MCCONE MADE BIG WW II PROFITS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000400030022-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 15, 2016
• Document Release Date: April 15, 2004
• Sequence Number: 22
• Publication Date: January 11, 1962
• Content Type: NSPR

JANUARY 11, 1962
Approved For Release 2004/05/05 : CIA-RDP64B00346R000400030022-5
'The Whington Merry-Go-Round
THE WASHINGTON POST Thursday, January]] 1 1962 B 17
McCone Made Big WWTIIiProfitq
By D
rew P
earson I confirmation as chairman of close financial kinship be tal, someone should come for.
With eight high, officials the Atondc Energy Commis-
fired from the Eisenhower Ad. sion on July 3,' 1958, he let slip
fo .. r;. one Interesting fact which
inistrati
n
Democrats and
Republicans
take a very
close look at
the conflict-of-
interest issue
ing and con-
firming n e w
men.
Mc-No"
John A
.
Cone, picked Pearson
to ? replace Allen Dulles as
head of the vitally important
:Central Intelligence Agency,
has a record which is interest-
ing on three counts:
1. He has made more money
out of Uncle Sam on war con-
tracts than perhaps any other
man now working for the Gov-
ernment.
2. He has had a continuing
close financial connection with
the Henry J. Kaiser interests
to which, as Under Secretary
for Air, he'gave a very inter-
esting quickie contract for
making Flying Boxcars (C-1.19)
in the, record time of 10 days,
at 'a price three times greater
than that of Kaiser's competi-
tor, Fairchild. . .
3. He is shrewd and able,
which accounts not only for
his capacity for making money
but for his agility in keeping
high Government positions
under both Republicans wand
Democrats.
When McCone came up for
puts him in a position of hav-
ing a possible conflict of in-
terest. Answering a question
from Sen. Clinton Anderson
(D.- N. M.), he said: .
"Yes, I have some business
relationships with Kaiser, inas-
much as a jointly owned com-
pany, 25 per cent of which is
owned by H e n d y (Joshua
Hendy Corp. of which McCone
owns all the stock) and 50 per
cent is owned by Kaiser
Aluminum, has a long-range
Contract to transport Kaiser's
bauxite from Jamaica to Baton
Rouge."
Yet when McCone was be- I
ing investigated by the late
Sen. Styles Bridges (R.-N. R.)
and the Senate Armed Serv-
ices subcommittee regarding
his quickie C-119 contract to
Kaiser, he claimed: "I have
had no business relationship
with. Kaiser for years. . I
have no benefit to gain from
the affairs of his companies.
The $taternent therefore that
I was a link in Henry Kaiser's
`chain of influence' should be
corrected.
Nonetheless, SenatoF Bridges
showed that McCone went to
amazing lengths to switch part
of a C-119 Flying Boxcar con-
tract away from Fairchild in
Hagerstown, Md., to Kaiser at
Willow Run, Mich., at a cost
figure which turned out to be
$1,339,140 per plane as against
Fairchild's $260,000.
A third congressional hear-
ing, Sept. 25, 1946, shows the
why it was possible for Kaiser
to barge ir} on McCone, have
luncheon with him, and walk
out with a tmultimillion-dollar
contract as good assigned.
This third hearing probed
the phenomenal war profits
rolled up by both McCone and
Kaiser when they were ship-
building partners' during the
war, and when they parlayed
an investment of $100,000 into
a profit of $44,423,000.
McCone was then president
of the California Shipbuilding
Co., organized about one year
before Pearl Harbor, when
Todd Shipbuilding put up
$50,000, with another $50,000
coming from the Betchel-Mc-
Cone-Parsons Company, Henry
Kaiser, and other companies
associated with Kaiser and
Betchel-McCone in building
Boulder Dam.
'Phenomenal War Profits
This combine made a kill.
ing. Uncle Sam needed ships,
was willing to pay any price
for them, and the Todd-Mc-
Cone-Kaiser combine went to
town, though later Todd got
out and left the West Coast
field to Kaiser and McCone:
According to the sworn
statement of Ralph E. Casey
of the General Accounting Of-
fice before the House Mer-
chant Marine Committee in
1946:
"It would seem. when profits
from Government contracts
paid from public funds soar
to such astronomical heights
in proportion to invested capi-
ward with a satisfactory ex-
planation.."
He went on to testify: "The
California Shipbuilding Corp.
was incorporated Jan. 6, 1941,
and the entire cash investment
represented by 1000. shares of
capital stock at a par value of
$100 consisted of $50,000 in-
vested by the Todd shipyards
and $50,000 invested by 10
companies affiliated with Hen-
ry J. Kaiser.
"About a year later, on Feb.
19, 1942, a meeting was called
for the purpose of declaring
dividends out of the surplus.
The minutes of the meeting
said:
After a full discussion upon
motion duly made . .. it was
unanimously resolved that a
dividend of $1000 per share
be, and the same hereby is,
declared."'
This, concluded GAO execu-
tive Casey, was a profit of
$1,000,000 on the investment
of $100,000 within one year-all
at the expense of Uncle Sam's
shipbuilding business.
The profitable partnership
between Kaiser and McCone
continued until it rolled up a
war profit of $44,423,000 and,
according' to McCone's own
testimony, the association is
continuing in the form of 'a
joint shipping line today. In
between McCone; as Under'
Secretary of the Air Force,
helped swing one of the
juiciest airplane contracts in
Copyright, 1962, Bell &'ndJeate,
Approved For Release 2004/05/05 : CIA-RDP64B00346R000400030022-5