wants, and succeeded quite well, especially toward the latter part
in keeping in close cooperation with them. But in the early days
it was a new game, even to the Allies, and everybody was feelijijf
their way, and it was a little difficult to get actual facts, just exactly
all the details that were necessary for its manufacture out here.
Mr* Freah. In other words, there was confusion all along the
Col. Stearns. Absolutely, sir.
Mr. Freah. If this statement, of course, contained in the foresterV
report is true, in that one month of April they could have fumidied
enough spruce and fir for the other training machines.
Acidity. â€” ^Measure 50 c.c. of alcohol into an Erlenmeyer flask.
has to go in, and that statement does not state the quality of stutf
that was shipped, and that is a very, very, very material item,
Mr. Frear. What have you to say of the stuff that you did cut and
ship as to the percentage that was used, so far as you know?
Col. Stearns. I have, as you know, or possibly you donH know, bat
I will tell you, systems of reports that were made at the factorie^-
This system developed as our program developed, and durinÂ£ the
fall and late summer of 1918 we received these reports. I have them
all here. There were over 100 fir reports.
Mr. Frear. That is, on fir material ?
Col. Stearns. Fir airplanes.
Mr. Frear. Elementary training planes?
Col. Stearns. Yes, sir. They indicate that of the stuff that went
from the cut up_ plant over 92 per cent was accepted, and leas than â€¢*
per cent was rejected.
Mr. FREAR..Thatis,.of fir.? . ., . .
Col. Steabns. That was fir.
Mr. Frear. Where did that go to, what plants?
Col. Stearns. Those reports came from the principal airplane f ac-.
tones, the Curtiss, the Standard, and all the principle ones. The
spruce reports, there were fewer of those came in, but summarizing
all that did come in, only threertenths of one per cent was rejected.
Mr. Frear. Of the spruce?
Col. Stearns. Of the spruce, only three-tenths, approximately, of
one per cent was rejected from the stuff that went from airplane, and
those reports, gentlemen, I have here for your investigation if you
desire to see them.
Mr. Frear. Did you not receive, and have you not in your filesj
to-day, a report or statement that 60 per cent of a shipment made to
Great Britain was refused?
Col. Stearns. That possibly was in the early days. It may pos-
sibly be in our files. I have no definite knowledge of it.
Mr. Frear. As late as August, 1918 ?
Col. Stearns. I have no knowledge of it. I will investigate, sir.
Mr. Frear. Is it not true that possibly at an early day the Curtiss
Co. and the Grand Eapid companies, and other companies using
airplane stuff, refused large quantities that were shipped from here ?
Col. Stearns. That is very true. That is why we were ordered
here, to straighten that situation out if possible. I think we did,
as evidenced by these reports that I quoted.
Mr. Frear. But if the report is true that Great Britain m one case,
refused to accept 60 per cent, if that statement can be shown from
your own records, and your report here shows that it is less than 1
per cent, there is something radically wrong?
Col. Stearns. I stated at the beginning that we do not have all-
the reports, anything like all the reports. These are all the reports
that we received, and this service of reporting was only started from
August on. All we have I have here. There are 100 on the fir, and,^
probably less than 30 of them for the spruce, but basing our informa-
tion on these reports, which is all we have to go^ by,' those are the
results. Now, there is no doubt, gentlemen, that in the days before,
that there was no such good quality going out. We do not pretend
to state for an instant that there was. This was a matter where we.
were all endeavoring to improve the situation.
Mr. Frear. Who furnished these reports?
Col. Stearns. They were furnished by the inspectors at the fac-
tories at which the spruce and fir was received.
Mr. Frear. The inspectors for the companies that were pur-
Col. Stearns. The government inspectors, sir.
Mr. Frear. Oh, the government inspectors ?
Col. Stearns. Yes.
Mr. Frear. That is, the government inspector might pass on it
and the inspector for the company might refuse it ?
Col. Stearns. I think it was the same man, Mr. Frear, I am not
positive, however, of that.
Mr. Frear. Did they use the same man in the case of the Curtiss .
Co., and some of the others.
734 WAK EXPENDITUBES.
â€¢ Col. Stearns. I am not familiar.
Mr. Frear. Wasn't there a dual system of inspection carried on,
one representing the company and the other representing the (iov-
Col. Stearns. I am not prepared to say that, sir, I do not know
how they did it.
Mr. Frear. Here is a statement taken from your records at Port-
land, known as the Washington spruce files, under date of August 15,
1918, from Maj. Ledbetter, from Aircraft Production No, 39. The
suggestion is that that is the name of an officer in Washington. In
this statement it recites :
The cable from England saying that sixty per cent of the fir and spmce from
the United States, upon inspection, were rejected.
Col. Stearns. I will look that fact up, Mr. Frear, I do not know
Mr. Frear. I was going to say, if you will see whether or not this
statement is in it.
Col. Stearns. In all these cases, I might say, where we have tweed
them down, we have found where the complaints came that there were
almost none from the material that was shipped from the cot up
plant. There was a good deal of complaining in regard to the ma-
terial that we shipped from the outside mills until we could get them
all going under the same system of sawing. They were gradually
improved from time to time.
Mr. Frear When did you begin shipping from the cut-up plant ?
Col. Stearns. I can not give you the exact date, but it was approxi-
mately around the 1st of March, I think, or the middle of March.
Mr. Frear. March, 1918?
Col. Stearns. Yes, and then, of course, the method of sawing and
the amount of airplane stock constantly improved as our experiment*
in that line continued. It was a new game, remembei', to every man.
not only ourselves but all these lumbermen on the Coast. It was new
to them. They were working with us, trying to find the b^ way to
do this thing, and it was largely, principally, through their vahant
efforts to cooperate that we managed to increase that percentaf^.
Mr. Frear. Of course, if this statement of August 15, 1918, is irw
it will show that the percentage was still pretty low, so far as th*
spruce that was sent over to Great Britian is concerned.
Col. Stearns. I have heard it stated, merely by hearsay, that that
was a shipment of G list, asked for by England, and that report was
the report of an inspector who thought it was the other, but I will
get the exact facts on that for ^ou as soon as possible.
Mr. Frear. It does not limit it, apparently, to any particular time,
and that is the reason I was wondering.
Mr. Lea. Does it refer to G list or not?
Mr. Frear. No. This is my memorandum.
Mr. Lea. Your figures, as I understand it, refer to cut-up plant
Col. Stearns. My figures that I gave you, yes sir, they do. Tbat
was only part of the shipment, however.
Mr. Frsar. What proj)ortion
Col. Stearns. Just a minute â€” ^I can not give you that. I ean hat*
it tabulated, though, and endeavor to find out. There were not niaBT
million feet in that report, as I previously stated, but il is tEe only
report we have from unbiased parties. That is why I gave it to you.
Mr. Frear. I am reading from page 7 of Nelson's report. This
has reference specifically to what we have, been discussing in the
testimony regarding the spruce in this section covered by the pro-
posed railway running along near the coast, up to Lake Pleasant,
running up from Deep Creek or the Pysht Eiver, or wherever they
may have selected it He says, on page 7 of his report here, which
was contained in the Ray report :
The spruce region of this county lies west of range 10 west, practically every
section containing spruce. The heaviest stand of best quality occurs in town-
ships 29, 90, 31, ranges 12, 13, 14 west. The remainder Is a uniformly heavy
stand of fair to good quality. This timber can be exploited by several routes.
The timber In town 81 north, range 10 west, is developed by the Chicago, Mil-
waukee & St. Paul Railroad; town 31, range 11 west by the Merrill & Ring
Logging CJo. railroad; and townships 31-32, range 12 west by the Goodyear
They are logging at Clallam Bay.
The Chicago, Milwaukee & St. Paul Railway hauls logs to Port Angeles and
dumps them at the mill there. The Merrill & Ring Co. dump into the bay at
Pysht, and the Goodyear Logging Co. into Clallam Bay. The logs from these
two operations are towed to the mills on Puget Sound.
If Clallam Bay is inside of 14 to 15 miles from this spruce that was
mentioned, the spruce could have been taken right to Clallam Bay
and rafted there, as is done to-day by the Goodyear Co., which is
doing business there, and rafted down to Port Angeles, could it not ?
Col. Stearns. Yes sir, but I suppose you know we have a pro-
jected survey from the end of our line to the bay, whereby, if we
could not have gotten suitable trackage arrangements with the Mil-
waukee, we intended to continue that 2 or 3 miles there and put our
logs into the bay at that point and tow them around to Port Angeles.
Mr. Frear. I understand. It would not have been necessary to
have made any such arrangements, however, if the logs were towed
from Clallam Bay, they could have been towed around to all of the
CoL SoasARNs. No, but, Mr. Frear, your investigation will disclose
that there were very important engineering difficulties that de-
manded the route we took ; there is no doubt of that, from an engi-
neer's point of view, and when we get into that with our engineers,
I am convinced you will be perfectly satisfied with the route that was
taken, from an engineering point of view. It was the only route for
our purpose. I am convinced that you will be convinced when that
testimony is brought out.
Mr. Frear. I am glad you have confident e in the persuasive power
of the engineer, notwithstanding that for years this plan had been
considered by tne various companies of going up these various lines,
up Deep Creek, up Pysht Creek, and up the Hoko River^ and the
switeh from one route to the other occurred within about thirty days.
Col. Stearns. On the advice of disinterested engineers.
Mr. Frear. And with all the engineers before them, in all the past
time, this other route had been considered not only feasible by. the
engineers of the railway company, but as desirable.
Col. Stearns. For their purpose, Mr. Frear; but not for ours; and
ours was a very different purpose, as you will see when the matter is
brought out clearly.
736 WAR EXPENDITURES^
Mr. Frear. Yes ; that is to say, the production of spnice, as yoo
people undertook to produce it, required a railroad like the one that
you have there to-day, costing over $100,000 a mile, and it had to be
put through that section, in your judgment?
Col. Stearns. Yes, sir.
Mr. Frear. Were all the railroads that were hauling spruce of thai
Col. Stearns. All railroads that were going to haul the amount of
spruce at the times, during the seasons and under the conditions thit
we were, would have to be of that type, if they were going to be
maintained without break at the time when the production of loinber
must not in any degi'ee be stopped. If it were stopped for any
time, it meant the shutting down of the factories all over the Uniteil
States and Europe ; and when that operation was going full tilt and
going hard it was on that operation mainly, backed up by those in
Oregon, that we were going to depend for our airplane lumber for
the airplane program that our allies and ourselves had mapped
out; there must not be a single day's delay^, and it was with that
understanding that that good road, and that road over a route that
could not be washed out, was picked.
Mr. Frear. You have made an argument, a long, extended argu-
ment, and you have passed upon a proposition that never came before
you; isn't that true?
Col. Stearns. I didn't pass on that.
Mr. Frear. Did you have any voice in the decision ?
Col. Stearns. I am talking from general information.
Mr. Frear. Did you have a voice in the decision in passing on it ?
Col. Stearns. No.
Mr. Frear. When did you first find it was necessary to take that
route, in your own judgment?
Col. Stearns. After I had talked with our engineers about it.
All I know, as I have stated before, is from hearsay: but I am am-
vinced that that hearsay is correct.
Mr. Frear. Ther is no road that has ever been built since the hep^
nig of time but what might have something to interfere with it-
operation; that is true, isn't it?
Col. Stearns. Might have what?
[Question read by the stenographer.]
Col. Stearns. Yes ; but we were not building for something that
might happen; we were building for a definite purpose, with the
understanding that if that road were stopped we would have to
answer for the cessation â€” for that lumber stopping. It was a mili-
tary problem â€” ^the continuation of that lumber coming out.
Mr. Frear. It was a military problem about getting airplane stnf
anywhere, not about that road alone; a military problem of gettisfr
it down in Oregon ; a military problem of getting it to the Vancootw
Col. Stearns. Yes ; but we are talking about that road now.
Mr. Frear. Of course, it was a military problem all along the Ww-
Col. Stearns. Yes.
Mr. Frear. We all recognize that ; no more in this case than anr-
thing else, except as to what quantity might be brought oat.
He says, in his statement :
The Chicago. MUwaukee & St. Paul -
reading from page 7 â€”
can be extended from Its present terminus in town 31 nortli, range 10 west,
to the spruce belt to the west and south, either up the Pysht River and across
the divide into the Solduc Valley, and down it, or west to the Hoko Valley, up
it and down Dickey River Valley and then on south. The distance from
Pysht to Lake Pleasant in the Solduc Valley Is 40 miles. Branch lines from
these roads would reach the main bodies of spruce.
If there had been a desire to build this road across the route that
was finaUy decided upon, and if the Milwaukee road was seeking to
get a road to Grays Harbor, the route taken would cut off nearly 50
miles, would it not, and ^ive a splendid i-oad for the use of that rail-
way company, at the expiration of the war, when hostilities ceased ?
Col. Steabns. Well, sir, if you investigate that further you will
find that that road leaves them with a little bobtail spur up the coast.
It will also take them through less productive country â€” 1 mean im-
mediately productive â€” ^than that through which they would go. I
don't think the Milwaukee, if they were ever going to build a line,
would ever build it over that route.
Mr. Frear. That is true, unquestionably, if built at their own ex-
pense, on the standard that was provided by the government, by the
sale of Liberty bonds.
Col. Stearns. You may add : In the disposal of those properties,
we, acting in protection of the government, have required that they
will not be sold except under approximately reproduction value; no
one is going to get those roads as a gift, not by any chance, because I
am the fellow that has to make the approval of the bid.
Mr. Frear. Do you, as a man without any previous business experi-
ence in your life, sitting here with millions of dollars in your con-
Col. Stearns. Surrounded bjr
Mr. Frear. Wait. [Continuing] Make the statement to this com-
mittee that that road is not to be sold excepting at the price it can be
Col. Stearns. I didn't.
Mr. Frear. What is your statement?
Col. Stearns. I said approximately reproduction value, and I
Mr. Frear. What do you hold that at?
Col. Stearns. I also state I am surrounded by the ablest lumber-
men advisers in this section, and I would not take any such action
without consulting those men, even if I am an Army officer.
Mr. Frear. You mean to say, if the committee understands you
right, that this road will not be sold at less than $100,000
Col. Stearns. I have no claim like that.
Mr. Frear (continuing). The cost of reproduction. It cost more
to do it than it did when that road was built, does it not?
Col. Stearns. I have entire reproduction values and have it locked
in the safe. When the time comes we will consult them and see
Mr. Frear. And you, without any previous business experience
along that line, have in your hands entire control in the determination
of the sale of all these railways and all these mills; is that right?
738 WAR BXPBN^DITUKES.
Col. tSTEARNs. Absolutely no.
Mr. Fbear. Who were?
Col. Stearns. My board of directors, and in a case of this kind
that thing would be forwarded to the War Department for final
Mr. Frear. What action was taken by your board of directors in
regard to the sale?
Col. Stearns. What action?
Mr. Frear. Yes.
Col. Stearns. I don't understand what ^ou mean.
Mr. Frear. What minutes were passed m regard to the sale of this
road and in regard to all these sales? I asked to have that broagbl
up. I don't know whether you brought it or not.
Col. Stearns. I misunderstood you in your wire. I thought joo
meant the minutes with respect to the letting of the contracts,
Mr. Frear. I would be glad to get that.
Col. Stearns. Those contracts were let before the corporation wis
Mr. Frear. Oh, so you have no minutes of the proceedings!
Col. Stearns. The board of directors approves, however, of my
action. They can have a vote secured on that â€” I mean the way we
are advertising â€” if you desire. They have been consulted with
Mr. Frear. What I am endeavoring to imderstand is who passes on
the sale to-day ?
Col. Stearns. The board of directors will make its recommendt-
tion to the Secretary of War.
Mr. Frear. I want to Imow what action appears upon your minutes*
as to who has the authority to make the sale to-day. Is the botnl
of directors going to determine every little sale of a thousand feel or
a million feet of timber?
Col. Stearns. Do you mean the equipment
Mr. Frear. What you have there, yes ; is it in your hands, or whose*
Col. Stearns. The main properties â€” ^the real properties â€” are ad-
vertised for sale, under sealed bids. The other equipment was adver-
tised for sale, or, rather, the major part of it; that was catalogued it
that time, was advertised for sale. The bids were too low for us ^â€¢
conscientiously think of accepting them.
Mr. Frear. What proportion were they?
Col. Stearns. Oh, I don't believe they aggregated $30,000 for
possibly $5,000,000 worth of stuff; the bids that came in, we couldn't
think of it, it would have been criminal for us to do such a tiling-
So we adopted a course, which is a more difficult one, but was the
only honorable one to pursue, which was to organize as efficient i
sales department as we possibly could, and sell this equipment u
the very best prices we could, and that was the policy we have bm
pursuing. We organized a sales department, and we have been sell-
ing this equipment at the very best price we possibly could obUin
for it, getting for the government a OTeat deal more than we t^9t
anticipated ; always running a risk â€” always laying ourselves open to
the fact that perhaps there were â€” somebody maybe had a graft *i
this, but under the circumstances it was the only honorable way to
handle it. We could not accept the bids received.
Mr. FrÂ£ak. I am not asking these questions in a tone of criticism,
but to ascertain what the business method is in this corporation, of
disposing of what is practically government material.
Col. Stearns. We have around us the best experts that we can
gather together here to appraise those valuesâ€” that equipment. The
most of that stuff is congregated at Vancouver Barracks. We have
a corps of experts down there to appraise the values of that, and we
are getting the best figures we can.
Mr. Freak. I understand from you, then, that you make the. state-
ment that these railroads and these mills are not to be sold excepting
Col. Stearns. Excepting under sealed bid.
Mr. Frear. No, excepting under, as I understood you, the receipt
of sealed bids ; that will reach up practically to the cost of reproduc-
Col. Stearns. Approximate cost of reproduction.
Mr. Frear. Why did you buy the Blodgett tract on December 2,
when the armistice occurred on November 11 ?
Col. Stearns. For the simple reason that we had a railroad to the
Blodgett tract, and we had an option to buy that tract, and we had
an option to buy it cheap, and if we hadn't bought that track we would
have had a railroad that we would have had to give over to Mr. Blod-
gett or anybody else that wanted it; and the result is we can get
something back on our railroad, and we can probably sell that timber
tract for more than we paid for it.
Mr. Frear. In other words, you forced Blodgett to sell so that
you could sell a railroad that had been built down there ; that is true,
isn't it? Blodgett protested against the sale, didn't he? He didn't
want to sell? Your correspondence shows that, don't it?
Col. Stearns. He was not especially desirous of selling, but the
contract had been closed. Neither could we have given Mr. Blodgjett
a million dollars, or more, of a railroad. Which would we be criti-
cized more for, giving him a milion-dollar railroad or buying the
Mr. Frear. I am not questioning the judgment that was finally
exercised, but I am pointing out the fact that you folks built a 24-
mile railroad down there, going from nowhere to nowhere else, until
after the armistice was signed ; a month afterwards, or thereabouts.
against Mr. Blodgett's protest, you took his tract. I am asking ii
you propose to hold that railroad until you get the cost of repro-
Col. Stearns. Approximately so, yes, sir.
Mr. Magee. Siippose you never get it, then what?
Col. Stearns. Well, we will have done our duty to the very limit.
Mr. Magee. That doesn't answer the question. You say you are
going to hold it until you get the cost of reproduction. Suppose you
can not get it?
Col. Stearns. I haven't finished my statement. We have done our
duty when we have
Mr. Magee. I have asked you a fair question. You say you are
going to get reproduction cost. Now, I ask you, if you can't get
reproduction cost, then what are you going to do? You certainly
can tell me that?
740 WAB EXPENDITUBBS.
Col. Stearns. Well, we will endeavor to promote the sale of tlisit
at the very best price we can, and if that sale is not
Mr. Maqee. You mean, you will sell it then at the price you can
Col. Stearns. No ; and if that sale is what the board of directors
â– considers proper, and the Secretary of War considers proper to dis-
pose of it, we will then have to cross the other bridge ox what we
will ultimately do with it. I have still hopes of selling it, but I hare
Mr. Magee. The ultimate bridge that you speak about crossing is
what you can get for the property.
Col. Stearns. Yes.
Mr. Magee. So, when you talk about this reproduction â€” getting
the reproduction cost â€” ^that is nothing more or less, in ordinary par-
lance, than "hot air," is it?
Col. Stearns. I don't say actual reproduction; I say approximite
reproduction. We will take into consideration a great many thin??
Mr. Magee. In addition to that, is it not a fact that if your board
should apj)rove the price at which it would be willing to sell a certain
property, if the War Department didn't approve of that, then the
sale would not go through?
Col. Stearns. Possibly so.
Mr. Magee. That is so, isn't it? Not "possibly," but it is a fact.
In other words
Col. Stearns. Yes; that is a fact.
Mr. Magee (continuing). Is the War Department superior to your
Col. Stearns. I consider that it is, for the reason that they vote
the stock under which we are operating, and the board of directoi^