The CHAIRMAN. Your Compliance man in Kansas City?

Mr. KIRCHNER. Yes.

The CHAIRMAN. Did he say that the Washington Compliance Division told him that, or that the district attorney at Kansas City said he would not prosecute?

Mr. KIRCHNER. I am not certain about that, but I do have a written memorandum from the Compliance Division in Kansas City stating that there would be no prosecution and the file was returned to me. I have the truck and the money. It is now up to my legal counsel. The CHAIRMAN. I think it is fine that you have the truck and the money, but that does not answer the question we have in mind. Any questions?

Mr. RIZLEY. Did you dispose of your business before you accepted this employment with the Government?

Mr KIRCHNER. Yes. It was turned over to my former manager out there.

Mr. RIZLEY. Have you conducted any spot sales or site sales in your region?

Mr. KIRCHNER. Yes. We have two in progress right now.

Mr. RIZLEY. Will you very briefly tell the committee just how one of those site sales is conducted?

Mr. KIRCHNER. A site sale is conducted by sending a crew into that location-whether a camp, post, or warehouse-in which surplus material is located. They inspect the material and "firm up" the inventory. An analysis is made of the inventory. There may be certain classes of goods that just do not lend themselves to a site sale. That type of goods is not included in the sale, but of the goods to be sold at the site, samples are pulled out and they are tagged, priced, and all of that.

On the opening day of the sale there are lists, and the customers can go to the sample tables and pick out what they want. On the tags we put maximum and minimum quantities, and so forth. Then there is a table where he fills out his order. There is a running inventory kept, and as soon as any item is exhausted, it is jerked off the sample table. We deliver right there if desired.

Mr. RIZLEY. After your priority claimants have been satisfied, suppose you had $1,000,000 worth of automotive parts, we will say, to sell; what method do you use in determining who will purchase first? Mr. KIRCHNER. When the general public comes in?

Mr. RIZLEY. Yes.

Mr. KIRCHNER. First come, first served; and you have minimum and maximum quantities, so that no one person can take the whole lot.

Mr. RIZLEY. Some of the complaints we have received-not from Kansas City, that I know of-are to the effect that a few people have gobbled up the remainder, and small businessmen who came miles and miles to attend the sale could not get any. Have you had experience along that line?

Mr. KIRCHNER. I certainly have. I can cite our Camp Crowderand think Fort Leavenworth-sales. This is within the veterans preference classification, setting minimum and maximum quantities. I had a veteran in my office complaining that he drove 200 miles in a truck to buy material to take back and resell in his business, and the

quantities were set so low that, according to his complaint, he only got half a truckload, and it hardly paid him to make the trip.

In about 2 hours I got a call from a veteran saying he was buying for his personal use and he said: "Why not cut out the man who wants to buy for resale for 3 days? You set the quantities too high and the first hundred people in front of me got it all and left nothing for

me."

So, on the one hand, we get a complaint that our quantities are too small, and on the other hand, from the same class, we get a complaint that the quantities were set too high and the material exhausted too quickly.

Mr. RIZLEY. You cannot lay all of this on the veteran?

Mr. KIRCHNER. I just used that as an illustration.

Mr. RIZLEY. The case I have in mind is where a site sale was advertised and some small businessmen drove a thousand miles to attend the sale, and when they got to the sale, although there was a lot of merchandise left after the priority claimants had gotten theirs, these little business fellows were not able to get any because brokers or large wholesalers were recognized first.

Mr. KIRCHNER. I do not believe I have any case of that type, and we always try to cut the maximum quantity down to small enough lots that it gives a large number a chance to buy.

Mr. RIZLEY. You used the expression, "first come, first served." That has been one of the complaints. At the sale I had reference to there were some 2,000 people there, and I was told that the fellow with the fastest automobile got there first and got the property, notwithstanding these people had come and registered in advance.

Mr. KIRCHNER. A spot sale is different than a site sale.
Mr. RIZLEY. I had reference to a site sale.

Mr. KIRCHNER. At a site sale they come in and register as they come. through the door, and they start buying.

Mr. RIZLEY. You do not have them register 2 or 3 days before the sale starts?

Mr. KIRCHNER. No, sir.

Mr. RIZLEY. We have also had a number of complaints from people who had a certificate to buy a specific article, tractor, or bulldozer, and they went and picked it out and put a tag on it, and when they went to get it they found the item had been sold to somebody else who was perhaps favored. Have you had any trouble along that line?

Mr. KIRCHNER. Not that I know of, and I hope we do not have any. I might say that we have had complaints to that effect, that favoritism was shown, but upon investigation we have found there was a sold tag, and it was sold to somebody ahead of him with an older certificate. I had one case, in the sale of machine tools, where a customer claimed his order was ahead of another one. Fortunately, a memorandum was in the file, and could be substantiated, that an order was placed by longdistance telephone, and confirmed by wire, and it was 2 or 3 hours ahead of this man's order.

Mr. RIZLEY. That is all.

The CHAIRMAN. Thank you, Mr. Kirchner.

(Witness excused.)

The CHAIRMAN. I understand there are two other regional directors in the room. I think they may be excused at this time. The committee

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feels we have covered pretty well, with the two regional directors who have testified, the situation within the regional offices.

Mr. Fields, please.

SWORN TESTIMONY OF BENJAMIN F. FIELDS, PUBLIC RELATIONS, WASHINGTON, D. C.-Resumed

Mr. WISE. Mr. Fields, do you have with you at this time your records reflecting the payment of brokerage commissions in connection with the purchase and sale of 539 rolls of bronze wire screening to C. B. Warr, of Oklahoma?

Mr. FIELDS. I left here this morning to get those figures, and took the matter up with our auditor, who informed us he was away behind in posting, and that he did not have that posted, and that the only thing he had was a memorandum from me on break-down.

Mr. WISE. Do you have that memorandum?

Mr. FIELDS. It is the same one you have.

Mr. WISE. Your auditor informs you it has not been entered?
Mr. FIELDS. That is right.

Mr. WISE. When did this commission become due to Mr. Dies? Mr. FIELDS. Mr. Dies left us on July 1. We made a settlement with him which included his pro rata share of that commission.

Mr. WISE. Did he receive that at that time?

Mr. FIELDS. He received the balance that was due him, which included that commission.

Mr. WISE. Is the same true of Mr. Brunner?

Mr. FIELDS. NO. Mr. Brunner left August 1. We have not made a settlement with him, but his commission is also included in the final analysis of his statement.

The CHAIRMAN. Mr. Fields, this auditor that you referred to is a certified public accountant who does work for you or anybody else who retains him, as good certified public accountants do. He, of course, makes no original entries for you. All he does is make recapitulations of entries made by you?

Mr. FIELDS. No. He makes all the entries, he or his assistants. The CHAIRMAN. What assistants?

Mr. FIELDS. He has several assistants.

The CHAIRMAN. You said the other day you kept the books.

He comes in

Mr. FIELDS. We keep them as far as memorandums, but we do not keep the books. The auditor is not there every day. maybe twice a month and picks up these memorandums.

The CHAIRMAN. Where do you keep the books and memorandums; at your office, do you not?

Mr. FIELDS. Sure.

The CHAIRMAN. That is what the subpena called for, to bring with you "all books, records, documents, memoranda," and so forth, in connection with these things. Do you have those with you?

Mr. FIELDS. I have given you all I have. I have given you a copy of the memorandum, and that is all the auditor has.

The CHAIRMAN. This (referring to exhibit 14) is nothing but a sheet of memorandum paper, is it?

Mr. FIELDS. That is right.

The CHAIRMAN. You made that just before you testified the other day, did you not?

Mr. FIELDS, I did not.

The CHAIRMAN. Then why does this memorandum have the notation:

If they question profits we make, which amount to 5 percent, remind them of the fact that they pay their own brokers and agents 121⁄2 percent. You did not make that notation at the time you made the memorandum, did you?

Mr. FIELDS. No. I made it when I copied it.

The CHAIRMAN. Where is the original memorandum?

Mr. FIELDS. You have it somewheres. It is the same as this.

The CHAIRMAN. We have nothing in our possession that shows payment to John Doe besides that memorandum.

Mr. FIELDS. That is the memorandum I have.

The CHAIRMAN. You said we have something else here. What else do we have?

Mr. FIELDS. I do not know. You have the records.

The CHAIRMAN. We will take a 10-minute recess so that you may find it.

Mr. FIELDS. You find it.

The CHAIRMAN. You have been subpenaed to come here and produce those records. Do you decline to bring them?

Mr. FIELDS. I do not decline. I brought them.

Mr. DAVIS. Is the actual book in which that item is entered in your office?

Mr. FIELDS. There is nothing posted yet.

Mr. DAVIS. The books are there?

Mr. FIELDS. Not on this transaction.

Mr. DAVIS. Mr. Chairman, I suggest we give him until 4 o'clock to bring those books, otherwise take the necessary action.

Mr. RIZLEY. I do not think it should take him until 4 o'clock. The CHAIRMAN. It is now 20 minutes after 2. If you are not back here with the records by 4 o'clock, the committee will go into executive session, and if the committee finds you to be in contempt, your action will be reported to the Speaker of the House of Representatives for certification to the United States district attorney.

You are excused until 4 o'clock.

Mr. FIELDS. Thank you.

(Witness temporarily excused.)

The CHAIRMAN. The committee will take a 10-minute recess.

(The committee was in recess from 2: 20 p.m. to 3 p. m.)

The CHAIRMAN. The committee will come to order.

Call your next witness, Mr. Wise, please.

Mr. WISE. Mr. William E. Bedell, please.

(Mr. William Estes Bedell was duly sworn by the chairman as a witness.)

SWORN TESTIMONY OF WILLIAM ESTES BEDELL, OWNER AND OPERATOR OF EXPORT TRADING CO., RICHMOND, VA.

Mr. WISE. Mr. Bedell, will you give your full name to the reporter? Mr. BEDELL. William Estes Bedell.

Mr. WISE. And your address?

Mr. BEDELL. 4101 Fourth Street NW., Washington, D. C., and I own and operate the Export Trading Co., 1409 East Main Street.

Richmond, Va., licensed in the State of Virginia and the city of Richmond, and registered in the chancery court.

Mr. WISE. Licensed as what?

Mr. BEDELL. William E. Bedell, trading as Export Trading Co.
Mr. WISE. And the business of the Export Trading Co. is what?
Mr. BEDELL. Mainly surplus materials.

Mr. WISE. What do you do with surplus materials?

Mr. BEDELL. Purchase and sell it.

Mr. WISE. All types of surplus material?

Mr. BEDELL. No.

Mr. WISE. What types?

Mr. BEDELL. It would run principally to textiles and hardware.
Mr. WISE. In the course of your business, do you have occasion
frequently to visit the Army Service Forces Depot in Richmond?
Mr. BEDELL. It is very important that I do; yes, sir.
Mr. WISE. About how frequently do you visit it?

Mr. BEDELL. Any time that an inspection is necessary.
Mr. WISE. How frequently is that?

Mr. BEDELL. Just such time as an offering is made where the property is located at that particular depot, and it becomes necessary to inspect its condition. If there should be three offerings in 1 week that required inspection, I would go three times that week. If there should be only one offering in a month, I would go once a month.

Mr. WISE. Would you say you average three or four visits a month to that depot?

Mr. BEDELL. That would be fair.

Mr. WISE. What would you do when you went there?

Mr. BEDELL. I would look at the material that had been offered through some offering of the War Assets Administration.

Mr. WISE. Will you look at exhibit 27? Is that a photostat of an order entered by you?

Mr. BEDELL. That is correct.

Mr. WISE. For the purchase of what?

Mr. BEDELL. Just what it says, "commercial bronze type wire cloth." Mr. WISE. And in the heading of that order your company is described as what?

Mr. BEDELL (reading):

Export Trading Co., Factors in Surplus Material.

Mr. WISE. Does that order contain a certification on the face of it?

Mr. BEDELL. It does.

Mr. WISE. Did you sign that certification?

Mr. BEDELL. I did.

Mr. WISE. Will you read that certification?
Mr. BEDELL (reading):

I hereby certify that I am a wholesaler or jobber of the type of material ordered herewith. I further certify that this merchandise, if sold to me in compliance with this order, will be broken down and offered by me to retailers in such assortments and quantities as are normally offered for sale to this class of trade.

Mr. WISE. Mr. Bedell, are you a wholesaler?

Mr. BEDELL. I am.

Mr. WISE. Do you have a warehouse in which you maintain your inventory?