INVESTIGATIONS: River of No Return

North America’s only known deposits of tin in commercial quantities are on Alaska’s Seward Peninsula. Looking for a domestic tin source, the U.S. has laid out $2,894,576 in loans and loan guarantees to develop the low-grade (.4%) ore of the Lost River mine, 40 miles east of Siberia. Last week the Joint Congressional Committee on Defense Production, headed by Indiana’s Senator Homer Capehart, issued a chilly report indicating that the U.S. was taken in by some cool customers.

An option to buy the property was held by the U.S. Tin Corp., formed in 1948 by President Harry R. Fischnaller and two other promoters. They issued, to themselves and others, 178,500 shares of stock for which the company apparently received no money. Among the stockholders are Irvin Hoff, administrative assistant to Washington’s Democratic Senator Warren Magnuson, and Anne Sanders, a Magnuson secretary. Although Hoff claims that he paid Fischnaller in 1951 for his 3,500 shares, the company lists his stock as issued “for services rendered.”

On the basis of a loan application that Capehart’s committee found to be studded with misstatement, and with the help of the Secretary of the Interior’s Alaska Representative Kenneth J. Kadow, Fischnaller landed a $374,000 loan guarantee from the General Services Administration in 1951. Just as the loan was issued, Kadow quit his job to become manager (later president) of U.S. Tin.

As the government showered more and more loans on U.S. Tin, the market value of company stock soared. From stock sales, the three founders pocketed at least $175,000, at least $85,000 of it Fischnaller’s. Since the first loan. U.S. Tin has produced $283,519 worth of tin and tungsten, less than 10% of the Government investment. GSA men are hoping to salvage the operation, and speak optimistically about current production rates. But the clear conclusion is that the U.S. has lost a lot of money at Lost River.