EXHIBIT NO. 321 Mr. JAMES REED, HARRIMAN RIPLEY & CO., INC., 333 Pine Street, San Francisco, Calif. DEAR JIM: I just want to bring you up to date. I am sending a copy to R. H. M. R. and E. R. H., for the same purpose. FACILITIES LOAN Without trying to tell you the entire story, we are working now along the following lines. The National Defense Advisory Commission has constructed a more or less standard type of facilities loan agreement. It is not entirely complete yet, but very far along. I am sending a mimeographed copy of the latest draft to you herewith. The idea originated with W. C. Potter a month or so ago, and Brownell, of Davis Polk, has had a lot to do with designing the contract. Its essential features, in brief language, are as follows: (1) Cramp borrows the money from the banks to rehabilitate the property and buy the real estate, the maximum being about $9,500,000. (2) Cramp has title to the whole shooting match from the beginning. (3) When the construction is completed (estimated at eighteen months from now), the Navy owes Cramp one-fifth of the total actual cost, and the Navy then is obliged to pay an additional one-fifth each year thereafter over a total of five years. (4) Cramp assigns these payments to the lending banks so that they have virtually a Government obligation. (5) The Government has certain rights in the property which I would refer to as priority of use. (6) If at any time ninety days pass by without the Government using the facilities for Government work, then Cramp has an option to buy out the Government rights, whatever they are, at the original cost less a certain agreed rate of depreciation per annum. Mr. Knudsen has had a lot to do with this contract, and many other also. The Philadelphia banks, under the leadership of the Federal Reserve (which cannot itself participate in this loan because of the rules of the Federal Reserve), and under the leadership of the Pennsylvania Company for Insurances on Lives, etc., are actively working on the matter, and there seems to be every reason to believe that they will make the facilities loan. Mr. Sinclair, President of the Federal Reserve of Philadelphia, has gone to Washintgon and discussed the whole matter with the Navy and the National Defense Advisory Commission. In order to press the Philadelphia banks to action, I went to Mr. W. C. Potter, Chairman of the Guaranty Trust, yesterday, and he expressed a distinct interest in having the Guaranty participate, but he said he did not want to do it unless the Philadelphia banks would welcome his being in the group. I put it up to the Philadelphia banks, and the answer just came back that they do not want the Guaranty Trust in at this stage, although they might welcome them later. WORKING-CAPITAL LOAN In addition, we need a working-capital loan of about $2,000,000. Mr. Sinclair says that without committing himself the Federal Reserve itself will favorably consider participating in this loan and taking the leadership and inviting other banks to come along with them. OTHER THINGS I really have not time to write about other things, which are moving very fast. Weyerbacher is moving into the plant and employing four or five people to start specifying in detail the rehabilitation program, which has to go as an exhibit to the facilities contract. The Old Company is asking the tenants to get out. Lehigh is approaching me wanting to trade. Lear is acting badly, apparently (I am advised) putting a couple more tenants on his property. It looks like possible condemnation. Reath is working actively with the Treasury Depart ment and thinks he will get $3,100,000 as the "invested capital base" for the property Cramp now owns. DEAR JOE: It is very thoughtful of you, busy as you are, to keep me so well posted. I have received this morning the draft of October 4, 1940, of the "Emergency Plant Facilities Contract," and find it particularly interesting. With reference to anticipating my planned arrival there on November 1st, I have discussed this further with Mrs. Reed and I now plan to leave from Los Angeles direct for New York on the Chief on October 26, reporting into your office on Tuesday morning, October 29. I am going to Philadelphia via New York because I feel it is important that we have a chat before I go to Philadelphia. As I am planning to take my vacation in Southern California starting the first of next week (we had to give up the idea of Sun Valley because the short time available). I will now plan to leave from there and not return to San Francisco, which was the original program. With reference to Mr. Johnny Greene, of the C. I. O. shipbuilders' gang, if he becomes too pressing Weyerbacher might advise him that I shall be very glad to meet with him upon my arrival in Philadelphia and discuss matters of mutual interest. With my thorough and intimate experience in handling these C. I. O. gentlemen, I look forward to a very interesting discussion, and without any trepidation either. I note your slight revision of the facilities financing and want to assure you again that whatever is worked out to your satisfaction will receive my full approval. With reference to the Cramp foremen annual dinner, I have also been considering what would be the most auspicious manner in which to publicize the reopening of the shipyard, and it would seem that this might well be the proper occasion for this momentous event. I certainly agree with you that one of the things which should be done at that time is the assumption of those pension obligations. Furthermore, I could with good effect set forth at this dinner the policy which I mentioned to you in that hand-made slogan in my letter of October 2, "Cramp's for the Philadelphians so that we may have the Philadelphians for Cramp's." I appreciate the value of good will in an enterprise like ours, and of the tremendous importance of sound experienced advice in handling all matters bearing on public relations. I therefore think that your suggestion with reference to Arthur Kudner is a very valuable one, and shall put this down for discussion with DuBose upon my arrival. Warm personal regards, Sincerely, JR: jm Mr. JAMES REED, CRAMP SHIPBUILDING COMPANY, 333 Pine Street, San Francisco, Calif. DEAR JIM: Just a few words to keep you up to date. In brief, the matter is moving really faster than we thought a week or two ago that it would. Our counsel have found a way to move the "earliest closing date" backward from October 23rd to October 16th. In other words, so far as the Philadelphia picture is concerned, we can have the money move around the table on October 16th instead of the 23rd. Whether we can move this fast with the Navy in respect to the facilities contract, the cruiser contract, etc., is a question. But I rather think we can. I certainly want you to have your but I am just wondering if you This would enable you to get to The uppermost thought in my mind is this. vacation, because you are going to need it; could not start it sooner than you planned. Philadelphia at an earlier date and still have had your rest. A Mr. Green of the Shipbuilders Union came to see Averell Harriman ; Averell told him that he will have nothing to do with the matter, and that was all there was to it. But I do not know how long we can hold off a decision in regard to our labor policy; and, naturally, that decision will be most important in having a bearing on our future. We crossed some bank bridges yesterday. We are making two separate loans, One starts at about zero and builds up to a maximum of $9,500,000, the proceeds to be used for construction facilities. The interest rate will be either 24% or 3%; I told you the other day that it would be 22%, but the trouble is that that rate was given to me by one of the big banks, and some of the other smaller banks sort of began to fan out on it; so it looks like 24% or 3%. It was agreed yesterday in Washington (we had to go to the Comptroller General of the Government to get final approval) that interest at 14% will be included in the cost of the facilities, and interest at 14% will be included in the cost of the cruisers. So, in effect, Cramp is reimbursed for 14% throughout and has to pay the other 1% or so out of its own funds. The second loan is for $2,500,000 and will be in the form of an extension of credit on which we will draw as we need it; we call this the working-capital loan. This will be made by the Federal Reserve Bank of Philadelphia with such commercial banks participating therein as may wish to do so. Interest rate is 32%. Maturities have yet to be worked out, but the principle will be the balloon variety at the end. As security for this loan we will have to assign our 6% fee payments, and we will have to enter some reasonable dividend covenant, which does not bother me at all because none of our directors are going to want to pay dividends out of this company unless it conforms with the most conservative kind of practice. Weyerbacher is at the plant and has a half dozen assistants feverishly preparing what is called Appendix A to the facilities contract. This appendix describes the general nature of the items of facilities to be constructed and acquired and what not. We now have a word of mouth option on the Lehigh property at $350,000. The Lehigh Executive Committee is meeting right now and we expect it to be put into writing. It was all settled in a big powwow in Admiral Robinson's office, with real estate experts and who not present. The Lear thing is a terrible mess; but we have Seltzer, our Philadelphia real estate expert, actively working on it and think we will find a way through it. If we do not, Admiral Robinson will simply condemn the property and the Navy will own it. In the early part of November, the old Cramp foremen are going to have their annual dinner. Perhaps you do not know that this has been happening every year since the plant closed down. I am told that something like 200 of them are coming. I have a lot of ideas about this which you and Admiral DuBose should consider. For instance, this would be the logical time for the New Company to assume the pension obligations of the Old Company. Very few people seem to know that Averell and Roland Harriman have personally been paying these pensions for the last fourteen years. To be sure, the amount is not now great, because it has tapered off as the beneficiaries have passed away, etc. In brief, the whole situation is now moving so fast that it is rather hard to keep up with it. The foreclosure sale takes place on Monday, the 7th. I am going there prepared with the necessary money to bid up to a high price in case any other bidder wants to come around, which I do not think he will do. Very sincerely yours, JOE R. P. S. By the way, when you get back it seems to me that you and Admiral DuBose should send for one Arthur Kudner and get him to come to Philadelphia which he will be glad to do. He runs the Kudner advertising agency. This may not sound like much of a recommendation, but let me assure you that I consider him one of the big men in this country, and a very good friend of ours, so to speak. He is the man who has put over the entire public reception program of the Buick car, and has done other things of outstanding merit. Anyway, my only suggestion is that you and Admiral DuBose have a chat with him, because he may be able to give you an idea or two here and there as to how to handle the public reception pertaining to the opening of Cramp. Mr. JOSEPH P. RIPLEY, EXHIBIT 323 SEPTEMBER 23, 1940. 63 Wall Street, New York City, N. Y. DEAR MR. RIPLEY: A certain Calvin Chapman, of Chapman & Company, brokers, here, has pestered me on the telephone trying to find out something about our financing, which I thought might be of passing interest to you. His story goes somewhat like this: "The American Ship & Commerce owns 83% of Cramp bonds and 61%% of Cramp common stock; therefore, American Ship & Commerce stock now quoted at around 1%, should be worth a great deal more than that figure as soon as the new financing is put out; he would like very much to have me buy, through him, all of the American Ship & Commerce that I can carry and also would like to have me keep him advised, and so forth." I told him that I was not interested in his proposition and that I had no personal knowledge whatever of any financial matters bearing on the relationship of the American Ship & Commerce to the Cramp Shipbuilding Co. Furthermore, I have mentioned this to nobody. Best personal regards. Very truly yours, JR: mcn EXHIBIT 324 Autobiog. (1) DuBose duties-authority-responsibility (2) Will discuss with Anderson & Eckhardt (Check his experience again) (3) O. K. Very favorably impressed by him. (4) If R. F. C. does insist, why not divide the job? (Bylaws require Separa) (5) Discuss. (6) What objection on Sept. 17th if court decision made? Discuss with Scarff. SEPTEMBER 3, 1940. MEMORANDUM TO MR. JAMES REED The following are matters which I merely suggest you deal with when you get here. (1) DuBose. The situation in regard to this matter is as follows. I learn on very good authority that the consulting per diem idea will not work. And I feel overwhelmingly that we want DuBose in the picture. You remember that just before you left for San Francisco at the time of your last trip I asked you whether it would be agreeable to you if he were Chairman of the Executive Committee, and you replied in the affirmative. So I got in touch with DuBose and made the earliest appointment I could with him, which was for a week ago today. I had lunch with him all along uptown, and covered the whole ground. The outstanding fact is that he is still an active officer in the Navy and cannot or does not wish to commit himself to taking any position until he has retired from the Navy. This is entirely proper. But my talk leads me to believe that the only practical way to bring him into our picture is as Chairman of the Executive Committee (the Committee consisting of yourself, DuBose, and myself), and to have him a permanent salaried officer of the corporation, living in Philadelphia as distinguished from living in Washington and going to Philadelphia only when called upon. As regards compensation, I think the logical thing to do is to pay him exactly the same as we propose to pay you. I hope that you will find all the foregoing agreeable to him when he is in a position to talk, which should be the early part of October. Naturally, I hope all of the foregoing will be agreeable to you. Duties. (2) I think we should be getting our Comptroller selected. And naturally I want you to take the responsibility for this item. Eckhardt is naturally very anxious to get the position. So far as I am concerned, he looks all right to me. I sent him over to see Mr. Paul Knight, of Arthur Anderson & Co., who will be the auditors. I rely very much on what Paul Knight says because I have known him for many years, and most favorably. I will be glad to show you the letter which he has written me in regard to the matter; it is very favorable to Mr. Eckhardt. (3) I feel the same about a Secretary and Treasurer. On this point I feel justified in recommending to you Mr. H. F. Mayer, who was for many years Comptroller of the National City Company, and was for five years Comptroller of Brown, Harriman & Co. (now Harriman, Ripley & Co.). His leaving us was not the slightest his own fault; I can explain this to you in person very easily. Yes! (4) Whoever you see fit to line up for Comptroller, and for Secretary and Treasurer, I have two suggestions to make. One is that you make clear that we cannot definitely commit ourselves to the matter until October 23rd and possibly later, because the lawyers cannot get all the legal procedure taken care of until then. Moreover, inasmuch as I am dealing with the RFC for help, there is always a chance that they may insist on naming the Secretary and Treasurer, which they sometimes do. I will of course resist it if they do that, but I do not like to see you get actually committed to anybody for these two important positions until we are sure that we can. (5) I would suggest that anybody we take on in an official capacity be told that salaries commence January 1, 1941, if this be agreeable to you. My thought is this. I hate to think of our taking on an administrative pay roll until we are in a position to have the Navy pay some or all of it in the cost of construction of the facilities. And I do not see how we can get really under way with such construction until the first of the year. Again, this is only a suggestion to you. (6) I am puzzled beyond words as to the exact date upon which to elect you as Director and President. My difficulty is as follows. As I say, the lawyers cannot unfold the machinery one minute earlier than October 23rd. To put it another way, this is the earliest date that we can be sure that everything is done and the yard is definitely going to open. On the other hand, it is more appropriate for you to sign final amendments to the registration statement, which should be going through about the 16th or 17th of September. The question boils down to one as to whether you wish to be publicly identified with the situation about September 16th, while there is still a chance of something upsetting the whole program. I really think that the chance is not all great. In other words, if anything upsets us, I think it will be before September 16th and not afterward. Nevertheless, there is that chance. You might discuss this with Mr. Scarff and counsel and let me know what you thing about it. (7) A firm named Pland-Evans, of San Francisco, has written to me expressing keen desire to handle the cafeteria job. One of their officers is an old college friend of mine, but that makes not the slightest difference. I bring it to your attention because I thought that inasmuch as they are in San Francisco you may have heard of them. 70533-42-vol. 3- -31 |