Thumbs Down for Harvey

ALUMINUM Thumbs Down for Harvey Everything seemed all set for Lea M. Harvey, an obscure Los Angeles aluminum fabricator, to become the fourth biggest U.S. aluminum producer--thanks to a $46 million Government loan (TIME, Sept. 10). But last week something went wrong. Secretary of the Interior Oscar Chapman notified the RFC and DPA that he was withdrawing his approval of Harvey's loan, which was enough to shelve it temporarily. His official reason: the grave power shortage in the Northwest, where Harvey planned to build.

Exhumed Skeleton. The real reason for Chapman's action was that Columnist Drew Pearson had dug out, and showed Chapman, Naval Intelligence reports on skulduggery at the Harvey Machine Co. during World War II. Chapman could have found out the same facts if he had made any real investigation of the company before awarding it one of rearmament's biggest loans.

Harvey had been turning out 20-mm. antiaircraft shells in World War II when the Navy investigated a report that oversized shells--likely to jam in guns or blow them up--were getting past the Navy's own inspectors in the plant. The investigation disclosed that one of the gauges being used for Navy inspection was defective. According to the Intelligence report, the plant itself had made defective gauges on orders of Plant Manager Herbert Harvey, Leo's brother. On the original order for the off-size gauges, Herbert Harvey had penciled: "Make five more like this one." An Army Air Force auditor, according to Naval Intelligence, had reported that Harvey was also taking priority materials obtained for war work, turning them over to subsidiaries. The Navy had recommended criminal prosecution, but the Justice Department had finally decided that the evidence was insufficient.

At the news, Montana's Senator James Murray and Representative Mike Mansfield and Washington's Representative Henry Jackson, who had been pushing the projected Harvey plant because it would bring new industry to their region, quickly changed their minds and demanded a Justice Department investigation.

New Digging. Pennsylvania's Republican Representative John P. Saylor thought the Harvey affair represented something more than a departmental slip. Before Congress he termed it "a vicious new scandal . . . perpetrated by high officials and politicians of the Administration." Since Harvey had been able to wangle a large power allotment from the Interior's Bonneville Power Administration before getting his loan approved, Saylor noted that Harvey had hired as his counsel C. Girard Davidson, one of Chapman's former assistants, who had worked with Northwest power agencies. Moreover, Saylor charged that the Harvey family, through big Democratic Party contributions, wielded potent influence on the Government. "With money he made off war contracts," said Saylor, Harvey had bought Los Angeles' Subway Terminal Building, which had been a financial failure. "Soon after Harvey purchased the building," said Saylor, "it was filled with Federal Government departments and a large new post office."

In Los Angeles, Leo Harvey blamed the whole uproar on a smear campaign by "the vested interests [who] fear competition . . ." But the chances of ever getting the loan looked pretty dim.

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