the shoe business, that he had five retail stores, jobbed shoes to other stores, and would sell these shoes to the small retailers. This was not only the highest bid that we received, but apparently offered an advantageous means of reaching the small merchants. Consequently, we sold the shoes to the Finn Sales Co. We thereafter discovered, however, that Mr. Finn was not what his agent represented him to be, that he did not own shoe stores and was not a regular shoe dealer. It was the experience in this case that caused us to take the precautions that we did in connection with the World Wide offer. (3) THE SALE OF 70,084 OUTDOOR COMBINATION HOODS AND CAPS The 70,084 outdoor combination hoods and caps sold by the San Francisco office represented only a fraction of the several hundred thousand of these items located in many regions that we were attempting to sell. In the regular routine of business on July 19 we received a telegram from the San Francisco regional office, as follows: "R. J. WIDMANN, "Washington, D. C.: "Refer to file 07-1-1346, navy yards and docks declaration, item 6, 70,084 spruce green winter caps, 'B' condition appraisal, $0.60. Federal activities and taxsupported institutions show no interest. Negotiated with wholesale distributors and dealers. High bid, $0.34 each for entire lot, from Stern Capitol Manufacturing Co., clothing manufacturers, located in Los Angeles. Request approval to close deal. "MOYER FOR STEPHENS." In addition, we were informed that our San Francisco office had gotten in touch with a large number of possible buyers and had as a result obtained the following bids: Stern Capitol Manufacturing Co., Los Angeles----- Al Levinson, Los Angeles---- Pacific Army and Navy Stores, Los Angeles_--- The following were contacted, but did not bid: Purchasing agent, city of Los Angeles. Purchasing agent, county of Los Angeles. Western Costume Co., Los Angeles. The May Co., department store, Los Angeles. Federal agencies, including Lend-Lease. Each $0.34 .15 .1155 0833 .05 The appraisal price was 60 cents, but the 34-cent price seemed, under the circumstances, to be a fair recovery price. Consequently, on July 20 we teletyped the San Francisco regional office as follows: "Mr. THOMAS C. STEPHENS, "San Francisco, Calif.: "Reurtwx July 19, declaration 07-1-1346, covering 70,084 spruce green winter caps, approval granted by this office to close deal. "LEE R. FLEMING, "Director, Textile Division." Thus we authorized the sale to be made to Stern Capitol Manufacturing Co., clothing manufacturers, of Los Angeles, Calif., at 34 cents. While this message was in transit, the San Francisco office received an offer from the Addressing Machine & Equipment Co., 326 Broadway, New York, N. Y., at 40 cents. After receiving our message they made the sale at 40 cents without any further authorization from the central office. Our San Francisco office has explained that they thought that since the central office had approved a sale at 34 cents, that certainly a sale at 40 cents would be acceptable and needed no further approval. (4) THE SALE OF 30,000 PAIRS OF SHOES TO D. RODITI & SONS, INC., A SUBSIDIARY OF THE RECIPROCAL TRADE CORPORATION The 30,000 pairs of shoes sold to D. Roditi & Sons, Inc., were identical with the shoes sold to the Finn Sales Co. at $2.68 per pair. They were black oxfords in broken sizes. These 30,000 pairs of shoes were declared surplus a week after the Finn sale. D. Roditi & Sons, Inc., offered $2.75 per pair, which was a higher price than had been offered for the identical shoes sold to Finn. We therefore closed this sale immediately, since the previous offering had been advertised over a period of 3 months and had resulted in a high bid of only $2.68. It was because this extensive advertising had failed to produce a better offer than $2.68 that we decided it would be wasteful to advertise this new lot. We felt that such advertising would not bring about an offer higher than $2.75. The bid of $2.75 seemed a favorable one because the shoes had cost the Government $2.83 a pair, and Dun & Bradstreet had reported that D. Roditi & Sons, Inc., had long been established as an exporter of general merchandise. (Do not confuse with a Delaware corporation of similar name at another location.) Reciprocal Trade Corporation, The; Import and Export, General Merchandise. New York City 18, N. Y., 1440 Broadway, Room 451. Philip H. St. Armour, Jr., president. Directors: The officers. HISTORY This is a New York corporation chartered on February 21, 1936, with an authorized capital of $100,000, preferred stock and 100,000 shares of no-par value common stock. The amount of paid-in capital has not been furnished. According to Herman V. Schloss, the majority of the stock in this corporation is owned directly by Charles Roditk and the balance of D. Roditi & Sons, Ltd., of London, England. Roditi International Corporation, Ltd., of London, England, which was started in that country in 1933. Complete details regarding the stock ownership and intercompany relations between Reciprocal Trade Corporation and Roditi International Corporation, Ltd., has not been furnished, but it is stated that operations are largely financed by loans from the parent organization. In addition, this company is reported to operate in close affiliation with C. Roditi & Sons, Inc., importers and exporters of general merchandise of 1440 Broadway, New York City. That company was chartered under New York laws on February 27, 1940, and was formed to act as American representative of D. Roditi & Sons, formerly of Paris, France. No figures are available on D. Roditi & Sons, Inc., and the extent of intercompany relations between the company and the subject organization has been withheld. Philip S. Armour, Jr., is 31, single and native born. He was previously employed for several years by Herman Schloss in charge of exports. Herman Schloss is 38, married, and a native of Manchester, England. He is reported to have been employed as a worker by the Roditi interests throughout his business career and for about 15 years was employed as American representative of D. Roditi & Sons, Ltd. In addition, to holding the office of vice president, secretary and treasurer of D. Roditi & Sons, as mentioned above, he is also the director of D. Roditi & Sons, Ltd., of London, England. Roditi interests in this country are controlled by Charles Roditi, who at the present time is president of D. Roditi & Sons, Inc. He is 48, married, and native-born. He was formerly president and managing director of D. Roditi & Sons, S. A., of Paris. France. That business was originally established in Paris, France, during 1880, by David Roditi, the grandfather of Charles Roditi. During 1903, the business was operated as a partnership of Albert Victor and Oscar Roditi, sons of David Roditi. Several changes subsequently took place and during 1930. the enterprise was succeeded by a stock company known as D. Roditi & Sons, S. A. Branches were maintained throughout Europe and separate companies were set up. At the present time, all of the officers on the continent of Europe are reported to be dormant, as only the British companies in the organization are active. Max Gross is aged 48, married, born in Germany, was a naturalized citizen, but lost that citizenship' on overstaying a visit in a foreign country, but has again applied for citizenship and expects to receive his full citizenship shortly. He has been employed by the Reciprocal Trade Corporation since inception, and prior to that was employed by Roditi International Corporation, Ltd., of London, England. Max Sprinzelles is 48, married, a native of Austria, but has his first papers. He was employed for 25 years in the banking business in Vienna, Austria, until 1940, when he came to the United States, and in August 1941 he was a student at New York University, studying accountancy and taxation. In August 1941 he became employed with Reciprocal Corporation and was appointed comptroller in 1944. METHOD OF OPERATION-FIRE HAZARD War effect.-According to the management, volume has increased during the past year, despite scarcity of shipping space and difficulty in obtaining licenses. This company operates in both the import and export field, handling a general line of merchandise, but specializing in hardware and textiles. There are approximately 200 active accounts. Sales are made to South Africa, Latin, and Central and South America, and in the domestic markets. Export sales are made on both sight draft and irrevocable letter-cf-credit basis. Payable against shipping document. Eight are employed. Rents, quarters, which are shared with an affiliated concern, on the fourth floor of a 26-story office and loft building, which is maintained in good repair, and occupied by concerns engaged in diversified lines. Fire record.-No fires reported. FINANCIAL INFORMATION On April 24, 1944, Max Sprinzelles, comptroller, declined a financial statement and said that volume transacted during the year 1943 increased over sales of 1942, approximately 30 percent. He also stated that operations continue on a profitable basis. According to Sprinzelles no inventory is carried, inasmuch as purchases are made principally against confirmed orders. A satisfactory nonborrowing account is maintained in one local depository. No detail financial information is available in outside quarters consulted. It is reported that a sizeable volume is transacted but in view of the fact that operations are reported financed to some extent by an affiliated concern, a balance sheet is necessary for a proper understanding of the financial position. PAYMENTS In trade investigations of April 12, 1944, one house reports a high credit of $261, terms 2 percent cash, payments discount and selling January 1942 to February 1944. Another house, reports high credit $833, payments discount and prompt and selling 1941 to March 1943. SUMMARY Volume increased during the past year and operations are reported profitable. Trade obligations are retired in a prompt manner. On the other hand, operations are reported financed to some extent by an affiliated company. STATEMENT OF LEE W. MORAN, AUTOMOTIVE DIVISION, OFFICE OF SURPLUS PROPERTY, TREASURY DEPARTMENT, WASHINGTON, D. C. Senator LANGER. Will you please state your name and address for the record? Mr. MORAN. Lee W. Moran, Automotive Division, Office of Surplus Property, Treasury Department, Washington, D. C. Senator LANGER. Mr. Moran, do you know Mr. Olrich? Senator LANGER. Mr. Moran, are you familiar with this statement: A major policy of the office of Surplus Property is to sell through regular trade channels, except in those instances when nonregular channels will pay a higher price for the merchandise. By regular trade channel is meant one which regularly handles the merchandise in question. That was made by Mr. Olrich in his statement of October 16, 1944. Mr. MORAN. Yes. Mr. LANGER. Are you familiar with the recent sale of 14,000 hydraulic jacks to the Walker and Weaver manufacturing companies at $42 each? Mr. MORAN. I am familiar with the jacks; but the figures and prices are wrong. There were 10,700 jacks, and the prices were $45 and $46. Senator LANGER. Did you receive any better offer than the $45 or $46 you stated? Mr. MORAN. Not from the class of trade to which we were offering the jacks. We offered the jacks to the original manufacturers. We had some other offers presented to us, but we were not dealing with that level of trade. We were selling them in the manufacturers' level. Senator LANGER. Would you say Mr. Olrich's policy set forth in his statement of October 16 was carried out in this transaction? Mr. MORAN. I would say it was a general statement of an overall policy. Senator LANGER. It was supposed to cover the entire situation. Mr. MORAN. I do not think we can ever cover all situations. We have so many various jobs to do, even though Mr. Olrich made that general statement, I do not think he meant it to apply to every situation. Senator LANGER. Are you familiar with the recent sale of 10,700 hydraulic jacks to the Walker and Weaver manufacturing companies, at $42 each? Mr. MORAN. May I correct the record as to selling price? I should like to have it show they did not sell for $42; they were sold for $45 and $46. Senator LANGER. You knew these companies had sold them to the Government at first? Mr. MORAN. Yes. Senator LANGER. At how much? Mr. MORAN. At $78 to $80. Senator LANGER. And they bought them back for $45 and $46. Mr. MORAN. That is right. Senator LANGER. Were you aware that these jacks were new and in their original crates? Mr. MORAN. They were new, but not in crates. Senator LANGER. You would say they were not in crates? Mr. MORAN. They were not in crates. Senator LANGER. What shape were they in; just standing there uncrated? Mr. MORAN. Uncrated. Not crated at all. Senator LANGER. Were you conversant with that portion of Executive Order No. 9425 and the recent Public Law No. 457, known as the Surplus Property Act of 1944, that admonishes a survey of the market in order to obtain for the Government the best possible sale? Mr. MORAN. Yes. I am also conversant with other parts of the act which say differently. Senator LANGER. What is it? I have a copy of the act here. I wish you would mark the sections for me. Mr. MORAN. I shall be glad to. [Witness marks certain subsections of section 2 of the Surplus Property Act of 1944.] Senator LANGER. Would you mark each one of those, please? Senator LANGER. Since these jacks were suitable for handling heavy equipment, did you make any attempt to find a market for them? Mr. MORAN. Before the jacks were offered, all the Federal agencies were circularized and the local regions notified the various States that they could buy them. Senator LANGER. Did you notify the highway department? Mr. MORAN. I could not answer that definitely, Senator. Senator LANGER. Did you permit those two manufacturers to solicit the trade to find out if these could be readily sold before they committed themselves to the purchase? Mr. MORAN. We permitted them, and in fact, suggested that they contact the trade. Would you like me to tell you something about the reasons for this particular sale of jacks? Maybe I can clear it up for you. Senator LANGER. Yes. Say anything you want to say. Mr. MORAN. These are 10-ton jacks and very heavy, and when declared surplus, knowing something about the trade, I knew there was no call for 10-ton jacks in that quantity. We contacted the two manufacturers and told them we had this number of jacks and we asked them what their normal production of that type was, and we were advised their normal production was 1,000 a year. This looked like a very serious situation and about a 9,000 back-log. It was not a very easy thing to face, so we asked the manufacturers how many they could absorb and they said they did not know. We checked with the War Production Board and about 1,900 of that type could be used in the country, but the 4-ton jack, which is a smaller jack, was very much in demand. This 10-ton jack is only used on large equipment. The Army bought them for handling heavy equipment. There was a considerable back-log of 4-ton jacks. Then, being left with this 10-year supply of 10-ton jacks, and no use for them, we suggested to the Walker Co. that they should ascertain whether or not-contact the trade and find out whether or not they could use the 10-ton jacks. They said if the price was made near the 4-ton jack price they could absorb a considerable quantity, and they suggested that if the jacks could be sold to the consumer at $100, or under, they could take possibly the whole quantity. It was suggested that if the price were held at $98 or $99 they could take care of a good part of them. It seemed better to sell them then than to have the warehouse space occupied. |