The one holding Rice was determined not to liquidate or even dilute, was Electric Boat. He was convinced that submarines would become a necessity for any nation that wished to present itself as a serious sea power. And while the profits he had garnered from his sales to the American navy were nowhere near what his detractors had implied, continued contracts to build submarines could provide a bridge until he had reacquired the wherewithal to rebuild his fortune—unless of course the Lake Company succeeded in supplanting Electric Boat as the government’s primary contractor.
That was precisely what Simon Lake, his father, and their associates, sensing opportunity, were determined to do. They identified Victor Metcalf as the weak link and concentrated their efforts on him.
With Roosevelt otherwise occupied, Metcalf was again responsible for allocating the $3,000,000 appropriation. The Lake Company wanted half, and they were convinced they could bully Metcalf into acquiescence. In addition to continuing to bombard the navy secretary with entreaties and threats, they attempted to engage Congress to support splitting the appropriation. This Thurston did by writing a bill, which another Connecticut congressman, Nehemiah Sperry, introduced, stipulating that the “appropriation for submarines be expended in a way that would this year again admit the Lake Company to competition,” and then writing a long letter to Chairman Foss explaining why it was in the best interests of the nation to divide the award evenly. Foss had been an ally in the past, although after the Lessler affair, his support could no longer be taken for granted.2
The effort met with some success as, in early February 1908, likely just to avoid further contention, Metcalf approved a contract with the Lake Company for a single submarine, reducing the number to be purchased from Electric Boat from eight to seven. Metcalf did include a rankling condition—Lake would have to design and build the boat at solely his expense, and the navy would only buy it if it met certain standards in sea trials. If Secretary Metcalf thought that one-eighth of the pie—for which they might not even be paid—would satisfy the Lake forces, he was mistaken. With the monopoly broken, and Rice seemingly unable to protect his interests, the Lakes and Thurston decided that rather than half, they should have it all. To squeeze Rice out, they would move from veiled intimations that Electric Boat had obtained their contracts through bribery to open accusations. For their wedge, they would use the 1908 appropriations bill, still under consideration in Congress.
The 1907 annual report from the navy, the draft of which was drawn up before the October crash, had recommended the addition of four battleships to the fleet as well as four submarines. In January 1908, however, with the economy in a tailspin, the naval affairs committee seemed prepared to reduce the number of battleships to two, but to add appropriations for four additional submarines. Battleships were extremely expensive, almost $10 million each, and so, with the Treasury under stress, the decision, which would save $17 million, seemed to make sense. In addition, the president was said to favor eight submarines, although he was insistent on the four battleships as well. The proposed legislation did not mandate splitting the submarine appropriation, although once more, the navy secretary would have discretion over choosing the vendor or vendors.
On February 10, the committee approved the proposed changes, after a bill introduced by Nehemiah Sperry to award submarine contracts based only on low bids was defeated. In the next few days, newspaper articles began to appear implying that Electric Boat had used chicanery to halve the battleship appropriation and then in securing the exclusive right to contract for the four additional submarines.3 Most of the articles did not specifically mention bribery, but an anonymous letter was also sent to the editor of the Detroit Free Press suggesting that a Michigan House and naval affairs committee member, George Loud, had been blackmailed by Electric Boat. “A Congressman does not want to get what happened to Lessler, but here is a big story tip for what it is worth. The submarine people brought out a candidate, a prominent lawyer, against Loud. He withdrew upon agreement of Loud to vote for submarines.”4
The following day, the New York Herald and the Washington Post also received anonymous communications, these asserting that a panel of experts had unanimously agreed that $1,476,296.60 paid to Electric Boat for submarines was based on egregiously and fraudulently inflated cost estimates. Two days after that, the Free Press received a second communication. “Loud voted for this $1,476,296.60 graft in the Naval Committee. There is a story in circulation that the Holland people got a prominent attorney to become a candidate against Loud last time; that Loud finally agreed to vote for the submarines upon deal that the attorney withdraw. The attorney withdrew. Subscribe for the New York Herald and the Washington Post. Loud can be defeated on this proposition alone by you. Watch Congressional Record. Have your local papers play up proposition. Have them write Loud for explanation and whether the withdrawal story is true.” A copy of the communication was also sent to Frank Edinborough, a Michigan state senator who had previously announced that he would contest Loud’s seat in the next election.
Only days later, Lilley filed a resolution: “That a special committee of five Members of the House be appointed by the Speaker to investigate the conduct of the Electric Boat Company of New Jersey and their predecessors, the Holland Boat Company, respecting the methods employed by said companies in connection with past and proposed legislation before Congress.” His reasons for requesting the investigation, which he stated for the record, were incendiary. “This Electric Boat Company has been a stench in the nostrils of the country for years, and, in my opinion, it has done more to corrupt legislation than all the other corporations on earth. I think the membership of this House is of the very highest quality, and that they are the best men, usually, from the districts from which they come; but with a flock of 383 here, it would be strange if there were not some sheep in it that had the foot-rot or scabies.”
George Lilley
Lilley was quite deft in avoiding specific charges against either Electric Boat or any specific member of Congress, including George Loud. But he made no secret that he expected to chair the investigative committee, from which he would wield full subpoena power, hire lawyers, and conduct interrogations as he saw fit. After he filed his resolution, he gave a series of interviews to the press. To the New York Tribune, he said, “I believe it is time for an investigation into their methods, so that the people of the United States may know and see for themselves how this company, maker of submarine boats, is enabled to usurp the power of the President, the Secretary of the Navy, and the Naval Board, and substitute a naval program of their own.”
Lilley then laid out what those methods were, once more avoiding any explicit charges. “There are no new tricks in the way of lobby work and influencing members that the Electric Boat Company is not adept in. . . . Attorneys have been hired by these people, who have usually been influential politicians from the home districts of members of the committee, and candidates have been brought into the field to contest the nomination of members who have opposed their policies. They have gone so far as to find out what new members of the House had applied for positions on the Naval Affairs Committee and they have been assumed to have influence in securing the assignment to members of that committee. It has also been said that they have contributed to individual and party campaign funds.”5
Other members of the naval affairs committee, even previously sympathetic ones, were none too pleased at Lilley’s implication that they might have been either actively or tacitly bought. In other interviews, Lilley accused unnamed press reporters of taking bribes and noted that the Detroit Free Press had reported that George Loud had accepted a bribe. On February 25, the House rules committee summoned him and, although they did not place him under oath, demanded specifics. Lilley responded by reading a carefully worded prepared statement in which he retracted the charges against reporters, explaining they had been based on bits of gossip. But he maintained, again without details, that he had firsthand knowledge that Electric Boat was corrupt
. Lilley was not a lawyer, so when he was asked who had prepared such a legal-sounding statement, he assured the committee that he had done so himself.
With Lilley’s accusations receiving widespread coverage across the nation, the rules committee on March 6 appointed a five-man committee to determine whether Electric Boat “has been engaged in efforts to exert corrupting influence on certain members of Congress in their legislative capacities, and have in fact exerted such corrupting influence.” The committee would of course have full subpoena powers, just as Lilley had requested.
The only problem for Congressman Lilley was that he would not be the one exercising those powers. He was not, as he assumed, appointed to chair the committee. In fact, he was not on the committee at all. Even worse for the congressman, the committee’s first act was to demand that he turn over “every fact in his possession on which his accusations and suspicions were founded, especially as he had asserted before the Committee on Rules that he was ‘not talking hearsay.’”6
The Lilley Committee
This was not how Lilley had envisioned the investigation being conducted. He responded by declining to testify, stating his intention to obtain counsel, and complaining that he was being “shadowed by detectives.” He did give the committee a list of questions that, as committee chairman, he had intended to put to the witnesses he summoned. Lilley told his colleagues that he had prepared the questions personally, without aid of counsel.
A few days later, Lilley appeared before the committee once more, this time with two lawyers at his side. He refused to either supply materials or answer questions as to specifics, merely restating that he had made no charges against any member of the House. Committee members wondered how Electric Boat could have perpetrated the corrupt practices and gained favorable votes without the knowledge and acquiescence of sitting congressmen, but Lilley refused to elaborate on his charges. Lilley was also informed “that the men whom Mr. Lilley’s suspicions had transformed into detectives hired to watch his office were raw recruits of the new police force of the office building, who were forced, while waiting for their uniforms, to patrol the corridors in plain clothes.”7
On the same day that George Lilley arrived with his lawyers, Robert G. Skerrett, who had accompanied the Lake family to Europe, handed in an article to Scientific American and Harper’s Weekly, echoing Lilley’s charges and “extolling the merits of the Lake type of boat.” Skerrett did not identify himself as an employee of the Lake Company, which he was, but did imply that he was an engineer with experience in submarine design, which he was not. Scientific American refused to publish the piece as an article but agreed to do so as a letter to the editor. They had to split it and run it in two parts, in succeeding weeks, beginning March 21. Before each segment, the editors made it a point to disclaim responsibility for the content. Harper’s published the piece in full, but not until April 4.
Like Lilley, Skerrett presented no specifics but relied on innuendo. “The departure of the battleship fleet has left the Atlantic seaboard sorely crippled so far as the mobile defense of heavy fighting ships is concerned. Should circumstances develop threatening hostilities, the cities of the eastern coast could readily be laid under tribute or reduced to ashes by any one of the principal foreign powers. This fact has called forth earnest protest and has given occasion for a determined move to effect legislation providing for a large number of submarine boats in lieu of the regular departmental recommendation for four first-class battleships and only four submarine vessels.”
But Skerrett was not really writing to save the battleship appropriation. “Setting aside the unwisdom of substituting submarines for battleships, the present effort to secure an increased provision for under-water craft could well be justified if the bill had not been drawn in a restrictive manner for the promotion of a single type of boat. This is not in keeping with technical advance, nor does it make for the nation’s security viewed in the light of the state of the art in its widest developments.”
His only motive, he noted, was patriotism. “The taxpayers of the country have a right to know if this substantial bounty of nearly five millions of dollars has brought a corresponding measure of national security against the day of possible need. The public has a right to know if all the sources of native skill have been drawn upon in this developmental work pursued by the government. And the people have a right to ask, ‘Have we secured the best to be had for the prices paid?’ It has been shown by competent authorities in their testimony before congressional committees that the prices paid for the submarines now in the United States navy were out of all reason unless the cost of development had been borne by the builders.”8
From there, Skerrett presented a long and detailed history of submarine procurement filled with distortions, half-truths, and outright fabrications. Each of Simon Lake’s discredited allegations was put forth as accepted fact. Scientific American was the preeminent journal of its kind in the United States, and the letter, for anyone not familiar with the actual history of submarine procurement, was bound to prompt outrage.
The committee hearings lasted more than six weeks. Dozens of witnesses were called to testify, virtually every person either directly or peripherally involved with either company, Congress, or in the press. The witnesses included George Lilley, Simon Lake, John C. Lake, Fred Whitney, George Loud, John Mellen Thurston, E. B. Frost, Lawrence Spear, Charles Creecy, and Isaac Rice. Robert G. Skerrett was questioned for two days as to the source of the material he published in his Scientific American piece. The committee apparently felt they were under scrutiny because the questioning of each witness, regardless of which side they favored, was scrupulous and aggressive. Every one of the sixteen charges that the committee had identified from George Lilley, be they in his resolution or public statements, was probed fastidiously. Each question that Lilley had submitted was put to the witnesses that he had identified as targets of his charges.
When the committee ceased proceedings at the end of April, the members and staff retired for almost two weeks to produce their report. It was submitted on May 12, 1908, and released publicly one week later. No one would accuse the members of being slipshod—the full record ran to almost two thousand pages. Everyone who had followed the hearings expected the committee’s findings to be ruination of one company and the vindication of the other. The headlines made it clear which was which.
“Charges of Corruption Without Foundation,” read the lead on page one of the Washington Times.9
Lake’s plan had backfired. George Lilley and the Lake forces were caught in so many lies that the congressman was fortunate not to be expelled, and Thurston, Fred Whitney, and even the Lakes, father and son, not indicted. Of the twenty-three conclusions of the committee, in at least ten of them Lilley is said to have acted “in bad faith,” “in contempt of the House,” or had “violated his obligation as a member of the House.” Another stated, “Mr. Lilley allowed himself to be used as an instrument of the Lake Torpedo Boat Company in its rivalry and attack upon a competing company,” and yet another: “That Mr. Lilley had no information to justify the charges made before the Committee on Rules.”10
In fact, the only evidence that the committee found of wrongful behavior was by George Lilley and Lake Company associates. Not only had Simon Lake met personally with George Lilley in a New Haven hotel room on February 14, six days before Lilley submitted his resolution—something both men had initially denied—but the resolution itself, Lilley’s prepared response to the rules committee on February 25, and the list of questions that were to be asked to hostile witnesses were drawn up by John Thurston, and then transmitted verbatim by Congressman Lilley, who claimed the language was his own. Both the anonymous letters to the Detroit Free Press and the communication on cost overruns sent to the New York Tribune and the Washington Post had been written by Fred Whitney, and the $1,476,296.60 figure was totally fictitious, concocted by “an agent of the Lake Torpedo Boat Company.”
The committee found not a scintil
la of evidence to support any of Lilley’s sixteen charges and concluded all were either total fabrications or distortions of behavior that was neither illegal nor unethical. The charge that Electric Boat had made campaign contributions to any of the naval affairs committee members who voted in their favor was false, as was the charge that reporters had been bribed. George Loud was totally exonerated. Robert Skerrett was found to have knowingly published material in his article that was fallacious, and no one in authority, save Admirals Melville and O’Neil, believed the Holland design inferior to Lake’s. Quite the contrary.
The press coverage was eviscerating. The New York Times headline was “House Flays Lilley For Boat Scandal: [Congressman John Sharp] Williams Denounces Representative as Guilty of Treason and Advocates His Expulsion.” The piece began, “When the select committee appointed to investigate the submarine scandal got through with its report to-day nothing was left of Representative George L. Lilley of Connecticut, author of the charges, except his membership in the House.”11
George Lilley was not expelled, however, although he became something of a pariah among his fellow House members. He did not seek reelection in November 1908, choosing instead to run for governor of Connecticut, the one place in America where the committee’s report was considered an unfair attack on an honorable public servant. Lilley won. His triumph was brief, however, as on April 21, 1909, only three months after he had been sworn in, suffering from “nervous exhaustion,” George Lilley died of “toxi-semia.” He was forty-nine years old and was given a state funeral.
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Going Deep Page 35
