engaged in that duty, wasn't he?
Sir. MoRLEY. As an investigator.
Mr. Frear. As an investigator of the Intelligence Department i
Mr. MoRLEY. Yes, sir.
Mr. Frbar. Then he was tried by coxu't-martial, convicted, and
sentenced to imprisonment, and the sentence was waived or annulled,
as I understand. Is that right.
Mr. MoRLEY. That I do not recall. Of course, the Spruce Produc-
tion Division, as a division, had nothing to do with it; the court-
martial matters were in the hands of the Western Department.
Mr. Frear. I understood you to say you looked over court-martial
matters; they just came to my attention as you spoke; I had for-
gotten -about it myself. Were you familiar with the different inter-
ests, around throughout Washington and Oregon, and if so, to wfcat
Mr. MoRLEY. I think I got to be familiar with the situation pretty
Mr. Frear. Did you travel around any?
Mr. MoRLEY. I did some traveling, but of course, most of the^*
men came into Portland who had business with the division, and I
had to do with matters of contract, and various (juestions that werf
arising frequently; of course, I had daily meetings with member^
of the staff, and 1 think I got to know the situation prettv well out
there, and if there is anything that you want my opimon about, any-
thing that I can enlighten the committee on, as to the result of whit
was done, I wiU be glad to do it.
Mr. Frear. Did you have anything to do with the Simms-C'arey
Mr. MoRLEY. No; I did not.
Mr. Frear. That was the contract for building the railway fn>ro
Lake Crescent to Lake Pleasant.
Mr. Morley. Yes, sir. Of course, the railroad was not jtÂ»t
merely from Lake Crescent to Lake Pleasant; it atso extended fion
the branch of the Chicago, Milwaukee & St. Paul over to Lab
Mr. Frear. How far is that ?
Mr. Morley. I do not recall the number of miles ; I should think
12 or 15 miles, anyway.
Mr. Frear. The testimonjr is that there were 38 miles of railway.
that was the length of the railway, and as it ran from 30 to 40 mile*
before it struck this place; you are familiar with the Ray innrti*
Mr. Morley. Yes ; I had a number of talks with him.
Mr. Frear. That is his finding, that it was 38 miles, cost $3,800,WÂ»:
it probably cost more than that.
Mr. Morley. You asked me in the first instance about the con-
Mr. Frear. Yes.
Mr. Morley. The contract itself was made in Washington, anti
made before I got out to the coast.
Mr. Frear. Yes; it was made on May 20, I believe.
Mr. Morley. Most of our contracts were made at our headquartÂ«*Â»
in Portland, signed by a contracting officer for the division and <wÂ«
on to Washington for formal approval, but that contract was made
directly in Washington. My understanding about it is this: That
although the Simms-Carej people had originally come to Gen.
Disque, and some negotiation haa been on foot with respect to their
opening up the so-caJied Olympic tract of timber, that they switched
tneir negotiation to Washington, and the matter of the contract was
concluded directly there, between the Simms-Carey people and their
attorneys, and the War Department.
Mr, Frear. Do you know how it came, about that the Sinams-
Carey Co., that had never had any previous experience in the cutting
of spruce, so far as the record goes, were given that contract ? A
contract for $25,000,000?
Mr. MoRLEY. I don't know how it came about, except from their
reoutation as efficient contractors.
Mr. Frear. But they had never had anything to do with the
spruce contracts, or logging propositions, but they were given a
contract for $25,000,000 for cutting of spruce, that is, for 250,000,000
feet; at first Disque's proposition was 500,000,000 feet, but when he
submitted it to the loggers there was subsequently a contract to
produce 250,000,000 feet; do you know how they came to secure
that contract, through what influence ?
Mr. MoRLEY. I do not know through what influence. Of course,
that assimies that there was some influence.
Mr. Frear. Unquestionably.
Mr. MoRLEY. Of improper influence.
Mr. Frear. That is not so necessarily true. What brought this
company to the attention of Maj. (or Gen.) Disque so that he gave
them a contract of $25,000,000, a contract to this company that had
no previous experience? I am reciting what is shown oy ray.
Mr. Morley. The general did not rive the contract to them. The
contract was made in Washington. They, as contractors, my under-
standing is, originally came to Gen. Disque, who was very desirous
of having that Olympic tract opened up, as it was one of the large
tracts of undeveloped spruce.
Mr. Frear. How much spruce was in that tract, do you know ?
Mr. MoRLEY. I could not tell you without reference to the figures,
but it was a very large body of spruce that lay in this Olympic dis-
trict, of course, imder divers ownership, but it was considered to be
very fine spruce; that is, timber which ran very high in spruce, a
very excellent quality of spruce, and looking to the future, to the
ability of. our division to meet the ever-increasing requirements of the
United States, and the Allies for the production of spruce, it seemed
highly desirable that that great body of spruce should be opened up
and made available, and so the General was anxious to have some-
body do it, and a great many plans had been brought to his attention,
no doubt, by various people, about it, and he nad endeavored to
interest a great many people and get them to do it, and finally the
Simms-Carey people came along, and said they would do it, and he
at that time started negotiations about it, ana then the matter was
taken up in Washington and the contract and its terms worked out
Mr. Frear. The Simms-Carey Co. was not a company doing
business in Washington or Oregon.
Mr. Morley. No.
634 WAR EXPEKDITURES.
Mr. Freak. They were a New York corporation.
Mr. MoRLET. They were a corporation, I think, that was omn*
ized for this particular matter. Two of the members of the finnliad
been contractors with lai^e experience.
Mr. Frear. Contractors for what ?
Mr. MoRLEY. I think very largely in large public works, railroads,
and that sort of thing.
Mr. Frear. They had nothing to do with spruce work.
Mr. MoRLEY. Not as far as I know.
Mr. Frear. You say you don't know how much spruce
Mr. MoRLEY. I can readily ^et the figures.
Mr. Frear. I wanted to mid out what your estimate is. I want to
find out how it compared with other experts^ with CrOTenuneot
experts. You know about the Cunalt Reservation that is at GhnyB
Mr. MoRLEY. Yes, sir.
Mr. Frear. How near to Gray's Harbor ?
Mr. MoRLEY. I do not know the distance.
Mr. Frear. Not over 25 miles.
Mr. MoRLEY. I do not know the distance.
Mr. Frear. Very accessible, was it; no mountains to dimb t That
was the Paulsen proposition, the Paulsen railroad, and the Paobai
Mr. MoRLEY. I don't want to give you information of a technical
character of this sort. I do not thiuK I would be Qualified to teD
you the conditions in that territory, how hilly, or wnat not. I am
very sure that anyone out on the coast who mows will tell jon that
the amoimt of the available timber, spruce in the Olympic disthcl
woidd far exceed anything in the Quinault Reservation; of ooune,
that is one of the sources of supply that would make available.
Mr. Frear. That is out on the peninsula, this timber jou are
speaking about, this timber to be struck by the extension of thÂ»
Milwaukee Eailway; that is a long ways from either the soxmd or Um
Mr. MoRLEY. I took a railroad of somewhere in the neighborliood
of 40 miles long to get into it.
Mr. Frear. Have you ever been out there where the raiboad wa**
Mr. MoRLEY. Yes; I have been over it.
Mr. Frear. What do you think of it?
Mr. MoRLEY. I am not an engineer, but it looked to me like a
finely built railroad.
Mr. Frear. It ought to be, costing over $100,000 a mile.
Mr. MoRLEY. It was not entirely completed; part of it had not beeri
ballasted, but a large part of it had.
Mr. Frear. It had tunnels, did it?
Mr. MoRLEY. It had a good deal of rock cutting; there may have
been some tunnels in it.
Mr. Frear. Do you know of any other railroad, in your whole ex-
perience in life, that has been built as a logging railroad, wfaero thej
built tunnels, a railroad that cost anywhere, approximately, $!0O,O(i^
Mr. MoRLEY. No; I do not know of any logging railroad thai co-l
that much, but this was not built as the or^Bary logging railroad.
it was built to bring out these euormous quantities of material and
t&f> a very large district, and I think was intended to be built in a way
wnich would be of value, and not simply a logging road.
Mr. Fbeab. Be of value to whom ?
Mr. MoRLEY. To the Government, ultimately.
Mr. Frear. But the Government was going to sell this road after
it had been used to bring out the timber. Surely they did not expect
to bring out timber for an indefinite length of time. The war was
expected to be over in about a vear or so after the signing of the
armistice. At least that was the statement of Secretary Baker.
That was assumed at any rate, although it was a surprise it occurred
as quickly as it did. What was the purpose of btiilding a road of this
kind at that place and of that character ^ Can you tell uie committee ?
Mr. MoRLEY. The railroad was built to carry a very large traffic,
and I suppose it would have to be built very much better than the
ordinary losing railroad, such as ordinary enterprises would build,
simply to extend into some timber. This was opening up a very
large area of timber, that would take a great many years to ultimately
log, I suppose, and the railroad necessarily had to be built to carry a
heavy traffic, and uiasmuch as the traffic which we would send over
it in the development of that timber would be exceedingly great, it
had to be built so it would carry that.
Mr. Frear. Are you f amiUar with the Siletz country ?
-Mr. MoRLEY. I am not famihar with it as a practical man, no.
Mr. Frear. Was there any more timber in tnis coimtry than there
was in the Siletz reservation?
Mr. MoRLBY. I would say so.
Mr. Frear. You would say so ? Do you know anything about it ?
Mr. MoRLEY. Well
Mr. Frear. Have you ever been in the Siletz country ?
Mr- MoRLEY. Yes; I have been up from
Mr. Frear. Whereabouts?
Mr. MoRLEY. Up from Toledo.
Mr. Frear. How far did you go up ?
Mr. MoRLEY. Not very many miles, just where we were logging.
Mr. Frear. Up to Siletz ?
Mr. MoRLEY. No, just a few miles beyond Toledo.
Mr. Frear. Siletz is only 10 or 12 miles?
Mr. MoRLEY. I never got right up in the midst of the timber.
Mr. Frear. You have not been in the timber?
Mr. MoRLEY. I have been in some timber, but I am not purporting
to be an expert on timber.
Mr. Frear. I am trying to find out what your knowledge is in
comparison of the two tracts. This was an ordinary logging road to
be built up to the Siletz, just an ordinary steam logging road that you
would find in the State of Michigan, but to accommodate the largest
sized timber, as large as can be found in any part of the peninsula,
because the largest trees to grow on the Siletz reservation
Mr. MoRLEY. They are very large trees, I don't know as they run
as laxge as the Olympic.
Mr. Frear. I have seen 9 and 10 feet in diameter there mjrself .
Those are as large trees as would probably be manufactured?
Mr. MoRLEY. That would be a large tree, but not as far as they go.
636 WAR EXPENDITURES.
Mr. Fbeab. But as large presumably, as would be used for eom-
mercial piuT)oses so far as yoiur knowledge goes, that is true, isn't it,
compared with the two districts ?
Mr. MoRLEY. Now, what are you asking me, whether the spruce.
Mr. Frear. No; larger trees. You are referring as I understood.
to the size of the trees and the traffic ?
Mr. MoRLEY. No ; to the volume of it.
Mr. Frear. Oh, then, is there any more timber in this section thai
was to be tapped bv the Milwaukee, where yoiur extension was more
than there was in tne Siletz section which takes
Mr. MoRLEY. I suppose so.
Mr. Frear. You aon't know anything about that, that is a quei^
tion for us to ascertain later on ?
Mr. Morley: I think you can find that out.
Mr. Frear. The railroad that was built from Toledo, north, from
Quinalt Bay there, the junction, that is an ordinary railroad, isn't
it, just an ordinary logging railroad? Of course, up to Toledo you
have the extension of tne Southern Pacific, but from that point on.
for the purposes of logging, it is just an ordinary logging rauioad i
r. I shom< '
Mr. Morley. I shomd say not,. I should say the Northern
built as a regular raibx)ad.
Mr. Frear. As a regular raibx)ad ?
Mr. Morley. Yes.
Mr. Frear. That is, for the purposes of losing, getting these logs
Mr. Morley. I think that was built as a regular railroad.
Mr. Frear. To be a permanent railroad ?
Mr. Morley. Yes.
Mr. Frear. What was the purpose of that?
Mr. Morley. Because it opened up a v^ large amount of timber
up in there, and it was expected that that railroad would be Talu^tle.
that the Government could ultimately dispose of it.
Mr. Frear. But a very extensive railroad of $100,000 a mile, who
would buy it ? Who would be able to buy it outside of the Southern
Pacific, so far as the Newberg section goes, the two roads at Newberp
in the north, and the Milwaukee road ?
Mr. Morley. Well, now, I have not the figures before me, and I
can not tell you what the comparative cost was, what the Quinauh
Northern cost it, it had not anywhere reached the stage of com-
pletion as the other road had.
Mr. Frear. Do you know anything about how the Warren Spmre
Co. got that contract instead of the Portland Construction Co. f
ifr. Morley. No.
Mr. Frear. Do you recollect, or was yom* attention called to the
correspondence of any of the efforts of the local company to giel it
when the Warren Spruce Co. came in ?
Mr. Morley. No.
Mr. Frear. The Warren Spruce Co. was an offshoot of the Warrei:
Construction Co., wasn't it?
Mr. Morley. I have understood that.
Mr. Frear. You have vseen all those contracts?
Mr. MoRLEY. The men who were interested in formingthe Warren
Spruce Co. were men who had been interested in the Warren Con-
Mr. Freab. Yes. The Warren Construction Co. was not composed
of men who had had any experience in loggmg^ was it, so far as you
Mr. MoBLEY. The men who did the actual work for them were
Mr. Frear. Oh, yes; they employed men, but the men who got
the contract, or the Warren Construction Co. who got the contract,
the same as the Sunms Carrier Kirbaugh Co., or any other company
was not composed of experienced loggers, or men who had had any
experience wnatever, that is the Warren Construction Co. was an
eastern company, was it not ?
Mr. MoRLEY. No; they were doing business out on the coast.
Mr. Frear. They were doing some business there in paving lines ?
Mr. MoRLEY. YcÂ».
Mr. Frear. How did they get their contract, do you know that ?
Mr. MoRLEY. That I don't know.
Mr. Frear. Did that come from the East, or do you know ?
Mr. MoRLEY. I think not. I think it was made out there. I
think they simply stepped to the front and said they were willing to
take that contract, ana it was very difficult to get people to make a
contract of that sort. They had a lai^e organization that was
available for contracting purposes.
Mr. Frear. What was their organization outside of â€” so far as
you know, they were not a railroad-construction company ?
Mr. MoRLEY. I don't know whether they had ever Duilt railroads
or not, but I think they had.
Mr. Frear. Where, or do you know ?
Mr. MoRLEY. I don't know. They had, from my observation,
a very efficient organization that did very efficient and eflFective work.
Mr. Frear. You mean as to their contracts that they performed ?
Mr. MoRLEY. Under their contract with the Government.
Mr. Frear. That is, you are satisfied that their cost-plus contracts
were conducted fairly and justly from the Government standpoint?
Mr. MoRLEY. From my observation we got the best results. Now,
I don't want to draw comparisons as between the three principal
cost-plus contractors that were directly imder the sunervision of our
division out there, those three, with the Warren Spruce Co., the
Grant Smith Co., and the aeroplane company.
Mr. Frear. Those were the three in Oregon ?
Mr. MoRLEY. Those were the three.
Mr. Frear. Of course you had the contract with Paulsen & Simms;
those were from Washington ?
Mr. MoRLEY. The PaiDsen is the Aeroplane Spruce Co.
Mr. Frear. Oh, that is the Aeroplane Spruce Co. ?
Mr. MoRLEY. Yes.
Mr. Frear. Then you had two in which Porter Bros, were operating
in Oregon, were they?
Mr. MoRLEY. The district was divided between those three cost-
plus contracts. The most northerly was the Aeroplane Spruce. Then
intermediate comes the branch Smith Porter. The southern operations
were taken by the Warren Spruce.
638 WAR EXFENDITUBES.
Mr. Fbbab. And the Symmes Eirbaugh Spruce Co., that was a
specific contract ?
Mr. MoRLEY. Yes.
Mr. Frear. Not the cost plus, except as for the raikoad?
Mr. MoRLET. That was handled as such for this reason, inasmuch
as the contract had these features. The contract provided, in the first
instance â€” speaking of the contract I mean the spruce contract as dis-
tinguished from the railroad contract â€” the spruce contract proTided
in general terms, a practical guaranty on the part of the Goyeniinent.
to give the Simms Carrier Eribaugh Co. cost plus 7 per cent; Uiat is.
if wey were not making that much, they had a n^ht to say this
contract would go on a cost-plus basis ; for that reason it was controlled
as a cost-plus contract and supervised accordingly.
Mr. Frear. But the Simms Carrier Eirbaugh Co. expected to make
20 per cent, as you probably know, or do you know?
Mr. MoRLEY. The contract provided that they could not make tf>
exceed 15 per cent. The Grovemment had the right to an accoimtiiig.
and they were obliged imder their contract to refund anythmg over
15 per cent.
Mr. Frear. Over 16?
Mr. MoRLEY. Yes.
Mr. Frear. Well, I asked you the question a few moments ago l
don't know just what your opportunities for observation were - ilo
you say that the Warren Spruce Co. in its operations under this cobt-
plus contract did satisfactory work to the office of Portland, Orep, '
Mr. Morley. Yes, sir.
Mr. Frear. That is, you people were satisfied with it ?
Mr. Morley. Yes.
Mr. Frear. So that no matter what our experience or understand-
ing is, after our investigation
Mr. Morley. I mean we were satisfied with it to this extent. It
seemed to me, from all mjr observations, that they were more effect-
ive in handling the operation than the others, perhaps that is
Mr. Frear. Was tnat the judgment
Mr. Morley. Making some invidious distinctions, because I
think the Grant Smith rorter people did well, but I believe that if ibe
accounts were anal^^zed you would probably find that the Warren
Spruce Co. were ultimately producing more spruce, and perhaps on
the whole at less expense, than an^v others.
Mr. I^EAR. That was one of tne companies that Davis was in-
vestigating, wasn't it?
Mr. Morley. Yes.
Mr. Frear. I assumed he was.
Mr. Morley. We had, as to all those contracts, the three of thos^
contracts, a supervisor of course on the ground, aside from our Port-
land office, what we called a district manager, district supanriBor.
who passed on everything, and generally supervised the operatioD of
Mr. I^EAR. Do you know, you were in close association, you sat
with Gen. Disque as he was there part of the time ?
Mr. Morley. Yes.
Mr. Frear. Do you say that he was perfectly satisfied with tbr
performances by the Warren Spruce Co. ?
Mr. Morley. No, I don't thmk so.
Mr. Frear. You do not think so ?
Mr. MoRLEY. I do not think anyone was perfectly satisfied with
the work done out there, there were mistakes occurred , a good many,
no doubt, and the work, on account of its very nature, and the very
character of it, and the speed with which it had to be done,
was verv costly, and we were not, any of us, satisfied, of course.
Mr. FiiEAR. But you say that they were in your judgment, they
were better than the other two; that is, I mean they reached nearer
the expectations than the other two ocmpanies, than the aeroplane,
or the Porter Bros. Co. ? I am asking tnis purely for the inquiry,
because I am not famiUar with the comparison.
Mr- MoBLEY. Well, now, that is perhaps not quite right for me to
say that, because I would not want to draw that distinction between
them and the Grant Smith Porter Bros. Co., but from my observa-
tion of them, the Warren Construction Co. were efficient contractors
under the circumstances that existed out there.
Mr. Frear. Do you know how many railways were built out there,
or under construction ?
Mr. MoRLEY. Well, we had, as I recall it, 13 railways.
Mr. Frear. Thirteen different railways ?
Mr. MoRLEY. Thirteen different railways.
Mr. Frear. Where were they, please, so far as vou remember ?
1^. MoRLBY. Well, there was the Quinault Soutnem Railway
Mr. Frear. That ran down to the Blodgett contract ?
Mr. MoRLEY. That ran down to the Blodgett contract.
Mr. Frear. That was about 25 miles long, I think.
Mr. MoRLEY. Twenty-five or thirty. And the Quinalt & Northern
which ran north from there
Mr. Frear. That was about what, 10 miles long at the time?
Mr. MoRLEY. As laid out, of course, it was considerably longer
than that, I can't recall the amount that had been completed. It
was projected for a Uttle farther distance than that. The North
Enema, the little raiht)ad that ran north from Toledo^
Mr. Frear. Just a moment; what is the difference between the
railroad that ran north of Toledo and the railroad that ran up from
Ouinault Bayt I was wondering whether two railroads running
Mr. MoRLEY. The Quinault & Northern ran along the coast, and
the one lliat ran north from Toledo was farther in me interior.
Mr. Frear. Farther in the interior, well, Toledo is east of Quinault
Mr. MoRLEY. Yes.
Mr. Frear. So it couldn't run into the interior, run farther north
into the interior, couldn't run farther east )
Mr. MoRLEY. I mean as it ran up it was farther from the coast.
Mr. Frear. You mean the Quinault Bay was farther than Toledo ?
Mr. MoRLBY. No ; Just tiie opposite.
Mr. Frear. Yes, I understand; Toledo was east of Quinault Bay?
Mr. MoRLEY. Yes.
Mr. Frear. And the Toledo road was the one that ran east. Did
they use that old logging road ?
Mr. MoRLEY. Yes; there was an old losing road; it was improved
and extended, a connection bmlt down to the slough at Toledo.
640 WAR BXPBNDITUBES.
Mr. Frear. Yes. Then, there was the Simms Carrier Road.
Mr. MoRLEY. Yes.
Mr. Frear. What other roads ?
Mr. MoRLEY. There was the road, so-called Paulson Road, that
Mr. Frear. That didn't run very far, did it? I mean, met with a
good many troubles, discouragements, didn't get very far?
Mr. MoRLEY. Just ofiFhand, it is sometime since I was there, al-
though I have had maps of all those in my office, I would not want
to tell you the route of each one; you can get all that information
Mr. Frear. My judgment on that is based on the rail report and
what other information I had. What other roads are there that you
can remember ?
Mr. MoRLEY. If I had my maps I could tell you, but it is so ea^r
for you to get that information
MrÂ» Frear. Surely. Those were small roads.
Mr. MoRLEY. Small roads; yes.
Mr. Frear. You had to do with getting the rights of way ?
Mr. MoRLEY. On those that were built on our own right of way.
and there were all sorts of questions that came up witti niermce
Mr. Frear. What kind of contracts were made with the different
roads â€” different kinds ?
Mr. MoRLEY. For those we acquired the right of way we took in
the first instance, which later we covered by conveyanoaa of the
rights of way
Mr. Frear. Then, you had, I suppose, connecting roads or short
roads, or short branches, that would connect with these various roads,
were there not ?