Mr. Maoee. I don't know as to that, but I presume those facts
can be ascertained; that is, I imderstand that about fifty millionf
were expended by this Government on the coast. Now, -vi^ether the
amount of money which the Grovemment received from the sale
of, say, 70 per cent of the product, forms any part of that, I don't
Do you know anything about that ?
Mr. MoRLEY. Yes; this is what was done. The cost of the whole
operation was prorated over the entire amount of lumber and the
Allies had to pay their share of that cost; as against that they harp
their share of what ultimately will be the salvage out there as the
result of the liquidation of the assets to recompense ihexxL Of
course, the United States will also get back and have refunded in r
such salvage as will help to meet its 30 per cent that it paid, but thr
entire cost of this whole operation, including the construction <•(
these railroads that we have spoken of, w^as spread over the entire
cost of that lumber and the Allies got about 70 per cent of it, and
they were supposed to pay their share of that cost; whether in the
ultimate settlement they nave paid exactly that amount or not, I
don't know, but I read in the papers the other dsLj that a settlement
was finally reached by which England had paid something like
thirteen miUions, as I recall it.
Mr. Magee. Of this production you mean ?
Mr. MoRLEY. Yes; I am not sure about the figfures.
Mr. Magee. WeU, the salvage probably falls short, I suppose.
Mr. Morley. WeU now, that I could not tell you, because I under-
stand the lumber business has boomed out on the coast and they nur
get more than they expected; I think that they will get more.
Mr. Magee. Take, for instance, the extension of the Chicag«
Milwaukee & St. Paul Railroad, you say 38 miles, with an expenditure
of four or five millions of dollars, why, what possible purcnaser ctr
there be for that property except the railroad 1
Mr. Morley. Well, that of course I don't know, but that railn>t»'
might very well — the construction of that railroad might very vi4I
have justified itself. In the first place, if the war had continue.^
another year or another six months we would have gotten a perfe^Uv
enormous amount of spruce from that district which would have beeo
hauled over that railroad and helped to amortize a very large pn^
portion of its cost; then, in the end, you would have had a rai]n*i>i
available for selling to somebody. (5f course it is valuable to 5oni*
of the people who own all that area of timber in there. They now hiv-^
got a railroad by means of which they can get their timber out, r.A
ultimately that railroad can be sold to somebody, for what price, i
don't know, but I think
Mr. Magee. The only probable bidder
Mr. Morley. I think it justifies itself. What is that !
Mr. Magee. The only probable bidder is the St. Paul Railn**-'
Mr. MoRLEY. Well, if I were representing tlie United States, I
would not want to concede it; I would certainly hope that I might get
Mr. Magee. It is practically an extension of the road, isn't it;
built with the same permanency as the main road there ?
Mr. MoRLEY. It is a well built railroad.
Mr. Magee. Well, with that same permanency, isn't it?
Mr. MoRLEY. I don't know; I think it is probably just as weD built
as the balance of that line from Port Angeles, along there that
belongs to the Milwaukee ro^d. I think it is probably as well built.
Mr. Magee. I assumed in going into timberland to get out spruce,
that ordinarily a logging road would be built; that is, a temporary
road for the purpose of getting out spruce, not a permanent structure.
Mr. MoRLEY. I don't think so, in that kind of a proposition, in
opening up that big territory — you are asking me just for my judg-
ment about it ?
Mr. Magee. Yes, you didn't get any spruce there; all the spruce
you got you got from other sources ? Now, do you know anything
about the supply of the other sources from which you did get spruce ?
Mr. Morley. That is rather an unfair remark to make, that we
built it and didn't get any results from it. We didn't get anv results
from it. Why?
Mr. Magee. I said you didn't get any spruce.
Mr. Morley. We didn't get any spruce. Why? Why didn't we
get any spruce ? Because it was completed at the time when the ar-
mistice came, and they didn't want any more spruce, but if the war
had continued longer we would have got an enormous amount.
Mr. Magee. That is the fact, isn't it? I was speaking about
the fact, not in a spirit of criticism, but as a matter of fact you
didn't get any; so that all the supply that was needed was got from
other sources. Now, do you know anything about the additional
supply from either of those other sources from which you got the
Mr. Morley. Just what do you mean by that ?
Ml'. Magee. Why, whether or not there are quantities of spinice
available in those States easily accessible without going into the
what you call the Olympia tract ?
Mr. Morley. Yes ; we were tapning those, making arrangements,
and we built our railroad from Quinault Bay north to get some,
we built our railroad toward the Blodgett tract, bought that Blod-
gett tract for that purpose, and we had contracts with other operators
by which they were to open up tracts of spruce. In other words,
we were reaching out to bring into play every available point of
production that there was, because it was necessary to do that in
order to gear up to the requirements that were made upon us. Now,
you see the war came to an end; therefore very large amounts of
money that were expended there, needed to enable us to get out
this additional source of supply, was not brought into play; that is
true; no one can gainsay that.
Mr. Magee. You remember when Congress appropriated in about
30 minutes six hundred and forty millions oi dollars for aircraft
production, don't you?
Mr. Morley. Yes.
658 WAR EXPENDITURES.
Mr. Magee. You remember at that time it was commonly stated
we soon would have 10,000 or 20,000 planes at the front ?
Mr. MoRLEY. Yes.
Mr. Magee. Well, now, it appears from investigation up to dai(*
that practically one billion fiity-five millions of dollars nad been
expended, and the undisputed result seems to be that not a pursuit
plane, which is called a fighting plane, ever reached the front, of
American manufacture, nor a bombing plane of American manu-
facture, and that the only planes that reached the front from thi^
country were the DH planes, I think some 213 at the front, and
perhaps a few more on the way, and those were designated, as I have
said, by our boys and others as '^flaming coffins," because the ga'^line
tank did not have any protection, and an incendiary bullet pie^in^
it would set the whole machine on fire, so I think the general opinion
in this country is, with the expenditures of a billion and fifty-five
million dollars, we made no progress in the aircraft art. at least n*>
material progress, and that our rank as compared with the air-
craft progress of other nations is very low.
Of course, the money has been spent — ^it is gone — ^but as it seems t^
me, and I think to other Members of Congress, that there isn't anv
subject of greater importance, so far as the production in this counin
is concerned, than the subject of aviation, and all these negative
results with such a large expenditure are clearly before the countrv.
and that an investigation of this character may be of very great benefi'
in impressing upon the country the absolute need of getting ^m^xd^
responsible head upon which responsibility for such lack of result"
can be fixed, as of future benefit to the production and to the oountn
Mr. Morley. Now, in all that I am entirely in accord with y<»-
so far as that is concerned, but you are inquiring now into the proiiuc-
tion of spruce. Of course, the Spruce Production Division had ahe^v
lutely nothing to do with building airplanes and getting them *•'•
France. Its job was to get the spruce needed by the alUed Govern-
ments and this country in order to build this great number of air-
planes that everybody wanted.
Mr. Magee. CJertainly; and that we expected we would get.
Mr. Morley. And there was that tremendous airplane program lb*:
you have referred to that was going to place 100,000 airplanes in the
sky, and as the result of that the Spruce Production Division o*/
there was told to get the spruce.
Now, whatever your committee can find out with respect to what
was done in the other things in connection with building airplan*?*-
why, I am heartily in favor of you doing it
Mr. Magee. Yes, but we want to know
Mr. Morley. But^
Mr. Magee. In this connection, too.
Mt. Morley. 1 think that you ought to investigate whether or n-'t
the money was properly spent on the Pacific coast.
Mr. Frear. I do not see that you and 1 differ any as to our vie*-?
as to the purpose of the investigation. Of course* you aro ju>t a-
much interested as I am, just as much interested as any other loya-
American citizen, in this question of aviation. In case of futur*
war of the country, why, it seems to me it would bo a treniendouJ}
important elemenl, the supremacy of the air, from the fact yon can
not hide in the air except behind the clouds, and the way Tview it.
instead of this Government being hindmost in this question of avia-
tion we should be foremost. That is the way I look at it, and if I
didn't feel that way about it, I would feel I would be useless in spend-
ing my time in investigating this subject.
Air. MoRLEY. Whatever the rest of the airplane program may have
done, whatever criticism there is to make about that, and it is prob-
ably subject to a lot of criticism, and I am heartily in sympathy
with your investigating it, but there was demand upon demand made
upon the Spruce Production Division for those large quantities of
spruce to meet this tremendous program, and they wanted it right
away, as soon as they coidd get it, and they aU supposed and we
supposed that the war was going to last a long time.
Now, the question is. Did the Spruce Production Division deliver
it; did they get the spruce ? I think you wiU find from the time we
got organized out there and got under way, we produced all the spruce
that was required from day to day, and we were meeting the ever-
increasing requirements that were put upon us. I think you wiU
find, when you get out and look at the statistics and get into it, that
we did meet those requirements; as far as delivering the stuff is con-
cerned for this enormous air program the Spnice Production Division
got it. Now, did they get it at too large an expense ? Did we pay
too much for it ? Did it cost too much ? Of course it cost a great
deal of money, the conditions under which we operated, the speed
at which we got to going, everything else made cost a secondary con-
sideration: the main thing was to get it, so I think you ought to take
into consideration, then, a certain further fact, that — 1 do not know
what percentage of that cost, but certainly a very large percenta,ge — a
great manjr millions of dollars of the expenditure that was made in
the Olympic district under this Simms-Carey Co., the building of
those railroads north and south from Quinault Bay, netted absolutely
no returns. They were being built to supply the requirements dur-
ing the succeeding months, and therefore, when you charge it off
against the net production actually made, of course, it showed an
entirely misleading situation.
If the war had continued, why, those costs would have been amor-
tized over the future production, and the costs would not have looked
so lai^e. I was out there a good many months, and I knew the offi-
cers and I knew the w^av they felt, and what they were doing. They
were all worldng under high pressure, patriotically, doing everything
they could to get the material for the Government and to protect
the interest of the Grovernment in every possible way they could.
Now, things have been said here about Col. Hitchcock. He mav have
made mistakes, but whatever he did, I know this to be a fact, he was
doing from patriotic motives and in accordance with the best of his
Now, take for example, what was said in the insinuations made in
the purchase of that Blodgett tract. Col. Hitchcock had some nego-
tiations with BlodMtt; there was some spnice timber interspersed
with other timber, but it contained a large percentage of spruce, and
it was needed. Mr. Blodgett owned it and Col. Hitchcock tried to
negotiate with Blodgett for the purchase of it, not to purchase all
the timber, but what we were doing with all these other timber own-
ers was to get a contract with the owner of the property to let us go
in there and select as such spruce trees as would be marked by the
Digitized by VjOOQiC
660 WAR EXPENDITURES.
Goveminent spotters as available for airplane material and to go
down there and take it out. Men were loath to make those t-on-
tracts with the Government, and although they didn't want to, they
were willing to let the Go\emment pick out a tree here and there
and cut it and take it out. Blodgett didn't want to do that: he
thought it would spoil his tract and didn't want us to go in there and
selectively log that.
ifr. Frear. There were other timbers in the tract, I supposed
Mr. MoRLEY. Yes ; a large amount of hemlock, fir, and other tim-
bers; but it was only selected trees that our spotters would go out
and designate as containing straight-^ain-stun, and containine a
certain percentage of airplane material^ so as to make it worth whik
to cut tnem. Hitchcock was trying to get the material do\^Ti there
as cheaplv as possible, and tried to get Mr. Blodgett to sell his timber,
and to allow us to selectively log it and sell those logs to the Govern-
ment, because that is the way we bought most of the logs, from private
people who were operating it, and so it was desired that if Blodgett
would not allow his timber to be selectively logged by us that he wouH
sell that timber to somebody that wouldf sell the spruce Io|e:s to the
Government, and whatever Hitchcock did in his negotiations with
Blodgett was to get that timber as cheaply as possible for the Unile<i
States. Hitchcock is a rather blunt man, forceful in his talk, and I
imagine he rubbed Mr. Blodgett the wron^ way, and the result wa^
that Mr. Blodgett would not deal with the Lnite'd States. We neetlt^i
that property, and we negotiated back and forth, and it was only
all the time for the right to log it; Of course, we could have commaii-
deered it, but we dicm't want to do that if we could agree with him
on a price, and that was our policy all the way tIu*ough, and so when
it came to Mr. Blodgett it ultimately seemed the thing to do. t<)
buy that tract of timber; enough could be gotten out of it so the
Government could not be paying too much for the spruce; it would
not be such a costly proposition, and it was decided to buy the tmrl
Something is said about that contract having been closed jii>t
about the time the armistice was signed. Mr. Blodgett had agreeii
to sell his timber at that price before the armistice, and he had boLt
this railroad down there, and we built the mill at Toledo which w».
going to do the sawing, all those things were all linked up into one
enterprise; the mill would be much more valuable if it could be
handled in connection with the railroad and the mill and railroad
with the timber. There we had the railroad and the mill. Th«»
war was at an end, but as a business proposition it was the tliiitg t'
do with that timber; if we allowed Mr. Blodgett to keep it maybe he
would be the only one in the market for the railroad, and the que<li«>'i
was, What was the best thing to do? We concluded at that time »••
had better buy the Blodgett tract.
Mr. Frear. When was that bought, do you know ?
Mr. MoRLEY. I can not give you the exact date.
Mr. Frear. Before the armistice ?
Mr. MoRLEY. The agreement was signed on the part of Mr. Blodgrtt.
Mr. Frear. Written agreement?
Mr. MoRLEY. Letters and correspondence.
Mr. Frear. Was the Government bound to take it?
Mr. MoRLEir. Not legally bound, but morally bound; but there
had been no signed contract,
Mr. Fbear. You thmk the contract was closed after the armistice ?
Mr. MoRLEY. Oh, yes; I closed it; I know all about it. We had a
number of conferences, and we took the best advice we could from
men who were familiar with conditions out there — ^men who were on
our advisory board — and our own judgment, and we concluded it
would be better for the Government to buy that tract of timber, and
so we took it.
Mr. Frear. Is that a part of the property that the Government has
advertised for sale on September 2.
Mr. MoRLEY. Yes, sir. Maybe that was a mistake in judgment.
Mr. Frear. We are glad to hear your own version of it, Major.
Mr. MoRLEY. We acted for what we thought was the best tor the
United States at that time.
Mr. Frear. You acted on your best judgment ?
Mr. MoRLEY. Yes; and that is true with respect to other things that
were determined on out there to do this or that. We acted in the
best possible light we had, and the best judgment. Personally, I
went out there without any axes to grind, by accident, because I was
detailed and sent out there, and these questions came up from time
to time and I simply had to pass on them and use my best judgment
as to what was best imder the circumstances to do, and you will find
that ia true with all the men who had charge of the various depart-
ments out there. Ttey may have made mistakes, but I do not know
of any graft on the part of Army officers or on the part of contractors.
That was part of my job to look at everything, at every contract that
was prepared, and to protect the interests of the Government, as best
I could, and that is what I attempted to do. Now, the thing: which
I think did more to bring on this investigation than other thing out
there was this Simms-Carey enterprise, this Simms-Carey contract.
That stirred up a good deal of feeling in the State of Washington
among a good many men; they did not like to see some outside con-
cern coming in there and logging and a great deal of criticism was
directed against the deparment because of that Simms-Carey matter.
The Simms-Carey enterprise could justify itself only because there
was a tremendous amount of available spruce up there that no par-
ticular private parties in Washington were willing to get out, and it
was needed, and we would have to hire somebody to do it. Of course,
as it turned out, we did not need the tract, but we all supposed we did.
Mr. Frear. Was any attempt made to advertise in a public way to
get bids, anything of that sort, of the premises ?
Mr. MoRLEY. I don^t know that any attempt was made to advertise
to get bids, anything of that sort; but of course attempts were made
with a great many of the people to get them interested to open up
those tracts of timber in there, but nothing came of it, and it was
quite a problem as to just what that Simms-Carey proposition would
result in; it was a very large imdertaking and would probably absorb
a very large percentage of the logging equipment of the State of
Washington, particularly in that district, and the operators there were
fearful that when the Government program got under way that every
man would be drawn upon and they would be put out of business,
because it took an enormous number of logging equipments and
crews and logging organizations to operate under that contract, and
147155— 19— VOL 1 44
662 WAB EXPEKDITUBES.
I know there was a feeling up there in Seattle that it was a mistake
and that the organizations that were there should hare been made
available, so that their situation in the industry would be conserved
and the whole thins: not disrupted.
This is a good illustration; that feeling got worked up there u>
quite an extent, and finftlly , when it came to the logging of this Blodgett
tract, which was going to take a very considerable equipment and a Tery
large nimiber of men, and to that extent draw on the industry out there,
a great number, a group of local lowers got together and organized
a company, and with a man named Frost at their head came down t<»
Portland and said: "We will log that Blodgett tract for the Govern-
ment at cost, and charge only a fair rental for our losing equipment
that we put in. We have got a little nucleus to^etner, and we will
turn in our equipment and organization and log wiat Blodgett tract
for the Government at cost.'' And that is what we have been trying
to do all along. We said: "That is fine and patriotic; that is what
we were trying to get you to do,'' and we made a contract with them
to log the Blodgett tract for cost, and I drew the contract whirfi
provided for a nominal consideration, $25, ^1 for each of them, they
all wanted to be a-doUar-a-year men and did not want to make any
profit out of the Government at all. So that contract was made, ani
they were going to go down there and use their judgment and their
experience for the Government, free of charge, and w^e were to pay
them a rental fixed at 15 per cent and 10 per cent for depreciation t«f
the equipment that went in there, so that is the way the Blodgett
tract was going to be logged.
Now, with that examme, there had been so much talk about the
great operations in the Olympic district, that it was going to absorb
the whole industry out there, take their men away from wiere: they
didn't want Simms-Carey to log that, and thev thought that Sinuft^-
Carey was going to make a big profit out of it tnat they ought to have.
We said, "Get together, gentlemen, and we will see what we can do
with Sinams-Carey." We said to them, "We believe it is best for
the industrv and the feeling in the State which seems to be agaitt^i
iron to let tne logging industry of Washington go in there and do that
ogging, and you abandon your contract," and finally Simms-Car?y
said, "All right, they will do that." They said. "If that is the way
you feel about it;" and so we said to these loggers: "Get together
now; Simms-Carey will abandon their logging contract and vou take
it on the same basis as this Frost enterprise, at cost, witliout any
profit, and we will pay you a fair rental for your equipment that y«»a
put in." And they had a meeting down there, several meetings, an*!
they tried to get a sufficient number of men to do that. We saiJ
that we had to have their decision promptlv, that time is everything.
that Simms-Carey were ready to go ahead and we are ready to p;'
into this logging operation; we can not wait. They got their
people together and finally said: "We can not put it through: iher^
IS not enough to go into it." There was a situation where apparently
the industry was willing to undertake something, but when yu
narrowed it down they were loath to do it; could not get together.
Mr. Frear. They furnished large amounts of spruce, didn't they '
Mr. MoRLEY. They furnished large amounts of spruce.
Mr. Frear. Practically furnished all that was furnished, didn*
Mr. MoRLEY. Yes; but there were these additional large tracts
that had to be opened, and the question was how to do it.
Mr. Freak. There was no spruce, was there, until you come to the
terminus of this railroad ?
Mr. MoRLEY. Some.
Mr. Frear. I mean, in any quantity. Was not the spruce avail-
able within a less distance than 40 miles from where you were getting
Mr. MoRLEY. You mean in other parts of the coimtry ?
Mr. Frear. Around in this section ?
Mr. MoRLEY. In the Olympic district or other places ?
Mr. Frear. I mean, these localities where you were getting it out.
Mr. Morley. Yes; we got it from those localities, but we wantecl
more, but the question ol opening up additional sources of supply —
we were contracting until it come to the end, and we saw it was a
chance that the war would close, but imtil that time we were con-
tracting with everyone that showed any inclination of opening up
timber to get logs out for the Government.
Mr. Frear. You criticized those logging associations ?
Mr. MoRLEY. I am not criticizing them.
Mr. Frear. They furnished all the spruce that had been furnished
and they claimed they could furnish enough to meet all needs. The