tions of these forces. We nave learned nothing to change the views on that matter
which were held by Maj. Poulois when we left Washington.

Third. After these first two considerations comes the American program of putting
into the field next year air forces in excess of the tactical requirements of its Aimy in
Fnmce. It is greatly desired that the United States shall be able to do tins. Such
air forces should consist of fighting aeroplanes and bombers.

Mr. Frear. Now, Mr. Secretary, I read into the record this morn-
ing from the testimony of Col. Clark, who you agreed was one of the
ablest men we had in the Air Service, who was with the Boiling
Commission. In Jime he cabled to the War Department to prepare
three British machines, and two different French machines, and the
Caproni Italian machine. Six different kinds of airplanes. All were
fighting machines.

Secretary Baker. Bombing machines, not fighting machines.

Mr. Frear. Not pursuit planes, but used for general purposes,
not training purposes. Did that suggest that we were to confine the
program to training planes ?

Score tary Baker. I did not say that. I am afraid I have been
misunderstood.

Mr. Frear. Possibly.

Secretary Baker. I said that at the outset the situation was that
we should buy, first, the training planes for the United States, and
that latter we should take the fighting planes.

Mr. Frear. How long did that policy govern the department ?

Secretary Baker. I can not answer that; Gen. Squier can tell you.
Cablegrams came every day in great numbers from France. I nave
looked everywhere for the BoUing record of August, 1917.

Mr. Frear. Oh, long before that vou had ordered the spads to be
manuf actiu^ed by the Curtiss Aeroplane Co. ?

Secretary Baker. Yes.

Mr. Frear. And those were fighting planes ?

Secretary Baker. Yes.

Mr. Frear. And those were cancelled afterwards ?

Secretary Baker. For some reason that did not work out.

Mr. Frear. What I mean is this. You were extending the pro-
gram by reason of Col. Clark's recommendations, which were alter-



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AVIATION. 69

wards approved by Maj. Boiling's recommendations when he cabled
over in June, and you asked for spads at the beginning and placed
contracts which were afterwards canceled. So it must have been
the purpose to continue with fighting planes and bombing planes
and nave them manufactured at the same time

Sacretary Baker. Undoubtedly that was true.

Mr. Fkbab. So if this was your program at the outset it was
modified very quickly ?

Secretary Baker. Oh, surely.

Mr. Frear. It appears that everything was dropped — I am asking
this as a question. Afterwards, it appears, everything was dropped
until the De Haviland Four coidd be lurnished ?

Secretary Baker. That I do not know. General Squier can tell
you how often the plan was changed, why it was changed, and what
consultations took place both here and abroad, but the plan obviously
was changed from time to time.

(Thereupon, at 4.35 o'clock p. m., the subcommittee took a recess
until 7 o'clock, p. m. the same day.)



SlTBCOMMITTEE No. 1 (AvIATION) OF THE

Select Committee on ExpENDrruREs in the

War Department, House of Representatives,

Friday, August 1, 1919.
The subconmiittee met at 10 o'clock a. m., pursuant to adjourn-
ment last night, Hon. James A. Frear (chairman) presiding. Also
present Hon. Walter W. Magee and Clarence F. Lea.

TESTIHONT OF HON. NEWTON D. BAKEB, SECBETAB7 OF

WAB— Besumed.

Mr. Frear. I will ask to have inserted into the record, in connec-
tion with the testimony of Mr. Ryan quoted on yesterday, where
Senator Reed was examining him, an excerpt from volume 2, page
1151 of the Thomas subcommittee Senate hearings, Sixty-fifth Con-
gress, second session, as follows:

Senator Reed. Mr. Ryan, you took over the various forces that you found on hand
to a large extent, did you not?

Mr. Rtam; I took over the Equipment Division of the Signal Corps. That was the
principal force.

Senator Reed. How many men were there in that division?

Mr. Ryan. There were hundreds. I do not know just how many.

Senator Reed. Who were the leading men besides those you have named?

Ifr. Ryan. Mr. Potter was chief; Mr. Kellogg was his assistant. Maj. Wolff, I
think, was in chaise of the finances; Maj. Brown was his assistant. Mr. Fletcher was
in chai^ge of purchases and contracts. Maj. Downev was in charge of disbursements.
Mr. Lockhart was in charge of raw materials. Col. Mixter was in cnarge of product'on.
Maj. Lead better was in cnarge of the supply of wood. I think those cover the p.in-
cipal activities.

Senator Reed. How many were Regular Army officers and how many were civilians
who gDt into Army uniforms.

Mr. Ryan. I can not say positively. I am not sure, but I think Maj. Downey was
the only R^ular Army officer in the list I have mentioned.

Senator Reed. The rest were civilians?

Mr. Ryan. Yes, sir.



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70 WAR EXPENDITURES.

Senator Reed. Mr. Potter came in from civil life?

Mr. Ryan. Yes, sir.

Senator Reed. What was his occupation or business before he came in?

Mr. Ryan. He was in the mining and metallurgical businesB and connected witik
the Guggenheims.

Senator Reed. And never had anything to do with aircraft?

Mr. Ryan. I think not.

Senator Reed. What was Mr. Kellogs:'8 biisiness?

Mr. Ryan. Mr. Kellogg was a manufacturer. I do not know just what he manu-
factured, but I think he was a metal manufacturer. I do not know exactly what Una.

Senator Reed. Was he an automobile man?

Mr. Ryan. I think not. He might have made parts for automobiles, but he was
not an automobile manufacturer.

Senator Reed. Mr. Mixter was in charge of production you sav. Who was he?

Mr. Ryan. He is connected with one of the plow companies, I think. I believe it
is the John Deere Co. or one of the harvester companies. I do not mean the Harvester
Co., so called, but one of the companies manufacturing harvesting machinery.

Senator Reed. Mr. Wolff was in charge of finances. Who was he?

Mr. Ryan. I think he was a certified public accountant.

Senator Reed. And Mr. Lockhart?

Mr. Ryan. I really do not know what his business was.

Senator Reed. And Mr. Leadbetter?

Mr. Ryan. I do not know what Maj. Leadbetter was.

Senator Reed. How about Mr. Downey?

Mr. Ryan. I think Maj. Downey was a Regular Army officer.

Senator Reed. There was not a single one of these men who had had experience,
so far as you know, in aircraft production?

Mr. Ryan. Not so far as I know.

Senator Reed. They were men that you think actually had the final say in regard
to contracts before you took charge?

Mr. Ryan. Subiect, of course, to Gen. Squier, who was Chief of the Signal Coris.
They were all under him.

Senator Reed. Yes. Do you know how much momey, approximated, had been
expended at the time you took charge in the production of aircraft? When I sRy
**exDended," Mr. Ryan, I mean actually paid out or that the Government obligated
itself to pay out.

Mr. Ryan. The actual expenditure, up to the time I took charge was aomething
like $350,000,000.

Senator Reed. Do you include in that the commitments?

Mr. Ryan. No; the actual expenditures. The commitments beyond that were
sufficient to absorb all of the appropriation that had been made the vear before of
$640,000,000. However, a good part of these commitments or a considerable part of
these commitments, over and above actual expenditures, were for things for which
thev would be reimbursed. For instance, take the production of thines for the Allies
and that the Equipment Division would be reimbursed for when tney completed
deliveries on work that they were doing, principally for the Allies; but the commit-
ments plus the actual expenditures had reached a total of the appropriation of the
year before, so that I was unable from the time I took hold until the new appiopriatioii
bill passed to authorize or approve any contracts for material.

Senator Reed. You asked for a new appropriation and got it, did you not?

Mr. Ryan. Yes, sir.

Senator Reed. How much was it?

Mr. Ryan. The appropriation asked for was a lump appropriation to cover the De-
partment of Military Aeronautics and the Bureau of Aircraft Production. It was
11,032,000,000.

Senator Reed. The new appropriation?

Mr. Ryan. Yes. That was afterwards suddivided between the two departmental

Senator Reed. And $640^000,000 would make $1,672,000,000 that has been appro-
priated up to this date for aircraft?

Mr. Ryan. That has been appropriated up to this date to carry us until June 30 of
the next year.

Senator Reed. What are the Government's commitments and expendituree up to
this time, as nearly as you could tell?

Mr. Ryan. 1 have not got them accurately. I have been away four weeks, and I
have not got them accurately. I would not like to state it. I can get it for you later.



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AVIATION. 71

Also, at the top of page 1162, the following quotation:

Senator Reed. This is true, anyway, is it not, that we were capable of quantity
production of the 150 horsepower Hispano-Suiza, is that right?

Mr. Ryan. Yes, sir.

Senator Reed. It is also true that that engine works admirably in the Spad machine,
which was an up-to-date fighting machine?

Mr. Ryan. 1 think so.

Senator Reed. It is a machine that is still used by the French and is regarded as
one of the best machines?

Mr. Ryan. That is true.

Senator Reed. As a matter of fact, we have not a single American-made fighting
machine on the front.

Mr. Ryan. I think that is true.

Senator Reed. I say, as a matter of fact, we have not a single American-made
fighting machine to-day on the front?

Mr. Ryan. I think that is true.

Senator Reed. As a matter of fact, we have not a single American-made fighting
machine anywhere, have we?

Mr. Ryan. I think that is true; that is, that is finally accepted.

Secretary Baker. Mr. Chairman, before you proceed with fresh
inqtdries, let me say, I am told that one or two copies of the memo-
randum of Gen. Ansell, with regard to the Deeds inquiry, have been
supplied to the committee.

Mr. Frber. To my committee ?

Secretery Baker. I understand so.

Mr. Frear. That is, will be furnished.

Secretary Baker. No; the committee is said to have two copies of
the memorandum?

Mr. Lea. I suggest that it was probably sent to Mr. Graham, the
chairman of the general committee.

Secretary Baker. Probably so. I understand they have been in
the hands of the committee, perhaps Mr. Graham's hands, for some
time.

Mr. Frear. If that is so, I did not know about it. This is the first
that I have heard that such a hearing has been had.

Secretary Baker. If you will be good enough, Mr. Chairman, to
have your clerk inquire of Mr. Graham, and get that memorandum,
and insert it as a part of my testimony, I will thank you; and if it has
not been furnished to Mr. Graham I will supply a copy for that
purpose.

Mr. Frear. If inserted in the record it might be something like
inserting the Hughes testimony.

Secretary Baker. Oh, no; it is very much briefer than that.

Mr. RiEAR. Well, the committee will he very glad indeed to have
the paper, and will then determine whether it snaD be inserted in the
record or not. We will be very glad to have it furnished, and then
the committee will decide that matter.

Secretary Baker. Well, if yoii decide not to insert it, I will come
down here and read it.

Mr. Frear. We will be very glad to have you do so, and then
you might answer any interrogatories that the committee might see
fit to propound.

Secretary Baker. Very well, if that is necessary.



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72 WAB EXPENDITURES.

(The statement referred to was subsequently furnished by Secre-
tary Baker and is here printed in full, as follows:)

CONCLUSIONS REACHED UNDER DATE OP JANUARY 16, 1919, BY THE ACTING JUDOB
ADVOCATE GENERAL IN THE MATTER OF THE REPORT OP HON. CHARLES E. HUGHES
AFFECTING CHARGES MADE AGAINST EDWARD A. DEEDS.

After reciting evidence in the case the following conclufliona are reached by Aclisg
Advocate General S. T. Anaell:

The conclusion of this office is, therefore, that Col. Edward A. Deeds should not
be tried by court-martial on account of any of the transactions discussed in this
memorandum.

The justice of the conclusion thus reached by this office finds confirmation in the
following language taken from a letter from Hon. John D. Ryan, Director of the Air
Service, addressed to the Secretary of War under date of November 13, 1918:

" I feel, as J stated in a former letter to you, that Col. Deeds performed a great service
in expediting the \*^ork on the Liberty motor. If he had followed strict regulations
and kept within them in the expenditure of monev for the production of the firet of
these model engines we would probablv not have had any quantity production yet.
I feel that the patriotic service rendered to the Grovernment and the sacrifice made in
connection therewith by Col. Deeds outweighed any technical violations that might
have occurred, and considering the conditions under which this work had to be done,
if the aircraft was to take any part in the war within a reasonable time, I think com-
mendation instead of coiut-martial should be Col. Deeds's reward.'*'

There are attached hereto the following papers: (a) The memorandum from the
Secretary of War referring the matter to tlijs office for report and recommendation,
together with the papers attached thereto: (b) indorsement from tl^ office dated
November — , 1918, returning to The Adjutant General a memorandum from the
Inspector General's Department, dated November 2, 1918, and the accompanying
papers; (c) memorandum submitted by this office under date of November 11, 1918,
expressing its conclusion based upon the Hushes report; {d) memorandum for Hon.
John D. Rvan, Director of Air Service, signed W. W. Montgomery, jr.. Chief Advisory
and Consulting Department, dated November 11, 1918; {e) memorandum submitted
to this office under oath and signed B. F. McCann, attorney for Col. Edward A. Deeds;
(/) affidavit of H. E. Talbott, former business associate of Col. Deeds; (g) memorandum
submitted to the Secretary of War by John D. Ryan under date of November 13, 1918;
(h) letter from Maj. E. A. Coleman, disbursing officer. Bureau of Aircraft Production.
to this office under date of November 25, 1918, with exhibits; (i) copv of the Offic'al
Bulletin, dated February 21, 1918, containing the newspaper article criticized by
Judge Hughes in his report; 0) affidavit of Edward A. Deeds, dated November 30,
1918, together with chronology and copies of correepondence submitted by Col.
Deeds; (h) letter to the Secretary of War from Hon. John D. Ryan, dated November 6,
1918.

Mr. Freae. In the testimony oflFered on yesterday, Mr. Secretary,
after briefly discussing the matter of air-plane production, and what
has been done from the time of the war up to the signing of the
armistice, in that work, I called attention to those who were in
positions of responsibility under Gen. Sjiuire — Col. Deeds, Mr. Potter,
etc., who held positions at various times — and the next man to
succeed Mr. Potter was Mr. Ryan who was appointed, I believe,
May 20, 1918, and took charge of aircraft production, and, I believe,
was in control until the end of the year.

Secretary Baker. Until after the armistice.

Mr. F^AR. Do you know about what time ?

Secretary Baker. I do not know exactly the time, but until a few
weeks after the armistice.

Mr. Frear. Before the beginning of December ?

Secretary Baker. I should say until in December.

Mr. Frear. Without taking up the time necessary to read it into
the record, I will ask to introduce just a brief extract, taken from



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AVIATION.



78



The Manual of Statistics, Stock Exchange Handbook, 1918, showing
the interests with which Mr. Ryan is connected:

John D. Ryan, 42 Broadway, is a director in the following concerns:

American International Corporation, director.

American Surety CJo. of New York, trustee.

Anaconda Copper Mining Co., president and director.

Chicago, Milwaukee and St. Paul R. R. Co., director.

Cuba Cane Sugar Corporation, director.

Emigrants Industrial Savings Bank- trustee.

Greene Cananea Copper Co., vice president and director.

Inspiration Consolidated Copper Co., director.

Mechanics & Metals National bank of the city of New York, director.

Montana Power C/O., president and director.

United Metals Selling Co., president and director.

From the first annual report of the Council of National Defense,
page 108, we find the cooperative committee on copper, giving the
names of men interested in the copper industry, ana, among omers:

J. D. Ryan, president Anaconda Copper Co.. 42. Broadway, New York City, chair-



And then we have the Anaconda Copper Co., the Montana Power
Co., the Chicago, Milwaukee & St. Paul Ky. Co., the Guaranty Trust
Co., and mention is made of the United Metals Selling Co., in connec-
tion with the Anaconda Copper Co. :

ANACONDA COPPER MININQ CO.

A corporation founded under the laws of Montana, June 18, 1895. The company
•owns the Anaconda Copper Mine at Butte, Mont., together with other mines and
claims and a large reduction and smelting works at Anaconda, Mont. It has an
interest in the Butte, Anaconda & Pacific Ry. Co., 69 miles.

In 1899 a controlling interest in the stock of this company was purchased by the
Amalgamated Copper Co. On May 6, 1915, the Amalgamated Copper Co. announced
a plan whereby it was to dissolve and distribute its holdings of Anaconda stock to its
fitockholders.

In February, 1915, purchased from the Amalgamated Copper Co. the entire stock
of the United Metals Selling Co.

On May 19, 1915, the company's stockholders voted to increase the par value of the
stock from $25 to $50 per share, the number of shares authorized to be reduced from
6.000.000 to 3.000,000, leaving the authorized capital $150,000,000 as before.

The initial dividend upon the company's new stock (par $50 per share) was $1 per
share, paid November 20, 1915. On February 28 and May 29. 1916, paid $1.50 per
share. On August 28 and November 27, 1916. and February 26 and May 28, 1917. paid
$2 a share. On July 16, 1917, paid 50 cents. On August 27 and November 26. 1917,
paid $2 per share. On February 25, 1918, paid $2 per share.

Earning a.





Oro88


Profit.


Charges
and depre-
ciation.


Dividends.


Balanoe.


1914


$64,377,151
87,273,88ft
150,640,688


$9,196,410
19,580,617
61,779,517


$408,831
2,884,811
8,064,607


$9,077,500
9,325,000
17,484,376


1 $287,912


1OT5


* 7,370,806


1910


* 33,343,907







1 Deficit.



^Surplus.



President, John D. Ryan, New York; vice president, Benjamin B. Thayer, New
York; vice president, C. F. Kelley, Butte, Mont; secretary and treasurer, A. H. Melin,
New York; assistant secretary, R. D. Cole, Butte; assistant treasurer, D. B. Hennessy,
New York.



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74



WAB EXFENDITUEES.



THE MOKTANA POWER CO.

A corporation formed under the laws of New Jersey, December 12, 1912. The
company was organized to combine the Butte Electric & Power Co., with various sub-
sidiary companies, includins: the Missouri River Electric & Power Co., the Madison
River Power Co., and the Billings & Eastern Montana Power Co. The company has
also acquired the stock of the Great Falls Power Co. and Montana Reservoir A Irriga-
tion Co.

In 1913 the company made a contract for supplying the electric x)ower for the op«m-
tion of 437 miles of the Chica|?D, Milwaukee & St. Paul Railway, the installation being
completed in the early part of 1917.

Stock, par $100, authorized common $75,000,000, preferred $26,000,000; issued^
common $49,407,500, preferred $9,671,800; total issued $59,079,300.

Earnings,



Gross.



Net.



Chargn. | Surplus.



1914
1915
1916
1917



$3,778,285
4, .359, 408
6,244,905
6,912,364



S2, 639, 239
3,167,504
4,753,282
4,889,032



SI. 063, 614 S1.S75,62S

1,189,162 I 1,978,342

1.319,735 3,439,547

1,395,605 I 3,403,421



Depreciation reser\^ during 1915, 1300,000; 1916, 1350,000; 1917, $350,000.

President, John D. Ryan, New York; vice president, Frank M. Kerr^ Butte; ^ice
president, Frederick Strauss, New York; vice president, Alfred Jaretzki, New York;
secretary and treasurer, Walter Dutton, New York; assistant secretary and treasurer,
Ernest Shaw, New York; assistant secretary, Stephen P. Hogan, Butte; assistant
treasurer, James F. Denison, Butte.

Directors: Frederic W. Allen, New York; W. S. Brayton, Montclair, N.'J.;
George F. Cansfield, New York; Charles Martin Clark, New York; Charles A. Coffin,
New York; William E. Corey, New York; Marcus Daly, New York; N. Penrose Hallo-
well, Boston; Frank M. Kerr, Butte, Mont.; Alfred Jaretzki, New York; Sidney Z.
Mitchell, New York; John D. Ryan, New York; Charles H. Sabin, New York; /. G.
Schmidlapp, Cincinnati; Henry Seligman, New York; Frederick Strauss, New York;
W. D. Thornton, Butte; Albert H. Wiggin, New York; W. K. Whigham, London;
H. P. Whitney, New York.

CHICAGO, MILWAUKEE A ST. PAUL RAILWAY CO.

A corporation organized under the laws of Wisconsin in 1863 as the Milwaukee A
St. Paul Ry. Co., the present title being adopted February 11, 1874.

Road owned June 30, 1916, 9,747.03 miles; owned iointly, 109.74 miles; used under
contracts, 351.17 miles; total operated, 10,207.94 miles.

Stock, par $100; authorized common, 1233,725,100; preferred, $116,274,900; issued
common. $117,411,300; preferred, $116,274,900; total issued, $233,686,200.

Directors: J. Ogden Armour, Chicago; Walter P. Bliss, New York; H. E. Byram.
Albert J. Earling, Stanley P'ield, Cliicago; Donald G. Geddes, New York; Edward
S. Harkness, New York; Samuel Mc Roberts, New York; Louis J. Petit. Milwaukee;
Percy A. Rockefeller, New York; William Rockefeller, New York; John D. Ryan,
New York; John A. Stewart, New York.

John D. Rvan, member executive committee (1918), five membera.

Chicago, Milwaukee & St. Paul Railway map is found on page 652 of Poor's Manual of
Railways, 1917.

The Seattle, Port Angeles & Western Railway, page 656, containing 66 miles, runs
from Discovery Junction westerly through Port Angeles to Majestic, a distance oi
62.4 miles, of which 38.4 miles extends from Discovery Junction to Port Angeles: from
Port Angeles to Majestic, 24 miles is in operation and an extension of 6 miles from
Majestic to Twin River is under construction for logging operations.

The 1919 Time-Table No. 124, gives this branch running from Port Towm»end to
Twin Rivers, 78.5 miles. The stock is owned by the Milwaukee Railway.

Poor's Manual, page 670, in 1917, states the Guaranty Trust Co. of N*ew York is
trustee for the Cliicago, Milwaukee & St. Paul Railway. This gives same directora,
as the railway built by the Government from the newspaper advertisements of sale
apparently extends west from Port Angeles about 60 milee.



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AVIATION. 75

GUARANTY TRUST CO.

(P. 628, Bankers' Directory, 1918.)

Location, 140 Broadway, New York City; president, C. H. Sabin; chairman of
board, A. J. Hemphill; paid up capital, $25,000,000; surplus, $26,173,000; deposits,
$508,930,000.

Directors: T. F. Rvan. E. J. Berwind, G. W. McGarrah, W. A. Harriman, R. W.
Goelet, D. C. Reid, A. D. Juilliard, G. B. Duke, A. H. Wiggin, T. DeWitt Cuyler,
J. 8. Hunnells, J. A. Spoor, J. R. Morron, A. H. Harris, G. M. P. Murphy, H. P.
Whitney, W. C. Potter, W. C. Lane, C. H. Allen, V. P. Snyder, T. W. Lamont, C. A.
Peabody, G. J. Gould, E. L. Marston, J. D. Ryan, D. Guggenheim, C. H. Sabin,
A. J. Hemphill, C. C. Dula, Albert Strauss.

(Taken from Bankers' Directors, 1916, p. 1839.)

Mr. Fbeab. Mr. Ryan and Mr. Potter are among the directors.

UNmED METALS SBLLINO CO.

This company was a New Jersey corporation, organized under the Amalgamated
Copper Co., by which it was absorbed in April, 1911.

The present company has been incorporated in Delaware with $5,000,000 capital
stock, ul owned by the Anaconda Copper Mining Co.

The purchase price of the assets, business, and good will of the United Metals Sell-
ingCo. in March. 1915, was $6,624,583.

The only oSicers named are those of the Anaconda Copper Mining Co., of which
John D. Ryan is president.

Directory of Directors gives John D. Ryan president of United Metals Selling Co.

Mr. Freab. Mr. Ryan for some years has been the president, as
you understand; of the Anaconda Copper Co. ?

Secretary Baker. He has been interested in it, but whether pres-
ident of it for some years I do not know.