DEAR SENATOR MCCARTHY:

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000400040037-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 15, 2016
• Document Release Date: March 12, 2004
• Sequence Number: 37
• Publication Date: January 11, 1962
• Content Type: LETTER

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CENTRAL INTELLIGENCE AGENCY
11 January 1962
Honorable Eugene J. McCarthy
United States Senate
Washington 25, D. C.
Dear Senator McCarthy:
Duriag our very pleasant visit on Tuesday, the 9th, you
raised the question of an incident that arose in 1956 with certain
scientists at the California Institute of Technology. I briefly
explained my position and so that you may be fully informed,
yesterday I arranged for the delivery to you of a copy of the
proceedings before the Joint Committee on Atomic Energy held
in connection with my confirmation hearings in July 1958.
I can add nothing to my statements made at that time,
although I would be happy to again review this matter with you
or anyone else who so desires.
With respect to the second question you asked, that of
a contract between the United States Air Force and the Kaiser-
Frazer Company which was consummated when I was Under
Secretary of the Air Force, 1950 and 1951, I am enclosing a
copy of public hearings before the Preparedness Subcommittee
No. 1 of the Committee on Armed Services, United States Senate.
These hearings were held for several days, starting June 2,
1953, as a result of a personal request by me to the late Senator
Styles Bridges.
Here again there is little, if anything, I can add to my
sworn testimony. Quite naturally I would be glad to discuss
this subject with you or others should you desire.
With reference to this morning's article by Mr. Drew
Pearson in which he alleges that my shipbuilding operations were
inordinately profitable, this matter too was reviewed by a
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Committee of the Congress in 1946. Therefore, I am enclosing
a transcript of the Hearings before the Committee on the Merchant
Marine and Fisheries, House of Representatives, held for the
purpose of investigating Maritime Commissions' merchant
shipbuilding program. I have marked the section relating to
my personal testimony. Although the subject is now very old
inasmuch as shipbuilding operations under my direction were
discontinued in 1945 and records are not available to me, my
testimony given under oath was complete and to my knowledge
satisfied the Committee.
You will readily note from the testimony that our ship-
building operations were adequately financed through subscribed
stock, subordinated stockholders' loans and bank loans for which
the stockholders were responsible. The earned fees were sub-
stantial because of the vast volume; however, nonreirnbursable
expenses, contract renegotiation and corporate income taxes
reduced the profit to a very modest figure when one considers
the scope of the operation. As the testimony indicates the entire
undertaking was handled in exact accordance with United States
Maritime Commission policy and contractual procedures.
In retrospect I feel the building of this vast yard (the
second largest in the United States), the assembly and training
of an organization in excess of 40, 000 men and women and the
production of some 475 ships of various types in record time
was really one of the satisfying accomplishments of my life. As
a measure of the magnitude of the operation, it is interesting to
note that the dead weight tonnage of ships produced in the yard
equals approximately 50 per cent of the total American flag
tonnage in active operation today.
With respect to the Kaiser contract for transportation
of bauxite for the Kaiser Aluminum Company referred to in the
Atomic Energy Commission confirmation hearings and also in
Mr. Drew Pearson's article, the circumstances were as follows:
Some six years after I left the Air Force, Kaiser Aluminum
called upon the shipping industry to submit competitive bids
for this engagement. My Company and a number of other major
shipping interests submitted proposals, and the proposal sub-
mitted by my Company proved to be most attractive to the
Aluminum Company. In the final negotiations we established
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a jointly owned company for the purpose of carrying out the
engagement. However, for many years prior and at the time
of the Hendy proposal I had no joint interests with Kaiser, I
held no stock in any Company of theirs, and they held none in
any Company of mine. The executives of Kaiser Aluminum were
most meticulous in determining that this undertaking was made
with the shipping company which could best serve the interests
of their stockholders and that no conflict of interest was involved,
and the same considerations were foremost in my mind.
Most sincerely,
Jo nA. McCune
Director
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15 January 1962
The attached letter is to be retained for information only.
See Mr. Houston's memorandum to the Director of 15 January
1962 concerning his visit with Senator Eugene J. McCarthy.
All copies retained temporarily with no distribution to be made.
Eventually, probably one copy should be held in file with memorandum
mentioned above.
STAT
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