vessels at the time they were turned over to the Government they would have received not less than $225 per ton and not to exceed $300 per ton. Carden and Herd got the ships for about one-half of their value because they belonged to Austrian citizens and were interned and had been for some time. The only reason that Carden and Herd turned the ships over to the Government at $128.67 was the further and more important consideration that they were to have the operation of the ships.

(f) After the Government took possession of the ships it failed to pay the fair and reasonable value of the ships, or to carry out its agreement to permit Carden and Herd to operate the ships for the Government. It is admitted that the Government did not pay the fair market price for the ships or permit Carden and Herd to operate

same.

(g) The Government took over by contract or seizure many other ships to be used in the prosecution of war from other American citizens and from aliens, and in each and every case except this one the Government paid the fair market value for the ships. Even German citizens and German Government received pay for ships taken or destroyed by this Government. Carden and Herd, two loyal, honorable American citizens are the only persons who have been denied justice and fair treatment.

(h) After the war, when there was an oversupply of ships, the United States Government sold the Carden and Herd ships that were not sunk or destroyed for approximately $150 per ton, and collected from the German Government for the ships that had been sunk by the German submarines. This Government made an enormous profit off the operation of these ships. One or two round trips to Europe at the going rate paid for a ship at its fair market price.

The foregoing facts have been recognized by President Wilson, Chairman Denman, Mr. Baruch, the War Adjustment Claims Board, the committees of the House and Senate, the House and Senate, and the Court of Claims, but mere technicalities have been interposed to defeat this just claim.

CLAIMANTS WERE TO OPERATE SHIPS

The claimants had discussed with Mr. Denman, chairman of the Shipping Board, and Mr. Baruch, special representative of the President, the matter of rescinding conditional contract of claimants with the New York syndicate and the sale of the ships by claimants to the Government. It was the general understanding that claimants were to operate the ships, and this was the chief consideration in this transfer. Mr. Carden on April 25, 1917, wrote to Mr. Baruch: DEAR MR. BARUCH: I saw Mr. Denman. He assured me we should operate the boats, provided we would do so on the same terms as other competent shipping concerns, and this we propose doing.

The claimants time and again called upon the Government to carry out its agreement and permit them to operate their ships, but for one excuse or another claimants were put off from time to time.

THE WAR CLAIMS ADJUSTMENT BOARD

Carden and Herd, prior to June 30, 1919, presented claim to the War Department under the act of March 2, 1919, commonly known

as the Dent Act, for $7,500,000 rising out of this transaction. Claimants claimed that they were entitled to the fair market value of their ships at the time taken or 5 percent commission of the gross receipts for the time that the Government used the ships. The claimants and the Government were both represented by counsel, and long and very extensive hearings were had before the Board of Contract Adjustment and the War Department Claims Board. The War Department Claims Board, Appeals Section, found that the claimants transferred the ships to the United States Government with the distinct understanding and as a part of the transaction the Government agreed to turn the vessels back to claimants for operation. The Board also found that the claimants were entitled to full compensation, measured by the difference from what they had received and the fair value of the ships. The Board denied the claim, however, on the ground it had no jurisdiction under the Dent Act to render an award. No Government agency or representative of the Government who had anything to do with the transaction has at any time, so far as I have been able to learn, denied that this is a just claim.

PRESIDENT WILSON'S APIROVAL

After the claim of Carden and Herd had been turned down by the War Claims Adjustment Board for want of jurisdiction, Mr. Carden, on February 3, 1921, addressed a letter to President Wilson, in which he recited at considerable length all the facts pertaining to this transaction from the beginning. And he appealed to President Wilson to aid him and Mr. Herd to secure a just and fair settlement of their claim. On February 19, 1921, President Wilson addressed the following letter to Secretary of War Newton D. Baker:

THE WHITE HOUSE, Washington, D. C., February 19, 1921.

MY DEAR MR. BAKER: Having read the enclosed, I am myself convinced that the claim is a just one, and my own recollection tallies with that of the writer in respect of everything in which I played a part in the narrative. I leave the matter to your own judgment as to what is equitable and right in the circumstances. My own wish would be that the claim could be paid.

Cordially and sincerely yours,

WOODROW WILSON.

As Secretary of War Baker retired from office within a few days, he was unable to take up and pass on this claim. The matter then was taken before Secretary of War John W. Weeks. He denied the claim on the ground that he did not have jurisdiction under the socalled Dent Act to allow claimants for the loss of the operation of the ships or the difference between what the Government paid for the ships and the fair market value of the ships. The claimants had been out several hundreds of thousands of dollars in the way of financing and other necessary expenses connected with this transaction. Secretary Weeks said he could allow, and he did allow, claimants the sum of $550,000 to cover out-of-pocket losses or expenses and for which the claimants had not been reimbursed. One of these items was $228,000 for financing. Secretary Weeks in any sense did not determine the question as to whether or not claimants were entitled to operating profits or the fair market value of their ships. It was expressly stated in Secretary Weeks' award that it did not include any prospective profits.

142654-39-ser. 4- -2

APPEALS TO CONGRESS

H. R. 8482 was introduced in the Seventy-third Congress. It was referred to the Judiciary Committee of the House. The Judiciary Committee, after extensive hearings and investigations, and after having considered the voluminous record made before the War Claims Adjustment Board, submitted a lengthy, careful, and unanimous favorable report to the House. We invite the members of the committee and the House to read carefully Report 979 which accompanied H. R. 8482, together with all the exhibits copied therein and referred thereto. This measure was passed unanimously by the House and Senate. The act referred to made it in order for the Court of Claims to consider the entire record of the proceedings before the War Claims Adjustment Board and all evidence that had been submitted to that Board

and render judgment upon any claims legal or equitable of George A. Carden and Anderson T. Herd, notwithstanding lapse of time or any statute of limitations: Provided, That in determining the amount of any judgment on any such claim, allowance shall be made for any amount heretofore awarded the claimants on account of such claim: Further provided, That if the Court of Claims shall, upon the evidence, reach the conclusion that the contract of sale included any right to the operation of the ships and that such right was not satisfied by the subsequent payment by the Secretary of War as an accord and satisfaction, then the recovery shall be limited to the duration of the World War.

The claimants then insisted and they still insist that they were entitled to either the fair market value of their ships at the time they were taken, subject, of course, to the amount heretofore paid, or to 5 percent of the gross receipts of the operation of said ships during the war.

COMMISSIONER RAMSEYER SUSTAINS CLAMANTS

The Court of Claims referred this matter to Judge Ramseyer, a Commissioner of the Court of Claims. Judge Ramseyer, as many of know, is one of the ablest lawyers who served in the House some years ago. Claimants Carden and Herd insisted before the Court of Claims they were either entitled to the fair market value of their ships at the time taken or to damages sustained by them in not being permitted to operate the ships according to the agreement. Judge Ramseyer, wrote and submitted to the court an exhaustive report, in which report he fully sustained the claimants. He found that the claimants turned over these ships to the Government at the small cash price with the further and more important consideration that claimants were to operate the ships, and as they did not get to operate the ships they were now entitled to the fair market value of the ships at the time taken and that the fair market value, after deducting $20 for European clearances and an additional $10 for good measure, the ships were worth $192 per ton. Judge Ramseyer found that the "memorandum of closing" was not a contract but was merely a memorandum transferring the title from the Austrian owners to the United States Government. He pointed out in his findings that the $550,000 awarded by Secretary Weeks was not in satisfaction of the claim of these parties but was to cover out-of-pocket losses or expenses for which the claimants had not been reimbursed. Judge

Ramseyer includes in his report letters and excerpts of testimony given by Mr. Baruch, Chairman Denman, the claimants, and others. The sum of his findings was that these claimants had a just claim and it had not been satisfied.

COURT OF CLAIMS DISREGARDS MANDATE OF CONGRESS

The decision of the Court of Claims is not sustained by the facts or the law. It did not try this claim on its merits. The court denied the claim for the following reasons:

(1) That the "memorandum of closing" of date May 3, 1917, and signed by Phelps Bros. & Co., agents, William Denman, Anderson T. Herd, and George A. Carden was the written contract made between these parties and the claimants. The court did not admit or consider any evidence as to the contract of sale of the claimants to the Government other than this "memorandum of closing." The court was in error in this respect.

Carden and Herd had made the contract for the sale of these seven ships in April. While Carden and Herd had a contract for the ships, the title of the ships had not passed. This "memorandum of closing' was merely for the transfer of the title from the Austrian owners through their agents, Phelps Bros. & Co., to the United States. The memorandum was drawn up by the attorneys for the Austrian owners and it was signed by the agents of the Austrian owners. Clearly the Austrian owners had no interest in the operating contract that existed between Carden and Herd and the United States Government and this provision had no place in the "memorandum of closing." Hon. Thomas Love, of Texas, suggested that that provision should go into this "memorandum of closing" but he was informed by Mr. Denman and Phelps Bros. & Co. that it had no place in that writing and therefore was omitted. The "memorandum of closing" itself shows there was another contract. Section 2 states:

2. Price. The price to be paid today (May 3, 1917) to Messrs. Carden and Herd is $6,788,006.70, being the price covered by the original contract.

If the "memorandum of closing" was the sole and only contract between these parties, why was the language used "being the price covered by the original contract?" The sum of $6,788,006.70 was the amount to be paid cash under the original contract at $128.67 per ton, but it was also agreed that these parties were to have the operation of these ships during the war. Of course, that part of the contract could not be carried out on May 3, 1917. It was provided in the "memorandum of closing" that the Government was to pay $20 per ton for the removal of restrictions. There was no mention of this in any other contract. Carden and Herd desired to operate these ships between the United States and South America. They had no interest whatsoever in the removal of restrictions in European countries. We were not then at war with Austria and this $20 per ton was paid by this Government as evidence of its good will toward Austria. If we were then at war and the Government was taking over these ships, the Government would not be subject to any restrictions in the operation of these ships to European or any other countries. This $20 per ton bonus meant nothing whatsoever to Carden

and Herd. This memorandum was for no purpose whatsoever except to effectuate the transfer of title and other property connected with these ships from the Austrian owners to the United States.

RIGHT TO OPERATE SHIPS REAL CONSIDERATION

The evidence shows that Carden and Herd had received a bona fide offer by financially reliable people of $14,000,000 for these ships. They turned it down. They were interested primarily in the operation of ships. The operation of ships was a very attractive and profitable business at that time.

They had made a conditional contract with the New York syndicate for $140 per ton, plus the right to operate these ships during their lives and receive 5 percent of the gross receipts. The initial 10 percent in cash had already been paid. The Government insisted that they bring about a mutual cancelation of the contract with the syndicate and turn these ships over to the Government. The syndicate and they canceled this agreement and Carden and Herd turned these ships over to the Government at $128.67 per ton. This sum was several hundred thousand dollars less than their out-of-pocket

expenses.

There appeared before the War Claims Adjustment Board many of the ablest shipping experts of this and other countries. They fixed the fair market value of these ships at from $225 to $300 per ton. How can any reasonable person believe that Carden and Herd turned down the two foregoing attractive offers and accented the $128.67 offer from the Government, not including several hundred thousand dollars out-of-pocket losses? This simply did not happen. President Wilson, Chairman Denman, Mr. Baruch, and the claimants know this did not happen, and for that reason President Wilson, Mr. Denman, Mr. Baruch, the War Claims Adjustment Board, Commissioner Ramseyer, and these claimants all agreed that these men had a just claim and it ought to be paid. The claimants are also sustained by former Assistant Secretary of the Treasury Thomas Love, by former Governor Stokes, and others.

Some of the greatest shipping experts testified that the gross earnings of these ships during the war would reasonably amount to $85.000.000. If the Government had carried out its agreement with claimants, they could and would have made on this item alone more than $4.000,000. The $14.000.000 offer made to Carden and Herd and which was turned down by them represented approximately the fair value of these ships at the time they were taken, according to the testimony of many of the experts.

WEEKS AWARD NOT SATISFACTION OF CLAIM

The Court of Claims was in error in saying that the award made by Secretary Weeks was in full satisfaction of this claim. Secretary Weeks held that he had no jurisdiction to pass on any question involved in this claim except the out-of-pocket expenses or losses, and he made an award merely to cover that amount. The award itself

uses this language:

Now, by virtue of the authority in me vested by said act (Dent Act), I do hereby award to the said Carden and Herd, in full adjustment, payment and ischarge of said claim exclusive of prospective profits, the sum of $550,000.