In the present case the principal sum was borrowed and lost and had not been paid on March 2, 1919, and was not then due. Relator That is the Chestatee Corporation however, was under obligation to pay this principal sum, which is conceded to be a loss within the act, and he was likewise under obligation to pay the interest incurred in the creation of this obligation. In other words relator was as much obligated on that date to pay the interest as it was to pay the principal. The aggregate of the two items at the time of payment by the Government constitute the net loss. If relator could not make claim for the interest because it was not payable at that time then by analogous reasoning relator could not be compensated for the principal debt, which was not due and payable at that time. The justice and equity in the one case is equal and parallel to that in the other, and since the principal amount has been allowed and its allowance approved by the courts, we see no reason why a similar allowance should not be made for the interest incurred prior to the passage of the 1919 act and accrued at the time of the payment of the principal debt to relator by the Government. I will state that the other case involved miscellaneous items upon which they subsequently paid $90,500, was then held in statu quo by stipulation between the Government lawyer and the Chestatee lawyer, and it had rested for 2 years, to be decided and settled in accordance with the Supreme Court decision I have just read. After that case was won, they repudiated that agreement, and I lost 2 years on those items, and they required me to carry that case through to the Supreme Court. So, gentlemen, I have now been up to the Supreme Court of the United States four times. The Supreme Court has affirmed every item of loss I have ever claimed which should have been allowed in 1919, except under this last opinion rendered in 1933, which affirmed the opinion of the Secretary, that the wording of the act did not permit him to award the interest which had accrued and been paid after the date of the passage of the act. Did Mr. ENGLEBRIGHT. You say the agreement was repudiated. you have a stipulation in writing, or was that a verbal agreement? Mr. PRATT. I say it was a stipulation and was ordered by the court, by consent of counsel. It was to be decided, based on the "purchase of property" case which went through, and after it went through they decided that the taking over of personal property was not the equivalent of the taking over of real property, and therefore I was required to take that case through the courts, with a consequent loss of time and expense. Commenting upon, but not criticizing the final decision of the Supreme Court, I would like to make this observation. Mr. Justice Brandeis, in affirming the opinion of the Secretary that interest paid and accrued after March 2 could not be reimbursed, said that the act of March 2, 1919, used the word "losses" in the past tense, carrying with it the idea that the losses sustained after that date were not reimbursable under that act. The most conspicuous part of that opinion, as I see it, is where he says: The method of determining the net losses in such businesses during a particular period, or in a particular adventure, is well settled. That statement, of course, is correct. But I respectfully submit, Mr. Chairman and gentlemen of the committee, that the activities of the Government which induced its citizens to go into these hazardous enterprises, to supply the needs of the Nation in an emergency, which could not be profitable, were particular adventures, and I think the idea of the ordinary mind is to take into consideration everything that happened during that adventure, expenditure, and liability and obligation, and to consider the balance sheet, or the profit-and-loss statement. It would not be fair, based on equity, it seems to me, to allow the principal amount of money loaned to the end of the adventure, and cut off the interest at any interim date in between, applying on a note. This is the statement of the Supreme Court by Mr. Justice Brandeis: When this court stated in the Wilbur case that is in reference to their previous opinion on the subject of interest, under which we were paid $44,000, up to March 2 that in determining the loss as of March 2, 1919, there shall be taken into account "the amount of interest which had been paid or incurred by relator for money borrowed and lost”, the word "incurred" was used to mean interest accrued on that date, as well as interest paid. It seems to me, gentlemen, not criticizing the Supreme Court, of course, that the original act said we were to be repaid losses by reason of money expended and obligations incurred. I take interest to be a legitimate obligations incurred, and it seems to me that the Supreme Court in using that language has, in effect, read out of the act of Congress the words "obligations incurred" and read into the act the words "obligations accrued. You realize the difference, and I think therein lies the whole trouble. Mr. VINSON. Will you explain to the committee how you interpret the difference in the meaning between the two? Mr. PRATT. I may incur an obligation to pay interest to the maturity of the note. I incur an obligation at the time I sign a note. Interest accrued as of any particular date cuts it off at that date. It seems to me that there is such a vast difference between the words "obligations incurred" and "obligations accrued" as not to require very much explanation. can incur an obligation that requires me to pay interest for the next 10 years, but when you say the obligation has accrued it means at that particular date. Mr. VINSON. What did the act of Congress say should be reimbursable? Mr. PRATT. That we should be reimbursed for losses sustained by reason of moneys expended or obligations incurred during the war, that is, between the dates of April 6, 1917, and November 11, 1918, by reason of the loss of money expended and obligations incurred in compliance with the request or demand of the Secretary of the Interior and other governmental agencies to supply the urgent needs of the Nation in the prosecution of the war. If the act had said "obligations accrued" I could understand how they would have been limited to the date of the act. But the act says "incurred", and if it is a legitimate obligation and the obligation was incurred within the statutory period. Gentlemen of the committee, with all due respect to the Supreme Court, I do not see how-and this wording also appears in the act, "just and equitable"-I do not see how there can be any doubt, very frankly, from the hearings, which Mr. Englebright attended, 57022-34- 2 and also Mr. Somers-I do not see how there could be any doubt from what came out of the hearings and what was said by Mr. Wingo and others who framed the original legislation, that justice has miscarried. Mr. VINSON. Mr. Chairman, I ask permission that Mr. Pratt may be permitted to file his complete statement for the record, which gives a chronological history of the matter that he has testified about. Mr. PRATT. Mr. Chairman, may I make this statement in conclusion. The administration of the War Minerals Relief Act passed by Congress, and there are five of them, the act of 1918, the act of 1919, the act of 1921, the act of 1924, and the act of 1929—the administration by the several Secretaries of the Interior and their commissions has been a chapter of accidents from the beginning, and I speak respectfully when I say that if it was not such a terrible tragedy to these people who complied with the Government's request, it would be a tremendous "comedy of errors," and speaking with all respect to the court, I think the biggest error that has been made yet has been made by the Supreme Court when it said that the Congress in using the words "obligations incurred" meant "obligations accrued." That is the trouble with the whole situation as it now stands, as I see it. Mr. VINSON. Mr. Chairman, I renew my request for permission for Mr. Pratt to file the complete statement he has prepared, which sets out the details of the different acts of Congress, and also ask permission for him to file the different acts of Congress in the record, so that the hearings will be complete. The CHAIRMAN. If there is no objection, it is so ordered. Mr. CHASE. Mr. Pratt, for what were the pyrites used during the war? Mr. PRATT. They were used to manufacture sulphuric acid necessary in the manufacture of explosives, such as TNT and so forth. Mr. CHASE. Where was the plant located at that time? Mr. PRATT. The property is located in north Georgia, in Lumpkin County, about 75 miles north of Atlanta. Mr. CHASE. What was the organization of the company? Mr. PRATT. The organization was the Chestatee Pyrites & Chemical Corporation. Its capital stock was $100,000, of which $20,000 was paid in in cash, and $80,000 stock was paid for the value of the lease. No claim was ever made for the value of the lease. And incidentally, in reply to your question, I would state this. The whole enterprise, with the exception of $20,000, which I put in first to prove the ore bodies the whole enterprise was built on borrowed capital and credit purchases, with the assistance of the Secretary of the Interior to secure money. Mr. CHASE. Who are the officers at this time? Mr. PRATT. My brother, Mr. N. P. Pratt, who since has been president of the Georgia School of Technology and chairman of the board of trustees of that institution, was president, and he is a mining engineer. I was vice president and treasurer, I being a mechanical and electrical engineer. My brother and myself were and are the sole owners of all the stock. Mr. CHASE. You spoke of the refusal to include in the award salaries paid to the executive officers of the company. What were those salaries? Mr. PRATT. The salaries that were paid to the executive officers were paid for engineering services, my brother being a mining engineer, and I being a mechanical and electrical engineer. The engineers' salaries amounted to about $600 a month. Mr. CHASE. A piece? Mr. PRATT. Yes. That was during the stimulation period. Of course, we were not allowed any salaries at all at any other time during the period of the war. We were not allowed to make claim for them; the corporation is the claimant. We were not allowed to make claims. The ruling of the Secretary in 1925 was to the effect that the individuals were not the claimants, but the corporation. Mr. CHASE. When was this arrangement with the financing company started? Mr. PRATT. It was originally started there was a first financing contract in a small amount for the month or two previous to the stimulation period, and then we were requested to enlarge. About a month before Mr. CHASE. What was the date? Mr. PRATT. I cannot give you the exact date. The two loans were made in March and May, on March 26 and May 17. Mr. CHASE. That is when the original financing was done? Mr. PRATT. No; that was our small financing in connection with our small enterprise. Mr. CHASE. When advances were made either to or by the Government to increase, did you make those advances, or did the agent of the Secretary of the Interior make them? Mr. PRATT. No advances were ever made by the Government. Mr. CHASE. I do not mean in money; I mean the negotiations. Mr. PRATT. They were made by the agent of the Secretary, in writing. Mr. CHASE. He knew of your company? Mr. PRATT. Yes. Mr. CHASE. So he made advances looking toward negotiations to increase the output of your company for the benefit of the Government during the war? Mr. PRATT. Yes. The Chestatee Co. at that time had been operating on a small schedule to supply some plants in Atlanta, since 1898 and the Geological Survey had made reports on it from time to time. So, when the necessity arose for the Government to have pyrites, which it had been getting from Spain before that time, the Geological Survey reported that we had a most promising field, and they in effect took our property. Mr. CHASE. When were these negotiations with the Secretary completed? Mr. PRATT. They were not completed-the war ended-because they had representatives on the ground all the time. I referred to the negotiations. The negotiations were concluded when, under the insistence of the Secretary, or the request I spoke of, I conferred with Mr. Ashcraft and his partner, Mr. Wilkinson, of the Ashcraft-Wilkinson Corporation, of Atlanta, and they financed the enterprise. Mr. CHASE. They are an Atlanta firm? Mr. PRATT. Yes. Mr. CHASE. When was the money actually paid by them to your corporation? Mr. PRATT. All except $50,000, which I mentioned, was supplied just before the Government interfered, which money went into the corporation because we had not expended it at that time. That was the period within the stimulation period, as provided in the act, in the time of war, between April 6, 1917, and November 11, 1918. The money was covered with notes given. Mr. CHASE. So the negotiaions had proceeded sufficiently far prior to April 6, 1917, so that you went ahead and borrowed money for the enlargement? Mr. PRATT. No; the Government did not interfere and make that request until May 17. Mr. CHASE. That is what I understood you to say, and I wondered if your other answer was correct. I understood you to say the second time was in April 1917. When was it? Mr. PRATT. No; I say the war started in April 1917. It was after that, to be exact, on May 26. I can show you the letters from Secretary Lane dated May 26, requesting us to go into operation. My reply was dated June 18, 1917. Mr. VINSON. What was your reply? Mr. PRATT. My reply was declining to do so unless the Government would underwrite the enlargement. It was thereafter when the Secretary appealed to Ashcraft and Wilkinson. Mr. CHASE. When was the date? Mr. PRATT. Mr. Ashcraft can answer that, I think, better than I can. Mr. CHASE. I am asking you. Can you not fix it approximately? Mr. PRATT. It was shortly after June 1918, or about that time, I think, simultaneously Mr. CHASE (interposing). Your negotiations with the Government had reached the point so that you were actually operating and secured the money to enlarge your plant; is that correct? Mr. PRATT. Not at that date. It was after that date when the Secretary appealed to me to enlarge the enterprise, and appealed to them to lend me the money. Mr. CHASE. When did they lend you the money? Mr. PRATT. They took the notes and discounted them; the record shows the exact date. But they loaned-I have forgotten the exact amount-$250,000 or $300,000 a month or so thereafter. Mr. CHASE. When? Mr. PRATT. After June 1918. Mr. CHASE. Within a month after June 1918 you had this sum of money, over $200,000? Mr. PRATT. Then when the Government decided we had to build a railroad connection they loaned us about $250,000 or $300,000. Mr. CHASE. When was that? Mr. PRATT. That was later in the same year, or early in 1918. Mr. VINSON. We will put in the record the exact date of the loans made by the Ashcraft & Wilkinson Co. Mr. CHASE. I want to get this clearly in mind, if I can. Mr. RAMSPECK. I think Mr. Pratt inadvertently stated that the first loan was made in June 1918. |