Mr. CORCORAN. I was very carefully paid not out of this plant at all. The borrower in this case was a completely separate corporation, with assets of its own. It was a California shipbuilding company. It wasn't the Todd Shipyard Corporation at all.

Senator BALL. I don't get that. You mean the Todd Shipyards paid your fee, but had nothing to do with the

Mr. CORCORAN (interposing). The Todd Shipyards was a stockholder, along with many other syndicate members, in a subsidiary corporation whose assets, of course, and whose liabilities were completely separated from Todd-Pacific coast shipbuilding corporation— and it was the assets of that corporation and the obligations to that corporation that were pledged to the loan.

Senator BALL. Yes; but in the long run, Todd is going to pay your fee out of what it gets out of this venture.

Mr. CORCORAN. No; it pays my fee out of its general assets, Sen

ator.

Senator BALL. That is just a technical

Mr. CORCORAN (interposing). Let me make it clear. Each one of these shipyard corporations is separately organized. Each one of them has its own separate corporation, its own separate contracts, its own separate capital, and its own separate obligations. The only relation of Todd Shipyards to it is that if there are dividends some day, after all obligations have been met and all loans to the Government repaid, what equity there is over such obligations in the operating funds is available for the declarations of dividends to the parent corporations. This Todd California corporation is owned by seven other corporations-a syndicate.

Senator BALL. Yes; but no corporation ever pays out $65,000 without expecting to get something back.

Mr. CORCORAN. What Todd Shipyards hopes and what the syndicate hopes, Senator, is that this magnesium operation will be a very profitable enterprise, not because of any contracts it has with the Government, but because it has been smart enough to get the right process and to get a commanding position in the market.

Senator BALL. You mentioned Todd Shipyards before. Is this particular case your only connection with them?

Mr. CORCORAN. That is right.

Senator BALL. Have you represented them on any others?
Mr. CORCORAN. No; this is my only relationship with Todd.

Senator BALL. This is the one you referred to in your statement?
Mr. CORCORAN. That is right.

The CHAIRMAN. Any other questions, gentlemen?

Proceed to the next item, Mr. Corcoran.

Mr. CORCORAN. The next item, Senator, is one which is a long while in telling, but in which I acted merely in a friendly capacity to a friend and took no fee at all. Do you want to go through it?

The CHAIRMAN. I would rather you would proceed in order and just take this brief as it is, so these gentlemen can ask any questions they desire.

Senator CONNALLY. Are you going on tomorrow, or are you going to conclude today?

The CHAIRMAN. We are going on tomorrow, but we are trying to get through with this witness this evening, and Mr. West will be the witness tomorrow.

Senator CONNALLY. He got no fee. I don't know about this, but

why not let him jump over to China Defense Supplies and come back to this. There is a small fee in connection with that.

The CHAIRMAN. That is all right. We will come back to that later. CONNECTION OF THOMAS G. CORCORAN WITH CHINA DEFENSE SUPPLIES, INC. Mr. CORCORAN. Early this year I was asked to do certain work for the Chinese Government. Since then I have spent considerable time and energy in assisting the representatives of China in this country to forward China's heroic struggle to defeat Japan. In spite of its great shortage of defense materials, China has been fighting the fareastern partner of the Axis dictators for 42 years.

When the United States passed the Lend-Lease Act, it decided to assist China's battle for the democracies by sending supplies to the Chinese Army. These lend-lease supplies are all purchased directly by the various procuring agencies of the United States Government such as the Army and the Treasury and not by the Chinese.

My work for China consisted in the adjustment of relations between certain American corporations in the Far East, of advice as to the selection of American personnel, and the appropriate organization of China's business under the Lend-Lease Act. In this connection I assisted in the corporate organization of the corporation known as the China Defense Supplies, Inc., which supervises all lend-lease arrangements for China.

My total compensation for this work was $5,000, which I received early last spring. This did not come directly or indirectly from any funds of the United States.

The CHAIRMAN. Questions?

Senator CONNALLY. No; I haven't any questions.

Senator HERRING. No.

Senator BALL. No.

Senator HATCH. None.

Senator BREWSTER With whom does the China Defense Supplies, Inc., deal?

Mr. CORCORAN. They deal with the various procuring agencies of the United States Government, such as the Army and the Treasury. All their supplies are bought by the Treasury and by the Army. The only reason I have included this is that there has been a good deal of whispering that somehow I must be getting a $5,000,000 cut on supplies going to China. I have never received a cent. There is no way to profit on the purchase of these supplies. They are bought directly by the Army and Navy and then shipped direct.

Senator BREWSTER. And where did China Defense Supplies, Inc., get their capital?

Mr. CORCORAN. It was supplied, as I understand it, from Chinese sources. It is a very small capital, Senator. It is a Delaware corporation.

Now shall we go to the Havenstrite matter?
The CHAIRMAN. Yes. Proceed.

CONNECTION OF THOMAS G. CORCORAN WITH HAVENSTRITE OIL WELL IN

ALASKA

Mr. CORCORAN. The so-called Havenstrite case is a case in which it has been alleged that I "influenced" Secretary Ickes to make an unsuccessful attempt to "influence" Secretary Knox to take some undefined action against the public interest in relation to an oil well in Alaska. Many variations of the original story have been circulated,

but all agree that it was a matter in which I asked and received no fee of any kind.

I should like to submit to the committee for incorporation in the record, first, this examination of Secretary Ickes before the Subcommittee on the Interior Department of the Committee on Appropriations of the House on April 23; second, a public letter from Secretary Ickes to the editor of the newspaper originating this Havenstrite story, dated May 6, 1941; and an editorial from the same paper, dated May 2, 1941, hereinafter quoted in full.

The CHAIRMAN. Was that the St. Louis Post-Dispatch?

Mr. CORCORAN. That was the Post-Dispatch in which the story originally appeared and which retracted the story in this editorial, copy of which I should like to put in the record.

In his letter Secretary Ickes states that the responsible chief of the paper originating the story admitted to the Secretary that “he was trying to get a story on Tom Corcoran."

The CHAIRMAN. They will be inserted in the record at this point. (The documents referred to were marked "Exhibits Nos. 346 to 348." Exhibit No. 348 appears in full in the text on p. 3920. Exhibits Nos. 346 and 347 are included in the appendix on pp. 4238, 4243.)

Mr. CORCORAN. This situation is understandable only in relation to the magnesium enterprise which I have just discussed.

Havenstrite was the brother-in-law of the chief Washington engineering representative of the magnesium syndicate. For some months I worked with this engineer in very close personal and friendly relations. As we were working together, the engineer occasionally criticized Washington for what he termed a "run-around" which the Government was giving his brother-in-law. And I still felt a certain loyalty to the Government, and that sort of thing hurt

me.

Havenstrite, a Californian, a successful independent oilman in the United States proper, had for some years been experimenting on the side with a well in Alaska on which he was planning to suspend drilling during 1941. He had come to Washington early in the year to attend to some legal details in connection with oil leases granted him during the Hoover administration. He had thereupon been urged both by the Alaskan Director of the Geological Survey and by the admiral in charge of oil reserves in the Navy not to discontinue his own drilling because the production of oil in Alaska, saving long tanker hauls from California under war conditions, would be important to national defense. The reasons given were that (a) all other competent organizations had already suspended drilling; (b) only an organization already on the ground could complete drilling within what was left of the short Alaska season; (c) the Havenstrite location, although completely upon private Interior leases and hundreds of miles from the Navy's oil reserves, was close to the Navy's operating bases in Alaska; and (d) the Havenstrite operation was the only practical prospect of getting petroleum production in Alaska

in 1941.

May I put in the record a map of the location in close proximity to the Kodiak base?

The CHAIRMAN. That will be made an exhibit.

(The map referred to was marked "Exhibit No. 349" and is on file with the committee.)

Mr. CORCORAN. Havenstrite did not feel that he wanted to invest new capital for the entire costs of continuing his venture, but it was suggested that the Government might be able to assist him as a part of the defense program. Havenstrite's complaint was that the Government had kept him waiting in Washington for weeks on end without giving him a decisive answer as to whether it would help him or would not help him, whether it wanted him to drill or not to drill. He preferred to live in California.

With this story, which checked up later, Havenstrite came to me late in April through my friend, his brother-in-law, not as a client, but as a friend. Such talk as we had about fees was only my friendly warning to him that he could not expect me (as many did expect me) to follow up a gesture of friendship with free legal work.

I first saw Secretary Ickes alone to tell him of Havenstrite's problem and that I thought it was only fair that Havenstrite have a decision one way or the other.

In that conversation, I pointed out:

(a) If all the vague talk about Government help to Havenstrite were brought down to earth, the only legally feasible chance to help him was the very small chance that he could get an emergencyfacilities contract or a defense-plant contract with the approval of the National Defense Council.

(b) If a problem so apparently local and specialized as oil in Alaska came without preparation to the National Defense Council, it would certainly be referred back to the Interior and the Navy for advice, all of which routing around would take a great deal of redtape time; in fairness to Havenstrite who had been waiting for weeks, and in recognition of the short Alaska summer which waited for no one, that delay should be avoided if possible by preconsideration by the Interior.

(c) In fairness to the Secretary, I pointed out that his Department would certainly be faced with two responsibilities: (1) A judgment by the Geological Survey on the chances that the drilling would be successful; (2) a retrading upward of the Interior's royalties if, with Government financial help, Havenstrite made money in the operation.

The Secretary agreed with my analysis and that Havenstrite ought to have a decision; saw Havenstrite and myself together, heard Havenstrite's story directly, and called Secretary Knox to say that Secretary Ickes thought Secretary Knox should talk to Havenstrite. Pursuant to this introduction, Havenstrite and I went to see Secretary Knox, who, during our conference, consulted the admiral with whom Havenstrite had been holding conversations. Secretary Knox then told Havenstrite that he was quite sure that the Navy wanted and would contract for the petroleum products that might be developed by Havenstrite's drilling, but that he would like a letter from the Secretary of the Interior assuming responsibility for the administrative and contractual problems because Interior leased lands-not naval reserves-were involved.

Havenstrite and I attended a large meeting with Secretary Ickes, the Geological Survey chiefs, and Interior counsel, relating to the letter requested to be sent to Secretary Knox. A letter drafted by the Department's lawyers was sent to Secretary Knox as Secretary

Ickes went away on a trip. The letter is set forth in the hearings before the House Appropriations Committee, Subcommittee on the Interior Department, April 23, 1941, and is as follows [reading from Exhibit No. 346]:

SIR: I have given careful consideration to the problems raised by Mr. R. E. Havenstrite's proposal for a Government loan to finance the drilling of a new test well in the Iniskin Peninsula area in Alaska held by him and his associates under oil and gas leases issued by this Department.

Insofar as these problems relate to the advisability of granting a loan, they are not within the jurisdiction of this Department, and it would be inappropriate for me to express any opinion concerning them. I would like to point out, however, that the royalties to the United States in the present leases were fixed at a specially low rate because the lessees were undertaking to explore the oil and gas possibilities of this area at their own risk and expense. Should it be decided to advance Federal funds to finance the operations of these lessees, I believe that the granting of a loan should be conditioned, among things, on an upward revision of the royalty rates fixed in the leases. For this reason I should be kept advised of further developments in this matter and be given an opportunity to suggest what revision ought to be required in order to protect the interest of the United States entrusted to this Department.

The next I knew there was public criticism of the relations between Secretary Knox, Secretary Ickes, and myself in the House Appropriations Committee hearings above referred to and Havenstrite decided that the matter was not worth waiting any longer for, and went back to California.

I neither asked, received, nor expected any compensation of any kind from Havenstrite.

There was much talk at the time that Government drilling by the Navy should be substituted for Havenstrite's private enterprise proposal. Nothing happened about this.

On December 10 the Office of the Petroleum Coordinator for National Defense issued the following statement:

War conditions on the Pacific coast, the Coordinator has been advised, affect tanker movements to the Pacific Northwest.

Washington, Oregon, and Alaska ordinarily are supplied with petroleum products by Pacific coast tanker movement. Oil and gasoline are shipped to the area from California by tank ship.

War conditions have created a problem of petroleum supply for the Pacific Northwest until remedial measures can be put into effect.

It is of utmost importance that we take every possible action to use existing supplies to best advantage. We must obtain additional supplies by other methods and invoke whatever measures may be necessary.

The Havenstrite story originated in the St. Louis Post-Dispatch. It was followed by a retraction in an editorial on May 2, 1941, which I have always considered closed the matter. The editorial read [reading Exhibit No. 348]:

TEAPOT TEMPEST, NOT TEAPOT DOME

The whole story of Secretary Ickes, "Tommy" Corcoran, and that Alaskan oil-well deal has not yet been told, but, so far as the record goes, it seems a tempest in a teapot instead of a new Teapot Dome. The one reprehensible thing seems to be that the record was not at once made as complete as it might have been.

The Post-Dispatch yesterday told how the Democratic majority of a House appropriations subcommittee, in the absence of the Republican minority, struck from the record Mr. Ickes' testimony about an effort of the Iniskin Refining Co. to obtain a Government loan to develop oil wells on a Federal reservation in Alaska, and a contract for sale and storage of the oil, from the Navy Department.