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Board Investigation Stands Still House Committee Makes Slight Progress in Seeking Mis- takes of Shipping Board -- Clears Schwab of Charges UCH of the attention of the Walsh congressional committee investigating the shortcom- ings of the Emergency Fleet corpora- tion was drawn last month to the charge that Charles M. Schwab, of the Bethlehem Steel Corp., when head of the government's shipbuilding corpor- ation, had obtained undue considera- tion from the government in behalf of the Bethlehem company. Col. Eugene H. Abadie, former comptrol- ler of the shipping board, was on the stand and he declared that when he had attempted to audit the books of the Bethlehem company, "powerful in- fluences" were brought to bear upon John Barton Payne, chairman of the board, to stop the audit.. He de clared, nevertheless, that he had un- earthed a voucher for $260,000 which had been made out in the main plant of the Bethlehem Shipbuilding Corp. to Charles M. Schwab, president, for "personal expenses incurred during October, 1918," for which there was no supporting data. The charge brought a quick and decisive response from Mr. Schwab and other officials of the Bethlehem company, who appeared on the wit- ness stand and offered proof that the Schwab voucher covered no irregular- ity. Mr. Schwab himself was quite vigorous in his denial of the charge and at one point tears streamed down his face when. he protested at such treatment in view of the whole-hearted way in which he had served his gov- ernment during the extremity of war. Eugene. G. Grace, president of the Bethlehem Steel Corp., also appeared on the stand and offered exhibits to show that the voucher for $269,543.53 alleged to cover personal expenses of Mr. Schwab during October, 1918, when he was director general of the Fleet corporation, represented money properly spent. Mr. Grace said that this sum had been paid in the regular method pursued in reimbursing Mr. Schwab for expenditures made by him and his office organization in connec- tion with the company's business. In distributing this item among the vari- ous departments of the business, $100,- 000 of it was charged to the Bethle- hem Shipbuilding Corp., which is a Bethlehem subsidiary in charge of ship- building. Mr. Gillen was called and declared the Schwab voucher was __ perfectly Proper. Charles Piez, of Chicago, for- merly director general of the Fleet corporation, also testified as to the regularity of Mr. Schwab's expenses and denied that there had been gen- erally evidence of graft in ship con- struction work. Later the committee met and Chairman Walsh announced the committee's judgment that the charge of irregularity was not justified. In testifying regarding the audit of voyage accounts of shipping board vessels, Colonel Abadie said: "To Sept. 1, 1920, 15,000 accountings had been received and of that number only two-thirds were in any way com- plete in their efforts to make up re- ports of nearly 7000 voyages. Of this vast amagunt of accountings, only a total of 172, representing 43 voyages, had passed the final audit section and were complete with the necessary records. Even then they could not be called complete, because the schedules of commissions and fees'in foreign 'ports had not been approved by the board. Belated Accounting Efforts "The fact was that the shipping board had completed but 43 voyage accounts out of 7000 voyages, and was not collecting the money due by the operators. I called attention of Judge Payne to this situation, and he esti- mated that it would cost $500,000 to make the necessary audit. Shortly after this we commenced work with 800 accountants." The result of the "drive" was set forth in a table submitted by Colonel A'badie showing the estimated figures determined by the investigations of the accountants. Some of these items were: Gross revenue, unaudited, estimated at $80,000,000; audit showed actual amount owing was $190,979,000; voy- age expenses, unaudited, estimated at $30,000,000, audited showed amount to be $77,629,000; net voyage revenue, un- audited, estimated at $50,000,000; audited, found to be $113,349,000; ship- ping board funds to be collected, un- audited, estimated at $50,000,000; audit- ed shown to be _ $128,607,000. Ac- cording to the witness, a total of 272 voyages in north European waters, ended March 1, 1920, had resulted in net losses of $3,000,000 to the shipping board. On 1589 estimated voyage reports on 1310 vessels engaged in foreign and domestic trade, dating from March 1, 1920, until' Sept. 23, 1920, according to 131 Colonel Abadie, the shipping board sustained a loss of $18,925,123.85. The total gross revenue amounted to $86,- 374,358.98, while the total voyage ex- penses incurred by the operators to- taled $55,381,288.52. Fixed charges for depreciation, insurance, maintenance and return on investment amounted to $49,918,194.31, thus causing a net loss of nearly $19,000,000. The annual report of the shipping board for the year ended June 30, 1920, showed a profit of $251,000,000, although the bal- ance sheet dated from the beginning of commercial operations. 'Colonel Abadie, in substance, accused the shipping board of: 1. Overpaying the Nafra Steam- ship Co. the sum of $873,849.57. 2. Assuming responsibility for ship- building contracts entered into by the Green Star Steamship Corp. for five ships with the G. M. Standifer Con- struction Co., Portland, Oreg., when the steamship company defaulted in its payments on the contract. 3. Directing the return of "millions of dollars paid by the Green Star line to the shipbuilder as progress install- ments on the vessels to the company, repayment of $1,350,000, borrowed by the steamship company from a New York trust company with government funds, and making other concessions. which favored the private companies to tne extent of millions. 4. Making constant changes in ship purchase contracts, modifying the terms of payment. Although the steamship company failed to make oth- er than initial payments, the ships were permitted to remain with the buyer. Following the charges, Martin J. Gillen issued a statement in which he said: oa "Colonel Abadie spent several hours in going into details of the contracts of the Nafra company, the Green Star line, and the Imperial Shipping Co, and showed that these companies had been favored by the shipping board and had not paid for their ships ac- cording to the contract terms and gave evidence that they had not done so. This may be true, but the record of the shipping board shows that of the 44 pioneer companies that purchased shipping board vessels none of them has paid in full for their ships because they have not the money to do so, and a vast majority of them have paid /