Ar. Hiss. Will you give us, Mr. Eliason, the 1917 stock holdings that were held by officers and directors of the du Pont Co.? Mr. Pierre du Pont, in the spring of 1917 did your company formally launch upon the manufacture of dyes? Undoubt Mr. PIERRE DU PONT. I believe it was about that time. edly there is a record of the executive committee on that subject. Mr. Hiss. The only record I have been able to find that seemed to point to a specific date was a meeting of April 3, 1917, just before the declaration of war, and the resolution stated that there had been an agreement made with Mr. M. R. Poucher to deliver $100,000 worth of common stock at the then market value, whenever the company decided to engage in the dye industry. The resolution further recited that as the company had decided to engage in the dye industry and had on April 2 appropriated money for an auramine plant, the stock should be delivered to Mr. Poucher. That would be the official beginning of the company's entrance into the dye field? Mr. PIERRE DU PONT. I would think so; yes. Mr. Hiss. Was construction undertaken by the company in connection with the dye industry in this period-1917? Mr. PIERRE DU PONT. Could you state? Mr. IRÉNÉE DU PONT. It certainly was started about that time. I certainly could not tell you what was done personally. Mr. Hiss. Mr. du Pont, I call your attention to extracts from the minutes of a meeting of the General Munitions Board held on Wednesday, April 11, 1917, which are offered as an exhibit, at which were present Colonel Dunn, Major Pierce, Paymaster Hancock, Mr. Summers, Mr. Eisenman, Mr. Rosenwald-do you know what Mr. Rosenwald that was, Colonel? Lieutenant Colonel HARRIS. Mr. Julius Rosenwald, I imagine. Mr. Hiss (continuing). Mr. Scott, and Mr. Bolton, secretary. (The minutes referred to were marked "Exhibit No. 1118-A" and are included in the appendix on p. 3129.) Mr. Hiss (reading): Mr. Scott advised the Board that a conference had been held yesterday with the Du Pont powder people, in which meeting a possible shortage of powder was mentioned and that further data on this subject was being compiled by the Du Pont people and would be submitted by them at an early date. Then, in this same connection, there was a meeting on April 16, 1917, of the same Board, extracts of the minutes of which I will offer for the record. (The minutes referred to were marked "Exhibit No. 1119" and are included in the appendix on p. 3129.) Mr. Hiss. At which the chairman-Mr. Scott being in the chair— reported that a conference had been held yesterday with Colonel DunnThat is the day before, April 15— and representatives of the Du Pont Powder Co., at which it was decided that the facilities of the Aetna Explosives Co. would probably not be needed. At this time you were of the opinion that there was serious danger of an extreme powder shortage, were you not, Mr. du Pont? Mr. PIERRE DU PONT. Yes, sir. Mr. Hiss. Do you remember on what basis it was thought that the facilities of the Aetna Explosives Co. would not be needed, if there was a demand for powder? Mr. PIERRE DU PONT. I did not know until today that was decided upon. I had never heard of it before. Mr. Hiss (continuing reading): Major Pierce suggested that, due to the location of the Aetna Explosives Co.'s plants, it might be advisable to keep them in operation. Colonel Dunn and Mr. Summers were appointed a committee to look into this matter further. Then the following day, April 17, a further meeting was held, extracts of the minutes of which I offer for appropriate number. (The minutes referred to were marked "Exhibit No. 1120" and are included in the appendix on p. 3129.) Mr. Hiss. That states [reading]: Mr. Summers presented a verbal report on conferences held with the representatives of the du Pont Powder Co. in connection with the advisability of continuing the Aetna Powder Co., who at present are in financial trouble. Mr. Summers reported that the Aetna people had had valuable experience in the manufacture of smokeless powder. * In connection with this matter, Mr. Summers pointed out the very great possibility of shortage in Army requirements and estimates. Were you of the opinion that the then existing Army estimates were inadequate and did not call for a sufficient amount of powder, Mr. du Pont? Mr. PIERRE DU PONT. The only record I have in April, I believe, is a statement issued, I think, by Colonel Harper, the day after the declaration of war in April, which indicated that for that year a very small amount of powder was needed. Mr. Hiss. And you felt that that was an inadequate estimate? Mr. Hiss. Returning again to the document which has been marked "Exhibit No. 1117", the memorandum of Mr. Pierce, you will notice in the first part of the paragraph the following statement: On April 21, at our request. a letter was obtained from General Crozier, of the Ordnance Department, which was in the nature of a passport for our engineers to visit water intakes and structures that were under guard from alien enemies. According to that paragraph, it was at your request, and not at the War Department's request, that you wanted your engineers to visit sites for powder plants. Is that correct? Mr. PIERRE DU PONT. I believe that is the case; yes, sir. Mr. Hiss. I show you a letter dated April 21, 1917, addressed to Mr. F. A. Scott, chairman of the General Munitions Board, and signed by Mr. Jay E. Hoffer, lieutenant colonel, Ordnance Depart ment. (The letter referred to was marked "Exhibit No. 1121" and is included in the appendix on p. 3130.)1 Mr. Hiss. The first paragraph states [reading]: 1. As the personal representative of the General Munitions Board in this particular matter, I submit the following report of the conference held in the Office of the Chief of Ordnance on April 20, 1917, with companies who are manufacturers of nitrocellulose smokeless powder. These companies, with their representatives present, are named below: 1 Entered into further in Hearings, Part XVII, p. 4173. E. I. du Pont de Nemours & Co., Wilmington, Del.: Col. E. G. Buckner, vice president, Mr. C. B. Landis, Mr. H. F. Brown, Maj. K. K. V. Casey, and Mr. L. R. Beardslee. Aetna Exposives Co., Inc., 120 Broadway, New York City: Col. Odus C. Horney. Hercules Powder Co., Wilmington, Del.: Mr. J. T. Skelley, vice president. The second paragraph says [reading]: 2. These four companies had been previously advised that the present and anticipated needs of the Ordnance Department of the Army for smokeless powder during the next 12 months amount to 26,500,000 pounds of caliber .30 powder, 42,000,000 pounds cannon powder of web thickness less than .05, and approximately 10,000,000 pounds seacoast cannon powder for 6-inch guns and above. The total of those three items, which is not given in the letter, is 78,500,000 pounds. The third paragraph contains estimates by the various companies as to their possible production. Under the heading "Caliber .30 powder" it appears that the du Pont Co. estimated that they could produce 1,500,000 pounds per month from May 1 to October 1, which would be a total of 7,500,000 pounds, and 3,175,000 pounds per month commencing October 1, which would be a total, going on the 12 months' basis, of 22,225,000 pounds, or a grand total of 29,725,000 pounds to meet the total Army requirement for .30 caliber powder. Under the next heading, "Cannon powder, web thickness less than .05", the du Pont estimate, beginning with November, which is stated on the next page, was 23,000,000 pounds, so that in November and December alone more than the total estimated requirements of cannon powder could be produced by the du Pont Co. Under the heading of "Seacoast cannon powder " the statement is made [reading]: E. I. du Pont de Nemours & Co. submitted a schedule under which the entire requirements of the Army could be completed by January 1918 and the entire Navy requirements within the time indicated by the representative of the Bureau of Ordnance, Navy Department, as desirable. Under paragraph 4 it states [reading]: The du Pont Co. is willing to furnish caliber .30 powder, water dried, at 60 cents per pound; cannon powder, water dried, at 472 cents per pound; and air-dried cannon powder at 50 cents per pound. The Hercules Powder Co. is willing to furnish caliber .30 powder, water dried, at 621⁄2 cents, air-dried at 65 cents a pound, and cannon powder of web thickness less than .05, water dried, at 471⁄2 cents, based upon present cost of raw materials and ability to procure the same. Those raw materials, at least to the extent of nitrate of soda, being purchased by you at that time. Turning over to the next page, paragraph 6 states [reading]: The companies were informed that it is not the present policy to urge an increase of capacity where existing free capacity is in excess of estimated requirements. At this same time your engineers were being sent to the field, according to Mr. Pierce's memorandum, if you will look at the third paragraph of the memorandum. There you will see the statement, on April 25-it was on April 21, the date of this letter, that the permission was secured from General Crozier for a passport for your engineers to visit various places, and on April 25 two of your locating engineers were sent from your Wilmington office to the field. In other words, you disagreed with the estimate of the Army at that time? Mr. IRÉNÉE DU PONT. May I point out one thing which you seemingly did not observe? Take, for instance, the cannon-powder schedule: 1,650,000 in June, 3,350,000 in July, 2,220,000 in August, 1,600,000 in September, and 1,350,000 in October, and then it jumps to 23,000,000 in November. Of course, we had no new plants coming in which made such a jump. It simply meant that the foreign governments' contracts had expired and all the powder going to them might have been turned over to the United States, but that would leave the Allies short on their requirements of powder, and they were depending on us. Mr. Hiss. Paragraph 7 of the letter states, in the last sentence [reading]: These last prices are lower than the present cost of manufacturing this powder at the Army powder factory. Mr. IRÉNÉE DU PONT. What page is that, please? Mr. Hiss. The last page of the letter, just above Hr. Hoffer's signature, the page with Mr. Hoffer's signature on it. Mr. IRÉNÉE DU PONT. Paragraph 7? Mr. Hiss. Paragraph 7. The first two sentences state specific prices. I will read the whole paragraph: In November 1916 the Department placed orders for air-dried cannon powder at 52 cents and 53 cents a pound, and for water-dried cannon powder at 51 cents and 52 cents a pound. Orders were placed on April 10, 1917, for waterdried cannon powder at 472 cents a pound and air-dried powder at 50 cents a pound. These last prices are lower than the present cost of manufacturing this powder at the Army powder factory. Did you at a later time, Mr. Pierre du Pont, see an estimate prepared by Indian Head, the Navy producing plant, as to cost of powder at about this same time? Mr. PIERRE DU PONT. I believe there was one; yes, sir; showing, I think, 32 cents per pound. Mr. Hiss. Yes. Mr. PIERRE DU PONT. But I think that was the bare labor and material cost and did not include many items that the ordinary manufacturer would have to include, but I am not sure of that because no details were given. Mr. Hiss. We will refer to that specifically later on. Mr. IRÉNÉE DU PONT. In that connection, would it be proper to ask what the actual cost at Indian Head was on powder which they produced at this time? Mr. Hiss. We can take it up now, if you would like. Mr. IRÉNÉE DU PONT. I thought it might be very interesting, because I understood them to say they used nine-tenths of 1 pound of alcohol per pound of powder, and during the war period we whittled it down to three-tenths of a pound, and the difference between nine and three made a differential of six-tenths on that one item, on which we had that advantage, I know. Mr. Hiss. If you do not mind, let us wait until we reach the date when it was actually submitted, which was a couple of months later. Attached to this letter from Mr. Hoffer is a proposed draft of a letter to the Chief of Ordnance. The first paragraph reads: The General Munitions Board, having been verbally requested by you to determine what is a fair and just price to be paid by the Government to the manufacturers of smokeless powder required to be made for the Army during the next 18 months, and having made what is considered a satisfactory investigation, recommends to you as fair and just the prices shown on the following table, which prices are to be exclusive of the cost of container and f.o.b. contractor's works No. 1 are substantially the prices stated before-namely, 60 cents a pound for caliber .30 powder, water dried, and 62 cents if air dried; 4712 cents for cannon powder, if water dried, and 50 cents if air dried; and 50 cents a pound for seacoast cannon powder, if air dried, and no quotation for water dried. The next document in the same folder does not bear a signature. If you could look that up for us, Colonel, we would like to know whether or not the letter was actually adopted on April 27, 1917. Lieutenant Colonel HARRIS. Any identifying numbers on it? Mr. Hiss. You might have a look at it [handing paper to witness]. Referring back again to Mr. Pierce's memorandum [reading]: Between April 25 and July 12 these engineers covered Tennessee, parts of Alabama, Kentucky, Illinois, Indiana, West Virginia, and the southwestern part of Virginia in search of suitable locations for smokeless-powder plants. That was at the same time that recommendations had been made in the letter of April 21, 1917, previously referred to, paragraph 6 reads: The companies were informed that it is not the present policy to urge an increase of capacity where existing free capacity is in excess of estimated requirements. Then, referring to the bottom of the paragraph of "Exhibit No. 1117", the memorandum by Mr. Pierce, we find the following: You are familiar with the work done by Colonel Buckner during approximately this entire time in endeavoring to bring the serious situation regarding lack of powder-manufacturing capacity before the proper authorities in Washington, this we understand being finally accomplished by the 1st of October. He was the vice president of your company in charge of military sales at that time? Mr. PIERRE DU PONT. Yes, sir. Mr. Hiss. On June 4, 1917, according to the minutes of your executive committee, there was a discussion but no action in regard to increasing military-powder capacity. Wherever I refer to them will you get the copies? Mr. ELIASON. You do not have that? Mr. Hiss. We did not get the complete statement, and when furnished will be used to verify whatever I may read by way of paraphrase.1 Mr. ELIASON. The date was what? Mr. Hiss. June 4, 1917. A resolution was passed to have the engineering department request an appropriation to build additional smokeless-powder capacity at Carneys Point, Haskell, and Parlin. They were three of the smokeless-powder plants? 1. The copies of executive committee minutes were later supplied by the du Pont Co. and appear in the appendix on p. 3161. |