
purchased (this is how General Aguilar in Washington heard that his govern- 
ment was about to buy pursuit equipment aud made advances to Bob Earl 
and probably also to United). It seems that our government turned down the 
request and this people feel very peeved about it, knowing that many foreign 
officers have been trained at U.S. Army fields.^ Azcarate spoke very frankly 
to me stating that a contract with Boeing, which was all ready for signatures, 
was canceled by order of the President and it has been decided that this 
equipment shall be purchased anywhere but in the States. He also said that 
inquiries have been already di.spatched to England and Italy for sending the 
men there as well as purchasing the ships there. 

I, naturally, told Azcarate that if he had spoken to us about it we would 
have solved the problem by either getting the necessary permission from our 
War Department or by having the six men brushed up on fast ships at some 
of our own fields but he insists that the men must go to a military school. 
Azcarate is out for Boeing and he only inquired about our prices in order to 
show that they are higher than Boeing quotations. He told me the higher 
performance is not necessary as Mexico is not going to fight the United States. 
He is not interested in the Osprey and wants to standardize on P. & W. engines 
because they already have sixty of them on hand. 

These diflBculties can be surmounted. My problem was to contact and interest 
another man with as much influence and this I did thru Watson, Phillips & Co. 
Our man in the Prosidencia now is Col. Rodriguez Familiar, a very close friend 
of the President and his protegee. There will be a lot of squabbling but I 
believe the colonel will have his way in a few weeks time. I have never seen 
any country where graft is so freely taken for granted. 

Watson, Phillips & Co. is the oldest British firm in Mexico, having been in 
business over a hundred years. They are very active and the financial rating 
is high. I looked up two other firms but was not as favorably impressed. We 
need not fear their being partial toward British products, they have been too 
long in this country and will favor whoever gives them a better deal. They 
have some American employees, use only American cars and only recently 
could have sold a British plane to the British Chargee d'Affairs but preferi'ed 
to sell him an American ship instead. 

Before seeing these people I inquired about them from different sources, 
including Mr. Glover, the commercial attach^ who recommends them, the 
National City Bank, and the ofticers at the Army aviation field and shops. 
They represent, among many others, John Thornycroft, Ltd. (ships and ma- 
rine engines), Merryweather & Sons, etc. They are, naturally, interested in 
having an agency contract, but I told them that we would prefer to try them 
on this (leal first and see how things come out. It's mainly on account of their 
connection at the national palace that I wrote them the letter, copy of which 
is enclosed. It's an agreement that can easily be terminated by simply writing 
them another letter, if we want to do so at any time. 

Pass the above information to Sperry who, as you know, cabled me to make 
inquiries as to who would make a suitable agent for their products. Watson, 
Phillips signed up the Mexican Government for a lot of equipment to go on 
the boats which are being built in Spain and inquired about Sperry instru- 
ments, but could not get anywhere with Schmidt who represents Sperry here. 
They are very anxious to get the Sperry agency. 

Besides the six Hawks, sixteen engines are needed, and the technical staff at 
the shops are working on a report showing all the reasons why a change from 
P. & W. to Wright should be made. I promised a Dodge sedan to the chief 
engineer in charge of the shops if he is successful in switching this initial 
orders to us. 

I gave Watson, Phillips the revised engine price list, dated April of this 
year, from which I cut off agents' discounts and Curtiss-Wright Export costs, 
leaving only list prices, and told them that we would give them ten percent 
discount up to ten engines and 15% on orders for more than ten engines. They 
are to advise us if they find it necessary to increase the prices. Naturally, 
all expenses connected with sales must be borne by them, except this particular 
gift to the factory engineer, if the deal goes thru, on accoimt of the fact that 
Watson, Phillips would not make any money on the six Hawks, as 5% is barely 
enough to pay all rake-offs and the price cannot be increased, we having 



^ The Am. Embassy knows nothing of this request. 



MUNITIONS INDUSTRY 915 

quoted $24,000 to Azcarate. There is a chance that Azcarate will be kicked 
out soon, though, in which case things will change quite a bit. 

This country has been neglected and I wish I could remain here a few 
months. They are going to buy a lot of stuff in the future, no doubt about it, 
but I must get out of here, am pretty sick, don't know if it is the altitude 
or what. Besides I must go and get my family ready to return to B. A. 

I knew there would be more grief about the smoke screen equipments sold 
in the Argentine. The Navy had to junk theii-s, and I expect a lot of kicks 
and trouble when I get back. I suggest you write Zuloaga and tfU him that 
we raised hell with Federal and made them refund three hundred dollars 
which Zuloaga may deduct from the balance he owes us on this order (1,332 
dollars). Very likely not even this will satisfy Zuloaga because by this time 
they probably found out, as the Navy did, that this equipment is absolutely 
useless. I collected $1,332, or half of the total, but had to pay $400 commis- 
sions. As I already told Owen, I had my doubts about our being able to 
collect the balance, after seeing the Navy's experience with the things, there- 
fore I told the boys that if we could not collect the remaining $1,332 we would 
have to deduct the $400 I gave them from the commissions due on the tool 
contract. Accordingly, when you send me the balance of commissions, keep 
$400 and I will advise the parties in B. A. that they will get these $400 if and 
when we receive the balance due on the apparati. In this way we will not 
lose any money. 

Our friend wrote me that he needs money to pay for a few things, including 
a new car, before he goes back home next month, and asks me to send his 
share as soon as possible. Hope you told him I would write him as soon as I 
get back home as per my cable of today. The contract must have been 
liquidated by this time but I suppose it will take a few days before you get 
the last payment. 

According to my cable, this letter should be air-mailed from here but I 
have changed my mind, too dangerous not only on account of its contents 
but also because in order to avoid a lot of red tape and a deposit of $250 
at point of entry, I came as a tourist instead of as a business man. If I were 
caught it would be an expensive affair, so I thought a couple of days delay are 
preferable to taking the risk. Will air-mail from San Antonio. 

So long and best regards to all. 
Yours sincerely, 

( Signed ) La wreince. 



Exhibit No. 334 

[Copy] 

Watson, Phillips & Cia. Sues., S. en C. 

IMPOKTADORES Y EXPORTADORES 

AVENIDA URUGUAY NO. ICi 

APARTADO POSTAL 67 

Mexico, D.F., 23d August 1933. 

[Confidential] 

Messrs. Curtiss-Wright Export Corp., 
27 West 57th Street, 

New York, U.S.A. 

Dear Sirs : Further to our letters of the 9th and 16th inst., we wish to give 
you the following further information with regard to the state of affairs in 
the various Government departments connected Vi-itli the purchase of the six 
pursuit planes. 

We are glad to say that, as far as we can be sure, everything is progi'ess- 
ing very satisfactorily in your interests. The Aviation Department has made 
an official report to the Presidencia on the various planes offered for the 
purpose, Boeing, Bristol, and Curtiss. This report has been seen by our repre- 
sentative and is distinctly favourable to your machines. We are also pleased 
to say that matters have been satisfactorily arranged in other quarters and we 
believe that we can count ujwn support in the necessary quarters when this 



916 MUNITIONS INDUSTRY 

question comes up for decision, which should be within the next ten days, if 
all goes well. 

We expect to be requested to submit our official quotation in the near 
future, and for your guidance we wish to state that this will be $26,000 U.S. 
cy per plane, if six are ordered. Should you by any chance receive any fur- 
ther direct communications in regard to prices we earnestly request you 
state that you have been obliged to revise your original quotation, either on ac- 
count of rise in price of material or due to our intervention as agents, and sup- 
port this figure. This has been done for reasons which you will doubtless appre- 
ciate, and we can assure you that same will in no way prejudice your chances 
of obtaining the order, on the contrary. 

We also have to inform you that Colonel Lezama, Assistant Chief of the Air 
Department expects to be in Tulsa, Okla., within approximately one week to 
receive the Fleet planes recently purchased l)y the flying school. This would 
bQ a good opportunity for you to interview this gentleman and submit any 
additional information which you may deem advisable, but we would impress 
upon you that this should be done in a discreet manner, and without any adver- 
tising, as Mr. Lezama does not wish it to appear that he is favoring any particu- 
lar make of plane. 

We have been in touch with the Presidente del Comite pro Vuelo, Mexico- 
Buenos Aires, Colonel Gustavo, G. Leon, with a view to impressing upon him 
the benefits of using either a Curtiss-Condor or a Northrop model for this 
flight. The authorities are still desirous of building a plane here for this 
purpose, but all those in a position to know are convinced that this will be 
entirely impracticable, and that the plane will have to be bought, if the flight 
is ever made. 

We do not believe that the funds available for this purpose will suffice for 
a Condor model, and we would therefore be glad if you would submit an 
estimate for a Northrop Sky Chief with all details and prices. We would also 
be obliged if you wou4d furnish us with detailed specifications and prices of 
your Wright Cyclone 700 h.p. as also your 14-cylinder Whirlwind model. Any 
information which you can submit in this regard will be of great assistance 
to us» 

We await with interest your reply to our various letters, and can assure you 
that we are dealing with this whole subject with all energy. 
Yours very truly, 

(Signed) Watson, Phillips & Cia. 
CHEP/p 

P.S. — ^We wish to state that we have been able to convince the Air Department 
that Wasp motors should not be furnished with your planes, and they are in 
agreement that should you receive the order Wright engines will be supplied, 
and will in all probability be standard for all planes here in the future. 



Exhibit No. 335 

[Copy] 

H. O. Claywell, 

Mexico, D.F., September 23, 1933. 
New address, % American Club. 

Curtiss-Wright Export Corporation, 

29 West 57th Street, Neio York. 
Attention Mr. Owen Shannon. 

Dear Mr. Shannon : Thanks for your favor Sept. 12th. I regret misunder- 
standing. However, this would not have happened had I not received the 
military catalogs. 

I congratlate you upon your representative who actually is not a c^'uimeivial 
one at present but one of the very highest Government authorities and a very 
expert one — a splendid gentleman and an excellent friend of mine. 

Regarding representatives as mentioned in the third paragrtiph of your letter 
Aug. Sth wherein yon stated that you have decided not to clesignate anyone 
as our representative or deal through any agent on the sale of military or 
commercial planes and engines to the Government of Mexico, this is what 
confused me when you wired later S/14 you wore already represented here. etc. 



MUNITIONS INDUSTRY 917 

Will you please quote me air mail on your model A16C. Sport Biplane com- 
plete with cowling and motor mount, including everything less engine but 
with metal prop and also with wood prop with engine installed. 

Me to furnish engines Comet 7-cyl. 165-hp. model 7 E.A.T.C. #47 radiaJ 
total weight dry 400#. 

For a quantity of five to be taken individually over a period of six months. 
Awaiting your early favors. 
Very truly yours, 

H- O. Claywell. 



Exhibit no. 336. 

[Copy] 

October 28, 1933. 
Mr. Robert L. Earle, 

Cicrtiss-Wright Export Cori)., 

29 West 57th Street, 'New York City. 

[Confidential] 

Dear Mr. Earle : The order for six Hawks may be obtained sooner than we 
expected. Since you left Mexico City very important conferences have taken 
place betwen ourselves and several parties of whose names you are aware. We 
are not able to give you all inside infonnation, but please have full confidence 
in our actions in the near future, and would add that prompt action is abso- 
lutely necessary in this case. 

The most important point at this moment is the " financial " end. Accord- 
ing to your company's letter of Sept. 7th the price of $24,000.00 still stands 
good and for important deals in the future with the same department, and other 
reasons, please ask your director to kindly cable us confirming that you main- 
tain above-mentioned price for this deal. For various reasons we have to 
ask you if you could increase our commission on the above amount from 5 
to 10%, because in this case we could perhaps obtaii! the sales contract Immed- 
iately. If possible our sales price to the Governnnnit of $26,000.00 should be 
maintained as this is of utmost importance. Delivery should be as soon as 
possible and the money for this deal is already set aside. 

Please take great care that no news about this proposition should reach 
Mr. Azcarrate. If he should inquire about certain moves in Mexico, please 
keep him in suspense as this matter must be kept secret until everything has 
been definitely decided. 

When cabling, please refer to the price only, and do not mention anything 
which refers to the aviation department. 

Please send some forms of Curtiss- Wright contracts such as usually used 
in such cases. May we sign contract for your account and delivery. 
Yours very truly, 

(S/d) Watson Phiixips. 

Exhibit No. 337 

Watson, Phillips & Cia Sues., S. En C. 
AvBNiDA Uruguay No. 103, Apartado Postal 67, 

Mexico, D.F., March 2nd, 193^. 
Messrs. Curtis s- Wright Export Corp., 
30 Rockefeller Plaza, 

New York Citij, U.S.A. 

[Strictly confidential] 

Military Aviation Department. 

Deiar Sirs : We have not reported for some time on this matter, but today 
we are in a position to let you have news of importance. We shall give you 
all details as far as we can by letter but many other details will have to be 
kept pending till the matter is ready for final discussion, and when we shall 
have an opportunity of talking to one of the ofiicers of your company. 



918 MUNITIONS INDUSTEY 

Sr. Lezama just arrived from a four-weeks trip with the son of Mr. Calles, to 
whom he gave instructions in flying. Mr. Calles jun. is going to purchase a 
plane in the near future for his private use. 

A special commission which was very busy at the aviation department for 
the last few weeks in making a close study of conditions and movements during 
1933, just finished their study and a new program together with new ideas 
about this Dept. are under consideration. 

We were informed confidentially of the exact position in this matter, and 
also were asked confidentially to make out a certain rejiort, which will be 
modified after we have given same in, according to the conditions and possibili- 
ties of the department. An entirely new arrangement and system will be 
established. The Talleres del Departmeuto de Aviacion will be taken over by 
a new management and transformed into a factory, similar to the one which 
Gral. Azcarrate once had in Mexico. The civil, as well as military aviation 
construction program, will be taken into consideration, but the military aviation 
depart, will furnish only the funds necessary for construction, repairs, up- 
keep of planes for this department. We can tell you that Mr. Calles jun. 
himself is active in this work already and that his father might be the main 
stockholder and pei^iaps director of the new company. 

Mr. Calles already received all the information we could give him, after 
which we were asked for further data which we mention below. 

They requested us to write to you asking you if you could furnish us with a 
rough sketch and outline of a plant for assembling and also for manufacturing 
for the most essential parts. They would like to make an arrangement with 
you whereby you help them to establish the plant and to break them in, in 
connection with manufacturing and assembling Curtiss-Wright motors, planes, 
etc. We know that you cannot possibly give them details for such a plant 
without knowing the exact plan of their work and their resources, but per- 
haps you can let us have some idea of what you would propose to be a suit- 
able plant for Mexico, giving them a rough idea about the cost of such a 
plant approximately. 

We now hnve to give them only an idea of the prices for the following 
models of planes, and under which condition you would let them manufacture 
same here. Also how many of each type they had to buy in order to give 
them the licence and facilities of manufacturing same in the new plant. 

1. Trainer, Osprey, Falcon, Hawks. 

2. Price each (ordinary sales price). 

3. Quantity of planes to be purchased in order to obtain licenses. 

4. Material and motors to be purchased only through you for your planes. 

5. In what way would you help them to start assembling and manufac- 

turning your planes in Mexico. 

6. Other conditions to be put forward in regard to this matter. 

Prices : at factory. Including 10 percent commission, but do not mention the 
amount of commission in future letters. 

For each of your models we have sufficient data and catalogues, but we 
must make a short description for each model in our next proposal, and 
therefore ask you to state this in your letter, too, as maybe some changes 
have taken place in the meantime, and we want to have the exact description 
of these models at present. 

In the meantime we are busy keeping in touch with all the responsible 
parties and we do our very best in pushing the matter wherever we can. We 
shall advise you at once of any news in the matter. We expect to see your 
Mr. Webster in Mexico in the very near future on his return trip to New 
York. 

Yours very truly, 

Watson, Phillips «& Cia. 



Exhibit No. 338 

[Copy] 

Frank Shekidan Jonas, 
277 Broadway, New York, December 27, 1933. 
Mr. Owen Shannon, 

C/o Curtiss-Wright Aviation Corp., 

Neic York City. 
My Dear Owen : Thanks very much for your most amusing Christmas card, 
which gave me a laugh, and Lord knows we need one these days. 



MUNITIONS INDUSTRY 919 

The Paraguay and Bolivia fracas appears to be coming to a termination, so 
business from that end is probably finished. We certainly are in one hell of a 
business, where a fellow has to wish for trouble so as to make a living, the 
only consolation being, however, that if we don't get the business someone else 
will. It would be a terrible state of affairs if my conscience started to bother 
me now. 

I am sorry I missed Webster when he went thru'. I was in Sao I'aulo the 
same day as he, but I only learned of this after he had left. Candara tells me 
that he is returning shortly, so I hope I will see him when he does. 

How does it fee! to be able to get legally drunk? It will probably lose all 
its zest and interest, and we all will be on the wagon. The heat is simply 
terrific here, which upsets my stomach, so perforce I have been walking the 
straight and narrow. You probably shivered all day Christmas, while I very 
nearly had a sunstroke playing golf. 

Owing to the Government in Argentine taking off the lid on exchange, it has 
raised hell here with imports, as the peso fluctuating to such an extent, that 
nobody can calculate what the landed cost of goods will be upon arrival. 
Every day some new ruling goes into effect, and we are all up in the air. 

From all indications, unless I receive orders to the contrary, I should be 
home about the first week in March, and I am looking forward to seeing you 
all. Wishing you a Happy & Prosperous New Year, I am 
Sincerely; 

(Signed) Frank. 

FSJ:RJ. 



Exhibit No. 339 

[Copy] 

Urueta & Samper H. (Sucesores) Joaquin Samper H., 

Negbgocios V. Reipresentaciones. 
Bogota, Colombia, K.J.., December 12, I'JJJ. 
No. 476 
Mr. W. F. GouxDiNG, 

Vice President, Curti^s-Wright Export Corportaion, 

30 Rockefeller Plaza, New York, N.Y. 

Dbak Mr. Gouu)Ing : Thank you indeed for the information contained in 
your letter no. 345 of the 5th inst., and for the enclosures received therewith. 
These we have read with extreme interest and pleasure for it is evident that 
efforts to convince the Govei'nment of the need and advisibility of making 
immediate additions to our air force have been effective. The likelihood of 
failure of the Rio Conference has aided iis considerably in this endeavor. 

As a matter of fact, we have been constantly discussing with the Seccion 
de Aviacion the advantages to be obtained in making new purchases now, 
emphasizing to them the fact that in addition to obtaining more satisfactory 
deliveries they would make a considerable saving over the prices they would 
have to pay if they waited until the emergency occurred and then had to 
rush the manufacturer, which would cause higher manufacturing costs, due 
to the necessity of employing overtime. For a long time they held the idea 
that it was to their advantage to hold off buying as long as possible in order 
to obtain the very latest innovations when they did purchase. We were 
finally able to convince them of the fact that basic changes in design were 
very improbable and that the minor improvements in detail could be easily 
incorporated in models already in their possession. 

With reference to the Condors we have been concentrating on these and 
hope to obtain results. At the present time there seems to be more interest 
in advanced trainers, particularly at the school at Call, and we are keeping 
after them quite closely. 

With reference to the contemplated order for the Hawks and Falcons, we 
sent you last night our telegram, copy enclosed, which reads : 

" Please make immediately courtesy call in my name Pradilla, Hotel 
Pennsylvania. Explanation Air Mail tomorrow." 

From very reliable sources we obtained the information, confirmed yester- 
day, that Mr. A. M. Pradilla, business man, partner of the firm G. Pradilla & 
Co. of this city, who was going to the States on business, has been appointed 
by the Government, by means of a confidential decree duly signed by the 
President, head of the armament commission which will operate both in the 



920 MUNITIONS INDUSTRY 

States and in Europe. Though Mr. Pratlilla has no knowledge whatsoever of 
armaments, etc., he will act as a business man in order to negotiate with 
the different manufacturers once the equipment has been picked out by the 
commission. 

The Government is putting the finishing touches to a contract to be entered 
into with the local banks here for the loan of $10,000,000 for national defense, 
of which, immediately they are obtained, $5,000,000 will be drawn for the 
use in mentioned purchases by the consulate in New York. The other 
$5,000,000 will be sent to Europe, to our consulate in London. 

Funds, hence, will be made immediately available and all purchases will be 
paid by the consulate against shipping documents as it has been the custom. 

Going back to Mr. Pradilla, he is a personal friend of mine and has been 
for many years. His personal reputation is good, though it has been said that 
his firm has used methods not quite in accord with a proper moral ethic. You 
will find him rather pompous, but really he's O.K. As a merchant he is clever 
and knows how to use the " chisel ", generally obtaining advantages in as far as 
prices are concerned. 

In requesting you to make a personal call in my name, I have sought two 
objects : One, to put you in contact, personal contact, with this gentleman, so 
that if and when the case arrives, you will be known to him and be in a better 
position to negotiate; second, that, he being a personal friend of mine, he will 
appreciate the call, without suspicion that there is a purpose behind it. As 
I informed you, his mission is not known, since his appointment has been kept 
strictly under cover. I will sincerely appreciate any information which you 
may be able to give me as to the activities of Mr. Pradilla, as well as to the 
outcome of your call and further contacts you will have with him. 

Before he left, he informed me that he would be located at the Hotel 
Pennsylvania ; however, you may also locate him through the Central Hanover 
Bank." 

Any additional information which you may be able to give me with refer- 
ence to the order for Hawks, Falcons, and Condors will be sincerely appreciated. 
In turn, we will keep you duly posted as to developments at this end. Of course 
we will push the orders as much as we can, both with Minister Araujo (with 
whom I enjoy very good friendship) and with the aviation section. 

With sincere good wishes and best personal regards, I remain, 
Yours very truly, 

(Sgd.) J. Samper. 

P.S. As you know, all planes purchased by the Government are set up and 
test flown by the Scadta, who charges a high percentage for their services, 
amounting sometimes to over 20 percent of the value of each box received. 
I have been discussing with the Government the advisability of having you 
quote the prices on airplanes on the basis of delivery in Colombia after each 
ship has been test flown here by yourselves. For this service you would be 
entitled to a higher price, of course, and both the Government and yourselves 
would have the advantage that each unit would be delivered by the factory, 
so, to say, doing away with the services of Scadta, which have not been as 
satisfactory as it may seem. Will you kindly give your ideas on this point, 
to further discuss the matter with the Government? An early reply would be 
sincerely appreciated. 

Exhibit No. 340 
[Copy] 

May 20, 1934. 
Dear Parm : The rather colorful and buoyant days of the Minister of War 
are finished and I am now back to the normal procedure of testing airplanes 
again. Trunk, commander of the American outfit at Cartagena flew the Minis- 
ter back to Barranquilla on Tuesday with a 3-Hawk escort and I tagged along 
in another Falcon with the Minister's aid. I told you that the Minister is sold 
on Falcon transportation, and sure enough I received a request thru the Min- 
ister's Aid to fly him to Palanquero, Thursday, on his way to Bogota. I was not 
overly anxious for this trip because there are many miles of tough jungle 
between Barranquilla and Palanquero and the War Minister is quite a respon- 
sibility on such a jump, however, I took him and everything turned out fine. 
He had a smooth, comfortable ride which is somthing the Scadta pilots never 
seem to care to give their passengers, so I am convinced that he will use a 
Falcon at every opportunity from now on. 



MUNITIONS INDUSTRY 921 

During my contacts with the Minister he seemed to tliiiik tliat he should have 
the 37 mm. gun installed on the Falcons and Condors probably as a result of 
the urging of Comm. Strong and Miranda (American Armament Co.) but I 
think I effectively discouraged the installation, principally by giving him the 
experience of the U.S. Army with the big guns. 

The Minister had to rush back to Bogota because of the progress mads at 
the Peace Conference. Last night's Bogota paper stated that an agreement 
had actually been signed and, as nearly as I can gather from other sources and 
the report is authentic. It therefore looks as tho there is no call for the 
purchase of more airplanes at this time. My general impression is that we 
don't have to do any more boosting of our products, that every one takes for 
granted that their equipment is the best which can possibly be bought. How- 
ever, their maintenance organizations are terrible and, no matter how good the 
airplanes, they won't take care of themselves. I therefore intend to do s< me 
urging in the direction of good maintenance before leaving. I have done quite 
a bit of talking about the value of the demonstrations over Barranquilla ;ind 
Cartagena from the viewpoints of satisfying the people as to where their taxes 
have gone. I have also tried to paint a picture to the Minister's aid of the 
value of such a demonstration over Bogota. If these people can become air- 
minded enough they will be willing to appropriate enough money to take care 
of their air force which will of course work out ultimately to the mutual 
benefit of Curtiss and Colombia. 

With regard to my departure, I could stay here indefinitely and still find 
things to do, however, after the setup of the present order of planes is com- 
pleted I believe I will have finished what I came for and then I have had just 
about enough. The 3rd Falcon has been flown, the 4th will be ready Monday 
or Tuesday, the 5th is about 30% along and will probably be ready sometime 
this week. They will start on the 6th this week and it should be ready the 
middle or latter part of next week. I should therefore be thru in Barranquilla 
in less than 2 weeks. As I have previously written I want to spend a short 
time in Cartagena before leaving the country which I will do after all planes 
are assembled here and then I think I can leave. Anything I might stay for 
beyond that would be in the nature of conducting a grammar school for 
Colombians which is a hopeless and endless task. 

Regarding Moloy's departure, I brought him back from Palanquoro the other 
day and took him over to Cartagena where I want him to spend a week or so 
with the Americans. They like him very much at Palanquero and hated to 
let him go but he was spending his time on old equipment and at this time I 
think the new equipment is much more important. He can go back to Palan- 
quero later for a while, say for 2 weeks, and by the end of that time I hope 
they will have assigned a few Americans there. At this time I believe that a 
service man should be here for the setup of the coming order of planes. T have 
made several requests for some of the American mechanics to be stationed here 
during the current setup but because of general chaotic conditions none have 
been assigned. Trunk has agreed to send one over Monday and I have offered 
to even help out with his expenses for a few days, if necessary, because I 
believe it will be a good investment to have one or two of those fellows familiar 
with these planes. Whether Moloy has to stay for the coming setup or not, 
the more knowledge of these planes that we can distribute, the better they 
will be taken care of. I am going over to Cartagena Monday to get set on the 
possibility of setting up the new planes there and I will make full report for 
the next mail. I will have to reserve final recommendation on Moloy's return 
until later on after I have worked with these Americans. I will appreciate 
advice from you as to when we may expect delivery of the new order. 

I do believe that we should as diplomatically as possibly get the setup of the 
coming order out of Scadta's hands. I have no complaints other than negli- 
gence but they simply don't take the interest that Americans w-ould take, nor 
do they have the knowledge of this type of construction that Americans would 
have. For instance we have had several cases of ribs being' broken by men 
walking on the wings. I found one airplane (the 3rd Falcon) where the hinee 
pins for the rear beams of both lower panels had been too short (Buffalo's 
fault), had gone ahead and left the hinge pin in unsafeties. In Moloy's absence 
I do all the inspecting and fortunately caught it before flight but occurrences of 
this nature are frequent and lead me to believe that whereas it is very con- 
venient to have full use of the Scadta plant here (machine shop, welding 
apparatus, etc.), with careful inspection on the part of Buffalo we will be bc^tter 
off in if the work is done elsewhere. 



922 MUNITIONS INDUSTRY 

Guess I have about run down for this time. I am still looking forward to 
hearing from you in connection with the gas tank troubles, what you want me 
to do about the trainer, and various items mentioned above. I am enclosing 
some Barranquilla newspaper clippings in connection with the Minister's visit 
which you will undoubtedly find interesting. Let me know what you think of 
the various discussions above and anything you might want me to do before 
shoving off. 

With best regards to you, and I will write again for Thursday mail. 
Sincerely yours, 

WirxiAM J. Crossweix. 
I Copy.] 



Exhibit No. 341 

[Copy] 

JuTY 28, 1933. 
Via air mail— #126. 
Captain C. K. Travis, 

Casilla 1429, Lima, Peru. 

Dear Gliff : Your letters nos. 29 and 80 of the 19th and 20th came in just 
as Web was leaving on a trip that will take him out of town for the next 
week or so. 

We noted that there are good prospects of another order for six to nine 
planes and sure hope that this comes through soon. As a matter of fact, I 
was talking with the consul general, Decker, today and he is firmly convinced 
that the scrap down there will be over within the next month, and in that 
event we doubt very much if they will purchase any more of the Hawks or 
Ospreys. 

Another point to keep constantly in mind Is that all factory costs here are 
increasing rapidly since our Government started on its inflation program and 
unless the orders for the new ships come in within the next few weeks we 
will have to increase our prices considerably. In this connection, will you 
please let us know by return air mail what your ideas are as to the amount 
of commission we should pay to Ashton & Webster on the present order and on 
future orders, bearing in mind that our costs are increasing continuously and 
at the present prices there is very little margin of profit for anyone. 

I am passing on to the factory your suggestions on the O.-prey and will 
let you know by next air mail what they suggest can be done. 

We will arrange to have fifteen or twenty cartons of Chesterfields packed in 
one of the plane or spare cases and will let you know later the case in which 
they are placed so that " Shorty " can be on the lookout for them and you 
can hand them out to the pilots there. Neither Web or I remember receiving 
a letter from you before on this subject. 

I cabled you to let Donnelly make his own arrangements with the Bolivian 
Government for his salary, traveling expenses, etc. 

We cabled Ashton & Webster that we would ship all of the plane and 
enfjine spares with the three ships, excepting the propellers, Imt n<iw we 
find that the Buffalo factory will be unable to ship the Hawk spares out until 
about the first week in September. We are doing everything possible to better 
this delivery but at present it looks as though Buffalo would not be able to 
improve it much, if any. The engine spares will go out with the plane. 

The principal reason foi- the delay in getting out these Hawk spares is that 
we did not receive the payment for them until a few days ago and at the 
same time Buft'alo received another order for ten Hawks for China, which in 
addition to the twenty-six Hawks and thirty-sonie-odd A-8 attack jobs they 
are building for the United States Government has pretty well swamped the 
factory at this time. 

Regards. 

Sincerely, 

OwEx Shannon. 
OS:D 
CC : La Paz 



MUNITIONS INDUSTRY 923 

Exhibit No. 342 

Cubtiss-Wright Export Corporation, 

New York City, August H, 1983. 
Via air mail 

No. #137 

Capt. C. K Travis, 

% American Commercial Attache, 

Buenos Aires, Argentina. 

Dear Cliff: Your letters of July 19th ami 2iith arrived while I was away 
from the office. I believe Owen Shannon has answered them fully, and I can 
only add that I hope the job in Buenos Aires progresses satisfactorily and 
that you will be able to get back to La Paz in time to take care of the arrival 
of the last three ships. 

If Webster & Ashton are able to work fast enough they may be able to get 
the additional nine or sixteen planes closed before the war ends. The consul 
general in New York seems to feel quite certain that the mess will be cleaned 
up within a month. I certainly hope we will be able to get some more business 
before this happens. 

With reference to the suggested changes for the Osprey l)y Jorilan. these 
suggestions arrived here too late to be incorporated in the last machines 
ordered for Bolivia, but on any future orders I believe they should be taken 
care of. It means an additional cost of about $250, but possibly this can be 
absorbed. 

The cost of raw materials have increased considerably, and it may be neces- 
sary to raise our price of $18,000, especially if we intend to pay Webster & 
Ashton the five percent commission that they are asking for. Incidentally, 
please write us or cable us as soon as you receive this letter, giving us your 
suggestions as to the commissions that Webster & Ashton are entitled to. 
Sincerely, 

C. W. "Websteb. 
CWW.js 

Exhibit No. 343 
CWW #35 

La Paz, Bolivia, Sept. 13, 1933. 
Mr. C. W. Weibstek, 

Curtiss-WrigJit Export Corporation, 

21 West 57th Street, Neiv York. 

DejlR Web: The 2 Hawks and the 1 Osprey will be ready to test early 
next week and can be delivered immediately with the exception of one of the 
Hawks. We cannot deliver that until I receive the propeller hub nut that I 
cabled for. There was a slip-up somewhere on that and one of the Hawk 
propellers came down with a nut for the other type of crankshaft, the one 
that lias the threads all the way out to the end of the shaft. Consequently 
the nut is too short and cannot be used. I will send it back as soon as the 
other one arrives. 

There was some damage done to the crates in shipment and we found one 
Hawk stabilizer badly smashed up. The second rib from the inside was com- 
pletely crushed and the rear spar was twisted and kinked. The fabric was 
also badly torn. The wing crate for the Osprey was evidently dropped some- 
where along the line and all the leading edges of the wings were dented at 
the support point of the crate. That was fixed up without any difficulty, 
as we were able to smooth out the dents without going into the wing. As 
I advised you by cable, Lloyds agent here has adjusted the matter of the 
stabilizer and it will be replaced by a new one without any effort to repair it, 
inasmuch as it belongs on a new plane. We will repair the damaged one here 
as well as we can and use it for a spare. The certificate on the adjustment 
should go out on this air mail or the next, direct from Lloyds. 

An effort should be made in the New York office to got the shipping docu- 
ments down here without so much delay. In the case of the last shipment 
of spares the documents were mailed by steamer mail and got here 3 weeks 
after the spares had arrived in La Paz. In the meantime the spares couldn't 



924 MUNITIONS INDUSTRY 

be dispatched and there was hell to pay. It was just yesterday that the 
documents arrived and they were able to unload the cases. In the past there 
have been several cas'es where the documents were late in arriving and held 
up the detail. Sometimes it has been due to having sent the letters by ordinary 
mail which only arrives here every 2 weeks, and sometimes due to mis 
addressing the letters. There was one case where a package was sent to 
" the Chilean Consul, Arica, Bolivia." 

The model of the Hawk caused quite an impres'sion here and of course 
everyone wanted one. We are going to have some more made here at the field. 
The original will be presented to the aviation school which is perhaps the 
only way to dispose of it without causing any hard feelings. It will be kept 
in the Casino. 

The kicks that Colonel Bilbao turned in to the General Staff on Curtiss 
planes and engines seems to have been squashed very definitely and effectively. 
There was quite a fuss about it if you will remember a few weeks ago. It was 
our staunch friends here among the pilots that turned tiie trick. They who 
have been flying our equipment went to the Contralor and General Staff on 
their own initiative and made written statements regarding the planes. These 
statements were by no means vague and every one boosted our stock. As far 
as I have been able to find out, there was not a complaint made by anyone 
but Bilbao. Colonel Jordon took the matter up directly with Bilbao and General 
Kundt and vociferated as follows, " I have had nearly 500 hours in Hawks 
and more than 250 hours in Ospreys and they are absolutely satisfactory 
in every respect. When you birds begin to know something abuut fiying, you 
will see why the Curtiss planes are the best that we have ever hjid." 

When I left Buenos Aires I bought 3 pairs of Meyorwitz goggles with 
triplex lenses to present to 3 of our best supporters here. I have arranged 
so that is can be done without any* hard feelings to the others. I felt that 
some appreciation should be shown some of the pilots such as Jordan, so I 
went ahead and bought the goggles. I had mentioned the matter several times 
to New York in past months and suggested that they send down a few pairs 
of goggles but had no reply of any kind. I am putting the charges on my 
expense account and consider it money well spent. Lopez told me in a con- 
fidential and friendly chat yesterday that if it liadn't been for Jordan and two 
or three others that he named, that the last order for planes would have been 
canceled and that our competitors would have been given a chance. Lopez 
also told me that Knndt recommended the purchase of 3 more Ospreys and 
3 Trainers on the strength of pilots' reports. The order has been approved 
but there will be the usual delay in getting the money. 

In connections with new planes, please let me know as soon as possible if 
we will have to quote higher prices. I received some information to that effect 
some time ago but nothing definite. It was simply stated that in view of the 
inflation and consequent increase in cost of labor and material that it might 
have to be necessary to raise our prices and not to quote until advised. 

There is an order pending at present for plane and engine spares amounting to 
about $66,000. The order has been approved and the money appropriated but 
they are planning to convert most of that amount into planes in addition to 
the six that they are about to order. That is right up our alley as spares 
will have to follow sometime. 

The war will probably last for months yet according to the looks of things. 
It v.ill all depend upon how long Paraguay c:ni keep going. At any rate, the 
government is financing the war for another 6 months and making provisions 
for a year. They have made arrangements for a loan of B^30,000,000 which 
they will receive in a very few days, and arrangements for an additional loan of 
B^25,000,000 if needed. Just how much of that will be converted into foreign 
currency, I have not been able to find out, but I presume that the greater part 
will go to war materials and planes. They can and will use their credit 
for internal purchases and army pay roll. 

I cabled today for quotations on bombs and to find out if we can sell direct 
from Federal Laboratories or if Grace & Co. here have an exclusive agency. 
They sold the last order of bombs and are after this order. We must beat 
them to it if humanly possible. The order calls for .'^00 fifty-pound fragmenta- 
tion, 300 one-hundred-pound, 500 one-hundred-ten-pound, and 200 two-hundred- 
twenty-pound demolition bombs. Those seem like odd sizes but we ought to 
be able to furnish them with bombs of approximately those weights. 



MUNITIONS INDUSTEY 925 

There is going to be some business in ground macliine guns, but I under- 
stand that there is an exclusive agency liere for Colt and they are already 
quoting on the deal. They have a lot of Vickers guns iu the Army here and 
it was planned to keep them standard but it seems that Vickers can't deliver 
under seven months from order and that Colt can deliver 50 guns in five weeks 
and at forty percent under Vickers prices. 

Three Junker bombers have recentlj^ been purchased, but we had no chance 
at that business, inasmuch as Lloyd Aereo Boliviano is in the deal and have 
agreed to take the planes for their line after the war. They are convertible 
jobs and Junkers is standard equipment on the Lloyd Aereo line. 

I am making up some lists of machinery and other things that we may be 
able to sell in a few months. There is no chance now to get the stuff across, 
as they consider anything except actual fighting equipment as an unnecessary 
luxury. Camera guns, lighting equipment, Sperry hoi'izous, radio, etc., come 
under that head in their eyes also. 

In connection with the Trainers, will it be possible to mount a larger engine 
for use in La Paz? I doubt very much if the standard 1G5 would get oft" the 
ground up here with a student. I wish you would take that up with the 
factory and see if they can put out a job with a suped-up seven-cylinder job. 
The R-540 I think it is. It is possible that the training school will be estab- 
lished at Villamoutes after the war (that is where it is now) and La Paz 
will be the base for fighters. P>ut whether the scliool will be at sea-level 
Villamontes or 14,000 foot La Paz, it would be necessary to have a trainer 
that could operate from both places. 

It is certainly too bad that Leon is unable to proceed to Buenos Aires soon. 
Of course I don't know a thing about the business arrangements there, but 
it looks like my work there was wasted, at least partly, in not having a 
follow-up immediately after the demonstration. I hope that the delay will 
not have any detrimental effect on business there. As you know, I was unable 
to do much without knowing what it was all about, but we will hope for a 
better schedule next time. We cannot neglect Bolivia ; they are our best 
customers at the present time. A small country but they have come across 
with nearly half a million dollars in the past year and are good for quite 
a bit more if the war lasts. 

Donnelly is still here and seems to have a job for several weeks or months 
more. They have made him a captain at his request and has been a couple 
of weeks in the Chaco on welding. He is due to arrive here tomorrow to fix 
up another wreck that happened last week. One poor devil had terrible luck. 
He made three successive flights here with an Ospi'ey and had a minor craekup 
on each one. On the fourth flight he unwisely let the ship swerve on him on 
the take-oft" and he just about had flying speed when he connected with a 
large rock pilce at the edge of the field. Sheared his landing-gear clean off 
and rolled him end over end three times but didn't hurt him a darned 1)it. 
Don gets $75 per week plus livhig expenses, but he will earn it when he repairs 
that wreck. 

They have two old Fokker D-7's here that have been lying in the hangar 
for seven years come December mas o menos and they are going to have Don 
weld them up and get them on the job again. I have tried to talk them out 
of it on the grounds that the tubing is bound to be rusty and eaten inside and 
that they will turn out to be coffins for someone, but they have just received 
new wings and engines for them. That was some of Vargas Guzmans' doings 
las year before they got wise to him and kicked him out of the service. 

Can think of nothing more except the mater of commission for Webster & 
Ashton and am not finished with that yet. 

I am going to Lima as soon as I can leave things here and will meet you 
there on the 11th of October as per your plans. This is a hell of a place and 
the customary cold in the head is again upon me and I've cried a quart of 
tears while writing this letter. I've had summer, winter, autumn, and fall ; 
cold weather, hot weather, and indifferent weather during the past six weeks 
and forgot to bring my red flannels up liere. 

Best of luck, Web, and I'm sure looking forward to seeing you soon. 
Sincerely, 

(Sgd.) Cliff. 



926 MUNITIONS INDUSTRY 

Exhibit No. 344 

Curtiss-Wright Export Corporation, 
Camilla 809S, Los Cei^iUos, Santiago, Chile, 2/15/33. 
Mr. C. W. Webster, 

Curtiss-Wriffht Export Corporation, 

29 West 57th Street, New York City. 

Dear Web : I was pleased to receive last Saturday your letter #70 of 30th 
January. 

Iiei;arairig the idea put forward by Comandante Aracena for the building of 
12 Falcons for Ecuador, we have not heard any further news on this subject. 
All the data we gave the comandante has been forwarded to the Eucadorian 
Government and that is where the matter stands at the moment. Perhaps 
you ci.uld find out from your representative in Quito, Senor Flores Gueera, 
something definite on this question, but suggest, of couse, you do so in a casual 
way, so that it will not interfere with any plans the government may have 
in view. 

With regard to the Falcon and Hawk, I confirm cables exchanged in this 
connection. Since cabling you this moi-ning, Pancho phoned to tell me that he 
had been promised permission to fly the planes out tomorrow, and if this 
be the case I will cable you immediately we know that authorization has been 
given by the Chilean authorities. 

Senor M. Cruchaga, the Foreign Minister — and who, at the same time, has 
been Acting Minister of National Defense — presided recently at an antiwar 
meeting held in Mendoza with the Argentine authorities, the object being to 
try and induce Bolivia and Paraguay to cease hostilities and go to arbitration. 
It was also agreed that neither Chile or the Argentine would lend any assistance 
to either country with arms or munitions. So, in a nutshell, we can see why 
it has been so difficult to dispose of the Falcon and Hawk to Bolivia or 
Paraguay. 

The newly appointed Minister of National Defense, Senor Emilio Bello 
Codecido, arrives from the States by the Santa Clara today. By the same 
steamer is arriving Senor Zalles, the Bolivian Minister in Santiago last year, 
who, you will recall, came to see us in the factory in July and wanted to buy 
Falcons for his Government, but nothing matured. Senor Zalles probably has 
instructions about the purchase of the Falcon and Hawk, and we must wait 
a day to see what transpires. 

I do not know from whom Pancho obtained permission, as only yesterday 
we received notice, passed down from the Foreign Minister, that on no account 
must the Falcon and Hawk leave the factory. The only way to get these 
ships out is for an agreement to be made between the Bnlivian and Chilean 
Ministers, and I am anxious to know what news Pancho will give us tomorrow. 

At the same time Jim Spencer is still working on selling the machines to 
Paraguay, but apparently he is meeting with more difliculties than Pancho. 

We cannot do any more than we have already done to dispose of the Falcon 
and Hawk, and you must not lose sight of the fact that Chile represents her- 
self as a peace-making nation and has promised not to provide or assist in 
providing war material to any of the belligerent S. American countries. 

Since writing your letter under reply you will have received mine in reference 
to the Rambler and now await your instructions. 

As matters now stand it would seem very difficult for us to get an offer 
for the European Hawk. There is no hope whatever of the Chilean Govern- 
ment acquiring this machine, and the only way I think you could dispose of 
it would be your dealing direct with other countries at S. America at present 
engaged in warfare. Jim Spencer has been trying to get an offer from the 
other side, but nothing has come of it. 

I note what you write about Jim Spencer and quite appreciate your attitude 
before dealing direct with him. In conversation the other day, he told me 
he had received your letters, so I did not make any comment on what you 
wrote me. 

The whole trouble in trying to make deals of this nature is that there is 
excessive graft to contend with. The Bolivian and Paraguayan Ministers know 
of our offer and yet they prefer dealing through agents. They both know 
our figure and the agent's figure, so you can imagine who has to take a share 
between sale and purchase prices. Jim has been working the deal for Bolivia 
and Paraguay through the Argentine. His figures are the same as Pancho's 
and he knows perfectly well that his commission is includorl in anvthing he 



MUNITIONS INDUSTRY 927 

cau get over $15,000. If he could make $1,000 on each plane for himself, I 
think he would be lucky. The other $i',00O would be paid to the other inter- 
mediaries. 

Have not seen Salvador for at least a month. He must still have the hump. 

We have just received a letter from the Air Corps stating that in view of 
the high quotation for the Sikorsky spares, they have decided not to place the 
order and will effect the repair with what element they have in the Maestranza 
in El Bosque. 

The dope and other material arrived here yesterday, all O.K. The Santa 
Barbara shipment is the only one still pending and we expect the decree will be 
signed this week. 

Work on repairs is proceeding steadily ; except to complete the 3rd ship 
(Hawk #7) by week-end. Falcons Nos. 2 and 29 have now been officially 
handed over to the Air Corps. Total costs on these two machines will be 
advised New York by next mail, so that you may deduct same from the Air 
Corps funds in your possession. 

Thanks for your kind wishes. Kesler is still hanging around wnitlng for a 
chance to fly away the Hawk and Falcon. 

Best regards. 
Sincerely, 

J. V. Van Wagner. 



Exhibit No. 34!i 

[Copy] 
Air Mail #93 May 15, 1933. 

Mr. V. J. Van Wagner, 

Casilla 3098, Santiago, Chile. 

Dear Jerry : With reference to your several private cables and also your 
letter of May 6th, regarding Arucena and Bofil. it seems to me that if the 
Peruvian Government is anxious to acquire equipment we should be able to 
work out some sort of deal with them. I cabled you this morning, as per con- 
firmation attached, in an effort to find out who Bofil is. Is he a direct rep- 
resentative of the Peruvian Government and, if so, what delivery must they 
have and how much are they prepared to pay? 

It seems strange to me that you have not been able to sell them the Wooten 
" Falcon." There is a ship for immediate delivery along with a quantity of 
necessary spares. My only object in flying the ship out of Chile into Peru 
is to make it available for sale to the Peruvian Government and to circumvent 
any possible sudden decision on the part of Chile to prevent the delivery of 
munitions to Peru. I have given you full instructions on the Wooten Falcon, 
so please stick to them in making a deal. 

It seems to me that Aracena's requirement of receiving the price of new 
Falcons and Hawks for his obsolete and worn present equipment is absolutely 
unreasonable. In my opinion, it would be a very satisfactory deal for Aracena 
to trade, if necessary, 2 used Falcons or 2 used Hawks for one new Cyclone- 
Falcon or Hawk. It would naturally cut down the number of planes in service 
but would give them modern equipment. He evidenly is still remembering the 
deal of last summer and fall, which was more or less of an accident but, at 
the same time, we were delivering new and unused equipment, although we 
admit that it was under-powered and more or less obsolete — nevertheless, it 
was new and had not been flown over many years as in the case of the present 
Hawks and Falcons. 

If Bofil, in representing Peru, is anxious to buy equipment and. as you 
expressed it, " urgently ", I wash you had cabled us when you first met 
him and given us the opportunity of shooting at the proposition in some form. 
You mentioned that you had told Bofil that you could not deal with him. 
Never make this blunt statement to any prospective customer but always string 
along with them leaving the door open for some kind of negotiation. We might 
have been in a position at the Buffalo factory whereby a production order was 
coming through for another customer on which we were ahead of schedule and 
that some of these planes could have been diverted to another customer in an 
emergency. Such would have been the case several weeks ago when we were 
delivering Cyclone " Hawks " to China. Unfortunately all of these Hawks have 
just been delivered. Bear this in mind and in the future always keep us fully 
informed. 

8.3876— .S4—PT 4 16 



928 MUNITIONS INDUSTRY 

Air mail me immediately all the iufonuatiou you can secure regarding the 
possible action on the part of the Chilean Government in connection with the 
proposed closing of Chilean ports to Bolivia. I harly believe that this drastic 
step vi^ill be taken but, nevertheless, the newspapers here are predicting it. 
Follow all these political events as closely as you can and keep us supplied 
with information. 

If there is a possible chance of making a deal between Bofil, Aracena, and 
ourselves, I think I would make a quick trip down the West Coast to sit in on 
it but I naturally do not wish to leave at this particular time unless it is 
absolutely necessary. 

Your letter of May 6th states that President Alessandri and the Minister of 
National Defense and Aracena are very anxious to keep the factory operating 
and commence on new production. How in the world does anyone in Chile 
expect to do this unless they find some dollars? My letter of May 4th, 
instructing you to close the factory tight unless Aracena and the Government 
finds some business for us still stands. The Government cannot possibly 
expect us to keep operating for the benefit of the Chilean Government and at 
our expense. 

I also cabled you this morning asking if Wooten had turned over his Falcon. 
I have been urging the Air Corps in Washiugrou to cable him instructions and 
they have agreed to do so. I'lcase follow this up and keep me advised. Regard- 
less of whether you sell the Wooten Falcon in Santiago, please get it started 
for Arica as soon as you can and notify us by cable when you expect it to 
be there so that we can arrange with Faucet t to have one of his pilots pick 
it up. In connection with this ship, do not rely upon or request Pan American 
Grace to supply the ship with gas and oil. You will have to make an arrange- 
ment with Chilean National Airways for fuel. 

In shipping your spares to Peru, do so in the most efficient way without 
using the Grace Line, consigning the shipment to Faucett and immediately 
notifying him by cable and also cable us. In other words, move this equip- 
ment into Peru as rapidly as possible. 

Also keep me advised as to what action you take in delivering the " Rambler." 

During this period of political unrest all over South America, circulate as 
much as you can among officers and people in an effort to obtain infor- 
mation pertinent to our business situation which may effect sales and shipments 
in all of the South American countries. 

Also please bear in mind that the deal for Wooten's Falcon is absolutely 
confidential. Do not permit stories to be circulated around Santiago about 
our purchasing the ship, to whom we are trying to sell it, and the price we 
get for it. 

Sincere good wishes, 

C. W. Webster. 



(Personal & Confidential) 



Exhibit No. 346 

Ankara, April 7th, 19S4. 



Mr. T. A. Morgan 

Curtiss-Wright Export Corporation, 

B.C. A. Building, 30 Rockefeller Plaza, New York. 

Dear Tom : I'm writing this to you direct, as I assume Jack will be on his 
way out here before this letter arrives in New York. 

Here are some important factors which must be kept in mind, as of great 
possible influence on affairs out here. A few days ago Mussolini made a speech 
in Italy in which he talked very frankly about his views regarding Italy's fu- 
ture lying in Asia and Africa. It probably didn't create any stir at home — 
you may not even have noticed it. But you can believe that it has caused a 
great stir out here. The Turkish ambassador has called on el Duce to ask 
him " what do you mean, Asia etc." El Duce, of course, replied that he didn't 
mean Turkey. And on the surface all is quiet. But if you know anything at 
all of the background of Italy's aspirations in Turkey — tangible evidence of 
which lies always at Turkey's front door in the form of the Italian mandated 
islands — you can well believe that these last utterances of el Duce's have made 
a most profound impression, which mere diplomatic assurances will not dispel. 

And under the surface there is every evidence of a determination to see that 
no stone is left unturned to see that Turkey's defenses are in shape. And 



MUiSriTIONS INDUSTRY 929 

aviation defenses are receiving the most serious attention of tlie big shots in 
the government. 

The machine gun episode for Hawks is just one indication. When I cabled 
you the other day that we have been asked to consider this one as a national 
emergency, I can assure you that I wasn't kidding. They're in deadly earnest 
about this. 

There is every evidence that the long delay in the Kayseri project has now 
received the renewed attention of the Prime Minister and Chief of Stalf, and 
I should not be the least bit surprised to see a break come almost any day. 
When I was in Zejai's office today, in walked the Prime Minister in person — 
all unannounced, a most unusual procedure. I don't know what was the pur- 
pose of the visit, because I, naturally, withdrew at once. But several indica- 
tions are that the Kayseri affair was very much in the foreground. 

There is every reason why they should press this matter to conclusion, and 
I'm rather expecting that Ismet Pasha will take it in hand to see that it is 
concluded, and that very shortly. 

Pretty well-confinned reports are that a tentative decision lias been reached 
also to start active and energetic efforts at once to nugniont their air pro- 
gram greatly. There is talk of an immediate budget for 170 planes to be 
purchased this summer. Al.so rumur.s of a sei)arate aviation department. 

All this may be ju.st idle talk, but I am strongly of the opinion that it is 
really firmly founded. If it is — and if (as appears to be the case) the Prime 
Minister and the Gazi are really taking it upon themselves to push this mat- 
ter — we may look for some real action at any time. 

Greece has much the same underlying attitude toward Italy that Turkey 
has. The Duce's speech took place since I left Greece, so I have no way of 
knowing what is the reaction tliere, but knowing the general political back- 
ground, I would expect the Greek reaction to be similar to that in Turkey, 
and I should not be surprised to hear that Greece's indecision on aircraft 
matters has been converted into a definite program. 

It's too early yet to say exactly wh.at will happen. I feel quite certain that 
there is no likelihood of any ojifn hivaks. I'm [ i!o believe that this little 
speech of el Duce's is going to result in a material augumentation and acceler- 
ation of Turkey's aviation program, and may have a very similar result in 
Greece. 

Please don't forget this background. It is very important. 
Yours sincerely, 

(Sgd.) Beuce G. Leigh ton. 

An incident. — I complained yesterday to the Minister that a numl)er of 
materials for Kaiseri had been delayed in the Customs House Ankara for two 
months. Today there was great to-do over the fact that the officer in charge 
of the Ankara warehouse — a major — has been ordered to ten days under 
arrest for dereliction of duty. I have an idea that the delays will be less 
long in future. 

(Sgd.) B. G. L. 



Exhibit No. 347 

[Air Mail 78] 

Januaky 31, 1933. 
Captain Clifton K. Travis. 

Compania de aviation Fauoett, 8.A., 

Apartado lJf29, Lhna, Peru. 

Dear Clif : According to your last letter, you planned on being in Lima on 
February 6th ; therefore, I am addressing this letter to Lima. 

Bill Goulding and Shannon have been exchanging cables with you regarding 
the payment, and I hope that you were able to straighten out this financial 
situation before you left La Paz. If we can in any way allocate the funds already 
cabled up here so as to cover the remaining portion of the Osprey and the 
spare parts, I believe it is the thing to do. In any event, we do not intend 
to release the 2 remaining Hawks that are now in New York until the con- 
tracted payments have been made. In view of present conditions in Bolivia, 
I believe we would be making a grave mistake to permit the Bolivian Govern- 
ment to get too far behind in their payments. The situation at Chaco is liable 
to blow up any time and if it does, the natural move for the Bolivian Govern- 



930 MUNITIONS INDUSTRY 

ment to make, and in view of their past performance, would be to default on any 
payments that are due. Therefore, let's hold them to their contracted pay- 
ments. If the show does not end this coming summer, they naturally will have 
to have additional equipment. I realize that the Government is abdUt broke 
at the present time, but they generally find the funds for munitions when 
necessary. In the future, if you have to make additional contracts, try to 
get your last three payments in New York, eliminating the final payment in 
Arica as called for in the two previous contracts. I know this is going to 
be rather difficult, in view of the precedent established, but do the best you 
can. 

I had a talk with Mr. Nichols of the Colt Co. last week and they have given 
their representation to a former Army ofiicer, and according to our agreement 
with the Colt Co., we are entitled to commissions only on machine guns 
installed on airplanes or shipped with airplanes, which eliminates us from 
participating on contracts for gun spares unless those contracts are placed 
directly with us. Bear this in mind and follow this situation closely so when 
the Government anticipates purchasing spare gun parts or complete spare 
guns, see that these contracts are placed directly with you. I understand that 
the Colt Co. is not favorably impressed with their representative and would 
prefer working with us, providing it does not complicate their contract with 
their agent. 

Sincerely hope that the Peruvian Hawks gave you no trouble. 

Please give my kindest regards to Jack Jennings when you see him and 
also give him any and all breaks that you can. He is down at Ancon as an 
assistant mechanic with Jugielski in setting up the Hawks. Also give my 
kindest regards to Slim Faucett, Dan, Slim Carlton, and the rest of the boys. 

With the best of good luck and sincere good wishes to you and Mable, 
Yours sincerely, 

C. W. Webster. 

P.S.- — As soon as possible let us have the full report on the Peruvian Hawks 
by cable and follow it up in detail with a letter. Also, what opportunity of 
selling Peru a few more Hawks? Have turned over your receipt to Mr. 
Jones. 

C. W. W. 



Exhibit No. 348 

[Airmail #84] 

Fkbrltary 8, IdoS. 
Capt. Clifton K. Tea vis, 

% Compania de Ariaciou Faucett, S.A., Apartado 1429, Lima, Peru. 

Dear Cuff : Your two letters of January 26th, addi'essed to Sliannon and 
myself, have just arrived, also your cables regarding the delivery of the first 
two Hawks for Bolivia. 

It was a great satisfaction to know that the Bolivian Government was 
entirely pleased with the performance. I agree with you entirely on the policy 
of nondelivery of equipment until all government accounts have been settled. 
Someone in our organization slipped up on the shipment of the first two 
Hawks in consigning tiiis material to La Paz. and when the other two Hawks 
go South, they will be shipped to your order so that it will be impossible 
for the Government to take them out of Customs until you have personally 
cleared them. I realize the difficulties that you have been up against and 
we can only do our I)est. 

Although you say there is an apparent scarcity of government funds, I still 
believe that Bolivia will be required to purchase additional aircraft equipment, 
and the dollars will be found somewhere when required. In my opinion, the 
real activity is just beginning, not only in the Chaco, but around Leticia as 
well. National pride and stubbornness will not permit these countries to 
quit until they blow up through absolute bankruptcy, and while the show is 
going on, it is our job as distributors of munitions to get our share. If we 
don't, someone else will. 

I am firmly convinced through personal conversation, while in Buenos Aires, 
that moral and financial support is coming and will continue from Argentine 
on behalf of Paraguay, and Bolivia will be required to find similar support 
either through the Standard Oil Company, or through wealthy nationals, such 



MUNITIONS INDUSTRY 931 

as Patino, whose business and financial interests are at stake. I am still of 
the opinion that before these two " comic opera wars " are finished in the 
north and south that practically all of South America will be involved — so 
watch your step and play your cards accordingly. 

I am anxious to get down there again as quickly as possible, and will 
probably make the grade between 6 to 8 weeks at most. 

We can look for considerable activity on the part of Mr. Jones and his 
friends sometime during their coming winter (June, July, August). 

While in Peru, and as soon as convenient, give me a frank picture of the 
Peruvian situation, and do what you can to assist Faucett in closing additional 
business there. For your confidential information, their friends to the ex- 
treme north are still purchasing heavily. You might use this in your official 
conversations but in a very careful and diplomatic manner. 

I have just heard that they intend to assemble the Hawks at Las Palmas 
instead of Ancon, which indicates that they intend to take them through to the 
Maranon River on wheels and shift to pontoons to reach the Amazon. 

In connection with the Cueto situation, he has written U9 that the Govern- 
ment has officially advised him that they did not request us to withhold his 
commission. Will you kindly mention this to Lopez and, if possible, have 
Lopez write you or us a letter stating that the Government will not sanction 
payments of commissions to any agenf and insist upon direct dealings with the 
Curtiss Company. 

Jerry Van Wagner has informed me that efforts are being made to dispose 
of the Hawk and the Falcon now in our factory, and with which you are 
lamiliar, to Bolivia for a certain price. Do what you can to promote the sale 
of these two ships, as such sale will have a direct bearing on my future deal- 
ing with "Jones." I would like to unload them as quickly as possible so that 
I can begin other negotiations for the near future. 

Shall be very glad, indeed, to purchase for Melgar the equipment which 
you itemized, and will immediately take the matter up with the Consul General 
in New York. I would like to make Melgar a present of this eipupment but 
it is impossible to do so, but we will give him the advantage of our best prices. 
We can also take care of the flight instruction of Melgar's son at the Valley 
Stream field, and will secure the dope on costs as quickly as possible, and take 
this up with the Consul General. 

The office sent to you on December 7th the photographs and specifications 
you mention. These were sent to you, care of Lopez. If you were unable to 
pick tliem up, let us know. We are also sending you immediately a supply of 
stationery, air-mail envelopes, etc., in care of Faucett in Peru. These will go 
forward in possibly several packages in order to get by the Customs. 

By the way, for our records, is the parachute which you are using the one 
with my name stencilled on the harness? 

I think of nothing more at this time. 

The best of good luck and good wishes to you and Mable and the youngster. 
Sincerely yours, 

C. W. Webster. 

Exhibit No. 349 

Curtiss-Wbight Export Corporation, 

La Paz, Bolivia, October 26, 1933. 

Dear Owen : Am writing this letter at midnight — just returned from dinner 
after a late session with Loi>ez and the Minister of War. Our plans have 
somewhat changed. Cliff, instead of going along with us tomorrow, is leaving 
for the Chaco on Saturday with the Minister of War and the chief of staff 
for a conference with Gen. Kundt and aviation officials at the front. The 
Government wishes to acquire 10 hirge lioml)ing pianos and it is a choice between 
Junkers and ourselves. Lopez and the Minister suggested that Cliff fly down 
there with them and the job is so important that we decided that if necessary 
we will have to delay the Argentine business. I'll go along to Santiago and 
across to B.A. and he will join me there just as soon as he can make it. He 
may be a week late but we'll have to make the best of it. 

The flnancial end of the job is naturally all important. Lopez wislies to 
make a deal with us for the bombers and probably other material which 
will run to possibly between $800,000 and $1,000,000. His suggestion is that 



932 MUNITIONS INDUSTRY 

they make an advance payment of 25% with a possible contract and tlie 
balance in monthly payments over a period of 18 months with the Banco 
Central of Bolivia guarantee back of the contract. The only thing I could tell 
him was that I'd take it up with the New York oflBce. Personally, I am sure 
that such a contract is as good as gold, but, of course, JAB and the others 
will have to be satisfied. The Banco Central is naturally the Government 
bank and receives all the Government's income. The income from tin alone is 
about $200,000 a month. This letter will reach you about the time I arrive 
in Buenos Aires and if JAB and the others think it is important enough they 
can phone me at the Plaza Hotel in B.A. It is my opinion that no definite 
decision will be reached until I have returned to New York but, on the other 
hand, they may rush their program. It is my intention as I told you in my 
other letter to return here the latter part of January. If we cannot accept 
the Government's proposition the business will probably go to Junkers or 
United or the British who seem to be inclined to accept similar terms. Please 
take this proposition up with JAB and in fact let them read this letter and 
then give me their reaction by cable in B.A. 

Hope we can come to some kind of agreement as there is plenty of business 
here. Lopez told me tonight frankly and confidentially that Bolivia had no 
intention of making peace until they got what they were after and, if necessary, 
the entire Patino company could back their stand. "Will be waiting for JAB's 
opinion. 

Sincerely, 

Wee. 



Exhibit No. 350 
[Copy] 

April 20. 1933. 

Dear Leon : Thanks for your cable. Sorry things turned out as they did, but 
possibly I can be of use to you even though I'm not on the pay roll. The 
thing I'm most interested in now is the matter of representation. Your cable 
gives me the impression that you are not interested in improving the quality 
and efficiency of your representation here. If that is the case, I'm afraid you 
are making a great mistake, for there is a fine order in the air and I should 
like to see you get it — and if I were with you I'd hope to share to a small 
degree in the profit. 

I refer to an order for 16 Loenings. The Government is, for some reason 
that I have not figured out, in a great hurry to acquire that number of amphib- 
ians and I know that they are giving preference to Loening. They are also 
thinking of Douglas. That latter company has a representative here who is 
about as effective as yours. I am definitely informed that Loenings are wanted 
and in all probability you will be hearing of this through Castro Lopes, though 
so far as I know he had not even gotten wise to the business yet. The clique 
that makes the purchases does not feel that it can do itself justice by dealing 
with them. 

I luive written to Web today, and am writing you to give you the picture as 
it looks to me. The Cia Provendns is a fine outfit for this type of l)usiness. 
I have given Web an idea of tlie firm and of its good connections. Tlie firm 
of Souza Sampacio & Cia, Ltda. Rua General Camara 73. which used to live 
exclusively on government business and which like Mayrink Veiga has staged 
a comeback, is an excellent house. This outfit I lielieve to be as good as 
Provendas, and I doul)t that there is little to choose between these tv.-o and 
Mayrink Veiga. So for the love of Mike, get some action up the)-e in the 
matter of an agent. Almost every day I have the question put to me by army, 
navy, or business people as to why Curtiss does not make an effort or show some 
interest in this market. 

I realize that Web is not losing sight of the financial end of things. To my 
mind, that is one of the most important, and I can say that I feel certain that 
if exchange is given to anyone in Brazil it will be given to suppliers of the 
Government, and of all classes of suppliers, those handing war materials come 
first in the present set up. If dollar credits are not available in advance, then 
sufficient milreis to enable you to buy your exchange in the bootleg market will 
be given. That's where it would be well for you or some other representative 
to be on the job. 



MUNITIONS INDUSTRY 933 

Let me hear from jou as how things are going, and when you will be com- 
ing through here. 

Sincere regards, 

Pierrot. 

Hope you can plan to stay over here a few days, it will pay you. I'm sure. 
But arrange to have your present connection canceled before you get here 
to facilitate your work. 

Cable address : Amcomat, Rio. 

Exhibit No. 351 

[Copy J 

W. H. Smyth-Beograd, 
Belgrade, March, 18, W3:i. 
Mr. Melvin Hall, 

% American Consulate, Ankara, Turkey. 

Deiar Major Hall : On March 13th, I received your telegram from Ankara 
reading as follows : 

" Do prospects justify visit of Vaughan President Wright now northern 
Europe. Telegraph Melvinhall Amembassy Ankara." 

I investigated the matter thoroughly and wired you last night to Ankara as 
follows : 

" Yes for eventual rush orders. Gould of Pratt Whitney working here." 

For your information, it appears that the French Legation in Belgrade has 
been bringing very heavy pressure to bear on the Yugoslavian Ministry of War 
and that as the result, the Yugoslavian air force will probably take Jupiter 
7-cylinder and Jupiter 9-cylinder motors for their main requirements and pos- 
sibly some K-14 for a few special cases. There is talk of using Jupiter 9-cyl- 
Inder motors on some old planes which are reported of doing 400 kilometers 
an hour, and there is a possibility that this plane will also be adopted as 
standard. 

Somebody has put the rumour around here that you have been spending 
such a long time in Turkey because the Turkish Hawks have not come up to 
their promised speed and that you are having a lot of trouble with the Turkish 
Government about this. This rumour has probably been put out by the Fi'ench, 
but in any case if you have time on your way back from Istanbul, it might 
pay you to stop here and to go to Novi Sad to refute the rumour in person. 

At the same time you could break the good news to Stauojevic about the reduc- 
tion in price and the announcement of the SR-lS20^F-5 plane. 

Even if the French should secure the general order for motors and planes, 
I believe we should be able to sell at least a few motors to the air force on 
the basis that if and when a war breaks, the Curtiss-Wright Company will be 
one of the tirst in the position to give them quick delivery on date, and it will 
be well for them to have some practice on these motors so as to know what to 
expect from these planes. 

I understand that Mr. Gould of the Pratt & Whitney Co., has been here for 
the past week working hard on the air force. 

Hoping to have the pleasure of seeing you in Belgrade on your way to Paris, 
I remain, 

Yours very truly, 

(S.) W. H. Smyth. 

(" Exhibit No. 352 " appears in text on p. 778) 



Exhibit No. 353. 

[Copy] 

February 17, 1932. 
A. B. Mercantile, 

Helsingfors, Finland. 

(Attention: Engineer Schroderus.) 
Gentlemen: We are pleased to advise you for your information that the 
Lithuanian Ministry of Defense has ordered from us five (5) Challenger 



934 MUNITIONS INDUSTRY 

engines for installation in their training planes. We believe that you will 
desire to communicate this information to the Finnish Ministry of Defense. 

We would also advise you confidentially that the Turkish Government has 
passed an order to us for twenty-four (l'4) Curtiss-Hawk single seater pursuit 
planes with Cyclone engines, six (6) Fledgling training planes with Whirlwind 
engines, together with a quantity of spare engines. Tliis information is not 
for publication and is to be communicated by you only in a confidential manner, 
should you deem it desirable to inform the Ministry to this effect. 

We enclose herewith a confirmation of our telegram to you of this date, in- 
forming you briefly of the new type of light observation and reconnaissance 
plane which we are now in a position to offer at a remarkably low price. This 
plane has a very high performance and is equally satisfactory mounted on 
wheels, floats, or skis. Should the Ministry be interested we would be pleased 
to forward full details of speciflcations and performances. 

With kind personal regards from the undersigned. 
Yours very truly, 

Curtiss-Wright Export Corporation, 
Melvin Hall, 

Vice President & General Manager. 
MH 
EMG 
enc. 1. 



(There was no exhibit marked " No. 354 ") 



Exhibit No. 355 
Aw Mail 
185 

FE33RUARY 9, 1933. 

Mr. Elmeb J. Faucett, 

Compania de Avlacion Fancett, S.A., 
Apartado 1^29, Lima, Peru. 

DELiR Slim : Just received a letter from Jerry Wagner stating the Peruvian 
Government is insisting upon a duty of 5 percent on a declared value of $3,000 
for bringing the " Rambler " into Peru from Chile, and is also insisting that the 
duty be paid in Chilean pesos at an exchange of 45 pesos to the dollar. This 
is the bootleg rate of exchange — the official Government rate being 16.50 pesos 
to the dollar. The Peruvian Government is entirely out of order in their 
demands. Will you kindly see what you can do about it? 

If the " Rambler " is taken into Peru, please have it definitely understood 
that the machine does not belong to you, but is the property of the Curtiss- 
Wright Export Corporation of New York. This is for the purpose of pre- 
venting any possibility of confiscation during the period of the Government's 
little comic-opera war. 

Sincerely hope the work of setting up and delivering the Hawks will progress 
smoothly. Jack Jenning's dad had a letter the other day stating that it 
was probable that the Hawks would be assembled in Las Palmas, instead of 
at Ancon. This leads me to ])elieve that they intend to ship the pontoons 
up the Maranon River, and fly the ships on wheels to that point, instead of 
going in directly from the west coast over the hills to the Amazon with 
the pontoon equipment. 

Is th&re any possibility of selling Peru additional Hawks or additional 
equipment of any kind? 

I am very anxious to get back to Lima as quickly as possible and may be 
able to leave here within the next 4 or 6 weeks. 

Please remember that no spare engines have yet been purchased for the 
Hawks, so please bring a little pressure to bear on the Air Corps officials and 
on Mr. Fardo, and see if this business cannot be concluded in the near future. 
For your confidential information, you might diplomatically inform interested 
parties that your neighbor to the extreme north is still purchasing in large 
quantities. Do not overlook such items as bombs, ammunition, machine guns, 
equipment, etc. 

My kindest regards to all the boys and best of luck. 
Yours sincerely. 

C. W. A^'e:bstek. 

P.S. — Are you serious about the little party on March 4? 



MUNITIONS INDUSTRY 935 

Exhibit No. 356 

[Copy] 
338 November 1st, 1933. 

Mr. Joaquin Sampep. H. (Umeta «& Samper), 

Apartado Postal 536, Bogota, Colombia. 

Dbiar Mr. Sampeb: Sorry to say that the press of other matters has prevented 
my writing you recently. 

Lt. Gonzalez arrived here and delivered the two films which we have found 
very interesting to see. I am having copies made and will return your nega- 
tives when this is completed. I am somewhat at a loss, however, just how to 
return them as I imagine there would be all kinds of custom difficulties if we 
simply mailed them to you. Please let me know, therefore, the procedure we 
should follow in this connection. 

I am very favorably impressed with Lt. Gonzalez, and we have arranged, 
together with Mr. Olano, to take him into our factory in Buffalo just as soon 
as the necessary government permission is obtained, where he will have an 
opportunity to study the methods which we employ in the manufacture of our 
aircraft. Mr. Olano felt that this was the purpose to which he wished Lt. 
Gonzalez' efforts directed. You may be sure that we will do everything to see 
that his stay in Buffalo is pleasant, interesting, and instructive. 

We have recently signed with Mr. Olano a contract covering one more 
Trainer. The price at which the plane was to be sold is $6,22r).00 f.o.b our 
factory, St. liOuis. While the contract is prepared and signed here, Mr. Olano 
explained that, due to the emergency situation no longer existing, it was neces- 
sary to have this contract approved in Colombia before we could proceed with 
the order and receive the customary deposit. Although this contract was 
signed on October 16th, we have not yet been instructed by the consulate here 
that authorization has been received from Colombia. You might look into 
this matter in Bogota and see if you can hurry it up. 

In one of your recent letters you refer to the attack-type military monoplane 
which we are building under contract for the U.S. Army — Army designation 
A-12. We have not sent you any information on this plane other than the 
official release due to the fact that we are not permitted to give out any 
information on this plane by the U.S. Government. This is in accordance with 
their customary policy whereby newly developed planes are not released for 
export sale until they have been one year in operation by the U.S. Government. 
We will be very pleased indeed to submit full specifications and details on this 
plane just as soon as it is permitted by the Government here. It will be very 
interesting for Lt. Gonzalez to be in Buffalo while we are building up these 
forty-six planes now on order for the Government. We expect the first of these 
to be completed along in December, so he will be there just at the right time. 

When we will be able to offer these planes for export sale, we do not know, 
but it may be several months before we can do this. Meanwhile, I think you 
should concentrate your efforts in endeavoring to get further orders for Hawks 
and Falcons, as we feel that the Colombian Government, now that they have 
made such a splendid advance in building up an air force, should not permit 
these efforts to lag. There is no telling when they will need a very strong air 
force. 

We also suggest that you give very serious consideration to the Condor 
bomber, full particulars on which we have recently submitted to you. We 
know of no better plane in the world which is available to the Colombian 
Government to be compared with this Condor bomber. 

Sometime ago you indicated that the Colombian Government would replace 
the Hawks and Falcons which had been lost. We are very anxious to know 
what the developments are along these lines. 

According to Lt. Gonzalez, the current opinion in Colombia is that the nego- 
tiations with Peru will come to naught, in which case Colombia will again be 
faced with the necessity of a strong air force. We know, as a matter of fact, 
that Peru has not been idle in adding to their equipment, and, unless Colombia 
maintains and increases their air force which they have now started, they will 
lose the advantage which they now have. 

We note with interest your activities in appointing a representative in Call 
to be near the school, and we should be very interested to receive reports 
of the school's operation and advices in connection with our planes operating 
there. You will recall that some time ago you submitted reports in connec- 



936 MUNITIONS INDUSTRY 

tion with various complaints about the Trainers. We liave written you fully 
in this connection and are awaiting your advices as to what action we should 
take. We want the Colombian Government to be thoroughly satisfied with 
the equipment which they have purchased from us, and as you know we have 
offered to make good any defects that there are, but we must know what 
these are. 

We have sent, as you requested, a number of booklets to your Call office. 
We will, of course, continue to correspond directly with you in Bogota as 
in the past. 

I think you know that Mr. Olano has resigned as consul general here in 
New York and has now gone in for aviation in a serious way. He has ar- 
ranged, together with Mr. Santos, to take the United States Navy course at 
Pensacola, where he is now. I have been in conference with him on this 
program for many months past, but as he requested that I treat this confi- 
dentially, I have not felt free to tell you anything about it. I have done 
everything possible to assist him in his plans and will continue to do so. 

It will be an excellent thing for Colombia to have these Navy-trained officers 
available. Mr. Olano is very enthusiastic about the development of aviation 
in Colombia, and with the thoroughly practical groundwork which he will 
obtain during the next year while undergoing his training, it should make him 
not only a most competent pilot but give him great experience and knowledge 
of aviation in general. I am very pleased indeed that he is taking this course. 
He has the great natural ability as a pilot, and I have cooperated with him 
here in arranging for him to do quite a little flying before he went to 
Pensacola. 

Mr. Oscobar is now acting consul in New York and I am confident that our 
friendly relations will continue there. 

We must, however, look to you to actively push the sale of our equipment 
in Colombia, and we trust that you will spare no efforts in endeavoring to 
arrange for the Colombian Government to place some further orders. Any 
information you can give us in connection with this matter will be greatly 
appreciated. 

Kindest personal regards. 
Sincerely, 

Curtiss-Wkight Export Corporation, 
(Sgd.) W. F. GouLDiNG, Vice President. 
WFG/f 

P.S. — Have the models for the minister of war been located? 

P.P.S. — Have just received your letter dated Oct. 28th, #465. We have not 
received any report from Todhunter outlining further details in connection with 
the troubles experienced with the Trainers. Kindly check up on this and send 
us a copy. 

I have noted your remarks about the models and hope that these will be 
located very shortly. Please keep us advised regarding the developments of 
your investigation. 

W. F. G. 



Exhibit No. 357 

Lima, December 16th, 193S. 
Mr. Owen Shannon, 

Curtis s-W right Export Corp., New YorTo City. 

Dear Mr. Shannon : I have a number of notes and communications on my 
desk not pertaining to any direct interchange of letters between ourselves but 
that I felt like writing to you about if for no other reason than that of giving 
you a feel of the pulse in Peru. 

Sales of airplanes are off for the time being, principally for lack of funds. 
The arrival of the last of the English ships together with the arrival of the 
first batch of French airplanes has probably been just as important in slowing 
up my work. The political situation in the country has taken a turn towards 
the bad, and I understand from Web that the Rio conference will turn out to 
be useless. 



MUNITIONS INDUSTRY 937 

The Peruvians apparently have just received a good burning on the Fairy 
Fox. This ship at sea level cannot catch up vs'ith our old Stinsons, with the 
Stinson cruising at 1,750 r.p.m. and the Fairy running wide open. I'm thinking 
the Colombians will have a few good chuckles with their new Falcons at all 
altitudes under 15,000 feet and in all probability at the high altitudes as well. 
These things are being pointed out to all the oflScers not concerned with the 
purchase of the English and French equipment. 

The first French airplanes to arrive have been Morane trainers with 
120 hp. Lorraine engines. The ship looks flimsy compared especially with the 
Fledglings and the Consolidated jobs here. The French pursuit ships are the 
Petrel (probably a Nieuport) with 500 hp. Lorraine engines. This ship is a 
high-wing monoplane with ic^ing radiators. The French claim 35,000 feet ceiling 
but in South America, very few people believe a Frenchman anyway. 

I am unable to get a decent figure for the Wooten Falcon. They have offered 
a price of $5,000.00 which is ridiculous and it appears improbable that they 
will pay more unless we get a change of inspector generals, at which time I 
could bring the matter up again. Please advise Web in this connection. This 
ship needs recovering badly and I feel that the price agreed to between Web 
and Faucett is reasonable. This ship should be flown at least once a month in 
order to keep the motor from rusting, even though the motor is being turned 
over a few times once a week. I think the Ecuadoreans might buy this ship if 
it was recovered ; why not contact Flores Guerra about it? 

The trigger motors have arrived and I am attempting to have orders issued 
whereby I can be assured that they will return the old ones. 

On our bomb quotations, we are lower than any other American quotation 
but still a little higher than the Vickers people. Our deliveries are far superior, 
however, and we stand a good chance of securing this business. 

As regards your #10 of the 28th ulti., better send me along the three instruc- 
tion books as requested. All the ones previously sent to the Faucett Company 
have been properly distributed. 

I understand thru Web that Casey has a new portable boundary light. We 
might be able to sell some here for use down in the jungles. Web had with 
him a working model that I would like to get if he brought it home with him. 

Will you be kind enough to mail me a pair of "American Transport " goggles 
with calobar lenses. These are for my own use. I will mail you the necessary 
funds the moment I hear from you. 

Proposals have been submitted on all the items we have exchanged cor- 
respondence about. I am still waiting for prices on horizons and directional 
gyros. Will appreciate this information as soon as available. 
Sincerely yours, 

Dan E. Tobin. 



Exhibit No. 358 

March 15, 1934. 
To : Tobin, Lima Peru. 
From : Webster. 

Good work have received deiwsit. Stop. Airmail contract immediately and 
have minister marine instruct bank Chase to establisli irrevocable credit balance 
Stop. Confidentially your competitors have just placed order 23 additional 
Falcons, 15 Hawks, but no deposit yet. Stop. Strongly recommend Peru make 
deposit inunediately additional Hawks, Falcons, for delivery priority. Stop. 
Your present schedule ends May 28 but starting May 14 can deliver two addi- 
tional airplanes each week until .Tune 1st, then four each week until July 1st, 
then nine per week but you must act inunediately. Stop. Can begin delivery 
Ospreys forty days at rate of two possibly three each week depending quantity 
c.i.f. price $18,500 each including two l)ombracks. machine guns, and $1,000 
commission. Stop. Have guns for nine Falcons, tliree Hawks, but Colt factory 
swamped possibly neces.sitating Euroi'eaJi guns for additional contracts will 
this be satisfactory. Stop. Recommend using Cyclone two engine and aluminum 
finish. Advise will telegraph later regarding Condors and used planes but 
sell Wooten Falcon for $10,000 including $1,000 commission. Stop. How about 
parachutes. 



938 MUNITIONS INDUSTRY 

Exhibit No. 359 

[Copy] 

[Via ail- mail— #101] 

May 3, 1933. 
Captain C. K. Travis, 

c/o America/)}, Consulate, La Paz, Bolivia. 

Dear Cliff: Tlie Faircliild Company is anxious to know wliat the prosijects 
are for the sale of some of tlieir aerial camera guns in Bolivia, catalogues and 
prices on which were sent you with our letter of March 9th. As I advised you 
at that time, Fairchild have given us temporary exclusive representation on 
their guns, which will not be made permanent unless we can produce some busi- 
ness for them. As we expect this gun to be a good seller, we are anxious to 
get their permanent sales rights on it and hope you can get an order for some 
in the near future. 

During the past few days the New Yorli papers have carried stories of the 
Bolivian planes bombing some of the Paraguanian rail centers with consider- 
able success. We are glad to see they are at last making some real use of their 
planes, and hope their success will convince them of the advantages they would 
gain by getting more of the Hawks and Ospreys. 

From one of your recent cables, we thought this might be the case and that 
they planned ordering three more Hawks and six Ospreys. 

We hope these orders will be forthcoming quickly, as Buffalo will soon be 
cleaning up their present Hawk production, and if the order came in now we 
could give them nnich better delivery than later on. 

If there are any prospects of getting some business for cartridges, links or 
bombs, let us know the sizes and quantity, as we believe we can now quote 
prices that should get the orders, particularly if we do not have to include 
any agent commissions. 

As Web probably wrote you, Jinnny Doolittle put on a successful demonsta- 
tion of the Hawk at Shanghai and is now on the way to Canton to demonstrate 
the first of the lot of eighteen ordered by them. 

What is Bolivia using for training ships? 

Our Trainer with the five-cylinder Whirlwind boosted to 220 hp., would 
give them pretty good performance at La Paz. We could also equip it with 
slots, if desired. 

You could offer them the standard two-place Trainer with the 220 hp. Wright 
in lots of six at $6,000.00 c.i.f. Arica. The slots would cost an additional $300.00. 

We could ship the first Trainer in five to six weeks and at the rate of two 
per week thereafter 

We have supplied some of these Trainers to China, and are now building six 
for Colombia. 

We are also building three Fledglings for Colombia and if we could get an 
order in the next few weeks for some for Bolivia we could start shipment 
in about six to seven weeks and one per week thereafter. 

On a lot of at least six Fledglings, equipped with the seven-cylinder Whirl- 
wind boosted to 340 hp., without armament, you can quote $15,000.00 c.i.f. 
Arica. 

The armament, consisting of one synchronized gun, one flexible scarf mount 
and flexible gun, and two A-3 bombracks, would cost $2,000.00 per plane extra. 

The 340-hp. Whirlwind Fledgling will give a performance at La Paz of 110 
m.p.h.. high speed, landing speed, 30 m.i).h., ceiling. 23.000 feet. 

Until we started building the three for Colombia we had not been in pro- 
duction on the Fledglings since 1930. However, it should be especially suitable 
for primary military training at La Paz. As you probably know, Brazil still 
has. I think, eight in use of the ten (used) ships they bought in 1931. These 
ships had all had considerable use here before being sent to Brazil. 

Colombia also has three Fledglings still in use that they bought in 1931. 

In September we offered used Fledglings through Cueto, but no more of these 
are available now. 

Colombia now has on order three more Hawks, three Falcons, three Fledg- 
lings, and six Trainers with the 195-hp. 5-cylinder Whirlwinds. 

We have heard a rumor tliat Peru has bought two Corsairs, but have not yet 
gotten confirmation of it. 

I sure hope you can close some more orders soon, as things have been slowing 
up here during the past few weeks, and there does not seem to be much other 



MUNITIONS INDUSTRY U39 

bu^^iness in sight, except possibly Argentina and China. Several of the Central 
American countries are talking about planes, but they are all so broke we can't 
expect to get much from them. 

I hope you are not finding that altitude too much for you. 
Regards from the crowd here. 
Sincerely, 

Owen Shannon. 
OS:D 



Exhibit No. 360 

CuRTiss- Wright Export Corporation, 

^eic York, February 10, 1933. 
Mr. Lawrence Leon. 

Avenida Roque Saenz Peiio 890, 

Buenos Aires, Argentina. 
Dear Lawrence : Newspapers the last few days have been carrying stories 
about the pending and probably political and revolutionary upheaval in 
Uruguay. 

I believe it would do no harm to slide over to Montevideo as soon as con- 
venient and contact the proper officials in an effort to promote the sale of 
aircraft or any class of munitions. Also, in this connection, do you think it 
advisable to make a personal contact with Paraguayan Government officials 
in Asuncion. 

I know that this is a rotten trip to make up the river, but it seems to me 
that the Bolivia-Paraguay trouble has not yet reached its peak and the condi- 
tions instead of becoming better are gradually getting worse. If such is the 
case, it will be absolutely necessary for Paraguay to find the money for the 
purchase of aircraft and other munitions. If we are able to sell them any- 
thing, we will have to work very carefully and quietly, and possibly work 
through you, as an individual, as the Bolivian Government would naturally 
raise " merry hell " if they believed that we were dealing with tlieir enemies. 
Yours sincerely, 

C. W. We^jster. 

P.S. This morning's newspaper carried a short story about Berrisso's pro- 
posed flight to New York, up the west coast. Do you think he will actually 
start this time and, if so, let me have any information you can as we will 
naturally like to see something of him when he arrives. 

c. w. w. 



Exhirit No. 361. 
[Copy] 

CuRTrss- Wright Export Corporation, 

La Pas, Bolivia, May 11, 1933. 

OS #10 

Mr. Owen Shannon, 

Curt is s-W right Export Corporation, 

21 West 51th Street, Neicn York. 

Dear Owens: This will acknowledge your letter #101 which was received 
today. Thanks for sending it c/o the consulate; that enables me to get this 
letter off on the mail tomorrow morning. 

Regarding the camera guns, I went to work on that as soon as your letter 
and description was received, or rather, as soon as I arrived back in La Paz 
in March. The Government here has a flock of French camera guns that were 
purchased some years ago and I was informed definitely that they were not 
in the market for more guns. As a matter of fact, the attitude here seems to 
be against anything that cannot be used for actual fighting. For example, the 
practice bombs did not go over at all. I pointed out that actual money could be 
saved by training their pilots to some degree of efficiency in bombing, but no 
interest nor action was taken. They still have a number of old porcelain 
l^ractice bombs but there has been no effort made to use them. I will tackle 
the camera-gun proposition again, but I am sure there will be no results. AH 



940 MUNITIONS INDUSTRY 

attention here is centered on actual fighting and they lose sight of the fact 
tliat the only way to produce efficient fighters is through proper and intensive 
training. 

You are quite right in assuming that the Bolivians are making good use of 
our planes in bombing. They have created a real menace to the Paraguayans 
as well as u deep fear. The Chief of Operations in the Chaco (Air Corps) 
has been urging the Government for several weeks to buy six more Ospreys 
and three additional Hawks, and the decision now, after having passed all the 
minor departments and the General Staff, rests with General Kundt, Com- 
mander in Chief of Field Operations. As I wrote Web, I expect a definite 
answer from the Government late this week or early next week. Slowness and 
red tape is still the order of the day here. There also might be a chance to sell 
some Travelair bombers. Some of the Brass Hats who are in positions of 
power here, although they know nothing whatever of aviation, seejii to think 
that the answer to the whole situation is a flock of 4,000-pound bombers. The 
remark was made that the Ospreys and Hawks were toys because they only 
carried some 460 pounds of bombs. That, of course, is the natural reaction of 
these people after all of these bombing expeditions with really good results. 
They have gone bomb-minded. 

As regards bombs and cartridges, Europe has that pretty well sewed up as 
they can offer them at much lower prices than we possibly could on account of 
the exchange and cheaper labor. 

I was sure surprised to learn that Jimmy Doolittle is in China. I'll bet my 
last dollar that he sure put on a real show for the Chinese. Sure would like 
to be over there to test and deliver the Hawks. 

Bolivia still has a few Vickers Vendaces of a near pre-war vintage that they 
are using for trainers. They also plan to repair and place in service some old 
French Caudrons that have been lying around in the hangars for a number 
of years. They are not interested in new trainers at present. Fighters is 
what they want. 

I am pushing our equipment with every ounce of energy but I think that 
aside from the Ospreys and Hawks, and possibly the Travelair bomber, there is 
little chance of introducing new equipment. Anyway, it is a consolation to 
know that aside from three Junkers tri-nK)tors presented to Bolivia by Patino, 
there hasn't been a single plane sold here with the exception of our own. 

Webster & Ashton will soon be able to take over here on business details 
and as soon as I finish the technical side of the negotiations I am going to shag 
my fanny out of here and go down to the coast where I can get a breath of air 
with some oxygen in it. 

Best of regards to the gang in New York. 
Sincerely, 

(signed) Cliff. 

Exhibit No. 362 

[Copy] / 

(Casilla 627. Cable address "Recneps") 

James H. Spencer, 
Santiago, Chile, Fe'bruary llf, 193S. 
Mr. C. W. Webster, 

Curtiss-Wright Export Corporation, 

27 West 57th Street, Neiv York. 
Dear Web : Your letter of Jan. 31st duly received and you have of course 
been advised by Jeri-y of my negotiations with him. It was for this particular 
reason that I did not reply to your cable of December 30th. 
The situation at present is as follows: 

Paraguay, with whom I have been dealing thro' the minister here in Santiago, 
and also thro' an official of the same Government in Buenos Aires, have shown 
an interest in at least the " Hawk " that is here. They made a counter offer 
for tins machine equipped with armament and bomb racks, but the offer was 
so ridiculously low that Jerry told me that it was no use even to consult you. 
Only yesterday the subject came up again, and I have stood pat on the price 
of $20,000, including armament, which, as you will see, does not cover very 
mucli margin, as against your figure of $15,000 without guns. 



MUNITIONS INDUSTRY 941 

I am of course in hopes of something materializing, but all these countries 
seem to take a mouth of Sundays to decide anything. 

On the other hand, Bolivia with whom I was also negotiating, showed an 
interest, and the Bolivian Minister here did quite a lot of cabling over the 
subject. 

Then Echenique started negotiations at a lower figure — with tlie result that 
my early work was lost. As I now untlerstand the situation, Bolivia will buy 
if Chile loill concede the permit to fly these two machines to La Paz. 

The ditiiculty of more than one person dealing on this kind of business is 
obvious, and governments will not go very far with any intermediary unless 
he can show proper credentials. In the pre.^ent case it was one of lower 
price, and a desire to buy two planes so that they should not go to the enemy. 

It now remains to be seen wlio will eventually, if at all, obtain possession of 
these macliiues. I have advised Paraguay that tlie one who puts up the money 
first in New York will be the owner. 

Chile, Argentine, Peru, and Brazil are trying to bring about a settlement of 
the Chaco dispute, and the two first countries (on the surface at least) are 
trying to prohibit any war munitions reaching destinations thro' their 
respective countries. 

1 don't see how they expect to force such an issue, as both the warring 
countries have international treaties on this point, which gives them full 
privilege. 

In the meantime both countries are fighting, with the long odds in favor of 
Paraguay. 

If you plan returning here before long, please let me know, as I would like 
to take advantage of your trip to ask you to bring me a few things. 

With kind regards. 



Sincerely yours, 



(Sgd.) James H. Spenceb. 



Exhibit No. 363 



Cubtiss-Wright Expoet Corporation, 

Casilla 3098, Los Cebbillos, 
Santiago, Chile, March 15th, 1933. 
Mr. O. W. Weestee, 

Curtiss-W right Export Corp., 

29 West 57th St., New York City. 

Dear Web: We cabled you on the 13th that the Peruvian Ambassador de- 
manded immediate action with regard to delivery of the Hawk and Falcon, 
and the following day received your cable " O.K. delivery." From this mes- 
sage we understood that the $36,000 held by the Chase National Bank had 
been placed to your credit without restrictions. 

Now, the whole trouble is in getting permission to fly the ships out of the 
country. Since the money was first deposited in New York, Pancho has come 
along almost every day to say that he expected authorization the following 
day, and we are now in just the same fix as we were then. The Peruvian 
Ambassador came out to the factory on Monday and took up a very furious 
attitude over the business, saying that he had complied with his part of 
the contract and that it was up to us to deliver the goods. It seems quite 
evident that Pancho has been blufl5ng the Ambassador all along by saying 
that as soon as the money was paid the ships would fly away, little thinking 
of the difficulties to be met in trying to do so. With the present action taken 
by the Chilean Foreign Minister to foment peace in S. America, he cannot 
possibly give his consent to allow war material to leave Chile, especially to 
a country engaged in warfare. Consequently, we are stuck in the mud. 

Pancho has just left the factory for the ministry in an endeavor and as a 
last resource to obtain permission to ship the machines by steamer to Callao 
and the Peruvian Ambassador has offered to pay all expense to be incurred 
in boxing and freight. This will not hide the fact that the planes are intended 
for Peru and will become known by everybody sooner or later. So we reall.\ 
think the minister will not offer any kind of facilities. We are at a loss to 
imagine what to do further, as we have thought out every iwssible way of 
getting the machines out of the country, even going so far as trying to get 
permission to fly them to the States. 



942 MUNITIONS INDUSTRY 

Pancho sold the ships placed at the factory ready for flight so he says, so 
what more can we do? He has requested us to cable you place the $3,000, on 
each ship to his credit in the National City Bank, but we have deemed it 
necessary to wait until something definite has been arranged about getting 
the planes away before doing so. If the ships cannot leave the factory (we 
have specific instructions from the authorities that under no circumstances must 
the leave the hangar) we may even be asked by the Peruvian Ambassador to 
refund the $36,000 and consider the contract rescinded. Should anything de- 
velop one way or the other we will cable you immediately. 

You will doubtless have heard of the unfortunate mishap which befell McMil- 
len last Saturday in the fiying from Mendoza to Santiago in a Fairchild, 
resulting in his death and that of the radio opei-ator. From official reports 
he apparently had motor failure and tried to make a landing on the top of 
a small mountain, but in trying to get in short, Smithy seems to think that he 
caught a down current which made him crash into the side just a few meters 
from the top. Both McMillan and his companion were found burnt to a cinder. 
The accident happened only 30 kilometers from Mendoza. 

The Rambler is ready to fly up to Peru and Kesler will take off as soon as 
we head from Faucett as to destination. 

No expense has been incurred on export dues, these being waived by the 
Peruvian authorities on instructions from Lima. 

Hoping to see you down here very soon and may you bring some of your 
usual luck with you. 

Kindest regards and wishes. 
Yours very sinppfely, 

J. V. Van Wagner. 



KxHiBiT No. 364 

[Copy] 

Cuetiss-Wbight Export Corporation, 

New York, March 30, 1933. 
Mr. Jerry Van Wagner, 

Casilla 3098, Santiago, Chile. 

Dear Jerry : Your March 22 air-mail letter arrived this morning. 

Was glad to hear that the Hawk and Falcon got away safely and with 
oflScial permission. 

Again please remember to refrain in all of your letters sent to this office 
from mentioning the name of Orsini. You can always refer to him as " Jones." 
Also do not converse with anyone regarding sales of machines or equipment 
going to other countries or any transactions concerning them. As mentioned 
in my previous letter, conditions are becoming very acute and I do not wish 
our files to contain anything with a bearing on this business. You can always 
send any necessary letters to my home and thereby keep them out of our files. 
It is perfectly all right for Pancho to mess around with things providing 
his activities and statements do not conflict with our present arrangements 
in other countries. 

It is true that the Ir«nch closed a contract with the Peruvian Government 
for 23 or 35 million francs credit which is to be spent exclusively for French 
equipment — complete airplanes, armament, radio, photographic, and other ma- 
terial. The Peruvian Government agrees to pay 700,000 francs per month, 
and is calling for complete delivery in 8 months. If the amount is 35 million 
francs ($1,400,000) the payments of 700,000 francs ($24,000) monthly will 
extend over a period of 5 years. A contract of this nature is not at all 
acceptable to us and we would not even consider it. I am quite sure that 
after the material has been delivered, the French outfit will find itself very 
much out of luck on the remaining payments. This contract is identical in 
many ways with the previous contract with United Aircraft, except that the 
amount has lieen increased and the time has been extended. In view of past 
Peruvian Government performances and the fact that United Aircraft is still 
holding the bag for about $700,000, I cannot possibly conceive of anyone stepping 
into another and similar situation. I believe it is merely a move on the 
part of the French, with French Government backing, to make a gift to the 
Peruvian Government of this aircraft equipment for the purpose of establishing 
French equipment in Peruvian Government service. I also believe that the 



MUNITIONS INDUSTRY 943 

French will follow their usual practice in handing the Peruvian Government 
a lot of junk and that the ultimate reaction will be very much in our favor, 
I hate to think of the Peruvian pilots flying this French equipment against 
Colombia and the 700 h.p. Cyclone Hawks. 

I am giving you this information so that you may be in a position to offset 
any adverse publicity which may be passed around Santiago. 

At the present time, I understand that 12 Breguet, 12 Potez, and 12 Morane 
machines have been designated and that training planes also will be provided. 

Please see Commandante Aracena or other Air Corps officials and advise 
them that you have been instructed by the New York office to close the Los 
Cerrillos factory unless the Government sticks to its agreement to i^rovide 
necessary work to keep it going. This means that the Government will have 
to order the necessary material to rebuild additional Hawks and Falcons. 

Also, you have not replied to my previous question as to what has become 
of the dollars that were sent to Chile for the credit of the Chilean Government. 
Has this money been spent for the purchase of material in fureign countries 
or is it still in the National City Bank? 

It is absolutely impossible to maintain the factory on an inoperative basis 
as its costs are prohibitive. 

Another matter which I wish you would take up immediately and possibly 
through Dias Lira is the question involving the possible manufacture in the 
Santiago plant of airplanes intended for other South American countries. 
This is in view of a possible embargo on the part of the League of Nations and 
the United States Government. In other words, would we be permitted to 
ship material into Chile for assembly and fabrication for such countries as 
Colombia, Ecuador, Peru, Bolivia, etc. 

Another point which you brought up in a previous letter is the fact that the 
Chilean Government would undoubtedly require us to pay a tax on the 10 
Falcons which were sold last summer and fall. If this mater comes to a head, 
please remind the Chilean Government that we paid to them $3,000 com- 
mission on each of these airplanes and that we certainly do not intend to 
pay the Government additional sums on this business. You can remind 
Aracena, but I do not believe that he is in back of such an idea, or any 
other officials, such as our two young laywer friends, that they are in no 
position to ask us to pay a tax on this business. I think you understand what 
I mean. 

Give Rogers of Irving Air Chute Company all the assistance you can. I told 
the Irving Company that the Chilean Government had not repacked their 
parachutes since the day they purchased them two or three years ago and it 
is highly advisable that some steps be taken to install a parachute depart- 
ment in the Army Air Corps for the proper handling and servicing of their 
chutes. Also remain as closely as you can to Rogers and see that he makes 
no price proposals without first consulting us. He did this in one or two 
other countries and it seriously embarrassed our business dealings. He must 
remember that Curtiss-Wright Export is selling representative of Irving in 
South America and that he must be guided by our policies and our prices^ 
He is a direct factory representative but has no authority whatever to quote 
prices to our customers without first consulting us. 

Regai-ding Byrne and the story you told Woodling, I feel that there is some 
action that you can take to prevent him from circulating around Santiago and 
recounting stories of his connections with Curtiss-Wright. If ho is still a 
British subject, why not take this matter up with the British Embassy and 
see if something cannot be done to curb his activities. 

Is Merino still in Santiago and what is he doing? The last time you men- 
tioned him he was connected \^ath the National Air Lines but recently Mac- 
Gregor told me that he had left his outfit and was doing nothing. 

Also is Marcial Arredonda still in the Air Corps and what is his connection? 

Our particular situation in Chile involving the factory is slowing up 
considerably and it is imperative that something be done immediately to make 
the Air Corps realize the factory faces a complete shut-down unless they 
step on the gas, order some material and permit us to proceed with the 
overhaul of some of their cracked-up ships. 

It is highly advisable that you ascertain what has become of the dollar 
acount which we established in the National City Bank in Santiago for the 
Government's credit. It is naturally our desire to draw on this particular 
83876— 34— PT 4 17 



944 MUNITIONS INDUSTRY 

account for the purchase of necessary factory material in preference to using the 
dollar reserve in our own hands in New York and which is rapidly disappear- 
ing. As soon as this is spent, the factory cannot possibly operate. 

Not having been in Santiago for a few months, I have not the true picture 
of affairs but my impression is that Aracena has slowed up and is doing 
practically nothing to keep the ball rolling. Please see him immediately 
and bring" this matter forcibly to his attention. 

Do not forget that we still have available Conqueror Hawk in Holland. 
You might mention that to your friend, the ambassador, but in all correspond- 
ence regarding this particular individual and subsequent sales, I believe it ad- 
visable to carry on your correspondence with me, personally, instead of running 
it through the office in case of possible future percussions. If you were 
able to secure the release of the Hawk and the Falcon going to Peru, it is 
assumed that additional permission could be obtained for other operations. 
Get onto this job immediately and let me have all the information obtainable 
and what we could possibly expect in the way of Chilean Government coop- 
eration or in the way of cooperation from individuals. 

In one of your last cables, you state that the Hawk and Falcon were 
delivered without armament. What happened to the material in the tail 
of the Falcon? 

Kind regards and best wishes to you all. 
Yours sincerely, 

C. W. Webster. 

P.S: Have you sent the Rambler to Peru? 



Exhibit No. 365 

[Copy] 

TJeueita & Samper; H., 
Bogota, Colombia, 8.A., April 3, 193^. 
43/504 

Mr. W. F. GOXTLDING, 

V. pres., C urt is s-W right Export Corp., 

30 Rockefeller Plaza, New York, N.Y. 

Dear Me. Goulding : Since writing you last, March 24, I have received your 
letter #369 of Mai'ch 22. This has served to confound me further, for as you 
know from cables exchanged between us I have been working under a continual 
series of assertions, denials, and confusion. I have only recently been assured 
by the highest executives that the order for the six Hawks and eiglit Falcoiis 
had been definitely placed at last, but your letter under reference, listing the 
difliculties which had been encountered there, together with previous contra- 
dictions, causes me to again doubt that the business has been actually con- 
sumated and so until I receive your written or cabled confirmation I shall 
continue to suffer the harassing uncertainty as to what has or has not been 
done. 

Whereas, I can appreciate your viewpoint regarding your policy of not 
restricting sales to any one country in a certain geographical division, you 
can likewise understand that the position taken by the directors of your 
firm to sell to Colombia's potential enemy has greatly jeopardized future 
sales possibilities to this country. I have, of course, expended every effort 
to counteract the unfavorable impression created at the ministry when tliey 
received the information, but what the result will be over an extended period 
of time only time can tell. As you have undoul)tedly guessed the usual con- 
fusion prevails in that sector and any definite prophesy would be of little 
value. 

Referring again to the discussed order of 14 additional units, I sliould ap- 
preciate being informed at the earliest opportunity under tlie supposition that 
the order has been placed, what arrangement was decided upon regarding the 
machine guns. 

The list of recommended spare parts has been delivered to the proper author- 
ities of the aviation department and I hope to soon be able to advise you of a 
favorable decision regarding the placing of the order. 
Yours very truly, 

Urueta & Samper H. (Sues) 
J. Samper. 



MUNITIONS INDUSTRY 945 

Exhibit No. 366 

CuRTiss Wright Export Coeporatiox, 
Casilla 3098, Los Cerillos, Santiago, Chile, May 6, 1933, 

Mr. C. W. WB3STER, 

Ctirtiss Wright Export Corporation, 

29 West 57th Street, Neio York City. 

Dear Web: Your letter dated April 27th, #86, to hand this morning. 

With regard to the shipment of material to Peru, we have already cabled 
that according to the Chilean customs law, transshipments are permitted in 
any port, without being called upon to pay import duties, but as the material 
is for war purposes, it would be necessary for you to get definite information 
from the Chilean consul general in New York, before embarking on such a 
venture. 

Regarding the other question you wished us to take up with Diaz Lira, and 
about which we have written you previously, we confirm our cable of the 4th 
inst. as follows : 

(Part) "Government issuing decree making effective paragraph 7 your 
agreement Jessen dated 30th Sept. 1932." 

Aracena and the Minister of National Defense are very anxious' that the 
factory should be kept going, and if possible commence on production again. 
The President, Senor Alessandri, is very interested in the factory and would 
like to see our activities increase. 

In my letter of 29th April I wrote about a visit we had from Mr. Bofil, who- 
was interested in buying six planes, with armaments for Peru. We have had 
another visit from Mr. Bofil, and he showed us a letter he had received from 
the Peruvian commercial agent in Valparaiso, whicli proves that the Peruvian: 
Government is actually interested in acquiring six airplanes as soon as pos- 
sible. According to Mr. Bofil the commercial agent has more power in these 
questions, than the ambassador, as he is responsible for the purchase of mate- 
rial and produce for the Peruvian Army. We advised Mr. Bofil that we could 
not do anything in the matter and it would be necessary to make some ar- 
rangement with the Chilean Government if Peru wanted. six plants urgently. - 
It seems that Mr. Bofil is well-known in the Government and has been at work 
trying to get the Air Corps dispose of the three last machines repaired iu 
the factory and three others undergoing repair. The director of material was 
sent out yesterday by Aracena to talk the matter over with us, and the idea 
is for us to take over the six planes — in a figurative way — and for us to sell 
them to Peru. The Air Corps will fix the price and the money will be placed 
to your credit in N.York. This money will then be utilized in buying modern 
equipment for Chile. Everything looks pretty hopeful and the Air Corps are' 
anxious that the business results. As soon as anything definite has been ar- 
ranged I will cable you. 

To our caljle referred to above we added : " Permission Falcon ready few 
days." 

We expect early next week to have Capt. Wooten's Falcon ready for flight to 
Arica with all papers in order. Marcial Arredondo will not be able to fly the 
machine up the coast, but we will get hold of another reliable pilot. Up to now 
Capt. Wooten has no word from Washington that we have taken over the 
Falcon, so we cannot very well take off the numbers and signs until he does. 
Perhaps he will receive this week-end some instructions from tUe States in 
this connection. The only work which will be done is painting out the U.S. 
signs and we will also dope the fuselage. With this covering of dope, I think 
the fuselage will be O.K. and remain in first class condition for a long time. 

As requested we will send the accessories and spare parts to Faucett by an 
early steamer. You suggest British or Italian lines. I think it will be more 
convenient to have them shipped up by one of the Chilean boats, if there are 
no restrictions on such materials leaving the country for Peru. 

Best regards and wishes. 
Yours very truly, 

J. V. Van Wagner. 



946 MUNITIONS INDUSTRY 

Exhibit No. 367 

CuRTiss Wright Export Corporation 

CaslUa 2098, Los Cerillos, Santiago, Chile, 29th April, 1933. 
Mr. C. W. Webster, 

Curtis Wright Export Corporation, 

29 West 57th Street, New York City. 

Deiab Wejb : I confirm the recent cables exchanged regarding Capt. Wooten's 
Falcon. After advising you that the Peruvian Ambassador had told us no re- 
ply to our olS'er had been received from his Government, we received a visit 
fronT a Mr. Bofil on the 20th of this month, with the object of making a deal 
for some interested party in Peru. He gave us to understand that the Peruvian 
Government wanted to acquire urgently 6 airplanes with armaments. It all 
seems very queer to us that outsiders are allowed to deal in these matters and 
from the foregoing it would appear that the Ambassador is playing some card 
with Mr. Bofil. Outside Aracena and the Paraguayan Minister, no one else 
other than the Peruvian Ambassador should have known that Capt. Wooten's 
plane was for sale. As you apparently wished us to dispose of the U.S. Army 
Falcon to anybody, we therefore made the same offer to Mr. Bofil who seemed 
to know the machine was for sale. The day we received your cattle advising us 
to have the Falcon sent up to Arica with destination Lima, Mr. Bofil came to 
tell us that his " client " was about to close the deal. In view of your instruc- 
tions we had to tell Mr. Bofil we could not do the business. We have had the 
Falcon registered in my name and taken out the necessary documents ; we are 
still short of the most important item, and this is the Government's permission 
to fly the ship to Arica and then out of the country. Aracena is trying to use 
his influence with the Foreign Minister and Minister of National Defence, and 
will let us know how he makes out in a day or two. You must not forget the 
great trouble we had in getting the other Falcon and Hawk away. Arredondo 
will return from his vacation next week and we will see if it will be possible 
for him to fly the plane to Arica. 

We cabled you this morning that Capt. Wooten is still without news from 
Washington about the ship being taken over by us, and we hope instructions 
will be cabled him in this respect at any moment, so that we can proceed to 
take out the U.S. Army signs and paint on the new registration number. 

The Rambler has been ready to fly since Thursday, but has not been able 
ito get away owing to bad weather. We secured the services of Senor 
Echegaray (Salavador's friend) and he took off on Thursday morning but re- 
turned after an hour as he could not get through the clouds. We had to 
install a reserve tank in the front cockpit to carry sufficient gas to make the 
hops up tlie Coast to Arica. Also we put in new spark plugs. All expense 
incurred on the Rambler will be charged to New York through our books in 
/the usual way. 

Donnelly left for LaPaz yesterday. He will fly as far as Arica and take the 

rtrain from there to the Bolivian capital. Cliff Travis cabled to say that an 

. autocarril may be sent down for Donnelly. You must remember that from 

;.yesterday we lose Donnelly's time, whilst he is away, at the rate of one dollar 

per hour. 

The. other day we received at the factory one of the two extra fuselages the 
Air Corps wish to have repaired, but I found it in even worse state than the 
rejected fuselages lying on the floor, and in my opinion is beyond repair. I am 
consulting the director of material as to what should be done with this fuselage. 

I am obliged for the photographs and information sent with your letter #83 
of 5th April, and will turn over to -the right quarter the material required for 
publication in the historical album of the Chilean Air Service. I do not think 
any further information will be necessary. 

With regard to your cable enquiry as to whether it would be possible to 
transship material in Arica for Callao, we confirm our reply after consulting 
Diaz Lira on the matter, that the Chilean customs law permits reshipment in 
any port for any outside destination. We suggested, however, that, as yours 
is material for war purposes, you consult the consul general in New York 
wnether any difficulty would be met in effecting transshipments in Arica. Such 
material, of course, could not leave the customhouse, and therefore would not 
pay import duties. You would have to appoint a shipping agent in Arica to 



MUNITIONS INDUSTEY 947 

attend to the transshipments and customs formalities, and we suggested Messrs. 
Grace (Arica Agencies, Ltd.), who have the best facilities in that port. 

We have not heard a word from Pancho yet ; presume he is still in Lima, but 
have no idea what he is doing up there. 

Kindest regards. 



Sincerely yours. 



J. V. Van WAGNE31. 



Exhibit No. 368 



CuRTiss Wright Export Corporation, 

NeiO York, March 28, 1933. 
Mr. jEaRRY VAX Wagner, 

CasiUa 309S, Santiago, Chile. 
Dear Jerry: Enclosed is a clipping from a New York newspaper regarding 
the delivery of the HaMk and Falcon to Peru. I am quite sure that you did 
not deliberately hand out this information as in times 1 ke these it is advisable 
to refrain from any kind of publicity in connection with contracts in South 
America and especially with those countries that are in the state of war. In 
fact, do not release publicity of an.v kind unless instructed from here. 

Today we received a cable from Lima asking us for prices on Colt-Browning 
gun equipment for both the Hawk and the Falcon. I immediately cabled you 
asking what armament, if any, was supplied. I recall that possibly the 
Falcon might have been partially supplied. 

If you have not already done so, please advise immediately by cable to 
my personal address any developments in connection with Wooten's Falcon. 
I prefer to bury this transaction as much as possible as far as the office 
goes in order to prevent any possible adverse publicity. 

The situation involving Peru is becoming very acute and is liable to be 
more so in the very near future. It looks to me like an embargo. 
Best of luck and good wishes. 
Yours sincerely, 

C. W. Webster. 



Exhibit No. 369 

[Via Airmail] 

Castro Lopes & Tebykica 

RUE da ALFANDEGA Sl-A-4 AND TEL. 3-5.304 

CAIXA POSTAL 2101, RIO DE JANEIRO 

RUA S. BBNTO 3C-2A S/LOJA, BALA 17 TEL. 2-1459 

C'AIXA POSTAL 2672, SAO PAULO 

Kio DE Janmro, NovcDihcr Jf, 1932. 
Mr. C. W. Webster, 

President Curtiss-Wriqht Export Corp., 

21 West 57th Street, Neiv York City. 

Dear Sir : Not having heard from you, since your departure for the South, 
we assume that you have returned to the United States via the Pacific coast, 
contrary to your intention of passing through Rio on your way back. 

Complying with your verbal instructions, we withdrew the proposals we had 
submitted to the Government in behalf of your company. Orders were placed 
for 23 Voights. 14 Boeings, and 15 Wacos, and in view of the delay in shipping 
these planes, due to lack of cover for exchange, additional orders were placed 
for other types : 2 Belancas and 20 Faireys. 

Recently 28 more Wacos and 20 Moths have been purchased by the Gov- 
ernment. ' Of the previous orders, 7 Voights, 15 Wacos, 2 Belancos, and 20 
Faireys have so far been delivered. 

Among the planes seized from the Sao Paulo Government after the close of 
the revolution, there are seven Falcons which are believed to have been 
smuggled via Argentina. We have been interpellated at the Ministry of War 
regarding this business, which is still being investigated by the Federal author- 
ities, and as they mistrust that during your stay in Buenos Aires you were 



948 MUNITIONS INDUSTRY 1 

instrumental in getting the Falcons in Sao Paulo, we would suggest that you 
send us a memorandum clarifying the situation, in order to enable us to act 
in your interest in the event of a possible incompatibility being attributed to 
your company in connection with future government business in Brazil. 

The experience derived from the Sao Paulo revolution has prompted the 
Federal Government to expand its aerial preparedness. Accordingly, two or 
tliree new military airjwrts are being projected and the establishment of a 
local airplane factory is being seriously considered, also a further increase of 
the military air fleet is being strongly advocated at both ministries (War and 
Navy). 

If we are to continue as your exclusive agents for Brazil we would naturally 
expect your formal appointment to this effect, followed by your support in the 
form of sales ammunition (airplane illustrations, specifications, performances, 
pricing tables, etc.) to enable us to go after the prospective business herein 
outlined. 

Thanking you beforehand for an early reply, we are, 
Yours cordially, 

Castro Lopes & Teibyrioa. 

Exhibit No. 370 

[Copy] 

Cuktiss-Wright Export Corporation, 

New York, January 21, 1933. 
Mr. S. Sampaio, 

Consul General of Brazil, 

n Battery Place, Neiv York. 

Mt Dear Mr. Sampaio : Confirming our conversation regarding the airplanes 
sold to the Santiago factory, and which later in some way seem to have found 
their way into Brazil, I wish to advise you that this entire transaction has 
been definitely closed, no material is left undelivered, and all funds paid to us 
have been entirely used. In other words, the contract is closed with no surplus. 

We are still very anxious, as I advised you, to open negotiations with the 
Brazilian Government for the sale of aircraft and aircraft material and also for 
the sale of spare parts for the Wright Whirlwind engines installed in many 
of the airplanes now in use in the Brazilian Ai'my Air Corps. It would be 
very much to the advantage of the Government to purchase these parts direct 
from us instead of through one of the airplane builders, and these builders 
naturally would have to purchase them from us and would expect their com- 
mission. This is a matter which you intended to take up with the proper 
Government officials. 

Another matter of great interest to us is the idea of an airplane factory in 
Brazil. The proposal in connection with this was submitted to the Brazilian 
Gfjveriiment about a year ago, but up to the present time no action has been 
taken. I should like to have some information along these lines at your earliest 
convenience. 

Yours very truly, 

CtJBTISS-WRIGHT EXPORT CORPORATION, 

, President. 

C. W. W^ebster 
jc 



Exhibit No. 371 

[Copy] 

[Seal— 57] 

Brazilian Consut.ate General, 
New York City, January 23, 1933. 
C. W. Webster, 

President Curtiss-Wright Export Corporation, 

21 West 57th Street, New York City. 
My Dear President Webster: I received today your letter of January 21st 
and I want to thank yon very mu; h for sending it. May I quote below the first 
paragraph of that letter: 



MUNITIONS INDUSTRY 949 

" Confirming our conversation regarding,' the airplanes sold to the Santiago 
factory, and which later in some way seem to have found their way into Brazil, 
I wish to advise you that this entire transaction has been definitely closed, no 
material is left undelivered, and all funds paid to us have been entirely used. In 
other words, the contract is completely closed with no surplus." 

Inasmuch as .vou are so kind as to confirm by letter our conversation, under- 
standing my necessity of sending a document about it in my final report of the 
matter, I am sure that you will understand my request for a detail of the 
referred conversation which it did not occur to you to mention, and which it is 
my duty to make clear to my Government. 

In our conversation you said to me that all the airplanes, which you num'bercd 
at eleven, were all delivered, the respective funds received, and payments made 
for them about the end of September 1932, but positively before the end of the 
revolution in Sao Paulo. In other words, the contract in question was com- 
pletely closed with no surplus before the end of that revolution. 

I will be grateful to you if you will confirm also by letter this detail, which 
I consider necessai'y in my report. 

About the other matters referred to in the second and third paragraphs of 
your same letter, I am giving to them my best attention and will write to you 
very soon about them. 

With anticipated thanks for tlie new favor I am requesting, I remain, 
Very sincerely yours, 

(Signed) Sebasttao Sampaio, 

Consul General of Brazil. 

Exhibit No. 372 

[Copy] 

Curtiss-Wright Export Corporation, 

J^eio York, January 28, 1933. 

Mr. Sebastiao Sampaio, 

Consul General of Brazil, 

Brazilian Consulate General, 

New York, N.Y. 
My Dear Mr. Sampaio: Complying with your request of January 23rd. and 
confirming our conversation regarding the airplanes that were sold in Buenos 
Aires and delivered at our factory in Santiago, Chile, and which you state 
eventually found their way into Brazil ; all of the machines contracted for were 
delivered and the payments received by the end of September 1932, which was 
before the end of the revolution in Sao Paulo. 

I tiiist this is the information that you require. 

We are still awaiting information from you regarding the possibility of 
supplying the Federal Govei-nment with engine spare parts, and tnist that we 
may hear from you regarding this project in the very near future 
Yours very truly, 

Cxjrttss-Wright Export Corporation, 
C. W. Webster, President. 
CW/w 



("Exhibit No. 373" was marked for identification only) 



Exhibit No. 374 

[Copy] 

[Air Mail #92] 

May 13, 1933. 
Mr. V. J. Van Wagner, 

Casilla 3098, Santiago, Chile. 
Dear Jerry : Your cable reading as follows was received yesterday afternoon 
at the house. 



950 MUNITIONS INDUSTRY 

"Aracena offers sell outside ten Falcons, three Hawks on condition be 
replaced latest type. Quote price, c.i.f. Valparaiso water-cooled Conqueror 
Falcons, Hawks excludin,i^ all commissions." 

I have studied carefully this cable but it infers several possibilities and 
being uncertain, I cabled you today as follows: 

" Retel don't entirely understand proposition. Has Aracena customer for 
Falcons, Hawks ; if so, where or must we find a customer? Price ten Conqueror 
Falcons, two guns, bomb racks, twenty-nine thousand dollars each. Three Con- 
queror Hawks, two guns, twenty-five thousand each. Same ships with Cyclone 
deduct one thousand dollars each and get much better performance." 

A doubt exists in my mind whether Aracena, himself, has a customer for 
his used Falcons and Hawks and will handle the sale, or whether he is merely 
giving us the opportunity of finding a customer for his used equipment and 
expects to obtain a price sufficient to cover the same number of the late 
type of Falcons and Hawks. If this is so, he must still believe in Santa Claus, 
as I certainlv do not know of any country in South America willing to pay 
$28,000, for used D-12 Falcons and -$24,000, for used D-12 Hawks. Assuming 
that this is the case, he must be thinking of the deal last summer and fall 
when we cleaned out the Los Cerrilios factory. I do not expect that this 
opportunity will present itself again. On the other hand, he might be privately 
dealing with Paraguay, Bolivia, or Peru, and possibly Ecuador, but it seems 
ridiculous on the face of it that any of these countries would be willing to 
pay such fantastic prices for used equipment vinless they were in desperate 
need of these planes and wanted immediate delivery. 

In view of the present situation in South America, with Argentina, Chile, 
and Peru, considering the closing of its ports to Bolivian munitions shipments 
and in general declaring their neutrality, it appears that Aracena might have 
considerable difficulty in securing permission to ship any kind of airplanes 
out of Chile. 

There are so many possibilities connected with this whole project that I hope 
you have already air-mailed me the detailed particulars. If any deal is con- 
summated, please bear in mind that payment must be made in dollars in 
New York and be entirely free from any Chilean Government taxes. 

You called for prices on the Conqueror Falcon and Hawk. The Cyclone- 
equipped machines would not only be $1,000 each cheaper, but would have a 
better performance and we certainly would recommend them. 

The enclosed photographs were taken in Buffalo the other day during flight 
tests of a Falcon on floats, equipped with the F-2 Cyclone of 700 hp., with full 
military load, consisting of pilot, gunner, 300 pounds of bombs, and 5 hours 
of fuel, it showed a maximum speed in excess of 175 miles per hour. Bearing 
in mind that these tests were made with floats, it is reasonable to assume that 
the ship will do at least 180' miles per hour with wheels. This same plane is 
also built for attack purposes with 2 additional guns installed in the lower 
wings. These would make practically no difference in the performance. 

For your information we are building a demonstrator to send to Buenos 
Aires and should be ready for shipment in from 4 to 6 weeks. This will go 
down on wheels for inspection of the Argentine Army and Navy and probably 
will also be demonstrated in Rio. 

This really is a flying machine and for its price cannot be equalled anywhere 
in this type of plane that can be offered for sale in foreign countries. Of course, 
w^e have other and more modern planes coming through the experimental depart- 
ment, but which we are unable to offer except to the United States Government. 

Please continue to send me all the information you can on the Ara(?&na 
project and it would possibly be advisable to continue to contact me at the 
house as I have a sneaking idea that Peru might be involved and I do not 
wish to embarrass other sales negotiations with other countries. 

My sincere good Avishes, 

C. W. Webstek. 
mw. 
ends. 



MUNITIONS INDUSTRY 951 

Exhibit No. 375 

[Copy] 

Cuktiss-Weight Expobt Cokpokation, 

:tfew York, February 28, 1933. 
Mr. Salvador Sanfuentes, 

Casilla 3098, Santiago, Chile. 

Dear Salvador : With reference to your cable of February 27th and your 
letters to Mr. Woodling and myself of November 29th : 

You have apparently forgotten our conversation in Santiago covering this 
matter. At that time, I explained to you that you could not expect a com- 
mission of 5 percent on the sale of the last 10 Falcons, but that I would handle 
the matter of adjustment find take care of your interests to the best of my 
ability. You were apparently satisfied at the time of our conversation, and 
the tone of your letter of November 29th was somewhat of a surprise to me. 

Going back to the original contract with the Chilean Government, you will 
remember that 40 machines were specified, 20 to be Falcons, on which a one- 
third deposit was made, and 20 more of a type to be decided upon later. Only 
10 Falcons were ever delivered and paid for, and these in pesos, which we 
were unable to withdraw from the bank, and it then became necessary to close 
the factory and maintain the cost of an inoperative plant at great expense 
to the Curtiss-Wright Company. Later we had the opportunity of selling the 
5 Falcons to another customer and subsequently the remaining 5 Falcons to 
the same individual. The arrangement of disposing of these 10 Falcons, how- 
ever, involved the cancellation of the remaining 10 Falcons on order for the 
Chilean Government and also the cancellation of the 20 additional machines 
specified in the original contract. This naturally caused a complete upset 
and breakdown in our entire financial set-up for the expense of building and 
equipping the factory in Santiago, training the 25 mechanics in the United 
States, and the attendant cost of their transportation to and from the 
United States. 

Tlie selling price to our new customer on the first 5 Falcons was $31,000 
each, . but it was necessary to pay the Chilean Government a commission of 
$3,131.51 on each plane, in addition to a commission of $4,000 on each plane 
to other parties in Buenos Aires in order to close this contract. The Curtiss- 
Wright Company, therefore, received only $23,868.49 each on the first 5 planes, 
which was $3,000 per plane under the price called for in the Chilean Govern- 
ment contract. On the succeeding 5 Falcons, we received from our customer 
only $27,500 each, but it was necessary to pay the Chilean Government a 
commission of $3,151.51 on each plane, and to other people $500 each on the 
first 3 of these planes, and $1,500 each on the last two planes. Therefore, on 
the 10 Falcons cancelled by Chile and sold to the other customer, Curtiss- 
Wright received only $230,684.90 instead of the contract price of $268,684.90, 
or a loss of $32,000 on the Chile contract. 

In your letter of November 29th you were demanding 5 percent commission 
on a contract for 10 Falcons sold to the Chilean Government, which the 
Chilean Government was unable to go through with and cancelled. It is true 
that you worked on the ultimate sale of the cancelled material to another 
customer and you are entitled to some commission, but I cannot conscientiously 
recommend to my company that they pay j^ou 5 percent on the full Chilean 
contract price which was never received by my company. The matter will have 
to be thoroughly discussed and an adjustment made, as I explained to you 
while in Santiago. 

The other matter of 20 percent commission on armament sold to ns by Chile 
is entirely out of order, as our customer refused to pay us a higher price than 
that quoted by the Chilean Government, and this armament was delivered by 
us to our customer at exactly cost price. This money was retained by Curtiss 
and applied against the Chilean debt to Curtiss-Wright. This arrangement 
assisted us in delivering the spares which were on order, and on which you 
are entitled to your 5 percent commission. 

You also refer to one-third payment to Curtiss by the Chilean Government on 
the original contract price. This one-third payment was returned to the 
Chilean Government when the contract was canceled. 



952 MUNITIONS INDUSTRY 

According to our books, we owe you 5 percent commission on tlie contract 
for spare parts, which amounts to $58,269.60; your commission being $2,913.48. 
Against this there is charged $59.56 for automobile tires purchased for you by 
Jerry in 1931, and charged against your commission account, leaving a balance 
in your favor of $2,853.92. This is all the company owes you, with the exception 
of the commission on the 10 Falcons, which will have to await a mutual 
adjustment. 

Any time you wish to confirm the foregoing statements or figures, we will be 
very glad to place the books of the OurtiSs-'W right Export Corporation at your 
disposal. 

I had planned to return to South America in March, but now my plans are 
rather uncertain, so if you are coming to the States, we can adjust everything 
very quickly, I am sure. 

Mr. Woodling is opening an account in your name in a New York bank, and 
depositing your balance of $2,853.92, and will send you the bank-deposit book 
and a check book. 

I sincerely hope that everything is progressing smoothly. I am sorry we 
could not accept your proposition of selling the two planes in the Santiago 
factory for $15,000 each, delivered in Argentina, this price to include your com- 
mission and delivery expense. It will be necessary for us to receive at least 
$15,000 each, delivery " as is " at the Santiago factory. You know that it will 
be impossible to secure official permission to deliver this material in Argentina. 

My sincere good wishes to Marianita and yourself, and I am looking forward 
to seeing you both soon. 
Sincerely yours, 

C. W. Webster. 



Exhibit No. 376 

COMPANIA DB AVIACH')N " FAUCB ". 

HoTEC, Bolivae No. 296, Lima, 

Lima, 19th May 1933. 
Mr. C. W. Webster, 'New York. 

Dear Web : Regarding the sale of aeroplanes here, many things went against 
us which we could not help ; first, the Douglas 0-38-S were at least 15 miles 
slower than Douglas stated, did not have the cruising speed nor range nor 
ceiling. When the *' Hawks " arrived without electric starters and Bank & 
Turn instruments, they did not like it at all ; than as we all know, the " Hawk " 
is slow on floats, but I believe they would have bought more if it had not been 
for Secretary of State Stinson's note to Peru, of course it was true but it 
created a very bad feeling against the North Americans. Everyone was very 
angry, Luis Pardo told me that he would never buy any more American aero- 
planes under any consideration. 

Then you remember that Peru's products, such as sugar, cotton, copper, 
wool, etc., cannot enter the U.S. on account of high tariffs, thanks to Hoover, 
but go to England ; Peruvians do not like it at all. Then they talked of em- 
bargoes in the States and the possibility of delays in getting ships that did not 
touch in Colombian ports to bring the goods from the States ; delays in delivery 
caused Peruvians to turn elsewhere for their goods. We know that they 
bought 6 " Falreys " from England, they got immediate delivery from stock ; 
these seaplanes are supposed to have a top speed of 200 per. 

Then some French interests gave their up to 25,000,000 francs, and I believe 
they soon expect to receive some 27 aeroplanes. Web., it is the liiggest mess 
you ever saw in your life, no head or tail to the show, until just recently when 
the new president appointed a person to control all purchases. 

I suppose you know that all our planes are on the other side of the " Hill ", 
Dan and Red also. The Government stopped our coast service on 21st of 
April, and Dan, Red. and Pinillos went over on Sunday, 23rd, April, in nos. 
4, 2, and 6, and I took no. 8 over on 4th May. We are just now finishing no. 5 
and it will have to go too, unless the was should be called off soon. Dan and 
Red are with the Government now. 

As soon as I finish no. 5 I want to start a new job, and install a " Cyclone " 
(our rebuilt Stinsons carry 1,400 lbs. of pay load at 115 m.p.h.). I have every- 
thing except some tubing and the tie rods for the wings. I got the spares from 
Posey, Portland, Oregon, a long time ago, and they cost us $05.00 for four spares 
in the rough against Stinson's $130.00 for one finished one. I want to build this 



MUNITIONS INDUSTRY 953 

ship with 30 square feet more of surface, 4" wider and 4" higher and about 
12" longer. I am sure this job would cruise at 140 or 150 m.p.h. by cleaning 
up the landing gear. 

The Government is highly pleased with our Stiusons and I am sure if I can 
get this job out within 3 or 4 months, I can control the commercial field in 
Peru, and then get connected up with Chile. I must do something as prices- 
asked in the U.S. are so high that we cannot ever expect to buy the lowest 
priced job on the market now. I do not expect that this job, outside of the 
motor propeller and instniments will cost me over $4,000 — dollars gold to 
build — based on the experience and labor costs of rebuilding our Stinsons. This 
job would go to any place in Peru and get off again with a full load. 

Could you get me a man experienced in building fuselages from the Travel 
Air Factory, and at what price? Just make a few inquiries and let me know, 
do not tell anyone just yet. Also what about a stress engineer, or who could we 
get to stress the job? Curtiss Stoner has helped me a good bit, he is good but 
has not the time to spare. 

The public is complaining every day, and wants our service back. Panagra 
is in a hell of a fix now. they cannot very well raise prices now, and they also 
cannot afford to run a Ford where they do not get the $1.80 per, and so they 
put on the Lockheed, and the public does not like it at all. 

We are certain that the new president will put the country straight soon, 
exchange has improved considerably, all Peruvian products have gone up and 
everybody is looking forward cheerfully. 

What have you heard in New York regarding " Faucett's outfit " since P. A. 
took over the China company? Westervelt wrote me some time ago that all 
their stock might fall into the hands of P. A. This is private. Everyone is 
disgusted with the Ford that Jasper sold to the Government, it cost $5,000, 
plus $8,000 freight. Red took the Ryan over the " Hill " yesterday, the " Fledg- 
lings " are in daily use and everybody is happy. They are fitted with " Chal- 
lengers " and they also have three spare motors ; I expect to send you an order 
for spares soon. Jack is working at " Las Palmas " now. 

The " Rambler " had a forced landing in Chile and broke the propeller, .so it 
is still there. 

With regard to shipments to Peru, why ship anything by Grace unless very 
urgent? They even refused to ship two sets of cylinders to New York yester- 
day, so we are shipping by the Pacific Steam. These are the last two sets of 
cylinders to be reground. We now have 5 motors reground, all with the new 
forged pistons, new valves, new front sections of crankcase, new propellers on 
all ships, oil radiators, instruments and shock struts, motors equipped with 
10-1 blowers. On my way over to San Ramon. I reached 19.000 feet witli four 
passengers and about 100 lbs. of baggage. No. 2 turned out to l>e a good job 
with the new Wright J-6. The next day after it went over the " Hill " a 
Peruvian pilot taking off with a Fairchild (Panagra) crashed into the left 
wing of No. 2 and completely destroyed the wing and lift struts (the only 
damage) the Fairchild was completely wrecked. 

Hope to hear soon from you, keep your chin up and your nose dry. Best of 
luck. 

Yours, 

(Sgd.) Slim. 

Exhibit No. 377 

[Copy] 

Curtiss-Wright Export Corporation 

27 West 57th Street, New York City 

Fabrica Chilena de Aebopla.xos 

Casilla 3098, Los Cerrii.los, Santiago, Chile, August 22nd, 19S3. 
Mr. C. W. Webster, 

% Curtiss-Wright Export Corp., 

29 West 57th Street, Neiv York City, U.S.A. 
Dear Web : I have just received your letters nos. 107 and 108, and it was 
good to hear from you after such a long absence. 

I appreciate very much your remarks on the factory administration, and 
am glad you do not hold me responsible for the bad luck we have had. I am 



954 MUNITIONS INDUSTRY 

also glad at the way you have treated Shaw and he is very grateful to New 
York for their consideration. Donnelly is in the Chaco and I have not had 
any news from him since he left. I still have his checks so cannot get a 
signed receipt for them until he comes back. 

Referring to cables exchanged in regard to the Government's offer of nitrate 
lor new equipment, we have still been unable to get complete details from the 
Minister of National Defence. He has been doing a round of inspection during 
the last few days and it has not been possible to interview him. Salvador 
expects to see him tomorrow, and will then again refer to this matter. I have 
already written that Horace Graham is in Europe so cannot consult him in 
this connection. 

I intend calling on Messrs. Buchanan & Co. this evening or tomorrow and 
discuss with them the proposals given in their letter to you of 13th July last. 
It occurs to me that they are mixed up in the nitrate business and probably 
want to pull off a deal for the Government. I cannot think of any customer 
other than the Chilean Government, but it seems rather strange that we should 
be asked to consult you with a view to carrying out the business, and at the 
same time Messrs. Buchanan state in the last paragraph of their letter " that 
the possibilities of business are great and when this purchase is put through 
it will only be by us." It sounds interesting and will let you know probably by 
this mail the outcome of my interview with Buchanan & Co. 

We are still pushing forward the law for tax exemption; Aracena advised 
us some time ago that it was on the verge of being signed, but it appears to 
be still awaiting the signature of the President. We can only keep asking 
about it until the final stage be passed. 

My farm is looking in good shape after having planted a few hundred more 
fruit trees and cleared all the rough stuff away. I am moving out there about 
the middle of next month and will let my house in town for the summer. 

Thanks for your kind wishes, which both Diana and myself heartily 
reciprocate. 

Very sincerely, 

(Signed) Jerry. 
P.T.O. 
COEEEO AB3?E0 

P.S. — I was into see Messrs. Buchanan & Co. this morning and, as I thought, 
they are in the nitrate market for the Chilean Government and wish to pur- 
chase new equipment for the Air Corps, Linea Aerea, the Militia Republicana, 
and private individuals. Buchanan & Co.'s agents in New York are Gibbs & 
Sons, and they will attend to all the negotiations from that end. I suggest, 
therefore, that you get into contact with Messrs. Gibbs and find out complete 
details, as I really think there is a great possibility of good business. 

Messrs. Gibbs are nitarte distributors, so they will find a market for this 
product, and you will merely have to quote your prices for airplane equipment 
and spare parts, etc. 

Salvador was in to see the minister of national defense on this same matter 
last evening, but do not know how he made out. I will keep you posted of 
future developments from this side and will thank you to advise me how 
you make out at your end. 

(Signed) Jerry. 



Exhibit No. 378 



Ex lis 



Curtiss-Wright Export Corporation, 

Tslew York City, November 8, 1933. 
To Mr. J. A. B. Smith, 

cc Mr. Allard, Bolivia: 
Mr. Webster writes as follows regarding the terms of payment on the pros- 
pective order for Condors from Bolivia : 

" I had no time to write you from La Paz just before I left as every minute 
was spent with Government oflicials right up until the train left. Bolivia 
wants to acquire 10 bombing planes and will take at least 7 and possibly all 
of them from us, providing we can make a mutually agreeable deal. They will 
spend from $800,000 to $1,000,000 with us if we can get together. Their 
proposition is this: Pay 25 or 30% cash with the contract and the balance 



MUNITIONS INDUSTRY 955 

in equal monthly instalments over a period of 18 months. The entire con- 
tract to be guaranteed by the Banco Central. Of course, this is their propo- 
sition and I believe I can probably get a larger cash payment and posstlily a 
shorter period of time. The Banco Central, while not a government l)ank, 
holds all the government's gold reserve and also the " Miners Drafts " which 
are really monthly taxes from the tin mines, are paid directly into the bank tO' 
the extent of about $200,000 per month. I went over to see the President of 
the Banco Mercantile, whom I know, W, A. Pickwoad, who is also General 
Manager of the Antofagasta-Bolivian Railroad and who has lived in Bolivia for 
a great many years. The Banco Mercantile is Patino's bank, and I believe also 
that Pickwoad represents Dillon, Read & Co., although I am not sure. Pick- 
woad old me that if I were able to have the President pass a law through 
Congress covering such a proposition and authorizing the Banco Central to 
make such monthly payments and then draw my contract under that law — 
specifying that money from the miners' drafts were to be used for the con- 
tract—the Banco Central to make such payments monthly direct to us and not 
through the government — that such a contract was absolutely sure. I went 
back to Lopez and the Minister of War and put that proposition iip to them. 
They both told me that such an arrangement could be made and requested that 
Travis go down to the Chaco immediately in company with the Minister of War^ 
Chief of Staff, and President of the Banco Central and go over the entire- 
aircraft program with Gen. Kundt. Travis started down by train and 4 days 
on trucks and will come out through the Argentine frontier after this session- 
and meet me in Buenos Aires the latter part of the week. 

" Take this letter up to JAB and Tom Morgan and Jack AUard and let them^ 
read it. Here is the way I figure it might be done, providing, of course, tliat 
New York is inclined to consider such a proposal. The price I would quote- 
would take care of an ' extra commission ' and delivered in La Paz by a'ir, tlie' 
Condors would be sold for around $70,000. For example, if the contract was^ 
$800,000 and we were paid around $250,000 cash, the balance, or !>5.10,()00, 
would be spread over 12 or 18 months whichever was decided upon. It would 
require G months or possibly a little less to turn out the 10 ships and if tlie 
period was 18 months we could have been paid at the expiration of that time, 
in round figures, about $430,000, consisting of the original $250,000 deposit and 
6 months installments of about $.30,000' each, so that the gamble would not be- 
great. No commissions would be paid to anyone until the entire contract had ' 
been paid for. This entire project, of course, will have to be thoroughly <lis- 
cussed with New York and I believe I will have time to get back home before 
they will wish a definite answer, and can start back here again within a few-' 
weeks after my arrival in New York. 

" We have Junkers to compete with as well as the British and both have 
expressed their willingness to play with Bolivia. I was told frankly by 
Lopez, who, by the way, is just about as strong as the president, and by the 
Minister of War, that they have no intention of quitting the war until they 
get what they are after. Pation himself in Paris is supplying funds constantly 
and with the backing and guarantee such as I have outlined I believe tbat a 
contract would be absolutely safe. I was also asked to secure about 8 good 
Army bombing pilots who might be available and out of jobs and looking for a 
little excite and money, to come down with the ships and go to wo- k in 
the Chaco for the government. This was a confidential request so do not 
mention it even to the Consul General. I believe your figures on costs of 
flying the ships down are somewhat high, as Panagra fly down their Fords 
and the cost is considerably lower; however, this is a matter that can be worked 
out later. If this project is interesting to New York, you can phone me at 
the Plaza Hotel in Baires but cable me first and let me know what day and 
time you intend to call. 

" We have not been able to get very far in Chile. Today is a ' fiesta ' with 
everyone off their jobs. Have an appointment with Aracena tomorrow morn- 
ing and have .spent the last two days with Merino. While he is only connected 
with the Linea Nacional, he is the only individual that seems to be getting 
any money to spend on aviation. Aracena seems to be a weak sister. INIerino 
claims that he will have in the neighborhood of a million dollars next year 
for aviation and frankly and confidently urged us not to let go of the factory, 
but, nevertheless I intend to talk it over with the President. Merino is very 
close to the President and is consulted about everything in connection -n'ith 
aviation, to the extent of going over the head of the Minister of War. I wonhl 
not be surprised to see Merino back at the head of Army aviation by the first 



956 MUNITIONS INDUSTRY 

of the year. He told me today that he wniits commercial ehips as well as 
Hawks and Falcons and also training jobs. I can give you no more informa- 
tion than this until I have gone further into it tomorrow or next day. 

" Harvey Brewton is here and have spent much time with him. He expects 
to leave on Sunday's plane for Bolivia and will also probably go down into 
the Chaco. Shorty Berger is also down there and additional spares, including 
engines, will undoubtedly be purchased. I did not answer your cable about 
the Osprey payment as you will undoubtedly have it within a day or two. 
Last Friday in the Minister of War's office I saw the signed order to cablo 
the funds to New York but it usually takes a few days of red tape to get it 
through. The full payment for the Trainers was also signed by Lopez but had 
3iot reached the Minister of War, so that should go through this week or early 
;next week. Remember that we have had exceptionally good business from 
Bolivia so try to be as patient as you can on the payments. 

*'As I told you in a previous letter, the Peruvian Government wishes also 

to make a similar deal with us for material as the French accepted. The 

French have been paid everything on schedule time and are asking to double 

;the present contract. It is possible to work out a plan whereby we would 

:ibe paid directly by the International Petroleum Company from taxes due the 

■government for material in the neighborhood of a million dollars. Both this 

project and the Bolivian project can be discussed with New York when 1 

arrive there just before Christmas. In the meantime, I wish JAB and the 

.others would give it some thought. As I told you before, Peru expects to mix 

things again with Colombia. In this connection, if there is trouble on the 

part of Colombia objecting to us selling Peru, we can make a deal whereby 

the material would be intended for the Bolivian Government and shipped along 

•with their orders to MoUendo. Bolivia and Peru are working very closely 

\together. Chile has now lifted the ban on shipments to Arica for Bolivia 

and is asking for the business through her ports but Lopez told me that he did 

not wish to hurt Peru's feelings and although it was more ditficult to ship 

through Mollendo, he intended to play ball with Peru." 

(Sgd.) O.A.S. 

Owen Shannon. 
OS:js 

Exhibit No. 379 

[Copy] 

La Paz, Deceml)er 15,. 1933. 
Mr. C. W. Webster, 

JJurtiss-Wright Ejoport Corporation, 

New York, 

IMt Dear Wee: Thanks for your letter of December 6. Your other letter 

mentioned therein has not turned up yet. The mail service here is slow and 

you nmst be careful what you say in letters. . .^ ^, /-. ^ 

Condors —Two of the ministers are at present down in the Chaco. One of 

them is the new INIinister of Defense— Benavidez— who you met in Lopez' office, 

and the other is Jose Antonio Quiroga. the new IMinister of War. A hst of 

new acquisitions has been made up by the Contraloria, amongst which we have 

managed to place 5 Condors, but there is some talk of the Estado mayor mcreas- 

insr this ouantitv to 9 units. In their list each machine appears at $70,000, 

use The position today is that they await the report of these Ministers 

and more important still nobody knows whether the war will last or not. At 

Dre'^ent the League of Nations Commission is in La Paz, but everything is kept 

so quiet that nobody knows what is happening. The general feeling is that 

the war will go on and at present the Government is busy making its financial 

arrangements As vou know, as from January 1 Bolivia's tin-export quota is 

hein-lncreased by some 4,600 tons of fine tin per annum and the Government s 

intention is to take up 2,000 tons of fine tin for itself in order to acqu "; niore 

sterlin- This would bring them to £400.000. This scheme may prove difficult 

to work as it will mean that the Government itself will have to buy and ship 

its own' quota of tin, so it may happen that the miners will be obliged to 

deliver 100% of their monthly shipments in drafts on London to the Banco 

Central de Bolivia. At present they deliver 60% nominally ; I say nominally 

because the miners are supposed to hand over as little as possible against their 

shipments. 



MUNITIONS INDUSTRY 957 

With regard to onr proposition, the Government's idea would be to get as 
long a credit as possible- — say, up to 24 months, which, of course, is far too 
much. With the increase in the tin quota we have suggested that as they 
must have credit that the sale of 5 Condors be guaranteed by Patino Mines in 
New York, or Simon I. Patino liimself, both guarantees being perfectly good, 
and I have no doubt you will agree to this in the event of our pulling this deal 
off. Naturally, our aim is to give them as little credit as possible and with 
the safest guarantees. No doubt the Government will also make the consul 
in New York intervene in the price question and probably also in dealing with 
Patino Mines, but before doing anything please cable us in case you are 
approached. 

There is absolutely no doubt that things are moving in the right direction 
for us, and if they do buy anything, our Condors will be bought. It will inter- 
est you to know that a sale which was being negotiated by Junkers, together 
with the Lloyd Aereo Boliviano, for 2 tri-motors was cancelled yesterday. This 
was a difficult job because in the event of purchases being made the Lloyd Aereo 
assist the Government financially by paying for part of the machines for their 
own account. 

We are right on top of matter and any developments will be cabled up imme- 
diately. I have the feeling that even if we do not — well, the full 5 or 9 ma- 
chines — that we shall get something. 

Cyclone etigines. — This has been a worrying and unpleasant business and for 
some days it looked as if we were all in the soup in spite of the fact that 
most people saw through Bilbao's game. Fortunately, however, things have 
now completely changed with the assistance of Colonel Jordan. His tele- 
graphic report from Cochabamba, and his personal expose here were both 
excellent and the whole affair, we think, has blown over to a great extent. One 
important thing is that Bilbao is to get out and Jordan will be made chief of 
aviation down there which is a God send for us. Both Cliff and Brewton 
are still down there and I have again wired Travis that he should stay there 
as long as possible specially whilst the two Ministers are still there. It is 
possible that Lopez will be going down as well in which case I shall ask Cliff 
to wait for him in Munoz or Villamontes. 

I think our position as regards the Junkers' competition will also change, as 
Kundt is now out of It. Penaranda and Toro are now the chiefs down below, 
and Toro specially is a good friend of mine, and a great admirer of the Osprey. 
He told me this himself when he was up here a few days ago. 

I am sorry that I cannot give you more definite news, but everything is 
undecided at present. My own feeling is that unless Paraguay comes across 
with some fair proposition on the war, will carry on and meanwhile Bolivia is 
making her own financial arrangements in case she has to carry on and mean- 
while Bolivia is making her own financial arrangements in case she has to 
carry on. Fortunately, we are in the happy position of being able to export a 
valuable metal like tin, and with exports actually about to increase. 

Travis's presence in the Chaco is most important, as the pilots are very 
friendly indeed towards him and he is very discreet in his ways. Brewton, 
with his knowledge, of course, is also very valuable, so between the two some 
excellent work must have been done. Berger is here and he started assembling 
the first Osprey this morning. Tlie other two have not arrived yet, but we 
expect on tlie Alto at latest on Wednesday next. We have no news from you 
as to the shipment of the trainers, and if no advice has come by mail when 
you receive this letter you might cable us, as they are anxious to get up 
quickly. We may sell another two trainers. I am pushing hard on this be- 
cause this will make all the pilots, specially the new ones, think Curtiss-Wright, 
which is bound to have influence on future purchases. 

My respects to Mrs. Webster, and with best saludos from Webby and self. 
Yours aye, 

(Sgd.) Tony. 

P.S. — If the deal looks like coming off, your presence here early in January 
will be indispensable. We shall cable you about this later, however. Mean- 
while, I hope you will also pull off your other Condor sale. 



(" Exhibit No. 380" appears in text on p. 804) 



958 MUNITIONS INDUSTRY 

Exhibit No. 381 
[Copy] 

April 5th, 1934. 
Mr. RoBEETO Escobar, 

Acting Consul General, Consulate General of Columbia, 
21 West Street, New York, N.Y. 

Dear Mr. Escobar : You know from copy of agreement wliicli I handed you 
that we had agreed to furnish and recommend certain personnel to go to 
Colombia. The agreement I have reference to is one dated January 31st, 1934, 
under which we were to furnish an expert in the flying of Condor planes, to 
accompany the planes to Colombia, and remain there for a period not to 
exceed three months to give instruction at the school fields in the handling of 
the Condor planes. 

We have selected one of our pilots from St. Louis who is expert in the oper- 
ation of the Condor. His name is Harvey Grey, and he will be ready to go 
to Colombia when the first Condor is ready. Quite probably you will wish to 
take advantage of his services to fly the flrst plane to Colombia. 

Under the terms of the agreement this pilot will actually be employed by 
us and the Colombian Government will, in turn, reimburse us on account 
of his services. While we would be quite agreeable to his flying this first 
plane to Colombia, due to this question of the pilots being in our employ, it 
must be clearly understood and agreed that no responsibility attaches to us 
after our delivery of the planes on floats, as per the contract, at our airpoi't 
in North Beach. The third clause of this agreement is intended to t-ake care 
of this situation. 

In addition to this one pilot, we also agreed to recommend for employment 
by the Colombian Government, the personnel necessary to fly the Condor planes 
to Colombia. Assuming that Mr. Grey would pilot the first plane there would 
remain the requirement of two additional pilots. Due to the nature of the 
flight, and the importance of safe arrival, we feel that only the most competent 
pilot personnel should be considered in this connection : men who have had 
experience in flying planes of this type over long water hops. 

Therefore Mr. Damon, president of our company in St. Louis, who is con- 
structing the Condors, after considerable selection, recommended the necessary 
two men for this work. We have been in touch with both of these gentlemen 
and have discussed, tentatively, with them, the nature of this employment. 
They are both available, and ready to go when the planes are ready. They 
would both, however, like to know, as far in advance as possible, whether or 
not they are to be employed on this mission. I would suggest, therefore, that 
this matter be decided as soon as possible. 

One of these men is Harry D. Copland, whose address is Garrison Road, 
Hingham, Mass. The other is Ira Smalling, room 501, Beaver Bldg., Madison, 
Wise, c/o Oscar Schwartz. 

Both of these men have had considerable naval experience flying multi- 
engine seaplanes, so that they are thoroughly familiar with water flying and 
navigation, both of which subjects are of the utmost importance in this flight 
to Colombia. Both men have been flying continuously for a number of years, 
and their experience and hours of flight on multi-motored planes, both land- 
plane and seaplane, is well over 1,000. Both men have previously been em- 
ployed in the Curtiss-Wright organization, and are well and favorably known 
to us. We have no hesitation whatever in recommending them for this mission, 
both on the basis of their experience and personality. Both men have sug- 
gested that if they are to make this trip that they be definitely assured as 
far in advance as possible to give them an opportunity to gather all of the 
data possible in connection with the particular route to be followed. Both 
have had flight experience in this southern area, having been airline pilots 
on similar routes. They wish, however, to post themselves fully on existing 
conditions and to determine exactly the particular route to be followed, and 
they point out that on account of weather conditions and the scarcity of 
facilities, they cannot plan too carefully on such a flight. 

Both men feel that they should receive for this particular mission $500 
and expenses — assuming, of course, that the entire mission would be completed 
within one month from the date of their employment, and if the trip exceeds 
a period of 1 month they should receive additional compensation at the rate 
of $500 per month. It has been our experience that for a mission of this 
kind it would be very difficult to interest a sufficiently high-grade pilot for 



MUNITIONS INDUSTRY 959 

less than the amount specified, and we really feel that in consideration of 
the nature of the task and experience required, also the responsibility attached 
thereto, that this would not be a high amount to pay. 

If you should desire any mechanical personnel we will be pleased to recom- 
mend them in addition to the pilot personnel. Of course, a copilot is desirable. 
At the time I was in Colombia the possibility of certain Colombian pilots 
coming up here was discussed, but if this is not done you may wish to use 
certain other personnel which you are organizing for Colombia, in the capacity 
of copilots. 

One of our St. Louis mechanics seems especially interested in making this 
trip. His name is George Clark, who formerly made trips for us to Latin- 
American countries. He is a very expert mechanic and has a very pleasing 
personality, speaks Spanish, and in addition to his aircraft mechanical 
knowledge is an expert on armament. 

Of course, we assume you will have radios installed in these planes. This 
is practically a necessity for this trip, and we will be glad to make recom- 
mendations with respect to radio operators. Frankly, we think that it would 
be easier and better to have these recommended by the company which furnishes 
the radios. 

In addition to the foregoing personnel, we also agreed to recommend an 
expert Wright engine mechanic competent to instruct and supervise the mainte- 
nance and care of Whirlwind and Cyclone engines. This requires a very high 
grade, intelligent mechanic with a certain amount of instruction experience 
and, in this connection, we recommend Mr. George Langille, whom the writer 
introduced to Mr. Pradilla on April 3rd. I understand Mr. Pradilla was 
favorably impressed with this man and it is simply a question of whether 
the Colombian Government wishes to employ a mechanic as mentioned in 
our agreement under which we agreed to make certain personnel recommen- 
dations. The foregoing will, I believe, discharge our obligations in connec- 
tion with this agreement, and we urge you to advise us promptly just what 
you wish us to do. I assure you it is our desire to cooperate with you to 
the fullest extent and assist you in every way in obtaining the services 
of expert personnel. If we can be of any further assistance in connection 
with the employment of the men mentioned above, do not hesitate to call 
upon us and we will do everything we can to help you. 
Sincerely yours, 

Curtiss-Wright Export Corporation, 
W. F. GouLDiNu, Vice President. 

WFG/f. 

ExiBiT No. 382 

[Via air mail] 

No. 53 

March 30, 1934. 
Mr. Anthony Ashton, 

Messrs. Webster & Ashton, 

Gas ilia 144, La Paz, Bolivia. 
Dear Tony : I have been so terribly busy here the last few weeks that I have 
not been able to write as frequently as I wished. In order to bi'ing you up to 
date, I am covering the entire situation as it stands today. 

In answer to your letter of March 17th, we are very glad that you finally 
were able to get a definite decision from the Government. The matter dragged 
along to such an extent that if you had not acted when you did we would not 
have been able to get machine guns. As a matter of fact, it was not until this 
week that we finally received a definite delivery schedule from the Colt Com- 
pany. In addition to that, our own factory found it necessary to increase prices 
and I was forced to cable you to withdraw our quotation. Your deposit arrived 
March 20th and it was not until March 26th, or last Monday, that I was able 
to get the company to accept the order. If I appeared to be curt with you, 
it was because I was having a hell of a job here trying to save the business. 
I realize that you have your own troubles, and many of them, but so do L 
I returned from La Paz on February 8th and advised the company that the 
contract was closed, just as the Minister and Lopez indicated. Both of these 
83876— 34— PT 4 18 



960 MUNITIONS INDUSTRY 

gentlemen had asked me to do certain work up here in connection witli the 
delivery of Condors, while arrangements were being made in Bolivia for the 
contract. As time dragged on and nothing happened, I was in a very em- 
barrassing ))Osition. Then the Government began asking for lower prices. I 
had made myself very clear, definite on price, during conversations with the 
Minister and saw no reason for further discussions along this line. In fact, 
if they had waited any longer the price would have been higher. 

We were also dealing with other customers, and your original delivery 
promise, owing to your delay, had been given to another purchaser. However, 
despite this fact, we will stick to our original promise and have the first ship 
ready at the factory in about seventy-five days. 

In this connection you cabled last night asking for date of delivery on the 
first Condor. I replied as per capy enclosed. You will remember, Tony, that 
my promise while in La Paz was seventy-five days. You instructed me to make 
it forty-five days and " not to worry." This was done, so it is now up to you 
to smooth over any argument. 

Delivery inspection : During my conversation with the Minister he asked me 
if we would permit the Bureau Veritas to inspect before delivery. I inquired 
as to what that organization consisted of and about the expense and was told 
that the expense would be very small. So I agreed to it. I have since made 
inquiries about that organization and found it to be a French outfit, which is 
not so good, but I will have a talk with their representative on Monday. I can- 
not give you any other information in this letter. 

The entire idea of having the Bureau Veritas inspect the Condors before 
they leave for La Paz is the most ridiculous thing I have ever heard of. It is 
merely useless expense and a nuisance. They probably never saw a Condor be- 
fore and what good can be gained by having their man in St. Louis? Haven't 
we delivered enougli airplanes to convince the Government that we are more 
to be depended upon than an outside party? Does the Government believe for 
one moment that we would start a bunch of American pilots, all friends of ours, 
on a 6,000-mile flight unless the ships were O.K., and what good could the 
Bureau Veritas do? We certainly do not intend to permit them to come into 
our factory and instruct them what goes into the manufacture of a Condor. 
This would result in considerable delay and much expense and would necessitate 
a higher cost. The only thing that we will permit the Bureau Veritas to do 
is to receive the ships at our factory in St. Louis in lieu of having complete 
airplanes inspected in Bolivia as in the past. However, I will write you more 
about them on Monday. 

Pilots : While in La Paz I offered my OAvn services gratis and as a frienaly 
gesture, to handle the delivery of the Condors. I also agreed at the request 
of the Government to secure some pilots who would remain in Bolivia and 
handle them in service. I told the Government that it would cost from $150 
to $200 per week for good pilots. I can now secure them as I cabled you for 
$600 for one chief pilot, $500 for three first pilots and $400 for copilots. The 
Government now decides that these men have to accept 30% of their salaries 
in National currency. All the good pilots want American dollars and will 
not accept any part of their salaries in National currency. You must have 
this adjusted quickly. 

Delivery costs : While in La Paz I told the Government that it would cost 
approximately $8,000 per machine for insurance and flight expenses. It will 
not be less than that. I also asked the Government to transfer $32,000 to 
New York to apply against those costs. I do not care if they send me the 
money or send it to the consul. In fact, I do not care if they send it at all, 
but if they wish to get these Condors to La Paz, they should send it to some- 
one in New York and quickly. 

Within a few weeks we will have to start spending money in connection 
with that job and you cannot send to La Paz for funds each time it is necessary 
to do a little traveling or to order gas and oil to send to each place en route. 
You do not realize the time and work it will require of me to handle this job. 
First we must apply to the Department of C<immerce for ships' licenses and 
numbers and these will have to be issued in my name. We must then apply 
for and receive permissi(m from each of the countries over which we will fly 
and then secure permission to land at the various overnight stops. We must 
al.so contract and pay for gas and oil and have it placed at each of the over- 
night stops. We must also station a man at each of these places to handle 
fuel and make necessary arrangements for the ships when they ari'ive. All of 
this costs money and the Government must make it available for me if they 



MUNITIONS INDUSTRY 961 

wish me to do the job. They cannot expect me to cable La Paz each time 
that I need a few dollars. I have a man In Washington on permits now and 
I am advancing his expenses myself. 

Insurance : I spent all morning with the insurance people arguing about costs. 
On Monday morning I will have their definile proposal and will write you 
again. 

Bomb racks : In answer to your cable of March 27th, the racks on the Condor 
wings will carry bombs from 30 to 120 lb. each and in the fuselage from 30O 
to 1,100 lb. If the Government intends to use bombs of more than 600 lb. 
these same racks in the fuselage will accomodate them. 

A few days ago Mr. Decker, the consul general, came to the office, acting 
upon cable instructions from the Minister of Defence, to discui^s various phases 
of the Condor situation. He argued about the high-priced pilots and tl'.e cost 
of flying the Condors to La Paz. Please be good enough to advise the Govern- 
ment that if they believe our estimated costs are too high for pilots and ihe 
delivery of the Condors, we will only be too glad to have them take over the 
job themselves. There is absolutely no profit in it for us and we are doing 
the job merely as a friendly act and would be greatly relieved if they would 
have the consul or someone else do it for us. It would seem advisable to us 
to deliver all four Condors at one time, but judging from your cable last night, 
asking for a delivery date on the first Condor, that you wish us to send them 
down separately. I am fearful that if we follow this procedure that consider- 
able conversation and possibly criticism will result from some source and that 
obstacles will be encountered in order to delay some of the ships. However, 
if the Government wishes us to send them separately, we will be very glad 
to undertake to do so, but please have it understood that we will not be respon- 
sible for any diplomatic move that might be made by other countries to prevent 
us from flying these ships to Bolivia. 

I believe this covers the entire situation to date and on Monday, I will write 
you regarding insurance costs and the Bureau Veritas. 

My sincere good wishes and the best of luck. 
Sincerely your.s, 

C. W. Webster. 

P.S. — Please extend to Shorty our best wishes for a speedy recovery and keep 
us constantly advised as to his condition. 

P.P.S. — It will also be necessai-y for the Government to place an order for 
parachutes for at least Bight pilots and copilots for the Condors and while they 
are about, they might just as well increase this number to 25 or 30 to take 
care of their necessary requirements. 



Exhibit No. 383 
[Copy] 

HOTET. DEL PRADO, 

Barranquilla, Colomhia, South America, April 25, 193^. 

Dear Parm : I am enclosing herewith copies of other correspondence with 
the usual set for Burdie and one copy of this letter for Ralph Damon. 

I spent last week-end in Cartegena with Conun. Strong and the American 
pilots and mechanics who have recently arrived, 24 pilots and approximately 
the same number of mechanics. Comm. Strong is in a little hot water and 
it is mostly in his interest that I am writing this letter. It seems that Comm. 
Strong left the States with the understanding that pilots were to be recruited 
who are willing to fight if necessary and instruct Colombian students other- 
wise. Contracts were drawn up accordingly and every one was very happy 
until the press got wind of the movement. The State Department then had 
to take official cognizance to which they were forced to react negatively in 
order to maintain a strict neutrality in South America. The pilots were told 
that passports would not be issued with the fighting clause in their contract 
and that should they engage in actual military combat after arriving here the 
consuls would be instructed to take up their passports and they would auto- 
matically lose their citizenship. A new contract was therefore drawn up, 
with the permission of Bogota, which eliminated the fighting clause. It seems 
that Comm. Strong was not consulted regarding this new contract and it was 
his understanding and intention all along that these pilots immediately 
organize as a fighting squadron and begin training as such at Cartagena. 



962 MUNITIONS INDUSTRY 

When Comm. Strong met the pilots and was informed of the above happen- 
ings he. asked for an immediate decision as to which of the two contracts tliey 
intended to keep, letting them know that he would not compromise. If they 
intend to instruct only they will fly only training planes and vice versa if 
they intend to fight. They unanimously decided to stick by the second contract, 
in other words, instruct only. 

Comm. Strong is quite incensed as a result of their decision and I presume 
that he is sincere in giving the impression that he didn't know of the second 
contract. At any rate he wants to take immediate steps to get other pilots 
down here who are willing to fight. He indicated to me that he will be in hot 
water with the War Minister who also thought this group would function as 
a fighting unit (as to who gave the permission for the second contract in 
Bogota, Quien sabe?). I therefore told him that I would give you all the 
dope in order that you may help recruit new pilots if you so desire. 

He thought that Ralph Damon could interest the Naval Reserve unit at St. 
Louis as some of these fellows had previously indicated a willingness to go 
in for flying of this sort. Please understand, however, that there is no 
obligation whatever for any action on the part of the Curtiss Co. He wanted 
you all to know just as another agent so to speak for contacting the type of 
pilot who is desirable. 

He wants men with military fliglit training (or naval) who have been trained 
in dive bombing and airplane gunnery. A high type of individual is necessary 
in order that Colombia may have the best impression possible of Americans 
which impression will be reflected by their use of American goods and 
equipment. 

Comm. Strong has consulted a lawyer here who advises that it is impossible 
for anyone to lose citizenship unless it is renounced or allegiance sworn to 
another flag. This may or may not be true but it does seem to me that citizen- 
ship could not be taken away for so small an offense as fighting in a foreign 
country. 

With regard to the inducements, Comm. Strong advises that a contract with 
the fighting clause will be given for one year. This country has a big aviation 
expansion program afoot and there will be considerable opportunity in the field 
for five years to come. Contracts will in all probability be renewed if the 
pilot party so desires. The pay will be $500.00 per month, half deposited in 
the U.S. and half payable in Colombia in pesos at the official rate of exchange 
which incidentally is considerably below the commercial rate. 

I don't know whether you will wish to do anything about this or not, my 
opinion is probably not. At any rate if you do, I would suggest having the 
pilots write Comm. Strong at Hotel Granada, Bogota, addressing him as Mr. 
J. H. Strong. I would suggest that of course in any contacts with pilots it be 
made perfectly clear that the Curtiss Co. is in no way responsible for anything 
other than merely letting them know that Couun. Strong is interested. Since 
Ralph Damon's name was mentioned by the Comm., he may or may not wish 
to acknowledge receipt of this information to the Comm. direct. 

I think I will have to bear some of the brunt of this holocaust by giving 
some of the Cuban pilots now in the country instruction on floats in order 
that they may begin training as a tactical unit. 

With best regards. 



Sincerely yours, 



William J. Crosswell. 



Exhibit No. 3S4 

[Copy] 

Februaky 6, 1934. 
Mr. Robert L. Earle, 

g/o Curtiss-Wright Corporation. 

501 Southern Building, Washington, D.C. 
Dear Earle : Jack AUard has asked me to write and see if you could obtain 
from the Army a list of about twenty-five recent graduates of Kelley Field, 
together with their service records, from which we could pick a number for 
ferrying airplanes to a foreign country with the possibility that they might 
obtain employment with that foreign government. 

We understand that a number of Kelley graduates have been discharged 
recently and these are the men to whom we refer. 



MUNITIONS INDUSTRY 963 

There exists an opening for a man in China to act as machine-gun instructor 
who may also be selected from this list. 
Thanking you in advance, I am 
Sincerely youre, 

Interoontinent Aviation, Ino. 
pgz/mk. 



Exhibit No. 385 

[Copy] 

Februaey 13, 1934. 
Mr. Robert L. Earlei, 

Curtiss-Wright Corporation, 501 Southern Building, 

Washington, D.C. 
Dear Earle: I talked with Mr. AUard regarding the specifications for pilots 
and he advised that he does not wish to disclose any information regarding 
what countries the pilots are to go to. He wishes you to obtain the names of 
pursuit, bombardment, attack, and observation pilots who are interested in 
going to a foreign country and a specification from them as to what country 
they would like to go. 

I'i^'om time to time we have occasion to send men out and we would like 
to have in our files information concerning a number of such pilots. 

We also suggest that you approach the Navy on this subject and obtain a list 
of Navy-trained pilots who may be available for such work as we at times 
have occasion to send out aii'plaues on floats. 

I would suggest that you have Lt. Hollidge write us fully giving complete 
information as to himself with I'eferences whom we may contact and that you 
supply us with as much information as you can concerning him in connection 
with the position of machine-gun instructor in China. 

AVe are not sure that this position is still open but it will pay about 800 
Hongkong dollars a month and should afford an opportunity for an Army- 
trained man to continue his work along military lines. 
Sincerely yours, 

Intekcontinent Aviation, Ino. 
Paul G. Zimmerman. 
V>gz.mh 



Exhibit No. 3SG 

CuRTiss W;;iGiiT Export Cokporation, 

^^cw York, April 27, 1933. 
Mr. Jerry Van Wagner, 

Casilla 3098, Santiago, Chile. 

Dear Jekry : We cabled you today as per confirmation attached. 

The Grace Co., owing to considerable pressure from the Colombian Govern- 
ment, has refu-sed to accept shipments consigned to the Peruvian Government 
or to Faucett, which makes it necessary to ship to the Canal for reshipment 
on British or Italian vessels. 

The thought occurred to us that we might circumvent the difficulty by 
shipping to Arica and reshipping from there to Callao. Inasmuch as the 
Chilean Government has closed the port of Arica to Bolivia, it is possible that 
they will take similar action with Peru. I would suggest that you take this 
matter up with Dias Lira and see if permission can be obtained to go into 
Arica and then come back up north to Callao. 

In connection with Wooten's Falcon, we have taken this over from the Army 
and wish to have it recovered as quickly as possible and spend as little money 
as possible in putting it in presentable condition. Begin immediately with 
your application for pt rmission to fly it north to Lima. This particular matter 
will have to be handled very diplomatically and carefully. If Pancho Echenique 
could obtain pennission for the Hawk and Falcon to go into Peru, you should 
have no difficulty in securing permission for this Falcon. The object is to 
get it out of Chile as quickly as possible, and arrange for Arrendonda to fly it 
up to Arica possibly, and for one of Faucett's pilots to take it up to Lima. 



964 MUNITIONS INDUSTRY 

The accessories and spare parts will have to be shipped on a British, or 
Italian, or another steamship, consigned to Faucett. It will be impossible for 
you to use the Grace Line. Please make arrangements as soon as you can and 
advise me when the material has actually been delivered into your hands and 
send me a complete list of all equipment. 
Sincere good wishes. 
Yours very truly, 

C. W. Websteb. 



Exhibit No. 387 
[Copy] 

Javier. Diaz Lira, Attorney, 

Santiago, April 20, 1933. 
Mr. J. VAN Wagnek, 

Mamiger Ctirrtiss-Wright Export Corp., Cittj- 

Dear Mr. Van Wagner: After a number of conversations that I have had 
with several officials, I want to confirm to you what I mentioned in my letter 
of the 10th inst., to the effect that there is not any difficulty, as respects the 
Government of Chile, in the Curtiss Company extending its activities of building 
planes for sale and exportation to other cuuntries. There is no regulation, 
neither in the law nor in the contract which resulted in the setting-up of the 
factory in Chile, that might prevent that activity of the company which you 
represent. 

On the Government's part, the initiative of the factory is considered not only 
with acceptance but even with evident pleasure, I have today discussed this 
matter fully with Mr. Diego Aracena, Chief of the Air Force, who told me 
th:it he accepted with enthusiasm the notice that the factory would intensify 
its work and production of airplanes for sale in Chile or in foreign markets, 
and, knowing the importance and benefit that this would mean to the country 
and to the advantages that would also accrue to the National Air Foi'ce, he 
would support all protection with reference thereto before the Government. 

On my part, although I don't see any legal reasons that could hinder Mr. 
Webster's plan, nevertheless, as a measure of prudence and courtesy to the 
Government, I recommend that you send a letter to the Chief of the Air Force, 
informing him of the company's plan and request his conformity with the 
assurance that it will be well received. 

With this in view, I am enclosing a proposed letter that you can study 
and consult with Mr. Webster on same if you deem it necessary. 
Very truly yours, 

(Sgd.) Javier Diaz Lira, 



Exhibit No. 388 

April 15, 1933. 
[Via airmail, no. 22] 

CiA DE AviAcioN " Faucett " ; S.A., Aptdo 1429, 

Lima, Peru. 

Gentlemen : We just received advice by telephone from the Barr Shipping 
Corp., our forwarding agents, that the Grace Line notified them they would be 
unable to accept any shipments consigned to you that moved on their steamers 
via a Colombian port. Evidently the Grace Line is taking a strong hand due 
to the fact that they have been subject to considerable pressure on the part of 
Colombian Government authorities in carrying material of a military nature. 
Our information is that the Colombian Government knows you are buying 
material for the Government of Peru, and consequently, is making every effort 
to prevent such material from reaching Peru. 

While we have not been oflicially informed of this from the Grace Line direct, 
we will take this matter up with them on Monday with a view of having them 
change this ruling. As far as we can see, there is no reason why they should 
refuse shipments consigned to you when the same thing may apply to hundreds 
of other concerns in Peru buying material which ultimately may reach the 
government. At any rate, if the refusal is definite, we could arrange to ship 
all your goods via the Canal. This would necessarily delay delivery of material 
to you considera'jly in view of the infrequency of sailings from Europe of 



MUNITIONS INDUSTRY 965 

steamers that do not touch Buenaventura. We understand the service from 
Europe of steamers via the Canal direct to a Peruvian port is about once a 
month. 

It may be possible that you might be able to appoint your shipping agents in 
Clallao to receive goods in your name, and in that way avoid the Grace Line from 
putting a stop to direct shipments for your account. You could no doubt 
arrange to have the government and, likewise the Peruvian counsul in New 
York accept shipments free of consular fees and duties, so that the Goveniment 
may continue to get material through you. We could declare the material by 
other terms on the bill of lading so as to throw the steamship company off the 
track; e.g., we could declare engine parts as "internal combustion parts"; 
" spark plugs " ; other aeroplane parts could likewise be changed ; e.g., " steel 
tubing " in place of aeroplane parts ; '' lacquer " instead of " dope ", etc., etc. 
We suggest you act on this immediately and give us the name of your for- 
warders by cable, referring specifically to this letter number for our guidance. 
We will write you further as soon as we have had an opportunity to discuss this 
matter with the steamship company. 
Very truly yours, 

Cubtiss-Wright Export Corporation, 
S. J. Abelow. 



(" Exhibit No. 389" appears in text on p. 810) 



Exhibit No. 390 
[Copy of telegraphic message] 

To : Aeroexco, New York. 

From : China Co., Shanghai, China. 

Date: April 3, 1933. 

About 1 to about 2 months ago I suggested Minister of Finance enter (s) 
(into) contract (s) acquiring large number (s) (of) military airplane (s) as 
protection against possible American embargo (upon) Stop Minister of 
Finance have signed contract (with) Intercontinent Aviation, Inc., March 
29th for 96 military airplane (s) subject to cancellation 15 days notice either 
party (ies) (to) Stop No description (s) plane (s), no price (s), no delivery 
date mentioned Stop Please notify Department of State of this contract 
stating that Chinese Government aviation expert(s) to decide about on type(s) 
at a later date No publicity of any kind must not be given this matter as 
Minister of Finance exceedingly anxious (to) transaction not to be known 
anyone except Department of State official (s) Stop It must be understood 
that this is not purchase (s) agreement (s) and is a contract (s) (for) for the 
purpose(s) (of) protecting Government against embargo (upon) this contract 
give us moral advantage (s) over competitor (s) Stop Writing fully. 

mf cc Messrs. Morgan, Smith, Webster, Goulding, Shannon. 



[Copy of telegraphic message] 

To : Aeroexco, New York. 

From : China Co., Shanghai, China. 

Date: April 3, 1933. 

Jouett reconnnended purchase 40 Northrop Aircraft Corp. bomber Stop He 
has suggested that he be authorized (to) return to United States in order to 
negotiate purchase (s) at not more than $40,000.00 each Stop If you can work 
out some extremely attractive deal on the basis of 30 and 40 I^orthrop Air- 
craft Corporation and 27 Curtiss Hawks consider it advisable quote immediately 
Stop Love United Aircraft Exports pressing hard for business understand 
offering attractive price Stop British very active effort to sell I am doing 
everything possible. 

cc Messrs. Morgan, Smith, Webster, Goulding, Shannon. 



966 MUNITIONS INDUSTRY 

Exhibit No. 391 
[Copied from carbon copy. Written in pencil: South American Tour 1931] 

JUI.Y 8, 1930. 
Mr. J. S. Allabd, 

Curtiss-W right Export Corp., 

21 West 57th Street, Neio York City. 

Dear Jack : The following Is a more or less complete outline of the conver- 
sion Mr. Famsworth had with Fowler Barker this afternoon. Undoubtedly 
you are cognizant of all these facts, but it will do no harm certainly to jot 
them down. 

It seems that Mr. Young recently received rather lengthy reports from the 
Commercial Attache at Buenos Aires and Montevideo expressing their appre- 
hension over strong European aeronautical competition. There is to be a 
British aircraft carrier in a river Plate around December 21st, cari-ying about 
20 assorted airplanes of English manufacture. Italy has stationed de Pinedo 
as Air Attache in Buenos Aires and is evidently making a strong bid for busi- 
ness. The French position was greatly strengthened by the recent trans- 
Atlantic flight carrying mail to South America. 

There evidently was a consultation between Captain Fleming, our Military 
Attache for Argentina and Uruguay and the two Commercial Attaches iu 
these countries, and Leigh Wade, who as you know, is down there representing 
the Consolidated people. This conference resulted in the determination to 
attempt to arrange some sort of a demonstration from the United States to 
counteract the European activities. The Department of Commerce will possibly 
interview the, leaders of the aircraft industry here and see what their attitude 
would be toward sending a group of planes to South America, possibly some 
of those participating in the national .air tour this year. It is thought 
possible that if the manufacturers so desire, a delegation of them will interview 
Secretary Ingalls and gain his consent for the use of one of our carriers to 
transport the planes to South America, citing the action of the British as a 
precedent. Undoubtedly this demonstration if ever made tangible would visit 
the international aeronautical exhibition to be held at Montevideo during the 
first half of February 1931. 

I am quite sure that this idea has not been broached to any of our competitors 
and nothing may ever come of it, but in the event that something does materi- 
alize we will at least have had a little bit of warning. 
Very truly yours, 



RPF-MB-4571 

Washington File : " South American Tour, 1931." 



Exhibit No. 392 

[Copied from carbon copy] 

Washington Office, September 29, 1930. 
BtTRDETTB S. Wright, Washington, D.C. 
J. S. Allaed, New York City. 
Carrier Trip to South America. 

I was in Mr. Ingalls' office this morning and his office urged that we push 
in every way possible the completion of the arranging for the carrier to go 
to South America. Comdr. Moulton believes that we must take the matter up 
with the White House by possibly a head of the Aeronautical Chamber of 
Commerce. I know that you are handling the matter as representative of theirs, 
together with tlie help of the Department of Commerce. It looks as though 
I may be out of town Wednesday of this week at Dayton, but I am hoping that 
I may be able to delay the trip until Thursday in order to be here when you 
are here on Wednesday. 
Very truly yours. 



BSW/LH-5641. 

Washington oflBce : " Carrier Trip to South America." 



MUNITIONS INDUSTRY 967 

Exhibit No. 393 
[Copied from original] 

Cubtiss-Wkight Export Corporation, 

October 7, 1U30. 
Inter-ofBce correspondense. 
From: J. S. Allard. 
To: B. S. Wright. 
Subject: Naval carrier to South America. 

Thanks for yours of October 3d on this subject, and as a result, Leigh 
Rogers and I are today drafting the letter for Fred Rentschler to present to 
Mr. Hoover. 

We will try to get this thing through in the very near future. 
Sincerely yours, 

(Sgd.) J. S. ALL.VRD. 

EMN. 

AVashington file : " Naval Carrier to South America." 



Exhibit No. 394 
Inter-office memorandum. 

[Copied from original] 

Curtiss-Weight Corporation, 

Export Division, 

March 11, 1931. 
From : IVIr. C. W. Webster, New York. 
To: Mr. Burdette S. Wright, Washington. 
Subject : Chile, visit of Comandante Merino. 

In line with my telephone conversation this morning, Comandante Arturo 
Merino B., Sub-Secretario of the Interior for Aviation, is the chief of all 
Chilean aviation — Army, Navy, and civilian. He is the biggest foreign cus- 
tomer we have and is entirely responsible for all our business in Chile. 

During the recent visit of the Prince of Wales to Chile, the Prince person- 
ally invited Merino to visit him this spring, which invitation was accepted. 
His original plan was to proceed to England first, and then visit the United 
States, but we have persuaded him to visit the United States first in order to 
witness the Air Corps manoeuvres during May. He has agreed to this program 
providing an oflScial invitation is extended to him by the U.S. Government 
through the War Department as a foreign observer. 

This means a great deal to us, as Merino has never been out of his own 
country and has always been partial to European methods and materials until 
we began to supply him with equipment a few years ago. It is up to us to 
lean over backward in selling Merino American ideas, methods, and equip- 
ment, and upon liis arrival here we are arranging an elaborate and extensive 
program calling for visits to various airports in this country. If possible, we 
would like to have you arrange for permission to visit various Army and Navy 
stations and have him meet the Army and Navy Secretaries, and, if possible, 
President Hoover. This seems advisable and necessary in order to offset the 
efforts of the Prince of Wales. 

Until 1926 the entire Chilean Air Service was equipped with British material. 
It is now about 90% American. 

If Merino comes to the United States, he will fly as far as Miami as the 
guest of Pan American Airways. We intend to pick him up at Miami with a 
private machine and bring him to New York. It is possible that I will have 
finished my work in Chile, so that I can accompany him back to the States. 

Your efforts to supply an official invitation promptly will be appreciated, as 
I would like to extend our own personal invitation not later than the first of 
next week. 

I am leaving Wednesday, March 18th, for Miami, where I will pick up the 
Pan American Airways, arriving in Chile the last of March. 

In order to further emphasize the importance of making these arrangements 
for Comandante Merino I should mention that we have at present orders 



968 MUNITIONS INDUSTRY 

amounting to $1,200,000 for the Chilean Government with another million or 
million and a half ready to be closed within the next month or so. 

Many thanks for your kind cooperation. 

C. W. Webster. 
jc (Sgd.) WEB. 

Washins'ton file : " Chile." 



Exhibit No. 395 

[Copied from carbon copy] 

Washington Office, Angust 12, 1930. 
Burdette S. Wright, Washington, D.C. 

J. S. Allard, Curtiss-Wright Export Corp., 27 West 57th St. 
Poland 

Colonel Foy of the Military Intelligence Division called Farnsworth to his 
office this morning and showed him some correspondence received from Major 
Emer Yeager, Military Attache at the American Embassy, Warsaw, Poland. 
Major Yeager, among other things, said that the performance of our pilots, 
planes, and motors, made a profound impression in Bucharest and Rumania. 
He happened to be standing by the side of the Chief of Rumanian Aviation in 
Bucharest while Doolittle was doing his stuff. The chief apparently expected 
the wings to drop off the Hawk at any moment during a power dive and had 
never seen anything at all like Doolittle's performance. 

In Warsaw, Captain Cannon seems to have carried off the honors with his 
superb handling of the Fledgling. He apparently put it through completely its 
paces leaving a firmly seated conviction of the stability, steadiness, and re- 
markable performance of the plane. As one Pole expressed it, he made it do 
everything but dance. All in all, the officials, including French and British 
Attaches, were deeply impressed with the power of the motors and the strength 
of the ships. 

Another dispatch deals wiht the jealousy of the French and English aroused 
by this flight. Shortly after our demonstration was finished, France made 
an official flight with high ranking officers to Warsaw and Baltic countries. 

This trip was made very secretly and with a minimum of publicity. Major 
Yeager tells of a flight of British airplanes to twelve Balkan and Scandanaviau 
countries to be made in September. This is supposed to be merely an official 
flight of the Royal Air Force, but Major Yeager learned from reliable source 
that it was deflnitely planned to off-set any good impressions of American 
aviation made by our Curtiss-Wright tour. 

Colonel Foy also had a dispatch from Warsaw enclosing what seems to be 
Polish pilot's licenses awarded to the members of the flight by the Chief of 
Polish Aviation as a mark of his appreciation. These insignia and accompanying 
letter are being sent to me here and I shall in turn forward them to you. 
Yours very truly, 



RPF/LH-4965 

Washington File : Poland. 



Exhibit No. 396 



Helsingfors, Finland, Fchruanj IS, 1931. 
The American Charge d'AFFAiRs, 
American Legation, 

Helsingfors. 

Sir : Pursuant to our conversation of this date, and complying with your 
suggestion, I beg to submit herewith a copy of communication prepared by the 
undersigned for translation into Finnish and submission to the Minister of 
Defen.se and certain other high authorities of the Government of Finland who 
have some interest and voice in the choice of a suitable high-powered aviation 
motor for the Finnish Air Force. This communication will be submitted in 
original to the Defence Minister tomorrow. 

It appears probable that a decision will be reached in the very near future 
with respect to a moderate initial order of new motors, which immediate order 
will in all probability lead to further and more important orders for the 
same type of engine later in the current year. I am assured that the responsi- 



MUNITIONS INDUSTRY 969 

ble technical authorities of the Finnisli Air Force, while not in unanimous 
agreement, favor our Wriglit " Cyclone " R-1820. Should the decision be in 
our favor, it will be the first important aeronautical business in the Baltic 
countries placed with American manufacturers. 

I have warning, however, that the decision may be influenced by political 
considerations, and I have good reason to believe that the Gnome et Rhone 
Company (French) are bringing considerable pressure to bear in an effort 
to secure this business for their " Jutiper " or " Mercury " engine which they 
build under license from the Bristol Aeroplane Co. (British). This pressure 
is of a nature which reflects little credit on the business ethics of the Gnome 
et Rhone Co. The Finnish Air Force possesses a certain quantity of Gnome 
et Rhone " Jutlpers " and I believe that some fourteen of these engines are 
now in the Gnome et Rhone factory near Paris for overhaul. The company 
apparently agreed to carry out this overhaul free of cost, but once having 
received the motors they appear now to boj using them as a lever, coupled 
with threats of making difficulties in future with respect to spare parts for 
the other " Jutipers " in Finnish hands, to force the Finns to divert their 
projected order for new motors to Gnome et Rhone. 

Our Euroi>eau competitors are undoubtedly using both economic and political 
arguments against American manufacturers, and have succeeded in convincing 
certain of the Finnish officials in high authority that America is out of the 
question, or at least not dependable,, for geographical and political reasons, 
as a suitable source of supply for military equipment. I believe their arguments 
fundamentally unsound and have attempted to combat them in mj' communica- 
tion to the Minister "f Defence. 

It has been suggested to me, and quite strongly, that it would be very helpful 
if the American Legation should use its good offices in this instance to combat 
this propaganda of uur European competitors and accredited representatives 
of their respective governments. Confidentially, I may mention that Colonel 
Vuori, Chief of the Finr.ish Air Ftsrce. who has stated frankly that he favors 
the "Cyclone" advised me last night that it would do a vast amount of good 
if the Charge d'Aftaires could talk personally with the Foreign Minister, the 
Finance Minister, the Defence Minister, and possibly the Minister of Com- 
merce, on the politico-economic situation as it may affect the subject of this 
memorandum, stressing especially the fact that the United States would be a 
dependable and rapid source of supply for Finland under all conditions that 
might conceivably arise. It may be that certain of the grounds for such a 
contention that I have advanced in my communication to the Minister of 
Defence will meet with your concurrence. 

It is possible that trade arguments will also be advanced against us, which 
would seem answerable in view of America'.s friendly relations with Finland, 
the recent decision of our Treasury Department respecting "dumiiing" and 
the vast amounts of money loaned to Finland by the United Stat<>s and 
potentially available for future loans. 

Any assistance in this matter that you may deem proper to afford will 
undoubtedly be of value to American export business in general, as well as 
being greatly appreciated by the undersigned and the interests represented 
by him. 

Respectfully, 

Curtiss-Wright Export Corporation, 
Melvin Hall, Vice President. 



Exhibit No. 397 

MEMORANDUM 

June 19, 1934. 
To : Thomas A. Morgan. 
From : Albert I. Lodwick. 
Subject : Importance of the export market to the aviation industry. 

1. From a national defense standpoint, it is essential that a large number 
of men be trained in the manufacture of aircraft in order to produce large 
quantities of aircraft in case of an emergency. Therefore, it is a distinct 
advantage to this country to maintain the greatest possible sales volume of 



970 MUNITIONS INDUSTRY 

American aircraft and engines abroad in order to provide employment for the 
largest number of men. 

2. It is estimated that 75% of the cost of producing an aircraft engine 
is for labor, that is, including the labor involved in the material and acces- 
sories furnished for the production of an engine. 

In the manufacture of airplanes it is estimated that 66% of the total cost 
of an airplane is for lobor, that is, including the labor involved in the manu- 
facture of accessories and materials required for the production of the air- 
plane. 

llie export business of the aeronautical industry during 1933 provided 
10,620,000 man-hours of labor. 

3. The export business has enabled a number of American aviation com- 
panies to continue operation. Without this business many American aviation 
factories would have been forced to close their doors, resulting in further 
unemployment as well as reducing the sources of supply for military and 
commercial aircraft which would be of vital importance to our Government 
in case of an emergency. 

4. All aircraft and aircraft engines of a military nature must first be re- 
leased by either the Army or Navy before an American manufacturer is per- 
mitted to ship these products to a foreign country. This policy definitely pro- 
tects the United States from a national defense standpoint by retaining the 
latest plane and engine developments exclusively for our own military and 
naval air forces. 

5. The export aviation business reduces the cost of airplanes and engines to 
the United States Government due to the fact that a proportion of the fixed 
charges and overhead is charged to the foreign business. 

6. The greater the number of countries purchasing our airplanes and engines, 
the greater our knowledge of the potentiality of their air force. Our pilots, 
mechanics, and salesmen procure very valuable knowledge of flying conditions, 
terrain, available landing fields, in foreign countries, which would be of great 
military value in case of an emergency. 

7. Licenses to manufacture American aircraft and/or engines in foreign 
countries have been granted, after approval by the tjnited States Army or 
the United States Navy, in several cases to foreign manufacturers. It usually 
takes from two to three years for foreign companies to manufacture the 
American product, by which time that product would be in the obsolescent 
stage in the United States. Any restrictions upon the exporting of American 
aviation products will doubtless cause our foreign customers to divert their 
trade to foreign competitors, thus building up the aviation industry in foreign 
countries, to the detriment of American aviation. It will also encourage for- 
eign countries to establish their own aircraft and aircraft engine manufactur- 
ing plants rather than depend on the United States and their source of supply. 
Such action by many of our present export customers would seriously affect 
the status of the aviation industry in the United States who are dependent upon 
the export field for over 35% of their sales volume. 

8. The following table indicates the increasing importance of exports to the 
total production of the aviation industry. In 1933, over one-third of the 
entire production of aeronautical products was shipped to foreign countries. 
Aeronautical exports were larger in 1933 than any other year in aviation 
history. The important part played by exports in relation to our total pro- 
duction is due not only to the sales promotion efforts and the high quality 
of our products, but is also due to the cooperation the industry has received 
from the commercial attaches and other United States Government repre- 
sentatives located in foreign countries. These figures are of even greater im- 
portance when it is realized that American aircraft available for export is in 
the obsolescent stage and that it must compete with foreign products which are 
released for export in many cases after passing the experimental stage. 
Foreign countries have likewise assisted their commercial companies in develop- 
ing business by sending their naval aviation units to foreign countries to demon- 
strate their latest types of flying equipment. An example of this was the 
visit of the British Navy to Turkey in 1929, and the flight of 35 Savoia 
Marchetti Torpedo and Bombing planes from Italy to Athens, Constantinople, 
Varna, and Odessa, in June 1929. 



MUNITIONS INDUSTRY 



971 



Total United States prodMCtion as compared to exports of American aircraft, 
aircraft engines, parts' and accessories 





Total pro- 
duction ' 


Aeronauti- 
cal exports 


Percent 
of total 




Total pro- 
duction ' 


Aeronauti- 
cal exports 


Percent 
of total 


1928 


$64, 662, 491 
70, 334, 107 
60, 486, 177 


$3, 664, 723 
9, 125, 345 
8,818,110 


5 
12 
14 


1931 


$54, 520, 627 
34, 861, 185 
25, 676, 165 


$4, 867, 687 
7, 946, 533 
9, 203, 978 


8 


1929 


1932 . 


26 


930 - - 


1933 


32 







1 Production figures are used due to the fact that reliable sales figures are not available for years prior 
to 1930. 

The above table indicates that the export business is more essential now 
than at any previous time. This business enables many factories to continue 
operation which will be of inestimable value to the Nation in case of an 
emergency. Any restrictions placed on the exportation of aeronautical equip- 
ment will divert this business to foreign competitive manufacturers as well as 
encourage foreign nations who are now our customers to establish their own 
factories to manufacture the products which now give employment to thousands 
of laborers in this country. Many factories must be kept in operation in times 
of peace if they are to meet the demands that an emergency creates. 

9. During the past two years, the aeronautical exports of the United States 
have been larger than those of any other country. The following table indi- 
cates that the United States exports in 1933 totaled $9,203,978 compared to 
$6,210,171 for the United Kingdom, our nearest competitor. The United States 
exports in 1933 almost equalled the combined exports of the United Kingdom 
and France. However, this enviable position has only been held by American 
aviation during the past two years. This situation has been brought about by 
the satisfactory operation of American airplanes and engines abroad which 
have resulted in large repeat orders during the past two years. Undoubtedly, 
some of our foreign competitors would welcome an embargo in those countries 
which have transferred their purchases of aeronautical equipment to the 
United States, and in this way injure the aviation industry of this country. 

An examination of the following figures will indicate the increasing impor- 
tance of American aeronautical products in the export field : 

Exports of aeronautical equipment from the United States, Great Britain, 
France, and Italy, 1928 to 1933 





United 
States I 


United 
Kingdom 2 


France ^ 


Italy * 


1928 


$3, 664, 723 
9,125,345 
8.818,110 
4, 867, 687 
7, 946, 533 
9, 203, 978 


$6, 466, 898 
10, 620, 086 
9, 971, 900 
8, 441, 734 
6, 107, 130 
6, 210, 171 


$5, 469, 027 
8, 455, 283 
8, 278, 452 
4, 559, 979 
2, 693, 393 
3, 035, 907 


$2, 160, 909 

1, 157, 080 

332, 055 

1,179,032 

1 272 236 


1929 


1931 


1931 


1932 


1933 . 


2 218 974 






Total... . 


43, 626, 376 


47,817,919 


32,492,041 


8, 320, 286 





■ Department of Commerce, Bureau of Foreign and Domestic Commerce, Trade Statistics Division. 

* "Accounts Relating to Trade and Navigation of the United Kingdom ", December 1933, December 1931, 
and December 1930. 

3 "Statistiques Mensuelle du Commerce Exterior de la France", December 1933, December 1931, and 
December 1930. 

* "Statistica del Commercio Speciale de Importazione e di Esportozione", December 1933, Decembe 
1931, and December 1930. 



10. In connection with the rivalry between the United States and European 
nations for the export business of the world, it is interesting to compare the 
wages paid in order to determine those countries which have a price advantage. 
An examination of the following figures indicate a decided advantage in favor 
of our European competitors. 



972 



MUNITIONS INDUSTRY 



Average cost of labor per hour in aircraft and aircrafit-engine manufacturing 

plants 



United States 



England 



France 



Cents 



Aircraft manufacturing 

Aircraft engine manufacturing. 



Cents 



Cents 



In spite of the fact that England and France pay lower wages for skilled 
labor required in the manufacture of aircraft and aircraft engines, they pay 
far higher prices for their military aircraft engines, as is indicated by the fol- 
hjwing figures. The prices paid by England and France doubtless enables 
their engine manufacturers to carry on an aggressive experimental engineering 
program as well as show a profit from their operations. Such a policy keeps 
alive production facilities which would be of inestimable value in case of an 
emergency. 

PRICE PER HORSEPOWER PAID FOR MILITARY AIRCRAFT ENGINES 

England, $15,000 per horsepower. 

France, $18.35 per horsepower for liquid-cooled engines. 
France, $12.50 per horsepower for air-cooled engines. 
United States, $11.50 per horsepower for liquid-cooled engines. 
United States, $7.98 per horsepower for air-cooled engines. 



SUMMARY 

During the past few years the United States exports of aeronautical prod- 
ucts have increased to such an extent that the United States leads the world 
today in the export field. The export business constitutes a large part of 
the total aviation production in the United States. The establishment in 
foreign countries today of American aviation products is extremely important, 
due to the fact that many nations are today formulating the nucleus of an 
air force. 

In future years the demand for aircraft products will undoubtedly increase. 
This not only means added aircraft purchases but means annual purchases 
of spare parts and accessories to keep their planes in operation. Further, 
it is necessary for these countries to purchase and set up equipment for the 
maintenance and repair of aircraft. If this machinery is set up for American 
planes, and relations with these countries are satisfactory for several years, it 
will be very difficult for our foreign competitors to obtain the expert business 
we now enjoy. These countries who are now building up an air force will 
purchase aeronautical equipment from France, England, Italy, or some other 
foreign country, if they believe that trade restrictions in the future may pre- 
vent their procuring spare parts for the American flying equipment they are 
purchasing today. Thus, the aviation industry of foreign nations will benefit 
to the detriment of the aviation industry in this country. Congressional in- 
vestigations, embargoes, pacifistic talk, and propaganda will doubtless cause 
some of our present customers to buy abroad, due to the tmcertainty of delivery 
and the uncertainty of obtaining spare parts in the future. The greater the 
volume of aviation business in this country, the better our national defense. 

Restrictions on aviation exports will not only send business to our foreign 
competitors but will tend to cause more unemployment in this country, de- 
crease the productive capacity of our factories, and weaken our national 
defense. 

A policy of continued investigation, uncertainty of the future, and trade 
restrictions will likewise encourage many foreign nations desirous of build- 
ing up an air force to establish their own airplane and airplane-engine fac- 
tories rather than depend on the United States as a source of supply. 

The problem settles down to a question of whether factories in Europe or 
the United States will enjoy this foreign business. 

Albert I. Lodwick. 
AIL : RMW 



MUNITIONS INDUSTRY 973 

Exhibit No. 398 

December 10, 1929. 
Mr. LEaGHTON W. Rogers, 

Chief Aeronautics Trade Division, 

Bureau of Foreign and Domestic Commerce, Washington, D.C. 

Dear Mr. Rogers : The Curtiss Aeroplane Export Corporation has recently 
consumated contracts for sale of military pursuit airplanes to the Dutch 
East Indies and to the Siamese Government. There contracts have finally 
been obtained after several months of work through the combined efforts 
of our representatives and those of the Bureau of Foreign and Domestic 
Commerce. 

We wish you to know how much we appreciate the splendid cooperation of 
your Division and of the Bureau and of the assistance given by your men 
in the field and your oflice in Washington. It is very probable that the con- 
tracts might not have been obtained liad it not been for the service which 
your organization was able to extend, as, of course, there are certain angles 
of situations and information which can be obtained by an otlicial representa- 
tive of the United States Government, which would be impossible for a private 
individual to gain. 

I certainly hope that the relation between this company and your Division 
may always remain as happy as they have been in the past and that you 
wili continue to allow us the privilege of calling upon you for assistance in 
the furtherance of our foreign business, not only in the countries where you 
have already assisted us but, I hope, also in more extensive fields included in 
our future program of expansion. I can see where the assistance you might be 
able to give us in newer fields which we have not yet reached, could be of even 
greater service to us tluin in those where we have already carried on negotia- 
tions, as, of course, making the initial step in new territory is the most dif- 
ficult part, unless contracts have already been established ahead of us and we 
are able to use them for guidance. 

Again thanking ydu for the splendid cooperation I wish to remain. 
Very truly yours, 

(Sgd.) BuKDETrE S. Wright. 
RLE/CC^2244. 

Washington file: General. 



(" Exhibit No. 399 " appears in text on p. 819) 



Exhibit No. 40O 

[Copied from carbon copy] 

January 31, 1930. 
Mr. Leighton W. Rogers, 

Chief Aeronautics Trade Division, 

Bureau of Foreign and Domestic Commerce, 

Washington, D.C. 

Dear Mr. Rogeks : You, I know, understand the difficulties which are con- 
fronting American aircraft manufactui'ers in the field of sales. The over 
production of the past year, and the reorganizations and mergers in the industry 
are bringing about a general reorganization and intensification of sales methods. 
It will be necessary for us to indulge in much more intensive effort in foreign 
markets during the coming year than it was in the past. 

The recent stock market conditions and their effect on the business of 
the country as a whole emphasize the need for such efforts in foreign markets 
by the aircraft industry. 

My company has expressed its appreciation in no uncertain terms of the 
assistance which it has received from the Department of Commerce, and in 
sales problems, especially exports, from the Aeronautics Trade Division. As 
an example, your aeronautics specialist in South America was instrumental 
last year in paving the way for, and in the consummation of, a sale for six 
of our airplanes in Brazil — a market from which we had not received any 
business for years. Such contributions to marketing constitute aid of original 
and outstanding value. 

Because of the strong competition offered by European aircraft manufacturers 
in the Far East, the embargo against United States aircraft in Australia 



974 MUNITIONS INDUSTRY 

(which it has been impossible to have lifted through diplomatic channels and 
by correspondence) and the missionary work which should be done at this time 
in the Far East in general, we are naturally very much interested in having 
an impartial observer for the aeronautics industry cover those territories in the 
same manner in which South America has been covered by your Bureau. The 
time is particularly opportune to have a qualified aeronautics man visit Aus- 
tralia, New Zealand and, if possible. South Africa. The Chinese market needs 
attention particularly because of tlie price competition offered by European 
makers. 

We have known for some time that the Department was asking Congress 
for funds to enable it to carry on and extend this foreign field work for the 
aeronautics industry, and this letter is being written to ask you about the status 
of that request for appropriations. Frankly, the company wants the assistance 
which these appropriations will bring into being. 
Very truly yours, 

BuEDETTE S. Weight, Vi'ce Presi^nt. 

Washington file: General. 



Exhibit No. 401 
[Copy] 

Department of Commerce, 
Bureau of Foreign and Domestic Commerce, 

Washington, May 12, 1933. 
Confidential. 
In reply refer to .... 45. 

Mr, C. W. Webster, 

President Curtiss-W right Export Corporation, 

21 West 57th Street, New York, N.Y. 

Dear Mr. Webster: Kindly refer to my letter of April 14, about the visit of 
the Brazilian Army Air Service officers who arrived yesterday on the " Southern 
Cross." It would be impolitic, I believe, to mention the proposition mentioned 
below to the Brazilian gi-oup now here. 

In connection with their visit, I note from correspondence from our Rio de 
Janeiro office that Captain Henrique Dyott Fontenelle was not included in the 
mission and, according to our office, was the principal advocate of Brazil's pur- 
chase and virtual standardization upon American aeronautics equipment. 

The Rio de Janeiro office suggested that some American manufacturers, or 
group of them, might desire to pay Fontenelle's way to this country, taking 
advantage of tlie present low steamship rates. First-class round-trip passages 
from Rio de Janeiro to Chicago and return now available for about $250.00, such 
round-trip passages being good for a period of six months in connection with 
the Century of Progress Exposition at Chicago.) 

It is understood that Captain Fontenelle can arrange to make the trip insofar 
as leave from his duties is concerned. This man has been placed in charge of 
the organization of the observation group of the Army. 

I quote from a report dated April 13 from Mr. Pierrot, and am pleased to 
attach the statement referred to therein : 

'* I have just secured a copy of the recommendations made by Fontenelle 
during the first two weeks of the revolution, when the War Dept. was in a 
quandary as to what type of equipment to purchase, and when a tremendous 
amount of pressure was being brought upon War Dept. officials by French and 
British manufacturers to buy their equipment. This translation of Fontenelle's 
report is of particular interest in substantiating the statements I made in my 
letter to the effect that he, more than any other single flying officer, had been 
responsible for the purchases of the large number of American planes acquired 
by the Army during the latter months of the revolution." 

I am passing this suggestion on to you without any recommendation on my 
part, as well as to other United States manufacturers likely to be interested, 
and who have been active in the Brazilian market. 

Please let me have your reaction. 
Very truly yours, 

(Signed) Leighton W. Rogers, 
Chief Aeronautics Trade Division. 

Inclosure 68209, 



MUNITIONS INDUSTKY 975 

Exhibit No. 402 

Februaky 18, 1931. 
Confidential. 
Memorandum for Mr. Dickson, Charge d' Affaires. 

Referring to previous conversations on the subject of the pending purchase 
of aeronautical equipment by the Finnish Air Corps, for which they have 
appropriations totalling approximately SMKs 60,000,000 (residue from 1930 to 
1931 new allowances), the immediate purchase of 10 airplanes engines, possibly 
18, at around $6,500 each, which has been debated for a number of months is, 
according to my latest information, to be decided on within a week or 10 days. 

As you know, two American companies, the United Aircraft Export Coi'pora- 
tion of New York, with their Pratt & Whitney " Hornet B ", and the Curtiss- 
Wright Export Corporation of New York with their Wright " Cyclone 1820 " 
are competing with French Gnome et Hrone " Bristol Jupiters ", English Arm- 
strong, Siddeley's " Jaguar Major " German Siemens-Halske's SH 20 ", and a 
German made Pratt & Whitney " Hornet A". I have in confidence from re- 
sponsible officials of the Air Corps that the consensus of opinion of the Techni- 
cal Board appointed to examine engines suitable for the needs of the Air Corps 
is in favor of the Wright " Cyclone ", with a noticeable amount of sentiment 
favoring also the other American engine — the " Hornet B ". Undoubtedly, 
however, at this particular moment, the " Cyclone " is most favored. There is 
too a body of opinion which has grown out of experience with French, English, 
and Gennan engines, and training of the air force personnel, in the countries 
mentioned, strongly favoring respective French, British, and German engines. 
The ramifications of the tendencies to favor European engines involve personal 
inclinations, friendships, former alliances, and various other unidentified 
reasons. 

It now appears, within the past several days, that while on the whole the 
American engine is best liked, it is doubtful if a decision to give the order for 
this particular group of engines will be tendered to America — ^and undoubtedly 
the company receiving the first order will logically be given the orders to fol- 
low — because no one in the council considering the purchases is willing to take 
the responsibility for giving the order to America. There have not been hereto- 
fore any American engines used in Finland (there is one engine from America 
now on test with the Ministry of Defense — a Wright " Cyclone 1750"), because 
of a more or less inherent belief that the Finnish Government would prefer to 
turn its orders to Europeans countries on account of possible closer political 
affiliations with European countries in the event of war. The argument used 
is the above in a general way, but specifically it is stated that the comparative 
distance of the United States from Finland, and of the European countries 
mentioned, makes the possibility of securing supplies when needed must more 
problematical. As a matter of fact, it is the experience of importers of Amer- 
ican goods here such as machinery, automobile, and other manufactured arti- 
cles, that their orders to the United States are frequently filled and deliveries 
made to Finland in much quicker time than orders for similar products sent to 
European countries. A case in point is the Wright " Cyclone 1820 " test engine 
sent to the Air Coi-ps for trial. This engine was shipped from New York on 
June 27, 1930, and arrived in Helsingfors, July 15, 1930. The order had been 
placed for the shipment a week or so before June 27. The Armstrong- Siddeley 
" Jaguar " so I am told by people in the Ministry of Defense, took a consider- 
able longer time to get here, being shipped from England, due principally to the 
length of tinae between receipt of the order and the actual shipment of engine. 
The relative shortness of deliveries from America is due to several factors 
inherent in American business methods (1) fast production, (2) prompt atten- 
tion to orders, and (3) direct steamship connections between New York and 
Helsingfors each week with a scheduled time of 14 days between the ports. 

This present engine order is of considerable importance to American aeronau- 
tical manufacturers ; it represents the first order of any importance for engines 
for military use to be made available to American manufacturers in as advan- 
tageous a prospect ; it is definitely the first order for airplane engines which 
American manufacturers have had as good a chance to get in Finland ; if this 
order goes to America, it opens up very good prospects for future business in 
Finland, and would very much strengthen the chance for doing business in 
surrounding countries, in the Baltic States and Scandinavia. One of the Ameri- 
can companies, the Curtiss-Wright Export Corporation, has devoted consider- 
able time and money in following up this opportunity, which I uncovered in 
83876— 34— PT 4 19 



976 MUNITIONS INDUSTRY 

October 1929 ; in June of last year they sent a demonstrating mission of three • 
airplanes to Finland at large expense and since then have had three highly 
paid men visit Finland for varying lengths of time. The United Aircraft Export 
Corporation have also sent one man to Finland in connection with this matter, 
having shown an active interest in it some months after Curtiss-Wright had 
earnestly taken it up. 

In view of the apparent political sentiment in the government here against 
the purchase of American engines, even though the Technical Board in the 
General Staff prefer the American engines, I believe that it would be of con- 
siderable assistance if certain government officials who might have a say in 
the final decision could be informed of the facts in the matter, as to American ' 
deliveries, etc. 

Cordially yours, 

OSBORN S. Watson, Commercial AttacM. . 



Exhibit No. 403 

Deipabtment of Commerce, 
BUBS1A.U of FoREaox and Domestic Commence:, 

Washington, March 24, 1931: 
In reply refer to 45. 

Mr. J. S. AiXARD, 

Vice President and General Maiuiger Curtiss-Wright Export Corporation, 
27 West 57th Street, Neiv York, N.Y. 
Deak Jack: Attached is a copy of a confidential letter from Commercial' 
Attache "Watson at Helsingfors, and of a memorandum which he wrote to the • 
Charge d' Affaires of the Legation there, concerning the status of the Finnish., 
airport engine order. 

As you will see, the recent delay on the part of the Finnish Government in 
placing the order is due to increased pressure being brought to bear on the- 
part of some of your European competitors. 
Very truly yours, 

(Sgd.) Leiighton W. Rogees, 
Chief, Aeronautics Trade Division. . 
Inclosure 38875. 



Exhibit No. 404 

Office of the American Commercial Attach^, 

Helsingfors, Finland, February 23, 1933. 
Director Burrvu of Foreign and Domestic Commerce, 
Department of Cominerce, Washington, D.C. 

(Attention: Mr. Leighton W. Rogers, Chief, Aeronautics Trade Div.)- 
Subject : Finnish Purchase of Czechoslovak Airplanes. 

Sir : I have inquired into the method of construction used by Smolick on the 
airplanes which the Finnish Government has contracted for and for which 
they also have a building license. From what I can gather, the construction 
used by Smolick is the dural and welded steel tubing plan as used in the • 
United States. I believe that the wing construction is with wood longeron 
and dural ribs. This is the construction which is referred to in Jane's All ■ 
the World's Aircraft with respect to airplanes preceding this model. 

In connection with this Czechoslovak purchase, even though it was a propo-- 
sition of a kind of baiter, the very fact that the Finns bought from the Czechs 
instead of from the English makes me believe to a certain extent that all 
of this official pressure by the English is not as effective as it might be. I 
have heard the sentiment voiced recently that perhaps this official pressure 
proposition has gone a little too far u]^ here. I sincerely trust that this is the 
case. A few days ago at a dinner the secretary of the legation was talking 
to Mr. Ryti, the Governor of the Bank of Finland, about Finnish Government 
purchases, and Mr. Ryti categorically stated that it was a Finnish Government 
policy to buy the best things they could at the cheapest price, regardless of 
political considerations. This sounds rather funnv to me in the face of some- 



MUKITIONS INDUSTRY 977 

recent Finnish Government purchases from England, but I am taking a spai'k 
of hoi>e from this Czechoslovak order. I expect our two big companies at 
home, who really have spent a considerable amount of money up here in Finland, 
are more or less inclined at this time to let this particular small territory 
ride for the time being. They have not had anybody up here at all since I 
came back. Both of them have very good agents, but I do not think that 
pressure from headquarters from time to time is a very salutary thing. 
I certainly hope that it may be possible within the not too distant future 
for some sort of cooperation to be brought about between the American aircraft 
firms who do a good deal of export, as referred to in Mr. Warner's article 
about which I wrote you a few days ago so that we may then lie able 
to take off our coats and drive right into the middle of these government 
orders. 



(" Exhibit No. 405" api>ears in text on p. 821) 



Exhibit No. 406 

[Copy] 
In reply refer to 45. 

Department of Commerce, 
Bureau of Foreign and Domestic Commerce, 

Washington, March 12, 1932. 

[Confidential] 
Mr. C. W. Webster, 

President Curtiss-Wrir/ht Export Corporation, 

27 West Fifty-seventh Street, -New York, 2V.Y. 

Dear Mr. Webster: As you may have already heard, there is an aviation 
mission on the west coast from Canton which arrived in Seattle on ^larch S. 
It consists of Brigadier General Woo G. Garr, commander of the second 
squadron of the Canton Aviation Bureau, and Colonel S. Iv. Yee, Director of 
the Cantonese Intelligence Bureau. These ofhcers are representing General 
Chang Wei Jung, Commander of the Canton Aviation Bureau whom you will 
recall as former Chief of the Nationalist Air Force at Nanking. According to 
Trade Commissioner Edward P. Howard, they came to inspect aircraft fac- 
tories and advise the San Fi-ancisco Chinese regarding airplane purchases 
for presentation to China. 

I could not advise you of their presence in the United States before, since 
I was requested not to from China. For obvious reasons I urge your keeping 
the information contained in this letter in strict confidence. Under no cir- 
cumstances should any publicity be given out about the mission. 

I understand that the two officers arrived from Seattle at San Francisco 
yesterday, where they will stay for approximately two weeks. They will 
then proceed to Los Angeles, Chicago, Detroit, Washington, New York, and 
Boston. I shall endeavor to arrange it so that they will visit Buffalo. 

You will be interested to learn that there is in San Francisco a joint com- 
mittee of the Chinese Chamber of Commerce and six Chinese trading com- 
panies which requested our San Francisco ofBce to help make a iireliminary 
survey for the use of the mission of pursuit bombing and observation planes. 
This joint committee has raised some funds from Chinese-Americans for the 
purchase of planes. Whether the Chinese-Americans in other cities who are 
reported to have raised, or to be raising, funds for this purpose will see the 
delegation is unknown. It is assumed that the officers will survey this field 
while here, if these activities have not already been consolidated by the San 
Francisco committee, since, as you know over 90 percent of the Chinese- 
Americans are Cantonese. Cleveland, Buffalo, Syracuse, Boston, and Detroit 
have been mentioned by the press in this connection. 

When our office in San Francisco asked our help we sent out one of the 
catalogs of Curtiss military planes ; also, photographs of the YP-20 and the 
02C2 " Hell Diver " with statements of performance and specifications. In 
passing this information, we mentioned, because of the Chinese preference for 
air-cooled engines, that some other Curtiss-Wright planes, as made for the 
United States military services, were liquid-cooled and if the committee and 



978 MUNITIONS INDUSTRY 

delegation were interested in these, your corporation would be pleased to 

furnish details. 

You can get in touch with the mission through our Mr. Wesley As^h. District 
Manager. U.S. Bureau of Foreign and Domestic Commerce, at 310 Custom- 
house, San Francisco. In doing so please make no mention of the fact that 
I suggested this action. 
Very truly yours, 

(Signed) Leighton W. Kogebs, 
Chief, Aeronautics Trade Division. 



(" Exhibit No. 407 " appears in text on p. S23) 



Exhibit No. 40S 

Febku-'lky 21. 1933. 
Mr. H. P. MacGowan, 

Acting Commercial Attach^, 

Edificio del Banco Hipotecario de Colombia, 

Bogota. Colombia. 
Df.ar Mb. MacGowan : I want to acknowledge receipt of your letter of Feb- 
ruary 1st aud extend our appreciation of the great assistance we can always get 
from your office. 

The Department in Washington advised us that they had a cable from you 
asking us to submit information on the planes that we are able to offer. As we 
have already passed this information, by cable, to Joaquin Sami>er. and knowing 
his close contact with you, I have simply cabled you in reply that he has all 
the necessary information. We have, I think, made a most advantageous offer 
on more Hawks and Ospreys and I hope something will result. Delivery is 
always an important factor and on these two planes I think we are in a position 
to make deliveries that cannot be equalled by any other company. My own 
opinion is that they should have more of both of these planes, aud with the 
equipment consisting largely of these planes they will have a fighting air force 
which would give them command of the air. 

Mr. Samper has advised me of Benny Mendez accident in one of the Hawks, 
and while I have written him a brief note expressing our best wishes for his 
speedy recovery, I shotild appreciate it if you see him personally to tell him we 
are indeed sorry to learn of his accident and trust that he will soon be all right 
again. We are. of course, following the press advices with respect to develop- 
ments, but always appreciate hearing from your office what is going on. 

The service man, Osborne, whom you mentioned, did not go to Colombia. 
We are sending another man, Harvey Brewton, who will probably arrive in 
Colombia within two weeks, and if he gets up to Bogota I told him to get in 
touch with you. 
Kindest personal regards. 
Sincerely yours, 

W. F. GonLDiNG, Vice President. 
WFG/f. 

Exhibit No. 409 

[Copy] 

Paris, May 23, 1932. 
JuLiEX E. GiX-LESPiE. Esq., 

American Commercial Attach^, 

American Embassy, Istanbul, Turkey. 
Dear Jltien : The attached copy of a letter to the Secretary of Commerce, 
which I am enclosing for your information, is self-explanatory. 

I am indeed appreciative of the cooperation which we have received from 
the Department of Commerce and particularly from yourself. Your assistance 
and wise counsel have been invaluable, and when I say that we are counting 
greatly upon your good advice and collaboration in our future dealings with 
the Turkish Government, you know what I mean. 



MUXITIOXS INDUSTRY 979 

I have lately received extremely bad reports from both Italian and French 
constructors with respect to their dealings with the Turkish Government, and 
the difficulties which have been created in practically all contracts with the 
Turkish governmental departments as an excuse for delaying and reducing the 
payments called for by the contracts. It seems to me that the Turkish Govern- 
ment is now very much on trial with respect to American business. We are 
calling upon them to meet their obligations promptly and honorably, as we 
propose to meet ours, and when they do so I am convinced that this favorable 
experience will be of assistance to the Turkish authorities in future dealings 
with the United States. Should the occasion happen to arise, which I trust 
it will not, I suggest that this might properly be pointed out to the authorities 
concerned by you or the Ambassador. 

With kind personal regards and best wishes. 
Sincerely yours, 

Mexvin Hall. 
MH/rbs. 

Exhibit No. 410 

[Copyl 

May 11, 1933. 

Mr. Julian Gullespie, 

American Commercial Attach^, 

American Enibassy, Istanbul, Turkey. 

Deur Gillie: Yesterday I wrote Henry the first letter simply because I 
wanted to hold up your letter until I could give you some definite informa- 
tion about what we are going to do on the Kayseri situation. I would must 
rather have written you first as I have the deepest appreciation for your 
many courtesies to me Avhile I was in Turkey, but I thought you would under- 
stand by reason for holding up the letter and I assure you that my apprecia- 
tion is none the less sincere by making this the second letter to Turkey since 
my return. 

In the first place, I cannot begin to thank you or Inez for what you did 
to make my stay in Turkey pleasant. Also your courtesies, when the two 
Helens were with me, were equally appreciated by them. With all the fussing 
and fuming I did about my long stay in Turkey, I really had a good time and 
enjoyed the experience. The gootl time was solely enjoyed with and through 
you. The experience was gained in my work with the Government and our 
agents. Tour courtesy in letting me use your oflBce as you did will always be 
remembered and your good nature and sound judgment and assistance to me in 
cur discussions of my many problems were priceless. 

Yesterday I received your cable about the Kayseri situation and I am grateful 
for your thoughtfulness in sending it to me. When you send such cables or 
incur any expense on Curtiss business will you please collect the costs from 
Bob Farnsworth. There is no reason in the world why your office should 
stand these expenses and I want your definite promise that you will collect 
them from Bob. 

I have the complete approval of the board of directors to replace C5apt. Coon 
at the factory and to send out the necessary personnel to step up production 
to completely satisfy the Turkish Government. Today I am interviewing Bob 
Simon who has had a vast amount of experience in factory management with 
Fairchild. Berliner-Joyce, and ourselves. He has been highly recommended by 
Ted Wright of our Buffalo plant and if my interview with him satisfies me he 
Avill probably be the man we will send out and you may rest assured that we 
are working just as fast as it is humanly possible, and will get him out there 
on the earliest boat. Substantially, my plan is to do as I told you when we 
discussed this problem in your office. Nothing will be said to Coon until his 
replacement arrives and the replacement will tie in with Emin Bey and Bob 
Farnsworth before proceeding to Kayseri. Then if Bob is available, he and 
Emin Bey should take this replacement down to Kayseri and introduce him 
{■nd get him started. If Bob is not available I would suggest that Ferdie 
Hulse be the man to go with him. The replacement will have a suitable letter 
to Capt. Coon outlining the situation and Bob or Hulse will be instructed as 
to the procedure to follow to get Coon back home. Fortunately, my board of 



980 



MUNITIONS INDUSTRY 



directors understand the situation in Turliey much better than I had hoped for 
and they are with me 100% in my present plans and I looli for results that we 
can be iiroud of and which will satisfy the Turkish Government. 

I have the approval of submitting a counterproposal to the Govei'nment on 
the new air-lines proposition and work is progressing most satisfactorily 
here on drafting a proposal. I hope to send it out by steamer within the 
next week and believe that the Turkish Government will realize from the 
proposal the sincerity of Curtiss-Wright in working on all of their aviation 
problems with them. 

I am sorry that the Hawks have not been accepted as yet but I have had 
some encouraging news from Bob and I cannot help but feel that the Turkish 
Government are doing all that they can to protect themselves against criticism 
in the procedure they are following on these further tests. I am sure every- 
thing will come out all right and the net result of our experience has been that 
we have learned a valuable but very expensive lesson. 

I showed the two reels of my movies last night and the picture that I took 
of you and Henry coming out of the Embassy is excellent, Helen and I will 
cherish this picture and show it many times just to have a good view of 
your good self. 

Please give my very best, in which Helen joins me, to Inez and the chil- 
dren and tell Mary Howard that I still love her and will come back to Turkey 
some day to see her. Also again many thanks for all you did for us and 
here's hoping things work out to your entire satisfaction as I am sure they 
will. The best dope I can get on the situation in the future for Department 
of Commerce is that even though the Department's activities in foreign fields 
are curtailed the good men such as yourself will be retained on the job under 
either the State Department or the Consular Service, or in some manner, and 
I am sure that nobody will replace you in the matter of value to the Govern- 
ment. Don't work. We all hope for the best and you may rest assured that 
you have some great boosters working for you here. 

Most sincerely, 
J. S. Allard. 
BMX. 



Exhibit No. 411 

[Copy] 

PAA-Via Pan Air. 

Apeil 20, 1933. 

Dear Web : Had Leon's cable this morning, and want to tell you that I 
appreciate Leon having thought of me, and that I realize that conditions are 
not such now as to justify you in adding to the expense of your organization. 

I have intended writing to you for some time, that is, for the past two weeks, 
in connection with your representation here. You've got to get a good outfit 
with the best possible Government connections. Don't lay off this market now 
in the hope that there will be another mix-up which will put the ins out. 
Even if that occurs, it is no reason wliy you should sit by and see chances for 
business go by the boards. There is considerable talk right now, and some de- 
gree of certainty that there is going to be some more buying by the Government. 

I know that there is definite interest in the acquisition by the army of a 
number of bombers. That business could be worked up if you had a good out- 
fit here to handle it for you. I know that Mayrink Veiga is working on it. 
I also know that M.V. are working actively on a proposition for an amphibian. 
The Government wants 16 amphibs — Loening preferred. I have told Lafayette 
I would communicate with you to see what could be done in the matter of 
having you quote him. If Loening or Douglas are not yet bought, they will 
buy French stuff. Here's a chance for you to knock off a pretty piece of busi- 
ness. I know that you are wondering where the dollars are coming from. 
Has anyone lost any money yet on the supplies they made during and after the 
last revolution? Don't worry about money. This Government, which will 
elect itself for at least four more years, is giving the War Dept. pretty much 
everything it asks for, and so long as Americans continue to drink coffee there 
will be dollar exchange. The financing can be handled, with a little ntanaging 
at this end. 

There has been a tremendous amount of interest recently in your representa- 
tion. Several firms have asked us to communicate with you but most of them 



MUNITIONS INDUSTRY 981 

'4iave been of the sort that I did not feel that it was worth while to call to 
jT^our attention. The Cia Provendas (Cia. Promotora de Vendas) Ediflcio A 
Noite, sala 1316, is the best of the lot, and has all sorts of good things to 
recommend it. It is all set so far as its ability to handle Government business 
is concerned, particularly in the War and Navy Depts. One of the directors 
of the firm is a brother of the interventor of the State of Rio de Janeiro, and 
others are all tied up with politics. Obviously, the crowd would not be so 
hot if there were a change of Government, but I have never seen things quieter 
here than they have been in the last four months. The local boys took all the 
fight out of the Paulistas, for the time being, at least, and I feel certain that 
'Tve can expect a few more mouths of calm, at least, unless the elections result 
in some local disturbances. I don't think that you can count on another real 
revolution for some time. 

Coincidence — just now Castro Lopes called me on the phone to ask me to 
have you advise him of his standing. He wants to know whether you are still 
interested in having them continue to work for you. He also said that there 
is considerable interest in your equipment. Write him a letter and tell him 
that you have decided to cancel the arrangement you had with him, in view 
of the unfortunate financial situation and the inability of Curtiss to get any 
business from the Federal Government in the past two years. 

The group of Brazilian pilots (Army) that is going to the States is scheduled 
to leave on the Southern Cross, arriving in N.Y. on May 11. You will want to 
see to it that you or someone from your organization meets them and take 
care of them. 

Maj. Plinio will be in charge of the group. Mello and Wanderly and Julio, 
all friends of mine, will be on the junket. They will visit the principal fac- 
tories, and I am depending on you impressing them sufliciently in Buffalo to 
sell them the idea of buying Curtiss. They expect to go as far as Seattle. 

Let me have a word from you personally about your intentions in this 
market. Do me the favor not to just let things go along as they are now for 
I'm telling you, you will regret it. There is going to be some more money 
made here soon, and you should be in on it. Let me have a reply immediately 
as to the Loening business. These planes are intended for Amazon service. 
On this business it would be well to let me know what you think of handling 
it through Mayrink Veiga. They are hot on the business, and I feel sure they 
can put it across. Provendas also could handle it, and are in a great stew 
because you have not communicated with them. Inasmuch as Leon will be 
coming back soon, you may want liim to do the appointing when he gets here. 
In that case, it would be advisable to cancel with Castro Lopes before that 
time so that he will have a clear field. 

With best regards to you, Leon, and the other boys in the office I have met. 
Sincerely, 

( Signed ) Pierrot. 

Pan American Airways System. A Maior Rede de Transportes Aereos do 
Mundo. 



("Exhibit No. 412" appears in text on p. 828) 



Exhibit No. 413 

[Copy] 
Aer-P-1-EMN Navy Department, 

Lll-4 (2) Bureau of Aeronautics, 

WasMngton, D.G., Aitgust 5, 1933. 
From : Chief of th6 Bureau of Aeronautics. 
To : All Inspectors of Naval Aircraft, U.S.N. 

Subject : Policy Concerning Sale Abroad of Airplanes, Motors, and Accessories. 
References : 

(a) Aeronautical Board Case No. 13, approved by Secnav. 10/13/26. 

(b) Aeronautical Board Case No. 34, approved by Secnav. 1/6/30. 

(c) Aeronautical Board Case No. 52, approved by Secnav. 10/12/32. 

(d) Buaer. Itr. Aer-A-ML, A2-14 (3), A7-1, dated 5 June 1933. 

1. References (a), (&), and (o) serve as a guide for this Bureau in its 
action relative to requests received concerning the release for export sale of 
airplanes, aircraft engines, and accessories. These references have been ap- 



982 MUNITIONS INDUSTRY 

proved by the War Department as well as by the Navy Department and conse- 
quently the policy based thereon is a joint policy followed by the Chief of 
Air Corps, U.S. Army, and by the Bureau of Aeronautics. 

2. The following is a summary of the provisions of references (a), (b), and 
(c) insofar as concerns matters which affect inspectors of naval aircraft and 
contractors for aeronautical material. 

Policy 

3. The War and Navy Departments will encourage the American aeronauti- 
cal industry in developing foreign business and assist in such development so 
far as consistent with national policy and the needs of the national defense. 

The following general policy governs the consideration given the differing 
military values of various items of equipment. This policy is subject to ex- 
ception when desirable in any particular case, and each case is determined upon 
its merits. Decisions will be made by the War and Navy Departments in 
specific cases. 

(a) Release for foreign sale, or public description, will be withheld indefi- 
nitely on equipment containing features so novel as to constitute new inventions 
of purely military use. 

(b) Desiigns including such features of marked novelty, either in general 
layout or details of construction, which have prospect of commercial usefulness, 
may be sold outside the services or abroad one year, generally, after going 
into regular production. The exact time of such release will depend upon the 
importance of the novel features concerned and will take into consideration 
the practicability of maintaining secrecy if the airplane is to be used from 
flying fields open to the public. Due consideration will also be given to the 
magnitude of the potential demand for the commercial product. 

(c) Release will, in general, be withheld for approximately one year after 
going into production in the case of airplanes of purely military types, without 
prospective commercial value, whose performance or flying qualities are of such 
special interest that their early test by pilots outside the American services 
may be considered unwise. 

(d) Airplanes, engines, and equipment which contain no strikingly novel 
features, but only efiicient assembly of well-known elements, may be permitted 
foreign sale at an early date. Such permission may follow immediately after 
the completion of an experimental order and its test by either service. Such 
sale of any service type abroad shall be made without military equipment in- 
stalled which either in itself or its mounting involves any important feature 
of novelty or consists of ordnance and armament equipment in use in com- 
bat and/or fleet operating organizations. No release of such ordnance and 
armament equipment for foreign sale will be made either with the airplane or 
separately unless a precedent for this release has already been established, 
or unless equipment of that model has been declared surplus. 

(e) No negotiations for the sale abroad of aircraft power plants, or aero- 
nautical accessories, which have been developed primarily for or with the 
assistance or direct encouragement of the W^ar or Navy Departments, or whose 
usefulness is primarily or exclusively military, should be initiated without the 
permission of the Department interested. Similar permission should be re- 
quired prior to any public exhibition or the publication of any description of 
such items. 

PROCEDUBE 

4. The following procedure will be used in carrying out the above policy : 

(a) The Aeronautical Board will not be required to consider all requests for 
the release of aeronautical equipment, but in lieu thereof 

(b) The Chief of the Army Air Corps or the Chief of the Bureau of Aero- 
nautics, according to which Department may have paramount interest in the 
case in question, is authorized to investigate the request in the light of exist- 
ing policies and, after joint conference when a proper course of action has 
been decided upon, prepare an answer for the signature of the appropriate 
Secretary. Action taken in all such cases will be reported to the Secretary of 
the Aeronautical Board as a matter of record. 

(c) In cases where the Chief of the Army Air Corps and the Chief of the 
Bureau of Aeronautics fail to agree, the matter shall be referred to the 
Aeronautical Board for action. 



MUNITIONS INDUSTRY 983 

5. It is directed that the foregoing information be conveyed to all contractors 
who now or in the future may be expected to be under contract for any of 
the material in question. 

6. Attention is invited to reference (d) for instructions relative to the meas- 
ures to be taken for safeguarding material in a confidential status. 

(Signed; facsimile) E. J. King, 
E. J. King, 
Rear Admiral, U.S.N., 
Chief of Bureau of Aeronautics. 

Copy to: CNO, DNI, Comdts. 3d, 4th, 5th, 9th, and 13th N.D. 



Exhibit No. 414 

Ootober 12, 1932. 

Mr. F. C. Nichols, 

Colt's Patent Fire Arms Manufaotvring Co., Hartford, Conn. 

Dear Mk. Nichols: The Automobile Tire & Tractor Co. has sent us copy 
of their letter, dated October 1st, addressed to you, which I believe you will find 
of considerable interest, particularly with respect to the tests which your gun 
is undergoing in Turkey. 

With respect to Emin Bey's closing paragraph, relative to remuneration for 
their efforts in developing business, I think that this is something that can 
best be covered through ourselves as, naturally, we always arrange to pay 
him a commission on sales and I think that all we need to take into considera- 
tion at the present time is in connection with aircraft type guns which we 
hope wdll be ordered for installation in our Hawks in Turkey. Of course, if 
this develops to a standardization of the Colt gun for all aircraft for the 
Turkish Air Force, you may be running into some complications with your 
Vickers arrangements, but that is something we could probably work out later. 
I should appreciate it if you would send me a copy of your reply to Tatco's 
letter and hope that you will not get involved in any question of commissions 
with them withous discussing the matter with us. 

In another letter which I have just received from Mr. Farnsworth, he refers 
particularly to the recent visit of General MacArthur to Turkey, and the fact 
that General MacArthur was received with great pomp and enthusiasm by the 
Turkish dignitaries. Naturally, the General was made familiar with the busi- 
ness which we are carrying on with the Turkish authorities and, apparently, 
he talked up American military equipment to the skies in discussions which he 
had with the Turkish general staff. Bob Farnsworth says that for safety sake 
he is not putting down in black and white what was said, but I rather gather 
that your equipment and ours did not suffer from lack of praise. This, of 
course, is for your confidential information. 
Very truly yours, 

Curtiss-Wright Export Corporation, 
W. F. GouLDiNG, Vice President. 
WFG/f 



Exhibit No. 415 

[Copy] 

New York, May 28, 1934. 
Mr. P. A. Hewlett, 

Sperrij, Central America: 

In reply to your memo of the 17th, we regret that as all of our business 
with Salvador and Panama is direct with the Government, we have no knowl- 
edge of the financial responsibility and credit standing of either Dada-Dada 
& Co., or Guardia & Cia., our agents in the above respective countries. 

We have no agent in Guatemala but make all of our contacts through General 
John A. Considine, who is a major in the United States Army, loaned to the 
Guatemala Government. 

Major Considine suggests th.at it would be more satisfactory for us to deal 
directly with the Government through him rather than attempt to deal through 
any local agent, as his recommendations ai*e followed by the President in the 
purchase of all types of military equipment. 



984 MUNITIONS INDVSTKY 

The Government of Guatemala has not recently made any purchases of air-- 
craft and it is nor likely that it will do so in the near future. 

OwEXN Shannon. 
OS.ja. 

Exhibit No. 416 

Febbcary 3, 1932. 
Mr. Lawrence Lex>n, 

Arroiio SSO, Buows Aires, ArgoititKi. 

Dear Lawrence : For your information. I enclose herewith a letter which I 
wrote Burdette Wright, who is in charge of our Washington office, in regard to 
the assignment of a U.S. naval officer to accompany the two Argentine naval 
officers who. we understand, will shortly arrive here for the purpose of select- 
ing and purchasing aircraft equipment. 

We are proceeding very cautiously in Washington and believe that when the 
request is made to our Naval Intelligence, if it is not already made, we can 
more or less guide their choice and see that an officer is selected who would 
most properly fit the job. 

This letter also acknowledges your letter of January ISth regarding the 
Fokker situation. It is comforting to know that he is definitely out of the 
picture and I sincerely hope the matter will adjust itself in the near future so 
that we can proceed with the Argentine contract. 

The information regarding the possibility of Sperry business has been trans- 
mitred to Messrs. Gillmore and Patterson at Sperry. I had lunch with them 
several weeks ago and the information I gave them is practically the same 
as you gave me in your letter. 

Conditions in Brazil are becoming more active and it seems advisable that 
someone from our organization stop in there as soon as convenient and see 
wliat can be done. I had a couple of letters from Figueira in the last mail, one 
of which outlines the proposition which they are working on for the export of 
between 500.000 and 600.00C' tons of manganese to the United States through a 
New York concern, the dollar proceeds of which would be devoted to the 
transaction involving the building of 40 military ships, probably Hawks, in 
a Brazilian factory along the lines of our proposal. Since making them a 
factory proposal, however, conditions here have changed considerably and we 
would prefer to have the Government oiierate along the same lines as the 
Government of Argentina is doing at the present time — build and operate a 
factory of their own. purchasing the manufacturing rigiits from us together 
with technical assistance and information. 

Independent of a factory proposal they wish us to quote on 12 each. Cyclone 
Hawks. Hell Divers, and Falcons. They state that they have about $800,000 
to spend this year on aircraft equipment and urge us to send down a demon- 
strator, a Hawk. Hell Diver, or Falcon type. Figueira mentioned that the 
British are sending down fighters and that the Fleet Comixrny has Leigh Wade 
down there at present with two training type machines and that the Gennan 
Junkers also has demonstrator jobs on hand. It is impossible for us to send any 
demonstration machines into Brazil with the exception of a Cyclone Hawk, 
and in order to do this it would be necessary to bring back from Holland and 
rebuild with a Cyclone engine, bring the entire ship up to date, the Hawk, 
used two years ago on the European mission. This would require at least 
three months' time. 

Figueira mentioned that Brazil just purchased 35 Irving chutes. 

I believe it is necessary that you spend a week or two in Brazil on your way 
home as it is beginning to look as though the Government intends to start 
something in the very near future. 

Matters pertaining to our present contracts witla the Argentine Government 
seem to be running along smoothly although not as rapidly as we might wish. 
Taravella finds that jigs, tools, and fixtures will cost considerably more money 
than the Government at first anticipated, and he is now reducing the list of 
material as much as he can so rhat the total amount when he cables it to 
Argentina will not scare the Government off the entire project. It is our 
belief that the entire list of material as submitted to us by Taravella will ' 
not be required by the Cordoba plant, as the Government will probably not be ■ 
able to build as many engines as they expect to and that many operations 
could be handled by hand instead of by machine, thus making it unnecessary 
to acquire all the equipment they are calling for. 



MUNITIONS INDUSTRY 985 

We have not yet heard from Pita in Paris regarding the advance payment 
on the seven Cyclones. Taravella cabled him again last night. It is Taravella's 
opinion that Pita is about to be recalled to Buenos Aires and for that reason is 
stalling on the job. 

I hope the general situation is coming along satisfactorily and that we may 
soon be able to receive our advance payment on the 50 sets of Cyclone parts. 
My sincere good wishes and hope the physical condition is steadily improving. 
Yours veiT trulj", 

C. AV. Webstee. 
jc. 



(" Exhibit No. 417 " appears in text on p. 830) 



Exhibit No. 418 

[Copy] 
Inter-ofiice memorandum. 

Curtiss-Wright Coeporatiox, 

Export DI\^SI0N, 
Washington, D.C., June 12, 1933. 
To: Mr. R. L. Earle. 
Subject : Central America. 

We are informed that a Major A. R. Harris has been acting as U.S. military 
attache to the legations in all five Central American Republics and Panama. 

If this is so. it would probably be very much worthwhile for you to see 
him and load him up with Curtiss-Wright dope, catalogs, etc. If he is to be 
in New York before his return South, we would like to have an opportunity 
to see liim. 

Of these six countries, we believe we have fairly good agents in Panama 
and Salvador, both of which have bought Curtiss-Wright equipment. By the 
way, we just received an order from Salvador last week for three Ospreys, 
which, we understand, is the first military equipment purchased by them. 

We understand Guatemala, Honduras, and Nicaragua are contemplating 
purchasing planes as soon as they have funds, and, as you already know, Hon- 
duras is planning to buy two or three ships now. 

It is, therefore, important that we use every possible channel to put Curtiss- 
Wright planes across to all of these countries and Major Harris might prove 
helpful. 

Up to this writing, we have had no contacts in Costa Rica and it might 
he worthwhile to stop in at their legation and give them the dope on our ships, 
particularly the Osprey and Trainer. Also find out to whom we should send 
information down there and what the prospects are of their making any 
purchases in the near future. 
Sincerely, 

(Signed) Owex Shanxox. 
Owen Shannon, 
mw. 

Washington file. 



(" Exhibit No. 419" apjDears in text on p. 831) 



Exhibit No. 420 

[Copy! 

Weight Aeronautical Corporaticn, 

Paterson, N.J., May 23, 193 i. 
To: Curtiss-Wright Export Corporation, New York City. 

Subject : Proposed contract with Argentine Government for Cyclone and 
Whirlwind engines. 

In view of the fact that we believe it would be to the advantage of all con- 
cerned if the Argentine Government purcliases Cyclone F-2 engines instead of 



9S6 Mv:::i:. xs ryiirsTEY 



" c- -■ -: r F-o Mc'wers on hand (,S:3-1>. 

,. - _- y— 3 ex.^p: ria: i;.e Cycl ne F-2 
-i-l lir Cr-lviie F-3 eagli-e lias S : 31 : 1 

" r" ~^'*"to F-3 

- - :.ioilines. 

_ r 7 : 1 Di .. - - ^-^u: gear in 

j^ne. In :iie rear sec- 

: :' i_:-jie this change 

r F-2 ai^ine it is 
T evait of national 

r is supe- 

- _. - T. ... ; ^ > to 50 

: n-_: - utpat of LToO r.y : .. sea 

wer to the CydoEt T-o ri-iane. 



- " -■ :r -he above r -r - '- 
:_ ; : T 1: 7'. aTailBl>lr _. r 
: : T~age oper 

' ^ :: ^ur«erior 
. ; : : - ~r less we£.: r 

' feet aMtude, tiie F-2 Crdones will not deto- 

„rf. Tbevef ore nai^ 87 octane fnd it is possible 

-n witliont damase. This cannot be ckme with 

- - 'e <9etaited foil opoi in tbe cnstomarv 

a attendant eaqtenses. 

er shears in reserve, all F-2 Cydcmes 

:n times of necessitr c»r when special 

1- 1-: ^-Tjione is readily available having 

e 5.500 feet altitude and from 

T^ - - . _ rade than the F-2 Cyclone. 

K8VIKW OF COin&JlCT 



We hare had vanoos iiiahrru of oar <x^anixation look over the pn^osed 
eontnKt nd offer flie foOovne — gpfiiw B : 

1. Aye 1. — (a) Azfade 1. Mm*eriml comirmeU€ for.— We bdieve the word 
" jmSH '" siMNild be ** mdls." 

(b) Vnikar ** BetariftwamJ' — Please correct "Hornet" to read "E.G.": add 
to I iiiiii— < III BigpBed wifli C^done engine — " one cylind^* head flioiiioconple 
with 15 £e^ lead and mdiraUiig gaqge;' t«lce out — ^^ corre^ondins odlector 
ring canpfetEL" 

As JOB know, we do not Bmgptj cMeetoT rings ^th onr Cjdone engjnes. 
ig Bfcj i ij eoHectfK' riosB axe not eonsidered standard egoipmait with Cyclone 
i ti iMi i as Taiioas nrnta—ilir—i differ and require diffn^it exhaust c<>Uectors. 
Tte tTpe of fnhmaai^ eoOetlar ia 100% dependeiU <m the ^pace inside the cowl, 
«i iaiw «i» i ju MJiM iii ip tar emA type and different shapes. Tbej are wholly de- 
jriMJial on design of tlie iMdi » M«a l aJT iiiaiio Hiis dioald be explained to the 
A igeaiine s widi respect f» Oe Crciane engine. 

How cm, we win r^iMMJ i b/P of typical exhaust coDeetor systems and 
data flawing the area him wiiij ta prevent back pressure. If the Argentines 
are iBwlffr to Banafiaetare their own ezhanst colleeti^ rin^ in the Argentine, 
we woold be williiig, apoB their w«^"g as eonqdete drawings and fall data of 
their jiaifaHatiifii. to haie fJi t r fM^ nngs made op for them at their own 



2. Fm§e 1 amd pmge 2, TTaiiTfna cfaadani propellers. — ^We assmne we will 
not ainij these but Oiat job wiH take care of matter. We wonld suggest 
ia any evcBt that to« aujuae the CoOffwing inlEormatkm from the Argentines: 

(a) Ma «! ■■ !■ ■■ d tim wm^ m r of fvopdler that it is possible to nse on the 
gireB airplanee— still aHuataiaii^ V^ff^ ground dearanee-^roper gronnd 
dearaaee is the U.SJL m 9 inchesL 

(b) &ve the t iil i nii li r i high speed of die airplane in qpiesdon at the critical 

■Hah«ii> nf flM- rtT"*. *■* * ntmtU ahf fhf r it In rmr trf tfr TTlii^l— jn"* 

<rf the C!Feiane-pr-=rere- r'--^" 



3iu2rrTro5rs ixdtjstby 987 

3. Page 3, time of delitery. — We can make following deliTeries F.A.S. New 
York. 

(a; 2 Cyclone SGR-1S2I} engines and 2 Whirlwind 250 H-P. engines, 30 days 
after notification that contract has been signed. 

(bi 13 Cyclone SGR-lS2iJ engines and 13 Whirlwind 230 H.P. endues— 90 
days after shipment of ab<jve engines <a>. 

4. Page 6, technical documents. — •*► "3. Assembly drawings ot each type of 
motor, where dimensions of same :iiay be determined exactly." We do not 
hare these and therefore c«:'nld nc't si^piy. However, the information wludi 
we believe they acraally want wr>ald be ss^Ued under " 2 — besides the longi- 
ttidinal and cross-sectional cut drawlngs."^ 

(b> "4. Installation drawings of the otI, gas, and • • *." Would supply 
drawings of typical installations. 

t c ) '• 5. The constructive " Tooend riBg ' or NACA cowling • * *." This 
-hould be secured from the mannfacrvrcT e4 eowls. 

(d) 6. Installation drawings and rosTTBCtion^ for propell^^. Ton would have 
to secure from Hamilton Standard. 

5. Page 9, neic orders. — Please rewrite this to read as follows: 

•• The Government reserves the rigbt of iaereasing the constituent items <:f 
all or any one of the materials called for in the present contract, in whatever 
limits it may deem desirable, and the sfl(>p6er agrees to furnish same on the 
same terms and tmder the same teehaieal eoaditions set forth in cjntraet 452. 
article 5. last subdivision, provided, howerer, sadi rig;ht is eierased by the 
Government within 00 days from the date on whi^ this contract is executed 
by the Supplier and provide! the repaired driiv«ies are not beyond the mano- 
facruring c-apacity of the st^jpiier. 

6. Inverted flight, acrobatics. — The carberetors, both 2 and 4 barreL on the 
Cyclone engine have a "bypass" wM(^ has a metered fuel flow at rated 
power. This permits inverted fii^t (a LiOfc a t ie) at full throttle rated power 
without difficulties. 

If inverted flight ( acrobatics ► are dene when the Cyclone is "throttled 
back " (or less than rated power ►, the Cyd«oe engines will ran ~ rich " owing 
to the fact that the " b.vpass " meters the fuel fl^ow for rated power, btit 
otherwise no difficulties will occur. 

7. r.S. Army inspection. — If the Argentines desire U.S. Army inspectioQ of 
their Cyclones when being buitt at ©mr plant, this can be arranged by getting 
in touch with us. and we win contact the Array inspector now stationed here 
at our plant, who will arrange the matter. The Army inspector has been 
contacted and we have been given assurance that he will be able to arrange 
this. The inspection he will give the Argentine engines will be identical with 
the inspection he customarily makes for the U.S. Army and will indude full 
inspection, right through maiMifaemring. through testing, and to shipping. 
The Argentines will be required t» par the Army inspector the following for 
the inspection: 

Cyclone geared S123. 00 ?«• engtne 

Whirlwind 250 direct . lOtt 00 per engine 

The following will apply to gen^^tw^ aa^ sAarters : 

Per generator $5. 00 

Per starter 5.00 

Will you please also inform us oo this pwnt as to whether or not the 
Argentines are interested. In mt^ respects sceh an arrang«n«it as outline»i 
above will be to the best advantage of the Argentines if they require other 
inspection than ours. It would. nndeobtedlT, cost them much less than if 
they had their own inspector on the job and they will have the assurance of 
the U.S. Army insx^^^tor who is stationed at oar plant and who is entirely 
familiar with our engines. 

S. Certification of shipping paper*. — If the Argentines so desire, arrangements 
can be made so that the U.S. Army iDSi)eetar certifies the shipping documents 
to the effect that the engines being sMw)ed are tte same as those which A. T. C. 
has been granted for the type in question. 

9. Proof of use by U.S. Ann^ ami UJ?, Xary. — It is not definite whether the 
U.S. Army or U.S. Navy would issue any written statement to the effect that 
they are or had bought certain materials. However, we believe we can supply 
you with copies of statements isisued l^ the Aeronautical Chamber of Com- 



988 MUNITIONS INDUSTRY 

merce, giving the Army and Navy contract awards and showing contract 
numbers of same. This will also show type and kind of engine. If this will 
be satisfactory, will you let us know? 

William: A. Reeiks. 

CC: Messrs. George Chapline, T. M. Lucan, W. D. Kennedy, W. E. Colviu, 
Philip Shepley. 

Exhibit No. 421 

Lima, Peru, April 23, 1934. 

IXSPECTOR GeXERAL OF A'VIATIOX, 

Lima, Peru. 

Sib : We wish to submit herewith our proposal for the combination Curtiss 
bomber, troop transport and ambulance plane. Specifieations, performance 
data, and photographs are contained in the catalog attached. 

The price on a quantity of three Condors, delivered in flying condition at our 
factory in St. Louis, equipt with 5 Colt machine guns, bomb racks, bomb sights 
and containing the necessary equipment for troop transport. 12 litters for 
ambulance work, complete blind flying instruments, etc., is $72,-500 each. The 
additional cost for ixtntoon equipment is $11,000 each. 

We can deliver the first plane at our factory in St. Louis within 90 days of 
receipt of first payment and deliver one additional plane each 10 days 
thereafter. 

The best terms of payment that we are able to offer is one third of the 
contract price at the time of contract and the balance in four equal monthly 
installments to begin .30 days after the first and advance payment, which means 
that the payments would extend over a total period of 5 months. It is under- 
stood that the balance of the two thirds payments would be covered by an irre- 
vocable credit in a New York bank. Owing to fluctuating costs and other 
pending contracts this proposal is valid for only a 30-day ijeriocl from this date. 

We also wish to submit herewith a pi'oposal for the latest type of Curtis 
Attack plane, known as the U.S. Army model A-12. Complete specifications and 
photographs are attached. 

This plane is the most modern fighting unit of its tj^pe ever developed and 
has been furnished only to the U.S. Army Air Corps. Providing we have a 
contract for at least 10 planes we will be able to secure permission from the 
U.S. Government to build it for Peru. The selling price for 10 planes CIF 
Callao, equipt with 5 machine guns and bomb racks is $48,950 each and $6,500 
each additional for the pontoon equipment. 

We believe we can secure prompt permission from the U.S. Government to 
accept a contract from Peru and depending upon this we could probably deliver 
the first machine in Buffalo within 90 days and continue at the rate of one 
plane each 10 days thereafter. 

It is also probable that we could extend the same payment tei'ms as on the 
Condors. 

Yours very truly, 



(" Exhibit No. 422 " appears in text on p. 836) 



Exhibit No. 423 

[Copied from carbon copy] 

Washington Office, October 16, 19S1. 
Burdetts S. Wright, Washington. D. C. 
Mr. W. F. Goulding, New York City. 

(China, possible release of Navy 02C-1.) 

I understand there are about five or six undelivered 02C-l's coming through 

at Buffalo for the Navy. As I wired you. Comdr. Dillon is very much against 

our taking these ships but I have talked to him and know that we will not 

lose his friendship should we go over his head. Capt. Cook, the Assistant 



MUNITIONS INDUSTKY 989 

Chief of the Bureau of Aeronautics of tlie Navy Department, told me that 
. if it was urgent he would certainly look with favor on helping us out. 

I accordingly ask by wire as to the urgency of the matter. We will go right 
after it if it is bonified and worth while. 
Very truly yours, 



BSW/lh-3673. 

Washington File : " China ". 



Exhibit No. 424 
[Copy] 

Istanbul, Turkey, Febmat-y 19, 1933. 
Captain Hamdi Bey, 

TeGhnical Section, Ministry of National Defense, 

Ankara, Turkey. 
My Dear Captain : In compliance with your request, I have pleasure in giving 
. you a brief memorandum on the subject of the most recent types of bombard- 
ment aircraft developed in America. American experience has indicated that 
the slow-moving and unmaueuverable heavy bomber with a verj- large bomb 
load is a less effective weapon than the high speed, more maneuverable type 
carrying a moderate bomb load. For that reason all the latest type of bombers 
designed for the American Army are built for a boml:) load of approximately 
900-100 kgs. only, but with a very high speed which renders them nuich less 
vulnerable to attack either by hostile ai