Mr. FLANAGAN. But you just testified a minute ago that it was normal accounting practice to carry legal fees as overhead.

Mr. STANHOPE. That is right, under certain circumstances, but under other circumstances it is not.

Mr. FLANAGAN. Can you tell me any circumstances in which normal legal fees would not be carried as overhead?

Mr. STANHOPE. Well, I will cite this one right here. There is no reason for charging it as overhead at all, you see.

. Mr. FLANAGAN. Were they to render services to the corporation in St. Louis or merely services to the office in Washington?

Mr. STANHOPE. According to our treatment they rendered services at the Washington office

Senator MCCARTHY. Never mind your treatment. Where were they rendered, those services, if you know?

Mr. STANHOPE. Well, I don't know.

Senator MCCARTHY. Let me ask you, as an accountant, you did not consider Boyle and Siskind as your lawyers, you considered them as your agents to help you get business and an RFC loan; is that not the reason you carried it this way?

Mr. STANHOPE. Well, not to my knowledge. In other words, I had no knowledge of what services they were to render.

Mr. FLANAGAN. Did you take any part in the preparation of your RFC application for loans in 1949?

Mr. STANHOPE. Well, frankly, I had forgotten all about it, but it is in my handwriting, so

Mr. FLANAGAN. In that application, am I correct in assuming that there is one question concerning payment of legal fees; that is, you have to answer a question about legal fees?

Mr. STANHOPE. Yes, sir; in connection with payment of the lawyer. Mr. FLANAGAN. Do you recall what you said?

Mr. STANHOPE. Well, I am sure that our St. Louis firm of Green, Hennings & Evans were the legal counsel who prepared the papers for obtaining that loan.

Mr. FLANAGAN. To your knowledge did Mr. Boyle or Mr. Siskind have anything to do with the preparation of the application for the loan?

Mr. STANHOPE. To my knowledge absolutely none.

Senator NIXON. Did you indicate on the application that Mr. Boyle was receiving legal fees?

Mr. STANHOPE. I don't think so.

Senator NIXON. You did not indicate that?

Mr. STANHOPE. No; I am sure he did not.

Senator NIXON. And that was a misstatement on the application? Mr. STANHOPE. No, I don't think

Senator NIXON. Well, then, your testimony is that he was rendering legal services

Mr. STANHOPE. No; our testimony was this, that Mr.-that the lawyers in St. Louis, Green, Hennings & Evans, were the only lawyers we employed in getting this loan application before the RFC. Now, I don't know the exact wording of that document we signed, but my memory is that was what it said.

Senator NIXON. And your testimony is that Mr. Boyle did not render legal services in getting the loan?

Mr. STANHOPE. That is right.

Senator NIXON. That is, any services rendered in getting the loans were other than legal?

Mr. STANHOPE. That is right, they were not legal.

Senator MUNDT. What is the date of making the application?

Mr. STANHOPE. What date?

Senator MUNDT. Yes.

Mr. STANHOPE. Maybe I can find it. You are talking about the $565,000 loan, are you not?

Senator MUNDT. The date that you listed your attorneys' firm in St. Louis as your legal company in preparing the application.

Mr. STANHOPE. Gentlemen, my copy of this particular document you are referring to is not dated although the application for the loan was dated July 6, 1949. That is, my copy of it shows that date. Senator MUNDT. July 6, 1949-you had made an earlier application. Mr. STANHOPE. No-wait a minute, I have the wrong loan.

No; that is correct, July 6, 1949, that is the date that my papers show as being the date of the application.

Mr. FLANAGAN. Will you speak up, we cannot hear you.

Senator MUNDT. You had made an application for an RFC loan prior to July 6, 1949, had you not?

Mr. STANHOPE. Yes, sir.

Senator MUNDT. And what was the date of that earlier application?

Mr. STANHOPE. November 19, 1948.

Senator MUNDT. November 8?

Mr. STANHOPE. No, November 19.

Senator MUNDT. November 19, 1948, I see. Now, will you turn to the place in the application where it asks about attorneys and read what you wrote.

Mr. STANHOPE. Well, the exhibit E of it, on one of the RFC forms, reads:

*

*

Agreement as to compensation for services rendered or to be rendered to applicant in connection with application and/or loan in consideration of making the loan by RFC to applicant the undersigned having been retained by applicant for the purpose of rendering professional and other services in connection with the application to the RFC for loan here represents to the said RFC that the undersigned has not made any agreement with the applicant to be paid ** * directly or indirectly any bonus, fee, or commission in any form in connection with said application or for the obtaining of the loan applied for by the applicant or any compensation in any form for services rendered or to be rendered in connection therewith except for the service and in the amount stated below

and below that it reads "none."

Senator MUNDT. And who is listed as the attorney?

Mr. STANHOPE. Well, we gave them an affidavit as to the amount of moneys paid to Green, Hennings & Evans for the handling of this

loan.

Senator MUNDT. Do you have that affidavit here?

Mr. STANHOPE. No, I don't. Well, maybe I can find it.

Well, that affidavit was prepared by Green, Hennings & Evans and shows the amount of legal services they charged us for handling that. Now, this is the November 19, 1948, loan application.

Senator HOEY. What does it show?

Mr. STANHOPE. It shows Green, Hennings & Evans' legal fees in connection with the loan, $350.

Senator HOEY. The letter dated June 23, 1949, from Mr. Stanhope to the RFC in St. Louis and the attached letter of June 17, 1949, and the tabulations attached will be exhibit 17.

(The documents referred to were marked "Exhibit No. 17" and may be found in the appendix on p. 1228.)

Senator MUNDT. You made out a similar application and affidavit for the other application of July 6?

Mr. STANHOPE. That is right.

Senator MUNDT. And in neither of those did you list the names of Boyle or Siskind as a firm or individually?

Mr. STANHOPE. NO.

Senator MUNDT. Despite the fact that he was on your payroll drawing $500 a month?

Mr. STANHOPE. That is right.

Senator MUNDT. So he was on your payroll at that time and drawing $500 a month and he was not there as a lawyer when you filed this report to the RFC?

Mr. STANHOPE. That is right.

Senator MUNDT. And he was not the lawyer that prepared this affidavit

Mr. STANHOPE. Well, now, if I understand, this affidavit, by the way, too, is not in connection with the application but actually in the closing of the loan itself. It is one of the documents

Senator MUNDT. That is right; it goes far beyond, if I understood what you read, beyond simply the preparation of the application, soliciting the loan and making your presentation and it talks about fees and lawyers

Mr. STANHOPE. But, sir, there was another point that I wanted to make

Senator MUNDT. And so Mr. Boyle received $500 a month and in your report to the RFC in connection with the loan he is not listed on that affidavit by you as attorney?

Mr. STANHOPE. That is right.

Mr. MUNDT. So, he must have been functioning down here then in some extra legal capacity; by that I mean extra lawyerlike capacity not necessarily legal, he was not functioning as your attorney and you had not put that in your affidavit.

Mr. STANHOPE. NO.

Senator HOEY. Well, in order to get this straight, what was the date of that affidavit for the last one in July 1949 ?

Mr. STANHOPE. Well, if I can find

Senator HOEY. And on neither one of those occasions, no checks were being paid to Mr. Boyle or Mr. Siskind, I mean, on these different dates-when you made the first affidavit in November 1948, Mr. Boyle was not on your payroll?

Mr. STANHOPE. That is right.

Senator HOEY. Mr. Siskind was not on your payroll?

Mr. STANHOPE. That is right.

Senator HOEY. Now, when you made your affidavit in July 1949, Mr. Boyle was not on the payroll?

Mr. STANHOPE. That is right.

Senator HOEY. Mr. Siskind was?

Mr. STANHOPE. That is right.

Senator HOEY. All right. I just wanted that straightened out; we want the facts.

Mr. FLANAGAN. Mr. Stanhope, referring back to that letter I read from a few minutes ago, did anyone in the RFC office at St. Louis instruct you to carry Boyle and Siskind as commission men at that time?

Mr. STANHOPE. I don't remember that they did, no.

Mr. FLANAGAN. Did anyone in the RFC office know that Boyle or Siskind were receiving other than straight commissions from you?

Mr. STANHOPE. Well, I don't know what they did know.

Mr. FLANAGAN. Did you have any discussions with anybody in the RFC concerning that matter?

Mr. STANHOPE. I don't remember any discussions in any office on names on the list as being paid money which would apply against this commission account

Mr. FLANAGAN. Well, did you get permission from anyone in RFC to put this under commission rather than carrying it as overhead?

Mr. STANHOPE. No, I did not think it was necessary. We were discussing it and they knew it, that names were included, the individuals who were being paid money.

Mr. FLANAGAN. Did they know what Mr. Boyle and Mr. Siskind were getting paid for at that time?

Mr. STANHOPE. I don't know that they did. I don't know.

Mr. FLANAGAN. Well, is it reasonable to assume, from reading the letter itself, would you not think that they were getting straight commission payments; anyone would assume that, would they not? Mr. STANHOPE. No, not necessarily.

Mr. FLANAGAN. Well, wouldn't anybody reading that letter assume Mr. Siskind and Mr. Boyle were being paid commissions from your company on the sale?

Mr. STANHOPE. They would, except for the fact we discussed it with them personally.

Mr. FLANAGAN. With whom?

Mr. STANHOPE. With the RFC, so that

Senator MUNDT. With whom specifically did you discuss that, with what official, in your capacity as comptroller?

Mr. STANHOPE. Well, I couldn't tell you that, either, because actually I was in and out

Senator MUNDT. You mean, if you had not done it, then somebody else may have done it; or you did not talk to them?

Mr. ŠTANHOPE. You see, here is what happened in that RFC loan: We were down there continually getting the details of this loan worked out. The loan had been passed and we were down there getting the details worked up. They had given us a loan and there were-what would you call it-conditions. We were working them out over a period of probably a month or so, but I don't know whom we talked with.

Mr. FLANAGAN. This letter referred to, which was dated June 17, 1949, was after you had the first loan and before you got the second loan?

Mr. STANHOPE. Yes, but I am talking about these conditions. The first loan was granted in March.

Mr. FLANAGAN. What I am trying to develop here is, What did you tell the RFC Siskind and Boyle were for?

Mr. STANHOPE. I don't know.

Mr. FLANAGAN. Did you tell somebody in the RFC they were actually not receiving commission but were in effect being paid legal fees?

Mr. STANHOPE. Well, frankly, I don't know whether I told them anything.

Mr. FLANAGAN. Do you recall any discussion with anybody in RFC regarding Mr. Boyle or Siskind in 1949?

Mr. STANHOPE. I don't remember any conversation.

Senator MUNDT. And as far as you know, right or wrong, the only thing RFC could assume from that letter was that they were being paid a commission against sales; that is what you wrote them.

Mr. STANHOPE. Yes; but, see here is the difference, though. What I am saying is that the RFC wrote an agreement which we signed in connection with the distribution of these commissions and that was a part of the first loan application, in granting the loan.

Now, what I am trying to say is this: That they understood the conditions, they understood what we were talking about when we referred to "commissions"-but I do not know the particular date or particular time or particular place when we discussed or with whom we discussed these points.

Senator MUNDT. Well, will you tell us what they were supposed to understand about Siskind and Boyle?

Mr. STANHOPE. Well, I am not absolutely positive that they understood anything about them, except

Senator MUNDT. Are you positive you understand what they were supposed to be doing?

Mr. STANHOPE. No; I don't know what they

Senator MUNDT. And since you could not have told them unless you understood it, no wonder there is doubt.

Mr. STANHOPE. Well, that could be true, too.

Senator NIXON. Mr. Chairman, may I ask a question on that point? Senator HOEY. Go ahead.

Senator NIXON. I think that I can probably help to clear this up and it will just take a moment, and it is for your own interest, because obviously, I mean, you had a lot of business and transactions to go through here and you cannot be expected to recall all of these little individual conversations.

Now, you recall, of course, the entries that were made out under your direction. I have here a photostatic copy of the letter.

Mr. STANHOPE. That is right.

Senator NIXON. Now, as a matter of fact, neither Mr. Boyle nor Mr. Siskind were carried as attorneys, were they-you did not even consider them as attorneys, did you?

Mr. STANHOPE. I did not.

Senator NIXON. And they were, in fact, as far as you were concerned, salesmen, and, reading from your records, from the commission ledger and these are your records, Mr. Stanhope, not mine here it says, "Commission ledger," and then the term "salesmen," and immediately after that, "William O. Boyle."

And I turn to the next page and it has, "Commission ledger," and "salesmen" and a dash and "Max Siskind."