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Fuze Co. (Inc.)

HEARING

BEFORE A

SUBCOMMITTEE OF

THE COMMITTEE ON WAR CLAIMS HOUSE OF REPRESENTATIVES

SEVENTY-SECOND CONGRESS

SECOND SESSION

ON

H. R. 12981

A BILL CONFERRING JURISDICTION UPON THE COURT OF CLAIMS TO HEAR AND DETERMINE THE

CLAIMS OF THE INTERNATIONAL

ARMS & FUZE CO. (INC.)

159762

FEBRUARY 4, 1932

Printed for the use of the Committee on War Claims

UNITED STATES
GOVERNMENT PRINTING OFFICE

WASHINGTON: 1933

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CLAIMS OF THE INTERNATIONAL ARMS AND FUZE CO.

(INC.)

SATURDAY, FEBRUARY 4, 1933

COMMITTEE ON WAR CLAIMS,
HOUSE OF REPRESENTATIVES,

Washington, D. C.

The subcommittee met at 10.30 o'clock a. m. in room 282A, Hon. Butler B. Hare presiding.

Mr. HARE. The committee will come to order. This is Subcommittee No. 1 of the War Claims Committee, to which has been referred H. R. 12981, to take the testimony and report the findings to the full committee. We would like to know who are present representing the proponents of this measure. (The bill referred to is as follows:)

A BILL Conferring jurisdiction upon the Court of Claims to hear and determine the claims of the International Arms and Fuze Company (Incorporated)

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That jurisdiction is hereby conferred upon the Court of Claims, notwithstanding the lapse of time or any statute of limitations or any defense because of any awards previously made by the War Department or any alleged acceptances thereof by the International Arms and Fuze Company (Incorporated), to hear and determine, upon the basis of just compensation, the claims of the said International Arms and Fuze Company (Incorporated) growing out of contracts numbered G-1048-559-A, dated January 1, 1918, and P-19219-4797-A, dated November 5, 1918, with the United States and the amendments and modifications thereof: Provided, however, That from any decision or judgment rendered in any suit presented under the authority of this act a writ of certiorari to the Supreme Court of the United States may be applied for by either party thereto, as is provided by law in other cases.

STATEMENT OF PAUL E. HAWORTH, ATTORNEY AT LAW, WASHINGTON, D. C.

Mr. HAWORTH. The gentlemen present are Mr. George R. Shields, of King & King, attorneys of this city; Col. Arthur Adams, who has been called as a witness, as he was secretary of the New York district claims board; Maj. W. J. Hawkins, vice president of the International Arms & Fuze Co., and Mr. R. L. Patterson, treasurer of that company.

Mr. HARE. You may proceed.

Mr. HAWORTH. Mr. Chairman and gentlemen of the committee, the International Arms & Fuze Co. was organized in 1915 by Mr. Rufus L. Patterson and some of his associates for the purpose of

entering into war contracts for the manufacture of fuses and other articles which might be used in munitions. The company had a plant at Bloomfield, N. J., covering about 25 acres. The contracts which the company had before America declared war were principally with the Canadian Government, it having entered into and completed quite a number of contracts, six for the Canadian Government. Immediately after the United States declared war on April 6, 1917, the company ceased all foreign operations and devoted itself exclusively to United States contracts. These contracts were almost entirely for the manufacture of small articles, such as fuzes, primers, and so forth.

In November, 1917, General Jamieson, Assistant Chief of Ordnance of the War Department, visited the fuse company plant and asked the officers of the company if they were in a position to enter into the manufacture of 155 mm steel shells. The equipment they had at that time was only partially suited for such work, but on the assurance of the Assistant Chief of Ordnance that contracts would be awarded them they enlarged the plant and equipped it to manufacture 155 mm shells. The War Department entered into a contract at that time with the company for the manufacture of 500,000 155 mm steel shells and advised the officers of the company that if this contract was completed in a satisfactory manner the Government would enter into another contract with the company for another equal number of shells-500,000.

Mr. PEAVEY. What did that expansion program of the company's manufacturing plant entail in the way of dollars?

Mr. HAWORTH. It cost the company a considerable sum of money. Mr. PEAVEY. Approximately?

Major HAWKINS. It was, roughly, $2,500,000.

Mr. HAWORTH. Of course, that item does not enter into the claim; we are not making a claim for that. A formal contract was entered into, a copy of which is here, the first contract, G-1048-559-A, which is a formal printed contract signed by the contracting officer for the United States.

Mr. HARE. Would you mind inserting that in the record?

Mr. HAWORTH. I will put both of the contracts in the record. This first contract was carried out in a manner that was not only satisfactory but brought forth very high compliments from the Ordnance Department, from President Wilson himself, from General Pershing, and from Marshal Foch. In this particular, permit me to state that I have seen letters and telegrams commending the International Arms & Fuze Co. for its efficiency in manufacturing these shells. I have seen those letters and telegrams in Mr. Patterson's New York office.

Shortly before the first contract was actually completed the Ordnance Department entered into the second contract for 500,000 155-mm shells. The Ordnance Department saw that the first contract would be completed in a satisfactory manner and did not wait until it was actually completed. There was a slight overlapping of time, the second contract being signed before the first contract was entirely completed.

The date of the first contract was January 1, 1918, and the date of the second contract was November 5, 1918. The armistice was signed November 11, 1918, at which time the first contract was

entirely completed and the second contract was well under way. The exact number of shells completed under the second contract was only about 15,000-I do not remember the exact number, but roughly 15,000. Of course, both of these contracts-in fact practically all war contracts-carried a 30-day suspension clause, which in substance provided that if for any reason, cessation of hostilities or any other reason, the Government desired to cancel or suspend the contracts, it was to give the contractor 30 days' notice. During this 30 days the contractor was not to buy any new raw material but was to wind things up as much as he could, but not incur new commitments. The order to suspend, under the provisions of the contract, was invoked soon after the armistice, December 8, 1918, and the company shut down.

As I said a moment ago, the plant covered about 25 acres. The peak of the pay roll included about 12,000 men and women. There were tons of explosives in the plant and at the magazines, and great quantities of finished and partly finished shells, fuzes, primers, and kindred materials. At this time the company had a total of 13 unfinished Government contracts and had finished 13 others. The only shell contracts, however, were the two shell contracts out of which this claim arises. The others were for smaller articles.

Immediately after the armistice the War Department claims board was organized with a number of subsidiary boards, district claims boards, which were responsible only to the War Department claims board here in Washington. The duties of the district claims boards were to adjust canceled contracts and contracts which had been completed, but for which complete payment had not been made. The district claims boards, of course, were extremely busy with this case and hundreds of others.

Mr. HARE. Did these contracts to which you refer, offered in evidence, have a provision whereby adjustment would be made in case contract was terminated?

Mr. HAWORTH. Yes, sir. Virtually all war contracts had such a provision.

The New York district claims board reported its actions every night to the War Department claims board. There were two liaison officers whose sole duty was to bring the reports of the New York district claims board from wherever it might be, in this case New York, to Washington to the War Department claims board. officer would leave one night and get back the next day and the second night the other officer would leave, so one officer left New York with the documents of the district claims board every night and came to Washington. All of these documents were passed upon by the War Department claims board, and if it disapproved any action the district claims board had taken, or were contemplating taking, the district claims board was notified of such disapproval. But if the action was satisfactory to the War Department claims board it did not necessarily notify the district claims board that it approved. In other words, if the War Department claims board did not disapprove, it approved.

As I said, this company had at the time of suspension (December 8, 1918) completed 13 contracts for the United States and had 13 others suspended after the armistice for the convenience of the United States. After stopping work on these, the company had no

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