Mr. ERNSHAW. I don't recall just whom I protested to, but someone above me, someone over me.

The CHAIRMAN. So you protested?

Mr. ERNSHAW. Yes, sir.

The CHAIRMAN. Who is above you that you would protest to? Mr. ERNSHAW. Well, there was Major Farnell.

The CHAIRMAN. Who else?

Mr. ERNSHAW. I don't remember who the other officers were. The CHAIRMAN. Major Farnell was the only one, awhile ago, that you had had any conversation with about this. That was your

testimony?

Mr. ERNSHAW. That was at the time of negotiation.

The CHAIRMAN. I understand. But Major Farnell is the only one that was over and above you in connection with this whole transaction; isn't that true?

Mr. ERNSHAW. He was directly above me.

The CHAIRMAN. He was directly above you?

Mr. ERNSHAW. Yes, sir.

The CHAIRMAN. He was the only one directly above you, and he was the only one you consulted with, so if you protested, you were bound to protest to him, don't you think?

Mr. ERNSHAW. That is my recollection, I went to him with it. The CHAIRMAN. What did he do

Mr. ERNSHAW. That I don't remember.

The CHAIRMAN. At any rate, the letter went out demanding payment?

Mr. ERNSHAW. That is right. This was not the only letter. I believe there were several that went out at that time.

The CHAIRMAN. And several of them did pay; didn't they?

Mr. ERNSHAW. I don't know whether they paid or not.

Mr. KENNEDY. Here is a letter of the 4th of June 1952, Mr. Ernshaw, a similar letter to Harry Lev's company, Mid City Uniform Cap Co. (Document handed to witness.)

Mr. KENNEDY. Was that first letter made an exhibit?

The CHAIRMAN. That first letter will be made exhibit No. 49. (Exhibit No. 49 was read into the record on pp. 600-601.)

Mr. KENNEDY. You are familiar with that letter?

Mr. ERNSHAW. Well, I recall it from reading it over again.

The CHAIRMAN. Let's get that letter made an exhibit.

Mr. ERNSHAW. Sir?

The CHAIRMAN. What is that letter, that photostat that you hold in your hand?

Mr. ERNSHAW. The letter to Mid City Uniform Cap, in reference. to the contract for the service caps and packing two to a box. The CHAIRMAN. It may be made exhibit 50.

(Exhibit No. 50 may be found in the files of the subcommittee.) Mr. KENNEDY. That states that Mid City Uniform Cap Co. should pay up the savings that they made by packing 2 hats to a box rather than 1?

Mr. ERNSHAW. Yes, sir.

Mr. KENNEDY. And your initials appear on that?

Mr. ERNSHAW. Yes, sir.

Mr. KENNEDY. You prepared that letter, Mr. Ernshaw?

Mr. ERNSHAW. Apparently I prepared this. It has my initials as preparing it.

Mr. KENNEDY. And, again, you were given orders to prepare it? Mr. ERNSHAW. Yes, sir, I believe I was.

Mr. KENNEDY. And you objected to it?

Mr. ERNSHAW. My recollection is that; yes, sir.

Mr. KENNEDY. And do you remember to whom you objected on that letter?

Mr. ERNSHAW. Not exactly. I would go through the same source, the same procedures as I did on the other.

Mr. KENNEDY. Captain Farnell?

Mr. ERNSHAW. Yes, sir.

Mr. KENNEDY. On September 26, Mr. Chairman, Mr. Harry Lev from the Mid City Uniform Cap Co., wrote into the New York Quartermaster Procurement Agency, and agreed that paying 0.0454 cent per cap was a reasonable amount to pay for the deviation that had been made, and that letter has already been made an exhibit.

The CHAIRMAN. The letter referred to is already an exhibit?

Mr. KENNEDY. Yes, and it has been read. Then this memorandum appeared on October 20, 1952, which stated that all contractors had been told, during the time of negotiation, that they could pack two hats to a box, and then Mr. Harry Lev, on the 31st of December 1952, wrote a letter into the Quatermaster and said that [reading]:

supplementing our letter of 26th of September, we wish to advise that while the amount of 0.045 per hat represents the difference in costs of packing, we did not actually save anything since our bid price took into account the new method of packing. We had been told that we would be permitted to use this method and submitted our bids accordingly.

Those two letters have been made exhibits already, Mr. Chairman. The CHAIRMAN. The Chair has received some wires. You said that all of these companies, Mr. Ernshaw, were notified that they might pack 2 caps instead of 1 to a box. I have before me, and they have already been made exhibits, but I want to inquire about them, several wires. One is from Philadelphia Uniform Co., signed by Mr. A. Price, president, denying that they had any knowledge that 2 hats could be placed in a box.

I also have a wire which has been made an exhibit from the Bancroft Cap Co., signed by Louis Goldman, whom you said were notified that they could pack 2 hats in a box, denying that any such agreement was offered to them, that they had any knowledge of it, or that they were permitted to do it.

I also have a wire from Mr. Frank Novoson, vice president of Society Brand Hat Co., in which they deny that they were given permission or even requested it. They knew nothing about it. These have already been made exhibits to the testimony.

I just want to inquire while the others are here: Have you any explanation? Can you understand why, if they were told that they might pack 2 hats to a box, they would go ahead and pack 1 hat to a box, in lieu of the savings that would result? Do you have any explanation of that, of why they wouldn't remember it or know something about it?

Mr. ERNSHAW. Well, I am not familiar. I didn't see those wires, and I don't know what the wires say. But I remember in the case of Bancroft Cap, they told me they would pack 1 in a box because they

had boxes on hand to pack 1 in a box. They were making a similar cap for the PX's.

The CHAIRMAN. Let's see about that, if that is reasonable. How much do they save by packing 2 hats instead of 1 hat? What is it? How much savings actually accrue?

Mr. ERNSHAW. The figure given here is around 412 cents.

The CHAIRMAN. Assuming that 412 cents is accurate, and I haven't heard anyone complain about it, considerable savings result to some-body by doing that. Is that not true? That is, either to the Government or the contractor?

Mr. ERNSHAW. I would say yes.

The CHAIRMAN. Well, you just heard it stated here that-I believe you stated it, that one reason for agreeing to it to begin with was because packing boxes were in short supply. Is that correct?

Mr. ERNSHAW. That was primarily the reason for it.

The CHAIRMAN. They were hard to procure. Notwithstanding, that, these companies say that they knew nothing about it, that they were permitted to pack 2 hats instead of 1, and if they had known that, obviously, apparently it is obvious, they would have taken advantage of it in order to save, first, material that was in short supply, and, second, to make that saving in money, value that would naturally accrue. (At this point, Senator Bender entered the hearing room.)

The CHAIRMAN. I cannot understand why, if they were all told, these folks didn't remember it and that they didn't take advantage of it. Do you have any explanation for it?

Mr. ERNSHAW. I don't know the basis for those wires, why they were put, or what question was put to them in the wires.

The CHAIRMAN. You may review the wires, if you care to look at them. I will let you look at some of them. They have been made exhibits. See if you can give us any explanation. All I am trying to do is get the facts. I just cannot understand why businessmen like that would not take advantage of such an offer under such a circumstance if the offer had been made to them, if they knew they could do it.

(Documents handed to witness.)

Mr. ERNSHAW. Those wires pertain to the particular contract.
The CHAIRMAN. That is right.

Mr. ERNSHAW. We would not go out after-after they were awarded the contract, they would have to request permission. We would not go out and tell them. At least, I wouldn't.

The CHAIRMAN. They say they do not know anything about it beforehand.

Mr. ERNSHAW. I did not read that in here. They said in connection with the contract they were not advised.

The CHAIRMAN. Assuming they knew something about it, do you know why they would pack 1 instead of 2?

Mr. ERNSHAW. I told you as far as Bancroft, my recollection is they had the boxes and would pack one in a box.

The CHAIRMAN. Notwithstanding there being in short supply, they wanted to get rid of the boxes?

Mr. ERNSHAW. They had a stock of boxes. I saw boxes in their plant. I was in the plant at that time.

The CHAIRMAN. Other contractors were hunting boxes; is that

Mr. ERNSHAW. That is right.

The CHAIRMAN. But notwithstanding the supply, your explanation is they wanted to pack 1 in a box, notwithstanding the opportunity to pack 2, they would only pack 1, in order to get rid of the boxes that were in short supply? That does not make sense, does it?

Mr. ERNSHAW. I didn't say they wanted to pack one in a box.
The CHAIRMAN. That is a way to get rid of the boxes, isn't it?
Mr. ERNSHAW. Yes.

Senator ERVIN. Instead of packing 1 in a box, they would pack 2 in a box and take the price of 1, wouldn't they?

Mr. ERNSHAW. I don't know.

Senator ERVIN.. You say those are contracts, but you have testified, haven't you, that all of the contracts were based on bids, which bids were figured on the theory that there would be two hats to the box?

Mr. ERNSHAW. But the contract was made to be manufactured and packed in accordance with the specification that called for one.

Senator ERVIN. That is what you say the writing said, but you said you told them they didn't have to do that, that you modified it to figure it on the basis of two hats to a box.

Mr. ERNSHAW. They figured-we advised them to figure two in a box.

Senator ERVIN. Yes; and yet those telegrams come from those people that you say you told them to figure two hats in a box, and they say they never heard of the proposition; don't they?

Mr. ERNSHAW. That is what they say.

Senator BENDER. Mr. Chairman, I would like to ask Mr. Ernshaw if in his private business he gets contracts from Harry Lev? Mr. ERNSHAW. In what, sir?

Senator BENDER. In your private business, have you gotten contracts from Harry Lev?

Mr. ERNSHAW. I have never done a cent's worth of business with him.

Senator BENDER. In your private business you never knew him? Mr. ERNSHAW. I didn't. I said I have never done a penny's worth of business with him.

Mr. KENNEDY. You talk with him frequently, don't you?

Mr. ERNSHAW. I wouldn't say frequently.

Mr. KENNEDY. But you talk to him?

Mr. ERNSHAW. I have talked to him occasionally.

Mr. KENNEDY. Is that about business?

Mr. ERNSHAW. Yes, sir.

Mr. KENNEDY. Here is a letter. Do you remember receiving this letter, Mr. Ernshaw? It is quite old.

(Document handed to witness.)

Mr. KENNEDY. Would you read it? Read it out loud.

The CHAIRMAN. Have you identified the letter?

Mr. ERNSHAW. Well, I don't recall just this exact letter, but I presume I did get it at the time.

The CHAIRMAN. You presume you received the letter?

Mr. ERNSHAW. Yes, sir.

The CHAIRMAN. All right. The letter may be made exhibit 51. Mr. KENNEDY. Read it.

Mr. ERNSHAW (reading):

I am enclosing

The CHAIRMAN. Who is it is addressed to?

Mr. ERNSHAW (reading):

DEAR GEORGE: I am enclosing my check for $100 in payment for one table for the Quartermaster dinner. I regret exceedingly that I will be unable to attend as my daughter is being married on June 19, and my presence here will be required. As the time is rather late, it is requested that you distribute the tickets as you think best rather than sending them to me. With kind personal regards.

The CHAIRMAN. Signed by whom?

Mr. ERNSHAW. There is no name on here. It just says Mid City Uniform Cap Co.

The CHAIRMAN. It is signed by Mid City Uniform Cap Co.? Mr. ERNSHAW. It has Mid City Uniform Cap Co., and it is blank. Senator ERVIN. The Mid City Cap Co. didn't have a daughter, did it?

Mr. ERNSHAW. I don't presume so.

Senator ERVIN. The corporations in my country don't have offspring.

Mr. ERNSHAW. The letter is not signed.

Mr. KENNEDY. I have a couple more questions.

The CHAIRMAN. What was the date of the letter?

Mr. ERNSHAW. June 1, 1948.

The CHAIRMAN. From where was it mailed?

Mr. ERNSHAW. It doesn't give any mailing place on this.

The CHAIRMAN. Does it give an address?

Mr. ERNSHAW. No, sir; it is a copy.

Mr. KENNEDY. Did you buy the tickets or what did you do with the $100?

Mr. ERNSHAW. I turned the $100 over to the one handling the Quartermaster Association dinner.

Mr. KENNEDY. So you bought the tickets?

Mr. ERNSHAW. I didn't buy the tickets. I turned it over and the tickets were distributed.

The CHAIRMAN. It says for you to distribute them.

Mr. ERNSHAW. I didn't. We were not permitted to distribute the tickets. The tickets were distributed all through one section there, all through one person.

Mr. KENNEDY. That is the quartermaster dinner that has just been canceled in New York this year?

Mr. ERNSHAW. It is the one similar to it; yes.

Mr. KENNEDY. There was another phase of this contract, this procurement 0534. The bids were closed on the 11th of January, and Mid City had its bid in on that day for $3.75 for 250,000, and a discount of 5 percent 15 days and 5 percent 20 days, and on the 18th of January it changed its discount and said the discount should read onefifth of 1 percent, 20 days. Do you remember what occurred regarding that, and who you contacted, and whose permission you got to allow that to go through?

Mr. ERNSHAW. I don't recall just what happened to that. I don't recall anything about it.

Mr. KENNEDY. If something like that happened, what would you do? Mr. ERNSHAW. There would be a difference, under a formal bid. Mr. KENNEDY. No, we are talking about this.