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Part III
Chapter 4

This webpage reproduces a chapter of
One Man's Fight
for a Better Navy

by
Holden A. Evans
[Former Naval Constructor, U. S. N.]


published by
Dodd, Mead & Company
New York
1940

The text is in the public domain.

This page has been carefully proofread
and I believe it to be free of errors.
If you find a mistake though,
please let me know!

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Part III
Chapter 6
This site is not affiliated with the US Naval Academy.

Part III

 p316  Chapter V

The Dizzy Whirl of 1916

It was starting anew with a clean slate. We had a wonderful organization. Our holding company owned every share of Drydocks stock. Clement Smith and his brother-in‑law George Miller owned control of the holding company. Mr. Smith was chairman of the Drydocks Company board, and all my dealings with the holding-company stockholders were through him. It was a pleasure to work with Mr. Smith.

The list of stockholders read like the Who's Who of Milwaukee business. I liked them all except one — Oliver Fuller. Though a small stockholder, he was president of the big Milwaukee bank and exerted more influence in our company than his ability warranted.

In the plant office, too, things were very cheerful. I let Jack Willis have one third of the stock the bank sold me under the terms of my new contract, at the price I paid. He now had a stake in the company. We made a contract with an important western firm to prepare designs and working plans and order material for ships to be built in Portland, Ore., and Harry Crosby was busy and happy. This contract paid us well and gave us much prestige.

Only out in the yard was it different. No longer was there just that small repair force, every man of which I knew by name. Hundreds and hundreds of new men were now on our pay rolls. The familiar old faces were lost among the newcomers. I found a strike on my hands.

I asked for a committee to meet me, with authority to act. When it came, I was delighted to see a number of the old men on it. We met in a friendly way and had no difficulty in reaching  p317 an agreement. The company granted two successive wage increases for the near future, agreed to practice no discrimination against union members, agreed to deal with shop committees, and agreed to put the Drydocks on a 50‑hour week when the construction jobs in which labor costs had already been figured, were finished.

"This is all right and fair," said a labor spokesman, "but how are we going to persuade the men out there to accept it?"

I remembered my riveters' strike at Mare Island.

"Let me talk to the men — all of them," I said. "I'll hire a big hall for tonight, if you will assemble them there."

They promised. Baltimore workmen weren't used to such personal dealing. The crowded hall gave me a splendid reception. These were not ugly, malicious trouble-makers but good men who knew I was fair. I explained the settlement and answered all questions. The chairman put the question, and the strikers accepted the agreement unanimously. When I left the hall the men rose and cheered.

Up and up climbed the index of the shipbuilding business. I now changed my managerial methods. When I began in Baltimore, I emphasized economy and efficient operation. The men said I counted the rivets and bolts and knew every day what every workman accomplished. Now my slogan became, "Volume and high prices!"

With only two shipbuilding ways, we had to push our hulls off fast. It meant much overtime work, and rush work is not conducive to efficiency. With ship prices what they were, it was poor business to slow down for the sake of scientific shop practice. The organization was tuned up for speed. Willis and his assistants took care of that. It was my business to get the high prices. I began spending most of my time in New York, associating with the foreign buyers and principally with the Norwegians. I no longer bothered to make estimates of cost. I found out the  p318 highest going prices and got them.

It took a hardy physique to keep up with Norwegians in their evening entertainments. When he was in New York, Christoffer Hannevig expected me to go with him nearly every evening. The parties were stag affairs.

"Why don't you have ladies sometimes?" he asked me.

My best customer's wish was my law, but my contacts in New York were then only business ones. I knew no young ladies to invite. But in New York you can get anything. I went to a young woman who made a profession of arranging parties for just such visiting firemen as Hannevig and myself. I ordered eight girls at $50 each, a mistress of ceremonies at $100, and several professional entertainers. It was all business. The hired hands could knock off at 2:30 o'clock A.M.

Delmonico's was then at its zenith. Of course, said my lady impresario, the party should be given there. I demurred. I might bump into people I knew.

"Mr. Evans," said the arranger, haughtily, "any party I arrange will pass muster anywhere. In fact, I sometimes introduce my girls to the out-of‑town buyers under the names of prominent society débutantes. Then they go home and brag about their New York social connections."

Eight lovely young girls, genteel in manner, quietly and properly dressed, reported that evening, and the whole affair was a distinct success. This was the sort of shop practice I was now substituting for scientific management. It paid even better. Hannevig was a human quotation board of shipping prices. Through him and his fellow Norwegians I was always in touch with the last-minute jump in the market and benefited accordingly,

I got to know young Hannevig well, and his evening peculiarities. If he ordered beer sent to the orchestra, that was a warning signal. If he told me to send champagne, it was time to go home,  p319 if I could persuade him. Sometimes I couldn't. When he had drunk enough, it became his irresistible impulse to go and lead the orchestra. Usually they took this in good part.

One evening when Hannevig had other appointments I dined with some sedate friends at the Vanderbilt Hotel, having my usual front‑row table reserved for the Midnight Frolic on the roof of the Amsterdam Theater. We had just finished our dinner when in popped Hannevig. He insisted on going to the Frolic with us. I didn't realize he was near tight.

At the Roof I discovered it, but he sat with us for an hour without doing anything to attract attention. Then to my great relief, he excused himself and left us.

A turn came on — a pretty girl dancing with a man dressed as a polar bear. Then Hannevig appeared on the stage, balancing with his walking stick in front of the girl. He continued this for several minutes, then made a graceful exit. The audience applauded, thinking it a part of the turn.

"Did you have any trouble?" I asked him next day.

"Not at all," he answered. "They merely asked me to leave. Usually they throw me out."

He told me he had been thrown out twice in London. Once it was worth it. At a music-hall production he had been able to stay on the stage half an hour before they discovered him.

Another type of shipbuilder was in the market — the man who still followed the old, sound methods, estimated and figured costs closely, and gave low prices. How could I get business against such competition? Easy. There was only a limited number of shipbuilding ways in the United States. I knew what was going on in all of them. I waited until my competitors filled their ways with cheap ships. Then, with demand more clamorous than ever, I could get any price I asked.

It is actually true that in the same week that a certain buyer contracted with a competing shipyard for a vessel, I signed a  p320 contract with him for a similar ship at $40 a ton more. For the whole vessel, this meant a price higher by a quarter of a million dollars. What was scientific management to that?

Hannevig was a dealer in ships, rather than an operator. He knew shipping, had agents in all important European centers, knew when to buy and where he could sell. Seldom did he actually take delivery of one of his ships. His practice was to make his 10‑per‑cent down payment and then sell his contract as the delivery date drew near. On a rapidly rising market, and with shippers paying premiums for quick delivery, his profits were enormous. I once knew him to make a contract and in less than a week sell it at an advance of $100,000. He never actually took over those first two ships I built for him. Because of the necessity to set up the plant, I was forced to take them on a long-time delivery contract. He waited until the contracts became short-time, then sold at a profit that made ours look small.

Many of his buyers were Americans. He couldn't understand American ship buyers and their ways. With us, the purchase of a ship was a serious event. Even a great concern like the Standard Oil Company pondered the purchase of a tanker in its board meetings. A Norwegian would buy or sell a ship with no more formality than a Florida Cracker meeting a friend in the woods and swapping dogs.

I often helped Hannevig sell to American buyers, in fact, disposing of his tonnage to the amount of more than $15,000,000. With C. E. Bedford, vice president of the Vacuum Oil Company, I made preliminary arrangements for the sale of a Hannevig ship. Mr. Bedford wanted Hannevig present at the meeting of the board to pass on the purchase. I told him Hannevig wouldn't come. Mr. Bedford insisted that he must, otherwise the directors would not approve the purchase.

'What do they want me for?" complained Hannevig, when I told him. "You can answer their questions, and I can't. I  p321 won't do."

I tried to excuse the gay Norwegian to the board, but the chairman was indignant.

"Won't come?" he exclaimed. "The man must be bluffing." Mr. Bedford telephoned him that if he didn't come the sale was off.

Mr. Bedford returned with the information that Mr. Hannevig was still obdurate. His representative, Mr. Evans, was there to answer questions. Take it or leave it, was Mr. Hannevig's attitude.

The board took it — without seeing Hannevig.

One day I was going into the old Waldorf when I ran into Mr. Albert Watts, executive vice president of the Sinclair Oil Company. He asked me if I knew where he could get some tankers. In less than a week I sold him more than five million dollars' worth of Hannevig tankers, and the money was in the bank to Hannevig's credit — and no officer of the Sinclair Company saw Hannevig either.

It was too bad that Americans let the Norwegians skim all the cream off the early part of the war shipbuilding boom. By the time our people woke up, we couldn't get steel. The U. S. Steel Corporation would not contract to sell us steel unless we could show a contract for a ship. We could buy steel from the independents, but their prices were around seven and eight cents a pound, while the Steel Corporation price was half that or less.

At the Drydocks we pulled many a sharp business trick to get steel. Once I drew a contract to sell two ships to our holding company and with that document was able to get steel. Also, we made it a practice to order 10 to 15 per cent more steel than actually required on a contract. When we had accumulated a good lot, we bought from the independents at high prices enough to fill out the schedule, and thus were able to keep up short deliveries and get enormous prices.

 p322  Hannevig kept shuttling back and forth to Europe. On one of his returns. I met him at the pier.

"Did you get money for more ships?" I asked him.

"Millions," he said grandly.

We celebrated his return that evening, but for me I hoped it would be more than a mere celebration. Millions he had brought, had he? I ordered an excellent dinner — still champagne instead of cocktails, just the right vintage of champagne with the dinner, a bottle of Napoleon 1803 for the finish.

When Hannevig came, he had his lawyer with him. This was not to my liking. In a moment we had alone together I protested that the lawyer had not been invited.

"I couldn't get rid of him," said Hannevig. "Give him a good dinner, and he will go home early. Then we can have a good time."

After the dinner and when we were finishing the bottle of brandy, I took up the business of the evening. Lawyer or no lawyer, I intended to get some of those millions. I offered to build two more ships for him.

"No, no, Holden," he said. "This time I'm buying only for early delivery, which you can't make."

"What do you mean by early delivery?" I inquired.

"All right," I said. "I'll build you two ships, with sixteen-months' delivery." I named a very high price, even for those times.

"You can't," he crowed. "In the first place, you can't get the steel. I know what's going on in your yard. With the work you have on hand, you can't possibly build two more ships in sixteen months."

"Hanny," I said, "have I ever fallen down on a promised delivery? Give me the contract, and if I fall down, it's my funeral."

He began to laugh immoderately.

 p323  "I think it will be your funeral, and I shall be there but not as a mourner," he said. "If you take my contract, you will find it has got a penalty clause of $1,000 a day for failure to deliver on contract time."

"Of course — but that's a joke."

We shook hands to make it a bargain. Here the lawyer interposed. He scented a most advantageous deal for his client, and he didn't propose to have it fall through during next day's headache.

"Both of you have had a good deal to drink," he said. "You have just made a very important agreement. Tomorrow, when we come to draw a contract, you will have forgotten half of it, and there may be disputes. Suppose I draw up a memorandum contract for you right now?"

We agreed. The lawyer wrote out a binding memorandum, and we both signed. I still have my copy — framed. On it is the notation, "Contract signed at 1:30 A.M. in the grill room of the McAlpin Hotel."

It was the best ship contract I ever made. I delivered the two ships to Hannevig far ahead of time and collected a large bonus. How did I do it? It was easy.

In the yard I had collected enough steel to build two ships. In that frantic market we made what we called "sellers' contracts." That is, the builder kept the title to a ship under construction until the buyer made his final payment. On the ways I had two well-advanced ships — ships the exact duplicate of those just ordered by Hannevig. Legally, they still belonged to our company. I was building them on a long-term contract, with a bonus for early delivery of only $300 a day.

Those two ships I finished up and delivered on the $1,000‑a‑day-bonus contract. Then, we laid down two new ships for the  p324 long-term contract, and by crowding the work, delivered them on time, too.

The steel situation grew worse. Even when we had contracts, we could not get the promised deliveries. One of our directors, Herman Falk, knew James Farrell, president of the U. S. Steel Corporation. He took me to see Mr. Farrell, and Mr. Farrell said that henceforth I should always get my steel. He kept his promise through the emergency.

American shipbuilding and shipping were becoming so important that Lloyd's Register formed an American Committee to deal with them. I was asked to become a member and accepted. By bringing me in contact with owners, underwriters, and members of Lloyd's staff, this service was beneficial to me. I made a very delightful friendship on the Committee with Sir Andrew Scott, Secretary of Lloyd's General Committee in London.

The year 1916 moved on toward the Presidential election. Though originally a Wilson man, I now very much desired the election of Mr. Hughes. While I was in Baltimore, I learned that a delegation of my old foremen at Mare Island Navy Yard was in Washington.

Wishing to renew these old acquaintanceships, I invited them over to see me in Baltimore. If there was a Republican stronghold in California, it was the town of Vallejo, at the Mare Island Yard. These foremen had great political influence in Vallejo, and I was astonished to find them all whooping it up for the re‑election of President Wilson.

Then I learned why. With the bigger, heavier Navy, Mare Island was proving to be a poor location for a navy yard. The Bay was too shallow for battleships to approach Mare Island, and it was difficult to keep the channel open for medium-draft ships. For several years there had been agitation to move the navy yard to a better location, thus destroying the thriving city of Vallejo. It was generally understood that Josephus Daniels,  p325 the Secretary of the Navy, did not favor removing the navy yard from Mare Island.

"John," I reproached one of the foremen, "do you mean to tell me that you, a staunch Republican, are working for the election of a Democratic President?

"What would you do?" he asked me. "I own a nice home in Vallejo, and other property. If the yard is moved, Vallejo is dead, and I'm practically ruined. If Mr. Wilson is re-elected, Mr. Daniels will remain Secretary of the Navy. That's the side my bread's buttered on."

There was a somewhat similar situation at Portsmouth, N. H. This town, too, was a Republican hotbed. Previous administrations had been neglecting Portsmouth Navy Yard. It was understood that Secretary Daniels was planning great improvements for the yard, with much work in the future.

I went to bed about midnight Election Day very happy that Mr. Hughes was safely elected. In the morning came different news. Late returns had pushed two Hughes states over into the Democratic column, re‑electing Woodrow Wilson. The two states were New Hampshire and California.


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