Soviet Union and North China ports was available, and that you had a thorough discussion.

When you referred to it, who were the people that had that discussion?

Mr. LENFEST. That was at a staff meeting.

Senator NIXON. Who were present?

Mr. LENFEST. Well, my recollection is that Sieling and Wasson and I were definitely present.

I don't remember whether Tode was present or not, because at that time he was doing a lot of traveling, and he may not have been at - that meeting.

I think Dr. Chen and Mr. Wei and maybe Darfoon Du were at the meeting, but I am sure that Wasson, myself, and Sieling were present. Senator NIXON. Here again, though, as far as the China International Foundation was concerned, the corporation which completely controlled United Tanker did not know anything about this?

Mr. LENFEST. I don't know whether they did or not. My assumption would be that Mr. Wasson, who was secretary-treasurer of the foundation, would let other trustees in the foundation know it, but I don't know that he did.

Senator NIXON. Your assumption would be that he might, but you do not know that he did?

Mr. LENFEST. Correct; yes, sir.

Senator NIXON. You did not feel it was necessary to tell them, though, did you?

Mr. LENFEST. No, we, in the United Tankers, only bother with them occasionally, when there is some problem that we don't think they can settle without the foundation authority.

Senator NIXON. When did you ever bother them on any problem with regard to United Tanker?

Mr. LENFEST. Well, the last one that I remember quite well was when we put money in to the Tioga Star Corp., $450,000, last December, I believe. And I thought that Morris should be advised of that. Senator NIXON. When did you ever advise them on any matter which involved the operation of United Tanker?

When did you ever advise the people in the foundation, who at least are supposed to control United? When did you ever advise them of a problem involving the operation of United Tanker?

Can you tell us of any instance? You did not advise them of the use of foreign crews. You did not feel it was necessary to advise them of the fact that you were considering this business between the Russian and north China ports.

Now, do you recall any instance where you did feel it was necessary to advise them?

Mr. LENFEST. Well, I have always felt that, as Wasson sat in at all of our meetings, he would carry to the foundation anything that they needed to know. And it is only on one or two occasions that I have insisted that Morris come to our meetings, so that we would have the authority of the foundatin, who owns the stock, in any decision that we made.

But, as a general thing, we never bother the trustees of the foundation, feeling that they will be advised of anything necessary through Mr. Wasson.

Senator NIXON. As a general thing, the foundation did not run United Tanker; did it?

Mr. LENFEST. That is a pretty difficult question to answer.
Senator NIXON. Well, in what respect did it run it?

Mr. LENFEST. Sir?

Senator NIXON. In what respect did it run it?

Mr. LENFEST. They elected the directors of United Tankers. Senator NIXON. In what respect, as far as the decisions were concerned of the corporation, did it make decisions?

You can't recall any at the present time?

Mr. LENFEST. Only on things which we felt the foundation should be aware of. For instance, I remember another case. We bought back considerable of the preferred stock from the United Securities Corp., a Liberian corporation, which at that time was owned by a Mr. Tjian, T-j-i-a-n, who had owned a paper mill in China and some vessels. He put his mill and 120 of his men on one of his vessels and moved to Brazil when the Communists came in. They had about a million dollars' worth of preferred stock that they had taken in return for the cash money they had advanced to help the United Tankers acquire ships. They had waived dividends. They had always been helpful in getting cash for us to put this corporation together. And they had the position of a preferred stockholder. This stock eventually wound up in the United Securities, and we were under pressure all the time to buy in that preferred stock. Because this paper mill had to be put up down in Brazil, they had a lot of expenses. I never felt that we should strip the corporation, the United Tanker Corp., of funds which might become necessary if the rates went down to where they were in 1949 and 1950.

So, anytime we bought in some of that stock, we referred that to the foundation and asked their permission to dissipate the funds in that way.

We were all anxious to redeem that preferred stock, so there would never be any inference that the Chinese capital had anything to do with the management of the tankers.

As long as the stockholders have money, you have got to listen to them. We were anxious to retire that stock so that there would never be any question but what they had been paid off, and the directors were not under any moral requirement to listen to their advices beyond what we felt their ability should give us.

Senator HOEY. Any further questions?

You may be excused.

Mr. LENFEST. Thank you.

Senator HOEY. The next witnesses will be L. James Falck and Willard Thorp.

Will you gentlemen each hold up your right hand?

Do you solemnly swear that the testimony you give in this case shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. FALCK. I do.

Mr. THORP. I do.

Mr. WRIGHT. I do.

Senator HOEY. Mr. Falck, will you please give your full name, your address, and the position you hold, to the reporter?

TESTIMONY OF WILLARD L. THORP, ASSISTANT SECRETARY OF STATE FOR ECONOMIC AFFAIRS; L. JAMES FALCK, ASSISTANT CHIEF, SHIPPING POLICY STAFF, STATE DEPARTMENT; AND ROBERT WRIGHT, ASSISTANT CHIEF, ECONOMIC DEFENSE STAFF, STATE DEPARTMENT

Mr. FALCK. L. James Falck, Assistant Chief, Shipping Policy Staff, State Department.

Senator HOEY. How long have you held this position?

Mr. FALCK. The titles may have varied, but, say, since 1944 or 1945. Senator HOEY. You were holding the position at the time that is under discussion here?

Mr. FALCK. Yes.

Senator HOEY. Mr. Thorp, will you please give your name?

Mr. THORP. My name is Willard L. Thorp. I am Assistant Secretary of State for Economic Affairs. I have held that position since November 1946, having been before that time for about 18 months the Deputy Assistant Secretary of State for Economic Affairs. Senator HOEY. And the third gentleman?

Mr. WRIGHT. My name is Robert Wright. I am the Assistant Chief of the Economic Defense Staff in the State Department.

Senator HOEY. All right.

I just called two witnesses. I did not know you were coming.
You may proceed with the examination, Mr. Flanagan.

Mr. FLANAGAN. Mr. Falck, do you recall that on the 16th of June 1949 Mr. Jarvis, of the ship-brokerage firm of Sieling & Jarvis, contacted you with regard to certain Soviet charters which were going to be entered into by the United Tanker Corp.?

Mr. FALCK. I recall that he telephoned about the middle of June. I am not sure of the exact day.

Mr. FLANAGAN. And did he ask at that time whether or not these charters would meet with the approval of the State Department? Mr. FALCK. Yes; whether we had any objection to offer to their seeking this business, as I recall it.

Mr. FLANAGAN. What did you advise him at that time?

Mr. FALCK. That the State Department had no objection, or had no reason to object. I might put it that way.

Mr. FLANAGAN. Did you take that up with any of your superiors? Mr. FALCK. Yes.

Mr. FLANAGAN. With what superiors?

Mr. FALCK. I do not recall specifically.

Mr. FLANAGAN. In any event, you took it up with your superiors? Mr. FALCK. That is right.

Senator NIXON. You say you do not recall specifically.

Do you recall anybody you took it up with?

Mr. FALCK. Well, no.

Senator NIXON. Who are your superiors there?

Mr. FALCK. Mr. Saugstad

Senator NIXON. Did you take it up with him?

Mr. FALCK. I think so.

Senator NIXON. Who else were your superiors?

Mr. FALCK. Well, let's see. The Director of the Office of Transport and Communications, I think, at the time was Mr. Radius. Senator NIXON. Did you take it up with him?

Mr. FALCK. I don't know whether I did specifically at that time or not. I know various questions like that had been discussed up there. Senator NIXON. Who else?

Mr. FALCK. I didn't take it up with anyone else within our own office. Senator NIXON. Two people, then?

Mr. FALCK. I had checked with other officers in the Department. Senator NIXON. You do not recall the other offices?

Mr. FALCK. The other officers were in the Petroleum Division and probably the Chinese Affairs Office. I don't know of anyone else. Senator MUNDT. Who was in charge of the Chinese Affairs Office at that time?

Mr. FALCK. I don't recall, at that time.

Senator MUNDT. Will you find out his name and insert it in the record?

Mr. FALCK. Yes.

Senator HOEY. Just what inquiry did this gentleman make of you, this Mr. Jarvis? And what did he inquire about?

Mr. FALCK. My recollection of this is that he said there was an inquiry on the market for a tanker or tankers for petroleum products, and the only thing I recall in the line of products was kerosene, that was mentioned, moving from the Black Sea to north China ports; and he inquired whether we wanted to object to it or not.

Senator HOEY. Was there any information given as to who was to be served by this? Or did you get the information from the fact that the reference was to the north China ports?

Mr. FALCK. Well, I knew the north China ports.

Senator HOEY. The north China ports; what would that indicate as to who was getting the cargo?

Mr. FALCK. I knew they were under the control of the Communists at that time; yes.

Senator HOEY. So, when he used the term "north China ports," you knew that involved the delivery of the cargo to the Communists in that section, because they were in charge of those ports?

Mr. FALCK. That is right.

Senator HOEY. All right. Go ahead, Mr. Flanagan.

Mr. FLANAGAN. Between June of 1948 and August 1948, did any one else contact you with regard to the Soviet charters which were being held by United Tanker?

Mr. FALCK. You mean 1949?

Mr. FLANAGAN. 1949; I am sorry.
Mr. FALCK. Not that I recall; no.

Mr. FLANAGAN. Do you recall receiving this letter of August 18, 1949, from Sieling & Jarvis?

Mr. FALCK. I don't recall having seen that for a little while afterward. I think I may have been away at the time it came in.

Mr. FLANAGAN. That letter, I might add, is in the record as exhibit No. 40. It is a letter addressed to the State Department by Sieling

& Jarvis, attention of Mr. Falck. And in the third last paragraph of the letter it says that

Since obtaining the above assurance,

talking about assurances from you—

we have made other charters with various bureaus of the U. S. S. R., and naturally will continue to do business with them until, as intelligent citizens of the United States of America, we are on notice that to do so will harm our Nation in any way, or are notified by you or any other competent authority to desist.

Do you recall making any reply?

Mr. FALCK. No; there was no reply made in writing.

Mr. FLANAGAN. Did you ever take it up with any of your superiors as to whether you should make reply to this communication?

Mr. FALCK. As I say, I have no personal recollection of this when it came in, because I don't think I was there.

Mr. FLANAGAN. As far as we have been advised by representatives of the State Department, no reply has even been made to that; has it? Mr. FALCK. That is right.

Mr. FLANAGAN. Do you know why no reply has ever been made? Mr. FALCK. So far as I know, there was no reply, because there was no change. There was nothing new to say.

Mr. FLANAGAN. In other words, the policy had not changed since your conversation with Mr. Jarvis in June of 1949 ?

Mr. FALCK. That is right.

Mr. FLANAGAN. Mr. Thorp, do you recall that in January of 1950 Secretary of Defense Johnson addressed a letter to the Secretary of State complaining about the fact that the Kettleman Hills and the Saint Christopher were engaged in trading with the Soviet?

Mr. THORP. That is correct.

Mr. FLANAGAN. Was there any other complaint, to your knowledge, to the State Department, prior to this letter of January 17, 1950? Mr. THORP. I don't recall any complaint of the same type, although as Mr. Syran testified, there were discussions between him and Mr. Saugstad on the general problem.

Mr. FLANAGAN. That was the problem of a company handling ECA cargoes and at the same time handling Communist cargoes?

Mr. THORP. That is correct.

Mr. FLANAGAN. Had that matter been brought to your personal attention prior to January 1950?

Mr. THORP. No; it had not.

Mr. FLANAGAN. It had not been brought to the attention of your office, other than Mr. Saugstad?

Mr. THORP. That is right.

Mr. FLANAGAN. This letter of January 17, 1950, we will place in the record.

Senator HOEY. That will be exhibit 44.

(The letter referred to was marked "Exhibit No. 44," and will be found in the appendix on p. 719.) ·