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Editorial
House Sabotages
Price Control Again.



VOL. LII. No. 14-S

ANN ARBOR, MICHIGAN, FRIDAY, JULY 3, 1942

2:15 A.M. FIN.



Savage

British Drive

Encircles

Rommel

:

Panama Spy
Ring Crushed;
20 Are Taken
In e U
wit ouP
Prominent Business Men,
Night Club Hostesses,
Among Those Seized
After Chase By Flyer
Hunt To Continue
For Other Nazis
U.S. ARMY HEADQUARTERS,
Panama Canal Zone, July 2.-(/P)--
A spy hunt by a U.S. Army observer,
who survived plots to poison him
and sabotage his plane, led today to
the round-up pf 20 persons accused
of spotting Allied ships for the Axis
and fueling enemy U-boats.
Taken into custody from Panama
to British Honduras, the 20 ranged
from night club hostesses to Canal
Zone workers. Some were prominent
business men, others shipping em-
ployes. The arrests began June 25,'
and were announced today by Lieut.-
Gen. Frank Andrews, Defense Com-
mander of the Cribbean Area, scene
of, many torpedoings in recent weeks.
General Andrews surmised that the
enemy expected this spy ring to be
smashed sooner or later and "most
likely has preconceived plans to place .
another echelon in formation." This,
too, will be hunted down and broken,
he said.,
the story of the spy round-up was
this:
A U.S. patrol plane spotted a slow
ship laden with oil- druns in the
Caribbean
Its ownership was traced and the
U.S. Army observer was put on the
trail.
Despite the attempts against his
life and his plane, the observer stuck
doggedly to his task- and, with the
help of U.S. Army, Navy and Canal'
Zone authorities and with British
cooperation, rounded up all persons
believed to have been inyolved in the
ring.
One of those held was arrested at
sea by the crew of a U.S. Naval patrol+
plane.
FOR Orders
Military Trial
For Saboteurs
Use Of Civil Courts Denied
Persons Hindering War
Effort, President Says
WASHINGTON, July 2. -()-
President Roosevelt today ordered a
military trial for the eight men ac-
cused of coming to this country in
Nazi U-boats to sabotage the war
effort. The prosecution is expected
to ask the death penalty.
At the same time, Mr. Roosevelt
issued a proclamation denying them,
and all persons who enter the country
for the purpose of espionage or sabo-
tage, the right of access to the civil
courts.
To try the men, Mr. Roosevelt cre-
ated a military commission consist-
ing of Major Generals Frank R. Mc-
Coy, Walter S. Grant, Blanton Win-
ship and Lorenzo D. Gasser, and
Brigadier Generals Guy V. Henry,
John T. Lewis and John T. Ken-

nedy.
The trial is to begin as soon after
July 8 as is practicable, is to be held
privately in Washington, and the
prosecution is to be conducted by
the Attorney General and the Judge
Advocate General. Col. Cassius M.
Dowell and Col. Kenneth Royall
were appointed to defense counsel.
The procedure established differs
materially from a court martial. The
latter form of trial is usually used to
try officers and men accused of mis-
conduct and to try military prisoners.
Senate To Continue


Jury Returns Treason
ConvictionOf Stephan
Benefactor Of Escaped German Flyer Is Found Guilty
Of HighestCrime In SwiftlyRendered Verdict

Alexandria Naval Base Out Of Danger

By PAUL M. CHANDLER
Associated Press Correspondent
DETROIT, July 2.-Stolid and
as devoid of expression as he had re-
mained through three days of trial,
Max Stephan, German-born Detroit
restaurant owner, tonight heard a
jury convict him of the highest
crime in the land-treason.
Reporting to a hushed and jammed
courtroom at 5:35 p.m., the six men
and six women jurors brought in
their verdict just83 hmiinutes after
receiving instruction from Federal
Judge Arthur Tuttle.
Government Attorney John W.
Babcock said it was the first convic-
tion for treason in the history of the
United States.
Stephan was accused of and ad-
mitted to 12 overt acts of assistance
to a fleeing Nazi prisoner of war,
Oberleutnant Hans Peter Krug.
These acts-the offering by Ste-
phan, a naturalized citizen, of food,
shelter, money and entertainment to
Krug on April 18 and 19-constituted
"aid and comfort" in time of war to
an enemy of the United States, gov-
ernment counsel contended.
Stephan's (wife, seated at his el-
bow, had sobbed into a handkerchief
through almost two hours of closing
arguments, but when foreman Jerry
Allies Launch
Strong U-Boat
Defense Plan.
Powerful Anti-Submarine
Vessels Open Campaign
In WidSpread Search
WASHINGTON, July 2.-(AP)-The
United Nations High Command has
thrown the full force of available
Allied sea power into the fight to
smash Adolf Hitler's U-boat offen-
sive, the Navy Department disclosed
tonight witlA an announcement that
British and Canadian warships were
cruising side by side with U.S. ves-
sels in the battle of the Atlantic.
Allied corvettes, destroyers and
other fully equipped "anti-submarine
vessels" are at work both on the dis-
tant high seas and in the campaign
against submarines operating along
our Eastern seaboard, the official
statement revealed.
Observers considered it probable
that the destroyers sent over here
might include some of those remain-
ing to the British out of the 50
American four-stackers traded to
them two years ago, but there was no
official information on this point.
The announcement did make it
apparent, however, that the Allied
ships were manned by their regular
Canadian and British crews. With
regard to the Britishers, particularly,
this means that hundreds of battle-
toughened veterans of two and one-
half years of U-boat warfare off
Britain's own shores now are helping
hunt the Nazi raiders on this side
of the Atlantic.
Flying Tigers
T ake Terrific
TollOf ,Japs
CHUNGKING, July 3, (Friday)
(A)-As the Flying Tigers of the
AmericantVolunteer Group prepare
to join wings with the regular Ameri-
can Army Air Forces in China tomor-
row, an official review of seven
months of AVG operations disclosed
today that 284 Japanese planes were
destroyed at a cost of only 15 men
killed or missing in action.
Besides this list of confirmed vic-
tories, the review said there were
"almost as many more probables"

which were not claimed because of
lack 'of eye-witness verification.
Nine AVG pilots were accidentally
killed, making a total loss- of 24 out
of 250 making up the group.

R AF's Air Attacks
RivalCologne Raid
Allies Blast Flanks, Rear Of Surprised
Enemy 62 Miles From Alexandria
The United Press reported late last night that 'British Imperials--sup-
ported by a' gigantic air offensive-had surrounded the entire German
Afrika Corps about 62 miles from Alexandria.
Reported blasting the surprised Axis army from both flanks and the
rear, the British, tremendously reinforced from the Middle East, turned
every available weapon into the attack.
Planes ranging as far west as Bengazi laid down a bomb and tracer

H. Armstrong pronounced the ver-
dict she was as coldly unemotional as
her convicted husband.
Judge Tuttle said he would pro-
nounce sentence "very shortly" when
he had completed his normal pro-
cedure of studying character reports
on Stephan provided by probation
officers,
The maximum penalty for treason
is death; the minimum is five years
imprisonment or $10,000 fine, or
both.
Stephan told histattorney that he
would not appeal the judgment un-
less he was sentenced to death.
In his closing arguments, Vern C.
Amberson, attorney for the defense.
admitted that the defendant had
committed the 12 acts named in his
indictment, but insisted that such
acts "were granted to Peter Krug as
an individual and not to an enemy
government."
Judge Tuttle instructed the jury
that it was their task to determine
whether it had been Stephan's intent
to render aid to "Germany-an en-
emy of ours" or to "Krug-an indi-
vidual."
Armstrong told reporters the jury
had taken two ballots before reach-
ing a conclusion, with one member
voting for acquittal on the first one.
Amberson had waged his defens
without calling a single witness, rely-
ing on the argument that Stephan
had been intent only on "showing
Peter Krug a good time."
Krug himself was the government's
most important witness. Proudly and
in the blue uniform of a Luftwaffe
officer, he took the stand for five
hours and told of trips to the de-
fendant's restaurant, to bars, a hotel,
and of receiving gifts of money from
him,
.prof. Slosson
Hits Pre -War
AlliedPolicies
"Concentrated unwisdom" on the
part of Great Britain and France in
dealing with Mussolini's invasion of
Ethiopia, Japan's push into Man-
churia, and Germany and Italy's in-
terference with Spain's civil war
helped lead the world into war, Prof.
Preston Slosson of the history de-
partment declared last night at a
Post-War Council 'meeting.
The "slap on the wrist policy" of
making gestures against the belliger-
ents but not actively interfering was
like "patting a hungry tiger on the
nose," Professor Slosson said. "Bri-'
tain and France should either have
declared war against these countries
or else have made it clear that they
did not approve of the aggressions
but did not consider them important
enough to go to war about."
"Our own policy was more like
turning our back and pretending the
tiger wasn't there," he claimed, con-
tinuing the analogy. "War has be-
come a process of machine production
and the attitude of a powerful neu-
tral may~determine the result of the
war," Professor Slosson contended.
"Neutrality is a legal fiction and
hypocrisy," Professor Slosson de-
clared, "and we made the right deci-
sion in deciding to trade with Bri-
tain, for Germany might have out-
produced Great Britain, enslaved
Europe, and we would have had to
face alone the power of Hitler."

barrage over the entire eastern
Mediterranean area that matched
RAF raids on Cologne and Bremen.


Alexandria, powerful British naval base, is shown from an aerial
photograph taken by an Italian pilot before the United States was at
war with Italy. The Axis drive through Libya into Egypt, now seemingly
checked by a great encirclement, threatened the base which is vital in
holding the Mediterranean and the tremendously important Suez Canal.
House Gives Winston Churchill
475 To 25 Vote Of Confidence
Prime Minister Paints Dark Picture Of Near Disaster1
In MiddleEast, Reports New Aid In Egypt
. ,f

LONDON, July 2.-G'P)-Prime Min-
ister Churchill today beat down with3
a 475 to 25 vote of confidence the
severest challenge yet made in the
House of Commons against his leader-
ship, but he left with the British a
dark picture of near disaster in the
Middle -East, alleviated, only by -news
that "very considerable" reinforce-
ments were pouring into the battle of
Egypt.
Churchill plainly showed that his
mind was in the field of action in
Egypt rather than in the debate and
bluntly told Commons:
"At any moment we may receive
news of grave importance."
He did not elaborate on what that
might beonor did he tell the House
more about the reinforcement he
said had reached the embattled
nazi Victory
Hopes Stilled
For Sumkner
BERN, Switzerland, July 2.-(/P)-
Berlin dispatches indicated tonight
that Germany had abandoned hope
of a final decision on the eastern
front this summer despite its victory
at Sevastopol and a tremendous of-
fensive effort now under way in the
central Russian sector.
The Nazis do hope by September
to wreck the Russian Army organi-
zation, stabilize winter positions and
release a large number of German
troops probably in anticipation of an
Allied second front.
Should the Axis - lies accom-
plish this objective and push the
Allies out of the Mediterranean, as
they hope to do by the African cam-
paign, they would be in position to
devote their major efforts to consoli-
dating the ground gained, sitting
back for the expected siege.
Regardless of this idea of strategy,
the greatest effort will be made for
the oil of the Caucasus, it was ex-
pected.

eighth Army uin Egypt or was ap-
proaching it..
The battle of Egypt, the Prime
Minister said, had developed "a re-
cession "of our hopes and prospects
in the Middle East and Mediterran-
ean. unequalled since the fall of
France."
A great cheer arose from the Com-
mons benches when the vote was an-
nounced and Churchill promptly went
back to work, flashing the "V-for-
victory" signal with his fingers
The censure motion which the
House refused to approve was the
first introduced against Churchill's
government since it assumed power
May 10, 1940, at the beginning of
the Lowlands invasion by Germany.
It was put before Commons by
Conservative-Rebel Sir John Ward-
law-Milne.
Previous votes of confidence have
been moved by Churchill's own gov-
ernment challenging its critics. The
latest of these was the 464 to one
vote of last Jan. 29.
The vote today left 115 of the
House's 615 members not accounted
for. However, less than two dozen
present abstained from voting and
Turn to Page 4, Col. 2
Knudsen Visit
Is Scheduled
For Thursday
Will Inspect Local Defense
Plants As Part Of Eight
Day Tour Of Michigan
Ann Arbor workers will get a look
at one of the key men in the victory
effort when Lieut.-Gen. William S.
Knudsen visits local war plants
Thursday afternoon.
As part of an eight-day tour of
Michigan industries outside of De-
troit, Knudsen is expected to inspect
the Hoover Ball & Bearing, Ameri-
can Broach & Machine, King-Seeley
Corp. and International Industries
plants.
He is expected to Erive in Ann
Arbor for lunch at the Union with
heads of local war plants after
spending the morning in visiting a
Plymouth industry.
Accompanying General Knudsen
will be: Col. A. B. Quinton, Jr., Depu-
ty Chief of the Detroit Ordnance
District; Frank Steere, assistant to
Col. Quinton, in charge of Produc-
tion and Inspection, and Maj. Wil-
liam Collins, aide to General Knud-
sen.
The tour will begin with a flying

By EDWARD KENNEDY
Associated Press Correspondent
CAIRO, Egypt, July 2. -(M)-Re-
inforced British tanks and artil-
lery struck with full fury late today
at the rear of the Axis army in a
carefully planned maneuver to coun-
ter the armored assault of Field
Marshal Erwin Rommel upon the
main British positions defending
Egypt and the Middle East.
The inconclusive battle raged into
the night. The decision, uponwhich
apparently rests the fate of British
and Allied power in the Eastern
Mediterranean, might not come for
a day or t,4o.
Picking his favorite time for a
fight, Rommel hurled his armored
legions upon the British at El Ala-
mein, 60 miles west of Alexandria,
when the sun would be full in the
Allied eyes.
British Send Tanks
At that time the British sent tanks
and artillery pounding against his
rear; by way of, his rnight, flank.
With this surprise move the en-
emy, too, was forced to fight with
the glare of the sun in is eyes.
Both sides have thrown everything
available in the region into the
struggle, which is the climax of the
Axis offensive of the past weeks.
The importance of the battle was
recognized here. The enemy will
take Egypt or be destroyed. The Al-
lied troops will save Egyptor be de-
stroyed.
There is scant chance of either
side{ turning back now.
The reinforcements of both men
and material that are reaching the
Allied lines are beginning to show a
marked effect, it was said here.
British Bring Up Cannon
The British are rushing up 25-
pound cannon and a new anti-tank
six-pounder which are hammering
away with a great gusto and deter-
mination and have proved an ex-
cellent deterrent to the German
tanks.
The defenders of Egypt repulsed
a heavy attack of enemy tanks and
truck-borne infantry upon El Ala-
mein last night.
Axis tanks broke through at one
point but were engaged and hurled
back.
Farther south, along the rim of the
Qattara salt marshes, Allied units
'took the offensive against the enemy
column.
The struggle, which had subsided
somewhat in'the night, began again
this morning, with the main blow
of the Axis coming this afternoon.
Enemy fighter activity increased
somewhat but the Allied air force
retained mastery of the skies and
struck heavily at the invaders.
(In the second day of the titanic
struggle, surging only 60 miles west
of the Nile delta, German and Ital-
ian communiques claimed the Axis
forces had punctured a weak spot
and were in pursuit of British col-
umns east of the defense anchor.)
Huge RAF Forces
Participate In Battle
CAIRO, Egypt, July 2.-(i)-The
greatest bomber effort ever made in
the Middle East took place in the
last seven nights with United States
planes lending a hand, an RAF an-
nouncement said tonight.
Night after night Wellington (Brit-
ish) and Liberator (U.S.) bombers
in large numbers have rained down
bombs on Bengasi, Tobruk, and Der-
na, Axis concentrations along the
coast, camps,, supply dumps in the

Savage Battle
Is. Continuing.
In Sevastopol
Hand-To -Hand Conflicts
Kept Up By Russians
Anid Fortress Ruins
MOSCOW, July 3, (Friday)-AP)-
The Russians announced early today
that Red Army soldiers and sailors
were fighting hand-to-hand with the
German invaders of Sevastopol on
the outskirts of that Crimean sea-
port-long after the Germans had
claimed its fall-while far to the
north the Nazis began a new drive
in the Belgorod-Volchansk sector,
north of Kharkov.
The midnight communique, the
third since the Germans announced
Sevastopol fell Wednesday noon, told
of the continuing savage bayonet
fight amid the ruins of the Black Sea
fortress.
Press dispatches said the heroic
defenders were taking thousands of
German lives in the savage fight,
but the Germans were said to have
15 times as many men engaged in
the struggle.
Russian tankmen were reported
locked in a continuing bloody battle
in the Kur k sector, 300 miles south
of Moscow but the Nazis have en-
larged their operational field now
to Belgorod and Volchansk, faro
the soutli. Belgorod is 50 miles north
of Kharkov and Volchansk is 35 miles
northeast of that big Ukraine indus-
trial city which the Nazis still hold.
The midnight commu pique said:
"During July 2 in the Kursk direc-
tion our troops carried out tank bat-
ties against the enemy.
"In the Belgorod and Volchansk
direction stubborn battles commenced
against attacking enemy troops.
"In the Sevastopol direction our
trops continued fierce hand-to-
hand fighting on the outskirts of the
front.
"On other sectors of the front
there were no essential changes."
Allied Airmen
AttackTiimor
Japanese-Held City Of Dili
Suffers Bombing Raid
ALLIED HEADQUARTERS, Aus-
tralia, July 3 (Friday).-(I)-Gen-
eral MacArthur's headquarters today
announced two successful Allied
night attacks on the Japanese-held
city of Dili, Portuguese Timor, in
which several fires were started by
drect hits on enemy objectives. All
planes returned.
The Japanes radio station and air-
dromes were the principal objectives
in these attacks.
This was the only new activity re-
ported, but the daily communique
stated that further details of the
Allied commando-type raid on Sala-
,maua on the night of June 27 and 28
indicate that enemy casualties were
greater than first reported.



Australia Of Great Importance
As Strategic Base, Dodge Says

"Australia is perhaps not the
principal base for strategy in a world
at war, but it is one in which there
is a special interest," Prof. Stanley
D. Dodge of the geography depart-
ment declared yesterday in a Uni-
versity lecture.
Prophesying that "Australia, in
spite of its meagre resources, will
contribute much to victory," Profes-

of supply is in the south of Australia,
in a section unsuited for agricul-
ture.
Australia's strong points "lie in a
tropical climate," Professor Dodge
remarked as he pointed out addition-
al strong points in the dry grass-
land and showed that the area of
supply is in the cooler parts of the
land.

Summer Vespers
Service To Be Hel

I