Mr. GRISWOLD. December 30, 1941. That is when it was signed. Mr. TOLAND. Isn't it a fact that before the contract was signed, Mr. Stone and people connected with your company went to the Judge Advocate General's office to ascertain that the contract was perfectly proper?

Mr. GRISWOLD. That is correct.

Mr. TOLAND. Have you received any contracts at all as a result of the relationship?

Mr. GRISWOLD. I would like to explain. We really haven't any direct contracts. Mr. Stone sent us a blueprint and some information regarding a protector cap that goes over a shell. That protector cap is made of brass. It had some machining on it, and we are not melters of brass, so we had some friends of ours in Erie that melt brass, and we got in touch with them and, in a word, it resulted in cur telling them about this business and they took the order direct and we are doing the machining, or are just about to start the machining operation with a very small percent of the total contract. That is the only business that has been written so far.

The CHAIRMAN. Did Mr. Stone then make a contract with that concern that made the major portion of it?

Mr. GRISWOLD. No; he didn't. A situation like that wasn't covered in our contract and I didn't know just what to do. I wanted to be ethical with Mr. Stone, and I think I called you [to Mr. Stone] on the telephone.

Mr. STONE. Yes; we had a conversation.

Mr. GRISWOLD. I said, "This business here runs".

Mr. STONE (interposing). About $184,999.

Mr. GRISWOLD (continuing). "We are not in the brass business and our machining part of the business runs about $12,000, and what will we do about the commission?" And he said, "We will leave it to you, whatever is fair." I said, "I will confirm that in writing and we will give you 5 percent of what we bill, which is about $12,000," so he gets about $600.

Mr. TOLAND. Mr. Griswold, I would like you to identify this letter that you sent me, and then I will excuse you.

Mr. GRISWOLD. Yes; that is right.

Mr. TOLAND. I offer this letter in evidence.

(The letter referred to, dated March 18, 1942, was received in evidence, marked "Exhibit No. 477," and is printed in the appendix of this volume.)

The CHAIRMAN. Mr. Griswold, prior to the national defense prowere engaged in manufacturing various commercial

articles?

Mr. GRISWOLD. That is right.

The CHAIRMAN. On account of priorities, on account of limited use of various materials, it slowed down your commercial production? Mr. GRISWOLD. That is right.

The CHAIRMAN. And you wanted to convert your plant into war production?

Mr. GRISWOLD. That is correct.

The CHAIRMAN. Now, do you and the other businessmen of this country think it is necessary for you to come down here to Washing

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ton and hire some of these parasites to get contracts for you? They neither toil, nor do they spín; they do nothing in the world but impress businessmen that they can get them business. Don't you know the War Department and the Navy Department want to do business direct with every concern in America who can make articles for the defense of this country, without having any brokers or commission merchants intervene?

Mr. GRISWOLD. That is the case, without a doubt, but then

The CHAIRMAN (interposing). You are an intelligent man and you were carrying on a big business. Don't you know that it is you people who build up these parasites that hang around Washington here and feed on the public and feed on the taxpayers, because this 5-percent commission goes into the cost of the article? Don't you know you could come down here with your blueprints and with your information and go to any naval officer or any Army officer and say, "We can convert our plant into making this or that material, and we will do it if you want us to do it"? Don't you know you could have gotten a contract without Mr. Stone or anybody else?

Mr. MAAS. That wasn't the case at that time, Mr. Chairman.
The CHAIRMAN. It has been the case all the time.

Mr. GRISWOLD. Maybe I can explain this. We are a firm of the size that if we didn't have someone looking after this local business here

The CHAIRMAN (interposing). That is a different thing. That is all right to have a sales agent. That is entirely proper.

Mr. GRISWOLD. Let me try to give you a picture. I don't know that I can, but here is a business capitalized at $1,000,000, and our plant is so set up that a very small part of it can continue unless we get this defense business. We are in a war, after all, and it was a case of our getting defense business and getting it pretty quickly or we would liquidate the business. We wouldn't putter around, but we would liquidate and forget it.

The CHAIRMAN. But you keep a regular sales agent here, as you should all the time, and he is as competent to lay before the Department heads the information as Mr. Stone or any one of these special agents in what they do.

Mr. GRISWOLD. We were very careful in this whole matter.

The CHAIRMAN. You are not to be criticized. Nobody is criticizing you.

Mr. GRISWOLD. We wanted to be ethical. We checked up and we contacted this Advocate General's Office, and Mr. Stone was here and our two men went to him because he knew where to go quickly, and so forth.

The CHAIRMAN. Yes; I know. Nobody can criticize you. Nobody can criticize anybody else who falls in that category. These men sell themselves that they can do certain things, and when you received a letter saying that Mr. Stone had gotten $500,000 worth for this company and $500,000 for that firm, then you said, "Here is a man who has got some inside pull," and he has no pull. He is just bluffing and making money out of the situation.

Mr. STONE. That is untrue, Congressman.

The CHAIRMAN. We will find out whether you have any pull or not. Where is your pull?

Mr. STONE. I don't have any, sir.

The CHAIRMAN. Then my statement is correct. Then you haven't any pull, and I resent your sitting here and saying you have influence with naval officers and Army officers until you can prove it.

Mr. STONE. I never said that.

The CHAIRMAN. You are going to have an opportunity to prove it. If not, I am going to continue the classification of you and your kind of agents that hang around Washington City and try to milk the public on these contracts.

Mr. STONE. It is very unfair for anybody to say I ever uttered those words. I never have. On the contrary, I think Mr. Griswold-——— The CHAIRMAN (interposing). Couldn't this gentleman have done the same thing?

Mr. STONE. No, sir; he could not.

The CHAIRMAN. If he manufactures the article, doesn't he know how to manufacture it more than you do? What superior knowledge did you have about his article that he didn't possess? How could you get a contract for him that he couldn't get?

Mr. STONE. I never said to any manufacturer that I could get him a

contract.

The CHAIRMAN. Couldn't he have done just as well in the Department as you have done?

Mr. STONE. If he had the time to do it and knew where to go and how to go about it.

The CHAIRMAN. Isn't that his business?

Mr. STONE. As a matter of fact, it has not been done.

The CHAIRMAN. We will find out. You put yourself in the position of intimating that you have pull. Do you want to run that down? Mr. STONE. No, sir; I never said that.

Mr. TOLAND. The documents introduced in the record with regard to the witness speak for themselves as to what they say.

With regard to Mr. Griswold, I would like to say for the record that I inquired about him and his company, and it has one of the finest reputations in the State of Pennsylvania.

The CHAIRMAN. And he needed nobody to help him as a special agent. He probably needed a sales manager here, and nobdy can criticize anybody who keeps a regular sales manager here to explain to the Government and explain to business what they are manufacturing. That is a legitimate and proper thing to do. I find no justification anywhere to get these men to do that. Why, these gentlemen knew nothing at all about the article that you manufacture until it was brought to their attention.

Mr. TOLAND. I didn't subpena Mr. Griswold as any criticism of him at all.

Mr. BRADLEY. How do these gentlemen get entree to the departments? They seem to have more influence with the departments than anybody else in Washington.

Mr. STONE. It is very hard work, sir.

The CHAIRMAN. We want to find out how you do it.

Mr. BRADLEY. What is your entree? Why can you go to the War Department or Navy Department and walk into any bureau chief or any officer of the Navy or Army having jurisdiction over contracts and sit down with him repeatedly on this case or that case-entirely different businesses-and do business for some third party?

The CHAIRMAN. And the manufacturers can't do it.

Mr. STONE. I can explain that, and I believe very briefly. We can go back to 1940 when I first got started. It was most difficult for our Government to have various materials made. There were many manufacturers who were very indifferent and you know that. They wanted to continue to make their regular line of endeavor. I do not do any business, incidentally, with the War Department. I don't see the Army at all. I confine my efforts to the Navy Department. I am in there every day working just the same as if I were to sell this brief case to various manufacturers, as a matter of fact. I have no pull; I have no influence. That is absolutely wrong and it is unfair not only to myself but to the naval officers whom I consider the finest group of men that I have ever met in business.

Mr. BRADLEY. Nobody has said anything about that.

Mr. STONE. I will get back to myself, sir; if you please. This work is not at all mysterious. I have followed the papers and have read a good deal about the so-called sales representative. There are sales representatives and there are sales representatives. There are lawyers and there are lawyers, for instance. I do not care to be placed in the category of a parasite. I work and work assiduously. The reason I charge 5 percent for my work is because that was the fee

Mr. BRADLEY (interposing). That isn't what I asked you. What induces the various officers of the Navy Department-you say you have nothing to do with the War Department-to sit down with you on different classes of manufactured articles and do business with you rather than with the manufacturers?

Mr. STONE. I don't believe it is true, sir.

Mr. BRADLEY. How do you get into the picture? You are getting 5 percent from somebody.

Mr. STONE. Because if I am to go to the Bureau of Ships, I will start going to my procurement officer for various materials that they order. I want to know just what they do, and I would like to know, and they usually tell you what they want to order. If I think my companies have the facilities, I offer them a list.

Mr. BRADLEY. You represent anybody who is looking for a contract? Mr. STONE. No, indeed. That is not my business.

The CHAIRMAN. Just a minute. Let's finish with Mr. Griswold. Mr. TOLAND. Mr. Griswold, have you anything you want to say? Mr. GRISWOLD. I wanted to say it was important for us, and we felt he knew the departments and where to go, and Mr. Stone came up and went through our factory and we felt he was in a position to judge what kind of work we might attempt to make. So, from there on we checked up on him and he had good references on him, and we were concerned about these articles in the paper, that you couldn't have these representatives, and where the line started and where it stopped. It was difficult to tell. We checked up as far as we thought it was necessary, and then we drew a contract with him. After more or less discussion the final contract was approved. That $150 a week that I heard you mention, by the way, sounds as though we paid him a flat $150 a week. That is deductible, you know.

Mr. TOLAND. Out of the commissions.

Mr. GRISWOLD. Also, we didn't draw a 3-year contract as such. We could cancel the contract. We wouldn't want to enter any 3-year contract.

Mr. STONE. And the drawing account is not paid until there is an award.

Mr. Izac. Approximately what amount of business did you do before the war effort was under way—your normal peacetime business? Mr. GRISWOLD. Our business runs between one and two million dollars.

Mr. Izac. Would that have justified you in having a representative in Washington?

Mr. GRISWOLD. That is just the point. Hardly, because my brother and I are still very active in that business.

The CHAIRMAN. But you kept a sales manager for carrying on that business?

Mr. GRISWOLD. We have a sales manager, and he is all right on the domestic business on our regular business. He goes out and talks to jobbers and he knows all that end of the business.

Mr. Izac. Then, the average small business firm in this country feels that in order to get into the War and Navy Department business, that is something different and distinct, and you would require some agent or some representative that would know that as distinguished from the commercial business and local business?

Mr. GRISWOLD. That is the way we felt. As a pure matter of business we thought it would cost us, in other words, at least 5 percent or more to handle this job properly, so we might as well pay it to a man who we thought knew more about it than we did in order to give us leads on things we could manufacture.

Mr. Izac. I think that is true of the average businessman.

The CHAIRMAN. How could he know more about. it than your sales manager and you knew about it?

Mr. GRISWOLD. Our sales manager knows about aluminum and iron cooking utensils, and he knows the retail trade and the jobbing trade and the relative prices and how they work, and he goes out and talks to jobbers, and he knows about window displays, and this, that, and the other thing. But with all due respect to our sales manager

The CHAIRMAN (interposing). Does your sales manager get a fee equivalent to 5 percent on the sales?

Mr. GRISWOLD. You mean on our business? No.

The CHAIRMAN. Then when you are paying Mr. Stone 5 percent you are paying out of proportion to that which your business normally pays for sales services.

Mr. TOLAND. Mr.. Chairman, along the lines of the question

Mr. GRISWOLD (interposing). Just a minute. Let me think of that a minute. I can't recall our sales figures in dollars, but our sales

expense

The CHAIRMAN (interposing). I am talking about your salary to your sales manager not being comparable to what you are paying Mr. Stone.

Mr. GRISWOLD. No; it would be far less.

The CHAIRMAN. Then you are paying Mr. Stone more out of proportion for the services he is rendering than you did pay your regular sales manager.

Mr. GRISWOLD. That is right.

Mr. STONE. He hasn't paid anything yet. He couldn't very well determine that, sir.