Senator NIXON. That question was raised and discussed with the people of United? Mr. JARVIS. I don't know that I said, "Now, look here, this is bad business." I didn't say that at all. In fact, I was satisfied that it was good business for the ship, paying business. Senator NIXON. As far as your client was concerned, then, was that their only interest, whether it was good business? Mr. JARVIS. I think so; yes. Senator NIXON. In other words, for them this was just a good business deal? Mr. JARVIS. It was a good business deal. Senator NIXON. That is why they took the business and that is why you advised them to take it? Mr. JARVIS. Exactly. Senator NIXON. All right. Senator MUNDT. I gather, then, from your testimony, that naval Intelligence rather approved of this shipment because it enabled them to interview people who had gone behind the iron curtain and it gave them an opportunity to talk to them. Mr. JARVIS. I gathered that; yes. Senator MUNDT. That is a shocking disclosure of the complete breakdown of the unified defense system, because, at the time naval Intelligence was encouraging you to do business with the Russians, Louis Johnson, who was Secretary of Defense, was writing General Fleming protesting about the same operation. He said [reading]: The Department of Defense is concerned that two United States-flag ships, the S. S. Kettleman Hills and the S. S. St. Christopher, have been chartered to transport gasoline and other petroleum products from Constanza, Rumania, to Dairen, China. Mr. JARVIS. I knew nothing of that letter until it was read here in the record. Senator MUNDT. But it certainly is a shocking disclosure of the complete breakdown of our defense system. It is Pearl Harbor all over again. You have naval Intelligence saying "Go to it, old boy," and Louis Johnson saying "This is terrible. They are trying to destroy the defense effort." I don't hold you responsible for that, but it certainly shows the degree of chaotic confusion found at the Defense Establishment and the Pentagon Building, which is rather typical but very disturbing. One says "Fine," and the other says "Stop, stop." Mr. JARVIS. I think you can have the same confusion in the Standard Oil Co. of New Jersey, which is a big corporation. Senator MUNDT. You might, but probably would not. If somebody would lose his job. Senator HOEY. You may stand aside. Senator MUNDT. Wait a minute. Senator HOEY. I thought you had finished. Senator MUNDT. That is enough on that. you did, Have you ever or has your firm ever received a letter from the Department of State? Mr. JARVIS. The only document that I can recall receiving from the Department of State was a copy of a cable that was sent to the consul in Shanghai in connection with, I think it was, the Kettleman Hills. Senator MUNDT. It is your testimony that in your experience as a businessman and your firm's experience you have never received a letter from any official or any employee of the Department of State addressed to Mr. Jarvis or to Jarvis & Sieling? Mr. JARVIS. We may have received letters from them in connection with some other subject, but not on this subject. Senator MUNDT. Any subject in the world, because you testified that it is your opinion that they never write letters to private citizens. I want to know whether you are going to stand on the testimony that you never received a letter from the Department of State or that your firm has never received a letter from the Department of State or any official thereof on State Department stationery. Mr. JARVIS. I don't recall any letter that we ever received, but it is possible that over the years, maybe 10 years ago, they may have written a letter in connection with a seaman. Senator MUNDT. To the best of your recollection-we cannot expect you to be completely sure-neither you nor your firm has ever received a letter from the State Department? Mr. JARVIS. I think that is true. Senator MUNDT. I see all those files you have there. Mr. JARVIS. To the best of my recollection. Senator MUNDT. That is all, Mr. Chairman. Senator HOEY. Mr. Jarvis, we thank you for your attendance. You may be excused. The committee will now recess until Monday morning at 10 o'clock. (Whereupon, at 12:15 p. m., the hearing was recessed until 10 a. m. Monday, March 10, 1952.) 95335- 52-27 SALE OF GOVERNMENT-OWNED SURPLUS TANKER VESSELS MONDAY, MARCH 10, 1952 UNITED STATES SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D. C. The subcommittee met at 10 a. m., pursuant to Senate Resolution No. 251, Eighty-second Congress, second session, agreed to January 24, 1952, in room 357 of the Senate Office Building, Senator Clyde R. Hoey (chairman of the subcommittee) presiding. Present: Senator Clyde R. Hoey, North Carolina; Senator Joseph R. McCarthy, Wisconsin; Senator Karl E. Mundt, South Dakota; Senator Richard M. Nixon, California. Also present: Francis D. Flanagan, chief counsel; Howell J. Hatcher, chief assistant counsel; Jerome S. Alderman, assistant counsel; William A. Leece, assistant counsel; Louis Sornson, consulting accountant; Ruth Young, chief clerk. Senator HOEY. The committee will come to order, please. Mr. Arthur G. Syran and Mr. Joseph S. Oppe will please come up to the stand. Will you each stand up and hold up your right hand? Do you solemnly swear that the testimony you give in this hearing shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. SYRAN. I do. Mr. OPPE. I do. Senator HOEY. Mr. Syran, would you please give your full name and address to the reporter? TESTIMONY OF ARTHUR G. SYRAN, DIRECTOR OF TRANSPORTA- Senator HOEY. And will you do the same, Mr. Oppe? Mr. OPPE. Joseph S. Oppe. I am Assistant Chief of the Office of Tanker Services, in the National Shipping Authority. Senator HOEY. Mr. Flanagan, you may proceed with the exami nation. Mr. FLANAGAN. Mr. Syran, how long have you been in your present position? Mr. SYRAN. I was Director of Transportation for ECA since late June 1948; and since January 1, 1952, I have been the Director of Transportation of Mutual Security Agency, which is the successor agency. Mr. FLANAGAN. Mr. Oppe, you are now with the Maritime Administration? Mr. OPPE. Yes; I am with National Shipping Authority, a branch of Maritime. Mr. FLANAGAN. How long have you been with the Administration, at this time? Mr. OPPE. At this time, I have been there 9 months. Mr. FLANAGAN. Prior to that, you were with the ECA? Mr. OPPE. No; prior to that I was with the National Federation of American Shipping for 1 year as Director of the Tanker Division, and prior to that I was with the Transportation Division of the Economic Cooperation Administration for 2 years, as Chief of the Tanker Branch. That would be from June 1948 to June 1950. Mr. FLANAGAN. And at that time you worked with Mr. Syran? Mr. FLANAGAN. What did you do prior to the time you were with ECA? Mr. OPPE. Prior to the time I was with ECA, I was for a year and a half with the chartering division of Sieling & Jarvis, brokers, New York. Mr. FLANAGAN. Mr. Syran, will you tell the committee when it first came to your attention that ships of the United Tanker group were allegedly chartered to carry oil to Chinese Communists? Mr. SYRAN. About mid-June 1949. Mr. FLANAGAN. And what did come to your attention at that time? Mr. SYRAN. Well, we found out at that time that the Kettleman Hills had engaged or was about to engage in a voyage from Constanza, Rumania, to northern China with a cargo of finished products. I don't remember whether it was kerosene, benzine, or what it was. Mr. FLANAGAN. At that time, in the summer of 1949, were other ships of the United Tanker fleet carrying ECA oil? Mr. SYRAN. Yes; I would say so. Mr. FLANAGAN. What was your reaction when you discovered that sister ships of the same fleet were chartered out to the Soviet Government to carry oil to Communist China? Mr. SYRAN. Well, we were very much concerned about it. Because from about December of 1948 up to the end of May 1949 the Communists had progressively gone down the mainland of China, and progressively ECA had to close out some of its missions. And we went right on down through Shanghai and finally to Canton. I believe that sometime in January or February we were extremely cautious in the shipments that we were dispatching to the mainland of China, to make sure that such commodities as actually arrived on the mainland were used by the Nationalists and there was not any excess that could fall into the hands of the Communists. And the last shipment that I recall that ECA financed to the mainland of China was about the 28th of May 1949; and that was to a place in south China called Amoy, A-m-o-y, which is about a hundred miles across the water from Formosa. And that was crude oil; and the purpose of |