The first witness called was Rear Admiral Edward L. Cochrane, the chief of the Navy’s Bureau of Ships. It was under his watch that this arrangement had been made with the Gibbs firm. Cochrane made clear that the arrangement with Gibbs & Cox had led to a “great deal of misunderstanding for some time,” and that his decision to retain the company as the Navy’s lead design firm had the full approval of the secretary of the navy, Frank Knox, who had died the previous month.
The job of the Bureau of Ships, Cochrane argued, was to help the secretary of the Navy, the president, and the Navy’s General Board to develop a set of specifications for the ship the Navy wanted to build. The basic specifications, which might run to as many as 115 sheets, would then be sent to prospective bidders. Once the contractor had been selected, Gibbs & Cox would then turn these specifications into as many as eight thousand working plans for shipyard use, as well as to make sure the yard got what it needed from its suppliers on time.51
“In our judgment,” Cochrane added, “it cost much less to do it the way we have done.”
Chairman Vinson cut the admiral off. “I understand that,” he said, “but you do designate an outsider to go out and buy, at the expense of the taxpayers of this country, supplies and materials to go into ships that our boys are going to fight in, and pay enormous fees for them to go out and buy, and thereby you admit to the public, as far as I see it, that you are not able or competent to go out and do the job yourself, when you have all the resources of the country; you can call in any man you want and put him in service.”52
Admiral Cochrane left the stand defeated.
William Francis Gibbs stood at the witness table the following day. As he raised his right hand and swore to tell the truth, the balding, jowl-faced Vinson peered back at him sternly through round reading glasses.
Summoning his dramatic flair and legal training, Gibbs gave a detailed history of his firm’s business with the Navy and the Maritime Commission. He then asserted that his company was run in the most conservative, prudent manner possible.
“Gibbs & Cox is in an independent position,” he said in his firm, patrician voice, “having no connections with any shipyard or apparatus, equipment, or material manufacturer. The company has never borrowed money from the government. I believe that the company has maintained a sound and conservative financial policy. The salaries of the executives have not been changed since 1937. No dividends have been paid. The company has never made any outside investments of any kind. All of the profits of the company have been added to the surplus. The entire surplus, with no deductions, has been retained for the needs of the business.”
The company’s profits, Gibbs said, had been reviewed by the Navy Renegotiation Board, which had declared that the previous year’s figures were sound and needed no renegotiation.53
“You will find there is something unique about what we are doing,” Gibbs told the committee. “In other words, here is a project conceived by individuals, backed only with individual initiative that comes forward in a time of great national emergency and performs a signal service for the United States.” He then vowed to “present to you this case with clarity and conviction so that when I go back to New York and face those 2,850 people [the Gibbs & Cox employees] who with heart and head and spirit have backed what we have tried to do for the United States, they would not say to me that I had not presented the case skillfully as well.”
When challenged about how Gibbs & Cox was performing a service that could have been provided just as well by the government, Gibbs insisted the Navy simply did not have the manpower in-house to perform all the technical work needed. “The Navy does its own ship designing and takes full responsibility for it,” he said, “but if you are going to construct ships in a shipyard, it is essential that you have relatively strong technical organization attached to the shipyard and responsible to the shipyard.”
Gibbs then explained how his firm performed a role very similar to how General Motors built tanks for the Army. “Today in shipbuilding,” he said, “if a shipbuilder gets an order for a ship accompanied by sufficient plans to clearly describe that ship and what the Government wants, it is his job to take that information and translate it into a ship. He translates it to a ship with the approval of every step by the Navy.”54 To prove that the shipyards found his firm’s expertise worth paying for, he pulled out a letter written in 1938 by the president of Maine’s Bath Iron Works, builder of many of the new destroyers. Even if Gibbs & Cox cost more money than other independent naval architects, it read, the quality of the product spoke for itself.
“The letter can be duplicated by every shipyard that employs us,” Gibbs asserted (not saying that many shipyards, like Newport News, hated him and his meddling).55
Gibbs then tackled a matter of public perception: the aura of mystery that surrounded him and his firm. A lot of this, he admitted, was by design. “I never speak to the press,” he said. “I never hold an interview, I don’t advertise, I don’t employ any publicity assistants, and the result is that there is no source from which anybody can get information. The result is that they are always thinking that there must be some strange, occult power in the person of some official of Gibbs & Cox which enables them to get work to do.”56
When grilled by the committee about his profits, Gibbs produced the numbers Frederic had given him. For the past two years, the firm had grossed $15 million, but only made a 4.91 percent profit after taxes.
Kline and the thirty-one members of the House Naval Affairs Committee were stunned. He had to be artificially deflating his profits.
Chairman Vinson jumped in, claiming that Gibbs made a gross profit of 32 percent after taxes.
All the questions about the accuracy of his records infuriated him—he and his brother had maintained meticulous financial records. He hated the insinuation of fraud and must have remembered what his father had been accused of three decades earlier. But Gibbs kept his cool and stuck to his guns, and then offered his own breakdowns, added that the Navy Renegotiation Board had examined these figures and determined that the accounts for 1941 and 1942 “are proper and sound, and that no renegotiation is necessary.”57
“I have perforce to think that when the Renegotiation Board makes a statement of that kind, they have looked into it and are correct,” Gibbs said proudly. He then rattled off a list of distinguished naval officers who sat on that board.
Vinson realized that the last thing he wanted to start was a credibility war between Congress and some of the most powerful men in the military. “Then I would say, also, that we have to be guided by the conclusions they reached in regard to the renegotiation,” Vinson said.
William Francis Gibbs knew that he had backed Vinson into a corner. He then extended an invitation to the entire Naval Affairs Committee to visit his office in New York.
“We are coming up there,” Vinson replied.58
“The reason that I was anxious for you to see that before we discussed this subject was that you will find there a frugal establishment,” Gibbs continued; “you will find no fancy offices. You will find me seated on a high stool behind a drawing board. You will see nothing that smacks of panoply and pomp. A simple place, done in the most frugal way. So there are no questions of expenditures made on an extravagant basis. We don’t do those things.”