active selling-I again had to get out in the field and sell, and we were trying to do this, and the only reason that some of these entries were made on these books was on the insistence of the Internal Revenue, when they came out to St. Louis to close the situation during the course of that year instead of over the 2-year period, which I objected to.

Senator MUNDT. Did you carry on your books of your company the retainer of the firm of St. Louis attorneys as commissions?

Mr. BLAUNER. We testified we do not.

Senator MUNDT. You do not what?

Mr. BLAUNER. That is right; carry it on the books as commissions. Senator MUNDT. So that the only lawyer on books under the heading of commissions is Boyle, and is Siskind?

Mr. BLAUNER. It happened to be in this general account we were building up on the overriding commission account. I tried to explain that to you to the best of my ability.

Senator MUNDT. I see no relationship at all, by virtue of the fact that it was to be charged to your Washington office

Mr. BLAUNER. But we were running our business.

Senator MUNDT. That they were to be commissions.

Mr. BLAUNER. I say you don't, I am sure you don't understand, or you would not be having an investigation of our accounts in the first place; I am positive that is the situation.

Senator MUNDT. There is nothing in your records to verify it.
Mr. BLAUNER. Pardon?

Senator MUNDT. Can you produce anything in your records to verify it?

Mr. BLAUNER. Is it necessary?

Senator MUNDT. Your books do not show it; your memorandum does not show it.

Mr. BLAUNER. I mean, isn't it customary for a company to set up their books, if they have nothing to hide along those lines, so that they get the information they want? We don't necessarily follow through on technicalities on these things.

Senator MCCARTHY. I still do not understand why you listMr. BLAUNER. I know you gentlemen don't, but it is a fact. Senator MCCARTHY. Wait a minute-I still do not understand why you list one lawyer's fees as legal fees; another lawyer who has practiced no law for you whatsoever, performed no legal services, you list as advanced commissions. You say that is because of some agreement that you had with the Internal Revenue Department, is that right?

Mr. BLAUNER. I didn't say that. I said they insisted on some of the other transactions that we had there, of listing them a certain

way.

Senator MCCARTHY. I see.

Mr. BLAUNER. During the year-not that particular item.

Senator MCCARTHY. The Internal Revenue Department, you say, was up to your office, and after that you changed your bookkeeping system?

Mr. BLAUNER. I did not say we changed our bookkeeping system. I said that they made suggestions about entries, so we could close certain transactions that happened in the year 1950 or 1949 for 1949

instead of carrying them over the way I originally planned, for 2 years.

Senator MCCARTHY. Who was the internal revenue man doing that work?

Mr. BLAUNER. I don't know the names of the parties, but I again was out there very much. Mr. Stanhope handled the situation with

them.

Senator MCCARTHY. Was Mr. Finnegan in on that?

Mr. BLAUNER. Oh, no; I said—I started to say something-internal revenue, I mean the agents that come in, not Finnegan. He had nothing to do with that.

Senator MCCARTHY. I see. You say as a result of the Internal Revenue Department's coming in you changed your bookkeeping so that you would list Attorney Boyle's fees

Mr. BLAUNER. I did not say that, Senator.

Senator MCCARTHY. Tell me, in 1946 or 1947 you hired Cusick? Mr. BLAUNER. That is right.

Senator MCCARTHY. You properly listed that as legal fees; is that right?

Mr. BLAUNER. And in addition to that-yes.

Senator MCCARTHY. Let us go slowly. Then sometime in 1946 you hired him, and in 1949 when you hired Boyle

Mr. BLAUNER. That is right.

Senator MCCARTHY (continuing). You changed your bookkeeping system so that you would carry your Washington lawyer on the books as receiving advance commissions. Could you tell us why? I am curious to know that.

Mr. BLAUNER. Yes, I told you why; that at the time I had an idea that I wanted to get some idea, because of our override commission account which we started to charge on our pricing at that time to cover these extra activities, let us put it that way, and that is a fact. Senator MCCARTHY. Did you feel that Boyle would be of any benefit to you in getting Government contracts?

Mr. BLAUNER. It did not enter my mind as such at the time, but I certainly, Senator-if I knew you and wanted, or any other Senator and wanted to go up any place, and ask you to introduce me to somebody if we had a deal up that we could legitimately bid on it————

Senator MCCARTHY. You have not paid a Senator for doing it? Mr. BLAUNER. I didn't say I did. I said if I had occasion to, I would talk to him about it. They are representatives of the people, and that is what we are supposed to come up here for.

Senator MCCARTHY. This Boyle-Siskind account cost you about $15,000, I believe, to date. Let me ask you this: In view of the fact that you testified that they performed no legal service for you, first, am I correct in that

Mr. BLAUNER. I did not say that.

Senator MCCARTHY. Did they do any legal services?

Mr. BLAUNER. They could have done any minor things that Mr. Green had taken up about collections; no major thing.

Senator MCCARTHY. Do you know of any minor thing?

Mr. BLAUNER. Yes, I understand Green talked to Boyle and Siskind on several occasions about a few items of collections, and so forth. I am telling you they were not major.

Senator MCCARTHY. So you are saying the only legal services that you know of they performed, that Green may have talked to Siskind or Boyle on several occasions?

Mr. BLAUNER. I made the statement that he may have. I know that he definitely talked to either one or the other regarding the claim over at the well, the General Accounting Office. I start to think of the initials GAO.

Senator MCCARTHY. Would you tell us this: What would you estimate would be a reasonable legal fee to cover the few times that Green talked to Boyle or Siskind?

Mr. BLAUNER. Do you want that information, I mean, as a matter of fact, Senator, as to what I might consider what actually happened in our experience in the last 2 years, or what?

Senator McCARTHY. I want to know this: I want to know what you would consider a reasonable legal fee for the legal services that Boyle or Siskind performed when they discussed this matter with Green.

Mr. BLAUNER. Now, these gentlemen were on a retainer fee, and I can say this to you on that one item what they accomplished on that was zero because we had to pay the claim.

Senator MCCARTHY. My question is what would you consider— Mr. BLAUNER. If I was going to hire a man for that purpose and knew in advance what he was going to accomplish, I wouldn't pay him anything for it if he didn't accomplish anything.

Senator MCCARTHY. So the only actual services, igal services, they performed then were a few conversations with Green. You say they accomplished nothing; therefore, their services were worth nothing. Do you feel now that you overpaid Boyle and Siskind in the amount of $15,000?

Mr. BLAUNER. No, I don't. We had them on a retainer basis.
Senator MCCARTHY. Do you think they earned the $15,000?

Mr. BLAUNER. We had them on a retainer basis; that was the agreement, and so we kept them on.

Senator MCCARTHY. I want to know though, in view of the fact that many of your contracts are with the Government, that means that the Government is paying Boyle or Siskind. I wanted to know from you now whether you feel they were worth $15,000 to you.

on.

Mr. BLAUNER. If I didn't think so, Senator, I would not keep them

Senator MCCARTHY. Then your answer is that you think they were worth $15,000.

Mr. BLAUNER. Yes, sir; until I discharge them, that is right.
Senator MCCARTHY. Did they get any business for you?

Mr. BLAUNER. None.

Senator MCCARTHY. None. Do you think that they were of any benefit in helping you get Government business?

Mr. BLAUNER. I know definitely they did not have to be.

Senator MCCARTHY. Did you think that they were of any benefit to you in getting the RFC loans?

Mr. BLAUNER. I know definitely they had nothing to do with it. As far as-to the best of knowledge they had nothing to do with the RFC loan.

Senator MCCARTHY. Then your testimony today is that you feel that neither Boyle nor Siskind helped your company in any way to

get either Government business or an RFC loan, is that your testimony?

Mr. BLAUNER. That is proper; that is correct.

Senator MCCARTHY. You say that the only legal services they performed was to advise once or twice with Green; that you say now they earned their $15,000, is that correct!

Mr. BLAUNER. Only because I stipulated an agreement with them, and agreed to pay them $500 a month as a retainer.

Senator HOEY. At this point in the record we will insert the memorandum from Mr. Stanhope dated February 17, 1949.

(The memorandum from Mr. Stanhope dated February 17, 1949, was marked as "Exhibit No. 20" and may be found in the appendix on p. 1236.)

Senator MUNDT. Maybe this might refresh your memory, Mr. Blauner. In the testimony you gave us earlier, this claim you are talking about is this $37,000 claim.

Mr. BLAUNER. That is right.

Senator MUNDT. Let me read you this testimony, and that may clear this thing up:

Senator HOEY. How much did you pay Boyle?

Mr. BLAUNER. Paid Boyle $1,250.

Senator HOEY. You paid Boyle how much?

Mr. BLAUNER. $1,250.

Senator HOEY. How much did you pay Siskind?

Mr. BLAUNER. The difference between that and the present day of $500 a month from February 1; I don't know.

Senator HOEY. Something like $12,000 to $13,000 to Siskind?

Mr. BLAUNER. Let me see, Senator, 1949 to 1950.

Mr. FLANAGAN. That is roughly $50,000.

That included the Green-

Mr. BLAUNER. Which had nothing to do with the legal fees.
Senator MUNDT (reading):

Senator NIXON. In other words, you paid Green, Boyle, and Siskind $50,000 working on these $37,000 worth of claims; is that right?

Mr. BLAUNER. That is right.

Mr. BLAUNER. Well, I did not understand at the time, Senator Mundt, that Green was included in that amount.

Senator MUNDT. It mentioned it specifically.

Mr. BLAUNER. I say-

Senator MUNDT. In other words, you paid Green.

Mr. BLAUNER. Is there something further in there, Senator, about that situation?

Senator MUNDT. You paid Green, Boyle, and Siskind, working on these $37,000 worth of claims, $50,000. You were asked whether that was right, and you said, "That is right."

Mr. BLAUNER. Senator, could I ask you one question? Is there anything further in connection with that statement?

Senator MUNDT. I will read on. I don't know; that is as far as I have gone. [Reading:]

Mr. FLANAGAN. Are those the only matters to your knowledge? Were there any other matters to your knowledge that either Boyle or Siskind worked on in behalf of your corporation, other than these two claims that you are talking about?

Mr. BLAUNER. I do not know of another single thing they did except this call that I told you, introductory call. You are talking about Boyle and Siskind only now?

Mr. FLANAGAN. Yes.

Was the Boyle call in the RFC in regard to your loan?

Mr. BLAUNER. That is what I understood at the time I was talking about.

Senator MUNDT. So that all they did for the $50,000 was to try to get you back $37,000 worth of claims, and whatever services Boyle rendered in connection with your RFC loan?

Mr. BLAUNER. At that time, Senator, can I say there was no objection raised in St. Louis to the payment of Boyle and Siskind on this money.

Senator NIXON. Who would object?

Mr. BLAUNER. By the RFC.

Senator MUNDT. I did not say they would object. I would not expect the RFC to object to your paying Boyle's salary. Why should they?

Mr. BLAUNER. We only paid them for 2 months.

Senator MUNDT. You had been in contact with them a goodly number of times in your behalf.

Mr. BLAUNER. Not by us.

Senator MUNDT. I am talking about the RFC.

Mr. BLAUNER. I am talking about the American Lithofold Corp. Senator NIXON. Mr. Blauner, what you have been trying to get across is that the book entries indicating that Mr. Boyle was paid commissions do not mean what they say; that actually Mr. Boyle and Mr. Siskind were attorneys for the company in Washington, is that cor

rect?

Mr. BLAUNER. That is correct.

Senator NIXON. Now, I think you can understand why the committee is puzzled, at least some of us, on this particular transaction. We had Mr. Toole, who was the treasurer of the company. He, of course, said, as you stated, that he did not have too much to do with the business end, but we asked him about the Boyle-Siskind contract, and he said he did not even know about it, never even heard about it, until he read about it in the newspapers; did not even know he was on the payroll, so he did not know what he did.

Mr. BLAUNER. Well-

Senator NIXON. Wait a minute, let me finish, and then you can have your opportunity.

Mr. BLAUNER. O. K.

Senator NIXON. So that you can get the purport of it. Then we had the comptroller, Mr. Stanhope, on the stand. We said, "Can you tell us what Mr. Boyle and Mr. Siskind did for the $16,250, to be accurate, that they have received to date, and that they are still receiving at that rate-I mean, that Mr. Siskind is still receiving at the rate of $500 a month?"

Mr. Stanhope said, "I don't know; I just paid the checks."

Now, we have you on the stand, and apparently as you pointed out, you are the fellow who does the work of 10 men, and I would not be surprised that you did.

Mr. BLAUNER. And the principal stockholder.

Senator NIXON. You are the principal stockholder; you are now the president of the company?