Mr. WARD. No, sir.

Mr. MAGNUSON. So therefore, so far as the commission basis is concerned, these officers, in your opinion, do not know about it?

Mr. WARD. They don't know the amount. They probably know the percentage, but it probably doesn't occur to them that it runs into so much money.

Mr. MAGNUSON. You are an old hand in this business, and as the chairman has well stated, and my colleague from Oregon, this committee is going to stop it.

What would you think of this idea, of requiring you and all your type-what do you call yourselves, sales engineers?

Mr. WARD. Yes, sir.

Mr. MAGNUSON. That you register with every department that you do business with and that you not only register, but that you file with that department, so that the public, anyone, can go down there and look at it, every officer and every procurement man will know what it is, the exact copies of your contracts with the manufacturers you represent and what you are going to get out of it?

Mr. WARD. I think it would be an excellent idea.

The CHAIRMAN. Because it would enable you then to advertise. that you are a registered agent, and your business would increase instead of decrease. That would be playing into your hands.

When did your conscience begin to hurt you and you considered this wrong after this publicity that we started in this?

Mr. WARD. Mr. Chairman, it never occurred to me.

The CHAIRMAN. Well, wait now. It occurred to you some time. Did it occur to you after this inquiry and the publicity that we are forcing on this through the newspapers, of this racket that is going on here in Washington city?

Mr. WARD. It only occurred to me when that gentleman asked the question.

The CHAIRMAN. Just occurred then? It never occurred to you all day yesterday, and never occurred to you when Mr. Stone was here? Mr. WARD. I don't know Mr. Stone.

The CHAIRMAN. And it has never occurred to you until just a moment ago, when Mr. Mott wrung it from you, that the whole thing was wrong?

Mr. WARD. No. He brought it to my attention.

Mr. MOTT. You think I have done my good deed for the day?
Mr. WARD. I think you have.

Mr. BRADLEY. Mr. Ward, these entertainments, this preyuletide party and the various other hotel entertainments that you gave to the Navy and Army officers-the purpose of that was to increase the good will that they might have toward you? Is that right or not?

Mr. WARD. I don't know that we could put it in that fashion.
Mr. BRADLEY. Just what would you have in mind?

Mr. WARD. Having in mind that these were all personal friends of mine, and we getting together once a year for this purpose for the last 5 years.

Mr. BRADLEY. And you charged it down as a business expense? Mr. WARD. Yes, sir, according to my books.

Mr. BRADLEY. I have listened to some of your answers to the questions of Mr. Mott, Mr. Magnuson, and the Chairman, and it doesn't strike me that you rendered any particular engineering services to

70533-42-pt. 7——12

any of these firms, that your main asset was that you were very well acquainted with the officers in these departments.

Mr. WARD. What good does that do me?

Mr. BRADLEY. It evidently has done you a lot of good, to the amount of $400,000 so far.

Mr. WARD. That is all competitive bidding, or competitive under negotiation.

Mr. BRADLEY. We understand that, but the thing you gentlemen hold down as an asset is your ability to have specifications changed sometimes.

Mr. WARD. I never testified to that. I never have tried it because I don't think it is possible.

Mr. MOTT. Oh, well, your letters show that.

Mr. BRADLEY. Your letters show that.

Mr. MOTT. Your letters hold out to these clients of yours that it is necessary for them, in order to get Government business, to employ a Washington representative, and you tell them how well you can do that. Now, I don't suppose you conceal the fact from your clients that you are entertaining these officers.

Mr. WARD. I don't tell them about it.
Mr. MOTT. You never tell them that?

Mr. WARD. No, sir. It is none of their business.

Mr. MOTT. Well now, there was one fellow here some time ago, engaged in a business of this sort, only he ran a straight racket. The service he rendered to his clients was to write to them from time to time and tell them how much entertaining he was doing here in Washington. It developed that he never rendered any real service to them, but they thought he did through this kind of correspondence, and he collected considerable fees. But you don't follow that method? Mr. WARD. No, sir.

Mr. BRADLEY. What I am concerned about, Mr. Ward, is this: Mr. WARD. The whole difficulty I have had is that I have kept records.

Mr. BRADLEY. Businessmen come down here to Washington from the various parts of the United States-sometimes they are small businessmen, sometimes they represent big concerns, but generally they are not in the big rackets. They go to the Navy and the War Departments and the Maritime Commission and they get a terrific run-around. They can never find out who has any authority to deal with them or to give them any consideration, and they quickly learn that if they don't engage someone who is in the business that you are in they never get any Government business.

Mr. WARD. Because they don't know how to go about it. Mr. BRADLEY. Nobody in the Department seems to extend themselves like they do for you gentlemen, and I wonder why.

Mr. WARD. Well, it is so convenient for this man or this man or that man to pick up the telephone and say, "Horace Ward, I want such and such information. Get it for me pronto." It is much easier than writing a letter. It is much easier than sending a telegram. The CHAIRMAN. Let me read a letter in that connection. This is a letter from the Diesel Marine Co., dated January 20, 1941. "Dear Horace:"

Mr. WARD. Who is that from?

The CHAIRMAN. This is from the Reiner Diesel Marine Auxiliary Units.

DEAR HORACE: Enclosed herewith is copy of a letter we received in the mail this morning from the Navy Department Bureau of Ships. Although this is undoubtedly a broadcast letter sent to a number of firms, it is of interest to us, and I would suggest that you arrange an appointment for me with the Navy Department, and, if possible, give me 2 days' advance notice of the time when I am to be on hand to discuss this requirement.

Now listen to this:

I assume that the Blank who signed this letter is Commander Blank, who sat next to me at your pre-Yuletide luncheon, and will look forward to meeting him again.

Cordially,

So that is the way your business is done?

Mr. WARD. Did you give me the correct name?

The CHAIRMAN. I am not going to give you the name.

Mr. WARD. I mean the manufacturer.

Mr. HINKEL. John Reiner & Co.

Mr. WARD. John Reiner & Co.?

The CHAIRMAN. Now, you had this party and you had this officer there, and this officer is signing the letter.

(The letter was received in evidence and marked "Exhibit No. 544.")

Mr. WARD. He wanted simply to identify this officer.

The CHAIRMAN. Of course, and he identified him by the time you entertained him.

Mr. WARD. Afterward.

Mr. BATES. You made the statement here that the engine business is highly competitive.

Mr. WARD. Yes, sir.

Mr. BATES. You know that isn't so, not with Navy business, because the Navy is negotiating all their engine work with the engine companies that can produce the engines. As a matter of fact, there is a great bottleneck in our shipbuilding program because of the lack of engines. Isn't that true-from 600 horsepower up?

Mr. WARD. That is right.

Mr. BATES. So where is the competition?

Mr. WARD. The competition is in this, that the other manufacturers of this type of engine could not take any contracts because they are loaded up to capacity.

Mr. BATES. So that makes it all the more reason there is no competition, if the other engine companies are all loaded up.

Mr. WARD. But in the case of the Coast Guard, some time last October they had a building program and they wanted to distribute the work around as much as they could, so they said, "Tell us your price and tell us how many engines you can deliver within a certain given period."

Mr. BATES. What size engines would those be?

Mr. WARD. Two hundred twenty-five horse from Kermath, and 250 from Hall-Scott, and 225 from Sterling.

Mr. BATES. That is for the small boats?

Mr. WARD. That is for small boats.

Mr. BATES. In the Coast Guard.

Mr. WARD. We knew we were going to get a substantial portion of that business.

Mr. BATES. And you knew it was not competitive.

Mr. WARD. But we were the low bidder.

Mr. BATES. Isn't it true that both the Coast Guard and Navy Department have been short of all types of engines?

Mr. WARD. That is true, sir.

Mr. BATES. During the past few months?

Mr. WARD. That is true, sir.

Mr. BATES. And isn't it true today that our real bottleneck in getting boats into commission is due to the shortage of engines, even though we have multiplied our engine capacity probably 20 times during the last year and a half?

Mr. WARD. I don't know how many times.

Mr. BATES. That is just a rough estimate.

Doesn't that indicate that there hasn't today been, and there hasn't been for months, any competition as we understand competition in the business world?

Mr. WARD. Well, sir, I will answer that question thus. That contract for 40 engines-I don't know that I ought to talk this way in public

Mr. BATES. You are not talking types or speeds or anything else. You are perfectly all right.

Mr. WARD. The building program was increased. They wanted 80 more, making 120. That was in January, I think. The same price obtained as it had in October. In the latter part of March they wanted 350 more, at the same price, although labor and material had gone up-the same identical price.

Mr. BATES. Of course, when you build 350 engines under a new contract, where you are in the habit of making 25 every 4 or 5 months, that will naturally keep down your overhead and make it possible to develop your engines at less cost, won't it, and maintain your old prices? I don't say it is so in this case.

Mr. WARD. My people tell me no, that it did not alter the price. The CHAIRMAN. Mr. Ward, you have been referred to as the dean of the sales engineers in Washington city. How much competition have you?

Mr. WARD. In what respect, sir?

The CHAIRMAN. In getting clients.
Mr. WARD. In getting clients?

The CHAIRMAN. Yes. How many people are engaged in the same kind of skilled business that you are engaged in? Who are some of them?

Mr. WARD. I anticipated that, Mr. Chairman.

The CHAIRMAN. Your memory should be better than that of all the others because as the dean, you ought to know everybody who is in the business.

Mr. WARD. I don't know them all but I know a few of them.

The CHAIRMAN. Read off the list.

Mr. WARD. I want to make this statement.

This statement is

made on hearsay. I don't know this to be a fact. I don't know what basis they work on.

The CHAIRMAN. We have a list, almost a volume, but we want to know how good your memory is as the dean.

He

Mr. WARD. There is George A. Gray in the Munsey Building. represents some airplane parts manufacturers, I believe. You have the name of Douglas Gibson. I think he is engaged in representing some steel concerns.

The CHAIRMAN. That is right.

Mr. WARD. There is Philip Israel. I don't know what he represents now. He used to represent the Buhler Co., manufacturers of Diesel engines. He told me the other day he was working on a retainer and expenses.

There is Harry Grant. I don't know how he operates. He is up here on Vermont Avenue-1101, or something like that. There is John Goes who represents the Chris-Craft Corporation. There is a man named Corse or Krause. He is only, I understand, a consultant. And there is Samuel Eaton who I understand represents the Higgins Industries of New Orleans.

The CHAIRMAN. How many more?

Mr. WARD. That is as far as my list goes.

The CHAIRMAN. Is that all the dean knows?

Mr. WARD. You see, there are a lot of them who have come into this business in the last few months.

The CHAIRMAN. You know who has been coming in since business and pickings were good around the Government. You know who they are. You have a list.

Mr. WARD. No; Mr. Chairman

The CHAIRMAN. Who are they?

Mr. WARD. Mr. Chairman, that is not so. I don't know them. If I knew them I wouldn't hesitate to tell you, at all.

The CHAIRMAN. All right.

Mr. WARD. I will do this. I didn't intend to show this letter. The CHAIRMAN. When a man admits he is doing something wrong, then we will help out to correct the evil. That is what we want to do. Mr. WARD. No, sir; I want to help the committee as much as I can, sir.

The CHAIRMAN. That is right.

Mr. WARD (handing letter to Mr. Shaughnessy). That is probably violating a confidence but I don't think we can recognize confidences in this investigation.

The CHAIRMAN. I will tell you what you do, Mr. Ward. You sit down tonight and see if you can't think of some more of these that have come in, and write them out and write me a letter in the morning and give me what additional names you can recall.

That is all we have got for Mr. Ward.

(The list was later furnished by the witness, was received in evidence, marked "Exhibit No. 544A" and is filed with the committee.)

Mr. MAGNUSON. I just want to ask a question. Mr. Ward, I am interested in this, as I think the other members of the committee are. What do you think is war profiteering?

Mr. WARD. I would say that war profiteering was to take advantage of the emergency.

Mr. MAGNUSON. Thank you.

Mr. HESS. Let me ask a question. Mr. Ward, it has been testified here that you had numerous luncheons and dinners and parties. Are you accustomed to also giving campaign contributions?

Mr. WARD. Campaign contributions?