THE HOGS OF HOG ISLAND
The Hogs of Hog Island Some Facts as to Profiteering and Inefficiency Developed by Commerce Committee in the Senate Inquiry ONE of if not the controlling factor in determining the effectiveness of...
...The plant was begun so late in the fall that much of the heavy construction work had to be done under the handicap of severe winter weather...
...Total...
...Fourth...
...I would not say that it was a paper company, but I would say that it was not a ship building company...
...That the International demanded a 10 per cent profit on the Hog Island enterprise but were brought down to 6 per cent by Mr...
...Since the examination into the conditions at Hog Island has been under way, Chairman Hurley has attempted to account for the delay in the ship building program by putting the blame upon labor...
...That comparison between the high Salaries paid by the Government the executives of the Hog Island enterprise are higher than what these same men received immediately before being attached to the Government pay roll In more than one-half of 269 cases that wera Sited...
...Mr...
...Joseph P. Cotton, New York, Attorney, partner of former Senator Spooner and formerly counsel for the United Stabes Shipping Board and Emergency Fleet Corporation, was exam-inecLat length by the Committee on Commerea of the Senate and developed' the following facts: One...
...Baldwin...
...It has stockholders who must be kept going...
...The corporation itself never had built a Ship or a ship yard...
...l>e«'em- Janit-Sunnnarjr...
...E. E. McNary, member of staff, $4,000...
...Frank Mulhauser, special representative, $3,-600...
...In some places it is necessary for men to get homes miles away from their work...
...It is certain that the total cost of the plant completed on the present plan and at this rate of cost will exceed the original estimate by more than 100 per cent, but setting aside the question of cost which, in this great crisis is, after all, a subordinate one, it is necessary to inquire whether this expenditure will bring results within the time of our necessity...
...A. F. Vanvibber, for two years with the Industrial Company of Boston, an interrelated corporation with Stone & Webster, assistant to the general manager, in charge of organization matters, $750 per month...
...Sometimes they cannot even find such shelter...
...Will Not Live on Patriotism GEORGE J. BALDWIN, vice president of the American International Corporation, under examination before tha Committee, referred to the contracts of the company for 120 steel ships costing in round numbers $200,000,000 and said in reply to a question by Senator Johnson: "Why, Senator, I have a boy over there.' Do you think I am in this thing for money...
...31, 1917...
...Senator Johnson...
...I said, some gentlemen specifically were not in this thing for money...
...Wherever it could get hold of a sheme it would take it...
...He said that on the building of the yards the International Corporation receives no profit at all...
...Baldwin denied that there had been any undue extravagance at Hog Island and defended the excess of costs over the estimates because of the need of speeding up...
...Holbrook of that firm is an officer oi the International, showing that in this instanca an interlocking company was getting the 5 per cent profit...
...NOTK.--This does not iihiud.- the following, to be entered on pny roll January i : Frederick fT Crura, statistician, at rate of S».t)Oi...
...The methods of pay vary and are not in the interest of labor and result in discontent...
...Harry L. Jones, instructor, $4,030...
...IN addition to these, the pay roll for the Industrial Service Department for the period ending June 30, 1917, is as follows: Pay roll for Industrial Department for period ending Dec...
...He continues: "It seems that no one but the worker is expected to be a mere machine...
...D. T. Pierce, for years executive assistant to the Barber Asphalt Paving Company, publicity manager, $833.33 per month...
...Richard E. Belches, clerk, $1,200...
...In the devlopment of its ship building program the Government has undertaken to build and finance the greatest ship yard in the world on an island in the Delaware River, near Philadelphia...
...The completed work on the second group of ways has thus far cost $286,752.76, against an estimated cost of $145,124.74...
...that on the ships the estimated cost of 50, 7,500 ton ships was $55,000,000, and 60, 7,500 ton ships was $55,000,000, and of there was a fixed fee in the contract of $55,000 for each of the small ships and $82,500 for each of the larger ships...
...Sixth...
...Great masses of men can not be brought together for effective work, on so complicated a construction problem as Hog Island unless the supervision is considerably more effective and the attendant conditions considerably more favorable to the prosecution of the work than has been the case at this year...
...The location of the plant was •uch that the railroad facilities supplied bj the district were unequal to the needs of the construction work...
...It is not in order, and I am trespassing upon the time of the Senate to say what I have said and desire to say at this time...
...Luther V. Scott, clerk, $1,500...
...Senator Nelson...
...Well, they had some sort of a railroad corporation in Uruguay...
...Material seems to have been ordered without regard for actual needs and existing facilities of handling that it is necessary to prevent undue congestion of railroads leading to the plant...
...Cotton...
...employment expert, $1 : snd Morris Ernst, employment assistant...
...It was a financing and engineering company...
...He submitted reports which not only set forth the housing problem, but recommended a solution...
...Francis H. Wing, intsructor, $3,952...
...James E. Douganj instructor, $5,512...
...Cotton...
...I want to say to you that it is not being done for money...
...Gets Organization at Least ASKED what the Government was getting for the profits it was paying the International, Mr...
...To meet it, the Government has entered upon the most stupendous ship building program ever attempted by any country...
...The Government undertook to finance the buying of the property, the building of the yard with all of its machinery and equipment, the purchase of the fabricated parts of the ships and the building of the ships, and the men who furnished no money but only that elusive commodity euphoniously described as the "know how" were to have a profit upon their own admissions of $6,000,000—a profit which Senator Johnson, of California, very early in the inquiry before all the facts were bared calculated at $7,500,000, but which if these profiteers are permitted to have their way will be at least three times that amount...
...Continuing the report says: "The actual work of constructing the shipyard was begun on October 1. Several factors have conspired to greatly increase the estimated cost...
...C. E. Parsil, instructor, $3,90...
...What was it...
...Lloyd's, the English authority on shipping, gives the maximum estimate of the American yards in this year as 3,700,000 tons, and that the steel output would be but 2,500,000 tons...
...that its contract was with the American International Corporation, but that all of its dealings are with tha executives of the International Ship Building Corporation...
...The means of handling construction material within the plant site were not made the first order of construction and inadequate driveways and insufficient railroad trackage during the early stages of the work have proved fruitful sources of delay and expense...
...MR...
...that it was leased to the Government at a rental of 6 per cent upon the actual cost...
...The corporation was ordered to proceed with the construction of fifty ships of 7,500 dead weight tons capacity, each and later was awarded a contract for 70 troop and cargo ships of 8,000 tons capacity...
...Samuel Gompers appeared before the Committee and said that labor would not be made the goat for the delay in the Government program...
...Charles B. Barnes, employment expert, $1...
...You don't need profits of six and seven million to kee pthese gentlemen going, do you...
...18 of thesa ways originally planned are to be abandoned, Commander Reed said that all of the work ol construction had been let out to 10 sub-contract* ing firms...
...Thomas B. Reed, for 17 years with the Philadelphia News Bureau, publicity assistant, $500 per month...
...COTTON said that Mr...
...He said the workmen are put to "live in stables or garages...
...Claude J Merchant, instructor, $2,860...
...Walter Goodenough, General Manager of the American International Corporation, gave out a statement as an offset to this report in which he claimed that the American International Corporation paid $2,-000,000 for Hog Island...
...He asserted that labor could not be expected to maintain high efficiency unless the housing problem is immediately solved...
...This contra* dieted the statement of the officers of the In* ternational Corporation that there was n* profit on the building of the ship yards...
...The investigation is not yet completed, but already the subject has been taken up on the floors of Congress...
...Senator Nelson...
...You can keep an individual alive on it, but a corporation has dividends to pay...
...Then there is the question of transportation...
...Please name some of the stockholders of the American International Corporation...
...C. H. Willingham, stenographer, $1,300...
...Amos R. Little, exemption expert, $3,500...
...It is proposed to tur-n out 6,000,000 tons of ship tonnage within a year...
...H. D. Oviatt, transportation manager, formerly with the New York, New Haven and Hartford Railroad, $1,250 per month...
...Other reliable authorities estimate the American output as low as 2,000,000...
...Senator Nelson...
...Cotton...
...In the desire for speed men have been taken in such great numbers that the supervising staff was unequal t> the task of effectively directing the workers, with a consequent great loss of output and efficiency...
...that the International had eliminated 60 acres of the best land of Hog Island, so that the International is collecting as a rental of 6 per cent from the Government for that portion of Hog Island which it is using upon a value two and a half greater than the whole of Hog Island a few months before the International acquired it...
...Personnel service: Heads ..............._____ !> ' t IS Clerks ____________________ Si '2 T Training service: Heads ____________________ 4—4 1 mm minors______________ in __ 10 Clerks ___________________ 2 — 2 Total ________.......____ :iO _ S« » llaye reported for duty, but not ou December pajr roll...
...Just a few comparisons will show the trend of the costs...
...but I cannot oblige the distinguished Senator by going into a discussion of it now...
...In testimony taken before eth House Committee on Rules it developed that the whole of Hog Island for years and up to a few months of the time when the International Corporation took it over, had been held under option for $800,000...
...The Hogs of Hog Island Some Facts as to Profiteering and Inefficiency Developed by Commerce Committee in the Senate Inquiry ONE of if not the controlling factor in determining the effectiveness of the participation of the United States in the war, is the shipping problem...
...George A. Burridge, instructor, $2,600...
...Carroll W. Doten, assistant in industrial training, $4,000...
...He said that he was not ready to say that standardization of wages would be desirable, but that as a war measure, it was a necessity...
...There are thousands of men working today who should be in hospitals...
...Temporary buildings, temporary telephones and temporary railroads, for which no provision was made in the estimate, have cost $698,269.17...
...You can't keep a man working at the ultimate height of his ability continuously...
...The American was comprised of three concerns—the Ameri-ican International Ship Building Corporation, the New York Ship Building Company, and Stone & Webster, engineers and contractors of Boston...
...That the International undertook the Hog Island contract with the distinct understanding that the corporation was to risk no capital...
...H. C. Waugh, assistant in industrial training, $3,000...
...Second...
...There are thousands of men who are working at top speed and must continue to do so to keep up with the race or drop out to give place to another man...
...C. R. Allen, industrial traning expert, $4,000...
...D. L. Hoopingarncr, assistant in industrial training, $3,500...
...that only 5 ways are near ready...
...A. L, Snyder, with Stone & Webster for thirteen years, in charge of interrelation with the Shipping Board, $625 per month...
...Leo F. A. McAuliff, clerk, $2,000...
...George J. Baldwin, a director of the International, had opened negotiations with the Fleet Corporation and that Charles A. Stone, President of the International and member of the firm of Stone & Webster, had later taken part in these negotiations...
...Each of the firms is paid a fee of 9 per cent on the cost as profit...
...It also developed that the estimates of costs of tha vast operation at Hog Island were made entirely by officials of the American International Corporation...
...James A. B. Schercr, lecturing and recruiting, $1...
...Men go to places and find they cannot be accommodated and must go elsewhere...
...that trains were purchased for $20,000 each which were secured only a short time ago for $7,000, and Senator Vardaman while declining to go into the discussion of the details, said: "It is a long story of malfeasance and misfeasance, disloyalty, greed for gain and pecuniary aggrandizement which the Commerce Committee I hope will bring to the attention of the American people...
...Commander Paul L. Reed of the United States Navy assigned to supervise the Government operation at Hog Island for the Emergency Fleet Corporation, under examination oft February 9, disclosed that the Government haa no contract with the American International SENATOR HIRAM JOHNSON of California is leading a brave fight against one branch of the profiteers...
...A little later it will be my unhappy duty, or some other Senator's, to call the attention of the American people to this matter in all of its hideous nakedness...
...Because yo- cannot kc^p a corporation alive on patriotism...
...Mr...
...Owen D. Evans, instructor, $4,758...
...Wilfred Jessup, exemption expert...
...Cotton, and later were forced to reduce tha demand to 5 per cent which is the profit they get under the contract...
...Senator Nelson characterized it as a dummy company...
...Commander Reed stated that the largest ol the sub-contract3 was let by the International to Holbrook, Cabot A Rollins of Boston, and that Mr...
...Total, $88,658...
...We were told by one of the employment men at Hog Island that somewhere between 500 and 1000 men are hired there every day...
...C. M. Clark, assistant to the general manager, $541.67 per month...
...No Limit to Cost FURAHER in his report he says that the American International Corporation estimated the total cost of the yards to be $21,000,000, but it did not guarantee the accuracy of the estimate and that no limits of the cost of the plant installation was imposed upon the corporation...
...The testimony disclosed that the government made a contract for (he construction of the Hog Island yard and the building of ships there with the American International Corporation which included such powerful financial persons as: Percy A. Rockefeller, Jr., J. Ogden Armour, Robert Dollar, Frank A. Vanderlip, Robert S. I,ovett, William E. Corry, John D. Ryan, Theodore N. Vail, Otto H. Kahn, Pierre S. du Pont, James A. Stillman, Berkinan Winthrop and Charles A. Stone...
...Senator Nelson...
...So far as could be developed not one of the directors of the corporation ever built a ship or had any ship building experience...
...Walter Goodenough, General Manager, $2,083.33 per month...
...Lower cost and at least equal, if not greater, progress could have been made if the working force had been kept down to more moderate proportions...
...It should be assured them that when the war is over they will be permitted to live...
...Baldwin explained that it was getting the complete organizations of trained men from the International Ship Building Company, Stone & Webster and the New York Ship Building Company, and that in no other way could the Government have got together an organization to do the work at Hog Island...
...It is known as the Hog Island Ship Yard...
...Five...
...Our imperative needs are for tonnage within the first eight months of the present year, and our program must of necessity bend itself to these needs...
...Frank P. McKibbcn, $3,500...
...In this critical moment men should be willing to work at top speed, but not to their disadvantage...
...General Manager Charles A. Piez of the Emergency Fleet Corporation made an inspection with Chairman Hurley, of Hog Island and reported upon the project saying that it "was laid out on too grand a scale and this stricture applies with equal force to the whole general policy of the shipping board during the last six months, which has been a policy of starving the established ship yards at the expense of the vast new projects fostered by the Emergency Fleet Corporation...
...If revealed that the Government on the original estimate would have to pay a profit of $l,O50y« 000, but on the estimate of Commander Reed as to the ultimate cost is would mean a profit of $2,500,000, and this is in addition to tha $6,000,000 that the officers of the International figured that they would have as profit upon tha: operating of the yard...
...that for the purpose of keeping the Hog Island accounts separate from the other activities of the International Corporation, a subsidiary corporation known as the American International Shipbuilding Corporation was formed and all the operations at Hog Island were done in the name of this corporation...
...was that it...
...Has the American International ever built a ship...
...H. Leon Sharmat, clerk, $1,200...
...Then, why," asked Senator Johnson, "has your corporation some six or seven million dollars profit coming to you directly and much more to the subsidiaries and sub-contractors...
...John P. Casey, instructor, $3,120...
...Well, they have participated in the profits just the same, and I want to know if such gentlemen could not be kept going very efficiently and very thoroughly without any more dividends...
...that the corporation was to receive its profits amounting to some $6,000,000 for possession of the ''know how" of ship yards and ship construction...
...Mr...
...In some cities men must ride miles in crowded trolley cars...
...He is exposing the grab of money kings for big profits out of the building of the Hog Island shipyard on an island on the Delaware river near Philadelphia...
...E. H. Fish, assistant in ¦industrial training, $4,000...
...Cotton...
...You said you have a boy V»ver there.' So hare I a boy 'over there,' and that is one reason why I am pursuing this inquiry, for it isn t just to your boy and it isn't just to my boy that any man who is already very rich should out of this crisis grow any richer...
...The cost of grading 102,000 cubic yards up to December 31 was $90,056.13, against an estimated cost of $51,000...
...Verna M. Diecks, clerk, $1,560...
...The location is so isolated and passenger-handling facilities leading to it so inadequate that experienced workmen have not sought permanent employment there...
...Can't Get Complete Picture ¥ T is not possible to get a complete picture of all that has been revealed as to the profiteering in connection with Hog Island...
...This total $6,000,000 does not include the percentage upon the rental on the valuation of $2,000,000...
...Fourth...
...Temporary roads thus far constructed have cost $238,801.48, against an estimated cost of $100,000...
...Third...
...Senator Johnson...
...Cotton...
...The only shipping man on the board of directors is Robert Dollar, a ship operator of San Francisco...
...Senator Vardaman during discussion in the Senate of the Hog Island enterprise was interrupted by Senator McCumber who asked if it was not true that the Government had paid for land of Hog Island ?2,000 an acre when there was an agreement that a purchaser could have it for $1,000 an acre...
...Senator Nelson...
...F. Mc-l.eod...
...E. M. Longfield, instructor, $1,284...
...I arose simply to call attention to this transaction...
...As revealed in the inquiry of the Senate Committee on Commerce investigating this and otiier shipping activities the Hog Island enterprise was designed to be a veritable Eldorado for the gentlemen who were fortunate enough to be connected with it...
...The Government has guaranteed labor prices but these guarantees, I have been informed, have been violated...
...James E. Neary, charge vocational service, $3,500...
...In Philadelphia the ferry boats are jammed...
...Was it only a company on paper, then...
...The cost of driving 16,252 piles up to December 31 was $513,163, against an estimated cost of $89,386, an increase of.574 per cent...
...Neither does it include clerks detailed to this department, seven in number...
...Men who put in no money but only that elusive commodity euphoniously described as the "know how" were to have a profit upon their own admissions of (6,000,000—a profit which Senator Johnson of California, very early in the inquiry before all the faets were bared calculated at $7,500,000, but which if these profiteers were permitted to have their way win be at least three times that amount...
...Baldwin found it difficult to name any of the stockholders, but after awhile he mentioned both members of the firm of Stone & Webster, and Frank A. Vanderlip, member of the Board of Directors...
...First...
...Among a few classes of labor there is a policy of limiting a day's labor...
...Mr...
...Big Salaries Paid IN addition 10 the fee which the International Corporation was to receive, the Government pays all of the salaries and in the examination of Meyer Bloomfield, head of the Industrial Service Department of the corporation some interesting evidence was adduced as to these salaries...
...This corporation was not L. existence at the time the contract was signed, but was organized subsequently for the specific purpose of assuming the job...
...12 have not yet been started and the remainder are in various stages of completion...
...Commander Reed repeated this several times...
...turee days per vto...
...Gompers said that the prices fixed by the Governments mediators for labor at shipyards vary in different sections of the country...
...On their original estimates and original demands the profit would have been $12,000,000...
...Under cross examination he was compelled to admit that not only had Holbrook, Cabot & Rollins, of Boston, a sub-contract but also the Ingersoll Rand Company had as contract, and Joseph P. Grace was a director in both companies...
...L. E. Eustis, assistant to the general manager, $550 per month...
...James McKinney, instructor, $2,600...
...Fifth...
...You would not expect a sprinter to keep up his highest pace indefinitely...
...Double the Cost HE also said that the ship ways contracted at Hog Island are estimated to cost $21,000,000, but will cost about $50y 000,000...
...Third...
...A vast program of ward construction on an elaborate plan with a large prospective output in 1919 and 1920 can, under present labor, material and transportation conditions, be carried on only at the direct disadvantage of our immediate ship-producing capacity.'' Felton Wrote Findings IT developed that M. P. Felton, a former President of the Chicago, Northwestern Railroad, wrote the findings, recommendations and criticisms that formed the body of the Piez report...
...Joshua Davis, janitor, $780...
...The names of the group who composed the International Corporation as heretofore set forth...
...Two...
...Some piece workers have found that the price of their labor per piece has been reduced...
...Senator Johnson...
...S.TVW...
...He said deductions from these figures would reduce the amount expected to be earned to $41,000 for each of the small ships and $65,000 for each of the larger ships, and that the total anticipated fee of the corporation would be $6,000,000...
...I have not words with which to condemn the loose method which has been employed in the building of that great shipping plant...
...Ship Building Corporation...
...Assuming the lower figure as the average, there exists a labor turnover of almost 100 per cent a month—a condition fatal alike to progress and to costs...
...Meyer Bloomfield, head, $5,000...
...they were not checked over by officials of the Emergency Fleet Corporation, The contractor was permitted to draw his own specifications and say what the job would cost, and his word was taken by the Government representatives...
...Had they ever get hold of a scheme before...
Vol. 10 • February 1918 • No. 2
