TESTIMONY OF BENJAMIN S. DOWD, PRESIDENT, EMPIRE
ORDNANCE CORPORATION

The CHAIRMAN. Mr. Dowd, if you will give your full name and connections to the reporter.

Mr. Dowd. Benjamin S. Dowd, president of the Empire Ordnance Corporation. Mr. Chairman, I would like to submit this brief statement to the committee.

The CHAIRMAN. You can state it for the benefit of the record, just what the statement contains.

Mr. Dowd. May I read it, Mr. Chairman?

The CHAIRMAN. How long is it?

Mr. Dowd. Two pages.

The CHAIRMAN. All right.

ORGANIZATION AND OPERATIONS OF EMPIRE ORDNANCE CORPORATION

Mr. Dowd. Empire Ordnance has built and is operating the largest independent group of companies exclusively manufacturing ordnance in the United States. Its business is the making of cannon for the defense program-not brokerage, and it never has employed any broker, not even Charles West.

The company and its affiliates has never paid out one penny in commissions or fees to obtain a single contract. We will place conclusive evidence before this committee that Charles West never had any agreement with Empire Ordnance or any of its associated companies to secure orders, or attempt to secure orders, from any source whatsoever.

Empire Ordnance and its affiliated companies never had, nor has now, one cent of United States defense money, either from the United States Government or any of its financial agencies. Even for its enormous expansion program, which was accomplished in record time and involved several millions of dollars for plants and machinery, Empire did not make application to governmental agencies established for that purpose.

In fact, when Empire purchased the stock of one of its affiliated companies, the Vulcan Iron Works, it paid off an R. F. C. loan balance of $150,000 which Vulcan previously had obtained, despite the fact that it was not yet due.

When it first became apparent that there would be need for largescale production of ordnance in the United States, the officers and stockholders of Empire Ordnance didn't wait for Government funds, as many others did. While others marked time waiting for Federal financial assistance, these pioneers raised their own capital, bought machinery, built plants, and started manufacture. As a result, the United States now has available and in operation the only organization-not even excepting its arsenals-which can, and does, turn out a complete cannon from start to finish. Yet all this has not lost

the taxpayers of this Nation a single dollar.

Due to the foresight, unselfishness, and patriotism of these pioneers, this Nation is now better equipped to meet the challenge of foreign madmen.

Not only did officers and stockholders of Empire Ordnance invest their own funds, but at no time have they taken out of their in

vested capital or earnings a single dividend. Every cent has gone back into the business-the business of creating matériel with which to fight the enemies of democracy.

Officers draw only modest salaries, although their arduous duties last far into the night. Empire Ordnance, to step up production for the "arsenal of democracy," has been on a 24-hour 7-day week for the past several months. Its several thousand employees receive in excess of $150,000 in pay roll each week.

The only contract Empire Ordnance had with the United States Government was for overhauling and repairing certain naval guns. It amounted to less than $200,000, and was awarded on open bids. The contract was completed to the satisfaction of the Navy Department, and many of the guns are now in action against the enemy.

The Empire Ordnance Corporation has been, and is now, exclusively engaged in the manufacture of tank guns and their component parts for the British.

The corporation is a Delaware corporation and was organized in May 1940. Raymond Voyes has been Secretary of the corporation, Frank Cohen, treasurer, and myself president since its inception. A group associated with Willys-Overland Co. was among the original organizers. Their connection with Empire Ordnance continued for a short time after the company's incorporation.

Mr. Raymond Voyes served in the French Army during the World War, where he distinguished himself as a pilot. After the World War he was associated with Swedish gun manufacturers, Bofors, in the manufacture of ordnance, and subsequently spent many years as a technical expert in the aviation industry.

Mr. Frank Cohen has been engaged in finances for many years.

With these men, and their associates, we built the Empire Ordnance Corporation and its affiliated corporations. These organizations are now all producing ordnance, consisting of the 75-mm-tank gun, the recoil mechanism for the 75-mm-tank gun, the mounts (carriage) for the 75-mm-tank gun, and also machining heavy armor plates for the M3 and M4 tanks.

(The allocation of this work is as follows:)

Empire Ordnance Corporation is located in Philadelphia, Pa., where it is actively engaged in the manufacture of gun tubes for the 75-mm. cannon, and also in the manufacture of breech rings and breech blocks for the same gun.

The West Pittston Iron Works, located in West Pittston, Pa., is engaged in machining and drilling armor plate for the M3 and M4 tanks.

Wissahickon Tool Works, Inc., located on the west side of the Schuylkill River, Philadelphia, Pa., is engaged in the manufacture of recoil mechanisms for the 75-mm. cannon.

Wilkes-Barre Carriage Co., located at Wilkes-Barre, Pa., is engaged in the manufacture of complete mounts for the 75-mm. tank cannon.

Schuylkill Manufacturing Co., located on the west side of the Schuylkill River, is engaged in the overhauling and repairing, and assembly of guns.

Vulcan Iron Works is located in Wilkes-Barre, Pa., where it is engaged in the manufacture of locomotives, steam engines, steel castings, and general foundry work. This company has been established for about 100 years,

Manayunk Forging Corporation is located in Philadelphia, Pa., where it manufactures forgings for gun tubes, breech blocks, breech rings, and other steel material for ordnance.

Roxboro Steel Co., located in Philadelphia, Pa., makes electric melt steel and ingots for ordnance. This steel is a special alloy steel, which must meet the very high physical requirements demanded in ordnance manufacture.

Ordnance Instrument Corporation is located at the Bush Terminal in Brooklyn, N. Y., where it is engaged in the manufacture of optics for telescopic sights and other firing-control instruments.

Mr. FULTON. Mr. Dowd, I understand you are the president of the Empire Ordnance Corporation..

Mr. Dowd. That is right.

Mr. FULTON. And 10-percent stockholder thereof, together with members of your family?

Mr. Dowd. That is correct.

Mr. FULTON. How much capital contribution have you made for that 10 percent?

Mr. DowD. I have made very little because I have a big family and it takes all my earnings for them.

Mr. FULTON. Have you made any, and if so approximately how

much?

Mr. Down. I have made no money contribution to the corporation. Mr. FULTON. And what is your estimate of the equity or present equity value of the stock of the Empire Ordnance?

Mr. Dowd. That is hard to tell because the contracts we have, we don't know whether we are going to make a profit or not, until the contracts are finished. At the present time I would say the profits are nil.

Mr. FULTON. What do you carry the assets on your balance sheet? Mr. Dowd. I prefer to refer that to Mr. Cohen, the treasurer, who has charge of our financial affairs.

Mr. FULTON. Could you tell me, Mr. Cohen?
Mr. COHEN. As of what date do you want?

Mr. FULTON. Any reasonably recent date.

Mr. COHEN. The basic capital of these companies is about $225,000, paid in.

Mr. FULTON. My question is how much do you have as assets? Mr. COHEN. Today if they can help us lick that Hitler it is worth millions; if they can't it is worth nothing.

Mr. FULTON. At what do you carry it on your most recent balance sheet?

Mr. COHEN. The assets run to about six or seven million dollars. Mr. FULTON. And what are the liabilities carried on that balance sheet?

Mr. COHEN. Probably about seven or eight hundred thousand dollars less.

Mr. FULTON. So that you carry now an asset over liabilities position of about $700,000?

Mr. COHEN. It is hard to get the exact dates. Ross Brothers & Montgomery are just finishing the statement and that ought to be ready in about a week, as of July 31. It takes us months before they catch up. Our own run-off is of October 31, and I imagine would show about eight or nine hundred thousand dollars capital.

Mr. FULTON. That is eight or nine hundred thousand dollars which you estimate now the assets of the company exceed the liabilities? Mr. COHEN. I imagine so.

Mr. FULTON. And Mr. Voyes, you hold an office in the company, do you?

Mr. VOYES. I do; yes, sir.

Mr. FULTON. And what is that?

Mr. VOYES. Vice president and secretary.

Mr. FULTON. And you also have a stock interest?

Mr. VOYES. I do.

Mr. FULTON. Of what percent?

Mr. VOYES. Ten percent.

Mr. FULTON. And for that what capital contribution did you make? Mr. VOYES. In cash?

None.

Mr. FULTON. Mr. Cohen, you hold a 15-percent stock interest in the company, do you not?

Mr. COHEN. Yes; 15 percent common stock.

Mr. FULTON. And your wife a 10 percent?

Mr. COHEN. Yes; and my son 5 percent.

Mr. FULTON. And an organization known as the Esco Fund?
Mr. COHEN. Fifteen percent.

Mr. FULTON. Which was organized by you, I believe, as a contribution to charitable societies of a part of your percentage, or how would you characterize it?

Mr. COHEN. If you will let me explain that to you I will tell it

Mr. COHEN. I was not interested in ordnance. I was asked to help some who were interested in ordnance to work together and set up a corporation which would be of help in fighting Hitler. I have been doing it since 1933. In 1933 I paid for quarter-page ads in the newspapers on my own behalf, requesting that, first, the United States should not send any ambassador to Germany; second, that the United States should not recognize Germany-if you will let me read one of these.

Mr. FULTON. I was not so much interested in your advertising in 1933 as I was in the question of what the Esco Fund was.

Mr. COHEN. That is what I am trying to explain.

Mr. FULTON. Which I was bringing out because it is one of the things for which you, I think, probably deserve some credit.

Mr. COHEN. I think we deserve a lot of credit for all we have done here and if you will allow me

Senator BALL (interposing). That is going back pretty far, isn't it, Mr. Chairman? Empire Ordnance was organized in May 1940.

The CHAIRMAN. We are interested in the Empire Corporation. We are not interested in making a voluminous record. We have certain facts in which we are interested. We would like to get those facts as quickly and as expeditiously and with as few words as possible, and get the meat of the thing.

Mr. COHEN. When I attempted with Mr. Voyes and Mr. Dowd and some others to put the Empire Ordnance Corporation together I interested the Willys-Overland group to come in and finance the organization of an ordnance company for that purpose. I was entitled to receive 15 percent of the common stock. I didn't want at that time to have the earnings out of the ordnance business and so I called together a number of educators who were interested in Jewish education and we formed this Esco Fund committee to which I assigned my interests right from its inception, and so they had the 15-percent interest of the Empire Ordnance Corporation at that time.

That is my total interest that I would have had in the Empire Ordnance Corporation.

Mr. FULTON. Well, Mr. Cohen, I just thought that for your benefit we ought to bring out what Esco Fund is. Just tell us very briefly. Mr. COHEN. Yes, sir. Esco Fund has busied itself with a number of things. It helped start shelters for the children who were being removed from the bombed areas in Britain and they have established, helped establish with the Interfaith Committee, seven of them. They also began the distribution of vitamins to the children, which was a result of our having had two refugee children in our home and we fed them the vitamins and thought we could do the same thing on a larger scale, and so they have been doing that.

They have also been helping in every way they can organizations that could also help promote what they call the democratic way of living, and it is surprising how if you have a small group that is vitally interested in helping a little money goes a long distance to do that.

Mr. FULTON. In short, this 15 percent is to an organization in which you have no personal interest and which does have these high motives you have described?

Mr. COHEN. I have no personal interest; they run it themselves; do whatever they want, and I help them get their money.

Mr. FULTON. Now, as to the 25 percent which you retain for your family, and as to the 15?

Mr. COHEN. That came later.

Mr. FULTON. And as to the 15 percent which you have given to the Esco; in other words, 40 percent of the present capital structure? Mr. COHEN. I didn't have 40 percent at that time; all I had was 15 percent.

Mr. FULTON. I am talking about now what you have. What is the capital contribution which you made for that 40-percent interest?

Mr. COHEN. This was the common stock you are talking about for the common stock. There was no capital contribution in the sense of money.

Mr. FULTON. Mr. Cohen, as I understand it from the discussions you and I have had, there was a conference or a number of conferences at which the question came up of the possibility of your working out a corporation or series of corporations which would be able to manufacture ordnance supplies?

Mr. COHEN. Yes.

Mr. FULTON. And it was decided that it would be desirable to purchase the Pencoyd plant of the Carnegie-Illinois Steel Co. for about $300,000, was it not?

Mr. COHEN. Yes.

Mr. FULTON. And the Carnegie Co. was willing to sell that on a partial-payment plan whereby $30,000 would be paid down and payments would be made from gross sales or at periodic times thereafter. Is that true?

Mr. COHEN. That is right.

Mr. FULTON. As to that $30,000, did you raise that partly from your self and partly from borrowing by yourself from another individual? Mr. COHEN. Yes; that was before the Empire Ordnance Corporation was organized.