of $60,000-Mr. Raftree proposed that Mr. Kelly's firm of Kelly & Nason be retained to do the advertising for E. Leitz. Mr. Chapman seconded the motion and it was carried.

So here we find the only two outsiders on the board of directors both getting the outside business from E. Leitz and then going over to another interlocking, not an interlocking directorate as such, but with them it was an interlocking directorate, and when the proposition for fees, for retainers and for advertising came up, we find the same bat-ball play, one nominating, the other to receive this service.

It would seem to me that it was then the duty of the Management Branch to immediately call that to the attention of the Director and say, "This just does not look right to us. Do you think we should do something about it?

Senator SMITH. Of course, you presuppose that those in the Management and Liquidation Branch were very brave men and do not realize that these men had more influence at the top than they had. Mr. NAIRN. That may be true.

(Discussion off the record.)

Mr. NAIRN. At the time Mr. Chapman and Mr. Horowitz were appointed to the board of directors of E. Leitz, Mr. Bergson was an Assistant Attorney General in the Department of Justice. Mr. Kirks and others who had preceded him here before the committee have led me to believe that in the case of the selection of certain directors whom they term important directors, the decision of selection was not made by the Director of Alien Property but was made by the Attorney General himself or by one of his immediate assistants.

Now, Mr. Bergson was an immediate assistant at the time these men were on the board. Mr. Bergson retired from the Department of Justice and his firm, which he immediately formed then, Bergson, Adams & Borkland

Senator HENNINGS. A Washington firm or a New York firm?

Mr. NAIRN. Washington firm-was retained by this same board of directors at a $1,200 a month fee.

Now, the picture would appear to present itself that if Mr. Bergson was able to appoint these men to a board and then resign and then in favor for his appointment, and the fact they were able to get contracts for legal services and for advertising that they in turn played Mr. Bergson a nice favor and retained his new firm for $1,200 a month and then Mr. Ford resigned from the Department of Justice and became a member of the firm.

Senator SMITH. Mr. Who?

Mr. NAIRN. Peyton Ford resigned. Bergson and Horowitz, the president of E. Leitz, were roommates at Harvard.

There is nothing illegal about this, but the picture to an investigator is that here we have a fraternity, at least everybody is rubbing everybody else's back. At least it is not good for Government to put in the hands of an individual the power to make himself rich or make his friends rich, and these men were doing that, there is no question. Senator SMITH. Could that not be remedied, Mr. Nairn, and I ask Dr. Kirks, too, if that could not be remedied by having legislation enacted which would preclude the appointment of people under those circumstances, such as we have in the law with respect to the Bureau of Internal Revenue, I believe, where you cannot practice before the

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Bureau for a period of 2 years after you have severed your connection. Senator DIRKSEN. Our latest case now on the front pages is of course Mr. Flanagan of the Public Utilities Commission, who having passed on Capital Transit rates and methods that are within the purview of the Commission, then goes over and takes a rather substantial position as a public relations man with Capital Transit. I think we explored that before and you did indicate that there was in the mill some proposal now to take care of this situation.

Mr. SCHLEZINGER. Yes, Mr. Chairman. There is an outstanding directive from the Attorney General which has been in effect now, I believe, for close to a year, which would prohibit this type of situation because it presently bars the employment by a vested enterprise, either as an employee or his retention as counsel by vested enterprises, of any employee of the Office of Alien Property for a period of 2 years after his employment with the Office ceased. It does not bar appointment to the board of directors. It does bar retention as counsel or employment by the enterprise.

Senator SMITH. Why should it not also bar directors? Why should not such a statute also bar directors, the selection of directors, the appointment of directors?

Mr. SCHLEZINGER. I certainly do not want to make any comment against that suggestion. I know it was considered at a high level and I know at that time the directive excluded directors.

Mr. NAIRN. We have been asked to determine whether sound policies were used in the selection of services for vested enterprises. Now, I would like your opinion as to whether such a situation as I have outlined would be a sound policy.

Mr. KIRKS. I would not have done it the same way had I been in office, but I prefer not to sit in judgment upon what my predecessors have done to develop that.

Senator SMITH. That is the one question I had remaining.

Mr. Kirks, did you make any effort to investigate any of the conduct of your predecessors in office or did you feel that was not up to you?

Mr. KIRKS. I made no attempt to investigate my predecessors in office. If by hearsay or directly anything came to my attention that questioned the propriety of anything that they had done that I could remedy or bring to the attention of the Attorney General, I did so. But I did not conduct any investigation of my predecessors.

Senator SMITH. In other words, if the Attorney General, your superior, had directed you to make any further investigation, you would of course have undertaken it then, had you stayed there long enough?

Mr. KIRKS. Certainly. I think a very extensive investigation of my predecessors and employees generally in the Office was conducted by the FBI. But I did not launch upon any investigation.

Mr. HAYES. Mr. Kirks, you answered a letter from the former staff of this particular committee. That letter is in the interim report. It has been referred to by Mr. Nairn. That letter is dated December 5, 1952, and appears on pages 46 to 48 of the interim report. In that letter you indicated to the former chief counsel of this committee that the Office was only able to furnish information of the type about which you are being asked now as to 10 or 12 large com

panies. You said in that letter that it would be impossible for you to furnish to this committee the information of this type as to all of the other companies involved because of the time element which would be involved in doing that. Can you indicate to us any other instances other than the ones in your letter in which practices of the kind Mr. Nairn has just interrogated you about have occurred that were brought to your attention while you were the head of this Office? Mr. KIRKS. You mean historical examples?

Mr. HAYES. That is right. There is no implication here and certainly I want the record to be clear that I agree with Senator Smith that so far as this witness is concerned you took over about the time this committee was constituted. It is certainly not a question directed at something about you-but what you know about it for the purposes of assisting this committee to do what it was directed to do.

Mr. KIRKS. If I can review in my mind whether or not there was any situation that should appropriately have been brought to the attention of the committee and Mr. Sapp, I am not conscious of it. The wording of this letter was not designed to exclude from your consideration anything that was appropriately to be inquired into. I right at the moment, and at the time this was written, had no knowledge of there being any other cases that were subject to inquiry. Mr. HAYES. You are aware of the fact that a number of investigations by the FBI were made with relation to various companies over the last several years, are you not?

Mr. KIRKS. Yes, sir, and I have read a large number of those reports, Mr. Hayes, if not all of them, and on the basis of the information that I gleaned from those reports, I made an effort to inquire into anything that was subject to my administration.

Now, if something had already been closed out of the picture, it could have been completely wrong, but if there was nothing I could do about it-I had more than I could handle within the time that was allotted me to keep the going matters concerned, I was not interested in building up a historical record and I made no effort to do so.

Mr. HAYES. You understand we have been directed by the Senate to ascertain whether or not in the conduct of the affairs of this Office practices have been engaged in of the type that you are being interrogated about?

Mr. KIRKS. Yes.

Mr. HAYES. You also understand upon inquiry of the former counsel of this committeee that the answer came from your Office that only as to certain portions of our request could you give us any information? You are aware of that?

Mr. KIRKS. Yes, I am. And that, Mr. Hayes, was based upon the fact that the Department of Justice had certain limitations about investigative reports, but I certainly made every effort to make available

Mr. HAYES. In the interim report on page 49 there is this state

ment:

Salaries of officials are quite large in some instances, and in at least one instance an individual drawing approximately $7,000 per year as salary was rewarded with $30,000 per year starting salary by the vested business enterprise. Now, without naming any names in accordance with Senator Dirksen's statement here, without trying to smear anyone, are you familiar with that instance?

Mr. KIRKS. I am not familiar with it, sir. After this report came out and it was the first time that this alleged condition existed, I naturally discussed it with my staff as to whether it was who it was and what was involved, and we have speculated. I have never learned from the counsel specifically whom they had in mind. Assuming the accuracy of that statement, that conduct is subject to scrutiny. But I have no personal knowledge of it and I do not know officially who was referred to.

Senator SMITH. Mr. Chairman, would it be well for Mr. Hayes and Mr. Nairn maybe to consult with Dr. Kirks and some of these other gentlemen and get at the bottom of that and at least advise us in at least a confidential session to start with whether or not it is worth going into? I have heard a lot of rumors of that sort. All we want to do is get at the facts regardless of who they hit, if they hit anybody. Mr. HAYES. Without unnecessarily smearing anybody.

Senator SMITH. Of course, all of us realize the period we are examining about antedates the period Mr. Kirks took office. I think after you have done that, we will need to have Mr. Kirks before us for a short session.

Mr. SCHLEZINGER. Since the interim report came out, I have made what investigation I could and I have been unable to find any such individual in the records of the Office of Alien Property. I am not saying there might not have been someone years ago. I still have no idea who the report is talking about in its reference to an individual who went from a $7,000 Government job to a $30,000 job with private enterprise. I just do not know, and I have not been able to find out. Mr. HAYES. Have you asked Mr. Rubin whether he knows about it? Mr. SCHLEZINGER. I asked Mr. Rubin some time ago. He did not know at that time.

Mr. Chairman, may I make one other statement?

Senator DIRKSEN. Yes, Mr. Schlezinger.

Mr. SCHLEZINGER. I do not want to take on any extra burden of work, of course, because we all have plenty to do, but I am wondering if possibly we could be helpful to the committee in this regard:

Reference was made early in Mr. Kirks' testimony to those phases of the resolution dealing with the dissemination of enemy technology for the benefit of the American public. I believe in the discussion of the Patent Section the other day, due to lack of time, that was not gone into at any great length. If the committee believes it would be helpful, I would be glad to try to furnish for the committee a statement covering the steps taken over the years, the publication of documeuts, and so on, for the dissemination of patents and scientific technology for the benefit of the public.

Secondly, if you wish it, I shall be glad to furnish for the record a copy of the patent contract entered into between the Attorney General and the Schering Corp. which represents the one outstanding example of the attempt of the Department of Justice to make the technology of a 100-percent vested enterprise available widely to the American public. The policy followed in that contract of course has not been followed in the case of enterprises such as General Aniline & Film where there are minority stockholders. The adoption in that case of policy followed in Schering would result in the Government taking something from minority stockholders and making it available to the public.

Senator DIRKSEN. I think those memoranda will be useful and may I suggest that they be furnished to the staff for inclusion in the record. Mr. SCHLEZINGER. We will be glad to do that.

(The information referred to follows:)

SUPPLEMENTARY STATEMENT BY OFFICE OF ALIEN PROPERTY ON DISSEMINATION OF ENEMY TECHNOLOGY

In Senate Resolution 245, 82d Congress, the Senate Committee on the Judiciary, or any duly authorized subcommittee thereof, was authorized and directed to make a full and complete examination and review of the administration of the Trading With the Enemy Act during the period from December 18, 1941, to the present for the purpose of determining whether or not during such period "(7) scientific and technical discoveries and technological advances have been made available to the public on the widest possible basis ***." Scientific and technical discoveries and technological advances subject to the jurisdiction of the Office of Alien Property Custodian, and of its successor, the Office of Alien Property, take two forms. First, such information is contained in inventions and processes disclosed in United States letters patent and applications therefor owned or filed by nationals of enemy countries. Second, such information is contained in published scientific and technical books and periodicals published in Germany.

Beginning almost immediately after the establishment of the Office of Alien Property in March of 1942, the executive branch of the Government made the basic decision that such technology should be made widely available. Thus, as early as April 21, 1942, the President announced that he had directed the Alien Property Custodian, Mr. Leo T. Crowley, to take over all patents controlled by the enemy and to make them freely available for war purposes of the United Nations and of the national needs of the United States. In accordance with these instructions, the Office of Alien Property Custodian, in its annual report for the period of March 11, 1942, to June 30, 1943, stated that: "Our primary objective in the administration of patents subjected to the control of this Office is to promote their widest possible use. This objective is carried out by the preparation and dissemination of information regarding the nature of vested patents and patent applications, by direct promotional activities undertaken to stimulate and broaden use of techniques and processes covered by vested patents and patent applications, and by a licensing program designed to facilitate the immediate and full use of vested patents in the prosecution of the war program and for production of commodities essential to the civilian economy” (p. 59).1

In that same report it was pointed out that "Republication of scientific works is necessary to provide material for industries, research workers, and scientific societies and other organizations and professions engaged in war work" (p. 63). The report also pointed out that:

"A scientific republication advisory committee, representing four leading national councils of learned societies, libraries, and Federal agencies interested in the use of research material, aids the Custodian in the selection and republication of important scientific works. Royalty arrangements are designed to promote republication at a minimum cost wthout granting windfall profits to publishers" (pp. 63–64).

In pursuance of the President's announced policy of making enemy-controlled patents freely available, the Alien Property Custodian adopted a policy of licensing such patents on a royalty-free, revocable, nonexclusive basis. The reasons for not charging a royalty on vested patents which had been owned by nationals of enemy countries and in which no nonenemy interest was asserted or claimed were explained on October 19, 1945, by Mr. Howland H. Sargeant, then Chief of the Division of Patent Administration, Office of Alien Property Custodian, in his testimony before the Subcommittee on War Mobilization, Senate Military Affairs Committee. Mr. Sargeant stated:

"Our decision to license the vested patents without charging any royalties for their use was not made lightly. It was finally made for two major reasons. First, preliminary experience indicated that it would not be administratively feasible

1This has been stated as the policy of the Office of Alien Property Custodian and of its successor, the Office of Alien Property, in each of the Office's annual reports. For a detailed explanation of this policy, the report for fiscal year 1944 is of particular interest.