Mr. TOLAND. Of when?

Commander WEYERBACHER. 1940.

Mr. TOLAND. Isn't it a fact that Rohleder during the 3 months in 1939 worked with you practically every day in connection with the report and the estimates that you submitted?

Commander WEYERBACHER. That was in connection with the Merchant-Sterling report.

Mr. TOLAND. But isn't it a fact he was with you daily in connection with those matters? Didn't he render you services? You so testified. Commander WEYERBACHER. Yes; he rendered some service.

Mr. TOLAND. He worked for you?

Commander WEYERBACHER. I say we checked his estimates, and the engineering firm checked it, and we got the reliability of his estimates. Mr. TOLAND. You paid him for that? Commander WEYERBACHER. No, sir.

Mr. TOLAND. You took care of him later when he got the contract? Commander WEYERBACHER. There was no understanding or anything. I don't do business that way.

Mr. TOLAND. You worked for nothing all the time up until your salary in November, is that right, except for the 3 months in 1939? Commander WEYERBACHER. That is correct.

Mr. TOLAND. And he worked for 3 months, off and on, during 3 months?

Commander WEYERBACHER. He didn't work there; he prepared his work in a few days.

Mr. TOLAND. He was with you a great deal, wasn't he, during that 3 months?

Commander WEYERBACHER. No.

Mr. TOLAND. Wasn't he with you day and night?
Commander WEYERBACHER. No, sir.

Mr. TOLAND. He wasn't at Cramp's with you when you were using that place, and Masterson was there as your representative while he was a Government employee also? Rohleder was not with you there; was not at those offices?

Commander WEYERBACHER. Not then, every day and night; no, sir. Mr. TOLAND. Was he there 3 or 4 days a week?

Commander WEYERBACHER. Probably.

Mr. TOLAND. During the 3 months' time?

Commander WEYERBACHER. Not the whole 3 months.

Mr. TOLAND. Well, for how long?

Commander WEYERBACHER. I would say, about 3 to 4 weeks.

Mr. TOLAND. And for which he didn't receive any compensation?
Commander WEYERBACHER. He wasn't there much.

Mr. TOLAND. But he was there, nevertheless?

Commander WEYERBACHER. Yes.

Mr. TOLAND. He gave some service to you, didn't he? You considered it valuable, didn't you? You checked it; you had it checked to see if his estimates were correct?

Commander WEYERBACHER. Yes.

Mr. TOLAND. He estimated. the cost of the rehabilitation for you, didn't he?

Commander WEYERBACHER. We checked him, yes.

Mr. TOLAND. He made that estimate, he had to determine in order to submit an estimate to you how much it would cost?

Commander WEYERBACHER. That is correct.

Mr. TOLAND. That took some time, didn't it?
Commander WEYERBACHER. Certainly.

Mr. TOLAND. And you didn't pay him for that?
Commander WEYERBACHER. Certainly.

Mr. MAAS. How near did his estimates turn out to be correct? Commander WEYERBACHER. On the plan that we had at that timeand as I say they were checked by Day & Zimmerman-Day & Zimmerman checked within 4 or 5 percent, but in the development, changing from building merchant ships to this larger program, we had to change the whole conception of this.

Mr. MAAS. There was no way to compare his original estimates with the ultimate cost?

Commander WEYERBACHER. No.

Mr. TOLAND. You said it was a very economical saving. What was his profit on the contracts that you gave him?

Commander WEYERBACHER. I recommended him; I didn't give him any contracts.

Mr. TOLAND. You recommended, he got them; what was his profit? Commander WEYERBACHER. I stated.

Mr. TOLAND. Six percent?

Commander WEYERBACHER. Oh, no; I said his profit plus his overhead was about 6 percent, which is less.

Mr. TOLAND. Isn't it a fact that he made as high as 38 percent on some of these contracts?

Commander WEYERBACHER. No.

Mr. TOLAND. Take a look at this cost statement. These are his own figures. See if he didn't make 38 percent, approximately, on that contract.

Commander WEYERBACHER. This contract there with detailed plans and specifications. I haven't the record here.

Mr. TOLAND. I will take it up. I want to take up your statement you made.

Commander WEYERBACHER. He was a low bidder and he has made a profit.

Mr. TOLAND. Are you good at mathematics? Figure it out, see what the percentage of his profits was?

Commander WEYERBACHER. Thirty-five percent.

Mr. FLAHERTY. What is the amount?

Commander WEYERBACHER. $21,235.00.

(The cost statement was received in evidence, marked "Exhibit No. 268" and is printed in the appendix of this volume.)

Mr. FLAHERTY. That is a job that he did?

The ACTING CHAIRMAN. That is the amount of the contract. Commander WEYERBACHER. Open competitive bidding, and he was the lowest.

Mr. TOLAND. What do you mean by open competitive bids?

The ACTING CHAIRMAN. The amount of the contract or amount of the profit, $21,000?

Mr. TOLAND. Amount of the contract. What do you mean by open competitive bidding in that contract?

Commander WEYERBACHER. When you have detailed plans and specifications and you send it out.

Mr. TOLAND. Do you know they were sent out in that case?
Commander WEYERBACHER. Oh, yes.

Mr. TOLAND. They were?

Commander WEYERBACHER. In this case.

Mr. TOLAND. How do you know they were sent out?

Commander WEYERBACHER. The records will show to whom they were sent.

Mr. TOLAND. You made statements. I want to know what you know about it. Who were the other bidders in that contract?

Commander WEYERBACHER. I don't know the names, but the record will show the names.

Mr. TOLAND. You made the statement it was open competitive bidding. Now I want to know what reason you had for making that statement; what do you know of your own knowledge as to the other competitive bids, if any, that were submitted about that particular contract?

Commander WEYERBACHER. The only thing I can know is that these plans and specifications were sent out to various contractors and the office received the bids; the bids were opened, the bids were analyzed, and recommendation was made.

Mr. TOLAND. Isn't it a fact that at the beginning you were in charge of all the purchasing?

Commander WEYERBACHER. Yes; I had to.

Mr. TOLAND. Isn't it a fact the late president, Mr. Reed, took it away from you?

Commander WEYERBACHER. Yes.

Mr. TOLAND. Why did he take it away from you? You had too much to do?

Commander WEYERBACHER. One of the things; that is what he said to me; he may have had other reasons but he didn't say it to me. Mr. TOLAND. One of the reasons he said was because you had too much to do?

Commander WEYERBACHER. Yes.

Mr. TOLAND. Isn't it a fact that your assistant, Mr. Masterson, was also under you in charge of the purchasing of material? Commander WEYERBACHER. Not in charge of purchasing.

Mr. TOLAND. He handled it, didn't he?

Commander WEYERBACHER. He handled the papers.

Mr. TOLAND. I show you a copy of a memorandum marked "Confidential," dated July 1, 1941. I will read it.

(The memorandum was received in evidence and marked "Exhibit No. 269.")

Mr. TOLAND. It isn't addressed to you. It doesn't designate to whom it was to go. [Reading:]

In conference with Commander Weyerbacher, I advised him that in accordance with the attached memorandum I was taking over, effective tomorrow, July 1, all procurement division activities. That it was not my desire to issue any written instructions in this connection, but to advise him in writing officially, so that he could handle it with his subordinates who were con cerned in any way that he felt was best.

He stated that he would be glad to cooperate in every way in the matter and his sole idea was to assist me in making a success of the whole shipyard project.

I told him this action had nothing to do with the major problem which had been under discussion with him and which I would discuss later.

He afterward brought the matter up with Admiral DuBose and questioned the significance of the action which I had taken. Admiral DuBose referred him back to me.

That was June 30, 1941. Then it says:

Tuesday, July 1. I told Commander Weyerbacher that the major matter which had been under discussion with him, Mr. Ripley, Admiral DuBose, had been placed on a strictly probationary basis, without any named time limit. In other words, it was from now on.

I also told him that I wanted him to concentrate his attention on the completion of all facilities work, as well as getting the shipbuilding construction under way and pushed forward in every possible channel.

He assured me of his desire to do so and regrets that anything had occurred either as a result of omission or error.

In turn, I assured him that this was, so far as I was concerned, nothing but a cold-blooded business proposition, into which no personalities would be permitted to enter, but that the decision made would be based on the facts and upon merit, entirely from the standpoint of the welfare of this company and not that of any individual.

He expressed his understanding and agreement with the thoughts which I had expressed. I afterward advised Admiral DuBose and Mr. Ripley, both of whom signified their approval. Signed, James Reed.

Mr. FLAHERTY. Was that letter transmitted to somebody after your investigators went in there?

Mr. TOLAND. It is an interdepartmental correspondence, Congressman, and it doesn't say to whom.

Mr. FLAHERTY. Was it prepared after your investigators went in? Mr. TOLAND. Prepared on July 1, 1941, by the president of the company at that time, who later died.

The ACTING CHAIRMAN. Who died before our investigators went in there, I believe.

Mr. TOLAND. That is it.

The ACTING CHAIRMAN. That was written prior to the investigators going in?

Mr. TOLAND. It was obtained from Mr. Reed's personal file. As a matter of fact, Commander, did Mr. Reed put you on probation on that date?

Commander WEYERBACHER. Yes, sir.

Mr. TOLAND. Why?

Commander WEYERRACHER. He apparently got the idea I was not cooperating with him.

Mr. TOLAND. In what respect?

Commander WEYERBACHER. He explains there; it is well explained. Mr. TOLAND. What else did he say to you that isn't in this memorandum?

Commander WEYERBACHER. Nothing more than I know of.

Mr. TOLAND. You have no recollection of anything else he said? Commander WEYERBACHER. No; other than what is recited here. In substance that is the same thing.

Mr. TOLAND. As a matter of fact, way back in June didn't Mr. Ripley suggest to you that it would be unwise for you to settle yourself permanently in the city of Philadelphia?

Commander WEYERBACHER. Yes. Mr. Ripley suggested that.

Mr. TOLAND. In fact, he wrote you on the 19th day of June, didn't

he?

Commander WEYERBACHER. Yes.

Mr. TOLAND. Did you receive the original of that letter?

Commander WEYERBACHER. Yes.

Mr. TOLAND. I offer it in evidence. I will read it, Mr. Chair

man.

(The letter was received in evidence, and marked "Exhibit No. 270.”) Mr. TOLAND. Are we about to recess, Mr. Chairman?

The ACTING CHAIRMAN. We will recess in a minute.

Mr. TOLAND. I don't mean right now. I mean for lunch.

The ACTING CHAIRMAN. Will you have some further questions for Commander Weyerbacher?

Mr. TOLAND. Ŏh, I have hours. Let me read this.

Öh,

The ACTING CHAIRMAN. Read that letter, and then we will recess. Mr. TOLAND. I will read exhibit 270.

Commander R. D. WEYERBACHER,

Warwick Hotel, Philadelphia, Pa.

JUNE 19, 1941.

DEAR TOMMY: I gathered the impression from Mrs. Weyerbacher, if I understood her rightly, that you are thinking of committing yourselves during the coming week end to a home somewhere around Philadelphia.

I suggest that you do not do this until you and I have had a chance to discuss the Cramp executive managerial situation in general. In brief, I am not entirely satisfied with the way the relationships are working out; and I think that before you go to the extent of committing yourself to some real estate we should, at our mutual convenience, have a chat about the matter.

Yours sincerely,

Copies to J. R., Wm. G. DuB.

Then it has in writing: "J. P. R. Talk to Chantry."

J. P. RIPLEY.

Did you have a talk with Mr. Ripley after you got that letter? Commander WEYERBACHER. What is added on to that?

Mr. TOLAND. That is in Mr. Ripley's handwriting, I assume. Do you want to look at it, Mr. Ripley? It is Mr. Reed's handwriting, I think. Is that Mr. Reed's handwriting, that note at the bottom? Mr. RIPLEY. That is Mr. Reed's handwriting.

Mr. TOLAND. Mr. Reed's handwriting, not yours.

Did you have a talk with Mr. Ripley after you received that? Commander WEYERBACHER. Yes, sir.

Mr. TOLAND. What was that talk about?

Commander WEYERBACHER. In general he said that he heard I was not getting along with Reed and for me to go back and talk to the Admiral and Mr. Reed.

Mr. TOLAND. What was it that you were not getting along with him about?

Commander WEYERBACHER. Well, he thought that I had too much to do, that some of my duties should be eliminated so that I could devote all of my attention getting the plant ready to build ships. Mr. TOLAND. That was the only thing that Mr. Reed was concerned about?

Commander WEYERBACHER. As far as I know.

Mr. TOLAND. He never said anything to you, or Mr. Ripley never said anything to you about anything else except the fact that you had too much to do?