properties scrapped or burned or thrown out than given U> any
private operator at a great big sacrifice to the Government I do
not know ^^et to this day whether we are going to get one penny out
of those things. They may yet have to be absolutely scrapped.
Mr. Frear. With all of your experience in the past year in the com-
mercial life handling $26,000,000 you are unable to determine!
Col. Stearns. I am unable to determine.
Mr. Frear. Now, let us see. Here is the position you placed this
Government in. Has the War Department indorsed this? Ha^'e
they made a settlement on this basis?
Col. Stearns. I understand that is so.
Mr. Frear. Does the Secretary of War know about this statement!
Col. Stearns. I do not know whether he does or not.
Mr. Frear. Here is the position you have placed the Government
in in dealing with foreign govermnents, is it not, that you have
figured 10 per cent on some of the most important securities held
here, and England with her eyes closed. We are holding all the
cards. England has made her settlement upon that basis. We ar?
playing with loaded dice, aren't we?
Col. Stearns. No, sir; we are not. The cards are absolutelv on
the table. The records are open to England or France or anybody
else to come in here and see exactly what it is and to see exactly 'where
they are. We do not know vet whether we are going to salvage our
properties, and it looks to-day as if our salvagable assets were not
going to be a great deal more than that, if these real properties are
Mr. Frear. You make a very long argumentative siat^nent each
time. Has England sent anyone over here to go over your bool&!
Col. Stearns. Yes.
Mr. Frear. What did they find?
Col. Stearns. I do not loiow.
Mr. Frear. When were they here?
Col. Stearns. A Capt. Thompson was here for several weeks. I
think it was just after the signing of the armistice.
Mr, Frear. Who was he sent by?
Col. Stearns. By the British commission from Washington.
Mr. Frear. Was he a British officer?
Col. Stearns. YeS.
Mr. Frear. Did he make any statement to you?
Col. Stearns. No, sir.
Mr. Frear. Did he make any inquiries of you?
Col. Stearns. Yes.
Mr. Frear. What were they or of what general character?
Col. Stearns. He came out here for information concerning our
operations, and I instructed my assistant to see that he was given all
the information he desired.
Mr. Frear. Did you ever have any conversation with him as to what
he ascertained ?
Col. Stearns. No, sir.
Mr. Frear. Do you know whether or not he went through your
books here to ascertain about these contracts?
Col. Stearns. I am quite sure he did.
Mr. Frear. Do you know?
Col. Stearns. I do not know.
Mr. Frear. Did you talk with anyone else about what he said?
Col. Stearns. I saw him in all of the various offices from time to
time getting information, but what he got I do not know.
Mr. Frear. Did he go through the books, or do you know ?
Col. Stearns. I saw him with books.
Mr. Frear. Did he have any accountant with him ?
Col. Stearns. No, sir.
Mr. Frear. It would probably take a good many accountants to go
through this thing in an intelligible way in order to make a basis for
the settlement, wouldn't it?
Col. Stearns. No, sir. We had that matter fairly well fixed so
that he could have gotten the general facts on the situation quite
Mr. Frear. This committee has been unable to get this statement
until yesterday, and I asked for it way back in May or June.
Col. Stearns. I do not think we have any record of such a request.
Mr. Frear. The request was made from Gen. Menoher's wanting to
know the value of tangible assets.
Col. Stearns. We have given several reports to Gen. Menoher; I
do not know whether the one you call for or not.
Mr. Frear. So that if we, as a Government, get out of this what
you seem to think we ought to get, and which we concede ought to
be gotten if possible, Great Britain has been cheated, not intention-
ally, I won't say that, but we have taken advantage of Great Britain
to the extent of how many millions dollars, depending upon how
much this salvage brings out of this $23,000,000?
Col. Stearns. I object to that.
Mr. Frear. I don't care whether you object or not. I am asking
whether it is so or not.
802 WAB EXPENDITURES.
Cpl. Stearns. No, sir ; it is not so, because if these assets are sold
they get more. I would' be very glad to see our Grovemmcnt con-
Mr. Frear. That is not the question. Has it erer been brought to
your attention before ?
Col. Stearns. I do not know what they will do. That matter is
absolutely up to the Finance Division in Washington to settle, and
not to this corporation.
Mr. Frear. Have you ever called their attention to this fact:
that this was only 10 per cent, where you were standing out to sell
these things for 100 per cent ? Have you said to the Finance Divi-
sion that you did not intend to sell these properties unless they were
sold at their approximate reproduction value?
Col. Stearns. That figure is made public.
Mr. Frear. I am asking: you yes or no; did you?
Col. Searns. No ; Mr. Frear, if you want the proof of these thin^
I can not give it all in yes or no.
Mr. Frear. I understand that. But every time I ask you a ques-
tion you begin with an argument or prefix or other supplementary
statements. If you have got any statement to make of vonr own
knowledge, not what your dreams are or what you understand about
Gen. Disque, you may state it. He passed upon this, as I under-
stand it, because he was the officer in control at that time. If you
have got anything that you know yourself, not what you surmi^^e
or what you individually are willing to give Great Britain — ^vou can
not give anything nor can this committee ffive anvthing. Now. if
we have covered this question and you know of any particnlar
statement tell it to the committee in connection with this.
Col. Stearns. Supposing we shonld sell these properties and crt
a return for them, I as the head of this corporation would be very
Mr. Frear. Strike that out, because that has not crot anything to
do with what we are trying to c:et at, what he is willing to do. His
willingness cuts no figure at all.^
Col. Stearns. I think it does in this case.
Mr. Frear. I apprehend you think so, but it cuts no figure as a
matter of law or as a matter of fact.
Col. Stearns. You are talking: about the future.
Mr. Frear. In which vou have no relation or no connection f«
far as the Government of Great Britain is concerned.
Mr. Lea. T want to make a statement here. I submit, a whiV
aero you called in ouestion the motive of this witness in reference tr»
these questions. Now he wants to give his reasons as to wbnt >*
thinks would be right in the pettlement with England, a»»d I think
it perfectly proper that he be permitted to state his feelinip? in re-
gard to that matter. And T want to make a statement in this con-
nection. T have no power to control the hearings of this committee,
and I want to repudiate and disapprove of the manner In whi^'k
this investigation is conducted. I think it is outrageon<5 th«t th^
Bepresentatives of the ^reat American Concrress of the TTnited St«tf«
should come here and pursue these browbeating and in^snlliaf
methods in questioning a witness who bv his manner show<? thiit h^
is a gentleman endeavoring to tell the truth. I shall, if this method
of examination and conducting this investigation continues, go to
the Congress and upon the floor of the House denounce with all the
vehemence I possess what I deem to be an outrage.
Mr. Freab« When this committee was first organized it was or-
ganized by unanimous vote of Congress. Every Democrat on the
floor of the House voted for that report. When the appointments
came on this committee to the chairman he at first refused to take
it from the Speaker. On the day before the first witness was called
the chairman placed his resignation in the hands of the Speaker,
because of interference that was promised in the conduct of the'
investigation. This the Speaker refused to accept. The chairman
then stated that there would be no eflTort to cover up anything in
this investigation from start to finish or he would have no connection
with it. One of the first witnesses called before the committee was
Homer Cummings, chairman of the Democratic national committee,
a man who had slandered the committee, including its Democratic
member, by claiming that this was a junket, and that we were going
about as a smelling committee to find out things without any ex-
pectation of a real inquiry, and when called upon for an explanation
by the committee he promised us that, as the chairman of the Demo-
cratic national committee, he would continue those tactics from that
lime on. One Democratic member was placed upon this committee of
three members, as is the usual course in every House committee.
Every witness of any importance that member of this committee has
cross-examined — something never known before in the history of any
investigation with which I have had connection, governmental or
otherwise. He has cross-examined sometimes for an hour and two
hours witnesses in the House investigation. We have been sent here at
the request of the House and of Judge Hughes, personally, and as
recommended by his report. In the Hughes investigation the At-
torney General sat at his elbow and never a question did he ask.
In the Thomas subcommittee Senate investigation never a question
was raised as to the efforts to get at the facts in this hearing. From
the start there has been a purpose to cover up, and for one this
member does not propose to stand for it.
Mr. Lea. That is what I object to. Your methods are not directed
to elicit the facts. The disposition is to brow-beat the witness and
deprive him of the right to give the facts. It is your methods of
examination that have forced me to cross-examine witnesses. I am
here to do my duty as a member of this committee, but I am not going
to remain in silence in the Congress of the United States and permit
this sort of examination. I am willing to go all the way with you if
you are going after the facts and give the witness a fair chance. This
witness is a man who is apparently an honest man and I wish him to
be given the right to tell the facts and I will give you every aid in
Mr. Frear. The statement of the member of the committee that has
just been offered is characteristic of some of the answers which have
come to us from this hostile witness, judged from the standard of
adverse or hostile witnesses. The witness s first proposition to this
committee was that we must swear all witnesses. That is the proced-
ui'e uniformly adopted, but as he comes as the agent of Mr. Disque
with that request, according to the testimony. His next proposition
804 WAR EXPENDITURES.
was that he wanted to make a formal statement, and he insisted upon
it, and objected in the record to its disallowance, notwithsUwding tnat
the Secretary of War and other very able men and high officials have
been brought before this committee and their testimony has been
taken. When we have endeavored to elicit from this witness a -y«"
or " no " answer he has gone off into the realms of eulogies ami of
micertainty. His own judgment and his own personality has alway-
been thrown into these answers, which isvery unusual and which
makes it difficult for the committee to ascertain the facts. That ha>
. been evidenced more than anything else by the replies that came to ihr-
member of this committee at my right, Mr. Magee.
He tried to keep the witness down to the record in his answere
and found it a very difficult thing to do. It is necessary to ask fir
" yes " or " no " or definite answers, and to get those' answers if
possible, or this committee will not know where it is going to lanJ
when making its report. This committee is going to get those fact-
or it is going out of business. The committee is going to get thes*
facts, and if we can not get them here we must try to get them el?^
where. We are going to undertake this no matter where it strik?-.
We intend to try to get the facts. We are not here to cover anything
up. If so, my resignation will go back to-morrow. When it come-
to appearing in the House, I will be only too glad to take the floor
with any member of this committee or otherwise and show on that
floor wKat has occurred up to the present time and what will occur
hereafter. It is immaterial to me what occurs. We are after th*
facts and are going to try to get them. This is between the Deint>-
cratic member of the committee and myself and does not relate :o
Mr. Magee. I want to say that if the remarks of the distingaishr-*
gentleman from California were aimed at my examination of the w r-
ness in any way, I want to except upon the ground that I feel i!:«:
they are entirely unjustified and unwarranted; that so far as I ax
concerned, in my examination of witnesses I shall try to get direc;
answers of yes or no or information from the witness and will n*<
permit in any case the witness to enter upon a dissertation insteail *f
answering tlie question ; that I had assumed that as far as I am ci*n-
cerned I had been courteous to the witness; I tried to be, and I haT.-
always tried to be in the case of the examination of every per^*t
whom I have had occasion to examine, and I shall continue in n:t
further work on this committee along the same lines that I ha^-
followed from the beginning of the investigation, without fear ••:
favor from any Democrat or any Republican or anv other person. I
propose, so far as I am concerned, to do my duty disinterestedly ar.ii
wholly in the public interest and, so far as I am able, to elicit all tb^
facts in this matter and to present them to the House, as we hiw
been directed to do.
Mr. Frear. You testified that the United States would not be out of
pocket over $12,000,000 in substance. It that right?
Col. Stearns. That was my opinion.
Mr. Frear. I want to be fair to the witness in regard to an?
question of judgment or as to figures, and he can correct them. The
only question is to hold him down to our subject. That is baseJ
upon this payment of Great Britain of $14,000,000.
Col. Stearns. Yes, sir.
* Mr. Freak. But if we should find out that the production is not
going to be so great that will have to be paid back.
'Col. Stearns. I would like to see them paid back some. It will
not amount to very much of a payment.
Mr. Frear. There is $20,000,000 involved.
Col. Stearns. No. You are talking now about valuation of the
Mr. Frear. But the real properties amount to a small amount of
the $20,000,000; $20,005,000 is the cost, and there are some construc-
tion items, but beyond that the others run to $3,908,000 of salvage,
leaving nearly $17,000,000 or $18,000,000 in round numbers. Part
of that is going to average better than those figures?
Col. Stearns. I hope so.
Mr. Frear. Do you not think so?
Col. Stearns. I believe it will be better than that.
Mr. Frear. Judging from the sales you have made, judging from
the bids you are getting, now, if it does is not the honorable thing
for us to do as a Government— and I know what your answer is going,
to be — is it not the honorable thing for us as a Government to say
immediately to these other Governments that they had the loss here
and they had to depend upon us for the airplane supply and they had
the erecting and equipment of the plants made
Col. Stearns. I think you are right.
Mr. Frear. That has not been brought to the attention of the
department because you sav you had no definite information, but
that is a thing that ought to he done, and must be done.
Col. Stearns. I think so; I agree with you.
Mr. Frear. You said this settlement was executed under protest.
Why under protest, this settlement here?
Ool. Stearns. Because we were not in a position to make a fair
enough estimate at the time.
^ Mr. Frear. You were in a position sufficiently close to have made
settlements with Great Britain?
Col. Stearns. No, sir; we were not estimating, even widely, what
return we were going to get on our properties, because the stuff had
not yet been all concentrated and we had not started our sales and
did not know what we were going to get.
Mr. Frear. But this occurred five montlis after Great Britain made
her settlement upon this basis and she could not have had any re-
course on the judflinent made by our Government?
Col. Stearns. She can not have any for some time, because we
have not yet exceeded that.
Mr. Frear. Just a word as to the matter brought out by Mr.
Magee. You stated that the cut-up plant at Vancouver cut 76,000,000
feet, while all the other mills only cut 56,000,000.
Col. Stearns. I am trying to get the facts on this. The way this
thing operated was the mills cut flitches or sawn cants for the cut-up
plant, and the cut-up plants manufactured them into approximate
dimension lumber and sent that out. Also these mills, m addition
to the sawn cants that they were cutting, cut up some dimension
lumber themselves, so that the dimension lumber which was shipped
east amounted to 143,000,000 feet. Sixty-six million of the dimension
147155— 19— VOL 1 53
806 WAR EXPENDITURES.
lumber went from outside mills and 76,000,000 went from the cut-
Mr. Fbear. But that is not a fair statement at all as given before.
Col. Stearns. I bear witness that I tried desperately here to teU
those facts to Mr. Magee.
Mr. Frear. The cut-up plants simply used the flitches and cants
brought in from the other mills?
Col. Stearns. From the other mills, and from the private riveis.
the little men who were riving, and from cost-plus operations. It
covered them all in together.
Mr. Frear. But of course you mean to say that the 66,000.000
feet is all the credit that goes to the outside?
Col. Stearns. Absolutdfy, Mr. Frear; we're not trying to take anj
credit from these mills.
Mr. Frear. These other mills, according to the statement of your
own report, can cut 3,000,000 feet a day. Now it would only tab
22 days to cut that amount?
Col. Stearns. They are not cutting just lumber, but airpltne
Mr. Frear, Oh, yes, but you were in a position to oomnumdeer
every mill, and they were cutting airplane lumber before you got
in tne business.
Col. Stearns. You know the percentage at that time.
Mr. Frear. True, but we all learned by that, and these lumbermf:
men and loggers could learn as rapidly — ^these men who had been in
the business from birth — as you could who came out here.
Col. Stearns. They were the men who taught us those things
Mr. Frear. And you were continually improving.
Col. Stearns. In our cut-up plants we learned from their ex-
Mr. Frear. But these mills could cut 3,000,000 feet a day, and in
22 days they could have cut that amount by using all those mills!
Col. Stearns. I contend our operations were nearly doubled \^
efficiency by the construction of these mills. You see the others aw
scattered among so many mills. You can not concentrate and get tbe
same efficiency in manufacture with mills scattered aU over the
country that you can by concentrating your plant there. We hid to
be trained, and men wno were especially interested in the indostrr
were trained and those men had to train others, and those others.
Mr. Frear. Surely that is always the way in any line of business.
Col. Stearns. And if the Vancouver plant was nothing else it wi«
a great school for them.
Mr. Frear. You said that you gave all the people who wanted help
such help as you deemed necessary and you tried to determine accord-
ing to your own judgment which were the ones that needed it acconl-
ing to the basis of production, or, in answer to Mr. Lea's question,
according to what they were likely to produce?
Col. Stearns. Yes, sir.
Mr. Frear. You gave the Seims-Carey, Kerbaugh Co. 24-honr serv-
ice, did you not?
Col. Stearns. Yes, sir.
Mr. Frear. Did you give that service to any other concern in the
Col. Stearns, No, sir. Our answer is obvious; that operation had
to get going to get that stuff out or our own production would have
Mr. Frear. Your production would have dropped off notwith-
standing all these loggers were asking to help ?
Col. Stearns. They were helping to their utmost. ^
Mr. Frear. Thev were?
Col. Stearns. We called on every logger to give us everything he
Mr. Frear, But you gave 4,000 men to Seims-Carey, Kerbaugh Co. t
Why did you not give those 4,000 men to the different loggers that
asked to help?
Col. Stearns. Because that operation was right in the heart of the
spruce that we were trying to get out.
Mr. Frear. I understand. Could not the Goodyear people and the
Merrill & Eing people, and could not some local loggers who have
been in the busmess for a lifetime have done that instead of going to
this New York concern ?
Col. Stearns. I have no record that we did not give the Goodyear
people and the Merrill & Eing people all the help they asked for in
the way of men.
Mr. Frear. Do you not know as a matter of fact from the corre-
spondence of Disque and others that the local loggers were not given
the same consideration as those who came from outside? Yes or no.
Do you know that that they were not given tiie same consideration
that the Seims-Carey, Kerbaugh Co. got, as shown by the Ray report?
Col. Stearns. You mean in furnishing soldiers?
Mr. Frear. All kinds of priorities, solaiers and everything else.
Col. Stearns. The soldiers were furnished to the operations, not
to the owner of *the operations. They were furnished to the most
important operation as far as the Government requirements were con-
cerned, according to our best judgment, not according to the owner
of the operation or to the operator. Personalities did not enter into
Mr. Fmjar. Seims-Carey were the only people that had soldierp
for 24 hours and operated three shifts a day?
Col. Stearns. There were lots of mills that were running straight
Mr. Frear. And you were giving them soldiers?
Col. Stearns. Not all soldiers, but we gave soldiers for extra hours.
Mr. Frear. Where?
Col. Stearns. The Willapa Lumber Co., and there were several
Mr. Frear. How many shifts did they have?
Col. Stearns. I think they had two ; perhaps three.
Mr. Frear. How many men did you give them?
Col. Stearns. I think it was probably around 160.
Mr. Frear. But you gave 4,000 to this other concern?
Col. Stearns. One was a great bi^ operation in the woods for lum-
ber and milling and railroad operations, and the other was for saw-
Mr. Frear. A little bit of a thing?
Col. Stearns. Not a little bit of a thing; they were very important
in their way, but there were hundreds of them.
808 WAR BXPBNDITUBBS.
Mr. Frbar. They all needed help if they were going to increase
your operations; they needed labor?
Col. Stearns. There were very few that came to us that we did not
give all we possibly could.
Mr. Frear. How do you know that?
Col. Stearns. Because I was the man that was giving out ti^OBB
troops and I know where those men went.
Mr. Frear. There are men who will go on this stand who make the
statement that they could not get in touch with your department in a
year. Do you mean to say you were the only man, that they were to
hunt you up?
Col. Stearns. They did not need to hunt me up. All they needed
to do was to write a letter to the War Department.
Mr. Frear. And that would settle them ?
Col. Stearns. They would have been given a prompt investigation.
Mr. Frear. An then what?
Col. Stearns. If the status of their operation had warranted it
they would have been given the help.
Mr. Frear. Your judgment was to determine? Have you had any
Col. Stearns. Yes, sir.
Mr. Frear Where?
Col. Stearns. We had some washouts down on Qninault and on
the Northern road.
Mr. Frear. Where abouts on the Northern road ?
Col. Stearns. There were some bad slides at various places along
the road. I did not go out and I can not give you the exact miles.
Mr. Frear. How recently was that?
Col. Stearns. They were just cleared up about a few weeks ago.
Mr. Frear. About two weeks ago?