Question. There was an estimate made, was there not, that the cost of rendering service should carry at least 90 percent of this advertising expense? Answer. There was. Question. Who made that calculation? Answer. The Commission's examiners and representatives of the company. Question. Have you reproduced in this report a typical 1931 monthly bill showing with whom advertisements were placed? Answer. Yes, sir. Question. That appears at page 29 of the report? Answer. It does. Question. It shows a total of $1,538.99 paid in that month, does it not? Answer. It does. Question. And it shows the names of the papers and magazines to which it was paid; does it not? Answer. It shows where the advertisements were placed. The bills were all paid to one company. Question. The payments were made to one advertising company, which placed the advertisements in various papers and other publications? Answer. Yes, sir. Question. This payment of $1,538.99, for this typical month of 1931, was for advertisements placed in what publications? Answer. Chicago Journal of Commerce, Electric World, Financial World, Forbes Magazine, Journal of Commerce, Magazine of Wall Street, Manufacturers Record, New York Herald-Tribune, New York Evening Post, New York Sun, New York Times, Public Service Management, Savings Bank Journal, and Wall Street Journal. Question. In addition to these publications, did the company place advertisements with several other publications? Answer. Yes, sir. Question. Name them, please. Answer. Chicago Investors News, Public Service Magazine, Electric World, United States Investor, Philadelphia Ledger, and Boston Transcript. Question. The advertising expense in 1927 represented what percent of the total cost of servicing? Answer. 0.54 percent. Question. And in 1931? Answer. 0.46 percent. Question. Since you have reproduced in your report the advertisement which appeared in the Wall Street Journal in November 1931, you may read it into the record. Answer (reading): We extend the facilities of our organization to those desiring information or reports on companies with which we are identified. ELECTRIC BOND & SHARE Co., Question. Turn to page 31 of your report, please, where you deal with contributions and donations; books, periodicals, papers, and so forth; dues and memberships, health department, and miscellaneous. To what did these expenses amount in 1927 ? Answer. $174,785.27. Question. And in 1931? Answer. $88,968.97. Question. Was it necessary to allocate this expense between the investment side of the business and the management side? Answer. It was. Question. Did you make such a calculation? Answer. Yes, sir. Question. Among the payments charged to the management side, was there a fee of $25,000 paid to an investment banker? Answer. Yes, sir. Question. What was the name of the investment concern? Answer. In 1927. Question. For what was it paid? Answer. For services under the service contract. Question. Do you know for what services? Answer. This firm was familiar with the workings and ramifications of certain managed companies. Question. In addition, was there an $8,000 payment made to the chairman of the committee on industrial cooperation? Answer. There was. Mr. HEALY. I undertook to find out about this contribution of $8,000 made to "Chairman Committee on Industrial Cooperation." By Mr. HEALY : Question. I take it, Mr. Meleen, that the quoted words were taken from the accounts or a voucher of the company. Am I correct? Answer. Yes, sir. Mr. HEALY. Í undertook to get some information concerning this $8,000 item, and, understanding that the committee referred to was a committee created by the Chamber of Commerce of the United States, I wrote to its secretary, and under date of December 23, 1933, was informed-I having mentioned the name of Lewis E. Pierson in that connection-that Our organization has not had a committee on industrial cooperation, of which Mr. Lewis E. Pierson has been chairman, or to which a contribution such as you mention in your letter of December 21 has been made. There was some other correspondence on the same subject with the chamber, which produced no result; but I wrote Mr. Lewis E. Pierson, of No. 1 Wall Street, New York, and received a reply under date of January 4, 1934, by which it appears that the committee was created by a group headed by the late C. A. Coffin, in 1926—I am quoting now as a result of Mr. Coffin's concern over the situation arising from the prevailing antagonism between labor and management on industrial matters. There has never been any fixed membership of the committee, but from time to time it has served to bring together for round-table conferences leading manufacturers and industrialists and those who could speak for organized labor. The subjects discussed at these conferences have ranged from such questions as technological unemployment and mass production to such matters as the necessity for mutual support of the share-the-work program. As to the specific information you request, upon the committee's work, it will take some time to assemble the exact facts and figures, but I shall have this done as rapidly as possible. One matter I can dispose of at once. The only utilities which have contributed to the committee have been the New York Edison Co. and the Brooklyn Edison Co., in both of which Mr. Nicholas Brady was interested. The only electric management company to contribute has been the Electric Bond & Share Co. I offer this letter for the record. May it be received? Examiner ADDISON. This letter will be received in evidence and marked as " Commission's Exhibit 5603." (The letter referred to was received in evidence and was marked "Commission's Exhibit No. 5603, Witness Meleen.") Mr. HEALY. I expect some further communication from Mr. Pierson, which will be the subject of further inquiry. By Mr. HEALY: Question. I also note, Mr. Meleen, a payment in 1927 of $5,800 to the National Electric Light Association. Answer. Yes, sir. Question. Did you learn what this was for? Answer. It was an assessment on Electric Bond & Share Co. for a joint fund to be distributed in accordance with the action of the committee for a research program in the Harvard School of Business Administration and the North Western University School of Commerce and the American Mining Congress. Question. The total contributions and donations in 1927 appears to have been $15,550. Answer. Yes, sir. Question. The item of $8,000, the payment to Mr. Pierson, has been referred to, as has the item of $5,800 payment to National Electric Light Association. In addition, there was a $200 contribution to the American Society of Mechanical Engineers. Do you know what this was for? Answer. That was in connection with the Ball furnace refractory investigation. Question. Then there was a contribution to the American Arbitration Association of $1,000, and $500 to the Broad Street Hospital radio fund. We also find an item under "General expense labeled "miscellaneous" and amounting to $155,097.48, do we not? Answer. Yes, sir. Question. Of this total of $155,097.48, can you dispose of $87,334.66 at once? Answer. Those were sundry items on all vouchers amounting to $100 or more which were examined. Question. That is, those sundry items, totaling more than $87,000, were examined to this extent: that all vouchers amounting to $100 or more were examined? Is that correct? Answer. Yes, sir. Question. Now, there is another item there, labeled "sundry ", and totaling $35,086.48. What does that represent? Answer. That represents sundry items on all vouchers amounting to less than $100, not examined. Question. The vouchers, then, were all less than $100, and you did not examine them? Answer. That is correct. Question. The next item we find is one of $25,000, which, I take it, is the $25,000 paid to Newman, Saunders & Co. of New Orleans. Answer. Yes, sir. Question. The next is an item of $1,500, and this appears to have been paid to whom? Answer. Louis P. Huff. Question. Do you know what this was for? Question. Do you know where he practices? Question. Do you know what the services were? Answer. No, sir. Question. There is a payment of $3,944.89 listed here as having been paid to James Sloane, Jr., of Washington, D.C. Answer. Yes, sir. Question. Do you know what this payment was made for? Answer. For services. Question. Do you know for what kind of services? Answer. I do not know. I believe, however, that it had something to do in connection with hydraulic power, before the Power Commission. Is that right? Question. We will call a witness from the company and see what we can find out about it. Now, in 1931, expenses of the kind with which we have been dealing the last few minutes were carried in how many accounts? Answer. Five. Question. And those accounts totaled what? Answer. $88,968.97. Question. What was the total of contributions and donations? Answer. $20,990. Question. What was the total of expenses for books, periodicals, papers, and so forth? Answer. $10.254.22. Question. For dues and memberships? Answer. $9.750.70. Question. For health department? Answer. $251.83. Question. And for miscellaneous (general)? Answer. $47,722.22. Question. Have you the detail here showing what contributions. and donations made up the total of $20,990? Answer. I have. Question. Where does that appear? Answer. On page 32-b. Question. The largest item is one of $10,000? Answer. Yes, sir. Question. And represents what? Answer. Emergency Unemployment Relief Association-a contribution to that organization. Question. The next largest item is of what amount? Answer. $8,000. Question. And that is a payment to whom? Answer. L. E. Pierson. Question. As chairman of what committee? Answer. The committee on industrial cooperation. Question. This is a contribution to the work of that committee for the year 1931? Answer. Yes, sir. Question. And Mr. Pierson is going to give us further information about it. In addition, did the company contribute $1,000 to the industrial council of the National Association of Manufacturers? Answer. Yes, sir. Question. Did it contribute $1,250 to the American Red Cross? Answer. It did. Question. And $240 to the Y.M.C.A.? Question. Now, you have referred to a miscellaneous general item which totaled $47,722.22. Can you tell us how this was made up? Answer. Yes, sir. Question. The details appear at what page of this report? Answer. 32-c. Question. The largest item is one of $21,137, and seems to relate to meal slips and supper money for employees. Is that correct? Answer. Yes, sir. Question. The next is "Miscellaneous expense-employees and officers, $7,871.81." The next is "Safe and vault rental", of more than $4,500? Answer. Yes, sir. Question. And a lot of small items which it seems unnecessary to repeat. Then there are sundry items totaling $12,932.92? Answer. Yes, sir. Question. Did you examine all vouchers which amounted to $100 or more? Answer. We did. Question. Turn now to page 33 of your report. Did this company pay for membership dues in the Chamber of Commerce of the United States? Answer. Yes, sir. Question. How much? Answer. Two years' membership dues of $8,000. Question. Does that mean a total of $8,000 or $8,000 each year? Answer. A total of $8,000. Question. Did you find that in 1931 the company printed and distributed a pamphlet called "Brakes on Prosperity"?" Answer. Yes, sir. Question. At what cost? Answer. $1,795.50. Question. This was the cost of printing and distributing how many copies? Answer. 149,800. |