& Ordnance Co., as a supervisor maintenant, which I held for some Then I went to Huntington, W. Va., and started a company years. called the S. K. Manufacturing Co., using a patented roll that I invented for making rotating bands for shells. I worked there during the war, and after the armistice was signed, both armistices, I came back here to Washington. Nothing to do but loaf around, I started this business I am in now.

The CHAIRMAN. That was about in 18,

Mr. WILLIAM SCRIMGEOUR. 1920, I judge.
The CHAIRMAN. Go ahead from 1920.

Mr. WILLIAM SCRIMGEOUR. Well, I started that business on the money I borrowed-I didn't have any-and I afterwards opened an office in the Albee Building, and my first man to give me a job was the Cyclops Steel Co., who hired me to take care of all Government business or outside business as occasion may require. I ran all the tests for those people, which I was very familiar with, and created what is called the "selective factor" in buying material for the Gov

ernment.

I stayed with that company until the National Forge & Ordnance Co. asked me to take a position with them, which I did. Including Cyclops Steel Co., I had two companies. In those days the Government was having trouble with periscope tubes. Now, gentlemen, I don't want to claim all the engineering work on periscope tubes.

Anybody who runs up against a naval engineer runs up against a pretty bright chap.

My business was to do the forging and the testing of the material. I have a letter from the Secretary of the Navy complimenting me on this job.

I stayed with them and took my two boys in with me and we created more business.

Mr. SHAUGHNESSY. I am interested in what the witness described as a "selective factor" in Government contracts.

Mr. WILLIAM SCRIMGEOUR. Well, in purchasing materials of that kind, they run a test for them to create a selective factor so that the man who furnishes the best material at the lowest price gets the contract, and Mr. Josephus Daniels gave me a nice contract on that test. The record will show that.

Mr. SHAUGHNESSY. He gave the company that you represented the

contract.

Mr. WILLIAM SCRIMGEOUR. I say "me"-that is the company. Mr. SHAUGHNESSY. The first company that you represented was the Cyclops Steel?

Mr. WILLIAM SCRIMGEOUR. Yes, sir.

Mr. SHAUGHNESSY. Thereafter, you entered into a contract with the National Forge & Tool Co. of Pennsylvania?

Mr. WILLIAM SCRIMGEOUR. Yes, sir.

Mr. SHAUGHNESSY. What did that contract provide?

Mr. WILLIAM SCRIMGEOUR. I think I have here on the record an agreement that I made with Mr. Wilder, somewhere here.

keep them in my mind. I want to explain another point there of why I wanted to get hooked up with the National Forge. They were machining the periscope tubes, and Cyclops Steel was making the forgings in those days, so I got them both together in order that we could get a very efficient tube out.

Mr. IzAC. What was your part in the picture? Were you the metallurgist who took the microscope, looked at the picture of the forging, or what did you do?

Mr. WILLIAM SCRIMGEOUR. I am the practical engineer on the job. I am a forger by trade. That is where I learned my business. Mr. Izac. Did you represent yourself as being the manufacturer's representative here in Washington?

Mr. WILLIAM SCRIMGEOUR. Certainly, I couldn't do anything else. Mr. SHAUGHNESSY. I show you a letter signed by yourself and also signed by Mr. Wilder, president and general manager of the National Forge & Tool Co., dated January 1, 1927, and ask you if you can identify that.

Mr. WILLIAM SCRIMGEOUR. Oh, yes; I can. I had that, sure. Your examiner came down there and got it.

Mr. MAXWELL SCRIMGEOUR. That looks like it.

Mr. SHAUGHNESSY. Is this agreement typical of most of your agreements?

Mr. WILLIAM SCRIMGEOUR. I think it is.

Mr. SHAUGHNESSY. I would like to read this for the purpose of the record showing what types of agreements these people had. This is addressed to the National Forge & Tool Co.

GENTLEMEN: Confirming our verbal agreement of recent date, I hereby agree to represent the National Forge & Tool Co. before all Government departments, and all stations, navy yards and arsenals, including the District of Columbia, where purchases are made of materials of your manufacture. We are to maintain an office with someone in charge, which is to be known as your Washington office, and keep same open during all working hours, the same as the Government, and on such days as the Government is open for business.

Should any sales be made to any Government establishment or in the District of Columbia, this office is to be credited for the sale. This does not include municipal or State governments outside of the District of Columbia.

The National Forge & Tool Co. is to furnish stationery with the Washington address printed on same.

All telegrams and long-distance telephone calls between Washington office and the National Forge & Tool Co., all bid bonds, contract bonds and annual guaranty bonds shall be paid by the National Forge & Tool Co.

The National Forge & Tool Co. is to furnish the office with one metal mahogany file case for the filing of all the correspondence; the said file case to be the property of the National Forge & Tool Co. at all times.

Should any traveling be necessary outside of Washington, D. C., expenses will be borne by the National Forge & Tool Co.

It is understood that authority is to be obtained from your main office before incurring an expense of this kind.

All other telegrams, long-distance calls, and other office expenses shall be borne by the Washington office.

We are to receive $50 on the first day of each month for office expenses. We are to receive 5 percent commission on all Government contracts for material of your manufacture, settlement to be made us when payment is received from the Government for all or part of the contract.

All soliciting of Government business shall be done jointly by both offices, keeping each office advised as to prices, delivery, and so forth, so that there will be no misunderstanding with any Government business.

This office is to have supervision over all testing of samples submitted for Government use. It is to be understood, however, that we are to accept advice and assistance on these tests from the main office.

This agreement does not obligate the services of this office in any tax cases before any Government department.

It is understood that we are at liberty to do business for other companies than yours, as we are at the present, but sufficient time will be devoted to carry on

70533-42-pt. 7- -8

your work satisfactorily, and we will not represent any concern who makes a similar article for sale to the Government.

This agreement is for a period of 1 year from date.

Signed William Scrimgeour and Mr. Wilder, the president and general manager of the National Forge & Tool Co. Dated January 12, 1927.

(The agreement was received in evidence, marked "Exhibit No. 526," and is filed with the committee.)

Mr. SHAUGHNESSY. Your agreement with the National Forge & Tool Co. was amended thereafter, was it not?

Mr. WILLIAM SCRIMGEOUR. Yes; I believe it was.

Mr. SHAUGHNESSY. In April of last year?

Mr. WILLIAM SCRIMGEOUR. It is the National Forge & Ordnance Co. now, sir. You see it has changed its name.

Mr. SHAUGHNESSY. I show you this photostatic copy of a letter taken from your files, and ask if you can identify it.

Mr. MAXWELL SCRIMGEOUR. Yes.

Mr. SHAUGHNESSY. This letter is dated the 14th of April 1941, addressed to Mr. J. C. Harrington, president of National Forge & Ordnance Co.

DEAR MR. HARRINGTON: We have your letter of March 15, 1941, in reference to the commission set-up set forth in our new agreement which we will accept under the terms stated below. Commissions to be paid us on all contracts dated from April 1, 1941, as follows:

Six percent commission on the first $100,000 worth of all direct Government business done by the company; 4 percent commission on the second $100,000 worth of all direct Government business done by the company; 21⁄2 percent commission on all direct Government business done by the company in one year over $200,000.

Also there is to be paid us as a retainer $50 a month on the first day of the month as heretofore.

This new commission basis is for award on all contracts received since April 1, 1941. However, all contracts on which the award was received prior to that date, will come under the old rate; that is, five percent commission on all contracts for forgings and ten percent commission on all contracts for periscope tubes.

We will carry on the same work as we have been performing for the company for a number of years. We hope that this new arrangement will work out satis

factorily for all of us. Yours very truly,

I would like to offer that.

WM. SCRIMGeour.

(The letter was received in evidence and marked "Exhibit No. 527.") Mr. SHAUGHNESSY. Mr. Scrimgeour, how many companies do you represent at the present time?

Mr. WILLIAM SCRIMGEOUR. About ten or twelve-twelve.

The CHAIRMAN. Read them off.

Mr. SHAUGHNESSY. You represent Blaw-Knox

Mr. BATES (interposing). Let's find that out from him.

Mr. SHAUGHNESSY. Do you have the record there?

The CHAIRMAN. Read off the ones that you now represent.

Mr. MAXWELL SCRIMGEOUR. National Forge & Ordnance Co.Mr. SUTPHIN (interposing). What is their address?

Mr. MAXWELL SCRIMGEOUR. Irvine, Warren County, Pa. That is the one I just mentioned. The Lalance & Grosjean Manufacturing Co., Woodhaven, L. I., N. Y.; Landers, Frary & Clark, New Brighton, N. Y.; Groen Manufacturing Co. of Chicago; McGill Manufacturing Co., Valparaiso, Ohio; Clemson Brothers, Middletown; Blaw-Knox

Welding Division, Blawnox, Pa.; Roller Bearing Co. of America, Trenton, N. J.; International Flare Signal Division, Tipp City, Ohio; McGraw Electric Co., Elgin, Ill.; Russell Steel Co., Baltimore; Superior Steel, Carnegie, Pa.; Royal Silver Manufacturing Co. of Norfolk; Edlund Co., Burlington, Vt.; Bolta Co. of Lawrence, Mass.; Metal Sponge Co. of Philadelphia; and Vischer Products Co.

Mr. SHAUGHNESSY (interposing). And those are all the companies that you represent at the present time?

Mr. MAXWELL SCRIMGEOUR. Yes; that list is the only one we have in connection with the Navy.

The CHAIRMAN. Now, with the War Department.

Mr. SHAUGHNESSY. Who else?

Mr. MAXWELL SCRIMGEOUR. The same ones.

The CHAIRMAN. Those are all the companies that you represent? Mr. MAXWELL SCRIMGEOUR. Yes.

The CHAIRMAN. Put a list of those companies in the record.

Mr. MAXWELL SCRIMGEOUR. We have discontinued connections. with the Birdsboro and P. Wall Co.

Mr. SHAUGHNESSY. Do your records disclose the number of Navy Department contracts you obtained or were instrumental in obtaining for each of those companies?

Mr. MAXWELL SCRIMGEOUR. We have submitted those to you. Mr. SHAUGHNESSY. Do you have a copy there?

Mr. MAXWELL SCRIMGEOUR. You have a copy that I sent you. There was one thing that I wanted to tell you in connection with National Forge amounts. Apparently, they are the amounts shipped, and I haven't confirmed that yet.

Mr. SHAUGHNESSY. We'll get into that.

Do you have your records there showing the Navy contracts obtained from the Blaw-Knox Division of Blaw-Knox Co. since September 1, 1939?

Mr. MAXWELL SCRIMGEOUR. Yes, sir.

Mr. SHAUGHNESSY. All right. What do your records show?

Mr. MAXWELL SCRIMGEOUR. The same as I sent you.

Mr. SHAUGHNESSY. How many contracts?

Mr. MAXWELL SCRIMGEOUR. Seven.

Mr. SHAUGHNESSY. Seven contracts.

those contracts?

What is the total amount of

Mr. MAXWELL SCRIMGEOUR. I didn't add them up. I add them up in the amount of $210,532.

Mr. SHAUGHNESSY. $210,532?

Mr. MAXWELL SCRIMGEOUR. Yes, total compensation to be paid. Mr. SHAUGHNESSY. The total compensation is how much?

Mr. MAXWELL SCRIMGEOUR. When they are to be completed $8,379.92, and we have already received to date $6,944.92. Mr. SHAUGHNESSY. What percentage does that represent? Mr. MAXWELL SCRIMGEOUR. Four percent.

Mr. SHAUGHNESSY. Four percent.

Mr. MAXWELL SCRIMGEOUR. That is, the relationship between the amount and the compensation which will eventually be paid is four percent.

Mr. SHAUGHNESSY. Do you always receive a $50 a month retainer from Blaw-Knox?

Mr. MAXWELL SCRIMGEOUR. That is from September 1, 1939.

Mr. SHAUGHNESSY. And you receive a $50 a month retainer in addition to the 4 percent for the Navy contracts?

Mr. MAXWELL SCRIMGEOUR. Not for the Navy, but for everything. Mr. SHAUGHNESSY. Everything.

The CHAIRMAN. Talk a little bit louder.

Mr. SHAUGHNESSY. The next company that you say is inactive, but you did represent them, is the Birdsboro Co.

Mr. MAXWELL SCRIMGEOUR. The figures I have here from the Birdsboro Co., were not checked, because as the letter that you have a copy of

Mr. SHAUGHNESSY (interposing). Go on.

Mr. MAXWELL SCRIMGEOUR. You understand that you have a copy of this. This was put under a different system and due to the fact that we couldn't do the company any good, we wrote them a letter and said that we would like to discontinue our association.

Mr. SHAUGHNESSY. But from February of 1940 to April of 1941, you were instrumental in obtaining over $70,000 worth of business with the Navy Department for that company?

Mr. MAXWELL SCRIMGEOUR. The way that we figured was just as we sent you.

Mr. SHAUGHNESSY. On that you received a commission of $1,762.60? Mr. MAXWELL SCRIMGEOUR. That is the way we checked from our records.

Mr. SHAUGHNESSY. You feel that there is due to you over $3,000? Mr. MAXWELL SCRIMGEOUR. Well, I imagine what is due us from the records we have here is the difference between $1,762 and $3,437. Mr. SHAUGHNESSY. Now, the National Forge & Ordnance Co. Mr. MAXWELL SCRIMGEOUR. I have that here. In looking over my file and going over it, it appears that the amount that you have is apparently delivered instead of contracted for. Evidently, I think, they represent deliveries on the contract.

Mr. SHAUGHNESSY. All right. The records that we obtained from you showed them from the National Forge & Ordnance Co. on Navy Department alone, since September 1.

Mr. MAXWELL SCRIMGEOUR. Since September 1.

Mr. SHAUGHNESSY. Since September 1, 1939, the amount of contracts obtained was $2,139,119.71.

Mr. MAXWELL SCRIMGEOUR. That is what I have.

Mr. SHAUGHNESSY. Upon which you have earned a commission of $100,482.63?

Mr. MAXWELL SCRIMGEOUR. Since September.

Mr. SHAUGHNESSY. Since September 1, 1939; and in addition to that you received a $50 a month retainer?

Mr. MAXWELL SCRIMGEOUR. In accordance with the agreement that you just read.

Mr. SHAUGHNESSY. Now, Landers, Frary & Clark.

Mr. MAXWELL SCRIMGEOUR. I checked my information from that which was received from the factory.

Mr. SHAUGHNESSY. Your records disclose that in representing that firm, they have obtained business from the Navy Department since September 1, 1939 amounting to $473,600.30, upon which you have earned a commission of $36,568.53?

Mr. MAXWELL SCRIMGEOUR. Yes.