Pay Dirt

Where there are subsidies there is apt to be graft and corruption. On that as- sumption the U. S. Senate last summer began looking into air and ocean mail contracts. A special committee headed by Alabama's Black found that U. S. shipping men bought vessels for almost nothing from the Government and then collected fat fees for carrying almost no mail, that U. S. airline executives made big speculative profits while small concerns were being frozen off the air mail map. But not until last week did Senator Black and his committee strike pay dirt that, in newspaper headlines, looked very dirty.

Late one afternoon, Chesley W. Jurney, a Texan who, after a generation of service as secretary to Democratic Senators and Representatives, was made Sergeant at Arms of the Senate last year, dropped his other duties and sallied forth from the Senate accompanied by J. Mark Trice, Deputy Sergeant at Arms and official Storekeeper. Sergeant Jurney wore grey striped trousers, a cutaway, a black 10-gal. hat, a heavy overcoat with a red handkerchief hanging out of its pocket. He carried a document signed by Vice President Garner directing him to "take into custody the body of the said William P. MacCracken before the bar of the Senate." A few minutes later in an office in the National Press Building, Mr. MacCracken held out his hand exclaiming: "Hello, Mr. Jurney."

"Hello, old pard," answered the Sergeant at Arms of the Senate.

Then both posed for photographs and Mr. Jurney read the notice of arrest. Being somewhat embarrassed by Mr. MacCracken's body, since the Senate had no jail of its own, Mr. Jurney gladly paroled it in the custody of Mr. Mac-Cracken's attorney, Frank J. Hogan, defender of Oilman Edward L. Doheny.

Mr. MacCracken was arrested for contempt of Senator Black's Committee before which he had appeared as a balky witness two days prior. In 1926, Mr. MacCracken, a specialist on aviation law, took up his post as Assistant Secretary of Commerce for Aeronautics under Secretary Hoover. In October 1929, he tendered President Hoover his resignation, stayed on in Washington as a lawyer-lobbyist for nearly all the larger air transport companies. From witnesses called during the previous three weeks Senator Black had learned that in May 1930 there had been a meeting of big air line operators in the Post Office Department at which Mr. MacCracken presided. The meeting's purpose was to carve up the U. S. air map and apportion mail routes and subsidies. Afterward President Hoover's Postmaster General Walter Folger Brown had given them exactly what they wanted.

When Mr. MacCracken was subpenaed to tell about that meeting he declined to give the Senate Committee access to his correspondence files. His excuse was that as a lawyer he was bound not to betray the confidence of his air mail clients. At Senator Black's suggestion he agreed to wire his clients for permission to open his files. Two days later he calmly admitted to the Committee that the evening before during a heavy snow storm, Colonel Lewis Hotchkiss Brittin, president of Northwest Airways, and Gilbert Givvin, secretary to the President of Western Air Express, had gone to his office and with his consent and assistance taken away papers which the Senate wanted. Then followed his arrest. At Mr. Black's request the Senate cited Col. Brittin (who had destroyed his papers), Mr. Givvin (who returned papers said to be the same as those taken) and his boss Harris Hanshue to appear and show cause why they should not be held in contempt of the Senate. Trusting Mr. MacCracken no more the Committee seized all the papers in his office.

But William P. MacCracken was not the big fish whom Senator Black was trying to catch in his net. The Big Fish was ex-Postmaster General Brown. Mr. Brown was not summoned, did not appear to testify. Senator Black indicated that he would be glad to question Mr. Brown if Mr. Brown would waive immunity. Mr. Browrn made no move. He remained in Manhattan where he is board chairman of Hudson Tubes, the sub-river line William Gibbs McAdoo built between Manhattan and Jersey City. Other witnesses told the following tale to the Committee:

 From 1929 to 1931 an account known as "B-50" had been operated with the brokerage firm of G. M. P. Murphy & Co. This account belonged to Joseph H. Bagley, vice president of the American Bank Note Co. and to Mr. Brown, a silent partner on a 50-50 basis. When Mr. Bagley died in 1932, Mr. Brown was left residuary legatee of his estate, said to have amounted to not more than $50.000.

 Account "B-50" had during 1929 made purchases of securities amounting to $1,388,000, sales of $1,312,000. In this account were several thousand shares of International Mercantile Marine stock (4,300 shares of the same stock are now part of a trust fund administered for Mr. Brown by the Toledo Trust Co.). In Manhattan Mr. Brown promptly told the Press that 95% of his IMM stock was bought before he became Postmaster. He added: "During my service in the Post Office Department no mail contract was awarded to the International Mercantile Marine Co." But a onetime Department of Commerce employe swore that he could not remember when IMM had ever failed to get a contract it asked for.

 Mr. Brown was alleged to have promised an ocean mail contract to the Philadelphia Mail Steamship Co. in which the Pennsylvania Railroad (225 shares of whose stock and 150 shares of Pennroad Corp. were listed among Mr. Brown's holdings) was interested provided a Senate resolution to hold up the contract was postponed. Senator Reed of Pennsylvania thereupon filibustered the Senate resolution to death last March so the bid could be opened and the award made. But the contract fell through because the steamship company had no ships.

 A record was found in the Post Office files showing that Mr. Brown's assistant, Warren Irving Glover, had protested against the Dollar Line's getting $42,000,000 a year in mail subsidy, saying: "Just as sure as God made little apples, if we go into this round-the-world contract on an other 10 or 12 or 15 million dollars . . . we will spill the American merchant marine program. We must not do anything to upset the political applecart, as that is our life blood. Congressman Free has absolutely told the Post Office Department, and he is very close to one Herbert Hoover, that if Dollar gets any more money he will expose the whole thing on the floor of the House. That is a thing I am afraid of."

 Post Office inspectors reported that they could not find a number of official letters of Mr. Brown's including one to Andrew Mellon on a mail contract for a Mellon air line. A stenographer in the Department testified he had destroyed 24 drawerfuls of papers after conferring with Mr. Brown's secretary. Senator Austin, a Republican member of the Black Committee, hastening to put a better face on this disclosure, asked: "Were they not just papers relating to eligibility, civil service examinations and such things as an opposing party might use if it came into office?" "That was the case." "Were you working for the Party or the Government?" demanded Senator Black.

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