Protzen. These gentlemen have informed us that it is the intention of Siemens to take over the administration of the Jaeger factory in France and that Mr. Protzen will supervise the future operation of that company in conjunction however with the actual Jaeger directory and personnel.

These gentlemen are endeavoring to locate Mr. Delage and Mr. Rodanet, and the other directors of Jaeger so as to arrange a meeting between these representatives of Jaeger and Mr. Altvater, who is expected in Paris in the near future. Incidentally, Mr. Rieper is already in Paris, having arrived there on the heels of the army of invasion.

It is the hopes of Siemens that an amicable arrangement may be made with Jaeger, whereby that organization will manufacture parts for the Siemens automatic pilot as well as parts for the Patin compass.

It is probable that the organization will be requested to manufacture other articles as well but for the time being the principal interest seems to be to obtain manufacture of the parts of these two devices.

We might call to your attention that all of the manufacture contemplated is to be effected for Siemens and Siemens will enter into a written agreement of some kind with Jaeger, the details of which are not known at the present time.

Siemens will therefore act as an intermediary between the German Government procurement and Jaeger.

Siemens indicates that it is desirous that this arrangement move forward as quickly as possible, since it does not wish Jaeger to be taken over in part by any other organization engaged in the same or a similar activity to that of Siemens. It is furthermore stated that in so proceeding, Siemens is in effect looking out for the interests and the good relations of Bendix.

Siemens advises that we shall be kept abreast of the negotiations and whilst we will not be permitted to change their course as dictated by the German Government, nevertheless, for reasons of courtesy, we shall be kept abreast of the procedure as far as it is possible to do so without transgressing secrecy obligations imposed on Siemens.

The Jaeger factory at Orleans, which never by the way got into operation, will not be opened; the machines that are at the present time in that factory will probably be taken in part to Germany and in part to the Jaeger factory in Paris, depending on where they are needed most. These machines will be utilized for fabrication of devices necessary to the German Government procurement program. From what we have been able to determine, Mr. Delage is in Le Puy (HauteLoire). It is contemplated that he will be contacted there in the very near future and urged to come to Paris to meet with the representatives of Siemens.

We shall be pleased if you have any suggestions to offer that you will communicate to us as soon as possible since it is probably that we will see soon Captain Altvater and Dr. Rieper and some of the other Siemens representatives in the near future.

Mr. TOLAND. That is signed by E. O'Hanrahan. He wrote that, did he not, at the time he was an employee of the Bendix Aviation? Mr. BENDIX. Yes.

Mr. TOLAND. And that was a report by him to another employee, Mr. Stanton?

Mr. BENDIX. Yes, sir.

Mr. BATES. What is the date of that?

Mr. TOLAND. After the fall of France, August 14, 1940.

(The document was received in evidence and marked "Exhibit No. 119.")

Mr. TOLAND. I have a memorandum dated September 18, 1940, for Mr. Gache. Do you know who he is?

Mr. BENDIX. What is the name, again?

Mr. TOLAND. Mr. Gache.

Mr. BENDIX. Yes.

Mr. TOLAND. Who is he?

Mr. BENDIX. Mr. Gache is an employee, a Frenchman employed in France by the French company.

Mr. TOLAND. By one of the subsidiaries of Bendix Aviation?
Mr. BENDIX. Yes; French companies.

Mr. TOLAND. This was written by O'Hanrahan, and bears the initials "E. O. H." Those are the initials of Mr. O'Hanrahan?

Mr. BENDIX. Yes, sir.

Mr. TOLAND (reading):

Today I have seen Mr. Del. our French Instrument licensee, who requested that his sincere thanks be conveyed, because of the fact, as he admits, that he has been able to keep all his machines due to the relations which he has had in the past with our company. He states further that thanks to these relations with our company and its German licensee, he has obtained some work from our northern friends

I wonder whom he had reference to. Who would the "northern friends" be? Do you know?

Mr. BENDIX. That must be Germany, the German companies.
Mr. TOLAND (reading):

the nature of which I have set forth for you some time back, and as a result, he is able to maintain some 300 employees. A goodly portion of these employees, however, he states, are office help, which he has not yet been able to occupy completely.

He stated that it is his desire to maintain both the radio and the instrument license. This may seem rather a peculiar statement, since the two licenses are incorporated in one document, but that is the way he put it and his attitude with respect thereto may be explained by the fact that Mr. G. expects to concern himself seriously with radio, whilst the self-opinionated S. O. B. to whom C. M. has ofttimes referred will concern himself with the aviation instruments.

Mr. G. stated that the aviation company was to more or less disappear, but Mr. Del. states that such is not the case, but that the aviation company has always been but a selling organization and had really no importance as far as manufacturing is concerned. You will remember that the manufacturing was done by the automobile company.

Mr. Del. states that they are working on the blind-landing equipment which was purchased from us and that he expects some orders in this field.

As far as the general prospects of the aviation company are concerned, he states that that will obviously depend upon the amount of aviation which our northern friends will permit in France. At the present time, there are rumors to the effect that France will be permitted to build some 50 airplanes per month.

He further states that on the products manufactured by him for our northern friends, a net profit of 10 percent is permitted to him. Obviously this is not very great, but there is nothing that he can do in the matter to change it.

Mr. BENDIX. Mr. Toland, I presume he means by those "northern friends" Siemens-Halske. That could be explained by some other officer of the company.

(The document was received in evidence and marked "Exhibit No. 120.")

Mr. TOLAND. Now, with regard to Robert Bosch, I would like to submit the agreements. Isn't it true that in December 1939, down to and including June 2, 1941, the Bendix Aviation Co. received from Robert Bosch, of Stuttgart, $392,843.49?

Mr. BENDIX. I think that would be correct.

Mr. TOLAND. Do you know whether that is correct or not?

Mr. BENDIX. I know it ran about $200,000 a year.

Mr. TOLAND. I would like to offer a statement concerning the royalties in the record.

(The statement was received in evidence, marked "Exhibit No. 121," and is printed in the appendix of this volume.)

Mr. TOLAND. Isn't it a fact also that your company interfered

with the war effort of Canada and Australia?

Mr. BENDIX. That I don't know, and I wouldn't think so.

Mr. TOLAND. Would you say that isn't a fact?

Mr. BENDIX. I wouldn't believe that, Mr. Toland. I think the company has been very cooperative with Canada.

Mr. TOLAND. Isn't it a fact, because of the agreements that your company had with foreign agents or foreign countries, that Canada and Australia did not get and could not get certain aircraft instruments and equipment that you people manufactured?

Mr. BENDIX. That I wouldn't know, Mr. Toland.

Mr. TOLAND. Didn't you agree with these people that when you divided up the world between yourself that you would sell one place and they wouldn't sell another place? Don't you have any recollection of that?

Mr. BENDIX. I had nothing to do with those negotiations.
Mr. TOLAND. You had nothing to do with those at all?

Mr. MAAS. The inference there is that they interfered with the Canadian war effort. I think that what you may mean is that they didn't assist the Canadian war effort. I don't see your point that they interferred with it.

If they had certain patent rights, simply not permitting Canada to use them was not interfering with Canada's war effort. It might not be contributing to it. Those are two different things.

Mr. TOLAND. I would like to offer certain documents-agreements between the Eclipse Machine Co., a division of Bendix Aviation, and Robert Bosch, of Stuttgart, Germany. I would like to offer those not to be printed but merely to be filed.

(A document dated August 6, 1940, was received in evidence, marked "Exhibit No. 122", and is filed with the committee.)

(The license agreements referred to were received in evidence, marked "Exhibits Nos. 123, 124, 125, 126, and 127," respectively, and are filed with the committee.)

Mr. TOLAND. Isn't it a fact, Mr. Bendix, that your company had licensing agreements with a European group of corporations with regard to the manufacture and sale of automotive and airplane carburetors?

Mr. BENDIX. Yes, sir.

Mr. TOLAND. By the terms of that agreement the world territory was allotted to the respective parties and Bendix agreed to stay out of Europe except Germany and Soviet Russia. Is that true?

Mr. BENDIX. I think so. That is with respect to our own activities and those companies' activities.

Mr. TOLAND. Is it a fact that in 1935 your company also entered into an agreement with a group of European Zenith Carburetor Corporations, to-wit the Société Generale Des Carburateurs Zenith, a corporation of Switzerland, an English Zenith Corporation, one in France, and one in Italy? By the terms of the agreement, the Zenith Corporation gave the Bendix Stromberg Carburetor Corporation, an affiliate of Bendix, an exclusive license under all of its carburetor patents for the United States and Canada; on the other hand, your company licensed Zenith under all its carburetor patents for Europe, including Great Britain and not Russia, excepting Canada and the British West Indies.

Do you have any recollection of that?

Mr. BENDIX. I do. I have a good deal of recollection of that. That was entered into as a settlement of long-standing litigation between our companies in this country. We had operated in Europe,

had lost our entire capital investment, and were anxious to get out of Europe to prevent any further losses, and we had one litigation in the United States against the Zenith Co. by which we acquired their property. It was a foreign-owned company. It is very complicated. It was a settlement of the litigation between the two companies.

Mr. TOLAND. I show you a photostatic copy of an agreement dated the third of May 1938, and ask you if you have any recollection of signing that?

Mr. BENDIX. My name doesn't appear on that.

Mr. TOLAND. It does not?

Mr. BENDIX. No, sir.

Mr. TOLAND. It is an agreement, is it not, between the Bendix Aviation Corporation and the Zenith companies. Isn't that true? Mr. BENDIX. That is right.

Mr. TOLAND. I offer it in evidence, and ask that it be printed. (The agreement was received in evidence, marked "Exhibit No. 128", and is printed in the appendix of this volume.)

Mr. TOLAND. Do you have any recollection, Mr. Bendix, of seeing this letter, dated October 10, 1940, written on Bendix Products Division stationery?

Mr. BENDIX. No, sir.

Mr. TOLAND. Mr. Chairman, I would like to read this letter. It is dated October 10, 1940:

Further to my letter of September 5 regarding Commonwealth of Australia, I have the following further thoughts on the Generale Zenith matter after discussing it with Mr. McConkey.

We are now shipping aircraft carburetors to Great Britain, Australia, and other countries in the Zenith-Solex territory. Perhaps the altered international situation justifies our doing so, but I think it likely that when the day of reckoning comes Generale Zenith will contend that the profits from this business belong wholly to them. Since the volume of this business is becoming large, the matter warrants serious study.

I can suggest no remedy except cancellation. Negotiation of a new agreement under present circumstances seems impossible. Meanwhile Mr. Turner's letter of August 20 to Mr. Mock indicates that Generale Zenith representatives are not willing to waive any of their rights, but intend to hold us to the letter of the contract. A further factor is the Presidential proclamation of September 12, 1940, which prohibits export of information regarding the design or construction of aircraft or aircraft engines, including, we are assuming, aircraft carburetors.

Recapitulating, it strikes me as an impossible situation that we cannot, under the Presidential proclamation, send Zenith the information which the agreement obligates us to send; they cannot, in their present position, pay us the royalties which they are obliged to pay; and we are undertaking a large export business with the prospect of forfeiting any profits we make on it.

Mr. COLE. To whom is it addressed?

Mr. TOLAND. Mr. M. P. Ferguson.

Who is he?

Mr. BENDIX. General manager of our South Bend plant.

(The letter was received in evidence, marked "Exhibit No. 129,"

and is printed in the appendix of this volume.)

Mr. TOLAND. I would like to read a communication dated August

12, 1940. It reads as follows; addressed to Mr. McCready. Mr. TOLAND. Who is he? It is from Mr. Ferguson.

Mr. BENDIX. Mr. McCready is another patent attorney at South Bend.

Mr. TOLAND. And Mr. Ferguson? What is he?

Mr. BENDIX. He is the general manager of the South Bend operations.

Mr. TOLAND (reading):

We have sold a large number of Y-9-H and PD B8 carburetors to Commonwealth of Australia for Pratt & Whitney engines which they are building in Australia. The total number I have in mind at the moment is about 625 Y-9-H and 150 PD-12-B8's. Most of these will be shipped between now and the end of the year. The question definitely arises if we have full freedom to ship these carburetors without Goudard's permission or without giving Goudard a cut. Please investigate. M. P. FERGUSON.

(The letter was received in evidence and marked "Exhibit No. 130.")

Mr. TOLAND. I have a letter dated September 5, 1940, to Ferguson from McCrady:

Replying to your memorandum dated August 28.

By section 5 of our agreement with Generale Zenith and Solex we granted them an exclusive license in the Zenith-Solex territory, which includes Australia as a colony of Great Britain. Section 35 provides that "Bendix will under no circumstances permit or acquiesce in the sale in the Zenith-Solex territory of carburetors manufactured by it." Sales by us of carburetors to Australia are therefore in exactly the same status as our sales to England.

Since Australia cannot get these carburetors from Generale Zenith, their Government would no doubt take any steps necessary to get them from us; this would bring into effect section 10, which provides that if regulations in any country compel it, we may license a third party in the Zenith-Solex territory, but proceeds from such licenses shall be divided 50-50. I do not believe that this section would have any application to the sales we are making, however; a sale and a license are different things.

I understand that the carburetors your memorandum refers to are to be shipped separately, not as part of an aircraft engine, hence section 20 of the agreement has no application.

This Australian situation brings to a focus a question which has for some time been becoming more pressing, whether we should cancel the agreement. I have advocated cancelation before, but the situation was different then, and Mr. Marcus disapproved it. As things now stand, the case for cancelation seems clearer than it did. Our royalties from the agreement average about $10,000 per year, which we would lose if we cancel. But profits from Australian business alone should run far in excess of that amount, not to mention the income to be drived from licenses in Australia, as well as in Great Britain and other parts of the Zenith-Solex territory. If politics has any weight, I feel sure that we had rather be supplying carburetors and information to Britain and Australia than to France and probably through France to Germany, which latter procedure seems certain to involve continuous friction with agencies of our own Government.

Furthermore, our performance of our own obligations under the agreement has become well-nigh impossible. We are supposed to send Zenith manufacturing, technical, and patent information, and give their representatives access to our factories These obligations are becoming more and more difficult to perform.

*

Then he continues further with regard to the cancelation.

All this is, of course, subject to Mr. Marcus' approval as well as your own. I enclose two extra copies in case you wish to send them to Messrs. Marcus and Stanton.

(The letter was received in evidence, and marked "Exhibit No. 131" and is printed in its entirety in the appendix of this volume.)

Mr. TOLAND. I would also like to offer in this connection a copy of a letter to Mr. Ferguson from Mr. McConkey, dated November 29, 1940; a letter dated December 6, 1940, from Mr. McCrady to Mr. Ferguson; a letter from Bendix Aviation, dated February 21, 1941, signed by A. R. M., who I assume is Mr. Marcus, to the Zenith