operations to date, the premiums for which were paid from corporate funds on a non-reimbursible basis. ‘The bond premiums were considered a justifiable corporate expense as an added precaution against loss of govern- ment funds (normally reimbursible under the terms of the Contract) aud in consistent continuation of established company policy. REVENUE PRODJCING FACILITIES Operation of facilities necessary to provide adequate subsistence aad quarters for the personnel of all agencies, contractors, and others (except for certain military detachments) stationed at Jobsite was an in- tegral part of the scope of H & MN work under terms of the Contract. During the early negotiations, representatives of the AEC indicated willingness to furnish subsistence and quarters without charge to Jobsite personnel and to adjust pay scales accordingly. This suggestion did not conform to established H & N policy in commection with other overseas projects, and, based on the firm request by H& HN, authorization was given to collect $1.50 per day both from Jobsite employees and from regular on-contineat employees visiting Jobsite on temperary assignments. Subsequent author- ization was alse given to collect the same amount from the persemel of all other agencies, contractors, subcontractors, and ethers who were furnished subsistence and quarters at facilities operated by H& HN. The extent of activities involved may be seen from the fact that through June 30, 1951, meals served to jobsite personnel totaled 2,335,173. The terms of the Contract also required that H & N operate other revenue producing facilities, such as Comuissaries (similar to Military PX and Ship Stere Operations); Bars serving both beer and liquor; Snack Bars; etc. Prices charged for items sold in these merchandising facilities were based on cost, plus a very nominal markup (e.g. in the Commissaries, the markup ranged from approximately 10 per cent om necessity items such as clothing, shoes, gloves, and sundries essential to the cemferts and welfare of the employees, to 30 er 35 per cent om so-called luxury items commonly obtainable from Military PX's and Ship Stores im similar locations). It was contrary to H & N pelies te merchandise strictly non-essential items and, in the main, this policy was adhered to despite the receipt ef a considerable volume of Field Requisitions fer items of a non-essential nature. This was accomplished by screening the requisitions upon receipt at the Les Angeles offices. H & N employees were, however, permitted te visit Nilitary PX installations at Emiwetok Island to purchase any items avail- able in the PX stocks. In accordance with the requirements of Article V of the Contract, all revenues derived from the operation of these facilities were applied as credits to the cost of the werk under the Contract. They were depesited monthly to the Contract Advance Fuad Account, and thue reverted te the government . From iuception, unusually rigid internal coatrol was exercised over the stocks and revenue derived from these facilities. As a consequence, ne significant shortages or thefts occurred. One reported loss by was presented to the bending company as a claim and was paid ia full. toee discussion of Blanket Position Bond under "Insurance." 1.-36