RELIEF OF GEORGE B. MARX WEDNESDAY, MAY 7, 1930 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF THE COMMITTEE ON WAR CLAIMS, Washington, D. C. Subcommittee No. 1 met, pursuant to call, at 10.30 o'clock a. m., Hon. Joseph L. Hooper (chairman of the subcommittee) presiding. Present: Representatives Hooper, Eslick, Stone, and Hare. Mr. HOOPER. The committee will be in order. (The committee thereupon proceeded to the consideration of H. R. 1611, which is as follows:) [H. R. 1611, Seventy-first Congress, first session] A BILL For the relief of George B. Marx Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury e, and he is hereby, authorized and directed to pay, out of any money in he Treasury not otherwise appropriated, the sum of $76,574.62 to George 3. Marx, of New York, New York, in full settlement of all claims of said George B. Marx against the United States arising under or from the canellation of a certain contract numbered 4241, dated August 6, 1918 (order Jumbered 110016), made by the United States with said Marx for the construction of a quant.ty of carts for carrying wire for the use of the Signal Corps, United States Army, during the World War; of which sum of $76,574.62 he sum of $65,712.96 is a balance of expenditures made by said Marx for the purposes of said contract for which he has not been reimbursed; the sum of $10,222.94 is a claim for certain valuable material disposed of, in connection with the operations under contract numbered 4241, by authority of a representative of the War Department; and the sum of $638.72 is a claim for extra work done by direction of a representative of the War Department in connection with contract numbered 4241. pose Mr. HOOPER. Before making your statement, Mr. Andrews, supI read the bill, so it may be fresh in our minds. It is very brief. (The chairman of the subcommittee thereupon read the bill under consideration.) Mr. HOOPER. Now, Mr. Andrews, if you will make your statement of the matter we will be glad to hear it. STATEMENT OF PAUL SHIPMAN ANDREWS, SYRACUSE, N. Y. Mr. ANDREWS. In the first place, when that bill was drawn I thought I was going to be able to obtain adequate proof of the $10,000. That, so far, I have not been able to do. So that that item and the small item of $638 are out, and we are making no claim for them at the present time. Mr. HOOPER. So it is the larger item of $65,712 that you are claiming? Mr. ANDREWS. An item of $58,000. Mr. Penn will tell you that wherever in going over the accounting features of this case any of the items which were doubtful at all and not susceptible of demon stration we conceded them. So that the amount allowed by the Wa Department now is in the neighborhood of $59,000. Mr. HOOPER. So there is a difference between the amounts allowed by the War Department of about $6,000? Mr. ANDREWS. Yes, sir; and we concede that to you. Mr. HOOPER. You concede that? Mr. ANDREWS. We concede that. In the early spring of 1918 M George B. Marx had manufactured for the Government a number o reel carts for carrying wire. Mr. Robert Marx designed, incidently I think, every reel cart which was adopted by the United States Gov ernment for service Mr. HOOPER. I beg your pardon. I am not going to interrupt you continuously. But are these carts made for rolling out wires fo communication and things of that kind? Mr. ANDREWS. For communication in actual service. These cart were used at the front first at the St. Mihiel drive, and the Infantr would go out with these carts unreeling wire as they went, and thu keep in continuous communication with the advancing troops. Mi Marx had in April, 1918, an interview with Maj. J. D. Hough, nov an executive of the Western Union Telegraph Co., who has volun teered to come down here if you gentlemen care to see him. Majo Hough explained to Mr. Marx that the need for reel carts had be come critically urgent at the front; that the type M reel carts de signed by Brill-we have the original documents of all these thingshad failed in tests; that the Government therefore had no reel cart for the troops, that they could not keep up communications with th advancing infantry, and that they had to have reel carts at th earliest possible moment. Accordingly Mr. Marx said to him tha if he used the steel castings, as usually done in the making of ree carts, it would take six weeks to two months to have the annealing done, and to have the shipment made by freight from where thes castings were manufactured. Mr. HARE. Just one question. I did not catch what you said about Mr. Hough. I understood you to say that he was with the Western Union. Mr. ANDREWs. He now is; he was then with the United States Signal Corps of the United States Army. Major Hough, therefore, upon learning that the steel castings would take six weeks to two months, requested Mr. Marx to furnish bronze castings for these reel carts. This was a contract preceding the one which we are now considering. Mr. Marx furnished the bronze castings at a very large extra expense, and thus expedited the delivery of the first 200 reel carts to such an extent that they were actually used in the St. Mihiel drive, some of them, and on the western front before the armistice; and Mr. Marx was the only one who had wire cart contracts who ever made any deliveries before the armistice to the United States Government. He lost money on the first two contracts for 100 wire carts each, which preceded the one which we are now considering. The fact that he lost money is difficult now to prove by figures. It so happens that a fire occurred on January 20, 1930, in the Marx plant in the buildings which contained all the records; and in order that you gentlemen may have a picture of the complete destruction we had some photographs taken, and have them, showing destruction of the papers and the destruction of the building. The only record as to those old contracts which were saved were the ones which happened to be in the War Department, with reference to contract 4241 on which we are now making the claim. Those we have complete; the others are lost. But the fact is that we believe we can satisfy you, but that we can not definitely prove it by accounting figures that Mr. Marx lost money on the first two contracts. Mr. HARE. Where is the relevancy of that? Mr. ANDREWS. That does not apply to this contract here. I am anxious that you should see Mr. Marx did not make a large amount out of the first contracts. Mr. HARE. I just wanted to get at where that was relevant. Mr. ESLICK. The first application, what was it, and where was it made? Mr. ANDREWS. On the first application we went to the War Department. I first had a bill introduced in the House and in the Senate. Mr. HOOPER. When? Mr. ANDREWS. In December, 1927, as I remember. If I may explain later, that is what you have in mind Mr. HOOPER. Before what committee was that? Mr. ANDREWs. The Committee on War Claims in the House, and the Committee on War Claims immediately requested a report from the War Department; and Colonel Robbins was ready to sign a report recommending payment, he told me, when he went out of office; and we had to start the thing all over again with Assistant Secretary Hurley. Mr. HOOPER. Was the matter never heard in this manner in which we are proceeding by the Committee on War Claims? Mr. ANDREWS. This is the first hearing before any committee of Congress that has taken place. Very briefly, then, I have tried to suggest what we have gone far to prove, then, that Mr. Marx lost money from patriotic motives on his first two contracts, because he agreed to supply bronze castings on the assurance from Major Hough that there would be contracts for company for wire carts awarded later on, and that he would make some profit out of those to recoup losses on the first contract. his Mr. HOOPER. He lost considerable on these bronze castings that you have spoken of? Mr. ANDREWs. He lost $134.45 on each cart out of 200; that is, $26,785 that was not all lost, but it all came out of his profit, that and other things which I have mentioned. I will not take time on that now, but it ate up the profit and went into the red, although, as say, we can not show you the account books now. But I think you will be satisfied when you read this brief that he did lose money on his first two contracts. I |