Coldwater & Flynn

Three weeks ago the Senate Munitions Investigating Committee began to hunt for crumbs of scandal in the U. S.'s Big Three shipbuilding companies--New York, Newport News and Bethlehem. But no crumb tickled the stout palate of the U. S. public until the Committee found the names of two of Wall Street's biggest bear speculators, of an ex-heavyweight champion, of the right-hand man of a famed promoter all nicely linked together with Edward J. Flynn who, next to Boss Farley, was henchman since times far back of 1932.

It came out in the rambling intricacy of testimony. Since Errett Lobban Cord had escaped the Committee's inquisition by going on a long yachting trip to the isles of Greece, the Committee seized as target for its questions Lucius Bass Manning, charge d'affaires of Cord's motor, aviation and shipbuilding interests. Long ago Mr. Manning protested that it was just a happy coincidence when, the day after Mr. Cord announced acquisition of New York Shipbuilding Corp., that firm was awarded the biggest ($38,450,000) slice of the New Deal's naval contracts (TIME, Aug. 14, 1933). Last week the Senators got a fuller account from him.

In the spring of 1933, said he, an option on 90,000 of the 175,000 voting shares of New York Shipbuilding had been secured by Bernard ("Ben") C. Smith and Thomas E. Bragg. At the mention ot those two famed speculators, the Senators sat up and took notice--wondering audibly whether the rise in that stock from $3.25 to $22 in five months' time had anything to do with those weird gentlemen's operations. The tale went on: Speculators Bragg & Smith came to Mr. Manning to ask whether Mr. Cord would take a half interest in the majority stock, plus the duty of managing New York Shipbuilding. Cord bought. Mr. Manning and Cord-chosen directors took over the management but the names of Smith & Bragg appeared nowhere as stockholders. Their interest was hidden behind the name of one director: James Joseph ("Gene") Tunney.

"It seems to me," ventured Senator Yandenberg, "that when Bragg and Smith, who were stock speculators and nothing else, came to you with something substantial, that in order to interest you they must have given some assurance that there was going to be some naval business and some PWA money."

Snapped Mr. Manning, "They did not."

Then Senator Vandenberg asked a casual question: "You know Mr. Flynn of New York?"

"Coldwater & Flynn?" asked Mr. Manning, naming Mr. Flynn's law firm. "Yes," he agreed, "I know him."

"Why was he hired as soon as these new interests took over New York Shipbuilding Corp.?"

"He was hired," Mr. Manning explained quite simply, "because our headquarters are in Chicago. . . . We felt we should be represented in New York."

A little further inquiry established that Coldwater & Flynn had been retained for $15,000 a year as soon as Messrs. Cord, Bragg & Smith had taken possession of New York Shipbuilding. Mr. Manning naively declared he did not know that Mr. Flynn was Secretary of State of New York.

Eager to query Messrs. Smith and Bragg, the Committee sent out subpoenas, was told the speculators were nowhere to be found. Next day Mr. Smith's attorney wired that his client was ill in a Manhattan hospital, would appear when able. Ill in the same hospital, of a heavy cold and general fatigue, lay Franklin D. Roosevelt's friend, Edward J. Flynn.

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