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January, 1921 Mr. Stevens and Mr. Dean were "ab- solutely honest," but that neither had an understanding of accounting neces- sary to deal intelligently with the claims, the experience in handling mat- ters of this magnitude, or the desired "resistance" of a negotiator. The set- tlement was made without authority, he said, and without consulting records of yards where the ships were built. Gillen cited instances of settlements for requisitioned ships where large sums were saved by following the principles laid down in the "Cotton contract." In settling for the so- called French group, 29 vessels in all, the former owners from whom they had been requisitioned demanded $7,- 677,179. But the shipping board, ad- hering to the Cotton contract, paid only $3,000,000. Again in the Italian group, said Gillen, a claim for a total of - $3,300,000 was advanced for two ships taken over by the . shipping board. The board paid only $700,000. In settling the claim forthe second Norwegian group, including 15 ships, $14,000,000 was claimed, but only $2,- 000,000 paid. In the settlement of the the Mitsui Co, a Japanese firm, for ships commandeered at the yards of the Skinner & Eddy Co., on the Pa- cific coast, the government also paid profiteer prices, Gillen said. Because the: Mitsui: Co. chad contracted at a price of $285 per deadweight ton, it was permitted by the terms of the set- tlement to pass that price along to the shipping board. He also spoke of a contract for a ship built by the Union Iron Works, the original price of which was $1,- 035,000. The first owner, the Jedson Shipbuilding Co. had paid $672,000 on account. The shipping board paid $2,045,000 in settlement and $315,000 more to the Union Iron Works to finish the vessél. No One Knew Where Money Went Gillen said when he entered into service for the shipping board at the time Judge Payne became chairman, that although more than $2,500,000,000 had been spent it was impossible to strike a balance because there was no record of the funds derived from op- erations, millions had been paid over to shipbuilders without supporting data and there was not even a record show- ing the amount of money on _ hand. Comptroller Tweedale of the shipping board, set about to remedy this sit- uation, Gillen testified. He charged that although there was a law on the books, passed July 1, 1918, requir- ing the treasurer to make an audit and submit a monthly report, this had not been done. He stated that although prior to claim of July 1, 1919, not a single report had been made during the whole year, Mr. Tweedale on Nov. 1, 1920, had filed vouchers for audit of $2,700,000,000. Of this amount, Mr. Warwick had re- fused to pass $1,500,000,000 because he said that there was not sufficient supporting data, but since that time data had been dug up for $600,000,000, leaving $900,000,000 as yet unaccount- ed for. The sum of $1,100,000,000 is yet to come up, as reports for the last four months are yet to be sub- mitted. Need Experienced Executives The reason for the "complete break- down" of the accounting system, Gil- len said, was that the same care was not exercised in the appointment of experienced men in charge of these departments as had been taken when H. H. Raymond and P. A. S. Frank- lin had been appointed to operate the ships and C. M. Schwab had been placed at the head' of the shipbuilding program. He said that the men ap- pointed had not the necessary experi- ence and were in no way qualified to tackle such a tremendous task. ~ "I have stated to the President and to the new President, Mr. 'Harding, with whom I have had a lengthy con- ference since his nomination, that the President should select men of known administrative ability to handle these big administrative jobs. Too many politicians get the big administrative jobs instead of the men who are prop- erly qualified to fill these positions. However, the senate has just as much responsibility as the President in see- ing .that these positions are properly filled. Instead of passing upon. a man's character, the senate committee, which are called upon to confirm the men nominated by the President, should say, 'What are your qualifica- tions?? Until the day comes when the senate shares with the President the responsibility of seeing that men of proper qualifications are selected for these big administrative jobs, there is little hope of us effecting economies, wiping out the huge losses in govern- ment, or running the departments which require good business methods." The new accounting system, now in effect, said Gillen, enables the board to make weekly statements showing the financial obligation to the board of its 176 operators. Steps to bring this about, following examination of bank accounts, included putting to work a force of 900 men, he said. Gillen also testified that while the shipping board was losing $3,000,000 a month last spring because its freight- ers, unable to obtain fuel oil, were idle, the board allocated several of its own tank steamers at rentals that THE MARINE REVIEW , 5 were far below the open market rate to private companies which did not have contracts to supply oil to relieve the shortage. Other points in his tes- timony were as follows: The army on Sept. 1 owed the ship- ping board $208,243,795, but had paid only $30,000,000. Without what Gillen claimed was "proper authority," Commissioner Ray- mond B. Stevens reduced the bill ren- dered the~ food administration for freight charges from $13,500,000 to $6,- 000,000. The American Shipbuilding Co.,, Cleveland, voluntarily offered to change a cost plus contract for shipbuilding to a lump sum figure, with a saving of $25,000,000 to the Emergency Fleet corporation. Commissioner Raymond 'B. Stevens, though a member of the board, was charged with having absented himself from Washington from Aug. 1 to Jan. 1, 1919: Gillen laid stress upon which he declared was the inefficient handling of the government owned _ tankers. He said that, while 40 per cent of the shipping board operators last spring were paying from $4 to $6 a barrel for fuel oil in the open market, the government chartered out to private companies which had no contracts to supply bunker oil requirements for the government's uses, oil tankers which might have been assigned to the job of relieving the shortage. During this time, he added, 60 per cent of the oil was being carried in tankers furnished by the shipping board, this oil bring- ing $2.07 a barrel. Although the mar- ket rate for tank steamers was from $15 to $22 a deadweight ton, the ship- ping board was time chartering its ships to private operators at $6.50 a deadweight ton per month. Through the creation of a "small liquidating corporation" Gillen stated he would solve the problem now confronting the shipping board. Take "The first big thing to do is to re- move the jurisdiction of the shipping board over the balance of shipbuilding construction, the disposal of all sur- plus supplies and sales, the balance of the settlement of claims and other matters of this nature. I would have ~congress create a 'small liquidating corporation, composed of five out- standing business men, to do _ the 'clean up' job. Thus you will enable the new shipping board to perform the function of handling the big going job." Bernard Van Renselaer, a lawyer from Rio de Janeiro, followed Gillen on the stand and testified that a "ring" had been formed at the Bra- Sales From Board