That is why I offer this to you, if you want it. I think you have it. Mr. TOLAND. Yes. I just put it in the record. Now may I call Major Fleet?

The CHAIRMAN. Wait 1 minute.

Are you through?

Mr. TOLAND. No; I want these three to stay, and now I want Major Fleet.

The CHAIRMAN. Are you through with this line of questioning? Mr. TOLAND. Yes; and then I am going into the Vinson-Trammell Act.

I will excuse you quickly, Mr. Breech, so you won't make any more speeches.

The CHAIRMAN. I want to say he made a very effective one by stating to the committee and the country that he has renegotiated some $73,000,000 worth of contracts to the Government.

Mr. MAAS. I don't think there is any objection to what he did. This isn't a trial. This is a hearing.

Mr. TOLAND. Will you swear Mr. Fleet?

The CHAIRMAN. Do you swear to tell the Naval Affairs Committee the truth, the whole truth, and nothing but the truth, so help you God?

Mr. FLEET. I do.

TESTIMONY OF REUBEN H. FLEET, CONSOLIDATED AIRCRAFT
CORPORATION, SAN DIEGO, CALIF.

Mr. TOLAND. Major, will you sit down, please?
Major, will you give the reporter your full name?

Mr. FLEET. Reuben H. Fleet.

Mr. TOLAND. Where do you reside?

Mr. FLEET. San Diego, Calif.

Mr. TOLAND. What is your present business or occupation? Mr. FLEET. Consultant for Consolidated Aircraft Corporation. Mr. TOLAND. How long have you been connected with that company, Major?

Mr. FLEET. Since its inception on May 29, 1923; nearly 19 years. Mr. TOLAND. Major, you have been subpenaed to come here like all witnesses and to produce certain documents. What was your original initial investment in the Consolidated Aircraft Corporation? Mr. FLEET. My personal was $15,000.

Mr. TOLAND. $15,000?

Mr. FLEET. My sister's was $10,000.

Mr. TOLAND. No; I am just asking about you personally. Subsequent to that time and up to the time of December 1941, what additional investment did you make in the Consolidated Aircraft Co. other than the $15,000?

Mr. FLEET. When we enlarged our plant the first time in San Diego, I personally invested $300,000. The company raised $900,000 from others.

Mr. TOLAND. I was just asking about your personal investment. I would like you to tell us all the investments of your own that you have made with this company during the period, starting with the $15,000, right down to the time of December 1941.

Mr. FLEET. First I invested $15,000 on May 29, 1923. Twentyfive months later; namely, on June 30, 1925, I bought half of my

sister's stock and paid her back her total investment of $10,000, plus 25 months' interest at 8 percent simple interest. I paid her $11,833.33 for the reason that I figured I was in a very speculative business and in the event that I lost her interest, I would at least have the feeling in my own heart that I had paid her back her money with 8 percent on it for the 25 months during which she had her investment there. Then I used that stock to sell at the same cost to my associates in business from time to time, always selling it to them at the then book value. That was on the general theory that if the factory manager, say, thus owning 6 percent stock interest, lost 6 cents with it, he would be more careful, that if the chief engineer, thus owning 6 percent stock interest, lost 6 cents with it, he would be more careful, and I admitted stockholders from our executives, perhaps 125 such, during the 18 years and 7 months that I managed the company. Mr. TOLAND. Are you through?

Mr. FLEET. You asked my total investment. Then in 1936 it became necessary to double the size of the factory. The company didn't have the money, and therefore we had to put out a stock issue. We couldn't sell our common stock at a fair price, and so we put out a preferred stock issue and raised $1,200,000 and with that we doubled the factory at that time. I took $300,000 of that and paid par for it. I might say, too, that this company, Consolidated, is rather unique in that it has never paid or given any shares of stock to anybody on earth for anything other than par cash; no discounts to anybody, no bonus to me for starting the company, no bonus to anybody for what he knew.

There is one more investment in the company. Consolidated bought during its 18 years and 7 months 10 other companies. In several cases it didn't acquire the corporate title of the company but bought either all the assets or certain selected assets. As a rule it paid for those purchases by stock; so we got the assets of those ten companies by paying for them in stock, this in addition to the $25,000 I founded the company on. $1,200,000 was put in for the preferred stock plus the assets of the ten other companies and that is all the money and all the assets that ever were put into Consolidated. Mr. TOLAND. Let me see if this is correct, Major. In 1923 you made an investment of $15,000. At that time the par value of one

share of stock was $100. Is that right?

Mr. FLEET. That is right.

Mr. TOLAND. Then in 1930 to 1934, 2,000 shares of stock, new stock, were issued for each share of old stock. Isn't that right?

Mr. FLEET. 1928.

Mr. TOLAND. And the stock was changed from $100 par to no par value?

Mr. FLEET. That is right.

Mr. TOLAND. Then from 1934 to 1941, 2,000 shares of stock were issued for each share of the original stock, with the par value of the stock set at $1 in place of the nonpar value, is that right?

Mr. FLEET. You had better state that again. I didn't quite understand it.

Mr. TOLAND. In 1934 to 1941, during that period, 2,000 shares of stock were issued for each share of the original stock and the par value was set at $1 in place of no par value.

Mr. FLEET. In 1928 we were forced to list our stock on one of the country's recognized exchanges. Since we had only 250 shares prior to that time, none of the country's recognized exchanges would list only 250 shares, so we therefore multiplied our shares by 2,000 for 1 and listed on the New York curb. The reason we listed on the New York curb was because another company had incorporated and taken the name "Consolidated Aircraft Corporation", our exact corporate name; we couldn't get it to let go of our name. Therefore the only way we could protect our name was to enjoin them first, but the courts wouldn't make the injunction permanent, so we had to list-beating them to it, so to speak-on one of the country's recognized exchanges. We did that on the New York curb.

Mr. TOLAND. In October 1941 it was 4,000 shares, wasn't it, at no par value?

Mr. FLEET. In 1941; $1 par value.

Mr. TOLAND. Equivalent to one share of the original stock?

Mr. FLEET. In 1941 we multiplied the number of shares that we had in the company by issuing two share for one.

Mr. TOLAND. Now isn't it a fact, Major, that on your original investment of each $100 in this company in 1923, that on November 21, 1941, based upon the list price of the stock on the New York Stock Exchange, the actual value of each share of the original 100 no-par value stock of this company on that date was $84,000? November 21, 1941, prior to the sale of your stock?

Mr. FLEET. You asked me whether or not that is a fact. I haven't figured it.

Mr. TOLAND. We figured it and I would like for you to see if on the original investment you made in this company, for every $100 you didn't have an actual market value in November of 1941 of $84,000 for each $100 invested by you?

Mr. FLEET. I might say to you and to the committee that in my opinion Consolidated Aircraft Corporation is the biggest success in aviation that has been made in the United States since it was organized, and I am very proud of that. The corporation declared in dividends, my money back, my original $25,000 back 318 times, and I sold out at 1,200 times, which together made 1,518 times, ignoring the $300,000 that I invested in the $1,200,000 issue of preferred stock. The CHAIRMAN. How much? Those figures sort of astound me. Tell that over again.

Mr. FLEET. Well, sir, if I ignored the $300,000 which I invested in 1936 and considered only the initial investment, I got that back 318 times gross, and then I sold out what stock I had left on the basis of 1,200 times gross-but don't forget I paid over $2,400,000 in taxes.

Mr. TOLAND. May I read this statement, Major, and if it is not correct, you check me. This is your income from Consolidated Aircraft Corporation from 1924 to 1941. In 1924 your salary was $10,000, is that right?

Mr. FLEET. That is your sheet?

Mr. TOLAND. Yes. You can check it against yours and I will find out how good my accountants are.

In 1924 your salary was $10,000?

Mr. FLEET. In 1923 for the first seven months of the company's history, my salary was at the rate of $10,000 a year, split between

Consolidated and Gallaudet 50-50, and for that specific time was $2,916.67.

Mr. TOLAND. In 1924?

Mr. FLEET. $10,000.

Mr. TOLAND. 1925, $10,505.08?

Mr. FLEET. $10,000 salary, $500 bonus, and $5 Christmas present. Mr. TOLAND. Now, in 1926 your salary was $10,505.08?

Mr. FLEET. Salary was $10,000, bonus $500, and $5 Christmas present.

Mr. TOLAND. And $132,000 dividend on common stock? Is that right?

Mr. FLEET. Yes. You skipped one dividend, however, if you want to put it in. You skipped the dividend in 1925.

The CHAIRMAN. We can overlook that one?

Mr. TOLAND. Did you get one in 1925? How much was it?
Mr. FLEET. $16,500.

Mr. TOLAND. In 1927 your salary went up to $15,505, without the 8 cents.

Mr. FLEET. I might say the 8 cents is due to the fact that the check is issued every 2 weeks. I ignored that and gave you the salary which in 1927 was $15,000; there was a $500 bonus and a $5 Christmas present.

Mr. TOLAND. And $214,500 dividends?

Mr. FLEET. $213,250.

Mr. TOLAND. 1928, $15,500?

Mr. FLEET. $15,000 salary and $500 bonus, and $5 Christmas present.

Mr. TOLAND. $231,000 dividend?

Mr. FLEET. And $231,000 dividend.

Mr. BATES. What was that Christmas present for, Major? Was it a little teaser or something?

Mr. FLEET. It was the practice of the company, starting in 1925, in order to build up good will, to give a turkey to everybody on Christmas. We found, after doing this 2 years, because unmarried employees didn't want a turkey, we gave $5 instead.

Mr. BATES (interposing). A sort of good-will offering?

The CHAIRMAN. Being an old company, probably that is where Jack & Heintz got those ideas.

Mr. FLEET. Jack & Heintz, according to the papers, gave quite substantial bonuses. Our corporation gave small annual bonuses for 5 years, and for many years we have given this Christmas present. Mr. TOLAND. Can we go ahead, Major, and finish this?

Mr. FLEET. $2,300 was my total in annual bonuses-paid over 5 years.

Mr. TOLAND. Major, suppose I read these through and you check me, and we will get rid of this.

1928, $15,500, $231,000 dividend; 1929, $18,255 salary.

Mr. FLEET. $18,000 salary and $250 bonus, and $5 Christmas present.

Mr. TOLAND. 1930, $18,035?

Mr. FLEET. $18,000, $20 director's fee and $5 Christmas present. I don't show the other $10.

Mr. TOLAND. In 1931, $16,166?

Mr. FLEET. In 1931 it is $16,200, or a 10 percent reduction due to the hard times.

Mr. TOLAND. 1932?

Mr. FLEET. And $20 director's fee.

Mr. TOLAND. 1932, $14,605?

Mr. FLEET. $14,580, and $16 director's fee.

Mr. TOLAND. 1933, $13,548?

Mr. FLEET. In 1933 it was another 10 percent reduced, to $13,122,

and $48 director's fees.

Mr. TOLAND. What do you have for 1934?

Mr. FLEET. $15,840.

Mr. TOLAND. Any dividend?

Mr. FLEET. No, sir. Just one minute-and director's fee, $48. Mr. TOLAND. 1935?

Mr. FLEET. 1935, $15,840, and $32 director's fee. No dividends. Mr. TOLAND. What about 1936?

Mr. FLEET. 1936, $15,840; $6,750 for dividends on preferred stock, and $16 director's fee.

Mr. TOLAND. 1937?

Mr. FLEET. 1937, salary $18,000, then the Christmas bonus was resumed. We skipped it for 6 years. The dividend on common stock was $80,020.50, and on preferred stock $18,000.

Mr. TOLAND. $98,000 altogether?

Mr. FLEET. $116,202.50 altogether, including salary.

Mr. TOLAND. 1938?

Mr. FLEET. 1938-salary, $19,300.

Mr. TOLAND. And the dividends?

Mr. FLEET. Christmus bonus $5, dividend $164,241; preferred dividend $18,007.50, and $20 director's fee.

Mr. TOLAND. 1939, Major?

Mr. FLEET. Salary, $20,000; $5 bonus, no dividend. We had to skip a dividend then; $18,030 dividend on the preferred stock, and no director's fees.

Mr. TOLAND. 1940?

Mr. FLEET. 1940, $35,937.50. That is the actual amount drawn. It was a salary of $36,000, $5 bonus, dividend $324,782, preferred dividend $18,030.

Mr. TOLAND. 1941?

Mr. FLEET. 1941, salary $62,500, bonus $5, common dividend $672,104, preferred dividend $9,015.

Mr. TOLAND. Now, Major, will you place that in the record?
Mr. FLEET. Yes.

(Document entitled "Major Fleet's Income from Consolidated Aircraft Corporation," prepared by accountants of the investigating committee's staff, was received in evidence, marked "Exhibit No. 171" and is filed with the committee.)

(Document entitled "Total Remuneration from Consolidated Aircraft Corporation to R. H. Fleet," furnished by R. H. Fleet, was received in evidence, marked "Exhibit No. 172" and is printed in the appendix of this volume.)

Mr. TOLAND. Isn't it a fact that in the fall of 1941 you had acquired considerable stock; namely, 347,622 shares, which you sold for $8,647,097.25? Is that correct?