time when we discussed the terms and conditions of the resolution approving the loan. Mr. FLANAGAN. Was that the $80,000 or the $565,000? Mr. KRAFT. That was the $565,000 loan. Mr. FLANAGAN. Where did you meet Mr. Finnegan on that occasion? Mr. KRAFT. He came into the office with Mr. Blauner and Mr. Stanhope. Mr. FLANAGAN. That was some time probably after November of 1949? Mr. KRAFT. Yes. Mr. FLANAGAN. At that time you had a discussion with Mr. Finnegan concerning the loan terms? Mr. KRAFT. Well, it was a general discussion. There were 8 or 10 of us in the meeting. Mr. FLANAGAN. Who was there representing the company, other than Mr. Finnegan and Mr. Blauner? Mr. KRAFT. Mr. Stanhope. Mr. FLANAGAN. Mr. Stanhope was also there? Mr. KRAFT. Yes. Mr. FLANAGAN. At that time did Mr. Finnegan indicate in any way his association with the corporation? Mr. KRAFT. No; he didn't. Mr. FLANAGAN. Then you did not know whether he was a stockholder, an attorney, or merely a friend? Mr. KRAFT. I think somebody mentioned, I believe, he was a stockholder; I didn't know. Mr. FLANAGAN. Did you know at that time he was internal-revenue collector in St. Louis? Mr. KRAFT. Yes. Mr. FLANAGAN. Have you ever received any gifts or gratuities of any kind from any official of the American Lithofold Co., either directly or indirectly? Mr. KRAFT. Well, I had an occasion-rather an incident I will tell you about. I at one time was talking to Mr. Blauner in the office. I was going on vacation, and I told him I was going fishing up in Minnesota, and he said he would like to take a rest for a few days and wanted to know whether he could not go fishing with me. "Well," I said, "I have reservations. I cannot get any more reservations." and he said, "Maybe I can get a reservation for a week," he said, "Would you go?" I said, "I will go." So I spoke to Mrs. Kraft, and- Mr. FLANAGAN. You spoke to whom? Mr. KRAFT. Mrs. Kraft, and she said it was all right. So, we went out and went up to Wisconsin, spent 5 days, and at the conclusion of that visit, why, I wanted to pay Mr. Blauner my part of it, and he said "No; it is already paid," and wouldn't leave me pay. I didn't want to be obligated to my borrower; so Mrs. Kraft and I decided to send him something. We sent Mr. and Mrs. Blauner a gift which I thought compensated them for the visit. Mr. FLANAGAN. What was the gift you sent them? Mr. KRAFT. The gift was ceramics that Mrs. Kraft made, handmade ceramics, very expensive. We sent them to Mr. and Mrs. Blauner. Mr. FLANAGAN. What did you consider the value of the ceramics to be? Mr. KRAFT. I would say about $200, $250. Mr. FLANAGAN. When did you send these ceramics to Mr. Blauner? Mr. KRAFT. Subsequent to the visit. Mr. FLANAGAN. How long after? Mr. KRAFT. A period of time as she made them. It took a little while to make some of these things. Mr. FLANAGAN. When was it that you went up to Wisconsin with Mr. Blauner? Mr. KRAFT. I think it was in August; August 15, I believe. Mr. FLANAGAN. Of 1949? Mr. KRAFT. Yes. Mr. FLANAGAN. Who was up at this camp other than your wife and yourself and Mr. Blauner? Mr. KRAFT. Mr. Blauner's wife and grandchild, and my two children. Mr. FLANAGAN. Any other officials of the firm? Mr. FLANAGAN. I have here a bill from Koerner's Resort on Spider Lake in Manitowish, Wis., which indicates that Mr. and Mrs. O. R. Kraft and 2 sons were at that resort for 5 days, apparently the 15th, 16th, 17th, 18th, 19th, 20th, and 21st-more than 5. Mr. KRAFT. No; it was 5 days. Mr. FLANAGAN. What? Mr. KRAFT. It was 5 days. Mr. FLANAGAN. And that the total bill was $272, and this was paid and found in the files of the American Lithofold Corp. Mr. KRAFT. Yes. (The document referred to was marked "Exhibit No. 3" and may be found in the appendix on p. 1191.) Mr. FLANAGAN. Now at that time it is true that the American Lithofold loan was pending in Washington; was it not? Mr. KRAFT. That is right. Mr. FLANAGAN. Just to keep the record entirely straight, it is also true that you, in the course of your work, had declined American Lithofold loans each time in your office as they came up. Mr. KRAFT. That is right. Mr. FLANAGAN. You never approved those loans? Mr. KRAFT. No; I did not. Mr. FLANAGAN. Did you receive any other gifts or gratuities from that corporation, either directly or indirectly? Mr. KRAFT. NO. In fact, I would not have gone with him on a fishing trip had I known I was going to be a guest. There was no intention of going as a guest. Mr. FLANAGAN. You felt at the time you went you were going on your own? Mr. KRAFT. On my own, absolutely. Mr. FLANAGAN. How long prior to August of 1949 had you known Blauner? Mr. KRAFT. Since the application or the loan was transferred from New York. I think that was in either late 1946 or early 1947. Mr. FLANAGAN. And you felt on friendly enough terms with him to want to spend a 5-day vacation with him and his family? Mr. KRAFT. That is right. He merely wanted the rest, and I will say this for the record that we never discussed business while we were on that fishing trip. Mr. FLANAGAN. He never once discussed the loans on the whole trip? Mr. KRAFT. He never once discussed, absolutely. Mr. FLANAGAN. To your knowledge, did any other employee of your office ever receive any gift of gratuity of any kind, either directly or indirectly, from any official of the corporation? Mr. KRAFT. Not to my knowledge. Mr. FLANAGAN. This was the only instance you know of? Mr. KRAFT. That is right. Senator HOEY. Mr. Kraft, do you recall whether this trip was made before or after the loan was rejected? Mr. KRAFT. It was after. Senator HOEY. You had already heard the matter and rejected the loan? Mr. KRAFT. Yes, sir. Senator HOEY. And it had been sent to Washington? Mr. KRAFT. Yes, sir. Senator HOEY. Did this loan come back before you for consideration at any other time after that? Mr. KRAFT. No, sir. Senator HOEY. It never did come back for consideration by you, by the office in St. Louis? Mr. KRAFT. No, sir. Mr. FLANAGAN. It is a fact though-is it not, Mr. Kraft?-that after the loan was approved it was the responsibility of your office to service the loan and see that the conditions were carried out? Mr. KRAFT. Yes, sir. Mr. FLANAGAN. And you did administer that loan after you took this trip? Mr. KRAFT. Yes, sir. Senator NIXON. Mr. Kraft, the situation with regard to the committee connection and Mr. Young is rather interesting to all of us, I am sure, and I would like to ask you this question. During your period of service with the RFC, you have testified already, Mr. Young did not call you on any other occasion- Mr. KRAFT. That is right. Senator NIXON (continuing). In regard to a loan. Did anybody else from the Democratic National Committee ever call you on any occasion in regard to any loan? Mr. KRAFT. No, sir; nobody. Senator NIXON. Did anybody ever call you from any other committee in Washington in regard to any loan? Mr. KRAFT. No, sir. Senator NIXON. On any occasion? Mr. KRAFT. No, sir. Senator NIXON. You never received a call from a representative of the Small Business Committee, for example? Mr. KRAFT. No, sir. Senator NIXON. On any matter? Mr. KRAFT. No, sir. Senator NIXON. On which a call was made from Washington which you took Mr. KRAFT. That is right. Senator NIXON (continuing). In which reference was made to a committee? Mr. KRAFT. That is right. Senator NIXON. And yet you still just assumed that it was a routine call even though you had never received any committee calls previously? Mr. KRAFT. Yes. I didn't know what it was. Senator MCCLELLAN. May I ask a question? Senator HOEY. Senator McClellan. Senator MCCLELLAN. Is it not a fact that when he referred to the committee you knew he meant and was representing the Democratic National Committee, and didn't you so govern yourself? Mr. KRAFT. No; no, I didn't Senator MCCLELLAN. Did you not believe at the time that he was telling you, and he implied to you, and you accepted such an implication when he referred to the committee that he meant the Democratic National Committee? Mr. KRAFT. I didn't know what he meant. I will be truthful. Senator MCCLELLAN. I did not ask you that. Did it not impress you at the time what he meant and was referring to, and did you not so accept it, and were you not governed accordingly? Answer that directly "Yes" or "No." You said you did not know. I am asking you what you thought at the time. What impulse did you act on? Mr. KRAFT. Well, I guess it could be the Demcratic; I didn't know. Senator MCCLELLAN. I ask you, What were your reactions to it? What did you assume! Mr. KRAFT. Well, I guess it was the Democratic National Committee. Senator MCCLELLAN. You thought so at the time; did you not? Mr. KRAFT. I suppose so. Senator MCCLELLAN. Yes. That is all. Senator HOEY. Thank you, Mr. Kraft. Senator HOEY. You may be excused. The subcommittee examined Mr. Dunham and Mr. Hise yesterday afternoon. This was done in executive session because of the condition of their health. That evidence was released to the press this morning at 9:30. This afternoon at 2: 30 the subcommittee will meet again over in the Capitol, the same place as yesterday, and examine Mr. Dodds in executive session for the same reason, and his testimony will be released in the morning. For the record, I am offering the report of G. W. Brodie, examiner; report of William J. Rochelle, examiner; report of H. J. Herrmann, examiner; and the report of R. M. Anderson, examiner, to be included in the record. (The documents referred to were marked "Exhibits Nos. 4, 5, 6, and 7." Exhibits Nos. 4, 5, and 7 may be found in the appendix on pp. 1191, 1196, and 1200. Exhibit No. 6 may be found in the files of the subcommittee.) Senator HOEY. The subcommittee will take a recess at this time until 10 o'clock in the morning, and the witnesses who have not been examined and who are under subpena will report back in the morning at 10 o'clock. (Whereupon, at 12 noon, the hearing was recessed to reconvene at 10 a. m. Saturday, September 15, 1951.) AFTERNOON SESSION The subcommittee met at 3 p. m. in the office of the Secretary of the Senate, United States Capitol Building, Senator Clyde R. Hoey (chairman of the subcommittee) presiding. Present: Senator Clyde R. Hoey, of North Carolina; Senator John L. McClellan, of Arkansas; Senator Hubert H. Humphrey, of Minnesota; Senator Thomas R. Underwood, of Kentucky; Senator Karl E. Mundt, of South Dakota; and Senator Richard M. Nixon, of California. Also present: E. C. Welsh, representing Mr. Symington; Francis D. Flanagan, chief counsel; Carmine S. Bellino, accounting consultant; and Ruth Young, clerk. Senator HOEY. The committee will come to order. Mr. Dodds, will you stand up and hold up your right hand. Do you solemnly swear the testimony you give in this case shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. DODDS. I do. TESTIMONY OF CHAUNCEY Y. DODDS, ASSISTANT TO DEPUTY ADMINISTRATOR, OFFICE OF LOANS, RECONSTRUCTION FINANCE CORPORATION Senator HOEY. Mr. Dodds, will you give your name and address to the reporter, please? Mr. DODDS. Chauncey Y. Dodds. Do you want my home address? Senator HOEY. Yes, please. Mr. DODDS. 2720 Wisconsin Avenue, Washington, D. C. Senator HOEY. Mr. Dodds, how long have you been with the Reconstruction Finance Corporation? Mr. DODDS. About 18 years. Senator HOEY. In what position? Mr. DODDS. When I came to the Reconstruction Finance Corporation, I held the position of Chief Examiner of the Drainage and Irrigation Division, then became a member of the Review Committee, and then Chief of the Small Business Division, then manager of the Office of Loans, and more recently Assistant to the Deputy Administrator. Senator HOEY. Yes. Now, Mr. Dodds, we are holding this executive session because the doctor has made a statement with reference to your health. Would you mind telling the reporter what the condition of your health is at this time. |