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12, what they are worth, because the gov- ernment is trying tosellthem. But they are not being operated by the shipping board, and we have got them tied 'up, properly tied up, supervised if | you please, in harbors in this country, be- cause we cannot operate them and just get the turn-around money out of them. So they are out of the picture. Ii you take your steel cargo ships, and you put them at $150 a deadweight ton, and they are now trying to sell practicaliy on that basis, when you take the depreciation for the time they have been in the water and at what they could be produced for--if you have 1200 of these ships, and call them worth $150 a deadweight ton, and call them 10,000 tons apiece, though they are not that large, you have about $1,800,000,000° of property, and the amortization of $2,000,000,000 has al- ready occurred at the prices we are offering our boats today. This $2.- 000,000,000 was a war expenditure, just as much as money expended for pow- der or anything else. It is gone. Experience Was Costly 'There has not been in that record a 'terrific amount of wastefulness, as such, because they had to expend money to build plants under unusual conditions and with no_ supervision. Over night we had to build in this country, if you please, a brand new shipbuiiding industry. We had to get riveters and machinists and every- thing cise called from the four quar- ters of the United States, and these men did not have any experience, and the government had to pay for that experience. You had to have superin- tendents, a lot of them, and you had to. train them, and that is simply a war waste. If you had the best men in Aimerica'on that job down there you would have had war waste. The things that I point ott are in connection with the failure to lay down fundamental principles of ac- counting, which would have given a judgment all down the line. And if there is any one big thing in my judg- ment that can be 'criticized down at Washington, it is the failure to estab- lish accounting systems so that they could tell what was going on in all these transactions, and thus be able to form an intelligent judgment and work along lines based on intelligent judg- ment. In reference to any wrongdoing in the shipping board, I want to say that I was there from Oct. 1, 1919, down to Aug. 1, 1920, and during that time I do not believe a dishonest mo- tive controlled any of the commission- ers, not in any way, shape or manner: nor any of the head officers that I came in 'contact with. That there have been some very lax things done, THE MARINE REVIEW. yes; but it has been due to the fact that that corporation is twice the size of the United States Steei Corp.; and it is due to the fact that it kas property scattered all over the face of the world, and in the United States it is scattered over 13 districts. Putting it on another phase, the shipping board was not like the army or the navy or the postoffice department. They had great bookkeeping systems in those departments when ithe war started; the shipping board had none. It was a brand new proposition. These depart- ments also had experience and rules in the dealings they had with con- tractors; the shipping board had none, as such. 'These other great govern- mental departments have had _ history behind them; the shipping board had none, This generai criticism of the mem- bers of the shipping board is not, in niy judgment. a just criticism. Take the case of John Donald, of .the ship- ping board, a man who must be pretty nearly 70 years of age. From 8.30 in the morning until 6 at night that old gentleman worked there day and night, day after day. And the same is true in the case of judge Payne--from 8.30 in the morning until 7 and 8 at: night, night after night. Those men were doing the best they could amidst the chaotic condition in accounting operation, and as well the chaotic condition over in the construc- tion department. The facts of the care are that the Norwegians had rep- resentatives over at the peace confer- ence at Versailles. They were badger- ing the American delegation, saying this big nation was not settling its bills, and, as I am informed, the President of the United States re- quested, through his proper represen- tatives, that the shipping board get busy on that bill. But he never told them to pay that bill differently than the law said it should be paid; nor did he tell them to settle that claim with- out making a proper investigation. We have settled $1,500,000,000 worth of cloims under the Payne system, in a period of about nine months and the application of the Cotton rule has saved this government between $200,- 009,000 and $250,000,000. Ae Tell of Shipping Board Blunders (Concluded from page 7) and which was desirous of obtaining contracts with the shipping board to build seagoing tugs. Mr. Sands made the report and underwrote a credit of $125,000 to the company. "Sands stipulated," said Downey, "that his remuneration would be $40,- January, 1921 000 for making necessary investiga- tions, reports, etc, and underwriting the credit up to $125,000, if, as and when needed, and vouching for the responsibility of the Providence Engi- neering Corp., provided I would per- sonally guarantee the payment of the $40,000 and the responsibility of the Providence Engineering Corp. and maintain the principal bank account of the corporation with his bank. I accepted Mr. Sands' proposition and agreed to give him four of my per- sonal notes for $10,000 each, with in- terest at @ per -cent." Bolling Denies Knowledge Before the hearings were closed in New York, both Bolling and Sisler appeared and denied any knowledge of the alleged $40,000. Alonzo Twee- dale, comptroller of the shipping board, also appeared and said that he had investigated the rumors set on foot against Bolling and had found them groundless. Bolling testified to having had at one time banking con- nections with Sands and said he had enjoyed the exbanker's friendship, but declared he could not satisfy himself as to what possible motive Sands may have had in connecting his, Bol- ling's, name with the $40,000 fund. John Cranor denied that he ever had applied to Sands or Bolling for aid in connection with getting shipbuilding machinery. He denied the allegations made by Sands that he get part of the $40,000. Cranor said the $40,000 was Sands' commission for arranging a line of credit of $125,000 for the Providence Engineering Corp. to aid it in obtaining a contract with the shipping board for the construction of some tugboats. Cranor said that he did not think the amount excessive when the size of the contract was con- sidered. The contract called for $2,- 850,000. The New York hearings were closed by William Denman, the first -chair- man of 'the shipping board, who ap- peared before the Walsh committee to charge that a grave mistake had been made when the shipbuilding plans of the government were first developed. There was no disagreement with Gen- eral Goethals, Denman said, over build- ing wooden ships, which were report- ed as being useful chiefly as auxiliaries to the steel ships. The trouble arose, he said, over certain features of con- struction, especially the placing of diesel engines in the ships. These en- gines, he said, would have made the shipping board vessels absolutely in- dependent of foreign bunkering sta- tions. A ship equipped with the diesel engine, he declared, could: travel all the way around the world without tak- ing on additional oil.