Senator ASHURST. Yes; it is hard to take hold of, like a large globe. You have to take hold of it somewhere. It is like a great globe. Do not hesitate, just say how you were blocked. Now, you say you were blocked, now say who blocked you, and how, and when and where. Name the men. Just go right at it. Mr. SCAIFE. There are memoranda that cover that, as I said a while ago. I will read you the memorandum. This memorandum is dated January 4, 1922, " memorandum for Captain Scaife." Senator WHEELER. Now, who gave you that? Mr. SCAIFE. This is from A. F. Myers. Senator WHEELER. Who is A. F. Myers? Mr. SCAIFE. A. F. Myers is special assistant to the Attorney General, and had been placed in charge of this so-called War Frauds Bureau. Senator WHEELER. Now, let me ask you one question here: Were you blocked in this investigation after the Congress of the United States appropriated a half million dollars for the purpose of carrying on the investigation of that? Mr. SCAIFE. No; I had already left the Department of Justice when that appropriation wase made. Senator WHEELER. Now, go ahead and tell about Myers. Mr. SCAIFE. I will continue to read the memorandum. [Reading:] By direction of General Patrick, Captain Volandt called on me this morning in reference to your request for a copy of the audit of cost records of the Glenn L. Martin Co. The audit in question was conducted under a clause in the contract with that company which provided that its cost records would be available for the information of the contracting officer." The Martin Co. and the Chief of Air Service both construe this provision to mean that as to all others, including other branches and officers of the Government, the records are to be treated as confidential. Attached hereto is a memorandum by Capt. R. H. Fleet, the contracting officer, which explains the situation with reference to the audit. The Martin Co. has objected to the audit on the ground that it unfairly eliminates certain items of cost which should be included, and the Chief of Air Service has promised them a hearing on their contentions in the near future. The audit therefore is not complete. When the audit is complete, the Chief of Air Service, following the established procedure, will consider whether or not there is ground for recovery of excessive payments, and will refer the whole matter with his opinion to the department. General Patrick say, however, that notwithstanding the foregoing instructions, he will furnish us the audit if we still desire it. While I am anxious that nothing be left undone to make our investigations thorough, at the same time I desire to avoid causing coordinate branches of the Government unnecessary embarrassment or trouble. It seems to me that in view of General Patrick's representations, we ought not to insist upon having a copy of the audit at this time unless you have good reason to believe that something unlawful will be disclosed thereby. Please let me have a memorandum of your views at your earliest convenience in order that I may communicate with General Patrick. Senator WHEELER. Now, who wrote that letter? Mr. SCAIFE. That was A. F. Myers, special assistant to the Attorney General. Senator WHEELER. Special assistant to the Attorney General. Now, who was A. F. Myers? Mr. SCAIFE. Well, he was called in to act as the head of this War Fraud Division under Colonel Goff. But if you will let me finish the correspondence I think it will answer your question. Senator WHEELER. All right. Mr. SCAIFE. Here is my reply, on January 5, 1922 [reading]: (Memorandum for Mr. A. F. Myers.) Replying to your memorandum of the 4th instant, which was received late yesterday; will say that the investigation of the Air Service is being handled by the Bureau of Investigation in accordance with the recommendations of the Hon. Charles E. Hughes, as will more fully appear in my memorandum to Colonel Goff, dated October 19, 1921. On October 26, 1921, I reported to Colonel Goff that liaison arrangements had been made with the Air Service and that Captain Volandt had been appointed by General Patrick to cooperate with the Department of Justice. Since that time a number of important matters have developed, including the audit and preparation for suit of two cases where these audits disclosed overpayments of $7,260,439.15 on two contracts Senator WHEELER (interposing). Now, what was that? Explain that to me right there. You say $7,000,000. I do not quite catch it. You say seven millions, about what? Mr. SCAIFE. On two contracts. Senator WHEELER. What about two contracts? Mr. SCAIFE. I say these audits had disclosed seven millions [reading]: These audits disclosed overpayments of $7,260,439.15 on two contracts, out of a large number to be audited, and on which a corps of auditors are now at work. Senator WHEELER. All right now Mr. SCAIFE (interposing). If you will let me help you, Senator. I think I can do it. I got this letter telling me that an audit that was made, however, is only for the confidential information of the contracting officer. Senator WHEELER. To whom? Mr. SCAIFE. To the contracting officer. Senator WHEELER. Wait a minute. Let me get this straight. Senator WHEELER. Who is the contracting officer; what do you mean by that? Mr. SCAIFE. It happened in this case that Capt. R. H. Fleet had signed that contract. My information was this: That there had been a Government audit of a contract of the Glenn L. Martin Co., and that the books of this company had been kept in code, and that they had been given a contract for airplanes, including accessories, for $59,000 apiece, which somebody else was building for $18,000. Naturally when I found such an audit was in existence I wanted to get the audit, so I went to the Air Service and asked for the audit. And instead of getting this audit, I got this memorandum from Mr. Myers. Now, I think if you will let me Senator WHEELER (interposing). Wait a minute. I want to get these facts straight in my mind. I do not know about the other members of the committee, but I want it. In that letter you stated there was $7,000,000 overpayment. Now, who was the $7,000,000 overpayment by? Mr. SCAIFE. I presume that refers to the Wright-Martin case, and the Dayton-Wright case, but you understand, Senator, I made numerous reports here. But I am not discussing those. I would like to take those up and discuss them in an orderly way. The fact I am discussing now is that it was blocked. Senator WHEELER. I want to get these figures as we go along. Senator WHEELER. Can you not tell me what you mean when you say $7,000,000 shows on the face here? Mr. SCAIFE. At that time I had talked to-I presume that refers to the Wright-Martin overpayment of $5,267,467.75; and then the Dayton-Wright Co. of $2,554,383.27, the two together making about $7,000,000. I imagine those were the two I referred to. Senator WHEELER. And then you go on to say [reading]: I have been informed by Captain Voldandt that he came to see you at your initiative and was informed that all information in regard to the Air Service must hereafter be transmitted through you. The result has been that the investigation I have been making of the Air Service is completely blocked. On November 21, 1921, when certain investigations of the War Department were placed in your charge I took up with Colonel Goff the reasons why the Air Service investigation should not be included in such an arrangement, and with his approval I have reported to Mr. Burns and Colonel Goff as I have always done. It had not occurred to me that you did not fully understand the plan of coordination, especially as you had not up to this time indicated to me that you were concerned in or were supervising this investigation. If there can be any misunderstanding in this matter I am quite sure the records will entirely clear me of any intention to act outside of my instructions and I am taking the matter up with Colonel Goff to the end that there will be that thorough cooperation that is so necessary to the success of so important an undertaking. JANUARY 5, 1922. H. L. SCAIFE. Now, on January 6, you got this back from Myers, assistant to the Attorney General [reading]: (Memorandum for Captain Scaife): JANUARY 6, 1922. I have your memorandum of the 5th instant, in reply to mine of the 4th. stating that you are taking up with Colonel Goff the matter of my inquiry concerning the audit of the cost records of the Glenn L. Martin Co. I can not allow to pass unnoticed the statement that, as a result of my conference with Captain Volandt, your investigation of the Air Service is "completely blocked." The conference was one of a series I have had with officers of the War Department with a view to securing better cooperation in our work. On behalf of General Patrick, Captain Volandt inquired who was the responsible head of the war contracts investigations. I told him that the work was being carried on under the general direction of Colonel Goff and under the immediate supervision of myself. This information has been repeated to General Patrick by Colonel Goff by letter. I also told Captain Volandt that all matters referred to this department for action should be addressed to Colonel Goff, in order that they might receive the attention of this office. I had in mind the fact that one of the claims mentioned in your memorandum, when transmitted to this department in the regular course, was referred to and acted on by Judge Lovett's division. It was not until you called the file to Colonel Goff's attention that this office knew anything about the claim. There has been, therefore, no thought of blocking you in your work and I believe that, upon reflection, you will admit that your irritation has led you into exaggeration of statement. On principle you must recognize the right of the higher officers of the War Department to communicate directly with the executive heads of the Department of Justice on matters of policy, since you yourself assert the right to take up with Colonel Goff my very reasonable request for information. Yours very truly, A. F. MYERS, Special Assistant to the Attorney General. Now, has any prosecution ever been had of the Wright-Martin case, to which this letter referred in 1922? Mr. SCAIFE. That referred to the Glenn L. Martin case. We have not gotten the audit yet. Senator WHEELER. Never got any audit yet? Mr. SCAIFE. It has not been worked up. Senator WHEELER. And that notwithstanding the fact that Congress subsequently voted a half million dollars for that purpose. Mr. HOWLAND. You understand the situation now? Mr. SCAIFE. I understand the situation is just like it was when this man Myers interfered. Senator WHEELER. But you furnished the War Department the facts upon which they could go ahead? Mr. SCAIFE. In innumerable cases. Senator WHEELER. Yes; but let us get right down to this particular case at this time. In this particular case you did furnish the Department of Justice the facts and figures on which they could go ahead and prosecute? Mr. SCAIFE. I went to Colonel Goff and said, "Here, they are blocking me on this investigation. It was agreed when I started the investigation I was not to be blocked." I said, "Now, here is an audit I have discovered at McCook Field, kept in code, according to my information." Senator ASHURST. Kept in what? Mr. SCAIFE. Kept in code, according to my information. Mr. SCAIFE. The books were kept in code, my informant stated, to dodge the income tax. Whether that was true or not, I don't know; I never got the report. Now, here is a man who had never had anything to do with my investigation. The reason I went to the Bureau of Investigation was in order to get away from this other crowd. I was working alone, nobody paying any particular atten tion to me. Senator WHEELER. Were you ever told by any person in authority to stop, that you were touching big people, or words to that effect? Mr. SCAIFE. I do not recall that. I only had one investigator, and that was Means. Means was suspended-especially when we began to get up to this crowd. Mr. Means was in the department-came into the department shortly after I began to work in the bureau, and he was assigned to assist me. Senator WHEELER. I did not catch that; I was interrupted. What was the last part of your statement? You said somebody was put on to assist you? Mr. SCAIFE. I said Means-Gaston B. Means. Senator WHEELER. He was put on to assist you by whom? Senator WHEELER. By Mr. Burns, of the Department of Justice? Senator WHEELER. Is that the same Gaston B. Means that has testified here in this case? Mr. SCAIFE. Yes. Senator WHEELER. And the same one who had this terrible record that we are told about now? Mr. SCAIFE. Yes. Senator WHEELER. And he was put on to this most important case by Mr. Burns, of the Department of Justice, for the purpose of making the investigation? Is that correct? Mr. SCAIFE. That is correct. Senator WHEELER. All this record that has been brought up against Mr. Means was prior to the time that he was put on this work by Mr. Burns, was it? Mr. SCAIFE. Yes. The first thing I did in this invetigation was to investigate Gaston B. Means. Senator WHEELER. And you found out, did you not, that the record that has been published in the newspapers that are trying to support Mr. Daugherty-you found that he had all that record prior to the time that Mr. Daugherty and Mr. Burns put him to work upon this investigation? Mr. SCAIFE. Yes, sir. Senator WHEELER. You did not see anything in the newspapers at that time, or hear any holler from Mr. Daugherty that he was a bad man, did you? Mr. SCAIFE. I don't recall it. I have a report there [indicating] of what I found about Means, if you want it. Senator WHEELER. You reported it to the Attorney General? Mr. SCAIFE. That report is to the Attorney General. Senator WHEELER. And he was still employed upon this particular case after you reported these facts to the Attorney General? Is that correct? Mr. SCAIFE. NO; that is not correct. Mr. Means was suspended, and I took it up with the Attorney General to ascertain why he was suspended. I knew why he was suspended; at least, I thought I did. Senator ASHURST. Why was it? Mr. SCAIFE. It was because he was getting these big crooks. Senator WHEELER. Go ahead. Mr. SCAIFE. The first time I saw Gaston B. Means was when I started the work-there was not an office for me to work in. I went to see Mr. Burns and told him what the situation was. Burns was always very nice to me, and he said, "Now, Captain, you just take my private office here Senator WHEELER. Who said that? Mr. SCAIFE. Mr. Burns-"until we can make arrangements, you just work in my private office." So I went in there, and about the next day I saw Gaston B. Means sitting over there and I thought Gaston B. Means was in there to investigate me and I went to work to investigate Gaston B. Means. Senator WHEELER. You wanted to beat him to it? Mr. SCAIFE. I had the advantage over Means at that time, because I had access to the confidential files. Senator WHEELER. What confidential files? Mr. SCAIFE. Both of the department-not of the department, but of the Bureau of Investigation. Now, I was at that time going into-I had just started in on the spruce production, and here was 92405-24-PT 3- -7 |