Mr. BENDIX. He is the general manager of the South Bend operations.

Mr. TOLAND (reading):

We have sold a large number of Y-9-H and PD B8 carburetors to Commonwealth of Australia for Pratt & Whitney engines which they are building in Australia. The total number I have in mind at the moment is about 625 Y-9-H and 150 PD-12-B8's. Most of these will be shipped between now and the end of the year. The question definitely arises if we have full freedom to ship these carburetors without Goudard's permission or without giving Goudard a cut. Please investigate. M. P. FERGUSON.

(The letter was received in evidence and marked "Exhibit No. 130.")

Mr. TOLAND. I have a letter dated September 5, 1940, to Ferguson from McCrady:

Replying to your memorandum dated August 28.

By section 5 of our agreement with Generale Zenith and Solex we granted them an exclusive license in the Zenith-Solex territory, which includes Australia as a colony of Great Britain. Section 35 provides that "Bendix will under no circumstances permit or acquiesce in the sale in the Zenith-Solex territory of carburetors manufactured by it.' Sales by us of carburetors to Australia are therefore in exactly the same status as our sales to England.

Since Australia cannot get these carburetors from Generale Zenith, their Government would no doubt take any steps necessary to get them from us; this would bring into effect section 10, which provides that if regulations in any country compel it, we may license a third party in the Zenith-Solex territory, but proceeds from such licenses shall be divided 50-50. I do not believe that this section would have any application to the sales we are making, however; a sale and a license are different things.

I understand that the carburetors your memorandum refers to are to be shipped separately, not as part of an aircraft engine, hence section 20 of the agreement has no application.

This Australian situation brings to a focus a question which has for some time been becoming more pressing, whether we should cancel the agreement. I have advocated cancelation before, but the situation was different then, and Mr. Marcus disapproved it. As things now stand, the case for cancelation seems clearer than it did. Our royalties from the agreement average about $10,000 per year, which we would lose if we cancel. But profits from Australian business alone should run far in excess of that amount, not to mention the income to be drived from licenses in Australia, as well as in Great Britain and other parts of the Zenith-Solex territory. If politics has any weight, I feel sure that we had rather be supplying carburetors and information to Britain and Australia than to France and probably through France to Germany, which latter procedure seems certain to involve continuous friction with agencies of our own Government.

Furthermore, our performance of our own obligations under the agreement has become well-nigh impossible. We are supposed to send Zenith manufacturing, technical, and patent information, and give their representatives access to our factories * * These obligations are becoming more and more difficult to

perform.

Then he continues further with regard to the cancelation.

All this is, of course, subject to Mr. Marcus' approval as well as your own. I enclose two extra copies in case you wish to send them to Messrs. Marcus and Stanton.

(The letter was received in evidence, and marked "Exhibit No. 131" and is printed in its entirety in the appendix of this volume.)

Mr. TOLAND. I would also like to offer in this connection a copy of a letter to Mr. Ferguson from Mr. McConkey, dated November 29, 1940; a letter dated December 6, 1940, from Mr. McCrady to Mr. Ferguson; a letter from Bendix Aviation, dated February 21, 1941, signed by A. R. M., who I assume is Mr. Marcus, to the Zenith

Carburetter Co. in Middlesex, England; and a letter to the British Air Commission, dated February 4, 1941, signed by Mr. Marcus, vice president.

I will show you these and if you haven't seen them, then, of course, you can't testify about them.

Mr. BENDIX. Mr. Toland, I haven't seen these.

Mr. TOLAND. You haven't seen any of them?

Mr. BENDIX. No, sir.

(The letters referred to were received in evidence, marked "Exhibits Nos. 132, 133, 134, and 135," respectively, and are printed in the ap.pendix of this volume.)

Mr. TOLAND. I would like to offer a letter from the Zenith Carburetor Co., Ltd., to the Bendix Aviation Corporation, dated April 30, 1941; and one dated the 12th of June 1941 from McCrady to Mr. Ferguson, both with respect to this matter.

(The letters referred to were received in evidence, marked "Exhibits Nos. 136 and 137," respectively, and are printed in the appendix of this volume.)

The CHAIRMAN. It is 12:30. Let's take a recess at this point until 1:30. Mr. Bendix, you be back at 1:30.

All witnesses subpenaed to be here today be back at 1:30.

(Whereupon, at 12:30, the committee recessed, until 1:30 p. m. the same day.)

AFTERNOON RECESS

The committee hearing resumed at 1:50, Chairman Vinson presiding.

The CHAIRMAN. The committee will come to order.

Mr. TOLAND. Mr. Marcus and Mr. Breech.

The CHAIRMAN. Do you solemnly swear the evidence you shall give in the Naval Affairs Committee shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. MARCUs. I do.

Mr. BREECH. I do.

TESTIMONY OF ERNEST R. BREECH, PRESIDENT, AND CHARLES MARCUS, VICE PRESIDENT, BENDIX AVIATION CORPORATION, AND VINCENT BENDIX, NEW YORK CITY-Resumed

Mr. TOLAND. Mr. Marcus, I will take you first. What is your present business or occupation?

Mr. MARCUS. I am vice president of Bendix Aviation Corporation. Mr. TOLAND. How long have you been connected with that company?

Mr. MARCUS. Since its inception in 1929.

Mr. TOLAND. Mr. Breech, what is your present position? Mr. BREECH. I am president of Bendix Aviation Corporation. Mr. TOLAND. How long have you been connected with Bendix? Mr. BREECH. I was elected president on February 24 of this year. I was elected to the board of directors prior to that, in December 1937, and was a member of the board and executive committee and finance committee from that time to date.

Mr. TOLAND. And prior to February were you connected with General Motors as well?

Mr. BREECH. I was vice president.

Mr. TOLAND. Of General Motors?
Mr. BREECH. Yes.

Mr. TOLAND. In charge of what?

Mr. BREECH. In charge of aviation companies, with the exception of Allison Engine, and miscellaneous companies, such as the household appliance divisions.

Mr. TOLAND. Now, Mr. Bendix, this morning I questioned you concerning the agreements made with Robert Bosch. Those agreements in effect covered starters for aircraft, automobile, and Diesel engines, aircraft deicing equipment, and equipment used in connection with superchargers and fuel injection pumps. The agreements further provided that your company gave Robert Bosch exclusive licenses for Germany only to manufacture these devices under Bendix patents and designs and that Bosch agreed not to export the devices from Germany and your company, the Bendix, agreed not to sell in Germany.

Both Bendix and Bosch, Robert Bosch, have maintained similar agreements with selected manufacturers in England, France, Italy, and Japan. Isn't that a fact? Do you know, Mr. Marcus?

Mr. MARCUS. In general Robert Bosch, in addition to the license which we granted to them

Mr. TOLAND (interposing). I am just asking you about these, about these agreements.

Mr. MARCUS. We have only an agreement.

Mr. TOLAND. With Robert Bosch?

Mr. MARCUs. To license Robert Bosch under the starter devices. Mr. TOLAND. In addition to that haven't your company and Robert Bosch, if you know, maintained similar agreements with selected manufacturers in England, France, Italy, and Japan with regard to these same items?

Mr. MARCUS. We have licensed these same items to other manufacturers in the countries you mention.

Mr. TOLAND. Do you have any knowledge of whether or not Robert Bosch itself made similar agreements?

Mr. MARCUS. I have knowledge of an agreement in which Robert Bosch has licensed its devices to a company in the United States known as the American Bosch Co.

Mr. TOLAND. Do you have any knowledge of any agreements that Robert Bosch made with any other manufacturers in Germany or in France, Italy, or Japan?

Mr. MARCUS. Robert Bosch owns subsidiaries in various other countries. They had a subsidiary in France, to our knowledge, and at one time they had a subsidiary in England. I believe that the latter has been taken over by British interests.

Mr. TOLAND. Now isn't it a fact also, Mr. Marcus, that these agreements provided that your company would supply, and you did supply, complete designs and manufacturing information on each of the products covered by the agreements?

Mr. MARCUS. That is true.

Mr. TOLAND. Through Robert Bosch in Germany?

Mr. MARCUS. That is true.

Mr. TOLAND. And isn't it a further fact that in early 1940 your company encountered considerable difficulty with the British naval

authorities in the transmission of specifications and plans to Robert Bosch?

Mr. MARCUS. None that I know about.

Mr. TOLAND. Isn't it a fact that your company was concerned as to how they could circumvent the interference by the British naval authorities and get the information to Robert Bosch in Germany? Mr. MARCUS. No information ever went from

Mr. TOLAND (interposing). That isn't answering the question. Isn't it a fact I will ask it again-isn't it a fact that early in 1940 that the British naval authorities interfered with your sending information to Robert Bosch in Germany?

Mr. MARCUS. Not to my knowledge.

Mr. TOLAND. Not to your knowledge. To your knowledge, Mr. Bendix; to yours, Mr. Breech?

Mr. BREECH. I know nothing about it.

Mr. TOLAND. Isn't it a fact that your company was concerned after this apparent interference on the part of the British naval authorities as to how you could circumvent that interference and still get the information to Robert Bosch in Germany?

Mr. MARCUS. I have no knowledge of that.

The CHAIRMAN. Do any of the witnesses have knowledge of that? Mr. TOLAND. No. I would like to read this, dated January 2, 1940:

Subject: Blueprints mailed to Bosch, Germany.

How do we send mail (blueprints) to Bosch, Germany? By air (?). I assume you know boat mail was captured, and showed up in England.

Signed by R. P. Lansing. That was first addressed to Lansing and then to McLean; their names are scratched out. Then there is name that apparently is Loving or Laving, L-o-v-i-n-g or L-a-v-i-n-g. Do you have any employee connected with you by

a

that name?

Mr. MARCUS. Not by that name.

Mr. TOLAND. This is on the interdepartmental stationery of Bendix of New Jersey. Now there are footnotes:

1. All license data is sent straight mail and is routed on Italian boats through Italy, Switzerland, to Germany.

2. We use air mail wherever weight of info or data permits.

3. Post-office routing officials for foreign mail advise there is nothing you can (something) about mail seizures except protest as did Secretary Hull today. 4. I believe best we continue to mail data if we are to receive royalties. McLean

Who is McLean?

Mr. MARCUS. McLean is today the manager of the Philadelphia division of Bendix Aviation, and at that time he was an assistant in the sales department of the Eclipse Aviation.

Mr. TOLAND. Is that his name? Do you know his signature?

Mr. MARCUS. I don't know his signature but I do know his name. This is interdepartmental, I take it.

Mr. TOLAND. Can you identify the handwriting?

Mr. TOLAND. I offer it because it was furnished to me, Mr. Chairman, by the Department of Justice as coming from the files of the company, Bendix Aviation Co. subsidiary.

(The memorandum was received in evidence and marked "Exhibit No. 138.")

Mr. TOLAND. Isn't it a fact that in 1939 you advised Robert Bosch that an Italian company, the Magneto Marelli Co., requested a license on a particular type of starter? Have you any recollection

of that?

Mr. MARCUS. I have. That is so.

Mr. TOLAND. Isn't it a fact that you said you would be glad to let Robert Bosch in on the deal and forego part of the royalty as sole licensor and grant a license to Magneto Marelli?

Mr. MARCUS. That is correct.

Mr. TOLAND. And that this arrangement was effected early in 1940?

Mr. MARCUS. I don't remember the exact date.

Mr. TOLAND. I show you a cablegram signed "Charles." Your name is Charles, isn't it?

Mr. MARCUS. That is right.

Mr. TOLAND. Addressed to Robert Bosch, at Stuttgart, Germany, dated December 15, 1939, and ask you if you sent that or caused it to be sent?

Mr. MARCUS. I do recall this and it was sent by me.

Mr. TOLAND. That in effect supports the questions I just asked you and the answers you gave?

Mr. MARCUS. The information was to go from Bosch to Marelli, who already had been a licensee of Eclipse Aviation for many years prior to that date. That calls for additional licensing of devices in the starter art.

(The cablegram was received in evidence, marked "Exhibit No. 139" and is printed in the appendix of this volume.)

Mr. TOLAND. Who is Mr. Dipper?

Mr. MARCUS. He is the representative of the Robert Bosch Co.
Mr. TOLAND. He is a German; is he not?

Mr. MARCUs. He is.

Mr. TOLAND. Do you know him?

Mr. MARCUs. I do.

Mr. TOLAND. I show you a cablegram or telegram dated February 20, 1940, addressed to you from Dipper in Stuttgart, Germany, and ask you if you recall receiving it?

Mr. MARCUS. I do recognize it.

Mr. TOLAND. I offer it in evidence.

(The cablegram was received in evidence, marked "Exhibit No. 140" and is printed in the appendix of this volume.)

Mr. TOLAND. Isn't it a fact, Mr. Marcus, that in May 1940 Robert Bosch informed your company that the German Government was requiring the Bosch Co. to grant a sublicense to another manufacturer under its Bendix starter license?

Mr. MARCUS. I believe that there was a request from Robert Bosch to grant a sublicense to some other company, but I do not know whether we ever received the name of that company.

Mr. TOLAND. Isn't it a fact that on May 23, 1940, your company cabled to Robert Bosch, transmitting technical information and designs on behalf of Bendix to the sublicensee?