Franklin, Roosevelt & Astor

Month ago Senator Arthur Robinson, an Indiana Republican who can always be trusted to believe the worst about Democrats, suggested that the Senate's ocean-&-airmail investigating committee ought to look into the following: Had Vincent Astor, a director of International Mercantile Marine, and Kermit Roosevelt, an I. M. M. vice president, while aboard the Astor yacht Nourmahal off Florida with their friend Franklin D. Roosevelt, received from P. A. S. Franklin, president of I. M. M., private business messages to be conveyed to the President?

As chairman of the Senate inquiry Senator Black of Alabama promptly promised to call Messrs. Astor, Roosevelt and Franklin before his committee and let his Indiana colleague examine them. Last week the three appeared in Washington under oath but Senator Robinson, strangely missing, did not follow up his charges. Other Senators were left to put the necessary questions. First Mr. Franklin and other officers of his company denied sending any messages to business associates aboard the Nourmahal. Then Kermit Roosevelt denied receiving any except one. in February 1933, just before Franklin Roosevelt's inauguration, in which a fellow officer briefly reported the closing of a deal for a steamship agency. Mr. Astor testified:

"I wish to say that no one on the yacht took up any matter of business or politics with the President. If he had tried, I think I would have thrown him overboard."

Senator White: Tell us, what luck as a fisherman did the President have?

Mr. Astor: On that subject I must remain noncommittal. Besides I am under oath. If you want me to talk about fishing you will have to unswear me.

Behind such trifles was masked the significance of the Black committee's resumption of operations. Its investigation of airmail contracts had made a headline stir which the U. S. would not soon forget. But unfinished was its more important inquiry into what profit the U. S. Government got from selling $559,000,000 worth of ships for $40,000,000, from lending $145,000,000 to shipping operators at infinitesimal rates of interest, from paying $140,000,000 in ocean mail subsidies during the last five years.

Last year the committee found that American Export Line had bought $40,000,000 worth of Government ships for $1,000,000, had received $4,289,000 in subsidies in three years for carrying only a comparative handful of mail, had paid its then President Henry Herbermann over $1,000,000 in salary and expense allowances during the same period (TIME, Oct. 9; March 12). The committee also looked into Dollar Line, found that it had received $14,000,000 in subsidies during four years, had paid its vice president, Robert Stanley Dollar, no less than $635,000 in commissions for negotiating purchase of Government vessels.

Last week it was International Mercantile Marine's turn and Philip Albright Small Franklin told his tale. Able executive and man of orderly habits--who keeps his desk clean by filing his papers on the floor of his office--Mr. Franklin has served I. M. M. since 1902 when J. P. Morgan put it together in the hope that it would become a great and profitable shipping trust, is today the No. 1 tycoon of U. S. shipping. When he became president of I. M. M. in 1921 he was also a great tycoon of shipping but not of U. S. ships. Then I. M. M.'s big lines were White Star, Red Star, Leyland, and Atlantic Transport Ltd., all of which fly the British flag.

Since the War the shipping business has been no hotbed of profits and Mr. Franklin has parted with most of his foreign ships. In 1927 he sold White Star back to the British for $35,000,000. Because more than $11,000,000 is still owing on that deal he unsuccessfully tried to block the merger of White Star and Cunard in a London Court (TIME, March 26). He has sold 28 of Leyland's 32 ships. Meanwhile he has brought new lines into his fold, acquiring an interest in Baltimore Mail Line; tying up with Roosevelt Line by inducing Kermit Roosevelt, Vincent Astor and friends to buy into I. M. M.; joining with the Dollar-Dawson Pacific Coast interests to control United States Lines; negotiating to take over Munson Line (TIME, Jan. 15).

Last week Tycoon Franklin made the most of this change in flag in defending I. M. M. from the charge that it was getting $7,000,000 a year in U. S. subsidies but had most of its money invested in foreign ships. He testified that whereas I. M. M. in 1926 owned and operated 94 ships (1,017,000 tons) of foreign registry as against only five (74,000 tons) of U. S. registry, today the proportion is nine (120,000 tons) foreign ships to 35 (385,000 tons) U. S. ships and, Mr. Franklin testified, its nine foreign ships--Belgen-land, Pennland, Westernland, Minnetonka, Miunewaska, Norwegian, Nubian, Dakotian, Nitonian--were all for sale. (Two days later the Nitonian was sold.) Moreover on July 1 I. M. M. will lose its job as agent for White Star as a result of that line's consolidation with Cunard. Further facts brought out last week:

P: Kermit Roosevelt in 1931 bought 6,700 shares of I. M. M. stock for $29 per share. He still holds it all. Current market value: $4 per share.

P: Vincent Astor paid $29.75 per share when he started buying I. M. M. stock in 1929.

P: P. A. S. Franklin received a bonus of $250,000 in 1927 for the sale of White Star; his $100,000 salary has been cut to $55,000.

P: I. M. M. paid $587,000 for attorneys' fees from 1928 to 1933, much of it to political lawyers in Washington for "looking after" the company's legislative interests.

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