in the community and without any thought that they would get, or without any reason to believe they could get, some substantial shipbuilding. During all that time the Navy Department was continually brought into the picture about this note, as was the Department of Justice. In early 1939 or the latter part of 1938, I don't know which, the Navy Department and the Department of Justice were practically ready to effect a settlement on that note for $100,000, if the $100,000 was laid on the line, cold cash.

Mr. MAAS. What year was that?

The ACTING CHAIRMAN. Either late 1938 or 1939. At that time I went to the Attorney General and to the Secretary of the Navy and protested the settlement of that note unless there was an actual concrete plan and a certainty that the shipyard would be opened, because I didn't want the situation to develop where the note would be settled and no shipyard open to furnish employment in the community, and then the land sold for some other purpose.

But the Attorney General's office at that time was anxious to settle the note because the note was against the building and not against the ground. The lien was against the building and they said, "We may as well take the $100,000 because if we let this go we will get nothing."

Mr. MASS. I know, at that time.

The ACTING CHAIRMAN. It was my insistence they make no settlement and it wasn't done at that time.

Mr. MAAS. That is right, but at that time there was discussion within the Navy itself on the military side to take over Cramps, to foreclose the notes and take the plant over for its notes and operate it as a Navy yard. It was discussed before this committee.

The ACTING CHAIRMAN. There was never discussed in the Navy Department

Mr. MAAS (interposing). It was discussed by naval officers before this committee as a possibility and the recommendations had been made along those lines.

The ACTING CHAIRMAN. That is not so, Mr. Maas. The committee never held any hearings on Cramps.

Mr. MAAS. I have been pretty regular in attendance at this committee, a little more regular than the gentleman from Pennsylvania. The ACTING CHAIRMAN. I disagree with the gentleman on that question. I will check the roll call, if you want to introduce extraneous matter in this discussion.

Mr. MAAS. I am going to pursue this subject at the appropriate time.

The ACTING CHAIRMAN. There is no reason why you shouldn't but I want to keep you straight on it.

Mr. MAAS. If you can you are the first person that ever has been able to. Now, Commander, I want to ask you another question. Did you participate, after you became an official of the new Cramp Co., in the settlement of the Navy's note?

Commander WEYERBACHER. Absolutely not.

Mr. MAAS. As general manager you had nothing to do with that? Commander WEYERBACHER. That was all settled before I was appointed to the office; that is my understanding.

Mr. MAAS. You had no connection at any time in any way with the settlement of that note?

Mr. TOLAND. When was the first time the prospective new company decided they would not build merchant ships but were going to build cruisers?

Commander WEYERBACHER. I think it was some time in the middle of June 1940.

Mr. TOLAND. 1940.

Commander WEYERBACHER. The words were "build cruisers."

Mr. TOLAND. To build cruisers. Now, getting back to Mr. Miller, did you consult with Mr. Miller?

Commander WEYERBACHER. Yes, sir.

Mr. TOLAND. When did you first consult with him?

Commander WEYERBACHER. The fall of 1940, and I may explain it this way: We had old crane runways, two of them had 15-ton capacities and two, 10, and modern shipbuilding required cranes of greater capacity in order to build large subassemblies, and I thought that those crane runways could be reconditioned to take care of this extra weight. I had had enough experience in aeronautical engineering to know about factors of safety, and so forth, so I thought it could be done, although some experienced engineers were of the opinion that they should be torn down, so I had to scout around to get a good man who could make my calculations and to advise me as to whether or not I was on the proper track and I was advised

Mr. TOLAND (interposing). When was this?

Commander WEYERBACHER. Mr. Miller did the work.

Mr. TOLAND. I say, when was this?

Commander WEYERBACHER. It was in the fall of 1940; the date is not clear in my mind.

Mr. TOLAND. When did you first talk with him? Was it before you were designated as general manager and vice president or after? Commander WEYERBACHER. After.

Mr. TOLAND. Tell us briefly the result of your talk with Mr. Miller; what happened?

Commander WEYERBACHER. Well, from that we went-he gave us a proposal to do the engineering work for the rehabilitation of the crane runways, the extension of two ways and the construction of two other ways, and some other miscellaneous work, and I finally recommended, and it was approved, that we would enter into an agreement with Mr. Miller to furnish engineering services.

Mr. TOLAND. And Mr. Miller at that time was an employee of the Navy Department?

Commander WEYERBACHER. He was not.

Mr. TOLAND. He was a retired employee?

Commander WEYERBACHER. Retired employee.

Mr. TOLAND. And Mr. Sinclair?

Commander WEYERBACHER. Mr. Sinclair was an employee.

Mr. TOLAND. And still is, isn't he?

Commander WEYERBACHER. Still is.

Mr. TOLAND. What was the amount of the contract that the company agreed to pay Mr. Miller for preparing the plans?

Commander WEYERBACHER. Plans and specifications were based on a fee of 2 percent of estimated cost of two million six, if the cost of the

company was under; therefore that made a maximum fee of about $52,000; if the cost would be less it would only be 2 percent of the cost, so it was a limit in fee.

Mr. TOLAND. How much of that has been paid? When did Mr. Miller die?

Commander WEYERBACHER. He died, I think, about 4 or 5 months

ago.

Mr. TOLAND. And the work was carried on. Had it been finished at that time?

Commander WEYERBACHER. I think practically all of it had been finished.

Mr. TOLAND. Had the full $52,000 been paid?

Commander WEYERBACHER. No, sir; the terms of the agreement were that the final payment would be paid upon the completion of the job and the job of the ways A and B is not yet complete.

Mr. TOLAND. Isn't it a fact that Mr. Sinclair was at the Cramp Shipbuilding Co. quite often at that time?

Commander WEYERBACHER. Yes, sir; he was an employee for Miller and since Miller's death he has acted for Mr. Miller, as far as I understand it.

Mr. TOLAND. At the same time he is a civilian employee at the Navy Department?

Commander WEYERBACHER. He does it on his vacation time and at nights and Sundays.

Mr. TOLAND. You know that of your own knowledge, or is that just hearsay to you?

Commander WEYERBACHER. There is a letter of instructions, I think in 1923, issued by the Assistant Secretary or Secretary of the Navy. allowing him to do it.

Mr. TOLAND. I beg pardon?

Commander WEYERBACHER. There is a letter authorizing that work to be done, that kind of work be done by civilian employees; I think it is dated around sometime in 1923.

Mr. TOLAND. Any directive ever issued for Naval officers to be consultants for firms that they are connected with?

Commander WEYERBACHER. I am glad you brought that subject up. Mr. Toland.

Mr. TOLAND. Is there?

Commander WEYERBACHER. A directive?

Mr. TOLAND. Permitting naval officers to be employed as consultants for firms where they are stationed?

Commander WEYERBACHER. Naval officers cannot.

Mr. TOLAND. I just asked you; you said there was a directive.
Commander WEYERBACHER. Under certain conditions.

Mr. TOLAND. What?

Commander WEYERBACHER. It was never applied; there was no directive for active officers to my knowledge.

Mr. TOLAND. But there is a directive in 1923 permitting civilian employees to obtain and have outside employment while they are employees of the Goverment of the United States, is that right?

Commander WEYERBACHER. To the best of my knowledge and belief. Mr. TOLAND. That is a fact?

Commander WEYERBACHER. To the best of my knowledge and belief I have seen a letter on that basis.

Mr. TOLAND. Your testimony is that Mr. Sinclair performed this work on his vacation and at nights?

Commander WEYERBACHER. To the best of my knowledge and belief. Mr. TOLAND. How much of that $52,000 has been paid to Miller and Sinclair?

Commander WEYERBACHER. I think there has been about $24,000

paid.

Mr. TOLAND. As a matter of fact the record shows that Mr. Sinclair was very much interested in behalf of your friend, Mr. Rohleder, in getting him contracts; isn't that true?

Commander WEYERBACHER. Not to my knowledge, except what I heard yesterday.

Mr. TOLAND. You don't know anything about that?
Commander WEYERBACHER. No.

Mr. TOLAND. Were you here yesterday?

Mr. WEYERBACHER. I heard that testimony, yes, sir.

Mr. TOLAND. And you heard the testimony that Mr. Sinclair, an employee of the Department, called on the supervisor of ships' office on behalf of Mr.

Commander WEYERBACHER (interposing). I know Mr. Sinclair very well and I believe Mr. Sinclair would probably advise Mr. Davidson that was the most practical and economical way of conducting the work, being a consulting engineer through Miller, advising what to be done, and how to handle the work.

Mr. TOLAND. I suppose when he was there calling on the supervisor of ships he was there on his vacation?

Commander WEYERBACHER. I am fairly sure he was; you can check the record.

Mr. MAAS. Did you say there is an order or directive that an officer in active service cannot engage in private business?

Commander WEYERBACHER. The law states that an officer on the active list cannot perform for contractors to the Government.

Mr. MAAS. But only contractors to the Government, nothing that prohibits them from having outside employment?

Commander WEYERBACHER. Not according to the statute.

Mr. TOLAND. When was the first time you ever hired Sinclair? Commander WEYERBACHER. In making my report to the MerchantSterling I employed Sinclair to do certain engineering work in connection with the Merchant-Sterling work.

Mr. TOLAND. How long did that take him?

Commander WEYERBACHER. I do not know. The record shows we paid him a certain amount of money.

Mr. TOLAND. Do you remember how much it was you paid him? Commander WEYERBACHER. I think three or four or five hundred dollars; I have forgotten how much.

Mr. TOLAND. I show you a check dated March 27, 1939, your signature, $455, to L. H. Sinclair, endorsed by him and bearing the endorsement "Carl M. Butler." Do you know who Carl M. Butler is? Commander WEYERBACHER. No, sir.

Mr. TOLAND. I offer that in evidence.

(The check was received in evidence, marked "Exhibit No. 262A," and is printed in the appendix of this volume.)

Mr. TOLAND. Now when was it that Mr. Rohleder first consulted you in connection with the proposed reorganization of Cramp? Commander WEYERBACHER. When I started this engineering report for Merchant-Sterling.

Mr. TOLAND. In 1939?

Commander WEYERBACHER. In 1939 Rohleder dropped into the office and renewed old acquaintances; I hadn't seen him since the Lakehurst days and at that time the excellent work he did at Lakehurst came to my mind, and in the conversation he suggested that he had a little idle time and how about letting him make some estimates. I said, "Certainly, go ahead." He made those estimates. We checked them; they seemed to be fairly good estimates, and they were rechecked by the independent engineering firm and they were found to be accurate.

Mr. TOLAND. What engineering firm checked them?
Comander WEYERBACHER. Day & Zimmermann.

Mr. TOLAN. They checked Rohleder's estimates?

Commander WEYERBACHER. They checked the estimates that my report incorporated.

Mr. TOLAND. After your report had been filed, sometime later, Day & Zimmermann made a check, is that it, or did they make it simultaneously?

Commander WEYERBACHER. After I filed my report Day & Zimmermann checked the report and made a separate report.

Mr. TOLAND. Do you know when it was that Day & Zimmermann were first consulted in connection with the survey to be made of the facilities of the old company?

Commander WEYERBACHER. It was made some time after the date of my report, if my memory is correct.

Mr. TOLAND. Wasn't it made in 1940?

Commander WEYERBACHER. No, sir; to my recollection it must have been 1939.

Mr. TOLAND. No, no; isn't it a fact that the Day & Zimmermann report said that to construct light cruisers that the plant could be rehabilitated?

Commander WEYERBACHER. That is another report.

Mr. TOLAND. They made two reports?

Commander WEYERBACHER. Oh, yes.

Mr. TOLAND. Day & Zimmermann? Well, let's take the report they made in October 1940. Didn't they report that the plant could be constructed, rehabilitated, for $7,907,000?

Commander WEYERBACHER. Without land.

Mr. TOLAND. Exclusive of the land?
Commander WEYERBACHER. Yes, sir.

Mr. TOLAND. What is the cost?

Commander WEYERBACHER. He made an interesting remark at that

time.

Mr. TOLAND. What has been the actual cost of the rehabilitation in the reconstruction of that plant?

Commander WEYERBACHER. The cost when the job will be completed will be approximately $11,000,000 and seven to nine hundred thousand dollars.

Mr. TOLAND. Close to $12,000,000?

Commander WEYERBACHER. Including land.
Mr. TOLAND. Close to $12,000,000?

Commander WEYERBACHER. Including land.

Mr. TOLAND. All right. What value is placed in that $12,000,000 on land?