Full of Dynamite

This time it was going to be different. Michigan's white-haired Homer Ferguson had the wary air of a schoolmarm with a roomful of restless kids. Under his watchful direction, the Senate War Investigating subcommittee last week gingerly reopened its inquiry into Howard Hughes's $40 million war contracts for one huge flying boat and three XF-11 photo-reconnaissance planes.

There would be no more girl-spangled hullabaloo. Photographers were warned not to take pictures while witnesses were testifying. Johnny Meyer, Hughes's ubiquitous pressagent, slipped in & out of the hearings, carefully unobtrusive.

Pressure at Work. The committee turned up some solid facts. Without question, bustling Henry Kaiser and his lanky associate Howard Hughes had had very special treatment in wartime Washington. Ex-WPB Vice Chairman Charles E. Wilson testified that he had ordered the flying-boat contract canceled. A couple of months later "we awoke to find the job was proceeding--Mr. Nelson had gone to Mr. Jesse Jones. . . ."

Ralph R. Graichen, aircraft technician then assigned to Air Corps headquarters, declared that the contract for the reconnaissance planes was authorized because of pressure from Elliott Roosevelt. Army contract officers protested the high cost of the plane, the unusual terms of the contract. They were overruled. The Budget Bureau recommended that the flying-boat contract be terminated, the F11 production transferred to someone else. The recommendation was ignored. Snorted one disgruntled colonel (according to a 1944 memo): "let Hughes "hang himself."

Then the committee summoned Major General Bennett Meyers, wartime deputy chief of procurement, who retired in 1945. A burly, balding man with a bristle-brush mustache, Meyers had had his troubles. After a trip to North Africa (where Elliott Roosevelt's photo-reconnaissance squadron was stationed), Assistant Secretary of War for Air Lovett called him up and demanded: "For God's sake, Benny, don't we have a photo-reconnaissance plane?" Then Harry Hopkins called him to the White House, said that it was an outrage, and why didn't he get busy and get one? General "Hap" Arnold got a query from the President about the Hughes plane.

An Awful Smell. Meyers got busy. But he was not happy about it. The committee produced transcripts of his worried telephone conversations with Lovett:

Meyers: "There is going to be an awful smell about [the Hughes contract] when it gets out. . . ."

Lovett: "Benny, my own feeling is that I never like any of these projects that are gone into under outside pressure. . . . Hughes has very powerful friends here in Washington."

Meyers: "Yes, sir. Jesse Jones and the President and everyone else seems to be in this. ... It is full of dynamite."

But it was Meyers who had finally approved the F11 contract, and Meyers had some explaining to do. The committee suddenly whipped out a familiar document--one of Johnny Meyer's expense accounts. Johnny had paid a $1,165 hotel bill for General Meyers at the Los Angeles Town House in April 1944, just before the F11 contract was signed. When the General found that the bill had been paid by Meyer, he had told his wife to repay the money. Mrs. Meyers, a 31-year-old blonde, testified that she had put $900 in an envelope and tried to get Johnny to take it, finally thrust the envelope in his coat pocket. Johnny himself was called, denied that he had been repaid.

Most Distorted Thing. Had Hughes ever offered him a job? Meyers said that Neil McCarthy, Hughes's vice president, had asked him to sign a contract to work for Hughes after the war. When was that? He wasn't sure. Around the time he approved the F11 contract.

Then Ferguson brought out the testimony of McCarthy himself. Said McCarthy: Hughes had told him that Meyers wanted a contract for a postwar job, with a down payment "to buy Liberty bonds." He had turned Meyers down. Then Meyers had asked if he could get a loan. McCarthy's recollection was that the amount requested was $50,000.

Sputtered Meyers: "It is the most distorted thing I have ever heard. I do recall telling [McCarthy] about a certain bond transaction. He asked me if there was not some way that Howard Hughes could help me on this proposition. I told him no."

At week's end, Howard Hughes himself flew into town, cocky, disheveled and sardonic as ever. When he appeared at the hearings, he demanded permission to question his "defense" witnesses himself. Ferguson refused. While the witnesses testified, Hughes sat scowling, scribbling questions on scraps of paper, which he handed to Ferguson to ask the witnesses.

This week Howard Hughes charged to the offensive. The chief reason for his failure to deliver the F-11s on time, he said, was the low priority assigned on materials and manpower. Until he hired Johnny Meyer to entertain Army officers, he got "the worst deal of any aircraft manufacturer in the U.S."

'Hughes admitted that General Meyers had asked for a loan, but said that the figure was $200,000. Meyers wanted to buy $10,000,000 worth of "Liberty bonds" on margin. When he turned it down, Meyers was "so angry at me I thought he would throw a monkey wrench in the [XF11] contract, but he didn't."

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