Mr. CARTER. Numerous letters were written to supply "the various foreign branches with material from the United States." Nor were such activities limited to the Western Hemisphere. Mr. Barreau communicated with Stahlunion's Japanese agency in Tokyo, offering to cooperate fully "during the critical period." He began his letter as follows:

Like all other foreign branches, it is assumed by this company that you are also cut off from supplies from Germany, and we are now engaged upon servicing the various foreign branches with material from the United States. * If you should fall in line with our suggestion, it is of course understood that you secure the approval of your headquarters in Duesseldorf.

I offer these letters for the record.

(The letters referred to were marked "Exhibits Nos. 494 495" and appear on p. 2223.)

Mr. CARTER. The Japanese company was fearful of possible complications, but Mr. Barreau was reassuring:

The fact that your company and subsidiaries are on the British black list was known to us, but we think that this should not throw any material difficulties into our future negotiations. It is very easy to get around that by using the names of your local friends as consignees, just as we do it with other branches, for instance in South America, with whom we have developed a tremendous business. Nor would our company, as a matter of protection, appear as shippers. For that purpose we ourselves are using our forwarding agents who are strictly American concerns.

After pointing out that it would be possible to obtain all the material that the Japanese company indicated as necessary, Mr. Barreau wrote: Offhand we would say that the cancelation of the American-Japanese trade treaty cannot influence our business very much. Before the war started we were operating our business exclusively with the United States, and in spite of a considerable number of set-backs, our dealings were always successful, even though the political relations between the United States and Germany during the past years have been none too pleasant.

Here is that letter for the record.

(The letter referred to was marked "Exhibit No. 496" and appears on p. 2224.)

Mr. CARTER. In his dealings with the South-American connections of Stahlunion Export, Mr. Barreau was careful to make certain that his activities were approved by his German principals as well as their South American representatives. An Uruguayan concern wrote on October 19, 1940, at the suggestion of Dr. E. Nicolai, of ThyssenLametal, in Buenos Aires, offering to act as representative of Steel Union in Uruguay. Mr. Barreau replied that such an arrangement was satisfactory, "provided that our dealings will not interfere with Dr. Nicolai's business."

I offer these two letters for the record.

(The letters referred to were marked "Exhibits Nos. 497-498" and appear on p. 2225.)

Mr. CARTER. Steel Union's "views are in harmony with the wishes of our mutual headquarters abroad." Mr. Barreau assured Cyro Vaz, commercial agent and importer for Stahlunion, Ltda., in Rio de Janeiro. Mr. Vaz, whose name appeared on the original United States proclaimed list, was told at the same time that Mr. Barreau was "insistent in maintaining that the majority of your business, as a matter of, so to speak, family spirit, ought to be played into our hands."

84549-44-pt. 16- -7

I submit the letter for the record.

(The letter referred to was marked "Exhibit No. 499” and appears on p. 2226.)

Mr. CARTER. In answer to an appeal for caution from Mr. Barreau, Cyro Vaz urged him not to be too much impressed by "such newspaper talk, which in the first place, is part of the defamatory campaign against Germany." He was grateful for the warning, however, and promised that everything possible would be done "to avoid an interruption of our business relations."

(The letter quoted from was marked "Exhibit No. 500" and appears on p. 2228.)

Mr. CARTER. Mr. Barreau then wrote he had sent him a certain news clipping "because it represents a vivid illustration of the direction of policy this country is taking." Moreover,

Since we are for the time being dependent upon the United States for supplies, it behooves us to take notice of whatever important political moments [sic] that appear and which may or may not have some effect on our mutual business. The British propaganda has taken on, in this country, a momentum that is beyond description and the sad part of it is that the public, as well as the administration, in spite of past bad experience, takes sides wholly with the British cause, so much so, that the country appears to be more British than the Britishers themselves.

(The letter referred to was marked "Exhibit No. 501" and appears on p. 2228.)

The CHAIRMAN. Wasn't it typical Nazi propaganda at that time that the British would fight to the last American?

Mr. CARTER. Yes, sir.

The CHAIRMAN. Which was being circulated without the Nazi label by certain Americans?

Mr. CARTER. Yes, sir.

The Latin-American agencies of Stahlunion did not have to depend entirely on the Stahlverein's known agents. Another concern, owned by naturalized Americans of German birth, was ready to serve. On a visit to Germany in the spring of 1939, Mr. Adam T. Schildge, of New York, had arranged with the parent firm in Duesseldorf to help supply its Latin-American agencies. Less than 3 weeks after war was declared, Mr. Schildge's organization, changing its name to Transmares Corporation, was offering delivery of steel to the Latin-American affiliates of Stahlunion. It informed them:

We received your name through the courtesy of Stahlunion-Export G.m.b.H., Duesseldorf.

(The letters referred to were marked "Exhibits Nos. 502-503" and appear on p. 2229.)

Mr. CARTER. Early in 1940, Stahlunion Limitada, of São Paulo, Brazil, requested Transmares to address all future correspondence to a cloak, under whose name letters to Transmares would likewise be

sent.

I offer that letter for the record.

(The letter referred to was marked "Exhibit No. 504" and appears on p. 2231.)

Mr. CARTER. Thus Stahlunion Limitada could receive supplies through a dummy concern established for that purpose. When the agent of Stahlunion in Colombia communicated with Mr. Schildge at

the suggestion of Horst Gilbert, a traveling representative of Stahlunion, Mr. Schildge made the following observation:

I do not believe that individuals like Mr. von der Heide, living in the interior of a South American Republic, would be on the black list. If the English should ever try to do this, their black list would have such an enormous volume that it would lose its effect.

(The letter referred to was marked "Exhibit No. 505" and appears on p. 2231.)

Mr. CARTER. Very close contact was maintained with the Stahlverein's affiliates in the export business, as well as Stahlunion's LatinAmerican agencies. A vice president of Steel Union resigned and became a vice president in Mr. Schildge's company. Early in 1939 Mr. Schildge made an effort to become confidential United States agent of the Dutch holding company that was the nominal owner of Steel Union. In writing to Berlin on March 7, 1939, in this connection, Mr. Schildge explained:

"I am on very friendly terms with the gentlemen" of Steel Union. I offer that letter for the record.

(The letter referred to was marked "Exhibit No. 506" and appears on p. 2232.)

Mr. CARTER. Steel Union's activities came to the attention of the British Minister of Economic Warfare. In a dispatch from London in the New York Times of May 2, 1941, it was reported that he had urged the freezing of German and Italian assets in the United States. Among other things he had pointed out that "since the outbreak of the war," Steel Union-Sheet Piling, Inc., described as a former sales agent for Stahlunion, the export branch of Stahlverein

has been buying steel from the United States steelmasters to fulfill existing and new contracts that would formerly have been supplied from Germany to Stahlunion's subsidiaries in Latin America.

I submit that newspaper clipping for the record.

(The news story from the New York Times referred to was marked "Exhibit No. 507" and appears on p. 2232.)

Mr. CARTER. Shortly afterward Mr. Barreau prepared a statement for his attorney to transmit to a Government agency. It declared:

The company during its operations prior to the outbreak of the present war was completely independent. The company never has acted as an agent for any of our German sources of supply. Our relationship with these sources, which we were free to change at any time, was purely that of buyer and seller.

(The statement referred to was marked "Exhibit No. 508" and appears on p. 2235.)

The CHAIRMAN. Apparently Steel Union-Sheet Piling was simply an anglicized version of Stahlunion.

Mr. CARTER. Apparently.

Mr. Barreau termed the charges made by the British Minister of Economic Warfare "essentially untrue."

So well did Steel Union carry on its business that between September 1939 and the middle of 1941 it handled orders in excess of $2,000,000. However, publication of the United States proclaimed list in July 1941, made it more difficult for the firm to operate.

The management accordingly brought into active operation the North River Steel Corporation, which then continued the business of

supplying Stahlunion's Latin-American agencies through various cloaks. North River's books show loans of $20,300 from Adam T. Schildge, and a loan of $10,000 from Gertrude Orbanowski.

Mrs. Orbanowski's son, Kurt, who had represented Stahlunion in Bulgaria, was sent to the United States in 1940 to become a direct or of Steel Union-Sheet Piling, Inc., and of its successor, the North River Steel Corporation. After the United States entered the war and it became apparent that North River could no longer function, this same Kurt Orbanowski, now vice president, who had shortened his name to Orban, got in touch with Steel Union's Buenos Aires agent, who it is known imported materials for various proclaimed list firms. In a letter of January 25, 1942, sent by courier because of its confidential nature, Mr. Orban explained that Edward Barreau, "who is a very newly naturalized citizen," planned to retire to a farm for the duration, but he, Kurt Orban, because of his birth in this country, was "much less subject to criticism in the present time," and he "may even take over or become the successor to the North River Steel Corporation."

Confident that the business could be carried on in spite of the war, he wrote:

The only real difficulty is the price ceiling because it is evident that no one will care to go to any trouble to make deliveries on orders not carrying priority if he cannot get any more out of it than on a priority order.

One possibility, he observed-

is that of officially paying ceiling prices only, and making sizable payments in cash on the side to the interested parties. This is the manner by which I managed to get the fairly sizable shipments of the North River Steel Corporation out of the mills and the same thing will have to be done again if we really want shipments to move.

The CHAIRMAN. That was at a time when we were woefully short on steel for our armament program. That was really a black market. Mr. CARTER. I think that is true, Senator.

*

*

**

Since "prices above the ceiling would automatically cause the application for export licenses to be turned down these sums would have to be treated confidentially, therefore, and remitted separately." Mr. Orban, in this six-page letter, outlined the various methods by which it would be possible to get around currency restrictions in the Argentine and the "confiscatory taxes" in this country.

(The letter referred to was marked "Exhibit No. 509" and appears on p. 2237.)

The CHAIRMAN. In other words, Mr. Carter, Mr. Orban was willing to violate the United States Government system of priorities set up for the purpose of national defense in order to supply the German market in Argentina, and, incidentally, also to hamstring the American defense program.

Mr. CARTER. That seems to be the case, Senator.

From the start any relationship between Stallverein and its United States affiliates was concealed. When Steel Union-Sheet Piling, Inc., was organized on September 19, 1935, it consolidated under Dutch ownership two predecessors whose shares were being held in trust for Stahlverein. These two predecessors had been organized during the period when American bankers were floating bond issues of Stahl

verein running into millions of dollars. One of them, Sheet Piling, Inc., was organized in March 1926, to sell in the United States the patented Larssen sheet piling used in the construction of cofferdams. The other, Steel Union Co., Inc., was established in June 1927, to import German steel and sell it in the high-priced United States market. It was originally planned to have a "Dutch camouflage" for these two firms. George E. Dix, who was to direct the activities of the companies in the United States, urged instead that the shares be held in trust for Stahlverein. In accepting this proposal, Stahlverein informed Mr. Dix on October 13, 1927:

We will gladly hope that you will be successful to avoid any difficulties by adopting the way recommended by you, which difficulties cur attorney tried to avoid by the selection of the Dutch camouflage.

I offer the original and translation as an exhibit.

(The letter referred to was marked "Exhibit No. 510" and appears on p. 2240.)

Mr. CARTER. In another connection, on learning from Price, Waterhouse & Co. that instructions had been received by them from abroad to audit the books of Stahlverein's New York agencies, Mr. Dix wrote Duesseldorf as follows:

In view of the more or less elaborate steps and care we have taken to establish the independence of action in connection with the American companies and Stahlunion-Export and Vereinigte Stahlwerke (Stahlverein), it immediately occured to me that it was undesirable to have it a matter of record that you had instructed a firm of public accountants to audit our books. It would rather seem the proper procedure that you request us to have this audit done and we would then comply by hiring Price, Waterhouse to make the audit immediately. (The letter referred to was marked "Exhibit No. 511" and appears on p. 2241.)

Mr. CARTER. The nominal owner of the capital stock of Steel UnionSheet Piling, Inc., at least until a few days before the invasion of Holland, was the Dutch banking house of N. V. Handelmaatschappij Voor Nijverheids en Commissiezaken, of Rotterdam. However, it appears that these Dutch shareholders were not given much information regarding the activities of Steel Union. On one occasion Mr. Barreau wrote them that

it would be most unwise to give you a full report of our business, how it is transacted, how the profits are made, and with whom we do it, because under present political conditions it must be expected that such information may get into hands which are not qualified to have it.

(The letter referred to was marked "Exhibit No. 512" and appears on p. 2241.)

Mr. CARTER. When the Germans invaded Holland, every effort was made by Mr. Barreau, in New York, to purchase the shares from the Dutch owners, in order to avoid having to operate under license required by the Executive Order that froze assets of Netherlands nationals in the United States as of May 10, 1940. On June 10, 1940, he was informed by his attorney, Eugene R. Pickrell, that a license might be obtained from the Federal Reserve bank that would permit—

the depositing in a bank or other depository in the United States for the duration of the present European war, of the consideration given by you in the purchase of these shares of stock.