"FROM FRYING PAN INTO THE FIRE"

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00318R000100340001-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 23, 2016
• Document Release Date: May 7, 2013
• Sequence Number: 1
• Publication Date: September 30, 1961
• Content Type: OPEN SOURCE

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other cns stations
DREW PEARSON over WTOP Radio, Washington, D.C., at 6:45 PM
"FROM FRYING PAN INTO THE FIRE"
DREW PEARSON: "Washington -- When Kennedy appointed John McCone as head
of Central Intelligence to replace Allen Dulles, he jumped from the frying
pan into the fire. McCone has a conflict of interest record which I'll
reveal in the Washington Merry-go-round next week."
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 'NMw \'nim iViTT2nnrl! NQV 2 2 io i
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ED FOLEY
WASHINGTON MERRY-GO-ROUND: By DREW PEARSON
IIPASHIi\'CrTON, Nov. 21.-It's said in Washinton
these days that to get a job with the Kennedy Administra-
tion you have to give money to the Republicans.
While not strictly true, Kennedy recently appointed John J.
McCone, a high-up Republican, to he head of Central Intelligence;
another Bill Foster, head of the Disarmament Commission,
Foster is an official of the Olin-Mathicson Company whose top
executive, John Merrill Olin, is finance chairman of the Repub-
lican Party. Various Olin-Mathieson executives were among the
most generous in putting dollars on the line for Nixon.
Meanwhile, the biggest money-raiser for the Democrats dur?
ing the lean years was Ed Foley, former Under Secretary of the
Treasury. As president of the "Seven Hundred and Fifty Club."
FAI-singlehandedly-helped to make up the Democratic 1936 deficit.
As an original New Dealer he has worked in government for
20 years, knows every bureau and Federal office. All he has gotten
from the new Democratic Administration is the cold shoulder.
Foley was vetoed as American Ambassador to Italy because he
is a Catholic. McCone, also a Catholic, has just been given one
of the choicest political plums in Washington-the CIA.
He has had no experience in undercover activities.
r-) 17
_37ll
Abusive Publisher
Ted Dealey, publisher of the Dallas News, who told President
Kennedy to his face that he was "running the country as if riding
on Caroline's tricycle," has an Interesting background. On one
Worked for the "wrong" party? occasion in Dallas he was arrested for "drunk and disci, d,'ruy coil
.`6cr,'1aggravated," and for "use of abusive language." He paid
lines of $33. -
Some newspaper publishers who were present, at the Texas
press luncheon 'riven for them by Kennedy resent the abusive
language used by Dealey to the President of the United States.
Dealey's arrest took place on Oaklawn Ave., in Dallas on :
starch 3, 1954, when, according to police records, a Cadillac driven
t,y Trudy Llewellyn Dealey (Mrs. Dealey) struck a '51 Nash con-
vertible. Mrs. Dealey, according to the police complaint, was listed
.as having "strong alcoholic breath, thick speech, and staggering
walk."
The publisher of the Dallas News, according to ingesting
officers, "cursed the complainant and threatened to strike him."
t)ealey called officer H. H. Stringer "A- and a -and caid
he would whip his-if he would take his uniform off." At the
police station, according to the police charge sheets, Dealey "called
officer a no good b-."
'Mrs. Dealey, according to the charge sheet, was charged with
,-ailing one officer a "lying b-" and a -."
According to one witness, a woman In the Dealey car kept .
;shouting: "You can't arrest him. He's Ted Dealey and owns half
of Dallas."
The Dealey Cadillac was "removed" by Felix McKnight, then .
!Managing Editor of the Dallas News, now editor of the Dallas
Thnes-Herald.
?
117HEN McKNIGHT WAS QUERIED about the niatter come
time ago, he indignantly declined to comment.
"11hhat Is your interest In this thing?" he asked. "Whai do
yott expect to get out of it?"
When Dealey himself was queried some tine ago, he -.aid:
;'Who are you to It" lntirested in thtie?" Ile added Hutt Ito 1t'UUld
not talk about it any further, he had company, and also a dog
that was whelping. Asked for an interview at his office when lie
-was not busy with his dog, Dealey replied: "No. You had setter
watch your step."
Six days after his arrest, the Texas publisher paid his fines.
But he didn't have to go to police headquarters. A member of the.
Dallas Police Department came to his office to pick tip the money.-
Note-On March 4, the morning after Dealcy's arrest, the
Dallas News carried no mention of the drunk and disorderly charge
against him. But it did carry an editorial, obviously written earlier,
devoted to traffic safety and the evils of drink, together with this
message of civic piety: "In Dallas, traffic enforcement was hot in .
February. Will it be hot in March?"
(O 1991, by the, Bell Syndicate, Inc.)
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-WTOP Radio
and various other stations
Washington, D. C.
Drew Pearson
6:145 P.M.
January 6, 1962
MAY EE SOME SENATE OPPOSITION TO McCONE
DREW.PEARSON: "Central Intelligence--there may be some Senate opposition
against John McCone, who's replacing Allen Dulles as head of C.I.A. The opposition
will not be based on religion, but because McCone holds stock in a shipping company
and is Chairman of the Atomic Energy Commission--gave the atomic merchant ship
'Savannah' to the States Marine Company, closely affiliated with McCone's own
shipping line."
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The Washington Merry-Go-Round THE WASHINGTON POST Wednesday, Jan. 10, 1962 F U.
McCone-Kaiser Relations R~call?d
By Drew Pearson
One of the first problems
facing the Senate Armed Serv-
ices Committee will be to re-
view the record laid down by
its late, much- ? .
R epubIican,j
Styles Bridges'
of New Hamp-
*
: ?
'
shire, regard-
i n g President
Kennedy's new
t r a l Intelli-'
gence.
The new CIA "
Pearson
chief, John A.
McCone, was appointed by Mr.
Kennedy just a few days after
Congress adjourned last Sep-
tember and it is now up to
the Senate Armed Services
Committee to confirm him.
.If Sen. Bridges' colleagues
turn to their own subcommit-
tee hearings of June 2, 1953,
and thereafter, they will find
some amazing testimony by
and about the new CIA chief.
Amazing as it it, the testi-
mony is not quite complete,
because later testimony by Mc-
Cone before the Joint Atomic
McCone, with being "merely
on leave of absence from his
position as president of the
Bechtel-McCone Corp.... be-
comes Under Secretary of the
Air Force and arranges a nice
fat gift for Kaiser, and that is
how Kaiser manages to con-
tinue to suck defense dollars
while our boys in Korea die
for lack of planes:"
McCone denied the state-
ment. However, he -did not
deny that the Bechtel family
owned 4200 shares of Kaiser-
Frazer common stock. He also
had a hard time putting a good
light on the highly unusual
chain of facts which Sen.
Bridges placed before the Sen-
ate Armed Services Subcom-
mittee as to how Kaiser got
the Flying Boxcar contract.
At that time, 1950, Henry J.
Kaiser's attempt to rival other
auto manufacturers with the
"Henry J" small-sized car and
other Kaiser-Frazer makes had
been a flop. He had a heavy
overhead, a factory at Willow
Run, Mich., which was closing
Force, under McCone, how-
ever, took part of the contract
away from Fairchild, despite
the higher cost. McCone, try-
ing to explain this to Sen.
Bridges, said that the Defense
Department wanted to develop
secondary suppliers. He had
to admit under cross-examina-
tion, however, that Secretary
of Defense Marshall had is-
sued the directive on "second
suppliers"? only after the
Kaiser contract had been ne-
gotiated.
In the end Kaiser charged
the Air Force not $688,365 as
estimated, but $1,339,140 per
boxcar. It even charged up to
the Air Force $78.000 for
liquor, food, and the cost of
a dedication party for its first
C-119-though this was caught
and disallowed by Air Force
auditors.
Faster Than Fast
The amazing, high-speed ne-
gotiations began on Dec. 5,
C-119s in the Kaiser Willow
Run plant was discussed. '
On Dec. 6, one day later, the
Kaisers appeared at the Fair-
child plant in Hagerstown and
demanded engineering data on
the C-119 which Fairchild had
developed and was then pro-
ducing. Under an Air Force
contract Fairchild was re-
quired to give the data to a
competitor.
Nine days later, Dec. 15, the
decision was reached to award
the Flying Boxcar contract to
Kaiser. No facilities or cost
studies had been made, and
the Air Force had no idea
what Kaiser was going to
charge Uncle Sam for being
bailed out at Willow Run.
All this caused Sen. Bridges
to ask McCone:
"If the Air Force's records
should indicate that the degi-
sion to award the contract fog
the C-119 to Kaiser-Frazer was
reached on Dec. 15 and that
the proposals were delivered
by Kaiser-Frazer to the Air
Materiel Command on Dec. 19,
four days later, what would
you say?"
"I would say that the actiori,
though apparently fast; was
proper under the sense of
emergency that we were o[r-
erating," replied McCone.
"It is even faster than fast,
is it not?" asked Bridges. ..
"It is pretty fast, you bet,"-
agreed McCone.
In all the testimony, how-
ever, McCone would not admit
that he had any continuing
financial relationship w i t
Kaiser.
Cop, Yr1aht. 1969, Bell 8yndloate, Inc
1950, w h e n , Kaiser, hard-
pressed from his unsuccessful
auto venture, applied to the
Reconstruction. Finance Cor-
poration for a $25 -million loan.
He was told he could get it
if he had a Government con-
tract.
Later that same day, thanks
to his old shipbuilding partner-
ship, he had lunch with Mc-
Cone, then-Under Secretary of
the Air Force in charge of pro-
curement. Son Edgar Kaiser
also was present, together with
Lt. Gen: K. B. Wolfe, deputy
chief of staff for materiel. At
this luncheon, Senate hearings
showed that the plan to build
down, and a large supply of.
machinery on hand.
According to the testimony
unearthed by Sen. Bridges,
Kaiser's close associate with
whom he had been engaged in
West Coast shipbuilding, John
A. McCone,' got him off the
hook. McCone produced a
quickie contract to manufac-
ture the G-119 or.Flying Box-
car.
The cost per plane as built
by Kaiser was to be $688,365,
as co'tnpared with $260,000 per
plane as.built by Fairchild in
Hagerstown, Md. The Air
Energy Committee, July 2,
1958, shows that he may have
been guilty of 'a conflict of in-
terest when as -Under Secre-
tary of the Air Force he award-
ed a Flying Boxcar contract to
the Kaiser-Frazer Company
for three times the. price the
Government was paying to the
Fairchild Corporation.
One Republican, Rep. Alvin
O'Konski of ? Wisconsin,
charged his fellow Republican,
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The Washington Merry-Go-Round THE WASHINGTON POST Thursday, January 11, 1962 B17
MeCone Made
By Drew Pearson
With eight high officials
fired from the Eisenhower Ad-
ministration for conflicts of
interest, It would seem manda-
tory that both ?"a, ,
Republicans
the conflict-of-1 4 `{
'interest Issue",. before appoint-. E?
ing and con- -
firming new
,men. John A
Mc- /',.i
.
SCone, picked Pearson
to replace Allen, Dulles as
bead 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
elose 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-119)
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 Republicatis and
Democrats.
When McCone 'came ? up for
confirmation as chairman of
the Atomic Energy Commis-
sion on July 3, 1958, he let slip
one interesting fact which
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 Hendy (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-
ing investigated by the late
Sen. Styles Bridges (R: N. H.)
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 statement therefore that
I was a link in Henry Kaiser's
'chain of influence' should be
corrected."
Nonetheless, Senator Bridges
showed that McCone went to
amazing lengths to switch.part
of a C-119 Flying Boxcar eon-
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.
g P~~Y IlIl11'amfe~~
close financial kinship be- tal, someone should come for-
tween McCone and Kaiser and ward with a satisfactory ex-
why it was possible for Kaiser planation."
to barge in on McCone, have
luncheon with him, and walk He went on to testify: "The
out with a multimillion-dollar California Shipbuilding Corp.
contract as good as signed, was incorporated Jan. 'S, 1941,
This third hearing probed and the entire cash investment
the phenomenal war profits represented by 1000 shares of
rolled up by both McCone and capital stock at a par value of
Kaiser when they were ship- $100. consisted of $50,000 In-
building partners during the vested by the Todd shipyards
war, and when they parlayed and $50,000 invested by 10
, into companies affiliated with Hen.
a an Proinvestment fit o fit of f $4 544,of423,$100000. .
McCone was then president ry J. Kaiser.
of the California Shipbuilding ' "About a year later, on Feb.
Co., organized about one year 19, 1942, a meeting was called
before Pearl Harbor, when for the purpose of declaring
Todd . Shipbuilding put up dividends out of the surplus.
$50,000, .with another $50,000 The minutes of the meeting
coming from the Betchel-Mc- said: '
Cone-Parsons Company, Henry After a full discussion upon
Kaiser, and other companies motion duly made . . it was
associated with Kaiser and unanimously resolved that a
Betchel-McCone in ? building dividend of $1000 per share
Boulder Dam. be, and the same hereby is,
declared.
Phenomenal War Profits This, concluded GAO execu?
This ' combine -made a kill. tive Casey, was a profit of
ing. Uncle Sam needed ships, $1,000,000 on the investment
was willing to pay any price of $100,000 within one year-all
for them, and the Todd-Me- at the expense of Uncle Sam's
Cone-Kaiser combine went to shipbuilding business.
town, though later Todd got The profitable partnership
out and left the West Coast between Kaiser and McCone
field to Kaiser and McCone. continued until it rolled up a
'According ' to the sworn war profit of $44,423,000 and,
statement of Ralph E. Casey according to McCone's own
of the General Accounting of. testimony, the association is
fice before the House Mer. continuing in the form of a
chant Marine Committee in Joint shipping line today. In
1946: between McCone, as Under
"It would seem when profits Secretary' of the Air Force,
from Government' "Contracts helped swing one of the
paid from public 'funds soar Juiciest airplane contracts in
to such ' astronomical heights history to Henry Kaiser.
ing, Sept. 25, 1946, shows the l in proportion to invested CAPt-
copyritht. I062. 8.u amdloab, zae.
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The Washington Merry-Go-hound
U. S. Funds Gave McCone Big Start
gence Agency,
which has a
vital influence
over American
the giant Cen-
mind on the
Berlin crisis
when he picked
John A. Mc-
President must
have, had his}:
By Drew Pearson
President Kennedy has
picked some A-1 men for high
office- some of the best in
the past two decades. But the
Looking back over McCone's
past, he has a record for. mak-
ing money out of Uncle Sam
unequaled by any other man
now in Government. The rec-
ord is all spelled out in con-
gressional hearings.
Cross - examined regarding
his shipbuilding partnership
with Henry Kaiser interests at
San Francisco during the war,
McCone admitted to the
House Merchant Marine Com-
mittee that the Government
had put up almost all the capi-
tal for their California Ship-
building Co., of which McCone
was p r e"s i d e n t. It netted
a r o u n d a 44-million-dollar
profit.
"What was the total cost tb
the Government of building
your yard?" asked committee
counsel Marvin Coles.
"Some $25 million,". replied
McCone. '
"Very little, very little," re-
plied the president of the com-
pany.
"Were there any profits to
subcontractors?"
"Oh yes, there must have
been."
A Wonderful Deal
"Did any of the executives
receive management salaries
that were reimbursable by the
Commission?"
"The executives . . . were
reimbursed in a manner
agreed to by the Commission."
"And that was with Govern-
ment funds?" McCone was
asked.
"That is correct."
"With material supplied by
the Government, with labor
paid for by the Government,
with interest on borrowed capi-
tal paid for by the Govern-
THE WASHINGTON POST Friday, January12,1962 B 25
shipbuilding material in Cali-
fornia Shipbuilding Co.'s
yards?"
"There was," was McCone's
laconic reply.
Coles asked if the value of
$14 million was accurate.
"That might have been the
original cost of it, but a large
percentage of it was nothing."
"Did you pay any money for
this shipyard and the surplus
property in the yard when you
acquired it from the Govern-
ment?" Coles asked.
"We relieved the Maritime
Commission of all their obliga-
tions and responsibilities for
the restoration of the site
that was owned by the Los
Angeles Harbor Board," was
McCone's reply.
More Gravy
"Did you receive in addition
to this yard that had cost
expenses, which McCone said
was given away in ? salary
bonuses, charities, group insur-
ance premiums, and ship-
launching expenses.
"Did you give away $50(0
diamond necklaces?" asked
Congressman Weichel.
"No, we gave $60 cigarette
boxes," replied McCone, add-
ing that. the top gift was $800
to a ship sponsor.
Summarizing the facts, Mc-
Cone's fellow Republican, Con-
gressman Weichel, said: "The
total number of ships you
built was 467. The plant cost
the Government $25 million.
There was $14 million worth
of property there when it was
finished and you got -$2.5 mil-
lion credit. That is roughly
$41 million ..."
Adding in some other fig-
ures and making a quick cal-
culation, Weichel concluded:
"Altogether your company
got $91 million for building
467 ships. Roughly, without
the deduction of taxes, it cost
the Government nearly $200,-
000 in fees for each ship built
by your company.
"The Todd (shipbuilding)
people," Congressman Weichel
pointed out, "had roughly
$11 million in fees and the
plant cost about $14 million.
Theirs was about half the cost
to the Government. Yours was
$200,000 per ship."
That was how John A. Mc-
Cone, now nominated to be
head of CIA, got his big start
up the business ladder to big
Government jobs and more
profits in business.
Oopyrl?ht. 1962, Bell 6yndlcate, Inc.
,
ment, with management bal. $25 million and this material
aries paid for by the Govern- which may have cost $14 mil
ment, what were the fees and lion, an additional sum. of
profits paid for?" $2.5 million in cash?" pressed
"For the building of ships," Coles.
replied McCone, without bat- "No," replied McCone, "but
ting an eye. we did receive a revision of
The House Merchant Marine our selective price contract
Committee also developed the under which the amount of re-
fact that the Government had capture was reduced by $2.5
turned over-to McCone, Kaiser million."
et al., all of the Government's . "So in effect you got an
materials, machinery, and additional $2.5 million, did
other facilities located at the you?"
shipyard estimated as worth "You might put it that way,"
about $14 million, finally admitted the president
"The Government put in of the shipping company.
$25 million to the building of Rep. Alvin Weichel, Ohio
this yard," counsel Coles Republican, also -brought out
asked. "At the time of the the fact' that McCone-Kaiser
completion of the contract was deducted from income taxes
of _ your corporation were in-there any Government-owned $4 million in nonreimbursable
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11tMMMA i; Vr 1Z MW rniui-avil
OVER WTOP RADIO
SAZURDAY.. 13 January 1962.
The Maritime Commission: There is something very mysterious about the
manner in which the Maritime Commission placed the operation of the new
atomic merchants vessel the Savannah in the hands of the States Marine
Company. This was done under Eisenhower after a committee of experts
recommended that a new atomic vessel be operated by the American President's
Line instead the Savannah was put under the States Marine Lines which
was the lowest on the list. Congressman Bonner of North Carolina has
pointed out that the States Marine Line has used foreign agents abroad
and foreign flag ships despite which it got this prize package.
Congressman Bonner also points to the fact that John McCone then strong
with the Eisenhower administration was then being made Chairman of the
Atomic Energy Commission and that McCone was in partnership with the
States Marine Line. McCone has now been nominated by Kennedy to be head
of Central Intelligence and comes up for Senate Confirmation next week.
The Maritime Commission: Some of the worse crack ups of liberty ships
during and after the war were the ships built by the Henry Kaiser shipyard.
The same Henry Kaiser to whom McCone awarded that quickie flying boxcar
contract at three times the cost of Kaiser's competitor, the Fairchild
Company at Hagerstown, Maryland.
Now a final prediction: Some people have wondered why I have
written about the past operations of McCone nominated to be head of
Central Intelligence. The reason is that Central Intelligence has been
guilty of some terrible mistakes, the fiasco in Cuba, the sending of the
U-2 over Russia just as Eisenhower was about to go to Paris and Russia.
This seriously set back the peace of the world. John McCone has charm
and determination, but was head of, the West Coast Shipbuilding Company
which made more money out of Uncle Sam during the war then any other
executive now in Government. He also awarded his wartime partner,
Henry Kaiser, with a quickie airplane contract at an exorbitant price,.
when he, McCone became undersecretary of the Air Force.
This is a record which the public has a right to know about, and
which the Senate cannot ignore. Unfortunately Senators have developed
a habit in recent years of confirming almost any name the President
sends them, so here is my prediction: In the Armed Services Committee,
Chairman Russell of Georgia will vot to confirm McCone as will Senator
Jackson of Washington, and probably also Senator Symington of Missouri
who is very kind-hearted. But I predict Senator Case of South Dakota
who has saved more money on war contracts than any other single Senator
will ask McCone some very important questions. I also predict that
Senator Margaret Chase Smith of Maine who has great courage and Senator
Glenn Beall of Maryland who also has courage will demand a careful
investigation of McCone before he is confirmed. 0
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The Washington Merry-Go-Round THE WASHINGTON POST Wednesday, Jan 17, I962 D 11
Experts .Reversed on NuclerSh?p
By Drety' Pearson
The biggest prize. in the
shipping world in the last four
I years has been the
of the first atomic
vessel everr'~,
built, the Sa-
vannah. Every
operation
merchant
qualified ship-!..-
(has wanted to>
t
through a mys.1
c i rcumstances,
in the hands
of States Marine, which oper-
ates a large number of for-
eign-flag ships manned by for-
eign crews, but which hap-
pens to be in partnership with
John A. McCone, who at the
time the Savannah contract
was let was chairman of the
Atomic Energy Commission.
McCone is now up for con-
firmation to be head of the all-
important Central Intelligence
Agency, and a long set of cir-
cumstances put him in the po-
sition of having favored close
business associates, such as
the Henry Kaiser interests,
when he has been in Govern-
ment.
,. The inside facts in the
award of the SS. Savannah to
the States Marine Line, which
has a working partnership
with McCone's personally
owned Joshua `Hendy Line,
,are hitherto unpublished.
In the spring of 1958, as
seven steamship lines applied
to operate the Savannah, Clar
ence Morse, then Maritime
Administrator, appointed n
special selectlon board of
maritime experts to recom-
mend the most qualified.
They recommended the
American President Lines,
with more than 30 years of
American-flagship experience
behind it, as the best qualified.
The others, in order of their
qualification, were: Isbrandt-
sen, Farrell, Moore-McCor-
mack, Pacific Far East, States
Marine, and U. S. Lines.
In other words, States Ma-
rine, the line with which John
McCone has a working part-
nership. was next to last. Yet
it ended up with the contract.
What happened was that
Maritime Commissioner Morse,
answerable directly to Secre-
tary of Commerce Sinclair
Weeks, overrode his own board
of experts. Morse explained
lamely that the board had put
too muEh emphasis on pas-
senger service.
So the; board went back into
session, eliminated passenger
experience as a criterion, and,
adding up all the remaining
factors, still came up with
American President Lines as
the best qualified ship op-
erator.
However, States Marine, no
longer handicapped by its lack
of passenger experience, rated
second. Higher ups in the
Commerce Department then
gave the contract to States
Marine as if the board had
never met. .
When I asked Under Secre-
tary Louis Rothschild, now re calling the shots. He came be-
tired, why he reversed the
hoard of experts, he replier]:
"There had been too much
lobbying."
He did not elucidate.
"But States Marine chiefly
operates foreign-flag ships," I
pointed out. "The Savannah
is to be the pride o? the U. S.
Merchant Marine. Did John
McCone talk to you about
this?"
"No," protested Rothschild
emphatically. He added that
one of States Marine's sub-
sidiaries operated under the
American flag.
"Besides," he said, "the
House Merchant Marine Com-
mittee completely approved
our decision."
Weeks Stepped In
Congressman Herbert Bon-
ner, North Carolina Democrat,
chairman of the House Mer?
chant Marine Committee, told
a different story. He had in-
troduced the bill authorizing
an atomic merchant vessel.
"We never approved their
decision," said Rep. Bonner.
"They came down here and
told us what they were going
to do and that was that.
"Morse had talked about
putting'the Savannah in the
hands of different companies
-the United States Lines in
the Atlantic, the American
Export Lines in the Mediter-
ranean, Moore-McCormack in
Latin America, and the Ameri-
can President Lines in the
Pacific.
"But Sinclair Weeks, the
fore our Committee and told
us that States Marine was go-
Ing to got the Savannah. There
must have been a terrific lot
of influence used to give this
to States Marine."
Whatever influence may have
been used probably took place
before John McCone took of-
fice as Atomic Energy chair-
man. He was confirmed on
July 9, 1958, and the Savan-
nah contract was awarded on
July 25.
A busy Senate paid little
attention to all this. Only
one Congressman, Bonner of
North Carolina, "father" of
the SS Savannah, challenged
McCone's apparent conflict of
interest. In a speech on the
House floor, Aug. 21, Bonner
said: .
"I have no concern with the
arrangements made by Mr.
McCone to meet the technical
requirements of the law in re-
gard to the difficult problem
of avoiding conflicts of inter-
est faced by so many able and
successful businessmen when
called to public service.
"However, the facts concern-
ing the intimate business re-
lationships which have existed
between Mr. McCone and Mr.
Mercer (head of the States
Marnie Lines) raise certain ob-
vious questions when we seek
to find the answer to the appar-
ently illogical assignment of
the nuclear ship Savannah to
States Marine Lines by the
Department of Commerce and
the Atomic Energy Commis.
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 CONC_RRQQTfTTAT RFCY)Rf _ QFNA'ri . If Ni 1 Q 4()C7
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Mr. President, I ask unanimous con- Yet McCone, before he became Chairman
Sent to have the entire column written of the AEC in 1958, admitted that h;s per-
by Drew Pearson, and published by the sonally owned shipping line, Joshua Hendy,
handled "intcrcoastal and coastwise trans-
Bell Syndicate on January 17, 1962, portation of chemicals, transports products
printed at this point in the RECORD. for Union Carbide, Dow Chemical, Stand-
There being no objection, the column and Oil of New Jersey, Standard Oil of
was ordered to be printed in the RECORD, California, and others."
as follows: "I have some business relationships with
JOHN MCCONE DID NOT SELL HIS STOCK WHAN? Kaiser," he also testified, "inasmuch as a
HE BECAME AEC CHAIRMAN-HIS SKIPPING jointly owned company, 25 percent of which
LINES DID PROFITABLE BUSINESS WITH AEC, is owned by Hendy and 50 percent by Kaiser
CONTRACTORS-THE LAW DOES NOT PERMIT Aluminum, has a long-range contract to
ANY CHOICE ON CONFLICT OF INTEREST transport Kaiser's bauxite."
(By Drew Pearson) "Would your firm continue to deal with
these firms in the atomic energy field, such as
WASHINGTON.-In June 1958, John A. Mc-"Union Carbide?" asked Senator CLINT ANDER-
Cone, the new would-be Central Intelligence. SON of New Mexico.
Chief, wrote a letter to Sherman Adams, later ?Yes I would a ect the- would con-
x
kicked out of Government for a conflict of in-
terest, to see whether he, McCone, might have
a conflict of interest as new Chairman of
the Atomic Energy Commission.
Ignoring the fact that the Goldfine charges
against Adams had not made him the best
man to act as judge, McCone listed the Utah.
Construction Co., Kaiser Engineers, Dow
Chemical, Union Carbide as doing large busi-
ness with the Atomic Energy Commission,
and simultaneously doing business with his'
own privately owned shipping companies.
Significantly, two of these companies,
Kaiser and Utah Construction, showed the
pattern of business links McCone has kept
with his old associates and war profiteers.
McCone was president and a partner with
Henry Kaiser and associates in running the
California Shipbuilding Co. during the war
when they rolled an investment' of $100,000
into an overall profit of $44 million.
Later, when he was Under Secretary of the
Air Force, McCone gave his old partner a
quickie Flying Boxcar contract at three times
the cost'the Air Force was paying Fairchild.
Incidentally, Senate hearings conducted by
the late Senator Styles Bridges, of New
Hampshire, showed that Kaiser and his sub-
sidiaries got a total of $219 011,919 in Gov-
ernment RFC loans; received $6,568 million
in Government contracts, and got approxi-
mately half a billion dollars in quickie tax
writeoffs.
BIG AEC CONTRACTORS
p
tinue," replied the future AEC Chairman.
"Union Carbide Is a large customer of
Hendy's" ANDERSON reminded him.
"Yes, they are," McCone ' agreed.
ADAMS GIVES HIS OK
However, he insisted that placing the stock
of his shipping companies in trust with the
Bank of California, in which he is also a
stockholder, cleared him of any conflict of
interest. This left him, however, with the
profits which would accrue from the con-
tracts his shipping companies made from
Union carbide, Kaiser, and the other firms
which did business with the AEC of which
he was Chairman. In other words, while
he was AEC Chairman, his shipping com-
panies would benefit from business with AEC
contractors.
On the basis of this, Sherman Adams, that
great judge of conflict of interest, OK'd the
arrangement; and the Senate, diverted by
the Sherman Adams-Goldflne headlines, also,
OK'd it and confirmed McCone as AEC
Chairman.
However, now that McCone is coming up
for another, even more important, post, head
of Central Intelligence, the Senate might,
take time to review the record and study
the law.
The conflict-of-interest law gives no:
choice either to McCone or to the Senate..
McCone said he had done "A great deal of
soul-searching" and had concluded he could
Kaiser has 'also been one of the biggest handle the AEC Chairmanship without any .
contractors with the Atomic Energy Com- favoritism. ` However, the AEC law does not
'mission including the period when Kaiser's permit a man to search his soul and make ?
old partrier, John McCone, was AEC Chair- the decision. The law makes the decision 'l
man. for him. It gives no alternatives other than "
The company which operates under the get out of any conflict with private business
all-inclusive name of Utah Construction ' interests.
Co. is also part-owned by Kaiser and actually "No member of the commission," it reads,
is a big seller of uranium to the AEC through "shall engage in any business, vocation, or
Its subsidiary, Lucky Mc Uranium Corp. , employment other than that of serving as a
Union Carbide is one of the biggest con- member of the commission."
tractors with the Atomic Energy Commis-
sion. `:It not only sells uranium to the AEC,
but operates AEC Plants at Oak Ridge,
Tenii?., and Paducah, Ky. Both Union Car-
bide and the Kaiser interests benefited from
the &EC's decision not to buy uranium from
"underdeveloped countries.". This obviously
played into the hands of established Ameri-
can companies such as Union Carbide and
_Ka1s~ _?? _ _
after soul-searching, but to make sure that
men like McCone did not serve on this pow- ;
erful commission with the power to make
tremendous profits for certain companies,
unless they gave up their stock in the com-
panies which benefited. This McCone did
not do, and in an early column, one signifi-
cant result affecting McCone's private ship-
ping line will be reported.
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The Washington Merry-Go-hound
THE WASHINGTON POST Saturday, January 20, 1962 C 15
Kennedy Has Become Tougher
By Drew Pearson F- his restlessness at first
took the form of examining
(The brass ring good for levery room in the White
one free ride on the :Wash . House. He turned up in
ington Merry-Go-Round today laces no President had even
goes to Presidedent Jdhn F. 1p
Kennedy.) seen before. One secretary in
{ a top, back room, was so flab-
Some remarkable changes bergasted she almost fainted
have taken place sirst rst n . F. when the President appeared
Kennedy during his first year
in the doorway. She had served
as President. No President under two previous Presidents,
during m Yf
experience in but never saw them.
Washington hash 61:4 Still Restless
caution hit him a jolt never to slow climb back from the
be forgotten, with the Cuban depths of the Cuban crisis and
fiasco. the Vienna tragedy. During
All his advisers, including l this Mr. Kennedy has regained
the Joint Chiefs of Staff, told confidence in himself, and
him the Cuban invasion would Europe has regained confi-
succeed. Eisenhower advisers, dente in hiln.
i
d
s
y
from whom he inherited the The old cocky Kenne
plan, told him the same thing. gone now. The "luck of the
Only Sen. William Fulbright Irish" has been relegated to
of Arkansas disagreed. It the background. The President
proved a tragic failure. still relies on his remarkable
With this, the luck of the memory, still reads the papers
Irish vanished. Mr. Kennedy with amazing rapidity, still
retreated to a policy of ex- uses the telephones. But he
treme caution, retreated also has gone back to his old ad-
from his new advisers, fell visers, realizes that his Secre-
back on his old. His brother tary of State, Dean Rusk,
was given the job of reorganiz- knows more than Dick Good-
1 friend Ted win and that he has some
e
much. Mr. Kennedy, after a year as
The surface President, is still active, still
c h a n g e s a r e. restless. He will drift into his
easy to diag secretary's room to " dictate,
nose; the less drop in on aides, shuffle
perceptible, be '- through their papers ask them
hind.the.SCefleSir.'.:a.`,?: _'t. A about problems they have for'
--
changes are Bearson gotten
more impor- no other President-certainly
tant. not in recent years-has
On the surface, Mr. Ken- shown such an amazing fac-
nedy -has settled down. ulty for keeping all sorts o
When he first became Presi- diverse problems in his head.
dent he was restless, hated to But the most notable change
be confined, couldn't get used in John F. Kennedy is that he
to Secret Service guards and is no longer overconfident.
the protocol that necessarily When first elected, he was
ties up a President. He was ac- cocky, sure of himself, certain
customed to driving his own that no problem was too com-
car to work, he couldn't get plex for him to solve. He had
used to going to his office won every battle he ever
merely by going downstairs in
the White House.
When he was first elected,
Mr.,Kennedy would sometimes
grab the wheel. of his car, tell
the Secret Service -man to
move over, and race down the
highway. He doesn't do that
any more.
RF.1?, lwITUVO%t~ .
pocket.
But there Is also a cautious
streak in the President. It is
not to be confused with cow-
ardice, which is not in him.
He has great courage, but it's
jmixed with *caution. And this
ing CIA, his c os
Sorenson was told to review able, loyal men in his cabinet.
European policy, a youngster, He still has not learned
Dick Goodwin, became chief what President Trwnan and
adviser on Latin America. Roosevelt learned, that it's
next to impossible to ?et along
Deadlock at Vienna with Congress, and that soft-
On top of this came another soaping will get him nowhere.
The President has become
tragedy-the deadlock with tougher in the past year,
Khrushchev at Vienna. Flying steeled ou the most difficult
home from Vienna, Mr. Ken- in
war and cunt
nedy was more depressed school the cold cold wa. and -
than at any time in his life. He gressional of of has forensics.
a vastly And better
talked about the probability President. But if shaft's one
that his children might live thing he still must learn, it's
under war. . The first thing he that high Gallup polls don't
the numoer vi iivuz, Luau ..~~_.
be lost in an atomic war.
Immediately after Vienna
came the return of his back in.
jury. "Thus three failures hit
him almost simultaneously.
Gradually came the long,
solve them by being too nice.
CoDyrlght, 1962. Bell Syndicate, inc.
Drew Pearson will predict
what will happen to General
Walker at the Senate hear-
ings next week-over WTOP-
radio at 6:45 tonight.
I "a
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'vTTG-TV and, various Jan. 21, 1962
other stations 7:30 P.M.
Opinion in the Capital
STATION WTTG-TV,,and various
other stations
DATE January 21, 1961 7:30 P.M. 'CrrY Washington, D. C.
REMARKS OF MR. PEARSON
MR. DREW PEARSON WAS SEEN ON THE TV SCREEN AS
HE WAS INTERVIEWED BY MARK EVANS AND MARTIN WELDON.
EVANS: "Drew, I've had the feeling things have been entirely
too quiet as far as you are concerned for too long with the
Kennedy administration, and now it seems as though you've un-
leashed some pretty powerful guns. I know Martin is ready to
fire one at you, so go right ahead."
PEARSON: "Things are pepping up."
WELDON: "Well, I thought, Drew ...fd-iscussion of Senator
Byrd and Dupont-General Motors stock dispose]
. EVANS: "Drew, on that 'same subject--or on another subject,
I should say, you have taken some pretty hefty swings at a very
important Kennedy appointee, probably as .important a job as there
is in the land, the head of the CIA, Mr. McCone. It looks as
though he may pass in spite of it."
PEARSON: "Oh, he's going to pass, he's going to be nomi-
nated--he's going to be confirmed; I knew that at the start.
But just the same I think it's very important when any man is
up for a very important office that the public has a chance to
look at him. I think it's the obligation of the press to report
the facts on him, and of the Senators to examine them further.
Well, the Senate did yesterday--the Senate Armed Services ' C om-
mittee did scrutinize him rather carefully, not as careful-Was
erhapa they should, but some members, mainly Mrs. smith or main*,
Senator Case of South Dakota, are asking a lot of questions which
I think are very healthy."
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EVANS: "Do you feel?--I think you've been rather kind to
the Kennedy administration thus far although I think you do that
'pretty much with all administrations until you start finding what
you think are weaknesses. Do you feel this is a real mistake on
the part of Mr. Kennedy?"
PEARSON: "Yes, I do. I think this is a serious mistake.
McCone has no background (there?)--he doesn't know anything about
espionage problems, intelligence--"
EVANS: "Who does?"
PEARSON: "Well, a lot of people do. Allen Dulles certainly
had a long background in it, and a lot of people from the State
Department do, and this man has been a very successful businessman
and all the records show that he's made a lot of money at govern-
ment expense. It's all spelled out in past hearings before various
committees, and why should he be head of an agency which has the
power of life and death in making recommendations in certain parts
of the world, especially in the Near East, where (') is
affected and where he owns--is the second biggest stockholder in
Standard Oil of California and a big stockholder in Standard of
New J'csrsey, which control the Arabian-American Oil Company."
VELDON: "Drew, the other day there's, I think, a Newsweek
story which told about the columnists here in Washington most
popular and influential with President Kennedy. Apparently the
President reads regularly Lippman and Alsop and Reston and you,
I think. Do you know how well you stand with the administration?
To what extent do you think you influence the congressional and
presidential actions?"
PEARSON: "Well, that's a very leading question that I
shouldn't answer."
WELDON: "Well, you have.some idea."
EVANS: "Have you any indication in regard to the McCone
story? The President must have read that--have you heard anything
from it?"
PEARSON: "McCone offered to resign the other day--"
EVANS: "As a result of the column?"
PEARSON: "Yeah, the President said not to resign, so I
have no influence with the President.."
WELDON : "But you do have en tre, don't you?"
PEARSON: "Oh, yes. I had a very nice visit with the President
last Saturday."
PEARSON: "I pinpoint my shots very carefully. Anybody who
reads the column--take, for instance, on McCone, will see that I
spent weeks digging into the records, naming dates, amounts
everything that he's done. That took an awful lot of work'
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The Washington Merry-Go-Roitnd
THE WASHINGTON POST Monday, January 22,1962 B 19
Mc Co ~ e Moldings Suggest Conflict
By Drew Pearson
Some of the Democrats
who shouted loudly and con-
tinuously about conflicts of
interest in the Eisenhower
A d ministra-?r
loath to talk
about. possible
conflicts in the
Kennedy Ad-
ministration -
tion of John A.
McCone, new
chief , of Cen=
tral Intelli-
gence.
This column was one which
helped expose some of the
conflicts among Eisenhower
officials, therefore feels obli?
gated - to do the same with
Democrats.
One of McCone's most im-
portant. investments is` In
Standard. Oil of California
and, Standard Oil of New Jer-
sey. He has been a director
of the former, and its report
to stockholders as of Aug. 1,
1961, lists him as owning
18,318 shares, on top of which
he received a stock dividend
of 915 -shares, which, at the
current, value of $53.50, gives
the new CIA chief an invest-
ment of $1,028,965.50 in Stand-
ard of California.
This makes him the second
biggest stockholder in a com-
pany whose profits and fu-
ture are materially influenced
by Central Intelligence.
McCone, when up for con-
firmation to past Govern-
ment - posts, has declined to
sell his stock in these oil com-
panies but. put ' them in :a
trust. Secretaries of Defense
Charley Wilson and. Robert
McNamara would : have been
in making his decisions. These, though he leans over back-
reports may have been com-
pletely conscientious a n d
accurate. But they ought not
to be made by a director who
has heavy investments in the
major American oil companies
affected by the Suez war.
Ilustration No. 4-Just prior
to the Suez war, Nasser put
the bite on- the Arabian-
American Oil Co., through his
friend King Saud of Saudi
Arabia, to collect $200 million
of advance oil royalties. This
was used, directly, to purchase
the huge., arsenal of Czech
arms which Egypt amassed on
Israel's border prior to the
Suez war. It was this build-up
of arms that touched off the
war.
Profits vs. Strategy
Illustration No. -5-During
the Suez war, Syria served an
ultimatum that it would cut
the pipelines crossing her ter-
ritory if any American oil
were sold to the French and
British. The United States
promptly curtailed all oil ship-
ments to the French and Brit-
ish. The CIA Director, who
must necessarily participate in
such a decision, should not be
a heavy stockholder in oil
companies that are affected.
. Illustration No. 6-During
the first three months of
1957, immediately following
the Suez crisis, Standard of
New Jersey raked in the huge
income of $237,000,000-16 per
cent more than in the same pe-
riod of the previous year. In
the same period, California
jumped its profits 13 per cent.
This resulted directly from the
Suez - crisis and a, resultant
boost in the price of oil. The
man who heads CIA, even
ward to ba impartial in his
judgments, should not be a
big stockholder in companies-
likely to profit from his de-
cisions.
Illustration No. 7-It was
CIA which secretly
ized
organ-
which kicked Premier Mossa-
degh out of Iran. He had
seized the Anglo-Iranian oil
refinery. Anglo-Iranian is a
competitor of Aramco. The
head of CIA, with oil stock,
should not be in a position
where he has to undertake op-
erations for or against com-
petitors of the companies in
which he has an interest.
. Illustration No. 8---The oil.
rich sheikdom of Kuwait
right now is in throes of
trouble with oil-rich Iraq. Brit-
ain gets most of its oil from
Kuwait. Some of Kuwait's oil
also goes to Sun Oil, Union
Oil, and Gulf-all competitors
of Standard of New Jersey and
Standard of California in
which McCone holds heavy
interest.
Again, a, CIA director, no
matter h o w conscientious,
should not be a man who _ di-
rectly or indirectly must
handle operations which could
affect his own companies or
his competitors.
NOTE - McCone's wholly
owned Joshua Hendy shipping
line with his partner, State's
Marine '(which got the prize
atomic merchant ship Savan-
nah contract when McCone
was atomic chairman), got $2
million in charter hire con-
tracts from Standard pf Cali-
fornia in 1960 and they have
continued to do a profitable
business. with it since.
Copyright, 1962, Bell Syndicate, Inc.'
w. ^ IM A 1U 1 LAIC SON
delighted to put their stock in
General Motors and Ford in
trust, but were not pej mitted
to do so.
Effects on Israel
It happens that Standard of
California and Standard of
New Jersey control the Ara-
bian American Oil Co., which
operates perhaps the most
fabulous oil concession in the
world, with reserves estimated
to last around 100 years.
It. also happens that the
Near East is a field where
Central Intelligence has
played an all-powerful role
and usually swung its weight
against Israel, the only demo-
cratic country in that area.
The CIA has probably in-
fluenced policy more than the
State Department, and it has
nearly always sided with the
oil companies.
Here are some illustrations
of* how events have been in-
fluenced in the Near East:
Illustration No. 1-In 1952,
CIA maneuvered an Egyptian
revolt that kicked out King
Farouk and substituted the
Naguib-Nasser rule. This may
or may not have been a good
thing, but there is no ques-
tion but that the coup was
organized by CIA, that it led
to the strengthening of Egypt
in the Arab world.
Illustration No. 2 -, When
John Foster D u 11 e s sent
George Allen, then Assistant
Secretary of State, with a spe-
cial message to President
Nasser, it was the Central In-
telligence director for the
Near East, Kim Roosevelt, who
told Nasser to ignore the
Dulles message.
Illustration No. 3 - During
the Suez war of 1956, it was
Central Intelligence 'which
sent , in the reports that
guided President Eisenhower
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The Washington Dlerry-Go-Roiind THE WASHINGTON POST Wednesday, Jan.24,1962 I) 11
MC Cone
By Drew Pearson
Senators who questioned
John McCone, new Central In-
telligence Chief, last week
seemed most concerned about
his position as
one of the big-;
gest s t o'c k-'
holders in.
Standard Oil.
of California..
In the back
was the influ-
ence this mightF
have on Mc-
Cone's CIAO
recomm c n d a-
tions regarding Arabian oil,
Israel, and one of.the world's
key trouble spots-+the Near
East.
Senators Who listened to Mc-
Cone's cool, quiet denials that
his $1,000,000 personal invest-
ment in Standard of Califor-
nia would influence hits deer
sions, did not know that only
one night before he had had
dinner with Ted Peterson,
long-time head of Standard
of California.
Peterson had come to Wash-
ington for the express purpose
of using his personal influence
and charm on any Senators
who might be opposed to Me-
Cone's confirmation, and con-
ferred with McCone on the
eve of the Senate hearing.
This in itself would indicate
how important the oil com-
pany considers McCone's ap-
pointment to the key post of
Central Intelligence. Chair-
man Dick Russell of Georgia
also confirmed its importance
on ell ullf-W
by declaring solemnly that Mc-
Cone's job was "second only
to the Presidency in, its im-
portance."
But Russell showed his an-
noyance when Senators
wanted to question McCone
by pointedly reading his per-
sonal mail during the critical
questioning. Then he studied
a coat-of-arms design and tried
to interest Srm Marn?arPf
1. An advance of 8200,000),-
000 in oil royalties to King
Saud to finance the 1Da6 ands
buildup against Isrci.
2. A Senate report the
$4,000,000 United Stair; bate
in Saudi Arabia was buiii, wiiii-
o
ecord
The lady from-Maine, how?I But Bartlett considerately!tion in order to help out the
poured McCone another glass Arabian-American Oil Co. in
ever, was not to be deterred. of water and went on with his its relations with King Saud.
She brought out that McCone questioning. 3. A Senate investigating
owned $1,000,000 worth of "Do you know," he inquired! committec report that Aramco
stock in Standard Oil of Cali- softly, "if Standard of Cali.!,
fornia, one of the four found- overcharged the United States
fornia is a member of thelNavy $67,000,000 on wartime
ers of the Arabian-American Arabian-American Oil Co.?" oil in order to help Saudi
Oil Co. "Yes, it is," acknowledged Arabia.
"It is clear," she pressed, the CIA nominee.
"that the Central Intelligence "And,' of course, all of us' This enator, signed by th of
Agency must make some eval- late Senator induct oe
have heard that this company,'ti-Iaine states: "To o induce the
uations, recommendations and operating in the Middle East 1
reports to the President re- has* at various times inter',grant of aid to the Saudi Ara-
garding the Middle East. Do vaned or or inter- bianr,government, the Arabian-
participated American Oil Co, uffciirrl '
you see any possibility of con- fared in the operations oflsell to the United States a
at
flict of interest on these mat- governments in those areas, "
ters as CIA director when you observed Bartlett. "Would you prices based on fuel oil at 40
cents a barrel.
have such large holdings in
'
have any
comment to make
"When the
er
these oil companies?" upon that?" de oil because United its Stater wag
"The amount of my holding "In my trips to the Middle
East," McCone replied y these m m a a n d s, notwithstanding
in Standard Oil of California cooll these prior proposals; tine coin-
that mentioned is approxi- "I have observed that the
you panics offered the Navy fuel
Aramco people handled their oil at $1.05 a barrel on a take-
mately correct," McCone ad- relationship with the govern- Itor
mitted. "It might be a little ments of Arabia and Bahrein -leave it basis. The Navy
larger than the figure you (was forced to buy the oil on
mentioned. But quite aside, d t d these terms.
way, an so repor e to me. I
mv?oninion is that the holding "The oil companies," con-
.
In
on't know of an
or e
y
or in several oil companies The Senators, perhaps inlactnea the ucvcrnment by ex-
would have no effect whatso- deference to Russell's' scowls acting high prices, despite the
ever on my activities as direc- and Saltonstall's fidgeting, did assistance granted Saudi nest
tor of Central Intelligence." not press McCone further. But boa the companies' request
to protect and preserve the
Sen. Russell had said that in the files, of the Senate in- "
it would not be necessary for vesti atin committee and the companies concessions.
g g CoDyriBht,.1362, Bell Syndicate, Inc.
Declassified and Approved For Release 2013/05/07: CIA-RDP67-00318R000100340001-0
McCone to sell his oil stock!State Department is an nmaz-
or his shipping company stock, ling record of oil-company in-
When Sen. Bartlett bought!tcrvention on the side of the
up the subject, Massachusetts, Arab states. It includes:
blueblood Sen. Leverett Sal.
tonstall fidgeted with irrita-
tion.
"Mrs. Smith has already
asked that one," Saltonstall
whispered fussily. "She has al-
ready asked those questions."
A
1,. R
 Declassified and Approved For Release 2013/05/07: CIA-RDP67-00318R000100340001-0 B15
-
The Washill ;ton Merry-vo-JUoIIIIU i?+L ?=y---- - - _. - ___
McCone Withheiu Some Facts
While Drew Pearson is in
the Midwest, his column is
written by his associate, Jack
Anderson.
By Jack Anderson
The Maritime Administra-
tion's confidential records re-
veal that John McCone, the
new Central Intelligence chief,
did not cor-
rectly inform
Senators 1 a s t
week about an
alleged conflict
of interest;
while he was
Atomic Energy
chairman.
We hope that
McCone's pe-
riod as CIA di-
rector will be
tration overruled the board
and gave McCone's shipping
partner the contract anyhow.
Claiming no part in the con-
-tract negotiations, McCone
testified last week: "This con-
tract was negotiated during
the spring of 1958. It was
awarded on the 6th of June
of 1958. I took office the 9th
or 10th of July, some Six
weeks later."
Maritime records disclose,
were completed before he was
sworn into the AEC.
Short Memory
Maine's demure Sen. Mar-
garet Chase Smith brought
out that McCone, though
aware of the States Marine
conflict, neglected to mention
it during his 1958 confirma-
tion hearings.
"Why didn't you mention
the States Marine lines in
your answer?" she asked
sweetly.
"I cannot recall," 'shrugged
McCone, "except that there
was no contract b e t w e e n
States Marine and the Atomic
Energy Commission."
Again, he was less than
frank about the AEC's part in
preparing the final contract.
South Dakota's GOP Sen.
Francis Case, author of the
Renegotiation act which has
saved the Government more
than $12 billion in excess
war profits, also tried to pin
McCone down on his World
War II profits.
Fat War Profits
volved financial discussion
which Case disputed by read-
ing the past record.
Sen. Glenn Beall, Maryland
Republican, brought out that
McCono, as Under Secretary
of the Air Force, had partici-
pated in awarding a juicy air-
plane contract to Henry
Kaiser, a former business
associate. Kaiser-Frazer,
promptly ran up the cost of
producing the C-119 flying
boxcar nearly five times the
previous price.
"Wasn't it a fact that Fair-
child was building the C-119
for $260,000?" d e m a n d e d
Beall.
"Just about,' McCone ad-
mitted.
however, that the contract
wasn't awarded until July 25,
1958. Even more significant,
it was held up by the Atomic
Energy Commission, which
wanted the language revised.
All this happened while Mc-
Cone was chairman. His legal
officer, who drafted the changes
that the AEC wanted in the
States Marine contract, was
James Wolf.
Reached in Pittsburgh, where
he is now practicing law, Wolf
confirmed to this column that
the AEC had delayed and re-
vised the contract. Maritime
officials, who helped with the
revisions, also recall that the
question of McCone's conflict
came up informally.
This makes clear (1) that the
AEC participated in preparing
the States Marine contract,
and (2) that the final drafting
occurred after McCone be.
came chairman.
Yet at his Senate hearing
last week, he claimed that the
contract negotiations not only
were handled strictly by the
Maritime -Administration but
productive and efficient. But one of the purposes of Senate confirmation debate is to alert the public regarding the past record of the office-holder, and put him on notice regard
ing the future. This was one
objective in cross examination
given alert and conscientious
members of the Senate Armed
Services Committee.
T h e y questioned McCone
about the arbitrary award of
the atomic-ship contract to
States Marine, which was as-
sociated with McCone in sev
eral joint shipping ventures.
A selection board, using a careful point system to de-
termine the best qualified
company, rated States Marine
sixth out of seven applicants.
Yet the Eisenhower Admini~c
"And Kaiser-Frazer charged
$1,200,000?" Beal pressed.
"Information of that nature
came out in the June, 1953,
hearing," McCone acknowl-
edged.
"Why," asked Sen. Howard
Cannon, Nevada Democrat,
"was the contract taken from
Fairchild and awarded to
Kaiser?"
"What happened was that
we were going through a vast
expansion of our aircraft
production p r o g r a ni," ex-
plained McCone. "The prob-
lem we faced was whether to
open up a second plant under
Fairchild management or to
take a second source such as
Kaiser-Frazer. The recommen-
dation of the Air Materiel
Command, which I approved,
was to select Kaiser-Frazer."
Copyricht, 1962, Bell Syndicate, Inc.
"Apparently," d e c 1 are d
Case, "it became possible for
a group with which you are
associated, with a basic in-
vestment of $100,000, to make
profits of over $44 million in
the. space of a couple of years
or less. Is that a fair state-
ment?"
"No," objected McCone.. "I
do not think it is, Senator."
He launched into an in-
Declassified and Approved For Release 2013/05/07: CIA-RDP67-00318R000100340001-0