In brief, the whole situation is now moving so fast that it is rather hard to keep up with it.

The foreclosure sale takes place on Monday, the 7th. I am going there prepared with the necessary money to bid up to a high price in case any other bidder wants to come around, which I do not think he will do.

Very sincerely yours,

JOE R.

P. S. By the way, when you get back it seems to me that you and Admiral DuBose should send for one Arthur Kudner and get him to come to Philadelphia which he will be glad to do. He runs the Kudner advertising agency. This may not sound like much of a recommendation, but let me assure you that I consider him one of the big men in this country, and a very good friend of ours, so to speak. He is the man who has put over the entire public reception program of the Buick car, and has done other things of outstanding merit. Anyway, my only suggestion is that you and Admiral DuBose have a chat with him, because he may be able to give you an idea or two here and there as to how to handle the public reception pertaining to the opening of Cramp.

Mr. JOSEPH P. RIPLEY,

EXHIBIT 323

[Office copy]

SEPTEMBER 23, 1940.

63 Wall Street, New York City, N. Y.

DEAR MR. RIPLEY: A certain Calvin Chapman, of Chapman & Company, brokers, here, has pestered me on the telephone trying to find out something about our financing, which I thought might be of passing interest to you. His story goes somewhat like this:

"The American Ship & Commerce owns 83% of Cramp bonds and 61% of Cramp common stock; therefore, American Ship & Commerce stock now quoted at around 1%, should be worth a great deal more than that figure as soon as the new financing is put out; he would like very much to have me buy, through him, all of the American Ship & Commerce that I can carry and also would like to have me keep him advised, and so forth."

I told him that I was not interested in his proposition and that I had no personal knowledge whatever of any financial matters bearing on the relationship of the American Ship & Commerce to the Cramp Shipbuilding Co. Furthermore, I have mentioned this to nobody.

(1) DuBose duties-authority-responsibility

(2) Will discuss with Anderson & Eckhardt (Check his experience again) (3) 0. K. Very favorably impressed by him.

(4) If R. F. C. does insist, why not divide the job? (Bylaws require Separa) (5) Discuss.

(6) What objection on Sept. 17th if court decision made? Discuss with Scarff.

SEPTEMBER 3, 1940.

MEMORANDUM TO MR. JAMES REED

The following are matters which I merely suggest you deal with when you get here.

(1) DuBose. The situation in regard to this matter is as follows. I learn on very good authority that the consulting per diem idea will not work. And I feel overwhelmingly that we want DuBose in the picture. You remember that

just before you left for San Francisco at the time of your last trip I asked you. whether it would be agreeable to you if he were Chairman of the Executive Committee, and you replied in the affirmative. So I got in touch with DuBose and made the earliest appointment I could with him, which was for a week ago today. I had lunch with him all along uptown, and covered the whole ground. The outstanding fact is that he is still an active officer in the Navy and cannot or does not wish to commit himself to taking any position until he has retired from the Navy. This is entirely proper. But my talk leads me to believe that the only practical way to bring him into our picture is as Chairman of the Executive Committee (the Committee consisting of yourself, DuBose, and myself), and to have him a permanent salaried officer of the corporation, living in Philadelphia as distinguished from living in Washington and going to Philadelphia only when called upon. As regards compensation, I think the logical thing to do is to pay him exactly the same as we propose to pay you. I hope that you will find all the foregoing agreeable to him when he is in a position. to talk, which should be the early part of October. Naturally, I hope all of the foregoing will be agreeable to you. Duties.

(2) I think we should be getting our Comptroller selected. And naturally I want you to take the responsibility for this item. Eckhardt is naturally very anxious to get the position. So far as I am concerned, he looks all right to me. I sent him over to see Mr. Paul Knight, of Arthur Anderson & Co., who will be the auditors. I rely very much on what Paul Knight says because I have known him for many years, and most favorably. I will be glad to show you the letter which he has written me in regard to the matter; it is very favorable to Mr. Eckhardt.

(3) I feel the same about a Secretary and Treasurer. On this point I feel justified in recommending to you Mr. H. F. Mayer, who was for many years Comptroller of the National City Company, and was for five years Comptroller of Brown, Harriman & Co. (now Harriman, Ripley & Co.). His leaving us was not the slightest his own fault; I can explain this to you in person very easily. Yes!

(4) Whoever you see fit to line up for Comptroller, and for Secretary and Treasurer, I have two suggestions to make. One is that you make clear that we cannot definitely commit ourselves to the matter until October 23rd and possibly later, because the lawyers cannot get all the legal procedure taken care of until then. Moreover, inasmuch as I am dealing with the RFC for help, there is always a chance that they may insist on naming the Secretary and Treasurer, which they sometimes do. I will of course resist it if they do that, but I do not like to see you get actually committed to anybody for these two important positions until we are sure that we can.

(5) I would suggest that anybody we take on in an official capacity be told that salaries commence January 1, 1941, if this be agreeable to you. My thought is this. I hate to think of our taking on an administrative pay roll until we are in a position to have the Navy pay some or all of it in the cost of construction of the facilities. And I do not see how we can get really under way with such construction until the first of the year. Again, this is only a suggestion to you. (6) I am puzzled beyond words as to the exact date upon which to elect your as Director and President. My difficulty is as follows. As I say, the lawyers cannot unfold the machinery one minute earlier than October 23rd. To put it another way, this is the earliest date that we can be sure that everything is done and the yard is definitely going to open. On the other hand, it is more appropriate for you to sign final amendments to the registration statement, which should be going through about the 16th or 17th of September. The question boils down to one as to whether you wish to be publicly identified with the situation about September 16th, while there is still a chance of something upsetting the whole program. I really think that the chance is not all great. In other words, if anything upsets us, I think it will be before September 16th and not afterward. Nevertheless, there is that chance. You might discuss this with Mr. Scarff and counsel and let me know what you thing about it.

(7) A firm named Pland-Evans, of San Francisco, has written to me expressing keen desire to handle the cafeteria job. One of their officers is an old college friend of mine, but that makes not the slightest difference. I bring it to your attention because I thought that inasmuch as they are in San Francisco you may have heard of them.

70533-42-vol. 3- -31

(8) I hand you herewith various papers which it seems to me you will want to read:

Registration Statement as filed.

Prospectus as filed.

Articles of Incorporation.

By-Laws.

Plan of Reorganization.

Letter of Transmittal.

Personnel set-up as of August 30th.

Memorandum dated July 31, 1940, entitled "American Shipping and Shipbuilding" written by Mr. E. A. Kircher of my office.

J. P. R.: W.

Copy to Mr. Scarff.

J. P. RIPLEY.

EXHIBIT No. 325

NAVY DEPARTMENT,

BUREAU OF SHIPS, Washington, D. C., May 11, 1942.

MEMORANDUM

Subject: Inquiry of House Naval Affairs Investigating Committee re subcontracts Awarded in Connection with Cramp Shipbuilding Company.

1. On October 29, 1940, the Cramp Shipbuilding Company was awarded Contract NOd-1550 (Emergency Plant Facilities Type) for the expansion of its shipbuilding facilities in connection with the performance of a contract for the construction of six light cruisers (Contract NOd-1498, dated October 29, 1940). Shortly thereafter the Company, after strong recommendations by Commander R. D. Weyerbacher, U. S. N. (ret.), Vice President and General Manager of the Company, engaged C. F. Rohleder as general contractor in connection with the rehabilitation of certain buildings in the Company's shipyard under Contract NOd-1550. The contract with Rohleder was of the cost-plus-a-fixed-fee type. Rohleder held other contracts in connection with work being done in the Cramp yard under NOd-1550; in fact, on September 1, 1941, Rohleder had contracts having a total value of $2,304,139.13, representing 54% of the total contracts in the Cramp yard.

2. In December 1940 Rohleder entered into a subcontract with J. P. Rainey & Company to perform certain electrical work in connection with the Cramp expansion. At about the same time Rohleder engaged Rainey in a personal capacity to take charge of the procurement and installation of electrical wiring and equipment under Rohleder's contract with Cramp. It should be noted that J. P. Rainey thus occupied a dual role. While his Company was subcontractor of Rohleder for the electrical work, he, himself, was also on the Rohleder pay roll as an employee. Captain R. T. Hanson, Supervisor of Shipbuilding at Cramp, has indicated that Rainey, acting in his capacity as an employee of Rohleder, was connected with the securing of bids on the electrical equipment discussed hereafter.

3. In the normal course of reviewing purchases under P. O. 627-156 for electrical materials in connection with the Rohleder contract, the Supervisor of Shipbuilding became suspicious of certain bids. On July 30, 1941, there had been submitted three bids for electrical apparatus. One was from Westinghouse Electric and Supply Company, one ostensibly from Adelphia Electric Company, and one ostensibly from the Walker Electric Company of Conshohocken. Affixed to the Adelphia bid was what purported to be the signature of N. T. Leithold, Secretary of the Company. The Walker bid carried what appeared to be the signature of A. M. Callanan, an official of that Company. When these bids came to the office of the Supervisor of Shipbuilding for the purpose of "confirmation" approval, the SupShip's suspicion was aroused for two reasons: First, some of the material covered by these bids had already been received in the Cramp yard, and second, it was noticed that the Adelphia and Walker bids appeared to be an original and a carbon copy, identical in all respects, save only with respect to the signatures and letterheads. The prices on those two

bids were exactly the same and were about $56.00 higher than that contained in the Westinghouse bid. Accordingly, the order for that material had been awarded to the Westinghouse Electric and Supply Company.

4. In the light of these discoveries, on 13 August 1941, the Supervisor discussed the matter with Rear Admiral W. G. DuBose, U. S. N. (ret.), President of the Cramp Company, who appears to have turned the matter over to Commander Weyerbacher, who in turn requested Rohleder to make a report on the matter. Under date of 14 August 1941, Rohleder submitted a memorandum to Weyerbacher explaining his part in the purchase from electrical supply houses, viz, that he telephoned three times for quotations on the items in question, and awarded a contract on the basis of these three quotations, and then made up the purchase order upon the receipt of the written confirmation of those quotations. He also disclaimed for both himself and Rainey knowledge of any reason why any bid should have been a carbon copy of another bid. On 13 August 1941 the Supervisor wrote to the Adelphia Electric Company and to Walker of Conshohocken asking for certain information. Of the Adelphia Company he asked whether the Walker Electric Company which the Adelphia Company represented was the same as "Walker of Conshohocken." Of Walker of Conshohocken he asked what position was held by A. M. Callanan and whether Callanan was duly authorized to sign quotations of the Company for the furnishing of electrical materials. The Adelphia Electric Company replied under date of 15 August 1941, advising that, "The Walker Electric Company, Conshohocken, Pennsylvania, has no connection whatever with the Walker Electrical Company of Atlanta, Georgia, which we represent." It was noted that Leithold's signature on this letter was different from that purporting to be his on the bid in question. The Supervisor's letter to Walker of Conshohocken was answered by a visit from Mr. A. M. Callanan of that Company. He denied that the signature on the purported Walker bid was his signature. He stated that, because of his frequent absences in the field, he customarily delegated authority to subordinates in his firm to sign letters for him, but that he had not authorized his signature to the particular bid in question. However, he admitted that on one occasion some weeks previously he had authorized a price quotation in response to an Adelphia inquiry, but stated that he was sure this was several weeks prior to July 30, the date of the bid in question. Callanan also admitted that, under certain circumstances, his firm released stationery bearing the Company letterhead to outsiders.

5. As a result of these discoveries and the suspicion aroused thereby, on 10 September 1941, the SupShip wrote the Cramp Shipbuilding Company to the effect that it was desired that procurement of miscellaneous electrical material covered by P. O. 627-156 be proceeded with in order not to delay the projects involved, but that reimbursement for commitments would be withheld pending further inquiry into the irregularities which had been found to exist in connection with the placing of that order.

6. On 11 September 1941 the SupShip wrote to Admiral DuBose, recapitulating the discoveries already made in connection with the irregularities on P. O. 627-156, and requesting that the Company make an inquiry into the method and procedure of the subcontracting activities of the Company's prime contractors. It was further requested that the Company advise the SupShip of the results of the inquiry, particularly as to whether the procedure known to have been followed in connection with P. O. 627-156 had likewise been followed in the case of certain other purchase orders listed in the SupShip's letter, or any other purchase orders initiated by Rohleder.

7. Upon receipt of the SupShip's letter of 11 September 1941 Admiral DuBose, by a memorandum of the same date, informed Commander Weyerbacher that a number of complaints had been made by the SupShip concerning alleged irregularities on certain of the Rohleder subcontracts and requested Weyerbacher to examine into and report on the matter. On the same date Admiral DuBose also requested Mr. W. T. Minor, Jr., an employee of the Cramp Shipbuilding Company, to make an investigation into the same matter. Apparently in response to an oral inquiry of Commander Weyerbacher, Rohleder submitted a letter dated 12 September 1941 denying that there had been any irregularities in the letting of the Westinghouse contracts.

8. On 16 September 1941 the SupShip wrote the Secretary of the Navy, via the Bureau of Ships, announcing the arrival at the Cramp Shipbuilding Company of representatives of the House Naval Affairs Investigating Committee, and stating that with his approval the Company was making its files and records available for examination by the investigators.

9. On 27 September 1941 Minor submitted his report to Admiral DuBose. This report confirmed the findings of the SupShip's office and further clarified the events which had occurred. Not only were the bids which were purported to have been sent in by the Adelphia and Walker Companies not sent in by either of these two companies, but they had been submitted by one DeWees of Westinghouse Electric and Supply Company, who in turn had been requested to do so by J. P. Rainey. The signatures of Leithold and Callanan on the two purported bids were neither signed by those men nor authorized by them, but as far as could be ascertained, were written by stenographers in the office of the Westinghouse Electric and Supply Company. It further appeared that the Adelphia Electric Company would in no event have submitted bids on the materials involved since it handled a line of electrical supplies different from that contained in the bid request, and, while Walker of Conshohocken occasionally made quotations on the type of materials involved, it generally did not quote on them.

It further developed that as soon as Rainey had signed a contract for the electrical work on the plant facilities, he had immediately begun negotiations with electrical manufacturers in order to protect himself against price advances. Accordingly, he had signed a contract for wire with the Hazard Insulated Wire Division of the Okonite Company on December 5, 1940, and one for conduit with Walker of Conshohocken on 22 January 1941. Since both of these manufacturers dealt only through jobbers or distributors, Westinghouse Electric and Supply Company was designated as the distributor in both instances. Rainey thus knew that in securing future bids it was almost certain that the bids from Westinghouse would be lower than those from the other suppliers with whom he had no such contracts. Since Rainey had requested Westinghouse to secure the two additional "bids" on the electrical equipment he knew that these two bids were not competitive. (Rohleder and Weyerbacher, according to Rainey, were aware of this lack of competition.)

In his report Mr. Minor concluded that, while the bids in question had been irregular, he did not believe that the obtaining of additional bids in these particular instances would have resulted in any materially lower net cost to Cramp Company. To support this conclusion, he pointed out that he had obtained additional bids on the material called for in the purchase orders and that, based on the bid prices from three local electrical suppliers, namely, Rumsey Electrical Company, Colonial Electric Company, and Royal Electric Company, even if these companies had bid originally, at least three of the orders would have been given to Westinghouse Electric Supply Company and the amount of money saved by awarding the orders to the low bidder in the other three cases would have resulted in but a slight saving to Cramp Shipbuilding Company. It was pointed out that it was impossible to say what delivery schedules would have been offered by the three local companies had they quoted their bids at the same time that Westinghouse made its bids, but on the basis of the delivery schedules furnished by the three local companies in the bids which were made at the request of Mr. Minor, the Westinghouse Company offered considerably better deliveries in all its quotations except one, and in that case, while two of the companies offered deliveries as good as those offered by Westinghouse, the price offered by Westinghouse was the lowest price. Thus Minor's conclusion was that the events had been unfortunate but were not important in their consequences.

10. On September 29, Admiral DuBose forwarded the Minor report to the SupShip. During the first week in October the President and Chairman of the Board of the Cramp Shipbuilding Company conferred with SupShip about the Minor report. The SupShip appears to have pointed out that the report made no comment or recommendations, failed to indicate any contemplated action, and was unresponsive to the letter of 11 September 1941, in that it did not probe into any of the other purchase orders initiated by Rohleder. After this conference Admiral DuBose requested the SupShip to return the Minor report for further consideration and investigation of the situation by the Cramp Shipbuilding Company. Accordingly on 8 October 1941 the report was returned to Admiral DuBose by the SupShip "without action on the part of this office, for your reconsideration and such further action as you may desire to take to comply more fully with my request of 11 September 1941 for inquiry into other purchase orders initiated by your subcontractor, C. F. Rohleder, in addition to the specific orders for electrical material covered by any basic letter.' On 9 October 1941 the Cramp Company engaged Mr. W. H. Beal of the New York Shipbuilding Company to