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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 INDUSTJlY ^ 



HEARINGS 

BEFOBB THB 

SPECIAL COMMITTEE 

INVESTIGATING THE MUNITIONS INDUSTRY 

UNITED STATES SENATE 

SEVENTY-THIED CONGKESS 

PURSUANT TO 

S. Res. 206 

A RESOLUTION TO MAKE CERTAIN INVESTIGATIONS 

CONCERNING THE MANUFACTURE AND SALE 

OF ARMS AND OTHER WAR MUNITIONS 



PART 7 

SEPTEMBER 18, 19, AND 20, 1934 

FEDERAL LABORATORIES, INC. 



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




i 



UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASHINGTON : 1935 



MUNITIONS INDUSTRY 

HEARINGS 

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 7 

SEPTEMBER 18, 19, AND 20, 1934 

FEDERAL LABORATORIES, INC. 



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



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UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASHINGTON : 1935 



MI6 18193S 







SPECIAL COMMITTEE INVESTIGATING THE MUNITIONS INDUSTRY 

GERALD P. NYE, North Dakota, Ghairman 

WALTER F. GEORGE. Georgia ARTHUR H. VANDENBERG, Michigan 

BENNETT CHAMP CLARK, Missoi'ri W. WARREN BARBOUR, New Jersey 

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

Stephen RaoshenbdsHj Secretary 

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CONTENTS 



Testimony of— Page 

Jonas, Frank Sheridan, sales agent for Federal Laboratories 1622, 

1624, 1629, 1671. 1673, 1685, 1697, 1704, 1712, 1737, 1746, 1764, 

1769, 1786, 1796, 1817. 

Rich, Carleton W., sales agent for Federal Laboratories 1642, 

1651. 1684, 1734, 1736, 1748, 1768, 1784, 1786 
Young, John W., president Federal Laboratories 1611, 

1623, 1625, 1629, 1638, 1642, 1652, 1673, 1685, 1690, 1709, 1716, 

1736, 1750, 1755. 1763, 1769, 1772, 1796, 1803. 

Corporate structure of Federal Laboratories 1611 

Relations of Federal Laboratories with Cuba 1622 

Methods used in obtaining business 1673 

Interest of Federal Laboratories in national legislation 1700 

Relations with South American countries 1704 

Foreign agents 1712, 1757 

Competition encountered in Latin American business 1746 

Interest of Federal Laboratories in legislation regarding embargoes 1763 

Interest in legislation regarding control of sales of firearms 1772 

Interest of American munition companies in South American revolutions- 1786 
Activities of Franli Sheridan Jonas as a munitions agent 1817 

ni 



INVESTmATION OF MUNITIONS INDUSTRY 



TUESDAY, SEPTEMBER 18, 1934 

United States Senate, 
SpEciAii Committee to Investigate 

THE Munitions Industry, 

W ashington, t). G. 

The hearing was resumed at 10 a.m. in room 310, Senate Office 
Building, pursuant to taking of recess, Senator Gerald P. Nye 
presiding. 

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

Present also : Stephen Raushenbush, secretary. 

The Chairman. The committee now wishes to hear Mr. John W. 
Young. 

TESTIMONY OF JOHN W. YOUNG 

CORPORATE STRUCTURE OF THE FEDERAL LABORATORIES 

(The witness was duly sworn by the chairman.) 

The Chairman. Be seated, Mr. Young, and give the committee 
your name, your residence, and business address, and your official 
connection. 

Mr. Young. My business address is 185 Forty-first Street, Pitts- 
burgh, Pa. I am president of the Federal Laboratories. My resi- 
dence is Kilbuck Township, Pittsburgh, Pa. 

Mr. Raushenbush. Mr. Young, you were asked to bring certain 
things with you this morning. One of them is a copy of all the 
minutes of the directors' meetings and executive board meetings 
before 1933. Have you brought those ? 

Mr. Young. I have, sir. Those are the minutes and also the stock- 
holders' minutes back through 1932 [handing papers to secretary]. 

Mr. Raushenbush. Are you handing me herewith a complete set 
of all the minutes of the board of directors and the executive com- 
mittee, if any, which took place before the reorganization in 1933'^ 

Mr. Young. I am. 

Mr. Raushenbush. You are? 

Mr. Young. Yes, sir. 

Mr. Raushenbush. We also asked you to bring with you samples 
of certain of the articles which you sell. Did you bring those? 

Mr. Young. I brought those which you had mentioned, but any- 
thing else which we sell I did not bring with me. 

Mr, Raushenbush. Will you explain them to the committee and 
explain not only the trade names but the effect of all of these par- 
ticular articles? 

Mr. Young. This one is a tear-gas hand grenade [exhibiting 
sample] . That is known aa our " jumbo-size " grenade [exhibiting 
second sample]. This is known as the " standard size." 

1611 



1612 MU]SriTIONS INDUSTRY 

Mr. Raushenbush, They are not loaded, I take it ? 

Mr. YouxG. No, sir. Those same containers can also be loaded 
with dm or what is chemically laiown as " sickening gas." That is the 
tear gas, the technical name of which is chloroacetophenone [exhibit- 
ing sample]. This is the sickening gas. The chemical name is 
diphenylchloroarsine [exhibiting sample] . 

Mr. Raushenbush. You load these grenades with either one of 
those two crystals? 

Mr. Young. That is right. 

Mr. Raushenbush. What other products have you brought with 
you? 

Mr. Thompson. I have brought a Thompson submachine gun. 

Mr. Raushenbush. You are the exclusive agent in North and 
South America for the Thompson submachine gun ? 

Mr. Young. We are, sir [producing sample]. 

Mr. Raushenbush. This is a wooden model only? 

Mr. Young. Yes, sir. I thought it would be safer to bring that 
down here. 

Mr. Raushenbush. What other products do you sell in addition 
to those two-sized grenades and the Thompson submachine gun, 
which you have here presented to the committee as exhibits? 

Mr. Young, We sell tear gas, for illustration, in banks, to be used 
against daylight hold-ups. That is a very large department in our 
business, and has stopped 17 hold-ups so far and captured 21 
bandits, 

Mr. Raushenbush. You also sell other articles, such as bombs? 

Mr. Young. That is a rather distinct part of our business, and 
separate from our regular line, in what we call our export or ord- 
nance business, which covers airplane bombs and airplane-smoke 
screens. 

Mr. Raushenbush. What kind of airplane bombs do you sell? 

Mr. Young. Demolition and fragmentation. 

Mr. Raushenbush. Can you describe the difference between those 
two briefly? 

Mr. Young. Demolition is purely for explosive purposes, and they 
are both loaded with TNT. Fragmentation is for the dispelling of 
fragments of metal. 

Mr. Raushenbush. Do you also sell the kind of bombs which set 
fire to houses, and that sort of thing? 

Mr. Young, Yes, sir; we sell incendiary bombs, 

Mr, Raushenbush, Incendiary bombs in addition? 

Mr, Young, Yes, sir. 

Mr. Raushenbush. That completes pretty thoroughly the list of 
articles which you scU? 

Mr. Young. Yes. We have sold some airplane bombs loaded with 
tear gas. 

Mr. Raushenbush. Outside of the tear gas and the vomiting gas, 
you do not sell any other kinds of gas? 

Mr. Young. No: we do not. 

Mr. Raushenbush. Will you describe briefly, as you understand 
it, the effect of your tear gas ? 

Mr. Young. As the darky said, wdien that gas hits you, no matter 
what you are doing, you immediately begin thinking about doing 



MUNITIONS INDUSTRY 1613 

something else. It closes yonr eyes, due to an irritation, and makes 
you want to get away from it. It does not overcome a person to 
make them unconscious. They can walk about, but they cannot see 
where they are going. I am speaking now of a normal concentra- 
tion. There are light concentrations, where it is not so effective. 
The effects wear off probably in 10 minutes after entering clear air. 
I myself have been subject to it in fairly heavy concentrations, three 
or four hundred times. 

Mr. Raushenbush. Do you sell what is also known as " poison 
gas"? 

Mr. Young, No; we do not. 

Mr. E.AUSHENBUSH. In your sales to some of the foreign countries, 
particularly Cuba, have you ever sold poison gas? 

Mr. Young. No; we have not. 

Mr. Raushenbush. What kind of gas have you sold there? 

Mr. Young, Just these two. 

Mr. Raushenbush. I wish to read at this moment from a mili- 
tary authority who has seen this gas in operation, and the sentence 
reads : 

* * * Most victims of poison gas, except the more severe cases, usually 
coutract tuberculosis of a type commonly known as " galloping consumption." 
It is my understanding that practically all of our gas casualties in the World 
War that did not succumb within a few days contracted this malady, and there 
are today, 15 years after the war, very few of them who have survived. 

Does not that seem to be somewhat in contradiction to the state- 
ment which you have made with respect to gas ? 

Mr. Young. No, sir. That writer is speaking of the use of lethal 
gases. These are not lethal gases. There is a folder put out by 
General Gilchrist, Chief of the Chemical Warfare Service, which 
gives you a very clear report on the after effects of gases during the 
war. General Gilchrist is a medical doctor and I think is consid- 
ered an authority on that subject. 

Mr. Raushenbush. The gas described here is described as a 
poison gas used in Cuba. The quotation goes on : 

It may be stated that the Cuban Army has had almost no training in the 
use of poison gas nor has it had any experience in its elfect. To permit the 
use of poison gas by undisciplined troops, untrained in the proper use of the 
gas and excitable as these Cubans are by nature, would create havoc not only 
with their opponents and innocent residents in the vicinity, but very probably 
among their own men. 

Do you know any other American firms that sold gas down there? 

Mr. Young. No; I do not; but this writer, whom I do not know, 
appears to be misinformed, because the Cubans were trained in the 
use of this, and it was not poison gas. 

Mr. Raushenbush. There seems to be an argument about that, 
which we will come to later. You have the headquarters of your 
company at Pittsburgh and most of the assembling of your products 
is done elsewhere. Is that correct? 

Mr. Young. On the military end it is correct. 

Mr. Raushenbush. What do you do in your Pittsburgh office? 

Mr. Young. Our Pittsburgh plant is devoted primarily to the 
manufacture of tear gas for bank protection and police use. 

Mr. Raushenbush. For your own company you showed assets 
in April of this year of $376,552 ? 

Mr. Young. That is right, sir. 



1614 MUNITIONS INDUSTRY 

Mr. Raushenbush. The explanation of that would apparently 
be that some other companies did a great deal of your assembling. 
That is true? 

Mr. Young. Yes, sir. 

Mr. Raushenbush. Would you name the other companies which 
supply you with your main products or do your assembling ? 

Mr. Young. Harrisburg Pipe & Pipe Bending Co., of Pittsburgh, 
do all our forging work. 

Mr. Raushenbush. For the bombs ? 

Mr. Young. Yes, sir. The Atlas Powder Co. in their plant at 
Tamaqua loaded those bombs. 

Mr. Raushenbush. Where do you buy your products for your 
demolition boml)s? 

Mr. Young. The Atlas Powder Co. 

Mr. Raushenbush. Is that the only company which supplies you 
with any powders or explosives? 

Mr. Young. The du Ponts loaded a small number of them. 

Mr. Raushenbush. With TNT? 

Mr. Young. That is right. 

Mr. Raushenbush. You have given the names of your largest 
suppliers. There are many others, are there not ? 

Mr. Young. There are many others, which I have turned in in a 
list to the committee. 

Mr. Raushenbush. Have you representatives of any of these 
companies on your board of directors? 

Mr. Young. Mr. Penniman, of the Atlas Powder Co., is one of 
our directors. 

Mr. Raushenbush. Your board of directors has changed some- 
what in the past few years, has it not ? 

Mr. Young. That is right. 

Mr. Raushenbush. I want to read to you a report made by an- 
other company about this and ask you to check it for correctness. 
This had to be done in that manner, because we did not save the full 
minutes of the directors' meetings prior to the reorganization. Will 
you just check this as of October 31, 1932? That is before your 
reorganization. 

Mr. Young. All right. 

Mr. Raushenbush. The company had 30 employees in the Pitts- 
burgh plant and 35 salesmen. 

Mr. Young. I would assume that is perhaps right ; probably a lit- 
tle more than that. 

Mr. Raushenbush. The directors of the company, all residents of 
Pittsburgh, are: Chairman, Walter Rae, structural steel contractor; 
John W. Young, president Federal Laboratories, Inc.; R. G. Bost- 
wick, attorney. 

With what firm is Mr. Bostwick connected? 

Mr. Young. Thorpe, Bostwick, Reed & Armstrong. 

Mr. Raushenbush. The list of directors of the company con- 
tinues : A. B. Ayres, president Porter Locomotive Co. ; Col. Andrew 
Berger, vice president. Potter Title & Trust Co.; W. W. Groves, 
chairman Railway Audit & Inspection Co.; Peter Bouterse, Pitts- 
burgh manager Sears, Roebuck Co.; Stanley Ash, warden Western 
Penitentiary; and Mr. McClung, attorney and son-in-law of Andrew 
D. Mellon. 



MUNITIONS INDUSTRY 1615 

Mr. Young. That is not correct. 

Mr. Raushenbush. He was not a director ? 

Mr. Young. He was a director, but not a son-in-law of Andrew 
Mellon. 

Mr. Raushenbush. Mr. McClung is an attorney? 

Mr. Young. Yes, sir. 

Mr. Raushenbush. The officers of the company are John W. 
Young:, president; B. H. Barker, vice president and sales manager; 
R. B, Reynolds, secretary ; and Harry Rau, treasurer. 

Mr. Young. That is right. 

Mr. Raushenbush (reading) : 

Mr. Walter Rae financed the company during the early development stages 
and was president until he was succeeded by Mr. Young four years ago. 

Mr. Young. Correct. 

Mr. Raushenbush. Then the report goes on as of 1932. 

Mr. Young makes the point, however, that sometime ago he requested his 
board to appoint an executive committee which is now actively functioning, 
with the following personnel : John W. Young, president ; Walter Rae. chair- 
man ; R. G. Bostwick, director ; Peter Bouterse, director ; and Dr. Alexander 
Lowy, technical director of Federal Laboratories. 

Who is Dr. Lowy? 

Mr. Young. He is director of the technical department. 

Mr. Raushenbush. Are there any other connections he may have ? 

Mr. Young. He is also affiliated with the University of Pittsburgh 
staff. 

Mr. Raushenbush. He is in the chemistry department? 

Mr. Young. That is right. 

Mr. Raushenbush. As to the present ownership, it is reported 
that the company has about 30 or 35 stockholders all residents of 
Pittsburgh. The important stockholders, in addition to those serving 
on the board of directors, are Mr. Wardrock, chairman of the board 
of the First National Bank; is that correct? 

Mr. Young. Yes. 

Mr. Raushenbush. Mr. A. D. Robb, vice president, Colonial 
Trust Co. 

Mr. Young. That is right. 

Mr. Raushenbush. Mr. J. O. Miller, vice president Peoples Pitts- 
burg Trust Co.? 

Mr. Young. That is right. 

Mr. Raushenbush. Edwin May, of the May Drug Co. ? 

Mr. Young. Yes. 

Mr. Raushenbush. It also gives the name of Mary Mellon 
McClung, whose husband is on the board. 

Mr. Young. That is not right. 

Mr. Raushenbush. The largest stockholder is the chairman, Mr. 
Walter Rae, who owns 650 shares, or 36.7 percent of the 1,771 
shares outstanding. Mr. Young owns 250 shares, or 14.1 percent of 
the amount outstanding. Control is now scattered, but Mr. Young 
states that he and his personal friends (not including Mr. Rae) own 
55 percent of the stock. 

Is that a correct report? 

Mr. Young. That was about right. 

Mr. Raushenbush. In the reorganization that took place Mr. Rae 
and Mr. McClung left the board, and Mr. Pennyman and Mr. Beattie 



1616 MUNITIONS INDUSTRY 

came in. Mr. Pennyman yon have connected witli the Atlas Powder 
Co. What interest or group or companies does Mr. Beattie rep- 
resent ? 

Mr. Young. John A. Beattie, his own company. 

Mr. Raushenbush. What do they do? 

Mr. Young. Tliey are financial counselors, 

Mr. Raushenbush. I see in your executive committee meet- 
ing of May 5, 1934, a statement, which I would like to have you 
explain : 

The president reported tliat American armament is making 4.2 mortar 
smooth-bore shells and using reclaimed TNT and shipping same to Bolivia. It 
was agreed that Mr. Beattie would arrange a luncheon with Mr. Young and 
Mr. Trees, and that Mr. Trees (Joseph C.) should be consulted about future 
action with regard to the American Armament Co. 

Would you explain the connection of Mr. Joseph C. Trees with 
you as president of the company or with you as stockholder at this 
particular' meeting? 

Mr. Young. My mind is a little hazy on that. May I read that 
[referring to paper] ? As I recall, there was not anything done. 

Mr. Raushenbush. I am interested in how Mr. Joseph Trees 
comes into the picture. 

Mr. Young. As a stockholder. 

Mr. Raushenbush. He is a stockholder? 

Mr. Young. Yes, sir. 

Mr. Raushenbush. Have you placed any of your stock in any 
of his companies? 

Mr. Young. The Trees Dale Development Co. 

Mr. Raushenbush. That is a holding company belonging to Mr. 
Trees? 

Mr. Young. Whether it belongs to Mr. Trees, or who owns it, I 
do not know ; but I know that Mr. Trees is interested in it. 

Mr. Raushenbush. Have you kept your directors pretty thor- 
oughly informed about all of the activities of your company ? 

Mr. Young. On the major activities; yes. I do not bother them 
with many of the routine matters. 

Mr. Raushenbush. You do not bother them on many of the rou- 
tine matters? 

Mr. Young. No. 

Mr. Raushenbush. Could you describe for the committee what 
proportion of your business is domestic and what proportion is 
foreign ? 

Mr. Young. Over what period? 

Mr. Raushenbush. Let us take this present year. 

Mr. Young. This present year, about half and half ; I guess about 
40 percent foreign and about 60 percent domestic. 

Mr. Raushenbush. And how was it last year ? 

Mr. Young. Last year I would say about 40 and 60. This year 
it might be 50 and 50. The Cuban business would swing it this 
year. 

Mr. Raushenbush. The Cuban business is considerable this year? 

Mr. Young. Yes. 

Mr. Raushenbush. Of this domestic consumption, how does that 
split between the material shipments to industrial plants and the 
material shipped to the police and military groups ? 



MUNITIONS INDUSTRY 1617 

Mr. Young. That is a question that I would not want to give any 
figures on. My general impression is that the material shipped 
to industrial plants would be very small compared to that shipped 
to police. 

Mr. Raushenbush. Are you a member of the Chemical Warfare 
Service Branch in Pittsburgh? 

Mr. Young. Yes; I am. I have done a number of services in 
that capacity. 

Mr. Kaushenbush. Are there frequently rush calls to you from 
industrial plants for tear gas and other products of yours? 

Mr. Young. I do not know that I would call them frequent. 
When they come they are usually rush calls. We have a great 
many industrial pay rolls protected with tear gas, the same as we 
protect the banks. We build it into the cashier's office where it is 
set off by foot controls. 

Mr. Eaushenbush. That would not be an industrial plant par- 
ticularly. That would be a bank, would it not ? 

Mr. Young. No. Practically all of the United States Steel Cor- 
poration's pa}' offices are protected with that ; the Ford Motor Co., 
and many of the large corporations. 

Mr. Raushenbush. In some of your literature, I have noticed, 
Mr. Young, that you make a considerable point of telling your agents 
the extent to which you are called upon in emergencies by the indus- 
trial plants of the country. 

Mr. Young. We have had two or three cases. I can recall a 
specific instance. It is the Auto Lite Plant in Toledo, where they 
called on us after they had $150,000 worth of damage done overnight. 
We came in there with the tear gas and I think saved further dam- 
age and some loss of life. 

Senator Clark. Has your business picked up since the textile 
strike started? 

Mr. Young. Not materially; about 5 to 10 percent, I would say. 

Mr. Raushenbush. There was recently an item in the paper that 
a plane flying from Pittsburgh to Rhode Island dropped in the Alle- 
ghenies with tear gas. Was that from your plant ? 

Mr. Young. Yes; that was from our plant. I was sorry it did 
not get through, because they had to use their firearms and kill 
two or three people because it did not arrive. 

Senator Bone. Where was this? 

Mr. Young. Up in Rhode Island, sir. If you will recall, the fail- 
ure of that plane with tear gas to arrive in Rhode Island — it was 
being shipped to the National Guards — forced them to use their 
rifles and two or three people were killed, and I believe several 
wounded. 

Mr. Raushenbush. How many agents do you employ in the United 
States at present? 

Mr. Young. We have about between 50 and 60. 

Mr. Raushenbush. Is that about one for each State ? 

]Mr. Young. We do not divide it that way. A section like Chi- 
cago and New York, of course, would take more, while a section 
out in Arizona perhaps would take one man to a couple of States. 

Mr. RAusHENimsH. They are selling both to the military and 
to the police and the industrial companies ? 



1618 MUNITIONS INDUSTRY 

Mr. Young. No. Our military business is not handled at all 
through the domestic organization. 

Mr. Eaushenuusii. Not even the National Guards of the vari- 
ous States would be solicited by your agents? 

Mr. Young. Yes. The National Guard is handled through those 
men. 

Mr. Raushenbush. That is what I meant. 

Mr. Young. Yes. 

Mr. Raushenbush.. So they are engaged in both the military 
and police and the industrial ends. Will you describe in just a 
few sentences your relations with the Auto Ordnance Co. and say 
what that is? 

Mr. Young. The Auto Ordnance Corporation owns the Thomp- 
son sub-machine guns. About 314 years ago they turned the domes- 
tic sale of that gun over to us. Since that time we have been han- 
dling the exclusive distribution of the Thompson guns. 

Mr. Raushenbush. The Auto Ordnance Co. does not manufac- 
ture any guns itself, does it ? 

Mr. Young. No. The Colt Firearms Co. manufactures the gun 
for them. 

Mr. Raushenbush. It is still manufacturing them? 

]\fr. Young. Well, they are not manufacturing them now. There 
are plenty of those guns on hand. 

Mr. Raushenbush. When did they stop manufacturing them? 

Mr. Young. I could not answer that. 

Mr. Raushenbush. Does the Colt Co. make their parts for these 
guns? 

Mr. Young. Yes. 

Mr. Raushenbush. And the Colt Co. makes the magazines, too? 

Mr. Young. I do not know that. 

Senator Bone. Are they used in the Army? 

Mr. Young. Yes ; they are. 

Senator Bone. Are they standard equipment? 

Mr. Young. They are. 

Senator Bone. The police departments use them ? 

Mr. Young. They do. 

Senator Bone. They would seem to take a rather short bullet. 

Mr. Young. They take the standard 45-caliber cartridge. 

Senator Bone. For revolvers? 

Mr. Young. The same is used in revolvers. 

Mr. Raushenbush. Are there any financial transactions between 
you and the Railway Audit & Insj)ection Co. ? 

Mr. Young. In what respect. 

Mr. Raushenbush. Do you sell together, or do you hire common 
agents ? 

Mr. Young. Yes. Their agent in two cities also works with our 
agent. 

Mr. Raushenbush. Which cities are those? 

Mr. Young. Atlanta and New Orleans. 

Mr. Raushenbush. Those are the only common agents you have? 

Mr. Young. To my knowledge. 

Mr. Raushenbush. They have a great many agents, do they not? 

Mr. Young. I do not know. They operate in other sections than 
that, I know. 



MUNITIONS INDUSTRY 1619 

Mr. Raushenbush. You have a director on the board who was 
present at a good many meetings ; is that Mr. Groves ? 
Mr. Young. Yes. 
Mr. Raushenbush. Who is also chairman of the Railway Audit 

& Supply Co. 

Mr. Young. That is right. 

Mr. Raushenbush. Do you know how many people they have ? 

Mr. Young. No ; I do not. 

Mr. Raushenbush. Senator, that is all I wanted to ask in a pre- 
liminary way. 

Senator Bone. This plane that you said crashed, was that the one 
that crashed near Bedford, Pa. ? 

Mr. Young. That is right, sir. 

Senator Bone. And that had some 400 pounds of tear gas aboard ? 

Mr. Young. Yes, sir. 

Senator Bone. Where was that going? 

Mr. Young. That was going to the National Guard at Providence, 
R.I. 

Senator Bone. Was there a strike on up there ? 

Mr. Young. There was. 

Senator Boxe. You sell your tear gas and sickening gas out on the 
West coast, do you ? 

Mr. Young. We do, sir. 

Senator Bone. Do you know whether you have sold any in Seattle 
recently ? 

Mr. Young. We have. 

Senator Bone. It was used in the strike out there ? 

Mr. Young. It was. 

Senator Clark. Is there any limitation on whom you sell that tear 
gas or sickening gas to, or do you just sell it to anybody who comes 
along and wants to buy it ? 

Mr. Young. Not on your life. 

Senator Clark. What is the limitation on it ? 

Mr. Young. The limitation has been put on there by ourselves, 
primarily. 

Senator Clark. There is no limit of law. 

Mr. Young. Not nationally ; no, sir. I think the fact that we have 
been in business 12 years and that the use of it by criminals has been 
so conspicuously absent from the newspapers, should speak suffi- 
ciently well for the control that we have put on it. 

Senator Clark. What is your limitation on the purchase of it? 

Mr. Young. The limitation we put is that an individual purchaser 
must have the approval of his local police department or sheriff 
before taking delivery. 

Senator Clark. In other words, let us say that there was going 
to be a local strike in some town. The police department of that 
town happens to be on the side of the industrialists. They buy 
tear gas, but the strikers, those on the other side, cannot buy tear gas. 
Is that the operation as a result of your rules? 

Mr. Young. I never saw that question come up as such. 

Senator Clark. You do sell tear gas to the industrial concerns 
throughout the country, I believe you had just testified? 

Mr. Young. I do. 



1620 MUNITIONS INDUSTRY 

Senator Clark. Did you ever sell any to any labor organizations? 
Mr. Young. I do not know that I have been requested to do it. 
Senator Clakk. I am just asking you the fact, whether you have 
or not. 

Mr. You>^G. No; I have not. 

Senator Clark. And there is no limitation on the traffic in inter- 
state commerce in these blinding or sickening gases? 

Mr. Young. There are some local ordinances pertaining to it in 
New York City and California and a few other places. 

Senator Boae. What would be the effect if these gases were em- 
ployed on a group of men who had been suffering from lack of 
proper food and lack of a suffi ient amount of sleep? I am thinking 
now of strikers wdio perhaps have been out of work a long time and 
who are not physically fit. 

Mr. Young. Senator, I could not answer that from the medical 
standpoint. But I do know that the effect would be far less than 
lead bullets, when those men get out of control. 

Senator Bone. It would not kill them, I understand that. Well, 
go ahead with your explanation. 

Mr. Young. I mean, there comes a time when men like ourselves 
come under the influence of mob-psychology. We do things that a 
sane person would not do and the police must bring them back to 
their rational reasoning. 

Senator Bone. I understand that. I did not ask for your com- 
ment on the merits of strikes, and so forth. I am asking you what 
effect this would have on men who were suffering from malnutrition, 
who were physically weak. 

Mr. Young. The effect is on the tear gland. It does not affect 
the body otherwise. 

The Chairman. Would it have any more effect, would it have a 
more damaging effect upon a man who was not enjoying the food 
that he needed or that his body needed than it would have upon a 
man who was in good health ? 

Mr. Young. I should not think so. 

Senator Clark. What is the effect of this sickening gas? Does 
it cause the person on whom it is used to vomit? 

Mr. Young. Yes; it is like seasickness. 

Senator Clark. Do you not think that that might be calculated to 
have a very much, greater effect on a man who is suffering from 
malnutrition than on a well-fed mill owner, let us say? 

Mr. Young. A man who was suffering from malnutrition, if he 
had been eating nothing, they would have a hard time vomiting; 
harder than the other fellow. 

Senator Clark. He might become just as sick. 

Mr. Young. That is right, sir. 

Senator Clark. And that is tlie purpose of this gas. 

Senator Bone. It would probably leave a man sick for a great 
many days; would it not? 

Mr. Young. No, sir. The records we have show that a man would 
be sick for 2 or 3 hours. 

Senator Bone. Let us go back to the fellow w^ho is weak from 
hunger, who has been out on a strike and who gets a bad dose of this 



MUNITIONS INDUSTRY 1621 

gas. What would likely happen to him? It would make him sick 
for a long time, would it not? 

Mr. Young. I would think not, because the effect wears off the 
body normally in 2 or 3 hours. Beyond that, I do not even know 
what I could say. 

May I offer a little statement here, which is a medical record from 
one of our penitentiaries? 

The Chairman. Yes. 

Mr. Young. This gas was used to stop a penitentiary riot. The 
use of it has been so extremely small that we do not have very much 
of a record of its effect. But here is one record, and this statement 
says [reading] : 

The men who were allowed to remain out in the yard for approximately 15 
minutes and then let into the cells, all by that time under their own locomotion. 
All of the inmates were then observed practically for the next 3 or 4 hours. 
At the end of that time they appeared to have reacted fairly well. 

Senator Bone. There is just one other question I woidd like to ask. 
We have witnessed a great many strikes of late. Have the Federal 
Laboratories shipped tear and sickening gas into those strike areas? 

Mr. Young. To the National Guard we have shipped some of it. I 
do not think it has been used. 

Senator Bone. Into what areas have you shipped this gas ? 

Mr. Young. All over the United States, sir. 

Senator Bone. In all of the strike areas? 

Mr. Young. In all of the areas, whether strike or not. We are 
constantly shipping it out. 

One of the general uses for gas is to rout barricaded criminals. 
That has been done quite successfully a number of times. Then there 
is a considerable amount of it used in training the police. They must 
have instructions. 

Senator Bone. You mean in hurling these hand grenades ? 

Mr. Young. Hurling them and using other means of projecting 
them. We have them in other implements. 

Senator Bone. They are fired in pellets from guns. 

Mr. Young. They are projected out. An amount of gas about like 
this [illustrating] is fired from a gun. 

Senator Bone. Are those held in solution in those grenades? 

Mr. Young. No ; it is solid ; put in as a solid compound and burns 
like punk, and gives off the fumes from holes in the sides. They do 
not explode. 

Senator Bone. They merely emit smoke. 

Mr. Young. That is right. 

Senator Bone. Wliich is the gas itself. Now, take a room of the 
size of this. Would one of those grenades fill it full of smoke very 
quickly ? 

Mr. Young. Yes; it would. 

Senator Bone. Then the smoke is propelled out under pressure. 

Mr. Young. That is right. 

Mr. Raushenbush. Senator, before the committee recesses for 
lunch, I would like to offer as an exhibit, to be inserted in the proper 
place, a correction by Mr. Sparre, director of the developments de- 
partment of the du Pont Co. He testified that the combined I.C.I. 



1622 MUNITIONS INDUSTRY 

and du Pont consumption of glycerin was around 5 or 6 percent 
and in this letter which I am herewith offering as an exhibit he says 
it was about 15 percent. 

The Chairman. It may be received. 

(The letter referred to was marked " Exhibit No. 598 " and is in- 
cluded in the appendix of Part V on p. 1396. ) 

The Chairman. The Chair has two telegrams here which have 
been overlooked in the last few days, which should be made a part 
of the record. One comes from Bernarr MacFadden and says ; 

WHl 85 42-NCV, New York, N.Y., 17 43GP. 

Hon. Gerai>d P. Nye, 

Chairman Senate Munitions Investigating Committee, 

United States Senate: 

Absolutely deny unfounded statements made by Miranda before your com- 
mittee implicating me in connection witb landing nmnitions orders with foreign 
countries. Miranda should be compelled to retract such statements concerning 
me and to offer a public apology for having made them. 

Beknarr MacFadden. 

There is another from the Bellanca Aircraft Corporation which 
says: 

WN65 XC-WUX TDWl, New Castle, Del. 13 31 OP. 

Senator Geirald P. Nye, 

Senate Arms Investigating Committee: 
Statements appearing in press reports your committee investigation that 
Lieutenant Commander Strong persuaded the Bellanca Aircraft Corporation to 
let Miranda handle its business in Colombia are untrue. Miranda has never 
sold any of our planes to Colombia. 

Bellanca Aircraft Corporation. 

The committee will stand in recess until 1 : 30 p.m. 

(Thereupon, at 12 noon, the committee recessed until 1 : 30 p.m.) 

after recess 

(The committee met at 1 : 30 p.m., pursuant to the taking 
of recess.) 

The Chairman. The committee will come to order. This is Mr. 
Jonas here, I believe, and will you be sworn, Mr. Jonas ? 

RELATIONS OF THE FEDERAL LABORATORIES WITH CUBA 

TESTIMONY OF FRANK SHEEIDAN JONAS 

(The witness was duly sworn by the chairman.) 

Senator Vandenberg. Will you state for the record your full 
name, address, and business connection ? 

Mr. Jonas. My name is Frank Sheridan Jonas. I have a sales 
agency in New York through which I handle the Federal Labora- 
tories sales, as well as other lines. I am also salesman for the Rem- 
ington Arms Co. and practically travel exclusively for them now, but 
my office in New York runs along just the same way. 

Senator Vandenberg. Now, Mr. Young, among other things this 
committee is instructed by the Senate to inquire into the general 
export situation in respect to munitions of war and the relationships 
between this Government and others, and this country and others, in 



MUNITIONS INDUSTRY 1623 

that respect. I want to chat with you and Mr. Jonas for a while 
about the rather colorful Cuban story for the last few years. 

You have been intimately informed respecting each step, have 
you not, in the changing government in Cuba ? 

Mr. Young. I have been informed, but I would not say how inti- 
mately it was. 

Senator Vandenberg. You have been pretty much a part of the 
picture in the changing government in Cuba, have you not? 

Mr. Young. Rather recently I have. 

Senator Vandenberg. Well, it is the general situation I would like 
to develop for a few minutes, so that we can see the background, and 
first of all I show you the first exhibit of the afternoon, which will 
be given an appropriate number, it being a letter to President Ma- 
chado dated January 9, 1932, signed by Mr. W. T. Neill on behalf 
of your corporation. 

(The letter referred to was marked "Exhibit No. 599" and is 
included in the appendix on p. 1829.) 

Senator Vandenberg. Who is Mr. Neill ? 

Mr. Young. Mr. Neill is a correspondent in our office. 

Senator Vandenberg. Authorized to sign your correspondence ? 

Mr. Young. Yes. 

Senator Vandenberg. I call your attention, on the second page, 
to the paragraph at the top of the page in which Mr. Neill is saying 
to President Machaclo : 

Of course, any sale of this equipment which we wouUl make to you would 
be with the full sanction of the United States Government. AVe are Avorking 
in close cooperation with the Chemical Wai-fare Department of the United 
States and conduct our negotiations with only those officials that are recog- 
nized by the State Department. 

That is a correct statement of your policy ? 

Mr. Young. That is the policy we endeavor to follow, j^es. 

Senator Vandenberg. You never deal with anyone except those 
officials that are recognized by the State Department ? 

Mr. Young. Not without the State Department's knowledge. 

Senator Vandenberg. In other words, if you deviate in any way 
from the rule of dealing only with officials that are recognized, you 
always keep the State Department informed of your activities? 

Mr. Young. So far as I can recall ; yes. 

Senator Vandenberg. And that is, then, a statement of your 
general purpose of all times ? 

Mr. Young. Yes, sir. 

Senator Vandenberg. Now, let us start in with the Cuban situa- 
tion along about 1932 when General Machado was still president. 
I show you a letter signed by Mr. Jonas, which I will ask Mr. Jonas 
to inspect, the letter being dated May 7, 1932, and addressed to Mr. 
Young, and which will be offered as an exhibit under its appropriate 
number. 

(The letter referred to was marked "Exhibit No. 600" and is 
included in the appendix on p. 1830.) 

Senator Vandenberg. May 7, 1932, is a time when the opposition 
group in Cuba with which Carlos Mendieta was identified, was 
beginning to be active. Is that a correct statement, Mr. Young? 

83876— S4—PT 7 2 



1624 MUNITIONS INDUSTRY 

Mr. Young. I don't know. I was not in touch with them at that 
time. I believe he had something to do with it. 

Senator Vandenbeijg. The letter in its opening paragraph refers 
to your brother Elmslie. Is he connected with you in business? 

Mr. Jonas. He is not. 

Senator Vandenberg. Oh, this is your brother, Mr. Jonas? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. Is he in the munitions business ? 

Mr. Jonas. Yes; he is. 

Senator Vandenberg. Who does he represent? 

Mr. Jonas. He is with the Winchester Repeating Arms Co. 

Senator Vandenberg. Mr. Jonas, I call your attention particularly 
to the paragraph in the middle of page 1 of this letter, exhibit 600, 
in which you reported to Mr. Young that, your brother having been 
introduced on this date to a colonel representing the Cuban Govern- 
ment, who is here placing orders for various war materials, then 
quoting from this paragraph, it says : 

He is asking the United States Government for prices. 

Did the Government sell abroad some of its equipment? 
Mr. Jonas. To Cuba, I believe they do sell. 
Senator Vandenberg. No other place but Cuba? 
Mr. Jonas. I believe they did in Haiti. 

Senator Vandenberg. That is under special treaty arrangement? 
Mr. Jonas. Yes. 

Senator Vandenberg. I again read from this letter in the para- 
graph referred to as follows : 

He is asking tlie United States Government for prices, but believes we can 
compete, as the Government lias increased tlieir prices, and are evidently 
endeavoring to discourage them placing the order with them. He has frankly 
stated that I must add 10 percent to my prices to cover him. 

Is that a correct quotation of your brother ? 
Mr. Jonas. No ; that is my letter to Mr. Young. 
Senator Vandenberg. You are quoting your brother, are you not? 
Mr. Jonas. Let me read that again. I am either quoting my 
brother or Demestre himself. 

Senator Vandenberg. Was it true? 

Mr. Jonas. That was true. 

Senator Vandenberg. Reading further, the letter says : 

Kindly therefore bear this in mind in making your quotation, and protect 
me with 25 percent on the bombs and my usual commission on the tear- and 
vomiting-gas equipment. 

What was your usual commission on the tear- and vomiting-gas 
equipment ? 

Mr. Jonas. I generally netted about 10 percent, and that commis- 
sion has to be divided. 

Senator Vandenberci. Now, I ask you to look at the last sentence 
on the second page of this letter, which reads as follows : 

He has promised to show me the Government prices on Thursday. 

Does that mean that this colonel, who was to receive 10 percent, 
shows you the United States Govermnent bid before you place yours ? 

Mr. Jonas. Just to be frank, I don't remember him showing me 
those prices. He said he would, but I cannot recall. 



MUNITIONS INDUSTRY 1625 

Senator Vandenberg. The statement is : He has promised to show 
me the Government prices on Thursday. The arrangement was that 
you were to see the prices before you made your bid? 

Mr. Jonas. I don't recall the details of that since 1932. 

Senator Vandenberg. What would be the object of showing you 
the prices except you were going to take advantage of the Govern- 
ment prices? 

Mr. Jonas. Well, I presume that was the reason. 

Senator Vandenberg. That is what the 10 percent was for, among 
other things, wasn't it? 

Mr. Jonas. No ; the 10 percent would come out of my commission. 

Senator Vandenberg. But what w^as it to pay for ? 

Mr. Jonas. He said he had various people to pay. 

Senator Vandenberg. He had to pay others? 

Mr. Jonas. Yes ; that was his story. 

Senator Vandenberg. And he was going to show you the Govern- 
ment bid before 3'ou put in your bid so that you could underbid the 
Government. Was that the arrangement? 

Mr. Jonas. I guess that is it; that is the object of it. 

Senator Vandenberg. Yes; I guess that is quite clear. I show 
you a letter of June 8, 1932, from you, Mr. Young, which letter I 
ask to be marked in evidence under its appropriate number. 

(The letter referred to was marked '' Exhibit No. 601 " and is 
included in the appendix on p. 1830.) 

Senator Vandenberg. In this letter you are now directly in touch 
with let us say a Cuban representative, the letter being addressed to 
Joaquin Demestre, Teniente de Artilleria. Does that mean military 
attache ? 

Mr. Jonas. No, sir ; it means lieutenant. He dropped from colonel 
to lieutenant but it is the same man we are talking about. 

Senator Vandenberg. Was that a voluntary drop ? 

Mr. Jonas. I misunderstood at first his title. 

Senator Vandenberg. Would a lieutenant be entitled to 10 percent, 
or would he get a little less ^ You don't need to answer that. 

At any rate, do you identify this gentleman as the one to whom 
the previous exhibit referred? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. You do? 

Mr. Jonas. Yes. 

Senator Vandenberg. Then there seems to be no impro]:)riety in 
going ahead with that phase of the discussion. Personally I am not 
at all interested in mere hearsay identifications Ijy correspondence of 
men who are thrown into unfortunate situations as the result, but 
here we have the first-hand information on the statement by the 
witness on his own responsibility that the identification is correct. 

Now, Mr. Young, I call your attention to the paragraph just below 
the quotes, reading as follows : 

A few days ago I checked up on the Government prices on some of this 
equipment and on the 4.2-inch mortar shells we were below the Government. 

In other words, the bid which you put in as the result of this 
arrangement did prove to be below the Government price; is that 
correct 't 

Mr. Young. Yes, sir ; I presume so. 



1626 MUNITIONS INDUSTRY 

Senator Vandenberg. That is a fact, as stated in your letter, is it 
not? 

Mr, Young. Yes, sir. 

Senator Vandenberg. Xow, we come to a letter, Mr. Young, of 
June 8, 1932, addressed to Mr. Jonas, which will be marked as the 
next exhibit. 

The letter referred to was marked " Exhibit No. 602 " and is 
included in the appendix on p. 1S31.) 

Senator Vandenberg. In this letter, " Exhibit No. 602 ", you are 
making a formal quotation on this same material, and I call your 
attention to the second page, the second paragraph thereon reading 
as follows : 

It might be after you get your Government prices that we will have to make 
some adjustments, though on some items tliere is not much room for adjust- 
ment. 

What does that mean? 

Mr. Young. I presume just about what it says, Senator. 

Senator Vandenberg. It means that after you found out what the 
Government bid was, then you could adjust your bid to a lower 
figure? Is that what it means? 

Mr. Young. I would not say it means exactly that. 

Senator Vandenberg. I am asking you. I don't want to put any 
improper interpretation on it, but I want your interpretation. 

Mr. Young. I said before up here I have already checked up on 
the Government prices. 

Senator Vandenberg. You mean by making adjustments in your 
prices after you get the Government prices and after you find out 
what the Government bid was you could adjust your bid upward ? 

Mr. Young. I don't think we did. 

Senator Vandenberg. Well, I call your attention to the postscript 
of this letter, in which it is said : 

It is very difficult to add 10% on, as you suggested. 

Then, skipping to the next paragraph, it says : 

Cuba has a price list of our equipment. Is it safe to jump prices 10% with- 
out getting your customer in trouble? I am going to let you and your customer 
add your 10%, and where it is possible to do so we will cover you; where it 
isn't, I believe it will be necessary for you to work it out some other way. 
It would be so much better if we could discuss it than it is to write a letter 
before I know what we are up against on Government prices. 

In other words, the whole arrangement, Mr. Young, including the 
10 percent commission, is entirely dependent on the Government 
price, and whether after you find out what it is j^ou can cover all 
of these divers and sundry factors that have to enter into your bid. 
' Mr. Young. I think it is a case that the amount of commission that 
would be available would depend largely on what was available in 
the spread between our cost and our profit on tliat order. 

Senator Vandenberg. And the question of whether you could pay 
the 10 percent or not would depend upon the conclusion of the other 
calculations to which you refer? 

Mr. Young. Yes. 

Senator Vandenberg. And both calculations would depend on the 
Government bid. At any rate, I show you the next exhibit, which 
will be properly marked with its appropriate number, which is a 



MUNITIONS INDUSTRY 1627 

•memorandum from Lieutenant Demestre to you, dated June 20, 1932, 
and I show you this simply for the purpose of indicating tliat you 
did make the sale, and that the sale followed this arrangement. 
There seems to be no question about that. I now offer this letter 
as an exhibit. 

(The letter referred to was marked " Exhibit No. 603 " and is 
included in the appendix on p. 1832.) 

Senator Vandenberg. Then in the same connection I show you 
the next exhibit, a letter dated July 7, 1932, addressed to Mr. H. E. 
Rau, signed by you, which I Avill ask to be marked as an exhibit 
under its appropriate number. 

(The letter referred to was marked "Exhibit No. 604" and is 
included in the appendix on p. 1832.) 

Senator Vandenberg. Who is Mr. Rau? 

Mr. Young. He is our treasurer. 

Senator Vandenberg. And this memorandum, signed by you, 
states that you have paid Lieutenant Demestre a total of $1,895. 
Was that the commission on the previous order ? 

Mr. Young. Yes, sir. 

Senator Vandenberg. Just for the purpose of establishing con- 
tinuing sales, I offer as the next exhibit this memorandum indicating 
the shipment of $18,000 worth of material, presumably under this 
same arrangement. 

(The letter referred to was marked " Exhibit No. 605 " and is 
included in the appendix on p. 1833.) 

Senator Vandenberg. Now, I would like to call A^our attention 
particularly to the next exhibit, which bears upon the shipments, 
being a statement of the Federal Laboratories, Inc. 

(The statement referred to was marked " Exhibit No. 606 " and is 
included in the appendix on p. 1833.) 

Senator Vandenberg. You will note that this memorandum on 
the stationery of the Federal Laboratories, Inc., indicates that you 
have sold to El Agregado Militar — is that military attache, or what 
does it mean? 

Mr. Young. I really don't know just exactly what that is. 

Senator Vandenberg. At any rate, it is some officer of the Cuban 
Government ? 

Mr. Jonas. Presumably. 

Senator Vandenberg. The shipment is identified as boxes of steel 
forgings, N.C.I.B.N. What does that mean? 

Mr. Young. It is a freight classification. 

Senator Vandenberg. Although these are classified for shipping 
purposes as boxes of steel forgings, the contents of each box was 
identified as including empty clemolition bombs. What is the pur- 
pose of classifying them as boxes of steel forgings, if the contents 
are demolition bombs ? 

Mr. Young. The transportation companies have all freight classi- 
fied, and this was the classification they designated for a shipment 
of this character. 

Senator Vandenberg. Would there be any other disclosure in con- 
nection with the shipment as to the actual contents of the freight? 

Mr. Young. The packing slip would give this same thing. 



1628 MUNITIONS INDUSTRY 

Senator Vandenberg. Reading further down, we find at the bot- 
tom of the statement this : 

Note: Bookkeeijing Dept. copy only. 

Copies of invoices which were sent to New York through our bank read as 
above except contents were described as letter of credit described them or 
empty aviation pumps. 

What does that mean ? 

Mr. Jonas. I can answer that. 

Senator Vandenberg. I would be glad to have you answer it. 

Mr. Jonas. Pumps in Spanish means bombs. And that means 
aviation bombs. In other words, pumps and bombs mean the same 
thing. 

Senator Vandenberg. This was not any transaction in which you 
were attempting to ship one thing and pretending you were shipping 
something else ? 

Mr. Young. No, sir. 

Senator Vandenberg. Did you ever make any shipments in which 
an effort was made to disguise the contents? 

Mr. Young. No, sir ; I did not. 

Senator Vandenberg. And this is simply an error in translation, 
which makes this appear somewhat discreditable. 

Mr. Young. May I call attention to the fact that this word " avia- 
tion ", I think, ties right in with aviation bombs. If it had been 
" gasoline pumps ", there might have been cause for suspicion there. 

Senator Vandenberg. Were these empty bombs? 

Mr. Young. They were empty. 

Senator Vandenberg. Isn't that a pretty high price for empty 
bombs, as compared with your price for loaded bombs? 

Mr. Young. No ; not in that small quantity, when you have to set 
up your forging machines to turn those out, and that is our standard 
price. 

Senator Vandenberg. These were in fact empty bombs ? 

Mr. Young. They were. 

Senator Vandenberg. Now I call your attention, Mr. Young, to a 
letter from Mr. Jonas, dated August 13, 1932, which will be marked 
" Exhibit No. 607." 

(The letter referred to was marked " Exhibit No. 607 " and is 
included in the appendix on p. 1834.) 

Senator Vandenberg. From this letter, " Exhibit No. 607 '', I read 
the following : 

I ;nn in receipt of a letter from Demestre today stating that owing to certain 
developments he is compelled to place his business through the Prince Lauten 
Corp. 

What is that company? 

Mr. Young. That is an export house in New York, handling all 
kinds of things, cotton goods principally. 

Senator Vandenberg. Reading further from the letter, it says: 

So in figuring any prict s on future Imsinrss the 10% which you add to 
protect him you can either pay me or the Prince Lauten Corp., or you can tell 
them that you will pay them direct when you hear frnni them. 

Yestei'day Mr. Ryan called me by telephone iind told me that he had received 
a certain order from Cuba, but as he was told not to divulge the source of the 
order he was not at liberty to tell me, but that if I objected to his quoting he 
would not do so. 



MUNITIONS INDUSTRY 1629 

Who is Mr. Ryan ? 

Mr. Jonas. Mr. Ryan is president of the Auto Ordnance Corpo- 
ration. 

Senator Vandenberg. What do they sell? 

Mr. Jonas. Thompson o;ims. 

Senator Vandenberg. The letter then reads further : 

However, lie would like to give them half the commission, to which I readily- 
agreed. He stated he felt that it was due to my work that the order was 
developed and for that reason he desired to protect me. I certainly appre- 
ciate this attitude, as he was willing to lose the entire order unless I agreed 
to part with my portion of my commission. 

Mr. Jonas, in view of your knowledge of the situation, may I ask 
whether that would indicate that Mr. Ryan was negotiating with 
the revolutionists at that time? 

Mr. Jonas. No, sir ; he was evidently referring to the same gentle- 
man who had asked for price previously. Mr. Ryan has not negoti- 
ated with any revolutionists. 

Senator Vandenberg. You think his desire not to divulge the 
source of the order was what? 

Mr. Jonas. To protect this gentleman who was trying to get the 
prices. 

Senator Vandenberg. It referred to the gentleman and the prices, 
and not to the character of the source of inquiry ? 

Mr. Jonas. That is correct, sir. 

Senator Vandenberg. Am I in error in remembering that j^ou said 
this morning, Mr. Young, that the Federal was the only agent for 
Thompson guns in this country? 

Mr. Young. We are at present. We were not the Ciiban agent 
at that time. 

Senator Vandenberg. I now show you the next letter, which is a 
translation, to be marked " Exhibit No. 608 " and now offered in 
evidence. 

(The letter referred to was marked " Exhibit No. 608 " and is 
included in the appendix on p. 1834.) 

Senator Vandenberg. This " Exhibit No. 608 " is a letter from 
Lieutenant Demestre to Mr. Jonas, and it starts out as follows : 

I received your letter of the 30th ult. with your quotation from Sedgley 
of the 29th. 

Who is Sedgley? 

Mr. Jonas. Sedgley is a manufacturer in Philadelphia. This 
has nothing to do with the Federal Laboratories. 

Senator Vandenberg. Is this chap known as " Sidewalk " 
Sedgley ? 

Mr. Jonas. I never heard of that name. 

Senator Vandenberg. Did you ever hear him referred to by the 
name " Sidewalk " Sedgley because he sells machine guns on the 
sidewalk in Philadelphia? 

Senator Clark. And delivers them on the sidewalk? 

Mr. Jonas. I never heard of him delivering on the sidewalk. 

Senator Vandenberg. Where is his place of business? 

Mr. Jonas. I have never been in his factory — never have seen it. 

Senator Vandenberg. Did you ever hear him referred to as " Side- 
walk" Sedgley? 

Mr. Jonas. Under oath, I have. 



1630 MUNITIONS INDUSTRY 

Senator Vandenberg. I continue reading from this letter as 
follows : 

As stated in my last letter, tlie business of repair parts should be handled 
as follows : 

Sedffley must invoice these repair parts for the following amount: $3,694.90 
f.o.b. New York, and he should fix the price list in accordance with this total 
quantity (it is enough to add 50 percent to each price). 

As a matter of fact that means they are not repair parts? 

Mr. Jonas. Those were repair parts. Those were parts for Lewis 
machine guns, mainsprings and various parts of the machine gun 
which they ordered. 

Senator Vandenberg. Sedgley handled nothing but machine guns? 

Mr. Jonas. No ; he sells sporting rifles and various things. 

Senator Vandenberg. I read further from this letter: 

If Mr. Sedgley will not accept this business on these conditions please look 
for another source. 

Where were these repair parts to go? 

Mr. Jonas. To Cuba. 

Senator Vandenberg. To the Cuban Government? 

Mr. Jonas. Yes ; to the Cuban Government. 

Senator Vandenberg. This is the Machado government? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. Now, Mr. Young, according to the next ex- 
hibit, which I show you, which will be properly marked, being a let- 
ter from you to Mr. Jonas, dated September 14, 1932, which is now 
offered as an exhibit. 

(The letter referred to was marked " Exhibit No. 609 " and is 
included in the appendix on p. 1835.) 

Senator Vande>berg. According to this letter, exhibit no. 609, in 
the third paragraph, it says : 

If yon want to reach me Friday, suggest you wire the Ben Franklin Hotel, 
Philadelphia. 

This is 12 days after the discussion about " Sidewalk " Sedgley. 
Did you go to Philadelphia to see Mr. Sedgley? 

Mr. Young. I did not, sir. 

Senator Vandenberg. Do you know Mr. Sedgle}^? 

Mr. Young. I have met him. 

Senator Vandenberg. Did you ever have any business with him? 

Mr. Young. Yes; we have bought two or three liundred dollars' 
worth of gas guns from him. 

Senator Vandenberg. Two or three hundred dollars' worth of 
what ? 

Mr. Young. Flare guns to shoot parachute IhnTS, and we bought 
some gas guns from him. 

Senator Vandenberg. Is he a recognized dealer in materials of 
this nature? 

Mr. Young. He has a catalog which would purport to be a recog- 
nized dealer. 

Senator Vandenberg. Are you familiar at all ^vith his sales, or 
where or how he makes them ? 

Mr. Young. I am very unfamiliar with his business. I have had 
very little contact with the gentleman. 



MUNITIONS INDUSTEY 1631 

Senator Vandenbeeg. I read on in this letter, " Exhibit No, 609 ", 
as follows : 

If I can get an extension of three days on the letter of credit for the armored 
car for Cuba I want to go to Washington to show it to two or three of the 
embassies. 

Were you also selling: armored cars? 

Mr. Young. Yes, sir ; that is one of our line of manufacture. 

Senator Vandenberg. To what extent does that traffic exist? 

Mr. Young. That was an armored limousine purchased for the 
use of the President and the Chief of Staif of the Army. There were 
two of them. 

Senator Vandenberg. The President and Chief of Staff of the 
Army of Cuba under the Machado regime, you mean? 

Mr. Young. That is riofht. 

Senator Vandenberg. You delivered those two cars to them for 
that purpose? 

Mr. Young. That is rio^ht. 

Senator Vandenberg. Did you come to "Washington and show 
them to other embassies? 

Mr. Young. I did, sir. 

Mr. Vandenberg. Did you have any luck? 

Mr. Young. Not yet. We also showed them to our own Govern- 
ment officials — that is, of the War Department. 

Senator Vandenberg. As I understand, it is not an armored car 
in the sense that it is a war machine ? 

Mr. Young. Oh, no ! 

Senator Vandenberg. It is an armored car which is in all effect 
a passenger car, but is intended to protect the rider from assassina- 
tion? 

Mr. Young. That is right. It was a Lincoln limousine that has 
all the appearance of an ordinary limousine, except it was armored 
between the upholstering and the outside shell. 

Senator Vandenberg. You showed it to some of the American 
departments, too ? 

Mr, Young, I did. 

Senator Vandenberg, Did you ever sell any to the American Gov- 
ernment ? 

Mr, Young. Not yet. 

Senator Vandenberg. I suppose the situation would have to get 
pretty tense before there was any market for that sort of equipment, 
would it not ? 

Mr, Young, I would not say so. Senator, I think the danger from 
radicals, the anarchist or crazy man, is such that there are times 
when officials of the Government should be so protected. 

Senator Vandenberg. I am inclined to agree with you. 

Senator Clark, Did you ever sell any of those armored cars to 
any individuals? 

Mr, Young, No, sir. 

Senator Bone. Who makes these armored cars for some of the 
underworld characters ? 

Mr, Young, I would like to find out, the same as our Department 
of Justice would ; but I do know we do not make them, Senator, 



1632 MUNITIONS INDUSTRY 

Senator Vandenberg. Is it pretty oenerally understood that there 
is a substantial traffic of that character ? 

Mr. Young. No; there is not. The manufacture of armored cars 
or armored bodies for the crooks, I think, has been very few. 

Senator Vandenberg. I show j^ou the next exhibit, which will be 
given the proper number, and I ask 3^ou, Mr. Jonas, to read that, 
particularly the latter paragraph, which refers to the reasons for an 
increased commission, and before entering it as an exhibit I will ask 
you if that is a true statement. 

Mr. Jonas. I agree, sir. That is true. 

(The letter referred to was marked " Exhibit No. GIO ", and is 
included in the appendix on p. 1835.) 

Senator Vandenberg. I will read a part of it as follows: 

Demestre has requested that we increase the price 25 percent to take care of 
him, but on account of Lake Erie's competition I am afraid to try that. We 
can talk over this matter in Washington. 

Does that mean to increase the commission to him or to increase 
the price to cover his previous commission? 

Mr. Jonas. I think it is his previous commission. I think that 
includes the total commission he wants. 

Mr. Young. Yes, sir. 

Senator Vandenberg. Along in October 1932, Mr. Jonas, you 
began to run into competition in the Cuban trade with the Lake Erie 
Chemical Co., or at least they began to appear in the situation. Is 
not that true ? 

Mr. Jonas. I presume so. 

Senator Vandenberg, I show you the next exhibit, Avhich will be 
given the proper mark, dated October 12, 1932. 

(The letter referred to was marked "Exhibit No. 611" and is 
included in the appendix on p. 1836.) 

Senator Vandenberg. The first paragraph of that letter mani- 
festly refers to the Lincoln automobile which we have been pre- 
viously discussing, and which appears, as you say, to have been a 
complete success, inasmuch as " Yesterday we shot a Springfield 
30.06 twice, one in the back of the car and one 7 inches below the rear 
glass. Neither of these two cartridges penetrated the metal. This 
proof has been a wonderful ad for the car, and will probably write 
today to Mr. Young congratulating him on the work." 

Then the next paragraph states [reading] : 

Parts from Sedgley : I have not figured any commission for you on the 
$1,021.30 as without doubt Sedgley will give you 5 percent if you insist. Make 
Sedgley understand that future orders will be placed tliru your medium. 
Nevertheless, in case Sedgley refuses to give you connnissi: n, please advise 
me and I will fix something for you. 

You have had transactions back and forth with Sedgley with 
respect to commissions? 

Mr. Jonas. On this I did ; yes, sir. 

Senator Vandenberg. Is this the only time you ever had transac- 
tions with Sedgley? 

Mr. Jonas. No; I have had other very small transactions with 
him. 

Senator Vandenberg. You seem to be complaining in this letter 
of the type of competition which Lake Erie is giving you. 

Mr. Jonas. That is his letter to me. 



MUNITIONS INDUSTRY 1633 

Senator Vandenberg. Yes; I stand corrected. He is reporting to 
you that the Lake Erie representative immediately commenced to 
discredit the Federal Laboratories material — 
stating that the bombs purchased by me were no good and of an old type. 

Is there any justification for that complaint? 

Mr. Jonas. I do not know enough about bombs to give a reply. 

Senator Vandenberg. Do you know anything about that, Mr. 
Young ? 

Mr. Young. Senator, I think that is just sales talk, and really I 
prefer that that type of material be left out of the investigation, 
from our competitors' standpoint. 

Senator Vandenberg. I am only interested in finding out the 
facts. 

Mr. Young. They were not; to answer the question. Frequently 
salesmen say a lot of things which they should not say, because 
they are driven into a corner by the buyer. 

Senator Vandenberg. I know that is so. 

The letter continues [reading] : 

As you can imagine, no one has paid any attention, because the bombs were 
manufactured by Federal exactly in accordance with my specifications. 

That would answer the previous question. 

Mr. Young. Yes, sir. 

Senator Vandenberg. Now I show you the next exhibit, which 
will be given a proper mark, dated December 8, 1932, in which Mr. 
Jonas is notifying the National City Bank of a deposit to the credit 
of Gumersindo, Suarez, Havana, Cuba. What was that for? 

Mr. Jonas. I was instructed to pay those commissions on that deal. 

Senator Vandenberg. Who was he? 

Mr. Jonas. He was a Government agent who supplied the Cuban 
Government with various articles. So that evidently he was work- 
ing for this man who was an agent there. 

Senator Vandenberg. Suarez and Demestre were in partnership in 
connection with this arrangement? 

Mr. Jonas. They evidently were. 

Senator Vandenberg. And Mr. Suarez was at the time an agent 
of their Government? 

Mr. Jonas. He is a supplier to the Government. They have mili- 
tary firms who supply goods to the Government. 

(The letter referred to was marked " Exhibit No. 612 " and is 
included in the appendix on p. 1836.) 

Senator Vandenberg. Now we come to the next exhibit, being a 
letter dated February 7, 1933, from Mr. Jonas to Mr. Young, which 
will be given a proper number. 

(The letter referred to was marked " Exhibit No. 613 " and is 
included in the appendix on p. 1837.) 

Senator Vandenberg. In that letter Lieutenant Demestre is a,sking 
for a bullet-proof vest, and so forth, but I particularly call your 
attention to the paragraph on page 2 entitled " Credit." That reads : 

Demestre claims that as they are short of funds it would be very much 
easier to do immediate business with his Government if you would agree to 
50-percent cash with the orders and the balance on terms. It is his opinion 
that there is no risk doing business on this basis, as the Cuban Government 
has always met their commercial obligations. Both Remington and Colt's 



1634 MUNITIONS INDUSTRY 

have extended them credit on this basis. In fact, on the ordiTS which were 
placed six weelis ago no deposit was made and they were given six months in 
whicli to pay. 

Mr. Jonas, you are reportino; Mr. Domostre"s claim that the Gov- 
ernment is running short of funds. This is February 7, 1933. Are 
wo now approaching the period when the political situation begins 
to change? 

Mr. Jonas. I think 30. 

Senator Vandexbeeg. This is the period, is it not, in which there 
had already been an armed revolt by Mendieta and Menocal? 

Mr. Jonas, I am not sure, Senator, but I do not think so. 

Senator Vandenbkrg. Between 1931 and 1933 the A.B.C, group 
grew up ; did it not ? 

Mr, Jonas. It must have been that time, 

Mr, Young. In 1932 the A.B.C. group was in existence, I do 
not know about the previous revolt, but I know they were sitting 
on a pretty hot griddle at the time. 

Senator Vandenberg, When did General Machado retire? It was 
August 1933, was it not ? 

Mr, Young. I believe it was, Senator. 

Senator Vandenberg, And this i^ in February of that year. Did 
you extend credit on this new basis ? 

Mr, Young, No ; we did not. 

Senator Bone. When did this new form of installment buying in 
munitions come into vogue? 

Mr, Jonas. No, gir; on all the deals which I have done it was 
generally cash. 

Senator Vandenberg, Were you justified in making the statement 
that Remington and Colt's had done that? 

Mr. Jonas. I had heard at that time, but it was nothing I could 
prove. Naturally, as a salesman, I was trying to get the sale. 

Senator Vandenberg. You do not know, in fact, whether the in- 
stallment business was existing or not? 

Mr, Jonas, No, sir. 

Senator Vandenberg, And you did not go into it? 

Mr, Jonas, We did not go into it. 

Senator Vandenberg, Now we are getting a little closer to the first 
revolution. I mean the first revolution in tliis gi-oup of revolutions. 
I show you a letter dated February 24, 1933, which will be marked 
as the next exhibit, and which is 3 weeks following the other letter, 

(Tlie letter referred to was marked " Exhibit No, 614 " and is 
included in the appendix on p. 1838.) 

Senator Vandenberg. Mr, Young, you are now writing Lieutenant 
Demestre, and the second paragraph refers to armor plate. It reads : 

We have been holding ourselves in readiness to make very early shipment 
of the armor plate for your truck bodies. We are sorry to learn that you are 
not in shape to pick up the complete trucks upon which we quoted. 

Senator Vandexp.erg. Where it refers to '' your truck bodies ", 
what does that mean? 

Mr. Young. They wanted to equip some work trucks for their 
Army and buy armor plate and put it on themselves. 

Senator Vandenberg, Did you ever make any shipment of that 
character? 

Mr. Young. No; we did not. 



MUNITIONS INDUSTRY 1635 

Senator Vandenberg. How would a shipment of that character be 
classified when it is shipped? 

Mr. Young. Shipped as armor plate. 

Senator Vandenberg. I call your attention to the last paragraph 
in that letter, which reads: 

There is a great deal of talk in the newspapers here about the impencling 
revolution, and if we are to believe all that the newspaiiersi say, I would cer- 
tainly urge you to speed the placing of these orders all possible. 

You appear to be urging the then-existing government to load up 
with your materials in order to be in a position to meet the crisis 
which you suggest is croAvding in upon them. 

Mr. Young. I would say so. 

Senator Vandenberg. Then we come to the next exhibit, whicli will 
be appropriately marked, which is 3 days later, being dated February 
27, 1933, being a letter from Mr. Jonas to Lieutenant Demestre. 

(The letter referred to was marked " Exhibit No. 615 " and is 
included in the appendix on p. 1838.) 

Senator Vandenberg. I call your attention to the third paragraph, 
the one which starts, " Unfortunately." 

First I will ask you if the statement in that paragraph is true ? 

Mr. Jonas. This is what this fellow told me. 

Senator Vandenberg. Who told you? 

Mr. Jonas. The nephew of Herrera, the Minister of War. 

Senator Vandenberg. You are directly quoting Rodriguez. He 
tells you the thing yoji report here. Is that correct ? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. And Rodriguez is Herrera's nephew? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. And Herrera is Secretary of War in the 
Government. Is that correct? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. I will read that paragraph : 

Unfortunately, or as it happens, fortunately, as the case might be, Rodriguez, 
Herrera's nephew (who was down in Havana at the time I was) told me that 
he could get this business, owing to his connections with his uncle. Knowing 
that the order for the last four or five million cartridges which were purchased 
by your Government was placed thru him, due to his relationship with the 
general, I felt it would be very foolish to ignore him and not show at least 
.some interest on his conversation ^\•itll me on the subject. 

Then, skipping a paragraph, the letter continues [reading] : 

During my conversation with Rodriguez he mentioned your name — ■ 

This is Mr. Jonas writing to Lieutenant Demestre — 

and wanted to know if I had done any business with you. I told him that I had 
done business with the War Department on orders which you were instructed 
to place, and gave him no further information. From his remarks, however, 
I gathered that he was suspicious about the automobile deal and told me that 
the chauffeurs 

Mr. Jonas. Chauffeurs. 
Senator Vandenberg (continuing reading) : 
had not been paid the usual commission — ■ 

What is the " usual commission " to chauffeurs ? 

Mr. Jonas. I do not know. Even the chauffeurs down there, when 
anyone buys a car, they have got to get a commission or they will 
discredit it. 



1636 MUNITIONS INDUSTRY 

Senator Vandenbkrg. You say " even the chaufFenrs." Do you- 
mean that that s^^stem j^ersists all the way down ? 

Mr. Jonas. Apparently it does, sir. 

Mr. Young. May I add, Senator, that this was the Machado 
administration. 

Senator Vandenberg. That is correct. We are still in the Machado 
administration. 

Mr. Young. That is right. 

Senator Bone. What significance does that have, or what signifi- 
cance are we to draw from that statement? 

Mr. Young. To the Cuban it has a great deal of significance. 

Senator Bone. I know, but this is a United States Senate investi- 
gation and we are trying to find out what it means. 

Mr. Young. Every Cuban knew that that administration only 
bought materials on this basis. 

Senator Bone. Make that somewhat plainer. What basis? It 
will save time if you will be specific. 

Mr. Young. On the basis that something was going into the 
organization. 

Senator Bone. What do you mean ? Do you mean that somebody 
was getting some money out of it on the side ? 

Mr. Young. Getting a commission. 

Demestre was representing Prince Lauten & Co., which was a 
commercial organization, to receive a commission. We did not feel 
they were doing any particular work for us, but were told they would 
act down there as agents and get paid for the business. 

Senator Vandenberg. In other words, to do business in Cuba you 
have to do it that way ; do you ? 

Mr. Young. That is what we find. 

Senator Vandenberg. And that is the way you did business in 
Cuba? 

Mr. Young. That is right. 

Senator Vandenberg. This letter would indicate that Kodriguez, 
who is the nephew of the Secretary of War, was beginning to be 
suspicious of Demestre. Is that what he indicated to you ? 

Mr. Jonas. That is what he indicated to me. 

Senator Vandenberg. What does that mean? What was he sus- 
picious of? 

Mr. Jonas. That he was not getting all the business, I presume. 

Senator Vandenberg. You mean Rodriguez was not getting it? 

Mr. Jonas. Every fellow down there wants to get all he can for 
himself. 

Senator Vandenberg. I see what you mean. Rodriguez is also 
selling? 

Mr. Jonas. Selling anything he can sell to the Government. 

Senator Vandenberg. And he is the nephew of the Secretary of 
War? 

Mr. Jonas. Yes, sir. 

Senator Vandenberg. And he is complaining because Lieutenant 
Demestre is doing so-and-so. What is his job? 

Mr. Jonas. He is a lieutenant. 

Senator Vandenberg. Connected with the Army? 

Mr. Jonas. He was connected with the Army ; yes, sir. 



MUNITIONS INDUSTRY 1637 

Senator Vandenberg. So that Rodriguez, the nephew of the Secre- 
tary of War, is complaining because Demestre, who is a lieutenant in 
the Army, may be getting something which Rodriguez thinks he 
ought to be entitled to because he is the nephew of the Secretary of 
War? 

Mr. Jonas. That is right. 

Senator Clark. Did he want a cut out of all the business going 
through that office ? Is that the idea ? 

Mr. Jonas. He would have liked to have had it that way, if he 
could. 

Senator Vandenberg. I show you the next exhibit, being a letter 
from Mr. Young to Mr. Carlos Mendyetta at New York, I call 
your attention to the fact that it is spelled " M-e-n-d-y-e-t-t-a." I 
want to ask you first, if that is the Mendieta who later became 
President ? 

Mr. Young. That is. That is a misspelling. 

Senator Vandenberg. That is the same Mendieta who became 
President in January 1934 ? 

Mr. Young. That is right. 

(The letter referred to was marked " Exhibit No. 616 " and is 
included in the appendix on p. 1839.) 

Senator Vandenberg. Was Mendieta connected with the Cespedes 
government, which immediately succeeded tlie Machado government? 

Mr. Young. No ; not that I know of. 

Senator Vandenberg. This letter, addressed to Colonel Mendieta. 
says: 

I am sorry I cannot get to see you personally and say good-bye, but I learned 
you are sailing Satui'day. I just wanted to express our congratulations to 
you and your associates on the marvelous outcome in Cuba. We, of course, 
regret tliat such a price of human life was paid, but it could have been much 
worse. 

Why would you be congratulating Colonel Mendieta unless he 
was part of the '■'" new deal " ? 

Mr. Young. He expected to be, sir. 

Senator Vandenberg. And was not? 

Mr. Young. I think that is the case. 

Senator Vandenberg. At any rate, you were very happy about 
this change, were you not? 

Mr. Young. I was. 

Senator Vandenberg. Why? 

Mr. Young. I have a great admiration for the man. 

Senator Vandenberg. For whom? 

Mr. Young. For Colonel Medieta. 

Senator Vandenberg. He did not have anything to do with the 
new administration. This is President Cespedes, is it not? 

Mr. Young. I believe at the time that this letter was written 
Cespedes had not been made President. 

Senator Vandenberg. I think he became President on August 14, 
1933, and this letter was written August 18, 1933. 

Mr. Young. The feeling among the best leaders of Cuba, who 
proved their worth to that position by later reaching it, was that 
Colonel Mendieta was the logical man to lead Cuba out of her 
difficulties, and the men who tried to hold that job, intervening at 



1638 MUNITIONS INDUSTRY 

the time when General Machado went out and Colonel Mendieta 
came in, proved that they were able to handle it. 

Senator Vandenberg. Your congratulations on the " marvelous 
outcome in Cuba ", then, does not refer to the election of President 
Cespedes? 

Mr. Young. No. 

Senator Vandenberg. Although that is the outcome which is con- 
temporaneous with your letter, is it not? 

Mr. Young. I never knew Cespedes. 

Senator Clark. That is probably one of the reasons he could not 
hang on. [Laughter.] 

Mr. Young. Thank you, Senator. 

Senator Vandenberg. How long was it before Mendieta became 
President ? 

Mr. Young. I think it was 4 or 5 months. 

Senator Vandenberg. He became president on January 17, 1934. 
That is 5 months later. You surely are not congratulating Colonel 
Mendieta in August on a marvelous outcome which results in 
January. 

Mr. Young. I was congratulating him on what had happened in 
Cuba, as I think every American who was familiar with the Cuban 
situation, what they were going through, w^ould express the same 
sentiment at that time. 

Senator Vandenberg. I am not quarreling with your opinion, but 
I am just trying to determine what it was you were registering 
your joy about. 

Mr. Young. That is right. 

Senator Vandenberg. The second paragraph of that letter states 
[reading] : 

I am so glad that you did not have to go through with tlie big program dis- 
cussed with you, General Menocal, Dr. Gomez, and Mr. Texidor. 

Who is General Menocal? 

Mr. Young. General Menocal was President of Cuba before 
Machado. 

Senator Vandenberg. Who was Dr. Gomez? 

Mr. Young. Dr. Gomez was there before Machado, and is now 
mayor of Havana. 

Senator Vandenberg. And who is Mr. Texidor? 

Mr. Young. Mr. Texidor was a commercial man. 

Senator Vandenberg. Were General Menocal and Dr. Gomez a part 
of the movement which overthrew General Machado? 

Mr. Young. I do not think they were, sir. They were in sympathy 
with it. Whether they made any contributions or not, I do not know 
personally, but they were not active. 

Senator Vandenberg. They certainly had no relationships with 
the Machado administration, did they? 

Mr. Young. They certainly did not. 

Senator Vandenberg. And neither did Colonel Mendieta have 
any with the Machado administration? 

Mr. Young. No. 

Senator Vandenberg. So you are expressing your joy that Gen- 
eral Menocal and Dr. Gomez and Colonel Mendieta, who were not 
part of the Machado regime " did not have to go through with the 
big program discussed with " them. 



MUNITIONS INDUSTRY 1639 

What was the " big proo-ram " which you discussed with them ? 

Mr. Young. They were talking about an attempt to force Machado 
out. 

Senator Vandenberg. And the big program involved the acquisi- 
tion of a large amount of munitions? 

Mr. Young. That is what they wanted to do. They discussed 
several things. General Menocal had a plan, being a military man. 

Senator Vandenberg. What I am getting at is, evidently, while 
Machado M-as still Presidont — and if I am wrong on this, you will 
please correct me — while Machado v/as still President, you were dis- 
cussing with General Menocal and Dr. Gomez and Colonel Men- 
dieta an armaments order which was to be part of the program to 
overthrow General Machado. 

Mr. Young. Did you say " discussing " ? 

Senator Vandenberg. Yes. 

Mr. Young. Yes. 

Senator Vandenberg. So that at that point you are not dealing 
with the Cuban Government, are you? 

Mr. Young. No; I was not. 

Senator Vandenberg. And at that point you are not doing what 
the letter to the State Department says, towit, that you dealt onlv 
with those whom the State Department recognized ? 

Mr. Young. Senator, I do not want the implication, if I may 
request it, that appears of dealing with these men on a proposed 
munitions order. 

Senator Vandenberg. By all means, make that plain, because I 
would not have it misunderstood for the world. 

Mr. Young. Because I told those men emphatically that they 
would get no support in the United States with the State Depart- 
ment supporting the Machado administration. 

Senator Vandenberg. Nevertheless, this " big program " would 
liave involved purchases, would it not, from you? 

Mr. Young. Had I considered negotiating on that • yes. 

Senator Vandenberg. Did you tell them that you would not sell 
them anything under any circumstances? 

Mr. Young. Unless the State Department approved it. 

Senator Vandenberg. You told them that at the time ? 

Mr. Young. I did, sir. 

Senator Vandenberg. "Where did these discussions take place? 

Mr. Young. In New York, in my office. 

Senator Vandenberg, Did you ever sell anything to this group 
prior to the downfall of General Machado ? 

Mr. Young. Not a penny's worth. 

These men, Senator, were outstanding there and were very much 
distressed about the conditions in Cuba and asked if they could have 
a talk with me. I granted that, as I think a gentleman should, and 
I listened to their story and advised them that I did not think they 
ought to go through with it, and it was just about 2 days after that 
that the Machado regime broke down. 

Senator Vandenberg. I am casting no aspersions upon them or 
upon you. but I am simply trying to determine whether or not there 
is any relationship between your group and the revolutionary groups 
here or anywhere else, and that is the sole purpose of this inquiry. 

83876— 35— PT 7 3 



gram 



1640 MUNITIONS INDUSTRY 

Senator Clark. These men knew, did they not. Mr. Young, that 
you were one of the purveyors of munitions to the Machado Govern- 
ment? 

Mr. Young. They knew Ave were shipping to the present Govern- 
ment. 

Senator Clark. That is what I sa}^ 

Mr. Young. I told them frankly we had shipped there. 

Senator Clark. Nevertheless, they sought you out and outlined 
their plans to you. You told them that you could not ship to them 
unless the State Department O.K.'d it, and they went ahead and 
outlined their whole plan of revolution? 

Mr. Young. No; I w'ould not say they outlined their Avhole plan 
of revolution. They described very briefly and, I think, very imma- 
terially their jjlan of force down there. 

Senator Clark. That is what you referred to as the " big pro- 
" ? 

Mr. Young. That is right. 

Senator Vandenbekg. We come now to a letter of October 17, 1933. 
which I will offer as " Exhibit No. 617." 

(The letter referred to was marked "'Exhibit No. 617" and is 
included in the appendix on p. 1839.) 

Senator Vandexberc;. Now, the Cespedes Government has fallen 
and the Grau Government, backed by Batista, has come in ? Is that 
a correct chronology? Thev came in September 15, 1933, did they 
not? 

Mr. Young. I think that is correct. 

Senator Vandenberg. Now, this exhibit is a letter from Mr. Texi- 
dor, whom you have identified as an agent in Habana and who 
subsequently became your agent. Is that correct? 

Mr. Young. That is correct. 

Senator Vandenberg. This is addressed to Robert S. Judge. Who 
is Robert S. Judge? 

Mr. Young. An attorney on Park Avenue. 

Senator Vandenberg. Is he connected with your company ? 

Mr. Young. No, sir. I say he is not connected officially. He has 
done a little law work for us at times. 

Senator Vandenberg. How does this letter happen to be in your 
files, Mr. Young? 

Mr. Young. Because he knew Mr. Texidor and I Imew Mr. Texidor 
and I knew him. Mr. Texidor did not know wdiere to reach me. 

Senator Vandenberg. Mr. Texidor is writing to Mr. Judge evi- 
dently because of this connection with your company, as follows: 

My chief object in addressing these lines to .voii is to enlist your kind co- 
operation in the following matter which I am sure will certainly be very 
beneficial to your combined interests with our mutual friend .John. 

Who is John ? 

Mr. Young. That is myself. 

Senator Vandenberg (reading) : 

It is of the .greatest importance that I get together with John at the earliest 
possible moment, and as I am not able to leave for the States immediately, 
I venture to ask if it would be possible for you to convince John of the 
expediency of his taking a flying trip to Habana. 



, MUNITIONS INDUSTRY 1641 

Skippino^ a few sentences, he goes on : 

* * * the imiKutant luoiiosition which I want to place before John also 
involves an investigation wliich it will he necessary for him to make personally 
on the spot. 

* * * It is important that you assure him that the parties involved in this 
proposition are not by any means of those whom he has met in the past, but 
that they are absolutely serious gentlemen, both morally and financially, in 
whose name I am making thisi urgent request for his visit to Habana. 

This reference to the men you have dealt with in the past refers 
to what ? 

Mr. Young. It refers to the men in the previous exhibit. 

Senator Vandenberg. That w'ould be the Machado regime or the 
Cespedes regime? 

Mr, Young. I think I woiikl be hazarding a wild guess to inter- 
pret who he did mean there. 

Senator Vandenberg. Very w^ell. I don't want any wild guesses. 
Did you do any business with the Cespedes regime? 

Mr. Young. No; I did not. 

Senator Vandenberg. At any rate, you are being requested ta 
make a quick trip to Havana and it is being pressed upon you the 
importance of the trip. We will pick that up in a moment again, 

I show you now^ another letter which I may offer as an exhibit, 
dated October 27, 1933. I shall have to refer to my chart to find 
out the government that was in control each time I pick up a differ- 
ent letter. This time they were under the Grau government. This 
is October 1933. This is a letter addressed to Mr. Jonas and signed 
by Ltns R. Rios. Who is he? 

Mr. Young. Rio-; is a commercial agent in Havana. He sells the 
Government and he represents other companies. 

Senator Vandenberg. He represents your company simply among 
many others; is that correct? Or does he represent your company 
only ? 

jVlr. Jonas. Xo. He represents several companies. 

Senator Vandenberg. Mr. Rios is now writing to you, congratu- 
lating you on the prompt and efficient manner you haVe handled his 
inquiries and says that that is just the kind of service the army 
expected and required. I call your attention to the last paragraph, 
which reads: 

With the change in government we have gained inconceivably. 

What would that refer to? 

Mr. Jonas. I had left for South America, and Mr. Rich, who is 
here, can answer all these questions from 1933 on. I was traveling 
for Remington and would not know about this. If you would like 
to have Mr. Rich, he is here. 

Senator Vandenberg. Let us have Mr. Rich, so that we can have 
the full picture. 

Senator Clark. You also travel for Remington? 

Mr. Jonas. The last year I have been traveling practically exclu- 
sively for them. 

Senator Clark. How is that? 

Mr. Jonas. For the past year I have been traveling practically 
exclusivelv for them. 



1642 MUNITIONS INDUSTRY 

Senator Clark. And you do not any longer represent the Federal 
Laboratories ? 

Mr. Jonas. Mr. Rich runs my office now, sir. I still have the 
agency. 

Senator Clark. You still have the agency for Federal Labora- 
tories ? 

Mr. Jonas. Yes, sir. 

Senator Clark. And also are the agent for Kemington ? 

Mr. Jonas. Remington Arms. But there is no connection between 
Remington and the JB'ederal Laboratories. 

(Carleton W. Rich thereupon came forward and was duly sworn 
by the chairman.) 

Senator Vandenberg. What is your connection, Mr. Rich? 

Mr. Rich, I am associated with Mr. Jonas in the general export 
business and in his work as export agent for Federal Laboratories. 

Senator Vandenberg. We are discussing the final paragraph of 
this letter from Mr. Rios, dated October 27, 1933, addressed to Mr. 
Jonas, in which he states : 

With the change in government we have gained inconceivably. 

What does he mean by " With the change in government we have 
gained inconceivably? " 

Mr. Rich. My interpretation of that is that he felt that he possibly 
had better contacts with the people in charge in the Government. 

Senator Clark. And that meant that you had, too? 

Mr. Rich. As it might reflect upon us. The " we " refers to him- 
self. 

Mr. Young. May I add, inasmuch as Mr. Rios was not our ap- 
pointed agent, he was referring, I think, to his own associates down 
there, to try to impress on us the fact that he was standing in better 
now with this new government than he had with the old ? 

Senator Vandenberg. I think that is probably so, because the next 
sentence is : 

Formerly General Herrera was against us and all the lesser oflScers with us. 
Now those lesser oflScers are up above, and we can reach the point of actually 
controlling all purchases — as long as they stay. 

In other words, this is one of those proletarian affairs where, when 
they finally get an opportunity, they do the same thing to w^hich 
they were objecting before they had a chance to do it themselves. 

That Avould not be an unfair interpretation, would it? 

Mr. Young. Well 

Senator Vandenberg. This is just the opinion of Mr. Rios? 

Mr. Young. I would not put that in and hand it to the new men. 

Senator Vandenberg. These new men are not the present govern- 
ment of Cuba. This is 1933 that we are discussing. 

Mr. Young. Those new men in the army — there was no change 
in the army, you see. 

Senator Vandenberg. Oh, yes. 

Mr. Young. I mean, after the overthrow of the army, which was 
simultaneous with the overthrow of Machado, the army officers under 
the Cespedes government continued right through to the present 
government. 



MUNITIONS INDUSTRY 1643 

Senator Vandenbekg. Inasmuch as Mr. E.ios is not here as a wit- 
ness and I, for one, have no interest in conversational gossip by 
these highly imaginative salesmen, except as they are here to testify 
exactly to what they know, I will not offer this letter as an exhibit. 

Senator Bone. When did the Machado government go in? 

Mr. Young. I do not know, sir. 

Senator Vandenberg. They went in 1924 and stayed in until 
August 1933. 

Mr. Young, I show you now what appears to be a memorandum 
signed by J.W. Y. That is yourself, is it not ? 

Mr. Young. That is right ; yes, sir. 

Senator Vandenberg. This is a memorandum, then, signed by vou 
and dated November 10, 1933, which I offer as " Exhibit No. 618."" 

(The memorandum referred to was marked "Exhibit No. 618", 
and is included in the appendix on p. 1840.) 

Senator Vandenb: kg. It reads as follows : 

In conversation with Mr. Texidor on Tuesday, Nov. 7th, I promised him a 
commission of 10 percent on all business done with the Menacol-Mendietta 
group and coraniission of 15 percent to 20 percent, depending on the product 
on ail business done with the Grau gi'oup. 

On November 10, 1933, the Grau administration is still in control^ 
is it not? 

Mr. Young. Yes, sir. 

Senator Vandenberg. And at this time the Menocal-Mendieta 
group are anti-Grau, are they not? 

Mr. Young. That is right, sir. 

Senator Vandenberg. And you are instructing your agents that 
if he does business with those who are on the outside, he can set 10 
percent commission on it, and if he. does business with the Govern- 
ment, he can have a 15- to 20-percent commission; is that right? 

Mr. YouA^G. That is right, Senator. 

Senator Vandenberg. You are offering to do business with both 
sides ? 

Mr. Young. No, sir. 

Senator Vandenberg. Well, how can I interpret it in any other 
way ? 

Mr. Young. May I explain? 

Senator Vandenberg. Certainly. 

Mr. Young. About the first of November there should be a letter 
in here — I think it was lost from my files, but I will give you the 
contents of it from memory. It followed my refusal to go down, 
as referred to in the previous exhibit put in here. He wrote me 
again — or it might have been a telephone call, I am not sure — ask- 
ing if I would not come down and have a conference with him in^ 
Habana. 

I went to Washington and talked to members of the State De- 
partment in the Latin American Division, gave them a complete 
history of my contact with these people, and asked them what I 
should do. 

They said they could not advise me in it, but the logical thing 
seems to be to go down there and see what there was to it and 
they would at least be interested in findinfr out. 



1644 MUNITIONS INDUSTRY 

I met the people in the Naval Intelligence Buiieau and gave the 
same story. When I got into Habana 1 gained the impression that 
the Grau group did not represent the people of Cuba. They were 
in power, but they were not at all popular and the leaders, as I could 
size them up, and the leaders as I knew them — I had met others 
whom I had never met before — were on the outside. I told Texidor 
that I could make no decision what to do until I came back to the 
United States. We would certainly have to work one way or the 
other. 

1 came back and stopped in Washington on my way through and 
had a further conference with the State Department. I was told 
there that they did not care to be quoted ; they could not advise me ; 
that the matter was up to my own judgment entirely. There was 
no ruling, no law, no treaty to their knowledge that would control 
the situation. I could do business either way I wanted. 

The Grau government, as you recall, was not recognized. Our 
own Government did not see fit to do that. 
Senator Vandenberg. That is correct. 

Mr, Young. And I told the State Department that in my judg- 
ment the sensible thing to do was to do business with those who were 
out rather than the government in power oi' the men who were hold- 
ing down that position. 

Senator Vandenberg. So the purpose of the higher commission 

upon business to the Grau administration was to increase the price to 

that particular group so as perhaps to make the purchase prohibitive? 

Mr. Young. No; it was not, sir; because I later paid that same 

commission on business with the Menocal-Mendieta group. 

Senator Vandenberg. Then what was the purpose of this memo- 
randum, which makes the discrimination 10 percent to the " outs " 
and 20 percent to the " ins " ? What is the purpose of the discrimi- 
nation except to discourage the sales to the " ins " ? 

Mr. Young. No ; it would be discouraging sales to the " outs ", 
because I was not giving him as much commission at that time. 
After all, when you are dealing with an agent, they put plenty of 
pressure on you to get all the commission they can. 

Senator Vandenberg. But does not the commission affect the 
price ? 

Mr. Young. Not necessarily so. 

Senator Clark. What was' the basis of this difference in conimis- 
sions to the " outs " and the " ins " ? How was it that on business 
to Grau's crowd you were willing to allow a commission of 20 
percent and on business to the Menedieta crowd you were willing to 
allow a commission of only 10 percent? 

Mr. Young. That was about the best deal that I could drive with 
Texidor at that time. That would be my answer. 

Senator Clark. Did Texidor give you any reason why there should 
be one kind of commission for one group and another kind of com- 
mission for another group? 

Mr. Young. He said that the Grau group had the money, the 
other group were asking for credit and, as you recall, I think they 
got some credit. 

Senator Vandenberg. You sold to the Grau group some material, 
did you not? You sold some material down there during the Grau 
regime, did you not? 



MUNITIONS INDUSTRY 1645 

Mr, Young. I would have to refer to my records, I do not recall it. 

Senator Vandenberg. Would it not be fair to say, Mr. Young, that 
the purpose of this discrimination related directly to your belief as 
to which government was the better government in Cuba ? 

Mr. Young. No; I would not say so. 

Senator Vandenberg. Did I misunderstand you, or am I correct 
in remembering that 3'ou said that 3'ou thought a change would be 
advantageous ? 

Mr. Young. Yes; I did. But remember I knew nobody in the 
Grau group. I knew all the leaders by that time in the Mendietta 
group, and I did not need the assistance in that group that I did in 
the Grau group. 

Senator Yaxdenberg. Apparently you were willing to deal with 
both groups. 

Mr. Young. Yes ; I was. I would put it this way : I was willing 
to deal wdth either group. 

Senator Clark. Did Texiclor suggest this difference in commis- 
sions, or did you? 

Mr. Young. No. I suggested that difference in commissions. 

Senator Clark. What was this difference in commission based on, 
Mr. Young? 

Mr. Young. They had all been 10 percent, or would have been if 
I had had them my way, speaking from the manufacturer's stand- 
point. I do not think I am disclosing any trade policy there. But 
I had not any particular contacts in the Grau group and Texidor 
refused to work for anj^thing less in that group. 

Senator Clark. So that Texidor did suggest the difference in the 
commissions ? 

Mr. Young. He suggested the set-up ; yes. 

Senator Vandenberg. After you left the State Department, the 
situation was that they left it to vour judgment as to what you were 
to do? 

Mr. Young. That is correct, and they asked me to keep them 
advised. 

Senator Vandenberg. And the purpose of the discussion with the 
State Department inevitably must have been to find out the relative 
merits on the regime or of that which might succeed it? 

Mr, Young, That is right. 

Senator Vandenberg, And that factor did not, you sa}', enter into 
your ultimate decision respecting prices at all? 

Mr. Young, No, sir. 

Senator Vandenberg. You were not attempting to influence the 
outcome ? 

Mr. Young. No, sir. 

Senator Vandenberg. On the contrary, you were perfectly willing 
to sell to both sides simultaneously? 

Mr. Young, No ; I would not say that. 

Senator Vandenberg. AVell, if Texidor had sent you one of these 
orders on which a commission of 10 percent would apply, from the 
" ins ", and one of these orders on which a 20-percent commission 
would apply, from the " outs ", on the same day, you would fill them 
both, would you not? 

Mr. Young. No ; I would not admit that. 



1646 MUNITIONS INDUSTRY 

Senator Vandenberg. You mean that when you got those orders 
you would decide which one you wanted to fill ? 

Mr. Young. Not having come to that question, I never had to 
make that decision. 

Senator Vandenberg. As a matter of fact, Mr. Young, the destiny 
of governments in South and Central America frequently hangs just 
as much upon the attitude of the munitions makers as it does upon 
the attitudes of other governments or peoples, does it not? 

Mr. Young. No ; I do not think it always does. 

Senator Vandenberg. I did not say always. 

Mr. Young. I do not think it did in this case; I do not think it 
did in this case at all. 

Senator Vandenberg. You have known of cases where that was 
or could be the situation, have you not? 

Mr. Young. I imagine that that has been the case at times. May 
I add, Senator 

Senator Vandenberg. Certainly. 

Mr, Young. That the change of government took place down 
there without any force. So that it was not a case of the munitions 
maker swinging the change in government. 

Senator Clark. You had given a schedule to Mr. Texidor. You 
agreed with him on a basis of commission of both for Grau and 
for Mendietta ? 

Mr. Young. Yes, sir. 

Senator Clark. And if he had accepted an order from Grau and 
one from Mendieta, as Senator Vandenberg has suggested, and they 
came to your place on the same day, you say you had not made up 
your mind what you were going to do; that you might have filled 
both or you might have filled only one and left the other fellow in 
the lurch, after he had given Texidor an order and relied on him to 
get it filled. 

Mr. Young. Senator, I think it is a bit unfair 

Senator Clark, What was your purpose in having a double set of 
commissions, different for each side, in your arrangement with Texi- 
dor, unless you knew what you were going to do ? 

Mr. Young. I explained that when I gave that to Texidor I did 
not know what I was going to do and I told them I could not advise 
him until I came back up here and talked to the State Department. 

Senator Clark. Did you ever tell Texidor which crowd he could 
deal with and which crowd he could not deal with ? 

Mr. Young. I did. 

Senator Clark. When did you do that ? 

Mr. Young. About 2 days after I got back. 

Senator Clark. That was before Grau was turned out? 

Mr. Young. I think it was ; yes. 

Senator Clark. You notified Texidor before Grau was turned 
out? 

Mr. Young. That he should play with the Mendieta group. 

Senator Clark. That you were going to cast your lot in with the 
Mendietta group. 

Mr. Young. Yes. 

Senator Clark, And not to deal with the Grau group? 

Senator Vandenberg, In other words, with the " outs " instead of 
the " ins," 



MUNITIONS INDUSTRY 1647 

Mr. Young. That is right. 

Senator Vandenberg. Therefore, have you notified your agent 
that he could not sell to the " ins ", but he could sell to the 
« outs " 

Mr. Young. I did not say that he could not sell to the " ins." I 
do not recall that I did. I told him, I said that we were going to 
work with the " outs." 

Senator Vandenberg. What did that mean? Wliat were you 
goins to do when you were cfoing to work with the outs? 

Mr. Young. I think our files reveal what we did, because within 
a week after I returned from Habana, there is a record of a con- 
ference. 

Senator Vandenberg. Abstractly and without reference to this 
particular situation, if you control a group of munitions which is 
essential in a war situation and can withhold that equipment from 
A and give it to B, or sell it to B, you have very definitely influenced 
the outcome of the situation, have you not ? 

Mr. Young. I would say so. 

Mr. Vandenberg. And that is precisely the situation that existed, 
potentially at least, when you notified your agent, as you have indi- 
cated to Senator Clark. 

Mr. Young. I did not tell him not to sell to the Grau group. I 
told him to go ahead and work with the other group. The Grau 
group had a perfect right to send in an order ; they had our quota- 
tions. 

Senator Clark. What would you have done if the Grau group had 
sent in an order? 

Mr. Young. I repeat. Senator, I think you are pressing me on a 
situation that did not develop. 

Senator Clark. All right ; you must have had something definitely 
in your mind when you gave Texidor this double scale of commis- 
sions. What would you have done if Texidor had gotten an order 
from both Grau and Mendieta? Was it your purpose to fill both 
orders, or was it your purpose to fill one order and leave the other 
fellow in the lurch? 

Mr. Young. I do not think it was possible for Texidor to do that. 

Senator Clark. You must have thought that there was some pos- 
sibility of doing it when you agreed with him on these commissions. 

Mr. Young. That is right. 

Senator Clark. You made him an offer of a very attractive com- 
mission on which he could negotiate ? 

Mr. Young. Understand, our regular commission is 20 percent. 

Senator Clark. Then, you were just chiseling on the Mendieta 
contract; is that it? 

Mr. Young. No; because I had contracts there which were not 
exactly any contribution of his. 

Senator Clark. Still I do not understand what you intended to do 
if he had been able to sell on the basis of botli commissions which 
you gave him, one for Grau and one for Mendieta. He had a 
perfect right to sell Grau and he had a perfect right to sell Mendi- 
eta under that agreement with you, did he not? 

Mr. Young. Yes. 

Senator Clark. Now, if he had sold both of them, what would 
you have done ? 



1648 MUNITIONS INDUSTRY 

Mr. Young. May I get that question just a little clearer ? Is it a 
question of whether we sell both sides of a dispute? 

Senator Clark. I am just asking you what you would have done 
in case you had gotten an order from both sides. According to your 
own story and according to this memorandum, you had given Texidor 
authority to negotiate with Mendieta on a commission of 10 percent 
and with Grau on a commission of 20 percent. That certainly gave 
Texidor the right to negotiate with them, did it not? 

Mr. Young. It did, sir. 

Senator Clark. And if he had taken orders from both parties, 
what would you have done about filling those orders? Would you 
have filled them both or would you have left one of them in the 
lurch, after he had given you an order and depended on you to fill it? 

Mr. Young. I repeat, I did not come up against that problem. 

Senator Clark. What did you have in mind when j^ou gave that 
double scale of commissions to Texidor ? 

Mr. Young. I was not clear which side could buy, until I came 
back to Washington to find out. 

Senator Clark. In other words, you did not know which way you 
were going to jump? 

Mr. Young. That is right. 

Senator Clark. And until you had decided which way to jump, 
you could not decide what you were going to do if both sides wanted 
to buy ? 

Mr. Young. It was not a case of my jumping; it was a case of the 
findings in the situation down there. 

Senator Clark. You came back and wrote this memorandum after 
you had been down there and made your findings; is that correct? 
You put in your files a memorandum of this agreement with 
Texidor? 

Mr. Young. That memorandum was made in Habana. 

Senator Clark. It is dated the 10th of November. When did you 
return ? 

Mr. Young, The agreement was made on the 7th. 

Mr. Clark. But the notation of it in your files, which we have 
here and which has just been offered in evidence, is a date of the 
10th of November, 3 days later. Was that made in Habana or when 
you returned to your office? 

Mr. Young. I had a habit of making memoranda on this equip- 
ment of all my transactions. 

Senator Clark. Where was this made? 

Mr. Young. This was made in Pittsburgh. 

Senator Clark. This was made in Pittsburgh, and at the time you 
made this memorandum of this double scale of commissions and you 
decided what you were going to do if you got orders from both 
parties? 

Mr. Young. This agreement was not made in Pittsburgh. 

Senatoi- Clark. I understand ; but the memorandum Avas made in 
Pittsburgh. At the time you wrote down this memorandum of the 
agreement made 3 days before in Habana you decided what you were 
going to do if both parties sent you orders through Texidor? 

Mr. Young. I would say it was ]:)robably a week after I got back 
before we did anything on that, when Dr. Martinez Saenz came to 
Pittsburgh. 



MUNITIONS INDUSTRY 1649 

Seiialor Clark. Did you ever notify Texidor that you would not 
accept orders from the Grau crowd? 

Mr. Young. No; I did not. 

Senator Clark. In other words, you left Texidor down there with 
authority to netrotiate with both parties? 

Mr. Young. Yes, sir. 

Senator Clark. But you had decided in your own mind that you 
would not accept orders from Grau if they came in? 

Mr. Young. I did not decide that I would not accept orders from 
Grau if they came in. 

Senator Clark. What would you have done if orders from Grau 
had come in? 

Mr. Young. I repeat that I did not have that question to settle. 

Senator Vandenberg. Let us see whether you did or not, Mr. 
Young. I show you a letter from yourself dated November 21, 1933, 
addressed to the State Department. This is 11 days after the memo- 
randum which we have been discussing, and I offer this as " Exhibit 
No. 619." 

The letter referred to was marked " Exhibit No. 619 " and is 
included in the appendix on p. 1840.) 

Senator Vandenberg. This letter reads as follows : 

Referring to our letter of November 17 relative to an order for thirt.v Thomp- 
son sub-machine guns for the Government of Cuba, * * * 

The Government of Cuba was then the Grau government? 

* * * wish to advise that this order has been increased to sixty guns. 

In your letter to Auto Ordnance Corporation will you please have it read 
sixty Thompson sub-machine gims instead of thirty? 

Does that indicate that you are selling Thompson sub-machine guns 
to the Grau government? 

Mr. Young. It does. 

Senator Vandenberg. So you did sell to the Grau government? 

Mr. Young. Not through Texidor. 

Senator Vandenberg. Oh ! 

Senator Clark. This is another commission ! 

Senator Vandenberg. But, regardless of Texidor, you did con- 
front a situation in which you had to decide whether you would sell 
to Grau or to the outs? 

Mr. Young. I did. 

Senator Vandenberg. And you decided to sell to Grau ? 

Mr. Young. That is right. 

Senator Vandenberg. So you did sell to Grau? 

Mr. Young. Yes, sir. 

Senator Vandenberg. We will return now to another exhibit, 
which I will offer as " Exhibit No. 620." 

( The document referred to was marked " Exhibit No. 620 " and is 
included in the appendix on p. 1840.) 

Senator Vandenberg. This appears to be a telegram addressed to 
your company, reading as follows : 

Young will arrive in today's plane. 

And it is signed " Martinez." 
Is this Martinez Saenz? 
Mr. Young. It is, sir. 



1650 MUisriTiONS industry 

'Senator Va^'denberg. Who Avas secretary under the Cespedes 
(Government? 

Mr. Young. I believe so. 

Senator Vandenbekg. Is he a member of the new Government ? 

llMr. Young. He was secretary under the Mendietta Government. 

;Senator Vandenbeeg. He was not a member of the Grau Govern- 
ment? 

Mr. Young. Not at this time ; no. 

Senator Vandenbeeg. You are now meeting Martinez Saenz, who 
rejn-esents the outs? 

Mr. Young. That is right. 

.'Senator Vandenbeeg. Having just sold to the ins? 

Mr. Young. That is right. Senator, I had no decision on that 
'Thompson order at all, and that is the reason I was not familiar 
with the buying of the guns. It came to me to write that letter to 
the State Department, but the order was sold by Mr. Rios through 
Mr. Jonas. 

Senator Vandenbeeg. You entirely controlled the sale of the 
Thompson gun? 

Mr. Young. I did not at that time, in Cuba. Since then I have. 

Senator Claek. What did you have to do with the distribution of 
the gun in Cuba? 

Mr. Young. Until sometime after that, about April of this year, 
the Thompson machine gun in Cuba was practically open to any- 
body to sell. We took over the distribution early in this year. 

Senator Claek. You did sell this order to the Grau Government? 

Mr. Young. It eventually cleared through us, but I had nothing 
to do with the taking of it, and I knew very little of it. 

Senator Claek. You are the one that communicated to the State 
Department to get licenses to export the guns ? 

Mr. Rich. May I clear that? 

Senator Vandenbeeg. Yes; go ahead. 

Mr. Rich. That was an order that came through Rios and came to 
us, and Mr. Young did not know anything about it. Inasmuch as 
they operated through Mr. Young, we passed that over to him to get 
the permit of the Government, as we always do. 

Senator Vandenbeeg. Mr. Young signed the letter ? 

Mr. Young. I am not sure I signed it. 

Senator Vandenbeeg. It is signed by the president of the com- 
pany. 

Mr. YouxG. It would be signed in my name; yes; by Mr. Ober- 
'deck, who, I believe, signed it. 

Senator Bone. I take it your company, in keeping with the prac- 
tice which seems to be almost universal, has delivered munitions to 
jagents in Latin America whose principal was not disclosed? 

Mr. Young. I would not say so. 

Senator Bone. It has been revealed here in the testimony and 
some of the correspondence that the agent refuses to disclose his 
principal in closing the deal. If you had an order for stuff you are 
selling and some man puts the money on the barrel head, would you 
■demand of him full and complete facts about his principal? 

Mr. You>'G. Yes; I would; and I have turned those orders down. 

.Senator Vandenbeeg. Now, I show you, Mr. Rich, a letter signed 



MUNITIONS INDUSTRY 1651- 

by you and addressed to Mr. Rios at Habana, dated December 19,'- 
1933, which letter will be marked as an exhibit with the appropriate ■ 
number. 

(The letter referred to was marked "Exhibit No, 621" and is- 
jnchided in the appendix on p. 1841.) 

Senator Vandenberg. I read from this letter, " Exhibit No. 621 "... 
as follows : 

It certainly was a tremendous surprise to have you confirm in your letter 
of tli;^ 17th that this man Figuerola has actually been appointed by Batista 
to imrchase for the Cuban Army. 

Who is Fifrnerola ? 

Mv. Rich. He is a man I have never met, but I have heard a o:reat 
deal about him that would not lead me to believe he was the kind of 
man to represent any government. 

Senator Vandenberg. You think 3"ou have full justification in de- 
scribinir Mr. Figuerola as you did in the next paragraph ? 

Mr. Rich. You mean with regard to his contemplated purchase 
of a cheaper gun? 

Senator Vandenberg. No; I mean respecting his reputation, and' 
that you were dead right, and so forth. Do you think you were- 
justified in that statement? 

Mr. Rich. I believe I was ; yes. 

Senator Vandenberg. The sentence I refer to reads as follows : 

You are dead right in your information that one very high-class and rei-uta- 
ble American manufacturer has refused to deal with Mr. Figuerola. 

Who was that manufacturer? 

Mr. Rich. The Remington Arms, so I understood. 

Senator Vandenberg. And reading further, it says : 

And I belive tliat ihere are others who either have I'efused or will refuse' 
if he approaches them. I would not he a bit surprised, as" a matter of fact, 
if certain officials in the Cuban Army were advised quite definitely by several 
American manufacturers that they want no dealings of a.;y kind with Mr, 
Figueriila. 

So iiir as his intended purcliase of machine guns is concerned, it is my 
understanding tliat he intended to purchase the Bergam gun and that this is a 
very cheap, small calibre, which can in no way be compared to the Thompson. 

What is the Bergam gun? 

Mr. Rich. I know it from reputation, but I do not know it per- 
sonally. Mr. Jonas can tell you about it. 

Mr. Jonas. It is a (jerman machine gun. 

Senator Clark. What calibre? 

Mr. Jonas. I think it is 2065, a smaller calibre than the Thompson, 
and it is a submachine gun, too. 

Senator Vandenberg. Do you know whether any of the Bergam 
material went into Cuba, Mr. Rich? 

Mr. Rich. I do not. 

Senator Vandenberg. Mr. Rich, I show you another letter which 
is addressed to Mr. Ryan and signed by Mr. Young. It is dated De- 
cember 14, 1933, which is oifered as an exhibit under the appropriate 
number. 

(The letter referred to was marked "Exhibit No. 622" and is- 
included in the appendix on p. 1841.) 



1652 MUNITIONS INDUSTRY 

Senator Vandenberg. I ask you, Mr. Rich, whether your identifi- 
cation of Mr. Figuerola in the first paragraph of that letter is 
justified? 

Mr. Rich. That was my understanding of it. I did not see his 
purchase, but I felt that was true. 

Senator Vandenberg. The paragraph to which I refer, reads as 
follows : 

Mr. Rich writes me that we had au upset on our contemplated order from 
Cuba due to the fact that a Mr. Figuerola, who has a questionable reputation 
as a " gun runner " has underbid us to the Cuban Government on the Thompson 
submachine guns. 

Wliat is a gun runner ? 

Mr. Rich. I did not write the letter, but my interpretation of a 
gun runner would be one who succeeds, or tries to get guns into a 
country illicitly. 

Senator Bone. In other words, he bootlegs guns into a country ? 

Mr. Rich. That is it, I should say. 

Senator Bone. How do these gun runners get the guns to run 
into a country? 

Mr. Rich. I do not know. 

Senator Bone. It must be from the manufacturers. 

Mr. Rich. I do not know. 

Senator Bone. We must assume that. 

Mr. Rich. I suppose so. 

Mr. Young. May I add, we never cared to get close enough to that 
business to find out where they did get them. 

Senator Bone. Don't you think it would be a good idea for legiti- 
mate business men to get closer to it and find out? 

The Chairman . Yes ; but legitimate business men do not want to 
know all about their business sometimes. 

Senator Bone. It seems to me it would be material for the man 
who has the exclusive agency for the Thompson guns to find out 
where they do get them illegally. 

Mr. Young. May I add, Mr. Figuerola took that order; and, if 
my mind does not fail me, this order which you are referring to 
from the Grau San Martin government was never cleared, and 
Figuerola caught the order before the letter of credit was opened up 
and took the order for Thompson machine guns. I also want to add, 
with reference to reputable American manufacturers refusing to deal 
with him, there were two others who did not — the Auto' Oi'dnance 
Corporation and the Federal Laboratories. 

Senator Vandenberg. Did he get the guns? 

Mr. Young. No ; he did not get them. 

Senator Clark. Why did you refer to him as a " gun runner "? 

Mr. Young. Why did you refer to Mr. Sedgiey as " Sidewalk " 
Sedgley? Pardon me for the question, but I mean the same reason. 
Senator Clark. I didn't refer to him as " Sidewalk " Sedgley, al- 
though I have heard him referred to that way. 
Mr. Young. It is the vernacular of the street. 

Senator Vandenberg. Did Mr, Figuerola have the right to handle 
Thompson guns at that time ? 

Mr. Young. No right whatsoever. 

Senator Vandenberg. He did not have a right to quote on them? 

Mr. Young. No. sir. 



MUNITIONS INDUSTRY 1653 

Mr. Rich. I notice this letter does not claim he was going to 
bootleg Thompson guns, but he was going to purchase them and 
ship them there. 

Mr. Young. He got a price on Thompson machine guns through 
a misrepresentation. 

Senator Clark. Who did he get the price from? 

Mr. Young. From j\Ir. Ryan's stenographer. 

Senator Ck.vrk. That was the Auto Ordnance Co. ? 

Mr. Young. That is right. 

Senator Vandenberg. The next exhibit will be a letter from Mr. 
Young to Colonel Batista, dated December 22, 1933. 

(The letter referred to was marked "Exhibit No. 623" and is 
included in the appendix on p. 1842.) 

This letter, " Exhibit No. 623 ", Mr. Young, would seem to justify 
what you said about your position, and I read the third paragraph 
simply for the purpose of supporting your testimony. It is as 
follows : 

We have been approached by Mr. Figuerola, but it is not convenient for us 
to conduct this business througli Mr. Figuerola. So that you will not be dis- 
appointed I am writing to you to tell you that we are desirous of serving you, 
and I sincerely trust we might have the pleasure of handling this in the same 
manner as the previous order. 

That indicates that you did not deal with Mr. Figeurola. 

Now, I offer as the next exhibit an invoice to Martinez Seanz from 
the Federal Laboratories, Inc. 

(The invoice referred to was marked "Exhibit No. 624" and is 
included in the appendix on p. 1842.) 

Senator Vandenberg. The Martinez Seanz to whom this invoice 
is directed has previously been identified as in opposition to the 
Grau Government. Is that correct? 

Mr. Young. That is right, sir. 

Senator Vandenberg. Was Grau still President on December 30, 
1933 ? 

Mr. Young. I do not have the record of that. 

Senator Vandenberg. I think he did not go out until January 16, 
1934. This is an order for gas masks, riot guns, incendiary bombs, 
and so forth and so on, sold to Martinez Seanz, is it not? 

Mr. Young. That is right, sir. 

Senator Vandenberg. So that here again you are selling to the 
" outs " on the threshold of their arriving as " ins." 

Mr. Young. Yes, sir. That equipment is still in storage here and 
has never been delivered. That was a memorandum invoice, as it 
is marked, I believe. 

Senator Vandenberg. I offer as the next exhibit a shipping order 
dated January 18, 1934. 

(The document referred to was marked " Exhibit No. 625 " and is 
included in the appendix on p. 1842.) 

Senator Vandenberg. This order is dated January 18, 1934, and 
the Grau administration is now out and the Mendietta administra- 
tion is in; and, in fact, it came in on the day previous. This is 
another shipment to Martinez Seanz evidently ordered before the 
change in government. If the government changed on the 17th 



1654 MUNITIONS INDUSTRY 

of January, manifestly this order was negotiated prior to the 
change. 

Mr. Young. This order was to take effect on the new government. 

Senator Vandenberg. This was an order taken before the new 
government came in contingent upon its arrival ? 

Mr. Young. Yes, sir. 

Senator Vandenberg. Well, that would bear out that you intended 
to work with the " outs " to get in. 

Mr. Young. That is right. 

Senator Vandenberg. I now offer as the next exhibit a letter of 
date January IS, 1934, directed to Martinez Seanz from yourself^ 
Mr. Young. 

(The letter referred to was marked "Exhibit No. 626" and is 
included in the appendix on p. 1843.) 

Senator Vandenberg. This letter appears to be addressed to Mar- 
tinez Seanz, who is still in New York, and I read from it, as follows : 

Confirming our understanding readied in New York on Tuesday night, we 
promptly proceeded with the additional order for thirty 300-pound demolition 
hombs, 500 gas masks, and 100 portable chemical cylinders, and we are also 
pushing production on the balance of the grenades and gas projectiles. 

That is the order previously identified in an exhibit just intro- 
duced. Then along toward the end of the letter it further says : 

We shall look forward to receipt of your draft for $15,000.00, plus expense 
money in Friday's mail to cover us for the new commitments in your order. 

The new commitments are for the new gOA^ernment. Is that 
correct ? 

Mr. Young. I presume that is what it covers. 
Senator Vandenberg. The letter further reads: 

I would greatly appreciate if, in the future, you would keep in closer touch 
with us by confidential correspondence addressed to me under personal cover. 

What is the point of that ? 

Mr. Young. To have it addressed to me rather than to the general 
office staff. 

Senator Vandenberg. You were on rather intimate terms with 
Mr. Seanz, were you not ? 

Mr. Young. Well, I considered him then, and still consider him 
a very close friend. 

Senator Clark. Seanz was the leader of a political organization, 
or one of the leaders of an organization known as the "A.B.C." 
group. 

Mr. Young. That is right. 

Senator Clark. And these bombs were used rather carelessly in 
Cuba in a campaign in which a number of citizens were killed down 
there ? 

Mr. Young. No, sir. 

Senator Clark. They did conduct such a campaign down there. 

Mr. Young. Not Avith our equipment. 

Senator Clark. They did not use your equipment, but they did 
use other equipment. 

Mr. Young. I would not say the A.B.C. conducted that campaign ;^ 
I do not know. 



MUNITION~S INDUSTRY 1655 

Senator Vandenberg. Now, we come to another letter dated Jan- 
uary 20, 1934, addressed to Carlos Mendieta, and signed by your- 
self, Mr. Young, which we offer as an exhibit. 

{The letter referred to was marked " Exhibit No. 627 " and is 
included in the appendix on p. 1843.) 

Senator Vandenberg. This letter, " Exhibit No. 627 ", reads exactly 
like the letter you wrote about the Cespedes inauguration, and it 
reads : 

It was with great pleasure that I read of your acceptance of the presidency 
of the Republic of Cuba, and I believe it is in order to congratulate the people 
of Cuba in having a man of your sympathies and exiierience to direct tliem at 
such a critical time. 

I wish to pledge to your support the staff and resources of the Federal 
Laboratories to assist you in bringing and maintaining order in Cuba. 

This final change met with your entire approval? 

Mr. Young. It did, sir, if my approval meant anything. I was 
glad to see it. 

Senator Vandenberg. You have made some contribution to it, have 
you not? 

Mr. Young. Financially? 

Senator VANDE^'BERG. No; in an indirect way? 

Mr. Young. Yes; I had frequently urged upon all of the leaders 
the wisdom of exactly what they did, and that was to form a coalition 
government and stop their fighting. 

Senator Vandenberg. You had urged that upon all of the leaders 
in Cuba? 

Mr. Young. All of the leaders I had met. There were three 
groups at the time. 

Senator Vandenberg. Yes; I understand. The relations of the 
United States Government to Cuba have been particularly acute and 
delicate because of the Piatt amendment, have they not, and there 
has been a particular responsibility upon us as a result of the Piatt 
amendment ? 

Mr. Young. Yes ; until it was rescinded. 

Senator Vandenberg. Certainly; which was considerably later. 
During this period the American Ambassador in Cuba was engaged 
in constant conferences on behalf of the United States Government 
in his official capacity seeking to work out an adequate program for 
the safet}^ of lives and property and the development of a stable 
government, was he not? 

Mr. Young. He was recommending the same program of coalition. 

Senator Vandenberg. How do you know what program he was 
recommending ? 

INIr. Young. I think it was rather common knowledge. 

Senator Vandenberg. At the same time he was dealing with these 
gentlemen, as I understand, you were also in conference with them? 

Mr. Young. Yes, sir. 

Senator Vandenberg. And you were making recommendations 
which you understood were the same as those being made by our 
representative. Is that right? 

Mr. Young. Some of them. 

Senator Vandenberg. You mean some of them were not ? 

83876— 35— PT 7 4 



1656 MUNITIONS INDUSTRY 

]\Ir. YouxG. I mean I was makino; some recommendations he was 
not makino: in disarmament. I think Mr. Welles was interested in 
keei)ing himself clear from that. 

Senator Vandenberg. Clear from what? 

Mr. Young. Any question of armament, and I think he did it 
admirably, too. 

Senator Vandenberg. Was that your only interest, armament 
ordnance— was that all you had in mind ? 

Mr. Young. No; what I had in mind was what I have accom- 
plished since. 

Senator Vandenberg. We will come to that shortly. What I am 
trying to establish, and I say to you I am not intending to be zealous 
m any sense, but I am simply trying to establish the fact that here, 
in a distinctly delicate situation respecting the diplomatic relation- 
ship between the United States and the Eepublic of Cuba and Amer- 
ican munitions makers were holding conferences with important 
officials in Habana, primarily interested in armament orders, and 
suggesting to the same Cuban officials the propriety of a future 
course of action with respect to their government. That is a correct 
statement, isn't it? 

Mr. Young. Would you mind stating that for me again, please? 
I do not think I agree with it, but I want to be sure I understand you. 

Senator Vandenberg. Well, I think I would rather rephrase it. 
I am trying to determine this, at a moment when a delicate diplo- 
matic problem between the United States and the Republic of Cuba 
is being handled through the regular diplomatic channels, simultane- 
ously an American munitions maker, wdio is primarily concerned 
with armament orders, is holding conversations relating to precisely 
the same diplomatic situation and offering his advice to these Cuban 
officials. Is that a correct statement? 

Mr. Young. May I add to that statement that all of my advices, 
all of my meetings were reported to the State Department with the 
statement that at any time they told me to stop, I would stop. I 
want to hold the State Department free from any question in this 
connection. They handled this just as admirably, I think, as any 
men could. I have not anything but the highest praise. They said 
they would not participate in taking sides. 

Senator Vandenberg. I am not criticizing the State Department, 
and abstractly I am not criticizing you. However, whatever it 
amounts to, the statement of facts I made is true ? 

Mr. Young. The statement of facts you made is true, and I would 
like to define that word " armament."' The program that was gen- 
erally carried through was one of police and tear gas, and my con- 
ferences with Martinez Saenz at that time dealt with the organiza- 
tion of a national police force on the basis of our State constabu- 
lary. I expected to make a profit out of it, as I am in business for 
profit. 

Senator Vandenberg. That is incidental and corollary to the state- 
ment I am trying to establish. Eliminating your interest, I am 
interested in the contemplation of a munitions salesman paralleling 
the diplomatic activities of the Government of the United States in 
a delicate foreign situation with advice of his own to the same rep- 
resentative of the foreign government with whom our Government 
is engaged in the negotiations. 



MUNITIONS INDUSTRY 1657 

Mr. Young. My advices were patterned after those being made. 
I was simph^ urging them against what appeared to be my own inter- 
est. They were talking about an order of $300,000, and I said : " The 
sensible thing to do is to follow the advice being given you about the 
formation of a coalition and not fighting it out, because you must 
eventually get together." 

Senator Vandenbero. Are you familiar with the terms of the 
Logan Act? 

Mr. Young. I never heard of it. 

Senator Vandenberg. This conclusion certainly is fairly drawn 
from the examination in which we have just been engaged : that you 
as a rej^resentative of the munitions business, during this episode in 
Cuba, clearl}^ demonstrated that the business of importing munitions 
is inseverably tied with the public interest and cannot be separated 
at all from the public interest and the policies of the Government 
of the Ignited States. That is true, isn't it? 

Mr. Young. I should think so. 

Senator Vandenberg. Now, Mr. Young, I show you the next ex- 
hibit, which will be given a proper mark, and is another letter from 
you to Dr. Martinez Saenz, dated January 22, 1934. 

(The letter referred to was marked " Exhibit No. 628 " and is 
included in the appendix on p. 1843.) 

Senator Vandenberg. I wish to call your attention to the final 
paragraph of that letter : 

This letter is not in tlie nature of a complaint. It is an appeal to the sense 
of fairness of yourself and your associates to see our end of the work com- 
pleted to a point where it does not work a hardship upon us. 

What do you mean by that ? 

Mr. Young. That means that the new government had not yet 
given us a confirmation of the material which was promised. 

Senator Vandenberg. Have you yet been paid at this time for that 
order which you accepted from Saenz prior to the change in gov- 
ernment ? 

Mr. Young. I had some money to return to Martinez Saenz. 

Senator Vande>jberg. There is no obligation outstanding against 
the revolutionary group, or was none at the time this letter was 
written ? 

Mr. Young. It would be a matter of checking dates there. Senator. 

Senator Vandenberg. At any rate, in other words, when you re- 
ferred to the fact there in that letter that you felt that " the sense of 
fairness of yourself and your associates to see our end of the work 
completed to a point where it does not work a hardship upon us ", 
you were referring exclusively to the payment of some current debts 
from the new government. Is that what you referred to ? 

Mr. Young. That might have been. 

Senator Vandenberg. I realize it might have been. I was won- 
dering what it was. 

Mr. Young. I am not clear in my own mind. There were a 
number of happenings there in just a few days. 

Senator Vandenberg. I am not blaming you for not being clear, 
because I cannot follow this except with a microscope. What does 
the phrase mean, ''see our end of the work completed"? End of 
what work? 



1658 MUNITIONS INDUSTRY 

Mr. Young. The proposal which Martinez Saenz had for the 
organization of a national police force. 

Senator Vandenberg. That refers entirely to the police-force 
project and has nothing whateA'er to do with the revolutionary 
movement ? 

Mr. Young. I should say so. 

Senator Vandenberg. Did you feel that you had any obligation 
remaining running to you in return for whatever assistance you had 
given in the change of administrations? 

Mr. Young. Personally? 

Senator Vandenberg. No; the Federal Laboratories; or, person- 
ally, either one. 

Mr. Young. I felt we had built up a goodwill there. There was 
no commitment to pay money. The matter was done entirely for 
future business. 

Senator Vandenberg. I am just interested in the phrase " to see 
our end of the work completed ", and I am wondering what that 
means. 

Mr. Young. I do not think our end of the work is completed yetv 
Senator. We are still doing work down there. 

Senator Bone. What work are you doing? 

Senator Vandenberg. We are coming to that, Senator. 

Senator Bone. Very well. 

Senator Vandenberg. The next exhibit will be presented and 
properly identified, being a letter from Mr. Texidor to Mr. Young, 
from Habana, dated January 26, 1934. 

(The letter referred to was marked " Exhibit No. 629 " and is 
included in the appendix on p. 1844.) 

Senator Vandenberg. This letter is confirming the cablegram from 
Texidor to you, that cablegram having read as follows [reading] : 

Young. Have iiuule arrnngements with president nnd Martinez for jneeting 
tomorrow morning. Evei-ything progressing very satisfactorily. Stop. Be 
prepared come immediately 1 advise you. Stop. Will communicate witb you 
after conference. 

That is where Mr. Texidor is arranging for a personal conference 
between you and the new President of the final regime. Is that 
correct — President Mendietta ? 

Mr. Young. Yes, sir. 

Senator Vandenberg. Now, the next exhibit, which will be prop- 
erly marked, is another letter from Mr. Texidor to Mr. Young, 
under date of January 29, 1934, and again confirms a cablegram 
which indicates a satisfactory result. 

(The letter referred to was marked " Exhibit No. 630 " and is 
included in the appendix on p. 1844.) 

Senator Vandenberg (reading the cablegram) : 

After conference with president and Doctors Martinez and Gomez. Result 
most satisfactory but believe extremely important you come immediately in 
order accelerate things. Stop. In making your plans you should figure that 
you will need remain here not less than week. Cable me when can expect 
you. Stoi). Strongly recommend speedy action as among other reasons I have 
to go States myself very shortly. 

That indicates that he has made the arrangement for your con- 
ference with the president, does it not? 
Mr. Young. That is right, sir. 



MUNITIONS INDUSTRY 1659 

Senator Vandenberg. What does he mean in the next paragraph 
by the sentence : 

As you know, my position with the leaders and yourself is a peculiar one, 
and, therefore, your presence here is very important, not only for the winding 
up of your presently pending matter, but also in order to obtain the compensa- 
tion to which you are so justly entitled. 

What does that mean? 

Mr. Young. Profit on the business I have been doing. 

Senator Vandenberg. The business that you had been doing? 

Mr. Young. The business that I had been doing and expected 
to do. 

Senator Vandenberg. What business had you done up to January 
29 except to sell them before they came in ? 

Mr. Young. $30,000 worth of business. 

Senator Vandenberg. Was not that to the " outs " before they were 
in? 

Mr. Young. That is right. Up to this time I had not done any- 
thing further. 

Senator Vandenberg. So that when he refers to the compensation 
to Avhich you are so justly entitled, he refers to the compensation 
which he figures you have earned through contributing to the success 
of this work? 

Mr. Young. That is a voluntary statement on his part, his letter 
to me. 

Senator Vandenberg. That is right. I am just wondering what 
was the proper interpretation of it is. 

Senator Bone. What is there about that sort of relationship which 
is peculiar? 

Mr. Young. Again I would not know what he means there. There 
was nothing peculiar about it to me, Senator. 

Senator Vandenberg. You went to Habana as a result of this 
exchange of correspondence or as a result of these arrangements, 
did 3^ou not? 

Mr. Young. I did, sir. 

Senator Vandenberg. The next exhibit, which will be properly 
marked, is an unsigned letter addressed to Mr. Young, president of 
the Federal Laboratories, Inc., addressed from Habana, under date 
oi February 10, 1934 

(The letter referred to was marked " Exhibit No. 631 " and appears 
in full in the text.) 

Senator Vandenberg. That letter reads [reading] : 

You are hereby appointed as a consultant to direct the planning, organizing, 
training, and equipping of a national police force, for which we agree to pay 
to you for your personal services tiie sum of ten thousand dollars (.$10,000) 
U.S. currency, payable as follows : .50 percent upon the signing of this agree- 
ment, 2.0 i)ercent in GO days, and the balance, or 25 percent, in U) days from the 
date of this agreement, and ttj further pay all traveling expenses incurred by 
you in the fulfillment of .such duties. 

You are to give not less than 1 month of ynur rime entirely m this serv- 
ice during the next 90 days, and 2 weeks additional time, if necessary, during 
this period. You shall be subject to call of the President for consultation during 
any ].ieriod months from date, and shall, if necessary, make two such trips 
to Cuba without additional personal compensation. 
KespectfuUy. 

By whom was that in fact signed ? 
Mr. Young. That was not signed. 



1660 MUNITIONS INDUSTRY 

Senator Vandenbekg. You mean this arrangement was never 
made? 

j\Ir. Young. The arrangement was made, but there was some slight 
change in the "wording. This is going into the record, and I do not 
want it to go into the record as it is, oecause there was some change 
in it. I do not have the copy which was actually signed. I will 
see that you get it, Senator. 

Senator Vandenberg. It is not particularly material, but can you 
indicate, for the time being, any material changes which were made 
in it? 

Mr. Young. Yes ; there was $2,000 added to it. 

Senator Vandenberg. It was $12,000 instead of $10,000. 

Mr. Young. For assistants. 

Senator Vandenberg. $2,000 for assistants in addition to $10,000 
for you ? 

Mr. Young. That is right. 

Senator Vandenberg. Any other changes? 

Mr. Young. Yes; they eliminated the organization of a national 
police force and put in their usual technical adviser. 

Senator Vandenberg. All right. Any other major changes? 

Mr. Young. Not that I can recall, sir. 

Senator Vandenberg. And that agreement was made and signed 
as indicated by the amendments? 

Mr. Young. Yes, sir; that was passed by the cabinet. 

Senator Vandenberg. Did you receive the $10,000? 

Mr. Young. I have received part of it. My work has not been 
completed yet. 

Senator Vandenberg. How much work have you done in connec- 
tion with it? 

Mr. Young. I put in about 8 weeks of my own time and my 
two assistants, the two men who were included on there to assist in 
the work, have put in, one of them about 8 weeks and the other about 
10 or 12 weeks. 

Senator Vandenberg. How much of that time has been spent in 
Cuba? 

Mr. Young. I am speaking primarily of the time spent in Cuba. 
The majority of it has been spent in Cuba, not all of it. 

Mr. Raushenbush. Of your own time, Mr. Young? 

Mr. Young. There have been about 5 or G weeks of my own time. 

Senator Vandenbercj. You were in Cuba 5 or 6 weeks under this 
contract, doing this work? 

Mr. Young. Yes, sir; and I have made 3 or 4 trips. 

Senator Vandenberg. Now, the gentleman who made this arrange- 
ment for you to see the president, out of which this subsequent 
$10,000 contract came, was Mr. Texidor, as I understand it. Is that 
correct ? 

Mr. Young. That is right, sir. 

Senator Vandenbercj. I sliow you the next exliibit, which will be 
properly marked, dated at Habana, February 12. 1934, being from 
yourself, Mr. Young, to Mr. Texidor. 

(The letter referred to was marked "Exhibit No. 632" and is 
included in the appendix on p. 1845.) 



MUNITIONS INDUSTRY 1661 

Senator Vandenberg. Two days later, according to this exhibit, 
Mr. Texidor is appointed your exclusive representative in Cuba t6 
handle the sale of your products and equipment. Is that correct? 

Mr. Young. That is correct, sir. 

Senator Vandenberg. The next exhibit is submitted for proper 
identification, being a letter from you, Mr. Young, to Mr. Texidor, 
dated February 22, 1934. 

(The letter referred to was marked " Exhibit No. 633 " and is 
included in the appendix on p. 1845.) 

Senator Vandenberg. The second paragraph of that letter reads 
as follows [reading] : 

There is still considerable anxiety on the part of the American ofBcials as to 
the future of Cuba. This anxietj' would be greatly lessened l)y announcement 
that the program which I have recommended has been officially adopted by the 
Cuban Government. 

To what program does that refer ? 

Mr. Young. The organization of the police. Instead of having 
the soldiers shooting their guns — to those wdio were in Cuba at that 
time it was customary to go to sleep to the tat-tat-tat of gunfire. 
Soldiers marching in the street and carrying a gun got itchy fingers, 
and it had the situation in a ver}^ nervous turmoil. 

Senator Vandenbe:rg. And you were recommending what? 

Mr. Young. The elimination of the soldiers with guns marching in 
the streets of the city and the intervention of police properly 
equipped with tear gas and equipment for controlling the tense situ- 
ation which they still had at that time. 

Senator Vandenberg. Equipped with your equipment? 

Mr. Young. That is right, sir. 

Senator Vandenberg. The next exhibit, which will be properly 
marked, is a letter to the President of the Republic of Cuba dated 
March 7, 1934, and signed by Mr. Young. 

(The letter referred to was marked " Exhibit No. 634 " and is 
included in the appendix on p. 1846.) 

Senator Vandenberg. That letter is written in Spanish. I am 
simply interested, for identification, in the third paragraph, which 
appears to say, I am told, that you were notifying President Men- 
dietta that you were going to bring a man b}^ the name of Alberto 
B. Moore down, he being chief inspector of the New York State 
police. Is that correct ? 

Mr. Young. That was recommending Albert Moore to the Cuban 
Government. Mr. Moore was asked if he would come down by the 
Cuban Government through Jefferson Caffery, our Ambassador, who 
transferred that on to the New York State Governor, and Captain 
Moore was loaned to the Cuban Government and, I think, spent 
some 6 or 8 weeks there. 

Senator Vandenberg. And he heartilv favored the use of your 
equipment and the institution of your program? 

Mr. Young. He had not much to say about what the program or 
equipment would be. but w^as down there conducting a school similar 
to that adopted by the International Police Chief's Association. 

Senator Vandenberg. As a matter of fact, he was in favor of the 
use of tear gas in situations such as were there contemplated, was he 
not? 



1662 MUNITIONS INDUSTRY 

Mr. Young. Yes; I think that is a matter of record in the New 
York State police. 

Senator Vandenberg. Yes, it is ; and it is a matter of record in the 
next exhibit, which will simply bo marked for identification. 

(The letter referred to was marked for identification as " Exhibit 
No. 635 " and is on file with the committee.) 

Senator Vandenberg. Then I call your attention to the next ex- 
hibit, which is a letter from you, Mr. Young, to Mr. Texidor, dated 
at Habana, Cuba, March 28, 1934. 

(The letter referred to was marked " Exhibit No. 636 " and is 
included in the appendix on p. 1847.) 

Senator Vandenberg. The opening sentence of that letter reads 
[reading] : 

I am euclosinii- herewith payment to the amount of $5,600 advance commis- 
sion on the order for the Cuban Government, although no letter of credit has 
yet been opened. 

Is not that a little unusual; that is, that sort of an arrangement? 

Mr. Young. Mr. Texidor had lost his business under the Machado 
administration, was in very bad financial condition, and on. the 
signing of the order, after the order was signed, a presidential decree 
issued, passed by the cabinet, and he asked if he might have that 
commission advanced, which I did. 

Senator Vandenberg. It is an unusual sort of an arrangement, is 
it not? 

Mr. Young. I should say so. 

Senator Vandenberg. But was justified by the facts which you 
have related? 

Mr. Young. Yes, sir. 

Senator Vandenberg. Please look at the next exhibit, Mr. Young, 
which is a letter to you from Mr. Texidor, dated in Habana, March 
31, 1934. 

(The letter referred to was marked " Exhibit No. 637 " and is 
included in the appendix on p. 1848.) 

Senator Vandenberg. Now, Mr. Texidor is reporting to you about 
an article concerning you in El Pais. I apprehend that is an Habana 
newspaper, is it not? 

Mr. Young. That is an Habana newspaper. 

Senator Vandenberg. And, after referring to the " sunny, lovable 
land of a thousand imperfections ", says that he is sending " the 
latest photo of ^^ourself, as sketched by the artist of El Pais ", and 
then there is some personal persiflage; and he drew your attention 
to liis translation of an article from El Pais in the issue of March 
29. 1934, headed " Cuba Gives Modest Eeward to the Expert Mr. 
Young, States F. Granero; and His Mission Will Be Exclusivel}^ 
Technical, Concerning Gases and 'Tricks.'" 

What does that mean ? 

Mr. Young. Did you ever hear of jiu jitsu? 

Senator Vandenberg. Yes, sir. 

Mr. Young. That is what he is referring to. 

Senator Vandenberg. I have seen some of it — both mental and 
physical. [Laughter.] 

I am putting the entire exhibit in the record, Mr. Young, because 
I think it l^ays you a highly deserved compliment and expresses the 
great debt of this Cuban Government to you. 



MUNITIONS INDUSTRY 1663 

The third paraf^raph reads [reading] : 
Commandant Franco Granero — 

Who, by the way, is the commandant? 

Mr. Young. He was the assistant chief of the national police. 

Senator Vandenberg (reading) : 

Commandant Franco Granero adds that Cuba is rewarding Mr. Young 
modestly. 

What is the reward he is referring to ? 

Mr. Young. If you know the man, I think you can understand it. 
Apart from that, t do not think you can. 

Senator Vandenberg. I am afraid I am going to be at a handicap, 
then. 

Mr. Young. He is very verbose in his expressions and loves to talk 
to the newspapers, and" is what I would call " running off at the 
mouth." When he speaks in his own language, I still include that. 

Senator Vandenberg. When he speaks about rewarding you ? 

Mr. Young. That is right. 

Senator Vandenberg. Let me read it again [reading] : 

Commandant Franco Granero adds that Cuba is rewarding Mr. Young 
modestly, when compared with the payments which this exiiert has received 
for his service in France, England, and in the United States. 

To what does that refer ? 

Mr. Young. Bless me if I know. I had no services in France or 
England. I think he was reaching up in the air and pulling that 
down. 

Senator Bone. Have you not reached that place in the munitions 
business where vou are entitled to the Order of the Knights of the 
Bath? 

Mr. Young. Senator, we speak of it as a munitions business. It 
is almost amusing to see how little business transacted there is which 
would be called " munitions." 

Senator Bone. Machine guns and demolition bombs and fragmen- 
tation bombs are munitions of war, are they not ? 

Mr. Young. There were none shipped to Cuba. 

Senator Bone. But you were agent for that and sell it? 

Mr. Young. Yes; I sell it; but it was not shipped to Cuba. 

Senator Vandenberg. It is more business with the Government 
than in munitions, is it not ? 

The fourth paragraph of this compliment, Avhich you modestly 
insist is overdone, states [reading] : 

He further adds, with regard to the assistant of Mr. Young, viz : Mr. Moore,, 
that this gentleman 

That is our friend, Mr. Moore, from New York ? 

Mr. Young. That is right. 

Senator Vandenberg (continuing reading) : 

that this gentleman, in addition to assisting Mr. Young, will teach the police 
the use of " tricks " — that is to say. artifices and cunning ways of easily 
dominating any disturbers of the public order, without the need of having 
recourse to violence, which special " tricks " are now being employed by the 
police of the most important cities of the world. 

To what does that refer ? Have you any idea ? 
Mr. Young. That is common police training — how to handle men 
without splitting their heads open in a brutal manner. 



1664 MUNITIONS INDUSTRY 

May I add soinethino- for the record, Senator? 

Senator Vandenbekg. Anything you want to, Mr. Young. 

Mr. Young. During the Machado administration it is cLiimed by 
the present Government officials, upward of 3,500 people were killed 
by being shot or put to death in one manner or another, usually in 
suppressing riots, where they would turn a machine gun right loose 
on a crowd. I believe since the new Government has come into 
force in Cuba there have been not more than six or eight deaths 
which have occurred due to public disturbance. I personally at- 
tribute that to the training of the police, the use of common sense 
instead of lead, and, where they cannot reason with a group, which 
is hard to do, in that case they can resort to tear gas, and nobody 
is injured, and they are all over it in a few minutes afterward and 
back as human beings. They have used tear gas a great deal there 
many times during the past few months. 

Senator Vandenberg. I agree with you that is a commendable 
change and an improvement. 

Let us go to the next letter, which will be properly marked, and 
which is a long letter from Mr. Texidor to you, Mr. Young, written 
at Havana under date of April 4, 1934. 

(The letter referred to was marked "Exhibit No. 638", and is 
included in the appendix on p. 1848.) 

Senator Vandenberg. He is confirming various cablegrams, to 
begin Avith, in this letter. First the cable which reads [reading] : 

Telegraph if you have remitted $8,000. U you have not, please write. 

Then comes his cablegram to you of April 3 [reading] : 

We positively agreed and it was clearly understood when you left that upon 
arrival Pittsburgh you would remit me up to $15,000 and that immediately upon 
$50,000 credit being opened you would increase amount to $25,000. Stop. Have 
contracted obligations to amount of $15,000 and having received remittance of 
$2,000 and $5,600 left by you, must urge you cable me balance of $8,000 agreed 
upon. Stop. * * * 

What is the explanation of that situation ? 

Mr. Young. I do not know whether it is fair to introduce Mr, 
Texidor's personal affairs into the record. 

Senator Vandenberg. You think it is entirely a personal matter 
with Mr. Texidor? 

Mr. YoiTNG. I am quite sure of it, sir. 

Senator Vandenberg. Then I am not interested in it. 

Then we will go to the second page, in the third paragraph, where 
it states [reading] : 

It is of the utmost importance, John, that we work absolutely together, 
and that particularly at this first beginning, in \\liich we arc having so much 
success, there be no misunderstandings of any kind, as these might prove 
very dangerous for ovu- future l)usiness. T know the situation here and all of 
the" omplicated lactors involved, and as 1 exi)laiiied to you wlien here, if we 
want to secure this business we have to " play ball " in accordance with the 
local circumstances. * * * 

What does that mean ? 

Mr. Young. I do not know, but I know it does not mean what it 
meant under the old INIachado administration. 

Senator Vandenbercj. Nothing of tlie sort which you have pre- 
viously experienced and in which you previously indulged has 
obtained under the present government? 



MUNITIONS INDUSTRY 1665 

Mr. Young. Not with my knowledge, sir. And I might add that 
both President JSIendietta and Martinez Saenz and the leaders are 
trying very much to run the thing as it ought to be run. 

Senator Vandenber(;. From what I know of that, I would like to 
join you in that testimony. 

Xow, (m page 3, the second paragraph, that letter states : 

I jun to linve an iuterviow today with your friend (viz, the one from wliom 
you are holiling tlie deposit) and expect to be able to report to you tlierieafter 
in a manner that will be very enconraging to both of us. 

What does that mean? 

Mr. Young. That was Dr. Martinez Saenz. 

Senator Vandenberg. What is the deposit about? 

Mr. Young. That is the $30,000 paid against this equipment, 
Avhich is still up here, and has been a question of disposition, and the 
Government do not feel that they have use for some of that material. 

Senator Vandenberg. Is the deposit also in status quo ? 

Mr. Young. Yes. 

Senator Vandenberg. Please look at the next exhibit, Mr. Young, 
which will be properly nmnbered. This appears to be a letter from 
Schneider & Co. at Paris, dated April 6, 1934, addressed to your 
company. 

(The 'letter referred to Avas marked "Exhibit No. 639" and is 
included in the appendix on p. 1850.) 

Senator Vandenberg. That letter reads in part as follows : 

We acknowledge receipt of your telegram of April 4th, asking us for a quota- 
tion on furnishing 1,500 complete rounds of 75-mm explosive shells and shrapnel 
for field artillery. 

Before following the matter to conclusion it is necessary, first, to know the 
country of destination to which these munitions are to be consigned. 

Why are you seeking quotations on French munitions? 

Mr. Young. There is nobody in the United States who is appar- 
ently set up to manufacture ammunition for fieldpieces. Cuba has 
a number of fieldpieces and no ammunition for them. They have an 
army. They wanted to buy 1,500 rounds. Not wanting to get into 
the business ourselves, we inquired of Schneider & Co., Avho built the 
guns, if they could supply the ammunition. 

Senator Vandenberg. No such ammunition is available in the 
United States, you say? 

Mr. Young. Not to my knowledge. 

Senator Vandenberg. Have you ever had any business dealings 
with Schneider c^ Co. ? 

Mr. Young. No, sir. 

Senator Vaxdenberg. The next exhibit will be properly marked, 
being a telegram of April 18, 1934, bearing upon the cablegram from 
Mr. Young to Mingtoy. 

(The document referi-ed to was marked '" Exhibit No. 640 '' and is 
included in the appendix on p. 1850.) 

Senator Vandenberg. Who is "Mingtoy"? 

Mr. Young. That is Texidor's cable address. 

Senator Vandenberg. That states : 

Depositing fifteen thousand for your account National City New York in- 
struction transfer Havana postal telegraph fees two percent. 

That relates to the previous transaction which we described? 
Mr. Young. Yes. sir. 



1666 MUNITIONS INDUSTRY 

Senator Vandexbkrg. Please look at the next exhibit. Mr. Youn^» 
which is a letter written to you by Alberto Arango Mestre, at Ha- 
vana, April 23, 1934. 

(The letter referred to was marked for identification as " Exhibit 
No. 641 " and is on file with the committee.) 

Senator Vakdenbero. Senor Mestre was connected with a well- 
identified political group in Cuba, was he? 

Mr. Young. Arango is the man's name. In Cuba they also use 
the name of their mother. 

Senator Vandexbeeg. This is Senor Arango? 

Mr. Young. Alberto Arango is the name he goes by, who was an 
associate of Mr. Texidor, also engaged as an optician, and he got an 
idea he w^ould like to — I hope this is not published. May I ask that 
this be kept otf the record? 

Senator Vandenberg. It is rather difficult to have testimony Avhich 
is not in the record, Mr. Young. 

Mr. Young. May it be kept confidential ? 

Senator Vandenberg. What is the reason that you feel that it 
should be? 

Mr. Young. It was a request from this man to satisfy some politi- 
cal ambitions which he had, which I answered nicely and dropped 
the matter. 

Senator Vandenberg. I do not think it is necessary to go into it 
beyond this, because I am not interested in embarrassing anybody 
down there needlessly. This gentleman seems to think that you have 
considerable influence with this new administration in Cuba. 

Mr. Young. Just where he got that, I do not know. 

Senator Vandenberg. You sort of had an idea that you had a little 
influence yourself, did you not, after reading what " El Pais " said 
about you? [Laughter.] 

Mr. Young. To meet at the Senate meetings which I had to do at 
times — and they usually met pretty late at night^ — and if you are up 
around the palace, Cubans rather envy you; if you can walk right 
in without being stopped at the door, because there are so many 
trying to get in there they get all kinds of ideas of what iDower you 
have and what you can do for them. 

Senator Vandenberg. And you can walk right in ? 

Mr. Young. I did, sir. 

Senator Vandenberg. We will now come down, just because of 
this scenic effect, to your letter to Mr. Texidor on the date of April 
25, 1934, in which you are reporting to Mr. Texidor how you can 
walk in up here is well as down there. 

I will offer this letter as " Exhibit No. 642.'' 

(The letter referred to was marked "Exhibit No. 642" and is 
included in the appendix on p. 1851.) 

Senator Vandenberg. You say there to Mr. IVxidor — 

I went to Wasliington Monday to delvo fintlier into subjects of (Hir mutual 
interest, but bad a great portion of my time taken up by tlie Department of 
•Justice. 

They found out I was in town and drafted me into assisting tbcni in the 
President's anti-crinie-legislation program and I bad to accompany tlie Attor- 
ney General to the Ways and IMeans rommittec meeting and the Senate and work 
on some legisU^tion. From there I was taken to the I department of Justice 
office for conference on apprehension of Dillinger and liis gang, and the last 
three-quarters of the day was lost insofar as our most interesting subjects 
were concerned. 



MUNITIONS INDUSTRY 1667 

AVhat was your connection with the anticrime legislation ? 

Mr. Young. Well, I was asked about it a number of times and the 
particular reference given here was to a meeting of a Ways and 
Means Committee on a bill, which later passed, dealing with fire- 
arms. 

Senator Vandenbeeg. The tax on machine guns? 

Mr. Young. That is right, and I was in there to answer questions 
for the Attorney General. 

Senator Vandenberg. Mr. Cummings? 

Mr. Young. Yeg, sir. 

Senator Vandenberg. He asked you to go? 

Mr. Young. Mr. Keenan did. 

Senator Vandenberg. Mr. Keenan asked you to go. 

Mr. Young. Yes, sir. 

Senator Vandenberg. The reference to the Attorney General is 
to Mr. Keenan, then, rather than to Mr. Cummings ? 

Mr. Young. That is right; to his office. 

Senator Vandenberg. That would explain why Mr. Cummings 
fails to recollect his request for your attendance. 

Mr. Young. I have been called in there a number of times. I 
do not know that the Attorney General knew who I was in the com- 
mittee. They wanted information as to how many gun.s had been 
sold and what was being imported and various other things, which 
information I was endeavoring to give them. 

Senator Vandenberg. Did you also assist the Senate Special Crime 
Committee in drafting legislation for prohibiting sale in the United 
States of submachine guns except to governmental units? 

Mr. Young. I would say yes to that; at least, I spent a good many 
hours in gathering data for them. 

Senator Vandenberg. Whom were you dealing with? 

Mr. Young. Mr. Keenan. 

Senator Vandenberg. Mr. Keenan was not connected with our 
committee. Colonel Hutchinson was the executive of our committee, 
the committee consisting of Senator Copeland, Senator Murphy, and 
myself. 

Mr. Young. I did not meet that committee at all. 

Senator Vandenberg. I thought not ; I could not remember it. 

Mr. Young. Do I refer to that here? 

Senator Vandenberg. No. I am just asking if you did help, and 
I understood you to say that you did. 

Mr. Young. I think I was behind the scene there, where they 
called me in without bothering you gentlemen, you were so busy; 
they were gathering the information and passing it on to you. 

The Chairman. What do you mean, " behind the scene " ? 

Mr. Young. I think I was too small to bother your committee. 

The Chairman. It is not tlie small man who played behind the 
scene. 

Mr. Young. Then we will change that expression to something 
more suitable. 

Senator Vandenberg. What do you think of the proposals to pro- 
hibit the sale of machine guns and sul*ma chine guns in the United 
States to anyone except gov^ernmental units? 

Mr. Young. I think it is fine. It is practically what we have been 
doing for three and a half years. 



1668 MUNITIONS INDUSTlli" 

Senator Vandenbkko. You mean your jjiactice has been that'^ 

Mr. YuuisG. Yes, sir. 

Senator Vande>;ber(j. You Avould favor leoislation to that end? 

Mr. Young. I did. 

Senator Vaxuenbeko. And do you favor it? 

Mr. Young. I still do. May I add, Senator 

Senator Vandenberg. Yes. 

Mr. Young (continuing). That before that bill could pass they 
offered an agreement, or we offered an airreement, which we were 
willing to sign at the request of the Attorney General — or, rather, 
we suggested it and lie thought it would be a good thing, and they 
were so worried about these machine guns that we entered into an 
agreement embodying that law as it was later passed, to be signed 
by the President. The agreement sui)posedly was put on the Presi- 
dent's desk, signed by us. 

Senator Vandenberg. I would suggest that you show Mr. Frank 
Jonas the letter that I now ask the secretary to lay before you. I 
would like to have him read the second paragraph particularly, with 
reference to his brother. 

(The letter referred to was handed to Mr. Jonas.) 

Senator Vandenberg. I would like to ask if that is a correct state- 
ment of your brother's activities. This is not your letter, it is Mr. 
Texidor's letter. 

Mr. Jonas. It is not true, sir. 

Senator Vandenberg. I will not offer it as an exhibit, then. 

The next letter that I want to refer to is a letter from you, Mr. 
Young, to Mr. Texidor. I call your attention to the second page, 
about the middle of the page, where you say : 

As evidence of this I have just talked with Walter Ryan. President of the 
Auto Ordnance Corporation, which company owns the Thompson submachine 
gun. He has promised to send you a cable today advising you that we are the 
exclusive distributors of this gun and orders from any other people would not 
be filled. That should stop our friend Richardson. 

Who is Eichardson? 

Mr. Young. He was a competitor. 

Senator Vandenberg. Can you identify him for me ? 

Mr. Young. He was connected with the Lake Erie Chemical Co, 

Senator Vandenberg. Can you give me his full name? 

Mr. Young. I do not know it; I have never met the gentleman. 

Senator Vandenberg (continuing reading) : 

Please do n«it lie surprised at the tactics of these people. They have proved 
that same stunt on a number of police departments in the States. 

Mr. Young. Can we eliminate any references like that to competi- 
tion? 

Senator Vandenberg. Except as they are pertinent. 

Mr. Young. It is hardly fair to them. 

Senator Vandenberg. It is hardly fair to them to write it, is it? 

Mr. Young. Well, in a sales negotiation — ^I believe everything that 
is in there, but just bringing it out in the papers in this country — 
it might hurt their business and I do not want to do it, if I can 
help it. 

Senator Vandenberg. The purpose of writing this was to hurt 
their business, was it not? 



MUNITIONS INDUSTRY 1669 

Mr. Young. No. There was an iinderstandin<T: that this gentle- 
man was offering the Thompson machine gun for sale. That was 
my understanding. I was trying to correct that impression, to say 
that he could not do it. I am not sure that he was. That was the 
claim that was made down there. 

Senator Vandenberg. I am not interested in your gjeneral quarrel 
Avith the Lake Erie Chemical Co. and its methods, which you seem to 
consider fairly reprehensible, 

Mr. Young. That is right. 

Senator Vandenberg. But I am interested in this statement : 

You have a copy of their catalog, you tell me, and if you know anything 
about array ethics, you will know that they are violating mostly everything 
that is sacred to any army officer when they printed this catalog. Their open- 
ing paragraph virtually offers to sell the engineering developments of the 
United States War Department to any foreign country. 

Now, that is a pertinent subject of inquiry. That is a rather 
serious charge. What does that mean? 

Mr. Young. I would prefer, in the matter of these records, to say 
that it was sales talk, sir. 

Senator Vandenberg. You say that is sales talk. 
Mr. Young. Yes. The catalog of that company, I think, will 
speak for itself. 

Senator Vandenberg. I think that is fair, that the catalog should 
speak for itself. Was it your opinion that the catalog should be 
interpreted in this fashion? I am interested only in "virtually 
offers to sell the engineering developments of the United States War 
Department to any foreign country " ? 

Mr. Young. Senator, I am anxious to assist the committee in any 
Avay I can about my ow^n business, but I do not want to be put in 
the' position of trying to hurt my competitor's business. 

Senator Vandenberg. I do not want you to, either. I am leaving 
out most of the things that you said to your agent, which certainly 
were not calculated to help your competitor in business. 

Mr. Young. That is right. We have our sales squabbles, as every 
compaii}^ does, I believe. 

Senator Vandenberg. Yes. But you can realize, Mr. Young, that 
sales talk or any other kind of talk, the committee cannot possibly 
ignore a suggestion that anybody, whether a competitor of yours or 
anybody else, is virtually offering to sell the engineering develop- 
ments of the United States War Department to any foreign country. 
Mr. Young. I have since learned that the statement in there, put 
in apparently by — at least the explanation comes to me — by an adver- 
tising man, goes further than the management of that company ever 
intended it to go. 

Senator Vandenberg. In other words, you think that while this 
fairly interprets the advertising literature, you have come to the 
conclusion that the advertising literature does not reflect the policy 
of the company in that respect? 

Mr. Young. It refers to a statement that the United States Govern- 
ment has spent vast sums in developments and that the United States 
ordnance engineers build according to Government standards. It 
was an implication like a lot of these exhibits have. After you look 
at them from the other side you can get quite a different implication. 



1670 MUNITIONS INDUSTRY 

I believed at that time they certainl_y had gone a lot further than 
they should go. 

Senator Vandknbekg. Is there a War Department regulation which 
prohibits the photographing of Army officers in uniform and the 
reproduction of those pictures in sales catalogs? 

Mr. Young. I was told that there was. 

Senator Vandenberg. I feel that is the only thing that is material, 
inasmuch as this is an investigation into public relations and not 
an investigation into private methods of sales promotions and other- 
wise. I will not offer that letter as an exhibit, but will pass to a letter 
from Martinez Saenz to Mr. John J. Young, which I will offer as 
" Exhibit No. 643." 

(The letter referred to was marked "Exhibit No. 643" and is 
included in the appendix on p. 1851.) 

Senator Vandenberg. The fourth paragraph of this letter, which 
has been marked " Exhibit No. 643 ", and which is dated May 29, 
1934, from Habana. is as follows : 

Please let me kuow by air mail what is your final vleeisiDii on tlic matter as 
I am anxious to reimburse the people that helped me while * * * 

What does that previous paragraph refer to? 

Mr. Young. It refers to this order amounting to $27,000, of which 
he has $27,000 against it and whatever I can salvage from that order 
to be returned to him. 

Senator Vandenberg. What seems to be the dispute between you 
and Mr. Saenz concerning this? 

Mr. Young. There is no dispute.. Martinez Saenz would like to 
have as much given back as he can and is urging me to try to dispose 
of his material somewhere else, but they are of a nature that it is 
hard to do that. 

Senator Vandenberg. What does it mean in a subsequent letter of 
June 2, 1934, when you say — 

I am not unmindful of my obligation to Martinez Saenz. At the same time 
I am not unmindful of his obligation to me and he has not cracked through. 

I will offer this as " Exhibit No. 644." 

(The letter referred to was marked "Exhibit No. 644" and is 
included in the appendix on p. 1851.) 

Mr. Young. My obligation to Martinez Saenz was on this order, 
as I tell YOU. 

Senator Vandenberg. And what was his obligation to you upon 
which he has not cracked through? 

Mr. Young, Obligation of his support in my program in Cuba. 
This letter was incorrect, by the way; there was a payment which 
was overdue. He was secretary of the treasury. I thought he knew 
about it and perhaps had been negligent on it. As a matter of fact, 
he had been away. 

Senator Vandenberg. That is what vou mean by " cracked 
through"? 

Mr. Young. That is what I mean, sir. 

Senator Vandenberg. I show you now a letter to Mr. Texidor 
dated June 21, 1934, which I offer "as "Exhibit No. 645." 

(The letter referred to was marked " Exliibit No. 645 " and is 
included in the aj)pendix on p. 1852.) 



MUNITIONS INDUSTRY 1671 

Senator Vandenberg. This letter indicates that you are sending 
JMr. Baxter to Habana to continue the training of police. 

Mr. Young. That is right. 

Senator Vandenberg. And in the fifth paragraph you are asking 
that arrangements also be made to permit him to drive over the 
island and sell equipment to the sugar mills and the industrial 
•concerns while he is there on this other mission ? 

Mr. Young. That is right, sir. 

Senator Vandenberg. I would like an explanation of the next 
letter which I show you, which is a letter of June 29, 1934, addressed 
to Mr. Texidor by you, Mr. Young, which I offer as " Exhibit No. 
'646." 

(The letter referred to was marked " Exhibit No. 646 " and is 
included in the appendix on p. 1852.) 

Senator Vandenberg. This letter reads : 

I am advised that Mario G. Menocal, Jr. 



I assume that he is the son of the former president? 
Mr. Young. That is right. 
Senator Vandenberg (reading) : 

wrote from Miami to a certain dealer in firearms equipment, stating tliat 
his brother had the Ford agency in Habana and that they wished to buy the 
following equipment for a Ford car in quantities sufficient to equip 60 cars 
which the Cuban Government were going to purchase in the near future. 

He lists equipment consisting of gas riot guns, shells, gas billies, 
hand grenades, and so forth, and then continues with the letter : 

It appears that they are making an effort to get around us and get in on 
this business. I am tipping you off immediately as I am sure that you are 
capable of handling this situation in the manner that will be most valuable 
to us. 

They are certainly a sweet bunch of double-crossers, but it is going to be very 
hard for them or anybody else to put over a program like this in the United 
►States without Federal Laboratories immediately knowing about it. 

To what does that refer? 

Mr. Young. I had recommended to the Cuban Government the in- 
stallation of police radio cruisers, and they got an order for 40 Ford 
cars on which they made their commission ; and when it came around 
to buying some more cars they thought perhaps they might make 
some money on the gas also, and, instead of recommending my 
product, they were going to try to handle everything. 

Senator Vandenberg, And that is the extent of this reference? 

Mr. Young. That is right. Senator. 

Senator Vandenberg. Well, it is immaterial. 

Now, finally, I show you a letter from Frank to John. That is, 
Mr. Jonas to Mr. Young, I apprehend? It is from Habana and is 
dated June 3, 1934, and I offer it as " Exhibit No. 647." 

(The letter referred to was marked " Exhibit No. 647 " and is 
included in the appendix on p. 1853.) 

Senator Vandenberg. Mr. Jonas is making certain statements 
about contributions to the revolution. I would like to know, Mr. 
-Jonas, the source of your information. 

Mr. Jonas. That was not a contribution to revolution. Senator. 
That was some money that this same Texidor owed Remington and 

83876— 35— PT 7 5 



1672 MUNITIONS INDUSTRY 

(lid not pay Remington, and I am referring to the fact that he had 
no right to use that money for revohitionary purposes. He should 
have paid his debts first. I wrote him that. 

Mr. Young. Mr. Texidor claims that he has made contributions, as 
a Cuban, you understand. 

Senator Vandenberg. Yes. 

Mr. Young. He had made contributions to the revolution of that 

amount. 

Mr. Jonas. He also owed the Royal Typewriter Co., I believe. 

Senator Vandenberg. And your notion is that he used the money 
which was due these other people for the purpose of encouraging the 
revolution ? 

Mr. Young. This goes a way back into Mr. Texidor's history. He 
still owes considerable money to some manufacturers, and he has 
paid quite a bit of it oil. I think Mr. Jonas is referring here to the 
fact that since it has come out that Mr. Texidor claims he has made 
contributions to the revolutionary fund back in the early days, be- 
fore I ever knew him, that it was perhaps unfair that he should not 
have paid his debts instead of contributing to the revolution. 

Mr. Jonas. That was not oni ammunition; that was on cash 
registers. 

Senator Vandenberg. I think that is all I should like to ask this 
afternoon, Mr. Chairman, so far as I am concerned. 

The Chairman. The committee will take a recess until 10 o'clock 
tomorrow morning. 

(Whereupon at 4:25 p.m., the committee recessed until 10 o'clock 
on Wednesday, Sept. 19, 1934.) 



INTESTIGATION OF MUNITIONS INDUSTRY 



WEDNESDAY, SEPTEMBER 19, 1934 

United States Senate, 

THE Munitions Industry, 
Special Committee to Investigate 

Washington, D.C . 

The hearing was resumed at 10 a.m., in room 310, Senate Office 
Building, pursuant to the taking of recess, Senator Gerald P. Nye 
presiding. 

Present: Senators Nye (chairman), George, Clark, Bone, and 
Vandenberg. 

Present also : Stephen Raushenbush, secretary. 

The Chairman. The committee will come to order. Senator 
Vandenberg, you may proceed. 

TESTIMONY OF JOHN W. YOUNG, FRANK SHEEIDAN JONAS, AND 

CARLTON W. RICH— Resumed 

methods used in obtaining business 

Senator Vandenberg. Mr. Chairman, some reference was made 
j'^esterday to the Logan Act, and I want to read the Logan Act into 
the record so that we will understand what we are talking about 
when we refer to it hereafter. I am reading from title XVIII of 
the Criminal Code and Criminal Procedure of the Government of 
the United States, chapter 1, section 5, as amended April 22, 1932, 
which reads as follows: 

Every citizen of the United States, whether actually resident or abiding 
within the same, or in any place subject to the jurisdiction thereof, or in any 
foreign country, who, without the permission or authority of the Government, 
directly or indirectly, commences or carries on any verbal or written corre- 
spondence or intercourse with any foreign government or any ofBcer or agent 
thereof, with an intent to influence the measures or conduct of any foreign 
government or of any officer or agent thereof, in relation to any dispute or 
controversy with the United States, or to defeat the measures of the Govern- 
ment of the United States ; and every person being a citizen of or resident 
within the United States or in any place subject to the jurisdiction thereof, 
and not duly authorized, who counsels, advises, or assists in any such corre- 
spondence with such intent, shall be fined not more than $5,000 aiid imprisoned 
not more than three years ; but nothing in this section shall be construed 
to abridge the right of a citizen to apply, himself or his agents, to any foreign 
government or the agents thereof for redress of any injury which he may have 
sustained from such government or any of its agents or subjects. 

Now, I want to make it plain that I am not attempting to apply 
this in any specific case whatever, whether it applies in any given 
instance depending entirely upon the legal interpretation as to 
whether or not the act of the citizen interferes either with the gov- 

1673 



1674 MUNITIONS INDUSTRY 

ernmental policy " in relation to an}^ dispute or controversy with the 
United States " ; or whether the action of any such individual tends 
" to defeat the measures of the Government of the United States." 

This letter phrase would certainly seem to coAer any violation of 
an embargo, and it would certainly seem to cover any violation of a 
Presidential proclamation. 

It is a matter of interpretation and construction whether it applies 
to activities other than those specifically licensed by the State De- 
partment in activities relating to governmental policy in other lands. 

I wanted to have the record show the act, and for that reason I 
have had it incorporated in the record. 

The Chairman. Senator Bone, you may proceed. 

Senator Bone. Mr. Young, what was the name of your agent in 
Argentina ? 

Mr. Jonas. Leon & Bonasegna. 

Senator Bone, Is that one name or a firm name? 

Mr. Jonas. It is a firm name. 

Senator Bone. Will you tell me how you spell that? 

Mr. Jonas. It is L-e-o-n & B-o-n-a-s-e-g-n-a. 

Senator Bone. They are in Buenos Aires, are they ? 

Mr. Jonas. Yes. 

Senator Bone. Now, your firm from time to time over the past 2 
or 3 years has had a course of correspondence with this agent down 
there ? 

Mr. Young. Yes, sir. 

Senator Bone. I call attention to a letter addressed to the 
Federal Laboratories, Inc., attention Mr. J. W. Yoimg, dated October 
19, 1933, which I offer as an Exhibit. 

(The letter referred to was marked " Exhibit No. 648 " and is 
included in the appendix on p. 1854.) 

Senator Bone. On page 2, Mr. Bonasegna, who is writing you, has 
this to say: 

In this airplane business there are a great many people that have to be taken 
care of besides our contact man, Mr. GanUara, therefore in your reply please 
tell us what our maximum commission on this business will be in order that we 
may be guided accordingly. 

Is he selling airplanes for your ? 

Mr. Young. No ; he is not. 

Senator Bone. What is he referring to there in reference to the 
airplane business? 

Mr. Young. I don't recall. 

Senator Bone. Read the letter over. 

Mr. Young. He is referring to smoke apparatus on airplanes. 

Senator Bone. Who is Mr. Gandara he refers to? 

Mr. Young. I don't know. 

Senator Bone. He says " our contact man." What does he mean 
by contact man ? 

Mr. Young. That I don't know. 

Senator Bone. Can you enlighten us at all about the allusions in 
these letters, because we will have a lot of them to explain as we go 
along, and I want you to be perfectly frank. 

Mr. Jonas. The contact man there, he handles different lines. I 
think he handles Curtiss- Wright airplanes. I don't know if contact 
man is the correct name, except he is a salesman. 



MUNITIONS INDUSTRY 1675 

Senator Bone. He says [reading] : 

There are a great many people that have to be taken care of besides our 
contact man. 

What does he mean by that ? 

Mr. Jonas. I think he wants to chisel more commission for him- 
self. 

The Chairman. These so-called " contact men " represent other 

people besides yourself? 

Mr. Jonas. Yes; and they are trying to get as much commission 
as they can for themselves. 

Senator Bone. Now, along in August 1932 we find this same firm of 
Leon & Bonasegna writing you again under date of August 1, and 
this letter I offer as an Exhibit. 

(The letter referred to was marked "Exhibit No. 649" and is 
included in the appendix on p. 1854.) 

Senator Bone. At the bottom of the page in this letter they say 
[reading] : 

There are many occasions when we are forced by circumstances to pay 
commission to third parties, which naturally comes out of our commission. 

Is that the same thing you have been telling us about, third parties 
forcing themselves into the picture ? 

Mr. Jonas. Yes; and in this case Bonasegna particularly has 
always got a long story to tell you to get as much commission as 
he can. 

Senator Bone. You paid him the commission? 

Mr. Jonas. We fight him on that. 

Senator Bone. I don't care whether you fight him or not, but do 
you pay the commission? 

Mr. Jonas. No; we do not pay anything but the regular com- 
mission. 

Senator Bone. The letter then further says : 

and if we are calculating on 25 percent and same is cut to 10 percent, we 
having compromised ourselves for 10 percent, let us say, it means that we send 
you the order and make no profit, which not only is unfair but also unprofitable. 

You sometimes paid 25 percent? 
Mr. Jonas. That is discount. 
Senator Bone. Is it commission or discount? 

Mr. Young. We paid him as high as 35 percent on some of our 
products and some down to 10 percent. 

Senator Bone. I read further from this letter, as follows : 

Perhaps it will be a surprise for you to know that when the newspapers 
speak about tear gas they call it " federal gas ", and when they talk about the 
weapons they talk about federal guns. 

What guns are they talking about, Mr. Jonas — machine guns ? 

Mr. Jonas. Gas guns. 

Senator Bone. Now, at the bottom of the next page, he says : 

As far as the gas grenades for artillery use are concerned, and about which 
you ask particulars, we shall no doubt have this information today, and if we 
see that there is active interest in this material on the part of the Paraguyan 
Government we will telegraph you the details. 

What sort of gas grenades would those be ? 

Mr. Young. I do not know; we do not have such a thing. It is 
a terminology on which he must have been confused. 



1676 MUNITIONS INDUSTRY 

Senator Bone. Now, 3'ou continue in the correspondence over that 
period and prior thereto about the use of gas in the Army and Xavy, 
as well as in the police department? 

Mr. Young. Yes, sir. 

Senator Bone. Is that the same kind of gas? 

Mr. Young. Yes, sir. 

_ Senator Bone. Just ordinary, standard tear gas used in military 
circles, is it? 

Mr. Young. Yes, sir. 

Senator Bone. And this sickening gas? 

Mr. Young. Yes. 

Senator Bone. Nothing added to it? 

Mr, Young. No, sir. 

Senator Bone. And what is Leon's first name ? 

Mr, Jonas. Eaoul. 

Senator Bone. A man Avho signs himself " Eaoul " on the letter- 
head of Leon & Bonasegna would be Eaoul Leon ? 

Mr. Jonas, Yes, 

Senator Bone. On September 22, 1931, he is writing you a letter, 
which is offered in evidence. 

(The letter referred to was marked "Exhibit No. 650" and is 
included in the appendix on p. 1856.) 

Senator Bone. This letter is addressed to you at 312 Broadway, 
New York, and he is suggesting in the letter that you go to Pitts- 
burgh and discuss a certain matter with Mr, Young and telegraph 
him the result of your interview. Then at the bottom of page 2 
he goes on to say : 

There is just one more matter before closing this letter. I am negotiating 
with Bolivia and at present have a pro forma order on my desk. I assume it 
is O.K. for me to work Bolivia, for, as I understand it, you have no con- 
nection there. 

Was that the case at that time ? 

Mr. Jonas. We had no agency there at that time, as I recall it. 

Senator Bone, Then, the letter continues: 

I have compromised myself, as far as commissions go, opposite my agent in 
La Paz, who hapi)ens to be a personal and intimate friend and who further 
happens to be a senator in that Republic. 

How did he compromise himself with the Bolivian senator? 

Mr. Jonas. These agents will make all kinds of claims, being ac- 
quainted with the niece of the President or an aunt or sister. 

Senator Bone. I understand; but I have not heard you impugn 
Leon so far in the hearing, and it just occurrs to you now that they 
were not reliable? 

Mr. Jonas. I am not impugning him. They were reliable; they 
were making those claims for sales talk. 

Senator Bone. Plow do you suppose he compromised himself with 
this Bolivian senator? 

Mr. Jonas. I do not know. 

Senator Clark. Did that arouse any curiosity in your mind when 
you read that letter? 

Mr. Jonas. It is a long time ago, and I have read many letters since 
that time. 

Senator Clark. It is a sort of custom with them to say those kind 
of things? 



MUNITIONS INDUSTRY 1677 

Mr, Jonas. It is customary for agents to make all kinds of claims, 
Senator. 

Senator Bone, He goes on further to say : 

I do not propose writing Mr. Young with respect to tbe discount ; we will 
merely acknowledge receipt of his letter and tell him that any negotiations with 
respect to details should be handled by you. It is much easier to do this by 
word of mouth than writing. 

Did you complete any details with respect to this Bolivian senator 
with Mr, Young? 

Mr, Jonas, I do not recall any such thing. 

Mr. Young, I am sure that was not discussed, Senator, Further- 
more, there was no change in Mr. Leon's commission on that situation. 

Senator Bone. I have before me another letter from Leon & 
Bonasegna dated August 1, 1932, which I offer as an exhibit. 

(The letter referred to was marked " Exhibit No. 651 " and is 
included in the appendix on p. 1857.) 

Senator Bone. In this letter there is reference made to " Lake 
Erie "; what is the name of that company? 

Mr. Young. Lake Erie Chemical Co. 

Senator Bone. Is that its present name — Lake Erie Chemical Co. ? 

Mr. Young. Yes. 

Senator Bone. I call your attention to this letter now, by Mr. 
Leon to Mr. Jonas, in which he uses this language in the last para- 
graph on the first page : 

As stated in the letter to the Federal, it is all very well for them to cut down 
our commission, but how the devil do they know just what our arrangements 
are here with the bunch of grafters we have to deal with. 

Mr. Jonas. Do you want a reply on that? 

Senator Clark. Who signed that letter, Senator Bone ? 

Senator Bone. That is signed by Mr. Leon. 

The Chairman. What is the date of it ? 

Senator Bone. It is dated August 1, 1932, written from Buenos 
Aires. 

Mr. Jonas. I think he was just trying to get some commission by 
using that as an argument. 

Senator Bone. Did you think that at the time ? 

Mr. Jonas. I felt absolutely sure at the time. 

Senator Bone. Do you think Mr. Leon and Mr. Bonasegna, his 
associate, are grafters themselves? 

Mr. Jonas. No; they are agents, and they try to get as much as 
they can. 

Senator Bone. Do you think they are treating you squarely or 
chiseling on you ? 

Mr. Jonas. I think they are trying to chisel. 

Senator Bone. Did jou have any inclination to fire them at any 
time, or have you just now at this hearing discovered they are not 
altogether what they should be ? 

Mr. Jonas. No ; I am not thinking of firing them, because I would 
find another agent would probably act the same way. 

Senator Bone. You expect that sort of thing all the time; is 
that your position ? 

Mr. Jonas. From an agent I kind of expect it. 

The Chairman. It is a kind of epidemic, is it? 



1678 MUNITIONS INDUSTRY 

Senator Bone. Do you expect that from agents in all countries?. 

Mr. Jonas. No, sir. 

Senator Bone. Just what countries do you expect that from? 

Mr. Jonas. Would I be committing myself ? 

Senator Bone. No ; you are here to answer questions. 

Mr. Jonas. It is pretty hard for me to tell which countries right 
now. 

Senator Bone. Take this country; would you expect it from. 
Argentina ? 

Mr. Jonas. No ; I would not say that. 

Senator Bone, Will you state specifically what you would expect 
from Argentina ? 

Mr. Jonas. I was not thinking of any particular country at that 
time. It has arisen at times, but I cannot point out any particular 
country. 

Senator Bone. Who is Kendrick van Pelt? 

Mr. Jonas. He is an American who is an agent there in Brazil. 

Senator Bone. One of your agents ? 

Mr. Jonas. Yes ; in a way he is one of my agents. 

Senator Bone. Where is he located ? 

Mr. Jonas. Sao Paulo, Brazil. 

Senator Bone. That is where the revolution started ? 

Mr. Jonas. So I believe. 

Senator Bone. Was he your agent in April 1933 ? 

Mr. Jonas, Yes, 

Senator Bone. I have here a letter written by Mr. Kendrick van 
Pelt to yourself under date of April 15, 1933, which is offered as 
an exhibit, 

(The letter referred to Avas marked " Exhibit No. 652 " and is 
included in the appendix on p. 1859.) 

Mr. Jonas. He was not my agent for any arms ; he was an agent 
on general lines. On Federal Laboratories he had some working 
arrangement where if he sent inquiries we would see what we 
could do. 

Senator Bone. Then he was authorized to sell gas for the Federal 
Laboratories ? 

Mr. Jonas. Yes; in Sao Paulo. 

Senator Bone. In this letter, " Exhibit No. 652 ", of date April 15,. 
1933, we find him addressing you " Dear Frank." You knew him 
very well? 

Mr. Jonas. Yes ; I know Mr. van Pelt very well. 

Senator Bone. Is he a responsible man ? 

Mr. Jonas. Yes. 

Senator Bone. Very reliable? 

Mr. Jonas. He is considered very reliable. 

Senator Bone. He says in this letter, " Exhibit No. 652 " : 

On my recent trip to Rio, I heard that the order for tear-gas bombs had 
been placed with some competitor through the son of the chief of police here, 
and that the price liad been increased approximately $1,200 as part of the 
greasing operation. 

Mr. Jonas. That letter was written by Bly, a German assistant of 
his, and I don't know anything about it. I have never heard any- 
thing furtlier about that at all. 



MUNITIONS INDUSTRY 1679 

Senator Bone. Just examine the letter ; it is not signed by anyone 
except Kendrick van Pelt. 

Mr. Jonas. I think the original letter, if I recall, was signed bv 

Senator Bone. Have you any occasion to believe this letter is not 
an original letter? 

Mr. Jonas. No ; I would not say that. 

Senator Bone. Then, why do you say someone else signed the 
letter ? 

Mr. Jonas. Because, as I recall, it was signed by that man named 
Bly. 

Senator Bone. You have the letter before you now. 

Mr. Jonas. I cannot account for what a competitor does. 

Senator Bone. That is not my purpose. The letter speaks for 
itself, and it indicates somebody got $1,200 of grease. 

Mr. Jonas. The deal might not have happened. Senator. 

Senator Bone. That letter says in a direct assertion that it did 
happen, and the letter is from your agent. 

Mr. Jonas. And this letter tells me Avhat some other fellow does. 

Senator Bo^E. You have just assured us that this agent is a very 
reliable man. 

Mr. Jonas. Yes, sir. 

Senator Bone. Do you want us to understand that he is a reliable 
man? 

Mr. Jonas. He is telling us what some other fellow does. 

Senator Bone. I want to know whether he is a reliable man. 

Mr. Jonas. Yes, he is. 

Senator Bo^e. You would not consider a reliable man one who 
engages in spreading gossip, would you, and does your firm retain 
such an agent as that? 

Mr. Jonas. Would you ask that question again? 

Senator Bone. Does your firm deliberately retain a man down 
there who misleads you by a false statement? 

Mr. Jonas. You get many false statements down there. 

Senator Bone. That was my purpose in asking whether this man 
was reliable or not. 

Mr. Jonas. He probably believed it and passed on the information. 

Senator Bone. He is not a gossiping old woman ? 

Mr. Jonas. No, sir; he was not considered as such. 

Senator Bone. You have reason to believe the man knows his 
business ? 

Mr. Jonas. Yes. 

Senator Bone. You do not think he would deliberately peddle 
gossip, do you? 

Mr. Jonas. It is surprising how much gossip you hear in this line. 
You would think there are millions and millions of dollars of 
orders, and there is nothing at all. 

Senator Bone. And there is millions and millions of dollars of 
business coming out of there ? 

Mr. Jonas. Not to me, sir. 

Senator Bone. Let us be frank : This record shows lots of business 
coming out of there ? 

Mr. Jonas. Yes. 



1680 MUNITIONS INDUSTRY 

Senator Bone. Millions of dollars of business coming out of South 
America. 

Mr. Young. Let me say our total business over a period of years 
has not yet reached the million mark. 

Senator Bone. How long have you been in business, Mr. Young? 

Mr. Young. I have been in business about 12 years. 

Senator Bone. When you became adviser of the Cuban Govern- 
ment you were not in a position to complain very much. I am 
wondering Avhether from your protestations you feel all of these 
stories of greasing are untrue. 

Mr. Young. No. sir; I do not. 

Senator Bone. You feel they are true in part? 

Mr. Young. In some instances I believe they are true. 

Senator Bone. Do you have any personal first-hand knowledge of 
a greasing operation, Mr. Jonas. 

Mr. Jonas. Well, I pay my agents, and I am not responsible for 
wdiat they do with the money. 

Senator Bone. When you pay an agent, do you call that a greasing 
operation ? 

Mr. Jonas. No, sir ; not to an agent. 

Senator Bone. So that if by any chance you should refer to some 
action yourself as a greasing operation, that would not be a normal 
commission ? 

Mr. Raushenbush. I think you had better rephrase that, Senator. 

Mr. Jonas. I don't understand what you mean. 

Senator Bone. Even if you should use the term " greasing " in con- 
nection with your own work, that would be entirely divorced from 
some regular commission operation? 

Mr. Jonas. I think greasing means there just what greasing im- 
plies up here. 

Senator Bone. With that understanding we are going along beau- 
tifully. On August 27, 1932, we find you writing to Mr. John W. 
Young, Federal Laboratories, which letter I offer as an exhibit. 

(The letter referred to was marked "Exhibit No. 653" and is 
included in the appendix on p. 1859.) 

Senator Bone. In this letter, " Exhibit No. 653 ", you are talking to 
Mr. Young about Mr. Mayrink? 

Mr. Jonas. May I read this letter, please? 

Senator Bone. Now, I will read you this statement from the letter, 
as follows : 

For your information, I had to do a little greasing at tliis end, so it will be 
necessary to pay me 10 percent on the hand grenades. 

In view of your statement of what greasing means, and what we 
are to understand by it, will you explain what you mean by that? 

Mr. Jonas. I probably had to pay part of my commission to May- 
rink. I do not recall the incident and do not know whether the 
order went through. 

Senator Bone. Apparently something went through, because you 
say, addressing Mr. Young, on August 27, 1932 : 

For your information, I had to do a little greasing at this end, so it will be 
necessary to pay me 10 percent on the hand grenades. For your information, I 
know that they have been quoted elsewhere $1.80. 



MUNITIONS INDUSTRY 1081 

Now. Mr. Young, what did you do when yoii were advised your 
associate had been greasing people down there? 

Mr. Young. May I call to your attention that this letter does not 
say he had to do a little greasing ; it says — 

I will have to do a little greasing. 

Senator Bone. Did you Avire him any protest? 

Mr. Young. This is back in 1932, and I do not recall how I com- 
municated Avith Mr. Jonas. 

Senator Bone. Do 3^ou recall what your reaction was in this greas- 
ing transaction? 

Mr. Young. My reactions were no, and I think no order was taken. 

Senator Bone. What was your reaction when a greasing operation 
came to vour attention, in connection with your own business? 

Mr. Young. My action is to fight it. 

The Chairman. You did not write any longhand letter protesting 
dgainst it. 

Mr. Young. I would not recall, but I know I have protested 
against it many times. 

Mr. Raushenbush. Will you furnish the committee with your 
letters of protest, because we did not find them in your files when the 
investigators went through them? 

Mr. Young. I think they are there, and I will be glad to look for 
them.^ 

Senator Bone. You say nothing was done in connection with this 
matter ? 

Mr. Young. I don't recall it. 

Senator Bone. Mr. Jonas says in his letter: 

I had to do a little greasing at this end. 

Mr. Young. That is not the way this copy of the letter reads here. 
Senator Bone. Read it for yourself, then. 
Mr. Young. This letter I have reads: 

For your information, I will have to do a little greasing at this end, so it 
will be necessary to pay me 10 percent on the hand grenades. 

Mr. Raushenbush. That is the way this copy reads — 

I will have to do. 

Senator Bone. Which of these copies is correct ? 

Mr. Jonas. I do not know. 

Mr. Young. I think this is correct, because the order did not come 
through and he did not do the " greasing." 

Senator Clark. Did you pay anybody down there any " grease ", 
Mr. Jonas, if you were to get the order ? 

Mr. Jonas. This was in New York City, and probably I was try- 
ing to do a little " chiseling *' on Young. 

Senator Clark. You were doing a little " chiseling " on Young 
at that time. Is that also an old trade custom? 

Mr. Jonas. I have been in the commercial business, up to 1932, 
in arms and ammunition, and nothing to do with government. 



^At the date of p\iblication of this volume the letters of protest had not yet been 
furnished the committee. 



1682 MUNITIONS INDUSTRY 

The Chairman, Sold nothing but arms and ammunition? 

Mr. Jonas. Just to sporting stores and tlie like. It was only 
after the embargoes started and I could not follow the other line. 
It is the only line of business I have been in. 

The Chairman. Did these embargoes really seriously impair your 
business? 

Mr. Jonas. Absolutely. It cut us down. Our business was very 
good with sporting-goods stores. I lost my position Avith the Win- 
chester Co. then and went into this business. 

Senator Clark. Were you in the habit of " chiseling " on Young ? 

Mr. Raushenbusii. Mr. Senator, may I suggest a question which 
I believe will clarify the situation? 

Mr. Jonas, the picture you are trying to convey to the committee 
in the answers to the questions asked of you is this, is it not : Your 
agents down there are in a competitive situation and you are not in 
a position Avhere you can tell them to violate what is the customary 
competitive practice down there? 

Mr. Jonas. That is it. 

Mr. Raushenbush. Is that correct? 

Mr. Jonas. That is correct. 

Senator Bone. Mr. Young, who is Mr. Li ? 

Mr. Young. He is Chinese. There are two or three Mr. Li's. 

Senator Bone. There was som© correspondence between Mr. Rich 
and yourself in March of this year about him, and maybe we can 
identify him. 

On March 3, 1934, Mr. Rich, your associate, writes you in care of 
Mr. Neufer, American Commercial Attache at Habana, referring to 
Mr. Li. 

I will offer that letter for the record. 

(The letter referred to was marked " Exhibit No. 654 " and is in- 
cluded in the appendix on p. 1859.) 

Senator Bone (reading) : 

While lie mentioned no names, he (lid limber up a little bit more frankly 
with regard to wliat he is so pleased to term our " misrepresentation " in China. 
From what he said there is not the slightest doubt that someone, in misguided 
enthusiasm and eagerness to make a sale, very undiplomatically offered a 
bribe to some Chinese official, apparently without having received any indica- 
tion from said official that any personal remuneration would be acceptable. 
Mr. Li says that they are very highly incensed over there due to this act on 
the part of a Federal representative. 

Can you enlighten us any further on that incident ? 

Mr. Young. Yes; w© had a very unfortunate experience in China 
with our representative who did that. 

Senator Clark. Did what? 

Senator Bone. Some representative offered a Chinaman a bribe. 

Mr. Young. That is, according to Mr. Li's information. 

Senator Bone. It was of such importance, apparently, in your in- 
terbusiness transactions, that Mr. Rich wrote you about it in New 
York. What was done about it? 

Mr. Young. Mr. Rich was not asking me if he could offer such a 
thing, but he was reporting that it had previously been done by one 
of our agents. 

Senator Bone. That is right. Do you suppose that offer was made 
on the theory that it is quite proper to pay commissions in China ? 



MUNITIONS INDUSTRY 1683 

Mr. Young. I have heard it said that it was. We have found, how- 
ever, that we can do business through Mr. Li's organization with- 
out it. 

Senator Bone. Who is your agent in Venezuela ? 

Mr. Jonas. B. de Santa Anna. 

Senator Bone. CoL B. de Santa Anna. He has represented other 
munitions concerns in this country in Venezuela in times past, has 
he not? 

Mr. Young. I presume he is more or less a general merchant in 
that business down there. 

Senator Bone. How long has he represented you ? 

Mr. Young. He has done no business so that apart from claiming 
to represent us [conferring with associates] . 

I beg your pardon, Senator. He did do some business. It was a 
very small order, but I would say he has been down there endeavor- 
ing to fill the capacity for 2 or 3 years. 

Senator Bone. Under date of June 14, 1932, from Caracas, Vene- 
zuela, he. Col. B. de Santa Anna, writes the Federal Laboratories, 
attention Mr. Young, in which he asks apparently for quotations on 
some materials and asked for samples, including riot guns, long- 
range projectiles, and short-range projectiles (tear gas), and cases 
for carrying the projectiles, that is, for an order of $1,660. 

(The letter referred to was marked " Exhibit No. 655 " and is 
included in the appendix on p. 1861.) 

Senator Bone. Then Colonel de Santa Anna goes on to refer to 
your competitors down in that country, and at the bottom of page 2 
states this [reading] : 

* * * I have to give away all my commissions ; officially to the Govern- 
ment 50 percent and unofficially the rest. 

Officially he gives away 50 percent of his commission to the Gov- 
ernment, he says, and unofficially he gives the rest of it away. [Con- 
tinuing reading:] 

As I have special arrangement with the people here I will ask you not to 
work directly and to make all your offers through me, as your representative, 
because you may make some mistake, which will have bad consequence for your 
future business here. 

Is Santa Anna still representing you there ? 

Mr. Young. Yes; he is. 

Senator Bone. Do you have reason to believe, Mr. Young, that he 
is about as good a representative as you can get down there ? 

Mr. Young. He seems to be getting all the business for the other 
firms. 

Senator Bone. You are still keeping him, however ? 

Mr. Young. That is right. 

Senator Bone. Do you do business in Costa Rica? 

Mr. Jonas. I took an order in Costa Rica. 

Senator Bone. However, it is a territory which you have taken 
over and handle? 

Mr. Jonas. Yes, sir. 

Senator Bone. Now, Mr. Rich evidently has had some experience 
in Costa Rica. Have you been down there, Mr. Rich? 

Mr. Rich. No; I have not. Senator. 



1684 MUNITIONS INDUSTRY 

Senator Bone. On Jnly 11, 1934, only a feAV -weeks ago, Mr. Rich 
Avrites the Federal Laboratories, Inc., in Pittsburgh, being in New 
York probably at the time, and I will offer that letter to be appro- 
priately marked. 

(Tlie letter referred to was marked "Exhibit No. 656" and is 
included in the appendix on p. 1862.) 

Senator Bone. It is apparent, is it not, that Mr. Jonas had been 
down in Costa Rica? 

Mr. Jonas. Yes, sir. 

Senator Bone. Mr. Jonas, you and Mr. Rich operate the New 
York office in connection with the export end of the Federal Labora- 
tories business, do you not? 

Mr. Jonas. For the past year I have been devoting practically all 
my time to Remington, but if I run across anything for Federal I 
send it up to Rich. 

Senator Bone. In that letter Mr. Rich states [reading] : 

Mr. Jonas had an exceptionally hard time in this, as Huber had just been 
through all of these territories, and liis visits had naturally not done us any- 
good. 

Who is Huber? 
Mr. Jonas. A competitor. 
Senator Bone. With what company? 
INIr. Jonas. Lake Erie. 

Senator Bone. So that he had been down there before you covering 
the territory and had not done your firm any good. 
Tlien Mr. Rich goes on to state in this letter [reading] : 

As it will be necessary to take care of a number of people down here, Mr. 
Jonas made special prices in some of the items, which he asks that you 
allow * * *. 

Whom did you take care of down there, Mr. Jonas? 

Mr. Jonas. I did not take care of a soul, sir. 

Senator Bone. Was it necessary to take care of anyone? 

Mr. Jonas. Just my agent. My agent gets his commission. 

Senator Bone. Did you have a number of agents there ? 

Mr. Jonas. No; I have one agent. 

Senator Bone. Mr. Rich, what did you mean when you said : 

It will be necessary to take care of a number of people down there. 

Mr. Rich. I did not knoAv who the people were down there, but I 
supposed possibly our agent down there was working through a third 
party. 

Senator Bone. You say you supposed it would be, but in the letter 
you say that it will be necessary, and are very definite in the letter 

Mr. Rich. That was the impression I had. 

Senator Bone. To take care of him in what w^ay? 

Mr. Rich. I presume he would have to split his commission with 
somebody down there. 

Senator Bone. Now, who is Mr. Yerex, INIr. Jonas? 

Mr. Jonas. Yei'ox runs an airplane line in Honduras. 

Senator Bone. In what? 

Mr. Jonas. An airplane line in Honduras, with passenger planes 
and commercial ])lanes. 

Senator Bone. In Honduras. Have you sold any gas products in 
Honduras? 



MUNITIONS INDUSTRY 1685 

Mr. Jonas. I think we sold an order 3 or 4 years ago — 3 years ago. 

Senator Bone. Some machine guns were sold down there? 

Mr. Jonas. I took an order recently. 

Senator Bone. On July 7, 1933, you were writing to Mr. Young 

Mr. Jonas. 1933? 

Senator Bone. July 7, 1933; yes, sir. You were writing to Mr. 
Young, telling him that you had caught Mr. Yerex just when he 
Avas on the point of giving the Lake Erie people an order and was 
able to convince him that he ought to buy Federal materials. 

I will offer that letter for the record. 

(The letter referred to was marked " Exhibit No. 657 " and is 
included in the appendix on p. 1863.) 

Senator Bone. In the letter to Mr. Young you go on to say, Mr. 
Jonas [reading] : 

As you know, we have been expecting the bomb business to be controlled 
by 

Mr. Jonas. May I ask you a favor, that you do not mention names 
because it might affect the man, and it was a very small business ? 

Mr. Young. Could we handle that case and leave the name out. 
Senator ? 

Senator Bone. How do you expect to do it? Did you ever see a 
lawsuit tried that wa}"? Did you ever see a man tried for burglary 
and his name not mentioned to the jury? 

Mr. Young. Senator, that is only a request. We believe it would 
be embarrassing to some people who were innocently brought into the 
picture. 

Senator Bone. Undoubtedly this whole investigation is embar- 
rassing to a lot of people. 

The Chairman. The chairman wonders why the names of anyone 
should be left out of the record because it might be embarrassing to 
them. 

Senator Bone. Here is a sale of machine guns, dynamite, poison 
gas, and shrapnel all over the world, and the war 15 years away, 
where 10,000,000 people were shot to death, and do you want us to 
refrain from mentioning names ? 

Mr. Young. It is my request and it is up to the Chair to do as you 
please. I have made my request. 

The Chairman. Frankly, gentlemen, is it not a fact that you your- 
selves look with disfavor upon the methods you do resort to in 
selling your wares around all over the world? 

Mr. Jonas. As I stated before, I have always been in commercial 
business and I do not like this business. 

The Chairman. You do not like this business? 

Mr. Jonas. No, sir. 

The Chairman. Mr. Young, j^^ou cannot say you like this kind of 
business, can you? 

Mr. Young. No, sir ; I do not say that. 

The Chairman. Why do you do it? 

Mr. Young. We got into this at the beginning of the depression, 
when we felt the slump, like everybody else did. The banks ceased 
buying protection and were more afraid of their de])ositors than 
they were bandits, and we were asked if we would make these bombs. 



1686 MUNITIONS INDUSTRY 

It offered an opportunity to keep our men employed. That was the 
beginning of our military business. 

The Chairman. Is it a kind of business that has you liking to go- 
to work every morning? 

Mr. Young. No ; I should say not. 

The Chairman. Why do you do it? 

Mr. Young. We are still in the depression. We hope we are 
working out of it. 

The Chairman. Are we to understand that the bankers are forcing 
you to do this kind of business? 

Mr. Young. Not at all, sir. 

The Chairman. It is the matter of profit alone which moves you 
to engage in this sort of business ? 

Mr. Young. I am in business for profit. 

The Chairman. Certainly. Now here is Mr. Jonas, who has 
no love for it at all, but he continues and encourages others to 
continue with him. It was only last December, right after Christ- 
mas — I do not know but the holiday spirit may have been upon 
him — that he was writing, under date of December 27, 1933, to Owen 
Shannon, of the Curtiss-Wright Aviation Corporation. The writer 
says that he believes that the Paraguayan and Bolivian fracas ap- 
pears to be coming to a termination, so that business from that end 
will probably be finished. [Reading:] 

We are certainly 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 
do not get the business, someone else will. It would be a terrible state of affairs 
for my conscience to start bothering me now. 

Mr. Jonas. That is true. 

The Chairman. You were being very frank there, were you not? 

Mr. Jonas. That is exactly how I felt about it when I wrote it. 

Senator Bone. Have you changed your mind about it? 

Mr. Jonas. No; I am hoping that I continue with Remington 
alone and can handle commercial business. 

The Chairman. What I fail to see is that we should be so careful 
in this matter, when we are handling the names and activities of 
those who do engage in this work, which seems to be prompted alone 
by profit. These men are engaged in this for profit and are dealing 
without the element of humanitarianism and are dealing in the 
taking of life. 

Senator Clark. The mandate of the United States Senate to this 
committee is to present the picture of the munitions trade, and I fail 
to see how it can be done without revealing names. 

Mr. Jonas. The other countries are doing the same thing and are 
not revealing names. 

The Chairman. The other countries have not tried to reveal the 
situation. 

Senator Clark. We are showing the skeletons in our own closet, 
and maybe the same example will be followed by them. 

Mr. Rausiienijush. Mr. Jonas, what you are trying to say is 
specifically, in other words, as I understand it, that 3'ou mean Eng- 
land 

Mr. Jonas. England, Czechoslovakia, Denmark — there are several 
subsidiary companies there, Vickers & Bofors, that are all doing 



MUNITIONS INDUSTRY 1687 

business. I was down in San Salvador and the son of General Mack- 
ensen was there. 

Mr. Raushenbush. Of the British Army? 

Mr. Jonas. The famous general during the war in Germany. 

Mr. Raushexbush. And all these foreign firms are doing exactly 
the same thing? 

Mr. Jonas. The foreign firms are doing exactly the same thing 
and making monkeys out of us. 

Mr. Raushenbush, You mean doing more of it than you are 
doing ? 

Mr. Jonas. Absolutely. 

Mr. Young. Many times more. 

Mr. Jonas. And considerably more than we are. 

Mr. Raushenbush. So that you lose business to the European 
firms because the European firms are doing " greasing ", " grafting ", 
or whatever j^ou call it, more effectively ? 

Mr. Jonas. More effectively because their sales are larger and they 
send out men of higher standing to do it than the average American 
representative there. 

Mr. Raushenbush. We had a case previously where in Constanti- 
nople they were not only using the whole embassy but loose women. 
Did you do that in South America ? 

Mr. Jonas. No ; I do not know of any cases like that. 

Mr. Raushenbush. You do not know of any cases like that? 

Mr. Jonas. No, sir. 

Mr. Raushenbush. How did they do it? Just money? 

Mr. Jonas. Just money and the size of their business, and spending 
more time there. The representative of a foreign firm will be there 
4 or 5 months. My trips are for a week or 10 days and I get in there 
and get out, because I clevote most of my time to the commercial end. 

Mr. Raushenbush. Could you put it this way: These foreign 
firms create a situation so that the American firms desiring to com- 
pete with them must do those things ? 

Mr. Jonas. Undoubtedly. 

The Chairman. You mean b}^ that, if you did not do these things 
you could not get the business at all ? 

Mr. Jonas. You could not get the business at all. 

The Chairman. But somebody else would, because they are willing 
to do that? 

Mr. Jonas. Yes, sir. 

Senator Bone. You understand, Mr. Young and Mr. Jonas, that 
we are not trying to pillory you. 

Mr. Young. We are trying to help you. Senator. 

Mr. Jonas. The Government buys a great many other things be- 
sides guns and ammunition, and I am afraid it would affect our 
general business with governments if any name is disclosed, because 
ammunition is only a part of the purchases. 

Mr. Raushenbush. You mean, Mr. Jonas, that the munitions busi- 
ness can ruin the rest of the business of the country by simply doing 
things which, if exposed, would ruin it? 

Mr. Jonas. Absolutely. 

83876— 35— PT 7- 6 



1688 MUNITIONS INDUSTRY 

Mr. Rausiienbush. That is, the munitions business is doing things 
which, if exposed, wonkl ruin the rest of the business? 

Mr. Jonas. Absolutely. 

Senator Bone. Do you think that if a newspaper in Buenos Aires 
or in Rio de Janeiro' published a story of racketeering in Chicago 
that the people of Chicago would be so incensed against the Argen- 
tinians that they would want to cut off their relations with them? 

Mr. Jonas. I do not think so. 

Senator Bone. Probably big newspapers in every civilized country 
in the world carried the story about Al Capone and racketeering in 
Chicago. Mr. Jonas, and about gun fights and booze racketeers. 

Mr. Jonas. And it is surprising how much criticism Chicago has 
received abroad. 

Senator Bone. Yes, sir, which cuts Chicago off from the rest of the 
country, from the rest of the world. 

The Chairman. Are you arguing, Mr. Jonas 

Mr. Jonas (interposing). I am not arguing at all, sir. 

The Chairman (continuing) : That we ought not to make public 
the facts regarding Capone ? Do you think that ought to have been 
treated quietly and secretly, behind closed doors, so that the rest of 
the world would not know what was going on ? 

Mr. Jonas. No ; but I hope you do not classify us as Capones. 

The Chairman. You should not draw the conclusion that I was. 
You surely do not feel that because the record has left a bad impres- 
sion for Chicago, all over the world, that it ought to have been 
treated more quietly, do you ? 

Mr. Jonas. No, sir, Senator; you are right. 

Mr. Rich. Senator, may I take the liberty of remarking in that 
connection ? 

The Chairman. I would be glad if you would. 

Mr. Rich. In one case we are dealing with governments and in 
the other case we are dealing with gangsters, who are not part of our 
Government, and we are just as anxious to get rid of them, more 
anxious, than anybody else. 

Senator Bone. How are you dealing with a government in dealing 
with some individual who is doing the work? 

Mr. Rich. If he is the only authorized agent of that government. 

Senator Bone. Would you think it a good idea to suppress the 
fact that a man in high service, like his government's service, could 
get away with things that are wrong? Do you think that that tendjs 
to improve government service or make governments more popular? 

Mr. Rich. No ; certainly not, Mr. Senator. I believe Mr. Young's 
idea was to suppress the name, if possible, to prevent any reaction 
on that particular individual. 

Mr. Raushenbush. Capone only got away with it for so long 
because he had control over minor official^, police court judges, and 
so forth, did he not? 

Mr. Young. Senator, I think we are getting a long way from 
the subject. As I said before, we are leaving it entirely up to you 
on the matter. 

Senator Bone. You understand we are not trying to single you 
out, Mr. Young, but we have this controversy every time any specific 
name is brought into this inquiry. 



MUNITIONS INDUSTRY 1689 

Getting back to this letter, you were expecting to do some busi- 
ness here through Mr. Yerex, and you had been expecting the busi- 
ness to be controlled by some public official down there? 

Mr. Jonas. That is what I had been informed. 

Senator Bone. And this got switched from the public official's 
hands into the hands of Yerex? 

Mr. Jonas. Yes, sir. 

Senator Bone. Who stated that the Government had to have all 
the discounts. What did Yerex mean by that ? 

Mr. Jonas. He meant he wanted to quote them a net price. 

Senator Bone. A net price? 

Mr. Jonas. Yes, sir ; which I was delighted to do. 

Senator Bone (reading) : 

Lake Erie had quoted $27.40 and in that price had a little over $300 allow- 
ance for Yerex. 

What was that? His commission? 

Mr. Jonas. I presume they were acting on the same basis to the 
Government, allowing them the same discount. That meant the 
discount. 

Senator Bone. Yerex was running an airplane line? 

Mr. Jonas. Yes, sir. 

Senator Bone. Is he a private citizen? 

Mr. Jonas. Yerex is an Australian or New Zealander, living there 
now. 

Senator Bone. But he was cutting in on one of the orders through 
the Lake Erie outfit? 

Mr. Jonas. No, sir; he was not cutting in on anything, but sent 
up here to make some purchases and buying it and trying to get as 
much discount as he could. 

Senator Bone. What is this reference to a little over $300, if the 
Lake Erie deal went through? 

Mr. Jonas. Yerex was telling me that, and I presume that was 
for the Government. 

Senator Bone. This is your letter? 

Mr. Jonas. Yes, sir. 

Senator Bone. That is your language? 

Mr. Jonas. Yes, sir. 

Senator Bone. You say [reading] : 

It is too bad that the switch took place at the last moment, cutting out 
Galiano and Izaguirre. 

Who is the man who was cut out? 

Mr. Jonas. That is the same man vou referred to. 

Senator Bone (reading) : 

Yerex has authorized me to pay to Izaguirre the $305.60 difference between 
the selling price and our list, less 20 percent and 2 percent. Just as I started 
to write this letter I got a long-distance call from Izaguirre, who had, of course, 
already been informed by Yerex, and I confirmed it and told him that I would 
give him personal check just as soon as I was informed that the money is 
available at the Baltic Shipping Company. 

Who were the Baltic Shipping Co.? Are they shipping agents? 
Mr. Jonas. No, sir; they are people doing business and also han- 
dling agencies. 



1690 ■ MUNITIONS INDUSTRY 

Senator Bone. You say here: 

Yerex has authorized me to pay Izaguine the .$80r».60 difference * * *. 

How could a private airplane man authorize you to pay a man 
$300^ 

Mr. Jonas. That was a 2-percent cash discount, I think. I do not 
recall the exact details. 

Senator Bone. Did you pay that to the official or the Government? 

Mr. Young. Senator, I might add that that was paid to that man. 
The whole matter was unfortunate, the way it was started out, with 
another party not mentioned in this correspondence, a commercial 
man, I believe, here in this country who called me on the long- 
distance phone and said he could fill this order and would I protect 
him with a commission. I did not know what our relationship was 
or what our agencies were until I communicated to Mr. Jonas, and 
indirectly promised him; but I said I thought I could protect him 
for perhaps 10 or 15 percent, depending on what the conditions were. 

We have to do business quite frequently with people who are not 
our regularly appointed agents over a period of time. 

Senator Bone. Just look at the next page of that letter, in the 
last sentence, where it states : 

I will therefore pay Izaguirre $314.24. 

Mr. Young. That was paid to him. 

Senator Bone. That was paid to him? 

Mr. Young. He was promised that when he came to Pittsburgh, 
because we assumed at first that he was the man to whom I had been 
talking on the phone, and the man, of course, went ahead and took 
it. We thought we were making a commercial arrangement, and. I 
was embarrassed afterward when I found out he was a public man. 

Senator Bone. He was a public official of Honduras? 

Mr. Young. That is right. 

Senator Bone. And he got this cut on the side on this order? 

Mr. Young. That is right. 

Senator Bone. Mr. Young, in connection with this reference to 
Honduras, and public officials there getting some money, the com- 
mittee have thought it desirable to make some general statements 
about the South American situation which seems to have occasioned 
some discussion in the public prints. I am going to make this state- 
ment to you, because your business has to do with Latin-America 
and because I think it is time that we should clear up one or two 
misapprehensions. 

We want the citizens of South America to understand that it 
affords no pleasure to this committee to force out the truth concern- 
ing all these transactions of North American companies. The 
methods which the arms makers and arms sellers use to promote high- 
price hostilities may easily become a menace to the peace of nations 
in every part of the world. 

We have made an honest effort to get at the facts, and we have 
spared no American company which has indicted itself from its own 
records. We have not spared European makers or sellers where the 
truth available to us involved them. 

We ask the citizens of South America to understand that peace 
ca^n only come with complete frankness. It cannot be bought by 
hiding, deceiving, and concealing. To show that officials of a com- 



MUNITIONS INDUSTRY 1691 

pany have used weak men is not an indictment of a people, any more 
than an expose of the racketeering of an Al Capone is an indictment 
of the people of Chicago. 

The Senate committee is not investigating the morals of a nation — 
it is getting at specific facts in connection with certain deals in the 
private munitions business. 

I hope and confidently expect that those European countries which 
are not already dominated by the munitions makers and sellers will 
start smiilar investigations shortly. 

When our investigation, and those in other countries which we 
hope will follow, is finished, I believe that every mother in this world 
will breathe more easily. I think I speak for the committee in say- 
ing that it desires above all other things to spare the coming genera- 
tion of boys the horrors of another great war. 

Mr. Young. Senator, may I add that I would like very much to 
see that thing come about and made universal. 

Senator Bone. What do you mean by " that thing " ? 

Mr. Young. That program of controlling armaments throughout 
the world. 

Senator Bone. I think people in their hearts instinctively share 
that view with you, Mr. Young. But there is a very strong profit 
motive which has been reflected in this inquiry in the statement, 
'' Well, as long as the business is there and others are doing it, I am 
going to do it." 

The committee can appreciate that viewpoint. They are not 
savage toward those men for feeling that way, and they fully realize 
the practical aspects of this whole matter. 

On the other hand, there seems to be a gi'im determination in cer- 
tain quarters to stifle this sort of an inquiry, because it is hurting 
business, because it interferes with private profits. Those who are 
exponents of that viewpoint are forgetful of the fact, apparently, 
that if this continues and the world continues to arm. and if interna- 
tional bitterness continues to be fomented, our civilization itself in.a,j 
be imperiled. 

Do you share the viewpoint that our civilization may be imperiled 
bv another great war? 

Mr. Young. I think it would be set back terriblv if we had another 
World War like we had. 

Senator Bone. That is a rather vague expression. What do you 
mean by "set back"? If you set back the civilization, you have 
wounded it grievously, have you not ? 

Mr. Young. Terribly. 

Senator Bone. You have jeopardized and threatened and perhaps 
terribly injured those institutions that are verv important to the 
welfare of society. 

Mr. Young. You mean I have done that? 

Senator Bone. No ; but if a war accomplishes that, it has grievously 
wounded the very things that make our civilization well worth while, 
has it not? 

Mr. Young. That is right. 

Senator Bone. Do you believe that every effort should be made to 
get at the causes of war and to remove them ? 

Mr. Young. Yes; I do. 



1692 MUNITIONS INDUSTRY 

Senator Bone. Do you think that can be accomplished except by 
publicity of the facts? 

Mr. Young. I have no objection to publicity of the facts except 
as it mifjht hurt the relationships with other governments; and that 
is your matter, that is not mine. 

Senator Bone. Of course. I do not suppose any government wants 
any unpleasant things revealed about any of its nationals. That is 
true, just as the people of the United States are not proud of AI 
Capone or of Sam InsuU. 

Mr. Young. Foreign governments will have protection ; they must 
have it, whether they make it themselves or purchase it. 

Senator Bone. Do you think the people of this country have a 
right to protest if British newspapers say that Sam Insull took 
shameless advantage of innocent iuA^estors? What would be our 
moral right to complain against a newspaper in London, for instance, 
saying that Sam Insull and his associates shamelessly bled those peo- 
ple ; or that Al Capone was a crook ? Where would the moral right 
on our part come in to be outraged by such a statement ? 

Mr. Young. Senator. I am not disj^uting that point at all. 

Senator Bone. No; but that is the point that is being made by 
business men. We might just as well say that British newspapers 
are hurting business in this country by printing the facts that Chi- 
cago has an Al Capone and another racketeer by the name of Insull 
and that they are working both sides of the street over here; be- 
cause that is what they did. Al Capone worked one side and Sammy 
Insull the other, and they did a good job, Capone cleaning up the 
underworld and Insull cleaning up the upper world. 

Do you think the people of this country w^ould have any just right 
to complain because of the fact that British newspapers referred to 
that, facetiously or otherwise ? 

Mr. Young. I am not disputing that at all, Senator. 

Senator Bone. We are getting dangerously near the real heart of 
this thing. You say that these foreign countries do not like the 
facts known that somebody was greased or took some money. Do' 
you think that the rank and file of the honest, hard working, decent 
citizens of those countries resent that, or is it just some officials? 

If you were an honest citizen of any country, without naming it. 
and it was shown that some official of that country had taken graft^ 
would that outrage your feeling? 

Mr. Young. Yes. 

Senator Bone. You think it would? Does it outrage your feel- 
ings to have someone advise you that a citizen of this country is a 
grafter, if it can be proved? You do not want to be put in a posi- 
tion here of saying that you would be outraged at an exposure of 
graft and corruption, do you, Mr. Young? Certainly you are not a 
type of business man that believes that it is wrong to expose graft 
and corruption. 

Mr. Young. No; I am not. 

Senator Bone. I am wondering why you say that j^ou would resent 
the facts of graft and corruption becoming known. 

Mr. Young. I did not ask you not to expose it. I quickly re- 
tracted what I did say, and said do just as the committee felt was 
wise. 



MUNITIONS INDUSTRY 1693 

Senator Bone. Are you a close friend of Major Porter, of the 
Chemical Warfare Service ? 

Mr. Young. A very intimate friend, sir. 

Senator Bone. Is there anything between you to indicate that gifts 
at Christmas time would be other than purely on a friendship basis ? 

Mr. Young. Nothing, Senator. 

Senator Bone. You sell your gas to the Pennsylvania State Police 
Department, do you not? 

Mr. Young. We do. 

Senator Bone. Major Adams, of the Pennsylvania State Police, i& 
known to you, is he not ? 

Mr. Young. Yes. 

Senator Bone. Writing to Mr. Diehl at Harrisburg, Pa., on May 
26, 1932, you make certain suggestions, and I will offer this letter 
as " Exhibit No. 658." 

(The letter referred to was marked " Exhibit No. 658 " and is in- 
cluded in the appendix on p. 1863.) 

Senator Bone. You suggest in this letter that — 

the last time when the bids were equal,, he gave the business to our competitors 
out of Cleveland, Ohio. 

Then you say : 

This time he has written specifications around competitors' product, and we 
know it is going to take something more than usual to crack him loose. 

Was he trying to exclude you from that field ? 

Mr. Young. I think he was, sir. I would like to add, it is my 
impression that Major Adams and our competitor are personal 
friends, and there was no reflection whatever on Major Adams. I 
was trying also to find some personal friends of his. 

Mr. Raushenbush. Mr. Young, when you say — 

This time he has written specifications around competitors' product — 

is not that a very definite accusation of something more than personal 
friendship ? 

Mr. Young. That is generally done when a department head wants 
to buy something; he writes the specifications around the product 
which he likes best and puts behind it " or equal." 

Mr. Raushenbush. You mean that is a customary practice in 
Pennsylvania ? 

Mr. Young. That is a customary practice in most police depart- 
ments, I believe ; in most municipalities. 

Mr. Raushenbush. Then there really is not any competitive bid- 
ding at all ? 

Mr. Young. Yes; there is competitive bidding. You can come in 
as equal. He has to describe some product when asking for bids, so- 
that the bidders will know what he wants. 

Mr. Raushenbush. Except that when it is drawn around a com- 
petitor's product it is more difficult for you to meet. 

Mr. Young. In this case it was not. 

Mr. Raushenbush. You could meet it? 

Mr. Young. Yes, sir. 

Mr. Raushenbush. Did you get the business? 

Mr. Young. I would not know whether we got the business on this 
order or not. We did get an order after that, sometime. It was 



1694 MUNITIONS INDUSTRY 

gotten because we were the manufacturer within the State and other 
things were equal. 

Senator Clark. They sometimes go to the extent of drawing speci- 
fications that contain a patented feature or something of that sort, 
so that nobody else can get the business. 

Mr. Young. In this case the products were both made under the 
same patent licenses. 

Senator Clark. But I say, that is the practice in some cases — to 
draw specifications containing a patented feature or some other 
feature that a competitor cannot meet at all ; is that not true ? 

Mr. Young. Well 

Senator Bone. That is done; yes. 

Mr. Young. Well, I presume it is. 

Senator Bone. Who is Roy G. Bostwick? 

Mr, Young. One of my directors. 

Senator Bone. I offer as an exhibit a Western Union wire of April 
17, 1933, as " Exhibit No. 659." 

(The telegram referred to was marked " Exhibit No. 659 " and is 
included in the appendix on p. 1864.) 

Senator Bone. This reads: 

Have wired Brandt, Coyne, and Mansfield * * * 

Who are they? 

Mr. Young. They were senators, sir. 

Senator Bone. State senators of Pennsylvania? 

Mr. Young. Yes. 

Senator Bone (reading) : 

Whom do you have on the ground in Harrisburg and how can I reach him? 

Roy G. Bostwick. 

That was during a legislative session ? 

Mr. Young. Yes, sir. 

Senator Bone. What were you and Bostwick doing with these 
State senators? 

Mr. Young. There was a bill before the senate which would pro- 
hibit the use of tear gas within the State, forcing us to move our 
factory out of the State, virtually putting us out of business. 

Mr. Raushenbush. Mr. Young, it was a bill providing for per- 
mits before chemical processes could be distributed, and imposing 
duties on the Pennsylvania State police; that is what the bill was, 
is it not? 

Mr. Young. The bill has a clause in it — I do not know whether I 
could put my finger on it in a hurry or not — but the bill has a clause 
in it which would have forced us to move out of the State. 

Senator Bone. At the same time that you were contacting these 
senators you were also contacting Mr. Spann, who was a Republican 
leader in the house, according to a Postal Telegraph wire. Was this 
bill killed? 

Mr. Young. I believe it did not pass, sir. 

Senator Bone. What if anything did your organization do in the 
campaign against this bill? 

Mr. Young. Precisely what you see there. We requested those 
senators and others that we could reach — we informed them that the 
facts of this bill would move our plant from the State and deprive 
about 60 employees of work. 



MUNITIONS INDUSTEY 1695 

Senator Bone. Mr. Casey, of the du Pont Co., sustained rather 
pleasant relations with you, did he not? 

Mr. Young. He is a personal friend of mine, sir. 

Senator Bone. Is Mr. W. A. Grove a friend of yours ? 

Mr. Young. Yes, sir. 

Senator Bone. Is he on your board? 

Mr. Young. Yes, sir; he is a director. 

Senator Bone. Of your company? 

Mr. Young. Yes, sir. 

Senator Bone. He is also chairman of the Railway Audit & Supply 
Co. of Pennsylvania? 

Mr. Young. I believe so. 

Senator Bone. What is that organization? 

Mr. Young. I do not know, except that they engage in auditing, I 
think, on railroad bills. 

Senator Bone. The Railway Audit & Supply Co. furnishes under- 
cover workers for employers in strike troubles, does it not ? 

Mr. Young. I think that is done through another organization. 

Senator Bone. Is not that done through that organization? 

Mr. Young. Not to my knowledge. 

Senator Bone. You say not to your knowledge ? 

Mr. Young. I thinli there is an association known as the " Central 
Industrial Service " that may do that. 

Senator Bone. I am going to read to you a short extract from a 
volume put out by the American Academy of Political and Social 
Science on private police methods, by Shaloo : 

Practically all private detective agencies do or will furnish operatives for the 
exclusive purpose of discovering the thoughts, plans, and aims of employees, 
with special emphasis on " radicals " and labor organizers. The exact number 
of dismissals resulting from the operatives' report that the radical or organizer 
is " inefficient " cannot be known. It is extremely diflBcult to learn the true 
character of workmen in a railroad shop or a steel mill, but the literature sug- 
gests a condition not unlike the system of Abdul-Hamid II. 

To secure the services of these " eyes, eai-s, and noses " the management of 
the corporation needs merely to communicate his requirements to such agen- 
cies as the Railway Audit & Inspection Co. * * * 

That is the company of your friend, Mr. Grove? 
Mr. Young. I would say so. 
Senator Bone (continuing reading) : 

The Thiel Service, the William J. Burns International Detective Agency, or 
Pinkertons National Detective Agency, and literally thousands of less well- 
known agencies stand ready to furnish informers, and by common consent the 
character of inside operatives varies with the reputation of the agency. This 
much may be confidently asserted : The labor spy, from whatever agency, is 
regarded, even by the company employing him, as one of the lowest foi'ms of 
human life, from the moral standpoint. 

Generally speaking, the operative secures employment in tlie regular way ; 
that is, by applying to the employment bureau of the industrial establishment 
and taking his chances. In some cases " recommendation " may be made by 
the general manager. When he has finally found employment, his chief task 
is to keep his eyesi and ears open and his mouth shut, except when sympathy 
and encouragement are necessary to secure information concerning laboi*'s 
movements and plans. If he is seeking information with reference to short- 
ages, as in a ticket office of a railroad, his technique, obviously, is largely 
silent obsei-vation. Reports are sent to the agency at the close of each day. 
At the agency the report is " edited " and polished, always leaving a sug- 
gestion that valuable information is undoubtedly about to be secured. This 
assures continuous employment. If the employing company contemplates aban- 



1696 MUNITIONS INDUSTRY 

doning the " service ", valuable " information " is discovered immediately. Most 
of the information, on the word of employers, is worthless. 

The report is a mastcriiiece of secrecy. The operative iise.s a number, and 
this may be frequently changed, always in the interest of efficiency. A mass 
of meaningless phrases, symbols, code numbers, letters, and signs are used. 
The reiKirt must be mailed from a place distant from the operation. Telephone 
calls to the agency must come from the next town. Secret mail boxes, under 
various names, are the destination of the reports. Special watermarked paper 
is often used so that any interception with attendant substitution is at once 
detected. Two operatives must never be seen together. Operatives must 
room alone when possible, and should not have too much money. They should 
join in the plans of labor, but not too violently. The final victory is to become 
secretary of the local, so that documents can be obtained. To achieve this 
nonpareil treachery requires long experience and ethical nearsightedness. How- 
ever, the ethics is subordinate to the legality. 

There is also a quotation on, page 183 of this volume which says : 

Bribing labor leadei'S and placing them on the pay roll of the agency, thus 
weakening the union and securing additional good sources of information. 
Hundreds of leaders of unions have been " approached " by agencies, and many 
of them, all too willing to be corrupted, have been easily persuaded to take 
on this extra work for the employing class. * * * ^ dozen officials of local 
unions irt Akron, Ohio, were discovered to be on the staff of the Corporation 
Auxiliary Co. a few years ago. And Robert Beattie, vice president of the 
Stationary Firemen's International Union and secretary of the Pittsl)urgh Cen- 
tral Labor Union, was shown to be a spy for the Railway Audit & Inspection 
Co. 

So Mr. Groves, a member of your board, is a chairman of a board 
of a company that supplies undercover operators in labor disputes, 
along with his other work. Is there any question about that in j^our 
mind? 

Mr. Young. I have no relationship whatsoever through that, 
Senator. 

Senator Bone. I am not asking you either to defend or to criticize 
him for it. I am just getting at the facts. 

Now, on May 19, 1933, there is a letter from Mr. Frank S. Jonas 
i;o Mr. John W. Young, which I offer as " Exhibit No. 660." 

(The letter referred to was marked " Exhibit No. 660 " and is in- 
cluded in the appendix on p. 1864.) 

Senator Bone. Mr. Jonas in this letter states : 

Commander Strong today called on the telephone and told me that you 
should not have written to the State Department requesting that he inspect 
the bombs for Honduras. 

First, let us find out who Commander Strong was. Was he the 
man whom the United States Navy had loaned to Colombia as an 
adviser ? 

Mr. Young. I believe he is, sir. 

Senator Bone. That is what our records indicate. ]\Ir. Jonas, what 
did Commander Strong tell you about this? What did he say about 
this indiscreet letter which you wrote to the Department about this 
Honduras business ? 

Mr. Young. Might I explain that. Senator? 

Senator Bone. Yes. 

Mr. Young. I never wrote to the State Department. There was a 
misunderstanding about that. The Honduras Government asked 
whom they might have to inspect their bombs. I told them that 
■Colombia had a man by the name of Strong inspecting them. Mr. 
Jonas misconstrued the fact and concluded that I had referred the 
matter to the State Department. 



MUNITIONS INDUSTRY 1697 

Senator Bone. Let lis leave that part of it and continue with his 
letter. It reads : 

He will, however, be pleased to make au inspection for you privately but 
does not want it to be known publicly. 

Why was that, Mr. Jonas? Why was this lieutenant commander 
of the United States Navy willing to make a private inspection but 
not a public inspection of these bombs ? 

Mr. Jonas wrote the letter, and I would like to have his explana- 
tion of it. 

Mr. Jonas. That is what he told me. 

Senator Clark. Is he still in the Navy? 

Senator Bone. I understand he is. 

Senator Clark. What is the date of the letter you have been read- 
ing, Senator? 

Mr. Kaushenbush. May 19, 1933. 

Senator Bone. We will come to that a little later. 

You had some relations and dealings with Lieutenant Commander 
Strong, who was in South America? 

Mr. Jonas. No, sir; he was here in New York. He was adviser 
for the Colombian Government. 

Senator Bone. He was adviser for the Colombian Government? 

Mr. Jonas. Yes, sir. 

Senator Bone. Loaned to them by the United States Navy? 

Senator Clark. Did he make this private inspection ? 

Mr. Young. No; he did not. 

Senator Bone. On October 20, 1932, Mr. Young, you wrote to 
James H. Strong, lieutenant commander. United States Navy, a letter 
which I offer as " Exhibit No. 661." 

(The letter referred to was marked " Exhibit No. 661 " and is in- 
cluded in the appendix on p. 1864.) 

Senator Bone. You say in this letter : 

I am very definitely counting on you to line us up for some additional busi- 
3iess. I expect to be in New York the latter part of next week myself, and I 
would like to see you while there. 

Was Commander Strong tied in with you in the lining up of 
business for you ? 

Mr. Young. I had hoped that he would be. It did not turn out 
that way. 

Senator Bone. You say here, " I am very definitely counting on 
you to line us up for some additional business." 

Mr. Young. That is right. 

Senator Bone. You evidently had had some very close relations 
with him prior to that? 

Mr. Young. Yes ; I had some relations with him. 

Senator Bone. As that time was Commander Strong engaged in 
this work of advising the Colombian Government ? 

Mr. Young. To refer back to dates, I do not know, but about that 
time I think there was some work going on that he was doing for the 
Colombian Government. 

Senator Bone. How could a lieutenant commander in the United 
States Navy be lining up business for a private firm ? Was he receiv- 
ing a commission? 



1698 MUNITIONS INDUSTRY 

Mr. Young. Yes; Lieutenant Commander Strong received a com- 
mission from us. 

Senator Clark. How much of a commission did you pay him ? 

Mr. Young. We paid him two or three times ; I do not recall the 
exact amount. 

Senator Clark. On what basis ? 

Mr. Young. What did you say? 

Senator Clark. On what basis? Was it a flat commission or a 
percentage ? 

Mr. Young. We paid him a 5 percent commission on an order for 
some gas. We paid him a commission that amounted to $180. Then 
we paid him $175 on some work that he did for us in the way of a 
technical service. 

Senator Clark. Where were those orders from ? 

Mr. Young. They were from the Colombian Government. 

Senator Clark. From the Colombian Government? 

Mr. Young. Yes. 

Senator Clark. And that was during the time when he had been 
loaned by the United States to the Colombian Government and while 
he was an officer in the United States Navy. 

Mr. Young. I do not know those periods, sir. 

Senator Clark. You are not certain about the dates. You still 
considered him a naval officer, did you not ? 

Mr. Young. No; I did not consider him a naval officer. When 
I was introduced to Commander Strong I did not know what his 
position was. It was not as commander. He was Mr. Strong, in 
civilian clothes. 

Senator Bone. But you are addressing him here as Lieutenant 
Commander Strong. 

Mr. Young. I learned that afterward. 

Senator Bone. You learned it by the time you wrote this letter 
and made this suggestion ? 

Mr. Young. That is right, sir. 

Senator Clark. You did not know whether you were paying him 
a commission as an officer of the United States Navy or as a pur- 
chasing agent for the Colombian Government? 

Mr. Young. I paid him a commission, not as a purchasing agent 
of the Colombian Government, but because he was associated with 
the Colombian Government. 

Senator Clark. He was associated with the Colombian Govern- 
ment at the time you paid him a commission ? 

Mr. Young. That is right. 

Senator Clark. Do you know when Commander Strong resigned 
from the Navy? 

Mr. Young. I do not, sir. 

Senator Clark. What is the date of that letter on which you 
addressed him as Lieutenant Commander Strong, Senator? 

Senator Bone. October 20, 1932. 

Senator Clark. Was it prior to that time or after that time that 
you paid him a commission? 

Mr. Young. I paid him another amount of $250 for some tech- 
nical work he did on our bombs. 

Senator Clark. Was that after or before October 1932, Mr. Young? 

Mr. Young. I think that was after, sir. 



MUNITIONS INDUSTRY .1699 

Senator Bone. You still maintain a very great deal of interest in 
Lieutenant Commander Strong, for again on May 15, 1933, there 
is another letter which I should like to refer to. 

The Chairman. If you will permit me to interrupt at this point, 
Senator, Commander "Strong was in the Navy at the time referred 
to in this letter, was he not? 

Mr. Young. That I did not know, sir. 

Senator Clark. You addressed him as lieutenant connnander, 
United States Navy. 

The Chairman. He did not resign until February 19, 1934. 

Mr. Young. I think in all of my correspondence I addressed him 
that way, right straight through. 

Senator Clark. What is the date, Mr. Chairman ? 

The Chairman. February 19, 1934, he resigned. 

Senator Clark. So that at the time that Federal Laboratories was 
paying Commander Strong he was not only an officer in the United 
States Navy but he had been loaned in a fiduciary capacity to the 
Colombian Government? 

The Chairman. By our Government. 

Senator Clark. By our Government ; yes. 

Senator Bone. You still retained your business connections and 
your relations with Commander Strong, for on May 15, 1933, I find 
that you are writing him again, which letter I offer as " Exhibit No. 
662." 

(The letter referred to was marked " Exhibit No. 662 " and is 
included in the appendix on p. 1865.) 

Senator Bone. You say in this letter : 

Saturday I had the pleasure of talking to Mr. Carlos Izaguirre, charge of 
affaii's, Legation of Honduras, Washington, D.C., who is interested in purcluis- 
ing 300 30-pound fragmentation bombs, and who would like to have an inspector 
act for him to ascertain that the bombs are built to specifications. 

Mr. Young. This is the letter that we referred to previously, 
Senator. 

Senator Bone. This refers back to that letter concerning that 
suggested inspection? 

Mr. Young. That is right. 

Senator Bone. At the bottom of the letter you will notice a post- 
script which reads : 

Deur Commandek: This customer will be buying some other equipment when 
he comes to Pittsburgh the end of the week. I understood from our last con- 
versation that you were interested in securing a job such as this. 

What sort of a job was that, an inspection job? 

Mr. Young. Acting as general inspector. 

Senator Bone. What work did you do, Mr. Young, here in Wash- 
ington to suggest either the propriety of certain legislation or the 
desirability of killing certain types of legislation ? 

Mr. Young. Before we leave Commander Strong, may I make a 
statement in that regard? 

Senator Bone. Yes. 

Mr. Young. Commander Strong was paid at his request for com- 
missions on one order and for work which he did. The entire pay- 
ment was on two very small orders, but we did over $200,000 
worth of business with the Colombian Government in which Com- 



1700 MUNITIONS INDUSTRY 

mander Strong did not figure at all, but on which he was inspector. 
That, I believe, throAvs some light on the fact it was not a general 
program of trying to buy Commander Strong. The commander felt 
he was entitled to the payment he received, and it was made at his 
request. 

Senator Clark. The essential fact is not how much he received, or 
how many orders, but the fact that is essential is that a United States 
naval officer loaned to the Colombian Government in a fiduciary 
capacity was taking payments at all. 

INTEREST OF THE FEDERAL LABORATORIES IN NATIONAL LEGISLATION 

Senator Bone. What sort of activities have you or any or your 
organization engaged in here in shaping national legislation? 

Mr. Young. It is very little, except on two bills. I do not recall 
the numbers of them, but one was for tear gas, which I think was 
aimed to stop the manufacture of tear gas, and I think the other 
was on the Thompson machine guns and all kinds of firearms, which 
passed in the last Congress. 

Senator Clark. The last session of the present Congress? 

Mr. Young. That is right. 

Senator Bone. Were you opposed to that firearms bill ? 

Mr. Young. I was sponsoring it; I was very much in favor of it. 

Senator Bone. Some of this legislation was designed to prevent 
the use of tear gas against labor demonstrations. 

Mr. Young. Yes, sir. I am not opposed to legislation on tear gas, 
but I am interested in how it affects us, and the use and the sale of it. 

The Chairman. Relative to your interest and your sponsoring of 
the firearms bill considered by the last session of this Congress, did 
you have no interest that was of a selfish order in that legislation ? 

Mr. Young. I had a combined selfish and patriotic interest in it. 
I was interested in stopping the importation of foreign-made sub- 
machine guns. On the other hand, I Avas interested in the other 
phase of the legislation. There have been a hundred of those guns 
brought from abroad so far this year, and there is apparently no 
control of it. 

Senator Bone. How are they shipped in ? 

Mr. Young. They are shipped in as small firearms. 

Senator Bone. To whom? 

Mr. Young. To the B. & T. Mimitions Co. 

Senator Bone. What are they, what sort of an outfit are they ? 

Mr. Young. It is an outfit who is endeavoring to market them 
througliout the country. 

Senator Clark. What does B. & T. stand for? 

Mr. Young. It is a partnership arrangement OAvned by Captain 
Tauscher and Colonel De Bobula. 

Senator Bone. Where are they located, Ncav York City? 

Mr. Young. Yes, sir. 

The Chairman. Do they manufacture any parts of that gun? 

Mr. Young. No; not to* my knowledge. 

Senator Clark. What kind of a gun is it? 

Mr. Young. It is a German gun, I think, knoAvn as " Schmeisser 



gun." 



gun 



MUNITIONS INDUSTRY 1701 

Senator Clark. That is a competitor of the Thompson submachine 
? 

Mr. Young. Yes, sir. 

Senator Bone. Is that gun controlled by anybody ? 

Mr. Young. I think they could answer that, if anybody could, but 
there is no evidence it can be controlled like the Thompson gun has 
been controlled for the past 3 years. 

Senator Bone. How is the Thompson gun controlled % 

Mr. Young. No gun of the Thompson manufacture is sold to 
other than law-enforcing bodies or by their approval. 

Senator Bone. Is that a regulation of the company? 

Mr. Young. That was a regulation of the company originally fol- 
lowed, and the Department of Justice investigation proved that for 
the past three and a half years such has been the case. 

Senator Bone. Then where do all of these Thompson machine 
guns come from? 

Mr. Young. Prior to that they had been sold to dealers, jobbers, 
and sporting goods houses. A number of them had gotten into the 
hands of the underworld, and it will take some time to have them all 
gathered up. Also, there have been a few raids made on police 
departments. 

Senator Clark. That was some of those sporting guns we have 
heard about from time to time? 

Mr. Young. No ; that is not what I am talking about. 

Senator Clark. I understand what you are talking about. 

Mr. Young. Formerly it was common practice for all types of 
guns to be sold through the hardware stores, 5 or 10 years ago, and 
I think you are familiar with that. The company voluntarily stated 
we will take this gun off the market and will sell it only to law- 
enforcement bodies, and for three and a half years that policy has 
been religiously followed. 

The Chairman. Your interest in this firearms bill was not occa- 
sioned by any domestic competition? 

Mr. Young. No; that competition had not arisen. It was just 
coming out at that time and has developed, I think, since. 

The Chairman. In April 1934, you were very active in support 
of this legislation, were you not ? 

Mr. Young. Yes ; I was. 

The Chairman. Didn't you have any domestic competition at 
that time ? 

Mr. Young. No, sir. 

The Chairman. What is the meaning of this statement, which 
you make on April 28, 1934, to Mr. W. B. Ryan, president of the 
Auto-Ordnance Corporation, in which you told him of a very inter- 
esting activity at the Bureau of Investigation in Washington, and 
then you say : 

We are arranging to conduct another school for all of their men in the 
various cities. 

Mr. Young. To my knowledge that gun had not yet been on the 
market ? 

The Chairman. Your knowledge at the time was it is now being 
made ? 



1702 MUNITIONS INDUSTRY 

Mr. Young. I had rumors they were making a gun to be marketed 
in New York. 

The Chairman. Let this letter to which reference has been made be 
marked as an Exhibit. 

(The letter referred to was marked " Exhibit No. 663 " and is 
included in the appendix on p. 1865.) 

Senator Clark. What gun was that you heard they were making 
to be marketed in New York? 

Mr. Young. I didn't know the gun had ever come out. 

Mr. Kaushenbush. What name is it known by ? 

Mr. Young. I cannot recall the name of the gun. 

Senator Clark. Is that the Hyde gun ? 

Mr. Young. Hyde ; that is the name. 

Senator George. Who was making the gun ? 

Mr. Young. I don't know who was making it, although I tried 
hard to locate the origin of the gun, and I could not do so at the 
time. 

Senator George. Was it the B. & T. you referred to? 

Mr. Young. No: they were importing a German gun known as 
the " Schmeiser." 

Senator George. Did they also import tear gas ? 

Mr. Young. No, sir ; they w^ere making some tear gas. 

Senator George. Who is the " T " in that firm, did you say? 

Mr. Young. That is Captain Tauscher. 

Senator George. Was he associated with Count von Papen and 
Count von Bernstorff ? 

Mr. Young. I have never met Captain Tauscher and don't know 
him. The most I know is what was printed in the New York Times. 

Senator George. Did you understand that he was associated with 
Von Papen and Von Bernstorff? 

Mr. Young. Only what I read in the papers. 

Senator George. That was his reputation and the newspaper story ? 

Mr. Young. Yes, sir. 

Senator Clark. He was expelled from this country by President 
Wilson in 1916 as a German agent, in connection with the Boy-Ed 
and Von Papen affairs? 

Mr. Young. I do not know. 

Mr. Raushenbush. The captain, according to reliable informa- 
tion, was an accredited representative of the German legation here 
before the war — not a representative without credit. 

Senator Bone. Then he came back after the war, according to this, 
and imported machine guns that were freely sold. Is that correct? 

Mr. Young. I do not know whether they were freely sold or not. 
He has a hundred of them on hand in New York, so I am told. 

Senator Bone. There is a restriction on the sale of those guns now? 

Mr. Young. Yes ; he will have to conform to the new law now, but 
prior to that he could have sold to anybody he pleased, and such 
sales would reflect on the industry. 

Mr. Raushenbush. To get the picture at this time, that runs 
through the correspondence, you were worried about your competi- 
tor getting hold of a machine gun they could market, and the one 
you referred to as being made in New York, the Hyde gun, was the 
one under discussion by your competitor, was it not ? 

Mr. Young. I believe so. 



MUNITIONS INDUSTRY 1703 

Senator Bone. I want to call your attention to a letter written 
by you, Mr. Young, to your agents, Leon & Bonasegna, dated March 
18, 1932, which letter is offered in evidence. 

(The letter referred to was marked " Exhibit No. 664" and is in- 
cluded in the appendix on p. 1866.) 

Senator Bone. In this letter you refer to the use of tear gas against 
labor demonstrations, and what not, and I direct your attention to 
the fourth paragraph, containing three lines, because a little while 
ago you and Mr. Jonas were suggesting that sometimes your South 
American agents were irresponsible, and I asked you if these agents 
were reliable, and you assured me they were responsible agents, and 
then you say in this paragraph : 

We have the highest regard for your ability, and I sincerely trust you will 
be able in the next three or four mouths to secure some business to pay you 
for your efforts. 

Did you mean that? 

Mr, Young. I said it, and I presume I meant it. 

Senator Bone. Is your word good? 

Mr. Young. Yes. 

Senator Bone. Going to the second page in the last paragraph, 
this is what you say to this firm, your agent, after having written 
a rather gossipy letter about riot guns and what not, then using this 
language : 

I am quite sure this present crisis, while it has brought a shortage of funds, 
has brought an acute demand for our products, which puts us in the preferred 
class, and we should impress upon the public officials that they should spend 
money for the purchase of tear-gas equipment, even when they cannot afford 
to pay salaries. 

What funds were you referring to? 

Mr. Young. Public funds to purchase equipment. 

Senator Bone. Why would there be an acute demand for your 
products accompanied by this lack of funds there ? 

Mr. Young. I think it is well known that in prosperous times 
you do not have trouble with riots that you do in time of adversity. 

Senator Bone. What did you mean by "preferred class"; did you 
mean a preferred class of business ? 

Mr. Young. Exactly; and we say further down that they should 
spend money for the purchase of tear-gas equipment even when they 
cannot afford to pay salaries. 

Senator Bone. You say in this letter — 

and we should impress upon the public officials — 

Is that what you are doing in Pennsylvania and down here in this 
campaign against tear-gas legislation? Well, to go on with the 
letter, you continue — 

We should impress upon the public officials that they should spend money 
for the purchase of tear-gas equipment, even when they cannot afford to pay 
salaries. 

Do you believe that? 

Mr. Young. There have been a number of police departments 
where they were unable to pay full salaries to the policemen, and 
conditions were such in their towns that if they had not purchased 
tear gas it would have been terrible. May I cite one case? 

8:J876 — 35— PT 7 7 



1704 MUNITIONS INDUSTRY 

Senator Bone. Yes, 

Mr. Young. Last week down in North Carolina at Honeycutt, 
they had not the proper equipment; they had not purchased tear 
gas because they did not feel they could afford it, but in the emer- 
gency, when it came, they employed 200 deputies made up of the 
citizenry of the town, and endeavored to stop a riot and killed seven 
people. In a condition like that the leaders of that town would be 
very much justified in spending two or three hundred dollars for tear 
gas. Then their little force of two or three policemen could have 
handled the situation without killing anybody. 

Senator Bone. We are glad to get all of the facts we can on this 
and get your views on the proper way to handle these disturbances. 

Let us go to another letter I want to introduce as " Exhibit No. 
665 ", the letter being dated October 15, 1932, addressed to Kendrick 
van Pelt. 

(The letter referred to was marked " Exhibit No. 665 " and is 
included in the appendix on p. 1866.) 

RELATIONS WITH SOUTH AMERICAN COUNTRIES 

Senator Bone. Kendrick van Pelt was your agent down in Sao 
Paulo, Brazil? 

Mr. Jonas. Yes, sir. 

Senator Bone. You are writing this letter to Mr. Van Pelt, and 
the letter reads : 

My DELiVR Van : I sent you a cable this week and expected an answer, as I 
thoufiht there might be something I could attend to for you up here. 

The unsettled conditions in Soulh America has been a great thing for me, 
as I sold a large ordei- for bombs to Brazil and also a fair cartridge order. I 
also sold very large bomb orders for Colombia, Peru, Ecuador, Bolivia, and 
now have made up all my losses, and I am back on my feet. It is an ill wind 
that does not blow someone some good. 

Is that true, Mr. Jonas, you have stepped up your business ? 

Mr. Jonas. I had received an order and expressed myself in that 
way. 

Senator Bone. And you said you have made up all of your losses 
and that you are now back on your feet. 

Mr. JoNi^s. It is just a way of expressing myself. I exaggerated. 

Senator Bone. That is one of the pictures we want to give the 
whole world, that a business gets back on its fieet when it sells large 
orders of bombs that are used to kill people. 

The Chairman. Not a very quaint expression, however. 

Senator Bone. I am quoting you, Mr. Jonas, that your business 
had been going down and they had not been buying demolition 
bombs, and then all of a sudden you sold a large bomb order to 
three or four of these governments, and the ill wind quit blowing. 

Now, we come to a letter dated May 2, 1932, addressed by yourself 
to Leon & Bonasegna, which I offer in evidence. 

(The letter referred to was marked " Exhibit No. 666 " and is in- 
cluded in the appendix on p. 1867.) 

Senator Bone, Mr. Jonas, calling attention to the last paragraph 
of this letter, it reads : 

Rio Grande do Sul recently purchased a million cartridges 7 mm, and I 
was wondering if there was a revolutionary movement in view. 



MUNITIONS INDUSTRY 1705 

What do you say about that ? 

Mr. Jonas. Rio Grande do Sul is located in southern Brazil, and 
they make a lot of their purchases there. 
Senator Bone. Is that a State ? 
Mr. Jonas. Yes ; that is a State in Brazil. 
Senator Bone. I read further from the letter as follows : 

At times like that they generally make purchases through Buenos Aires- 
agents, so it might be advisable for you to investigate and see if you can 
connect witli the right parties, as you might be able to interest them in the 
Thompson gun. This gun is known in Rio Grande and lias been used with 
success at various times. 

That was the Thompson machine gun? 

Mr. Jonas. Yes, sir. 

Senator Bone. In August 1933 you wrote a letter to Mr. Gordon 
Pickerell, the letter being dated August 21, 1933, and I offer the 
same in evidence. 

(The letter referred to was marked "Exhibit No. 667" and is in- 
cluded in the appendix on p. 1867.) 

Senator Bone. Mr. Gordon Pickerell is a friend of yours? 

Mr. Jonas. Yes; he is a friend of mine. 

Senator Bone. Of Pickerell & Co. What is that firm ? 

Mr. Jonas. It is an American agency in Para, Brazil. 

Senator Bone. What does it sell down there ? 

Mr. Jonas. I think they sell Ford cars and various other agencies. 

Senator Bone. American products? 

Mr. Jonas. Yes, sir. 

Senator Bone. Let us read this letter, as follows : 

My Dear Gordon : Your letter of August 12th reached me this morning, and 
while I would like very much to transact the business you propose, owing to the 
severe regulations at this end, it is too risky a proposition. 

Mr. Pickerell you evidently knew very well ? 

Mr. Jonas. Yes. 

Senator Bone. What was he proposing? 

Mr. Jonas. He said he wanted to buy some machine guns. Per- 
sonally may I express an opinion ? 

Senator Bone. Yes. 

Mr. Jonas. I do not believe he knows anything about that busi- 
ness, and he was trying to give me the information that he knew of 
some business. I don't think he knew what it was all about. 

Senator Bone. You say in this letter : 

You see, it is absolutely necessary that we make a sworn declaration snpci- 
fying the party and the country to which the material is being sent, and I 
cannot afford to take the chance, especially since I specialize in armament. 

I am sending you under separate cover catalogs of the Thompson submachine 
gun, which I am sure is the gun that you require. 

Did he send you information of his requirements ? 
Mr. Jonas. No ; he did not. He said a machine gun, and I said if 
he had a license I would try to sell him the Thompson gun. 
Senator Bone. Then comes a postcript, in which you say : 

There is a man here in New York that might be able to do this business, but 
not with the Thompson gun. He could supply Lewis 30.06 Government machine 
guns and the Colt Browning 30.06 rifle. He asked $300 for the Lewis gun and 
$300 for the Colt Browning rifles. New 30.06 ammunition in quantities of 100,000 
will cost $40 per thousand. 



1706 MUNITIONS INDUSTRY 

This man was askino; for quotations on cartridges in 100,000 lots, 
so it would not be so small a lot. 

Mr. Jonas. I do not know whether he mentioned any lot. A man 
came in the office the day previous and said he had some guns which 
he could ship from Belgium, and I thought of that and gave this 
information. The thing was never consummated and I never heard 
from Pickerell again on it. 

Senator Clark. Who was the man who walked in the office ? 

Mr. Jonas. A fellow by the name of Brown, I think it was. 

Senator Bone. He must have been interested in sizeable lots when 
you sent down quotations on thousands. 

Mr. Jonas. You can hear more stories down there ; you will hear of 
-a. fellow wanting to buy 10 guns, and by nighttime it is a hundred 
thousand guns. 

Senator Bone. It is some kind of a sizeable lot where he takes 
cartridges in lots of 100,000. 

Mr. Jonas. Absolutely. 

Senator Bone. Let us go on with the letter which continues read- 
ino; as follows : 



'to 



If this type of gun would interest yo,u I will be able to handle it for you, 
through this man. However, it will be on a cash basis, as this is the only way 
this business can be handled. 

That must have been revolutionary business. 

Mr. Jonas. No ; I couldn't say. 

Senator Bone. Then, what kind of business was it that was being 
done on a cash basis? 

Mr. Jonas. All munitions business is generally on a cash basis. 

The Chairman. Mr. Young, what is your annual volume of busi- 
ness in the Federal Laboratories ? 

Mr. Young. I believe I can give that to you. We did, I think, a 
little short of half a million dollars last year. 

The Chairman. 1933? 

Mr. Young. Yes; and $395,000, from memory, in 1932. 

The Chairman. What part of that total last year was domestic and 
what part of it foreign ? 

Mr. Young. Last year, I think, the majority of it was domestic — 
always the majority has been domestic. 

The Chairman. Is it a pretty even division? 

Mr. Young. I would hazard a guess about 60 percent domestic and 
Jibout 40 percent foreign. 

Mr. Kaushenbush. You testified last year and this year it was 
about 50-60. 

Mr. Young. Yes ; for this year. 

Senator Bone. Now, Mr. Jonas, you state, when I read from this 
lett<?r, that " it will be on a cash basis ", that it Avas an ordinary 
transaction and you had to have cash on the drumhead? 

Mr. Jonas. Any of that business, you want cash. 

Senator Bone. So that it could not have had any connection with 
•any revolutionary movement? 

Mr. Jonas. No; the Pickerell letter said it was, and I said I would 
not handle it. 

Senator Bone. I asked you if it was, and I thought you said it 
was not. 

Mr. Jonas. No; I did not mean to answer that way. 



MUNITIONS INDUSTRY 1707 

Senator Bone. The letter I have read to you is dated August 21, 
1933, and was addressed to Mr. Gordon Pickerell, and that letter was 
in answer to a letter which he had written you on August 14, 1933, 
a week before ? 

Mr. Jonas. Yes. 

Senator Bone. I offer this letter of Pickerell to Mr. Jonas, dated 
August 14, as the next exhibit. 

(The letter referred to was marked " Exhibit No. 668 " and is in- 
cluded in the appendix on p. 1868.) 

Senator Bone. In that letter he says to you : 

Hope this reaches you, ns there may be some money in it for you and me. 
The revolutionary govt, here is organizing a secret society for their own protec- 
tion and want machine guns, jiortable macliine guns — lik<» rifles and juiuiniiii- 
tion. Money they have and can arrange the necessary credits. TTie necessary 
contraband here can also be arranged as long as they come invoiced as macliine 
parts. 

^Vhat contraband was he talking about? 

Mr. Jonas. Evidently, if I consummated the order with him. I 
have never shipped anything without State Department license. 

Senator Bone. You know this whole South American picture; 
what did he mean by " necessary contraband "? 

Mr. Jonas. He wanted to know if I could get that in by contra- 
band, and I told him that it could not be done. 

Senator Bone. You said in your letter to him there is a man here 
in New York that might be able to do this business? 

Mr. Jonas. Who might be able to do it, but I did not know whether 
he could or not. This man said he could; and if he had a license 
from the State Department, he could; otherwise he could not 
handle it. 

Senator Clark. Does the letter say anything about a license? 

Mr. Jonas. No; but that is the way I do my business. I would 
not take a chance on anything unless I had a State Department 
license. 

Senator Clark. Here is a letter from Pickerell in which he says 
this thing can be gotten in by contraband, if it is labeled " machine 
parts ", and you apparently wrote back and said that you were in 
a position to handle the business. 

Mr. Jonas. Yes ; but referring to machine guns and not referring 
to machine parts. 

Senator Clark. He is talking about machine guns, too, and says 
they can be shipped in as machine parts. 

Senator Bone. Let us read this over. On August 14, he wrote 
and said they have got the money, and the necessary contraband can 
also be arranged as long ag they come invoiced as machine parts. 
So apparently he had the whole thing fixed up and then he said : 

So the rest is up to you, and as I am not sure of your address, I am sending 
this to 21 West St. If you will air mail me as to your possibility of getting, 
the above articles and prices I can do the rest. 

And then the letter further proceeds: 

Lnter on they are going to need machine guns and ammunition — officially — 
and we will get the order as they have written Germany about this business. 
I hope you will give me a quick answer one way or anotlier. In short the first 
lor will be secret, the second, official. 



1708 MUNITIONS INDUSTRY 

Then, a week later comes your letter, and you tell him that owing 
to the severe regulations here in New York it is too risky, but you 
add a ix)stscript in which you tell him there is a man here in New 
York that might be able to do this business, but not with the Thomp- 
son gun, and that he could supply the Lewis and the Browning gun. 
You describe it as tlie Lewis 30.06 Government machine gun. What 
government is that? 

Mr. JoisAs. That is the caliber. 

Senator Bo>;e. It says " Government" machine gim; are they the 
type used by the Army ? 

Ir^enator Clark. The Government has used some Lewis guns. 

Senator Bone. And then you go on to say to him that he asks 
$300 for the Lewis gun and $300 for the Colt Browning rifles, and 
that the 30.06 ammunition in quantities of 100,000 will cost $10 per 
thousand. 

Then, following that, you say to him : 

I w 11 be able to handle it for you, through this man. However, it will be 
on a cash basis, as this is the only way this business can be handled. 

Kead the letter and tell me if I am wrong. 

Mr. Jonas. I never heard from Pickerell again about this thing 
to this day. 

^^enator Bone. That is not the point; you offered to do it. 

Mr. Jonas. I would not have entered into any contract on that 
business. 

Senator Clark. According to your own statement you were not 
willing to ship yourself because it was too risky, but you Avere willing 
to act as this man's agent in securing the contraband. 

Mr. Jonas. I did olfer to act as broker in the case ; you are right. 

Mr. Raushenbush. Who was the man ? 

Mr. Jonas. I think it was Brown ; Silas Brown, or some such name. 

Senator Clark. This letter has been read twice to you. and you 
say in so many words you will not handle it yourself because it is too 
risky a proposition, and then in the postscript you say if he wants 
to deal with the fellow- that had the Lewis and the Browning guns, 
you will handle it for him as his agent. Is that not con-ect 'i 

Mr. Jonas. I said that, sir. 

Senator Clark. And you meant it when you said it? 

Mr. Jonas. I don't know that I did. 

Senator Clark. You are just writing these letters to pass the time 
away? 

Mr. Jonas. No, sir; I am afraid of business like that. Pickerell 
is an old friend of mine and I wrote him alonjr those lines. I really 
did not expect to J)ear from Pickerell again, because he is not in that 
business. 

Senator Clark. You did say in the po.stscript you were perfectly 
willing to handle it i)rovided it was cash, and that seemed to be the 
only thing worrying you. 

Mr. Raushenbush. Mr. Jonas, in that connection, did any Euro- 
pean commercial people ship any mtmitions during that revolution? 

Mr. Jonas. Thre was no revolution at that time. 

Mr. Raushenbush. Brazil was having three or four revolutions 
during those times, was it not? 



MUNITIONS INDUSTRY 17C9 

Mr. Jonas. I do not knoAv. Brazil is a country as big as the United 
States. 

Mr. Raushenbush. Brazil did get a great deal of munitions from 
foreign countries? 

Mr. Jonas. They got most of their munitions from foreign 
countries. 

Mr. Raushenbush. You do not know where they got them at the 
time of the revolution? 

Mr. Jonas. No, sir. I never heard of any shipped then. 

Senator Bone. You were contacting other firms selling material, 
and among the agents which vou contacted was Mr. Shannon of 
Curtiss-Wright ? 

Mr. Jonas. Yes, sir. 

Senator Bone. And he was in New York on June 14. 1932, when 
the letter was written. You suggest in this letter that you are pro- 
jDosing to the Winchester Co. to let you fly down to Brazil, 

Mr. Jonas. Is that to Mr. Young or Mr. Shannon ? 

Senator Bone. There is just a reference to Mr. Shannon in the 
letter. You are writing to Mr. Young making a sort of general re- 
port, in which you say you are suggesting that the Winchester Co. 
let you fly down there and attempt to take on some business for 
them. 

Mr. Raushenbush. Do you offer that letter, Senator? 

Senator Bone. I do not think it is important. 

I want to call 3^ our attention to a letter dated August 1, 1932, 
written by Leon & Bonasegna, agents in Buenos Aires, to the Federal 
Laboratories. That may be appropriately numbered as an exhibit. 

(The letter referred to was marked '' Exhibit No. 669 " and is 
included in the appendix on p. 1868.) 

Senator Bone. I particularly direct Mr. Young's attention to the 
second page of that letter, where there are certain observations 
made. 

Mr. Young. Senator, may I refer back, without reflection on the 
Pickerell correspondence, as this seems to be an investigation in 
which the Federal Laboratories are investigated, and Federal Labo- 
ratories had no knowledge, and it was not our business. I think we 
are on record that there were no guns, Thompson guns, considered. 

May I have your question now ? 

Senator Bone. I direct your attention to the paragraph which is 
slightly below the center of the page, and which reads as follows : 

Regarding Bolivia aud Paraguay. As far as Bolivia is concerned, we are 
daily awaiting advices from our agent in La Paz, giving us some definite reply 
in connection with the business we have pending with that Government. 

Can you tell us what business you had pending in La Paz ? 

Mr. Young. I presume we had considerable. We did considerable 
business with them. 

Senator Bone. It states that it is " pending with that Govern- 
ment." What was it? Bombs or what? 

Mr. Young. It was bombs. 

Senator Bone. Demolition and fragmentation bombs? 

Mr. Young. Yes, sir. 

Senator Bone. The letter states further [reading] : 

Immediately on receipt of his reply, which we expect to be in the afBrmative, 
we will, as promised in one of our letters to him, take the first train for La 



1710 MUNITIONS INDUSTRY 

Paz and see if we can finally close this business, which should amount to some- 
thing:. If anythinfr sliould develop within the very near future, we would nat- 
urally immediately telegraph you, telling you just what the situation is. 
As far as Paraguay is concerned — 

Was that during the Chaco trouble? They had been carrying on 
a battle down there over the Chaco country. 
Mr. Young. I do not know how the dates check. 
Senator Bone (continuing reading) : 

we are in daily touch with the military attache of this city for that country, 
and we expect some time between today and tomorrow to have some news from 
him ; in fact, the writer has an appointment with the attache for this afternoon, 
and it is possible we may supplement this letter in the event of his having 
tangible news which may be of interest to you. 

So that it is apparent that at that time your agents down there 
were endeavoring to make sales to both Paraguay and Bolivia. That 
is the point in this letter, is it not ? 

Mr. Young. We did not discriminate. 

Senator Bone. You did not discriminate. You explained that 
very fully in your statement yesterday, so that I will not go further 
into that. 

Now, directing your attention to another letter written by these 
same agents, Leon & Bonasegna, of Buenos Aires, to you, under date 
of July 26, 1932. Mr. Leon, who writes this letter for the firm, has 
this to say in the second paragraph [reading] : 

As stated in one of our previous communications, we have been very diligently 
following the question of the material you manufacture with the following 
Governments: Chile, Peru, Bolivia, Paraguay, and Uruguay — 

You were having contractual relations with all those countries? 

Mr. Young. All Latin American countries. 

Senator Bone. I will proceed with the letter [reading] : 

and while we cannot expect, nor do we expect, more on account of the deplor- 
able financial conditions of these countries to get immediate results, still the 
fact remains that there is a live interest, and we are keeping after the heads of 
these Governments (through intermediaries whose influence counts for some- 
thing, of course), to the best of our ability. 

(The letter referred to was marked " Exhibit No. 670 " and is 
included in the appendix on p. 1869.) 

Senator Bone. In other words, to use your own language, in the 
letter your own agents state that there was a deplorable financial 
condition, and still, according to Mr. Leon, your agents were — 

keeping after the heads of these Governments * * * whose influence counts 
for something — 

in order to get contracts with them, despite their deplorable financial 
condition. You always sought, of course, to have someone who had 
influence in those countries. That is correct, is it not? 

Mr. Young. Yes, surely. 

Senator Bone. And you wanted political influence because that is 
the only thing which counted. That is correct, is it not? 

Mr. Young. I am merely taking the statement of a salesman here. 
He does not say " political " influence. 

Senator Bone. But you are taking the word of a man concerning 
whom you said some very splendid things, in a letter written about 
this time; that is, that he had very good ability. Did you mean 
that? 



MUNITIONS INDUSTRY 1711 

Mr. Young. He has been a very good producer. 

Senator Bone. Leaving that aside, you said that you had a very 
high regard for him, did you not? 

Mr. Young. As a producer. 

Senator Bone. As a producer. Exidently, the man knows what 
he is talking about. Despite the financial conditions, which are 
deplorable in all the South American governments, your agent says 
that he is — 

keeping after all the heads of these governments (through intermediaries 
whose influence counts for something, of course) to the best of our ability. 

The letter continues [reading] : 

Through the medium of your local press you are acquaintfcd no doubt with 
the bellicose conditions which exist between Bolivia and Paraguay on account 
of limits of territory in dispute. 

So that evidently the Chaco dispute Avas in full swing in July 1932 
at the time that this letter was written, and also the one discussed 
a moment ago — the letter bearing date of August 1, 1932. [Continu- 
ing reading :] 

For the last year or more there has been a guerilla warfare going on in the 
Paraguayan Chaco, which is causing great anxiety to both Governments, neither 
of whom openly declare war, but guerilla warfare seems to be going on indefi- 
nitely. Last week the Bolivians and the Paraguayans were in trouble again, 
and the general opinion in these countries was that a declaration of war was 
imminent. 

Then he goes on to state [reading] : 

T:iking advantage of this state of affairs, the writer has insistently pushed 
both the Bolivian and Pax-aguayan Governments — 

What did you understand him to mean by " pushing" them? For 
orders ? 

Mr. Young. Yes, sir; I would. 

Senator Bone. Now, again, on August 11, 1932, very shortly after 
the time of the letter which I have just read, Mr. Jonas writes to 
Leon & Bonasegna in Buenos Aires from New York. I will ojffer 
that letter to be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 671 " and is 
included in the appendix on p. 1870.) 

Senator Bon'E. Mr. Jonas has this to say in that letter [reading] : 

Tour letter addressed to Federal Laboratories dated July 26th — 
The one I have just read — 

with reference to the Paraguay and Bolivia situation was forwarded to me for 

attention. 

In other words, when your firm got the letter they sent it over to 
you, Mr. Jonas, for attention. 

I will go on with the letter [reading] : 

I immediately took a plane to Washington and visited both the Paraguay and 
Bolivia Legations. Unfortunately for us, however, it looks as if the trouble 
they are having is going to be settled amicably. 

[Laughter.] 

I do not know that we need any comment on that. That seems 
too plain for dispute, but let us get the picture a little more plainly 
in the record. 



1712 MUNITIOTsTS INDUSTRY 

This letter was addressed to tlie Federal Laboratories, that is, to 
Mr, Yonnfj', dated July 26, where he speaks of the trouble between 
Bolivia and Paraguay. 

Let me read part of that again [reading] : 

Your letter addressed to Federal Laboratories, dated July 26, with reference 
to the Paraguay and Bolivia situation was forwarded to me for attention. 

That is, forwarded to you by the Federal Laboratories for atten- 
tion. So that Mr. Young, having confidence in you, sent it over 
for your attention, and you write Mr. Leon and tell him [reading] : 

Unfortunately, for us, however, it looks as if the trouble they are having is 
going to be settled amicably. 

That is signed by Mr. Jonas. 

Mr. Raushenbush. For Mr. Jonas, it might be said that he is 
unfortunately an intellectually honest man. 

Senator Bone. We are not trying to pillory Mr. Jonas, but trying 
to paint a picture of the munitions business. If all of us can look 
at this in an impersonal way and in a sort of abstract fashion, we 
will all get along better and get through with it, assuming an atti- 
tude of sportsmanship. However, we want the people of the country 
to know what it is all about and to get a picture of the munitions 
business. 

Do not feel, Mr. Jonas, that we are trying to make an example of 
you, or to pillory you, but we have been a little rough on all the 
gentlemen in getting facts, because some of them did not want to be 
frank. Nobody is going to be hurt by being frank. 

Then, at about the time of the Brazil revolution, Mr. Jonas adds 
[reading] : 

I have done exceptionally well for Federal and recently closed some big 
business with Cuba and Brazil, which will keep me going for a while. 
With regards and the best of wishes, I am 
Yours sincerely. 

That was at about the time of the Brazilian revolution, was it 
not? 

Mr. Jonas. Yes, sir. 

The Chairman. The committee will recess until 1 : 15. 

(The commitee thereupon took a recess until 1:15 p.m. this 
afternoon.) 

After Recess 

foreign agents 

(The committee reconvened, pursuant to the taking of recess, at 
1:30 p.m.) 

The Chairman. The committee will be in order. 

Senator Bone. Mr. Jonas, who is Mr. W. Perrin Iverson? 

Mr. Jonas. He is a salesman that I knew in South America, and 
I have known him up here. 

Senator Bone. With what firm is he connected ? 

Mr. Jonas. I think he is with Topp Bros. now. 

Senator Bone. There is a note in this letter that I have before me, 
"Exporters Afloat, Inc." Is that some export house in New York? 

Mr. Jonas. He was trying to start a company that would purchase 
a yacht and take various merchandise samples around the world. 



MUNITIONS INDUSTEY 1713 

Senator Bone. I have before me a letter dated December 30, 1932, 
bv you to Mr. Iverson, which I will offer as '' Exhibit No. 672." 
^ (The letter referred to was marked " Exhibit No. 672 " and is in- 
cluded in the appendix on p. 1871.) 

Senator Bone. In this letter, Mr. Jonas, you are setting forth in 
memorandum form a statement of your experience, and what not. 
You say: 

Confirming our conversation of today, I wisli to submit in tleruil particulars; 
regarding my personal and business life. 

Nationality : American. 

Age : 45. 

Married : Two children. 

Religion : Protestant. 

Education : Graduated Morrison's Preparatory School at 16, and then took 
a commercial course in istenography, languages (Spanish and Portuguese). 

1904-19€6: Worked with the Crane Co., general office work and cost clerk. 

1907 : Worked with Winchester Repeating Arms Co., office work. Resigned 
same year to go to Bolivia on the construction of the Viacha-Cruro Railroad as 
a Spanish correspondent. Contract completed, returned to New York. 

19US-1911 : Connected with Madeira-Namore Railway Co. in northern Brazil 
during its construction as timekeeper, construction foreman, and during part 
of 1910 and 1911 was appointed purchasing agent. Resigned in June of 1911 
and returned to the Unitetl States. 

1911 : Travelled as a salesman, covering New York State. Ohio, Connecticut, 
and Long Island for the Ruberoid Co. Resigned in 1932. 

1912-1916: Travelled for a year with the Savage Arms Co. in this country 
and was leaving for South America as tlieir foreign representative, but, owing 
to illness in my family, resigned and rejoined the Rul^eroid Co. as a salesman 
and remained with them until July 1916, but again resigned to represent my 
former connection, Winchester Repeating Arms Company, in South America, 
and have been with this company ever since, except for a period of six months. 

Those are statements of your general experience? 
Mr. Jonas. Yes, sir. 
Senator Bone. You continue: 

Travelled Brazil from Manaos to Porto Alegre until 1919. I then took the 
representation on a commission basis and also took on as side lines B. F. 
Goodrich Co. (mechanical goods), the New Haven Clock Co., the Edw. Miller 
Lamp Co., and the Ruberoid Co. In 1921. during the crisis, I returned to the 
United States and the Winchester Co. paid me a retainer to remain with them. 
I resided here for a year, and in 1922 they gave me entii'e suitervision of the 
Latin-American territory. 

That was for the Winchester Arms Co. ? 
Mr. Jonas. Yes, sir. 
Senator Bone (reading) : 

In 1924 I resigned and went into business for myself as a rubber broker, 
but, owing to market conditions (the Stevenson plan), 1 lost heavily and again 
connected in my old position with the Winchester Co. with their permission 
to take on noncompetitive lines, so I secured the agency of Smith & Wesson 
revolvers, Harrington & Richardson noncompetitive shotguns, and Federal 
Laboratories, Inc., and have remained with the Winchester Repeating Arms 
Co. ever since. 

It is true my experience has been quite varied, but this diversity has all 
tended toward a more complete education in the manner of doing business in the 
foreign field. I have referred to Latin America principally, although I have 
travelled in the interests of my company in Africa and the West Indies and 
feel that I know conditions generally even better than average. 

I must confess that my real interest lies in the expansion of American trade 
abroad, whether it be the direction of that trade from the United States or 
the exploitation of it abroad personally. The fact remains that my experience 
has been so wide that I feel it would be worth considerable to those who are 
simihirly interested. I might add that my sales for the past seventeen year* 
have averaged $750,000 annually. 



1714 MUNITIONS INDUSTRY 

So in that letter you state in this cold and somewhat detailed 
fashion a record that indicated you had been very successful as a 
salesman ? 

Mr. Jonas. Yes, sir. 

Svinator Bone. In reading this letter there have been a good many 
firms mentioned. Did you at any of these periods own stock in any 
of these firms? 

Mr. Jonas. Yes; that is, not in that period, but I own some stock 
now in Federal Laboratories, 20 or 21 shares. Is that the amount, 
Mr. Young? • 

Mr. Young. Twenty-one shares, I believe. 

Senator Bone. In Federal Laboratories? 

Mr. Young. Yes, sir. 

Senator Bone. Were your arrangements with these firms over 
there generally on some commission basis or on a salary, or does the 
letter itself that we have introduced clearly indicate? 

Mr. Jonas. With the Winchester Co. I was on a salary most of the 
time. For a year I was on straight commission, and then I got a 
salary and a bonus over a certain amount of business; the last 2 
years I was with them I worked on a salary and bonus. 

Senator Bone. Would you say that a good deal of the foreign 
busint:ss done out of this country in South America or in Latin 
America is done, in the major part, on a commission basis? 

Mr. Jonas. The major part is on a commission basis — I would 
say " yes " ; especially now. 

Senator Bone. Today you have this ownership in and are a repre- 
sentative of Federal Laboratories? 

Mr. Jonas. Yes, sir. 

Senator Bone. When did you go with them? 

Mr. Jonas. I first took on their line, I think — about what time? — 
I think in 1928. 

Mr. Young. 1928; yes. 

]\Ir. Jonas. About 1928. 

Senator Bone. Y'ou handle, as I understand, the foreign business 
for Federal Laboratories ? 

Mr. Jonas. Yes, sir. 

Senator Bone. Do you attempt to handle business in this country 
for them? 

Mr. Jonas. No, sir; I do not do any business in this country for 
them. 

Senator Bone. Having the export end of their business, your office 
is located in New York, I take it? 

Mr. Jonas. I have an office in New Y'ork, but at present I am 
devoting most of my time to Remington. 

Senator Bone. To which company? 

Mr. Jonas. Remington Arms. 

Senator Bone. Mr. Rich is one of your staff in connection with 
that export business? 

Mr. Jonas. We work on a partnership arrangement on the Federal 
Laboratories business. 

Senator Bone. What is that arrangement, Mr. Jonas? 

Mr. Jonas. He gets 25 percent of the net profits, and I pay the 
expenses. 



. MUNITIONS INDUSTRY 1715 

Senator Bone. In handling this foreign business, do you have 
subagents ? 

Mr. Jonas. Yes, sir. 

Senator Bone. What financial arrangement do you make with 
your subagents in South America and Central American countries? 

Mr. Jonas. It depends on the product. On bombs, I get a dis- 
count of 25 percent and I give my agents 20 percent, retaining 5 per- 
cent for myself. On tear gas, I get 10 percent. The discount is 35- 
percent, and we grant 25 percent to the agents. 

Senator Bone. Why is it necessary to pay so much larger com- 
mission on tear gas than on bombs, for instance? 

Mr. Jonas. I presume that there is more profit in the tear gas. 

Mr. Young. May I answer that question, Senator? 

Senator Bone. Yes. 

Mr. Young. It is the introduction of a new product, and it takes 
considerable more work to educate the buying public as to what 
it will do. As a matter of fact, we got into the bomb business by 
trying to sell gas to those republics. They said, " Well, we do not 
want your gas, but will you sell us the bombs ^" That was the be- 
ginning of our bomb business. 

Senator Bone. You only have one competitor in the gas field? 

Mr. Young. Just one main competitor. 

Senator Bone. That accounts in some measure for the size of the 
conmiission, does it not? 

Mr. Young. Do you mean that the size is large? 

Senator Bone. Yes. Would they not be considered fairly sizable 
commissions ? 

Mr. Young. I do not consider it so, in a specialty. If 3^ou com- 
pare that with safes or filing cabinets or cash registers — the National 
Cash Register Co. was built up on the basis of paying, I think, 40 
percent commissions to its district agencies. There are many, man}^ 
lines that pay that same rate of commission. We pay it throughout 
the country. 

Senator Bone. Mr. Jonas, on April 22, 1932, you write a letter to 
Mr. George S. Forman, Palace Hotel, Rio de Janeiro, Brazil, which 
letter I will offer as " Exhibit No. 673." 

(The letter referred to w^as marked " Exhibit No. 673 " and is in- 
cluded in the appendix on p. 1872.) 

Senator Bone. Who is Mr. Forman? 

Mr. Jonas. He is a representative of the Colt Patent Firearms Co. 

Senator Bone. You are thanking him for some letter that he has 
written under date of March 29, and you say following that — 

I am back with Winchester on a commission basis, and at the same time I 
am allowed to work the various i-ainbows we have here in New York on Gov- 
ernment business. 

What are these Government contracts that you referred to as 
" rainbow business " ? 

Mr. Jonas. When I first started to try to get business in that line, 
we heard a lot of rumors — different people coming around with 
crazy inquiries for tremendous quantities of guns and ammunition 
and bombs, that never materialized. I was not doing anything at 
all, hardly, in the line until business actually developed without my 
instigation. 



1716 MUNITIONS INDUSTRY 

Senator Bone. You say in this letter — 

I am glad to hear that the foreigners now don't think all of us millionaires 
and will probably be a little more sympathetic in the future. Jealousy always 
creates hatred, and this depression might make them a little more considerate 
in the future. 

You are referring, I take it, to what you thought was some atti- 
tude of jealousy on their part? 

Mr. Jonas. On the part of the foreigners. During the big days 
they all thought that every American was a millionaire. 

Senator Bone. Your subagents, whom you appoint in these Latin- 
American countries, confine themselves to the lines that you handle, 
or do they handle other lines, too? 

Mr. Jonas. They all have different lines; maybe 100 different 
lines. 

Senator Bone. Under date of November 27, 1933, there is a letter 
from Young to Mr. Rich, which I offer as " Exhibit No. 674." 

(The letter referred to was marked " Exhibit No. 674" and is in- 
cluded in the appendix on p. 1873.) 

Senator Bone. In this letter you tell Mr. Rich as follows : 

Please proceed to appoint du Pon't agent in Peru as our agent on a 15- 
percent basis and quote him on all of those bombs. Tell him we will give him 
a 90-day trial period, unless we are forced to deal direct with the Government, 
which we prefer not to do. 

I am also writing you tomorrow on a similar set-up in Ecuador. 

Who was the du Pont agent in Peru ? 

Mr. Young. Mr. De Rossi. 

Senator Bone. De Rossi ? 

Mr. Young. Yes. 

Senator Bone. Would this be another case of one of the sub- 
agents that Mr. Jonas has told us about? 

Mr. Young. That is right. 

Senator Bone. And when that agent was appointed there, he 
would work under Mr. Jonas ? 

Mr. Young. Yes, sir. 

Mr. Jonas. That does not mean that I got that difference in the 
commission. 

Senator Bone. Were these du Ponts suggesting suitable people to 
you for work as agents in South America ? 

Mr. Young. I should not like to put it that way. Mr. N. E. Bates 
is a personal friend of mine, and he wrote me saying that he thought 
this man would make a good agent. 

Senator Bone. That is the man known as "Nick"" Bates? 

Mr. Young. Yes. 

Senator Bone. And Colonel Casey, of the du Pont Co., has also 
written you? 

Mr. Young. Yes, sir. 

Senator Bone. He is a friend of yours, I understand ? 

Mr. Young. Yes, sir. 

Senator Bone. They had been pleased to make some suggestions 
to you as to desirable men whom you might retain in South America 
as your local representatives? 
Mr. Young. Yes. sir. 



MUNITIONS INDUSTKY 1717 

Senator Bone. Did you have reason to believe that those repre- 
sentations were based on knowledge that the du Pont people had 
of the integrity and the ability of those people ? 

Mr. Young. I think so. Mr. De Rossi seems to represent a num- 
ber of leading firms. These are all brokers down there who deal in 
a certain class of business. 

Senator Bone. Did you attempt to be careful and to exercise 
judgment in the selection of your representatives there ? 

Mr. Young. We tried very hard to be careful. 

Senator Bone. In a letter dated January 9, 1934, early this year, 
you are writing Mr. Jonas in Argentina. I offer this letter as 
^' Exhibit No. G7r)." 

(The letter referred to Avas marked " Exhibit No. 675 " and is in- 
cluded in the appendix on p. 1873.) 

Senator Bone. You say in part : 

Nick Bates returned Saturday from his trip. 

That is the Mr. Bates who is the du Pont representative? 

He recommended to us previously ttie assignment of Ernesto de Rossi, Lima, 
Peru ; Sr. Don Francisco Sefzig, Guayaquil, Ecuador. 

We followed his recommendations and are getting some very active work 
from these two companies. 

Were those companies in Ecuador and Peru that you were refer- 
ring to or were you referring to du Pont? 
Mr. Young. I think that should read : 

■' These two countries." 

Senator Bone. Instead of " companies " it should be " countries " ? 
Mr. Young. Yes. 
Senator Bone (reading) : 

We hope to close a $120,000 order out of Peru in the next three or four 

weeks. 

What would that have been on? 

Mr. Young. On bombs. 

Senator Bone. For military purposes? 

Mr. Young. Yes, sir. 

Senator Bone. That is, not gas bombs ? 

Mr. Young. That is right. 

Senator Bone (reading) : 

De Rossi certainly seems to have the inside, as he has given us all the infor- 
mation necessary to know where we stand. 

Then down below you say : 

Tliis morning I spent practically an hour on the long distance, working on a 
$65,000 order for Bolivia. It looks as though we are going to close the order 
today or tomorrow. It is a matter of credit now, since our friend, Metcalf, 
has again succeeded in nicking us for $1,500, * * *. 

What was that transaction ? 

Mr. Young. That was Metcalf buying for W. R. Grace & Co., 
who buy at a net price and required us to reduce our price to that 
extent. 

Senator Bone. Let this side rest for a moment and I will ask about 
W. R. Grace & Co. That is a New York corporation, is it not ? 

Mr. Young. Yes. sir. 



1718 MUNITIONS INDUSTRY 

Senator Bone. Quoting now from another letter dated February 
23, 19;i4, written by N. E. Bates, Jr., to Mr. Young, I will offer this 
letter as " ExhibitNo. 676." 

(The letter referred to was marked "Exhibit No. 676" and is in 
eluded in the appendix on p. 1874.) 

Senator Bone. This is from Wilmington, Del., to you. He speaks 
of being on friendly terms with parties in South America. He says : 

* * * the experts are favoring, for one reason or the other, certain manu- 
facturers and discrediting the products of others. Triana * * * 

Who is Triana ? 

Mr. Young. I do not know, sir. 

Senator Bone. He says : 

I am on friendly terms with Dr. Triana. 

He also says later on — 

I am on friendly terms with Colonel Boy. 

Who is he? 

Mr. Young. I do not know. 

Senator Bone. And this letter says : 

I hope to he able to interest him a little more in the samples of bombs 
eventually sent by your company. 

Now, who is Stuart Hosie? 

Mr. Young. Stuart Hosie is just what Mr. Bates described here — 
he was appointed to act as their agent in Colombia, but, as I recall it, 
he was not appointed by us. 

Senator Bone. He was a du Pont agent? 

Mr. Young. He was a du Pont agent. 

Senator Bone. Concerning him Mr. Bates has this to say : 

He is extremely well connected in government circles and his reputation 
in B;;gota is of the highest. 

Do you know what that connection was? 

Mr. Young. No ; I do not. 

Senator Bone. Again, on February 24, 1934, you wrote a letter to 
Mr. Bates, which I offer as " Exhibit No. 677." 

(The letter referred to was marked "Exhibit No. 677" and is 
included in the appendix on p. 1874.) 

Senator Bone. In this letter you acknowledged receipt of the let- 
ter which we have just been referring to, relative to Stuart Hosie and 
then you say : 

* * * I am now recommending to our export office that they appoint Mr. 
Ilosie as our exclusive agent in Colombia. 

This gives us rather a solid block of du Pont- a la-Federal agents in Peru, 
Ecuador, and Colombia. All we have to do now is to get the business. 

That would indicate, perhaps, if not an alliance, a close friendly 
association with the du Pont set-up in South America? Is that the 
custom ? 

Mr. Young. Yes; I think you will find that is normal in any class 
of business ; we were buying from the du Ponts and were on friendly 
personal relations, on terms of friendship with them. 

Senator Bone. That is right; you were buying powder from them 
for your bombs, were you not? 

Mr. Young. Yes, sir. 



MUNITIONS INDUSTRY 1719 

Senator Boke. Did any of the airplane companies in South 
A^merica represent you either directly or indirectly? 

Mr. Young. At one time or another they did. 

Senator Bone. Which ones? 

Mr. Young. Both the United and the Curtiss-Wright sold for us 
at different times. 

Senator Bone. In a letter dated July 1, 1931 — this goes back 
some time — you write to Mr. Jonas : 

Cdnfirming aj:reenieiit reached in our office today, pertaining to business 
received tlirou^di tiie Curtiss-Wriglit Export Co., and through the United Air- 
craft Exports Co.. this is to be advised you that we hereby assign these cus- 
tomers to you for sales supervision, * * * 

So Mr. Jonas was to take over that work of supervisiong those 
sales actively? 

* * * with the understanding that in territory outside of that which is 
now covered in ynur contract of this same date, and on business on which they 
are op -rating on a :iO-percent b.iss you will receive a .^)-percent additional 
((Verriding commission as your remuiieration, except on smokeless screen equip- 
ment, on wliicii yi»u will receive. a commission of T'/j percent; the commission 
being payable on our present standard products at our present list prices. 

I offer this letter as " Exhibit No. 678." 

(The letter referred to was marked "Exhibit No. 678" and is 
included in the appendix on p. 1875.) 

The Chairman. Is there y)ietty general use made of the machinery 
and the sales organizations that other American manufacturers have 
in those South American countries? Do you all make use of it more 
or less? 

Mr. Jonas. What set-up. Senator? 

The Chairman. Well, Cnrtiss-Wright for example, have their 
representatives in South America. Do you work with them? 

Mr. Jonas. When I have the opportunity I do. 

The Chairman. And they work with you? 

Mr. Jonas. At present they are not working with us but formerly 
they did. 

The Chairman. United Aircraft? 

Mr. Jonas. United Aircraft have not worked with us for quite 
some time. They did for a while. 

The Chairman. They did for a while? 

Mr. Jonas. Yes. 

The Chairman. What other Amer'can companies have you 
worked with down there in the matter of sales? 

Mr. Jonas. It was principally the aircraft companies. 

The Chairman. Principally the aircraft companies? 

Mr. Jonas. Yes. sir; I mean for the Federal Laboratories line. 

Senator Bone. Who is Luis Aubry? 

Mr. Jonas. He is a Peruvian, sir. 

Senator Bone. Connected with the navy, was he not? 

Mr. Jonas. He was connected with the navy; yes. 

Senator Bone. Commander in the Peruvian Navy? 

Mr. Jonas. Yes. 

Senator Bone. He also had some tie-in with the Electric Boat Co. 
of New York? 

83876— 35— PT 7 8 



1720 MUNITIONS INDUSTRY 

Mr. Jonas. That I do not know. I think there was some tie-up 
on that. 

Senator Bone. Was he not their Peruvian representative ? 

Mr. Jonas. I have met him only once, so I do not know much 
about the details of that. I have never done any business with him. 

Senator Bone. On January 5, 1933, you wrote him a letter, which 
I offer as " Exhibit No. 679." 

(The letter referred to was marked " Exhibit No. 679 " and is in- 
cluded in the appendix on p. 1875.) 

Senator Bone. In this letter you were outlining the type of goods 
that the Federal Laboratories were selling in South America, and 
you say : 

We are in a position to supply you with tlie very latest design of airplane 
bombs, both demolition and fragmentation types, such as are now used by the 
Unit<'d States Government. 

Was that true? 

Mr. Jonas. That is what I understood from the Federal Labora- 
tories, that I could use that statement. 

Senator Bone. You were authorized tO say to Mr. Aubry that you 
could supply Peru with the same type of bombs that the United 
States Government was using. 

Our fragmentation bombs are of the very latest ring type and we recommend 
the 25-pound size. 

Why is that the most desirable size? 

Mr. Young. It is the most efficient size. 

Senator Bone. What do you mean by the most efficient ? 

Mr. ifouNG. To get the best effect for the amount of weight that 
the plane has to carry. You get almost the same effect from a 25- 
pound bomb, I am told, as you could from a 50-pound bomb. 

Senator Bone. By that you mean in the destruction of life? 

Mr. Young. You can put it that way ; in the spreading of missiles. 

Senator Bone. Fragmentation bombs are not used to demolish 
buildings. They are used to destroy life, are they not ? 

Mr. Young. That is right. 

Senator Bone (reading) : 

We manufacture these bombs in 25-lb., 50-lb., 100-lb., and 120-lb. sizes. We 
also manufacture 50O-lb. and 1.100-lb. sizes. The most popular types used, how- 
ever, are the 25-lb., 50-lb., and 120-lb. 

We have recently developed an incendiary bomb, * * * 

Was that developed in your laboratories? 
Mr. Young. Yes, sir. 

Senator Bone. Do you have a research division working out details 
of that kind? 

Mr. Young. Yes; we do. 
Senator Bone (reading) : 

* * * which should be of great value to your country. The bomb shell 
weighs only sixteen pounds and carries a chaige of thirty-four pounds of 
fagots * * * 

What are those? 

Mr. Young. That is a little fagot — fagot is the proper name of it. 

Senator Bone. Is it made of wood? 

Mr. Young. No; it is made out of cloth and other material. It is 
burning when it leaves the bomb and continues to burn for about 
10 miiuites. 



MUNITIONS INDUSTRY 172i 

Senator Bone (reading) : 

* * * giving a total weight of fifty pounds, and wliicli are thrown from 
fifty to one hundred feet in a radius from the bomb wlien it explodes. As these 
fagots are soaked in a gasoline and fuel-oil formula they continue to burn for 
at least ten minutes, setting fire to anything that is combustible with which they 
come in contact. We supply you with the formula for loading these bombs and 
the material can be furnished from your own natural resources in your country 
at a very low cost. 

The price of these bombs in one thousand lots, loaded with fagots, but not 
with the fuel, is $16.00 each. Your army will find this one of the most effective 
bombs they could possibly use and also the least expensive. 

We would like to call your attention to the great advantage in use of gases, 
whether the tear gas or the sickening gas. The tear gas will drive men out of a 
fortress or a barricade. It is persistent and remains effective in closed quar- 
ters for days. The effects last for ten or fifteen minutes after entering clear air. 
It forces the enemy to expose himself or to wear a gas mask. 

The sickening gas will incapacitate a person who comes in contact with it 
for a period of six or eight hours. It causes severe vomiting, headaches, and 
weakness ; but does not leave any permanent after effects. It is a marvelous 
gas to use before effecting a capture. Airplane bombs and hand grenades 
loaded with these chemicals can be shipped without the difiiculty experienced 
with high-explosive bombs. The price on the chemical bombs is shown an the 
attached list. 

The Chaikman. How are these commodities shipped? 

Mr. Young. The Department of Commerce has the regulations set 
up for shipping those, for packing, providing a certain type of pack- 
ing to be used. Some are shipped by express and some by freight. 

The Chairman. In ocean shipments, for example, are they shipped 
on passenger vessels? 

Mr. Young. No; there is a regulation that any explosive cannot 
enter a port. A boat carrying a load of explosives, if it is entering 
a port, must unload the explosives on a lighter and leave them out 
in the harbor before it goes into a port. On the tear gas, I do not 
believe that is necessary. 

The Chairman. Is there any regulation against their being shipped 
on board a passenger vessel ? 

Mr. Young. Yes ; there is. 

The Chairman. They cannot be shipped on a passenger vessel? 

Mr. Young. That is the explosives. The tear gas is allowed to 
be shipped on passenger vessels and passenger trains. 

The Chairman. How about an incendiary bomb? 

Mr. Young. The incendiary bombs are to be shipped unloaded and 
they go purely as metal parts. 

The Chairman. They are loaded at the place where they are to be 
used ? 

Mr. Young. Yes, sir. 

The Chairman. How about the material for loading them? 

Mr. Young. They had that down in Peru. 

The Chairman. Have they had it everywhere else where you have 
shipped those bombs? 

Mr. Young. The material for loading, if they do not have it where 
they are going to use the equipment, it is shipped in steel drums, the 
same as the Department of Commerce have set up for shipping 
gasoline or oils. 

The Chairman. Is there any prohibition against the shipment of 
those steel drums on a passenger liner? 

Mr. Young. I do not know. 



1722 MUNITIONS INDUSTRY 

The Chairman. Do you know whether any of your material has 
been shipped on passenger liners? 

Mr. Young. I do not know that. The steamship companies are 
very careful in that, and offhand I would say only freight liners 
would carry that equipment. 

Senator Eone. Under date of March 11, 1932, Raoul Leon was 
writing you from Argentina, and I offer this letter as an exhibit. 

(The letter referred to was marked " Exhibit No. 680 " and ap- 
pears in the appendix on p. 1876.) 

Senator Bone. In this letter, " Exhibit No. 680 ", Mr. Leon says : 

It is a long time since I have written you, but the fact of the matter is that 
there has been nothing to write about. 

Since the presidential decree which made it unlawful to import tear gas into 
the Argentine, the Federal Laboratories account has been an uphill game with 
us% because we could not afford to let the thing die out, and as a conseiiuence 
kept right after all the prospects that we have and have had, knowing full 
well that there would be no immediate results forthcoming, nor would it be 
possible to make sales until such time as the decree above referred to was either 
amended or abolished. 

Was there a decree down there excluding tear gas ? 

Mr. Jonas. It must have been when he wrote me that. 

Senator Bone. He says it would be impossible for him to make 
sales until it was either amended or abolished. 

Mr. Young. As I recall, there was an attempt made on the part 
of Germany to fill that part of the country with a tear-gas product, 
and it was necessary to put up some legislation to prevent anyone 
from bringing it into the country. Our sales down there were en- 
tirely with the divisions of the Government, and it is still in that 
manner. 

Senator Bone. Then Mr. Leon proceeds in this letter as follows: 

Due to the shut-door attitude, as regards the impoi'tance of gas or gas guns, 
it is impossible even at this time to even import samples ; and inasmuch as I 
have been obliged to return the riot gun to the telephone company, which they 
so kindly loaned me, and which I have used for about six months, tlie only 
demonstrating outfit that I have is one pencil and one billy, plus two or three 
hand grenades, and this is all. 

What kind of a demonstrating outfit would a pencil be? 

Mr. Young. It is a little device about the size of a fountain pen 
we used to make that would shoot tear gas. 

Senator Bone. That is a little pocket tear-gas gun? 

Mr. Young. Yes, sir. 

Senator Bone. That shoots a cartridge and shoots gas into one's 
face? 

Mr. Young. Yes. 

Senator Bone. It has an almost asphyxiating effect, doesn't it? 

Mr. Jonas. No; it does not have an asphyxiating effect at all. If 
I would shoot a gun in your direction, you would get the effect of it. 

Senator Bone. It would blind me? 

Mr. Jonas. It would not blind you, but you probably would not be 
able to see for 10 minutes. 

Senator Bone. Now, what about the billy? 

Mr. Young. The billy is a policeman's weapon which performs the 
dual service of a blackjnck and a tear-gas gun at the same time. It 
has a cartridge inside of it which shoots gas. 



MUNITIONS INDUSTEY 1723 

Senator Bone. Then Mr. Leon goes on to say : 

Might I suggest that you find some way of handing some friend or acquaint- 
ance, or steward or purser of some steamer, two or three pocket-pencil gmis, 
with instructions to deliver them to me. This is an easy matter, as they could 
carry them in their pocket and no one would know the difference. 

The Chairman. Let us get this straight. It was illegal to ship 
those pencils in there, wasn't it ? 

Senator Bone. By presidential decree you said. 

Mr. Young. We had no equipment down there at the time. 

The Chairman. Yes; but this is an invitation to smuggle them in. 
I know this is in the nature of a sample, but the request is to smuggle 
it in. 

Mr. Young. May I read this more carefully? 

Senator Bone. Yes; certainly. You will note he says this is an 
easy matter, as they could carry them in their pocket and no one 
would know the difference. Then he proceeds to say : 

The riot gun I realize is more difficult, but still it is always possible ; and it 
occurs to me that this could be done by separating the stock from the barrel by 
taking out the screw and it could be delivered to me in two pieces. 

Mr. Jonas. I don't think this was done, Senator Nye. 

The Chairman. I am afraid you will discover in a few minutes 
that it Mas done. 

Mr. Jonas. My memory fails me, then, or I would not have made 
that statement. 

Senator Bone. This is coming from the agent in whom Mr. Jonas 
had every confidence, a man who had great ability and integrity, and 
I read further from his letter : 

I am sending you this letter by air mail as I am in a hurry to get the 
pencils and the riot guns. You have many acquaintances in the steamship 
business and I am sure you will find someone who would be willing to carry 
same and place it in my hands. 

Mr. Young. It is rather interesting to know, Senator, there have 
been no shipments into that country outside of a sample, as you indi- 
cate has been done here, which I loiow nothing of, except to police 
departments, and I think the condition Mr. Leon found himself in 
was Avithout any sample whatever to demonstrate to the police 
department. 

Senator Bone. Now, let us see what Mr. Jonas did. On March 22, 
1932, Mr. Jonas replied to Mr. Leon, and this letter I offer as an 
exhibit. 

(The letter referred to was marked " Exhibit No. 681 " and is 
included in the appendix on p. 1877.) 

Senator Bone. In this letter, " Exhibit No. 681 ", Mr. Jonas says : 

I was quite surprised to learn that tear gas was embargoed in the Argentine. 
This was the first news that I have had to this effect. I sincerely hope that 
you will be able to have this i-uling abolished and that shortly we will be able to 
do some business. 

Do you know whether that ruling was abolished ? 

Mr. Jonas. It evidently was. 

Senator Bone. He was evidently successful, then? 

Mr. Jonas. I am not saying he did it, but it Avas abolished. 



1724 MUNITTOlSrS IXDUSTRY 

Senator Bone. Reading further from your letter, I find the fol- 
lowing: 

I have written the factory to send me the samples you requested, and at the 
first opportunity I will deliver them to some purser on the Munson Line, 
requesting him to deliver it to you. 

Did you deliver them to some purser on the Munson Line? 

Mr. Jonas. If you have the information to that effect. I must have. 

Senator Bone. You did not want to admit it only aftei' we indi- 
cated it had been done. 

Mr. Jonas, To be perfectly frank, I did not recall .the incident; 
honestly, I did not. This was in 1932. 

Mr. Young. Senator, I believe this is like violating some of our 
traffic laws. The intent of the decree originally was to stop the im- 
portation of a flow of tear gas throughout the country in times of 
unrest, and not probably to go to that fine extent. We all violate 
traffic laws and the crime seems to be in getting caught. In this 
case there was no actual violation of the desire of the Government to 
keep other gas from coming in. 

The Chairman. Then why would it not have been the simple mat- 
ter to ask the Government for permission to export these samples 
for that purpose ? 

Mr. Young. That would take a long routine job, and he was in a 
hurry to get these. 

The Chairman. It was quicker to violate the law and get results 
than any other way? 

Senator Bone. Now, let us follow it up and see what happened 
about the gas. In May 1932, Mr. Jonas, you addressed a letter to 
your friend Mr. Leon, which I offer as an exhibit. 

(The letter referred to was marked " Exhibit No. 682 " and is 
included in the appendix on p. 1877.) 

Senator Bone. In the first paragraph of this letter you say : 

Last Saturday I sent by Mr. Blake, chief officer of the Soutliern Cross, 1 riot 
gun, 2 long-range cartridges, and 2 short-range cartridges. Please meet him at 
the steajner and see what you can do to take it off. 

Was the Southern Cross one of the Munson Line ships ? 

Mr. Jonas. Yes ; and I remember the incident now. 

Senator Bone. In that paragraph you are telling him plainly to 
slip it by the barriers in Argentina. 

Mr. Jonas. Unless he could get a police officer to come on board 
and get it for him. He could not take that along without a permit 
from the officer. 

Senator Bone. You did not say that, and you Just said you were 
surprised to hear about this, and that you didn't know about it. 

Mr. Jonas. As a matter of fact, they use tear gas on the Southe^m 
Cross to keep away stowaways, not this particular gas, but they 
use tear gas. 

Senator Bone. On May 20, 1932, Mr. Leon gave some further light 
on this subject in a letter written by him to you on that date, which 
I offer as an exhibit. 

(The letter referred to was marked " Exhibit No. 683 " and is 
included in the appendix on p. 1878.) 



MUNITION'S INDUSTRY 1725 

Senator Bone. In this letter Mr. Leon says : 

Further to your letter of May 2, I have today been to the Southern Croas, 
have seen ]\Ir. Blake, and have takeia possession of the riot gun and two each 
long- and short-range cartridges. 

There is no reference to the police there. 

The Chairman. Maybe Mr. Leon was a police ojQBcer. 

Mr, Young. No; he was our agent. 

Senator Bone. The letter reads further: 

I assume you have also taken possession of the thi*ee Protecto guns and that 
you are sending them to me by some other source. 

What does he mean by that? 

Mr. Jonas. Some other party, I assume. 

Senator Bone. What are the Protecto guns? 

Mr. Young. That is our fountain-pen gun. 

Senator Bone. Did those go in in the same fashion? 

Mr. Jonas. Evidently. 

The Chairman. Mr. Young, do you feel that there is comparative 
safety in shipping such munitions as you deal in with South 
America, upon vessels, and that there is not much chance of fire or 
explosion by reason of it? 

Mr. Young. Yes ; that is not a matter of opinion, Senator. Those 
products have been thoroughly tested by the Bureau of Explosives. 
Perhaps the best example of that would be the accident that occurred 
last week when a plane dropped and cracked up going to Rhode 
Island, which has been mentioned previously. 

The Chairman. There was no explosion? 

Mr. Young. There was no explosion, and nothing happened except 
the product was pretty well destroyed. 

The Chairman. Of course, there wasn't any TNT or anything 
like that in the shipment. 

Mr. Young. No; all TNT shipments go only in freight boats. 

The Chairman. Isn't TNT shipped in passenger vessels? 

Mr. Young. Not to my knowledge. 

The Chairman. You have no recollection of any shipments in 
passenger vessels? 

Mr. Young. I am not sure there have not been. 

Senator Bone. Under date of September 15, 1932, you were writ- 
ing Mr. Metcalf, manager of Grace & Co., and your letter I offer 
as an exhibit. 

(The letter referred to was marked as " Exhibit No. 684 " and is 
included in the appendix on p. 1878.) 

The Chairman. Who is this Grace & Co. ? 

Mr. Young. They are well-known shippers. 

The Chairman. On steamship lines? 

Mr. Young. Yes, sir. 

Senator Bone. You say in this letter, " Exhibit No. 684 " : 

I hesitate to comment on the availaliility of boats to carry this cargo, since 
that is your business, but it seems to me that a small freight boat could be 
chartered to take a cargo of this size. We understand that shipping regulations 
prohibit the carrying of these bombs on boats carrying passengers. Carrying 
of TNT bombs, however, should be no greater hazard than carrying dynamite, 
as the detonators and firing mechanisms are not packed with the bombs. They 



1726 MUNITIONS INDUSTRY 

represent nothing more than metal container for the TNT ;ind, as ynu (1( uht- 
less know, it takes quite a violent shock to set off TNT. With the Interstate 
Commerce Commission allowing shipment of these across the country in l.c.l. 
lots, there should he no serious question of mixing this freight with other types 
of freight aboard a steamer. 

What result did you get ? 

Mr. Young. I got no result at all. 

Senator Bone. Is this stuff shipped on steamer? 

Mr. Young. It was shipped on a freight boat without passengers. 
I based my contention for that argument on the fact that you can 
drop a loaded TNT bomb from an elevation of 4,000 feet where it 
might hit on a rock or on concrete and it will not explode. 

The Chairman. What will happen to it if fire reaches it? 

Mr. Young. In that case, I could not answer. 

The Chairman. It is just heaven help anybody who happens to 
be on board the ship? 

Mr. Young. This was not shipped on a passenger vessel. We 
investigated and found the interstate commerce rulings were such 
that it was shipped on a freight steamer. 

The Chairman. TNT will explode if it is reached by fire? 

Mr. Young. I could not answer that, but I doubt it. TNT is 
exploded by a violent shock, and it takes a three step-up of explosives 
in order to get TNT to go off. 

The Chairman. Would lightning set it off? 

Mr. Young. I should say no. 

The Chairman. You get pretty violent shocks from lightning. 

Mr. Young. Again, I am only a layman and a business man, and 
on that question I am not informed. 

The Chairman. I am only inquiring. 

Mr. Young. I am trying to give you the best information I have, 
but I think there are experts who can answer your question very 
readily. 

Senator Bone. You personally think it would be safe to ship TNT 
without detonators on the average steamer? 

Mr. Young. Yes, sir. 

Senator Bone. Now, Mr. Jonas, Leon & Bonasogna are writing 
you again under date of August 22, 1932, which letter is offered in 
evidence. 

(The letter referred to was marked " Exhibit No. 685 " and is 
included in the appendix on p. 1879.) 

Senator Bone. In this letter Mr. Leon is suggesting that he does 
not agree with you that prospective business with Paraguay and 
Bolivia is dead, and he says trouble with these countries still exists 
and that only last night a new attack was made by Bolivia on Para- 
guay, and then he continues: 

Only yesterday we had an air-mail letter from our agent in Bolivia in answer 
to one of ours in which I offered to go to La Paz, in which lie advised that 
momentarily he did think it advisable for me to take the trip, not because 
there was no interest hut because there would still be some delay regarding a 
fixed decision, more for administrative reasons than for anything else. He 
further went on to say that he \v:is keeping right after the minister and that 
he expected to be able to give nie something shortly. 

That would indicate he Avas not Avaiting for orders but was actually 
soliciting the minister for munitions orders. That is right, isn't it? 
Mr. Jonas. It appears to be right. 



MUNITIONS INDUSTRY 1727 

Senator Bone, Mr. Leon then goes on further to say : 

Just as a matter of iuformation for you, and which I would ask you to keep 
confidential, our agent in La Paz is Mr. Jorge Saenz, of the firm of J. Saenz 
& Hijos. This name no douht will be familiar to you, as it treats of one of 
the strongest firms in Bolivia, Mr. Saenz, Sr., being president of the Bolivian 
Railroads, head of the alcohol monopoly, and an important banker. Mr. Saenz, 
Sr., you will recognize as an ex-Ambassador to Italy. It so happens that Saenz 
is a very distant relation of my wife, and he is a very close pal of mine; there- 
fore, anything he can do for me or in the protection of my interests, he is 
doing with great pleasure. It might further be interesting for you to know 
that Mr. Saenz, Jr., is the actual head of their business, Mr. Saenz, Sr., being 
in Europe. In other words, the idea that I am trying to put over is, that our 
agent in Bolivia is not just one of those manufacturers' representatives but a 
person of weight and responsibility, and with very close social relations with 
the President and Ministers of the Republic of Bolivia. As a matter of fact, 
he was asked by the President to form part of the Cabinet, which he refused on 
account of his business interests. 

I take it that you were thoroughly satisfied with your business con- 
nections in Bolivia, and that they were as strong as they could be in 
that country? 

Mr. Jonas. Nevertheless, he did not do any business; it was all 
done through W. R. Grace & Co. 

Senator Bone. Now, on April 4, 1932, there appears a letter from 
Mr. Young to Mr. Jonas, which I offer in evidence. 

(The letter referred to was marked " Exhibit No. 686 " and is 
included in the appendix on p. 1880.) 

Senator Bone. It appears from this letter, " Exhibit No. 686 ", 
that in your search for business you wrote Mr. Jonas concerning the 
Panama Canal, as follows: 

I notice in Sunday's Herald Tribune that they were expecting labor trouble 
at the Panama Canal. This pajier lists the Callahan Co. and Shirley, Peterson, 
and Gunther as contractors. This is for the new Madden Dam Alejuela. I 
think if tliese people are properly solicited they can be convinced of the im- 
portance of carrying tear gas on hand in Panama. I suggest you follow this 
through. 

Did you solicit them for tear gas? 

Mr. Jonas. I probably wrote them on the subject. 

The Chairman. Did you get any orders? 

Mr. Jonas. I do not recall whether we got any orders or not. 

Mr. Young. May I add this was not an attack against labor, it 
was directed against the resultant troubles that often comes when 
there is a dispute with labor, and down in that country it is far more 
terrible than it is up here. 

The Chairman. Mr. Young, is it a fact that you watch or have 
watched closely the papers noting where labor troubles are being 
experienced and then conclude that is a field and market for you, 
and you proceed to get into that market ? 

Mr. Young. No, it is not a fact; and that was merely incidental. 
We have no organized plan, and take no pains about watching the 
newspapers about those things. We frequently do notice it, and will 
call it to our agent's attention. 

Senator Bone. You have alluded frequently in your correspond- 
ence to labor disturbances around the United States and the desira- 
bility of using this gas to suppress labor disturbances. 

Mr. Young. That is correct. 



1728 MUNITIONS INDUSTRY 

Senator Bone. As a matter of fact this gas is to be used more to 
correct labor disturbances than in any other field ? 

Mr. Young. May I state one case ? 

Senator Bone. Yes. 

Mr. Young. In San Francisco where tear gas was used we had a 
labor strike of the longshoremen which seemed to be getting along 
fairly well, or at least there was no great trouble until this report 
came to me from the police department that the Communists' organi- 
zations got the longshoremen's union to reduce their fees to 50 cents 
per member; then immediately most of the Communists went into 
the longshoremen's union, although they knew nothing about long- 
shoremen's work, and then they called for a vote, and in a short 
time organized labor found themselves in the hands of the Commu- 
nists, and then we had an occasion where tear gas, according to the 
chief of police of San Francisco, saved a great number of people 
from being killed. 

Senator Bone. Is that the story you got? 

Mr. Young. That was the story I got. 

Senator Clark. Mr. Young, why should the police department of 
San Francisco be reporting to you about the longshoremen's strike? 

Mr. Young. As one of the suppliers of the gas, they were natu- 
rally reporting back to me what happened ; not officially or anything 
like that, but our man was there, and that Avas the statement made 
to him. 

The Chairman. How did he happen to be there ? 

Mr. Young. He was on the job, as you would expect him to be. 

The Chairman. Do you have representatives in all of the larger 
cities ? 

Mr. Young. We do, sir. 

The Chairman. One of their jobs is making sales when troubles do 
arise ? 

Mr. Young. Their job is making sales all of the time. 

The Chairman. Why was it necessary for you to advise Mr. Jonas 
of this situation in Panama ; wouldn't he have known of it, if you 
had not notified him ? 

Mr. Young. He might have. 

The Chairman. You state here in this letter of April 4 you noticed 
in Sunday's Herald-Tribune they were expecting labor trouble at 
the Panama Canal, and you said if this company that was having 
the labor trouble was properly solicited they might probably be con- 
vinced of the importance of carrying your tear gas there in Panama. 

Isn't that a pretty strong indication you do follow up closely 
wherever labor troubles do arise and, if you do not have representa- 
tives on the spot, you see that one gets there in a hurry ? 

Mr. Young. I think that is merely incidental. In major cases 
like we have had in Wisconsin and in Toledo we did follow them 
closely, but as to going on a campaign against labor, we do not do 
that. 

The Chairman. I was not charging that at all, but I was pointing 
out you were looking for a market such as labor trouble would 
create. 

Mr. Young. I might say that far more actively we do that as to 
bandits, where a bank is held up, and we then call on the neighbor- 



MUNITIONS INDUSTRY 1729 

in<; bank and find him in a good frame of mind to talk about pro- 
tection. Yet there are hundreds of banks held up, and we don't 
follow them all through. That was probably a Sunday paper I 
read at my home and saw the clipping and thought I would pass 
it on. 

The Chairman. Then, even bank robbers have a tendency to help 
some people? 

Mr. Young. Yes, sir. 

Senator Bone. Mr. W. A. Graves, chairman of the Railway Auto 
Supply Co., is chairman of your board, and that is a company that 
supplies undercover operators to be used in breaking strikes; is that 
true ? 

Mr. Young. I would rather Mr. Graves answer for himself; I am 
not familiar with his business. 

Senator Bone. Would you have any occasion to doubt the authen- 
ticity of that statement I read this morning? 

Mr. Young. I think it is a very narrow definition of his business. 

Senator Bone. They supply undercover men as strike breakers? 

Mr. Young. I know they do detective work. 

Senator Bone. They do detective work in the ranks of organized 
labor, of course, and naturally working for the employer they might 
want to discredit a strike, and there is no particular love lost in 
strikes, is there? Anybody working under cover as a secret-service 
man in a labor organization would not have any sympathy with the 
labor organization, that is most obvious. 

Mr. Young. I would not say that. 

Senator Bone. No ; of course you would not say it, no one would 
say it, yet a man on the board of a company doing that sort of work 
is on your board, and you want to tell us that your company has no 
object in finding out about strikes. 

Mr. Young. I might say we also have bankers on our board of 
directors. 

Senator Bone. I understand, and that is beside the point we are 
now inquiring about this labor angle. We will leave it in that 
fashion. 

Under date of April 4, 1932, Mr. Young, you were writing Mr. 
Jonas concerning Bogota, Colombia, and I offer that letter in 
evidence. 

(The letter referred to was marked "Exhibit No. 687" and is 
included in the appendix on p. 1880.) 

Senator Bone. You say in this letter : 

I notice Bogota. ColoiiibiM. is iiiidcr s])enal guard of twelve Imndred police 
operating as an army. 

Wliat was happening in Bogota to require 1,200 men on the streets 
operating as an army? 
Mr. Young. I do not recall. 
Senator Bone. Then you asked this question [reading] : 

What are we doing to put on an inteu.sive campaign to sell the Colombian 
Government and get them to put up some money. 

Who appropriated the $350,000 ? 

Mr. Young. I believe I am quoting the account there. 

Senator Bone. The new.spaper account? 

Mr. Young. Yes. 



1730 MUXITUOXS INDUSTRY 

The Chairman. This is another market that developed for you by 
reason of your watching the newspapers, wasn't it, Mr, Young ? 

Mr. Young. No; I would not say it developed by reason of that, 
Senator. We had been trying prior to that and at that time to sell the 
value of tear gas to the South American police departments for their 
use. 

The Chairman. But this little uprising down in Bogota meant a 
little additional salesmanship and the chance to sell? 

Mr. Young. It is the human thing for a man not to buy something 
until he needs it, then he wants it right away. 

The Chairman. Likewise it is a question of putting forth your 
best when the other fellow is under fire? 

Mr. Young. Yes, sir. 

Senator Bone. You are writing Mr. Jonas again on July 22, 1932, 
which letter is offered as an exhibit. 

(The letter referred to was marked "Exhibit No. 688" and is 
included in the appendix on p. 1881.) 

Senator Bone. That letter reads in part as follows : 

My Dear Frank : Replying to your letter of July 16th, relative to proposed 
trip to Latin America, as you know I have been studying this market veiy 
intensively, and I do not know a more opportune time than at present to cover 
this territory insofar as the actual need for equipment is concerned. 

You explain in the next paragraph what makes this an opportune 
time. You say [reading] : 

I believe these needs are so pertinent that financial arrangements can be 
made with the various countries. The present depression gives the necessnry 
cause or excuse to start a revolution, and the prospects of a revival of trade in 
the future is furnishing the incentive to those who are out of power to try to 
get into power through the medium of revolution. 

Then you continue in the last paragraph [reading] : 

Have you circularized your mailing list again? We sent you 100 copies of 
our circular on bullet-proof vests yesterday * * * 

Were you then dealing in bullet-proof vests ? 

Mr. Young. We still are. 

Senator Bone. Did the revolution or the revolutionary situation 
down there step-up or perk up the market for you ? 

Mr. Young. As you probably recall, sir, they attempted to kill the 
President of Peru. 

Senator Bone. That was the time, was it not, when there were a lot 
of scandals in Peru over Government financing, involving several 
huge bond issues? 

Mr. Young. I do not remember. 

Senator Bone. Do you remember, Mr. Jonas? 

Mr. Jonas. About that time. 

Senator Bone. You remember the Juan Leguia scandal? 

Mr. Jonas. Yes, sir; I remember that in the newspapers. 

Senator Bone. Another committee of the United States Senate 
went into that and revealed fully the phases dealing with the Peru- 
vian bond situation. 

Senator Bone. Now, Mr. Jonas, under date of April 18, 1932, you 
wrote a letter to the Winchester Repeating Arms Co., of New Haven, 
Conn., which will be appropriately marked. 

(The letter referred to was marked " Exhibit No. 689 " and is 
included in the appendix on p. 1881.) 



MUNITIONS INDUSTRY 1731 

Senator Bone. In that letter you say in part, Mr. Jonas [reading] : 

I am also working with Mr. Saraga, of 17 Battery Place — 

Who is he? 

Mr. Jonas. He is a broker who handles army equipment. 
Senator Bone. Handles arms equipment? 

Mr. Jonas. Belts and anything along those lines he can get hold of. 
Senator Bone. Do you know what he was referring to in this par- 
ticular case? 
Mr. Jonas. I have not the slightest idea, sir. 
Senator Bone, I will continue reading — 

who has requested iiie to quote liim on 200,000 30/40 caliber cartridges and 
100,000 351 cartridges. I\Ir. Saraga tells me that these goods are for export, 
but would not give m** destination. 

You do not know where those were going, in cEise that deal was 
consummated ? 

Mr. Jonas. No, sir. 

Senator Bone. On the 26th of June 1933, shortly after that letter, 
you wrote Mr. Young this letter, bearing date, as I say, of June 26, 
1933. 

(The letter referred to was marked " Exhibit No. 690 " and is 
included in the appendix on p. 1881.) 

Senator Bone. In that letter to Mr. Young you state in part as 
follows [reading] : 

On the 12 magazines for Thompson guns which Saraga wants to buy, I can 
very easily say that these are to be delivered to a passenger going to Buenos 
Aires. 

Who was that passenger? Was there a prohibition against ma- 
chine guns going into the Argentine to private individuals? 

Mr. Jonas. Except for the Government; yes. 

Senator Bone. Except for the Government? 

Mr. Jonas. Yes, sir. 

Senator Bone. Now, you say at the bottom of that letter, writing 
to Mr. Young [reading] : 

I can see no harm in filling the order this way as it is not prohibited to 
handle magazines here in New York. 

You were not averse to making the deal in New York, although 
you knew they would have to be smuggled into the Argentine ? 

The Chairman. What relations have you had with Mr. Saraga? 

Mr. Jonas. We bought cartridge belts from him. Mr. Kich can 
tell you more than I can about it. 

Mr. Rich. We bought from him, as a broker, some cartridge belts 
and gun slings, which we had orders for and did not know where 
to get them, and he is well versed in sources of supply of that char- 
acter of material, and we bought through him. 

Senator Bone. You say to Mr. Young [reading] : 

If you are agreeable, you can ship them to me at my office and bill me for 
them. I will then collect from Saraga and remit. 

Under date of January 16, 1934, Mr. Young, you were quoting 
W. R. Grace & Co., of Hanover Square, New York, prices on 
incendiary chemical bombs. 

(The letter referred to was marked " Exhibit No. 691 " and is 
included in the appendix on p. 1882.) 



1732 MUNITIONS INDUSTRY 

Senator Bone. In that letter you say to the Grace Co. [reading] : 

Gentlemen : We wish to confii-m prices given you over tlie telephone this 
afternoon in connection with your inquiry for Chile — 

Was the Grace Co. buying munitions of war for Chile? 

Mr. Young. The Grace Co. represented us in Chile and Bolivia. 

Senator Bone. They were your representatives in Chile and 
Bolivia? 

Mr. Young. Yes, sir. 

Senator Bone. And Peru? 

Mr. Young. No; not in Peru. 

Senator Bone. You quoted one thousand 30-pound smoke bombs, 
loaded; two thousand 59-pound incendiary, loaded with fire (fagots 
but not fuel) ; and five hundred 30-pound chemical bombs (burning 
type C. H. & I. M.) 

What does that mean? 

Mr. Young. Senator, is it in order that those prices be not quoted 
in the record? 

Senator Bone. I think it is perfectly all right to delete prices. 
There is no harm in deleting the prices.^ 

The letter goes on to state : 

The nbove quotation is subject to a discount or commission of 20 percent. 
These prices are f.o.b. Pittsburgh. 

Now, under date of August 11 

The Chairman. Let us get the record very clear as to W. R. 
Grace & Co. That is the Grace Steamship Line? 

Mr. Young. No. 

The Chairman. Do they owm the Grace Steamship Line? 

Mr. Young. I think there is an affiliation there. They are all 
housed in the same building. This is a merchandising company, I 
believe. 

The Chairman. They own the Grace National Bank, of course? 

Mr. Young. I think it is the same affiliates. 

The Chairman. Or are affiliated with its ownership. "VVhy 
would thei^e people be interested in obtaining quotations on smoke 
and incendiary bombs? 

Mr. Young. W. R. Grace & Co. are merchants who do business 
throughout Latin America and found as their customer these gov- 
ernments, interested in the purchase of this equipment. 

The Chairman. You have done a very fine business with them, 
have you not? 

Mr. Young. We have considered them very good agents. 

The Chairman. When did they become particularly active as cus- 
tomei's of yours? 

Mr. Young. They became most active through Bolivia — the sale 
of equipment to Bolivia. 

The Chairman. You mean within the last year or two? 

Mr. Young. Within the last 2 years. 

Senator Bone. What are the Neill Federal Laboratories, or is this 
a wire signed by Mr. Neill? 

Mr. Young. That would be signed by Mr. Neill, the correspondent. 



1 The nricos appeariufi in " Exhibit No. 691 '' wore deleted by permission of Senator 
Bone. (See appendix, p. 1882.) 



MUNITIONS INDUSTRY 1733 

Senator Bone. I am referrino; to a Postal telegram under date of 
August 11, 1982, addressed to Mr. Frank Jonas, in care of Export 
Consolidated Companies, New York, N. Y., which reads : 

See immediately J. B. Rios, of W. R. Grace Co., Hanover Square, New York, 
about aerial bombs and liand grenades. Refer to their inquiry of tentb sent to 

this office. 

Neilx. Federal Laboratories. 

That was evidently in relation to some inquiry which they had 
made on that type of equipment. 

(The telegram referred to was marked " Exhibit No. 692 " and 
appears in full in the text.) 

The Chairman. You say that they were your agents? 

Mr. Young. Yes, sir ; we gave them an exclusive right to sell our 
product in these countries. 

Senator Bone. What was your understanding with W. R. Grace 
& Co. with respect to commissions on this war stuff ? 

Mr. Young. Briefly, it was explained in that letter. We gave 
them 20-percent commission. 

Senator Bone. In a letter dated September 26, 1932, addressed to 
Mr. H. E. Metcalf, manager W. R. Grace & Co., Hanover Square, 
New York, N.Y., from the Federal Laboratories, Inc., there appears 
one line which I want to place in the record. The entire letter will 
be appropriately numbered. 

(The letter referred to was marked "Exhibit No. 693" and is 
included in the appendix on p. 1882.) 

Senator Bone. The line of that exhibit to which I wish to direct 
your attention is as follows: 

It is understood tliat you and Mr. Jonas have arranged between you as to his 
position in the picture. 

Had Mr. Jonas arranged the commissions which were to be paid 
to the Grace people for sales which they might consummate? 

Mr. Young. It came in under his direction. 

Senator Bone. There is an ink notation on the bottom of the letter, 
which states : 

It is understood that you get 5 percent on the list 

initialed J.W.Y. 

I presume that is your memorandum. 

Mr. Young. That bears out the previous statements. Mr. Metcalf 
does not get that, but Mr. Jonas gets the 5 percent. 

Senator Bone. Can you enlighten us any further as to your rela- 
tions with W. R. Grace & Co., other than you have already given us? 

Mr. Young. I think that covers it. 

Senator Bone. I call your attention to a letter dated October 14, 
1932, to your agents, Leon & Bonasegna, in Argentina, this letter 
being written by Mr. Jonas. I will ask that that be appropriately 
numbered as an exhibit. 

(The letter referred to was marked "Exhibit No. 694" and is 
included in the appendix on p. 1883.) 

Senator Bo?je. I would direct your further attention to a para- 
graph toward the bottom of the letter, which reads : 

The Bolivian Government has made purchases of army equipment through 
Grace & Co. and this morning the same company called up and asked for quot'i- 
tions on demolition bombs. * * * 



1734 MUNITIONS INDUSTRY 

I have quoted tlicm uu chemical bombs and they are forwarding these quota- 
tions. If we could sell some of these, we could make a .eoml profit, as there 
is only one other competitor in the States. 

That being, I take it, the Lake Erie concern? 

Mr. Jonas. Yes, sir. 

Senator Bone. I believe I understood you to say that Grace did 
not represent you in Peru. Is that correct ? 

Mr. Young. We had negotiations on that, but never turned it over 
to them finally. 

Senator Bone. I call your attention to a letter dated the 8th of 
August 1933, written by Mr. C. W. Rich, addressed to Leon & Bona- 
segna, in Buenos Aires. I will ask that that be appropriately 
numbered. 

(The letter referred to was marked " Exhibit No. 695 " and is 
included in the appendix on p. 1883.) 

Senator Bone. That letter reads, in part, as follows : 

Gentlemen : Thanks very much for your letter of July 26th, informing us in 
detail of your conversations with the police inspector in Buenos Aires and the 
Peruvian Ambassador. This cooperation, you may be sure, is very much appre- 
ciated, and we only regret that we are unable to authorize you actually to 
close any business that may be in the offing for Peru. \V. R. Grace & Company 
is representing us in Peru, and, of course, you will understand that this makes 
it impossible for us to sell through other channels. 

We informed W. R. Grace, however, of your activities with the Peruvian 
Minister in Buenos Aires, and they are following through strongly in Peru. 

Would that enlighten us any further? 

Mr. Young. That was a short period before De Rossi was ap- 
pointed. 

Senator Bone. What were the activities of Messrs. Leon & Bona- 
segna with the Peruvian Minister in Buenos Aires? Of what did 
their activities consist? 

You say : 

We informetl W. R. Grace, however, uf your activities with the Peruvian 

Minister in Buenos Aires * * *. 

Mr. Rich. Will you permit me to answer that ? 

Senator Bone. Yes, sir. 

Mr. Rich. The activities down there consisted, as I understood 
from them, that, I believe, the diplomatic officer from Peru requested 
their Ambassador to investigate the activities of the Buenos Aires 
police in the use of tear gas; and when they undertook to investigate 
its use and general efficiency, they called in Mr. Leon, who was the 
most expert in the use of gases, and the one who had successfully 
introduced it into the Argentine. 

Senator Bone. It was Leon & Bonasegna, then, who were able to 
introduce the use of this gas into the Argentine? 

Mr. Rich. I believe that is correct, 

Mr. Jonas. They were the people; yes, sir. 

Senator Bone. Mr. Young, have you a plant in Gibbstown, N.JJ 

Mr. Young. May I look at the reference? 

Senator Bone. Yes, sir. Here is a letter, dated September 6, 1933, 
addressed to W. R. Grace & Co., from the Federal Laboratories, 
where you are quoting on fragmentation and demolition bombs. I 
will offer that as an exhibit to be a]:)propriately numbered. 

(The letter referred to was marked " Exhibit No. 696 " and is 
included in the appendix on p. 1884.) 



MUNITIONS INDUSTRY 1735 

Senator Bone. In that letter you state, in part, as follows : 

I wish to confirm our telephone conversation of today. We can furnish at 
Gibbstown * * * on September 16th the following bombs, provided we re- 
ceive the order by noon September 7th. 

Mr. Young. That is a point for loading freight boats with TNT 
bombs. 

Senator Bone. Again, on October 2, 1933, Leon & Bonasegna wrote 
a letter to Mr. Jonas, which I will ask be marked' as an exhibit. 

(The letter referred to was marked '' Exhibit No. 697 " and is 
included in the appendix on p. 1884.) 

Senator Bone. In that letter they state, in part, as follows : 

Further to your recent letter regarding our releasing Chile, due to the fact 
that Grace & Co. are interested in working that territory, we do not feel 
that we would like to release this territory for the time being at least. 

So that evidently at that time Grace & Co. were working for you 
in Chile. 

Mr. Jonas. Neither of them have secured any business in Chile 
that I can recall. 

Senator Bone. What connection did anyone in the W. R. Grace & 
Co. firm have in Bolivia — that is, in an official way — this year? 

Mr. Young. This year? 

Senator Bone. Yes, sir. 

Mr. Young. Their agent was a})pointed as minister of defense for 
a period of about 3 months, I believe. 

Senator Bone. That is, the ao-ent of W. R. Grace & Co. in Bolivia 
was appointed minister of defense. Now, under date of April 26, 
1934, Mr. Rich, of your staff, is writing you relative to a conversation 
of the preceding clay concerning rumors that the xVmerican Arma- 
ment Co. had obtained " that big Bolivian order ", as he speaks of it. 

I will ask that that letter be appropriaUdv marked. 

(The letter referred to was marked "Exhibit No. 698" and is 
included in the appendix on p. 1885.) 

Senator Bone. Mr. Rich states : 

I sounded out Mr. Metcalf. of Grace & Company, and he cabled La Paz. He 
just called up, saying, "That he liad I'eceived a cable reply informing him that 
they did not expect any action to be taken until the Pre??-dent's return from 
the front." 

What front was that? 

Mr. Young. The battle front. 

Mr. Rich. The Chaco front. 

Senator Bone. The letter continues, in the last paragraph: 

Mr. Metcalf had The information, and while he does not want to say any- 
thing definite at this moment, nevertheless their general manager in La Paz 
is about to assume a very important position about May first, wliich will bring 
him immediately in touch with the President. No doubt we will hear more 
definitely about this in the near future. In the meanwhile, of course, you will 
keep this dark. 

Of course, you expected, through this Grace connection, to be right 
up close to the powers that be in Bolivia, and naturally you would? 

Mr. Young. No; on the contrary, Grace & Co. tried to keep that 
appointment from being made, for the position in which they put 
the agent, Mr. Tellez, he was unable to purchase from W. R. Grace, 
and during the period he was minister of defense Grace got no 
business and the American Armament got it. 

83876 — 35— rT 7 9 



1736 MUNITIONS IISTDUSTRY 

Senator Bone. Who haiidlos the shippinii- of munitions that are 
sold to or throui^h Grace ? 

Mr. Young. Grace. 

Senator Bone. Were they shipped on vessels of their OAvn line? 

Mr. YouNO. I do not know whose line they were shipped on. They 
take care of the shipment. 

Senator Bone. You have no doubt how they were shipped, have 
you ? 

Mr. Young. Yes ; they were shi])ped on re*»;ular freight boats. 

Senator Bone. Do those boats go through the Panama Canal? 

Mr. Young. That I do not know. 

Senator Bone. Do you know whether they were shipped on Ameri- 
can lines or foreign lines? 

Mr. Young. That I do not know. 

Senator Bone. What lines do you use in shipping stuff to South 
America, to the west coast? 

Mr. Young. Perhaps you can answer that, Mr. Rich. 

Mr. Rich. To the west coast? 

Senator Bone. Either coast. 

Mr. Rich. To the west coast I believe that the Grace line is 
the usual line to ship down there on. 

Senator Bone. What about to the east coast? 

Mr. Rich. The east coast ? We have not shipped any of those .ma- 
terials at all to the east coast, which I recall. 

Senator Bone. Here is a letter dated June 8, 1932, signed by Mr. 
Young as president and addressed to Mr. Frank Jonas, which I will 
ask be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 699 " and is in- 
included in the appendix on p. 1885.) 

Senator Bone. That letter reads, in part, as follows : 

Replying to your letter of June 7th, we are pleased to quote the Cuban Gov- 
ernment on the following equipment. 

And then there is a long quotation of different materials with com- 
missions running 10, 20, and up to 35 percent, 35 percent on long- 
range tear-gas cartridges and the like, and 20 percent on bombs and 
rifles. 

You state in this letter, under the postscript : 

Cuba has a price list of our equipment. It is safe to jump prices ten percent 
without gttting your customer in trouble. I am going to let you and your cus- 
touK r add your ton percent and wliere it is possible to do so we will cover you; 
where it isn't, I believe it will be necessary for you to work it out some other 
way. It would be so much better if we could discuss it than it is to write a 
letter before I know what we are up against on government prices. 

Is it safe to jump prices down there? 

Mr. Young. I think this is the same order which we discussed this 
morning with Demestre, or yesterday. 
Senator Bone. You say : 

Our firing mechanism is the propeller type 

That is on your incendiary bombs — 

simihir to that in use by the Government. 

You mean our Government? 

Mr. Young. Where is that referred to? 



MUNITIONS INDUSTRY 1737 

Senator Bone. That is in the last little paragraph before your 
signature. 

JSIr. Young. Yes ; that refers to our Government. 

Senator Bone. There is a reference here to a bomb called the 
" Bouncing Betty." What kind of a bomb is that ? 

Mr. Young. I am told tiiat that has not been released by our Gov- 
ernment and it is a secret war bomb. 

Senator Bone. So Uncle Sam is still hanging onto the " Bouncing 
Betty"? 

The Chairman. Do you know what private rights exist in connec- 
tion with that particular product? 

Mr. Young. The "Bouncing Betty"? 

The Chairman. Yes. Do you know what it is? 

Mr. Young. N^o ; I am not familiar with it. 

The Chairman. Are you prepared to produce it? 

Mr. Young. No, sir. We have been asked not to. 

The Chairman. That is not a product with which your company 
is at all familiar? ■ 

Mr. Young. No. 

The Chairman. It is nothing which you developed? 

Mr. Young. We were requested not to manufacture or sell the 
bomb. 

Senator Bone. Do you know how it is made? 

Mr. Young. I think the War Department will probably want to 
discuss that themselves. They have said it is confidential informa- 
tion. I stopped there. 

The Chairman. But it is not something which was perfected or 
discovered in your own laboratories? 

Mr. Young. Not that bomb ; no, sir. 

Senator Bone. Who is Byer & Co., of New York? Mr. Jonas, 
you can probably tell us about that. 

Mr. Jonas. A commission house, sir. 

Senator Bone. That is a commission house? 

Mr. Jonas. Yes, sir. 

Senator Bone. To whom do they sell? 

Mr. Jonas. They export all over the world, I guess. It is not on 
l^ombs alone. I have never had an inquiry before or since from 
them. 

Senator Bone. They sell to anv outfit in the world who wants to 
buy the stuff? 

Mr. Jonas. General merchandise. It is an inquiry which they 
had. and nothing ever came of it. 

Senator Bone. I am referring to a letter under date of January 
19, 1933, from you, Mr. Jonas, to Byer & Co., Inc., 120 Liberty Street, 
New York, N.Y., which I will ask be appropriately numbered. 

(The letter referred to was marked "Exhibit No. 700" and is 
included in the appendix on p. 1886.) 

Senator Bone. They asked you for quotations and prices on a lot 
of stuff, and you wrote this letter dated January 19, 1933, stating: 

Confirming our conversation with reference to quoting you on the following 
material. The quotations and deliveries I can make are as follows : 2,000 
Sprinjrfielil 30.06 Government rifles and bayonets, $24.50. 



1738 MUNITIONS INDUSTRY 

Do you have those in stock? 

Mr. Jonas. No, sir; I have not. Sedgley gave me a list of stuff 
which he had. 

Senator Bone, It would have been bought from Sedgley ? 

Mr. Jonas. Yes, sir. 

Senator Bone. Where does he get such a vast number of rifles? 

Mr. Jonas. I do not know, sir, but I think he buys these from 
the Government at Government sales. 

Senator Bone. Does the Government sell these rifles? 

Mr. Jonas. I presume they do. 

Senator Bone. He could not get Springfield rifles and bayonets 
from the Government unless the Government sold them, could he? 

Mr. Jonas. No, sir. 

Mr. Young. There were surplus sales of those rifles following the 
war, Senator. 

The Chairman. This might have been second-hand material. 

Mr. Jonas. Undoubtedly. 

Senator Bone. That letter further states : 

Deliveries can be made 100 a week. The terms requested on these rifles are 
25 percent with the order and the balance on an irrevocable letter of credit; 
payment against documents after each shipment. 

The prices on the 100 Thompson guns will be as follows : 

That is the Thompson submachine gun ? 

Mr. Jonas. That is the Thompson submachine gun; yes; sir. 

Senator Bone (continuing reading) : 

On the 21-A, $175 f.o.b. New York. 

On the 21-AC, with Cutts compensator, $200 each. 

That is a gun similar to the one we had the model of here ? 

Mr. Jonas. Yes, sir. 

Senator Bone (continuing reading) : 

If there is no agent in the country to which these goods will be shipped the 
discount will be approximately 15 percent on these prices. 

One million 150-grain United States Government 30.06 cartridges, $28 per M. 

Does the Government manufacture those? 

Mr. Jonas. No, sir; that is manufactured by Remington Arms or 
Winchester. 

Senator Bone (continuing reading) : 

Deliveries : 100,000 first week, 100,000 second week, 200,000 each week there- 
after until order is completed. In other words, delivery in six weeks. 

.45 caliber ammunition, $15 per M. Deliveries : 100,000 at once, 100,000 first 
week, 100,000 second week, 200,000 each week thereafter, making total delivery 
of a million in 5 weeks. 

Can you tell us, Mr. Jonas, or have you any idea, where this ship- 
ment might have been going had it ever been consummated ? 

Mr. Jonas. No deal which I know of was consummated. Just as 
I said before, Senator, this was one of the rainbows. 

Senator Bone. If they did not get this from one of these parties, 
the parties wanting the guns might have gotten them somewhere 
else? 

Mr. Jonas. They might have gotten them somewhere else. 

Senator Bone. Do you know Soley in England, Mr. Young? 

Mr. Young. All I know about Soley is Avhat I learned from this 
investigation. 



MUNITIONS INDUSTRY 1739 

Mr. Jonas. I know the man. 

Senator Bone. Has the San Salvador Government been buying 
munitions in recent months? 

Mr. Jonas. I do not think they bought any cartridges — yes, they 
bought some cartridges recently from the Remington Arms, a small 
shipment, but they bought a lot in Europe. 

Senator Bone. They have been buying bombs, too ? 

Mr. Jonas. Yes, sir ; they bought some bombs from us. It was 
about a year ago, I guess. 

Senator Bone. Under date of July 6, 1933, there is a letter from 
you, Mr. Jonas, to the Remington Arms Co., Bridgeport, Conn., 
enclosing an order from the Auto Ordnance Corporation. What 
outfit is that? 

Mr. Young. That is the Thompson Machine Gun Co. 

Senator Bone. That is the Thompson Machine Gun Co. These 
are for the police department. 

I will ask that that exhibit be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 701 " and is 
included in the appendix on p. 1887.) 

Senator Bone. That letter, in part, reads as follows : 

I have today received an order from Honduras for a quantity of bombs. 
This is being shipped by Baltic Shipping Co. This company are also agents for 
Dada-Dada, of San Salvador, who are doing a great deal of buying for the 
San Salvador Government and who have recently placed an order for $14,000 
net for bombs and have also placed an order with Curtiss-Wright for $56,000. 

Then the letter continues : 

They state that Dada-Dada have requested price on revolver and rifle ammu- 
nition and have asked me to quote. 

What was going on in San Salvador at that time ? 

Mr. Jonas. Nothing, except the regular army equipment. 

The Chairman. Who is Dada-Dada? 

Mr. Jonas. He is an agent for various manufacturers, Curtiss- 
Wright and Colt. 

Senator Bone. Under date of March 6, 1933, you, Mr. Jonas, are 
writing to Seclgley. Is he the one to whom Senator Vandenberg 
referred yesterday as " Sidewalk Sedgiey " ? 

Mr. Jonas. Yes, sir. 

Senator Bone. I will ask that that letter be appropriately marked. 

(The letter referred to was marked " Exhibit No. 702 " and is 
included in the appendix on p. 1887.) 

Senator Bone. In this letter you say : 

I liave an inquiry for 750' Lewis machine guns and 10,000 Spriugflelds, which 
seems incredible, but nevertheless I have to follow it through. 

Where did you get that inquiry? 

Mr. Jonas. It was just one of those rainbows. I do not remember. 
Senator Bone. You are unable to inform us about that? 
Mr. Jonas. I do not know. It might have been a Chinese inquiry. 
I do not know. 

Senator Bone. The letter continues : 



Have you as yet written to the B.S.A. people- 

Who are they? 

Mr. Jonas. British Small Arms. 



1740 MUNITIONS INDUSTRY 

Senator Bone (continuing reading) : 
In England to find out if you can get quotations on Lewis guns in bond lie re? 

How are guns held in bond in England ? 

Mr. Jonas. I do not know. I have been told that guns are held 
in bond in England and Belgium, these guns, but I have never been 
able to trace any. 

Senator Bone. What is meant by being " held in bond " ? 

Mr. Young. May I reply to this. Senator? 

Senator Bone. Yes, sir. 

Mr. Young. It is reported to me that all surplus or obsolete arma- 
ment of those countries are put in bond, and the commercial agents 
are permitted to sell it, take it out of bond, as they get the orders. 

Senator Bone. There is an agreement here between 

The Chairman. Just a moment. How did you read the last word 
of that letter. Senator? 

Do you think that is a misprint in the letter ? 

Senator Bone. Is it " there " or " here " ? 

Mr. Jonas. It is " there." 

Senator Bone. I read it " here." 

Mr. Jonas. No. 

Senator Bone. It does refer to England? 

Mr. Jonas. Yes, sir. 

Senator Bone. I will ask to have at this time an agreement dated 
September 15, 1933, between the Federal Laboratories, a Delaware 
corporation, and Frank S. Jonas introduced as an exhibit and prop- 
erly marked and filed. It has to do merely with commissions and 
it is not necessary to read it. 

(Tlie agreement referred to was marked " Exhibit No. 703 " and is 
included in the appendix on p. 1887.) 

The Chairman. What commissions, Mr. Jonas, are usual and are 
generally found in this line of work? 

Mr. Jonas. Five percent. I am speaking of for export. 

Mr. Young. I think the schedule is given on there, Senator. That 
agreement. Senator, includes the entire schedule there of the commis- 
sions Mr. Jonas received and what he should pass on to his agents. 

The Chairman. That particular contract, then, speaks very gen- 
erally, does it, of the practice that is followed ? 

Mr. Young. Yes; it does. 

Senator Bone, Mr. Jonas, do you have frequent disagreements or 
disputes with your agents over their commissions? 

Mr. Jonas. I have had disagreements with them ; they want more 
commission. How do you mean — with my agents abroad? 

Senator Bone. Well, with all of your agents in South America. 
Mr. Jonas. Well, they are always trying to get more than we are 
giving them. 

Senator Bone. Are any of them satisfied with the commissions that 
they get? 

Mr. Jonas. I beg your pardon? 

The Chairman. Senator Bone asked if any of them are satisfied 
with the commission arrangement? 

Mr. Jonas. They are always kicking for more, sir; no, they are 
not satisfied. 



MUNITIONS INDUSTRY 1741 

Senator Bone. Going back to the letter that was referred to this 
morning and read into the record, where Mr. Young writes to Mr. 
Leon, there was not any doubt in your mind when you wrote that 
letter that those men were men of integrity and ability, as you indi- 
cated there. 

Mr. Young. Senator, in a business correspondence like that, you 
have got to be as courteous as possible, particularly in dealing with 
a Latin ; you have got to be as courteous and polished as you can. 
You are talking with him face to face, where he can read the expres- 
sion on your face; you might talk much more frankly. But when 
he is 3,000 miles away and reading the letter and you want to gcold 
him, you want to do it as nicely as you can. 

Senator Bone. You were not scolding him there. You were tell- 
ing him that you thought he was a man of ability and integrity. 
You meant that, did you not? 

Mr. Young. Yes. 

Senator Bone. Under date of November 21, 1932, Mr. Leon writes 
a letter to Mr. Jonas, which I offer in the record as " Exhibit No. 
704." 

(The letter referred to was marked " Exhibit No. 704 " and is 
included in the appendix on p. 1889.) 

Senator Bone. He says : 

Deab Frank : I have just finished having an interview witli Francis Love, 
of the United Aircraft, and while it is true that for several reasons he finds 
it prudent not to malie any arrangement with us, due principally to the fact 
that both the Army and Navy have always purchased direct and do not care 
on this class of equipment to work thru an agent, still my interview with 
Love has been very fruitful, as he has given me a lot of information by word 
of mouth that perhaps you could not have written or would not have cared to 
write. 

Mr. YouKG. Senator, ig it necessary to bring in these personal 
discussion? Might we eliminate that? 

Senator Bone. Eliminate what part of it? 

Mr. Young. A personal discussion with Mr. Love. 

Senator Bone. There is not a great deal of this. 

Senator Clark. We have already examined Mr. Love with refer- 
ence to it. 

Senator Bone. Mr. Love has testified fully and clearly about his 
relationships down there. This letter continues : 

He has given me all the inside information not only regarding your troubles 
with the Federal, but also what kind of an outfit they are. 

Evidently Mr. Love is not cherishing a very high opinion of you 
or of your company. 

He has further given me a lengthy word picture of what the Lake Erie 
crowd amount to. 

Evidently Mr. Love of the United Aircraft Corporation did not 
have a very high opinion of either your company or the Lake Erie 
crowd. 

Senator Clark. And he was dealing with both of them at the time. 

Senator Bone. And he was where he could see them and talk with 
them personally. 

Mr. Young. Does not this really show a bias on Mr. Love's part, 
recommending Lake Erie? 



1742 MUNITIONS INDUSTRY 

Senator Bone. This says: 

He has further given me a lengthy word picture of what the Lake Erie 
crowd amounts to. 

What do you infer from that language? 

Mr. Young. I infer that he was knocking one and boosting the 
other for his own interest. 

Senator Bone. We will go on with the letter : 

Last but not least he tells me that you are undecided as to the advisability 
of taking on the Lake Erie and throwing down the Federal. 

From what Love tells me the Federal outfit do not seem to be straight 
shooters ; of course, he has told me this confidentially. * * * 

This is Mr. Leon talking, remember. 

He further advised me just how and who make up their products. From 
the information that he gave me I gather that the profit on all this material 
is enormous, and that all that Young says in his letters regarding there being 
no profit in it for him is pure bologne. 

Mr. Young. Senator, I protest that 

The Chairman. Where is that letter written from ? 

Senator Bone. From Buenos Aires. 

Mr. Young. The committee investigators have had an oportunity 
to look into our profits. There is being quoted here and on the 
record an opinion of a third party who was biased and advocating 
the product of a competitor and trying to discredit us, and this is 
being put on the record as though it were a fact. 

Senator Bone. We are trying to get a picture of the munitions 
business and what the munitions people think of one another might 
be interesting to the public. 

Mr. Young. The fact is that the man shows his lack of accurate 
information by saying that the profits are so enormous, as shown 
when you compare the small profits that we make with what I heard 
of the United Aircraft profits. Compared with those, we are cer- 
tainly pikers. 

Senator Bone. One would not have to work on his imagination 
very hard to agree with you on that particular point. But let us 
continue with the letter. 

If this is true, then my opinion is that we were getting bilked when we were 
advised that only 10-percent commissions would be paid on the police business, 
but it confirms what my personal opinion was. 

We have done, and are doing;, a lot of work for the Federal. At present 
I have before me an order ad referendum for one of the Provinces for approxi- 
mately $2, .500, which should be closed this week. I have several other busi- 
nesses on the pan, and it does not seem fair to me that we should continue 
working as intensively as we have on the outlook for future business that will 
repay us for the spade work, if we are not going to get a fair shake, and I 
would like to have you tell Young just exactly how I feel about the entire 
proposition. If it is true that we have been able to introduce Federal material 
in this country, we can just as easily kill it and work some other line. The 
agent for the German Bergman machine gun, as well as tlie exclusive repre- 
sentative for a large German gas factory, which makes a similar line to the 
Federal or Lake Erie, has been after us for G months or more to drop our 
American line and take on the German one. He can do nothing with it but 
he knows we can. We want to play fair with you and we want to play fair 
with the factories we represent through you, but we also ant fair play from 
them. 

Among other things we talked about, Love confirmed what our agent in Bolivia 
wrote us about last week, and whirh is that the Federal Laboratories through 
Grace has sold Federal Laboratory material to the Bolivian Government. We 



MUNITIONS INDUSTRY 1743 

are giving you this information in case you do not know it in order tliat you 
may claim from Young the value of our commission. There's no reason in the 
world why we should have worked for a solid year, made a trip to Bolivia, and 
did all of the initial work, if we are not to profit by the business once it is com- 
menced. It is very important that you look into this matter as it's something 
that interests botli you and ourselves, not only from a standpoint of dollars 
and cents, but from a standpoint of business policy. If this has actually hap- 
pened, then with the same judgment, if the Argentine Ai-my were to order 
direct from the Federal Laboratories tomorrow we would be cut out of our 
commissions. 

I wish you would write me plainly and explicitly with respect to the entii-e 
proposition as your reply to this letter will serve as a base for the work which 
we are now doing and contemplating doing. We are working on two big deals — 
one in Uruguay and one in the Province of Buenos Aires — and it would be 
suicide for use to continue the work compromising ourselves to certain com- 
xuission arrangements if we are not to be fully protected. 

How was he compromising himself to certain commission arrange- 
ments ? 

Mr, Young. Senator, I think it is fimny — as you will notice, Mr. 
Leon's letters are always crying about the fact that he has certain 
obligations, that he must have more commission or he will go with 
a competitor firm. He is still with us and crying for more territory. 
I think it is a salesman's letter putting up the best argument that he 
can find to try to chisel more commission for himself. 

Senator Bone. Here is his side of the story : 

It seems that every time we write the Federal Laboratories on a matter of 
business policy that they always shoot from some different angle and never 
come down to anything concrete which is absolutely necessary in all business 
arrangements. 

Mr. Young. In other words, we never give him more commission, 
which he is asking for. 

Senator Bone. How long had he been representing you down there? 

Mr. Young. I would say since back in 1930 or 1931. 

Senator Bone. You have had a long experience with him ? 

Mr. Young. 1929, I think. 

Senator Bone. Now Mr. Jonas, writing Mr. Leon on May 26, 1932, 
has this to say — and I offer this letter for the record as " Exhibit No. 
705." 

(The letter referred to was marked " Exhibit No. 705 " and is 
included in the appendix on p. 1890.) 

Senator Bone. This letter reads : 

I was very pleased to receive your letter of 27th ultimo giving me the in- 
formation I desired regarding the status of the tear-gas situation. I sent this 
letter on to Young and this morning received copies of two letters he had writ- 
ten — one to you and one to the Minister of War. The man is an idiot and I 
■cannot understand why he should have done this. 

Senator Clark. Who is that? 

Senator Bone. Mr. Jonas is telling Mr. Leon that the man is an 
idiot, referring to Mr. Young. 

His letter to you giving you advice as how to act is the most presumptuous 
thing I have ever read and I would suggest that you write him telling him that 
you can run your own affairs in the future. I have a contract for two years 
more and as long as I have an agreement you ^ill have one if you care to 
continue. 

It is quite apparent from this Mr. Jonas was thoroughly sold on the 
idea that Mr. Leon was a very capable man and knew his business. 



1744 MUNITIONS INDUSTRY 

JSIr. Young. I will let Mr. Jonas answer that letter. I think that 
is one for him to answer. 

Senator Bone. I think it would be in order for Mr. Jonas to make 
it more plain, to try to illuminate it a little, if he can. 

Mr. Jonas. I w^as criticizing the type of letter that had been writ- 
ten, I think at the time. I cannot just recall now. 

Senator Bone. Mr. Jonas goes on to say : 

Young has been doing some good business up liere and it has gone to his head. 
His letter to the Minister of War will probably find the waste basket. I am to- 
day writing to Young to leave matters of this kind entirely in your hands. 

Did you write your chief telling him that hereafter he ought to 
leave it in Mr. Leon's hands? 

Mr. Jonas. I criticized the letter that Mr.. Young wrote to the 
Minister of War; the style of letter that he wrote. I do not know 
that we have got a copy of it here. 

Senator Bone. Now, .showing that you thoroughly appreciate Mr. 
Leon's ability and his judgment, you add this : 

If you can use me up here for pureliasing anything or representing you in 
any w^ay, you can rest assured I will give it the best attention. 
With regards and the best of wishes, I am, 
Sincerely, 

^ 4^ 4c 

Then you add a postscript : 

How about Thompson guns? Is there anything doing? 

A cheerful sort of a letter. 

No^v we have a little more light, and a little more heat along with 
it, from Buenos Aires under date of June 18, 1934, which is a letter 
from Mr. Leon to Mr. Jonas, which I offer as " Exhibit No. Y06." 

(The letter referred to was marked " Exhibit No. 706 " and is 
included in the appendix on p. 1891.) 

Senator Bone. Apparently he is still a member of the organization. 

The Chairman. Whom is he writing to now? 

Senator Bone. Mr. Frank Jonas, of Ne\v York. He says : 

Dear Frank : I'erhaps this letter will reach you on your return from your 
Central American trip. 

I do hope that your trip has been a success as all your trips are ; furthermore, 
I hope that you have been behaving yourself? 

The ob.iect of t'lis letter, apart from the fact that I always like to write to 
you, is to tell you that I had a long and interesting conversation yesterday with 
Frank Love. 

That is the Mr. Love of the United, is it not ? 
Mr. Jonas. Yes, sir. 
Senator Bone (reading) : 

While we did not come to anything tangible, the fact remains that he called 
u)e up ; tliat means to me that lie always lias me on mind and it is possilile that 
some day we will get together. 

That would be, I assume, a consunmiation devoutly to be wished 
if those two could get together. 

He again put particular stress on what a G. D. Fool our friend Young is, 
and confirmed your opinion about bis preaching on a soap box and going around 
the corner selling armament. 

Were you a minister at any time, Mr. Young. 
Mr. Young. Not that I know of. 



MUNITIONS INDUSTRY 1745 

Senator Bone. Did you ever preach on a soap box ? 

Mr. Young. Xot that I know of. 

Senator Bone. Mr. Love evidently had the idea that you had done 
something of that sort. 

The Chairman. Seriously, Mr. Young, is not this only one more 
evidence that in the field of those selling armaments there is little 
regard for one another? 

Mr. Young. I think there is very little regard for one another. 
In the export business we find a vicious sentiment toward each other 
that you do not appreciate in this country. 

Senator Bone. I know; but here is an American, Mr. Frank 
Love 

Mr. Young. But he is in that business ; I say, he is in that business. 

Senator Bone. You think it is the business that gives him that 
particular twist? 

Mr. Young. I am not talking about Latin- America. I am talking 
about America now. 

Senator Bone. When they get in the munitions business, they get 
that particular twist ; is that it ? 

Mr. Young. I do not know if they get it after they get into the 
business, but the men who are in it seem to be very vicious toward 
each other. 

Senator Clark. Mr. Love's company is not a competitor with your 
company, is it ? 

Mr. Young. Yes. 

Senator Clark. In what line ? 

Mr. Young. Inasmuch as they are selling our competitor's prod- 
ucts against ours. We considered Mr. Love a competitor. 

Senator Bone. Now, Mr. Leon goes on to say as follows : 

He also went on to tell me ultout Young's licbby of brotherly love, etc., etc., 
and finished up by saying that he would not trust him as far as he could 
throw a bull by the tail. 

Mr. Leon then goes on further in this entertaining letter : 

Things are very quiet here just now and, this being the case, the police da 
not use any gas, which means it is bad for us, because we cannot sell them 
goods when they have stock on hand ; however, I am working on a scheme vfith 
the police which may bring about desired results. * * * 

What were the}^ going to do ; stir up some trouble ? What was the 
scheme your agent was working on that might bring some results, 
Mr. Young? 

Mr. Young. I do not know. 

Mr. Rich. Shall I answer that. Senator ? 

Senator Bone. Yes; we want all the light possible, if you can give 
it to us. 

Mr. Rich. His plan was to develop a system of training for the 
police ; a more intense system of training which would thereby auto- 
matically mean the use of more tear gas. 

Senator Bone. Do they go out and spray this gas around in train- 
ing? Or do they only use it when there are men in front of them? 

Mr. Rich. I mean training in the operation of riot guns. 

Senator Bone. They could throw a little bit of wood or throw a 
grenade that was not loaded. They would not have to throw the gas. 



1746 MUNITIONS INDUSTRY 

Mr. Rich. They probably would want to throw the entire grenade 
to see just how it worked, to see what effect it has, and how far- 
reaching the effects might be. 

Mr. Young. Can I give an illustration to make that more clear 
to you. Senator? 

Senator Bone. Yes. 

Mr. Young. In Seattle, Wash., there were about 200 grenades 
thrown by inexperienced men. The results were nothing like those 
that they had in San Francisco where four men were the key to the 
situation. Tliey were trained in the use of gas, and the}^ handled a 
much larger problem. 

It is necessary that men use their head when they are using gas 
just the same as when they do anything else. 

Senator Bone. Do you think that the fellows out in Seattle who 
were throwing these gas bombs lost their heads ? 

Mr. Young. I do not think they knew what to do. They had not 
been trained in what to expect. They did not know how to use the 
wind currents. Wind is a factor. 

Senator Bone. Are you attempting, through your organization, to 
correct that lack of knowledge in this technique out in Seattle ? 

Mr, Young. Yes ; we are. 

Senator Bone. You are working in Seattle now ? 

Mr. Young. We believe that there should be a limited number of 
policemen thoroughly trained in the use of it, and when the occasion 
comes, in the opinion of the city management to use it, then is when 
it should be called into action, by men who know how. 

Senator Bone. What work are you doing in the State of Washing- 
ton in teaching police forces to use this gas ? 

Mr. Young. I cannot answer that specifically. 

Senator Bone. Just give us some general idea. 

Mr. Young. Except that we were at one time j)utting on schools 
for the police department, a select group picked by the superin- 
tendent of police. That was done on the north Pacific coast. The 
dates and how it was handled, I am not familiar with. 

Senator Bone. Was it done in Seattle? 

Mr. Young. I think it was. 

Senator Bone. In Tacoma ? 

Mr. Young. I can give you that from our records, if you are 
interested in it. 

Senator Bone. I would like to have you give me that information ; 
yes. 

Mr. Young. I shall be glad to later. 

Senator Bone. Did you work in Portland also ? 

Mr. Young. Yes. 

Senator Bone. Are those departments using this equipment now? 
Are they well equipped now ? 

Mr. Young. I could not answer that from memory. 

COMPETITION encountered IN LATIN AMERICAN BUSINESS 

Senator Bone. Mr. Jonas, to digress a moment from these letters, 
I wish you would tell us a little, if you will — and I want you to be 
frank with us — about the competition that you get in your Latin 
American business. Mr. Young has painted a picture of the atti- 



MUNITIONS INDUSTRY 1747 

tude of mind that men seem to acquire in the munitions business. 
I wish you would give us a little idea, if you will, of what sort of 
competition you run up against in South America. 

Mr. Jonas. On what kind of lines? 

Senator Bone. On the munitions business. 

Mr. Jonas. On arms and ammunition or on general lines? 

Senator Bone. Yes ; and on gas, too. Take the arms and ammuni- 
tion first. For instance, with both European and American com- 
petitors, what sort of competition do you run into down there? 

Mr. Jonas. I find that w^e have a great deal of difficulty competing 
with European countries, because their prices are so much lower 
than ours. They have men stationed out there all the while. They 
spend more money in getting the business than we do, which makes 
it very difficult. 

Senator Bone. How can they spend more money and still sell at 
lower prices? 

Mr. Jonas. I presume because labor is cheaper in Europe. For 
instance, in France they sell practically all Government stuff. 
Orders are shipped from their factories. They have a society there 
that handles pretty nearly everything. 

Senator Bone. What do j^ou mean by Government stuff? 

Mr. Jonas. The Government actually makes the sale through an 
agency that they have. 

Senator Bone. The French Government itself gets into the picture 
and sells to a public French agency? 

Mr. Jonas. Through a French agency. 

Senator Bone. And that cuts down on the selling cost, is that it? 

Mr. Jonas. They manufacture this stuff; that is the way I under- 
stand it. 

Senator Bone. The French Government does not manufacture very 
much in the w^ay of munitions, does it? 

Mr. Jonas. Yes, sir; they do. 

Senator Bone. They have the Schneider Works there. 

Mr. Jonas. They have the Schneider Works, and there is the 
Societe Francais and other companies. I think there are more than 
just the Schneider Co. 

Senator Bone. You think that they have large organizations; that 
is, organizations of European manufacturers? 

Mr. Jonas. I think that the Government representatives help them 
more than Government representatives help us. For instance, they 
had a French mission in Brazil at one time. I was out there. They 
sold several million dollars worth of material from the French Gov- 
ernment, and they actually had their offices out there all the while 
with the army and navy officials in Brazil. 

The same thing has happened in several countries that I have been 
in. For example, in San Salvador they had General Mackensen's 
son from Germany. He was out there representing the manufacturer 
of some gun, a high caliber gun. 

In Costa Rica the Italians were active. They brought down a 
sample of a very heavy caliber gun and in trying it out they pretty 
nearly blew away one of the towns. 

Senator Bone. Does the Italian Government also interest itself 
in a friendly way in this business ? 



1748 MUNITIONS INDUSTRY 

Mr, Jonas. I do not know about the Italian Government, but I 
imagine that they work ah)ng the same lines. 

Senator Bone. The French Government is in the picture by having 
sold munitions in South American countries? 

Mr. Jonas. Yes. 

Senator Bone. And the British have done the same thing? 

Mr. Jonas. No. The British have independent companies, inde- 
pendent factories ; they have the Vickers Co. They work from their 
own factories. I do not think it is backed by the Government. 

The Chairman. You mean that they have their own factories in 
South America? 

Mr. Jonas. No armament factories. There are cartridge plants. 

Senator Bone. Schneider-Creusot is not a Government factory in 
Prance. That is a private concern, is it not? 

Mr. Jonas. That is a private concern. 

Senator Bone. Schneider is one of the great armament makers of 
the world? 

Mr. Jonas. Yes ; but they in turn manufacture for the Govermnent 
and the Government does the selling. 

Senator Bone. Do you mean that the French Government itself 
actually becomes a broker and sells stuff for this private firm ? 

Mr. Jonas. This societe does. 

Senator Bone. Is that a fact, Mr. Rich ? 

Mr. Rich. That is what we understand. 

Senator Bone. The French Government actually becomes a broker 
for the sale of Avar munitions? 

Mr. Rich. Apparently they do, from the information that we get. 
That obtains for all classes and types of arms and all war materials, 
including airplanes, ammunition, guns. 

Senator Bone. Armament of every kind ? 

Mr. Rich. Yes. 

Senator Bone. So. in the sale of heavy ordnance, heavy field guns, 
5-inch guns and 6-inch guns, we find the French Government actively 
interesting itself in that sale? 

Mr. Jonas. Yes; and they get most of the business, as well as 
Czechoslovakia. Denmark is shipping a lot of stuff in. 

Senator Bone. Denmark is ? 

Mr. Jonas. Yes. They have a big factory. 

Senator Bone. Does the Danish Government interest itself in an 
official way in that? 

Mr. Jonas. I think it is a subsidiary of Krupps. 

Senator Bone. That creates a type of sales competition which we 
would not run into in other forms of business ? 

Mr. Jonas. No. You do in the steel business. But I do not know 
enough about that to talk about it. 

Mr. Rich. The Montevideo police recently were in the market for 
quite a lot of equipment. We were advised that the British Ambas- 
sador had interested himself in the matter and pers(mally had sent 
over a corps of detectives to England to train them over there at his 
own expense, at the expense of the Government. 
Senator Bone, Which minister did that? 

Mr, Rich. The British Minister. 

Mr. Jonas. That was in Uruguay. 



MUNITIONS INDUSTEY 1749 

Senator Bone. So it may be safely said, tlien — and you will cor- 
rect me if I am in error — it may be safely said that the sales efforts 
of the European munitions makers and munitions concerns, by and 
large, have behind them the sanction and the moral support of their 
governments; is that correct? 

Mr. Rich. I should say it is. 

Senator Bone. Do you agree with that too, Mr. Jonas? 

Mr. Jonas. Yes, sir. 

Senator Bone. Mr, Young, from your experience in South Ameri- 
can countries, would you agree that that is a fair statement? 

Mr. Young. That "is what I have heard. And I might add that 
I have also heard that most of the armies are trained by French or 
German or some other foreign officers. 

Senator Bone, Who are sent into South America by their respec- 
tive governments? 

Mr. Young. I do not know how they are sent in there, but I do 
know that they are very definitely favoring the purchase of European 
equipment. 

Senator Bone. Xow, getting down to the American competition 
field, Mr. Young has expressed himself as to the attitude of mind 
created by his business, but what do you find to be the outstanding 
factors of competition from the standpoint of your American com- 
petitors, Mr. Jonas? You do not have to give names and I am not 
asking you to draw invidious comparisons between companies, so I 
want you to be absolutely free in talking to us about it. 

Mr. Jonas. I have heard criticism from competitors, and as a rule 
no salesman who knows his stuff would hardly criticize his competi- 
tor. He would rather stick to his own line. 

Senator Bone. What methods are employed by American firms 
down there that you do not think are fair, for instance, and methods 
that had better be eliminated from the field of business ? 

Mr. Jonas. Criticizing his competitors' products. 

Senator Bone. Do they all do that? 

Mr. Jonas. Yes; I know of cases. 

The Chairman. I thought you told us this morning or yesterday 
that the getting of business in a good many instances is dependent 
upon who bids the highest in the way of commissions to agents, 
agents of the Government, and others. Is that the case ? 

Mr. Jonas. Not in all cases, I would not say. Senator, 

The Chairman. In a general way, do those Americans who are 
operating in the same field you are operating in down there, and in 
competition with you, use methods that are straightforward, and 
you have no difficulty? 

Mr. Jonas. As a rule, the Americans I work with are straight- 
forward. The Americans try to be straightforward. 

Senator Bone. Who is Mr, Huber ? 

Mr. Jonas. Mr, Huber is with the Lake Erie Chemical Co, 

Senator Bone, The Lake Erie Chemical Co. is the only American 
firm that is competitive with you ? 

Mr, Jonas, Yes, sir. 

Senator Bone. In other words, they parallel your products? 

Mr. Jonas. Yes, sir. 

Senator Bone. Are they competitors in the world markets also? 

Mr. Jonas. I believe so. 



1750 MUNITIONS INDUSTRY 

Senator Bone. Under elate of December 27, 1932, you are Avriting 
Mr, Young from New York, and this letter I offer in evidence. 

(The letter referred to was marked "Exhibit No. TOT " and is 
included in the appendix on p. 1891.) 

Senator Bo^;e. You say this to Mr. Young in the letter referred to : 

Huber informed me today that our bomb fuse and Lake Erie's bomb fuse 
were sent to Picatinnj^ Arsenal for a test, and the report was that Lake Erie's 
fuse was exactly as per Government standard spocitications, while ours was not. 

What is the Picatinny Arsenal? 
Mr. Young. The Picatinny Arsenal is in New Jersey. 
Senator Bone. That is a Government arsenal in New Jersey, is 
it not? 

Mr. Young. Yes. 

Senator Bone. This letter then reads further : 

Undoubtedly he is spreading this information around, so please investigate 
and advise me. 

Is that one of the things you were referring to a moment ago, 
Mr. Jonas? 

Mr. Jonas. As regards competition; yes. 
Senator Bone. The letter proceeds further: 

During our conversation he also informed me that Goss had given him the 
New York City territory to work, with the exception of the New York police 
department, which Goss claims he has in the palm of his hands. 

Who is Goss? 

Mr. Jonas. He is president of the Lake Erie Chemical Co. 

Senator Bone. Reading again, the letter says: 

He also volunteered the information that Goss received an order every 2 
weeks from this department. Take this information for what it might be worth. 

So, apparently the Lake Erie group said they had the New York 
police department in the palm of their hands. 

Mr. Jonas. That is what I was told. 

Senator Bone. Is the territory divided in this way : That you sell 
to the New York State police and they sell to the New York City 
police department? 

Mr. Jonas. I have nothing to do with the domestic business. 

Senator Bone. Well, Mr. Young, is that the way is was — that you 
sold to the New York State police force and Mr. Huber's group sold 
to the New York City police department? 

Mr. Young. You are again trailing Mr. Love with the mark that 
usually follows behind him from his correspondence, and I think this 
is sales talk again. I know the New York police department have 
purchased gas from other people besides the Lake Erie Co., and I 
am sure they do not buy gas once a week; but they probably buy it 
once or twice a year. 

Senator Bone. Who else do they buy from? 

Mr. Young. They buy from ourselves and in addition to ourselves 
ihey have the B. & T. Munitions Co., who we understand had an 
order from them, but I don't think they have filled it. 

Senator Bone. Where are they? 

Mr. Young. They are in New York City. That is the one we dis- 
cussed a while ago. 



MUNITIONS INDUSTRY 1751 

Senator Boxe. Under date of February 8, 1933, Mr. Yoimg, you 
wrote to Mr. Jonas, which letter I offer as an exhibit. 

(The letter referred to was marked '' Exhibit No. 708 " and is 
included in the appendix on p. 1892.) 

Senator Bone. You say in this letter referred to : 

I received a letter from my brother Paul, and I am passing on for your 
consideration a Dortion of tlie letter : 

For the past few weeks there has been a fellow here by the name of Cole- 
man, representing the Erie Tear Gas concern. 

Mr. Young. That again is a statement, and all I have is that the 
statement was made here. 

Senator Bone. No ; you are making this statement. 

Mr. Young. I am quoting the letter. 

Senator Bone. You are quoting the letter of your brother Paul. 

Mr. Young. Yes. 

Senator Bone. Wlien he says " here ", where was he ? 

Mr. Young. He was at that time in Ecuador. 

Senator Bone. Your brother Paul was in Ecuador, and he was 
telling you that a fellow named Coleman, representing the Lake Erie 
Chemical Co. was down in that country, and that he had no scruples 
about paying something to get his contracts through. Did you be- 
lieve your brother? 

Mr. Young. Yes. 

Senator Bone. You believed your brother, did you ? 

Mr. Young. Of course. 

Senator Bone. And you are writing to one of your officers, telling 
him about this? 

Mr. Young. Yes. 

Senator Bone. And the letter continues : 

So it looks as if he might cash in on the missionary work we have been 
doing. 

What does the next name, Sotomayer y Luma, mean? 

Mr. Jonas. That is the Spanish name of the person he refers to. 

Senator Bone. What was your brother Paul doing in Ecuador. Mr. 
Young ? 

Mr. Young. He is a missionary. 

Senator Clabk. He does more than one kind of missionary work. 

Mr. Young. My brother Paul was not working for me, but John 
Reed was. 

Senator Clark. He says this fellow Coleman and the Lake Erie 
group — 

might cash in on the missionary work we have been doing. 

Mr. Young. My brother has nothing to do with me. 

Senator Clark. What does he mean by " missionary Avork we have 
been doing " ? 

Mr. Young. What your brother would probably have reported to 
you in your campaign, when he is interested in your work. It is 
purely a family relationship, and no business relationship whatever. 

Senator Clark. He was doing missionary Avork for j^our company, 
according to his own statement. 

Mr. Young. That would be a family expression, in social conversa- 
tion, as we are brothers. H? did talk to some of the Government 

83876— 35— PT 7 10 



1752 MUNITIONS INDUSTRY 

officials whom he woiihl know personally, but there was not even a 
question of payin<2; him any commission. That mi<^ht be clarified if 
I would <^ive an iUustration which he Avent through about that time 
or previous to that when there was an attempted revohition in Quito 
and they shot and killed over 1,000 people in about 2 da3'S. My 
brother was in Quito at the time, and he called on the President and 
told him that tear gas would have saved a situation like that. 

Senator Clark. That was the missionary Avork he was worried 
about the Lake Erie Chemical Co. cashing in on. 

Mr. Young. That is all I would know of it. 

Senator Bone. Now, under date of March 8, 1934, Mr. Young, you 
were writing to Mr. de Rossi ; who was he ? 

Mr. Young. Our Peruvian agent. 

Senator Bone. We offer this letter as an exhibit. 

(The letter referred to was marked " Exhibit No. 709 " and is 
included in the appendix on p. 1893.) 

Senator Bone. You say to Mr. de Rossi : 

I am in receipt of a very interesting report from W. R. Grace, giving tlie 
final set-up of prices in wliicli tlie U.S. Ordnance & Engineering Co. (anotlier 
name for the Lake Brie Chemical Co.) are quoting $83,000, while their agent, 
Mr. Tobin, is quoting $104,000. 

As you say, the U.S. Ordnance & Engineering Co. is another name 
for the Lake Erie Chemical Co. 
Mr. Young. Yes, sir. 
Senator Bone. Then the letter proceeds: 

You will here see an example of the character of these people when they 
will double cross their own agent. 

I want to pause a moment to say when I asked Mr. Jonas and 
Mr. Young to give us some little picture of this I had something of 
that kind in mind, as you seemed to confine your statements to the 
fact they misrepresented your product, or lied about it. 

Mr. Young. Senator, I have a little bit of sportsmanship in me, 
and I can inform my agent of things he must look out for, and I 
owe him the duty to do that, but to spread those things to the public 
you can see what you would think about me, and I do not want to 
be put in a position of trying to exploit the weakness of my com- 
petitor even under the advantage of a Senate investigation. 

Senator Clark. You need not worry about that. Mr. Young. To- 
morrow we will have the same things here said about you. 

Senator Bone. If you gentlemen could look over the file you would 
have no objection to telling the truth, and I think if you would read 
the files you would lose all of your scruples right here; but there is 
something that you ought to realize, and that is that no munitions 
business, I think, in the whole world can now be said to be a private 
business. Any business that is built around life-destroying instru- 
mentalities cannot be said to be a private business. We have taken 
utilities out of the realm of private business and it is now a public 
business, and we are regulating thenu Certainly death-dealing in- 
strumentalities are in no different position, but the trouble is the 
munitions business has felt it could do as it pleases and nobody could 
do anything about it. Not long ago 10,000,000 people were killed in 
a war, and witnesses such as you gentlemen tell us if we had another 
war like that we would not have any civilization. Don't you think 
a thing of that kind is of interest ito the people, and that it is of 



MUNITIONS INDUSTRY 1753 

interest to the people to know Avhat that business is doing, whether it 
is causing more trouble ; or do you take the position that it is strictly 
your business and we have no right to inquire ? Do you have a small 
boy? 

Mr. Young. I do. 

Senator Boxe. Do you gentlemen have boys? If you do, just go 
home and look at your young boy and see whether the munitions busi- 
ness is a private business, and I think you will answer the question 
vourself. 

Mr. Young. I am in sympathy with what this committee is trying 
to accomplish. I think I can say you can have 100-percent backing 
from our company, and that my directors will back me up in that, 
but I think it can all be accomplished without washing dirty linen 
in a hearing of this kind. If the people of this country want legis- 
lation to control this, I will be very happy to work with you on that 
in any way I can, and not against you. 

The Chairman. Mr. Young, there is already in part in the record 
a revelation of your deep interest in certain legislation, and you went 
so far as to say you felt you had sponsored it, yet the record reveals 
that your interest in that legislation of last winter known as the 
•' gun-control bill " and your motives in sponsoring that bill from the 
record as it stands now and as will be made clear before we finish 
reveals that that interest was not prompted nearly so much from a 
desire to help in legislation to curtail crime as it was prompted by a 
desire to get rid of certain competition that was threatening and 
certain competition that existed. 

By what right do you assume if we would undertake a legislative 
program without, as you put it, washing the dirty linen in public 
in a public hearing — why do you assume we would expect there 
would be whole-hearted cooperation of an unselfish sort by those of 
you who have profited so largely from what we are working out now ? 

Mr. YouxG. Senator, your records are incomplete, and I will be 
glad to give you, when you have more time, a detail of what I did on 
that. I spent hours and hours and days working on that, and the 
bill as put through does not prevent competition. It is wide open, 
and we are not closing it to open competition but closing it to this 
bootleg selling, and I think if you will talk to Mr. Joseph Keenan, 
Attorney General, he will say we did try to help him. 

Senator Bone. If there is a lot of dirty linen, do you think we 
ought to put it away and not bring it out? 

Mr. YouxG. I think if in its work this commitee does what it is 
intended to do, it will eliminate a lot of it. 

Senator Bone. I think we have expressed to you before that we 
have no desire to harm you or to hurt you. 

Mr. Young. I think it is hurting, when you get the cooperation 
the committee wants. 

Senator Bone. I do not think you will find anyone here says this 
committee has found anyone enthusiastically cooperating with it. 

Mr. YouxG. I am promising you that our company will. 

Senator Boxe. This letter, " Exhibit N"o. 700 ". reads further : 

There is unc (-tlier card that you can play, if necessary, in order' to secure 
this order, viz : We have some T.N.T. loading equipment which we are willing: 
to loan to the Peruvian Government to fill this order. This would eliminate 



1754 MUNITIONS INDUSTRY 

the necessity of their paying $5,500.00; they would theu only have (to) pay the 
transportation there and back, which should not exceed $500.00. 

Did you make some bombs for the Government ? 

Mr. YouxG. No; the Harrisbnrg Pipe Co., who manufacture our- 
bomb forcings, have. 

Senator Bone. I have here a letter where Mr. Jonas is in Panama 
and is Avriting to the Federal Laboratories, Inc., under date of June 
15, 1931, which letter is offered in evidence. 

(The letter referred to was marked " Exhibit No. 710 " and is 
included in the appendix on p. 1893.) 

Senator Bone. Mr. Jonas says : 

I called oil the chief of police in Panama City and was surprised to learn 
that they had placed an order about three months ago with the Lake Erie 
Chemical Co. when Huber was down here for 6 machine guns, grenades, 
ammunition, and pineapples. 

What are " pineapples " ? 

Mr, Jonas. That is a term used for grenades. 

The Chairman. That is a term that came out of Chicago, 

Mr, Jonas. I think they used it during the war. 

Senator Bone. They are a fragmentation bomb? 

Mr. Jonas. It is a hand fragmentation bomb. 

Senator Bone. Or a hand grenade, in other w^ords. 

Mr, Jonas, Yes ; a liancl grenade. 

Senator Bone. The letter further reads as follows : 

I asked him to permit me to see the machine guns which Huber sold them, 
and I received tlie shock of my life. The gun is an imitation Thompson as far 
as the bari'el is concerned and the breech looks like a bicycle pump. There 
was no proper magazine for this gun. However, they were sold genuine 
Thompson magazines, which fit them perfectly. I asked the chief of police if 
he had tried these guns out, and he said he had not. I als'o asked him why 
he did not buy genuine Thompsons. He told me that Huber had told him that 
these were the latest type Thompson guns. 

Then, further down in the letter, he says : 

As they had never tried out these guus, I urged the chief to try them out 
yesterday, but he was not able to do so because he was not feeling well. I told 
him that you would like to buy one of these guns and ship them a genuine 
Thompsion instead. He is agreeable to this, so you can write him a letter upon 
i-eceipt of this letter. The chief was very much peeved after I gave him this 
information and will probably make some trouble for Huber. 

Then to the letter is added this postscript : 

P.S. : If you want this gun, write to Universal Export Corp. and they will 
attend to tliis matter. Have ajipoinfed them our agents. Address, 
Panama, 11. P. 

The Chairman. 'J'he committee will be recessed until 10 o'clock 
tomorrow morning. 

(Thereuijon, at 1 p.m., the committee recessed until 10 a.m., Thurs- 
day, Sept. 20, 1934.) 



INVESTIGATION OF MUNITIONS INDUSTRY 



THURSDAY, SEPTEMBER 20, 1934 

U>;iTED States Senate, 
Special Committee to Investigate 

THE Munitions Industry, 

Wa^hinffton^ D.G. 

TIk' hearing was resumed at 10 a.m., in room 310, Senate Office 
Building, pursuant to the taking of recess, Senator Gerald P. Nye 
j^residing. 

Present: Senators Nye (chairman), George, Clark, and Bone. 

Present also: Stephen Raushenbush, secretary, and Donald Y. 
Wemple. investigator. 

The Chairman. The committee will be in order. 

TESTIMONY OF JOHN W. YOUNG, FRANK SHERIDAN JONAS, AND 

CARLETON W. RICH— Resumed 

Mr. Young. May I make a correction. Senator, to one of the 
minutes? 

The Chairman. Very well. 

Mr. Young. There is a notation where I said I turned in all of 
the directors' meeting minutes prior to the reorganization. It should 
read for 2 years prior to the reorganization. 

The Chairman. Very well. Senator Bone, you may proceed. 

Senator Bone. Mr, Young, I believe on yesterdaj^ you testified 
that there are some bankers on your board. Is that correct? 

Mr. Young. There is one banker on our board. 

Senator Bone. One banker. Does he interest himself in your 
-business ? 

Mr. Young. He is not a heavy stockholder. 

Senator Bone. Does he interest himself actively in your business? 

Mr. Young. I think his time is pretty heavily engaged with his 
own banking business. 

Senator Bone. So that he just merely serves on the board without 
taking any active interest in the business ? 

Mr. Young. I would not say that. I would say he takes the nor- 
mal interest of a director. 

Senator Bone. Is he aware of what we have been discussing in this 
hearing, or does he care ? 

Mr. Young. I should say he would care. How inugli of it he is 
aware of, I do not know. 

Senator Bone. Is he sufficiently interested even to inquire into 

what is going on ? 

Mr. Young. I should think so. 

1755 



1756 MUNITIONS INDUSTRY 

Senator Bone. I know, but you do not answer my question. You 
may think so, but does he do it? We are trying to get the facts. 

Mr. YouNo. Yes ; ho frequently does. 

Senator Bone. What does he think of this business? I am curious 
to get the reaction of a banker toward the munitions business. 

Mr. Young. This banker happens to be a former military officer. 

Senator Bone. That explains it. Let us not go into that further. 

Mr. Raushenbush. Mr. Young, the record shows that there is 
more than one banker on your board, does it not ? 

Mr. Young. No, sir. 

Mr. Raustienbush. We have identified them, and there was more 
than one from banks or trust companies. 

Mr. Young. They are interested but not on the board. 

Senator Bone. You would assume that a man serving in the Army 
would think the munitions business is all right. Do you think he 
has the complex of a banker or military man, or a little of both ? 

Mr. Young. I think he has made a pretty good banker, but some 
of both. 

Senator Bone. Who is Aiken Simons? 

Mr. Young. Aiken Simons is a friend of mine. 

Senator Bone. What is his business? 

Mr. Young. He has worked for the du Pont Co. 

Senator Bone. What is he doing now ? 

Senator Clark. Is he the same man who appeared in the record 
last week as representing the du Fonts in various departments? 

Senator Bone. Yes, sir. What does he do ? That is the fellow. 

Mr. Young. He works. Senator, with Major Casey. 

Senator Bone. Were you here last week when a letter of Mr. Si- 
mons Avas put in the record, a letter written to you ? 

Mr. Young. No; I was not here. 

Senator Bone. That was introduced as " Exhibit No. 482 ". and I 
will read it to you, not having the exhibit before me. This was 
written to you by Simons under date of December 28, 1932. It 
reads : 

My Dear John: Thank you for the very handsome dressing; case which came 
to me on Christmas morning. I will find it very nsefnl. 

I spent a very quiet but very pleasant Christmas despite the rotten weather. 
Regarding- the attempts of Mr. Hoover and the cooky pushers in the State Dept. 
to effeci embargoes on munitions sent out of the country — I do not believe that 
there is the least occasion for alarm at present. 

Had you been discussing this embargo business with him? 

Mr. Young. Yes, sir. 

Senator Bone. And he was assuring you or perhaps reassuring 
you that there was no occasion for alarm, that there would not be 
any embargo on arms? 

Mr. Young. We were discussing the question of an embargo by the 
United States, which did not include other nations. 

Senator Bone. I understand [continuing reading] : 

The President and the State Department both lack authority to do any- 
thing now and in the spirit that Congress is in and with the large amount of 
oral business ahead I feel quite sure that no further authority will be 
granted. 

Do you recall that letter? 

Mr. Young. I recall it as you read it. 



MUNITIONS INDUSTRY 1757 

Senator Bone. Who were the '" cooky pushers " to whom he was 
referring ? 

Mr. YouxG. I do not know. 

Senator Bone. Was Secretary Stimson one of them? 

Mr. Young. I do not know. 

Senator Clark. What did voii understand by it when you got that 
letter? 

Mr. Young, I did not understand it. It is probably an expression 
of Colonel Simons. 

Senator Bone. Is it a sort of vernacular or argot in the munitions 
business, which we do not know anything about? 

Mr. Young. The expression had never been used before to me. 

Senator Bone. We run across a lot of very queer expressions in 
this business, and I was wondering if " cooky pusher " was another 
loose expression, or sort of vernacular, which has grown up in this 
peculiar business, or if it meant just what anyone would ordinarily 
understand. Can you enlighten us any on that point? 

Mr. Young. I cannot. I do not know what it meant. 

Senator Bone. Do munitions makers call State Department people 
" cooky pushers ", when they try to bring about peace? 

Mr, Young, I am quite sure they do not, 

foreign agents 

Senator Bone. I think these facts were developed yesterday: 
That W. R. Grace & Co. was representing you in Peru; also that 
the}^ were interested in representing you in Chile. That is correct, 
is it not? 

Mr. Young. Yes, 

Senator Bone. Mr. Raushenbush, I am not certain that this was 
introduced in evidence yesterday. I want at this time to offer it, 
if it has not been. 

On January 2, 1934, you addressed a letter to Mr, Walter B. Ryan, 
president of the Auto Ordnance Corporation, Nassau Street, New 
York. Who is Mr. Ryan, Mr. Young? 

Mr. Young. He is the president of the Auto Ordnance Corpora- 
tion. 

Senator Bone. Do they have that name now? 

Mr. Young. They still do, sir. 

Senator Bone. What does that organization produce? 

Mr. Young. The Thompson submachine gun. 

Senator Bone. You state here [reading] : 

Followins; our conference in the office of Mr. Van Vleck, I am enclosing 
herewith a brief report on our activities in the export field, which I trust will 
give you a clear idea of the extent of our missionary work for the Thompson 
submachine gun. 

I believe if the Thompson gun is to be sold in any quantities it will only be 
sold after somebody contacts the present governmental authorities and educates 
them on the merits of the Thompson gun and builds up an interest in its 
adoption. 

I am not going to read the rest of it, being just merely an ordinary 
business letter. The interest in the letter arises in the list of agencies 
and reference to the territories in the letter. 

In this letter you show W, R, Grace & Co. as representing you 
in Bolivia, Sr. Don Francisco Sefzig in Ecuador, and having 



1758 MUNITIONS INDUSTRY 

agents in Peru, Colombia, Costa Rica, Dominican Republic, Mexico, 
China, Japan, Hawaii, United Kingdom of Great Britain, Mrs. 
Patricia Kendall. 

Personally, I am rather interested in this lady. What work does 
she do in England ? Who is Mrs. Patricia Kendall ? 

Mr. Young. Mrs. Patricia Kendall was an authoress, noted for 
her knowledge and writings on India. She did not represent me 
in England, as this might classify her as an agent in the same sense 
that other people did. 

Senator Bone. That is why I asked, because it is apparent that 
she is doing some peculiar sort of work, which seems to qualify her 
at least as a munitions worker. What is her work, because you make 
a special i^oint of referring to her work and the work she is doing ? 
Let us be enlightened on that. 

Mr. Young. The work she did was primarily to interest the Indian 
authorities in India in the use of tear gas. 

Senator Bone. Now, that is interesting. In other words, they 
were to use tear gas on these poor devils in India, who were all 
about two-thirds starved. Is that the work she is doing ? 

Mr. Young. If you will study the record in India, you will find 
there has been what I would term an unnecessary loss of life in con- 
trolling riots by the use of firearms. 

Senator Bone. It is interesting to know that the lady is much 
interested in suppressing these Indians with tear gas. Have the 
British authorities listened to the lady's suggestions ? 

Mr. Young. It is equally interesting to know that Mrs. Kendall 
was doing her work without remuneration, in interest of India. 

Senator Bone. A sort of missionary work, such as was being done 
in South America ? 

Mr, Young. Not as was being done in South America. It was an 
entirely different matter. 

Mr. Raushenbush. Mr. Young, the police in England have not 
accustomed themselves to using tear gas in the case of riots, the way 
our police have, have they? 

Mr. Young. No; they have not. 

Senator Bone. In Turkey we see the Automobile Tire & Tractor 
Co. Is that the concern which appears throughout these hearings, 
Mr. Raushenbush, as the A. T. & T. Co. ? 

(There was no audible reply.) 

Do you have a representative in Russia ? 

Mr, Young, No; we do not. 

Senator Bone, You have had two visits from special representa- 
tives of Russia, but so far no agents have been appointed, 

I would like to have that letter introduced, and I would like to 
come back to it a little later, 

(The letter referred to was marked " Exhibit No, 711 " and is 
included in the appendix on p, 1894.) 

Senator Bone. In a letter written by Mr, Jonas, addressed to you, 
Mr, Young, under date of November 24, 1933, there is a statement 
to which I wish to direct your attention. I will offer that for the 
appropriate number, 

(The letter referred to was marked " Exhibit No, 712 " and is 
included in the appendix on p, 1899,) 



MUNITIONS INDUSTKY 1759 

Senator Bone. I want to refer to the third paragraph of that let- 
ter, which refers to the Mayrink-Veiga. Who are they? Identify 
them again. 

Mr. Jonas. They are agents for various factories in this country. 

Senator Bone. Are they your agents in Brazil ? 

Mr. Jonas. They -were at one time. They are not my agents any 
more. 

Senator Bone. Were they in November 1933 ? 

Mr. Jonas. No. 

Senator Bone. That letter states, in part, as follows [reading] : 

Mayrink-Veiga are " persona non grata " witli the present regime, due to their 
excessive profiteering in the last revolution. I have placed our agency for 
the Federal Government with Souza Sampaio, \Yho are socially the best people 
in Brazil. They are connected politically, and I honestly believe tliat if any 
business arises it will be ours. 

Now, is this the same Sampaio who was once in the consular 
service ? 

Mr, Jonas. No, sir ; they are no relation. 

Senator Bone. On July 27, 1934. the Federal Laboratories, Inc., 
through its export department, addressed a letter to the consul gen- 
eral of Peru in New York City, being a very short letter, with only 
four lines. In this letter it is typed F. B. It reads as follows : 

Consulate) General of Peru, 

21 West Street, Neiv York, N.Y. 
GEiNTijJMAN : Our representative, Lieutenant Henry Carter, for Peru on our 
company's business. 

We would appreciate it greatly if you would be kind enough to visa his pass- 
port, for wliieh we thank you sincerely. 
Yours very truly, 

Federal Laboratories, Inc., 

Export Department. 

Who is Lt. Henry Carter ? 

Mr. Young. He is one of our engineers. 

Senator Bone. Is he at present in the Army ? 

Mr. Young. He is in the Reserve Corps. 

Senator Bone. He is in the Reserve Corps ? 

Mr. Young. Yes, sir. 

Senator Bone. So that title only has significance by reason of the 
fact that the is in the Reserve Corps ? 

Mr. Young, I did not know that title was on those things. We 
try to avoid that. That was probably put on without my knowledge. 

"Mr. Raushenbush. Mr, Young, is Mrs, Kendall a religious mis- 
sionary ? 

Mr. Young. No; Mrs. Kendall is a society woman— a woman of 
very high standing in society — who is a lecturer and a writer. She 
has no financial interest in the business whatsoever. She was only 
interested in the humane application of tear gas. 

Mr. Raushenbush. And she had the same difficulty in India as 
you had in England in interesting the police in this novel way of 
suppressing riots by the use of tear gas ? 

Mr. Young. She was not working on it from that standpoint. She 
was recommending to them that she thought it would greatly help 
the situation and tenseness, or relieve the tenseness which exists in 
India. 



1760 MUNITIONS INDUSTRY 

Mr. Raushenbush. And her social or literary standing sort of 
gave her some prestige to operate with ? 

Mr. Young. Mrs. Kendall has the highest prestige in England, 
and has been called in by the India House and lectured before them 
and lectured before Oxford. I am sure it would be unfair to Mrs. 
Kendall to drag her in as a commercial agent in this business. 

Senator Bone. You have listed her here as one of your agents. 

Mr. Young. I did not know that was done. I know I did not 
write this up, and it may have been attached to the transmitting 
letter, but I did not know she was listed. 

Senator Bone. Munition houses have a habit of disclaiming 
moral responsibility for their letters. We have found dozens of 
them in the files. You or your company dragged that in. If there 
is any dragging in, your company did it. The lady may be merely 
unfortunate in having her name tied in in this fashion. A lot of 
munition companies seem to proceed on the Spartan theory that the 
oiFense is not in doing something wrong but in getting caught at it. 

Who is Col. P. M. Smoot, mentioned in your list of agents? 

Mr. Young. I know nothing except from the name, sir. 

Senator Bone. Read on page 5 of " Exhibit No. 711 ", at the top 
of the page: 

Col. P. M. Smoot, adjutant general, Honolulu. 

Mr. Young. He had been stationed in Honolulu and was selling 
the Thompson machine gun for the Auto Ordnance before we came 
into the picture. I have never met the man personally. 

Senator Bone. What is his business over there ? He is known as 
"Adjutant General." You designate him as "Adjutant General." 
Is he an adjutant general or is that merely a courtesy title? 

Mr. Young. I am afraid I could not answer that. I do not loiow. 

Senator Bone. Who wrote this letter? 

Mr. Young. Mr. Smoot was recommended to us when we took over 
the distribution of the Auto Ordnance in that territory as having 
applied to them to sell the Thompson gun there. That is as much 
as I know of him. 

Senator Bone. I go back to the letter dated January 2, 1934, " Ex- 
hibit No. 711 ", written by you, addressed to Walter B. Ryan, of the 
Auto Ordnance Corporation [reading] : 

Dear Mr. Ryan : Following our conference in the office of Mr. van Vleck, I 
am enclosing herewith a brief report on our activities in the export field, which 
I trust will give you a clear idea of the extent of our missionary work for the 
Thompson submachine gun. 

Then to that letter you attached this list, Mr. Young. You say you 
did not write this. At least, you were using the first person in the 
letter, and you had in here [reading] : 

You are familiar with correspondence witli Colonel Smoot regarding repre- 
sentati(m for tlie Tiiompson gun in Hawaii. 

Mr. Young. Senator, this was a report written up by a clerk in 
our office in response to that letter. There has been much repetition 
here, and some of it quite needlessly, if I were giving it my personal 
attention. Colonel Smoot was more familiar to Mr. Ryan, to whom 
the letter was addressed, by far, than we were, because all we knew 
we had gotten from Mr. Ryan. 



MUNITIONS INDUSTRY 1761 

Senator Bone. Let us go back before that time and see what the 
record reveals. On March 8, 1933, I find a letter from W. B. Ryan, 
Jr.. president, Auto Ordnance Corporation, addressed to you, Mr. 
Young, which will be appropriately numbered. 

(The letter referred to was marked "Exhibit No. 713 and is 
included in the appendix on p. 1900.) 

Senator Bone. That letter from Mr. Ryan states [reading] : 

I enclose original correspondence with Colonel P. M. Smoot, Adjutant General 
of Hawaii which is self-explanatory. Their letter of February 23d is obviously 
one which' should be replied to by yourself. We can recommend Colonel Smoot 
as an agent in Honolulu, and in view of the arrangements between your com- 
pany and ourselves, I think it would be very suitable to keep him on m that 

capacity. . , .^ 

Kindly return this correspondence when it has served its purpose. 

Now. after having your memory refreshed, are you unable to fur- 
ther advise us as to who Colonel Smoot is? 

Mr. Young. I did not see this letter and I had nothing to do with 
replying to it. It was handled by routine correspondence in the 
(jffice. That is the reason I could not answer it more fully. 

Senator Bone. Are you unable to tell us wdiether he is in the Army 
or not. or has any active connection with the military over there? 

Mr. Young. This letter appears to say he has. 

Senator Bone. It refers to him as Adjutant General of Hawaii. 

Mr. Young. I would be very glad to look that up and report back 

to you. 

Senator Bone. Our committee can ascertain that. It thought per- 
haps you could inform us. 

Mr. Young. No ; I cannot. 

Mr. Raushenbush. Mr. Young, he was the agent for the Thomp- 
son gun in Hawaii, wasn't he? 

Mr. Young. There seems no doubt of that from that letter. 

Senator Bone. You also list him as the agent of Federal. 

Mr. Young. We appointed him in response to the letter, I presume, 
because we have no other agent there. 

Mr. Young. I think perhaps an investigation can be made to find 
out. I will be very glad to try and do that for you. 

Mr. Raushenbush. An investigation to find out what? 

Mr. Young. Whether he is part of the Army now, or whether 
he had been, or what is his status. 

Senator Bone. This letter to Mr. Ryan dated January 2, 1934, 
has been introduced in evidence. 

Mr. Young. There should be another letter or two with that which 
probably would have explained it. 

Mr. Raushenbush. It says in that letter that Mr. Ryan asks that 
the correspondence be returned. I assume that that is why it is 
not in your files. 

Senator Bone. On July 26, 1934, there appears in your records 
a statement signed by G. Oberdick. Who was he ? 

Mr, Young. My secretary. 

Senator Bone. That is the young man here? 

Mr. Young. Yes, sir. 

Senator Bone. I will offer this statement as " Exhibit No. 714." 
(The statement referred to was marked "Exhibit No. 714" and 
is included in the appendix on p. 1900.) 



1762 MUNITIONS INDUSTRY 

Senator Bone. This is an open statement to all Federal export 
agents. It is a rather lengthy statement, and I am going to read 
some few extracts from it. 

We take keen delight in advising you tliat the first G mouths of 1934 has 
been the most successful period in the history of our company. Total sales 
up to June 30 are three times as great as those for any single preceding year. 
A very gratifying feature of this excellent sales record is the important part 
that has been played by the export department of our business. To those of 
you who have contributed to this marvelous record we extend our sincere 
appreciation and congratulation. We know it has taken a lot of hard work 
to get this business, but it has paid dividends. 

With conditions of unrest as they are today throughout the world, you have 
a real opportunity before you if you will only get back of this thing and push 
the Federal program. 

Tear gas is fast becoming recognized as the leading and most humane, yet 
effective manner of quelling street riots and mob violence, not only in the United 
States, but in foreign countries as well. Here are a few instances where 
Federal tear gas has been used quite successfully in putting down riots, both 
of minor and major proportions. 

You doubtless are familiar with the conditions existing in Cuba immediately 
after the overthrow of the Machado Government. Strife reigned. Many peo- 
ple were killed or seriously wounded in street fighting. Realizing the need for 
some systematic and effective way of restoring quiet and peace to the island, 
the new government, under the direction of President Mendietta, appointed 
Mr. John W. Young, our president, as technical adviser to the Cuban Govern- 
ment on all police matters. 

Mr. Young is now engaged in the organization and operation of a national 
police force to preserve law and order on the island. 

It might appear from that that we did not need a Piatt amendment 
very badly. 

One of the first steps taken was to see that each division of this national 
police force was equipped with what we felt to be an adequate supply of tear- 
gas equipment to enable them to handle any emergency that might arise. 

The Cuban Government has already purchased over $400,000 worth of equip- 
ment, with more to follow. Included in this equipment are gas hand grenades, 
both tear and sickening gas, gas riot guns and shells, gas billies and cartridges, 
gas masks, Thompson submachine guns, portable chemical cylinders with gas 
and smoke charges, etc. 

We have also equipped their police with a fleet of radio patrol and armored 
cars. The attached newspaper clipping shows a section of this fleet as 
assembled at our factory here ,iust prior to shipment to Havana. These cars 
are built of special steel to withstand all types of pistol and rifle fire. Thick 
glass is used in windows and windshield to protect against pistol fire. Each 
car is equipped with a police siren, spotlight, puncture-proof inner tubes in 
the tires. 

Each car is also equipped with a case in which is carried the following 
equipment : 2 gas riot guns, one dozen long-range shells, two dozen Jumbo 
type grenades, two gas billies, six cartridges, two type GB military gas masks, 
one Thompson snbninchine gun, and one bullet-proof shield. Tlie 'armored 
trucks usually carry double this amount of equipment. The trucks are also 
equipped with an apparatus which can be used to release tear gas or lay down 
a smolce screen from the rear of the truck, thus obstructing it from the view of 
the enemy. 

Tliis type of equipment, without question, should 1)0 very valuable to the 
police departments of your country. It would enable them to reach a given 
point in a hurry and be prepared to meet any emergency that might arise. 

Argentina, Bolivia, and Colombia have now standardized on Federal tear gas 
for their pulicc. The Buenos Aires police are exceptionally well trained in the 
use of gas combatting all kinds of disturbances. They have used it on numer- 
ous occasions quite successfully. Their police instruction manual carried com- 
plete details and instructions for the use of tear gas. This indicates clearly 
the extent to which they have gone in the use of this type of modern equipment 
in their police work. 

Ronmania is another country in which Federal tear gas had a real intro- 
duction. Not so very long ago we received a report from our agent in Bucharest 



MUNITIONS INDUSTRY 1763 

enclosing a newspaper clipping commenting on the excellent results secured by 
the Bucharest police when they used Federal gas to break up a riot in their 
city streets. This is another case where the police in a foreign country have 
been exceptionally well schooled and educated in the use and value of tear gas 
as both a defensive and offensive weapon for police use. 

The world famous Eoyal Canadian Mounted Police use Federal tear gas 
" to get their man." Note the attached facsimile copy of order which we 
received from them. 

For the past three years we have been awarded the contract from our own 
Government covering their tear-gas requirements. 

Then, skipping over to the next page, this statement says : 

We are confident that if given an opportunity, we can perform a simihir 
service to your good Government in meeting their many police problems. Don't 
hesitate to impress upon them the importance of handling their riots and dis- 
turbances in a liumane, yet effective manner. Unquestionably tliis can best be 
accomplished with the use of tear gas in sufficient quantity to insure success. 

Be sure to advise your customer that when they use gas, to use plenty of 
jf * * * 

During recent months we have had renewed labor disturbances in various 
sections of the United States. Here's the way they met the situation. San 
Francisco purchased Federal tear gas to the extent of $30,000. Toledo, Ohio, 
used up $8,000 worth of gas; the Pittsburgh area (which as you know is the 
steel center of the world) purchased over $75,000 worth of gas (Federal) 
to protect their properties. Youngstown, Ohio, another steel center, bought 
Federal gas to the amount of $25,000. 

Now, Mr. Young, have you given us what you believe to be a fairly 
complete picture of your activities in lobbying either in State legis- 
latures or in Congress? 

Mr. Young. I believe I have. I tried to. 

INTEREST OF THE FEDERAL LABORATORIES IN LEGISLATION REGARDING 

EMBARGOES 

Senator Bone. Have you attempted to interest other munitions 
companies, or to interest those engaged in furnishing what might be 
called " war supplies ", to combat so-called " efnbargo " declarations 
or laws? 

Mr. Young. I believe when the question first came up I wrote to 
our competitor in the industry that he would be equally interested. 

Senator Bone. Did you get in touch with anyone else in the 
munitions business ? 

Mr. Yoltng. I wrote to the directors of our company, I believe. 

Senator Bone. What did you suggest your directors to do? 

Mr. Young. Acquaint their local senators with the conditions as 
they saw them. 

Senator Bone. I call your attention to a telegram dated December 
20, 1932, which I will offer as " Exhibit No. 715." 

(The telegram referred to was marked " Exhibit No. Y15 " and is 
included in the appendix on p. 1902.) 

Senator Bone. This was along about the time of that cooky pusher 
letter. This is addressed to Mr. Jonas and reads : 

Suggest you enlist Curtiss and United in * * * 

Who are they? 

Mr. Young. That is Curtiss-Wright and United Aircraft. 

Senator Bone (reading) : 

Suggest you enlist Curtiss and United in opposing the President's proposed 
arn)>^ embargo to Congress which would throw this business to Europe. Stop. 
See you tomorrow. 



1764 MUNITIONS INDUSTRY 



Mr. Joiuis, what did you do toward enlisting these big companies? 

Mr. Jonas. I do not think — in fact, I laughed at the thing when 
T got it. I said to Mr. Rich, " I do not think there is a possible 
chance to do anything there ", and it did not go any further. 

Senator Bone. You were not interested at all in embargoes, al- 
though your business wa.s an export business? Is that what you 
wanted us to understand ? 

Mr. Jonas. No, sir; but I did not think I was important enough 
to do anything. 

Senator Bone. You were just indifferent to this embargo matter. 

Mr. Jonas. I did not know enough about politics. I did not 
think that I could do anything. I do not recall doing anything. 

Mr. Young. Senator, I am not trying to dodge this telegram or 
the activities that I had. I w^as very sincere in my activities. 

Senator Bone. I do not doubt it. 

Mr. Young. I believe that an embargo which does not include 
the other countries does not accomplish the purpose that the sponsors 
of the embargo try to accomplish. 

Senator Bone. Then your idea is, as long as any one country 
sells ammunition around the w^orld, there should be no efforts made 
to impose an embargo on shipments of arms ? 

Mr. Young. No ; I would not say that, either. 

Senator Bone. What would you say? 

Mr. Young. I think that if a general program can be enlisted for 
an embargo and to stop w^ar, it is a good thing. 

Senator Bone. You think that if a general program could be 
started, you would be in favor of going along with it, do you? 

Mr. Young. Yes; I do. 

Senator Bone. How" would you suggest starting a general program 
of that kind? V/ould you suggest discussing it here or suppressing 
the discussion of it and "starting it in Argentina, organizing a society 
to promote peace in the Argentine — just how would you work it? 

Mr. Young. I think the last embargo that was placed on Bolivia 
started out along the proper lines. It was unfortunate that it did 
not take as w^ell in other countries as it did here. 

Senator Bone. The only way to create embargo sentiment is to 
discuss the desirability of embargoes; is that correct? 

Mr. Young. Yes, sir. 

Senator Bone. In the United States, the proper place to dis- 
cuss it would be in the United States. Is there anything wrong 
with that idea? 

Mr. Young. There is nothing wrong with discussing it in the 
United States. 

Senator r>oNE. Every time tliere has been a discussion of it, we 
find running through all of this correspondence, a story of propa- 
ganda of munitions companies against it and a desire to tlnvart it, 
to frustrate it, and attempt to send men dowm to Washington to 
kill it, " to put the heat ", to use a western expression, on Senators 
and Congressmen, and on legislators to stop it. That is the picture. 
Where are w^e going to get with these efforts if munitions companies 
apply this sort of political pressure to men in public life? Do you 
think that is the proper thing for them to do? What would you, 
as a munitions man, suggest? 



MUNITIONS INDUSTRY 1765 

Mv. Young. I avouIcI siifjoest that an effort be made to tie in the 
leading powers to a pact which would make an embargo effective. 

Senator Bone. Was not our State Department discussing that 
with other nations at the time? 

jNIr. YoiNG. It was not for a proposed embargo, as I had been 
informed up to that time. My telegram reads : 

Which would throw this business to Europe. 

Senator Bone. Yes; but the munitions companies make no dis- 
tinction about that at all. They are just opposed to embargoes. 
Your friend who is with the clu Fonts refers to the State Depart- 
ment facetiously as a '' bunch of cooky pushers." Is it regarded as 
sissyfied and old-maidish to discuss peace problems? 

iVIr. Young. I should not think so. 

Senator Bone. Mr. Jonas writes under date of December 29. 1932. 
to Mr. Young, a letter which I will offer as " Exhibit No. 716." 

(The letter referred to was marked " Exhibit No. 716 " and is in- 
cluded in the appendix on p. 1902.) 

Senator Bone. This is about the time when this embargo matter 
was being discussed and they were talking about '^ cooky pushers." 
Mr. Jonas says: 

Dear Mr. Young : Last night a friend of mine who is in the Department of 
Commerce and who was formerly commercial attache abroad visited me and 
asked me if I was doing anytliing with Ecuador. He informed me that they 
were in the market for more or less the same list of stuff that you were 
mentioning last week and also told me that the purchasing would" be done 
thru the Ecuadorian Minister in Panama. 

About three weeks ago this same inquiry came to the State Department, 
requesting tliem to sell them this lot of material, but the Government refused 
to accept the order. However, they did not object to them buying from the 
manufacturers in this country. This was my reason for telegraphing you last 
night. 

Can you throw any light on that rather equivocal language? 

Mr. Jonas. I think it was Mr. Brooks who told me about this 
business in Ecuador. 

Senator Bone. I cannot understand you. 

Mr. Jonas. I think it was Mr. Brooks who told me about this 
inquiry in Ecuador. 

Senator Bone. It rather paints a picture of an embargo against 
shipping into one country and, to get around it and circumvent it, 
shipping into another country. 

Mr. Jonas. I do not think there was an embargo. I did not know 
of an embargo. 

Senator Bone. Wliat is this reference to permits ? 

Mr. Jonas. Unless they were trying to purchase from the United 
States Government; I do not know. I have never shipped any- 
thing without a permit. I would not have tried to get an order 
if I did not have a permit. 

Mr. Young. I believe, Senator, that through Panama they were 
endeavoring to purchase this direct from the Government, as though 
it were for Panama. 

Senator Bone. The letter is rather obscure, and we wo'ild like to 
have you tell us what it means, if you can ? 

Mr. Young. That is the best I "can make out of it. This is back 
in 1932, and I cannot recall what else it could mean unless there was: 



1766 MUNITIONS INDUSTRY 

an attempt on the part of interests in Ecuador to purchase from 
our Government and to use Panama as a means to accomplish that. 

Senator Bone. On January 10, 1933, you received a letter from 
Mr. E. H. Pitcher, which I offer as Exhibit No. 717." 

(The letter referred to was marked " Exhibit No. 717 " and is in- 
cluded in the appendix on p. 1902.) 

Senator Bone. Who is Mr. E. H. Pitcher? 

Mr. Young. Mr. E. H. Pitcher is our salesman in Washington. 

Senator Bone. Who is he? 

Mr. Young. Our salesman here in Washington. 

Senator Bone. In Washington City? 

Mr. Young. Yes, sir. 

Senator Bone. Was he contacting the departments here, to keep 
you advised as to what was going on ? Read the letter and see what 
the character of it is. A copy of it was sent to Mr. Jonas. 

Evidently you were wiring him, because he acknowledges a copy 
of your telegram; and the subject of your wire must have been the 
embargo that was then being threatened. 

Mr. Young. At that time we had a negotiation on with Bolivia, 
and the embargo was in the course of discussion. I asked Mr. Pitcher 
to find out whether he thought it would go through and what we 
should do with the negotiation. 

Senator Bone. Your agent, Mr. Pitcher, who appears to be well 
informed, says: 

We have learned from what we consider a reliable source, that the War 
Department objects to the original draft of the congressional resolution em- 
powering the President to put an embargo on shipments of U.S. arms to warring 
countries, holding that it would be unfair to bar American manufacturers of 
arms and munitions from warring nations when these markets still will remain 
open to foreign countries. 

Would that appear to be the sole reason that the War Depart- 
ment was advancing, so far as you know ? 

Mr. Young. I do not know. I think Mr. Pitcher was passing on 
conversation of the street. 

Senator Bone. Shortly after that, April 15, 1933, Mr. Jonas writes 
to Mr. Sedgley a letter, which I offer as " Exhibit No. 718." 

(The letter referred to was marked " Exhibit No. 718 " and is 
included in the appendix on p. 1903.) 

Senator Bone. This letter is wa-itten to Mr. R. E. Sedgley, of 
Philadelphia, Mr. Sedgley being the arms man who has been under 
discussion here. 

I want you to read that letter, Mr. Jonas, and then tell us what 
it means. I will read the first sentence of it. It says : 

For your information, Arica, Chile, is a free port. Enough said. 

Mr. Jonas. This was evidently an answer to a question that Mr. 
Sedgley asked me regarding this port. 

Senator Bone. What was his question? 

Mr. Jonas. Apparently the goods could be shipped to Arica. 
Have you got any other letter. Senator, to refresh my memory on it ? 

Senator Bone. No; that is the only letter. What did you mean 
by Arica being a free port? 

Mr. Jonas. That arms could be shipped to xVrica. 

Senator Bone. As a matter of fact, all ports on the coast are free 
ports, are they not ? 



MUNITIONS INDTJSTEY 1767 

Mr. Jonas. That was the reason that arms could be shipped to 
Arica. That must have been the answer to the question of Sedgley's. 
Senator Bone. Sedgley is a shipper of arms ? 

Mr. Jonas. Yes, sir. 

Senator Bone. He is the man who has been referred to as " Side- 
walk " Sedgley ? 

Mr. Jonas. Yes. 

Senator Bone. He is a jobber of second-hand arms? 

Mr. Jonas. Yes, sir. 

Senator Bone. Was that a port through which some arms could 
be shipped at a time when they could not be shipped through an- 
other port? 

Mr. Jonas. Not that I know of. 

Senator Bone. Then just what is the meaning of this cryptic ob- 
servation, " Enough said " ? That implies that he would understand 
what you meant? 

Mr. Jonas. It does imply that, and I am trying to think what it 
meant at the time. 

Senator Bone. Among the munitions boys, what does an expres- 
sion of that kind mean? 

Mr. Jonas. Well, we all have different styles of writing. 

Senator Bone. You tell us what you meant by your style. 

Mr. Jonas. I am trying, honestly, to recall. Senator, what I meant 
by that. The thing is absolutely out of my mind, honestly. 

Senator Bone. Perhaps this will help you to refresh your memory. 
In the same letter there is a reference to Cutts compensator. That 
is a little de^ ice on the end of a gun ? 

Mr. Young. On a Thompson machine gun. 

Mr. Jonas. It can be used on any gun. 

Senator Bone. But it is used on the Thompson gun ? 

Mr, Jonas. It is used on rifles. It is used to stop the recoil. 

Senator Bone. Taking the reference to Cutts compensator in con- 
nection with the reference to a free port and " enough said ", might 
these not indicate that some of these very effective Thompson ma- 
chine guns were being passed through the port of Arica? 

Mr. Jonas. No, sir. No Thompson guns were being shipped; none 
at all. 

Senator Bone. They were not? 

Mr. Jonas. Absolutely not. 

Senator Bone. You want us to understand that that was merely a 
little slip of the pen, or something of that sort? That it did not 
have any significance at all? 

Mr. Jonas. I do not know what the significance was, sir. 

Senator Bone. My reason for asking you that is that we want 
you to be frank with us. You can understand why members of this 
committee are a little bit dubious about the frankness of munitions 
men. We want to be fair with you, and we want to be kind to you. 
There is no desire on our part to hurt you at all. But we want you 
to be frank with us. 

Mr. Jonas. I appreciate the object of your meeting, but I really 
do not know what " enough said " there means. I have forgotten 
about this thing. 

83876— 35— PT 7 11 



1768 MUNITIONS INDUSTRY 

Senator Bone. Well, you are the one who can explain it. When 
munitions men come before the committee, they must not charge the 
committee with a lack of fairness to them when they themselves, 
who have locked within their breasts the sole explanation for these 
actions, refuse to explain them. 

Mr. Jonas. I am not refusing to explain this, sir, but I am just 
trying and cannot recall what it was. 

Senator Bone. You gentlemen use trade expressions and equivo- 
cal expressions and ought to be prepared to come here and tell us 
what they mean or else be prepared to have an inference in the record 
that you refuse to do so. There is nothing unfair in that. Such 
a proposition is as old as the English common law. The man who 
writes the letter knows what he means. If he does not want to ex- 
j^lain it, the natural inference will follow. 

Let us read a letter dated July 18, 1934, which I will offer as 
" Exhibit No. 719." 

(The letter referred to was marked " Exhibit No. 719 " and is 
included in the appendix on p. 1903.) 

Senator Bone. This letter is addressed to Mr. Frank S. Jonas and 
signed by Gus O. Oberdick, of the Federal Laboratories. It reads : 

My Dear Busto: * * * 

Who is he? 

Mr. Jonas. He is a stenographer in the office. 

Senator Bone (reading) : 

After reading over Watson, Phillips' letter to you of July 9th a seeoncl time, it 
appears to me they are complicating matters somewhat. 

The order originally specified shipment direct to the police department on 
basis of cash against shipping documents to be forwarded through bank. 

Now they are requesting that we forward the equipment tlirough their 
Tampico agent who will arrange to make collection of the money. 

To what did this refer? 

Mr. Oberdick. This was an order from the police department 
and later I believe they changed the shipping instructions to go to 
the agents who would collect the money for it. I believe this was to 
sort of speed up the shipment. 

Mr. Rich. Possibly I can explain that. 

Senator Bone. We would be glad to have an explanation of it. 

Mr. Rich. We originally had instructions to ship that straight to 
the Government and then subsequently the instructions were changed, 
suggesting that we ship care of their agent who could help expedite 
the shipment through. It was just utterly impossible for us to do 
that, as we had to ship to the Government. 

Senator Bone. What was the ultimate destination of the shipment 
being discussed? 

Mr. Rich. It was supposed to be Tampico, I believe. 

Senator Bone. This letter reads: 

Will the Mexican consulate in New York pass the shipment consigned to 
Wats(m, Phillips' agent in Tampico? 

Mr. Rich. I understand the Mexican consul was perfectly willing 
to pass any sliipment anywhere into Mexico. 

Senator Bone. Where is Watson, Phillips located? 
Mr. Rich. Mexico City. 



MUNITIONS INDUSTRY 1769 

Mr. Young. Can I help you on that, Senator? 

Senator Bone. Yes ; if you will. 

Mr. Young. There are no Thompson machine guns ever shipped 
from the United States to any country without a permit from the 
State Department. 

Mr. Raushenbush. As far as you know. 

Mr. Young. That is as far as I know. 

Mr. Oberdick. This shipment later went through in the regular 
way. 

Senator Bone. Is there any further explanation of that? 

Mr. Young. That is all. 

Senator Bone. Mr. Young, yesterday we mentioned a young chap 
by the name of Pickerell who was operating in Brazil. I do not 
know that we made quite plain what his connections were down 
there. 

Mr. Jonas. That letter was to me. 

Senator Bone. Was he representing you there? 

Mr. Jonas. He was not representing me there. 

Senator Bone. He was in this arms deal down there ? 

Mr. Jonas. I do not know what deal he was in. He has never 
done any business for me. I have never given him my representa- 
tion. He has always wanted it, but I have never given it to him. 

Senator Bone. What were his connections down there? 

Mr. Jonas. He was the agent for the Ford Motor Co. and various 
other lines ; agent for a shipping company. 

Senator Bone. He was a friend of yours? 

Mr. Jonas. Yes, sir. 

Senator Bone. He was in Para, Brazil? 

Mr. Jonas. Yes, sir. 

Senator Bone. Were any of his people connected in any public 
way with governmental activities? 

Mr. Jonas, At present, no. 

Senator Bone. Were they at the time? 

Mr. Jonas. No, sir. 

Senator Bone. The American Government? 

Mr. Jonas. No ; not at that time. 

Senator Bone. Well, at what time were any of his immediate 
family connected with the Government? 

Mr. Jonas. Years previously. 

Senator Bone. I beg your pardon? 

Mr. Jonas. Probably 2 years previously — I do not think his peo- 
ple were in the Government at that time. I am pretty sure of that. 

Senator Bone. You say you do not think they were in the 
Government ? 

Mr. Jonas. I am sure he was not in the Government then. 

Senator Bone. I did not ask about him. I asked about his people. 

Mr. Jonas. His people I am talking of now, sir. 

Senator Bone. Are you not able to advise us whether they were 
in the Government service? 

Mr. Jonas. His people were in the Government service. 

Senator Bone. They were in the Government service? 

Mr. Jonas. Yes, sir. 

Senator Bone. Tell us which Government. 



1770 MUNITIONS INDUSTRY 

Mr. Jonas. In the American Government. 

Senator Bone. When you say " his people ", who do you mean ? 

Mr. Jonas. I am referring to his father. 

Senator Bone. His father was in the Government service. What 
position with this Government did his father hold? 

Mr. Jonas, He was American consul. 

Senator Bone. His father was American consul. Where was he 
located? 

Mr. Jonas. In Para. 

Senator Bone. Where is Para located? 

Mr. Jonas. In northern Brazil. 

Senator Bone. Is that a seacoast city? 

Mr, Jonas. It is at the mouth of the Amazon. 

Senator Bone, That was not brought out yesterday. When was 
his father in the Consular Service? 

Mr. Jonas. I think he was retired about 6 years ago. 

Senator Bone, About 6 years ago ? 

Mr, Jonas, Six or seven years ago. He is an old man today. I 
do not think he is at all active. 

Senator Bone. Of course, if his father is no longer in the Govern- 
ment service or was not in the Government service at that time, the 
incident, of course, has no particular significance, 

Mr, Jonas, No, sir. 

Senator Bone. There should be no intimation of that kind in the 
record. Was the young man down there during the time his father 
was in the Government service? 

Mr, Jonas. When on his vacation he was, and after probably about 
5 or G years later he was in business. 

The Chairman. Mr, Young, yesterday there was some discussion 
of your relations witli certain police departments. Does the Federal 
Laboratories sell to the New York State troopers or the State police? 

Mr, Young, Yes, sir; we do. 

The Chairman. To whom do you sell? 

Mr, Young. Through the New York State purchasing department. 

The Chairman. Who handles that for the State? 

Mr, Young. I could not give you the name of the purchasing 
agent. It comes through on regular forms. I do not know the 
name. 

The Chairman. Do you have any people to whom you look, on 
the State police force? 

Mr. Young. No; we do not. 

The Chairman, Who is Captain Moore ? 

Mr, Young, Captain Moore is the chief inspector of the New York 
State police. 

The Chairman, Have you had contacts with him? 

Mr. Young. Yes; I have. 

The Chairman, Just what have these contacts had to do with? 

Mr, Young. I met him one time in their police school. He is a 
man who has a very high reputation in police schools in the United 
States, Later I recommended him to the Cuban Government, and 
he was loaned to them for about 6 weeks. 

The Chairman, Has he finished that work in Cuba ? 

Mr. Young. Yes ; he has. 



MUNITIONS INDUSTEY 1771 

The Chairman. Have you paid Captain Moore a commission? 
Mr. Young. I have not, sir. 

The Chairman. Has your company paid him a commission ? 
Mr. Young. They have not. 

The Chairman. Have you paid him any expenses? 
Mr. Young. No; we have not. 

The Chairman. Did you have any hand at all in his employment 
in Cuba? 

Mr. Young. I recommended him, and the payment of his fees 
down there was made to me, and paid by me over to Captain Moore. 
The Chairman. Who paid you? 

Mr. Young. The Cuban Government. There was an error in the 
payment, there was $6,000 paid in one lump, and that was to cover, 
as my contract read, for myself and for two assistants. 

The Chairman. You recommended Captain Moore to the Cuban 
authorities ? 

Mr. Young. Yes, sir. 

The Chairman. He was to do what, train the police down tliere? 
Mr. Young. He was to put on the police school. 
The Chairman. Demonstrating the methods of handling gas 
bombs ? 

Mr. Young. The New York State police have a police college 
which has been adopted by the International Police Chief's Associa- 
tion as a model police college, and it was intended to have Captain 
Moore duplicate that college in Habana, and he sent down their 
curriculum and a duplicate program. 

The Chairman. He was there about 6 weeks ? 
Mr. Young. Yes, sir. 

The Chairman. What was paid to him for that service ? 
Mr. Young. I do not recall oif hand. I think the total traveling 
expenses for two trips, and the time down there was about $2,000. 
The Chairman. I expect, Mr. Young, that you, like all members 
of this committee, are a believer in an adequate national defense? 
Mr. Young. I am. 

The Chairman. Do you contemplate that we should be prepared 
for any foe that might be developed in the future ? 

Mr. Young. I am very much interested in the national defense. 
The Chairman. You work with the Federal authorities in plan- 
ning such a defense, of course? 

Mr. Young. We are on the industrial program division of the 
War Department, and I would say further that practically all of our 
developments which we have worked out in our own research de- 
partment have been mailed in to the War Department, making that 
information available to the War Department, 

The Chairman. Would your comi)any consider a proposition to 
sell supplies for national defense to a country that might some day 
be our foe ? 

Mr. Young. That is a question of what might be considered in a 
man's ()))inion of who would be our foe. 

The Chairman. Who is the authority we can turn to today, to 
tell us who our foe in another war is going to be? 

Mr. Young. Is there anybody, do. you think, in our Government, 
who Avonid want to go on record and say we expect such and such a 
nation to be our foe. I would hesitate to hazard such a statement. 



1772 MUNITIONS INDUSTRY 

The Chairman. Of course it is hard to conceive Great Britain 
being our foe ; we just don't think of it that way, do we? 

Mr. Young. No. 

The Chairman. Or France either; we don't count them as being 
at all apt to be giving us any trouble, or we giving them any trouble. 

Mr. Young. No ; we do not. 

The Chairman. How about Japan ; there is a large feeling in this 
country, and I guess in Japan, too, that there might be war between 
the United States and Japan some day. Do you feel that our na- 
tional defense must be a program looking to a possibility of diffi- 
culties against Japan ? 

Mr. Young. I do not believe Japan could ever do much in the 
United States. 

The Chairman. Would not ever do much ? 

Mr. Young. Yes. 

The Chairman. We are not going to argue that, I don't think any 
of us think they can, but there is a lot of talk to that effect. 

Mr. Young. Yes. 

The Chairman. A large part of our national defense program is 
based upon ultimate war with Japan, or at least that we should 
defend ourselves against that possibility if it should develop. Would 
you feel it would be perfectly all right from the standpoint of our 
national defense to sell what you produce to Japan? 

Mr. Young. I have given them quotations on some of our equip- 
ment. 

The Chairman. That was not the question. Do you feel it would 
be a good move from the standpoint of our American national 
defense ? 

Mr. Young. The material I quoted them, I would say yes. 

interest in legislation regarding control or SALES or firearms 

The Chairman. We showed yesterday, or you showed your interest 
in the legislation having to do with the firearms bill here in CongTess 
last winter. Just what was the purpose of j^our interest in that, 
would you state, even to the extent of repeating yourself of yesterda}^, 
if need be. 

Mr. Young. Senator, I believe that there has been a flow of firearms 
into this country which has been entirely unnecessary. When fire- 
arms were first introduced, almost everyone felt they could carry 
them — that is, back in the pioneer days, and the country has never 
gotten entirely away from that. I believe control has been given to 
tear gas because the manufacturers are so limited that they have 
voluntarily endeavored to keep it from being sold promiscuously 
through stores, like firearms were. I am a firm believer that fire- 
arms should eventually be kept under close control where there is 
no way for them to be bought by the young boys who have an idea 
they would like to start shooting. 

The Chairman. You say that without any thought of a possible 
desire to eliminate competition so that you can have the entire field 
yourself ? 

Mr. Young. I would not say that was the dominating thought, 
Senator. As a matter of fact, I believe if you will revicAV back over 
the records, the bill pertaining to the gun was less severe, as orig- 



MUNITIONS INDUSTRY 1773 

inally proposed by the Department of Justice, than I recommended 
it, and as it was afterwards made. I said, " Let us do it right while 
we are at it." 

The Chairman. Now, in April of this year, on the 28th, you wrote 
W. B. Ryan, of the Auto-Ordnance Corporation, New York, in 
which you told him of your recent visit and conference at Washing- 
ton Avith the Bureau of Investigation. You spoke of the new laws 
that were going through Congress as being laws that would greatly 
increase the work of the Bureau of Investigation and require them 
to increase their staff of men, and also increase the amount of equip- 
ment they will need ; and then you say : 

From information I gather in Washington I feel very confident that the fire- 
arms bill will go through Congress and become a law. This is very encouraging, 
for it will do much to spike possible competition and to kill off the gun that 
is now being made in New York. 

I want you to tell us now about that gun being made in New York, 
that statement being made as of last April. 

Mr. Young. I think that question was discussed yesterday, in 
which I told you all that I know about it. 

The Chairman. Doesn't this letter serve to refresh your memory 
at all? 

Mr. Raushenbush. Was that the Hyde gun ? 

Mr. Young. It was the Hyde gun. 

The Chairman. You wrote the letter, didn't you, Mr. Young? 

Mr. Young. Yes ; I did. The report that came to me on that Hyde 
gun, as I can recall it, was that it w^as being peddled to anyone who 
would take it up to manufacture it. I think there was one gun in 
negotiation. I have never seen the gun, and my information de- 
pended entirely on the report I picked up, and the most I could get 
there was that there was such a gun being talked about. 

The Chairman. But you said it was being made in New York, and 
indicated that it was a very decided source of competition. 

Mr. Young. Did I say it was, or promised to be ? 

The Chairman. You were speaking of spiking possible competi- 
tion and killing off the gun that is now being made in New York. 

Mr. Young. I meant to say being made, but not in the sense that 
they were being manufactured in quantities; that was my under- 
standing, at least. It might have been manufactured in quantities, 
but I do not know. 

The Chairman. Now, then, your interest in this firearms legis- 
lation was as largely occasioned by the competition you had or that 
was being threatened, as it was by any patriotic desire to break down 
this crime wave we were dealing with at the time, wasn't it? 

Mr. Young. I believe it is possible to have both of those motives. 

The Chairman. I can see very clearly that not only is it possible 
but it is quite probable it would exist. 

Mr. Young. That is right. 

The Chairman. At that time, in the spring of this year, you were 
engaged in a very extensive campaign to sell those guns ? 

Mr. Young. I was. 

The Chairman. Of what did that campaign consist? 

Mr. Young. The normal campaign we have with all of our prod- 
ucts. We circularize all police departments by direct mail. 



1774 MUNITIONS INDUSTRY 

The Chairman. What contacts did you have with the Department 
of Justice or Bureau of Investigation respecting the individual sale 
of machine guns? 

Mr. Young. When the Attorney General's office became concerned 
over the talk of legislation about that gun and what could be done 
to control it, they asked if the manufacturers and sales agents of the 
gun would confer with them and tell them the history of the gun 
and any recommendation we had. 

The Chairman. Weren't you a little bit afraid the Department of 
Justice was going to be overly severe in the matter of the sale of 
guns to individuals? 

Mr. Young. At first I was; but when I got to talking to them I 
lost that fear. I saw they were very earnestly endeavoring to find 
the most logical solution for this time. 

The Chairman. On October 30, 1933, you wrote Mr. Ryan, and a 
copy of that letter will be laid before you and introduced in evidence 
at this time. 

(The letter referred to was marked " Exhibit No. 720 " and is 
included in the appendix on p. 1903.) 

The Chairman. You say in this letter, " Exhibit No. 720 ", as 
follows : 

Following your plione conversation today, I thinli we should give every 
serious tliouglit as to how far we want to bind ourselves to the Department of 
Justice on the Individual sale of machine guns. 

What is the meaning of that language ; it is not clear to me what 
that meant? 

Mr. Young. It has not any specific meaning to me. 

The Chairman. Let us read the next paragraph of the letter, 
which says: 

I have no fear from any of the present staff in Washmgton ; but, after all, 
that is a political organization, and time might come when there may be some 
officeholder who may not be like-minded to the present staff. Therefore, I think 
we should be careful in voluntarily giving too many rights which we now have. 

Now, what rights did you have? 

Mr. Young. We had the right to sell that gun. 

The Chairman. Is this what is referred to as the " Tommy " ? 

Mr. Young. Yes; that is the Tommy. We had the right to sell 
that gun to anyone. 

The Chairman. To anyone that wanted to buy it ? 

Mr. Young. Yes, sir. 

The Chairman. There were no restrictions? 

Mr. Young. Yes ; that is right. 

The Chairman. What restrictions were being contemplated at 
that time? 

Mr. Young. The restriction being contemplated at that time was 
to take it off of the market entirely. 

The Chairman. Do you mean as relates to individual sales, or 
sales to police? 

Mr. Young. Sales to everybody. 

The Chairman. Who was going to supply the police? 

Mr. Young. Apparently there had been no provision made for 
that. There was a vicious feeling against the gun and they wanted 
to take it off of the market, was the impression we got. We believed 



MUNITIONS INDUSTRY 1775 

the gun is very valuable for police departments. We had no par- 
ticular interest in selling to individuals and the agreement which 
we voluntarily offered to the Attorney General's Office was that no 
gun sold to any other than a division of the Government would be 
sold without first securing the permission of the Department of 
Justice. That means that not even a sheriff or police officer, under 
our regulations, was permitted to buy the gun without getting the 
approval of the Department of Justice. 

The Chairman. What would be wrong with that? 

Mr. Young. Because sheriffs go out of office, and if they person- 
ally purchased the gun, they would take it as their possession, and 
the gun is eventually brought back on the market. If a county or 
a municipality buys a gun, it remains public property, and we have 
a certificate which every purchaser had to sign then, and still has 
to sign, stating that the gun is purchased as the property of that 
division of the Government and w^ill not be disposed of in any 
manner without the consent of the Auto-Ordnance Corporation, in 
writing. 

The Chairman. What is the law now? 

Mr. Young. The law is now that we can sell this gun by reporting 
them to the Department of Justice and paying a tax of $200 per 
gun. Police departments do not pay any tax. I think the law is 
very fair. 

The Chairman. Last fall it appears you were finding yourself 
faced with the competition of this new Belgian machine gun. You 
said in correspondence at that time that this particular gun " can be 
sold in the United States cheaper than the Thompson, and it gives 
me some concern if it should come on the market." 

How large was the threat that it was coming on the market ? 

Mr. Young. There had been 100 of them imported in, and they 
were laying in the warehouse in New York at that particular time. 

The Chairman. You said in your letter of date August 8, 1933, 
to Mr. Ryan of the Auto-Ordnance Corporation, quoting your exact 
language, the following: 

I have examined one of these guns which Lieutenant Cutts has. It appears 
to be smaller and simpler than the Thompson. It can be sold in the United 
States cheaper than the Thompson and it gives me some concern if it should 
come on the market. 

You considered that real competition, did you not? 

Mr. Young. Yes, I did; and I think the whole situation can go 
into the flooding or the dumping of German or Spanish guns on 
the American market, which has been going on for the past several 
years, and it ought to be stopped, and is not effectively stopped. 

The Chairman. As a matter of fact, would you not have liked to 
have had the right to sell that gun ? 

Mr. Young. No; I would not. It is an inferior gun and I would 
not care for it. You can buy a Spanish imitation of the Smith & 
Wesson gun for about $8, but no police department would have it. 

The Chairman. All right, you then went to the Attorney General 
and attempted to get an embargo imposed upon the importation of 
foreign-made machine guns, did you not ? 

Mr. Young. I did. 



1776 MUNITIONS INDUSTEY 

The Chairman. Did you get such an embargo? 

Mr. Young. We had an agreement which was put on his desk, 
and I had the promise through the Attorney General's Office that 
<vould be done. 

The Chairman. Then you proceeded to get the rights to sell this 
gun, the right you said you did not want, did you not? 

Mr. Young. No; I was offered the rights but did not proceed to 
get them, and did not tiike them. 

The Chairman. Now, the concluding paragraph of this letter of 
August 8, sent by you to Mr. Ryan is as follows : 

Assuming the President will take the requested action we have only to 
consider then the matter of American manufacture under patent rights. Har- 
rington & Richardson or Sedgley may take some such rights and develop com- 
petition for us on a price basis that would prove embarrassing. Do you wish 
me to secure from Mr. Stone proposed price for license under the patent, or 
have you any other suggestions. 

Doesn't that pretty clearly indicate you seriously considered buy- 
ing the patent rights ? 

Mr. Young. No; I was speaking for Mr. Ryan. My contract on 
the Thompson machine gun does not permit me to handle any other 
competing gun, ^nd I was asking Mr. Ryan what he proposed to 
do from his standpoint. 

The Chairman. The facts are that you placed the Belgian manu- 
facturer of this gun in a position of having to sell the patent rights 
here if he wanted to sell in the market at all, did you not? 

Mr. Young. Yes ; I think that could be said. 

The Chairman. You destroyed to him, through the embargo that 
you requested, any bargaining power that the Belgian manufacturer 
might have for the sale of his product in America. 

Mr. Young. Yes, sir. 

The Chairman. Let the letter of August 8 from Mr. Young to Mr. 
Ryan be marked as an exhibit, 

(The letter referred to was marked " Exhibit No. 721 " and is 
included in the appendix on p. 1904.) 

The Chairman. Under the machine-gun rules and regulations 
that have been written during the last year it is made difficult, and 
even impossible to make individual sales of machine guns, is it not? 

Mr. Young. I think that is what was intended to be done. 

The Chairman. Have you made individual sales at all ? 

Mr. Young. I do not think we have made a single individual sale 
since that law went through. 

The Chairman. How have you gotten your machine gun onto 
the market? 

Mr. Young. It is sold solely to the police departments, where I 
think it belongs. ^^ 

The Chairman. As relates to sales, yes ; but do you loan machine 
guns? 

Mr. Young. Just in what way ? 

The Chairman. Do you loan machine guns? You cannot legally 
sell them, so, do you loan them at a rental price? 

Mr. Young. I do not think you can loan them, even, under the 
bill. I don't think you can dispose of them in any way by gift, 
loan, or in any manner. 



MUNITIONS INDUSTRY 1777 

The Chairman. Now, I want to read you a letter dated August 
12, 1932, addressed to Donaldson's Amazon Expedition, which letter 
is offered in evidence. 

(The letter referred to was marked " Exhibit No. 722 " and appears 
in full in the text.) 

The Chairman. This letter, " Exhibit No. 722 ", reads as follows : 

Gentlemen : We are advised by our Mr. May that you are interested in 
securing two Tlionipson sulnnacliine guns to take with your expedition to South 
America. I am sure you will find no gun more valuable to you than the 
Thompson submachine gun. 

We are not in position to sell you these guns outright as they are sold only 
to police departments, but we can offer you an arrangement which will doubt- 
less interest you even more than an outright purchase. For a deposit of 
$100 on each gun, we will loan the equipment to you, and if returned within 
six months, refund $50 on each gun. If returned within one year there will be 
no refund, but you will agree to guarantee the return of the guns In good 
condition, reasonable wear and tear allowed. 

We would be very pleased to hear from you further on this basis. 

Mr. Young. May I call your attention, Senator, that this was 
written May 12, 1932, and the bill was passed about that time, in 
1934. 

The Chairman. What is the meaning of this language, " We are 
not in position to sell you these guns outright." 

Mr. Young. As a matter of fact, we were, but we did not choose 
to. I mean there was no law prohibiting us from selling those guns, 
but we were not in position, according to the company policy, to sell 
the guns in that manner, and that was the most polite way we found 
we could tell them that. 

Senator Clark. You can kill a man just as dead with a gun you 
rented as one you bought, can't you? 

Mr. Young. This was a very high-grade expedition into the Ama- 
zon for research work, and I thought the men needed the protection 
they could get from that gun. 

The Chairman. Why couldn't you sell them a gun ? 

Mr. Young. We could. 

The Chairman. Then why didn't you? 

Mr. Young. We didn't care to do it. We have turned down many 
requests to buy Thompson machine guns. 

The Chairman. For instance, what requests? 

Mr. Young. Wealthy men have wanted to buy the guns out on a 
ranch or a place such as that, and Mr. Ryan, who has control of that, 
has steadfastly adhered to the policy that it is a police gun. It has 
been sold to banks, such as the Federal Reserve bank and organiza- 
tions of that type, but we have steadfastly discouraged its use by 
individuals. A man may have it in his home and be entirely honor- 
able ; and one of his servants may steal it ; and it is out in the hands 
of the criminal; and that brings a bad reputation to the name of 
the gun. 

Mr. Raushenbush. Have any of them been sold to industries ? 

Mr. Young. There have been a very few of them sold for pay-roll 
protection. The gun will not be sold to any industry in labor 
trouble. Mr, Ryan has steadfastly prohibited its use under such 
conditions. 

Mr. Raushenbush. You have sold to some of the large steel com- 
panies ? 



1778 MUNITIONS INDUSTRY 

Mr. Young. We have sold a few, and I think they bought them in 
the earlier days when the guns could be purchased through supply 
stores. 

The Chairman. In how many instances have you resorted to this 
loan practice? 

• Mr. Young. So very seldom that I told you we do not do it. I 
did not recall it at that time, Senator, and my secretary tells me there 
is one other case where this was offered; and neither case went 
through, to my knowledge. 

The Chairman. Your manufacture involves a great many patents 
and secrets, does it not? 

Mr. Young. Yes, sir. 

The Chairman. Do you sell these patents and secrets abroad ? 

Mr. Young. Some of them we do and some we do not. 

The Chairman. Do you sell to Japan? 

Mr. Young. We offered to sell our tear-gas patents to Japan. 

The Chairman. I offer in evidence a letter of date February 9, 
1932, addressed by the Federal Laboratories, Inc., by its president 
to Okura & Co., No. 30 Church Street, New York. 

(The letter referred to was marked " Exhibit No. 723 " and is 
included in the appendix on p. 1904.) 

The Chairman. Who is Okura & Co. ? 

Mr. Young. They are Japanese merchants in New York, brokers. 

The Chairman. This letter is marked for the attention of Mr. I. 
Koizumi, who is he? 

Mr. Young. He is either a clerk or the district manager there, I 
don't know which. 

The Chairman. He had evidently written you wanting certain in- 
formation ; what was that information he wanted ? 

Mr. Young. It is a well-known fact in America, amon^ the 
American manufacturers that the Japanese desire to get as much 
information as they can, and one of their waj^s of getting informa- 
tion is to get all of your patent numbers and copies of the patents 
and look them up, and he was endeavoring at this time to get all of 
our patent numbers, and I think this was a courteous stall. 

The Chairman. However much of a stall you may want to call it 
now, you very definitely did agree to turn over to the Japanese 
Navy not only the patents and rights for issuance of it, but also the 
formula, manufacturing process, detailed manufacturing specifica- 
tions, and detailed instructions for their use, did you not? 

Mr. Young. I did, and I said that before, and it is explained by 
what you get, whether you turn it over to them or not, by buying 
the products and taking them over and rebuilding them. 

The Chairman. You did not supply the numbers of the patents 
that were involved ? 

Mr. Young. No ; as a matter of fact, there are other ways in which 
they could get them if they chose. 

The Chairman. But if they got the numbers of the patents, they 
could more readily trace them, could they not? 

Mr. Young. Yes; much easier for them. 

The Chairman. And if they had traced them, they would not need 
to buy any patent rights from you, would they? 

Mr. Young. Not most of them, that is true. 



MUNITIONS INDUSTRY 1779 

The Chairman. Do you not think on matters of that kind it 
would be far better that the Government alone control such patents 
and devices? 

Mr. Young. Are you referring now to tear-gas patents ? 

The Chairman. Anything that might he for use of a national- 
defense nature. Evidently here you had developed something no 
one else had, and which gave us a large advantage. 

Mr. YouNo. With this hand grenade, the gas billy, and the gas 
line gun, and the gas mask, that is what we were negotiating with. 

The Chairman. But here was the request for patent numbers of 
all your products. 

Mr. Young. In this letter I state : 

Regarding Captain Hiraoka's request for aU patent nnnibers of oiu- proflncts, 
I should be very glad to accommodate him, but I am not just sure that I can 
give him what he wants. 

The Chairman. You say this was a sort of stall ^ 

Mr. Young. That is exactly it. It was a polite stall. 

The Chairman. Then why, in the concluding paragraph of your 
letter, did you urge him to speed up because things were coming to a 
pass where a little bit later you might not be able to do anything for 
him at all ? 

Mr. Young. I wanted to sell him and I want to sell him the rights 
on this product [exhibiting hand grenade]. I did not want that 
officer to be prying into other things I did not want to sell him. 

The Chairman. The fact is that embargoes were being talked at 
that time. Is not that true ? 

Mr. Young. Yes. 

The Chairman. In the concluding paragraph of your letter vou 
state ; 

Due to the impending possibility of Federal embargo on such materials I 
trust you will be able to secure authority from Tokyo to proceed with the 
transaction at an early date; otherwise, this authority might be received too 
late and I would be requested by the State Department to hold up the trans- 
action. I dislike to hurry you but believe it expedient to close the deal as 
soon as possible, and I will come to New York any time you are ready to 
discuss the matter further. 

That was not a stall, was it? 

Mr. Young. Senator, may I refer to it as a sales letter, in which I 
politely stalled him on certain things he wants? 

The Chairman. Let us get through with this letter first. 

Mr. Young. And in which I tried to urged him to go ahead and 
buy things I wanted to sell him. I do not recall any embargo, or 
proposed embargo, against Japan. I was trying to urge him to go 
ahead and buy, and using sales talk. There was a. talk of embargo 
in general. 

The Chairman. But you wanted to sell him? 

Mr. Young. Yes; I did. 

The Chairman. Sell him what? 

Mr. Young. Our tear-gas patents and specifications for manu- 
facture. 

The Chairman. Detailed instructions for their use? 

Mr. Young. Yes, sir. 

The Chairman. I want to ask you again, Mr. Young, do you be- 
lieve in an adequate national d3f?nse? 



1780 MUNITIONS INDUSTRY 

Mr. Young. Yes; I do; and thoro are some thin<,rs which those men 
would like to buy which they cannot be given. 
The Chairman. Why cannot they buy them? 
Mr. Young. I do not have a price on them. 

The Chairman. Are they matters on which our Army and Navy 
have an exclusive right, Mr. Young? 

Mr. Young. At least my knowledge of them is such that it should 
be kept exclusively for the Army and Navy. 

The Chairman. If you had gone tl)rough with this deal with 
Japan, would you first' have had to obtain the consent of the Army 
and Navy? 

Mr. Young. I would not have had to do it, but I w^ould have re- 
ported it to them promptly. 

It might help, Senator, if I tell you that no foreign visitors, under 
an agreement which we have with the Navy — no foreign govern- 
ment visitors will be permitted to go into our plant without first se- 
curing a permit from either the Army or the Navy. 
Senator Bone. Does that apply to your gas activities? 
Mr. Young. That applies to everything now. That was made, I 
think, several months ago. 

The Chairman. Does the Navy, by any chance, take those products 
on board a naval vessel and take them all around the world and 
demonstrate them to other powers, as they do some of the guns on 
our naval vessels? 

Mr. Young. No; we have never sold this to the Navy. 
Senator Bone. Why would the Army and Navy want to keep your 
gas activities secret, when you are selling to every country in the 
- world? 

Mr. Young. I am not speaking about the gas activities. I offered 
to sell the gas activities, and I am sure there would be no objection 
on the part of either the War or Navy Department to such common 
knowledge. The question of types of bombs or other military infor- 
mation, I believe there would be a question on. After all, this is 
police equipment and not military equipment [exhibiting hand 
grenade] . 

Senator Bone. The only thing so far wdiich has been kept out of 
the public records is this " Bouncing Betty ", which was discussed 
yesterday. The rest of it seems to be open to the w^orld. 

Mr. Young. I cannot agree to the rest of it being open to the world. 
Senator. 

Senator Bone. You have agents throughout South America, ap- 
parently selling everything which you make. Wh}^ this claim of 
secrecy and all this mysterious business in connection with the muni- 
tions game, when munitions men are selling this stuff all over the 
world — not only selling it but encouraging governments to buy it? 

Mr. Young. When the War Department releases information, 
which they do, we then feel free to go ahead and market it. Where 
they do not release it, as they frequently do not — and we have let- 
ters in our files to that effect — we respect that and do not attempt to 
exploit it. 

The Chairman. Just Avhat is this agreement which you have with 
the Auto Ordnance as relates to the Thompson machine gun? 

Mr. Young. I believe. Senator, we gave a copy of that agreement. 
The Chairman. I mean just roughly. 



MUNITIONS INDUSTRY 1781 

Mr. Young. It is a rather long agreement to discuss, but we have 
the exclusive sale and distribution of the Thompson machine gun 
to police departments in the United States. 

The Chairman. To police departments alone? 

Mr. Young. No ; we sell it to the Government now also. 

The Chairman. Then you have exclusive right to the sales of the 
Thompson machine gun, which can be made in the United States? 
Is that it? 

Mr. Young. Yes, sir. 

The Chairman. How do you make your sales to the Government? 
Do you exercise any salesmanship there at all ? 

Mr. Young. Our salesmanship is exercised in explaining to the 
men who will use it the functions of the gun, and the purchases are 
made on competitive bidding. 

The Chairman. Why do you need salesmanship at all? The gun 
is pretty well recognized, is it not? 

Sir. Young. The fact that they were selling about two guns a 
week before w^e took over the sales shows that the gun cannot sell 
itself. People must know about it. There are new people coming 
into power who are not familiar with the weapons which are avail- 
able. 

The Chairman. New people coming into power where? In the 
Army and Navy? 

Mr. Young. Appointed police chiefs; appointed heads of differ- 
ent departments in the Government. 

The Chairman. We are talking now about your business with the 
Federal Government. 

Mr. Young. With the Federal Government. 

The Chairman. Do you employ salesmen to sell to the Federal 
Government ? 

Mr. Young. Yes, sir; Mr. Pitcher sells to the Federal Govern- 
ment. 

The Chairman. How long has he been thus employed? 

Mr. Young. He has been with us about 6 years. 

The Chairman. Do you pay commissions on sales that are made 
to the Government? 

Mr. Young. Yes; we do. 

The Chairman. How large a commission ? 

Mr. Young. It depends on the department. I think it is 5 
percent up to 15 percent. 

The Chairman. You say, depending on the department. Are 
some departments harder to sell than others ? 

Mr. Young. In the Army they have their schools of instruction, 
and they buy them without any effort other than to contact them 
and take bids. 

Senator Clark. What does the Army use the Thompson gun for ? 

Mr. Young. They are used quite generally throughout the Army. 

Senator Clark. They are not standard equipment in the Army, 
are they ? 

Mr. Young. Yes; they are. 

Senator Clark. Wliom do they arm with it? What branch of 
the service? 

Mr. Young. I think it is in use in practically all branches of the 
service except the Engineering Corps. 



1782 MUNITIONS INDUSTRY 

Senator Bone. It is not an Infantry arm, is it? 

Mr. Young. It is a combination between a side arm and a rifle, 
and what we are advocating at the present time is that the non- 
commissioned officers carry the Thompson submachine gun, and 
there are advocates of that program within the Army. 

The Chairman. That woukl put the Government in the market 
for as many as three or four thousand Thompson machine guns? 

Mr. Young. They were never in the market for that number clur- 
ing my work with the gun. 

The Chairman. August 26, 1933, you wrote Mr. Ryan concerning 
this matter, and I will ask that that letter of August 26 be marked 
as an exhibit for the record. 

(The letter referred to was marked " Exhibit No. 724 " and is 
included in the appendix on p. 1905.) 

The Chairman. In that letter you state : 

Referring to our conversation of yesterday, wish to advise that it will be 
agreeable for you to put a man to work soliciting the U.S. Government for a 
prospective order for 3,000 Thompson submachine guns, paying him a commis- 
sion of 5 percent, one half of which would be deducted from our regular 
commission. 

Mr. Young. That was a request from Mr. Ryan to me, of which I 
knew nothing except that under the first agreement he would be 
required to have my permission to give somebody else a chance to 
sell it. 

The Chairman. You seem to be very cautious about who was to 
be engaged to represent you and to receive this commission in Wash- 
ington. Who was finally engaged? 

Mr. Young. I do not believe the man was engaged. I never met 
him, and I have no knowledge of his work since then. 

Senator Bone. Is there a difference in prices to the different Gov- 
ernment dej)artments? 

Mr. Young. Yes, sir. 

Senator Bone. How do you account for that? 

Mr. Young. In some departments we have had to put in schools 
throughout the United States teaching them how to use it. That 
has cost money and, obviously, that cost must come from somewhere. 

Senator Bone. Did I understand you to say that you call for 
bids on it? 

Mr. Young. Yes; we do. 

Senator Bone. Then you do not have what is called "negotiated 
contracts " ? 

Mr. Young. They are not negotiated contracts. 

The Chairman. Do you have to pay larger commissions to get 
your product into some departments than others ? 

Mr. Young. Yes, sir. Our business is all worked on a commis- 
sion basis with our agent ; and if an agent is put on a school out over 
the United States, for instance, in Seattle, Wash., that is costing 
him money, and the customary complaint is that our men have not 
been interested in the Thompson machine gun for Government de- 
partments because the amount of work has not enabled them to make 
any money on it. 

Senator Bone. What departments of the Government buy these 
guns ? 



MUNITIONS INDUSTRY 1783 

Mr. Young. I think we might say the Army, Navy, Marine Corps, 
Coast Guard, Department of Justice, or the feureau of Prisons, and 
the Treasury Department and the Mint. 

The Chairman. In some countries it appears that commissions 
have to be inchisive of what is paid to officials, and in some instances 
the Government, in order to get the sale across. Do you experience 
anything of that kind here in selling to the United States Govern- 
ment ? 

Mr. Young. No, Senator; I have not experienced anything like 
that. 

The Chairman. You are not paying commissions to any Army 
or Navy officers? 

Mr. Young. No; I am not. 

The Chairman. Do you have any knowledge as to whether your 
agents are doing that? 

Mr. Young. I have absolutely no knowledge of them doing it. 

The Chairman. What measure of competition comes to you in 
your South American field from German manufacturers ? 

Mr. Young. Mr. Jonas, I believe, can answer that better than I 
can. 

The Chairman. Mr. Jonas, is there considerable German compe- 
tition ? 

Mr. Jonas. Czechoslovakia is really the principal competitor, with 
the Schmeisser gun, and the Gergman gun, more or less the same 
type but a smaller gun, but it is a portable machine gun. 

The Chairman. As you encounter these things in South America, 
or as they are reported to you at your New York office, do you 
report to the Department of Commerce and to the United States on 
that competition? 

Mr. Jonas. No, sir; I do not. If I meet any of our commercial 
attaches down there. I give them the information in conversation. 

The Chairman. Do you report to the State Department or any 
other department of the Federal Government? 

Mr. Jonas. No, sir; I do not. 

Senator Bone. Is there any restriction in Germany on the manu- 
facture of those guns over there ? 

Mr. Jonas. I think most of those guns are made in adjoining coun- 
tries, smaller countries. Some are made in Denmark, I believe. 

Senator Bone. Are they merely jobbed throughout Germany? 

Mr. Jonas. I believe they are, sir. I am not positive they are 
shipped from Germany. I have seen German representatives, met 
German agents handling; the thing. I know they come from Europe, 
but I could not tell you exactly who they come from. 

The Chairman. In connection with the discussion of this matter, 
I call attention to a letter dated November 21, 1932, addressed to 
Mr. Frank S. Jonas, by Raoul Leon, which I ask be entered as an 
exhibit. 

(The letter referred to Avas marked " Exhibit No. 725 " and is 
included in the appendix on p. 1905.) 

The Chairman. Who are Harrington & Richards Arms Co.? 

Mr. Jonas. The}' are manufacturers of small arms, shot guns, and 
revolvers, in Worcester, Mass. 

83876 — -.'.o — PT 7 12 



1784 MUNITIONS INDUSTRY 

The Chairman. Up in Massachusetts? 

Mr. Jonas. Yes, sir. 

The Chairman. Mr. Young, have you done any business with 
them ? 

Mr. Young. I do not recall buying anything from them, unless we 
repaired a gun. 

The Chairman. Who is W. T. Neill? 

Mr. Young. He is a correspondent in our office. 

The Chairman. A correspondent? 

Mr. Young. Yes, sir; sales correspondent. 

The Chairman. I have a copy of a letter here dated January 11, 
1933, signed by Federal Laboratories, Inc., by W. T. Neill, ad- 
dressed to Cowdrey & Co., 17 Battery Place, New York, N.Y. Who 
is Cowdrey & Co. ? 

Mr. Young. Cowdrey & Co. are brokers in New York. 

The Chairman. That letter may be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 726 " and 
appears in full in the text.) 

The Chairman. This letter says [reading] : 

Kindly refer to your letter of January 9th, in which you ask for more details 
on our inquiry for 4,000 Crai? rillea. We prefer to have these rifles quoted 
without bayonets or slings. We, too, have agents in most foreign countries 
and wanted to protect them on this inquiry. However, we are dealing through 
a broker, who states that his principals are negotiating from Berlin. Just 
what the ultimate destination of these rifles would be he does not claim to 
know. We regret, therefore, that we cannot supply this information. However, 
if the order is placed, sihipment will be made from New York and all obligations 
will be discharged on presentation of shipping documents. 

What is the meaning of that ? 

Mr. Young. May I finish the letter? 

The Chairman. Let us read it aloud : 

Will you please wire us after receipt of this information. A quotation is also 
desired on 7,000,000 rounds of ammunition for these rifles. We have warned 
our prospect that shipment can be made only to governments recognized by 
the State Department. He assures us that the ultimate purchaser falls within 
that classiflcation. 

Mr. Young. Senator, I think it is correspondence coming through 
our regular routine. I learned the man who was the broker was a 
man by the name of Nagode, who lives in Pittsburgh, and nothing 
further was heard of the inquiry, and all the information I know is 
contained there. There were one or two other similar inquiries re- 
ceived from him which were of the same nature. 

The Chairman. Did you happen to call this particular inquiry 
to the attention of the State Department in Washington ? 

Mr. Young. I do not know that. I do not think they did. Those 
things flow along and if anything developed seriously we Avould 
promptly call it to their attention. 

Senator Bone. Mr. Kich, who is Mr. D. Hadiopoulos in New 
York? ^ 

Mr. Rich. Mr. Hadjopoulos is a Greek who engages in business 
primarily with the Far East. Just what his product is I do not 
recall offhand, but he occasionally gets inquiries for military equip- 
ment, mostly gas masks and helmets. 



MUNITIONS INDUSTRY 1785 

Senator Bone. Is he a New York munitions broker ? 

Mr. EicH. I should say, among other things, he is, but that is 
not his main business, as I understand it. 

Senator Bone, You Iiave had some contacts with him in reference 
to guns, have you not? 

Mr. Rich. Yes; he has sent in on several occasions an inquiry for 
guns, and the only source of supply I could think of was Mr. Sedgley, 
and I found out he had already applied to Mr. Sedgley, and that 
is all there was to it. 

Senator Bone. What gun was he inquiring about? 

Mr. Rich. It seems to me it was Lewis, but I am not ])ositive. 

Senator Bone. Perhaps I can refresh your recollection by a mem- 
orandum I have here. Was it not the Marlin machine gun? 

Mr. Rich. The Marlin machine gun. 

Senator Bone. What is the Marlin machine gun ? 

Mr. Rich. It is a field machine gun and not a submachine gun, as 
I understand. 

Senator Bone. It is much heavier ? 

Mr. Rich. Yes, sir ; 30.06. 

Senator Bone. It is used in regular military work? 

Mr. Rich. Exactly. 

Senator Bone. Under date of March 12, 1934, you addressed a 
letter to Mr. D. Hadjopoulos, to which I will direct your attention. 
Mr. Wemple, will you supply Mr. Rich with a copy of that letter ? 

I ask that that be given the appropriate exhibit number. 

(The letter referred to was marked " Exhibit No. 727 " and is 
included in the appendix on p. 1907.) 

Senator Bone. Mr. Rich, in that letter you are referring to infor- 
mation which you evidently gave him over the telephone. 

Mr. Rich. Yes, sir. 

Senator Bone. In which you speak of these Marlin machine guns, 
saying : 

These guns have never been fired. At the close of the World War, the U.S. 
Army, as you can well imagine, had tremendous quantities of newly manufac- 
tured equipment of all kinds in preparation for shipment to Europe. These 
guns are part of this supply that was never used. In accordance with the 
standard practice of the U.S. Government, any ordnance material is always 
put out of commission before being sold publicly. In this case the barrels 
were ruined, but in other respects the guns were intact. Mr. Sedgley has 
equipped these guns with brand new barrels, and tliey are in every sense the 
equal of a new weapon. 

Who would supply the new barrels? The Marlin people? 
Mr. Rich. I understand he makes them himself. Senator. 
Senator Bone. That would appear from the paragraph following, 
which reads : 

Mr. Sedgley enjoys a very excellent reputation as a gunsmith, and, as I 
told you, he is always not only willing but desirous of selling his merchandise 
trubject to test and inspection by the buyer or any designated authority. 

Does Sedgley have a plant for the manufacture of rifle barrels ? 

Mr. Rich. I believe he does. I have never visited his plant in 
Philadelphia, Senator, but my information is he has a plant there 
for reconditioning arms. 



1786 MUNITIONS INDUSTRY 

Senator Bone. Can you give us any idea, Mr, Rich, for whom 
those guns were intended ? 

Mr. EiCH. No, I cannot. Senator; but it is my information they 
were for the Far East. 

Senator Bone. This letter is dated March 12, 1934. Can you ad- 
vise us as to any country in the Far East that at that time wat. 
interested in securing machine guns through a broker? 

Mr, Rich. Of course, occasionally we do get requests from China,, 
and from time to time we continue to hear China is interested in 
machine guns, is interested in helmets, and is interested in gas 
masks. 

INTEREST OF AMERICAN MUNITION COMPANIES IN SOUTH AMERICAN 

REVOLUTIONS 

Senator Bone. Mr. Jonas, will you tell us who Martins & Co.. 
happen to be ? 

Mr. Jonas. In what city, sir? 

Senator Bone. Porto Alegre. 

Mr. Jonas. Southern Brazil. They are commission agents, repre- 
senting various manufacturers. They represent 

Senator Bone, Where is that city located? 

Mr. Jonas. Porto Alegre is in southern Brazil. 

Senator Bone. Is it in southern Brazil? 

Mr. Jonas. Yes, sir. They represent the Remington Arms. They 
represent the Federal Laboratories, and a great many concerns they 
represent there. They are just a commission agency. 

Senator Bone. I will come back to that in a moment. I would*' 
like to ask Mr. Rich one or two more questions. 

Can you give us any further light. Mr. Rich, on the sale of arms- 
by the United States Government? 
'Mr, Rich. No, sir; I cannot, sir. 

Senator Bone. How would Sedgley come into possession of a 
large quantity of these machine guns? 

Mr. Rich. I can only state what I understand to be the case, 
Senator. 

Senator Bone. Give us that information. 

Mr. Rich. Wliich is that it is the practice of the United States 
Government frequently to dispose of surplus Army materials by 
open bids, and that all sorts of materials are disposed of by the. 
United States Army in that way. 

Senator Bone. Do they dispose of uniforms? 

Mr. Rich. Yes, indeed. 

Senator Bone. Rifles? 

Mr. Rich. Rifles. 

Senator Bone. Revolvers? 

Mr. Rich. Revolvers? T have never encountered them. 

Senator Bone. Annnunition? 

Mr. Rich. I have never encountered that. 

Senator Boxe. Just tell us, if you can, what is disposed of in the 
way of sales by the Government. 

Ml'. Rich. Cartridge belts, shoes, and suspenders. They frequently 
pronounce a i^ublic sale of those, and they go to the highest bidder. 
And the uniforms I am almost sure of, and rifles, I believe. 



MUNITIONS INDUSTRY 1787 

Senator Bone. Ammunition? 

Mr. Rich. I do not know about ammunition, Senator. 

Senator Bone. You are not yure about that? 

Mr. Rich. No; I am not. 

Senator Bone. If it should appear that the Government sold am- 
munition, would it not be a rather startling fact? 

Mr. Rich. It would be startling. 

Senator Bone. From where are these guns sold ; the arsenals ? 

Mr. Rich. I believe that is the case. 

Senator Bone. Can you tell us how far the Government ruins these 
barrels, for instance, on the rifles? 

Mr. Rich. I cannot tell you from experience. I understand they 
put the breeches out of commission, or some sort of thing. 

Senator Bone. What kind of prices does this equipment bring? 

Mr. Rich. That I do not know. 

Senator Bone. I think perhaps you can enlighten us a little about 
Mr. Sedgley's operations. AVhere is his plant; New York City? 

Mr. Rich. In Philadelphia, Senator. 

Senator Bone. In Philadelphia. I think that will appear from 
the former testimony in the record. How large a plant does he have? 

Mr. Rich. I have no idea, because I have not visited his plant 
in Philadelphia, sir. I have never seen it. 

Senator Bone. From what you know of his operations, would 
you say that he makes general tender of arms all over the world ? 

Mr. Rich. I should say so. 

Senator Bone. Would you classify him as a sort of American 
Soley. You know about the Soley Co. ? 

Mr. Rich. I do not know very much about them, so that I would 
liesitate to make a comparison. 

Senator Bone. Sedgley is in the habit of picking up material 
from various sources, is he not? 

Mr. Rich. I should judge that he is. 

Senator Bone. Is there anyone in this country whose operations 
take in a field bigger than Sedgley's ? 

Mr. Rich. I am unable to say. I am not acquainted with any 
others. 

Senator Bone. Tell us, if you can, what other private concerns are 
•operating in the same field as Sedgley. 

Mr. Rich. I do not know of any others. Senator. 

Senator Bone. How about Bannerman? 

Mr. Rich. I think he works with Sedgley. 

Mr. Wemple. Senator, perhaps Mr. Jonas can advise us. 

Senator Bone. What other concerns sell arms generally like Mr. 
Sedgley does, Mr. Jonas? 

Mr. Jonas. I think Bannerman works jointly with Sedgley. That 
is the impression I got. There is another concern, Lucke & Kiffe. 
I think they sell, themselves. Also Griffin & Howe. 

Senator Bone. Where are they operating? 

Mr. Jonas. They are on Forty-fourth Street. 

Senator Bone. In New York City? 

Mr. Jonas. Yes, sir. 

Senator Bone. You have named three or four of them. Are there 
.any more? 

Mr. Jonas, Not any more that I can think of. 



1788 MUNITIONS INDUSTRY 

Senator Bone. According to the best information which you have,, 
which of those woiikl be the largest? 

Mr. Jonas. Sedgley, I should say. 

Senator Bone. It is very apparent from this letter that the injury 
that the Government does to this equipment when it is sold, in this 
particular instance of these Marlin machine guns, is of such a char- 
acter that the gun can be very readily put back into use. That is 
correct, is it not, Mr. Jonas? 

Mr. Jonas. I think the Government now burns the barrels and the- 
receivers, in the last sales that have been made. 

Senator Bone. So that all the party needs to do that buys them is 
to replace that part and the gun is in perfect order ? 

Mr. Jonas. It would seem so, sir. 

Senator Bone. That is quite apparent from this letter. Now, Mr. 
Jonas, getting back to Martins & Co., in Brazil, they address you as 
" Dear sir and friend." 

You were quite well acquainted with Mr. Martin, of that company? 

Mr, Jonas. That is the Spanish way of addressing a letter. Yes, 
I am well acquainted with him. 

Senator Bone. He adds this statement in this letter of June 21, 
1932, which I will offer as " Exhibit No. Y28." 

(The letter referred to w^as marked " Exhibit No. 728 " and is- 
included in the appendix on p. 1907.) 

Senator Bone. The statement to which I refer is : 

Thus I would add the following: Before the outbreak of the revolution in 
1930 

Let me ask parenthetically if that is when this Sao Paulo revolu- 
tion began, or is that another revolution? 

Mr. Jonas. I think that was the revolution in 1930. 

Senator Bone. Did that extend through to 1932 ? 

Mr. Jonas. No, sir. 

Senator Bone. Were there a number of revolutions about that 
time ? 

Mr. Jonas. 1930 was one of the big revolutions. 

Senator Clark. 1930 was when they turned the Government out,, 
is it not? 

Mr. Jonas. Yes, sir. 

Senator Bone. The new government that came in as a result of 
that revolution lasted through and the Sao Paulo revolution did not 
upset the new government ; is that right. 

Mr. Jonas. That is right. 

Senator Bone. I ask these questions so that we may get the picture 
correct. I will proceed with the reading of this letter : 

Before the outbreak of the revolution in 1930 there was here a salesman of a 
Canadian factory trying to negotiate with the Government of this State and 
really sold them a large order of munitions, which was delivered much later — 
that is, when the revolution was already ended. 

Who was this Canadian salesman and what factory did he- 
represent ? 

Mr. Jonas. The Dominion Cartridge Co. 
Senator Bone. And where are they located? 
Mr. Jonas. In Montreal. 



MUNITIONS INDUSTRY ' 1789 

Senator Bone. What munitions were sold by that Canadian repre- 
sentative ? 

Mr. Jonas. I learned in New York of a shipment of one million 
7 mm. cartridges that had been shipped. 

Senator Bone. Were there any guns in that shipment? 

Mr. Jonas. No, sir ; not that I know of. 

Senator Bone. Continuing with this letter : 

These munitions were destined for tlie revolution 

In other words, the Dominion Cartridge Co. was selling these 
cartridges to the revolutionists. That is true, is it not ? 
Mr. Jonas. Yes, sir. 
Senator Bone (reading) : 

These munitions were destined for the revolution but negotiations were car- 
ried on in such secrecy that even the commander of the military brigade knew 
nothing of the matter. As for myself I did not think that the revolution would 
arise and that if it did the Government would suppress it. This purchase of 
munitions was made on the basis that payment would be made when the revo- 
lution was successful, therefore I do not believe that Winchester comes into 
the question as the sales agent, because Winchester does not do business that 
way without guarantees. 

Can you tell us whether the Canadian Government was aware of 
these activities? 

Mr. Jonas. I cannot. 

Senator Bone. It is apparent from this communication that the 
Canadian company was negotiating this very quietly. Is that correct? 

Mr. Jonas. I should imagine so from this letter. 

Senator Bone. All of these sub rosa activities were being carried 
on without the official knowledge of the Canadian Government? Is 
that correct? 

Mr. Jonas. I do not know, sir ; I presume so. 

Senator Bone. We may assume that? 

Mr. Jonas. Yes ; we can assume that. 

Senator Bone. This paragraph that ends with the statement — 

therefore I do not believe that Winchester conies into the question as the sales 
agent because Winchester does not do business that way without guarantees — • 

would indicate that this was a sort of contingent-fee arrangement 
on the part of this other company, but that the American company^ 
being good business men wanted the money right on the drumhead. 

The Chairman. I would like to ask Mr. Young, or any one else 
present who might have the information, was this Mr. Sedgley that 
has been referred to as Sidewalk Sedgley, arrested about 2 years 
ago in connection with the sale of guns to gangsters ? 

Mr. Jonas. That I do not know. 

Mr. Young. I do not know. 

Mr. Rich. I have never heard of him being arrested. 

Mr. Jonas. I have never heard of him being arrested either. 

Senator Bone. Is Martins a rather prominent man down there ? 

Mr, Jonas. No; he is just an agent. He is not prominent. 

Senator Bone. Does he not know what is going on ? Do you not 
think that he knows what is going on? 

Mr. Jonas. He ought to have some idea. He mixes with the 
political parties there. He is the agent in a small town. 

Senator Bone. He is a good mixer and he knows what is going on.. 

Mr. Jonas. Yes ; he knows what is going on. 



1790 MUNITIONS INDUSTRY 

Senatoi- Boxe. Koiulrick van Polt was a Brazilian arms agent 
wlio has come into this hearing quite frequently. He lived in Sao 
Paulo, Brazil. That is correct? 

Mr. Jonas. Yes, sir. 

Senator Bone. I have here a letter dated July 12, 1932, from Mr. 
Jonas to Mr. Kendrick van Pelt, which I offer as " Exhibit No. 729." 

(The letter referred to was marked "Exhibit No. 729" and is 
inchided in the appendix on p. 1908.) 

Senator Bone. In this letter you say that you are enclosing a copy 
of a letter to Martins, your agents in Para. 

Mr. Jonas. That is another Martins, the one in Para. 

Senator Bone. Is he related to the one we have previously been 
discussing ? 

Mr. Jonas. No. There is no relationship whatsoever. 

Senator Bone. The last paragraph of this letter states : 

P^rom the news in the papers in the last two days I was sure I would be 
receiving cables from you for all kinds of our material. According to the 
New York Times the lid is off in Brazil, so get busy and see if you cannot 
stir up something. 

You were referring there to the possibility of orders that you 
might secure? 

Mr. Jonas. Yes, sir. 

Senator Bone. Here is another letter dated August 4, 1932, to 
the Federal Laboratories in Pittsburgh, signed by Mr. Jonas, which 
I offer as " Exhibit No. 730." 

(The letter referred to was marked "Exhibit No. 730" and is 
included in the appendix on p. 1908.) 

Senator Bone. This letter asks for the shipment of certain tear- 
gas grenades. I will merely show you the letter and we will pass 
on to the next exhibit. 

On August 4, 1932, Mr. Jonas addressed a letter to Mr. E. H. 
Pitcher, which I offer as " Exhibit No. 731." 

(The letter referred to was marked "Exhibit No. 731" and is 
included in the appendix on p. 1909.) 

Senator Bone. In this letter you say : 

Owing to a shipment I have leaving for Brazil on Saturday and on which 
it was necessary for me to attend to the presentation of the drafts, etc., at 
the bank tomorrow, it will be impossible for nie to come to Washington, so I 
intend telephoning Mr. Ynsfran and will endeavor to make an appointment for 
some other day. 

What was that shipment? 

Mr. Jonas. That was a shipment made by the Winchester Kepeat- 
ing Arms Co. to the Government of Brazil. 

Senator Bone. That was the shipment to the bona fide Govern- 
ment of Brazil ? 

Mr. Jonas. Yes, sir. 

Senator Bone. Who is Mr. Fred Treat, of Tucson, Ariz.? 

Mr. Jonas. Mi'. Fred Treat is an old friend of mine. I have 
known him for a good many years. 

Senator Bone. On August 17, 1932, you write Mr. Treat a letter, 
Avhich I offer as " Exhibit No. 732." 

(The letter referred to was marked " Exhibit No. 732 " and is 
included in the appendix on p. 1909.) 



MUNITIONS INDUSTRY 1791 

Senator Bone. You say in this letter, in part : 

I am busy as hell on the Brazilian revolution and Paraguay and Bolivian 
situation, and I am bidding on a great many things. 

Mr. Jonas. I think I will have to leave that word " hell " out of 
my vocabulary in the future, gentlemen. 

Senator Bone. Were you fairly successful in that business, Mr. 
Jonas ? 

Mr. Jonas. I took several orders ; yes, sir. 

Senator Bone. Let me go back just for an instant to a letter to 
Mr. Pitcher, which is " Exhibit No. 731 ", dated August 4, 1932, in 
which you said you were telephoning to find a Mr. Ynsfran. Who 
was he? 

Mr. Jonas. He was connected with the Paraguan military attache. 

Senator Bone. He was connected with the Paraguayan military 
attache in Washington? 

Mr. Jonas. Yes, sir. But I believe he was in New York that day. 
As I recall it, he was in New York and I was trying to locate him 
in New York. 

Senator Bone. You were shipping these things to Brazil, but you 
were telephoning him. Was the telephone in connection with this 
Brazilian shipment? 

Mr. Jonas. No, sir. It had nothing whatsoever to do with it ; no 
connection at all. 

Senator Bone. Nothing at all ? 

Mr. Jonas. Nothing whatsoever, sir. 

Senator Bone. It appears in the record that at this time the rebels 
down in Brazil were getting plenty of ammunition. That is the case, 
is it not? 

Mr. Jonas. You could not prove it by me, sir ; I do not know. 

Senator Bone. They seemed to have plenty of ammunition. 

Mr. Jonas. Well, they have a factory in Sao Paulo, and I believe 
the factory supplies them with all the material that they did have. 

Senator Bone. I have before me a letter dated August 24, 1932, 
written to Mr. Young by Mr. Jonas, your principal, Mr. Jonas, 
which I offer as " Exhibit No. 733." 

(The letter referred to was marked "Exhibit No. 733" and is 
included in the appendix on p. 1910.) 

Senator Bone. You say in this letter : 

I just heard from my friend at the Guaranty Trust Co. on the telephone, 
and he told me that while an irrevocable letter of credit had been opened it had 
not been guaranteed by a New York bank, so the conditions remain unchanged. 

You were arranging a letter of credit there ? 

Mr. Jonas. That was for the Government. I was not arranging 
a letter of credit. I was making sales to Mayrink Vega. 

Senator Bone. For the purpose of the record, let us understand 
who Mayrink was. 

Mr. Jonas. He was a Government agent. 

Senator Bone. A Brazilian Government agent? 

Mr. Jonas. Yes, sir. 

Senator Bone. Did he have an official or semiofficial relationship 
with the Government? 

Mr. Jonas. Not an official relationship. He was just sent up 
here to purchase some stuff. He was a broker; that is, a commission 



1792 MUNITIONS INDUSTRY 

man in Rio, and he had secured contracts to place these orders here 
for the Government. 

Senator Bone. The Brazilian Government sent him up to New 
York to negotiate the purchase of war munitions? 

Mr, Jonas. Yes, sir. 

Senator Bone, And he bought a lot of munitions about that time ? 

Mr. Jonas. Yes, sir. 

Senator Bone. About $3,000,000 worth? 

Mr, Jonas, I do not know ; a very large quantity ; not munitions — • 
Lord no, I mean airplanes. 

Senator Bone. Well, they were for military purposes? 

Mr, Jonas, Yes, sir. 

Senator Bone. Those are munitions of war. I will ask you to 
read the letter. It says in the second paragraph : 

It apears that Mayrink and Love were getting very nervous about this and 
they are certainly keeping tlie wires hot trying to arrange finances. 

Now, who is Mr, Love referred to here ? 
Mr, Jonas, Mr. LoA^e of the United Aircraft Corporation. 
Senator Bone. And they were getting into the picture selling 
jnilitary airplanes to Brazil? 
Mr. Jonas. Yes, sir. 
Senator Bone, You say in the last paragraph — • 

The other side — 

What does that mean — " The other side " ? 

Mr, Jonas, The other side refers to the revolutionists. 

Senator Bone (reading) : 

The other side has actually placed orders for airplanes and other credits 
have been opened, but no orders placed as yet. 

So the other side was also buying airplanes — that is to say, the 
revolutionists. From whom were they buying, do you know? 

Mr. Jonas, I do not know. 

Senator Bone. Did they buy their planes from the United? 

Mr. Jonas. I do not know, I had nothing to do with it. Senator, 

Senator Bone. Can you not throw a little light on it and tell us 
whether Mr. Love was selling airplanes to them? 

Mr, Jonas, No; I do not think that the United Aircraft were 
selling them airplanes, because if they had, I think Mr, Love would 
have told me. 

Senator Bone. Which airplane company was selling airplanes to 
the revolutionists while negotiations with the Brazilian Government 
were going on ? It clearly appears in the letter that that was being 
done. 

Mr. Jonas. I am just trying to think. I think it was the Fleet 
planes that were sold. 

Senator Bone. Fleet? 

Mr. Jonas. Yes. 

Senator Bone. Was that the plane that was sold to the revolu- 
tionists? 

Mr, Jonas, That is the plane that I heard was sold. 

Senator Bone, Were you down there about that time ? 

Mr, Jonas, No, sir ; I was up here. 

Senator Bone. But you were in touch, were you not? 

Mr. Jonas. I was not in touch with them there, sir. 



MUNITIONS INDUSTRY 1793 

Senator Bone. All of the undercurrents of information were com- 
ing to you, were they not? 

Mr. Jonas. Well, in this business, naturally I hear information. 
I cannot help it. 

Senator Bone. You were in the picture; you wanted to sell down 
there, too, and naturally you were in touch and knew what was 
going on. 

Mr. Jonas. Senator, I would not have sold them a thing without 
a Government permit under any conditions. 

Senator Bone. I am not saying that you would. But in order to 
be a good salesman you have to know what is going on, and in this 
•case you would have to know what was going on in this territory, 
would you not? 

Mr. Jonas. It is natural; yes. 

Senator Bone. I am not trying to trip you up on this, Mr. Jonas. 
T merely want you to tell us what you do or what was going on 
down there. You had information of what was going on, did you 
not? 

Mr. Jonas. Naturally, I try to get as much information as possible. 

Senator Bone. That is what I mean. I think you are a rather 
energetic sort of person, and you would know what is going on. 
Manifestly, from this letter, it appears that the revolutionists were 
getting military planes, too. Of course, they were getting them 
from outside sources. Now, can you be a little more explicit and 
tell us what you know about this ? 

Mr. Jonas. I had nothing to do with this; I had nothing to do 
with the deal; so I cannot say. 

Senator Bone. Was Fleet airplane a military airplane ? 

Mr. Jonas. I think it is a training plane, if I am not mistaken. 

Senator Bone. You can drop bombs off a training plane, can you 
not? 

Mr. Jonas. I guess you can drop bombs off anything. 

Senator Bone. Who manufactures that plane, do you know? 

Mr. Jonas. I think it is the Consolidated Co. 

Senator Bone. Consolidated? 

Mr. Jonas. I think so. 

Senator Bone. That is in this country? 

Mr. Jonas. Yes, sir. 

Senator Bone. Where do they operate ? 

Mr. Jonas. Buffalo, I believe. 

Senator Bone. Do you know what airplane combination they are 
tied into? 

Mr. Jonas. No; I do not. 

Senator Bone. You say in this letter : 

Negotiations, however, are pending. Please destroy this letter after reading it. 

Why did you want the memorandum destroyed? ^ 

Mr. Jonas. I wish I had had all my letters destroyed. 

Senator Bone. There were allusions here to both sides getting 
materials for war purposes from the United States. Of course, it 
made it just a little tough to have a memorandum like that floating 
around. That is true, is it not ? 

Mr. Jonas. It does, sir, but I have not sold and would not sell 
.anytliing unless I had a Government license. Senator. 



1794 MUNITIONS INDUSTRY 

Senator Bone. We imderstancl that. But the boys down there on 
both sides were gettin<»: this stuff. 

Mr. Jonas. But in the hist revohition I sohl the frovernnient. and 
3 weeks later the other side came in. They won the revohition and 
they were the government. 

Senator Bone. Surely. Of course, in this game where the outs 
may become the ins in the next week, as a fair margin of safety, it is 
desirable to be on good terms with both of them. That is right,, 
is it not 'I 

Mr. Jonas. I guess you are right, sir. 

Senator Bone. Who is Mr. Feldman, a Dr. E. D. Feldman, Mr. 
Young? His address is apparently 80 West Fortieth Street, New 
York City. 

Mr. Young. I am trying to recall who he was. 

Senator Bone. I have here a letter of August 24, 1932, addressed 
to Dr. Edward D. Feldman by the Federal Laboratories, which I 
offer as " Exhibit No. 734." 

(The letter referred to was marked "Exhibit No. 734" and is- 
included in the appendix on p. 1910.) 

Senator Bone. What interest did Dr. Feldman have in these 
matters 'I 

Mr. Young. As I recall, now. Senator 

Senator Bone. That is, in these South American revolutions. 

Mr. Young. I think he wanted to represent us in Europe. 

Senator Bone. What sort of a doctor is he? 

Mr. Young. I do not know. We did not go into it any further. 
We did not investigate that far. We did not consider him. 

Senator Bone. Are doctors interesting themselves in the practical 
aspects of these revolutions ? 

Mr. Young. I imagine that he is a doctor of philosophy in 
chemistry or some technical branch. 

Senator Bone. That might explain his interest in this letter.. 
You say that — 

He- 
Referring to Mr. Jonas — 

has been working day and night on certain deals pertaining to the revolution 
in South America, and I am sure this is the real reason he has been unable 
to see you. 

So it now very clearly appears that Mr. Jonas was well advised 
when he says he knew what was going on down there. What were 
these deals pertaining to the revolution that Mr. Jonas was work- 
ing on? 

Mr. Jonas. May I answer that. Senator ? 

Senator Bone. Surely. Both of you may ansAver; anybody may 
answer. 

Mr. Jonas. That was on the w^ork that I was doing with Mayrink 
Veiga. I v.'ps with hin> for 2 months, practically. 

Mr. Young. May I add tliere. Senator, that we woii^d hardly be 
disclosing specific details to a stranger who was asking for an inter- 
view in connection with arranging a territory for him somewhere 
else ? 

Senator Bone. I did not mean to suggest the propriety of reveal- 
ing these tilings to the doctor, but I w^ant you to reveal them to us. 



ing on 



MUNITIONS INDUSTRY 1795 

Mr. Young. Mr. Jonas has stated what it was. 

Senator Clark. What revolution was it that you were work- 

Mr. JoNAs. I was not working on a revokition. I was selling the 
Government. 

Mr. Young. The Brazilian Government during the time of the 

revolution. 

Mr. Wemple. Mr. Jonas, you just testified that you were working 
with Mayrink Veiga for approximately 2 months ? 

Mr. Jonas. Yes. 

Mr. Wemple. That 2 months, during what period ? 

Mr. Jonas. In 1930 ; I cannot tell you exactly. 

Mr. Wemple. About when, in 1930? 

Mr. Jonas. I think it was the fall. 

Mr. Wemple. June, July, August? 

Mr. Jonas. More or less around that time. I am not absolutely 
•certain. 

Senator Bone. Mr. Young, you go on here and say : 

I had a delightful time on my vacation what little opportunity I had to be 
away. 

You were busy at that time. Was that on orders for South 
America, or what was it occasioning this vast amount of work that 
you were compelled to do? 

Mr. Young. Over the past few years, I have not been ver^r much on 
taking vacations. I may go away for a few days at a time, or a 
week. 

Senator Bone. I have here a letter of August 25, 1932, from Mr. 
Jonas to Mr. Young, which I offer as " Exhibit No. 735." 

(The letter referred to was marked " Exhibit No. 735 " and is 
included in the appendix on p. 1910.) 

Senator Bone. On August 25, 1932, while the Brazilian revolution 
was under way, Mr. Jonas writes you, Mr. Young, in New York and 
says [reading] : 

I was advised today to call on United Aircraft, and although our prices on the 
Brazilian order were approximately $1,100 high, I was given this order purely 
at the request of Mr. Mayrink Veiga, and I was very fortunate he was here 
or we would have lost. Tliis order is being prepared and will be given to me on 
Monday. The prices quoted were as follows : 

100 25-lb. fragmentation bombs, loaded $34..50 plus 70 cents freight. 

100 25-lb. " " empty ,$20.50 plus 36 cents freight. 

150 2.5-lb. demolition bombs, loaded .$33.50 plus 70 cents freight. 

150 2.5-lb. " " empty $19.50 " .30 " 

200 120-lb. " " loaded $07.00 " 3..37 

200 120-lb. " " empty $26.00 "1.66 

5,000 hand grenades $2.00 each net. 

It is rather interesting to know that while your prices were approx- 
imately $1,100 high, Mr. Mayrink Veiga slipped the order to you. 

Mr. Jonas. Mayrink and I were very good friends at that time, 
and I had done him a lot of favors, and I think he could well have 
afforded to give me the order with that reference. 

Senator Bone. You say [reading] : 

The Peruvian order which I am sending tomorrow is taken at the prices 
you gave me over the telephone, and on this order we are approximately $250 
high. 



1796 MUNITIONS INDUSTRY 

That Avas an order that you had actually taken. Through whom, 
was that? 

Mr. Jonas. I was informed that it was that high. Many a time a, 
customer would give you that information when it is not true to. 
make you think that you are getting the business at such a high price. 

Senator Bone. You think that is just sales talk? 

Mr. Jonas. I think it is just sales talk. Then it was also sales 
talk on my part to Mr. Young, to show that I was doing a too-good 
job. 

Senator Bone. You say [reading] : 

because I will have an opportunity next week of quoting on over $200,000 worth: 
of material, * * * 

For what country was that material to be prepared? 
Mr. Jonas. I think it was Bolivia ; that was through W. B, Grace 
& Co. 

Senator Bone (reading) : 

I heard today from a man who happened to be in Cowdry's office that the- 
Atlas Powder Company had received a large order from Bolivia for bombs. 

Was the Atlas Powder Co. making bombs ? 

Mr. Young. No; they did not. That was just a rumor. 

Senator Bone. That is indicated when you say later on that you 
are checking to see if the story was true. 

I have here now a letter of August 26, 1932, to Mr. Jonas from the 
Federal Laboratories, Mr. Young, president, which I offer as " Exhibit 
No. T3G." 

(The letter referred to was marked "Exhibit No. 736" and is 
included in the appendix on p. 1911.) 

Senator Bone. This letter reads: 

My Dear Frank : This acknowledges your letter of August 25th, giving 
us a copy of the United Aircraft order for Brazil. 

Was United Aircraft working that close with you, to give you a 
copy of their order? 

Mr. Jonas. On the bomb order. There was some mix-up on it, 
but Mayrink Veiga later placed the order direct for the bombs. But 
the United Aircraft had the entire list of material that they wanted. 

Senator Bone. You go on further and say [reading] : 

* * * if yon will send us a telegram when the signed order is put in 
your hands, all we will have to do is to release word and our entire organiza- 
tion will be functioning 100 percent to expedite shipment. I believe if we 
could get this shipment out in record short time it will help our chances on 
future business and we are going to show you some good work along this 
line. 

What was this order that you had in prospect on which you wanted 
to function a 100 percent? 

Mr. Jonas. That was the same order. 

Mr, Young. That is the Brazilian order, 1 believe. I think it is 
very clear, Senator, from the letter. They were asking for a very 
close delivery time. 

Senator Bone. On this matter of being the high bidder or at least 
above the lowest bidder, you have this to say in your last paragraph ; 
[reading] : 

I know you get a great deal of satisfaction out of taking an order on some 
other basis than being the lowest bidder. I think, when the situation is all 



MUNITIONS INDUSTKY 1797 

washed up, that Frank Jonas will have taken the full lion's share of all the 
business. 

You had reason to know that Mr. Jonas was a very aggressive and 
enterprising salesman ? 

Mr. Young. You always have pride in selling your goods on qual- 
ity and not Ioav price alone, and that is what I was complimenting 
him on. It is not just the case of seeing who can give the cheapest 
products. 

Senator Bone. All of those products — were they called for on 
plans and specifications that required them to be built to a certain 
type? 

Mr. Young. Not all of them. There is a wide variance in the way 
different ones are purchased. 

Senator Bone. Do these South American governments call for 
bids on stuff that they want or do they permit the munitions makers 
to frame up some type of death-dealing instrument and offer it to 
them on a basis where high and low bids are not of much importance ? 

Mr. Young. Quite frequentl}^ it is put entirely into the hands of 
the manufacturer. 

Senator Bone. The man who can convince them that these things 
will clestroj^ human life to a greater degree than some other instru- 
mentality — to that extent that man has a better chance of selling 
them, is that the idea ? 

Mr. Young. They use a different military term to describe it than 
that. 

Senator Bone. I understand, but I am not a military man, and I 
am not familiar with military terminology. I am trying to express 
it my own way. but that is true, is it not? The more effective the 
instrument is to kill people, the more likely you will sell it. That 
would follow, would it not? 

Mr. Young. Usually that is discussed as to the efficiency of the 
product to go off, whether you have so many duds, or the care with 
which it is machined. The standard of a fragmentation or demoli- 
tion bomb is so generally defined that the sales talk is limited to 
the quality of your work in machining. 

Senator Bone. Let us identify once more for the purpose of the 
record Mr. Figuerola. Can you tell us who he is? I have a letter 
here which I offer as " Exhibit No. 737 ", to Mr. Jonas from Mr. J. 
Cunill de Figuerola. 

(The letter referred to was marked "Exhibit No. 737" and is 
included in the appendix on p. 1912.) 

Senator Bone. Mr. Figuerola is writing to you, Mr. Jonas, under 
date of August 31, 1932. 

Mr. Jonas. Yes, sir. I met Mr. Figuerola first on an inquiry 
from the Winchester Repeating Arms Co. He told me he was in 
the market for certain things, and Figuerola told me that he sold 
various other materials which he had in Europe or was agent for 
some concern in Europe. 

Senator Bone. He operates out of New York City ? 

Mr. Jonas. He operates out of New York City and he claims he 
was operating in Europe. 

Senator Bone. Does he live in New York? 

Mr. Jonas. So I believe. 



1798 MUNITIONS INDUSTRY 

Senator Bone. How long have you known him? 

Mr. Jonas. I have known him probably — well, I knew him 3 or 4 
months prior to that letter. 

Senator Bone. In his letter to you bearing this dat€ that I have 
meTitioned, he says : 

In accordance with your verbal request we take pleasure to submit the 
following information : 

We offer subject to prior sale. 
50.000 Mauser infantry-type rifles, each complete with strap, sheath, and 

bayonet $18. 50 

These arms are perfect and as good as new. 

Caliber 7 MIM — model 98 and 1926. Delivery within 4 weeks. 
1.^,000,000 7 M/M cartridges for the above rifles at $16.50 per M 

This ammunition is in stock and was manufactured in 1918 and 1924. 
Perfect order. Delivery within 4 weeks, 

5,000,000 7 M/M cartridges for the above rifles at $17.50 per M. Delivery 
within 4 weeks. This ammunition is in stock in perfect condition manufactured 
in 1919-24. 

7 M/M cartridges of new manufacture at $23.50 per M. Delivery at the 
rate of 2 million per month. After the second month 3 million per month. 

Senator Bone. Who would manufacture those cartridges? 

Mr. Jonas. I don't know ; probably he was quoting on the Euro- 
pean products; undoubtedly he was. 

Senator Bone. European products? 

Mr. Jonas. Yes. 

Senator Bone. You were not trying to sell American products, 
then? 

Mr. Jonas. At that time there was a big inquiry from China, too, 
and there is another letter you referred to I think yesterday, from 
that concern that asked for these large quantities. 

Senator Bone. Where is the Mauser gun made? 

Mr. Jonas. It is made in various places, and it was formerly made 
in Germany. 

Senator Bone. It is not made in this country? 

Mr. Jonas. At first the Mauser was made by the Remington 
Arms Co. 

Senator Bone. They have not made it for years? 

Mr. Jonas. No. 

Senator Bone. When they were offering this material they were 
not stimulating American manufacture, and of course the only 
interest an American jobber would have in this would be the com- 
mission he would make out of it. That is obvious. 

Mr. Jonas. Yes, sir. 

Senator Bone. So that it would not give emploj^ment to labor in 
this country. 

Mr. Jonas. Undoubtedly not. " 

Mr. Wemple. I notice Mr. Figuerola in this letter signs his name 
of the firm of Manufacturers Export Co. 

Mr. Jonas. Yes; that is an organization he had. 

Senator Bone. Is this the same Mr. Figuerola who operates under 
the name of International Ordnance & Instrument Co.? 

Mr. Jonas. So I believe. 

Senator Bone. Now, we come to this next item as follows : 

36 Schneider, light field guns model 97. caliber 75 mm complete with perfect 
condition and as good as new. The equipment includes carriage, limber, sights, 
optical instruments, and ammunition carriage. Price per each unit f.o.b., 
European port $7, .500. 



MUNITIONS INDUSTRY 1799 

Is that tlie famous "To " French gun we have heard about? 

Mr. JoxAS. Yes ; this is a list of material he had. 

Senator Boxe. In other words, Figuerola had this stuff? 

Mr. JoxAs. Yes : that he could sell. 

Senator Bone. That also would not give any employment to Amer- 
ican workmen '{ 

Mr. Jonas. No, sir. 

Senator Bone. The next item is 20,000 shells complete with igni- 
tion at $15, and then the next item is as follows : 

60 antiaircraft machine guns, cal. 40 mm. model 1/39, latest model 930, new 
and ready for delivery. Price per unit, $14,500. 

What kind of guns were those? 

Mr. Jonas. I don't know anything about artillery. 

Senator Bone. Presinnably they were foreign guns? 

Mr. Jonas. They were. 

Senator Bone. They could not easily get that sort of stuff in this 
country ? 

Mr. Jonas. I do not think so. 

Senator Bone. The next item is 50,000 shots for the above (40 mm) 
shells and shrapnel at $17, and then the next item is as follows: 

50 Vickers-Terni, cal. 25. 4 ram. This is one of the latest war machine 
guns. It can be used as field or antiaircraft machine gun. It is used for 
tank equipment. Length of the barrel 762 mm. Total length of the gun 
1455. Speed 150 per minute. Range 2,800-3,000 meters. Price complete per 
ainit $1,830. 

Obviously thosp are foreign guns. 

Mr. Jonas. Ye^. 

Senator Bone. Th'^' next item is as follows : 

30 75 mm Krupp fir guns, model 95 L/24, cal. 75 mm. Each battery con- 
sists of 6 guns and xucludes 100 shrapuells per battery. Price per battery, 
:$90,000. 

Not only have we the French guns, but we also have German guns 
now, it seems. Tlien here is the following item : 

20 mountain batteries complete, Krupp 75-mm guns, model 96 1/13. Each 
l)attery consists of 4 guns and the reguhir equipment with 100 saddles. 

200 ammunition boxes and 400 shots (50% grenades and 50% shrapnels). 
Price per complete battery, with ammunition, $68,000. 

Additional ammuniticn for the above guns at $24.50. 

One would think this fellow was getting ready to equip a whole 
.army. 

The Chairman. He could do it, if called upon. 

Senator Bone. Apparently this Mr. Figuerola is in a class with 
Soley in England. 

Mr. Jonas. You would think so from that list. 

Senator Bone. Where would he get hold of the field artillery? 

Mr. Jonas. I have not the slightest idea. 

Senator Bone. Can you tell us how it is that a private citizen can 
quote field artillery of this type? 

Mr. Jonas. I don't know how he could. 

Senator Bone. How can that stuff be sold in this country so 
freely ? 

Mr. Jonas. I have never sold any, and I don't know. 

Senator Bone. I am asking you how he could sell this stuff so 
freely in this country. 

83876— 35— I'T 7 13 



1800 MUNITIONS INDUSTRY 

Mr. Jonas. I think there were several inquiries from China, and 
several people wrote over to get this equipment to be sold. 
Senator Bone. The last item quoted in the list is as follows: 

200 Hotchkiys inacliiue guns, light type, for 7-mm cartridge, complete with 
two barrels, spare parts, and 88 straps for 50 cartridges each. Guaranteed to 
be in perfect condition, same as from the factorj-. Price, each, $400. 

Then the letter closes with this statement : 

All the above equipment can be delivered very prompt from 4 to 6 weeks 
from date of the order and our acceptance. Terms of payment: Irrevocable let- 
ter of credit divisible and negotiable with expiration against shipping docu- 
ments f.o.b. European port. 

Can you o;ive us any further light on that offer, which is one of 
the most astounding things we have had offered to us ? 

Mr. Jonas. I sometimes think it originated in his mind, but I 
don't have any knowledge of it. 

Senator Bone. We have had Soley quoting under the signature of 
Mr. John Bell, the managing director, and there is no question 
about that. 

Mr. Jonas. It might be true. 

Senator Bone. You have no reason to doubt it? 

Mr. Jonas. I have no way of proving it. 

Senator Bone. You have no reason to doubt it, either. 

Mr. Jonas. I guess you are right. 

Senator Bone. He talks about a letter of credit so that all that is 
necessary to do is to establish a line of credit, and he had this equip- 
ment, sufficient to equip quite a whole army, available for sale. 

iNIr. Jonas. Yes. 

Senator Bone. Under date of August 31, 1932, Figuerola writes 
you, Mr. Jonas, which letter I offer in evidence. 

(The letter referred to was marked " Exhibit No. 738 " and appears 
in full in the text.) 

Senator Bone. In this letter Mr. Figuerola says: 

This is to confirm oui' verbal understanding in reference to offers that we 
mailed to you this even date. 

Evidently he is referring to the document on which I have just 
examined you, Mr. Jonas; and then he goes on to say further: 

In the event that you effect a sale of said equipment, or any part thereof, 
the same being accepted by us as a commission of 5% of the total net of said 
sale shall be paid to you when the monies of the complete sale have been 
received and total deliveries of the material made. 
We beg to remain, 
Very truly yours. 

Manufacturers Export Company, 
(Signed) Josh Cunill de Figuerola. 

Now, can you give us any further light on Figuerola's operations 
in South America, or any light at all on any of his operations? 

Mr. Jonas. I really don't know any operations he has done. He 
claims he has sold various stuff in South American countries, but 
I am not in possession of any information. 

Senator Bone. He has also claimed that he placed his stuff in the 
hands of the revolutionary group. 

Mr. Jonas. He has not made any claim like that to me. 

Senator Bone. Do you knoAv anything about his operations at all ?' 

Mr. Jonas. No, sir ; I do not. 



Munitions industry 1801 

Senator Bone. The Smith & Wesson Co., under date of September 
7, 1932, writes to you, Mr. Jonas, which letter I offer in evidence. 

(The letter referred to was marked "Exhibit No. 739" and is 
included in the appendix on p. 1913.) 

Senator Bone. In this letter they say to you : 

During the return trip last night Capt. Beebe remarked that it might be well 
to approach Mr. Francis H. Love with quotations owing to the fact that " money 
had been found to finance certain Brazilian sh'pments."' 

Who is Mr. Francis H. Love? 

Mr. Jonas. That is the United Aircraft. 

Senator Bone. In this letter to you they quote the expression 
" money has been found to finance certain Brazilian shipments." 
What would that mean ? 

Mr. Jonas. That was the shipment from Mayrink Veiga we spoke 
of. 

Senator Bone. Why would he quote that statement in this letter? 

Mr. Jonas. I cannot account for what a man would do, but I feel 
certain he was referring to the United Aircraft. 

Senator Bone. Why would Smith & AVesson Co. resort to such 
consideration and put it in quotation marks? 

Mr. Jonas. That was an inquiry from Mayrink Veiga. 

Senator Bone. Are you sure that was stuff going to the revolu- 
tionists ? 

Mr. Jonas. Yes. 

Senator Bone. You are quite sure of that? 

Mr. Jonas. Yes. 

Senator Bone. Who is Mr. Trest? 

Mr. Jonas. That is Mr. Treat. 

Senator Bone. You have already identified him. 

Mr. Jonas, Yes, sir. 

Senator Bone. It is written " Trest " here, and that is the reason I 
inquired. You were writing Mr. Treat under date of October 13, 
1932, and this letter I offer in evidence. 

(The letter referred to was marked "Exhibit No. 740" and is 
included in the appendix on p. 1914.) 

Senator Bone. In this letter you w^ere writing Mr. Treat as follows : 

Have supplied all the bombs and a lot of other military equipment to most 
of the countries fighting in South America, and if they keep it up much longer, 
I will have no cause to complain. 

That is merely a repetition of what you have said in another form 
before ? 

Mr. Jonas. Yes, sir. 

Senator Bone. You sailed down to Rio in October, 1933? 

Mr. Jonas. Yes, sir; for the Remington Arms Co. 

Senator Bone. Who is Walter P. Brown? 

Mr. Jonas. He is an agent for an American concern in Sao Paulo. 

Senator Bone. I have here a letter dated October 27, 1933, from 
yourself, Mr. Jonas, to Walter P. Brown, which is offered as an 
exhil)it. 

( The letter referred to was marked " Exhibit No. 741 " and is 
included in the appendix on p. 1914.) 



1802 MUNITIONS INDUSTRY 

Senator Bone. Tliis letter is addressed to Walter P. Brown in 
care of Byington & Co., New York. Who are they? 

Mr. Jonas. That is their New York office. 

Senator Bone. What does Mr. Brown do? 

Mr. Jonas. He acts as shipping agent, and has been doing some 
buying. 

Senator Bone. Do they handle arms? 

Mr. Jonas. Byington & Co. does not handle arms. 

Senator Bone. Look at the letter I have referred to, and there is 
.a letter in longhand attached to it, dated October 21, in which there 
is reference to the fact that Figuerola did not play the game with 
you, meaning yourself, and he chided you a little and says that you 
should not put him in Figuerola's class because of that incident. 
'\Yliat Avas this Figuerola deal that led Mr. Brown to make this 
remark ? 

Mr. Jonas. Figuerola bought some material for Brown, which he 
claims he only bought on the condition he would have to produce a 
license before he would deliver it. 

Senator Bone. Produce what ? 

Mr. Jonas. He bought some material for Brown, ammunition and 
various other materials, and I happened to have introduced Figue- 
rola to Brown, but I received nothing on the deal. 

Senator Bone. Was Brown selling ammunition on the side ? 

Mr. Jonas. Brown was purchasing ammunition. 

Senator Bone. For whom? 

Mr. Jo" vs. I would ask no questions. 
. Senator Bone. You do not know who his principals were ? 

Mr. Jonas I knew who the men were in New York who were 
with him. 

Senator Bone. I mean who was he purchasing ammunition for ? 

Mr. Jonas. I did not try to get any information, but I told him 
if any purchases were made, nothing would be delivered unless he 
could get a State Department license. 

Senator Bone. Are State Department licenses issued to any con- 
cern in this country when these military planes are shipped into 
the revolutionists? 

Mr. Jonas. If they are shipped to the revolutionists, they cannot 
obtain licenses. 

Senator Bone. But the revolutionists got the planes. 

Mr. Jonas. I believe that shipment, from what I heard, was after- 
ward delivered to the Government of Brazil, because it could not 
be shipped. 

Senator Bone, Who are Carr Bros. ? 

Mr. Jonas. I don't know. 

Senator Bone. There is a letter taken out of the files addressed 
to the Ilectigra])h Co.; do you know who they are? 

Mr. Jonas. I don't know. 

Senator Bone. Can you tell us, Mr. Young? 

Mr. Young. I don't know anything about this correspondence; 
it does not pertain to the Federal Laboratories, and I don't know 
anything about it. 

Mr. Jonas. This seems to be some inquiry from Mayrink Veiga. 



A 



MUNITIONS INDUSTRY 1803 

Senator Bone. It is indicated here that Mayrink Veica was piir- 
ehasino; military equipment to the amount of $3,000,000. Do you 
think that is about right ? 

Mr. Jonas. I think so. 

The Chairman. Mr. Young, you wrote to Mr. Jonas about some 
competitive tactics you were running up against. The Lake Erie 
Chemical Co. have been pretty serious comj^etition to you? 

Mr. Young. Sometimes; yes. 

The Chairman. Who is Mr. Huber? 

Mr. Young. I think he is their export man. 

The Chairman. You state in this letter to Mr. Jonas as follows: 

I bad an interesting' conversation with the vice president of tlie Lake Erie 
Chemical Co. in Pittsburgh last week. I complained to him about Richard- 
son's tactics and the tactics of some of their men here. He seemed to think it 
was smart. He stated one of his men. when asked recently by a police chief, 
" wliat about Federal and their products ". spoke np and said. " I have never 
heard of the firm before. They must be a very small outfit or we would know 
about them." In another case the same representative of theirs replied to 
a police chief who wanted to know about the difference between the two prod- 
ucts, stating there was no difference, that they made everything Federal sells 
and it all goes into the same pockets ; that if the chief bought from them he 
woiild get the same thing. 

There is only one answer to competitive tactics such as this, that is, to be 
on the job and to demonstrate that they are liars in such a manner that they 
are out. 

The letter from which I have just quoted is offered as an exhibit. 

(The letter referred to was marked "Exhibit No. 742'' and is 
included in the appendix on p. 1915.) 

The Chairman. I now offer a letter under date of April 21, 1932, 
from the Lake Erie Chemical Co. to Mr. J. W. Young. 

( The letter referred to was marked " Exhibit Xo. 743 "' and is 
included in tlie appendix on p. 1915.)^ 

The Chairman. This was the Lake Erie Chemical Co. writing to 
you in a friendly way on the way your agents were in his opinion 
swindling the bankers in Ohio and Indiana. 

Mr. Young. May I see that letter, please? This was a matter 
which did not pertain to the Federal Lal)oratories. It was a prac- 
tice that has been followed by one of our agents on the side, and we 
knew nothing of it. When it was called to our attention the man 
was immediately spoken to about it. 

The Chairman. I have here a letter of date August 9, 1933, from 
the Federal Laboratories, addressed to the Lake Erie Chemical Co., 
which is offered in evidence. 

(The letter referred to was marked " Exhibit No. 744 " and is in- 
cluded in the appendix on p. 1916.) 

The Chairman. This letter, Mr. Young, sets forth certain activ- 
ities in Washington about antigas legislation and then speaks of 
another meeting to come. What was that meeting you referred to? 

Mr. Young. The management of the tAvo firms have tried to get 
together on such experiences as our salesmen had, and to eliminate 
that feeling, and one of the advantages coming from the N.R.A. 
is to make it more possible. 

1 Reference is made to " Exhibit No. 743 " in the proceedings of Sept. 21, 1934, in the 
examination of Lalie Erie Chemical Co. See pt. 8, p. 1997. 



1804 MUNITIONS INDUSTRY 

Senator Bone. My heavens, have you folks got a code ? Seriously, 
I am asking is there a code involved in this business at all? 

Mr. Young. Our company operates under a code. 

Senator Bone. Would you file a copy of that with us. I would 
like to see it. 

Mr. Young. It is not a munitions code. We subscribed to the 
N.R.A., however. 

The Chairman. Is this the chemical manufacturers' code? 

Mr. Young. No; our company first operated under the general 
code, and it operates now under the industrial safety equipment 
manufacturers' code. 

Senator Clark. You had a price-fixing agreement before the 
N.K.A.? 

Mr. Young. We have always had a price agreement with the 
Lake Erie Chemical Co. on products that are licensed under patents. 

Senator Clark. The very low things the management of the two 
companies had to say about each other — notwithstanding that, you 
had a price agreement? 

Mr. Young. That is prescribed under the patents, where under 
the present laws of the United States the owners of the patents 
can set the prices at which articles can be sold. 

Senator Clark. Your companies did get together on bids for the 
Department of Justice? 

Mr. Young. On those particular articles we did. It was not a 
case of getting together, but the requirement was that the contract 
should be sold at such a price, regardless of who the buyer was. 

The Chairman. In that connection, I have before me a letter dated 
December 8, 1933, from the Lake Erie Chemical Co. to yourself, 
which is offered in evidence. 

(The letter referred to was marked " Exhibit No. 745 " and is 
included in the appendix on p. 1916.) 

The Chairman. Mr. Young, were your foreign competitors rather 
aggressive in spreading false stories about your activities? 

Mr. Young. We ran into some serious arguments from other sales- 
men in the foreign territories just as we did domestically. 

The Chairman. Who is N. E. Bates? 

Mr. Young. N. E. Bates was previously identified as an employee 
of the du Fonts, a salesman for the du Fonts. 

The Chairman. He wa-ote you under date of January 11, 1934, 
which letter is offered in evidence for the record. 

(The letter referred to was marked " Exhibit No. 746 " and is 
included in the appendix on p. 1917.) 

The Chairman. In this letter Mr. Bates says : 

I iUii very glad indeiMl to Ica'.n tliat your i>i-ic'es as given De Rossi are below 
the English and French quiitations. I am very conhdent that should the 
Peruvians buy bombs they will get them from you through De Rossi. 

The English and the French were active down there, were they? 

Mr. Young. They were very active. 

The Chairman. In another letter reference is made to the mud 
thrown by the Czechoslovakian interests. What is the meaning of 
that? 

Mr. Young. I would take that in the sales vernacular they were 
trying to discredit the American manufacturers as being unable to 
supply responsible equipment. 



MUNITIONS INDUSTRY 1805 

The Chairman. Now, we have had all of this evidence of the tre- 
mendous severe competition between you and the Lake Erie people, 
and I would like to ask was there really any competition at all ; 
weren't you workinof pretty much hand in hand with them? 

Mr. Young. No, Senator. 

The Chairman. You had these price-fixing agreements? 

Mr. Young. Senator, these hand grenades and the gas and car- 
tridges are patented, and the owners of the patents under the present 
law of the United States have the right to say what price a patented 
article shall be sold, and that was the price-fixing agreement which 
is referred to in the correspondence. 

The Chairman. In a letter by Mr. G. Oberdick to :Mr. C. W. 
Rich, dated July 13, 1934, reference is made to Major Harris; who 
is Major Harris? 

Mr. Jonas. He is military attache in Central America. 

The Chairman. This particular letter has to do with business in 
Costa Rica. Have you been there, Mr. Young? 

Mr. Young. No; I was not. 

Mr. Jonas. I was there. 

The Chairman. In this letter Mr. Oberdick says: 

Unquestiouably Frank has done a mighty nice job here and we are glad of 
the opportunity to crack down on some of this business. The price schedule 
as mentioned in your letter wholly meets with our approval. There are just 
two exceptions, etc. 

Did you set up this price schedule ? 

Mr. Young. That is the schedule I just explained to you, and we 
set that up. because w^e happened to own the patents. 

Senator Clark. You own the patents, bitt you are licensing your 
competitor ? 

Mr. Young. Yes, sir. 

The Chairman. In this same letter, in the concluding paragraph 
we find reference being made to getting the gas shipment ready and 
asking advice in advance as to how the cases shall be marked, and 
then saying that what you are most!}' concerned about is how you are 
going to handle the Thompson gun and that you will wait further 
word from them before you take any action on it. Wliat is the 
reference there to marking these cases? 

Mr. Oberdick. The shipping cases have to be marked according 
to the number and name of the department of the government to 
whom they are going, and we have to have the proper marking before 
we can determine what markings to use on the cases. All of the 
shipments of tear gas would have to bear the mark tear gas, and the 
Thompson gun also would be described as a Thompson gun, and we 
are merely working out the details of the numbers to be put on them. 

The Chairman. You are following the rules which you have stated 
would not let you sell a gun to any individual in the United States 
while you might loan it in an instance, but you would not sell it. 
However, j^ou were selling them for their foreign market? 

Mr. Young. I do not say we would not sell an individual, but I 
say we will not sell an individual except where it was approved by 
the Department of Justice of the United States. 

Senator Bone. Does it require a lot of detail work to mark a 
package of Thompson machine guns? 



1806 MUNITIONS INDUSTRY 

Mr. Oberdick. No ; but you have to have instructions as to what 
to put on the cases. 

Senator Bone. If you put on it " This package contains Thompson 
machine guns ", wouldn't that be sufficient? 

Mr. Oberdick. That is not what I mean ; but what I am referring 
to is the correct name of the department of the government to which 
it is going. 

The Chairman. Who were these guns for? 

Mr. Oberdick. The Costa Rican Government. 

Mr. Rich. I can clear that up. We were consolidating shipments 
from three different points, and we wanted to get the case numbers 
so that we would not have two cases of the same mark, as no. 1, or 
same mark as no. 4 or no. 5. 

The Chairman. Mr. Jonas, in connection with your business in 
San Domingo you had a conference with Mr. W. E. Dunn? 

Mr. Jonas. Yes, sir. 

The Chairman. Who was Mr. Dunn ? 

Mr. Jonas. Mr. Dunn was loaned to the San Dominican Govern- 
ment to handle finances. 

The Chairman. Loaned to the government by whom? 

Mr. Jonas. By the United States Government. 

The Chairman. And you had a conference with him? 

Mr. Jonas. Yes, sir. 

Senator Bone. What department is he in? 

Mr. Jonas. I do not know what department. 

The Chairman. He reported to you that the government had 
been victimized. Can you explain that incident? 

Mr. Jonas. It was on a shipment we made to them, and I believe 
our competitors informed him we had asked too high a price. The 
San Domingo Government took everj^thing and everything was paid 
for and they were our standard prices. 

The Chairman. In a letter from you, you state, ]Mr. Jonas, that 
you are endeavoring to get in touch with Mr. Neitzger of the Na- 
tional City Bank to see what we can do. Who was Mr. Neitzger ? 

Mr. Jonas. Mr. Neitzger handled all of their finances in the 
National City Bank, and I had to put the money through the 
National City Bank; the credit had to be opened with the National 
City Bank. 

The Chairman. Mr. Young, just one or two questions more. 
Reference was made yesterday to your brotlier. Is he a missionary ? 

Mr. Young. Yes; he is. 

The Chairman. Where? 

Mr. Young. In Ecuador. 

The Chairman. How long has he been there ? 

Mr. Young. He has been there about 12 years. 

The Chairman. Is this brother demonstrating your gas bombs to 
South American countries? 

Mr. Young. No; he is not. 

The Chairman. He has done that? 

Mr. Young. He had with him on his person one of these small 
guns because he travels up in the mountains, up the Amazon River, 
and I think in a friendly meeting one time he demonstrated that 
gun. 



MUNITIONS INDUSTRY 1807 

The Chairman. Demonstrated to whom? 

Mr. Young. I do not recall except I have a hazy recollection that 
he demonstrated one time to one of the Government officials. 

The Chairman. On April 21, 1932, in a letter which I am offering 
for the record he makes certain statements which I will read. 

(The letter referred to was marked "Exhibit Xo. 747" and is 
included in the appendix on p. 1917.) 

The Chairman. Heading from the letter, he says : 

Yesterday I saw the Minister of War again and made arrangements to 
demonstrate today. The Minister, two generals, the head of the police of 
Quito and a number of officers and soldiers were present. I used the " Billy " 
first but I am sorry to say it did not prove a success. I shot it at two soldiers 
but they were able to stand the gas and get me. I then shot the grenade 
in a room and asked the men to go in. This was a real success and helped to 
gain what I had lost through the failure of the billies. 

Senator Clark. Did he say whether he got any converts on this 
occasion ? 

The Chairman. Reading this letter it says : 

Colonel Santor happened to be here on a visit and he witnessed the demon- 
stration. I found out through his conversation with the minister that he 
seemed secured some gas grenades (larger than yours and black) through 
the American Brewer. Yoder. This, no doubt, is the reason b.e has been putting 
me off. It is more than likely that he got something out of it. 

Who is Yoder ? 

Mr. Jonas. Yoder is an American brewer in Ecuador. 

The Chairman. Then the letter goes on to say : 

Before leaving, the minister asked me to give him the best price on 100 
" billies '■ and 200 grenades. I told him I would write you and have you 
send him quotation and terms direct. Address him Senor Don Leonardo Soto- 
mayor Luna, Minestro de Guerra of Marina, Quito, Ecuador. Also send litera- 
ture to Capt. Virgilio Guerrero, intendente general, Quito, Ecuador. This fel- 
low has been in the States and speaks English. He would appreciate any 
newspaper clippings, etc. 

I have a letter from the Reed boys telling me that they are getting in touch 
with you. It may be best to have them as your agents from now on but I 
don't think they should come in for any of this first order as I — 

. The letter stops there, and we have not been able to find the next 
p^ge of it in your files. Who are the Reed boys he refers to? 

Mr. Young. They were two boys in business in Ecuador to whom 
he turned this business over to handle. 

The Chairman. Isn't this most unusual practice to have a mis- 
sionary as your agent selling and soliciting orders and staging 
demon.strations ? 

Mr. Young. No, sir ; that is not an agent either, it is my brother, 
and he knows these men personally, I am sorry I don't have the 
next letter from him, and I will be glad to try to look it up in my 
files to see if I have a copy of it, where he said this is getting into 
a commercial business and I must draw out of the picture, and turn 
it over to the Reed boys. 

He started on a friendly basis, and I think I can furnish you 
that letter. In addition, this is tear gas, it is not munitions sales 
that he is entering into. 

The Chairman. He was demonstrating it to the war minister. 

Mr. Young. They needed it down there. 



1808 MUNITIONS INDUSTRY 

The Chairman. Are you going to argue it was not for military 
purposes, and that here you have a man who is a missionary at 
work selling this as a side line, or was his missionary work a side 
line ? 

Senator Clark. Wasn't there a letter read here in which he spoke 
of his missionary work ? 

The Chairman, Something is said about that in this letter, " Ex- 
hibit No. 747 ■', and we will read it. He says : 

My Dear John : Since writing you last we have been in our Indian station 
in Agato, Otavalo. We had a weeli of joyful simple life. Our visit was a 
blessing to us, and we have reason to believe it was also a blessing to Miss 
Brown and Miss Robel, the two brave girls stationed there. Six or eight 
Indians showed a desire to follow the Lord, and we prayed with them. Some 
of them had made previous beginnings, but had been pulled down by sin. 
Indian wtirk needs a great deal of prayer. 

Mr. Young. I think, Senator, that the conditions in Ecuador 
will warrant that work, if you are familiar at all with conditions 
there j and if you are, you would see the need of a humane weapon 
such as tear gas for use in their affairs ; and I would not limit it to 
my brother in Ecuador, engaged in missionary work. Tear gas has 
many, many people who sponsor it because of its humane phase. 

Senator Clark. It is also an effective munition of war. 

Mr. Young. It is not munitions of war. 

Senator Clark. It was developed during the war to effect the 
advance of infantry. 

Mr. Young. It has not proved to be effective in war. 

Senator Clark. It was used effectively in the last war. 

Mr. Young. It was only used as a harassing instrument to make 
men wear masks. 

Senator Clark. It was used in the last war, was it not, as a muni- 
tion of war? 

Mr. Young. I do not think the War Department today would 
consider it a munition of war. 

Senator Clark. It was certainly a munition of war during the 
last war, and it was developed in that way. 

The Chairman. Mr. Young, it all strikes me, in the face of this 
case of your brother, and then your own activities, not alone indi- 
cate a humanitarian desire, but indicates very greatly a commercial 
desire. Here is your brother, by reason of his acquaintance and his 
closeness to the ministers of war and generals down there, breaking 
a way for you, opening up a market for you in that particular 
country. It is very advantageous to have a brother like that, is it 
not? 

Mr. Young. My brother has been very advantageous to me on 
many occasions. 

The Chairman. And that, combined with your ability to walk into 
the Palace down in Habana and let people see you do have the right- 
of-way there; things like that mean a great deal in your business, 
don't they ? 

Mr. Young. Those things we get enjoyment out of. 

Senator Bone. What church does your brother belong to? 

Mr. Young. He belongs to the Christian Missionary Alliance. 
That is a missionary organization which is operating in Ecuador. 

Senator Bone. He evidently believes in militant and muscular 
Christianity ? 



MUNITIONS INDUSTRY 1809 

Mr. Young, Senator. I do too, and I think there are a great many 
people who still believe in a national safety program which is accom- 
plished through preparation. 

Senator Bone. I take it you would give an entirely new signifi- 
cance to the old hymn, Onward, Christian Soldiers, and are we to 
understand that that old hymn is given a new meaning in a future 
war? 

Mr. Young. We are largely the i^roduct of early training, and 
while this country is going through a transition period, and where 
there is an attempt to condemn anything in the way of war, that 
is no sign we have not reached that stage. 

Senator Bone. Do you think there is anything more sinful tlian 
war? Society will hang a man for taking another man's life, yet 
in the last war 10 million of the very best young men in the world 
were shot to death ; they died a terrible death. Do you think there is 
anything sinful in that sort of thing? You are a churchman. I take 
it, and I am anxious to get your views for the benefit of the country 
at large on the ethical side of war. 

Mr. Young. My views are that preparation is the surest way of 
preserving peace. 

Senator Bone. Europe was very well prepared in 1914, was it not, 
and Germany had the largest army in the world, and it was said 
France had an enormous army. Did preparedness stop that mess 
over there? 

Mr. Young. I have been in many arguments and discussions and 
frequently in debates on that subject. Belgium was not prepared, 
and I think there may be very strong argument on both sides. 

Senator Bone. If neither Germany nor France had been prepared, 
and had been in the same position as little Belgium, that holocaust 
might not have occurred. 

Mr. Young. We might have been subjects of Germany. 

Senator Bone. You believe in that, do you? 

Mr. Young. Our national propaganda during the war would lead 
us to believe that was true. 

Senator Clark. Nobody is silly enough to believe that national 
propaganda toda}?^, at this day and time. 

The Chairman. Is that not pretty well recognized now as being 
propaganda ? 

Senator Bone. Who started that propaganda? 

Mr. Young. I don't know. 

Senator Bone. The munitions makers had a pretty large hand 
in it. 

Mr. Young. At that time I was not in the munitions business, and 
I know nothing about it. 

Senator Bone. You know something about war, and I take it you 
know something of the l)ackground of it, or you would not be quali- 
fied to debate on this subject which you assured me a moment ago 
you had debated on. In view of that fact you would be qualified to 
express an opinion to the committee. 

Mr. Young. I would rather not any further. Senator. 

Senator Bone. I asked Mr. Jonas a moment ago about Mr. Pick- 
erell. Are you sure of the date of his withdrawal from the Govern- 
ment service ? 

Mr. Jonas. I am not, but it was some years ago. 



1810 MUNITIONS INDUSTRY 

Senator Bone. If it slioiild be made to appear he did not retire as 
consul there until July lOSi, will you advise us whether that is 
accurate? 

Mr. Jonas. Yes, sir; I Avill. I am positive he was not consul there 
at that time. He has been retired quite some years now. 

Senator Bone. You think he has been retired for some years ? 

Mr. Jonas. Yes, sir. 

The Chairman. Mr. Young, in your competition, at least in Latin 
America, there is a large meaning given to titles and names, is there 
not? 

Mr. Young. I think they give more attention to that, probably, 
than in some of the other countries. 

The Chairman. Yesterday there was identified by Senator Van- 
denberg a letter dated May 11, 1934, addressed to yourself, in which 
reference w^as made to the fact that names could be put to large ad- 
vantage down there. When was your Federal Laboratories Co. 
organized ? 

Mr. Young. 1923. 

The Chairman. How did it come to be called " Federal Labora- 
tories " ? 

Mr. Young. I don't know. I had nothing to do with the naming 
of it. 

The Chairman. I will ask that this letter to which reference has 
been made, dated May 11, 1934, from Mr. Young to Texidor, be 
incorporated as an exhibit in the record. 

(The letter referred to was marked " Exhibit No. 748 "' and is 
included in the appendix on p. 1918.) 

The Chairman. Mr. Young, I show you some very handsome cata- 
logs of your company ; I believe these were issued by you ? 

Mr. Young. We had some catalogs issued. 

The Chairman. Here is one, for instance. How broadly is that 
circulated ? 

Mr. Young. That is distributed in military circles. 

The Chairman. In what country, our own country? 

Mr. Youxg. Yes; and abroad. 

The Chairman. Anybody who is in the market and has the money, 
wanting to buy, gets this catalog? 

Mr. Young. I would not say that. I think our records show our 
sales have been to governments and not to individuals particularly. 

The Chairman. For the committee's record, these evidences of 
your salesmanship in the form of these catalogs Avill be included 
as exhibits for the committee and given the Exhibit Nos. 749, 750, 
751, 752, 753, and 754, and perserved as such, but not to be made a 
part of the ]:)rinted record. 

(The catalogs referred to were respectively marked '* Exhibits 
Nos. 749 to 754", inclusive, and are filed with the committee.) 

Just one more thing, Mr. Young, do you advertise in some maga- 
zines ? 

Mr. Young. Yes; we do. 

The Chairman. How extensive an advertising expense do you 
have annually? 

Mr. Young. Very, very little. 



MUNITIONS INDUSTRY 1811 

The Chairman. I observe that you do have an advertisement in 
a magazine called " Bolivia." 

Mr. Young. We do. 

The Chairman. Who publishes that magazine? 

Mr. Young. That magazine is published in the interest of the 
Bolivian Government. We have an ad appearing in there as compli- 
mentary to the Government after we had received some business. 
The consul said, " This is published for the goodwill of the Bolivian 
Government and circulated through the universities and throughout 
the United States. Would you care to put an advertisement in it?"' 
And we placed an ad in it to help support the magazine. 

The Chairman. Have you seen the magazine? 

Mr. Young. Yes; I did. 

The Chairman. If the magazine is dependent upon advertising, 
then it is fair to say that the munition makers in America support 
that magazine, is it not ? 

Mr. Young. I think that was done for the same reasons which 
everj'body else was shipping into Bolivia, and, for instance, muni- 
tions were the principal thing going in at that time. 

The Chairman. Munitions were the principal thing going in at 
that time. We have those who are arguing today that this investi- 
gation might easily lead to trouble, and that, at least, it is going to 
ruin our business in South America. In Bolivia, if it injures the 
munitions business, what part of the total business done, commer- 
cially, in Bolivia is going to be injured. 

Mr. Young. I do not know, Senator. 

The Chairman, You have said that the largest part of the busi- 
ness going to Bolivia is munitions. 

Mr. Young. I am no authority on that. 

The Chairman. I notice from this magazine, which I am offering 
also as a committee exhibit, the advertisements of a number of 
Arruerican industries. I am just going to run through them. 

(The document referred to was marked " Exhibit No. 755 " and is 
filed with the committee.) 

The Chairman. I find here the names of the following companies: 
All-America Cables, Webster & Ashton; that is, the International 
Harvester Export Co. ; the Bolivian Railway Co. ; the Ford V-8 ; 
the Bank of Bolivia; Chrysler Export Co.; Webster & Ashton. com- 
mission agents and representatives; and then, as having relation 
directly to the munitions industry, the remaining advertisers are- 
as follows : 

Here is Curtiss-Wright Export Corporation with a full page;" 
General Motors, controlled by the du Fonts, with a half page ; here 
is a tire advertisement, Goodyear tire advertisement; Federal Gas 
Munitions Co.; Federal Laboratories, Inc.; Bolivian Power, a tide 
water oil company; Remington Arms; American Armament; Colt's 
Patent Firearms Manufacturing Co. 

This magazine seems to be pretty much supported by the muni- 
tions industry. 

Is it represented to you as being supported by the munitions- 
industry? 

Mr. Young. I do not know. I spent $70 on it, Senator. 



1812 MUNITIONS INDUSTRY 

The Chairman. $70 per month? 

Mr. Young. No; I put in, I think, two ads ahogethei. 

The Chairman. Both the same price? 

Mr. Young. About the same price. 

The Chairman. Your advertisement here is a quarter page, so 
that that is $35 a quarter page, is it not? Is that about it? 

Mr. Young. It was about $70 per insertion. 

The Chairman. Per insertion? 

Mr. Young. Yes ; and I think we had two insertions. 

Senator Bone. One of your very ornate catalogs here seems 
to be entirely taken uj), so far as the illustrations are concerned on 
the cover, with labor troubles. You show a scene which I take to 
be a graphic scene from the West Virginian coal strike, with the 
streets full of gas; then you shoAv an illustration entitled "Against 
California Communists ", and then another one of the Weirton, 
W.Va., strike. Was that the steel strike? 

Mr. Young. That was during the steel strike. 

Senator Bone. And another one taken at Pittsburgh, Pa. Here 
are a couple of uniformed officers standing on the steps of the 
United States Capitol with gas guns in their hands. Was the Capi- 
tol in danger ? Is that the reason you ran this picture ? 

Mr. Young. That, Senator, was when the hunger marchers came 
down on the Capitol. 

Senator Bone. That was to be used on the hunger marchers, 
w^as it? 

Mr. Young. No; that was to be used to protect the Capitol from 
any mass rush. 

Senator Bone. Did you think they were going to rush the Capitol 
and do something to Congressmen? 

Mr. Young. I am photogTaphing what the police department had 
done there. 

Senator Bone. Then you show a scene at Steubenville, Ohio, being 
a street scene with gas filling the streets. Then you show a scene of 
the Clairton steel strike. Where is Clairton? 

Mr. Young. In the vicinity of Pittsburgh. 

Senator Bone. Then you show a scene of the Fayette County coal 
strike. Is that in Kentucky? 

Mr. Young. That is in Pennsylvania. 

Senator Bone. Then there is another picture of a Los Angeles 
street scene in a Communist riot and a scene in Clarksburg, W.Va. 
What happened down there? 

Mr. Young. That was a coal strike, and I think they killed one or 
two people. 

Senator Bone. Then you show a scene marked " New York State ", 
Avith a street filled with gas. What was that? 

Mr. Young. That was a milk strike. 

Senator Bone. Then you show a picture taken at Ambridge, Pa., 
" End of a stubborn strike." Apparently it was intended to show 
the gas end of this stubborn strike. What was that strike ? 

Mr. Young. That was a strike in which they had stopped men 
from going into the mill by beating them into unconsciousness. The 
pickets were armed with clubs about 3 feet long, pieces of concrete, 
and bricks, and sent several employees who attempted to go to work • 
to the hospital. 



MUNITIONS INDUSTRY 1813 

Senator Bone. Here is a scene marked " Wisconsin milk strike." 
What are they? Farmers? 

Mr. Young. That was a picture of the National Guard endeavoring 
to control the Wisconsin milk strike. 

Senator Boxe. But the men whose pictures are shown here are not 
National Guard men. They are in civilian clothes. 

Mr, Young. Then it would be deputy sheriffs. The National Guard 
controlled most of that. 

Senator Bone. In another part of your literature you refer to 
white phosphorus grenades. What are they? 

Mr. Young. They are incendiary. 

Senator Bone ( reading;) : 

The burning phosphorus is hurled in all directions for ranges of 50 to 75 
feet. Casualties are produced by the phosphorus particles, burns from which 
are very painful and long healing. 

For what was that sort of device intended to be used ? 

Mr. Young. That is purely military, and is not sold except to a 
jxovernment or a war department. As a matter of fact, it has never 
been sold. 

Senator Clark. Mr. Younfr, I understood you to say that your 
price-fixing agreement with the Lake Erie Co.. which is now known 
as the United States Ordnance Engineers, is it not? 

Mr. Young. Yes, sir. 

Senator Clark. I understood that that had only to do with pat- 
ented articles which you control? 

Mr. Young. Yes, sir. 

Senator Clark. I have before me a letter dated April 19, 1933, 
from you to Mr. B. C. Goss, president of the Lake Erie Chemical 
Oo., in which you state : ^ 

Referring to meeting held in Youngstown, Ohio, on March 27. relative to 
the matter of sizes and prices of grenades and candles and price of billy, 
we hereby submit the following schedule, effective May 10, 1033. 

We believe it l^est to designate the size of the grenades or candles in the 
terms of the lachrymator contents. We understand that we are both using 
CN, but any substitute for CN would come under the same classification : 

1. Pocket-size grenade : Contents 17 grams CN. Price, $5 each. 

2. Standard-size grenade : Contents 26 grams CN. Price, $8 each. 

3. Jumbo-size grenade : Contents 85 grams CN. Price, $10 each. 

Do you control the patents on all of them ? 
Mr. Young. Yes, sir. 

Senator Clark. Mr. Goss writes back to you, under day of Feb- 
ruary 14, 1933 : - 

You will probably also recall that, when Mr. Conkling developed his fast- 
burning grenade with the rows of openings down the side (which you so 
successfully copied or imitated immediately after we put same on the market), 
the name candle was retained by the Army merely as a means of distinguish- 
ing it from the small grenade having a smaller filling, although the new one 
was intended for throwing, and, therefore, obviously a grenade. 



1 This letter was entered into the record during the proceedings of Sept. 21, 19.34. 

in the examination of the Lake Erie Chemical Co. (See pt. 8, p. 109fi.) It was marked 
" Exliibit No. 799 " and appears in the app<"iulix to part 8 on p. 2074. 

-This letter was entered into the record during the proceedings of Sept. 21. 19.34. 

In the examination of the Lake Erie Cliemlcal Co. (See pt. 8, p. 1997.) It was marked 
•" Exhibit No. 800 " and appears in the appendix to part 8, on p. 2075. 



1814 MUNITIONS INDUSTRY 

Was that a case where you were jumping their patents 'f 

Mr. Young. No, sir. The Conklin patent was an improvement 
on this [exhibiting sample], which put side channels clown the inside 
of the grenade. The improvement on our grenade has the side chan- 
nels on the outside. 

Senator Clark. What does Goss mean when he states that you 
so effectively copied it or imitated it immediately after putting it 
on the market? 

Mr. Young. That was his opinion of what had happened. 

Senator Clark. Then he says : 

You successfully doublecrossed us twice ou this Washington police business ;. 
the first time, by quoting $5.50, while we quoted $8.00 in accordance with our 
contract with you, you claiming to have misunderstorxl the contract. The next 
time a chance to hid came, although you had, on the previous occasion, advised 
that you fully understood the contract and would abide by it in the future, we 
again quoted $8.00. You waited until the last minute before the bids were tO' 
be opened, being cei'tain that our bid would already be in, as it was, and again 
changed your bid to $5.50, so that once more you got the order. 

Mr. Young. That was a misunderstanding. We sell the Govern- 
ment at a lower price than we do the municipal police departments, 
and their price was not determined; there was no set notice which 
we should give the Lake Erie Chemical Co. of a price to be set, and 
before sending in our bid I telephoned them and told them we would 
reduce it to $5.50. They had previously mailed in their bid at 
$8 but had an opportunity to submit another bid and got their bid 
in also at $5.50. 

Senator Clark. Goss says here that you doublecrossed them by 
pretending to make a mistake, and then after you said you fully 
understood the contract did the same thing again. Is that true ? 

Mr. Young. He thought that the short notice did not give them 
time to get their bid in, and they did get a second bid in under their 
agent's name. 

Senator Bone. There was a price-fixing agreement as to the price 
at which you should sell the Washington police department? 

Mr. Young. Yes, sir. 

Senator Clark. That goes on a little later in the letter, as follows : 

I am compelled, however, to say that every agreement you have ever made 
with me, you have violated almost before the ink was dry on your signature,, 
and I have your instructions to representatives over your own signature, di- 
recting them to use misrepresentatioi" which you have specifically agreed not 
to use. 

What was your reply to that communication ? 

Mr. Young. I did not agree with him at all. 

Senator Clark. You did not agree with him at all ? 

Mr. Young. No, sir. 

Senator Clark. I do not know that I blame you for that. What, 
was the arrangement which you had with the Lake Erie Chemical 
Co. by which, after a bid had been submitted to the Department 
of Justice, you agreed to have the Department of Justice reopen the 
bids? 

Mr. Young. This time the slioe w^as on the other foot. They, I 
believe, had given a discount which had not been provided for, and 
I endeavored to ask the Department of Justice to let it go through,, 
and nothing could be done of it. 

Senator Clark. Here is a letter from Mr. A. S. Ailes, Mr. Young. 



I 



1 



MUNITIONS INDUSTRY 1815 

He is vice president of the Lake Erie Chemical Co., is he not? 
Mr. Young. Yes, sir. 
Senator Clark. It is dated December 8, 1933, and states: 

My Dear John : My understanding was that you were going to call some- 
body down at the Department of Justice and have permission granted for us 
to amend our bid offering two percent discount, the same as you and I further 
understood that you were going to notify me if you secured such permission. 

That seems to be a more simple procedure than having the Bureau throw 
out the bids and re-advertise. I do not see where the payment to us of the 
50-cent royalty would cure the situation. 

We are primarily interested in getting an even chance with the Federal 
Laboratories at Government business, not so much for the business itself 
but to offset the advertising your agents are doing all over the country that 
the U.S. Government uses Federal Laboratory weapons and munitions 
exclusively. 

The error having been made by the Federal Laboratories in direct variance 
with the written understanding, it looks to us like it is up to you to secure 
this permission for us to amend our bids. 

Did you undertake to have the Department of Justice reopen the 
bids? 

Mr. Young. I asked them if they would reopen the bids. 

Senator Clark. Did you have any particular influence with the 
Department of Justice which would have led you to believe that 
you could control their opening or not opening of the bids? 

Mr. Young. This was in favor of my competitor. There is a 
ruling. I believe, that if the Government can have evidence that the 
cost can be cheaper, and it is agreeable to all parties to rebid, that 
the Government can throw out the bids and have a rebid. 

Senator Clark. Did you call the Department of Justice? 

Mr. Young. I did call the Department of Justice. 

Senator Clark. Now I find that on April 19, 1932, the Lake Erie 
Chemical Co., through B. C. Goss as ex-lieutenant colonel, Chemical 
Warfare Service, as he signs himself in a communication to the 
Government, complains to the General Supply Committee of the 
Treasury Department, saying : 

la accordance with our conversation of recent date, we wish to register a 
protest on the recent award to Federal Laboratories, Pittsburgh, on gas guns, 
one and one-half-inch bore, gas billies, and tear bombs, on the ground that 
there was no competition and that this company was not given the opportunity 
of bidding on this equipment, and on the further ground that the prices at 
which awards were made were, in some cases, unreasonable.^ 

Did you secure business from the Treasury Department without 
bidding on it ? 

Mr. Young. No ; there was a bid. 

Senator Clark. They state in this letter there was no bidding. 
What is your feeling about that? 

Mr. Young. There was a bidding. They did not get their bid in. 

Senator Clark. Then sometime later, about 1933, the Lake Erie 
Chemical Co. filed a complaint with the Federal Trade Commission 
against you, that letter being addressed to the Federal Trade Com- 
mission, attention : Mr. Ishmael Burton, Chief Examiner, under 
date of January 23, 1933.^ 



^This letter was entered into tlie record during tlie proeeedinss of Sept. ^1, 19.'54. in 
the exnmination of the Lake Erie Chemical Co. (See pt. 8, p. 1997.) It was marlied 
" Exhibit No. 802 " and appears in the appendix to part 8 on p. 207(5. 

-This letter was entered into the record during the proceedings of Sept. 21. 19M4, in 
the examination of the Lake Brie Chemical Co. (See pt. 8, p. 2003.) It was marked 
•' Exhibit No. 806 " and appears in full on p. 1816. 
83876 — 35— PT 7 14 



1816 MUNITIONS INDUSTRY 

These will all be offered later in connection with another examina- 
tion, but I want to read that letter : 

In accordance with our recent conversation at your t^iffice, we are herewith 
enclosing a copy of tlie catalogue distributed by the Federal Lal)oratories, Inc., 
Pittsburgh, Pa., and a copy of their advertisement appearing on page 96 
of the January 1933 issue of the American Exporter. 

Their catalogue carries many reproductions of U.S. Army Chemical War- 
fare JService photographs which have been used to lead the reader to believe 
that they were actual photographs of equipment which was made by Federal 
Laboratories, Inc., when, in fact, Federal Laboratories, Inc., have taken Chemi- 
cal Warfare Service photographs and stated that these same pictures repre- 
sent actual material of their own manufacture. 

Many untrue statements have been made in describing the illustrations which 
are apparent to anyone familiar with chemical warfare and ordnance. Many 
of these are called to your attention in the marked copy enclosed. 

In the Federal Laboratories advertisement appearing in the American Ex- 
porter the statement is made " The largest cities on two continents use our 
gas-riot guns, billies, hand grenades, and pistols " whereas the Lake Erie 
Chemical Company supplies the police departments of New York, Chicago, 
Philadelphia, and many other large cities, as well as many large foreign 
cities. 

As indicated above, we wish to make a formal complaint against the ad- 
vertising practice of the Federal Laboratories, Inc., Pittsburgh, Pennsylvania. 

That is signed " The Lake Erie Chemical Co., A. F. Spring, as- 
sistant manager." 

Mr. Young. Yes, sir. 

Senator Clark. What became of that complaint, Mr. Young? 

Mr. Young. The case was dismissed by the Federal Trade Com- 
mission, I believe. 

Senator Clark. Did they conduct an investigation? 

Mr. Young. Yes. 

Senator Clark. Did you appear before them ? 

Mr. Young. They had an attorney in our office making an ex- 
amination. 

Senator Clark. Did they carry out the investigation? 

Mr. Young. No. 

Senator Clark. That is all. 

Senator Bone. Mr. Young, what do you think the Christian Mis- 
sionary Alliance — is that the proper name ? 

Mr. Young. Yes, sir. 

Senator Bone (continuing). Would think of the picture which 
your brother presents, a minister or missionary, with a tambourine 
in one hand and a gas bomb in another, figuratively speaking ? 

Mr. Young. That picture of a missionary living out in the wilds 
of the upper Amazon is not very important. Senator. 

Senator Clark. Suppose the picture was taken in the office of the 
Minister of War? 

The Chairman. With generals and the minister of war. 

Senator Bonpl He could not have been doing any Christian mis- 
sionary work with the war minister. 

Mr. Young. My personal opinion is it would be all right. 

The Chairman. Senator Bone, I do not want to cast any reflection 
at all, but of considerable amusement to me has been the excerpts 
from one judge's decision, taken from volume 81 of the American 
State Reports, the judge delivering the decision being one Dent. 
He declares: 



MUNITIONS INDUSTRY 1817 

This is a suit from the peaceful shares of Randolph County, instituted by 
Clara, intei married with Eli Moore, of Montrose, against her pa, the Reverend 
Anthony Mustoe, of Breitz, near tlie happy land of Cauaau, the neighboring 
county of Tucker. * * * 

Eli entered the contest badly disfigured. The backbone of his evidence had 
been broken by the obstruction put in its way in the execution of the deed of 
trust and the note under seal, solemn acts which cannot be easily explained 
awav. and by which he is estopped from telling the truth — not a great hardship 
on Eli. 

A little further on the judge declares : 

The evidence tends to show that while pa Mustoe does a little preaching, 
trying to gather the lost sheep into the fold, and has one eye on the pearly gates, 
where the wicked cease from troubling and the weary are at rest, he keeps the 
other to windward in au endeavor to make friends with the Mammon of un- 
righteousness. * * * 

He appears to have stumbled onto the truth here, and afterward tries to cor- 
rect himself, under the coaching of his counsel. He is probably a little absent- 
minded. 

Then it concludes: 

When a man only preaches a little and undertakes to deal in the transitory 
things of this life, it is well always to have writings with him, as memory is 
cue of the worldly things that may be counted uncertain. 

The committee will recess until 2: 30; and as to the witnesses who 
are now before the committee, all are excused except Mr. Jonas and 
Mr. Rich. We will want them back this afternoon. 

(Whereupon the hearing was recessed until 2 : 30 p.m.) 

ArXERNGGN SESSION 
ACTIVITIES OF FRANK S. JONAS AS A MUNITIONS AGENT 

The hearing was resumed at 2 : 30 p.m. pursuant to the taking of 
recess. 

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

Mr. Wemple. Mr. Rich, I have here four letters. The first one is 
a letter from yourself under date of March 21, 1934, written to Mr. 
Oberdick. 

The second is a letter from Mr. Oberdick to yourself under date 
of March 22, 1934. 

The third is a letter from you to Mr. Oberdick under date of 
March 22, 1934. 

The last is a letter from Mr. Young to vou under date of Decem- 
ber 13, 1933. 

I will ask you to look at these letters and tell us if they are true 
and correct copies of the letters that are in your files [handing letters 
to Mr. Rich] . 

Mr. Rich. They are substantially correct. I have no doubt they 
are true copies. 

IVIr. Wemple. I wanted that merely for the purpose of the record. 

Mr. Jonas, in order to clarify the record a little bit, we were talk- 
ing this morning about your activities in connection with some ma- 
terial that was purchased by certain Brazilian interests along in the 
fall or latter part of the summer of 1932. 



1818 MUNITIONS INDUSTRY 

About that time I believe you were employed by, or were in the 
employ of, the Winchester Kepeating Arms Co. 

Mr. Jonas. That is right, sir. 

Mr. Wemple. Representing them in South America? 

Mr. Jonas. Yes. 

Mr. Wemple. Shortly after that you severed your connections. 
That was about when ? | 

Mr. Jonas. About December 1932. 

Mr. Wemple. About when? 

Mr. Jonas. December 1932. 

Mr. Wemple. December 1932? 

Mr. Jonas. Yes. 

Mr. Wemple. Are you sure it w-as not a little earlier than that, 
Mr. Jonas? 

Mr. Jonas. I am not sure, it might have been. 

Mr. Wemple. Some where along in August 1932 ? 

Mr. Jonas. Oh, no. I severed my connections with them later. 

Mr. Wemple. Later than that? 

Mr. Jonas. Yes, sir. 

Mr. Wemple. At that time, where w^as your office? 

Mr. Jonas. 56 Pine Street. 

Mr. Wemple. 56 Pine Street, you say. 

Mr. Jonas. Yes. 

Mr. Wemple. Under the name of 

Mr. Jonas. Frank S. Jonas. 

Mr. Wemple. This was in 1932? 

Mr. Jonas. 1932; yes. 



Mr. Wemple. You did not have any office space- 



Mr. Jonas. Previous to that I had had office space in 21 West 
Street. 

Mr. Wemple. In 21 West Street. 

Mr. Jonas. Yes, sir. 

Mr. Wemple. How much previous to that? 

Mr. Jonas. I think I started in 21 West Street about March 1932 
and in the fall I moved over to 56 Pine Street. 

Mr. Wemple. You were there in the latter part of the summer^ 
from June up until November 1932. 

Mr. Jonas. It might have been as late as that; I cannot tell you. 

Mr. Wemple. And that was the office of the Export Consolidated 
Co., was it not? 

Mr. Jonas. That is right. 

Mr. Wemple. Mr. Huber was head of it, was he not? 

Mr. Jonas. Yes. 

Mr. Wemple. And you were associated with Mr. Huber at the 
time ? 

Mr. Jonas. I was associated with Mr. Huber on Federal Labora- 
tories at the time. 

Mr. Wemple. You were associated with Mr. Huber on Federal 
Laboratories, business only? 

Mr. Jonas. Yes. 

Mr. Wemple. Any other business you handled for yourself, is 
that right? 

Mr. Jonas. Yes, sir. 



MUNITIONS INDUSTRY ' 1819 

Mr. Wemple. Alono; about that time, you had some dealings with 
a man named Figiierola, did you not? 

Mr. Jonas. I did. 

Mr. Wemple. Who was operating, we understand, under the name 
of the Manufacturers Export Co. 

Mr. Jonas. That is right. 

Mr. Wemple. The same gentleman operates today under the name 
of International Ordnance & Instrument Co. 

Will you tell us briefly the extent of the dealings that you had 
with Mr. Figuerola? 

Mr. Jonas. The only deal I recall having with Mr. Figuerola was 
a deal on some munitions. 

Mr. Wemple. You say it was a deal on some munitions. What 
kind of munitions? 

Mr. Jonas. Rifle cartridges? 

Mr. Wemple. Rifle cartridges? 

Mr. Jonas. Yes. 

Mr. AVemple. What type of cartridges were they, Mr. Jonas? 

Mr. Jonas. 30.06 Government cartridges. 

Mr. Wemple. They were 30.06 Government cartridges. Now, were 
they cartridges manufactured by the Winchester or the Remington 
Arms Co.. or do you know who manufactured them? 

Mr. Jonas. No, sir ; I do not know. 

Mr. Wemple. You have no information about that? 

Mr. Jonas. No. 

Mr. Wemple. What was the extent of that deal, Mr. Jonas? 

Mr. Jonas. The cartridges were paid for and stored. 

Mr. Wemple. Just tell us how all of this came about. You had 
some sort of dealings with Mr. Figuerola. Did he approach you 
with some sort of a proposition, or did you approach him, or how 
did it happen? 

Mr. Jonas. I think I approached him on it. Mr. Brown 

Mr. Wemple. Is that Mr. William P. Brown? 

Mr. Jonas. William P. Brown; yes. 

Mr. Wemple. Of Byington & Co., 165 Broadway, New York City. 

Mr. Jonas. Yes, sir. 

Mr. Wemple. He is their resident agent, is he not? 

Mr. Jonas. Yes, sir. 

Mr. Wemple. What did he do ? 

Mr. Jonas. He asked me to purchase some cartridges for him. 

Mr. Wemple. You say that he asked you to purchase some car- 
tridges for him? 

Mr. Jonas. Yes. 

Mr. AVemple. Did he tell you for whom these cartridges were to be 
purchased ? 

Mr. Jonas. I suspected, but I cannot tell you whether he did or 
not. 

Mr. Wemple. You say you suspected. What did you suspect? 

Mr. Jonas. From the information that I had from him, in talk- 
ing to him I suspected that they were for Brazil. 

Mr. Wemple. They were for Brazil? 

Mr. Jonas. Yes. 

Mr. Wemple. Were they for the Government of Brazil; that is, 
the government that was in power at tliat time, or did you suspect 



1820 MUNITIONS INDUSTRY 

that thoy mi<iht be for tlio revolutionary forces, which hiter appeared 
in the ])ictiire? 

Mr. Jonas. From the information that he gave me, it would be 
the Government. 

Mr. Wemple. You ^rj from the information that he jzave you, you 
assumed that these cartridges were to be purchased for the govern- 
ment which was in power at that time in Brazil; is that what you 
say ? 

Mr. Jonas. No, sir; I did not say that. I said that he said it 
would be the Government that w^ould get those cartridges. 

Mr. Wemple. He said it would be the Government that would get 
those cartridges, but he did not say what the government would be ; 
is that it? 

Mr. Jonas. No, sir ; he said it would be for the Government. 

Mr. Wemple. That is, if the government that was in powder should 
suddenly go out of power and the revolutionists step in, and they 
got the cartridges, that would be to whom the cartridges were con- 
signed; is that correct? 

Mr. Jonas. Yes. 

]\Ir. Wemple. What was the nature of the transaction? You say 
that he wanted you to buy these cartridges ? 

Mr. Jonas. Yes. 

Mr. Wemple. Did you buy the cartridges, Mr. Jonas? 

Mr. Jonas. I paid for the cartridges for him. He bought the cart- 
ridges and I paid for them. 

Mr. Wemple. You say you paid for them. If you paid for them, 
you must have bought them. 

Mr. Jonas. Not necessarily. He bought the cartridges from Ban- 
nerman & Co. 

Mr. Wemple. Bannerman & Co., they are second-hand dealers in 
New York, the people who own this Bannerman Island ? 

Mr. Jonas. Yes. 

Mr. Wemple. They have an arsenal up there ? 

Mr. Jonas. Yes. 

Mr. Wemple. Were these new cartridges? 

Mr. Jonas. No ; I do not think they were. 

Mr. Wemple. They were old cartridges? 

Mr. Jonas. Yes. 

Mr. Wemple. Approximately how old, do you know ? 

Mr. Jonas. No ; I have not any idea. 

Mr. Wemple. What was the price of them? 

Mr. Jonas. That I cannot tell you. I think around twenty dollars 
odd. 

Mr. Wemple. $20 a thousand ? 

Mr. Jonas. Yes. 

Mr. Wemple. How many cartridges did you purchase ? 

Mr. Jonas. One million. 

Mr, Wemple. What was the total amount of the bill, do you 
remember that ? 

Mr. Jonas. No ; I do not. 

Mr. Wemple. Are you sure that the bill was not something around 
$23,500? 

Mr, Jonas, It might have been. 



MUNITIONS INDUSTRY 1821 

Mr. AVemple. You have no knowledge of that ? 

Mr. Jonas. No. sir ; I have not. 

Mr. Wemple. But it was approximately that amount, was it not? 

Mr. Jonas. Approximately. 

Mr. Wemple. Who was associated with you in this purchase ot 
cartridges that you were buying for Mr. Brown or upon Mr. Brown's 
say so? 

Mr. Jonas. Well, Figuerola went up with me, and whether he or 
I made the payments I do not remember. I did not know where to 
get these cartridges, and Figuerola told me where to get them. 

Mr. Wemple. You say that Figuerola told you where to get the 
cartridges. How did he come into the picture? Did you call him, 
or did he call you, or how did that come about ? 

Mr. Jonas. I do not know whether I called him or whether I met 
him or how it came about. 

Mr. Wemple. So he told you where you could get them, is that it ? 

Mr. Jonas. Yes. 

Mr. Wemple. And he went up with you to Bannerman ? 

Mr. Jonas. Yes. 

Mr. Wemple. When the purchase was made ? 

Mr. Jonas. Yes. 

Mr. Wemple. Did he pay over any money to Bannerman, or did 
you pay for these cartridges ? 

Mr. Jonas. I think he ]5aid the money — I am not sure. 

Mr. Wemple. Are you sure that you did not pay for them? I 
thought you just told' us that you were purchasing the cartridges. 

Mr. Jonas. Well, it is the same thing, whether I gave them the 
money or whether he paid for them. 

Mr. Wemple. The question I am asking is. Who paid the money, 
actually? 

Mr. Jonas. That I cannot tell you. 

Mr. Wemple. That is, whether you paid the money or whether 
he paid the money ? 

Mr. Jonas. I cannot tell you that. 

Mr. Wemple. Was it paid for by check or by cash? 

Mr. Jonas. It w^as paid for by cash. 

Mr. Wemple. If it was paid for by cash, who had the cash? 

Mr. Jonas. I told vou Mr. Brown gave me the cash. 

Mr. Wemple. Brown gave you the cash? 

Mr. Jonas. Yes. 

Mr. Wemple. Then you had the cash and you must have paid 
for them. 

Mr. Jonas. I either gave it to Figuerola to pay for, and Figuerola 
t^aid Bannerman — what I mean to say is one of us turned over 
the cash. 

Mr. Wemple. You now say that one of you turned over the cash, 
and you have just testified that you received the cash from Mr. 
Brown. 

Mr. Jonas. Yes. 

Mr. Wemple. And that you received the cash from Mr. Brown, 
that you and Mr. Figuerola went up to see Bannerman, and it is 
quite natural to assume that, having the cash in your pocket, there 



1822 MUNITIONS INDUSTRY 

would be no necessity of transferring it to Mr. Figuerola; so that 
you probably paid over the cash. Is that correct? 

Mr. Jonas. That is correct. 

Mr. Wemple. The price was something in the neighborhood of 
:$23,500; is that right? 

Mr. Jonas. Yes. 

Mr. Wemple. Was there any commission on that deal, Mr. Jonas ? 

Mr. Jonas. I think there was a few hundred dollars. 

Mr. Wemple. You think a few hundred dollars? 

Mr. Jonas. Yes. 

Mr. Wemple. Is it not a fact that they told you the price would 
be $23,500, and you said that you could not pay more than $23,200? 

Mr. Jonas. I have just told you that I cannot remember all of 
the details. I have none of the figures. You could probably tell 
me more about it than I recall. You have all of the facts. 

Mr. Wemple. As a matter of fact, the records of Bannerman & 
Co. indicate that $23,500 was the asking price; but that, according 
to certain statements which have been made to investigators who 
have investigated Bannerman, you stated to them that you could 
not pay more than $23,200. 

Now, after this deal was consummated, did you at any time re- 
turn to Bannerman Bros, and receive any rebate from them? 

Mr. Jonas. No, sir ; I did not. 

Mr. Wemple. Do you know whether anybody else did? 

Mr. Jonas. That I do not know. 

Mr. Wemple. You have no knowledge of that? 

Mr. Jonas. I have no knowledge of that. 

Mr. Wemple. How much money was turned over to you by Mr. 
Brown. First, did Mr. Brown turn this money over to you person- 
ally? 

Mr. Jonas. Yes. 

Mr. Wemple. He personally turned the money over to you? 

Mr. Jonas. Yes. 

Mr. Wemple. Was Dr. Ferreira there at that time, Mr. Jonas? 

Mr. Jonas. No; he was not. 

Mr. Wemple. And he had nothing to do with it, did he? 

Mr. Jonas. He had nothing to do with it. 

Mr. Wemple. Did Mr. Brown give you the exact amount of the 
bill, or did he give you a sum that was considerably larger than 
the $23,500 ? 

Mr. Jonas. He probably gave me the exact amount of the bill. 

Mr. Wemple. You have no knowledge of how much he gave you ; 
you have no recollection? 

Mr. Jonas, No ; I have not. 

Mr. Wemple. You do not remember whether any other business 
was consummated at about that time, so that you would have some 
reason to liave a larger amount of money in your pocket at that 
time ? 

Mr, Jonas. No. That is all that he gave me. 

Mr. Wemple. Just an iimount sufficient to pay for the purchase 
of those cartridges. 

Mr. Jonas. Yes. 

Mr. Wemple. In connection with Mr. Figuerola, you had some 
other dealings, I believe. Will you explain what they were? 



MUNITIONS INDUSTRY 1823 

Mr. Jonas. No; I do not recall having any further dealings, except 
that Brown asked me to buy him a boat. 

Mr. Wemple. Brown asked you to buy him a boat? 

Mr. Jonas. I told him I would not handle any boats. 

Mr. Wemple. Did he tell you what he wanted the boat for ? 

Mr. Jonas. No; he did not. 

Mr. Wemple. What did you do about it? 

Mr. Jonas. Figuerola was there and Figuerola said that he would 
handle it. 

Mr. Wemple. Figuerola Avas in Mr. Brown's office at the time? 

Mr. Jonas. Yes. 

Mr. Wemple. Do you know how he happened to be there? Had 
you called him? 

Mr. Jonas. I think we had returned from this Bannerman deal. 
1 cannot give you the details on it. 

Mr. Wemple. That was after you had returned from the Banner- 
man deal? 

Mr. Jonas. Yes. 

Mr. Wemple. And Mr. Brown brought up the subject of purchas- 
ing this boat? 

Mr. Jonas. Yes. 

Mr. AVemple. And you told Mr. Brown that you would not handle 
it or have anything to do with it? 

jNIr. Jonas. That is correct. 

Mr. Wemple. Did you suggest that he get in touch with Mr. 
Figuerola ? 

Mr. Jonas. Figuerola was there and I think Figuerola made the 
suggestion that he would handle it. 

Mr. Wemple. Do you know what happened after that ? 

Mr. Jonas. What I read in the newspapers afterward and what 
Mr. Brown told me afterward. 

Mr. Wemple. What did he tell you ? 

Mr. Jonas. That the boat had arrived and just about that tune 
the revolution was over. 

Mv. Wemple. You read in the newspapers that the boat had 
arrived, but this was before the boat had been purchased when you 
were all over there and talking about it, was it not ? 

Mr. Jonas. He told me that they had purchased the boat. 

Mr. Wemple. Did you say that he told you they had purchased 
the boat or were about to purchase the boat ? 

Mr. Jonas. It was afterward; he naturally must have told me 
afterward that they purchased the boat. 

Mr. Wemple. Did he describe to you the details of it? 

Mr. Jonas. No. 

Mr. Wemple. Did he say who had handled it, who had purchased 
the boat for him? 

Mr. Jonas. He told me that Figuerola purchased it for him. 

Mr. Wemple. Do you know Mr. Fred Zimmerman? 

Mr. Jonas. I met Mr. Fred Zimmerman about a year ago. 

Mr. Wemple. What is his business? 

Mr. Jonas. Yachts. We had an inquiry for a yacht in our office 
and we got in touch with this fellow Zimmerman. This is probably 
a year and a half after the revolution. 



1824 MUNITIONS INDUSTRY 

Mr. Wemple. You never knew Mr. Zimmerman before that time, 
Mr. Jonas? 

Mr. Jonas. I had seen him, but I had never met him. 

Mr. Wemple. Did you know that Mr. Zimmerman and Mr. Figue- 
rola had purchased the boat jointly? 

Mr. Jonas. I heard that they had from Mr. Brown. 

Mr. Wemple. You heard that through Mr. Brown. 

Mr. Jonas. Yes. To be perfectly frank with you, I did not know 
whether they bought the boat jointly or not. The details of that, 
I do not know. 

Mr. Wemple. But you heard that the boat had been purchased ? 

Mr. Jonas. That is correct. 

Mr. Wemple. Was this on one of the occasions when Mr. Brown 
and others came over to your office in 21 West Street? That was 
when you were associated with Mr. Huber there that they discussed 
those matters in that office, was it not? 

Mr. Jonas. No, sir ; I do not remember any of those matters being 
discussed in the office. 

Mr. Wemple. Did they discuss the purchase of airplanes? 

Mr. Jonas. I do not remember any such discussion. 

Mr. Wemple. In connection with this business, did you meet any 
other people? Did you meet Dr. Ferreira? 

Mr. Jonas. I met Dr. Ferreira ; yes. 

Mr. Wempln. Did you meet Lt. Leigh Wade ? 

Mr. Jonas. Yes. 

Mr. Wemple. The round-the-world flier? 

Mr. Jonas. That is correct. 

Mr. Wemple. He was a round-the-world flier, was he not? 

Mr. Jonas. Yes. 

Mr. Wemple. Whom else did you meet in connection with that 
matter ? 

Mr. Jonas. I think these were all that I met. I do not remember 
any others. There was some other man up here, but I did not meet 
him. 

Mr. Wemple. And that is according to the best of your knowledge 
and recollection at the present time the full extent of j^our participa- 
tion in any of the business which was carried on by those individuals? 

Mr.' Jonas. When you say " full extent ", how do you mean ? 

Mr. Wemple. Just what the words imply, the full extent ; you clid 
nothing else? 

Mr. Jonas. I heard that they had bought several things. 

Mr. Wemple. What did you hear they bought ? 

Mr. Jonas. I am not sure — ammunition. 

Mr. Wemple. What kind of ammunition? You have just testi- 
fied that yon assisted in the purchase of some ammunition, some 
30.06 Government cartridges from Bannerman. What was this 
ammunition? 

Mr. Jonas. I heard that they had bought some ammunition. The 
quantity, I cannot tell you. 

Mr. Wemple. Where did they buy it, do you know ? 

Mr. Jonas. They were dealing with some other party. I do not 
know who it was. 



MUNITIONS INDUSTRY 1825 

Mr. Wemple. Was it in this country or in Canada? 

Mr. Jonas. I do not know that they bought the ammunition in 
Canada. 

Mr. Wemple. You do know that Mr. Figuerola made a trip to 
Canada, do you not? 

Mr. Jonas. Yes; on the boat. 

Mr. Wemple. You mean that the boat came down for him ? 

Mr. Jonas. I mean he went up there for the boat. 

Mr. Wemple. You do not know for what else he made the trip? 

Mr. Jonas. No, sir. 

Mr. Wemple. What else did you know that they had purchased 
besides the annnunition? 

Mr. Jonas. I think they had purchased some airplanes. 

Mr. Wemple. Do you know from whom they purchased the air- 
planes ? 

Mr. Jonas. I heard they purchased the airplanes from Con- 
solidated. 

Mr. Wemple. That is the Consolidated Aircraft Co. ? 

Mr. Jonas. Yes. 

Mr. Wemple. That is the company that has a factory in Buf- 
falo, N.Y.? 

Mr. Jonas. Yes. 

Mr. Wemple. Did you hear who the principal in the deal was? 

Mr. Jonas. I think I heard that they were dealing through Wade. 

Mr. Wemple. That is the Lt. Leigh Wade, the former Army flier ? 

Mr. Jonas. Yes. 

Mr. Wemple. He purchased these airplanes? 

Mr. Jonas. That I do not know. 

Mr. Wemple. But that is what 3^ou heard; it is just hearsay? 

Mr. Jonas. Yes, sir. 

Mr. We^^iple. Do you know whether those planes were actually 
shipped or not? 

Mr. Jonas. I believe they were shipped to the Brazilian Govern- 
ment; yes 

Mr. Wemple. You believe thev wprp siiipDed to the Brazilian 

Government ? 

Mr. Jonas. Or taken over by the Brazilian Government. 

Mr. Wemple. They were bought originally, in any event^ 

Mr. Jonas. But not shipped. 

Mr. Wemple. They were bought originally by the revolutionary 
government, or what was to be a government if the revolution was 
successful. But, due to the fact that the revolution was not suc- 
cessful, they were taken over by the government then in i)ower. 
That is what you heard? 

Mr. Jonas. Yes. 

Mr. Wemple. Do you know whether those planes were delivered 
from Buffalo or were they delivered from some other place ? 

Mr. Jonas. I do not know. 

Mr. Wemple. You do not know anything about it ? 

Mr. Jonas. No, sir 

Mr. Wemple. Did you ever hear, during your travels in South 
America, that such planes had been delivered from Chile? 

Mr. Jonas. I heard that some planes were sent up from Chile ; yes. 



1826 MUNITIONS INDUSTRY 

Mr, Wemple, You heard that some planes were sent up from Chile 
to where? 

Mr. Jonas. I heard Paraguay first. I heard that they were flown 
to BraziL 

Mr. AYemple. You heard that the pLanes were delivered in Chile 
and flown to Brazil across Paraguay? 

Mr. Jonas. Yes. 

Mr. Wemple. What else did you hear in connection with that 
flight? 

Mr. Jonas. Very little of the details, because — what I mean is,, 
the things I got, I would not talk about. 

Mr. Wemple. Did you know that one plane did not get there? 

Mr. Jonas. Yes; I think I heard that. 

Mr. Wemple. Where did it go? 

Mr. Jonas. I heard that Paraguay took it over. 

Mr. Wemple. It dropped in Paraguay? 

Mr. Jonas. Yes. 

Mr. Wemple. It was not landed there; it just happened to drop 
in Paraguay? 

Mr. Jonas. I do not know anything about it. 

Mr, Wemple. I understand that this is just hearsay, but I want 
to get your story on it. 

Aside from what you have just testified, now, you had no further 
dealings ? 

Mr. Jonas. Yes; I had further dealings. 

Mr. Wemple, You did. 

Mr. Jonas, Yes. 

Mr. Wemple. What were they? 

Mr. Jonas. They asked me to purchase some ammunition from 
Griffin & Howe. 

Mr. Wemple, They asked you to purchase ammunition from Griffin 
& Howe ? 

Mr. Jonas. Or to present an order with Griffin & Howe. 

Mr. Wemple. Griffin & Howe — are they the second-hand dealers, 
or what tj'^pe of dealers are they ? 

Mr. Jonas. They deal in high-class guns. They are very expen- 
sive gun.^miths. 

Mr. Wemple. They are associated w^ith Abercrombie & Fitch? 

Mr. Jonas. Yes. 

Mr. Wemple, How did they happen to have sufficient ammunition 
to fill such an order as that ? 

Mr, Jonas, I could not tell you that, 

Mr. Wemple. Did you purchase that ammunition? 

Mr. Jonas. I did not purchase it. I placed the order for it. 

Mr, Wemple, You placed the order for it? 

Mr, Jonas. In accordance with Brown's instructions. 

Mr. Wemple. Who paid for it? Did you pay for that in cash, 
the same as you jiaid for the other order? 

Mr. Jonas. I ]:)aid for that in cash the sam" way; yes, 

Mr. Wemple. How much did it amount to? 

Mr. Jonas. The total amount? I do not know. 

Mr. Wemple. Well, approximately. 

Mr, Jonas. I kept no track of any moneys paid. I know that 
it was paid, and I would tell Brown how much it was, and he would 
pay me. 



MUNITIONS INDUSTRY 1827 

Mr. Wemple. Apjjroximately how much was it? 

Mr. Jonas. Well, there were different items; there were primers — 
I could not tell you the amount. The thing is out of my mind abso- 
lutely. May I add something there? 

Mr. Wemple. Yes. 

Mr. Jonas. On the conditions under which I bought that ammuni- 
tion ; there was a warehouse receipt, and it would not be delivered 
at any time unless they produced a State Department license. 

Mr. Wemple. In connection with these dealings, the purchase of 
this ammunition and the other things that you have just testified 
to ; what compensation did you receive for all of this ? 

Mr. Jonas. I was sujjposed to receive compensation from Mr. 
Brown. 

Mr. Wemple. You were supposed to receive your compensation 
from Mr. Brown? 

Mr. Jonas. From Mr. Brown. 

Mr. Wemple. Who made the arrangements as to what the com- 
pensation was to be? 

Mr. Jonas. Brown said whatever he made or whatever they gave 
him he would give me half of it. 

Mr. Wemple. Who did he mean by " they "? 

Mr. Jonas. I do not know his people. 

Mr. Wemple. They were to give him $1,000, and he was to give 
you one-half? 

Mr. Jonas. Yes. 

Mr. Wemple. That covers the full arrangement? 

Mr. Jonas. Yes ; and that letter you have offered ex]_ j.ains the 
whole thing. 

Mr. Wemple. This letter that was introduced in eviden ^ this 
morning ? 

Mr. Jonas. Yes, sir. 

Mr. Wemple. The $1,000 payment he had received from Byington, 
of which you received one-half, or $500 ? 

Mr. Jonas. Yes. 

Mr. Wemple. That covers the only extent of your remuneration? 

Mr. Jonas. Yes, sir. 

Mr. Wemple. You have received no other moneys from any other 
source whatever ? 

Mr. Jonas. No, sir. 

Mr. Wemple. Not from anyone? 

Mr. Jonas. No one at all. 

Senator Clark. Who is Abercrombie you refer to? 

Mr. Jonas. That is Abercrombie & Fitch. 

Senator Clark. This Bannerman Co. hold themselves out as being 
in the munitions business? 

Mr. Jonas. I think so. 

Senator Clark. They get out a catalog advertising everything up 
to 6-inch guns. 

Mr. Jonas. Yes; they had a very large place, I understand. 

Senator Clark. That is located at the arsenal on an island up the 
Hudson River? 

Mr. Jonas. I think they are supposed to have one there, but I 
never visited it. 



1828 MUNITIONS INDUSTRY 

Mr. Wemple. In connection with, this proposed purchase of a 
vessel, were you iDromisecI any commission by Mr. Figuerola? 

Mr. Jonas. I was promised a commission, but no definite amount 
from him. 

Mr. Wemple. You expected to receive something? 

Mr. Jonas. Yes; I expected something. I had a share. 

Mr. Wemple. Did you ever receive anything? 

Mr. Jonas. I never received anything. 

Mr. Wemple. You never received a cent from him ? 

Mr. Jonas. No, sir. 

Mr. Wemple. Do you know whether anybody else ever received 
anything ? 

Mr. Jonas. No; I don't know that. I don't think I have spoken 
to Mr. Figuerola since. Yes; I did. I asked him if he had made any 
money on it, and he said he had not; he said he had to pay other 
people, or something of the kind. 

Mr. Wemple. I believe in some of the letters offered in evidence 
you have freely expressed your personal opinion of Mr. Figuerola. 
and you are not particularly friendly with him these days? 

Mr. Jonas. Yes, sir; that it right. 

Senator Bone. Do you know whether your company, the Federal, 
supplied the gas that was used in the San Francisco strike troubles? 

Mr. Jonas. They told me they had, but I had nothing to do with it.. 

Senator Bone. Do you know anything about this Spokane trouble ? 

Mr. Jonas. No; except what he told me that they had shipped 
orders, but I know nothing of the details of it. 

The Chairman. The witness will now^ be excused, but Mr. Jonas,, 
before you leave for home my own heart tells me, and I think from 
conversations I have had with other members of the committee, 
what I am about to say to you reflects their views to some degree. 

The committee does really appreciate your testimony. I am cer- 
tainly aw\are of the fact of what it has meant to you to give the 
testimony which you have, and I do not expect there is going to 
be any job for you; I tliink you are not going to continue to have 
employment with the du Fonts, Remington, and the Chemical Co. 

It is altogether fair to assume that within say the next few weeks 
these companies will be taking public baths, washing their hands of 
all of the sordid things they have done, and folks like you are going 
to lose their jobs; but there are others going to be employed to 
pursue the same identical policy. 

I simply cannot excuse you without expressing, as I have, my 
appreciation of what it has meant to you to give the testimony you 
have given. You seem to be one of the few who have entered some- 
what into the spirit of this iuA^estigation, and I hope if there is 
something more you woukl have given that you think will help us 
and help the world in the cleaning up of this munitions industry 
that is in so much need of cleaning up, you will reach us and let us 
knoAV Avhat further investigation we can nudie to advantage. 

We do ai)preciate, Mr. Jonas, what you have done. 

Mr. Jonas. Thank you. Senator Nye, it is very nice of you. 

This concludes the record of the Federal Laboratories, Inc. The 
committee at this point took up the case of the Lake Erie Chemical 
Co. and the United States Ordnance Engineers, which is printed 
in part VIII. 



APPENDIX 

(" Exhibit No. 598 " appears in the appendix to Part V on p. 189G) 



Exhibit No. 599 

January 9, 1932. 
Honorable Gerardo Machado, 

President, Republic of Cuba, Havana, Cuba. 

Dear Sir: Several times in the past we have addressed communications to 
you al)out the use of Federal tear gas weapons in supressing the revolts which 
are occuring with greater frequency in the Republic of Cuba. The weapons 
wliich we offer for your consideration are described in the enclosed folder. They 
represent the most modern equipment, not only for municipal police, but also 
for troops that engage in skirmishes with rioting mobs and with revolting 
soldiers. 

The use of the more familiar methods of police in combatting mob dis- 
turbances only antagonizes the revolters more and gains for them popular 
sympathy which is exactly what the administration is trying to avoid. On 
tiie contrary, by using tear gas grenades, riot guns, and other gas weapons these 
j-evolts are just as effectively dealt with but no one is injured and there is no 
blood on the hands of the defenders of the nation. In the United States this 
policy of using tear gas in mob disturbances is now generally recognized as 
proper and efficient. Moreover the use of such weapons has extended into 
Mexico and Central and South American republics. Your own country would 
muh.ubtedly derive the same satisfaction from the use of modern, humane 
weapons. 

In addition to our line of police weapons we also manufacture strictly military 
equipment for the dispersion of chemical substances. The catalog which we are 
enclosing herewith shows items which represent the latest developments in 
chemical warfare. Tliese weapons are particularly useful in the many skirm- 
ishes which are carried on with rebels Avho flee to the hills and to out-of-the- 
way places where only aerial attack can bo made. 

We have been enileavoring for some time to discuss this matter with the 
proper members of your cabinet. Just recently we have started negotiations 
with the Cuban-American Trading Company, the president of which we have 
asked to represent us in a possible sale of our equipment to the Republic of 
Cuba. We believe you are acquainted with the gentleman in question and 
would like you to grant an audience with him so that this matter can be 
discussed thoroughly. 

Of course, any sale of this equipment which we would make to you would be 
with the full sanction of the United States Government. We are working in 
close cooperation with the Chemical AVarfare Department of the United States, 
imd conduct our negotiations with only those officials that are recognized by 
tlie State Department. 

Won't you please advice us through the proper member of you'' cabinet, 
the best means of presenting this matter to the police, army, and marine of- 
ficials. We will thank you very much for any consideration that you 
give us. 

Yours very truly, 

Federal Laboratories, Inc., 
W\ T. Neill. 
WTN:MP. 

1829 



1830 MUNITIONS INDUSTRY 

Exhibit No. 600 

Fedeibal Laboratories, Inc., Pittsburgh, Pa., 

New York, N.Y., May 7th, 1932. 
Mr. John Young, 

Prcs. Federal Laboratories, Ine., 

Pittsburgh, Penna,. 

Deiar Sir: My brother, Elmslie, today introduced me to a colonel represent- 
ing the Cuban Government, who is up here placing orders for various war mate- 
rial. He has just closed an ammunition order with him. 

Among his requirements are the following and on which he must have a price 
here by Thursday morning and information regarding delivery dates. Kindly 
therefore reply by air mail or special delivery. 

400 gas masks, at $12. 50 each. 

2 only 4.2-inch mortars 16. 00 $32. 00 

2 only 3-inch mortars 15. 50 31. 00 

300 demolition projectiles, 4.2 42. 00 empty— 57. 00 loaded 

300 demolition projectiles 38. 00 empty — 52. 00 loaded 

500 empty fragmentation bombs 30# with firing 

mechanism 19. 00 

500 loaded fragmentation bombs 30# 46. 00 

3 only riot guns 65.00 

100 long-range tear-gas cartridges 8. 00 

100 long-range vomiting-gas cartridges 10. 00 

100 30.06 Springfield rifles. 

The terms are cash with the order. My brother has seen his letter of credit, 
which calls for $50,000.00. 

He is asking the United States Government for prices, but believes we can 
compete, as the Government has increased their prices and are evidently en- 
deavoring to discourage them placing the order with them. He has frankly 
stated that I must add 10% to my prices to cover him. Kindly therefore bear 
this in mind in making your quotation and protect me with 25% on the bombs 
and my usual commission on the tear and vomiting gas equipment. 

He thought that our prices on our demolition projectiles for the mortars high 
and as this is a cash order, please figure as close as you can. 

If you are coming to New York in the very near future, I will arrange to 
have you meet this gentleman, otherwise he is prepared to go to Pittsburgh. 

He spoke of a new type of bomb which was now being used by the U.S. 
Government in which he is interested. It is made up of a series of rings. I 
told him that you made the latest equipment in all types. Kindly therefore 
write me full particulars regarding the type of bombs you supply and give full 
information regarding the firing mechanism. 

Please give this inquiry your immediate attention and reply immediately 
and keep in mind that the Government is also quoting. He has promised to 
show me the Government prices on Thursday. 
Yours truly, 

Frank Jonas* 



Exhibit No. 601 

June 8, 1932. 
Joaquin Demestre, 

Tenicvte de ArtiUeria, 

c/o Cuban Embassi/, Washmgton, B.C. 
My Dear Liexttenant Demestre: Referring to your inquiry of June 7th. we 
are pleased to quote the Cuban Government on the following equipment : 

Each 

400 type B military gas masks, at $12.50 

2 40.2-inch Maxwell rifled mortars, complete, at 1, 600. 00 

2 3-inch Maxwell rifled mortars, complete, at 1,550.00 

300 demolition projectiles, 4.2-inch mortars, empty, at 42, 00 

Loaded with TNT or white pho.sphorous, at 57. 00 

300 demolition projectiles, 3-incli mortars, empty, at 38. 00 

Loaded with TNT or white phosphorous, at 52.00 

(The alwve quotations are on rifled mortars and shells. A consid- 
erable reduction will be given if smooth-bore mortars are ordered.) 



MUNITIONS INDUSTRY 



1831 



Each 

300 explosive rifle grenades, at $3. 50 

500 empty fragmentation bombs, 30 pound, with firming meclianism 

(same Jis United States Govert.), at 26.00 

500 loaded fragmentation bombs, oO-pound, with firing mechanism 38. OO 

3 only riot guns, at 65.00 

100 long-range tear-gas cartridges, at 8. 00 

100 long-range vomiting gasi cartridges, at 10.00 

A few days ago I checlved up on the Government prices on some of this 
equipment, and on the 4.2-inc'h mortar shells we were below the Government. 
We were also below them on the 4.2-inch mortars. In fact, I do not think any 
4.2-inch mortars would be sold by the Government. 

We recommend the 4.2-inch mortar over the 3-inch mortar, as the 3-inch shell 
does not have the large capacity. 

We should be glad to have you come to Pittsburgh and see some of this 
equipment demonstrated at our factory. 

We have just recently developed a 50-pound incendiary bomb which can be 
sold for $16.00 each. Our firing mechanism is the propeller type, similar to 
that in use by tlie Government. 
Very truly yours. 

Federal Laboratories, Inc., 
By , President. 



Exhibit No. 602 

June 8, 1932. 
Mr. Frank Jonas, 

Roam 810, 56 Pine Street, Netc York, New York. 

My Deiar Mr. Jonas : Replying to your letter of June 7th, we are pleased to 
quote the Cuban Government on the following equipment : 



Com- 
mission 
figured 



10% 
20% 
20% 
20% 

20% 



20% 
20% 
20% 
35% 
35% 
35% 



400 type B military gas masks, at 

2 4.2" Maxwell rifled mortars, complete, at 

2 3" Maxwell rifled mortars, complete, at-. 

300 demolition projectiles, 4.2" mortars empty, at --. 

Loaded with TNT or white phophorous, at 

300 demolition projectiles, 3" mortars empty, at 

Loaded with TNT or white phosphorous, at 

(The above quotations are on rifled mortars and shells. A reduction 

will be given if smooth bore mortars are ordered.) 

300 explosive rifle grenades, at _ -- 

500 empty fragmentation bombs, 30-pound, at 

300 loaded fragmentation bombs, 30-pound, with firing mechanism, at 

3 only riot guns, at 

100 long-range tear-gas cartridges, at --- 

100 long-range vomiting-gas cartridges, at 



$12. 50 
1,600.00 
1, 650. 00 
42.00 
57.00 
33.00 
52.00 



3.50 
19.00 
46.00 
65.00 

8.00 
10.00 



$5, 000. 00 
3, 300. 00 
3, 100. 00 
12, 600. 00 
17,100.00 
11,400.00 
15, 600. 00 



1, 050. 00 

9, 500. 00 

23, 000. 00 

195. 00 

800. 00 

1, 000. 00 



A few days ago I checked up on the Government prices on some of this equip- 
ment, and on the 4.2" mortar shells we were below the Government. We were 
also below them on the 4.2" mortars. In fact, I do not think any 4.2" mortars 
would be sold. We recommend the 4.2" mortar over the 3" mortar, as the 3" 
shell does not have the large capacity. 

I believe it would be very much worth while to have this customer come to 
Pittsburgh with you and let us give him some demonstrations, and would recom- 
mend that you bring him on, providing he come before next Tuesday, as I am 
leaving Monday night for upper New York State and arriving in New York City 
Wednesday or Thursday. If he cannot ccime to Pittsburgh, and you have the 
negotiations in position to close, or you think my presence might help you in 
settling a few details, perhaps building an order up, I can catch the plane 
tomorrow afternoon, get in New York about 6 : 30, and spend Thursday evening 
with you and all day Friday. 

83876— 35— PT 7 15 



1832 MUNITIONS INDUSTRY 

It might be after you get your Govenimeiit prices that we will have to make 
some adjustments, though on some items there is not much room for adjust- 
ment. At any rate, do not fail to call on me if I can be of any value. 

I presume the new l)()nib he is referring to is the " Boimciug Betty." If that 
is the case, 1 am sure he cannot purchase it. 

We have just recently developed a oO-pound incendiary bomb which can be 
sold for .$16.(10 each. Our firing mechanism is the propeller type, similar to 
that in use by the Government. 
Very sincerely yours, 

Federal Laboratories, Inc., 

, President. 

J.W.Y. : G.O. 

It is very difficult to add 10% on as you suggested. In the case of the 
mortars and shells we are competing with Government prices. The 4.2" mor- 
tar shell is $57.50. We are quoting $57.00, as against our former price of 
$85.00. The $85.00 was given on a chemical shell which is a oit more expensive 
than the demolition, but we have made a very marked cut. $1,650.00 is the 
price on the Government 4.2" mortar. We have quoted $1,600.00, which hap- 
pens to be our regular list. Should we add the 10% to this? and go above the 
Government price? 

Cuba has a price list of our equipment. Is it safe to jump prices 10% 
without getting your customer in trouble. I am going to let you and your 
customer add your 10% and where it is possible to do so we will cover you ; 
where it isn't, I believe it will be necessary for you to work it out some other 
way. It would be so much better if we could discuss it than it is to write a 
letter before I know what we are up against on Government prices. 

I think we should discuss with this man the following additional equipment : 
Jumbo hispeed combination tear and vomiting-gas grenades, $14.00 ; portable 
chemical cylinders, $155.00 ; airplane smoke screen apparatus. 

J.W.Y. 



Exhibit No. 603 

El Agregado Militar Emba.tada de Cuba, 

Washington, D.C., June 20, 1932. 
Federal Laboratories. Inc., 

185 Forty-first Street, Pittsburgh, Pa. 

Gentlemen : I am pleased to place with you an order for the following 
material : 

200 explosive rifle grenades $3.00 $600' FOB Pgh. 

400 type " B " military gas masks 12. 00 4, 800] .p,^„ ^ ^. 

3 riotguns 65.00 1^5 (e^cU note) 

100 long-range tear-gas cartridges 8.00 800) UJeucu noie; 

6, 395 

This material will be inspected by the undersigned as soon as it is ready 
for delivery. 

The total price of the above items, packed for export and delivered free 
alongside steamer in New York City will be $6,395.00. Half of the payment 
should be made with the order ami the rest against shipping documents. 
The boxes should be marked as follows : 

EJERCITO, HABANA. CUBA, 
CARE OF CUBAN CONSUL, 
PIER L# EAST RIVER, 
NEW YORK CITY. 

The bill in quadruplicate is to be sent to this office. 

Thanking you in advance for your kind attention to this matter, I am, 
Very truly yours, 

Joaquin Dbmbstbb, 
T entente de ArtiUeria, 
Special commhsioner of the War Department of Cnha 

tor the purchase of war material. 



MUNITIONS INDUSTRY 1833 

Exhibit No. 604 

July 7th, 1932. 
H. E. Rau: 

On tile orders for Cuba, a total of !fl,895.00 is to be paid to Lieut. Demestre. 

$340.00 has already been paid to him and I should be credited for this. The 
balance is to be paid to him when irrevocable letter of credit has opened for 
us in a Pittsburgh bank. 

This letter of credit is to call for the entire balance due on the orders against 
shipping document. 

If this letter of credit is opened by Friday, I suggest you send him a check 
through Mr. Barker, who will be in Washington Saturday. Check should be 
made payable to Mr. Barker so it can be cashed while he is in Washington. 

J. W. Young. 



Exhibit No. 605 

Fedeu.:Vl Laboratories, Inc., 

July 28, 1932. 
Sold to : El Agregado Militar, Embajada De Cuba, Washington, D.C. 
Shipped to : Departniento de Guerra Y. Marina, Havana, Cuba. 
Invoice #14005, 140O<3, 14007; order #15826, 15971, 15«20. 
Terms : Net, f.o.b. Pittsburgh, Pa. Via : R.R.R. Florida East Coast. Florida 
East Coast Car Ferry. 

200 explosive rifle grenades $3. 00 ea. $600. OO 

400 type B militai-y masks 12. 00 ea. 4, 800. 00 

3 11/2" cal. riot guns 65.00 ea. 195.00 

100 11/2" cal. tear-gas projectiles 8.00 ea. 800.00 

500 30 lb. mark V bombs as per your speci- 
fication 24.50 ea. 12,250.00 

500 primers & detonators .35 ea. 175.00 

30 fuzes & loaded tetryl tubes for 120-1 b. bombs ; no 
formal order received as yet. Billing will be 
made upon rec. of order OIK). 00 

Total 18, 820. 00 

Amount received in advance $6,125.00, $175.00, & 

$3.395.00 9. 695. 00 

Balance due upon presentation of bill of lading $9, 125.00 

I hereby certify that this account is correct and is shipped as ordered. 

Payments received amounting to $9,695.00, balance due in the amount of 

$9,125.00. 

Fbjderal Laboratories, Inc., 
, Sec. 

Subscribed and sworn to before me, a notary public, in and for Allegheny 
County, Pittsburgh, Pa., this 28th day of July, 1932. 

— — • , Notary Public. 



Exhibit No. 606 

Fedekal Laboratories. Inc., 

Protection Engineebing, 
Pittsburgh, Pa., August 20, 1932. 

Sold to : El Agregado Militar, Embajada De Cuba, Washington, D.C. 

Agent, Jonas: invoice no. 14416; order no. 16119; customer's order no., wire 
7/2.5/32; letter 7/28/32. 

Shipped to : Ejercito, Habana, Cuba, % Cuban consul, pier 13, East River, 
New York City. 

Terms : Net b.o.f. New York, August 19 ; freight prepaid. 
15 boxes steel forgings, n.o.i.b.n. : contents each box, 2 empty demoli- 
tion bombs; total, 30 empty demolition bombs, at $41.46 each $1,243.80 

Note. Bookkeeping department copy only. 

Copies of invoices which were sent to New York through our bank read as 
above, except contents were described as letter of credit described them, or 
empty aviation pumps. 



1834 MUNITIONS INDUSTRY 

Exhibit 607 

New York, N.Y., Aug. 13, 1932. 
Fedebal Laboeatobies, Inc., 

Pittsburgh, Pa. 
(Att. Mr. Young) 

My BtiAR Mr. Young : I am in receipt of a letter from Demestre today stat- 
ing that owing to certain developments he is compelled to place his business 
tlirough the Prince Lauten Corp., so in figuring any prices on future business 
the 10% which you add to protect liim you can either pay me or the Prince 
Lauten Corp., or you can tell them that you will pay them direct when you 
hear from them. 

Yesterday Mr. Ryan called me by telephone and told me that he had received 
a certain order from Cuba, but as lie was told not to divulge the source of the 
order he was not at liberty to tell me, but that if I objected to his quoting he 
would not do so. However, he would like to give them half the commission, 
to which I readily agreed. He stated he felt that it was due to my work that 
the order was developed, and for that reason he desired to protect me. I cer- 
tainly appreciate his attitude, as he was willing to lose the entire order unless 
I agreed to part with ray portion of my commission. 

With regards, I am, 
Yours very truly, 

F. S. Jonas. 

FSJ:RL 



Exhibit No. 608 

[Translation] 

Habana, Sept. 2, 1932. 
Mr. Frank Jonas. 

Deiar Jonas : I received your letter of the 30th ult. with your quotation from 
Sedgley of the 29th. 

1. As stated in my last letter, the business of repair parts should be handled 
as follows : 

Sedgley must invoice these repair parts for the following amount : $3,694.90 
f.o.b. New York, and he should fix the price list in accordance with this total 
quantity. It is enough to add 50% to each price. 

As soon as Sedgley accepts these conditions we will immediately send the 
order with an irrevocable letter of credit against the Continental Bank of New 
York in favor of R. F. Sedgley for $3,694.90. irrevocable for 3 weeks. As soon 
as Mr. Sedgley receives payment he will deliver to you personally a check for 
$1,232.30. 

From this quantity your commission is 5% ($111.00), and the balance, or 
$1,121.30, please deposit as follows : 

Account 8927, Cumersinde Suarez National City Bank, New York. 

If Mr. Sedgley will not accept this business on these conditions, please look 
for another source. 

2. The Dominion Cartridge Co. have an agent in Habana, therefore they do 
not wish to give you the price. For your information, it is well for you to know 
that the activities of said agent cannot be successful, because the business is in 
our hands, and it is not agreeable for us to work with this agent, owing to the 
manner in which he has made his jvroposal. 

If yon are able, with this information we have given you, to obtain low prices 
from the Dominion Cartridge Co., there is a very big possibility of securing an 
order for two million caliber .30 cartridges. 

3. Do not forget to send me information regarding the Tetryl press that IJ 

requested in my letter of August 29th. 

Affectionately, 

J. Demestrej. 



MUNITIONS INDUSTRY 1835 

Exhibit No. 609 

Federal Laboratories, Inc., 
Pittsburgh, Pa., U.S.A., Sept. l^th, 1932. 
Mr. Frank S. Jonas, 

c/o Export Consolidated^ Companies, 

21 West Street, New York, N.Y. 

My Dear Frank : Replying to your letter of September 12th relative to the 
75 m/m shells, find we can have these manufactured for us with guaranteed 
delivery, starting shipment in sixty days and completing it in ninety days. The 
cost will be somewhere between $13.00 and $14.00. It will be necessary for us 
to add our profit, your commission, and that of the United Aircraft to this. I 
am in favor of quoting our net cost just as soon as I have it determined, and 
agreeing between us what each should take in the way of profit. Don't quo^e 
a definite price to Love until you hear from me further. I think this price 
is very reasonable for new equipment. 

We are a little ahefd of schedule on the first delivery of empty bombs. I 
wish we could be ahead of schedule on the final delivery, but we have had some 
l»ad breaks. 

I am going east on Friday and Saturday and Sunday to help push things 
along and will possibly run up to New York on Monday. If you want to reach 
me Friday suggest you wire the Ben Franklin Hotel, Philadelphia. 

If I can get an extension of three days on the letter of credit for the armored 
car for Cuba I want to go to Washington to show it to two or three of the 
Embassies. The ultimate destination of the car will be kept entirely secret 
and there is no reason for the Cuban Embassy to be called in on the display. 
It would be fine if you could be in Washington at the same time and drive 
back to New York with me. I would try to drive real nice for you. 

I hope the Prince Lauten Corporation comes through on the Cuban tank. 
This will be a nice clean deal for us. 

AVith reference to General Augilar's samples, do you mean that we should 
charge him. I believe Jones did not have this in mind, but wanted them sent 
down on memorandum, or perhaps at our expense. I will talk to you about 
this the next time I see you. 

The armored trucks referred to by me were three five-ton White trucks with 
armored bodies and aluminum-panel finish, sold by me for approximately 
$9,500.00 each, eight years ago. 

The trucks have been driven about 4,000 miles each and are in mai-velous 
condition. They were used only for the transportation of pay rolls in some 
of the mills here. These pay rolls are now being handled by check and the 
trucks can be purchased practically at the buyer's ow'n price. 
Sincerely yours, 

Fedb3?al Laboratories, Inc.. 
John AV. Young. President. 

J\\^Y : GO. 



Exhibit No. 610 

New York, N.Y., Sept. 26, 1932. 
Mr. Young, 

Federal Laboratories. Inc., 

Pittshuryli, Pa. 

Deiar Mr. Young : Confirming our telephone conversation of today, I am in 
accord with your agreement to allow 2iy^% on the bomb order placed by 
AA^ R. Grace & Co. In turn I am to allow Grace & Co. 221/2% of this discount. 
However, as yrm quoted the lOO-lb. bombs at the 120-lb. price, I trust you will 
be able to allow me the difference in price so that I can protect Leon & 
Bonasegna and have something left for myself. 

I today received a letter from Demestre advising me that Captain Castellanos, 
assistant to the chief of staff of the Army, was on his way here to 
])urchase war material. It will principally consist of airplanes and 
machine guns. Among the various items he will purchase there will be an 
item for 100 l<30-lb. vomiting-gas bombs on which Federal has been specified. 



1836 MU^vTITIONS INDUSTRY 

As soon as I receive this order I will send same on to you. Demestre has 
requested tliat we increase the price -iy'/o to take care of him. lint on account 
of Lake Erie's competition I am afraid to try this. We can talk over this 
matter in Washington. 

With regards. I beg to remain 
Yours very trulv, 

F. S. Jonas. 
FSJ : RL 



Exhibit No. Gil 

[Translation] 

Habana, Oct. 12, 1932. 
Sr. Fkamv S. .Toxas. 

Room 1702, 21 West St., New York. 

My Dear Jonas: I received yesterday your letters of the 6tli and 7th of 
October, enclosing mine of the 4th. Thanlcs. 

Lincoln AiUomohile. — The liquidation of the automobile appeared correct to 
me. The difference betvvetn the :fS,y(JO and the ^^K^'^^ which 1 sent should cover 
the freight and insurance. I found it reasonable that you held 5 percent for 
yours^elf, and if there is anything to be given to Prince Lauten we will tix it 
with him. The automobile is very much liked, so much so I have already given 
an order to the Federal for the construction of a new armored car. Yesterday 
we shot a ypringtield 30.(H? twice, one in the. back of the car and one 7 inches 
below the rear glass. Neither of these two cartridges penetrated the metal. 
This proof has been a wonderful ad for the car and will probably wa-ite today 
to Mr. Young congi-atulating him on the work. 

Parts from Sedffley. — I have not figured any commission for you on the 
$1,021.30, as without doubt Sedgley will give you 5 percent if ycsu insist. Make 
Sedgley understand that future orders will be placed through your medium. 
Nevertheless, in case Sedgley refuses to give you commission, please advise me, 
and I will tix something for you. 

Lake Erie Chemical Co. — A representative from this company has just arrived 
in Habana with the neces^sary equipment for making a demons. ration of their 
gases. 

This representative immediately commenced to discredit Federal Lal>oratories 
material, stating that the bombs purchased by me were no good and of an 
old type. 

As you can imagine, no one has paid any attention, because the bombs were 
manufactured by Federal exacdy in accordance with my specifications. Sec- 
ondly, they have been tried out with good results ; and, thirdly, becaus>e their 
sales methods in trying to discredit competitors brought no results. 

I am telling you this so that you can advise Mr. Young of the procedure 
employed by Lake Erie Co. It is quite probalde this company will not be able 
to sell anything here. 

Yours very truly, 

J. Demkstre. 



Exhibit No. 612 

December 8. 1932. 
National Citt Bank, 

55 Wall Street, New York, N.Y. 
Gentlemen : Eiclosed please find my check no. 1052 for .$2,242.8.", which 
kindly credit to the account of Gumersindo, Suarez, Habana, Cuba. 
Yours very truly, 

F. S. Jonas. 



MUNITIONS INDUSTRY 1837 

Exhibit No. 613 

Federal Laboratories, Inc., 

Protection Engineesjing, 

Pittsburgh, Pa., U.S.A. 

New York, N.Y., February 7, 1933. 
Mr. John W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 

Dear Mr. Young : The result of my visit to Havana was as follows : 

Demestre wants to have you ship him to Secretaria de la Guerru y Marina, 
Ejercito, Havana, one bulletproof vest, metlinm size and one portable chemical 
tank. Kindly send me a supply of your invoices, as he will instruct me at what 
price to invoice these goods. 

With reference to the armored trucks which you offered his Government, they 
are not interested as they have a number of chassis on hand and intend to do 
their own armor plating. They will send you specifications for the side plates 
and places where the holes are to be drilled. Mr. Demestre would like to know 
if these plates should be riveted or welded. 

With reference to the 30-lb. chemical bombs containing vomiting gas, this 
order will be placed early this year as soon as the appropriation has been 
granted. 

They require 1,000 steel projectiles 37 m/m as they have all the one-pound 
empty shells they require. He informed me that the American Government 
charged $7.50 for these projectiles and that France has quoted $3.98 f.o.b., l)ut 
if you can meet the American price and advise him immediately he will cable 
to France suspending the order. They also want 1,000 fuses for these shells. 
The fuses are to be packed separate from the projectiles. The type of projectile 
required is the ordinary steel projectile. They have manufactured them in 
Cuba, but with a very low-grade steel and it is not satisfactory. I am today 
writing to Demestre to send you by mail the sample you request of the pro- 
jectile. He would also like to hear from you immediately what price you can 
quote on 500 lbs. of white phosphorous with which he intends to load some 75 
m/m shells and desires full information for loading. If we do not do this he 
will secure prices from some other source and it is my advice to you to grant 
his request as Demestre intends to give us everything he can. 

They also require 400 service cannisters, M.I.V. hose of 27". This order 
will be placed very shortly. 

Credit: Demestre claims that as they are short of funds it would be very 
much easier to do immediate business with his Government if you would 
agree to 50% cash with the orders and the balance on terms. It is his opinion 
that there is no risk doing business on this basis as the Cuban Government 
has always met their commercial obligations. Both Remington and Colt's 
have extended them credit on this basis. In fact, on the orders which were 
placed six weeks ago no deposit was made and they were given six months 
in which to pay. 

There are several matters I wish to take up with you, so kindly let nie 
know when you expect to be in New York. 

Pardon me for not writing you in further detail, but I have all my cor- 
respondence piled up and have not the time. 

With regards, I beg to remain, 
Yours very truly, 

Frank S. Jonas. 
R. L. 

Frank S. Jonas, 
FS J : RL 

P.S. — Please return the enclosed letters from Leon & Bonasegna and advise 
me what action you and Thompson will take. Personally I recommend that 
you agree to their proposal. I am enclosing some newspaper clippings showing 
the Buenos Aires police on parade with our apparatus. Kindly return same 
to me immediately as I need them here in New York. 

Encs: 



1838 MUNITIONS INDUSTRY 

Exhibit No. 614 

February 24, 1933. 
Lieut. J. Dbmestre, 

Calle Medrane, Buen Retiro, 

Mariano, Havana, Cuba. 

DEU.R Lieut. Dembstke : When Mr. Jonas returned, he was greatly concerned 
that we keep ourselves in position to give you very prompt service on your 
orders : 

1. One thousand 37 mm projectiles at $7.50 each. We agi-eed to make these, 
but requested that you send us a sample so that the projectiles could be made 
to conform exactly to your sample. There are fifteen different models of 
projectiles to fit a 37 mm gun and we wanted to be sure we were giving you 
exactly what you wanted. Neither the order nor the sample has been received 
yet. 

2. Armor plate. We have been holding ourselves in readiness to make very 
early shipment of the armor plate for your truck bodies. We are sorry to 
learn that you are not in shape to pick up the complete trucks upon which 
we quoted. 

There is a great deal of talk in the newspapers here about the impending 
revolution and if we are to believe all that the newspapers say, I would cer- 
tainly urge you to speed the placing of these orders all possible. 
Very sincerely yours, 

Fedekal Laboratories, Inc., 

, President. 

JWY : GO 



Exhibit No. 615 

February 27, 1933. 

Dbmestre: I received your telegram late Saturday afternoon with reference 
to quoting you on Remington cartridges, and replied as follows : 

" En contestacion a su cable tenemos que conimunicarle que con fecha de ayer 
hemos cotizado precio directamente al Jefe del Estado Mayor." 

(Unfortunately, or as it happens fortunately, as the case might he), Rodriguez, 
Herrera's nephew (who was down in Habaua at the time I was), told me that 
he could get this business owing to his connections with his uncle. Knowing 
that the order for the last 4 or 5 million cartridges which were purchased by 
your Government was placed thru him, due to his relations^hip with the gen- 
eral, I feel it would be very foolish to ignore him and not sliow at least some 
interest on his conversation with me on the subject. 

I felt from the conversation I had with you in Habana that he was not in a 
position any more to control this business. However, about 4 days ago Rodri- 
guez called on me and told me that he had had a talk with the general on the 
telephone, instructing him to place an order for 1 million cartridges and in- 
sisted on us giving him the lowest price. Together with Rodriguez I took the 
matter up with the Remington Co., and in front of me he telephoned direct 
to General Herrera, quoting him the price, and evidently from the conversation 
the general told him to close theorder and that a confirmation order would be 
forthcoming. 

During my conversation with Rodriguez he mentioned your name and wanted 
to know if I had done any business with you. I told him that I had done 
business with the War Department on orders which you were instructe<l to 
place, and gave him no further information. From his remarks, however, I 
gathered that he was suspicious about the automobile deal and told me that 
the chauffeurs had not been paid the usual commission, as they both complained 
to him when he was in Habana about not receiving anything, and stated that 
they were informed that he, Rodriguez, had sold the cars. On investigation, 
he said that you had placed the order direct with us and that he could pur- 
chase similar cars at less money. I gave him no information and told him 
that you paid us the price we quoted and that was all we knew about it. 

He says he is returning to Habana and intends to devote his time to Govern- 
ment business and wanted to know if I had an agent. Mr. Monaghan advised 
him that we had no Government agent for Remington, and I told him that we 
had an agreement for the Federal line with an outside agent. He said he also 



MUNITIONS INDUSTRY 1839 

wanted to work this line, but I told him I was not in a position to do anything 
with him. Please write uie at length telling me how you want to work with 
Federal and if you want me to make a contract with Gumersindo Suarez, so 
that I can truthfully say that I have an agent and cannot work with him. 

It is certainly a most embarrassing position to be in as the proof of the 
pudding is the eating, and Rodriguez in the past three years certainly lias 
produced business for the Winchester Co., and Remington were only too pleased 
to get the business away from Winchester. 

I prefer to work with you, naturally, as your actions in the past have been 
most friendly and above board, and I will not commit myself until I hear from 
you. As regards the Remington deal, however, as you can see from the above 
explanation, I was unable to do anything other than I did. 
Yours very truly, 

F. S. Jonas. 

P.S. — I certainly regret that the deal had to go through as it has, because 
in this instance I will only make 1 percent and had I been able to work with 
you I would have fared much better. 



Exhibit No. 616 

August 18, 1933. 
Col. Carlos Mendybita, 

c/o /Sf.iS. Morro Castle, New York. N.Y. 
My Dear Colonel : I am sorry I cannot get to see you personally and say 
good-bye, but I learned you are sailing Saturday. I just wanted to express 
our congratulations to you and your associates on the marvelous outcome in 
Cuba. W^e, of course, regret that such a price of human life was paid, but it 
could have been much worse. 

I am so glad that you did not have to go through with the big program dis- 
cussed with you, General Menocal, Dr. Gomez, and Mr. Texidor. 

After matters adjust themselves and your own position is established in the 
new Government I believe I can be of service to Cuba in establishing a means 
of national safety against further uprisings. 

Please give my regards to Dr. Gomez and your associates, and our assurance 
that we are most happy to see you return under the conditions you are able 
to do this. 

Very sincerely yours, 

Federal Laboratories, Inc., 

, President. 

JWY : GO 



Exhibit No. 617 

ALBUANDRO texidor, HAVANA, CUBA 

Havana, October 17, 1933. 
RoBEKT S. Judge, Esq., 

Attorney at Lmo, 220 Park Avenue, Neto York Cit}/. U.S.A. 

My Del\r Mr. Judge: I imagine that you have been more or less surprised at 
the various events that have taken place here since I saw you last in New York. 
I have been reading some of the American papers and have no doubt that you 
will have been able to form an idea of the present state of affairs in this 
country from the accounts published in your local press. 

My chief object in addressing these lines to you is to enlist your kind coop- 
eration in the following matter, which I am sure will certainly be very bene- 
ficial to your combined interests with our mutual friend John. It is of the 
greatest importance that I get together with John at the earliest possible 
moment, and as I am not able to leave for the States immediately I venture 
to ask if it would be possible for you to convince John of the expediency of 
his taking a flying trip to Havana. You may assure him that this will be of 
enormous benefit to him and that his presence here is indispensable, in the first 
place because thei-e are certain things which I want him to see personally, 



1840 MUNITIONS INDUSTRY 

and secoiully because it is of the utmost importance that lie meet certain indi- 
vi(]uals at this end, witli whom I couhl not bring about tliis personal contact 
if I went to the States. In other words, the important proposition which I 
want to place before John also involves an investigation which it will be 
necessary for him to make i)ersonMlly on the spot. 

I know how busy John is, but as this is strictly a sound business proposition 
involving a positive and concrete transaction, I feel that it really warrants his 
giving serious consideration to ni.v request. It is important that you assure 
him that the parties involved in this proposition are not by any means those 
whom he has met in the past but that they are absolutely serious gentlemen, 
both morally and financially, in whose name I am making tins urgent request 
for his visit to Havana. 

As this matter is of such extreme importance and no time should be lost if 
we do not want to lose this great opportunity, I would strongly recommend 
your wiring me as to whether John's trip to this side cjui take effect, and if so, 
exactly when, as I have to inform the parties interested of the result of my 
efforts to this end. I am also anxious that John should know that if he would 
like to have his wife accompany him I should be very glad to accommodate 
them in my own home and would do everything in my power to render their 
stay here as agreeable as possible. 

Once more repeating my assurance that your kind and valuable cooperation in 
this matter will redound to the considerable benefit of all concerned, and 
thanking you in advance, I remain, with best personal greetings. 
Most sincerely yours, 

Alejandro Teixidor. 



Exhibit No. 618 
[Memo for Texidor file] 

In conversation with Mr. Texidor on Tuesday, Nov. 7th, I promised him a 
commission of 107r on all business done with the Menacol-Menyatta group, and 
commission of 15% to 20%, depending on the product on all business done with 
the Grau group. 

J.W.Y./11-10-33. 

Exhibit No. 619 
ce — E. H. Pitcher. 

November 21st, 1933. 
State Deipartment. 

Washington. B.C. 

Gentlemen : Referring to our letter of November 17th relative to an order for 
thirty Thompson submachine guns for the Government of Cuba, wish to advise 
that this order has been increased to sixty guns. 

In your letter to Auto-Oi'dnance Corporation will you please have it read 
sixty Thompson submachine guns instead of thirty. 
We will appreciate your prompt attention. 
Yours very truly. 

Federal Laboratories, Inc., 

, President. 

JWY : GO 



Exhibit No. 620 
[Postal telegraph] 

G 6 — Par Jacksonville, Fla. 

1142 A, Nov. 12, 1933. 
Federal Laboratories, Inc. — PFL. 

Young will arrive in today's plane. 

Martenez. 841A FL. 



MUNITIONS INDUSTRY 1841 

Exhibit No. 621 

Decembee 19, 1933. 
Via air mail.. 
Mr. Lvis R. Rios, 

Concordia 19. Hahaiia. Ciiha. 

Dear Mr. Rios : It certainly was a tremendous surprise to have you coiifirni in 
your letter of tbe 17th that this man Figuerola has actually been appointed 
i)y Batista to purchase for the Cuban Army. 

" You are dead risht in your informaticni that one very h"gh-class and reputable 
American manufacturer has refused to deal with Mr. Fi.uuerola. and I believe 
that there are others who either have refused or will refuse if he approaches 
them. I would not be a bit surprised, as a matter of fact, if certain officials 
in the Cuban Army were advised quite definitely by several American manufac- 
turers that they want no dealings of any kind with Mr. Fi.iiuerola. 

So far as his intended purchase of machine guns is concerned, it is my 
understanding that he intended to purchase the Bergam gun and that this is 
a very cheap, small calibre which can in no way be compared to the Thomp- 
son. I believe the sales price of the gun was in the neighborhood of $.50, so 
you can imagine more or less what it must be. 

As you know, we are very desirous of doing business witli the Cuban (^oy- 
ernment and appreciate very much their patronage. Ho\A-ever. we feel a great 
deal as you do in the matter and would surely like to see any further deafings 
conducted in the same manner as their previous order for Thompsons which 
you placed. 

I cannot help feeling that with the relations that you described existing l>e- 
tA\ee'i yourself and Captain Betancourt, as well as Lieutenant Cainblor, i)lus 
the ill effect on Colonel Batista, which the disfavor of his emissary must cause 
when he learns of it as he undoubtedly will through several channels, that 
you will be able to redirect the course of this business into proper channels 
once more. I should be very glad if you would keep me i)osted as closely as 
possible on the turn of affairs in Cuba. By the way, what is new regarding 
the incpiiry for gas masks, etc., in which they were interested a few weeks ago? 
Very truly yours, 

C. W. Rich. 

CWR/fb. 

cc — Pittsburgh. 



Exhibit No. 622 

December 14th. 1933. 
Mr. Walteir B. Ryan. Jr., 

President Auto Ordnance Corporation. 

31 Nassau Street, New Yorlc. N.T. 
My Dear Mr. Ryan : Mr. Rich writes me that we had an upset on our con- 
templated order from Cuba, due to the fact that a Mr. Figuerola, who has a 
questionable reputation as a "gun runner", has underbid us to the Cuban 
Government on the Thompson submachine guns. 

I am quite worried about this, knowing the type of man Mr. Figuerola is. 
When I was in Cuba last month I personally talked to Colonel Batista, and 
while I was there he decided to buy the additional thirty guns. I hadn't the 
slightest idea that Mr. Figuerola would be permitted to come in and compete 
with me under the circumstances. 

If you will advise Mr. Figuerola that you are withdrawing yonr quotation 
to him. I think we can perhaps still clear this situation up. I certainly feel 
that we are entitled to protection on this order, after personally going to Cuba 
on it. It is the most pleasant thing to go into Cuba during times such as these. 
Incidentally, if Mr. Figuerola could deliver tbe Thompson guns at a lower 
price than I quf)ted. he would put me in disrepute with the Cuban Government, 
and they would think if I was high on the guns, we would naturally be high 
on other items. 

Sincerely yours, 

Federai. Laboratories. Inc., 
John W. Young, President. 
JWY : GO. 



1842 MUNITIONS INDUSTRY 

ExHlRiT No. 623 

December 22, 1933. 
Colonel FuixjENCio Batista, Chief of Army, 

Havana, Cuba. 

My Dear Col. Batista : Wlien the writer had the pleasure of meeting you 
personally in Havana you were exceedinKly busy making preparation for what 
I learned later to be an attempted uprising, and which you very ably stopped. 

I am sorry I did not have more tinre to explain to you the value of our 
products, but I understood at that time you were interested in purchasing 
30 additional Thompson submacliine guns. We have not as yet been favored 
with this order. 

We have been approached by Mr. Figuerlo, but it is not convenient for us 
to conduct this business through Mr. Figuerola. So that you will not be dis- 
appointed I am writing to tell you that we are desirous of serving you. and I 
sincerely trust we might have the pleasure of handling this in the same man- 
ner as the previous order. 

Please feel free to call upon us at any time we might be of service to you. 
Very sincerely yours, 

Fedeiral Laboratories, Inc., 
, President. 

JWY : GO 



Exhibit No. 624 

Federal Laboratories, Inc., 
General Offices and Factory, 185 Forty-first St., 

Piiisliurgh, Pa., U.S.A. 

Sold to Martinez Seanz. Dec. 30, 19.33 ; Agent, Jonas. Invoice no. 19219% ; 
our order no. 21019. 

500 gas masks 20.00 each. $10,000 

200 11/'" cal. riot guns 5-5.00 each 11,000 

50 incendiary bombs 24.00 each 1,200 

51 demolition bombs__ 67.00 each 3,417 

500 rifle grenades 2.20 each 1,100 

18 121/2 lb. fragmentation bombs 25.00 each 450 

12 30 lb. fragmentation bombs—--— 33. 00 each 396 

27, 563 

Payments to be made only to Federal Laboratories, Inc., Pittsburgh, Pa. 
All claims for shortage or damage must lie made within five days of receipt 
of goods. Goods returned without our permission will not be accepted. 



Exhibit No. 625 

SHIPPING ORDER 

federal laboratories, inc. 

No. 21178 
Date Jan. 18, 193^. 
Ship to Martinez 
Agent Jonas 

30 300 lb. demolition bomb. 
500 Type GE gas masks. 
100 I'ortable chemical cylinders. 
6,000 Grenades 103M. 
2,500 11/2-inch Cal. Projectiles CN-DM. 

* Order when check comes in for $15,000.00. 



MUNITIONS INDUSTRY 1843 

Exhibit No. 626 

January 18, 1934. 
Mr. Martinez Saens, 

% Hotel Walton, 72nd Street, New York, N.Y. 
My Dhlvr Martineiz : Confirming our understanding reached in New York on 
Tuesday night, we promptly proceeded with the additional order for 30-300 
pound demolition bombs, 500 gas masks, and 100 portable chemical cylinders, 
and we ai'e aLso pushing production on the balance of the grenades and gas 
projectiles. 

This confirms my statement to you that we have advanced to your repre- 
sentatives here $423.00 to date. We have receipts for this amount, which 
are open for inspection at any time. 

I am proceeding with the proposed organization material for the national 
police organization and hope to have this ready for preliminary study when 
you wish it. 

There is too much to be done between this and January 31st, my scheduled! 
date for sailing to England. I am, therefore, postponing my trip abroad until 
such time as your program is more nearly complete and success is assured. 

We shall look forward to receipt of your draft for $15,000.00, plus: expense 

money in Friday's mail to cover us for the new commitments in your order. 

I would greatly appreciate if, in the future, you would keep in closer touch 

with us by confidential correspondence addressed to me under personal cover. 

Most cordially yours, 

Federal, Laboratories, Inc., 

, President, 

JWY:GO 



Exhibit No. 627 

January 20, 1934, 
His Excellency Carlos Mendieta, 

President of Cuba, Presidential Palace, Habana, Cuba. 
My Dear Sir: It was with great pleasure that I read of your acceptance of 
the Presidency of the Republic of Cuba, and I believe it is in order to congratu- 
late the people of Cuba in having a man of your sympathies and experience to 
direct them at such a critical time. 

I wish to pledge to your support the staff and resources of the Federal Labora- 
tories to assist you in bringing and maintaining order in Cuba. 

With sincere personal regards and best wishes for a successful administra- 
tion, I am, 

Very truly yours, 

Federal Labor.\tories, Inc. 

• • , President. 

JWY : GO 



Exhibit No. 628 

January 22, 1934. 
Dr. Martinez Saenz, 

% Rosales Lavendan, Metropolitan Bldg., Habana, Cuba. 
My De^ar Martinez Saenz : I am enclosing herewith a copy of a letter which 
I sent to Mr. Alejandro Texidor. I am writing to him because it was he who 
first drew me into this picture, and wlio has, in a large measure, advised me in 
my activities. 

Please confer with him. I believe he can assist you in the program which 
we last discussed just before you left New York. I am anxious to have the 
whole matter cleared up as promptly as possible, and this certainly is the 
logical time to do it. 

This letter is not in the nature of a complaint. It is an appeal to the sense 
of fairness of yourself and your associates to see our end of the work com- 
pleted to a point where it does not work a hardship upon us. 
Most cordially yours, 

Feder.\l Laboratories, Inc. 

, President. 

JWY : GO 



1844 MUNITIONS INDUSTRY 

Exhibit No. G29 

Alejandro Texiuob 

Habana, January/ 26, 193Jf. 
No. 4 
Mr. John W. Young, 

185 Farty-first Street, PHtshurgh, Pa., U.S.A. 

My Dear Mr. Young : I have just cabled you as follows ; 

" Young. Have made arraugements with President and Martinez for meet- 
ing tomorrow morning. Everything progressing very satisfactorily. iStoj). 
Be. prepared come immediately I advise you. Stop. Will conuuunicate with 
you after conference." 

I have not wired you before this, because it has been so very hard to arrange 
this meeting with the President and Martinez, due to their being so extremely 
busy, and it was only this morning that I was able to accomplish it. As 
promised in my above message, as soon as the meeting is over I shall cable 
you the result, which I expect will be very gratifying to you. 

I also want to acknowledge receipt of your copies of those addressed by 
you to Martinez Saenz and President Mendietta. These letters are excellently 
well couched so as to give me full support in my endeavors to wind things up 
quickly and very satisfactorily for you, who deserve every attention and com- 
pensation. I am sure that both President Mendietta and Martinez Saenz 
and also General Menocal and Dr. Gomez share this view. Just continue to 
depend on me, with the certain conviction that you will be taken care of 
one hundred percent. 

Meantime, with renewed assurance of my highest esteem and friendship, 
and with very best greetings and remembrances to your good self and Mrs. 
Young, believe me. 

Most sincerely yours, 

Alejandro Texidor. 

AT.MM. 



No. 



Exhibit No. 6P.0 
Alejandro Texidor 

Havana, Juiiuanj 29, 193'i. 



o 
Mr. John W. Yox^ng, 

IS.) Forty-first Street, 

Pittsburgh, Pa., U.S.A. 

My Dear John : Late on Saturday afternoon I concluded my conference with 
the President. Dr. Miguel Mariano Gomez, and Dr. Martinez Saenz, and there- 
after at once cabled you as follows : 

"After conference with President and Doctors Martinez and Gomez. Result 
most satisfactory, but believe extremely important you come immediately in 
order accelerate things. Stop. In making your plans you should figure that 
j'ou will need remain here not less than week. Cable me when can exi)ect you. 
Stop. Strongly recommend speedy action as among other reasons I have to go 
States myself very shortly." 

As stated in this message, the result of my conference was very gratifying, 
but I b(dieve nevertheless that it is very advisable for you to come to Habana 
to vvork with me in order to clear up this affair. As you know, my position 
with the leaders and yourself is a peculiar one, and therefore your presence 
here is very important, not oidy for the winding up of your presently pending 
matter but also in order to obtain the compensation to which you are so .iustly 
entitled. 

I took the precaution of pointing out to you in my cable that you would need 
to so arrange your affairs as to permit of your spending at least a week here, 
because I foresee that, on accoimt of the local conditions, we may not be able 
to obtain immediate attention, and while I know that they will give you all the 
time you need, on the other hand we shall have to be reasonable and, in con- 
sideration of the many important matters to which they have to attend, give 
them a little leeway in regard to time. 



MUNITIONS INDUSTRY 1845 

Your answering cable came to hand this morning announcing that y( vi expect 
to arrive iiere on February otli, wliicli is entirely satisfactory. It is very 
important that you bring along with you all possible data as to what you have 
done, and also all your plans for equipment for the Government, as I want to 
take these to Batista and so pick up some business at the same time. It is also 
extremely important that you bring some pictures of tlie ffiinboats which, dur- 
ing your last visit here, you told me the Govermnent of Washington was ready 
to sell. The Cuban Navy is entirely out of suital)le equipment, and I believe, 
therefore, that if we have an acceptable proposition to put before them, it will 
be very easy to secure an order for at least half a dozen. Please be sure to 
bring along everything that you have in this line. 

I am sending this letter to you by air mail in order to give you more time 
to prepare and assemble all this matter. If you can also bring one of the 
police riot guns with, say, half a dozen shells for demonstration purposes, or 
anything of this nature that you have that can be used locally, this will be 
very advantageous, and you may rest assured that you will experience no diffi- 
culty in getting this material through the customhouse. 

I hope that you will be able to bring Mi-s. Young with you on this trip, as 
things are very quiet here now, and I think she would enjoy her stay. In the 
meantime, please give her my best regards, and with a warm handshake to 
yourself, believe me. 



Yours very sincerely, 
AT.MM. 



Alejandro Texidor. 



("Exhibit No. 631" apiiears in text on p. 1659) 



Exhibit No. 632 

Habana, February 12, 193Jf. 
Mr. Albtandro Texidob, 

O'ReiJlii No. 68. Haiana, Cuba. 

My Deiar Mr. Texidor: Your cable on Saturday said you were writing, but 
exclusive representative in Cuba, to liandle the sale of our products and equip- 
ment. 

You agree to exert your best efforts and give all the necessary time to the 
development of the sale of these products, and further agree not to handle any 
competing line during the term of this agreement. 

This agreement is subject to cancellation by either party upon previous notice 
of sixty days in writing by one to the other. 
Yours very truly, 

Fedeeal Laboratories, Inc., 

, President. 

JWY : MM. 



Exhibit No. 633 

February 22, 1934. 
Mr. Alejandro Texidor, 

P.O. Box 2055, Habana, Cuba. 

My Dear Mr. Texidor : l''our cable on Saturday said you were writing, but 
up to the present time we have received no letter from you. I have been 
wondering just what is going on in Havana, and will certainly appreciate some 
report here on IMonday. 

There is still considerable anxiety on the part of the American officials as 
to the future of Cuba. This anxiety would he greatly lessened by announce- 
ment that the program which I have recommended had been officially adopted 
by the Cuban Government. 

I would like to know very much what each of the cabinet members had to 
say thus far ; what Col. Batista's present attitude is, particularly in regard 
to my appointment and the two trainers. I would also be interested in know- 
ing whether your activities to reinstate or secure your school supplies contract 
will have any effect upon the action of Col. Mendieta on my proposal. 



1846 MUNITIONS INDUSTRY 

I think I have satisfactory arrangements about consummated to handle the 
credit of your school supplies providing you can arrange for certain assign- 
ments or guarantees to my people here. This will be more of a formality, 
and I think an entirely feasible plan, the details of which we can work out 
when I return. 

Very sincerely yours, 

Fedek-al Laboratories, Inc., 
, President. 

P.S. — AVe have just completed a new export price list, effective February 15, 
1934. This contains a few slight changes in the previous list dated May 15, 
1933. Copy of the new list is attached. 

JWY:GO 



Exhibit No. 634 

Habana, marso 7 de 193 Jf. 
Honorable Senor Presidente de la Republica, 

HabaiHi. 

Honorable Seiior Presidente: Me permito manifestarle respetuosamente que 
vine a Cuba a instancia del doctor Martinez Saenz y me informo que el Consejo 
de Secretarios habia aprobado el plan que hube de semeter a la consideracion 
de dicha junta de acuerdo con mi reporte de fecha 9 del mes ppdo., y que 
debia volver a Cuba acompanado de dos auxiliaries para conienzar el trabajo 
inmediatamente. 

Al llegar a esta ciudad hube de informarme de las dificultades que la clase 
obrera esta proporcionando al Gobierno y en prevision de lo que pudiera 
suceder, me permiti hacer a mi fabrica un pedido de una cantidad suficiente 
de gases para que pudieran ser usados en caso de emergencia, cuyo equipo, 
habiendo side embarcado inmediatamente despues de recibir mi orden, debera 
llegar a esta ciudad el proximo viernes, dia 9 de marzo. 

Con la anuencia de las Autoridades de Nueva York hube de conseguir la 
amplia cooperacion del Inspector Sr. Alberto B. Moore, active presidente de 
la Asociacion de Jefes de Policia de Nueva York, Inspector Jefe de la Policia 
del Estado do Nueva York, y Jefe del Colegio de Policia de Nueva York, a los 
efectos consiguientes. 

No existe en mi juicio en los Estados Unidos una autoridad policiaca mas 
competente que el Inspector Sr. Moore, pero tanto el Sr. Moore como el que 
suscribe no puede emprender la realizacion del trabajo, ni seria posible ix)ner 
en uso el equipo que esta en camino para esta, hasta tanta no recibamos 
autorizacion por medio de decreto presidencial para poner en practica el pro- 
grama de nuestra campaiia, el cual llevara implicito nestro reconocimiento 
oficial en esta cuestion de parte del Gobierno de Cuba. Esto es realmeute de 
vital importancia para nosotros, pues sin picho requisite podriamos perjudicar 
en juestra reputacion oficial que ostentamos en representacion del Gobierno 
de los Estados Unidos, por inmiscuirnos en asuntos interiores de un pais 
extranjero. 

Tan pronto estemos en posesion del correspondiente decreto presidencial, pro- 
cederemos a organizar una PatruUa de Emergencia y dentro de dos meses 
podremos organizar y equiper una Cuadrilla Nacional de 500 policias compe- 
tentes para mantener el orden ; ademas estableceremos un Colegio de Policia 
similar al que existe en el Estada de Nueva York y organizaremos un compe- 
tente personal para el mismo. Este proyecto abhorrara al Gobierno de Cuba 
anualmente una cantidad mucha superior al gasto del equipo y, lo que es mas 
importante todavia. asegurara una Administi'acion pacifica en este territorio. 

Necesito senalar la necesidad de equipar una officina en esta ciudad para 
poder realizar nuestro trabajo con comodidad y perfeccion, y que de cabida a 
los auxiliarios de que tendremos necesidad. La obra que acometeremos deman- 
dara de nosotros largas horas de trabajo, de dia y de noche y cualquier inter- 
rupcion en el mismo podria resultan costoso, pues no podemos disponer mas 
tiempo que lo necesario para desarrollar nuestra plan aqui y que nos permite 
nuestros deberes actualmente abandonados en los Estados Unidos. 

En el caso de que seamos favorecidos con su solicitud, estamos en condiciones 
de establecer en vuestro pais una organizacion de policia eficiente que sere 
reconocido en todas partes del mundo como tal, cabiendole a vuestro Gobierno 



MUNITIONS INDUSTRY 1847 

el beneplacito de haber contribuido a realizer uno de los actos mas importantes 
y meritorios para salvaguarder los iutereses generales de la comunidad. 

El Embajador Sr. Caffery me ba informado que el Inspector Sr. Moore no 
debera emprender ningun trabajo en esta ciudad hasta tanto no se haya decre- 
tado formalmenta por Ud. La aiitorlzacion de sus servicios y los mios aqui, 
en vista de los cargoes oflciales que representamo en los Estados Unidos, sienda 
necessario que se solicite a nuestro Gobierno la correspondiente autorizacion 
para utilizer nuestros servicios. 

Ruega a Ud., el senalado favor de que se guarde en la mas absoluta reserva 
la actuacion que habremos de realizar tanto el Sr. Inspector Moore como yo en 
este asunto. 

Podria solicitar a la Institucion Rockefeller en los Estados Unidos que hi- 
ciere un estudio de las difficultades obreras y activities comunistas en esta 
isla, y creemos que al pedirlo Ud. podria hacer un estudio muy util para deter- 
minar la causa basica de todas estas serias diflcultades obrei-as y encontrarse 
una solucion a ellas, lo que podria llevarse a efecto sin gasto alguna para el 
Gobierno de Cuba. 

Tambien es nuestro proposito, pues asi consta en nuestro programa, hacer 
una confitra-propaganda a los comunistas, la que ba tenido mucbo exito en otros 
paises. 

Todo esta trabajo sera comenzado tan pronto como Ud. oborgue la correspon- 
diente autorizacion, sin cuyo requisto, tanto el Inspector Sr. Moore como yo 
careceriamos de la Indispensable autorizacion oficial para dar comienzo a 
nuestra obra. 

Damos a Ud. la seguridad de que nos sera muy grato prestar culaquier ayuda 
a nuestro alcance y al tanto de sus gratas ordenes, quedamos de Ud. con la 
mayor consideracion y respete, 

FEDE3RAI, Laboratories, Inc., 
■ , President. 

JWY.MM. 

[Translation from Ex. 634, p. 2] 

You can ask the Rockefeller Institute in the United States which made a 
study of the labor difficulties and Communist activities in this island, and we 
believe we can, at your request make a very useful study for determining the 
basic cause of all these serious labor difficulties and recommend a solution to 
them, which can all be done without any cost to the Government of Cuba. 



("Exhibit No. 635" was marked for identification and is on file with the 

committee) 



Exhibit No. 636 

Havana, March 28, 1934. 
Mr. Ale-jandro Texidob. 

O'Reilly No. 68, Havana, Cuba. 

Deiar Mb. Tesidob: I am enclosing herewith payment to the amount of 
$5,600.00 advance commission on the order for the Cuban Government, although 
no letter of credit has yet been opened. 

My experience with the Departmento Gubernamental has been so discourag- 
ing, tbat I do not desire to expose my company to the petty politics involved 
in such large orders as we shall be handling. I believe it wise, therefore, to 
bave a letter of credit opened together with each order, so that there will be 
no opportunity for apparently unexplainable delays which would work hardship 
on us in running up interest rates and charges which rapidly dissipate the 
small margin of profit that we shall have on this business. 

The National City Bank is prepared to cable us through their New York 
office on the same day that a letter of credit is opened, and I shall have 
arrangements made to promptly send partial commission cheques on receipt of 
such cables. 

Very sincerely yours, 

FEn)EBAL Laboratories, Inc., 
, "President. 

JWY.MM. ^ 

8387S— 35— PT 7 16 



1848 MUNITIONS INDUSTRY 

Exhibit No. 637 

Havana, March 31. 1934. 
Mr. John W. Young, 

185 Forty-first Street, Pittf<burgh, Pa., U.S.A. 

My Dear John : In the hope that you are spending a pleasant Easter with 
your family, I send you herewith, by way of a " carinoso " reminder of this 
sunny, lovable land of a thousand imperfections, the latest photo of yourself, 
as sketched by the artist of " El Pais." Don't get too conceited (and don't let 
Mrs. Young frame it) ! 

I am also enclosing a translation of a short article appearing in the same 
issue of the ab(>ve-mentioned daily, which you may find a little more gratifying 
than the newspaper artist's conception of your personal beauty. It does at 
least demonstrate the very favourable spirit in which your valuable aid to the 
preservation of law and order is being accepted here by the people that count. 

Looking eagerly forward to your kind and prompt response to my air-mail 
letter of the 29th, and to your early return here so that we may get things really 
going. I remain with reiterated greetings and good wishes both to yourself and 
Mrs. Young. 

Very sincerely yours, 

Alejandro Texidor. 
AT : MM. 

[Translation of article in El Pais, Mar. 29, 1934] 

Cuba Gives Modest Reward to the Expert Mr. Young, States F. Graneko, 
and His Mission Will be Exclusively Technical, Concekning Gases and 
" Tricks " 

Commandant Franco K. Granero, aide-de-camp and chief of the personal 
military service of the President, while chatting amiably, according to his cus- 
tom, with members of the press visiting the palace, referred to certain state- 
ments that had been published concerning Mr. Young, technical expert of the 
national police. 

Commandant Franco Granero states that Mr. Young is not undertaking any 
other work than that of technical instruction of the national police in the use 
of certain modern processes to avoid assaults and disorders in the capital of 
the Republic, and more particularly in the use of tear gas to prevent and 
quell riots. 

Commandant Franco Granero adds that Cuba is rewarding Mr. Young mod- 
estly when compared with the payments which this expert has received for his 
service in France, England, and in the United States. 

He further adds with regard to the assistant of Mr. Young, viz. Mr. Moore, 
that this gentleman, in addition to assisting Mr. Young, will teach the police 
the use of "tricks" — that is to say, artifices and cunning ways of easily domi- 
nating any disturbers of the public order without the need of having recourse 
to violence- — which special " tricks " are now being employed by the police of 
the most important cities of the world. 



Exhibit 638 

Alejandro Texidor. 

68 O'Reilly St., 
Havana, April Jf, 193^. 
No. 3. 
Mr. John W. Young, 

125 Fortij-first St7-eet, Pitt-iburgh, Pa., U.S.A. 

My Del\r John : I herewith confirm the last cables exchanged between us, viz : 
Mine of April 2nd (coded) : 

" Telegraph if you have remitted $8,000.00. If you have not, please rush." 
Yours of April 3rd : 

"My understanding money payable immediately credit opened. Let's fol- 
low outline my letter March twenty-eight. Two thousand doubtless 
arrived Thursday. Pushing production." 



MUNITIONS INDUSTRY 1849 

Mine of April 3rcl : 

" We positively agreed and it was clearly understood wlien you left that 
upon arrival Pittsburgh you \v(;uld remit me up to $15,000.00, and that 
immediately upon $50,000.00 credit being opened you would increase 
amount to $25,000.00. 8top. Have contracted obligation.s to amount of 
$15 000.00 and having received remittance of $2,000.00 and $5,600.00 left 
by you, must urge you cable me balance of $8,000.00 agreed upon. Stop. 
Am progressing extraordinarily in obtainment total amount credit, but 
must insi.st upcni your financial support as promised when here, espe- 
cially as you perfectly understand local circum,stances." 
Yours of April 4th : 

" Typewritten figures on boats our cost, pencil figures suggested sales price. 
Stop. Friday's understanding reversed to you before leaving, due ex- 
periences Monday, Tuesday. Stop. Rise steel prices made necessary 
eighteen thousand investment armor plate today ; must cover automobiles, 
also due contemplated price rise. Directors object further cash outlay 
until letter credit furnished. Amount cash payment not so important." 
I must confess that your replies have been rather surprising to me, as I was 
pretty sure of my having impressed upon you right up to the last moment the 
entire situation, and was under the certain impression that you fully understood 
everything, especially in view of your having worked with me so closely for 
almost a month. 

In the first place, it was positively understood and agreed between us that 
ui)on your arrival in Pittsburgh you would cable me up to $15,000.00, and that 
upon my obtaining a letter of credit in your favour for $50,000.00, the amount 
of $15,000.00 would be increased by you to $25,000.00. I venture to lay stress 
upon the fact that this was distinctly and definitely understood between us, 
regardless of any subsequent impression that you may have got, as you mention 
in your cable of today. Your experience in the department in questions has 
nothing to do with the department with which I am working, and you know 
perfectly well that I cannot go back on my promises to this department under 
pretext of your experiences with the other. Furthermore, I must remind you 
that the advance of $15,000.00 would come out of the deposit of $30,000.00 wliich 
you actually are holding and of which you still have a balance of $24,000.00, 
after your having already paid out $6,000.00. Therefore, your company, in 
making me the required remittance of $8,000.00, will actually not suffer any 
further cash outlay, as you point out in your cable. 

It is of the utmost importance, John, that we work absolutely together, and 
that particularly at this first beginning, in which we are having so much suc- 
cess, there be no misunderstandings of any kind, as these might prove very 
dangerous for our future business. I know the situation here and all of the 
complicated factors involved, and as I explained to you when here, if we want 
to secure this business, we have to " play ball " in accordance with the local 
circumstances. Therefore, regardless of your cabled statement as to " your 
directors objecting to further cash outlay ", in view of my explanations in the 
preceding paragraph, and your own knowledge of things here, I hope that upon 
receipt of this letter you will be good enough to cable me the $8,000.00. 

Incidentally, I venture to remind you, further, that while you were here I 
actually laid out of my own pocket up to $4,700.00, and have laid out an addi- 
tional amount of $2,500.00 since you left. If my financial position were better, 
you may rest assured that I would not insist upon your making the remittance 
agreed upon between us, but under the circumstances I have no choice. 

Arrangements are under way to open a letter of credit in favour of your 
company immeiliately after the first fortnight of this month, viz, by about the 
16th or 17th of April, and, of course, in the event of any shipment arriving 
(iuring this period, same will be paid for immediately, irrespective of this credit. 
Therefore, you can see from this that I am working just as fast a^ I can in 
our combined interests. 

I am to have an interview today with your friend (viz, the one from whom you 
are holding the deposit), and expect to be able to report to you thereafter in a 
manner that will be very encoui-aging to both of us. 

I have been working very closely with Col. Batista in connection with the 
Cuban fleet, and will write you tomorrow morning, after having had the further 
interview which I am due to have with him tonight, when I shall give you a few 
points that I shall want you to reconsider regarding the prices on some of the 
items. 



1850 MUNITIONS INDUSTRY 

I also have a list of requirements which are going to be placed with you 
officially by the purchasing department, and also have in my possession the cata- 
logue from the United States Ordinance, in which you were so keenly interested. 

In a word, I am devoting every moment of my time now to your business, as 
I feel so encouraged by the bright outlook for the future that I believe my 
investments will in the long run bring me gratifying returns. 

In closing, I want to repeat to you, John, that it is absolutely indispensable 
that you work 1009c with me. You know that I am faithfully honest, and that 
I reahy enjoy working with you, but I am very anxious that there should be no 
misunderstandings which would threaten the smooth progress and development 
of our business, especially as the distance is long and you know how the people 
are down here. 

Looking forward with interest to your early further news, I remain. 
Very sincerely yours, 

Alejandro Texidor. 

AT.MM 



Exhibit No. 639 

Schneider & Co. 

Paris, France, 

April 6, J93/,. 

Gentlemen : We acknowledge receipt of your telegram of April 4th, asking 
us for a quotation on furnishing 1,500 complete rounds of 75 mm explosive 
shells and shrapnel for field artillery. 

Before following the matter to conclusion it is necessary, first, to know the 
country of destination to which these munitions are to be consigned. 

Besides, in the case where it should concern a country in which we are not 
represented and admitting that we would be able to obtain the prescribed 
export authorization from our Government, we would need to know the type 
of material from which these munitions are to be fired ; if it is not a 
" Schneider " cannon, you would have to specify the firing conditions of the ma- 
terial employed (initial velocity, pressure, weight of projectile; number and 
inclination of the rifiing) ; it would be best to complete the information by- 
sending the tracing of the interior arrangement of the cannon in question. 

We wish you to accept, gentlemen, the assurance of our best consideration. 

Schneider & Co. 



Exhibit No. 640 

[Postal telegraph] 

April 18, 1934. 

MiNGTOY, 

Havana. 
Depositing fifteen thousand for your account National City, New York, in- 
struction transfer Havana. Postal telegraph fees two percent. 

Young. 



MiNGTOY, 

Uavwna, Cuba. 

Estimated freight, twenty-five hundred. Estimated shipment next week, 
gases, machine guns, masks, seventy thousand. Tracing your check. We also 
need cash. 

Young. 



FL Deferred cable 4 9 FL Pgh., Pa., April 18, J934. 

MiNGTOY, 

Havana, Cuba. 
Practically all masks, guns, ready this week. Is today's deposit available 
against tliis shipment. (Stop.) Armour plate delaying cars middle May. 
(Stop.) Important deposit apply against entire order, not individual items; 
request commission payments according March twenty-eight schedule. Sending 
heavy air mail today. 

Young. 



("Exhibit No. 641" was marked for identification and is on file with the 

committee) 



MUNITIONS INDUSTRY 1851 

Exhibit No. 642 

April 25, 1934. 
[Letter No. 16] 
Mr. Alejandro Texidor, 

P.O. Box 2055, Havana, Cuba. 

My Dear Alex : I went to Washington Monday to delve further into subjects 
of our mutual interest, but had a great portion of my time taken up by the 
Department of Justice. 

They found out I was in town and drafted me into assisting them in the 
President's anticrime legislation program, and I had to accompany ihe Attor- 
ney General to the Ways and Means Committee meeting and the Senate and 
work on some Itgif^lation. From there I was taken to the Department of Jus- 
tice office for conference on apprehension of Dillinger and his gang, and the 
last three-quarters of the day was lost, insofar as our most interesting subjects 
were concerned. 

I also have been subpenaed by the Government to be in Chicago on May 1 
to assist in conviction of an international counterfeiting ring. They promised 
me they will only keep me in Chicago one day, however. 

These are little interruptions which are aggravating but which are necessary 
to the general welfare of Federal Laboratories with our own Government. 

I appreciate the many problems you have, and would certainly like to be 
•down there with you to help you out. 

Very sincerely yours. Federal Laboratories, Inc., 



President. 



JWY : GO 



Exhibit No. 643 

Habana, May 29, 1934. 
Mr. John J. Young, 

185 Forty-first St., Pittshurgh, Pa., U.S.A. 
Dear Mr. Young : I refer to your kind letter dated May 24th. 
I am very sorry that I did not have the pleasure of seeing you during your 
^visit to Habana. 

I understand that you have put through your project to reorganize the 
Habana police and preparing tliem for the use of gases manufactured by you. 

Under the.se circumstances I think it is time to reimburse me the funds that 
«vere used by the ABC in purchase of certain merchandise that we did not 
receive on account of the change of government. 

Please let me know by air mail what is your final decision on the matter as 
I am anxious to reimburse the people that helped me while I was in exile such 
-a part of the funds that they handed to me as I may obtain. 

This arrangement was made on the understanding that part of the merchan- 
dise that was ordered by me could be used by your company, and that no 
prejudice was to be suffered by the Republic of Cuba, of which I have fully 
informed the president and the cabinet. 
Yours very truly, 

J. MartInez Saenz. 
JMS/BN. 



Exhibit No. 644 

[Letter No. 35] 

June 2, 1934. 

Mr. Aleuandro Texidor, 

P.O. Box 2055, Havana, Cuba. 

My Dear Alejandro: The delays on the letter of credit are breaking the 
morale of my organization. I have worked them so hard to get production out 
on the Cuban orders and then to have the material laying here unable to be 
shipped on account of the letter of credit, and unable to collect for that which 
we have already shipped, has made them lose heart in a lot of the Cuban work. 
We cannot penult this. We must go over the top on Cuba. 

I have been reading in the papers of the disturbances that are coming up, 
and I know this must make Colonel Batista very impatient to get this equipment 
<iown to Havana. 

We are pushing production of the armored cars just as fast as it is safe to 
push it. Please let him know how hard you are working on this. 



1852 MUNITIONS INDUSTRY 

I wrote you yesterday regardiug Martinez Saenz, and uuduubtedly he is the 
one who is holding up this payment. I cabled you today as per attached cou- 
firniatiou, and sincerely hope you can pi-y that letter of credit loose. I am not 
unmindful of my obligation to Martinez Saenz. At the same time I am not 
unmindful of his obligation to me and he has not cracked through. His recom- 
mendation to the (jrovernment to have me train the police was not a payment of 
a debt. It was a new favor which he was extending to the present Govern- 
ment, and I consider our service \\ill be a contribution before we are through 
with them. 

I hope before the day is over I will have your cable stating the letter of 
credit has cleared. With sincere personal regards, I am, 
Yours very truly, 

Fedekai. Laboratories, Inc., 
, F resident. 

JWY : GO 



Exhibit No. 645 

June 21, 1934. 
Mr. Alejandro Texidor, 

F.O. Box 20oo, Havatm, Cuba. 

My Dear Alejandro : I am arranging to send Mr. J. J. Baxter to Havana to 
continue the training of the police. He hopes to arrive there probably Tuesday. 
He might be delayed somewhat on account of taking his car. 

Mr. Baxter has been conducting police sciiools for us. He has just recently 
finished a school for the Ohio State Police. He is a very capable all-around 
man. 

Mr. Baxter will look after tlie details of all of the equipment which we are 
sending down and see that it is properly assembled and put in use. He will 
be on hand to receive the trucks when they arrive, and take care of any of 
the necessary details, so that you will be relieved of any unnecessary bother. 

Mr. Baxter has been in the Philippines and understands something of the 
Latin-American country. I am sure he wdl get along admirably in Cuba. 

Will you, before leaving Havana, arrange so that he can take his car, and. 
drive over the island with Pablo Parez, selling equipment to the sugar mills 
and industrial concerns. If the right support is given him he should sell 
$50,000 to $75,0U0 worth of equipment in a short permd of time. If you could 
arrange for a permit for him to do this work, taking lO'/f over-writing com- 
mission for yourself and a 5% or not over 7^^% commission for your associates, 
I \\ill be willing to underwrite Baxter and let him see what could be done. I 
think there is considerable business to be done with the banks alone. 

It is understood that Mr. Baxter will be at your service without compensa- 
tion when you need him on Government business. That I am willing to pay 
for myself in order to help you capitalize on all of the opportunity which you, 
now have. 

You will find Mr. Baxter 100% trustworthy, and a real diplomat when it 
comes to handling such matters as you require. 
Very sincerely yours. 

Federal Laboratories, Inc., 
, President. 

P.S. Received your cable about the extra magazines and drums for the two 
Thompson guns shipped on the lUth. Immediately wired Auto Ordnance to- 
ship 4 type L drums and 4 type XX magazines. They will probably go for- 
ward tomorrow. When talking with you over the 'phone, nothing was said 
about the drums, and shipment went forward with only two extra type XX. 
magazines. 

Exhibit No. 646 

Export Offices, 
271 Broadway, New York, N.Y., June 20, 193J,. 
Letter No. NY-52 via air mail. 
Mr. Alejandro Texidor, 

Apartado 2055, Havana, Cuba. 

My Dear Alex : I am advised that Mario G. Menocal. Jr.. wrote from Miami 
to a certain dealer in firearms equipment stating that his brother had the Ford, 
agency in Havana and that they wished to buy the following equipment for a 



MUNITIONS INDUSTRY 1853 

Ford car in quantities sufficient to equip sixty cars which the Cuban Govern- 
ment were going to purchase in the near future. He said in his letter that 
they did not warit Federal Laboratories to quote on this order : 2 gas riot 
guns, 1 doz. shells for each. 2 gas billies, 1 doz. shells for each, 2 doz. liand 
grenades. 1 bullet-proof vest, '1 Thompson submachine guns, '1 ammunition pans, 
2 gas masks. 

It appears that they are making an effort to get around us and get in on this 
business. I am tipping you off immediately, as I am sure that you are capable 
of handling this situation in the manner that will be most valuable to us. 

They are certainly a sweet bunch of double-crossers, but it is going to be 
very hard for them or anybody else to- put over a program like this In the 
United States without Federal Laboratories immediately knowing about it. 

I wish you would advise me by return air mail what you think about this 
inquiry. 

I am inclined to quote on it in such a manner that Federal will not appear, 
but at prices sufficiently high to put them out of the running. In this way we 
beat them at their own game. 

I would make the exception to this quotation on the Thompson guns. On 
these I refuse to alhiw anybody in Cuba to quote, as I have gone on record as 
saying that they cannot be purchased through anybody but Federal 
Laboratories. 

Let me hear from you on this by return mail. 
Yours sincerely, 

John W. Young, President. 

fb. 



Exhibit No. 647 
[In pencil: Letter to president Federal Laboratories from (S. Jonas) "Frank"] 

Havana, 6/3/34. 

My Dear John : Rec'd your letter of the 31st. Thanks. 

Several things have happened since your departure, but nothing very concrete. 

Saw Eisner yesterday, and he said he had again been advised that the 
40.000 L/C on the second order would be opened — Re the second L/C on the 
first order, he could give me no information. 

Regarding your remarks on Texidor, I sincerely hope you are right. I have 
yet, however, to find a man who champions him. If it is true that he spent 
all this money in helping the revolution, $50,000 of it belonged to Remington, 
also a large sum belonged to Royal Typewriter and others. If a man uses 
another fellow's money without his consent, there is only one term you can 
apply to him. 

Migoya is being transferred to the stocks to take charge of a detachment. 
Several changes are being made and trouble is in the air. 

If I were you. I would not consider manufacturing the 75'' and 37 m/m 
unless the credit is first opened for the complete lot, because you might be left 
holding the bag. 

Please mail me to Hotel Washington by return mail Canal Zone — prices 
on the above shells with full description of these shells, as I can sell some in 
Guatemala. Also send me particulars and prices on the Cowdrey gxm. 

Note your remarks re Colombia, which are quite interesting. According to 
a letter received from Rich, however, Driggs is going along with his contract. 

Write me by return mail to Canal Zone. Remaining there a week and will 
then decide where I will go from there. Keep me informed re the Cuban situ- 
ation as to payments, so that if I am returning here I can follow them. 

Regards, in which Grace joins, 
Sincerely, 

Frank. 



1854 MUNITIONS INDUSTRY 

Exhibit No. 648 

October 19th, 1933. 
Messrs. Federal Laboratories, Inc., 

Pittsburgh, Pa. 

(Attention of Mr. J. W. Young.) 

Dear Sirs : We would refer to your communication of October 3rd, copy of 
which you sent us by air mail. 

We liave read your letter, as well as some supplementary letters on the same 
subject written by Mr. Jonas, with great interest, and today we have been in 
contact with Mr. Gandara, recently returned from Cordoba, and he tells us 
that before the end of the week we will have a firm order for one pair of X-^ 
smoke-spraying apparatus, which will come from the Cordoba factory. Regard- 
ing the price at which you will invoice this material, we will go into that in a 
separate paragraph. 

We agree with you that it is wrong to sell the Government anything but 
Monel metal, and the Government is convinced that they cannot use smoke 
sprayers unless they are of this metal or better. 

Regarding the question of price, please refer again to our letter of September 
21st addressed to Mr. Jonas. On rereading our letter we find that it is very 
ambiguous and subject to misinterpretation. The prices which we quoted are 
per unit, therefore the pair would be twice the amount as stated in our letter ; 
in other words, one unit, as quoted by the Lake Erie, is $650, but if a pair is 
ordered or two units it means that the price would be $1,200 the pair, whereas 
you quote $1,300, their price thus being $100 under yours. 

Mr. Gandara tells us that when we get the order from the Cordoba factory 
for the first pair it would be advisable for you to bill at a price of $570 each ; 
that is to say, the price at which Lake Erie is quoting two pairs or four units. 
Once this is established we no doubt can get the buying office of the Cordoba 
factory to adopt the Federal as the standard, in which case prices will not be 
asked from competitors on future purchases, but the business will come direct 
to us. 

On receipt of this letter, and taking as a basis the price of one pair as $1,140, 
we would ask you to please send us a quotation for 5 pairs, 10 pairs, and 20 
pairs, in order that we also can put on record our quotations for their future 
reference. 

In this airplane business there are a great many people that have to be 
taken care of besides our contact man, Mr. Gandara. therefore in your reply 
please tell us what our maximum commission on this business will be in order 
that we may be guided accordingly. 
Yours very truly, 

RL/GHS. . 



Exhibit No. 649 

August 1, 1932. 
Messrs. Fedehax. Laboratories, Inc., 

Pittsburgh, Penna. 

Dear Sirs : We would acknowledge receipt of your telegram of the 30th ult., 
received today, in which you advise us that you can only allow 10% commission 
and 3% guarantee, otherwise you cannot accept the order, and asking us to 
reply by telegram, to which we have replied as per copy attached. 

You can understand that our compromise opposite the Montevideo police 
must be fulfilled, inasnmch as we have taken the order in our name for your 
account ; therefore, even though you paid us no commission, we would be obliged 
to make delivery, and it is for this reason that we said under the circumstances 
we must accept. 

If you will refer to your previous correspondence in connection with dis- 
counts, commission, and so forth, you will find that you have advised us that 
we were authorized by you to quote to the police departments up to 25% dis- 
count, and that we wore to be protected with our 25% commission ; therefore 
we do not understand your telegram. 

It is somewhat disheartening, we must say, to receive a telegram of this 
nature, not so much for the dollars and cents implied but on account of the 



MUNITIONS INDUSTRY 1855 

fact that it seems to the writer that we have never been able to get things down 
to a tirm footing as far as prices and commissions are concerned, and it cer- 
tainly would please us to know just once and for all what this situation is, in 
order to be guided thereby in the future, as otherwise we are liable to make an 
arrangement of some kind at some future date which will cost us money instead 
of making money for us. As j^on are so many thousands of miles away from 
us. it is a most difficult proposition to come to a perfect understanding by 
correspondence, especially so on account of the fact that there are many times 
when things that could l)e settled by word of mouth cannot be written. There 
are many occasions when we are forced by circumstances to pay commission to 
third parties, which naturally comes out of our commission, and if we are 
calculating on 25% and same is cut to 10%, we having compromised ourselves 
for 10%. let us say, it means that we send you the order and make no profit, 
which not only is unfair but also unprofital)le. 

The work that we have done for you in the propagation of the material you 
manufacture is something that you cannot gauge. Perhaps it will be a sur- 
prise for you to know that when the newspapers speak about tear gas they call 
it Federal gas. and when they talk about the weapons they talk about Federal 
guns. In this connection, under separate cover, we shall l>e very glad to send 
you clippings from the local papers in connection with the rounding up of a 
band of thieves, which is interesting. The fact of their referring to Federal 
weapons and gas is nothing more or less than the result of the work which we 
have done. Let us consider another aspect which perhaps you have not con- 
sidered. "While it is true that you may consider 25% commission as a large 
one for the work which we do. I wonder whether you have ever considered the 
fact that we have spent thousands of dollars on trips through the intei-ior 
propagating the use of tear gas, and in practically every Province of the Re- • 
public, without considering the fact that a special trip was made to Chile and 
several special trips to Uruguay, solely and exclusively with the object of 
interviewing people whom it miglit have been possible to interest in Federal gas- 
It is unfortunate that the wrier is not in a position to, or perhaps it would 
be better to say, finds it impossiible to, make a trip to the States at this time, 
as we are sure that with a personal interview we could do more in an hour, as 
far as getting down to some basis is concerned, than correspondence will 
ever do. 

Regarding Bolivia and Paraguay, as far as Bolivia is concerned, we are 
daily awaiting advices from our agent in La Paz. giving us some definite reply 
in connection with the business we have pending with that Government. Imme- 
diately on receipt of his reply, which we expect will be in the affirmative, we 
will, as promised in one of our letters to him, take the first train for La Paz 
and see if we can finally close this business, which should amount to some- 
thing. If anything should develop within the very near future, we would 
naturally immediately telegraph you, telling you just what the situation is. 

As far as Paraguay is concerned, we are in daily touch with the military 
attache of this city for that country, and we expect some time l)etween today 
and tomorrow to have some news from him ; in fact, the writer has an ai^point- 
ment with the attache for this afternoon, and it is possible we may sui)plement 
this letter in the event of his having tangible news which may be of interest 
to you. 

Not having heard from you further to our recent cable requesting that you 
get in touch with Mr. Insfram at Washington, we assume that you are either 
in direct communication with him and awaiting further advices or that he is 
waiting instructions from his Government, and that you have nothing to tele- 
graph us about until such time as these instructions are received. It is neces- 
sary that you keep in touch with us in this connection, in order that we can 
follow this proposition just as closely as possible. 

As far as the gas grenades for artillery use are concerned, and about which 
you asked particulars, we shall no doubt have this information today ; and if we 
see that there is active interest in this material on the part of the Paraguayan 
Government, we will telegraph you the details. 

Your further communications with regard to the above are awaited with 
interest. 

Yours very truly, 

Leon & Bonaseigna, 



1856 MUNITIONS INDUSTRY 

ExHiriT No. GHO 

Leon & Bona8EX5NA, 
Buenos Aires, September 22nd, 1931. 
JMr. Frank Jonas, 

312 Broudwaii, New York, N.Y. 

Dkab Frank : I am writing you in a personal ^ay ratlier than from tlie lirm 
as I do not want this letter to go on record, it bAing a private letter from me 
to you. I am referring to your letter of September 12tli, air mail, received 
this morning, in which you transcribe a letter which you had from Mr. Young. 

With all due i-espect to Mr. Young, and keej)ing in mind the luct tliat he is a 
live wire and watches world's events, I would hate to have him think that we 
at this end are fast asleep ; in this I refer to the letter which you transcribe 
and the recent events in the Chilean Republic. 

For your information, which you can pass on to Young if you think it desir- 
able, possibly on the same day he wrote to you we wrote to the Minister of the 
Interior of the Chilean Republic on exactly this same matter. Furthermore, we 
have been insistently writing to the different governments — by this I mean to 
say cabinets, they having changed periodically week by week — calling their 
attention to the necessity of adding gas as standard equipment in the army 
and navy. 

Apart Irom this, we have been quietly working through the Chilean Embassy 
in this city, and it might be well for you to know that only yesterday I had a 
long interview with the Ambassador, and that on Thursday's Trans-Andiue, 
copy of a letter I am writing him today and with whatever remarks he wishes 
to add, is going forward to the proper authorities at Santiago, and requesting 
.an immediate reply. 

Further, for your private information — and this I would not like to have go 
any further — I have been notified privately by Major Velasquez, head of the 
police guard, who are the military officials in charge of the police department 
in Buenos Aires, that they had had a private request from the Minister of the 
Interior of Santiago to the Minister of the Interior of this country to loan them 
any part of the Federal gas equipment which they have here, which equipment 
the Chilean Government would return to them in due course. 

In other words, I want you to know that there are many things that we 
do not write about, liecause we think it unnecessary. What the Federal people 
vpant are results. Up to the present time, while business has not been large, 
we at least have given more time to Federal equipment this year than to any 
other individual line we handle. Furthermore, that while they may think 
they are paying us a very large commission, that this is not the case, as it is 
costing us a great deal of time and money in trying to develop this business. 
I have taken at least five trips to the interior cities, all for our account, of 
which I have never made mention. While it is true that we have not had 
material results from these trips, I can tell you that we are going to get them. 
The Federal people know that we have not had material results from these 
trips ; I can tell you that we are going to get them. The t^ederal people know 
that this takes time, and so do we. It might further interest you to know that 
on Friday last I pulled off the best demonstration that it is possible to make at 
La Plata in the presence of the (Jovernor ad interim, the chief of police of the 
Province of Buenos Aires, and the Inspector General of the Province of Buenos 
Aires, and about three hundred spectators, including approximately one hun- 
dred secret-service men. The actual firing was done by Captain O'Connor, of 
the Buenos Aires military police guard, who happens to be the head of the 
vice squadron of this city. The idea that I am trying to put over is that we 
are not sparing time or money, because this all costs money, in the endeavor 
to make the Fe<leral Laboratories line a big line, which sunietime we hope will 
produce results. 

Now, let us look at the other side of the picture. We are today in receipt of 
an air-mail letter from the Federal Laboratories, signed l)y W. T. Neill, whicli 
states that as per your request they are sending us some catahigues, and so 
forth. These catalogues will Ite very welcome once they are received, because 
we are at present not only in touch with the airplane factory at Gordoba, head 
of the military aviation of this country, but also with Captain Marcosi A. Zar, 
head of the aviation division of the Navy, and Lieutenant A. Gomez, chemical 
t^nginwr, also of the Navy. Once I am in receipt of these catalogues I will 
continue my work and hope to be able to do something that will bring results. 



MUNITIONS INDUSTRY 1857 

lu Neill's letter they go on to say that they have considered the problem of 
quantity discounts very thoroughly ; that they want to meet European com- 
petition, and so forth, and give us a schedule of discounts which siupercedes 
all others previously quoted. They give us as a maximum discount 207o, which 
is for orders for $10,000 gross. 

We do not wish to make any comments on the way they run their business, 
becau,s^ after all they know what their costs are, and know how far they can 
go in discounts. Looking at it from our side of the fence, however, if this 
is the best they can do, then we had better discontinue our efforts opposite 
the minister of war, with whom we are in treaty at this time, as it is not 
possible to quote them 20% discount on quantity lots after having actually 
sold them with a discount of 25%. We do not wish to be dictatorial in any 
way, the issue at present being that we must either desist from offering further 
goods to the War Department or that the Federal people authorize us to con- 
tinue quoting 25% discount. In their letter they state that we, of course, are 
at liberty to make further allowances out of our commissions, but this we 
absolutely refuse to do. I)ecause we think it is unfair. 

On receipt of this letter I think it is important enough that you take a 
train and go to Pittsburgh, discuss the matter thoroughly with Mr. Young, and 
immediately thereafter telegraph us the result of your interview, and we will 
act accordingly. 

There is just one more matter before closing this letter. I am negotiating 
with Bolivia, and at present have a pro-forma order on my desk. I assume it 
is O.K. for me to work Bolivia, for, asi I understand it. you have no connection 
there. I have compromised myself, as far as commissions go. opposite my 
agent in La Paz, who happens to be a personal and intimate friend, and who 
further happens to be a senator in that republic. It is necessary that in your 
cable you advise me whether or not I am authorized to go ahead. For your 
private information, it is po.ssiiide tliat I may have to go to Bolivia, in which 
event I would take advantage of the trip and go to Valparaiso via Antofogasta. 
If it is necessary that I take this trip, it would be interesting for me to know 
how nuich the Federal Laboratories would contribute towards the expense of 
same. 

Summarizing: I think that with the information this letter imparts, Mr. 
Y'oung can form a pretty good idea of what we have done and what we are 
capable of doing, and it is now up to him to let us know just how far he will 
meet us. If Mr. Young isi liberal in his ideas and gets to the point where he 
will cooperate with us morally and tinancially. we can then do a great many 
more tilings than we have in the past, feeling that we have both his financial 
and moral support, and that he realizes that we are working not only for our 
own interests but for his. 

Please be .sure, just as soon as possible, after receipt of this letter, that you 
telegraph me in order that I may know the exact posiition. Please do not skimp 
words, because our future actuations will depend on what you tell us. I do 
not propose writing Mr. Young with respect to the disc(mnts ; we will merely 
acknowledge receipt of his letter and tell him that any negotiations with 
respect to details should l»e handled by you. It is much easier to do this by 
word of mouth than writing. 

With best and kindest regards, I am, 
Very sincerely j'ours, 

Raoul. 



Exhibit No. 651 

Leon & Bonasegna. 
Buenos Aires, Auffust 1, 1932. 
Mr. Frank Jonas, 

312 Broadway, Neiv York Cifij. 

Deiak Frank : I am just in receipt of two communications from you of July 
18th. 

If it were not for the fact that I can see probabilities in connection with the 
Federal Laboratories account, and that I expect to be able to do some business 
and make a few honest dollars within the course of this year, I do not mind 
telling you that I wcmld send the account to hell, and take up the Lake Erie 
account, which I can have for the asking. I do not pretend to tell .vou how I 
can get it, but I do not mind repeating that all I have to do is go and get the 
account, in which event the Federal could whistle. 



1858 MUNITIONS INDUSTRY 

We are today in receipt of a cable, of which no doubt you are cognisant ; but 
if you are not, here is what it says : 

" Reference Montevedio order can only allow 10% commission and 3% guar- 
antee ; otherwise cannot execute ; reply. Federal." 

and I am attaching hereto copy of my air-mail letter of this same date to them, 
which is self-explanatory. 

As stated in the letter to the Federal, it is all very well for them to cut 
down our commission, but how the devil do they know just what our ari-ange- 
ments are here with the bunch of grafters we have to deal with. It is hard 
enough trying to do business and guaranteeing dollars, when dollars are not 
available, without having a thing of this sort come up at the psychological 
moment, and after the initial work has been done and the initial order placed. 
Frankly I do not understand it. I think, Frank, that you should get after these 
people and settle the proposition once and for all. Furthermore, if we are to 
continue doing woi'k for the Federal Laboratories, we want some kind of a 
contract with a fixed date ; that is to say, we want to be sure that we are their 
agents for a determined length of time, at a determineil rate of commission,, 
and with set discounts when business is to be done with police departments and 
governments, otherwise both you and we are in the air as far as this account 
is concerned, which is unsatisfactory and unbusinesslike. 

The Federal people must think that we are making a pot of money out of 
this, when this is not the case, for if it is true that we make a good commission, 
it takes months of time to accomplish a job, and a great deal of expense, apart 
from the fact that we are gradually developing a business for them in South. 
America which is costing them nothing to get and which will remain for them 
the day they choose to no longer have us represent them in this part of the 
w^orld. This is obviously unfair, and while there is still a chance, we wish to^ 
correct it if possible. 

I now make special reference to the smoke-screen attachment and your re- 
marks in connection with them. I remember perfectly that you spoke to me 
about the smoke-screen attachment and that you advised that both Curtiss and 
United were authorized to sell smoke-screen attachments together with their 
planes. On the other hand, you told us there was no objection to our selling, 
smoke-screen attachments if we could get the order. The proof that this is as 
we state, that if the company did not want us to sell smoke-screen attachments, 
there would have been no necessity on their part of writing to us sheets and 
sheets with respect to same and quoting us prices, neither would it have been,, 
necessary for them to telegraph us prices in connection with it. The point of 
view as taken, in my opinion, is completely wrong. Do not think for one mo- 
ment that the Argentine Government buys planes only from the United States. 
Why cannot we sell smoke-screen attachments to the Government to be placed on 
the planes, not only bought abroad, but manufactured right here in Cordoba. 
I think the point of view as taken is absolutely absurd. Moreover, the smoke- 
screen attachment in which Captain Zar is interested are for planes already 
acquired and have nothing to do with the planes wliich they will purchase from 
Wright or United in the future, at which time no doubt they will specify the 
equipment which has to go with the plane. 

I am afraid, Frank, that you are all wrong and that it will be necessai'y for 
you to go into this matter carefully with Mr. Young, calling his attention to 
these facts and showing him that this procedure will only tend to lose the 
business. If there is any misunderstanding, the misunderstanding is on your 
part, or better said, there is an error in conception somewhere. Please let us 
know their final decision on this matter, without losing si.ght of the fact that 
the airplane people's business is to sell airplanes, and ours is to sell Federal 
equipment. 

Regarding tlie other letter on the Thompson guns, it will be interesting for 
me to know whether the inquiry to which you refer was for the Argentine or 
for Brazil. 

While on the subject of Thompson guns it would be interesting for me to 
know just what connection the old finn of Portalis <& Co. had with Thompson. 
and some details with respect to the Thompson guns wliich the Paraguayan 
Government bought from Portalis & Co. some years ago. It is very important 
that I have this information. 

As far as the bill for the magazines is concerned, please be advised that we 
have already sent the Auto Ordnance Corp. a cheque covering their lull, 
therefore this matter is closed. 



MUNITIONS INDUSTRY 1859 

Just as soon after receipt of this letter as is possible, and once you have seen 
Mr. Young. I would appreciate it greatly if you will take the matter up with 
me by air mail in order that I may know just exactly what the situation is. 
Yours very truly, 

( Signetl ) Raoul. 

KL : GHS. 



Exhibit No. 652 

Kendrick van Pelt, 
Representacoes Praco Ramos de Azevedo, 16 Predio 

Gloria, Sao Paulo, Brazil, 

Sao Paulo, Ajiril 15, 1933. 

Telephone 4-1042 

Cable address : VANPELT. 

Mr. Frank Jonas, 

277 Broadway, New York City. 
Dear Frank : On my recent trip to Rio, I heard that the order for tear-gas 
bombs had been placed with some competitor thru the son of the chief of 
police here and that the price had been increased approximately $1,200 as 
part of the greasing operation. I have not yet been able to discover who the 
Emprezas Promotora de Vendas is, but I expect to go to Rio tomorrow and 
since you give their address I shall try to find out something about them. 
Sincerely, 

(Signed) Kendrick van Pelt. 

KVP/ME 



Exhibit No. 653 

New York, .Y.Y., Auffust 27, 1932. 
^Ir. John W. Young, 

Federal Lahoratories, Inc., Pittsburgh, Pa. 

My Dear Mr. Young : I am in receipt of your letter of August 26th, and as 
soon as I receive the Brazilian order will telegraph you. I had dinner with 
Mayrink last night and he told me the order had already been made for me, 
tut expected satisfactory credit arrangements with United Aircraft either 
this morning or on Monday. The credit has already been established but was 
not satisfactory to the banks up here; however, according to Mayrink, it is 
now being arrangetl in accordance with the banks request. 

I note your remarks regarding 10(S commission each on the hand grenades. 
You formerly quoted me a price of $1.80 and I am figuring on a 10% commis- 
•sion on this item. 

For your information, I will have to do a little greasing at this end so it 
will be necessary to pay me 10% on the hand grenades. For your information, 
I know that they have been quoted elsewhere $1.80 

With best regards, I am, 
Yours very truly, 

FSJ : RL 



F. S. Jonas. 



Exhibit No. 654 
[CC-Factory] 



March 3, 1934. 



Mr. John W. Young, 

c/o Mr. Neufer, American Commercial Attach^, 

Habana, Cuba. 

Dear Mr. Young: After our telephone conversation I went down to see Mr. 
Li and gave him the quotations and later confirmed in accordance with copy of 
letter sent to the factory. 

Mr. Li particularly inquired as to loading charges, and while I felt quite sure 
that there were none in South Amboy, in the light of your experience in 



1860 MUNITIONS INDUSTRY 

Gibbstown, where they slaiipeil on an unexpected $-400, I thouLiht I would play 
safe and set a contirinatiou from you. 

I had quite a little talk with Mr. Li and several rather interesting points 
oanie up. As I sat with him, he turned to his secretary and said, "Take this 
cable to Minister Coiiff ". and proceeded to (junte on our bombs. I would jiot 
suggest doing anything in an overt manner, but inasmuch as this Minister Cong 
seems to be Mr. Li's direct contact, it would be interesting to know or learn 
through our State Department, if we could do so judiciously, just who this 
Minister Cong is. I, of course, do not know whetlier this motion on his part 
was some Chinese subtlety. There didn't seem to be any occasion for him to 
start his cable in my presence, and I am wondering if this gesture was de- 
libciate'y intended as a blind. However, perhaps it was not, and it would be 
interesting to learn who this bird in China is. This particularly in view of 
the following remarks I am going to make. 

While he mentioned no names, he did limber up a little more frankly with 
regard to wdiat he is so pleased to term our " misrepresentation "' in China. 
From what he said, there is not the slightest doubt that someone, in misguided 
enthusiasm and eagerness to make a sale, very undiplomatically offered a 
In-ibe to some Chinese official, apparently without having received any indica- 
tion from said official that any personal remuneration would be acceptable. 
Mr. Li says that they are very highly incensed over there, due to this act on 
the part of a Federal representative. 

He went on to elaborate how it had come under his observation that several 
American companies (not mentioning names) had gotten in very bad through 
somewhat undiplomatic acts in China and how in one or two cases their com- 
pany had taken over the representation and succeeded in reestablishing those 
companies in the good graces of Chinese officials. 

He then remarked that he would be interested in acting for us in the Chinese 
market. As you will recall, that is a complete reversal of his remarks to you 
and me the other day that he was not interested in representation. However, 
as I believe I have mentioned to you, I have for some time had the hunch that 
they are interested in handling our line. 

One of the companies that he mentioned as liaving gotten in bad in China 
through " misrepresentation "', and whom they had been able to reestablish, was. 
the Diebold Co. I remember that on one occasion you told me something about 
a hook-up in domestic business between Diebold and Lake Erie where Lake Erie 
had double-crossed them. 

After conversation covering all the foregoing matters, Mr. Li inquired if it 
would be possible to arrange to have this initial order shipped and billed by 
some other company, for instance, Du Pont, making it appear as though these 
were, say, Du Font's bombs. He said that his purpose in this wo\dd l)e'to free 
this shipment of any taint that would attach to it going forward as Federal 
shipment. After they have tried our bombs and found them entirely satis- 
factory, then he would plan to inform them that these bombs actually were 
Federal. 

On that basis, however, he deferred taking this up with you until the moment 
of placing the order. He did not mean that this would be a condition of the 
order but simply to consider the matter at that time. I am informing you of 
this unofficially just to keep you posted. Mr. Li's thought was to say nothing 
about it until placing the order. 

Everything about these dealings with Mr. Li and bis various inquiries is to 
be sure somewhat strange and unusual, Init I am inclined to feel that there is 
some good solid meat to all this, and I am distinctly hopeful of something real 
developing. 

Mr. Li told me that he fully expects a decision the early part of the week. 
I will cable you if the developments are interesting to us. 

Wishing you the best of luck with your undertakings in Cuba, I am 
Yours very truly, 

C. W. Rich. 
CWR/fb 



MUNITIONS INDUSTRY 1861 

Exhibit No. 655 

[Air mail] 

Colonel B. deSanta Anna, 
c/o E. Dagnino, 
Gobernacion, 
Caracas, Venezuela, 
Cable : Colbdesa. 

Caracas, Venezxjela, June 1^, 1932. 
Fldekal Laboratories. Inc., 

18.J Forty-first Street. Pitts'burgh. Pa., U.S.A. 

Dear Mr, Young : Acknowledging your letter of May 23, I wish to express 
to you my appreciation for the military films which you are sending to me to 
be shown to the President. General J. V. Gomez. 

I did not receive theni yet, hut as soon as they arrive and the demonstration 
is made I will return them to you. 

At June 9, 1932, I secured a good order for you from the government here, 
but. owing to the interference of Mr. Jonas in my territory, I ask this order 
to be cut until I straighten with you the intention of this man, which with his 
funny tactics is making prejudice to your corporation in the territory where 
I am working for your behalf. He may get many letters from the President, but 
the orders will come through me. 

I represent several good U.S. factories in Venezuela and South America, and 
I have their best cooperation for the benefit to the work I am doing for them. 
Using his influence. Mr. Jonas got restriction of my territory, and the arrange- 
ment made between you and me, and with his consent,, was eliminated. Now, 
when I am right in the work for your benefit, lie is procuring to get the busi- 
ness directly, ignoring the fact that I have introduced your line to General 
Gomez since 1930. as representative of United Aircraft Export Co., and since 
November 1931 I am working as your representative here. 

At last, do you mind to tell me, am I representing you here on 20%-commis- 
sion basis or not? Please make it clear to me and to Jonas also and confirm it 
by written argreement ; otherwise I do not intend to lose time for business In 
which is mixed such inconvenient persons as Jonas, when I have good oppor- 
tunity to work with somebody else, which is offering the style of your goods 
for exactly 20 and 40% less than your prices and giving the goods c.i.f. at 
Venezuela. 

Not only your orders, but many others are given to me, and I may dispose 
of them the way I like. So. if you intend to get business here, please tell to 
your export department manager to keep inside of my territory. Owing to the 
interference of this man in my business for your benefit, your corporation lost 
exactly $38,800.00 since February 1932 in three countries, exclusive \enezuela, 
in which I was working for your behalf. 

The sample order will consist of: 

Ten Federal gas riot guns at $65.00 $6.50.00 

Fifty long-range projectiles (tear gas) 8.00 400.00 

Fifty short-range projectiles (tear gas) 6.00 300.00 

Ten cases for carrying the projectiles 6. 00 60. 00 

Ten protective maces 25.00 250.00 

Total 1, 660. 00 

The prices are from your catalogue, and the price for short-range projectiles 
is given not $5.00 but $6.00 each. 

I have ready very good order for you, which will be given to you as soon 
the experiment is made with the materials of the first order. With this I am 
opening new market for your line here, and from you will depend the future 
business, to compete with the British, French, and Swiss competitors here. 

The Government likes to have the goods shipped c.i.f. La Guayra at that 
price, and I did not discuss the matter, first to give you chance to get in and 
because I hope you will consent on that, specially when I remember you told 
me in November 1931 at Hotel New Yorker that the prices on the Federal gas 
riot guns and projectiles are old and may be cut considerably, even though in 
sniall quantity, without affecting my commission. 



1862 MUNITIONS INDUSTEY 

From $1,660.00 I deducted $50.00, which is the difference between your and 
my price on short-range projectiles, so the order for you is $1,610.00. 

From that amount I deducted my commission of $322.00, or $322.00, and 
$50.00 is $372.00, is deducted of $1,660.00, and will give to you $1,288.00 

Of that amount, 35%, or $450.00, is sent by me to you as deposit and 65%, or 
$834.00, will be paid to you against documents of shipment at New York, 
through National City Bank, N.Y.C. 

The time of delivery is not indicated, and I leave it to you, hoping that 
you will do your best to send the goods soon possible. The shipment must be 
consigned to Ministerio de Guerra y Marina, Venezuel, via La Guayra. 

Remember, it is good order pending for you and from the prompt delivery 
of the first will depend the confirmation to the second one. 

I am including the letter of the Secretary of War to me of June 14, 1932, as 
confirmation to this sample order and will appreciate if you I'eturn it to me. 

As you have very serious competitors here and to compete with them and to 
get the order for you which means a permanent future business here for you, I 
have to give away all my commission ; officially to the Government 50% and 
inofficially the rest. As I have special arrangement with the people here, I will 
ask you not to work directly and to make all your offers through me, as your 
representative, because you may make some mistake which will have bad con- 
sequence for your future business here. 
Sincerely yours, 

COLONEIL B. DE SaNTA AnNA. 

P.S. — At June 9 I send you a radiogram : Order confirmed, airmailing details 
stop disgusted interference Jonas my territory. 



Exhibit No. 656 

July 11, 1934. 
Federal Laboratories, Inc., 

Pittsbm-ffh, Pa. 

Gentlemen : We are happy to advise that Mr. Jonas succeeded in interesting 
the Government of Costa Rica in making a trial of our equipment, and we 
are listing below the equipment ordered. 

Mr. Jonas had an exceptionally hard time in this, as Huber had just been 
through all of these territories, and his visits had naturally not done us any 
good. 

As it will be necessary to take care of a number of people down there, Mr. 
Jonas made special prices in some of the items, which he asks that you allow, 
as he is confident that if the demonstration of this equipment goes off well, large 
orders will result. Y^ou know that Major Harris is to demonstrate this equip- 
ment for the Government. 

The order is as follows: 

Net price to Jonas 

1 21 AC Thompson $146.67 

1 type L magazine 14. 70 

6 standard CN tear-gas bombs IS. 00 

1 No. 80 gas mask 12. 50 

1 gas billy and 3 cartridges 13. 50 

3 Protect-O guns 9. 00 

1 dozen cartridges for Protect-O gun 2. 00 

50 Protect-O guns 150. 00 

1,000 Protect-O gun cartridges 166. 67 

10 billies and 50 cartridges for same 180. 30 

Please prepare this material for shipment and advise when ready, when we 
will give you shipping instructions. 

Yours very truly, 
f.b. C. W. Rich. 

P.S. — This material is to be invoiced and shipped direct to us. 

( ;WR. 



MUNITIONS INDUSTRY 1863 

Exhibit No. 657 

July 7, 1933. 
Mr. John W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 

Db^ar Mr. Young : I succeeded in getting hold of Mr, Yerex. 

I cauglit him when he was on the point of placing the order with Mr. Huber, 
of Lake Erie. I was fortunately able to convince him that he should buy 
Federal materials. Although he first tried to put off the actual signing of 
the order, pending a trip to New Orleans, etc., I got him out to lunch, he and 
two lady friends (all expense and no pleasure involved), and succeeded in 
getting his name on the dotted line, as per the order I sent you yesterday. 

As you know, we have been expecting the bomb business to be controlled by 
Col. Izaguirre and this was switched from his hands into Yerex's, who stated 
that the government had to have all the discounts. Yerex called up Izaguirre 
and explained the matter to him. 

Lake Erie had quoted $27.40 and in that price had a little over $300 allowance 
for Yerex. Yerex finally agreed to place the order with us on the same basis, 
and that brought our price to list less 20% and 2%, or $25.87. Inasmuch as 
you had already figured on a 20% and 5% basis when we expected to go through 
Izaguirre and Galiano, this is really a 3% saving, not to mention the additional 
percentage which you had figured on for Galiano. 

It is too bad that the switch took place at the last moment, cutting out 
Galiano and Izaguirre. Yerex has authorized me to pay Izaguirre the $305.60 
difference between the selling price and our list less 20% and 2%. Just as I 
started to write this letter, I got a long-distance call from Izaguirre, who had, 
of course, already been informed by Yerex and I confirmed it and told him 
that I would give him my personal check just as soon as I was informed that 
the money is available at Baltic Shipping Co. 

He told me that this trouble and mixup had all been caused by friend Huber, 
who had telegraphed the Minister of War in Honduras and had also been after 
the Honduras consul here, informing them that our price was way too high. 
All that he accomplished was to lose money for others without getting anything 
for himself except a black eye in certain quarters as we can readily imagine. 

As informed on the order, this shipment is to be consolidated with the 
Salvador shipment. 

Very truly yours, 

Frank S. Jonas. 

CWR/fb 

P.S. — The invoices to Honduras is to be billed at $27.40 per bomb and the 
practice bombs at $4.00 each. 

There will also be $8.64 discount or commission on the practice bombs. I will 
therefore pay Izaguirre $314.24,^ 

Exhibit No. 658 

Mat 26, 1932, 
Mr, D. L. DiEHL, 

Union Trust Building, Harrisburg, Pa. 

Dear Mr. Diehl: I am wondering if you have any connection in the State 
executive office that we could use at this time. We have a case with the 
Pennsylvania State police;- Major Adams is a personal friend of our com- 
petitor, and the last time when the bids were equal, he gave the business to 
our competitors out of Cleveland, Ohio. This time he has written specifica- 
tions around competitors product, and we know it is going to take something 
more than usual to crack him loose. 

When we talk to the major, he is very nice, but that doesn't get us the 
business. In case of State unemployment we certainly need to place all busi- 
ness in the State of Pennsylvania that we possibly can. The order amounts to 
approximately $1,000, but the most important part of it is that our competitor 
will use it to claim that our own State purchases and uses his equipment. If 
you have any influence with the supplies department we will certainly 
appreciate it. 



* Written in ink. 

83876— 35— PT 7 17 



1864 MUNITIONS INDUSTRY 

You will be interested in knowing that we are showing a reasonable profit 
so far this year ; that this morning we received the award for the annual con- 
tract with the Government on this equipment. We are getting exclusive busi- 
ness of most of the leading police departments today. We would hate to lose 
this Pennsylvania State order. The order is for 6 riot guns and 90 shells for 
same. 

Thanking you in advance, I am, 
Yours truly. 

Federal Laboratories, Inc., 
President. 



Exhibit No. 659 

[Western Union] 

ScBANTON, Penn., ApHl 11, 1933. 
John W. Young, 

Federal Laboratories, Inc., 
Have wired Brandt, Coyne and Mansiield. (Stop.) Whom do you have on 
the ground in Harrisburg and how can I reach him? 

Roy G. Bostwick. 



[Postal Telegraph] 

Pittsburgh, Pa., April 11, 1933. 
R. G. Bostwick, 

Care of Knapp, O'Malley, Hill, and Hai-ris, 

Eleotric Building, Scranton, Penna. 

Mister Spann promises us his support in the house. (Stop.) He suggests- 
you wire Mansfield stating you are against bill number nine ninety now before- 
senate. 

Young, 

Federal Laboratories, Inc. 



Exhibit No. 660 

[File to 1933] 

May 19, 1933. 
Mr. John W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 

Dear Mr. Young: Commander Strong today called me on the telephone and' 
told me that you should not have written to the State Department requesting 
that he inspect the bombs for Honduras. 

He has. therefore, asked me to have you write the State Department to the 
effect that you had asked him to make this inspection and that he had refused 
to do so. He will, however, be pleased to make an inspection for you privately,, 
but does not want it to be known publicly. 
Very truly yours, 

Ik Frank S. Jonas. 

FSJ/fb. 



Exhibit No. 661 

October 20, 1932. 
James H. Strong, 

Lieut. Commdr., U.S.N., Philadelphia, Penna. 

My Dear Comm. Strong: If you have not already received a letter from Mr.. 
Frank S. Jonas suggesting that you meet him at #56 Pine Street, New York 
City, any day this week, preferably Saturday, T wish you would write him and 
arrange to meet him at my oflSce, room 810, at that address. 

Mr. Jonas was in Pittsburgh Monday and Tuesday of this week and received 
instructions from me as to what he should do. If you are not going to be in. 



MUNITIONS INDUSTRY 1865 

New York, please advise the most suitable time to meet you in Pliilaclelphia and 
he will come down there at our convenience. 

I am very definitely counting on you to line us up for some additional busi- 
ness. I expect to be in New York the latter part of next week myself, and I 
would like to see you while there. 
Very sincerely yours, 

Federal Laboratories, Inc., 

— , President. 

JWY : GO. 



Exhibit No. 662 

May 15, 1933, 
Commander James H. Strong. 

5S05 North 16th Street, Philadelphia, Penna. 

Deab Commander Strong : Saturday I had the pleasure of talking to Mr. 
Carlos Izaguirre, charge of affairs, Legation of Honduras, Washington, D.C., 
who is interested in purchasing 300 30-pound fragmentation bombs and would 
live to have an inspector act for him to ascertain that the bombs are built to 
specifications. 

I took the liberty of telling Mr. Izaguirre that you had inspected orders 
which we manufactured at different times for other foreign governments, and 
if he would communicate with you and you were unable to serve him you could 
undoubtedly give him some advice as to where he could secure an inspector. 

Mr. Izaguirre expects to be in New York on Wednesday and Thursday of 
this week, and if you will let Mr. Jonas at our office know how to reach you he 
can doubtless make the appointment. 

Please do not consider me forward in making this suggestion. I am anxious 
to have this government well taken care of, and if you are not open to serve 
them you will do me a service by recommending a man who can handle our 
inspection. 

Most sincerely yours, 

Federal Laboratories, Inc., 
President. 

JWY : ABH 

c.c. to Mr. Carlos Izaguirre. 

c.c. Jonas. 

Delar Commander: This customer will be buying some other equipment when 
he comes to Pittsburgh the end of the week. I understood from our last con- 
versation that you were interested in securing a job such as this. 

J. W. YOITNG. 



Exhibit No. 663 

April 28, 1934. 
Mr. W. B. Ryan, 

President Auto-Ordnance Corporation, 

31 Nassau Street, New York, N.Y. 

My Dear Mr. Ryan : The writer had a very interesting conference on Monday 
and Tuesday of this week with the F.ureau of Investigation in Washington. 

We are arranging to conduct another school for all of their men in the 
various cities. 

The new laws going through Congress will greatly increase the work of this 
Bureau and require them to increase their staff of men and also increase the 
amount of equipment they will need. 

From information I gather in Washington, I feel very confident that the 
firearms bill will go through Congress and become a law. This is very en- 
couraging, for it will do much to spike possible competition and to kill off 
the gun that is now being made in New York. 

We have during the past month put on an intensive drive throughout our 
organization to push up the sale of Tommies. I hope the results are as pleasing 
to you as they are to me. Won't you please clear up the contract-arrangement 
confirmation? 



1866 MUNITIONS INDUSTRY 

AVe are proceeding with the circularization and assume that the invoice for 
your share of the advertising cost will be approved in accordance with your 
letter. 

Very sincerely yours, 

Federal Labokatobies, Inc., 

, President. 

JWY : GO 



Exhibit No. 664 

March 18, 1932. 
Xeon & Bonasegna, 

Alslna 2062/6/70, Buenos Aires, S.A. 

CrENTLBMEN : I have just finished reading your letter of February 11th, giving 
1-eport of the conditions after the Provincial Government's decree regarding tear 
gas. Your experience is somewhat similar to ours, for during the past three 
years we have had to do considerable lobbying in our Ts'ational Capital and also 
in State capitols to prevent unfavorable legislation against the use of tear gas, 
legislation usually being sponsored by radical leaders who wish to prohibit the 
use of tear gas against communistic or labor demonstrations. 

We have been successful, however, in all of our lobbying in Argentine to get 
the present unfavorable legislation turned about so that it allows nil police 
departments to use it, and all banks and financial institutions to use it. 

If you get a hold of the right people, I am sure you can sell them on the 
idea that the thing they want to prohibit is firearms more than they do tear 
gas. From what IMr. Jonas tells me, I think you are perfectly capable of taking 
care of such work. 

We have the highest regard for your ability, and I sincerely trust you will be 
able in the next three or four months to secure some business to pay you for 
your efforts. 

As you doubtless know from newspapers, we are confronting the same obsta- 
cles in the States that you are, and am glad to report that we have been fairly 
successful in keeping up our volume of business. 

Last week the Ford Motor Company in Detroit was caught by a march of 
Communists, who attacked the entrance to the plant out in a large twenty-five- 
acre field, and the Ford police were entirely unprepared to cope with the situa- 
tion. They had a few tear-gas grenades, about twelve in all, to meet a crowd 
of three thousand in this large field, with a thirty-five-mile-an-hour wind. 

We were asked by telephone to I'usli two hundred more grenades and a lot 
of riot guns and ammunition, which we did, and since then they have been able 
to curb any further attempts. This experience has served as a warning to 
other companies, and there is a general movement for preparing against such 
attacks between this and May Day. 

Yesterday I was in, what I believe, the largest banking room in the United 
States, covering three floors of a building that extends over a city block. The 
bank called us in to ask us to assist in protecting them against a riot attack, 
should such attack occur, as they feel inability to meet such an emergency with 
firearms. 

We are equipping a hundred and twenty police with billies, supplying them 
with hand grenades and riot guns so they can effectively handle any attack 
on their bank, without bloodshed or damage to property. 

I am quite sure this present crisis, while it has brought a shortage of funds, 
has brought an acute demand for our products, which puts us in the preferred 
class, and we should impress upon the public officials that they should spend 
money for the purchase of tear-gas equipment, even when they cannot afford to 
pay salaries. 

"Very respectfully yours. 

Federal Laboratories, Inc., 
'■ — President. 



Exhibit No. 665 

Room 1702. 21 West St., 
Nciv York, N.Y., October 15, 1932. 
Mr. Kbndrick van Pelt, 

Caixa Postal 2737, Sao Paulo, Braail. 
My Dear Van : I sent you a cable this week and expected an answer as I 
thought there might be something I could attend to for you up here. 



MUNITIONS INDUSTRY 1867 

The unsettled conditions in South America has been a great thing for me 
as I sold a large order of bombs to Brazil and also a fair cartridge order. I 
also sold very large bomb orders for Colombia, Peru, Ecuador, Bolivia, and 
now have made up all my losses and I am back on my feet. It is an ill wind 
that does not blow someone some good. 

I sincerely hope that the revolution did not cause you financial losses and 
that business will soon again be good for you. 

Am opening an office of my own the first of next month and will write you 
the details. 

With regards and the best of wishes to you and the family, I am. 
Sincerely, 

F. S. Jonas. 

r.S. The bank paid your insurance. I today sent Long $50 against his 
commissions. I owe him $102 but as I have not been paid my entire commis- 
sions on the Rack-A-Rock deal I have only sent him this amount as it is 
proportionate to the amount I received. 

He claims he has an order for 10,000,000 cartridges but he did not enclose 
any letter of credit so it is probably a dream which will not materialize. 

FSJ: RL 



Exhibit No. 666 

May 2nd, 1932. 
Leon & Bonasegna, 

Calle Alcine 2062, Buenos Aires, Argentine. 

My Deiae Leon : Last Saturday I sent, by Mr. Blake, chief officer of the South- 
ern Cross, one riot gun, 2 long-range cartridges, and 2 short-range cartridges. 
Please meet him at the steamer and see what you can do to take it off. 

The Auto-Ordnance have recently made a very large sale of Thompson sub- 
machine guns to the Chinese Government and now only have 3,000 left. While 
I was in Buenos Aires Crocker was working with the Banco de la Nacion to 
equip their branches with one or two for each branch. This order would have 
amounted to a good deal had it gone through. Please see what you can do 
as Ryan of the Auto-Ordnance recently called me and told me that unless I 
could do some business he would not continue with the agency. 

Rio Grande Sul recently purchased a million cartridges 7 m/m and I was 
wondering if there was a revolutionary movement in view. At times like that 
they generally make purchases through Buenos Aires agents, so it might be 
advisable for you to investigate and see if you can connect with the right par- 
ties, as you might be able to interest them in the Thompson gun. This gun 
is known in Rio Grande and has been used with success at various times. 

With regards and the best of wishes, I am, 
Sincerely, 

Frank S. Jonas. 



Exhibit No. 667 

Federal Laboratories, Inc., 
277 Broa&n:a'y, Atvgust 21, 1933. 

[Via air mail] 
Mr. Gordon Pickerell, 
c/o Pickehjeix & Co., 

P.O. Box 632, Para. Brazil. 

My Dear Gordon : Your letter of August 12th reached me this morning, and 
while I would like very much to transact the business you propose, owing to 
the severe regulations at this end, it is too risky a proposition. You see, it is 
al)solutely necessary tliat we make a sworn declaration specifying the party 
and the country to which the material is being sent, and I cannot afford to take 
the chance, especially since I specialize in armament. 

I am sending you under separate cover catalogs of the Thompson submachine 
gun, which I am sure is the gun that you require. I can allow you a 10% com- 
mission on the prices quoted in the catalog. The Auto-Ordnance Company, who 
are the manufacturers of this gun, will not allow me to export a single gun 
unless they get permission in Washington from the country for which shipment 



1868 MUNITIONS INDUSTRY 

is intended. A great many of these guns have been getting into the hands of 
gangsters, and the Government is doing all possible to stop this. 

I am now handling general export sales as well as arms and ammunition, so 
if I can be of service here to you at any time, drop me a line. 

With regards to you and the family, in which Grace would join me if she 
were here, I am, 

Yours sincerely, 

F. S. Jonas. 

P.S. Tliere is a man here in New York that might be able to do this busi- 
ness but not with the Thompson gun. He could supply Lewis 30.06 Govern- 
ment machine guns and the Colt Browning 30.06 ritle. He asks $300 for the 
Lewis gun and $300 for the Colt Browning ritles. New 30.0<j animunltion in 
quantities of 100,000 will cost $40 per thousand. If this type of gun would 
interest you, I will be able to handle it for you through tins man. However, it 
will be on a cash basis, as this is the only way tliis business can be handled. 

F.S.J. 



Exhibit No. 668 
[Mr. Gordon Pickerell to Mr. .Tonas] 

Paba, Aug. Vi, 1933. 

My Deae Jonas : Hope this reaches you as there may be some money in it 
for you and me. The Revolutionary Govt, here is organizing a secret society 
for their own protection and want machine guns, portable machine guns — like 
rifles and ammunition. Money they have and can arrange the necessary credits. 
The necessai-y contraband here can also be arranged as long as they come in- 
voiced as nnichine parts. So the rest is up to you, and as I am not sure of 
your address I am sending this to 21. West St. If you will air mail me as to 
your possibility of getting the above articles and prices I can do the rest. 

Later on they are going to need machine guns and ammunition — officially — 
and we will get the order, as they have written Germany about this business. 
I hope you will give me a quick answer one way or another. In short, the 
first lot will be secret ; the second, official. 
Best regards, 

G. PlCKE3lELL. 



Exhibit No. 660 

August 1st, 1932. 
Messrs. Fedekal Laboratories, Inc., 

Pittsburgh. Penna. 

Dear Sirs: We would acknovrlcdge receipt of y(;ur telegram of the 30th ult. 
received today, in which yon advise us that you can only allow 10% commission 
and 3% guarantee, otherwise you cannot accept the order, and asking us to 
reply by telegrnm, to which we have replied as per copy attached. 

You can understand Ihat our comiiromise o])posite the Montevedeo police 
must be fulfilled, inasmuch as we have taken the order in our name, for your 
account, therefore, even thdugh ycu paid us no conniiission, we would be obliged 
to make delivery, and it is for this reason that we said, under the circumstances 
we must accept. 

If you will i-efer to your previous correspondence in connection with discounts, 
commission, and so forth, j-ou will find that you have advised ns tliat we were 
authorized by you to quote to the police departments up to 25% discount, and 
that we were to be protected with our 25% commission ; therefore we do not 
understand your telegram. 

It is somewhat disheartening, we must say, to receive a telegram of this 
nature, not so much for the dollars and cents implied, but on account of the 
fact that it seems to the writer that we have never been able to get things 
down to a firm footing as far as prices and commissions are concerned ; and 
it certainly would please us to know .iust once and for all what this situation 
is, in order to be guided thereby in the future, as otherwise we are liable to 
make an arrangement of some kind at some future date which will cost us 
some money instead of making money for us. As you are so many thousands 
of miles away from us it is a most difficult proposition to come to a perfect 
understanding by correspondence, especially so on account of the fact that there 



MUNITIONS INDUSTRY 1869 

are many times when things that could be settled by word of month cannot be 
written. There are many occasions when we are forced by circumstances to 
pay commission to third parties, which naturally comes out of our commission, 
and if we are calculating on 25% and same is cut to 10%, we having compro- 
mised ourselves for 10%, let us say, it means that we send you the order and 
make no profit, which not only is unfair but also unprofitable. 

The work that we have done for you in the prcjpagation of the material you 
manufacture is something that you cannot gauge. Perhaps it will be a surprise 
for you to know that when the newspapers speak about tear gas they call it 
Federal gas ; and when they talk about the weapons, they talk about Federal 
guns. In this connection, under separate cover, we shall be very glad to send 
you clippings from the local papers in connection with the rounding up of a 
band of thieves, which is interesting. The fact of their referring to Federal 
weapons and gas is nothing more or less than the result of the work which 
we have done. Let us consider another aspect which perhaps you have not 
considered. While it is true that you may consider 25% commission as a large 
one for the work which we do, I wonder whether you have ever considered the 
fact that we have spent thousands of dollars on trips through the interior, 
propagating the use of tear gas, and in practically every province of the Re- 
public, without considering the fact that a special trip was made to Chile and 
several special trips to Uruguay, solely and exclusively with the object of inter- 
viewing people whom it might have been possible to interest in Federal gas. 

It is unfortunate that the writer is not in a position to, or, perhaps it would 
be better to say, finds it impossible to, make a trip to the States at this time, 
as we are sure that with a personal interview we could do more in an hour, 
as far as getting down to some basis is concerned, than correspondence will 
ever do. 

Regarding Bolivia and Paraguay, as far as Bolivia is concerned, we are daily 
awaiting advices from our agent in La Paz, giving us some definite reply in 
connection with the business we have pending with that Government. Imme- 
diately on receipt of his reply, which we expect will he in the afiirmative, we 
will, as promised in one of our letters to him, take the first train for La Paz 
and see if we can finally close this business, which should amount to something. 
If anything should develop within the very near future, we would naturally 
immediately telegraph you, telling you just what the situation is. 

As far as Paraguay is concerned, we are in daily touch with the military 
attache- of this city for that country, and we expect some time between today 
and tomorrow to have some news from him ; in fact, the writer has an appoint- 
ment with the attache for this afternoon, and it is possible we may supplement 
this letter in the event of his having tangible news which may be of interest 
to you. 

Not having heard from you further to our recent cable requesting that you 
get in touch with Mr. Insfram at Washington, we assume that you are either 
in direct communication with him and awaiting further advices or that he is 
waiting instructions from his Government, and that you have nothing to tele- 
graph us about until such time as these instructions are received. It is neces- 
sary that you keep in touch with us in this connection, in order that we can 
follow this proposition just as closely as possible. 

As far as the gas grenades for artillery use are concerned, and about which 
you asked particulars, we shall no doubt have this information today ; and if 
we see that there is active interest in this material on the part of the Para- 
guayan Government, we will telegraph you the details. 

Your further communications with regard to the above are awaited with 
interest. 

Yours very truly, 

Leon & Bonasegna. 



Exhibit No. 670 
[Via Aerea. Leon & Bonasegna, Calle Alsina 2062/6/70] 

BtteInO'S Aikes, July 26th, 1932. 
Messrs. Febebai. Laboratories, Inc., 

Pittsburgh, Pa. 
Dear Sir : We would confirm our telegram of yesterday as per copy attached 
and acknowledge receipt of your telegram of today in which you ask us to send 
you full details regarding artillery shells, which you state you can manufacture. 



1870 MUNITIONS INDUSTRY 

As stated in one of our previous communications, we have been very diligently 
following the question of the material that you manufacture with the following 
Governments : Chile, Peru, Bolivia, Paraguay, and Uruguay, and while we can- 
not expect, nor do we expect, more on account of the deplorable financial con- 
ditions of these countries to get immediate results, still the fact i-emains that 
there is a live interest, and we are keeping after the heads of these Governments 
(through intermediaries whose influence counts for something, of course), to 
the best of our ability. 

Through the medium of your local press you are no doubt acquainted with 
the bellicose conditions which exist between Bolivia and Paraguay on account 
of limits of territory in dispute. For the last year or more there has been a 
guerilla warfare going on in the Paraguayan Chaco, which is causing great anx 
iety to both Governments, neither of whom openly declare war ; but guerilla 
warfare seems to be going on indefinitely. Last week the Bolivians and the 
Paraguayans were in trouble again, and the general opinion in these countries 
was that a declaration of war was imminent. 

Taking advantage of this state of affairs, the writer has insistently pushed 
both the Bolivian and Paraguayan Governments, and our cable to you of yes- 
terday was the result of an interview which we had with the military attach^ 
of the Paraguayan Legation, who was very much interested in what we had to 
offer, and who no doubt by this time has already notified his Government of the 
details. It was at the suggestion of the military attache that we cabled you to . 
interview the Paraguayan charge d'affaires at Washington, Mr. Pablo Max 
Tnsfran, who no doubt has already been notified, or will be notified direct from 
Asuncion, to get in touch with you. 

"We have quoted the Paraguayan Government list prices less 10% in order to 
give you some leeway when quoting Mr. Insfran, as we are under the impres- 
sion that an order is about to result. As the question of payment in this case 
is a very important one, first, on account of the precarious state of the Para- 
guayan exchequer, and, secondly, on account of the difficulty of procuring dol- 
lars, even though local currency is available, it is preferable that you treat the 
question of payment right in Washington and insist on same before goods are 
shipped, otherwise you will run a very grave risk, we on part assuming no 
responsibility in this respect. We know that Paraguay bought quite a lot of 
equipment in France and Germany last year and that same was paid for before 
shipment was effected, therefore there is no reason why, in the event of doing 
business, that they should not observe the same procedure with you. . 

Each time we are called on to quote governments on military equipment it 
seems that we never have sufficient information in order to be able to quote 
intelligently ; therefore might we ask that you give us full information regard- 
ing the material that you manufacture or can manufacture. By this we mean 
full information regarding calibres, types of shells, bombs, whether demolition, 
fragmentation, or chemical, and, in the latter case, what chemicals can be em- 
ployed, not only in artillery shells but also in aerial bombs ; also if it makes any 
difference in the charging of the shells whether they be employed for artillery 
or aerial bombs. In other words, we want to have as much information as we 
can in order to be able to reply to the questions which are put to us, and which, 
on account of our ignorance as to what you manufacture, we are unable to 
reply to intelligently. 

In the event that Mr. Insfran has not received instructions from his Govern- 
ment by the time you receive this communication, we would ask that you tele- 
graph us, in order that we in turn can take the matter up with the legation 
here. 

Yours very truly, 

Leon & Bonasegna. 

RL/GHS. 

Exhibit No. 671 

[Air mail] 

August 11, 1932. 

Leon & Bonasegna, 

Calle Alsina 2062, Buenos Aires, Argentma. 
My Dear Leon: Your letter addressed to Federal Laboratories dated July 
26th, with reference to the Paraguay and Bolivia situation, was forwarded to 
me for attention. I immediately took a plane to Washington and visited both 



MUNITIONS INDUSTRY 1871 

the Paraguay and Bolivia Legations. "Unfortunately, for us, however, it looks 
as if the trouble they are having is going to be settled amicably. In any event, 
I have submitted prices to both countries and given them full details and 
catalogs regarding our line and they promised to forward them to their re- 
spective Governments and will advocate that they equip themselves with our 
products in case of future trouble. 

By the same mail in which your letter arrived I received the following let- 
ter from Mr. Roehrig with reference to Alfredo Gottling, desiring to sell 
Thompson gtms : 

"Alfredo Gottling wants to be specially remembered to you. He will make 
up a repeat order for Winchester as soon as things improve a little. In the 
meantime he would like to study the ' Thompson Sub ' gun with you ; I suppose 
you are still dealing with Mr. Ryan? Please send at the earliest possible mo- 
ment at least 12 complete prospectus of the Thompson gun, with all attachments, 
spares, etc., complete quotation for everything pertaining to the gun. You may 
mail the literature either to me, or better still, direct to friend Gottling. 
(You know his address is Rivadavia 611, BA.) He says you need not have any 
fear when dealing with him in this business, everything will be aboveboard ; 
even if the U.S. police notify the Arg. police of shipments it would be in order, 
because he would sell the guns only to people who got the consent of the Gov- 
ernment and police authorities. Kindly see that all information is clear, so 
there is no delay in placing business when it can be had." 

I am writing Mr. Gottling that you have the representation and to communi- 
cate with you. Mr. Gottling formerly did some business for me and could have 
sold a great deal had it not been for restrictions. Please see what you can do 
to work out a satisfactory arrangement with him, if it is convenient to you. 
You know my cost and I feel I should make at least $10 a gun with the amount 
of work and trouble I have in contacting here. I certainly wish you could 
send me an order for Thompson at an early date, because I am losing ground 
with Ryan. 

I have done exceptionally well for Federal and recently closed some big 
business with Cuba and Brazil, which will keep me going for a while. 

With regards and the best of wishes, I am. 
Yours sincerely, 

F. S. Jonas. 



Exhibit No. 672 

[File : " Exporters Afloat, Inc. Mr. Iverson, 341 Madison Ave., N.Y.C." (Pencil note : 

" On the rocks.")] 

December 30, 1932. 
Mr. W. Perrin Iverson, 

SJfl Madison Avemie, Ndip York City. 

Dear Mr. Iveeson ; Confirming our conversation of today, I wish to submit in 
detail particulars regarding my personal and business life. 

Nationality, American. 

Age, 45. 

Married, two children. 

Religion, Protestant. 

Education : Graduated Morrison'si Preparatory School at 16, and then took a 
commercial course in stenography, languages (Spanish and Portuguese). 

1904-1906. Worked with the Crane Company — general office work and cost 
clerk. 

1907. Worked with Winchester Repeating Arms Company — office work. Re- 
signed same year to go to Bolivia on the construction of the Viacha-Oruro 
Railroad as a Spanish correspondent. Contract completed, returned to New 
York. 

1908-1911. Connected with Madeira-Namore Railway Co. in northern Brazil 
during its construction as timekeeper, construction foreman, and during part 
of 1910 and 1911 was appointed purchasing agent. Resigned in June of 1911 
and returned to the United States. 

1911. Traveled as a salesman, covering New York State, Ohio, Connecticut, 
and Long Island for the Ruberoid Co. Resigned in 1912. 

1912-1916. Traveled for a year with the Savage Arms Co. in this country, 
and was leaving for South America as their foreign representative, but, owing 
to illness in my family, resigned and rejoined the Ruberoid Co. as a salesman 



1872 MUNITIONS INDUSTRY 

and remained with thoia until July 1916, but again resigned to represent my 
former connection, Winchester Repeating Arms Company, in South America, 
and have been with this company ever since, except for a period of six months. 

Traveled Brazil from Manaos to Porto Alegre until 1919. I then took the 
representation on a commission basis and also took on as side lines B. F. 
Goodrich Co. (mechanical goods), the New Haven Clock Co., the Edw. Miller 
Lamp Co., and the Ruberoid Co. In 1921, during the crisis, I returned to the 
United States and the Winchester Company paid me a retainer to remain with 
them. I resided here for a year and in 1922 they gave me entire supervision 
of the Latin-American territory. 

In 1924 I resigned and went into business for myself as a rubber broker, 
but, owing to market conditions (the Stevenson plan), I lost heavily and again 
connected in my old position vpith the Winchester Co. with their permission 
to take on noncompetitive lines, so I secured the agency of Smith & Wesson 
revolvers, Harrington & Richardson noncompetitive shotguns, and Federal 
Laboratories, Inc., and have remained with the Winchester Repeating Arms 
Company ever since. 

It is true my experience has been quite varied, but this diversity has all 
tended toward a more complete education in the manner of doing business in 
the foreign field. I have referred to Latin America principally, although I 
have traveled in the interests of my company in Africa and the West Indies and 
feel that I know conditions generally even better than average. 

I must confess that my real interest lies in the expansion of American trade 
abroad, whether it be the direction of that trade from the United States or 
the exploitation of it abroad personally. The fact remains that my experience 
has been so wide that I feel it v/ould be worth considerable to those who are 
similarly interested. I might add that my sales for the past seventeen years 
have averaged $750,000 annually. 
Yours very truly, 

Frank S. Jonas. 

FS J : RL 



Exhibit No. 673 

New York, April 22, 1932. 
Mr. George S. Forman, 

Palace Hotel, Rio de Janeiro, Brazil. 

My Dear George: Thanks for your letter of March 29th, which I was very 
pleased to receive. 

I am back with Winchester on a commission basis, and at the same time I 
am allowed to work the various rainbows we have here in New York on Gov- 
ernment business. Maybe some day with luck I will find the pot of gold at the 
end of one of these rainbows, and hope that you will be with me. Most of 
them so far have been bubbles, but like an old prospector I always feel some 
day I will strike it lucky. 

I am glad to hear that the foreigners now don't think all of us millionaires 
and will probably be a little more sympathetic in the future. Jealousy always 
creates hatred, and this depression might make them a little more considerate 
in the future. 

I am working with Huber on the different line he handles, and it was through 
him that I took Major Figueroa from the Dominican Republic up to the Colt 
factory, which resulted in tlie major purchasing two 50-caliber machine guns. 
Huber told me that Jonas Wolfe had sent you to him and that any business 
that Jonas Wolfe originated or developed was protected by your arrangement. 
Huber also states that when you called at his ofiice you assured him of 5% 
on any business that he developed, and Huber is now claiming his commission 
from Jonas Wolfe. Huber had been working on the Dominican Republic, as 
you know, for many months previous to the consummation of the order, and I 
can verify the fact that it was undoubtedly his work that developed this busi- 
ness, because Huber had been working through Captain Valverde and Colonel 
Flallos for considerable other stuff, which really did materialize. Huber cer- 
tainly deserves his commission on the deal, and I hope you will write to Colt 
telling them of your conversation with him. 

Hoping to see you soon, and with regards and best wishes, I am. 
Yours sincerely, 

F. S. Jonas, 

FSJ:RL 



MUNITIONS INDUSTRY 1873 

Exhibit No. 674 

Federal Laboratories, Inc., 
Pittshurr/h, Pa., U.S.A., November 27. 1933. 
Mr. W. C. Rich, 

% Frank S. Jonas, 

277 Broadway, New York, N.Y. 

Dear Mb. Rich : Please proceed to appoint Du Font's agent in Peru as our 
agent on a 15% basis and quote him on all of tbose bombs. Tell him we will 
give him a 90-day trial period, unless we are forced to deal direct with the 
Government, which we prefer not to do. 

I am also writing you tomorrow on a similar set-up in Ecuador. 
Enclosed find correspondence with Mexico. What happened to the last letter 
I sent down? Please let me have something promptly, so I can reply to 
Romero, and return this correspondence with your letter. 
Yours very truly, 

Federal Laboratories, Inc., 
(Signed) John W. Young, President. 
JWY : AEH 



Exhibit No. 675 

Januaky 9, 1934. 
Mr. Frank S. Jonas, 

Buenos Aires, Argentina. 

My Dear Frank : Your letter of December 26th, together with Leon's letter 
of the same date is acknowledged. I like very much what you say about Leon, 
and certainly his work speaks for itself. I look forward with pleasure to 
meeting him personally. The program he proposes, however, is one not so 
easily answered. 

Nick Bates returned Saturday from his trip. He recommended to us pre- 
viously the assignment of Ernesto de Rossi, Lima, Peru ; Sr. Don. Francisco 
Sefzig, Guayaquil, Ecuador. 

We followed his recommendations and are getting some very active work 
from these two companies. We hope to close a $120,000.00 order out of Peru 
in the next three or four weeks. Incidentally, it is some concern to us, as 
Tobin claims to represent Curtiss-Wright and is below us in price. De Rossi 
certainly seems to have the inside, as he has given us all the information 
necessary to know where we stand. 

I am planning a conference with Nick Bates in Wilmington later in the 
week. I met him at the boat but did not have time to talk business there. 
If Leon were to make this trip, Peru and Ecuador would be two of his prin- 
cipal places, and I do not see how we could pay him a commission when we 
already have a commitments to these agents. 

This morning I spent practically an hour on the long distance working on a 
$65,000.00 order for Bolivia. It looks as though we are going to close the 
order today or tomorrow. It is a matter of credit now, since our friend 
Metcalf has again succeeded in nicking us for $1,500.00, which he claims is 
necessary to get cash instead of credit. We have been fighting for three days 
on the question of credit, as they want 6 months' time, and I do not believe it 
advisable for onr company to extend credit to them now. 

In your letter you state that we have not allowed you anything for adver- 
tising in the export field. This is news to me, as Mr. Rau has the following 
charges made up for export advertising: American Exporter, $500.00 (per 
year) ; new military catalogue. $1,600.00; and there is quite a bit of incidental 
items, such as postage and circulars, letters to foreign governments on armored 
cars, vests, etc., which he has not listed. Incidentally, this amounts to more 
than we have spent for domestic advertising this year. 

I am contemplating sailing for England and Europe on January 31st. This 
means that the next two montlis will carry a heavy export expense for this 
business, a good portion of which will be to your credit. 

It may be wise to have somebody visit northwest South American countries to 
further instruct the new agents, and I hope you will at least plan to visit 
there on your return. 

For the company to agree to pay $2,500.00 for Leon's trip at this time does 
not appear to me to be a proper expenditure, much as I should like to meet 



1874 MUNITIONS INDUSTRY 

him, for it is difficult to fit liiui in on the commission due to tlie existing 
agents. Perhaps you can suggest some further plan. 
Most sincerely yours, 

Fedekal Laboratories, Ixc, 

. President. 

JWY : GO 
CO — Rich. 

P.S. — I am giving you the necessary authority herewith to force collection 
of Machado's account. 

J. W. Y. 



Exhibit No. 676 

E. I. Du Pont de Nemours >& Company, Inc., 

Wilmington, Delaivare, February 23, 19S/f. 
Mr. John W. Young, 

Federal Laboratories, Inc., 185 ^st Street, 

Pittsburgh, Pa. 

Dear John: For your information there is being quoted inmiediately follow- 
ing excerpts from a letter received from Mr. Stuart Hosie, our agent in Bogota : 

" On Thursday I took j'our letters to the Ministry of War. I did not meet 
Colonel Escallon, but had an opportimity to talk with Dr. Triana (Jefe de la 
Oficiua de Control previo), who told me that the ministry would possibly be 
interested in " Bombas aereas eon y sin espoletas " as well as in munition for 
cannons, and it would be convenient to send samples. But at the same time 
he told me that the ministry has had very bad experience with the bombs 
bought in the States from Drix »& Chorion (?), which did not explode! As I 
am on friendly terms with Dr. Triana, I told him quite frankly that there must 
be something wrong with the opinions given by the Colombian experts, against 
the products of well known factories such as Remington Arms, Mauser, and now 
another American manufacturer and it appeared to me that the experts are 
favouring for one reason or the other certain manufacturers and discrediting 
the products of others. Triana does not believe in any crooked business, but 
he admits that certain officers may be in favour of certain nationality and 
consequently in favour of buying from the respective country. 

"As to bombs for aviation, these have been bought lately from Bofors, because 
they have given apparently the best results. The ministry follows the advice 
of Coronet Boy, but as I am on friendly terms with him too, I hope to be able 
to interest him a little more in the samples of bombs eventually sent by your 
company." 

Mr. Gomez, of our foreign trade development division wrote under date 
of 11th February 1934 from Bogata, stating he had interviewed Mr. Stuart 
Hosie and the latter was very much interested in receiving catalogs and if 
possible samples of your bombs with and without the firing mechanism. 

It is my suggestion that if you are not tied up in Colombia that you give 
your good consideration to Mr. Stuart Hosie as a possible agent. He is ex- 
tremely well connected in government circles and his reputation in Bogota is 
of the highest. 

When I was in Bogota I told Mr. Hosie I would reconnnend him to you, as 
I did not know whether or not you had an agent in Colombia. I told him 
also that if the field was open you would be glad to send him your catalogs, 
prices, etc. I shall be interested to know what your decision has been in 
regard to Hosie, so that I may be in antecedents in the event he writes me. 
Yours faithfully, 

N. E. Bates. Jr. 



Exhibit No. 677 

February 24, 1934. 
Mr. N. E. Bates, 

Military Sales Division, 

E. I. du Pont De Nemours d Company, 

Wilmington, Delaware. 
My Dear Mr. Bateis : Replying to your letter of February 23, relative to 
Stuart Hosie, I am now recommending to our export office that they appoint 
Mr. Hosie as our exclusive agent in Colombia. 



MUNITIONS INDUSTRY 1875 

This gives us rather a solid block of du Pont-ala-Federal agents in Peru, 
Ecuador, and Colombia. All we have to do novF is to get the business. 

I am looking forward to seeing you next week. In the meantime please 
accept my thanks for your suggestions and your interest in our behalf. I trust 
it will react to some favorable business for your good company. 
Very sincerely yours, 

Federal Laboratories, Inc., 



President. 
JWY : GO 



Exhibit No. 678 

Federal Laboratories, Inc., 
Pittsburgh, Pa., U.S.A., July 1, 1931. 
Mr. F. S. Jonas, 

312 Broadway, Neio York, N.Y. 
Dear Mr. Jonas : Confirming agreement reached in our uflice today pertain- 
ing to business received through the Curtiss-Wright Export Company, and 
through the United Aircraft Exports Company, this is to be advised you that 
we hereby assign these customers to you for sales supervision, with the under- 
standing that in territories outside of that which is now covered in your con- 
tract of this same date, and on business on which they are operating on a 
twenty-percent basis you will receive a 5% additional overriding commission 
as your remuneration, except on smoke-screen equipment, on which you will 
receive a commission of 7%% ; commission being payable on our present 
standard products at our present list prices. 

It is understood and agreed that in territory covered by contract now held 
by Mr. Simmons the United Aircraft has the privilege of selling, and we shall 
endeavor to secure that commission also for the Curtiss-Wright. 
Very sincerely yours, 



JWY : AEH 



Federal Laboratories, Inc., 
(Signed) John W. Young. 



Exhibit No. 679 
[Cable address: Jonasnel, New York] 

New York, N.Y., January 5, 1933. 
Commandante Luis Aubry, 
c/o Electric Boat Co., 

40 Wall Street, New York, N.Y. 

Dear Sir : Referring to my visit at your offices this morning I take pleasure 
in giving you an outline of the type of goods we manufacture, which I am 
sure will be of interest to your Government. 

We are in a position to supply you with the very latest design of airplane 
bombs, both demolition and fragmentation types, such as are now in use by 
the United States Government. Our fragmentation bombs are of the very 
latest ring type, and we recommend the 25-pound size. Only the highest grade 
of steel forgings obtainable are used in making up these bombs, and all firing 
mechanisms are of the latest type design used in the U.S. Army. 

We manufacture these bombs in 25-lb., 50-lb., 100-lb., and 120-lb. sizes. We 
also manufacture 500-lb. and 1, 100-lb. sizes. The most popular types used, how- 
ever, are the 25-lb., 50-lb., and 120-lb. 

We have recently developed an incendiary bomb, which should be of great 
value to your country. The bomb shell weighs only sixteen pounds and carries 
a charge of thirty-four pounds of fagots, giving a total weight of fifty pounds, 
and which are thrown from fifty to one hundred feet in a radius from the bomb 
when it explodes. As these fagots are soaketl in a gasoline and fuel-oil formula, 
they continue to burn for at least ten minutes, setting fire to anything that is 
combustible with which they come in contact. We supply you with the formula 
for loading these bombs and the material can be furnished from your own 
natural resources in your country at a very low cost. 



1876 MUNITIONS INDUSTRY 

The prices of these bombs in one thousand lots, loaded with fagots, but not 
with the fuel, is $16.00 each. Your army will find this one of the most effec- 
tive bombs they could possibly use and also the least expensive. 

We would like to call your attention to the great advantage in use of gases, 
either the tear gas or the sickening gas. The tear gas will drive men out of 
a fortress or a barricade. It is persistent and remains effective in closed quar- 
ters for days. The effects last for ten or fifteen minutes after entering clear 
air. It forces the enemy to expose himself or to wear a gas mask. 

The sickening gas will incapacitate a person who comes in contact with, it for 
a period of six or eight hours. It causes severe vomiting, headaches, and weak- 
ness ; but does not leave any pennanent after effects. It is a marvelous gas to 
use before effecting a capture. Airplane bombs and hand grenades loaded with 
these chemicals can be shipped without the difficulty experienced with high- 
explosive bombs. The price on the chemical bombs is shown on the attached 
list. 

Another intensely interesting and valuable equipment, which can be shipped 
without difficulty, is the airplane smoke and gas discharging equipment. Two 
or three planes equipped with these attachments can throw down a smoke cur- 
tain, behind which your army can readily advance, particularly if the smoke 
curtain is mixed with gas and layed down to the windward of the army. This 
cloud is effective for a distance of two miles, approximately 3% kilometers. 

The equipment which we would recommend would consist of two attachments 
for each plane, one under each wing. This would be similar to the equipment 
used by the United States Army and Navy. The price of this apparatus is 
$1,700.00 per pair for each plane. 

We would be very glad to quote you on specific chemicals, either smoke, toxic, 
or tear gas. This apparatus is also very valuable in spraying insecticides on 
plantations to kill locusts and other insects. 

The portable chemical tank and the rifled trench mortar should be studied, 
and I believe would be of inestimable value in the natural defense of your 
country. 

Yours very truly, 

Frank S. Jonas. 

FS J : RL 

Exhibit No. 680 

Leon & Bonasegna, 

March 11, 1392. 
Mr. Frank Jonas, 

312 Broadway, New York City. 

Dear Frank : It is a long time since I have written you, but the fact of the 
matter is that there has been nothing to write about. 

Since the presidential decree, which made it unlawful to import tear gas into 
the Argentine, the Federal Laboratories account has been an uphill game with 
us, because we could not afford to let the thing die out, and as a consequence 
kept right after all the prospects that we have and have had, knowing full well 
that there would be no immediate results forthcoming, nor would it be possible to 
make sales until such time as the decree above referred to was either amended 
or abolished. 

Now that we have a constitutional government the chances are more than 
fair that we shall be able to do something with the new administration which 
Mdll allow us to again make sales, and in this respect we have several pros- 
pects about which I will be writing you just as soon as I have something 
tangible to write about. 

During the last week or ten days I have been following up this proposition 
again more closely than in the past, and it is possible that we may see some 
results within the very near future. 

Due to the shut-door attitude, as regards the importation of gas or gas guns, 
it is impossible even at this time to even import samples, and inasmuch as I 
have been obliged to return the riot gun to the telephone company, which they 
so kindly loaned me and which I have used for about six months, the only 
demonstrating outfit that I have is one pencil and one billy, plus two or three 
hand grenades, and this is all. You will agree with me that this is not very 
much to work with. 



MUNITIONS INDUSTRY 1877 

Might I suggest that you find some way of handing some friend or acquain- 
tance or steward or purser of some steamer two or three pocket-pencil guns 
with instructions to deliver them to me. This is an easy matter, as they could 
carry them in their pocket and no one would know the difference. The riot 
gun I realize is more difficult, but still it is always possible, and it occurs to 
me that this could be done by separating the stock from the barrel by taking 
out the screw, and it could be delivered to me in two pieces. You will under- 
stand that I am perfectly willing to pay for this material at cost, for without 
same it is practically impossible to work. As a matter of fact, I am indebted 
to the chief of police of Rosario and Tucuman for one of these pencils, as I 
promised to give each one of them one months ago, and I have not been able 
to make good. 

As the prospect for doing business is here, and as you know I now have com- 
petition both from the States and Europe, it would please me greatly to enter 
into this competition with both feet, but I must have material to work with. 

I am sending you his letter by air mail as I am in a hun-y to get the pencils 
and the riot guns. You have many acquaintances in the steamship business, 
and I am sure you will find someone who would be willing to carry same and 
place it in my hands. 

I hope this will find you well, and with best and kindest regards. 
Yours very truly, 

RL/GHS (Signed) Raoxjl Leon. 



Exhibit No. 681 

March 22, 1932. 
Leon & Bonasegna, 

Calle Alcina 2062, Buenos Aires, Argentina. 

My Dear Leon : Thanks for your letter oi March 11th. I was quite surprised 
to learn that tear gas was embargoed in the Argentine. This was the first news 
that I have had to this effect. I sincerely hope that .vou will be able to have 
this ruling abolished and that shortly we will be able to do some business. 

I have written the factory to send me the samples you requested and at the 
first opportunity I will deliver them to some purser on tlae Munson Line, request- 
ing him to deliver it to you. Last week I received a fair order from Brazil and 
sold a very nice order to the Santo Domingo Government. The latter order 
was for large demolition bombs and demolition hand grenades. I do not know 
what they expect to do with them. 

I am not connected with Winchester Co. any more and I am now free lancing 
for Remington and other lines at export. So far I cannot complain as I have 
done a fair amount of business. 

Hoping to hear from you shortly and with best regards, I am. 
Sincerely yours, 

F. S. Jonas. 

FSJ : RL. 



Exhibit No. 682 

May 2, 1932. 
Leon & Bonasegna, 

Calle Alcina 2062, Buenos Aires, Argentina. 

My Dear Leon : Last Saturday I sent by Mr. Blake, chief oflBcer of the South- 
ern Cross, one riot gun, 2 long-range cartridges, and 2 short-range cartridges. 
Please meet him at the steamer and see what you can do to take it off. 

The Auto-Ordnance have recently made a very large sale of Thompson sub- 
machine guns to the Chinese Government and now only have 3,000 left. "While 
I was in Buenos Aires Crocker was working with the Banco de la Nacion to 
equip their branches with one or two for each branch. This order would have 
amounted to a good deal had it gone through. Please see what you can do as 
Ryan, of the Auto-Ordnance, recently called me and told me that unless I could 
do some business he would not continue with the agency. 

Rio Grande Sul recently purchased a million cartridges, 7 m/m, and I was 
wondering if there was a revolutionary movement in view. At times like that 
they generally make purchases through Buenos Aires agents, so it might be 



1878 MUNITIONS INDUSTRY 

advisable for you to investigate and see if you can connect with the right parties, 
as you might be able to interest them in the Thompson gun. This gun is known 
in Rio Grande and has been used with success at various times. 
With kindest regards and the best wishes, I am 
Sincerely, 

Frank S. Jonas. 
FS J : RL. 



Exhibit No. 68S 

Leon & Bonasegn'a, 
Buenos Aires, May 20, 1932. 
Mr. Frank S. Jonas, 

c/o Export Consolidated Companies, 

21 West Street, Neio York Citij. 

Dear Frank : Further to your letter of May 2nd, I have today been to the 
" Southern Cross ", have seen Mr. Blake, and have taken possession of the riot 
gun and two each long and short range cartridges. 

If you will refer to the Federal Laboratories bill of April 18th and to my 
recent letter on the subject, you will find that they are invoicing us for a riot 
gun and 3 Protecto guns complete. I assume you have also taken i)ossession of 
the three Protecto guns and that you are sending them to me by some other 
source. I would be very glad to know just how these are being sent, as I am 
in a great hurry for them, and would ask you to give this matter your attention. 

Mr. Blake has today told me that you are back again with the Winchester 
people, and that your brother also has gone back to them. Having no oflScial 
news in this respect from you, I am sending this letter to the new address you 
gave me, and hope it will reach you safely. 

Please reply by air mail re the Protecto guns. 
Yours very truly, 

(Signed) Raoul Lbx>n. 

RL/GHS. 



Exhibit No. 684 

Septbmbek 15th, 1982. 
Mr. H. E. 1MEITCAI.F, 

Manager, W. R. Grace d Company, 

Hanoi-er Square, New York, N.Y. 

Deiar Mr. Mbtcai-f: We wired j'ou this morning as per attached confirmation. 
I sincerely trust you will receive telegraphic reply from Bolivia in time for us 
to proceed with the manufacture and have the bombs in New York by the tenth 
of October. We can at least get a very large percentage of them. 

I hesitate to comment on the availability of boats to carry this cargo, since 
that is your business, but it seems to me that a small freight boat could be 
chartered to take a cargo of this size. We understand that shipping regula- 
tions proliibit the carrying of these bombs on boats carrying passengers. Car- 
rying of TNT bombs, however, should be no greater hazard than carrying 
dynamite, as the detonators and firing mechanisms are not packed with the 
bombs. They represent nothing more than metal containers for the TNT and, 
as you doubtless know, it takes quite a violent shock to set off TNT. With the 
Interstate Commerce Commission allowing shipment of these across the country 
in L.C.L. lots, there should be no serious question of mixing this freight with 
other tyr)es of freight aboard a steamer. 

The freight rates which we quoted to New York include a lighterage charge. 
The rate to New Orleans or Los Angeles was the railroad freight rate only, 
as we had no means of determining a lighterage charge in these two latter 
poi-ts. I presume that it would not be necessary for a lighterage charge in 
New Orleans, and if the entire order was given we would absorb the lighterage 
charge in Los Angeles. 

The arrangement between you and Mr. Jonas is satisfactory to us. 

You understand that the shipping schedule which we have given you calls for 
twenty-f(Hir liours a day, seven days a week working schedule with us, and bars 
any trouble due to fires, explosions, or " acts of Providence " beyond our control. 



MUNITIONS INDUSTEY 1879 

You can be assured, however, that the bombs will be manufactured faster by 
far than it would be possible to secure them anywhere else in the world. 
Looking forward to the pleasure of having youi- order, I am, 
Very sincerely yours, 

I'edeeal Labokatories, Inc., 
Initialed JWY, President. 
JWY : GO. 



Exhibit No. 685 

[Leon & Bonasegna, Calle Alsina 2062/70] 

Buenos Aires, August 22, 1933. 
Mr. Frank S. Jonas, 

312 Broadway, New York. 

Dear Frank : I am in receipt of your air-mail letters of July 30th and 
August 11th. 

I have already written you at length regarding the question of discounts and 
commissions, and having covered the subject completely, there is nothing fur- 
ther that I can add except to hope that you will have been able on receipt of 
my recent correspondence, to have a show-down with Mr. Young and decide 
what our future actuation with them is going to be. 

Regarding new business, I have two proposals up with the Buenos Aires as 
well as the Montevideo police, and I am expecting some small orders within 
the course of this month. As far as the Buenos Aires police order is con- 
cerned, I am sure that it will be placed on the same terms as the last order ; 
and consequently if we are only to make 10% commission on the business, we 
are not going to be satisfied, as the time and work employed in taking this 
business is not commensurate with the profit involved. We hope that Mr. 
Young, all in accordance with the correspondence previously exchanged, in 
which he authorized us to quote 25% discount to police departments, will not 
be arbitrary and refuse to fill the orders unless it is on a 10% commission 
basis for us. 

I do not agree with you that our prospective business with Paraguay and 
Bolivia is a dead issue ; the trouble between these two countries still exists, 
and only last night the papers were full of new attacks made by Bolivia on 
Paraguayans. Only yesterday we had an air-mail letter from our agent in 
Bolivia in answer to one of ours in which I offered to go to La Paz, in which 
he advised that momentarily he did not think it advisable for me to take the 
trip, not because there was no interest but because there would still be some 
delay regarding a fixed decision, more for administrative reasons than for 
anything else. He further went on to say that he was keeping right after the 
minister and that he expected to be able to give me something shortly. 

Just as a matter of information for you, and which I would ask you to keep 
confidential, our agent in La Paz is Mr. Jorge Saenz, of the firm of J. Saenz & 
Hijos. This name, no doubt, will be familiar to you, as it treats of one of the 
strongest firms in Bolivia, Mi-. Saenz, Sr., being president of the Bolivian rail- 
roads, head of the alcohol monopoly, and an important banker. Mr. Saenz, Sr., 
you will recognize as an ex -Ambassador to Italy. It so happens that Saenz is a 
very distant relation of my wife and he is a very close pal of mine ; therefore, 
anything he can do for me, or in the protection of my interests, he Is doing 
with great pleasure. It might further be interesting for you to know that 
Mr. Saenz, Jr., is the actual head of their business, Mr. Saenz, Sr., being in 
Europe. In other words, the idea that I am trying to put over is that our agent 
in Bolivia is not just one of those manufacturer's representatives but a person 
of weight and responsibility and with very close social relations with the Presi- 
dent and ministers of the Republic of Bolivia. As a matter of fact, he was 
asked by the President to form part of the Cabinet, which he refused on account 
of his business interests. 

Regarding your paragraph re Alfredo Gottling, I will have absolutely no 
objections to getting together with Mr. Gottling, but personally I do not believe 
that we will get anywhere. I make this statement in view of a conversation 
I have just finished having with the Buenos Aires chief of police. Colonel Garcia, 
who again emphatically stated that it was against the law to bring in what 
83876 — 35— PT 7 18 



1880 MUNITIONS INDUSTRY 

are termed here as " armas de guerra ", and a submachine gun, such as the 
Thompson, certainly is classified, by this Government at leaf^t. as an " arma de 
guerra." The only possible way to bring in Thompson guns is through the 
Arsenales de Guerra de la Nacion ; otherwise they will be confiscated. However, 
I have an appointment with Mr. Gottling for tomorrow, and after our interview 
I will again write you and tell you just exactly what we have arrived at. 

I am always very glad to get your letters, and I want to assure you that 
now more than any time we are keenly interested in selling both Federal and 
Thompson equipment. Business is so absolutely rotten that any business is 
nice to get, and especially so business of this nature, where once the order is 
tak(>u the operation is practically finished. 
Yours very truly, 

(Signed) Leox H. Bonasegna. 

RL/GHS. 



Exhibit No. 686 



(Answered 4/5/32.) 



Federal Laboratories, Inc., 
Pittsburgh, Pa., U.S.A., April J,, 1932. 
Mr. Frank Jonas, 

% Export Consolidated Co., 

21 West Street, New York, N.Y. 

My Del\r Frank : I notice in Sunday's Herald Tribune that they were expect- 
ing labor trouble at the Panama Canal. This paper lists the Callahan Company 
and Shirley, Peterson, and Gunther as contractors. This is for the new Madden 
Dam Alejuela. I think if these people are properly solicited they can be con- 
vinced of the importance of carrying tear gas on hand in Panama. I suggest 
you follow this through. 
Yours truly, 

Federal Laboratories, Inc., 
John W. Young, President. 
JWY : AEH. 

(Pencil notation: " W. E. Callahan Construction Co., St. Louis, Mo., Grafe, 
vice pres., or Capt. Crawford in Panama, C.Z., Slocumb @ Panama City, Ancon.) 



Exhibit No. 687 

Federal Laboratories, Inc., 
PittsMrgh, Pa., U.S.A., April J,, 1932. 
Mr. Frank Jonas, 

% Export Consolidated Co., 

21 West Street, Neio York, N.Y. 

My Dear Frank : I notice Bogota, Colombia, is under special guard of twelve 
hundred police operating as an army. What are we doing to put on an intensive 
campaign to sell the Colombian Government and get them to put up some 
money. The same paper carried an account where Asuncion, Paraguay, is 
selected as headquarters for Russian propaganda with $350,000 appropriated. 
It seems to me a special bulletin to all South American republics, reproducing a 
copy of this newspaper clipping and mailing it to them, should stir them to 
getting tear gas. 

Yours truly, 

Fedebal Laboratories, Inc., 
John W. Young, President. 
JWY : WEH 

(Pencil: "Answered 4/5/32.") 



MUNITIONS INDUSTRY 1881 

Exhibit No. 688 
[Photostatic coiay] 

Federal Laboratories, Inc., 
Pittsburgh, Pa., U.S.A., July 22nd>, 1932. 
Mr. Frank S. Jonas, 

c/o Export Consolidated Companies. 

21 West Street. New York, N.Y. 
My Dear Frank : Replying to your letter of July 16th, relative to proposed 
trip to Latin America, as you know I have been studying this market very in- 
tensively, and I do not know a more opportune time than at present to cover 
this territory insofar as the actual need for equipment is concerned. 

I believe these needs are so pertinent that financial arrangements can be 
made with the various countries. The present depression gives the necessary 
cause or excuse to start a revolution and the prospects of a revival of trade in 
the future is furnishing the incentive to those w^ho are out of power to try to 
get into power through the medium of revolution. 

If you do not contact with these people personally at this time, I am afraid 
European countries will get in especially on the Winchester end, and you will 
lose both valuable business and some contacts. 

Have you circularized your mailing list again? We sent you 100 copies of our 
circular on bullet-proof vests yesterday, and previous to that we sent you all 
of the material we had on hand that you requested of me personally. I have 
been detained in Pittsburgh and unable to see my way clear to get to New York 
before next week. 

Sincerely yours, 

FEa>ERAL Laboratories, Inc., 
John W. Young, President. 
JWY : GO. 



Exhibit No. 689 

New York, April 18, 1932. 

WiNCHESTEK RePE.\TING ArMS Co., 

NetD Haven, Conn. 
(Att. : Mr. Beebe.) 

Gentlemen : For your information, I am working on the following prospects, 
which I trust will develop shortly. Mr. Lew, of the Bank of Canton, for 
China ; Curtiss-Wright. United Aircraft, North American Aviation Corp. ; Mr. 
Wing Kwong, of the Shanghai police. 

I am also working with Mr. Saraga, of 17 Battery Place, who has requested 
me to quote him on 200,000 30/40-caliber cartridges and 100,000 351 cartridges. 
Mr. Saraga tells me that these goods are for export but would not give me desti- 
nation. I, therefore, told him that in case your quotation would include the 
10% Government tax. 

I will give you further details in a day or two on the other companies with 
whom I am working. 

Auto-Ordnance looks very favorable, as they received a peimit to ship a 
quantity of guns and ammunition for China and are now waiting credit to be 
opened. 

Kindly send me six (6) export price lists and six catalogs of arms and am- 
munition. Please include with these the same quantity of flashlight catalogs 
and price lists. 

Please send the above catalogs to room 1702, 21 West Street. 
Yours very truly, 

F. S. Jonas. 

FSJ : RL. 



Exhibit No. 690 

June 26, 1933. 
Mr. John W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 
DeAb; Mr. .Young : . On the , 12 magazines for Thompson guns which Saraga 
wants to buy, I can very easily say that these are to be delivered to a passenger 
going to Buenos Aires. 



1882 MUNITIONS INDUSTRY 

If you are agreeable, you can ship them to me at my office and bill me for 
them. I will then collect from Saraga and remit. 
Please advise me if this is O.K. 

I can see no harm in filling the order this way, as it is not prohibited to 
handle magazines here in New York. 

Would appreciate your doing your best on this order for me. 
Yours very truly, 

Frank S. Jonas. 
CWR/fb. 

Exhibit No. 691 

January 16, 1934. 
W, R. Graob & Company, 

Hanover Square, New York, N.Y. 

(Attention Mr. H. E. Metcalf, manager.) 

Gentlemen : We wisli to confirm prices given you over the telephone this 
afternoon in connection with your inquiry for Chile : ^ 
1,000 30 lbs. smoke bombs, loaded. 

2,000 59 lbs. incendiary, loaded with fire (fagots but not fuel). 
500 30 lbs. chemical bombs (burning type G. H. & I. M.). 

The above quotation is subject to a discount or commission of 20%. These 
prices are f.o.b. Pittsburgh. 
Trusting we may be favored with your order for this material, we are, 
Yours very truly, 

Fedeeal Laboratories, Inc. 
(Export Department.) 
CWR/fb. 

("Exhibit No. 692" appears in test on p. 1733) 



Exhibit No. 693 

September 26, 1932. 
Mr. H. E. Mettoalf, 

Manager W. R. Grace & Company, 

Haimrer Square, New York, N.Y. 
Dear Mr. Mettcalf : Confirming our phone conversation today and revising our 
quotation of Saturday, we will allow you 21/^% for cash against shipping docu- 
ments. Your regular discount of 20% will apply against list prices shown 
in our letter of September 24th. Corrected quotation as follows: 

500 25-lbs. fragmentation bombs, ring type, loaded with TNT, at 

$35.50 each $17, 750. 00 

Freight, $1.66 each $830. 00 

500 50-lb. fragmentation bombs, ring type, loaded with 

TNT, at $35.50 each 28,500.00 

Freight, $3.47 each 1,735.00 

250 100-lb. demolition bombs loaded with TNT, at $65.00 

each 16, 250. OO 

Freight, $6.00 each 1. 500. 00 

4, 065. 00 57, 500. OO 
Less 20% 11, 500'. 00 

46. 000. 00 
Less 21/2% cash discount 1,150.00 

44, 850. 00 
Plus freight 4, 065.00 

Total 48, 915. OO 

1 The prices quoted in " Exhibit No. 691 '" were deleted by permission of Senator Bone. 
(See text, p. 1732.) 



MUNITIONS INDUSTRY 1883 

The freight rate on the 25-lb. fragmentation bomb as quoted to us is $1.66 
instead of $1.40. It is understood that you and Mr. Jonas have arranged 
between you as to his position in the picture. 

It is understood tliat you agreed to allow us to ship the 100-lb. demolition 
bombs instead of 120-lb. bombs at the same price. For your information, we 
are penalized approximately $1,150.00 in order to make delivery date in San 
Pedro in time to meet the boat on October 17th. 

I want to thank you for the order, Mr. Metcalf. "We do appreciate it and I 
want to have our service in expediting the order show our appreciation. 

Personally I think you are a thousand dollars to the good on this order 
because I wasn't in New York. 

Very sincerely yours, Fedejral Laboeatories, Inc., 

(Signed) J. W. Y., President. 

JWY : GO 

Ink notation on l^ottom of letter : " It is understood you get 5% on the list." 
Initialed JWY. 



Exhibit No. 694 

[Air mail] 

October 14, 1932. 
Leon & Bonasegna, 

Calle Alsina 2062, Buenos Aires, Argentine. 

My Delar Leon : This letter is confidential, so please tear it up the moment 
you have read it. 

I had lunch with Love of United Aircraft last week and he told me he is leav- 
ing for Rio and Buenos Aires on Saturday, October loth. During the conversa- 
tion I brought up your name, telling him of what a good agent you would make. 
He told me that he was corresponding with you and intended to make some 
arrangement with you, but on a small commission basis, as the business that he 
was working with tlie Argentine Government would run into very large figures. 
He impressed on me that I should not mention this to you on any condition, 
so I would appreciate it very much to keep this infonnation confidential. 

The 3,000 Thompson guns is a myth and nothing yet has developed in any of 
your territory ; however, from day to day I hope something will result. I 
received your letter of the 28th and I have shown it to Young and Ryan. 

I again went to Washington last week and saw the Paraguayan Minister, 
and he told me he has not received instnictions as yet, but as soon as he did 
he would inform me. 

The Bolivian Government has made purchases of army equipment through 
Grace & Co., and this morning the same company called up and asked for quota- 
tions on demolition bombs. Other companies are also manufacturing these 
bombs, so they will have to figure a vei'y low price as you know how closely 
commission houses buy. If the Government would only deal direct there would 
be a chance of making some money, but thru a commission house I cannot see 
where anyone was getting rich. 

I have quoted them on chemical bombs and they are forwarding these quota- 
tions. If we could sell some of these, we could make a good profit, as there is 
only one other competitor in the States. 

Roehrig again wrote me regarding Gottling and says he is most anxious to 
sell the Thompson guns, but I have replied that they will have to take the 
matter up with you, as you have the exclusive agency. 

With regards and the best of wislies, I am, 
Sincerely, 

F. S. Jonas. 
FSI : RL. 

p]xHiBiT No. 695 

Export Office, 277 Broadway, New York. N.Y.. 

S de Agosto de 1933. 
Leion & Bonasegna, 

Calle Alsina 2062/10, Buenos Aires, Argentina. 
Gentlemen : Thanks very much for your letter of July 26th, Informing us in 
detail of your conversations with the police inspector in Buenos Aires and the 
Peruvian Ambassador. This cooperation, you may be sure, is very much ap- 



1884 MUNITIONS INDUSTRY 

I^reciated and we only regi'et that we are unable to authorize you actually 
to close any business that may be in the offing for Peru. W. R. Grace & Co. 
is representing us in Peru and, of course, you will understand that tliis makes it 
impossible for us to sell through other channels. 

We informed W. R. Grace, however, of your activities with the Peruvian. 
Minister in Buenos Aires and they are following through strongly in Peru. 
Thanks once more for your good offices in this matter. 
Very truly yours, 

P'EDERAi/ Laboratories . Inc.^ 
(Export department.) 
CWR/fb. ■ 

Exhibit No. 696 

September 6, 1933. 
Mr. H. E. Metcalf, Mgr., 

W. R. Grace & Company, 

City Hall Station, New York, N.T. 

Dear Sir : I wish to confirm our telephone conversation of today. We can 
furnish at Gibbstown, N.J., on September 16th, the following bombs, provided 
we receive the order by noon September 7th : 

20 121/^ # fragmentation bombs; 260 80# frag, bombs. 

16 25% # demolition bombs; 100 100# dem. bombs. 

5 800# demolition bombs ; 14 600# dem. bombs. 

10 10# demolition bombs ; 25 50# dem. bombs. 

50 50 # frag. 
We once more want to emphasize the fact that in order to make this delivery 
it is imperative that we have your authority to proceed with the order by noon 
on September 7th, and that we shall effect delivery at Gibbstown, N.J., during 
September 16th. 

We want to call your attention to the price which you are using. In some 
cases you have used quantity prices for larger quantities that are being sup- 
plied. If you are able to take the number of bombs which we have outlined 
here, we will use the price which you have repeated to me on the telephone; 
otherwise, if you are unable to take the entire order, will be obliged to split the 
difference in selling price with you. Repeating once again our prices, the 
121/^-lb. fragmentation bombs were priced to you by myself at $17.50 each. 
Similarly, I priced the 25-lbs. demolition at $27.00, the 300-lb. at $200, the 
600-lb. at $365, and the 10-lb. bomb at $20. You told me that you were using 
the following prices : 30-lbs. frag. $32.00. This price should be $33.60 since the 
quantity is under 500. On the 100-lb. demolition you used price of $62, which 
should be $63.50 in quantities of less than 100, not including freight on the 
bomb casings. On the 50-lb. demolition you use price of $39.50, which should 
be $42, not including freight. On the 50-lb. frag, you used price of $43, which 
should be $44, not including freight. I told you on the phone to omit freight 
charge on the 300- and 600-pound bombs, since we would absorb this charge 
ourselves; that is, freight charges to the loading plant only. 

We hope that you will be able to obtain this order and we want to assure 
you that we will do our best to give you a quality product and make delivery 
on September 16th. We want to also call your attention to the fact that on 
the 100-pound demolition bombs we will be obliged to furnish two types, the 
difference being very trivial ; namely, in the taper on the end of the bomb 
body which will in no way effect the purpose of the bomb. The above prices 
quoted you are list prices and you are entitled to a 20% discount on these 
prices. Since we are standing by awaiting word from you to proceed we will 
ask that you give us some acknowledgment or advice before noon on Septem- 
ber 7th. 

Federal Laboratories, 
R. B. Reynolds. 



Exhibit No. 697 
No. 10. Leon & Bonasegna, 

Calle Alsima 2062/70, Buenos Aires, Oct. 2nd, 1933. 
Mr. Frank S. Jonas, 

277 Broadtvay, New York. 
Dear. Frank : Further to your recent letter regarding our releasing Chile, 
due to the fact that Grace & Co. are interested in working that territory, we 
do not feel that we would like to release this territory for tlie time being at least. 



MUNITIONS INDUSTRY 



1885 



You will remember that I made a trip to Chile especially for Federal busi- 
ness, and we would like to cash in on our investment. We positively know that 
Chile at this moment is in no position to buy gas. We further know that 
there have been a lot of leads in connection with this business, and we have 
taken the matter up with two Chilean Ambassadors in tliis country, with abso- 
lutely no results. We are now in toucb with a third Ambassador. Please do 
not think that we are neglecting this business, because we are not. It interests 
us exceedingly, but, like everything else, it is a question of working it. 
Yours very truly, 

(Sgd.) Leon & Bonaseigna. 

RL/GHS. 

Exhibit No. 698 

Apku. 26. 1934. 
Mr. John W. Young, 

President Federal Laboratories, Inc., 

1S5 Forty-flrst Street, Pittsburgh, Pa. 

Dear Mr. Young : Pursuant to our conversation of yesterday and your infor- 
mation that you had heard it rumored that the American Annaments Company 
had obtained that big Bolivian order, I sounded out Mr. Metcalf, of Grace & 
Company, and he cabled La Paz. He just called up, siaying, " That he had 
received a cable reply infonning him that they did not expect any action to be 
taken until the President's return from the front." 

On the specific inquiry as to whether American Armaments had received any 
business, they informed him that they would investigate thoroughly and advise 
him. 

Mr. Metcalf had the information, and while he does not want to say any- 
thing definite at this moment, nevertheless, their general manager in La Paz 
is about to assume a very important position about May 1st, which will bring 
him immediately in touch with the President. No doubt we will hear more 
definitely about this in the near future. In the meanwhile, of course, you will 
keep this dark. 

Yours very truly, 

C. W. Rich. 



ExHiriT No. 699 

June 8. 1932. 
Mr. Frank Jonas, 

Boom 810, 56 Pine Street, New York, New York. 

My Dear Mr. Jonas : Replying to your letter of June 7th. we are pleased to 
quote the Cuban Government on the following equipment : 



Com- 
mission 
figured 



10% 
20% 
20% 
20% 

20% 



20% 
20% 
20% 
35% 
35% 
35% 



400 type B military gas masks, at 

2 4.2" Maxwell rifled mortars, complete, at 

2 3" Maxwell rifled mortars, complete, at 

300 demolition projectiles, 4.2" mortars empty, at 

Loaded with TNT or white phosphorous, at 

300 demolition projectiles, 3" mortars empty, at 

Loaded with TNT or white phosphorous, at 

(The above quotations are on rifled mortars and shells. A reduc- 
tion will be given if smooth-bore mortars are ordered.) 

300 explosive rifle grenades, at 

500 empty fragmentation bombs, 30 pound, at 

300 loaded fragmentation bombs, 30 pound with firing mechanism, at 

3 only riot guns 

100 long range tear-gas cartridges, at 

100 long-range vomiting gas cartridges, at 



Each 



$12. 50 


$5, 000. 00 


1, 600. 00 


3, 300. 00 


1, 650. 00 


3, 100. 00 


42.00 


12,600.00 


57.00 


17, 100. 00 


33.00 


11,400.00 


52.00 


15, 600. 00 


3.50 


1, 050. 00 


19.00 


9, 500. 00 


46.00 


23, 000. 00 


65.00 


195. 00 


8.00 


800. 00 


10.00 


1, 000. 00 



A few days ago I checked up on the Government prices on some of this equip- 
ment and on the 4.2" mortar shells we were below the Government. We were 
also below them on the 4/2" mortars. In fact, I do not think any 4/2" mortars 
would be sold. We recommend the 4/2" mortar over the 3" mortar, as the 3" 
shell does not have the large capacity. 



1886 MUNITIONS INDUSTRY 

I believe it would be very much worth while to have this customer come to 
Pittsburgh with you and let us give him some demonstrations, and would 
recommend that you bring him on, providing he come before next Tuesday as 
I am leaving Monday night for upper New York State and arriving in New 
York City Wednesday or Thursday. If he cannot come to Pittsburgh, and you 
have the negotiations in position to close, or you think my presence might help 
you in settling a few details, perhaps building an order up, I can catch the 
plane tomorrow afternoon, get in New York about 6:30 and spend Thursday 
evening with you, and all day Friday. 

It might be after you get your Government prices that we will have to make 
some adjustments, though on some items there is not much room for adjust- 
ment. At any rate, do not fail to call on me if I can be of any value. 

I presume the new bomb he is referring to is the " Bouncing Betty." If that 
is the case, I am sure he cannot purchase it. 

We have just recently developed a 50-pound incendiary l)omb which can be 
sold for $16.00 each. Our firing mechanism is the propeller type, similar to 
that in use by the Government. 
Very sincerely yours, 

Fedeual Labokatoeies, Inc., 
, President. 

JWY : GO 

It is very difficult to add 10% on as you suggested. In the case of the 
mortars and shells we are competing with Government prices. The 4/2" mortar 
shell is .$57.50. We are quoting $57.00, as against our former price of $85.00. 
The $85.00 was given on a chemical shell which is a bit more expensive than 
the demolition, but we have made a very marked cut. $1,650.00 is the price on 
the Government 4/2" mortar. We have quoted $1,600.00, which happens to 
he our regular list. Should we add the 10% to this? and go above the Govern- 
ment price? 

Cuba has a price list of our equipment. Is it safe to jump prices 10% without 
getting your customer in trouble. I am going to let you and your customer add 
jour 10%, and where it is possible to do so we will cover you; where it isn't, 
I believe it will be necessary for you to work it out some other way. It would 
be so much better if we could discuss it than it is to write a letter before I 
know what we are up against on Government prices. 

I think we should discuss with this man the following additional equipment- 
jumbo hispeed combination tear and vomiting gas grenades, $14.00 — portable 
chemical cylinders, $155.00 — airplane smoke screen apparatus. 

J. W. Y. 



Exhibit No. 700 

January 19, 1933. 
Byer & Co., Inc., 

120 Liberty St., New York, N.Y. 

Gentlemen : Confirming our conversation with reference to quoting you on 
the following material : The quotations and deliveries I can make are as 
follows : 2,000 Springfield 30.06 Government rifles and bayonets, $24.50. 

Deliveries can be made 100 a week. The terms requested on these rifles are 
25% with the order and the balance on an irrevocable letter of credit ; payment 
against documents after each shipment. 

The prices on the 100 Thompson guns will be as follows : On the 21-A, $175.00 
f.o.b. New York. On the 21-AC, with Cutts compensator, $200.00 each. 

If there is no agent in the country to which these goods will be shipped, the 
discount will be approximately 15% on these prices. 

1,000,000 150-grain U.S. Gov't. 30.06 cartridges, $28.00 per M. 

Deliveries : 100,000 first week, 100,000 second week, 200,000 each week there- 
■after until order is completed. In other words, delivery in six weeks. 

45 calibre anununition, $15.00 per M. 

Deliveries: 100,000 at once; 100,000 first week; 100,000 second week; 200,000 
•each week thereafter, making total delivery of a million in five weeks. 
Yours very truly, 

F. S. Jonas. 

FS J : RL 



MUNITIONS INDUSTRY 1887 

Exhibit No. 701 

[Codes used: General, A.B.C. 5th Ed. Imp., Bentley's, Lleber's] 

Frank Sheridan Jonas, 
277 Broadway, Neii> York, N.Y., July 6, 1933. 
Remington Arms Co., 

Bridgeport, Conn. 

Genilembn : Enclosed please find an order I have today received from tbe 
Auto Ordnance Corporation, to which kindly give your attention. 

Same is to be invoiced at jobbers' price less 10% tax as they will forwai*d you 
a statement showing that these goods are sold to the police department. Of 
course, if they are used for demonstration, the tax will have to be included. 

I have today received an order from Honduras for a quantity of bombs. 
This is being shipped by Baltic Shipping Company. This company are also 
agents for Dada-Dada, of San Salvador, who are doing a great deal of buying 
for the San Salvador Government and who have recently placed an order for 
$14,000 net for bombs and have also placed an order with Curtiss-Wright for 
$56,000. They state that Dada-Dada have requested price on revolver and rifle 
ammunition and have asked me to quote. Please advise me what quotation I 
should make them. 

Very truly yours, 

(Signed) Frank S. Jonas. 

CWR/fb. 

Exhibit No. 702 

March 6, 1933. 
R. F. Sedgley, Inc., 

2311 North 16th Street, Philadelphia, Pa. 

Dejar Mk. Sedgley : The list you gave me of the machine guns you have in 
stock is over a year old, so it is probably not correct. Will appreciate it very 
much if you would send me by retuna mail a revised list of the goods you 
have in stock for sale. 

I have an inquiry for 750 Lewis machine guns and 10,000 Springfields, which 
seems incredible, but nevertheless I have to follow it through. 

Have you as yet written to the B.S.A. people in England to find out if you 
can get quotations on Lewis guns in bond here? 
Yours very truly, 

F. S. Jonas. 

FSJ : RL. 



Exhibit No. 703 

Agreement made tMs 15th day of September 1933 between Federal Labora- 
tories, Inc., a corporation of the State of Delaware, hereinafter referred to as 
" Federal ", and Frank S. Jonas, of New York, N.Y., hereinafter referred to as 
" Jonas." 

Witnesseth : That Federal hereby employs Jonas as export manager, and 
Jonas hereby accepts such employment upon, under, and subject to the following 
terms and conditions : 

Jonas shall be entrusted with the responsibility of supervising and shall be 
credited as hereinafter provided on all sales of Federal which are made for 
direct export shipment, excepting those sale or shipments into Canada, the 
United Kingdom of Great Britain, and India. Jonas shall give his best efforts 
and not less than half of his time in directing the sales of Federal products 
and other products handled by Federal, and in securing and supervising agents 
for Federal. Jonas shall maintain his own office and all necessary clerical 
help to properly conduct the business at his own expense, said office to be 
satisfactory to Federal, but Federal shall not require Jonas to pay an office 
rental greater than is now provided in his present lease. 

All subagency agreements, rate of commission, and subagents and terms of 
credit shall be subject to the written approval of Federal at the home oflice of 
Federal. A schedule of subagency commissions now in force is attached hereto 
and made a part hereof. All payments for goods sold shall be made direct to 



1888 MUNITIONS INDUSTKY 

Federal. Demonstratiug eqiiipment shall be supplied direct to agents by Fed- 
eral at regular demonstratiug prices unless otherwise provided for in writing. 
The remuneration to be paid to and received by Jonas for his services shall 
be as follows : 

1. On products sold for export shipment as mentioned herein, on which 
Federal acts only as sales agents and does not participate in manufacturing 
the same, whicli includes gas maslss, Thompson submachine guns, Smith & 
Wesson revolvers, plain armor plate, helmets, and armored cars, Jonas will 
receive as his commission one-half of the profit or commission realized by 
Federal in the transaction, 

2. On products sold for export shipment as mentioned herein, manufactured 
by Federal or in which it participates in manufacturing, the remuneration of 
Jonas will be on a commission basis, which shall be as follows : 

(«) 10% overriding commission on such sales made of gas grenades, riot 
guns and cartridges, gas billies and cartridges, smoke candles for police use, 
bank equipment, and bullet-proof vests. 

(&) 5% overriding commission on all such sales for military use, which cate- 
gory includes airplane bombs, smoke screen and gas-spraying apparatus, port- 
able chemical cylinders, mortars, livens, projectors, explosive grenades, aerial 
gas grenades, and white phosphorous grenades. 

Overriding commission means a commission in addition to the commission 
paid to subagents. 

Commissions shall be calculated on the gross sales prices, f.o.b. factory, and 
all commissions shall be payable upon receipt of payment of the account by 
Federal. The total combined commission to Jonas and subagents shall not 
exceed 55% on the protect-o-guns, 45% on the remaining tear-gas equipment, and 
25% on military equipment, except as specifically provided in an existing agree- 
ment between Federal and Jonas with regard to the Government of the Argen- 
tine Republic. 

Where the total annual export sales are in excess of $250,000 per year, said 
rates of commission shall be reduced by 10% for each additional $100,0<)0 or 
fraction thereof in excess of $250,000.00. An example of this commission set-up 
is as follows : 

1,000 hand grenades at $8.00 each $8, 000. 00 

Less quantity discount of 20% 1, 600. 00 

Net amount of invoice 6,400.00 

Agent's commission, 30% of net $1, 920. 00 

Jonas" overriding commission 10% of net 640. 00 

Total commission allowed, 40% 2, 560. 00 

In case of export sales totaling $250,000 in a given year (net amount after 
quantity discount deducted), Jonas' commission would be $25,000.00. 

In case of such sales totaling $300,000 in a given year (net amount after 
quantily discount deducted), Jonas' commission would be 10% on the first 
$250,000.00 and 9% on the remaining $50,000.00. 

It is understood and agreed that Federal sliall not be responsible for delays 
in delivery due to strikes, accidents, acts of Providence, or other causes beyond 
its control, or liable for damage arising therefrom or because of the actions of. 

This agreement shall be effective upon the date and shall continue in 
force for two years from said date and thereafter, until the expiration of sixty 
days after notice in writing is given by either party to the other terminating 
the agreement. In event that the agreement shall be cancelled by Jonas, he 
agrees no to engage directly or indirectly in any business competing with Fed- 
eral for a period of two months after termination of this agreement. He 
further agrees not to engage directly or indirectly in any business competing 
with Federal during the life of this contract. 

This agreement supersedes and cancels tlie present contract between the 
parties covering Latin America, Mexico, and Cuba, except the total commission 
provision of the Argentine Government contract above referred to, and is a per- 
sonal agreement and nonassignable by Jonas without first securing the written 
apr)roval of Federal. 

In witness whereof Jonas hereunto set his hand and seal and Federal has 
•caiTsed these presents to be duly sealed with the common and corporate seal of 



MUNITIONS INDUSTRY 1889 

the said corpf'i'''ition affixed thereto by the hand of its authorized officers, all the 
■day and year aforesaid. 

Fedeeal Laboratories, Inc. 

Attest : 

By , [SEAL] 

President. 

> 

Secretary. 



Schedule of maxirmim discount or commission for export agents 

Police an<l banls equipment: Percent 
Protect-O-guns--, 50 

Police billies and cartridges, gas hand grenades, gas rifle grenades, riot 
guns and cartridges, model YS sy.steras — grade A. safe equipment, 
chemical vault lining, gas candles, smoke candles , 35 

Munition vests, model YS system — grade B 30 

Military equipment : 

Trench mortars and shells, demolition bombs, fragmentation boml>s, in- 
cendiary bombs, practice bombs, gas masks, airplane smoke and gas 
spraying equipment, portable chemical container, aerial gas grenades, 
Avhite phosphornus grenades 20 

Thompson sub-machine guns, bullet-proof vests, 25 



ExHDUT No. 704 

Leon & Bonasegna, 
CalJe Alsina 2062/6/70, Buenos Aires, November 21st, 1932. 

Mr. Frank S. Jonas, 

56 Pine St., New York, N.Y. 

Dear Frank : I have just finished having an interview with Francis Love of 
the United Aircraft, and while it is true that for several reasons he finds it 
prudent not to make any arrangement with us, due principally to the fact that 
both the Army and Navy have always purchased direct and do not care on 
this class of equipment to work thru an agent, still my interview with Love 
has been very fruitful, as he has given me a lot of information by word of 
mouth that perhaps you could not have written or would not have cared to 
■write. 

He has given me all the inside information not only regarding your troubles 
with the Federal, but also what kind of an outfit they are- He has further 
given me a lengthy word picture of what the Lake Erie crowd amount to. Last 
but not least he tells me that you are undecided as to the advisability of taking 
on the Lake Erie and throwing down the Federal. 

From what Love tells me the Federal outfit do not seem to be straight shoot- 
ers. Of course he has told me this confidentially. He further advised me just 
how and who make up their products. From the information that he gave me 
I gather that the profit on all this material is enormous, and that all that Young 
says in his letters regarding there being no profit in it for him is pure 
" bologne." If this true, then my opinion that we were getting bilked when 
we were advised that only 10% commission would be paid on the police business, 
but confirms what my personal opinion was. 

Unfortunately, we have done work too well for the Federal Laboratories, as 
the trademark Federal is firmly entrenched, and the police, not only of this 
city but also of the provinces, will not even look at Lake Erie. The proof of 
this is that they even refuse to see the samples which the Williams Chemical 
Co. brought down. Just for your private information, we have seen the contract 
between the Williams Chemical Co. and the Lake Erie, where they pay them 
40% on some products and 50% on others. 

We have done, and are doing, a lot of work for the Federal. At present I 
have before me an order ad referendum for one of the provinces for approxi- 
mately $2,500 which should be closed this week. I have several other busi- 
nesses on the pan, and it does not seem fair to me that we should continue 
working as intensively as we have on the outlook for future business that will 
repay us for the spade work, if we are not going to get a fair shake, and I 



1890 MUNITIONS INDUSTRY 

would like to have you tell Young just exactly bow I feel about the entire 
proposition. If it is true that we have been able to introduce Federal material 
in this country, we can just as easily kill it and work some other line. The 
agent lor the German Bergman machine gun, as well as the exclusive representa- 
tive for a large German gas factory, which makes a similar line to the Federal 
or Lake Erie, have been after us for six months or more to drop our American 
line and take on the German one. He can do nothing with it but he knows we 
can. We want to play fair with you and we want to play fair with the factories 
we represent through you, but we also want fair play from them. 

Among other things we talked about, Love confirmed what our agent in 
Bolivia wrote us about last week, and which is that the Federal Laboratories 
through Grace has sold Federal Laboratory material to the Bolivian Govern- 
ment. We are giving you this information in case you do not know it, in order 
that you may claim from Young the value of our commission. There's no 
reason in the world why we should have worked for a solid year, made a trip 
to Bolivia, and did all the initial work, if we are not to profit by the business 
once it is consummated. It is very important that you look into this matter, 
as it's something that interests both you and ourselves, not only from a stand- 
point of dollars and cents, but from a standpoint of business policy. If this 
has actually happened, then with the same judgment, if the Argentine Army 
were to order direct from the Federal Laboratories tomorrow, we would be cut 
out of our commissions. 

I wish you would write me plainly and explicitly with respect to the entire 
proposition as your reply to this letter will serve as a base for the work which 
we are now doing and contemplating doing. We are working on two big deals, 
one in Uruguay and one in the Province of Buenos Aires; and it would be 
suicide for us to continue the work, compromising ourselves to certain commis- 
sion arrangements, if we are not to be fully protected. 

It is unfortunate that I cannot go to the States at this time and take this 
matter up with you and Young, as I am sure that with a personal interview, 
and with your assistance, that we could thresh the thing out and come to some- 
thing tangible once and for all. It seems that every time we write the Federal 
Laboratories on a matter of business policy, that they always shoot from some 
different angle and never come down to anything concrete, which is absolutely 
necessary in all business arrangements. 

I am writing you this in a personal way as I want you to feel that this letter 
is from me to you, not from our firm, and that you can use same as you see fit. 

With kindest and best regards, I am. 
Sincerely yours, 

(Signed) Raoul Leon. 

RL/CHS. 

Exhibit No. 705 

May 26, 1932. 
Messrs. Leon & Bonasegna, 

Calle Alcina 2062, Buenos Aires, Argentine. 
(Attention: Mr. Raoul Leon.) 

My Deiar Raoul : I was very pleased to receive your letter of the 27th ultimo, 
giving me the information I desired regarding the status of the tear-gas situa- 
tion. I sent this letter on to Young and this morning received copies of two 
letters he had written, one to you, and one to the Minister of War. The man 
is an idiot and I cannot understand why he should have done this. His letter 
to you giving you advice as how to act is the most presumptuous thing I have 
ever read and I would suggest that you write him telling him that you can 
run your own affairs in the future. I have a contract for two years more and 
as long as I have an agreement you will have one if you care to continue. 

Young has been doing some good business up here and it has gone to his head. 
His letter to the Minister of War will probably find the wastobasket. I am 
today writing to Young to leave matters of this kind entirely in your hands. 

You will be surprised to hear that I am back with Winchester and if busi- 
ness picks up I will take another trip fur them, but from the looks of conditions 
I will be an old man before this develops. 

Western Cartridge Co. manufacture sporting powders and I have written to 
them about you and asked them to communicate with you regarding the agency 
if they are not already represented. If I find that they are represented I will 
endeavor to secure some other agency for you. 



MUNITIONS INDUSTRY 1891 

If you can use me up here for purchasing anying or representing you in any 
way, you can rest assured I will give it the best attention. 
With regards and the best of wish, I am, 
Sincerely, 

P.S. How about Thompson guns? Is there anything doing? 
FS J : RB. 



Exhibit No. 706 

[Codes used : General, Western Union, A. B.C. 5 Edition, Lieber's, Private, Bentley's. 
U. T. 47, Cuyo 3091/92, Casilla Correo 1271, direccion telegrafica "Buenleon"] 

Leon & Bonasegna, 
Galle Alsina 2062/70, Buenos Aires, June 18th, 193^ 

Mr. Frank S. Joxas, 

277 Broadivoif, New York. 

Dear Frank : " Tell Leon we are passing along to Mr. Jonas, who is on a 
trip. Congratulate him on initiative of last paragraph and wish him luck. We 
are preparing his latest police order." 

Perhaps this letter will reach you on your return from your Central 
American trip. 

I do hope that your trip has been a success as all your trips are ; further- 
more, I hope that you have been behaving yourself. 

The object of this letter, apart from the fact that I always like to write to 
you, is to tell you that I had a long and interesting conversation yesterday 
with Frank Love. 

While we did not come to anything tangible, the fact remains that he called 
me up ; that means to me that he always has me on mind, and it is possible 
that some day we will get together. 

He again put particular stress on what a G.d.fool our friend Young is 
and confirmed your opinion about his preaching on a soap box and going 
around the corner selling armament. He also went on to tell me about Young's 
hobby of brotherly love, etc., etc., and finished up by saying that he would 
not trust him as far as he could throw a bull by the tail. 

He then went on to tell me that Colonel Goss, of the Lake Erie outfit, not 
only is a great technician in materials of chemical warfare, but that he has 
surrounded himself with experts, and that in his opinion it was a better outfit 
than Federal, ending up his talk by telling me that if I wanted that line, he 
could get it for me. I promptly told Love that while I appreciated his offer, 
that we were tied up with Federal thru you and that for the moment at least 
we did not contemplate making any kind of a change unless you took over the 
Lake Erie or any other concern, in which case we would follow you. 

It want you to understand perfectly, Frank, that Love in his offer was not 
trying to double-cross you or anything like it, and he went on record to this 
effect, to the contrary, that anything he could throw your way he would gladly 
do so, as he considers you one of his best friends. 

Things are very quiet here just now, and this being the case, the police do 
not use any gas, which means it is bad for us, because we cannot sell them 
goods when they have stock on hand ; however, I am working on a scheme 
with the police which may bring about desired results, and which is to have 
them use up some of the stuff they have by giving the men practice with the 
material. I may or may not be able to put it over, but I am going to try. 

Nothing more for today. I hope this will find you and yours in the best 
of health and with best personal regards, believe me, 
Sincerely yours, 

Raoul. 



Exhibit 707 

New York, N.Y., December 27, 1932. 
Mr. John W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 

My Dear Mr. Young : I talked to the Santo Domingo consul on Saturday and 
he told me to see him today with reference to the account, so this morning I 
visited him and he told me that the mail had just arrived and he expected to 



1892 MUNITIONS INDUSTRY 

have some good news for nie tomorrow moi'iiing. I have had so many promises 
that I am becoming disgusted and if I am not paid tomoiTow please see what 
you can do to collect this account through the State Department or through 
Major Cutts. 

I talked with Love this morning and have an appointment for tomorrow with 
him. If there is anything of interest will communicate with you. 

Huber informed me today that our bomb fuse and Lake Erie's bomb fuse 
were sent to Piccatiny Arsenal for a test and the report was that Lake Erie's 
fuse was exactly as par government standard specifications while ours was not. 
Undoubtedly he is spreading this information around, so please investigate 
and advise me. During our conversation he also informed me that Goss had 
given him the New York City territory to work with the exception of the New 
York Police Department which Goss claims he has in the palm of his hands. 
He also volunteered the information that Goss received an order every two 
weeks from this department. Take this information for what it might be 
worth. 

Caraga this morning informed me that you had telephoned to him and wanted 
to know what you want to see him about. I told you while you were here that 
I was in touch with Saraga, so why communicate with him without letting 
me know? 

I have made inquiries regarding Mr. Apikian of the Adept Mercantile Trading 
Co. and the reports are he is the proverbial Turk. 

I received the very nice toilet set which you sent me and thank you very 
much for same. 

With regards, I am 
Yours very truly, 

F. S. Jonas. 

FS J : RL. 



Exhibit No. 708 
[Letterhead of Federal Laboratories, Inc., Pittsburgh, Pa., U.S.A.] 

Febbuary 8th, 1933. 
Mr. Frank S. Jonas, 

56 Pine Street, Neto York, N.Y. 

My Dear Frank : I received a letter from my brother Paul, and am passing 
on for your consideration a portion of the letter : 

" For the past few weeks there has been a fellow here by the name of Cole- 
man, representing the Erie tear gas concern. He is pretty slick and has no 
scruples about paying something to get his contracts through. So it looks as if 
he might cash in on the missionary work we have been doing. Sotomayer y 
Luma, the former Minister of War, is now appointed as Ecuadorian consul to 
Germany. I am trying to see him before he gets away. 

" I think that John Reed is taking a bit more interest in getting tear-gas or- 
ders now and trust that he will not allow Coleman to run away with the 
business. 

" Exchange here continues to go up. The sucre that used to be worth about 
fifty cents gold is now worth about twelve. However, this has been a great help 
to us on short allowances as we have been running on about 50%, and the sucre 
still buys as many bananas and native products as ever. In fact, bananas are 
selling for as low as twenty cents a bunch this money, which is about three 
cents gold. A Mr. Meigs, an American engineer here, is drying bananas. I 
am sending you a sample box. You might be able to interest someone there In 
promoting this business. I can get these for you for three or four cents a 
pound gold." 

What are your suggestions? 
Very sincerely yours, 

Fbdeeax, Laboratories, Inc., 
(Signed) John W. Young, President. 

JWY : GO. 



MUNITIONS INDUSTRY 1893 

Exhibit No. 709 

3/8/34. 
From Mr. Young to Mr. De Rossi. 

My Dear Mb. De Rossi : I am in receipt of a very interesting report from 
W. R. Grace, giving the final set-up of prices in wliich tlie U.S. Ordnance & 
Engineering Co. (another name for the Lake Erie Chemical Co.) are quoting 
$83,UO0.0O, while their agent, Mr. Tobin, is quoting $104,000.00. You will here 
see an example of the character of these people when they will double cross 
their own agent. (I only learned during the past week that the U.S. Ordnance 
& Engineering Co. is a new name for the Lake Erie Chemical Co., and it does 
not look to me as though they were treating their agent fairly.) 

There is one other card that you can play, if necessary, in order to secure 
this order, viz : We have some TNT loading equipment which we are willing to 
loan to the Peruvian Government to fill this order. This would eliminate the 
necessity of their paying $5,500.00; they would then only have to pay the 
transportation there and back, which should not exceed $500.00. 

Referring to the question of the salary of the specialist, do not overlook the 
fact that this specialist will educate your ordnance officers in the technique of 
loading TNT into bombs and shells, a very valuable course of training, which 
will give them the very latest methods now being used in the United States. 
There is a great deal to learn about loading TNT, in order to avoid cavities and 
to get the proper crystal form in order to have high-order detonation. I would 
press the importance of their learning how to load bombs. 

Incidentally, there was a statement made that we had furnished the United 
States Government with all their bombs, which is not the truth ; they make 
most of their own. 

My address by cable for the next two weeks will be: " Young, care Mingtoy — 
Havana ", and my mail address, Apartado 2055, Havana. 
Very truly yours, 

J. W. Young. 



Exhibit No. 710 

Panama, R. de P., June 15, 1934. 
FEn>EiiAL Laboratories, Inc., 

185 Forty-first Street, Pittsburgh, Pa. 
My Dear Mb. Young : I called on the chief of police in Panama City and was 
surprised to learn that they had placed an order about three months ago with 
the Lake Erie Chemical Co., when Huber was down here, for 6 machine guns, 
grenades, ammunition, and pineapples. I asked him to permit me to see the 
machine guns which Huber sold them,, and I received the shock of my life. 
The gun is an imitation Thompson, so far as the barrel is concerned, and the 
breech looks like a bicycle pump. There was no proper magazine for this gun. 
However, they were sold genuine Thompson magazines, which fit them per- 
fectly. I asked the chief of police if he had tried these guns out, and he said 
he had not. I also asked him why he did not buy genuine Thompsons. He 
told me that Huber had told him that these were the latest type Thompson 
guns. Mr. Ryan should certainly get after the Lake Erie Co. and put a stop to 
this. I examined the gun and found that there was no manufacturer's name 
anywhere on the gun, and the only mark they had on it was on the barrel 
which said " Model 33." In supplying the Thompson 50'-drums magazine along 
with this gun (of course, on the magazines the auto ordnance name is 
stamped), it gives one the impression that they are buying a genuine Thompson 
gun of the latest model. As they had never tried out these guns. I urged the 
chief to try them out yesterday, but he was not able to do so because he was 
not feeling well. I told him that you would like to buy one of these guns and 
ship them a genuine Thompson instead. He is agreeable to this, so you can 
write him a letter upon receipt of this letter. The chief was very much peeved 
after I gave him this information, and will probably make some trouble for 
Huber. 

I am leaving for Costa Rica tomorrow morning. 
Very truly yours, 

F. S. Jonas. 

P.S. If you want this gun, write to Universal Export Corp. and they will 
Attend to this matter. Have aiJpointed them our agents. Address, Panama, 
R.P. 



1894 MUNITIONS INDUSTRY 

Exhibit No. 711 

January 2, 1934. 
Mr. WAiTEE B. Ryan, 

President Auto-Ordnance Corporation, 

31 Nassau Street, New York, N. Y. 
My De.\r Mr. Ryan : Following our conference in the office of Mr. Van Kleck, 
I am enclosing herewith a brief report on our activities in the export field, 
which I trust will give you a clear idea of the extent of our missionary work for 
the Thompson submachine gun. 

I believe if the Thompson gun is to be sold in any quantities it will only be 
sold alter somebody contacts the present Governmental authorities and edu- 
cates tl'.em on the merits of the Thompson gun and builds up an interest in its 
adoption. I doubt if we can get our representatives to do this unless we assure 
them protection. We do not want to assure them' this protection unless we 
are reasonably convinced that we have the proper type of representative to do 
this work, and this in turn requires a careful study through various channels, 
plus personal supervision of a traveling export man. All of this latter we have 
been doing. 

As you know it took us 6 to 8 months to get under headway in the domestic 
field. I believe it will take even longer to get under headway in each of the 
respective fields. 

I should be very pleased to have your advice as to whether or not we might 
have exclusive protection to cover a period of 2 years. We, in turn assure 
you of our earnest endeavor to aggressively push the sale of the Thompson gun 
in these territories. 

Very sincerely yours, 

Fedejral Laboratories, Inc., 

• , President. 

JWY : GO 

Argentina 

leon & bonasegna 

You are doubtless familiar with the activities of this firm. They have repre- 
sented us for several years and have succeeded in building up an excellent 
business on Federal products. This country has standardized on Federal Gas 
exclusively, their purchases running well into thousands of dollars. 

Bolivia 

w. r. grace & co. 

These people have already secured for us orders for both military and police 
equipment totalling over $100,000.00. 

Brazil 

This country has been divided into three sections in order to get the best 
possible results in our line. Mr. Jonas is now on a tour of the South American 
countries, and the following agencies have been appointed : 

SOUZA, SAMPAIO & CIA., RIO DB JANEIRO 

To represent us on all Brazilian Government business. 

LUMINOSA, 8. A., RIO DE JANEIRO 

Represent us for all Brazil, with the exception of Sao Paulo, for Dolice 
equipment. 

KENDRICK VAN PELT, SAO PAULO 

Represent us in Sao Paulo. 



MUNITIONS INDUSTRY 1895 

Chile 

leon & bonasegna 

Have been covering Chile for some time. Mr. Jonas now working on definite 
appointment for Chile on present trip. Negotiations now pending through 
Arturo Lamarca for larger order Santiago police. 

ECTTADOR 

GUAYAQUIL 

8R. BON FRANCISCO SEFZIG, GUAYAQUIL 

Just recently appointed. This gentleman also represents the Du Pont people 
in Ecuador. Highly recommended to us by Mr. Bates of Du Pont. In addition 
to this we have already done considerable missionary work in this country. 
Sales to date $3,000.00. 

Peru 

ernesto de rossi, lima 

Appointed recently on recommendation of Du Font's, whom he also represents. 
A real live wire — now working on a large bomb inquiry — possesses excellent 
Government contacts and we are confident he will give us some real representa- 
tion here. 

Colombia 

daniel jimenez duran, bogota 

Recently granted selling privilege in Colombia. Reports to date indicate that 
he has been quite active with Government and police oflScials, with some excel- 
lent contacts. 

We have sold the Colombian Government during the past two years military 
and police equipment valued at approximately $75,000.00. 

Paraguay 

leon & bonasegna 

Have been covering this territory through a subagent, Artaza Hnos., of 
Asuncion. A small sample order has been placed for tear-gas products. 

Uruguay 

leon & bonasegna 

We are well represented here. Our products well introduced. The Monte- 
video police department have standardized on Federal gas. Purchase totaling 
over $5,000.00. 

Venezuela 

col. b. de santa anna, caracas 

Represented us here for some time. Federal products well introduced. War 
Department using Federal gas. 

Costa Rica 

W. R. GRACE & company 

This territory just recently turned over to them. They have good contacts 
here, and we are well pleased with set-up. 



83876— 35— PT 7 19 



1896 MUNITIONS INDUSTRY 

Cuba 

Mr. Young has been covering this situation personally for tlie past several 
niontlis. Has already made one trip to Habana, with a second trip scheduled 
shortly. Considerable business already developed on entire Federal line, includ- 
ing Thompson guns. 

We also have an agent on the ground, Mr. Louis Rios. 

San Salvaiwr 

dada-dada company 

We are well represented here. Although just recently appointed they have 
already closed some very nice business. Sales to date total $12,000.00. They 
have extremely good connections with the proper governmental oflScials. 

Dominican Repxjblio 

chaa. a. pogson, santo domingo 

Recent appointment. This party also represents Du Fonts in this territory 
and has been highly recommended. Federal products well introduced here. 
Sales to date on both military and police equipment total over $20,000.00. 

Mexico 

watson, phillips & cia, mexico city 

Recent appointment. Appear to be quite active, with good contacts. Our 
products well introduced in Mexico. To date over $10,000.00 worth of tear gas 
equipment has been shipped into this country- 

Guatemala 

akturo monsanto & co., guatemala city 

Appointment 1 month old. Highly recommended by several other firms whom 
they represent here. 

Africa, Philippine Islands, Strait Settlements, Federated Malay States, 

Java, Sumatra, French Indo China 

FILSINGER, RHINES & CAMPBELL, INC., NEW YORK CITY 

Mr. Ernest Filsinger, president of this company, is now on a tour of this 
territory, covering important centers. Subagents are being appointed by him 
and reports to date indicate considerable interest in the entire Federal line. 

SlAM 
INTERNATIONAL ENGINEERING CO.. BANGKOK 

Federal products have already been introduced here and we have sold them 
considerable oquipnieiit. We are now working with them on a current inquiry 
for airplane smoke screens. 

China 

intercontinental aviation, inc., new york and shanghai 

Recent appointment. This company connected with Curtiss-Wright. Mr. 
Pauly, vice president, is now in China. 

Japan 

okura & company, new york 

These people have represented us here for several years. Business during 
past 2 years total approximately $10,000.00. 



MUNITIONS INDUSTRY 1897 

« Persia 

Our dealings with tliis Government have been direct, without the aid of an 
agency. To date we have sold them equipment valued at $4,000.00. 

Russia 

We have had two visits from special representatives of Russia. So far, no 
agent has been appointed. 

Portugal 

sindbeata das industries, lisbon 

A fairly recent appointment. While no business has resulted to date, they 
seem to have good Government connections and are actively pushing all of our 
products^ 

Greece 

m. agexasto & j. sotibopoulo, athens 

These people have excellent reputation and have secured some valuable 
Government contracts from time to time. They are at present working on large 
inquiry for Federal equipment. Mr. Young will probably cover this on his trip 
to Europe this month. 

Bulgaria 

officei equipment co., bucharest, rumania 

These people have just recently been given the privilege of working Bulgaria. 

Lithuania 

inz. pe. nik8a 

, This party recently granted selling privilege here, though no definite arrange- 
ment made. He has already succeeded in creating some interest in our military 
equipment, and we are hopeful of some business developing. 

Czechoslovakia 

capt. a. t. element, peaha 

Introduced tear gas into this country over two years ago, their initial pur- 
chase totalling approximately $600. Inactive for a time, but with conditions 
improving, is again pushing Federal products, and we are hopeful of some 
additional business here. 

Jugoslavia 

GEORGE H. SCHELLENS, BELGRADE 

Recently granted selling privilege in this country. 

Norway 

a. johnson, stockholm, sweden 

Note. — The name of Arnes & Company or Oslo has been scratched out. It 
contains the following notation : " Recently granted selling privilege here upon 
the recommendation of the American commercial attache." 

Hawaii 

COL. p. M. SMOOT, adjutant GEN., HONOLULU 

You are familiar with correspondence with Col. Smoot regarding representa- 
tion for the Thompson gun in Hawaii. 



1898 MUNITIONS INDUSTRY 



Afghanistan . 

mb. ahmad shah, kabul 

We have recently had correspondence with this party relative to Federal 
products. No definite agency arrangement, however, has been made. 

UMiTEa) Kingdom of Great Britain (India) 

MBS. PATRICIA KENDALX. 

I believe you are familiar with the work she is doing. Mr. Young also 
expects to cover England in his present trip to Europe, which is scheduled for 
the middle of January. 

France 

mb. habby o. stone, pabis 

Mr. stone formerly was export representative for the General Electric Com- 
pany. Went through training at our factory and is fully conversant with our 
complete line of equipment. Has not been very active of late, although he has 
turned in a small volume of business. 

Spain 

MABTINEZ DORBIEN, MADRID 

Appointed through Mr. Stone. Excellent connections with high Government 
oflicials. Competitive tests on gas equipment for Government officials showed 
superiority of Federal products, and latest information we have is that order 
for sizable quantity will be placed with Federal. 

Turkey 

automobile tire & tbactob co. 

Appointed through Curtiss-Wright Export Corp. To date have secured 
business totalling approximately $2,500.00. 

Rumania 

office eqxnpmbnt co., buchabest 

Federal products well introduced here. Business (tear gas) to date totals 
over $10,000.00. Negotiations under way on large military order, also Thomp- 
son submachine guns. As you know, these people have Thompson gun on 
hand. Mr. Young will probably cover this company on present trip to Europe. 

Sweden 

a. johnson & co., stockholm 

Note. — The following name and notation have been crossed out in favor of 
the above " Europeiskt Varnuutbyte, Stockhohn. This agent just appointed in 
September. They expressed specific interest in the Thompson gun and felt 
confident could develop some business on this equipment." 

Holland 

b. a. quintu8, o/o office u.s. commeibcial attach^, the hague 

Granted selling privilege upon the recommendation of the U.S. connnercial 
attach^', Mr. Van Wickel. Appointment approximately 6 months old. 



MUNITIONS INDUSTEY 1899 

Iceland 
g. m. bjornsson, ketykjavik 
Extended selling privilege on Thompson gun and Federal police equipment. 

Finland 
johnson & co., stockholm 
Note. — " Warner Marthin, Helsingfors " crossed out in favor of above. 

Canada 
chemical protection company, ottawa 

Represented us here for past several years. Have made very creditable 
showing. Federal gas equipment now used by Royal Canadian Mounted 
Police, Canadian prisons, and local police. 

The greater part of this territory is circularized by direct mail advertising, 
which reaches all officials of the various countries and cities who would be 
interested in your product. It is also covered by advertising in the America)i 
Exporter. 

In addition to the agents as listed above, the United Aircraft Exports and 
Curtiss-Wright Export Corporation also have the privilege of quoting on 
Federal equipment in various South American and European countries. 

(Added in pencil :) 

Denmark : A. Johnson & Co. 



Exhibit No. 712 

November 24, 1933. 
Mr. John W. Young. 

Federal LaTjoratories, Inc., 

277 Broadway, New York City. 

My Dear Mr. Young : With reference to the trouble the Brazilian Govern- 
ment has been having with the gas bombs, I visited this morning, the Isle de 
Governado, which is the Brazilian Navy base, and everything has been satis- 
factorily ironed out. I do not believe that you will hear anything further 
from this. They have not as yet used our smoke-screen apparatus, but have 
promised to do so shortly. 

They are interested in our practice bombs, incendiary bombs, and chemicals 
for smoke screens, and as soon as an appropriation is made, I am sure we will 
be given the business. 

Mayrink-Veiga are " persona non grata " with the present regime, due to 
their excessive profiteering in the last revolution. I have placed our agency 
for the Federal Government with Souza Sampaio, who are socially the best 
people in Brazil. They are connected politically, and I honestly believe that if 
any business arises, it will be ours. 

I have seen most of the aviators, who visited our factory last year, and they 
all send their best regards. I have delivered your letter to Captain Cabral, 
regarding the plant installation, and he seems very sanguine about closing the 
deal for us. 

I am very glad that I have made this trip, as it has renewed old acquain- 
tance, and I know and feel certain that any business arising, will be given 
to us. 

Sincerely, 

Frank. 

P.S. — I have written to Rich regarding other matter, pertaining to your 
business and he will keep you informed. 

Frank. 



1900 MUNITIONS INDUSTRY 

Exhibit No. 713 

[On the side of law and order — Thompson anti-bandit guns] 

Auto-Ordnance Corporation, 
56 Pine Street, New York City, March 8, 1933. 
Mr. John W. Young, 

Presulent Federal Laboratories, Inc., 

185 Jflst Street, Pittsturijh, Pa. 

Dear Mr. Young : I enclose original correspondence with Colonel P. M. 
Smoot, adjutant general of Hawaii, which is self-explanatory. Their letter 
of February 23rd is obviously one which should be replied to by j'ourself. We 
can recommend Colonel Smoot as an agent in Honolulu, and in view of the 
arrangements between your company and ourselves, I think it would be very 
suitable to keep him on in that capacity. 

Kindly return this correspondence when it has served its purpose. 
Yours faithfully, 

W. B, Ryan, Jr., President. 
WBR : HZ 
Ends. 



Exhibit No. 714 

July 26, 1934. 
To All Federal Export Agents: 

We take keen delight in advising you that the first six months of 1934 has 
been the most successful period in the history of our company. Total sales 
up to June 30th are three times as great as those for any single preceding 
year. A very gratifying feature of this excellent sales record is the important 
part that has been played by the export department of our business. To 
those of you who have contributed to this marvelous record we extend our 
sincere appreciation and congratulations. We know it has taken a lot of hard 
work to get this business, l)ut it has paid dividends. 

With conditions of unrest as they are today throughout the world, you have 
a real opportunity before you if you will only get back of this thing and push 
the Federal program. 

Tear gas is fast becoming recognized as the leading and most humane, yet 
effective, manner of quelling street riots and mob violence, not only in the 
United States but in foreign countries as well. Here are a few instances 
where Federal tear gas has been used quite successfully in putting down riots, 
both of minor and major proportions. 

You doubtless are familiar with the conditions existing in Cuba immediately 
after the overthrow of the Machado government. Strife i-eigned. Many people 
were felled or seriously wounded in street fighting. Realizing the need for 
some systematic and effective way of restoring quiet and peace to the island, 
the new government, under the direction of President Mendieta, appointed 
Mr. John W. Young, our president, as technical adviser to the Cuban Goveni- 
inent on all police matters. 

Mr. Young is now engaged in the organization and operation of a national 
police force to preserve law and order on the island. One of the first steps 
taken was to see that each division of this national police force was equipped 
with what we felt to be an adequate supply of tear-gas equipment to enable 
them to handle any emergency that might arise. 

The Cuban Government has already purchased over !fi4()0,000 worth of equip- 
ment, with more to follow. Included in this equipment is gas hand grenades, 
both tear and sickening gas; gas riot guns and shells, gas billies and cartridges, 
gas masks, Thompsini submachine guns, portable chemical cylinders, with 
gas and smoke charges, etc. 

We have also e(iuiiiped their police with a fleet of radio patrol and armored 
cars. The attached newspaper clipping shows a section of this fleet assembled 
at our factory here just prior to shipment to Habana. These ears are built of 
special steel, to withstand all t.vpes of pistol and rifle fire. Thick glass is used 
in windows and windshield to protect against pistol fire. Each car is equipped 
with a police siren, spotlight, puncture-proof inner tubes in the tires. 

Each car Is also equipped with a case in which is carried the following equip- 
ment : 2 gas riot guns, one dozen long-range shells, two dozen jumbo-type 



MUNITIONS INDUSTRY 1901 

grenades, two gas billies, six cartridges, two type GB military gas masks, one 
Thompson submachine gun, and one bullet-proof shield. The armored trucks 
usually carry double this amount of equipment. The trucks are also equipped 
with an apparatus which can be used to release tear gas or lay down a smoke 
screen from the rear of the truck, thus obstructing it from the view of the 
€nemy. 

This type of equipment, without question, should be very valuable to the 
police departments of your country. It would enable them to reach a given 
point in a hurry and be prepared to meet any emergency that might arise. 

Argentina, Bolivia, and Colombia have now standardized on Federal tear gas 
for their police. The Buenos Aires police are exceptionally well trained in 
the use of gas in combatting all kinds of disturbances. They have used it on 
numerous occasions quite successfully. Their police-instruction manual carried 
complete details and instructions for the use of tear gas. This indicates clearly 
the extent to which they have gone in the use of this type of modern equipment 
in their police work. 

Rumania is another country in which Federal tear gas has had a real intro- 
duction. Not so very long ago we received a report from our agent in Bucha- 
rest enclosing a newspaper clipping commenting on the excellent results secured 
ty the Bucharest police when they used Federal tear gas to break up a riot in 
their city streets. This is another case where the police in a foreign country 
have been exceptionally well schooled and educated in the use and value of tear 
gas as both a defensive and offensive weapon for police use. 

The world famous Royal Canadian Mounted Police use Federal tear gas to 
get their man. Note the attached fac simile copy of order which we received 
from them. 

For the past three years we have been awarded the contract from our own 
•Government covering their tear-gas requirements. The award was made to us 
after competitive tests proved conclusively the superiority of Federal gas, and 
notwithstanding the fact that in many cases our competitors' prices were 
lower than ours. 

Enclosed is just a few testimonial lettersi on the usefulness and splendid work 
accomplished by tear gas. We have hundreds of such letters in our files. 
Additional ones can be sent to you if you want them. 

We are confident that if given an opportunity we can perform a similar 
service to your good Government in meeting their many police problems. Don't 
hesitate to impress upon them the importance of handling their riots and dis- 
turbances in a humiuie yet effective manner. Unquestionably this can best be 
accomplished with the use of tear gas in sufficient quantity to insure success. 

Be sure to advise your customer that when they use gas to use plenty of it. 
We have found from experience that if the police try to disperse a mob with 
too little gas, their efforts will not be successful. To toss a couple of grenades 
and gas shells into a fighting mob could not be expected to control it. You 
have got to give them gas and plenty of it. 

During recent months we have had renewed labor disturbancesi in various 
sections of the United States. Here's the way they met the situation : San 
Francisco purchased Federal tear gas to the extent of ,$301,000. Toledo, Ohio, 
used up $8,000 worth of gas; the Pittsburgh area (which, as you know, is the 
steel center of the world) purchased over $75,000 worth of gasi (Federal) to 
protect their properties. Youngstown, Ohio, another steel center, bought Federal 
gas to the amount of $25,000. 

You can readily see they are prepared to meet any emergency that might 
arise, and when the trouble strikes they will be able to give them plenty of 
gas. They have found from experience that it is much better to prepare before 
the strike than to spend hundreds of thousands of dollars rebuilding plants, etc. 

Our military equipment, saich as airplane bombs, smoke screens, portable 
chemical cylinders, etc.. are all of the very latest design and incorporate the 
finest workmanship and material that it is possible to secure. 

We are contractors to 17 foreign governments on this type of equipment. 
Many repeat orders have been received from these customers. This shows that 
they are s^atisfied with the materials they purchased from us. 

We guarantee our products to give absolute satisfaction, and you may assure 
your Government officials in any negotiations you have with them that we 
stand back of our products at all times to give satisfactory performance. 

Along with this letter we are sending you copy of our latest catalogue, both 
on military and police equipment. We shall be very glad to send you additional 
literature if you want it. 



1902 MUNITIONS INDUSTRY 

It is our desire to cooperate with you in every way possible to iielp you in 
your negotiations for new business. Won't you please acknowledge this letter 
and let us have a report as to your activities during the past few months, and 
more particularly what prospects are for the immediate future V 
Very sincerely yours, 

Federal Laboratories, Inc., 
G. Oberdick. 



Exhibit No. 715 
[Western Union Telegram] 
GU75 26 DL, PITTSBURGH, PENN., 20 1128A. 



1932, Deo. 20, a.m. 42 



Frank S. Jonas, 

56' Pine St., CD, NYK: 

Suggest you enlist Curtiss and United in opposing the President's proposed 
arms embargo to Congress which would throw this business to Europe. See 



you tomorrow. 



Young Federal Laboratories, Inc. 



Exhibit No. 716 

Neiw York, N.Y., December 29, 1932. 
Mr. Young, 

Federal Laboratories, Inc., PUtsbwffJi, Pa. 

Dear Mb. Young : Last night a friend of mine, who is in the Department of 
Commerce and who was formerly commercial attache abroad, visited me and 
asked me if I was doing anything with Ecuador. He informed me that they 
were in the market for more or less the same list of stuff that you were mention- 
ing last week and also told me that the purchasing would be done thru the 
Ecuadorian Minister in Panama. 

About three weeks ago this same inquiry came to the State Department re- 
questing them to sell them this lot of material, but the Government refused to 
accept the order. However, they did not object to them buying from the manu- 
facturers in this country. This was my reason for telegraphing you last night. 

I have read in the papers this morning that Persia was making their pur- 
chases in Germany and have placed several orders there. This only makes 
me more convinced than ever the order we spoke about last week has nothing 
to do with Persia. 

I^ast night Mr. Netzker, of the National City Bank — whom I had asked in the 
morning to cable to their branch and find out just what has transpired as regards 
the Government meeting our drafts — he told me that he received a reply stating 
that there was every evidence the draft would "be paid this week or early next 
week. This was my reason for telegraphing you last night, so that you would 
not take any other steps to make collection. Hoping that we will not be again 
disappointed, I remain, 



Yours vei-y truly, 
FS J : RL. 



F. S. Jonas. 



Exhibit No. 717 



E. H. Pitcher, 
1010 Vermont Avenue ISIW., 
Washington, D.C., January 10, 1933 
Federal Laboratories, Inc., 

Pittsburgh, Pa. : 
The writer acknowledges receipt of your telegram of yesterday and to advise 
that so far as he has been able to learn, it would appear that the embargo on 
munitions is not being seriously considered at this time. The writer assumes 
that you know that the embargo in question was drafted by the State Depart- 
ment and is' intended to keep U.S. munitions from Bolivia and Paraguay. 



MUNITIONS INDUSTRY 1903 

We have learned fi-om what we consider a reliable source that the War 
Department objects to the original draft of the congressional resolution, empow- 
ering the President to put an embargo on shipments of U.S. arms to warring 
countries, holding that it would be unfair to bar American manufacturers of 
arms and munitions from warring nations when these markets still will remain 
open to foreign countries. 



E. H. PiTCHEB. 



Copy to Frank S. Jonas, 56 Pine Street, New York, N.Y, 
P-O'D 



Exhibit No. 718 



April 15, 1933. 



Mr. R. E. Sedgley, 

2S11 North 16th Street, Philadelphia, Pa. 
Dear Mb. Sedgley : For your information, Arica, Chile, is a free port. 
Enough said. 

Re Cutts Compensator, I spoke to Young, and he states he is compelled to 
bill you at $25, but will refund you 15%. 
Yours very truly, 

F. S. Jonas. 
FS J : RJ 



Exhibit No. 719 

Fedeeal Labobatoeies, Inc., 
Pittsburgh, Pa., U.S.A., July 18, 1934. 
Mr. Fbank S. Jonas, 

277 Broadway. New York City, N.Y. 
(Attention Mr. F. Busto.) 

My Del4:b Busto: After reading over Watson Phillips' letter to you of July 
9th a second time, it appears to me they are complicating matters somewhat. 

The order originally specified shipment direct to the police department on 
basis of cash against shipping documents to be forwarded through bank. 

Now they are requesting that we forward the equipment through their Tam- 
pico agent who will arrange to make collection of the money. 

There is not a lot involved in this shipment, but I can't understand the 
change in the shipping instructions. I don't see how it is going to speed up 
clearance of the shipment in any way. 

Will the Mexican consulate in New York pass the shipment consigned to 
Watson Phillips' agent in Tampico? In your letter to them of July 6th, you 
mentioned that the consulate stated he would be very glad to pass the shipment 
provided the material was consigned direct to the police department, but now 
that Watson Phillips want it cleared through their agent, I'm just wondering 
if you will be able to get clearance. 

Please let us have your further comments and instructions on this so that 
we know where we stand before we get the equipment off to International 
Forwarding Co. 



Sincerely yours, 
GO : MT. 



FEajEaiAL Labokatobies, Inc., 
(Signed) O. B. Oberdiok. 



Exhibit No. 720 

October 20, 1983. 
Mr. Walter B. Ryan. Jr.. 

President Auto-Ordnance Corporation, 

56 Pine Street, New York, N.Y. 

My Dei\b Mr. Ryan : Following our phone conversation today, I think we 
should give very serious thought as to how far we want to bind ourselves to 
the Department of Justice on the individual sale of machine guns. 

I h;ive no fear from any of the present staff in Washington, but after all, 
that is a political organization and time might come when there may be some 



1904 MUNITIONS INDUSTRY 

oflBceholder who may not be like-minded to the present staff, therefore, I think 
we should be careful in voluntarily giving too many rights which we now have. 
Sincerely yours, 

Fedebal Laboratobies, Inc., 

, President. 

JWY : GO. 



Exhibit NO'. 721 

August 8th, 1933. 
Ee competition. 

Mr. Waltek B, Ryan, Jr., 

President Auto Ordnance Corporation, 

56 Pine Street, New York, N.Y. 

My Dear Mr. Ryan : We seem to have some new competition facing us in 
the Schmeisser machine pistol, a Belgian development, which happens to be an 
improvement upon the Bergmann submachine gun. 

The Schmeisser gun was first called to my attention in a mail-order cata- 
logue by W. S. Darley Company. It was next called to my attention by 
Lieut. Cutts, who said he was offered the American rights. It has also been 
brought to my attention by our Mr. Stone in Paris. I am enclosing a copy 
of Mr. Stone's letter to us, which will necessitate some reply. 

I have examined one of these guns \^ hich Lieut. Cutts has. It appears to be 
smaller and simpler than the Thompson. It can be sold in the United States 
cheaper than the Thompson, and it gives me some concern if it should come 
on the market. 

Inasmuch as you were away, I took the responsibility upon myself to go 
before the Attorney General with the suggestion that an embargo be placed by 
the President upon the importation of all submachine guns in the United 
States, pointing out that this action would be necessary if they hoped to 
make any progress in their drive against crime. The suggestion was well re- 
ceived and is being passed on to President Roosevelt this week. 

Assuming the President will take the requested action, we have only to con- 
sider then the matter of American manufacture under patent rights. Harring- 
ton & Richardson or Sedgley may take some such rights and develop competi- 
tion for us on a price basis that would prove embarrassing. Do you wish me 
to secure from Mr. Stone proposed price for license under the patent, or have 
you any other suggestions? 
Very sincerely yours. 

Federal Laboratories, Inc., 

, President. 

JWY : GO 



1 



("Exhibit No. 722" appears in text on p. 1777.) 



Exhibit No. 723 

February 9, 1932. 
Okura & Company, 

30 Church Street, Neio York, N.Y. 
(Attention Mr. I. Koizumi.) 

Dear Mr. Koizumi : I was very pleased to receive your letter of February 4th 
and to learn that the Japanese Navy intend to purchase some of our products 
on or before March 31st. 

Regarding Captain Hiracka's request for all patent numbers of our products, 
I should be very glad to accomodate him, but I am not just sure that I can 
give him what he wants. If he is desirous of securing more complete informa- 
tion about the equipment we have offered to you in our proposal, I am afraid 
these patents will be very incomplete, for the most valuable part of the equip- 
ment which we have offered to you is still in the patent office and patents have 
not yet been issued. In fact, they will not be issued for some time to come, as 
we propose to keep these processes secret as long as we can. 



MUNITIONS INDUSTRY 1905 

While we have some twenty-five of the patents already issued in the United 
States, I would pi'efer not to give you these patent numbers until we can 
handle the entire deal, as it might prove to be confusing. 

"We wish to turn over to you not only the patents and the right to them in 
Japan for issuance there, but also the formulas, manufacturing process, detailed 
manufacturing specifications and detailed instructions in their use. 

This information is all so closely knit together, we wish you would discourage 
any attempt or desire to break up our proposal in smaller units. We desire 
to get you thoroughly started on the right track and have offered you terms 
that will enable you to do this at an extremely small cost compared to the im- 
portance of the subject and the volume of information and material which 
we will turn over to you. 

Due to the impending possibility of Federal embargo on such materials, I 
trust you will be able to secure authority from Tokio to proceed with the trans- 
action at an early date ; otherwise, this authority might be received too late 
and I would be requested by the State Department to hold up the transaction. 
I dislike to hurry you, but believe it expedient to close the deal as soon as 
possible and I will come to New York any time you are ready to discuss the 
matter .further. 

Yours truly, 

Fedekal Laboratories, Inc., 

, President. 

JWY : AEH. 



Exhibit No. 724 

AuGxrsT 26, 1933. 
Mr. Walter B. Ryan, Jr., 

President Auto-Ordnance Corporation, 

56 Pine Street, New York, N.Y. 
My Dear Mr. Ryan : Referring to our conversation of yesterday, wish to 
advise that it will be agreeable for you to put a man to work soliciting the 
U.S. Government for a prospective order for 3,000 Thompson submachine guns, 
paying him a commission of 5%, one-half of which would be deducted from our 
regular commission. 

I believe we should thoroughly investigate such a man before turning him 
loose to represent us with the Government, however, and I suggest you care- 
fully check his credentials and references to determine the correctness of his 
claims. 

I feel it is desirable to have a man work and concentrate on an order the 
size he mentions, but we want to be sure we have the right man. I should 
also like to follow through on this personally and be posted on the detail of 
negotiations. I am planning to go to Washington immediately following our 
sales conference and can look into the matter while there. 

I presume it is unnecessary to mention that specific limitations should be 
attached to any agreement on this negotiation. 
Very sincerely yours. 

Federal Labor-^torjes, Inc., 

, President. 

JWY : GO 



Exhibit No. 725 

LEX)N & Bonasemna, 
Buenos Aires, November 21st, 1932. 
Mr. Frank S. Jonas, 

56 Pine Street, New York City. 

Dear Frank : I have just finished having an interview with Francis Love of the 
United Aircraft, and while it is true that for several reasons he finds it prudent 
not to make any arrangements with us, due principally to the fact that both 
the Army and Navy have always purchased direct and do not care on this class 
of equipment to work through an agent, still my interview with Love has been 
very fruitful, as he has given me a lot of information by word of mouth that 
perhaps you could not have written or would not have cared to write. 

He has given me all the inside information not only regarding your troubles 
with the Federal, but also what kind of an outfit they are. He has further 



IQOQ MUNITIONS INDUSTRY 

given me a lengthy word picture of what the Lalce Erie crowd amount to. 
Last but not least, he tells me that you are undecided as to the advisability of 
takinii- on the Lake Erie and throwing down the Federal. 

From what Love tells me the Federal outtit do not seem to be straight 
shooters; of course, he has told me this confidentially. He further advised me 
just how and who make up their products. From the information that he 
gav(- me I g;ither that the profit on all this material is enormous, and that 
all that Youn.ii- says in his letters regarding their lieing no profit in it for him 
is pure " bologna." If this is true, then my opinion that we were getting bilked 
wlien we were advised that only lOVc commissions would be paid on the itolice 
business, but confirms what my personal opinion was. 

Unfortunately we have done our work too well for the Federal Laboratories, 
as the trade mark " Federal " is firmly entrenched, and the police, not only of 
this city but also of the provinces, will not even look at Lake Erie. The proof 
of this is that they even refuse to see the samples which the Williams Chemical 
Co. brought down. Just for your private information, we have seen the con- 
tract between the Wiliiams Chemical Co. and the Lake Erie, where they pay 
them 40% on some products and 50% on others. 

We have done, and are doing, a lot of work for the Federal. At present I 
have before me an order ad referendum for one of the provinces for approxi- 
mately $2,500.00, which should be closed this week. I have several other 
businesses on the pan, and it does not seem fair to me that we should continue 
working as intensively as we have on the outlook for future business that will 
repay for the spade work, if we are not going to get a fair shake, and I would 
like to have you tell Young just exactly how I feel about the entire proposition. 
If it is true that we have been able to introduce Federal material in this 
country, we can just as easily kill it and work some other line. The agent 
for the German Bergman machine gun, as well as the exclusive representative 
for a large German gas factory, which makes a similar line to the Federal 
or Lake Erie, have been after us for six months or more to drop our American 
line and take on the German one. He can do nothing with it but he knows 
we can. We want to play fair with you and we want to play fair with the 
factories we represent through you, but we also want fair play from you. 

Among other things we talked about. Love confirmed what our agent in 
Bolivia wrote us about last week, and which is that the Federal Laboratories, 
through Grace, had sold Fetleral Laboratory material to the Bolivian Govern- 
ment. We are giving you this information in case you do not know it, in 
order that you may claim from Young the value of our commission. There is 
no reason in the world why we should have worked for a solid year, made a 
tri]) to Bolivia, and did all the initial work, if we are not to profit by the 
business once it is consummated. It is very important that you look into this 
matter, as it is something that interests both you and ourselves, not only from 
a standpoint of doUars and cents, but from a standpoint of business policy. 
If this has actually happened, then with the same judgment, if the Argentine 
Army were to order direct from the Federal Laboratories tomorrow, we would 
be cut out of our commission.. 

I wish you would write me plaiidy and explicitly with respect to the entire 
proposition, as your repl.v to this letter will serve as a base for the work which 
we are now doing and contemplating doing. We are working on two big 
deals, one in Uruguay and one in the Province of Buenos Aires, and it would 
be suicide for us to continue the work, compromising ourselves to certain com- 
mission arrangements, if we are not to be fully protected. 

It is unfortunate that I cannot go to the States at this time and take this 
matter up with you and Young, as I am sure that with a personal interview, 
and with your assistance, that we could thresh the thing out and come to 
something tangible once and for all. It seems that every time we write the 
Federal Laboi-atories (m a matter of business policy, that they always shoot 
from some different angle and never come down to anything concrete, which 
is absolutely necessnry in all business ari'angements. 

I am writing you this in a personal way as I want you to feel that this letter 
is from me to you, not from our firm, and that you can use same as you see fit. 

With best and kindest regards, I am. 
Sincerely yours, 

(Signed) Raoul Leon. 
RL : GHS 



("Exhibit No. 726" appears in text on p. 1784.) 



MUNITIONS INDUSTRY 1907 

Exhibit No. 727 

#1. CC-Sedgley 

March 12, 1934. 
Mr. D. Hai>jopoulos. 

24 Stone Street, New York, N.Y. 

Dear Mr. Hadjopoulos : In accordance ^^•ith telephone conversation. I am 
enclosing photograph of the Marlin machine gun, which can l)e supplied by Mr. 
Sedgley, of Pliiladelphia. I also confirm information which I gave you on this 
subject. 

These guns have never been fired. At the close of the World War the U.S. 
Army, as you can well imagine, had tremendous quantities of newly manufac- 
tured equipment of all kinds in preparation for shipment to Europe. These 
guns are part of this supply that was never used. In accordance with the 
standard practice of the U.S. Government, any ordnance material is always put 
out of commission before being sold publicly. In this case the barrels were 
ruined, but in other respects the guns were intact. Mr. Sedgley has equipped 
these guns with brand new barrels and they are in every sense the equal of a 
new weapon. 

Mr. Sedgley enjoys a very excellent reputation as a gunsmith, and, as I told 
you, he is always not only willing but desirous of selling his merchandise 
subject to test and inspection by the buyer or any designated authority. 

If I can serve you in any way in this matter, I should be only toi> liappy if 
.\ou would call on me. 
Yours very truly, 

C. W. Rich. 
CAVR/fb 



Exhibit No. 728 

[Translation] 

Martins & Cia., 
Porto Aleyre, June 21, 1932. 
Mr. Frank S. Jonas, 

S12 Broadway, New York. 

Dear Sir and Friend: Your letter of April 28th received and we talie pleas- 
ure in replying as follows : John C. Long & Co. of Rio de Janeiro has informed 
us of an article published in the " Diario de Noticias " of Rio which shows that 
the Government of Rio Grande do Sul wishes to acquire a certain quantity 
of munitions and thus we went to the military commander who told us that 
the Government does not propose to buy munitions. We also went to the 
palace where we were informed that the article in the Diario de Noticias was 
not exact and that the Government was not interested now in buying munitions. 

Thus I would add the following : Before the outbreak of the revolution in 
1930 there was here a salesman of a Canadian factory trying to negotiate with 
the Government of this State and really sold them a large order of munitions, 
which was delivered much later, that is, when the revolution was already 
ended. These munitions were destined for the revolution but negotiations 
were carried on in such secrecy that even the commander of the military brigade 
knew nothing of the matter. As for myself I did not think that the revolu- 
tion would arise and that if it did the Government would suppress it. This 
purchase of munitions was made on the basis that payment should be made 
when the revolution was successful, therefore I do not believe that Winchester 
comes into the que.stion as the sales agent because Winchester does not do 
business that way without guarantees. 

Business with the Government is at present very doubtful and payments 
will be very much delayed. If anything should arise I shall let you know. 
I have asked them if we may submit bids when they are again in the market 
for munitions and at that time I think the Government will limit itself to 
Winchester or Federal Laboratories and deal directly with them, preserving 
for us the usual commission. If the Government should shortly decide to 
buy war materials preference will be given to that company which will give 
credits because the financial troubles of the Government will not permit it to 
buy otherwise. I wrote to John C. Long & Co. asking that they send us the 
latest catalogs in I'ortuguese on Winchester, in order that we may give them 
to the Government. * * * Winchester cartridges, caliber 22. We are 



1908 MUNITIONS INDUSTRY 

sorry to say that Winchester cartridges, calil)er .22 short, long, long rifle, and 
.22 automatic have been for some years practically useless because of their 
very low quality. An enormous percentage of the cartridges do not fire, so 
that it is impossible now to sell the .22 here. Some time ago we wrote about 
this matter to Winchester and also to John C. Long & Co. and thus far we 
have had no reply. These cartridges were imported into Rio de Janeiro and 
spread throughout the entire country. You can imagine, my friend, what a 
bad impression this created, and it seems to me that it is high time that Win- 
chester should take some action in straightening out this matter. If new 
business develops I shall see the Minister of War about it. 
For the present I offer you my kind regards, 
Very truly yours, 

(Sgd.) Martins & Cia. 
H/CL 



Exhibit No. 729 

JuxY 12, 1932. 
Mr. Kendrick Van Pelt, 

Caixa Postal 2737, Sao Paulo, Brazil. 
My Dear Van : Enclosed please find copy of a letter I have today written 
to Barata. Please find what it is all about, and if you effect the sale we split 
the commissions. 

I am also enclosing copy of a letter to Martins, my agents in Para, so you 
can see that he will have to be protected with 5%. 

From the news in the papers in the last few days I was sure I would be 
receiving cables from you for all kinds of war materials. According to the 
New York Times the lid is off in Brazil, so get busy and see if you cannot stir 
up something. 

Yours sincerely, 

F. S. Jonas. 
FS J : RL 
Ends. 

P.S. — Please give Barata a Thompson gun catalog. 



Exhibit No. 730 

New York, August 4, 1932. 
Federal Laboratories, Inc., 

Pittsburgh, Pa. 

Gentlemen : I received the following cable from Edmundo Machado & Co. 
in Rio de Janeiro, reading as follows : 

" Reply urgently if possible to ship on the Western World at the lowest price 
300 Federal tear-gas grenades. Payment cash against delivery of documents 
in New York. German eomi^etitors offering similar articles ", to which I replied : 
" Six dollars sixty cents of 500 purchased 10 percent less." 

Yesterda.y afternoon I telephoned Mr. Machado in Rio de Janeiro and he 
insisted on the 30% discount to which I agreed as I note you allow an extra 
10% in lots of 100. He told me he was opening credit in the Guaranty Trust 
Co. and that he had arranged the license for shipment, which had been cabled 
to the Brazilian consulate in New York. Upon my arrival in the office this 
morning I found the following telegi'am from him : 

" Competitors offering similar article at a lower price reply immediately 
minimum prime. Stop. Probably will obtain a new order shortly." 

I then visited the Brazilian consulate and found that the license had been 
cabled permitting the shipment of 300 Federal gas grenades. I then visited 
the Guaranty Trust Co. with reference to the credit, but found that no credit 
has yet been opened. 

I then cabled Edmundo Machado as follows: 

" Competitor offering liquid instead of crystal type gas our exclusive patent 
cannot leak guaranty to stand tropical climate. Sto]). Treasury and other 
departments use Federal exclusively. Stop. INIaximum discount allowable 
30% on grenades. Stop. Goods in transit from Pgh. for S.S. Western World. 
Stop. Consul has permit but Guaranty Trust informed credit unopened; reply 
immediately what about Thompsos guns and cartridges." 



MUNITIONS INDUSTRY 1909 

At 1 : 26 p.m. I received the following rush cable from him : '• Reply imme- 
diately." 

It is now 6 : 30 p.m. and I have not heard anything further. I sincerely hope 
that Lake Erie has not gone ahead and cut prices to such an extent that we 
cannot compete. If I receive a cable in the morning I will telegraph you. 

I do not intend to let the goods go forward unless I receive a check in ad- 
vance and have instructed Mr. DeMay to hold the shipment until he hears from 
me. 

Mr. Love is contacting with the Paraguayan Embassy for airplanes and so is 
Curtiss-Wright. They both stated tliat they intended to see what they can do 
with them on bombs, so I did not interfere. I intended to work both these 
prospects when I go to Washington next Tuesday. 

Mr. Antenor Veiga arrives by plane next Sunday evening from Rio Janeiro. 
He is the partner of Mayrink Veiga who appears to be doing all the buying for 
the Brazilian Government. Mr. Love has asked me to meet Mr. Veiga at the 
airport with him when he arrives. I am a very old friend of Mr. Veiga's and 
I am sure if there is any business I will get it. 

Mr. Love told me today that Colonel Goss had some one at the National City 
Bank (one of the big officials), ask him to give Goss an interview and I believe 
it is set for next Monday or Tuesday. Love, however, assured me that he did 
not intend to have Goss experiment on him, if he has not built airplane equip- 
ment, smoke screens, and bombs. He has promised not to place any orders until 
lie takes the matter up with me. 
Yours very truly, 

F. S. Jonas. 



Exhibit No. 731 

Room 1702, 21 West Street, 
Neio York, N.Y., August 4, 1932. 
Mr. E. H. Pitcher, 

1010 Vermont Ave., Washington, B.C. 

'D'EJiS. Mr. Pitcher: Thanks for your letter of August 3rd. I again called at 
the Paraguayan consulate but could not learn where Mr. Ynsfran could be 
located. I therefore telephoned the Paraguayan embassy in Washington and 
■was told that he would not be there until tomorrow. 

Owing to a shipment I have leaving for Brazil on Saturday and on which it 
was necessary for me to attend to the presentation of the drafts, etc., at the 
bank tomorrow, it will be impossible for me to come to Washington, so I intend 
telephoning Mr. Ynsfran and will endeavor to make an appointment for some 
other day. 

I received the following telegram from P.G.H. today : " Have inquiry Bolivian 
legation Washington also letter from Leon & Bonasegna regarding Para- 
guayan inquiry. Stop. Advise where you want copies mailed." 

To which I replied : " Please send copies Bolivian inquiry and Leon's letter 
to me here in New York. Also duplicate copies to Mr. Pitcher." 

Will appreciate it if you will wire me collect tomorrow what you can ascertain 
as to the urgency of their inquiry and the necessity for my coming to Wash- 
ington or deferring my trip until next Tuesday. 

With regards, I am 
Yours truly, 

F. S. Jonas. 



Exhibit No. 732 

August 17, 1932. 
Mr. Fred Treat, 

1325 East Speechcaij, 

Tucson, Arizona. 

Dear Fred: I received your letter yesterday regarding the loss of the books 
■and also one this morning stating that you had received the records. 

Fortunately, I have a receipt from the express company valuing the books 
at $30, so I am today putting in a claim and as soon as I collect this amount 
I will remit to you. I am certainly sorry that these books were never de- 
livered to you as I am sure you would have enjoyed reading them. 



1910 MUNITIONS INDUSTRY 

I am liusy as liell on the lirazilian I'evohitioii and Paraguay and Bolivian 
situation and I am bidding on a great many things. If I am successful In 
closing half of all the l)usiness I am working on I will be able to pay off my 
debts and have a few dolhirs left over. This is all I want; in other words 
I want to start even again. 

Grace has been away in Maine for a couple of weeks' vacation and came 
back looking fine. Yours truly has not had time to go any place, b-ut if I make 
any money within the next few weeks don't be surprised to see me coming 
out to Tucson to visit you, and, in that event, I will bring a couple of books 
alon^ to help me in nry work. 

With regards and the very best of wishes, I am, 
Yours very sincerely. 



P.S. — Pardon the brevity, but honest old dear, I am so Inisy as a proverbial- 
cat. 

FS J : RL 



Exhibit No. 733 
[Confidential] 

New York, N.Y., August 24, 1932. 

Mr. Young, 

Federal Lnboraforien Inc., Pittshurfih. Pa. 

Dear Mr. Young: I just heard from my friend at the Guaranty Trust Co. 
on the telephone and he told me that while an irrecovable letter of credit had 
been opened it had not been guaranteed by a New York bank, so the conditions 
remain unchanged. 

It appears that Mayrink and Love were getting very nervous about this, and 
they are certainly keeping the wires hot trying to arrange finances. 

The other side has actually placed orders for airplanes and other credits 
have been opened but no orders placed as yet. Negotiations, however, are 
pending. Please destroy this letter after readinjj it. 
Yours very truly, 



FSJ : RL. 



Exhibit No. 734 



F. S. Jonas. 



August 24th, 1932. 



Dr. Edward D. Fei^dman, 

80 West 40th Street, New York, N.Y. 
My Dear Dr. Feldman : Replying to your letter of August 17th. relative to 
Mr. Jonas. 

He has been working day and night on certain deals pertaining to the revolu- 
tion in South America and I am sure this is the real reason he has been unable 
to see you. 

I explained to him when I was last in New York about Mr. Wright. 
I had a dcliglitful time on my vacation what little opportunity I had to b& 
away and feel very much better as a result. 
Very sincerely yours, 

Fbderai, Laboratories, Inc., 
■ — • , President. 



Exhibit No. 735 

New York. New York, August 25, 19S2. 
Mr. John W. Young, 

I'cdrral Lahnratorirs, Inc., Pitts-hnrffh, Pa. 
My Dear Mr. Young : I was advised today to call on United Aircraft, and 
alth()U<rh <;ur i)rices on the Brazilian order were approximately $1,100.00 high, 
I was given this order inirely at the request of Mr. Mayrink Veiga, and I was 
very fortunate he was here or we would have lost. This order is being prepared 
and will be given to me on Monday. The prices quoted were as follows : 



MUNITIONS INDUSTRY 1911 

] 00 25-lb. fmgmentation bombs, loaded $84.50 plus 70 cents freight. 

100 25-lb. " " empty 20.50 " 36 " 

15U 25-lb. demolition bombs, loaded ;>5.50 " TO " 

150 25-lh. '• " empt.v 19.50 " 36 " 

200120-lb. " " loaded 67.00 " $3.37 

200120-lb. " " empty 26.00 " $1.66 

5.000 hand grenades 2.00 each net. 

On the 12th of August you wrote to United Aircraft as per attached letter 
quoting the attached prices for the smaller quantities, but with these prices we 
were entirely out of line. This I happen to know is an absolute fact and can 
give you the proof on your arrival in New York. 

The Peruvian order which I am sending tomorrow is taken at the prices you 
gave nie over the telei»hone and on this order we are approximately $250 high. 

If you will accept my advice, I would advise you to allow this difference on 
both these orders, hecause I will have an opportunity next week of quoting on 
over $200,000 worth of material, and I believe the question will be raised, unless 
you agree to this allowance. If you are coming to New York next week, which 
is not necessary, make it Monday or Tuesday, as there are one or two things 
coming up on which you can be of assistance. However, I do not want you to 
make any special trip for my account. Will telegraph you if I find it absolutely 
necessary for you to come. 

It's no use going into details on the amount of work I have put in on these 
orders, but it is sufficient to say I am glad the deal is over. 

I heard today from a man who happened to be in Cowdry's office that the 
Atlas Powder Company had received a large order from Bolivia for bombs. 
I am trying to check the story and see whether it is true or not. Please see 
what you can do in this directiou. I called W. R. Grace & Co. regarding this 
matter and they do not believe it is true, as they are also working on an order 
for bombs with Bolivia and waiting a reply at any moment. 
Yours very truly, 

F. S. Jonas. 



I 



Exhibit No. 736 

Fedeeal Laboratokies, Inc., 
PittsburgJi^ Pa., U.S.A., August 26, 1932. 
31r. Frank S. Jonas, 

% Exnort Confiolidatedi Companies, 

21 West Street, New York, N.Y. 

My Dear Frank: This acknowledges your letter of August 25th, giving us 
A copy of the United Aircraft order for Brazil. I appreciate the advance in- 
formation on this order, as it gives us an opportunity to get i)roduction all 
scheduled, and if you will send us a telegram when the signed order is put 
in your hands, all we will have to do is to release word, and our entire organ- 
ization will be functioning 100% to expedite shipment. I believe if we could 
■get this shipment out in record time, it will help our chances on future business, 
and we are going to show you some good work along this line. 

We have no record here of what commission you are to receive on the new 
price of $2.00 for hand grenades, but presume you are expecting lO^/', which 
will be applicable in this case. 

It is interesting to know that we were only 21/0% higher than Lake Erie. 
Considering the fact that that they do not have a commission similar to yours 
to pay. we are ui reality 21/2% lower than they are in our factory price, and I 
am quite sure vre are going to be considerably ahead of them in actual 
delivery dates. 

On the Peruvian order. I think, we are probably holding alxiut the same 
relation in regard to price. 

Your suggestion that we refund $1,100.00 is well taken in view of the larger 
-order that is pending. It is much easier to make the suggestion, however, than 
do it. If I come to New York next week, it will be primarily to work with 
you. and it will probably be on Tuesday, as I am supposed to be at a bank 
directors' meeting, 3 : 00 p.m. Monday afternoon at the Citizens Banking Co., 
leaving here about 2 : 00 p.m. Saturday afternoon. 

I have been going over our cost figures once more, and, frankly, to pass 
along the $1,100.00 you suggest would take most of the attractiveness out of 
83876 — :;.-)— PT 7 :.'o 



1912 MUNITIONS INDUSTRY 

this order. As it now sets up, even with what Love passes along, United Air- 
craft is making more than anybody else. 

When it comes to the order for $200,000.00 worth of material, I thinli we can 
consider a discount of 2i/^% or possibly, under exti'emity, 5%, because we will 
have the other two orders already on our books, and they will be carrying the- 
bulk of our overhead, and I am willing to pass this advantage along. 

This is your opportunity, Frank, and I think it is our opportunity, and if 
United Aircraft are trying to squeeze us down that we have to supply this 
material merely as a fill-in, so that after we are all washed up we just made 
expenses, then I think we had better plan to do our business direct in the 
future. I especially want to see you get enough out of this opportunity to get 
on your feet with a comfortable bank balance so that you can travel as you 
want. 

I seriously question the Atlas Powder order for Bolivia. I think this is 
just talk. I have made inquiries, and they seem to know nothing about it. 

I know you get a great deal of satisfaction out of taking an order on some 
other basis than being the lowest bidder. I think, when the situation is all 
washed up, that Frank Jonas will have taken the full lion's share of all the 
business. 

Sincerely yours, 

Fe3>bral Laboratoriets, Inc., 
John W. Young, President. 
JWY : GO. 



Exhibit No. 737 

Manutacturers Export Company, 
47-49 West Street, New York, U.S.A., August 31, 1932. 

Cable address : " Figuerola." 
Dept. : Ordnance. 

Mr. Frank A. Jonas, 

21 West Street, New York City. 
Dear Sir: In accordance with your verbal request, we take pleasure to submit 
the following information : 

We offer, subject to prior sale : 
50,000 Mauser infantry-type rifles, each complete with strap, sheath, 

and bayonet $18. 50 

These arms are perfect and as good as new. Caliber, 7 M/M ; 
model, 98 and 1926. Delivery within 4 wrecks. 

15,000,000 7 M/M cartridges for the above rifles, at, per M 16. 50 

This ammunition is in stock and was mani;factured in 1918 and 
1924. Perfect order. Delivery within 4 weeks. 

5,000.000 7 M/M cartridges for the above rifles, at, per M 17. 50 

Delivery within 4 weeks. This ammunition is in stock, in per- 
fect condition, manufactured in 1919-1924. 

7 M/M cartridges of new manufacture, at, per M 23. 50 

Delivery at the rate of 2 million per month. After the second 
month, 3 million per month. 
36 Schneider light field guns, model 97, caliber 75 nun., complete, 
with perfect condition and as good as new. The equipment in- 
cludes carriage, limber, sights, optical instruments, and ammimi- 

tion carriage. Price, per each unit, f.o.b. European jiort 7, 500. 00^ 

20,000 shells, complete with ignition, at 15. 00 

60 antiaircraft machine guns, cal. 40 nun., model 1/39, latest model 

930; new and ready for delivery. Price, per unit 14,500.00- 

50,000 shots for the above (40 mm.) shells and shrapnel, at 17.00 

50 Vicker.s-Terni, cal. 25, 4 mm. This is one of the latest war ma- 
chine guns. It can be used as field or antiaircraft machine gun. 
It is used for tank equipment. Length of the barrel, 762 mm.; 
total length of the gun, 1455; speed, 150 per minute; range, 

2,800-3,000 meters. Price complete, per unit 1, 830. 00 

20,000 grenades for the above Vickers-Terni machine gun 25, 4 mm., 

per 100 400. 00 

16 machine guns, cal. 20 mm. ; type, L/50 ; model, 1929, vnth tripod, 
prism field glass, accessories, and spare parts. This is specially 
fitted against aircraft. Price, per unit (perfect, new) 5,100.00 



MUNITIONS INDUSTRY 1913 

Ammunition (any quantity), per 100 grenades, spelled " granates "_ 490.00 

Ammunition (any quantity), per 100 light balls 468. GO 

30 75-mm. Krupp field guns, model 05 L/24 ; cal., 75 mm. Each 
battery consists of 6 guns and includes 100 shrapnels per bat- 
tery, "price, per battery 90, 000. OO 

All this equipment is perfect and is delivered in the original 
Krupp equipment, which consist of :-6 guns, 1 spare gun car- 
riage, 7 limbers, 17 ammunition cars, 1 field forge, 1 battery 
car. 
20 mountain batteries, complete, Krupp 75-mm. guns, model 96 L/13. 
Each battery consists of 4 guns and the regular equipment, with 
100 saddles, 200 ammunition boxes, and 400 shots (50% grenades 
and 50% shrapnels). Price, per complete battery, with ammuni- 
tion 68, 000. 00 

Additional ammunition for the above guns, at 24. 50 

200 Hotchkiss machine guns, light type, for 7-mm. cartridge, com- 
plete with two barrels, spare parts, and 88 straps for 50 car- 
tridges each. Guaranteed to be in perfect condition, same as from 
the factory. Price, each 400. 00 

All the above equipment can be delivered very prompt from 4 to 6 weeks from 
date of the order and our acceptance. 

Terms of payment : Irrevocable letter of credit, divisible and negotiable with 
expiration against shipping documents f.o.b. European port. 
Very truly yours, 

Manufacttxrers Export Company, 
( Signed ) J. CuNrLL, De Figueirola. 



("Exhibit No. 738" appears in text on p. 1800.) 



Exhibit No. 739 

Smith & Wesson, 
Springfield, Mass., September 7, 1932. 
Mr. Frank S. Jonas, 

4022 Tvx) Hundred and Nineteenth Street, 

Bayside, L.I., N.Y. 

Dear Mr. Jonas: .38 M. & P. 6" sq., $20.38 each. 

The present merely confirms our conversation of yesterday, in which we told 
you that at the moment we have on hand about 2,500 .38 M & P, square butt, 
6", blue revolvers, which we offer at $20.38 net each, suitably packed for 
export, f.o.b. cars New York City. 

During the return trip last night Capt. Beebe remarked that it might be 
well to approach Mr. Francis H. Love with quotations, owing to the fact that 
" money had been found to finance certain Brazilian shipments." 

You will remember that we gave Mr. Love our regular prices several months 
ago and agreed to allow him a commission on such business that he could insti- 
tute and finance. 

If your remarks refer to Brazilian business, we hope that you will arrange to 
personally secure any orders that may be in the market so that you may enjoy 
the confidential 5%. 

Of course, if the business is engineered through Mr. Love he will be inclinecl 
to demand some compensation. 

Please give this matter your consideration and let us hear from you at your 
early convenience. 

With best wishes, hoping that you will be successful in this venture, we 
remain 

Yours very truly, 

Smith & Wesson, Inc., 
(Signed) F. N. Bungey, 

Export Division. 
FNB : FR 
CC sent c/o F. V. Huber 



1914 MUNITIONS INDUSTRY 

Exhibit No. 740 

October 13, 1932. 
Mr. Fred Trest, 

P.O. Box 2815, Tucson, Arizona. 
My Dear Fred : I am still waiting a check from the Express Co. in payment 
of the books lost. I am again writing them today and are trying to make 
as quick a collection as possible. 

I am waiting to hear from you with reference to the records and as soon 
as you let me know I will purchase some more for you. 

I have been working about 24 hours day and I have done exceptionally well 
and if I only had the time I would come out and see you. I have a very 
interesting tale to tell you when we meet. 

Grace has been on the " outs " most of the time as I have had to do a lot 
of entertaining, but she is O.K. again as I have shown her that it is lucrative 
business. 

Have supplied all the bombs and a lot of other military equipment to most 
of the countries fighting in South America and if they keep it up much longer 
I will have no cause to complain. Let me know when you are coming East 
and I will meet you. 

With regards and the best of wishes, I am, 
Sincerely, 

F. S. Jonas. 
FS.I : RL 



Exhibit No. 741 

October 27, 1933. 
Mr. Walter P. Brown, 

% Byington & Co., New Yorh, N.Y. 

Dear Brown : I received your check for $500.00, for which I thank you. I 
was glad to receive it as I felt it was according to agreement. 

I am sailing for Rio tomorrow on the Western World, and would appreciate 
it if you would honor me with a visit at the steamer. 
Yours sincerely, 

Frank S. Jonas. 
FSJ/fb 

(The following letter is written in longhand.) 

October 21. 

Dear Frank : Since the night in 16 Street, when you accused me of not 
playing the game with you, I have never been able to understand your attitude. 
That fact that Figuerola did not play the game with you is no reason for you 
putting me in his class. I made myself believe that your action was just a 
sudden outburst, but evidently it was not. 

When Byington came to New fork you asked me how he was feeling and 
what his attitude was towards me, and I answered you by stating that he gave 
me 1,000 dollars, which was to let yon know that I was still in good standing. 
I have no reason to believe that this money was given to me for my work in 
the revolution, as he has given me money from his own funds every trip he 
makes to the States for the work I do for him in taking care of his small 
securities here. 

I am enclosing cancelled check so you may see it was from Byington's pri- 
vate account, and has nothing to do with Byington & Co. I know that you 
played 100% with me and I have witli you, but I sincerely and honestly feel 
that this 1,000 dollars is not part of our deal. If I thought so I would have 
settled with you long ago. I am not making excuses, I am telling you what 
I believe. I always thought you had suflScient confldonce in me to play the 
game with you, t)ut the Figuerola deal made you very bitter, and you thought 
that no (jnc \vas on the level. I can only say that I am willing to settle with 
you out of sportsmanship and nothing else. 

With kind regards, 
Sincerely, 

(Sgd.) Brown. 



MUNITIONS INDUSTRY 1915 

Exhibit No. 742 

(Pencil notation: "Rich: Writing you separate letter on the exchange of 
guns.) 

June 21, 1934. 
Mr. Frank S. Jonas, 

% New York Office. 

My Del\e Frank : Glad to get your letters of the 14th and 15th from Panama. 
I cabled you yesterday as per attached confirmation. Your letter regarding 
Huber's activities in Panama City is indeed interesting. I have written to 
Ryan a suggested letter to use in circularizing the Latin American countries to 
counteract such tactics as Huber is using. 

I had an interesting conversation with the vice president of the Lake Erie 
Chemical Co. in Pittsburgh last week. I complained to him about Richardson's 
tactics and the tactics of some of their men here. He seemed to think it was 
smart. He stated one of his men, when asked recently by a police chief, 
" what about Federal and their products ", spoke up and said, " I have never 
heard of the firm before. They must be a veiy small outfit or we would 
know about them." In another case the same representative of theirs replied 
to a police chief who wanted to know about the difference between the two 
products, stating there was no difference, that they made everything Federal 
sells, and it all goes into the same pockets ; that if the chief bought from them 
he would get the same thing. 

There is only one answer to competitive tactics such as this; that is, to 
be on the job and to demonstrate that they are liars in such a manner that 
they are out. 

I predict that the chief of police of Panama City is through with them after 
such treatment. 

I will keep you posted if anything further develops on the Bolivian situation. 
I am instructing Rich to offer to exchange a Thompson gun ^ to the chief of 
police of Panama for one of Lake Erie's guns. 
Very sincerely yours, 

Fedehial Laboratories, Inc., 
J. W. Y., President. 
JWY : GO 



PS. — In my cable to you at Costa Rica I mentioned the name of Ricardo 
Ample, Managua. Because this man has done a little selling for Auto-Ordnance, 
he has received quotations giving his 25% commission or discount, and unless 
you can get him lined up and disposed of or reappointed, it would be vei-y 
unwise to have him footloose. 

Walter Ryan won't be back from his vacation until the first of July, and I 
have only been able to make arrangements with Gray, but I feel confident I 
can put this deal across satisfactorily, particularly if you advise me you have 
taken care of this man. 

J. W. Y. 



Exhibit No. 743 

The Lake3 Eriei Chemical Company, 

' April 21st, 19.32. 

J. W. Young, 

Federal Laboratories, Inc., Pitts'buryh, Pa. 
Dear Sirs : Mr. W. P. Abbey is back at the old trick of supplying new gas 
to the banks where Anakin made installation several years ago. 

The procedure he followed here in Ohio was to take the Lewis-Hughes gas 
from one bank and sell it to the next bank as fresh goods and. at the same 
time, he claimed to make an inspection of the locks, which he is entirely in- 
capable of doing. He would then take the Lewis-Hughes gas which he took 
out of the bank he had sold to the next bank and sell it as fresh goods. 



i(Ink nutation : " Rich on evnn exchange 21-AC."') 



1916 MUNITIONS INDUSTRY 

Apparently, he is following this same procedure over in Indiana at the 
present time. On April 4th he replaced Lewis-Hughes gas in the First National 
Bank of Cayuga, Indiana, using a Federal Laboratories order blank, on which 
he marked "One complete vault gas reload, $13.00; salvage credit, $3.00; 
paid, $10.00." He has a shoe box full of Lewis-Hughes glass bottles, from 
which he extracts three bottles for the charge and hasn't even got sense 
enough to use a separate box to take away the salvage bottles, but mixes them 
right back in the ones he is installing, making it perfectly apparent to the 
banker that he is keeping up his supply by extracting the gas from one bank 
and selling it to another. 

We want to know at once what your attitude is toward this swindle. We 
have one bank prepared to arrest him for obtaining money under false pre- 
tenses, but our own opinion is that the best thing we can do is to send out 
a general warning letter and, inasmuch as he is in your employ and using 
your order blanks, we will certainly let it be known that this swindler is 
working for the Federal Laboratories, and unless you stop him or help us to 
iStop him we will let it be known that the swindle is perpetrated with your 
knowledge and consent. 

I am enclosing a copy of a letter which we propose to send to all banks in 
any territory that could possibly be reached by Abbey, but we will withhold 
the sending of the letter until we hear from you, as this business may be going 
on without your knowledge. 



Very truly yours, 



Lake Erie Chemical Co., 

A. S. AlLES. 



Exhibit No. 744 

[Carbon copy] 



August 9, 1933. 



The Lake Erie Chemical Co., 

3S06 Hough Avenue, Cleveland, Ohio. 

Gentlemen : You have doubtless already read the enclosed clipping out of 
New York newspapers. Such editorials are not doing the industry any good. 

On August 4th I was in Washington endeavoring to stop some proposed legis- 
lation against gas. The legislation being proposed would have, in my judg- 
ment, very unnecessarily handicapped the manufacturers. Most of the day's 
work was spoiled, however, by the account of the New York Stock Exchange 
experience in the afternoon paper. 

We have for a long time frowned upon the sale of tear gasi to sporting-goods 
stores. I notice you have continued to do it. Don't you think the little profit 
you gain from those sales would be very expensive to us both in the long run? 

I have been waiting to hear from you as to a suitable time for our next 
meeting. 

Yours very truly. 

Federal Laboratories, Inc., President. 



Exhibit No. 745 

The Lake Erie Chemical Company, 

December 8, 1933. 

Mr. J. W. Young, 

Federal Laboratories, Inc., Pittsburgh, Pa. 

My Dear John : My understanding was that you were going to call somebody 
down at the Departinent of Justice and have permission granted for us to 
amend our bid offering 2% discount, tlie same as you and I further understood 
that you were going to notify me if you secured such permission. 

That seems to be a more simple procedure than having the Bureau throw 
out the bids and readvertise. I do not see where the payment to us of 50^ 
royalty would cure the situation. 

We are primarily interested in getting an even chance with the Federal 
Laboratories at Government busiiness, not so much for the business itself but 
to offset the advertising your agents are doing all over the country that the 
U.S. Government uses Federal Laboratory weapons and munitions exclusively. 



MUNITIONS INDUSTEY 1917 

The error having been made by the Federal Laboratories in direct variance 
with the written undei'standing, it looks to us like it is up to you to secure 
this permission for us to amend our bid. 
Yours truly, 

Lake Erie Chemical Co., 

A. S. AlLES, 



Exhibit No. 746 

E. I. Du Pont de Nemours & Co., 
Wilmington, Del., January 11, 1934- 
Mr. John W. Young, 

President Federal Laboratories, Inc., 

185 Forty-ftrst street, Pittsburgh, Pa. 

My Deiab John : Thank you very much for your letter of the 9th inst. I 
arrived home safely, but six of the Black Label Johnny Walker whiskey bot- 
tles, which I purchased in Curacao, at $2.10 per bottle, were broken in my suit- 
case somewhere between the Pennsylvania Station and Wilmington. During my 
travels in South America, where opportunities for pilfering are myriad, I had 
the good fortune not to lose a bloody thing. It is rather unfortunate that in 
the States my bag should have been forced open and two bottles taken from it, 
letting the others so loosely packed that probably in heaving the bag from the 
baggage car to the platform, the remaining bottles were all broken. 

I am very glad indeed to learn that your prices as given De Rossi are below 
the English and French quotations. I am very confident that should the Peru- 
vians buy bombs they will get them from you through De Rossi. De Rossi is a 
damn good man ; and if prices are at all competitive, he will obtain prefer- 
ence. Tobin has probably gone haywire on his quotation on 100-kilo bombs. 

Regarding the report from Peru and Colombia on the performance of your 
bombs, the statements made to me l)y the heads of departments at the War 
Office concerning failures were probably due to sinister iniluences working 
against you at those offices, which influences can be very successfully combated 
by our agents in those countries. I do not know who your agent is in Colombia. 
1 would suggest either Hernan Restrepo or Stuart Hosie or possibly Joaquin 
Samper. While these rumors were circulating in the War Department, nat- 
urally I evidenced great surprise and questioned the veracity of the statements, 
hinting that perhaps interested parties were trying to practice sabotage. Sim- 
ilar unfavorable reports were circulated about Remington and also about the 
Mauser rifle offered by Stuart Hosie. The whole matter smells to me very 
strongly of Czechoslovakian mud, and Hosie is trying to get at the bottom of 
the dirt. I am sure he will succeed. 

I am sorry that I was so hasty with you at the pier upon arrival, and I hope 
you will give me an opportunity to talk to you more at length about the situa- 
tion in South America very soon. I do not know exactly when I shall be in 
New York, possibly within two weeks. If you could possibly arrange to be in 
Wilmington before that, I shall be very glad to talk things over with you. It 
was very nice indeed for you to have taken the trouble to meet me in New York, 
and I assui-e you it is very much appreciated. 

With kindest regards, 
Cheerio, 

N. E. Bates, Jr. 
NEB : AKR 



Exhibit No. 747 

Casilla 137 Quito, Ecuador, 

April 21, 19S2. 

My Dear John : Since writing you last we have been in our Indian station 
in Agato, Otavalo. We had a week of joyful simple life. Our visit was a 
blessing to us and we have reason to believe it was also a blessing to Miss Brown 
and Miss Robel, the two brave girls stationed there. Six or eight Indians 
showed a desire to follow the Lord and we prayed with them. Some of them 
had made previous beginnings but had been pulled down by sin. Indian work 
needs a great deal of prayer. 



1918 MUNITIONS INDUSTRY 

Yestorday I saw the Minister of War ajiain and made arrangements to 
demonstrate today. The Minister, two generals, the head of the police of 
Quito, and a nnmher of officers and soldiers were present. I used the "Billy" 
first hut I am sorry to say it did not prove a success. I shot It at two 
soldiers hul tliey were ahle to stand the gas and get me. I then shot the 
grenade in a room and asked the men to go in. This was a real success and 
helped to gain what I had lost through the failure of the Billie. 

Colonel Santor happened to be here on a visit and he witnessed the demon- 
stration. I found out through his conversation with the Minister that he seemed 
secured some gas grenades (larger than yours and black) through the American 
brewer, Yoder. This no doubt is the reason he has been putting me off. It is 
more than likely that he got something out of it. 

Before leaving the Minister asked me to give him the best price on 100 
Billies and 200 grenades. I told him I would write you and have you send 
him quotations and terms direct. Address him Senor Don Leonardo Sotomayor 
Luna. Minestro de Guerra of Marina, Quito, Ecuador. Also send literature to 
Captain Virgilio Guerro, Intendente General, Quito, Ecuador. This fellow has 
been in the States and speaks English. He would appreciate any newspaper 
clippings, etc. 

I have a letter from the Reed boys telling me that they are getting in touch 
with you. It may be best to have them as your agents from now on but I don't 
think they should come in for any of this first order as I 



NoTR. — Written in longhand and the third page is lost. 



Exhibit No. 748 



NM. 



May 13, 1934. 



Mr. ALEJANDRO' Tecxidor. 

P.O. Box 2055, Havana, Cuba. Letter no. 27 

My Del\r Alejandro : Referring to your letter no. IS relative to Thompson 
submachine guns, wish to advise that we do not agree with your interpretation 
that the letter of credit only covers 20 armoured cars. The 10 armoured sedans 
you will notice call for equipment in each of these sedans, and part of this 
equipment is made up of the Thompson giins. It was this partial shipment that 
we made that caused the trouble and which evidently has given Richardson his 
tip to quote the Thompson at $175. 

Four or five years ago it was possible for men like Richardson to get q\iota- 
lions on these guns and they sold them here and there as they could. This 
proved to be a very unsatisfactory method, however, and two years ago the 
distrilnition of this gun was turned over to us. Richardson still thinks he can 
play with the gun. and this is really where we gain the advantage on him. If 
he has taken that order, he will not be able to fill it. The result will then be 
that he has embarrassed himself and will lose face with the Cuban officials. 

Now, as to why we made this partial shipment. You were putting a great 
deal of pressure on us to get equii)ment down there for INIay Day. We were 
running our factory day and night to do it. I believe we would have done our- 
selves a great deal of harm had we allowed May Day to go by and not sent any 
equipment to Cuba. 

On the other hand, you promised me that a letter of credit was being opened 
and would l>e available in New York before this shipment left New York City. 
I therefore felt we should make the shipment, and there wasn't anything left to 
do, really, but to bill it against the letter of credit. It was not until the goods 
had left on the boat that you advised me the letter of credit was not being 
opened ; that you wanted to collect locally, and I wired New York office to have^ 
the bank relea.se the letter of credit. They phoned back they had released the 
local i)ap(>rs in Havana to Mr. Frank Jonas, who shares the office and office 
staff with me and is very close to our business. I told them to mail the New 
York papers to you, so I presume both of you have each of your papers by this 
time. 

The thing I want to point out briefly is this. We are going to a great volume 
of business together. This Company has the credit and are very glad to use it, 
and believe this is expressed in tlie present set-up. I shipped $9,000 down 
and again shipped $25,000 down and haven't received payment yet for either 
shipment, and this is contrary to arrangement we had made between us. 



MUNITIONS INDUSTRY 1919 

As these accounts amount to larger items I think it is very necessary that 
we adhere to a given plan, and feel the plan I left with you, and which you 
said was entirely agreeable, should be followed. 

The thing I like about you is that you are a scrapper, and I don't mind a 
little excitement myself at times. If we are going to do as nmch business as 
you and I think we are going to do there is going to be considerable scrap- 
ping, and I will do all I can to work in a way that whips competition. 

As evidence of this I just talked with Walter Ryan, president of the Auto- 
Ordnance Corporation, which com'iiany owns the Thompson submachine gun. 
He has promised to send you a cable today advising you that w^e are the 
exclusive distrilmtors of this gun and orders from any other people would not be 
filled. That should stop our friend Richardson. 

Please do not be surprised at the tactics of these people. They have pulled 
that same stunt on a number of police departments in the States. Had our 
orders for Thompsons canceled. At tirst I was very resentful over such competi- 
tive practice, but I am learning that this is to our advantage, for those 
people are unable to fill tlie order. The police chief gets peeved over the delay 
they have caused him and comes to disbelieve everything they say. 

You have a copy of their catalogue you tell me, and if you know anything 
about Army ethics you will know that they are violating most everything that 
is sacred to an army officer when they printed this catalogue. Their opening 
liaragraph virtually offers to sell the engineering developments of the U.S. 
War Department to any foreign country. They take their name, U.S. Ord- 
nance Engineers for the purpose of misleading the customers, making thenf 
think they are connected with the U.S. Ordnance. They put their photographs 
in with army uniforms and with the U.S. insignia on the uniforms, something 
that is prohibited by the AVar Department. They take inter-department letters 
out of the army files and reprint them in advertising. Tliey reproduce Govern- 
ment checks they have received in payment of their orders from the U.S. 
Government, a policy which heretofore, I have only known to be done by a 
•' kike " Jew. 

Reputable people do not have to produce Government checks to prove that 
they get Government business. Certainly the Cuban Government would not 
want me to reproduce their checks. They do not siiecify that the order they 
got from the U.S. Government was secured because they were low bidder on 
a competitive item in which a dozen manufacturers were able to quote, and 
that there are a thousand manufacturers that supply equipment to the Govern- 
ment that could do the same thing, but won't. 

A further review of their catalogue will show that a large percent of their 
illustrations apart from their personal photographs deal with Government 
pictures and illustrations, and in reality their catalogue may be called the 
brain-child of an advertising man, and is not backed up by all the manufac- 
turing facilities as they would have you believe was theirs. 

The real truth back of this catalogue is that they had no plan of getting 
into the ordnance business until after Federal Laboratories released their 
catalogue. They then sat down to copy our catalogue and see what they could 
do to follow us in competition. This is a virtual admission from Colonel Goss, 
president of the U.S. Ordnance Engineers. 

Colonel Goss styles himself as ex-chief of Chemical Warfare Service and 
then in small letters he puts down " Second Army, A.E.F." Those who under- 
stand what this means get a much different impression than the average un- 
suspecting person who goes away with the impression that he was ex-chief 
of the Chemical Warfare Service abroad. 

Since getting their catalogues I understand why it has been so difficult 
for an American to get a copy of it, and I predict that there will be trouble 
ahead for them whenever the Army officials happen to get one of these 
catalogues. 

Very sincerely yours. 

Federal Laboratories, Inc., 

• President. 

JWY : GO 



(Exhibits Nos. 749 to 755, inclusive, are sales catalogs of Federal Laboratories 

and are on file with the committee.) 

X 



4 
{ 



I 



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 8 

SEPTEMBER 20, 21, 1934 
LAKE ERIE CHEMICAL CO. 

AND 

U. S. ORDNANCE ENGINEERS 



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




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
83876 WASHINGTON : 1935 



MUNITIONS INDUSTRY 



HEARINGS 

BEFORE T^ . 

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 8 

SEPTEMBER 20, 21, 1934 

LAKE ERIE CHEMICAL CO. 

AMD 

U. S. ORDNANCE ENGINEERS 



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




UNITED STAITSS 
GOVERNMEKT PRINTING OFFICE 
83876 WASHINGTON : 1935 



^)r 



&U6 18 1935 



I 



SPECIAL CO^MMITTEE INVESTIGATING THE MUNITIONS INDUSTRY 

GERALD P. NYE, North Dakota. Chairman 

WALTER F. GEORGE, (ieorgia ARTHUR H. VANDENBBRG, Michigan 

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

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

Stephen Raushenbdsh, Secretary 
II 



OMflMi 



^ SupL c1 Oocumente 






CONTENTS 

Testimony of: ^ase- 
Goss, Byron C, president, Lake Erie Chemical Co., and U.S. Ord- 
nance Engineers 1921, 

1927, 1937, 194S, 1959, 1965, 1971, 1980, 1988, 1997, 2«02, 2008 

Hamilton, Stephen W.. deputy collector of customs. Port of New York 2024 

Huber, Ferdinand V., sales asent for U.S. Orduiince Engineers 1921,. 

1921 , 1925, 1933. 1912, 1964, 1967. 1973, 1983, 1991, 1988, 2000 
Tupper, Ernest A., chief of the division of Foreign Ti'ude Statistics, 

Bureau of Foreign and Domestic Commerce 2017,2034 

Corporate structure of U.S. Ordnance Engineers and the Lake Erie 

Chemical Co 1921 

Secrecy in shipments 1924 

Business relating to machine guns 1932 

Predating of orders to evade embargoes by certain companies 1944 

Erection of gas plants in foreign countries 1947 

Use of United States military connections in promoting sales 1950 

Plans for erection of a chemical plant in Turkey . — 1959 

Use of influence and bribery in making sales 1962 

Relations with Latin-American republics 1984 

Evasion of export licenses 1988 

False labeling of shipments 1991 

Relations of Lake Erie Chemical Co. with the Federal Laboratories 1996 

Department of Commerce statistics regarding the export of munitions 2017 

Difficulties in control of exportation of arms — 2024 

m 



i 



INVESTIGATION OF MUNITIONS INDUSTRY 



I 



THURSDAY, SEPTEMBER 20, 1934 

United States Senate, 
Special. Committee to Investigate 

THE Munitions Industry, 

Washington,, D. G. 

The committee met, pursuant to call, at 10 a. m., in room 310, 
Senate Office Building, Senator Gerald P. Nye presiding. 

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

The Chairman. The committee will be in order. 

TESTIMONY OF B. C. GOSS AND FEKDINAND V. HTJBER 

CORPORATE STRUCTURE OF U.S. ORDNANCE ENGINEERS AND THE LAKE ERIE 

chemical CO. 

The Chairman. Mr. Goss and Mr. Huber, you will come forward 
and be sworn. 

(The witnesses were duly sworn by the chairman.) 

The Chairman. Which one is Mr. Goss? 

Mr. Goss. I am Mr. Goss. 

The Chairman. Mr. Goss, and when you have finished Mr. Huber 
will follow with the same information. Just state your full name 
and residence address, your business, and business connections. 

Mr. Goss. My name is B. C. Goss; business address. Lake Erie 
Chemical Co., 5806 Hough Avenue, Cleveland, Ohio; residence, 2936 
Torrington Road. Was there anything more you wanted me to state ? 

The Chairman. No ; that is sufficient for the present. Mr. Huber, 
you will do the same. 

Mr. Huber. My name is Ferdinand Y. Huber ; business address, 
21 West Street, New York City; home address, 3549 Seventy -sixth 
Street, Jackson Heights, Long Island, N.Y. 

Senator Clark. Mr. Goss, you are president of the Lake Erie 
Chemical Co.? 

Mr. Goss. Yes, sir ; and also of the U.S. Ordnance Engineers, Inc. 

Senator Clark. What is the connection between the Lake Erie 
Chemical Co. and the U.S. Ordnance Engineers, Inc. ? 

Mr. Goss. Would you like me to go a little further back, or is it 
sufficient just to explain the connection? 

Senator Clark. Yes; I was going to have you go into that, 
anyway. 

Mr. Goss. We started with what is called the " Lake Erie Glass 
Co." quite a number of years ago, and, following that, a couple of 
years later we incorporated the Lake Erie Chemical Co. 

1921 



1922 MUNITIONS INDUSTRY 

Senator Clark. When was that? 

Mr. Goss. The Lake Erie Glass, I believe, was 1922, and the Lake 
Erie Chemical was about 2 years later, as I remember. Then about 
1928, I should say, we bought out the Anakin Lock & Alarm Co., 
of Chicago, and the Protex Co., of Chicago, and tliey were ali com- 
bined in the Lake Erie Chemical Co. 

Then the next step was a little over a year ago when we incorpo- 
rated this new company, the U.S. Ordnance Engineers, Inc., which is 
purely an export company to sell certain products of the Lake Erie 
Chemical Co., for which the name Lake Erie Chemical Co. had 
ceased to be suitable — purel}' munitions and such things as were not 
really chemical products. 

Senator Clark. Machine guns, for instance? 

Mr. Goss. No ; not machine guns. 

Senator Clark. I am coming into that later. 

Mr. Goss. That will be fine. Is it permissible for me to make a 
suggestion ? 

Senator Clark. Let me ask a question first. Does the Lake Erie 
Chemical Co. own the stock of the U.S. Ordnance Engineers, Inc.? 

Mr. Goss. No, sir; they do not; but there are substantially the same 
stockholders owning the stock with a few variations. 

Senator Clark. In other words, it is an identity of stock owner- 
ship rather than ownership of the U.S. Ordnance Engineers by the 
Lake Erie Chemical Co.? 

Mr. Goss. Yes, sir. 

Senator Clark. Are the officers identical? 

Mr. Goss. No, sir; they are not. I am president of both com- 
panies, but with that exception I think none of the other officers are 
the same. 

Senator Clark. Are the offices located at the same place? 

Mr. Goss. Yes, sir. 

Senator Clark. Mr. Huber, what is your connection ? 

Mr. Huber. I am agent for the U.S. Ordnance Engineers. 

Senator Clark. Your office is in New York ? 

Mr. Huber. Yes, sir. 

Senator Clark. Now^, Mr. Goss, what was your suggestion? 

Mr. Goss. I have been here since Monday and have followed this 
thing carefully, and if it will be of help to the committee, I will 
be glad to make a statement that will answer in advance a lot of 
questions I know will be asked, unless you would rather ask the 
questions. 

Senator Clark. We will get them out in time. 

Mr. Goss. It will save time ; that is all I thought. 

Senator Clark. I have no objection to your making a statement. 

Mr. Goss. I was going to outline our connection with Mr. Huber 
and the Export Consolidated Co. 

Senator Clark. Suppose you do that. Is that Mr. Huber's com- 
pany, the Export Consolidated Co.? 

Mr. Goss. Yes. It is the one that has exclusive sale of our prod- 
ucts, but we do not pay any of the expenses or anything of that 
sort, it being purely on a commission basis, like any other dealer 
would be. 

Senator Clark. What territory does that agency include? 



1 



MUNITIONS INDUSTRY 1923 

Mr. Goss. It includes all the export business, with the exception 
of China. 

Senator Bone. For what company? 

Mr. Goss. For the U.S. Ordnance Engineers, because the Lake 
Erie Chemical Co. does not sell anything for export, except that 
it is sold through the U.S. Ordnance Engineers, Inc. 

Senator Bone. I understood you to say the U.S. Ordnance Engi- 
neers was purely an export company and handles the munitions for 
the Lake Erie Chemical Co. 

Mr. Goss. That is right, and I say the Lake Erie Chemical Co. 
does not do any export business except through the U.S. Ordnance 
Engineers. 

Senator Bone. Then that company farms its export business to 
the Export Consolidated Co.? Is that the way you arrange it? 

Mr. Goss. That is right. 

Senator Bone. What is the idea of farming it down through two 
or three companies? 

Mr. Goss. No particular reason, except, as I explained, the Lake 
Erie name was not suitable for certain products that are not chemical 
in any sense of the word, and in order not to be handicapped in 
the sale of these we incorporated the new company, which is the 
Export Co., for such products as the Lake Erie makes for export. 

Mr. HuBER. It is really not the Export Consolidated that handles 
it for the U.S. Ordnance Engineers; it is my own private business. 
I handle it as F. V. Huber, for the U.S. Ordnance Engineers, and 
all of the business of the U.S. Ordnance Engineers is carried on 
under the name and on the stationery of the U.S. Ordnance 
Engineers. 

Senator Clark. When was the U.S. Ordnance Engineers, Inc., 
formed ? 

Mr. Goss. About a year ago. 

Mr. Huber. My contract with Lake Erie ceased in December, and 
we made a new contract with the U.S. Ordnance in January of this 
year. 

Senator Clark. Now, Mr. Goss, would you describe the capital 
structure of the two companies? 

Mr. Goss. Both companies have 999% shares common stock 
outstanding. 

Senator Clark. Does it have any par value ? 

Mr. Goss. No par. 

Senator Clark. How much capital was actually paid in on either 
of these companies ? 

Mr. Goss. Back in 1922, $10,000. 

Senator Clark. Was that cash or other assets ? 

Mr. Goss. Both. 

Senator Clark. How much cash; do you remember? 

Mr. Goss. No ; I don't recall that. 

Senator Clark. The capital was in the Lake Erie Glass Co.? 

Mr. Goss. Yes ; the Lake Erie Glass Co. was incorporated to man- 
ufacture colored enamel by a process I developed while I was with 
the General Electric Co. 

Senator Clark. When that was transferred into the Lake Erie 
Chemical Co., what was the capital structure of that? 



1924 MUNITIONS INDUSTRY 

Mr. Gross. It was in stock. 

Senator Clark. No new cash entered into the transaction? 

Mr. Goss. No new cash, except by that time the Lake Erie Glass 
Co. had made some money. 

Senator Clark. When the U.S. Ordnance Engineers was incor- 
porated, what was paid in on that? 

Mr. Goss. Well, we have missed a step in there. When we bought 
out the Anakin Lock & Alarm Co. and the Protex Corporation there 
was an additional $10,000 in cash put in, and in between that time 
and the time when the U.S. Ordnance Engineers was formed, there 
was another $20,000 cash put in. But when the U.S. Ordnance was 
formed there was no additional cash at that time. 

Senator Clark. So that the U.S. Ordnance Engineers did not 
represent any cash at all. 

Mr. Goss. No additional cash. 

Senator Clark. Did they have any other assets except the contract 
with the Lake Erie Chemical Co.? 

Mr. Goss. Yes. As I explained, the new company was for the 
purpose of furthering the export business, and a portion of the 
money and other assets of the Lake Erie Chemical Co. was trans- 
ferred to the new company, as they would need some capital, and the 
amount of capital in the new company now is greater than that 
left in the Lake Erie Chemical Co. 

Senator Clark. So that the stock in the U.S. Ordnance Engineers, 
Inc., was in the nature of a dividend from the Lake Erie Chemi- 
cal Co. ? 

Mr. Goss. Yes ; substantially that. 

Senator Clark. No new assets came in to the U.S. Ordnance Engi- 
neers, Inc., except by transfer from the Chemical Co.? 

Mr. Goss. That is right. 

Senator Clark. For which the stockholders of the Lake Erie 
Chemical Co. took stock in the new company? 

Mr. Goss. That is right. 

Senator Clark. You say the stock of the new company is now 
greater than that of the old company; what is the stock of the new 
company ? 

Mr. Goss. Not the stock, the assets. 

Senator Clark. I mean the capital, or the assets of the U.S. Ord- 
nance Engineers, Inc. 

Mr. Goss. As I recall it is divided about two-thirds to the new 
company and one-third to the Lake Erie, due to the fact the Lake 
Erie was a going business and did not need the capital. It is around 
$100,000 for the Ordnance and $50,000 in the Lake Erie. 

SECRECY IN SHIPMENTS 

Senator Clark. Now, Mr. Huber, I direct your attention to a let- 
ter dated February 24, 1933, which I offer in evidence under the 
appropriate number. 

(The letter referred to was marked " Exhibit No. T56 " and is in- 
cluded in the appendix on p. 2041.) 

Senator Clark. I ask you, Mr. Huber, to look at this letter just 
offered in evidence and state what was the reason for goods going to 



MUNITIONS INDUSTRY 1925 

Colombia being marked " Siam." That is as far from Colombia as 
you can get? 

Mr. HuBER. The consular agent of Columbia told me in the start 
when we started selling munitions that they did not want anything 
of this nature to get out, nobody was supposed to know they were 
buying anything, and, consequently, I advised the factory that any 
correspondence pertaining to this would be called Siam business. 

Senator Clark. Were the goods marked " Siam " ? 

Mr. HuBER. No; not when they were shipped; this is just corre- 
spondence between the factory and myself. 

Senator Clark. I notice in this letter you say [reading] : 

I was unsuccessful in contacting Commander Strong here, and delayed my 
advice to you until the last minute. 

What were you trying to contact Commander Strong about — 
you were apparently not as successful in contacting him as your 
competitor, the Federal? 

Mr. HuBER. This is February 1933 and I don't remember what 
was previous to that. It might have been something regarding 
specifications of the order. 

Senator Clark. Did you have any business dealings with Com- 
mander Strong? 

Mr. HuBER. I think the colonel wrote me something about that, 
and said to contact Commander Strong and get the proper specifi- 
cations. 

Senator Clark. Did you ever have any business dealings with 
Commander Strong, Colonel Goss? 

Mr. Goss . Yes. 

Senator Clark. Just tell us what that was. 

Mr. Goss. It was rather unfortunate for us. 

Senator Clark. Was that when he was in the United States Navy 
or the Colombian Navy, or both ? 

Mr. Goss. Let me tell you the story of that. 

Senator Clark. Just go ahead. 

Mr. Goss. We had an inquiry from the consul general of Colombia 
one day for certain material, and instead of answering that by mail, 
I took it down to the consul general's ofSce the next morning. 

Senator Clark. When was that, do you remember? 

Mr. Goss. No ; I don't remember when. 

Senator Clark. Do you remember the year? 

Mr. Goss. It was 1933; I remember that. I started telling the 
consul about the virtues of our product, showing him the drawings, 
and so forth, and he told me this, now, wait a minute — I am not 
quoting him exactly, but just the approximate nature of the con- 
versation — he said, " I don't know anything about this myself, but I 
have a man that is advising me on it, and I will not buy anything 
without his O.K." He said, " You better get in touch with him and 
talk to him about these specifications." 

So I said, " That is fine. Who is this man ? " He said, " It is Mr. 
Strong." I said, "Where is he? ", and they tried to get him on the 
phone but were unsuccessful, and finally they gave me his telephone 
number in Philadelphia. I called that number and asked for him, 
and he was not there, and I left a message for him to call me. Later, 
when he came in he called me, and I introduced myself and asked 



1926 MUNITIONS INDUSTRY 

him if I could come down there, to which he agreed. I went on to 
Philadelphia that same evening, getting there about 9 o'clock in the 
evening, and went out to his house and introduced myself and told 
him why I was there. We sat a couple of hours talking about these 
products, and I showed him figures and drawings, and he quizzed 
me about what I knew about aerial bombs. At the conclusion of this 
conversation he said, well, he thought he could get mj^ office an order ; 
and he said, " If I get it, can I get a commission on it." I had pre- 
viously been told that they would not do anything without his 
O.K., so I did not see any reason why I could not give him a com- 
mission, and I asked him, " How much do you want? " 

Senator Clark. Who did you understand he was representing at 
that time ? 

Mr. Goss. I did not understand anything, except I knew he was 
asked for advice. He did not say anything about what his relation 
was or what he was, and at that time I knew nothing about what he 
was or what his relations were to the consul. 

Senator Clark. Did you know at that time that Commander 
Strong was an officer of the United States Navy ? 

Mr. Goss. No ; I did not. So we agreed to give him 5 percent if 
he was successful in getting the order for us. We later got one very 
small order. I think it was two hundred 30-pound ring-type frag- 
mentation bombs, on which we paid him his 5 percent. 

I am not sure about the chronology of these things, but from time 
to time we got additional requests for quotations coming out from 
the same source, the Colombian consul. 

The next time, I believe — I understood this arrangement with 
Strong was still in effect — but it happened that our competitor's bid 
was lower than ours. I do not know whether Mr. Strong was re- 
ceiving anything from the competitors, but I expected to have his 
support in getting this business again if he was there, and I pre- 
sumed that he would be. But their bid was considerably lower than 
ours, and we were offered half of the order at their price, and we 
said, " Much obliged, we are not interested in trading our dollars 
for yours " ; that we did not want it at that price. 

Somewhere along the line here I found out that he was being paid 
by the Federal or somebody, just as we were supposed to have been 
paying him a commission on any orders. 

Senator Clark. He was catching them going and coming, was he? 

Mr. Goss. Yes. I heard rumors that he was in the same relation to 
Driggs, Miranda, and others, so I said, " Nothing doing." That is 
the only time we have paid him, and that amount, I think, was $250. 

Senator Clark. Do you know in what connection it was you told 
Mr. Huber to contact Strong, and Huber reported on the 28th day 
of February that he could not reach him ? 

Mr. Huber. That was on specifications, and I think we can show 
that. 

Senator Clark. Then this letter, " Exhibit No. 756 ", goes on and 
says [reading] : 

I talked to the consul and it seems that he was sore because information 
had been getting around about purchases by Colombia, and I added insult to 
injury of the other fellows by telling him that the last shipment was made 
up with old TNT. 

That was a Federal shipment? 



MUNITIONS INDUSTEY 1927 

Mr. HuBER. No ; I think that was Driggs. 

Senator Clark. You were telling him about some other com- 
petitor shipping bad TNT, and he was then talking about the gun 
fights, and so forth. What was it he said about that? 

Mr. HuBER. He said he had heard that from other sources. 

Senator Clark. Did you understand he was going to shoot up 
you, Driggs, or somebody else? 

Mr. HuBER. No; I had heard him say that he had almost shot a 
man for it. He did not believe it. In other words he was rather 
incensed about it and said, " If you can prove that I will guarantee 
to give you all of our business." 

Senator Clark. Then you say in this letter : 

I tried the system of scaring him into it and the reaction was very favorable. 

How did you go about scaring him ? 

Mr. HuBER. I told him that our merchandise was the very best, and 
that we gave him more for his money than anybody else would give. 

Senator Clark. That was not calculated to scare him and to bring 
about a favorable reaction, I should think. I read further from this 
letter as fallows : 

lie duly cautioned me not to let my stenographer find this out, because she 
is a friend of tiie stenographer in the Peruvian consuhite, and I told him that 
I mailed his inquiry directly to you and have no copy in the files. He was 
emphatic in stating that he would refuse the order, if the news leaked out. 
You had therefore better identify this order as " Siam ", in your operations 
as well as in loading them, etc., until they are finally on the boat, and paid for, 
even after they are shipped don't mention Colombia, as they might have another 
order some day. I will take out my own telegrams asd write my own letters 
about this in order that there is no slip up from this office. 

Ola no says that he thought he was asking for Army specifications when he 
wrote the letter and says that he will hold to Army specs. He wants tail fuses 
on the 300-and GOO-pound bombs. 

If we could prove my statement that the last order for bombs was filled with 
old TNT, in writing, I will guarantee you this order in hand. Could an aflB- 
davit or letter be obtained from some witness in a reasonable time? If so, this 
will cinch the order, but — as Comm. Strong probably was their inspector that 
received the shipment it might be a boomerang, and Strong might find a pretext 
to turn down our shipment (if we get it). 

i Was that about the time you had become suspicious of Strong's 
activity ? 

Mr. HuBER. I did not know that Commander Strong was getting 
a commission ; the colonel did not even tell me about it. 

Senator Clark. So even though he was looking for a pretext, they 
turned down your order? 

Mr. HtTBER. Sure. 

Senator Clark. Reading further, the letter says: 

Altho Olano told me that he had asked others for quotations, I am rather 
inclined to believe that he did not ask Federal to quote, because this was one 
of his stipulations to Young last September, and Jonas told every dog and his 
brother, gloating about " the big order from Colombia." 

Olano was the Colombian consul? 
Mr. HuBER. Yes. 

Senator Clark. Now, Colonel Goss, what is your customary 
method of shipping these tear-gas bombs? 

Mr. Goss. What is the method of shipping what — these bombs ? 

Senator Clark. Yes; shipping these bombs. 

Mr. Goss. I don't know if I understand the question. 



1928 MUNITIONS INDUSTRY 

Senator Clark. Is it safe to carry thorn around in a trunk, for 
instance ? 

Mr. Goss. Yes; it -would be perfectly safe. You cannot ship 
them, except under interstate-commerce rej^ulations, and they have a 
certain number, I.C.C. 40, and you stamp that on the box. 

Senator Clark. What was this incident of your ]Mr. Pa"\vley carry- 
ing a trunkful of bombs on the steamer with him? 

Mr. Goss. Well, he didn't do that. He was leaving for China and 
he was very anxious to take these bombs with him, and asked us 
to ship them out to him to the port, which was either Seattle or San 
Francisco, I don't remember which. He thought he would be al- 
lowed to put them in his trunk and take them with him, but when 
he asked permission to do that, the steamship company refused. 
Then those bombs were shipped back to Cleveland and we had to 
ship them through the Barr Shipping Co. 

Senator Clark. You write this letter to Mr.Pawley. dated IMarch 
26, 1934, which I offer in evidence. 

(The letter referred to was marked " Exhibit No. 757 " and is in- 
cluded in the appendix on p. 2041.) 

Senator Clark. Mr. Pawley was connected with Intercontinent 
Aviation ? 

Mr. Goss. Yes; he was president. 

Senator Clark. They were establishing aviation schools of some 
sort in China? 

Mr. Goss. Intercontinent Aviation, as I understand, is a subsidiary 
of Curtiss-Wright, or perhaps of the Sperry Corporation, or, at least, 
they are connected up, I do not know the exact connection. Inter- 
continent Aviation, as I was told, was formed to construct and 
operate air lines in several foreign countries, including Turkey, 
China, Cuba, and I think another country was Peru. Mr. Pawley 
was president of that Intercontinent Aviation. Does that answer 
the question? 

Senator Clark. What I was getting at was the relationship be- 
tween your company and Mr. Pawley. These were sample bombs 
you were furnishing Mr. Pawley, and I want to know what he was 
going to do with them. Did he have an agency for you ? 

Mr. Goss. Yes; he did. Previous to this Intercontinent had had 
an order from China for one thousand 100-pound demolition bombs 
which they had asked us to fill, and as a result of that when he was 
going back to China he wanted our representation on this equipment, 
and also he wanted to take samples with him, and he came out to 
Cleveland and spent a little time learning as much as possible about it. 

Senator Clark. You say in this letter : 

I have your letter of March .5th, enclosing copy of letter from Mr. C. F. 
Wang, engineering oflBcer, Central Aviation School, Hangchow. 

That is after these bombs were shipped to him? 

Mr. Goss. Yes. 

Senator Clark. Then the letter reads further: 

I greatly regret that this has occurred, but believe you know the reason for 
it, as you remember these samples were shipped to you at the boat, as you 
intended taking them with you in a trunk and, for this reason, they were not 
packed in soldered tin cases as are all of our export shipments. 

Will you explain that, please? 



MUNITIONS INDUSTRY 1929 

Mr. Goss. This is almost self-explanatory. We sent them to the 
port thinking he could get permission to take them with him on the 
boat, but he was not allowed to do that, and they were sent back to 
Cleveland and asked to be forwarded through the Barr Shipping 
Corporation. 

Unfortunately, on account of that slip-up, when tliey were sent 
back they were not repacked, they were not packed in tin in the first 
place, thinking he was going to take them in his trunk. So when 
they were reshipped b}^ regular ocean freight the shipping depart- 
ment forgot to put them in tin as they are usually packed. 

On the boat going over all of this is carried as deck shipments^ 
on account of possible fire or something happening, and in Tact it is 
very difficult to get the steamship company to handle this class of 
merchandise at all, and particularly anything that has the word. 
" gas " attached to it, so that on the way over they were apparently 
soaked with water and arrived in that condition, which is in very bad! 
condition. 

That is what he is referring to. 

Senator Clark. What does Wang have to do with it ; that is, the. 
Central Aviation? 

Mr. Goss. He is the man who received it. Mr. Pawley sent it 
to the aviation school, where he was going to give the instruction. 

Senator Clark. What were these, bombs or grenades? 

Mr. Goss. They were largely police equipment. 

Senator Clark. Suppose you differentiate between bombs and 
grenades. Colonel. 

Mr. Goss. In the first place, vv'e have been in the tear-gas business 
ever since about 1924, that equipment being manufactured for police,, 
prisons, banks against burglary attacks, and that sort of thing, and 
the equipment consisting essentially of grenades, candles, gas clubsy 
and long-range gas guns. 

Senator Clark. A grenade is something that you throw by handy 
is it not ? 

Mr. Goss. That is right. 

Senator Clark. And n bomb is an aerial bomb. Is that the 
differentiation ? 

Mr. Goss. The two words are very loosely used by the press and 
by the public. 

Senator Clark. I understand from the correspondence that you 
and Federal do not have the same classification. I am trying tc> 
get your classification. 

Mr. Goss. I personally never referred to a grenade as a bomb. By 
a " bomb " I mean exactly what you indicate there. It is a larger 
thing, generally dropped from an airplane. There are mortar bombs 
and projector bombs. It is used for big things and the phraseology 
is not very accurate and, as I say, it is not accurate the way it is used. 

I do not remember just whut your question was. 

Senator Clark. I was trying vo. get at the differentiation between 
a bomb and a grenade. What equipment do you deal in. Colonel? 

Mr. Goss. Do you want me to go into it in chronological order? 
We started on colored enamels. When the Lake Erie Chemical Co, 
was formed, we started making police equipment, tear-gas equipment, 
and we made similar products, what is called " Detecto Gas ", for 



1930 MUNITIONS INDUSTRY 

fumigating houses and killing vermin, and we make a spray for 
protecting cloth from moths and we make '' Chlorocold " for treating 
colds with chlorine gas. A large part of the chemical business was 
the vault and safe protection business for quite a long time. We 
had the contract 4 years for i^rotecting United States post offices 
against burglaiy, the automatic equipment going on the vault door. 

Senator Clark. That was tear gas? 

Mr. Goss. That was tear gas; and saved dozens of them. 

Senator Clakk. Do you use sickening gas for the same service? 

Mr. Goss. No; we never use it. It would not be suitable for that 
purpose. What is called sickening gas or DM is not as instantaneous 
in its action on the individual as tear gas. They use that when they 
"Want to produce an effect lasting longer and not an instantaneous 
effect. It is not suitable for stopping a rush of rioters, bandits, or 
anything else. 

Senator Clark. What else do you sell? 

Mr. Goss. We make daylight hold-up equipment for banks which 
is both electrically and manually operated. We make night protec- 
tion for both vaults and safes and for warehouses and similar places 
that are attached to the doors, such as the New York Central Rail- 
road freight doors, which were protected by means of this equip- 
ment. 

Those, I think, w^ere the chief of the Lake Erie Chemical Co.'s 
products. 

Senator Clark. How about the U.S. Ordnance Engineers? 

Mr. Goss. Tw^o years ago, or perhaps a little less than that, there 
seemed to be quite a demand for certain types of munitions, such as 
aerial bombs, particularly, and we were asked on a number of occa- 
sions if we could furnish them, and we first said we could not, and 
then we started making inquiry as to whether we could, and the first 
order that we sold was this one to Intercontinent Aviation for China, 
and that Avas sold by the Lake Erie Chemical Co. before the new 
company was organized, and I think there were perhaps one or two 
others sold before we organized the new company. But the name 
" Lake Erie Chemical Co.", as you can see, was not suitable for that. 

Senator Clark. What else do j^ou deal in; that is, the United 
States Ordnance Engineers? 

Mr. Goss. What else ? 

Senator Clark. Yes, sir. 

Mr. Goss. Other than aerial bombs, you mean? 

Senator Clark. Yes, sir. 

Mr. Goss. We make any number of products, all of which are 
shown in our new catalog. In general they are military equipment, 
anything that we are equipped to make and know how to make. 

Senator Clark. Do you nuike any machine guns ? 

Mr. Goss. I can answer that best by beginning at the beginning, 
because I could not make an answer yes or no which would answer 
the question. 

Senator Clark. You do deal in machine guns. You can answer 
that yes or no, can you not? 

Mr. Goss. Yes ; I could answer it " No ", but it would give you a 
misunderstanding of the true situation, and, therefore, I do not want 
to answer it " No ", and I want to tell you the situation. 



MUNITIONS INDUSTKY 1931 

Senator Clark. Make the explanation, but the correspondence 
clearly shows that you do. 

Mr." Goss. I beg your pardon. I am going to ask you to retract 
that in a minute. The story of that situation is this : 

Back a year and a half or perhaps more ago I was in Griffin & 
Howe's store, and, as you know, they are manufacturers of possibly 
the finest sporting guns and rifles made in this country, and Mr. 
Griffin introduced me to an expert German machinist that he had in 
there named Hyde, and told me that Hyde had been working a couple 
of years on a machine gun at home in his spare' time, that he had a 
workshop in his basement, and asked me if we would be interested 
in selling that gun as something to counteract the competition of 
Federal Laboratories, who had the Thompson gun. I told him I 
certainly would, if it were an improvement, and it was a good 
gun. I think it was not ready at that time even to test or demon- 
strate, but sometime after that, when I was in New York again, we 
went over to Abercrombie & Fitch's basement, where they have a 
shooting range, and shot this gun, and I saw that it was far simpler 
than the Thompson gun, having onl}^ one moving part instead of a 
large number of moving parts, and I was quite taken with the thing. 

At that time they gave me an option on this gun, when, as, and 
if it was ready for actually putting on the market. There had to 
be some more work on it. That condition existed for quite a long 
time. I wrote them a number of times asking them what they were 
doing and whether they had got the thing finished yet, and the 
answer was always that Mr. Hyde was very busy with his own work 
and flid not have much time, except his time at home, and he had not 
finished it yet. And it went along in that same condition until last 
year, and he had not finished it yet, and it went along in that same 
condition until last winter I was down in Senator George's territory, 
doing a little quail hunting, and Mr. Huber wrote me down there 
that he was going to some South or Central American country, and 
wanted to know if he could take this gun with him ; that he had been 
in touch with them in New York and was satisfied it was now ready 
for the market. 

I wrote back that inasmuch as I did not know anything about it 
personally, that I did not want it sold under the name of the Lake 
Erie Chemical Co., but if he felt satisfied that it was ready for the 
market, I had no objection to his taking it along and taking any 
orders he could get in the name of his own company, the Export Con- 
solidated Co., and I believe that you did that, Mr. Huber, and 
got one order on that trip for five or six guns from the Government 
of Panama. 

That is exactly the condition the thing is in right now. I have not 
yet given my permission for selling it under the name of Lake Erie 
Chemical Co., but I have given Mr, Huber and Mr. Richardson, when 
they are on trips, if they are satisfied with the condition of the guns, 
to sell it under the name of the Export Consolidated Co.; and I 
also agreed to help finance the manufacture of such guns if they got 
orders for it in return for a percentage of the profit from it. 

That is the present status of it. 

Senator Clark. That was in the name of the Lake Erie Chemical 
Co. that you entered into that agreement? 

Mr. Huber. That is right. 



1932 MUNITIONS INDUSTRY 

BUSINESS RELATING TO MACHINE GUNS 

Senator Ci-ark. I call your attention to a memorandum agreement 
under date of May 4, 1934, with Mr. George J. Hyde and/or the Hyde 
Arms Co., 952 Adelphia Street, Brooklyn, N.Y. I will ask that that 
be appropriately numbered. 

(The document referred to was marked " Exhibit No. 758 " and 
is included in the appendix on p. 2042.) 

Senator Clark. That document reads in part as follows: 

Dear Sir: Tlie Lake Ei-ie Chemical Company of Cleveland, Ohio, agrees to 
employ you for a period of six mcmtlis at a salary of ,$300 per month to manu- 
facture machine guns and do such other work as we may direct at our plant 
in Cleveland. We alsd agree to purchase from you at cost and to transport 
to Cleveland such harrels and other parts as you may have on hand and which 
are applicable to your latest model gun, and also to transport to Cleveland j-our 
milling machiiie which we will also later purchase from you at cost less rea- 
sonable depreciation if you so desire. The $200 recently advanced to you shall 
be applied toward the purchase price of the above-mentioned barrels and parts 
which you now have. 

We further agree to apply for and prosecute patent applications covering 
your machine gun, magazines, etc., and to advance all costs of same including 
drawings, etc., against royalties. You agree that resulting patents will be 
assigned to the Lake Erie Chemical Company, who will pay you or the Hyde 
Arms Company a royalty of (5%) five percent of the gross net sales of my 
gun and other inventions. By gross net sales is meant the total net amount 
which the company receives after sales commissions have been paid. 

You agree to vote your stock in the Hyde Arms Company in support of the 
above agreement, in which you own a total of 165 out of 250 authorized, of 
which 195 is outstanding. In case any of the above transactions are functions 
of the Hyde Arms Company rather than yours as an individual, you agree to 
cause such action to be taken by the Hyde Arms Company. 

Receipt of one dollar and other valuable consideration is acknowledged by 
you in consideration of this agreement. 

The Lake Erie Chemical Company, 
By B. C. Goss, President. 

As soon as we know where we stand on getting a patent, etc., we will arrange 
some way of taking cra-e of Mr. Griffin's claim, probably by making you an 
advance against royalties sufficient to take care of him and also the other two 
men. 

Does that represent the status of the agreement? 

Mr. Goss. That represents an agreement which was never carried 
out. 

Senator Clark. Was it executed? 

Mr. Goss. What do you mean by executed ? 

Senator Clark, Was it signed? 

Mr. Goss. Oh, yes ; it was signed. 

Senator Clark. It produced a valid contract? 

Mr. Goss. It produced a valid contract except that Mr. Hyde never 
went through with his end of it. I might go on to say that I drew 
up that thing in a very brief manner, when I stopped in New York 
on the way to Turkey, and Mr, Hyde was to go out to Cleveland him- 
self and spend several months there, and was going to help to make 
some guns in our shop, and make the drawings for the patent appli- 
cation, and so forth and so forth, and Mr, Hyde went out to Cleve- 
land, and he is a very peculiar character, and it is very hard to under- 
stand his mental reactions, but he was dissatisfied and did not like 
being away from New York, and felt he was not going to get enough 



MUNITIONS INDUSTRY 1933 

money out of it, after the agreement was signed, and got on the train 
and went back to New York without saying anything to anybody in 
our organization. So that the thing never went into effect and the 
status is just where it was, that we have never taken the thing over. 

Senator Clark. Mr. Huber, you sold some of these guns, did vou 
not? 

Mr. Huber. Yes, sir. 

Senator Clark. I call your attention to a letter dated July 6, 1934, 
from yourself to the U.S. Ordnance Engineers. Inc., Cleveland, Ohio, 
which I will ask to be appropriately numbered. 

(The letter referred to was marked " Exhibit No. 759 " and is 
included in the appendix on p. 2043.) 

Senator Clark. Did you sell these guns intending to use Thomp- 
son magazines with them? 

Mr. Huber. Yes, sir ; we did use Thompson magazines. They are 
interchangeable. 

Senator Clark. This is a. letter to the U.S. Ordnance Engineers, 
Inc., being a letter from you, Mr. Huber, and in that letter you 
state : 

I find that last Friday or Saturday a regulation was put into effect that an 
export license was required from the State Department for shipping of arms 
or ammunition to Cuba and today have made application for 61 gams and 
three magazines in the event that we are able to obtain the Thompson 
magazines. 

Was that because there were not magazines for the Hyde guns, or 
because magazines for the Hyde guns were not suitable ? 

Mr. Huber, Magazines for the Hyde guns were not suitable. 
Hyde had a round magazine, but he had not finished it. 

Senator Clark. You were trying to buy up Thompson magazines 
to use them in the Hyde gun ? 

Mr. Huber. That is right. 

Senator Clark. The letter continues: 

The customhouse in New York advise us that permits are now required for 
China, Honduras, Nicaragua, and Cuba. We inquired as to Bolivia and Para- 
guay, but the customhouse states there is no permit required, which shows 
they are not well informed. 

What United States official told you the permit was not required ? 

Mr. Huber. They did not tell me personally. I sent a fellow over 
to the customhouse to get the blank to make the application upon and 
he inquired where permits were necessary. 

Senator Clark. Was that the customhouse in New York ? 

Mr. Huber. That is right. 

Senator Clark. And he was informed that no permits were re- 
quired, this being immediately prior to July 6, 1934? 

Mr. Huber. And they gave him a list of the countries requiring 
a permit, and he said to them, " How about Paraguay and Bolivia ? " 
And they said, " There is no regulation on that ; there is no permit 
required." 

He came back to the office and I said, " They are crazy." 

Senator Clark. Could you tell us^ to what official he talked there. 
Mr. Huber? 

Mr. Huber. No ; I do not know. 

Senator Clark. I would be interested to find out. 

83876 — 35— PT 8—2 



1934 MUNITIONS INDUSTRY 

Continuing with the letter: 

Wc still liave four weeks in which to deliver the 300 magazines if they are 
obtainable and I have another order from Panama calling for 24, which I would 
like to supply as an accommodation. Hyde finished this morning 63 guns and 
the whole Oriffin & Howe organization have been working day and uiglit to 
complete this production on time. 

Hyde was having his guns manufactured by Griffin & Howe? 

Mr. HuBER. He has parts made at various places. He took them 
u]) to Griffin & Howe to finish them up. Certain machining, and 
so f;)rth, was done up there, and fitting, and so forth. 

Senator Clark. He was having the gun barrels made by Win- 
chester, was he not? 

Mr. HuBER. Winchester made his gun barrels; yes, sir; and some 
castings wore made in Jersey and some machining done in Jersey, 
and some sights which he imported. 

Senator Clark. This was a 45-caliber gun ? 

Mr. Huber. That is right; the same caliber as the Thompson. 

Senator Clark. Do you know how much of an order H^'^cle gave 
Winchester ? 

Mr. Huber. One hundred barrels, I understand. 

Senator Clark. Is it not a rather unusual jDrocedure for a con- 
cern like Winchester to take on an order like that? 

Mr. Huber. It was all the barrels. 

Senator Clark. I understand; but it required Winchester to tool 
up and make them, did it not? 

Mr, Huber, Yes; but they expected to get more business and took 
the first order, I understand, for $5 a barrel. 

Senator Clark. You do not know whether or not Winchester were 
making these guns for somebody else besides yourself ? 

Mr. Huber. No, sir; I do not know. They might have made the 
barrels for Thompson. 

Senator Clark. They were made by Colt, were they not? 

Mr. Huber. The gun is manufactured by Colt, The barrels might 
have been made by Colt, Winchester, or anybody else. 

Senator Clark. What are the parts made in New Jersey? 

Mr, Huber. If I showed you a picture of the gun, perhaps I could 
tell you better. 

Senator Clark. All right; suppose you do that. 

Mr, Huber, Tlie i^art containing the magazine, holding the maga- 
zine, is a casting. I understand that was cast over in some foundry 
in Jersey. 

Senator Clark. Do you know tlie name of that concern which 
cast it? 

Mr. Huber. No ; T do not. 

Senator Clark. Tt is not particularly material. 

Mr. HuBFJi, I think that big barrel there, the rear part of it is 
made over in flersey. Tlie wooden stocks were made at Griffin & 
Howe's phint, and the inside mechanism. I think, was cast over in 
Jersey and macliinod over in Jersey, That is about all I know 
about it. 

Senator Clark, Now, I understand that these guns were so manu- 
factured as to readily use Thompson magazines. Is that correct? 

Mr, Huber. That is right. The magazines are interchangeable. 



MUNITIONS INDUSTRY 1935 

Senator Clark. Is that because your outfit or, rather, the Lake 
Erie Chemical Co. and Hyde did not want the expense of manufac- 
turing his own magazine ? 

Mr. HuBER. No. Hyde was working on developing a round maga- 
zine, but he never could get the thing right ; and a round magazine 
slips in the same as the Thompson magazine. As the round maga- 
zine never developed, we abandoned it altogether. 

Senator Clark. You never made any magazines of your own ? 

Mr. HuBER. Straight magazines; yes, sir. 

Mr. Goss. I think I was responsible for that, because I was the one 
conducting the conversation with Mr. Hyde. I asked him to make 
it so that the magazines were interchangeable for both kinds, be- 
cause, if a police department had one gun, say the Thompson gun, I 
wanted them to be able to use either magazine in the gun for their 
convenience and to make it simpler for the user; and it would help 
cut down sales resistance if the magazines were interchangeable on 
both kinds. 

Senator Clark. But neither you nor Hyde manufacture or had 
manufactured for you any special magazine for the Hyde gun? 

Mr. Goss. Yes; we did. Right from the beginning we have been 
working with Mr. Hyde in this matter, advising him that we wanted 
a magazine, but we wanted not a round magazine but a straight 
magazine. 

Senator Clark. Were any special Hyde magazines ever manu- 
factured ? 

Mr. Goss. Oh, yes. 

Senator Clark. Who manufactured them? 

Mr. Goss. He did. 

Senator Clark. Where were they made? 

Mr. HuBER. He made them himself. They are straight magazines 
and not round. 

Senator Clark. They were made by Hyde ? 

Mr. HuBER. They were made by Hyde. 

Senator Clark. He made them personally? 

Mr. HuBER. That is right. 

Senator Clark. How much? 

Mr. HuBER. He made 61 for the guns which were shipped, and he 
made probably 30 or 40 more, or, say, 100 altogether. 

Senator Clark. Were you here yesterday when the memorandum 
from Mr. Jonas was read, in which he said that these guns were 
being sold and that the only name on them was on the magazine, 
which was marked " Thompson " ? 

Mr. HuBER. Yes. 

Senator Clark. Were these guns sold in South America as Thomp- 
son guns? 

Mr. HuBER. No, sir; absolutely not. 

Senator Clark. Did you sell them yourself? 

Mr. HuBER. I sold them myself. Here is the way the thing hap- 
pened : I flew from Nicaragua to Costa Rica and got to Costa Rica 
and could not find them. 

Senator Clark. To whom did you sell the guns? * 

Mr. HuBER. The chief of police in Panama City. He carried me 
to David, Panama, and I left the gun and samples in David and 



1936 MUNITIONS INDUSTRY 

went to Panama City without anything as to that type of mm and 
showed a picture, and they said, " Send us the sample gun ', and I 
sent them on my return going home, and from Guatemala City I sent 
them air express to the chief of police in Panama, and he compared 
the gun and ordered five more from me. 

Senator Clark. You said that you w^ere going over to see Mr. 
Groves at the Guaranty Trust Co., who were handling the estate. 

Mr. HuHER. I think that means the Ryan estate. 

Senator Clark. It does not say so. 

jMr. HuBER. It is copied wrong. 

Senator Clark. I could not figure it out. What was the Ryan 
estate doing with the magazines? 

Mr. HuBER. I understood the Guaranty Trust Co. took over as a 
trustee the Ryan estate and among other things took the Thompson 
machine gun on the auto ordnance. 

Mr, Goss. I think it will clarify the situation if I answer a ques- 
tion which has not been asked. They asked for 300-round magazines 
with the guns. 

Senator Clark, They asked for Thompson magazines, did they 
not? 

Mr. Goss. In the first place, no one knowing a gun from a broom- 
stick would take it to be an imitation of the Thompson gun, because 
they are very different, but thej^ wanted the round magazine origi- 
nally, and we asked the Federal Laboratories if they would make a 
magazine for this gun, which, however, they refused to do. It was a 
story which was finally settled by making the straight magazine 
and sending them down on approval, and I believe they were 
approved. 

Mr. HuBER. We got a subsequent order for straight magazines. 

Senator Clark. Mr. Huber. I call your attention to a letter dated 
May 21, 1934, which I offer for appropriate number, signed by you, 
and addressed to the Lake Erie Chemical Co., attention Mr. A. S. 
Ailes, 

(The letter referred to was marked " Exhibit No, 760 " and is 
included in the appendix on p, 2044,) 

Senator Clark. Mr. Ailes was vice president of your company? 

Mr. Goss. Yes, sir. 

Senator Clark. Along about the middle of the page you are talk- 
ing about the contract between Hyde and your company, you state : 

I was over to the office of MacDevmott & Turner, 165 Broadway, to discuss 
the matter regarding tlie gun and as Mr. Hyde was present they suggested 
certain changes in the set-up in order to have the contract with Mr. Hyde more 
liberal and at the same time more definite. Mr. Robert Cauldwell, of the 
above-mentioned firm, discussed this proposition witli the notes from Mr, 
Turner, and they wanted to submit the following : 

First. Mr. Hyde wants a longer period of employment specified in the con- 
tract, or a cash allowance in addition to the royalties, to pay off Mr. Griffin, 
Griffin & Howe, and other moneys that he has spent in the development of 
this gun. 

Second. The expenses in obtaining and defending tlie patent for the account of 
Lake Erie Chemical Company are not to be charged against Hyde's royalties. 

Third. Tlie machinery referred to in the contract to stay in New York. 

Fourth. The sale of the gun in New York City be licensed to Hyde. In dis- 
cussing this Mr. Hyde thought it would be all right to work with me as long 
as I had the control of the sales in New York City, but Mr. Hyde believes that 
he can sell more of them in New York City than anyone else. 



MUNITIONS INDUSTRY 1937 

Do you agree with that, Mr. Huber? 

Mr, Huber. He told me he had made a connection with the police 
department. That is what he told me. 

Senator Clark. Your company was supposed to have very close 
relations with the police department, was it not? 

Mr. Huber. That is what he told me. I told him I did not think 
he had any better connections. 

Senator Clark. There was a statement which was made yesterday, 
wdien yon were probably present, Colonel, in which Mr. Love, who 
was affiliated with you in some sales operations, stated you had the 
police department of New York in the hollow of your hand. 

Mr. Goss. I wish he was right. I was not aware of the fact. I 
think it is untrue, and I criticized and scolded Mr. Huber and other 
people for making statements like tliat, but the situation was just 
this: That after competitive demonstrations had been made, to the 
best of my knowledge the New York City police department had not 
bought any other gas than ours for a period of 3 or 4 years, and I 
told Mr. Huber that, and perhaps he told Mr. Love that, or whoever 
wrote that letter. 

Senator Clark. "What about the statement of Love that you get 
an order from the police department of New York every 2 or 3 
weeks for gas? 

Mr. Goss. That, again, is " horsefeathers." I wish it were true. 
It was on an average of about once a year when we got orders, but 
sometimes those orders would come in groups — that is, one order 
for precinct stations or emergency squads. I do not know how they 
were fixed, but I do know there was a time when we got several 
orders in a period of a month, and there were no more for a year 
again. 

Senator Clark. Do you still furnish all the gas requirements for 
the New York i^olice department ? 

Mr. Goss. No. sir; we have furnished all that have been delivered 
to them. I will say that, but the last order which they placed was 
placed with B. & T. Munitions but it was never delivered, and prob- 
ably never will be. 

Senator Clark. Why not? 

Mr. Goss. Because they do not exist any more. 

Senator Clark. You mean B. & T. do not exist ? 

Mr. Goss. No. That is what I told Inspector Dittman, one of the 
reasons for a little controversy which developed between us — I do 
not know whether you want me to go into that. 

Senator Clark. You mean in your relations with the New York 
police department ? 

Mr. Goss. Yes. 

Senator Clark. I would be glad if you would. I am interested 
in these statements that you hold the police department of New York 
in the hollow of your hand. 

Mr. Goss. The situation was, as I stated, that for several years 
they bought no gas except from us, which was on the basis of their 
own tests, and so forth. This year, when the time came around to 
buy gas, this B. & T. Munitions Co. had been working very hard on 
the New York police department, and Inspector Dittman, trying to 
sell them a grenade which de Bobula and Tauscher had developed, 
and which was in violation of a number of patents. 



1938 MUNITIONS INDUSTRY 

Senator Ci.ark. Who is this that is trying to sell them? 

Mr. Goss. De Bobula and Tauscher; the B. tt T. munitions, in 
other words. This was the Captain Taiischer. who has been referred 
to several times in the testimony in the last few days. In the process 
of trying to sell their grenades they told inspector Dittman that it 
contained 90 grams of tear gas, chloroacetophenone. 

So that when he was ready to buy tear gas, he sent out a request 
for a quotation on 200 hand grenades, containing 90 grams of CN. 

I was just about to leave the country and instead of writing him, 
I had two samples made up of a grenade very similar to the ones 
he had been furnished in previous years, and that he had found 
quite satisfactory, and it was a special construction that we do not 
use for anybody else. 

I took them into his office along with a letter and I told him 
that I was not going to divulge either to him or to anybody else 
the composition of our grenade. I told him further that it was 
not possible to put 90 grams of CN in that grenade. 

I handed him the letter in which I said that — 

I am handing you herewith two samples of grenades of the types which 
w.e are willing t(j iurnish you and a price of $5.50 i; r a quantity of 200. These 
grenades contain a certain nuniher of grams of smokeless powder and so many 
grams of other chemicals. 

And I said : 

I am not going to tell you what those other chemicals are and I am not going 
to tell anybody. You can test those samples and if they are satisfactory you 
can buy them ; if not, it is all right with me. 

So that that developed into sort of a controvers3^ Inspector Ditt- 
man later claimed that that letter was written with the intention 
of deceiving him, although I told him at the time very specitically 
that I was not going to tell him what the other chemicals were and 
simply stated in a letter that it contains so many grams of other 
chemicals. It was something in the neighborhood of 120 grams of 
other chemicals. 

At any rate, they persisted in this — now wait a minute. There 
is another step in there. This was just about May Day. It was 
just about May Day, was it not, Ferdo? 

Mr. HuBER. It was the 27th of April. 

Mr. Goss. At any rate, we got a wire out at the plant that they 
had to have these 200 grenades at New York Monday morning. I 
believe Tuesday was May Day and that the inspector would 
bu}' me or Ferdo or somebody a dinner, if we would get them to him 
Monday morning. 

As i explained these were special grenades, these were not our 
regular production. We had none of them in stock and I had some 
of the men work all of Saturday afternoon and some on Sunday in 
order to get these shipped. 

The telephone order that was given Mr. Huber — I do not know 
the exact wording of it, but the Avay we got it out at the plant 
was that we were to make these up like the samples submitted, 
which we did. But they never accepted those grenades. They 
turned them down on the ground that they did not contain 90 
grams of CN per grenade. 

Senator Clark. Is that the lot that the Department rejected? 



MUNITIONS INDUSTRY 1939 

Mr, Goss. That is right. So they turned them down, and we had 
a long argument in order to get them back, because they laid around 
there for 2 or 3 months, I guess, before I finally succeeded in getting 
them back. 

In the meantime they sent out specifications again, saying the same 
thing — 90 grams of CN — and B. & T. got the order, but they have 
never filled it. 

Senator Clark. I call your attention to a letter dated May 17, 
1934, from Mr. Huber, of the Lake Erie Chemical Co., attention Mr. 
A. S. Ailes, headed " Not to be repeated and strictly confidential." 
I offer that letter as'^Exhibit No. 761." 

(The letter referred to was marked '* Exhibit No. 761 " and is in- 
cluded in the appendix on p. 2046.) 

Senator Clark. This letter says : 

Deab Mb. Ailes: Following my letter of yesterday to Inspector Dittman, 
I called on him this afternoon to ascertain the exact status of tlie grenades 
that we supplied. In previous contacts with the inspector he always assumed 
a rough-shod conversation, but today he was very cordial, open, and politely 
very frank, and for tliis reason I am taking the matter very seriously in 
order to put up the picture to you. I do not have a copy of Colonel Goss' 
letter to Inspector Dittman dated April ITth. but the colonel referred to 
this letter in a pencil note on his letter of April 28th. 

Mr, Goss. It was very unfortunate that he did not have a copy 
of it, or he would not have written the letter. 

Senator Clark. The inspector had refused some grenades, it says 
in the next paragraph. Those were the grenades that you had 
sent him ? 

Mr. Goss. Yes. 

Senator Clark. The letter reads : 

The inspector refused the shipment of grenades, reporting to the purchasing 
department that this is not what he ordered and is instructing the quarter- 
master to return them to you. I asked him how they were going to dispose 
of this order, and he said they would give it to the lowest bidder on a content 
of 90 grams of CN, and so far De Bobula is the lowest bidder of $6 less 10 
percent, but he supposes that if Federal or ourselves would underbid De 
Bobula, we could have the business. I told him that this is quite improbable, 
and he is determined to get grenades of 90 grams CN content at as cheap a 
price as possible, and I see no way of getting around this excepting that you 
might arrange with Federal to underquote De Bobula. 

Your relations with the Federal were very strained, were they not? 

Mr. Goss. That came out this morning. 

Senator Clark. Your relations with them were very strained? 

Mr. Goss. Yes. 

Senator Clark. You were accusing each other constantly, like a 
pair of pickpockets. What do you suppose put it in Mr, Ruber's 
head to suggest this arrangement with Federal to underbid De 
Bobula? Were you in the habit of doing things in collusion with 
the Federal Laboratories? 

Mr. Goss. The truth was what put it in his head, just as was 
stated this morning, on that particular type of thing there is a 
patent, and Federal and ourselves had a patent suit, or there was a 
beginning of a patent suit. The patent suit was finally adjusted by 
our taking out a license under the patent, w^hich gives a perfectly 
legal right to set a price on anything containig this certain burning 
mixture. 



1940 MUNITIONS INDUSTRY 

Tliat is an unfortunate thing, from our standpoint, but it was 
nothing that we could heliD. Any price changes on that sort of 
thing had to be agreed to by them. 

Senator Clark. The letter goes on to say : 

The inspector then repeated the disagreeable transactions and connections 
that he has had with Lalie Erie, and while he will not go out of his way to do 
us any harm, he will tell anyone who asked him their opinion of Lake Erie 
Chemical Co. the history of his disagreeable transactions, which he explains 
to be very unbusinesslike. 

It seems that the inspector was a little bit tired of being in the 
hollow of your hand. 

Mr. Goss. Do not quote me on that. 
Senator Clark. The letter continues: 

While I was sitting there he received your letter of yesterday explaining the 
affair of the National Equipment Corporation of Kansas City, which he .said 
was another black eye and a poor explanation of the facts. His idea of satis- 
faction was that you should fire the National Equipment Corporation as a.iients 
and also make them retract every circular that they send out regarding the 
machine-gun statements. He also stated that their opinion was that the 
machine gun was not yet ready for the market, and he would so answer any 
inquiry that came to him regarding it. He recently was asked what sub- 
machine gun the police department used, and naturally replied Thompson was 
the only one that they had but there were other ones in experiment but not 
yet fully developed. 

Who was the National Equipment Corporation ? 

Mr. Goss. What he was referring to there was something that was 
a mistake. It was not done with our consent. The National Equip- 
ment Corporation is an individual out in Kansas City. I do not even 
remember his name. Mr. Ailes handles all of these domestic sales. 
But we had told a number of our representatives who kept writing 
in and wanted to know if we did not have a machine gun that could 
compete with the Thompson gun, for police-department use — that is, 
Mr. Ailes had told a number of these representatives that we were 
working on such a gun. Then, following the progress of this thing, 
he apparently had written this man in Kansas City that this gun 
had been tested by a man in the New York Police Department, and 
he repeated some remarks that this man had made which were quite 
complimentary to the gun. 

Senator Clark. That was the Hyde gun? 

Mr. Goss. Yes; that is right. This local man out there, entirely 
unauthorized, got out a printed bulletin about the thing saying that 
it was approved by the New York City Police Department which, 
of course, it was not. I do not blame Inspector Dittman for being 
sore about it. 

Senator Clark. He says that his idea of satisfaction was that you 
should fire the National Equipment Corporation as agents and also 
make them retract every statement that they sent out regarding the 
machine gun statements. 

Did you follow his suggestion and fire the National Equipment 
Corporation ? 

Mr. Goss. No. Mr. Ailes is in charge of our tear gas sales and he 
severely censured him for sending out the bulletin. But I do not 
concur in Inspector Dittman's suggestion that he should be fired, 
because it was a mistake. 

Mr. HuBER. The Colonel was in Turkey when that took place, 
Senator. 



1 



MUNITIONS INDUSTRY 1941 

Senator Clark. I understand that, but it seems to me that a matter 
such as this, involving the New York City Police Department, is one 
of great importance and should have been handled very carefully. 

This letter continues : 

As tlie inspector owes me a dinner he offered to bet me a dinner in order 
to cancel it, that no patent suit would stop De Bobula from supplying tear-gas 
grenades. Upon his insistence I accepted the challenge. He then pointed to 
your photostatic letter of February 13, 1933, to the Federal Laboratories by 
Kwis, Hudson, and Kent with the remark that he has been in the special 
investigating service for many years and now learned that. These lawyers were 
also lawyers for Federal Laboratories, and after a lengthy conference between 
yourselves and Federal the lawyers told both of you that there were no patents 
at all that would hold water and that De Bobula could and would go ahead 
with manufacture regardless of patent suits. He predicted that either or both 
Federal and ourselves could only stop De Bobula by buying him out. 

What transpired? 

Mr. Goss. A suit was filed against him by Federal Laboratories, I 
believe. We offered to join in that, but we did not do so. 
Senator Clark. He also says: 

Younii' is usually in town on Thursdays and Fridays and if you want me to 
I will talk to him about preparing a suit against De Bobula for infringement, 
and, or, both of us putting in a quotation lower than $5.00 on a 90-gram CN 
content grenade. It is a matter for both of you to decide whether or not you 
want De Bobula to get the advertising of the N.Y. police dept. or whether you 
also want to come out with a round grenade. Inspector Dittman analysis of 
De Bobula's grenade reveals a CN content of 93 grams. 

Did you join with Federal in that suit? 

Mr. Goss. No ; we did not. 

Senator Clark. Did you have anything to do with it? 

Mr. Goss. We offered to. 

Senator Clark. You consulted with Federal about bringing suit 
against De Bobula. 

Mr. Goss. Yes. 

Senator Clark. Thej being the patentees and you the licensee? 

Mr. Goss. That is right. We offered to help in any way that 
we could. 

Senator Clark. But they did not desire your assistance. 

Mr. Goss. No; I would not say that. They preferred to bring 
suit in their own name, and we offered to help in the testimony or 
in any other way that was necessary. 

Senator Clark. Did you bear any of the cost of the litigation? 

Mr. Goss. No. 

Senator Clark. Has the case been decided? 

Mr. Goss. I do not think it was ever actually filed. It certainly 
never came to court, because they busted up before they had a 
chance. 

Senator Clark (reading) : 

In conclusion, I want you to fully realize that Inspector Dittman has con- 
vinced himself that Lake Erie have not played fair and have used methods 
varying from veiled threats to misstatement of facts which are incorporated 
in the colonel's letter of April 17th, and the statements of machine guns as 
well as the past history of your transactions with them. He also insinuated 
something regarding your responsibility for having used these methods. 

I cannot conceive how we could satisfy his department excepting to give 
his department some distinct advantage, possibly by putting in 200 candles 
to be paid for when and if used or to be paid for after a specific period, but 
even so, I think he Avould reject the offer if we would not come down in the 
price to at least meet De Bobula or underquote him. 



1942 MUNITIONS INDUSTRY 

Was any such proposition ever made ? 

Mr. Goss. No, sir ; and there never will be. 

Mr. HuBEE. This whole letter was just my personal slant on the 
situation. 

Mr. Goss. It was a matter of not having very much information, 
because I had handled that New York City situation personally. 

Senator Clark (reading) : 

I cannot realize any wisdom in the colonel's letter to Inspector Dittuian 
of April 17th which was misleading regarding the CN content, because you 
offered by telephone yesterday to put 90 grams of CN in a candle at regular 
prices. I feel sure that the colonel knew what he was talking about when 
he told me that it Mas physically impossible to put 90 grams of CN in a 
candle, and it turns out that Federal are able to put it in their Jumbo 
grenade and that we can do the same. Such misleading information is treach- 
erous and I have given you the above picture very frankly, and you should 
regard it as strictly confidential information, and I positively do not want to 
be quoted on any of it, but you may guide yourselves accordingly. 

What was the fact, Colonel. Could you not put 90 grams of 
CNin? 

Mr. Goss. Senator, I hesitate to repeat a scolding in public, but 
Mr. Huber is not a chemical man and does not understand these 
chemical terms any better than I can understand or remember these 
Spanish words. The whole difficulty there arose from this phrase- 
ology that we were talking about awhile ago. He mixed up the 
word " candle " with the word " grenade " and I said to Inspector 
Dittman that it was impossible to put 90 grams of CN in a grenade, 
not in a candle. 

I believe you have already read in that letter that Mr. Huber said 
that he had never seen my letter of March 17, and in the last para- 
graph he is criticizing me for having written it. 

Mr. Huber. No; I never saw it. Inspector Dittman showed it to 
me, but I had no copy of it. 

Senator Clark. Mr. Huber, I call your attention to a letter dated 
September 13, 1933. from Mr. A. F. Spring to Hr. Huber, and I offer 
the letter as " Exhibit No. 762." 

(The letter referred to was marked " Exhibit No. 762 " and is in- 
cluded in the appendix on p. 2047.) 

Senator Clark. What position does Mr. Spring hold? 

Mr. Goss. He is vice president and he is also superintendent of the 
plant. 

Senator Clark. He says : 

Dear Hubeb : Yesterday we received your cable for a quotation on two 
thousand (2,000) rifles and are doing everything possible to locate two thousand 
guns which we believe would be in acceptable condition but cannot tell you 
anything at the present minute. However, we expect to have full information 
on these on Friday, and will communicate with you immediately. 

Where did Mr. Spring propose to get those 2,000 guns, do you 
know? 

Mr. Huber. I was down in Nicaragua at the time. I sent a cable 
up here asking them to see if they could get 2,000 rifles. The letter 
is addressed to me in New York, but my brother was in the office 
there at the time. He thought maybe we could find a lot of rifles 
around some place. Nicaragua wanted to buy 2,000 rifles. I sug- 
gested to them in the cable either to my brother or to the factory 



MUNITIONS INDUSTKY 1943 

directly, to see if they could get them from the United States 
Government. 

Senator Clark. Did they get the guns? 

Mr. HuBER. No. 

Senator Clark. From any source? 

Mr. Huber. Xo. They have not. Up to the present time they 
have not bought them. I think I am going to get the order 
eventually. 

Senator Clark. You mean you have not sold the guns because you 
could not get the guns or because Nicaragua would not take them? 

Mr. Huber. Not in this country. They wanted Springfields and 
they are not available here unless the United States Government 
sees fit to sell them to them. I do know where there is a lot of 800 
Springfields over in Europe which I have been trying to sell them 
ever since. 

Senator Clark. The United States Ordnance Enofineers do deal 
in rifles? 

Mr. Goss. This is not an activity of ours. Mr. Huber has the 
right to do business, other tlian our business, and that is why I 
explained he had this company of his own, the Export Consolidated. 

Senator Clark. Is Mr. Spring an officer of your company or of 
Mr. Huber's company? 

Mr. Goss. Absolutely not. But we would do them that favor, if 
we could help to get the rifles, if we knew where to get them. 

Senator Bone. Springfield is the regular Army gun, is it not? 

Mr. Huber. That is right. 

Senator Bone. It is the regular United States Army rifle ? 

Mr. Huber. That is correct. 

Senator Bone. How did great quantities of them get to Europe? 

Mr. Huber. They were left there after the war. 

Mr. Goss. They were sold as surplus. 

Senator Bone. To whom were they sold? 

Mr. Goss. Anybody that would buy them. 

Senator Clark. They practically gave them away. 

Mr. Goss. They were sold at auction. 

Mr. Huber. They were surplus material. 

Senator Clark. I understand that the United States Ordnance 
Engineers were simply going out to get these rifles as an accommo- 
dation to Mr. Huber? 

Mr. Huber. That is right. 

Senator Clark. The second paragraph of this letter refers to an 
automatic gun. Is that the Hyde gun that Mr. Spring was talking 
about ? The letter says : 

In regard to the automatic gun, I would suggest that we wait uutil your 
return before taking up the various questions with Mr. Griffin unless you 
should be successful in placing an order in the meantime, and in which case, 
of course, we must have a very detailed report on all difficulties which you 
have encountered in order that these may be eliminated on any future guns. 
I believe your understanding is correct that Mr. Griffin has one hundred (100) 
of these barrels, and should be able to make delivery within the time specified 
in your letter. 

Is that the Hyde submachine gun that he is talking about ? 
Mr. Huber. That is right. 



1944 MUNITIONS INDUSTRY 

PREDATING OF ORDERS TO EVADE EMBARGOES BY CERTAIN COMPANIES 

Senator Clark. I call your attention to a letter of Januarv 9. WM^ 
from Mr. Goss to Mr. Huber, which I will offer as " ExiiibitNo. 703. "" 

(The letter referred to was marked " Exhibit No. 768 " and is in- 
cluded in the appendix on p. 2048.) 

Senator Clark. This letter reads: 

I am advised that the five submachine guns will he retidy on Saturdiiy of thi? 
week without magazines, and we can obtain tlie magazine.-? here. 

What were those guns? 

Mr. HuBER. Those were the Panama guns. 

Senator Clark. They were for the Panama police department ? 

Mr. Huber. That is right. 

Mr. Goss. It might help to a further understanding of this to say 
that you have only sold two orders of these Hyde guns anywhere: 
one was the Cuban and one was the Panama. 

Mr. Huber. That is right. 

Senator Clark. And noAV, Mr. Huber. I call your attention to a 
letter dated May 11, 1933, from you to Col. B. C. Goss, which I will 
offer as " Exhibit No. 764." 

(The letter referred to was marked " Exhibit No. 764 " and is in- 
cluded in the appendix on p. 2048.) 

Senator Clark. This reads : 

According to the papers of this morning, it seems as though the League of" 
Nations is going to eliminate South American bomb business. With your per- 
mission, I will send a cable to Mayrink Veiga 

Who is Mayrink Veiga? 

Mr. Huber. Our agent in Brazil. 

Senator Clark (reading) : 

* * * or you could send it directly suggesting that they place the bomb- 
order with us immediately and antedating the contract so that we would be in 
a position to fill the order because it is altogether possible that any move on 
the part of the League of Nations would not hinder existing contracts. 

In other words, Mr. Huber, you were proposing to violate the law 
by simply dating back the contracts and then claiming that it was a 
contract already in existence when the embargo went into effect? 

Mr. Huber. That is virtually correct. Is not that what I said 
there ? 

Senator Clark. Was that done ? 

Mr. Huber. No. 

Senator Clark. What is your reaction to that, Colonel ? 

Mr. Goss. My reaction was that we did absolutely nothing about it 
and had no intention of doing any such thing. 

Senator Clark. You had no scruples of any sort about the violat- 
ing the law in this regard, Mr. Huber? 

Mr. Huber. It would not have been me. It would have been them 
down there. 

Senator Clark. You were suggesting to them to do it. You were 
responsible for the suggestion. 

Mr. Huber. I have been in those countries many years and I know 
how they do things clown there. 

Senator Clark. You have no scruples of any sort about this- 
violation ? 



MUNITIONS INDUSTRY 1945 

Senator Bone. Can you tell us whether or not that is the technique 
•developed in order to get around our present embargoes? 

Mr. HuBER. I will tell you where I got that idea. When was that 
[referring to letter] ? That was May of last year — I suppose it has 
been done. I do not know of any specific instances when that was 
done. 

Senator Clark. Did you ever hear of it being done before, or did 
jou evolve that out of your own inner consciousness? 

Mr. HuBER. Probably it came out of myself. 

Senator Bone. You say that that is the way they do business 
down there. Is that a sort of a quaint old South American custom? 

Mr. HuBER. One of them. 

Senator Clark. I call your attention to a letter dated July 13, 
1934, addressed to the United States Ordnance Engineers, from Mr. 
Huber, which I offer as " Exhibit No. 765." 

(The letter referred to was marked " Exhibit No. 765 " and is in- 
•cluded in the appendix on p. 2048.) 

Senator Clark. This was just a couple of months ago — July 13, 
1934. 

Upon receiving your sx)ecial delivery I immediately called Fiala Outfits, Inc., 
and they advised me to order 4 dozen 38 Smith & Wesson special tear-gas 
•cartridges, and I wired you accordingly. 

Mr. Johnson, of Griffin & Howe, advised that they import the barrels and 
mechanical parts of the over-and-under guns, assemble, and fit them here, as 
well as the engraving, and that a good gun would cost about $300 to $350. 
I told Johnson this gun was for you, and he said he would be glad to give it 
to you at a minimum profit, but ordinarily they get from $500 to $1,000 for 
them. He also said that he had a Browning over-and-under gun for about $100. 

What are over-and-under guns? 

Mr. Huber. The colonel can explain that better than I. It is a 
shotgun of some kind. 

Senator Clark. Suppose we have the colonel explain it. 

Mr. Goss. That is a sporting shotgun, a very expensive one. It 
has 1 barrel above the other instead of the 2 barrels parallel, as most 
double-barrel guns have. It costs about $400 apiece. 

Senator Clark. In the postscript of this letter Mr. Huber says: 

If you do not want the order for 2,500 1-pounders, at $3.80, do you have 
any objection to referring this inquiry to Hercules Powder? Please advise. 

That was ammunition, was it not? 

Mr. Huber. Yes, sir. 

Senator Clark. Did you supply that sort of ammunition, Colonel? 

Mr. Goss. No; we do not make that. 

Senator Clark (reading) : 

I hate to lay down on the 4" motor proposition, but in turn will concentrate 
on the 2%" projector. Grapevine rumors report the Federal are making up a 
new badge for them. 

What did that mean, Mr. Huber? 

Mr. Huber. That should probably be " batch." Either a new 
batch or a new bomb for them is what it should mean. 

Mr. Goss. A new batch is what that should be, I think. 

Senator Clark. What is grapevine? 

Mr. Huber. General rumors that you get on the street or any 
place else. I got a lot of grapevine rumors right here in the last 
couple of days. 



1946 MUNITIONS INDUSTRY 

Senator Clark (reading) : 

If this is true someone else will get in bad, as I assume that tlie Colombian 
Consulate ordered the two fuses from us to check Federal, but we supplied 
them a sample of the army standard fuse and not the tail fuse for their bombs. 

Then you also go on. Mr. Hiiber : 

The grapevine also reports that the Bolivian order was increased to $3,000,000 
from an original order of $241,000 in order to get around the embargo as secre- 
tary * * * 

Who was the grapevine in this case with reference to the Brazilian 
order being increased from $241,000 to $3,000,000 to beat the 
embargo? 

Mr. HuBEE. I believe that was Emslie Jonas, if I am not mistaken. 

Senator Clakk. Who? 

Mr. HuBEK. Emsley Jonas. 

Senator Clark. Is that the brother of the Mr. Jonas that we have 
had before us? Which Mr. Jonas is he? 

Mr. HuBER. That is Frank Jonas. This is his brother. 

Senator Clark. You still were on speaking terms? 

Mr. HuBER. Emslie and I are on speaking terms, Frank and I 
are not. 

Senator Clark. You and Frank used to be partners? 

Mr. HuBER. Yes. 

Mr. Goss. That is why. 

Senator Clark. How long ago? 

Mr. HuBER. About March of 1932, I think, until I took on the 
Lake Erie, which was the latter part of October 1932. 

Senatox- Clark. Wiiat v.as that Bolivian order to which you refer 
here ? 

Mr. Huber. I understood that American Armament had an order 
for $241,000 of trench mortars and shells for them, and that when 
they were talking about the embargo, the rumor was going around 
New York, this grapevine rumor, that they had increased that order 
and antedated it. 

Senator Clark. In other words, the proposition was this, Mr. 
Huber : The American Ordnance actually had an order for $241,000 
worth of munitions of war, which actually antedated the embargo. 

Mr. Huber. No; they had a legitimate order for $241,000. 

Senator Clark. I say, an order which actually antedated the date 
of the embargo. 

Mr. Huber. Yes. 

Senator Clark. Which, under the ruling of the State Depart- 
ment, they had a right to deliver. 

Mr. Huber. That is right. 

Senator Clark. They had simply sneaked in under this $241,000 
order an order for $3,0*00,000 worth of munitions, in order to defeat 
the embargo. 

Mr. Huber. That is the grapevine. 

Senator Clark. That is all you Imow about it, what Mr. Emslie 
Jonas told you? 

Mr. Huber. Yes. 

Senator Clark. Did you get any other information on the subject? 

Mr. Huber. I think it was published in the newspapers thiit the 
American Armament Co. had an order for, not $3,000,000, but 
$1,600,000. 



MUNITIONS INDUSTRY 1947 

Senator Clark. Do you know what the order consists of? 
Mr. HuBER. No ; I do not. 

Senator Clark. You do not know what they delivered ? 
Mr. HuBER. I do not know what it was; trench mortars, aerial 
bombs, and so forth, I suppose. 

ERECTION or GAS PLANTS IN FOREIGN COUNTRIES 

Senator Clark. Mr. Goss, you are erecting some poison-gas plants 
for the Chinese Government, are you not — or you were in 1932 ? 

Mr, Goss. We are acting as engineers. We are not actually erect- 
ing the plants. We are acting as engineers for them; yes. 

Senator Clark. Is this about the same time that the du Pont Co. 
was selling a cheaper powder process to Japan? 

Mr, Goss. I do not know anything about that. 

Senator Clark. You contracted to superintend the erection of 
these plants, did you not? 

Mr. Goss. That is right. 

Senator Clark. You furnished the engineers? 

Mr. Goss. That is right. 

Senator Clark. And the plans? 

Mr. Goss. That is right. 

Senator Clark. And actually superintended the building i 

Mr. Goss. That is right. 

Senator Clark. Are the plants completed? 

Mr. Goss. No, sir. 

Senator Clark. How near completion are they ? 

Mr. Goss. Well, I do not know that and if I did I would ask per- 
mission not to announce it publicly, because I think it might be 
injurious to a friendly nation. 

Senator Clark. How long have you been engaged in that ? 

Mr. Goss. Since the date of that contract that you have in your 
hands. 

Senator Clark. That is the loth of September 1932. 

Mr. Goss. Yes, sir. 

Senator Clark. How long after that was it started ? 

Mr. Goss. There is a great deal of work to be entered into before 
we could actually start the building, and I think the work has been 
going on about a year now. 

Senator Clark. This is for the Chinese National Government, that 
is the Nanking Government? 

Mr. Goss. That is right. 

Senator Clark. I offer as an exhibit under its appropriate number 
this contract referred to. 

( The document referred to was marked " Exhibit No. 766 " and is 
included in the appendix on p. 2049.) 

Senator Clark. You offered plans to the Colombian Government 
for the establishment of a complete gas warfare division of the Army, 
including factories of various kinds, and including training the 
troops ? 

Mr. Goss. That is right. 

Senator Clark. I offer this letter in reference to that matter dated 
January 8, 1934, and addressed to Mr. Roberto Escobar as an exhibit. 



1948 MUNITIONS INDUSTRY 

The letter referred to was marked " Exhibit No. 767 " and appears 
in full in the text.) 

Senator Clark. I think this letter is interesting enough to read, 
and I will read it, as follows: 

Mr. Roberto Escobar, 

Acting Consul General, 

Consulate General of ColotnMa, 

21 West Street, New York, N.Y. 
Dear Sir : In accordance with request made to Major Spring, we are pleased 
to submit herewith our recommendations for the establishment of a cliemical 
wariare department for your army which will be invaluable both for defense 
and offense. 

First phase. It would be impossible to obtain the necessary war gases from 
outside your country during an emergency and it is, therefore, recommended 
that the first step in the program be the building of plants to manufacture 
same within your own borders. 

We are, therefore, attaching herewith quotations and estimates covering 
three plants — 

I think I will ask you, Mr. Goss, to pronounce these names as I 
don't think I can do it myself. 

Mr. Goss. If those names specifically mentioned have any bear- 
ing, which I believe they have not, I would request that the specific 
names be omitted on account of the possibility of doing an injury to 
a friendly nation. I do not think they want their plan known. 

Senator Clark. Have these plans been adopted by the Govern- 
ment? 

Mr. Goss. No; they have not. 

Senator Clark. Then no damage will be done to them. 

Mr. Goss. They are being considered. 

Senator Clark. If they have not been accepted, no damage will 
be done, and if you won't pronounce them, I will attempt to do it 
myself. 

Mr. Goss. I will pronounce them, but I just offered a friendly 
suggestion. 

Senator Clark. Inasmuch as the plans have not been accepted, I 
do not see where any harm can be done. 

Mr. Goss. Then I will pronounce them. They are : 

— chloroacetophenone, diphenylchloroarsine, and mustard gas, which are 
the three most prominent war gases. 

Senator Clark. Then this letter, " Exhibit No. 767 ", reads further : 

Additional plants can be built and put into operation if desired, including 
gas-mask factories, phosgene plant, fragmentation hand and rifle grenade 
plant, shell-filling plant for all gases, smokes, and liquid fire, stokes mortar 
bomb-filling plant, projector bomb-filling plant, and gas candle and grenade- 
filling plant. 

The Lake Erie ("heinical Company will furnish all equipment necessary, 
assembling same at one point for shipment and inspecting same befoi'e ship- 
ment. The cstiniateil cost of building includes estimates of labor costs for 
erection, but it is umlerstood tliat the Lake Erie Chemical Company will not 
actually erect the building, although, if you should desire us to do so, we will 
furnish quotation based on our furnishing building complete, as well as 
e<iuii)nH'nt. Wo ))elieve, however, it will be to your advantage to have us 
furnish i)laiis and utility requirements only for the buildings, and employ 
local architects and contractors to erect the building. 

The prices for complete equipment for each plant, as quoted, are f.o.b. Cleve- 
land, Ohio. 

Since the Lake Erie Chemical Company is making a very nominal charge for 
drawing up the plans and specifications for each of the buildings, the estimated 



I 



MUNITIONS INDUSTRY 1949 

cost of such specifications and blueprints for each plant shall be payable at the 
time contract is signed. . 

In regard to the equipment of each plant on which quotation is made, m each 
case a deposit of 33M3% will be paid on the placing of order, the balance to be 
covered by irrevocable letter uf credit placed in a mutually satisfactory bank 
within the United States, payable on sight draft attached to bills of lading 
when material is shipped. 

It is estimated that the time necessary for completion of the chloraceto- 
phenone, diphenylaniinechlorarsine, and mustard-gas plants would be approxi- 
mately twenty months from date of order, assuming thiit ordinary facilities for 
construction are available and assuming that electrical energy, water, steam, 
refrigeration, etc., have been run inside of building wallis" before arrival of 
equipment. It must be clearly understood that the above time is an t'stimate 
only and cannot be guaranteed under the circumstances. 

In order to supervise the installation of equipment and putting same into 
operation, it is estimated '.hat two (^xpert engineers will be required, whose 
time and expenses would he approximately as^ follows : 

One general superintendent, who would probably be required for a period of 
two years, and whdse time would cost .$40.00 per day and expenses. 

A "second high-class engineer would cost $20.00 per day and expenses for an 
estimated period of six months. 

If it is considered advisable, from the standpoint of economy, to carry out 
a program of creating a chemical warfare service by gradual stages, the writer 
would then recommend that the mustard-gas plant be the first one to be built 
and put into operation, since this is considered to be the most all-around valu- 
able war gas from the average standpoint of offense and defense. 

I would place the chloracetophenone plant second in order of preference and 
the diphenylaminechlorarsiue plant ass the third one to be built. 

Second phase. The next step in the above program would, of necessity, be 
the establishment of plants for loading the war gases manufactured above into 
artillery shells, aerial bombs, mortar and projector bombs, gas candles, and 
grenades. The choice of weapons and, therefore, the projectiles into which these 
war gases should be loaded could best be determined as the result of a personal 
conference between the writer and your general staff or a representative thereof, 
in order that the writer might be made familiar with your tactical situation. 

Inasmuch as we do not accept consulting work for competing or antagonistic 
governments, it is understood that such a conference would be regarded as 
highly confidential and secretive. 

Cost estimates covering any of the above will be furnished on request after 
such conference. 

Third phase. The next step would be the organization of a unit of chemical 
troops and their training to handle intelligently the different war gases and 
equipment. The usual unit is the chemical regiment, the peace strength of 
which would be 1.033 officers and men (war strength, 2,321). In your case, 
however, the writer would recommend that we start with a chemical battalion, 
the peace strength of which would be 297 officers and men, which can be gradu- 
ally expanded as desired. 

i?he writer will be pleased to prepare for you complete tables of organization, 
equipment, munitions, and requirements, etc., for a chemical battalion or regi- 
ment, and to supervise the training and instruction in tactics, on a time and 
expense basis to be arranged. 

Fourth phase. The next step in the chemical- warfare program would be the 
instruction in tactics for the other branches of the army in chemical-warfare 
offense and defense. Your own chemical battalion would act as a nucleus and 
furnish insti-uctors for this purpose. 

The following branches of your army will doubtless in time adopt the follow- 
ing, or most of the following, chemical weapons : 

I. Aettlleby 

(a) Smoke-screen shells: 

1. WP 

2. FM 

3. FS 

(b) Gas shells: 

1. CN 

2. DM 

3. HS 

S:'.S76 — .".."• — PT 8 3 



1950 MUNITIONS INDUSTRY 

II. Infantry 

(a) Projector and projector serenades: 

1. WP 

2. CN 

3. DM 

4. Hifrli-explosive, fragmentation. 

(b) Hand grenades: 

1. WP 

2. CM 

3. DM 

(c) Candles: 

1. HC 

2. CN 

3. DM 

III. Air Service 

(a) Spraying equipment: 

1. FM 

2. FS 

3. CN 

4. HS 

(b) Aerial drop bombs: 

1. AVP 

2. CN 

5. DM 
4. HS 

IV. Tank Corps 

(a) Portable pressure cylinders: 

1. FM 

2. FS 

3. CN 

4. CG 

(b) Giant candles : 

1. HC 

2. CN 

3. DM 

I'resiinial)ly your chemical warfare service will be charged with the manu- 
facture and supply of all of the above, or such items of the above as you may 
decide to adopt as standard, in addition, of course, to the devices which your 
chemical troops will use, in each case your chemical warface service will be 
charged not only with the manufacture but with the combat use. 

The decision as to which of the above usual chemical weapons should be 
provided for your army in the beginning would necessarily be determined in 
conference as outlined above. 

In a<Idition to these offensive measures, the chemical warfare school, which 
we would necessarily organize, would train officers, who would later be as- 
signed to different units of your army as instructors and advisors in defense 
measuies against chemical warfare weapons. 
Very truly yours, 

B. C. Goss, 
Ex-Lieiitv)t(nif Colonel, CJi(iiiic<il Warfare Service. 

Consulting Engineer. 

You say nothing came of that negotiation ? 

Mr. Goss. Not yet. 

USE OF UNITED STATES MILITARY CONNECTIONS IN PROMOTING SALES 

Senator Clark. Do you think that the name of your company, 
U.S. Ordnance Engineers, Inc., together with the fact that you com- 
monly advertise yourself as a lieutenant colonel in the Reserve Corps 
of the United States Army would lead other nations in South Amer- 
ica to think that you had some connection witli the ITnited States 
Government ? 



MUNITIONS INDUSTRY 1951 

Mr. Goss. No, sir; in view of the fact it says U.S. Ordnance Engi- 
neers, Inc., very clearly. I think it would lead them to believe I had 
some experience along this line, however; at least, that was my 
intention. 

Senator Clark. U.S. Ordnance Engineers, Inc., in their adver- 
tising advertise the fact a good deal, don't they, that you are on the 
reserve list of the United States Army ? 

Mr. Goss. I think they do, and I think it is perfectly legitimate. 

Senator Clark. This I show you is a photostatic reprint of one 
of the pages of your catalog? 

Mr. Goss. It is. 

Senator Clark. It is a large picture of you, B. C. Goss, ex-lieu- 
tenant colonel, United States Army, president U.S. Ordnance Engi- 
neers, Inc., and over on the side here it says : 

Byron C. Goss, G.O. No. 3, W.D. 1U24. Lieutenant colonel, Chemical Warfare 
Service, U.S. Army. As chemical adviser in the office of the Chief of Chemi- 
cal Warfare Service, later as chief gas officer of the 1st Army Corps, and 
finally of the 2nd Army, by his untiring energy, exceptional ability, and wide 
knowledge of gases, he rendered service of great value to the American Expedi- 
tionary Forces in practically every battle in which American troops were en- 
gaged, thereby contributing materially to our success. 

Then, down underneath the picture it says that Dr. Goss is a well- 
known army man and the leading expert in the manufacture and use 
of gas. He received his doctor's degree in chemistry at Princeton 
University. The value of his military services during the World War 
is attested by the officers with whom and under whom he served. 

After leaving active service. Dr. Goss was for a time assistant 
manager of the experimental engineering department of the General 
Electric Co. at Nela Park, Cleveland, Ohio. He then founded this 
organization for the manufacture of chemical warfare and ordnance 
materiel. 

Because of his expert knowledge of chemistry and the manufacture 
of Avar materiel, and his successful experience in tactics. Dr. Goss's 
advice on military affairs is in constant demand. He retains his 
rank of lieutenant colonel in the Reserve Corps of the United States 
Army. 

Then, on another page under a similar large picture, is the name 
of A. F. Spring, vice president, U.S. Ordnance Engineers, Inc., and 
to the side of that picture it says that A. F. Spring received his 
degree of bachelor of science at Knox College, Galesburg, 111. He 
was then appointed junior gas chemist in the United States Bureau 
of Mines and was assigned work on gas-mask development. During 
the World War he served as an officer in the Chemical Warfare 
Service of the United States Army and after his discharge at the 
end of the war he was commissioned in the Chemical Warfare Re- 
serve and now holds the rank of major in this branch of the service. 
He Avas recently ordered to active duty by the War Department 
and appointed official instructor in chemical warfare at the National 
Rifle Matches, Camp Perry, Ohio. 

Then, below that is another picture and under that picture the 
name of H. A. Grundler, plant superintendent, U.S. Ordnance En- 
gineers,^ Inc. To the side of that picture there is a statement that 
H. A. Grundler was graduated from Case School of Applied Science, 
Cleveland, Ohio, as bachelor of science in chemical engineering-! 



1952 ' MUNITIONS INDUSTRY 

After graduation he served on the research staff and then in produc- 
tion development for the United States Rubber Co. He holds the 
rank of lieutenant in the Chemical Warfare Reserve, assigned to 
the manufacturing arsenal, toxic smoke and lachrymatory division. 

Then on a subsequent page is a large print photograph of copies of 
checks received by your company from the United States Gov- 
ernment. 

Now, Colonel Goss, you do not think all of that is calculated to 
represent official connection with the United States Government to 
South American people? 

Mr. Goss. Very definitely not. It states very definitely what our 
present position is. This is intended to create the impression that 
we know what we are doing, and you will have first to remember 
we are up against very severe competition in the State Department, 
and the Chemical Warfare Service, Department of Justice, Andrew 
Mellon, du Pont, and all of these people. 

Senator Clark. Is Andrew Mellon competing with you down 
there? 

Mr. Goss. All of this is in the person of Mr. Young, or, I mean, 
represented by Mr. Young. 

Senator Clark. What is your understanding of the connection of 
Mr. Young and Colonel Mellon? 

Mr. Goss. It was brought out in the testimony here. 

Senator Clark. It was brought out in the testimony Mr. Young 
was asked if a certain director was a son-in-law of Andrew Mellon, 
and he denied it, and that is all of the reference to Andrew Mellon. 

Mr. Goss. I was only referring facetiously to the connection our 
competitors had. 

Senator Clark. Do you understand du Pont is in competition 
with you? 

Mr. Goss. No, that was said in a facetious manner. That is 
based on these same grapevine rumors of all of the connections our 
competitors are said to have had. 

Senator Clark. Would you say, when Mr. Spring and Mr. Grund- 
ler had their pictures taken for your catalog purposes in their 
uniforms as officers of the United States Reserve, that is not under- 
taking to advertise and emphasize your military connections; these 
gentlemen do not or