The Birmingham age-herald., 1918-11-01


 the obvious impropriety of transactions l by government officers and agents with | firms or corporations in which they are interested, compels to the conclusion that ! public policy demands that the statutory provisions bearing upon this conduct should be strictly enforced. It Is there fore recommended that the officers found to have had transactions on behalf of the government with corporations in the pe- cuniary profits of which they had an in- terest, should be prosecuted under sec tion fl of the criminal code.
 COMMISSION SHOULD REPORT The federal trade commission should be requested to report upon the proper cost of mahogany for airplane propellers, to the end that upon the coming in of its report the question of the propriety o1 further action with respect to the transactions of the Mahogany Manufac- turers and Importers association may be determined.
 Tt is recommended that the represent atives of the Department of Justice should keep in touch with the progress of the re-audit of accounts so that 1t may be advised of the complete enforce ment of the rights of the government i'll l final settlement of accounts, and that the government has been fully protected against unnecessary JOSS through WdSLe and the absence of suitable factory su- pervision.
 Permit me also to suggest that a spe- cial division, or subdivision, of the pres ent bureau of investigation, in the De- partment of Justice should be assigned | to the consideration of suggested delin- quencies in connection with aircraft pro- duction so that the work already done may be appropriately followed up. In artf fn1Ila ia m activities in relation to spruce produc- | tion, which being largely centered on | the Pacific it was impracticable to em-
 brace in the present inquiry, should be carefully scrutinized.
 NO EFFORT TO RETARD "An exhaustive examination" says At | torney General Gregorys letter of trans
 initial, into the entire conduct of air I craft matters fails to show that any member of either board has had any de- i sire to retard or delay production, or has done anything to accomplish that re- 1 suit. or has intentionally caused the waste of funds, or been actuated by a djsloyal motive, or been guilty of dishon- l esty or malversatlon, unless there be l truth in the specific charges which Will now be referred to. (The charges against Colonel Deeds and the officers charged with dealing with concerns In Wnlch they were interested).
 "I agree with the conclusion reached 1 by Judge Hughes that there is no evil fdence upon which 1t fairly can be charged 1 that any member of the aircraft boards, | including MT. Howard Coffin, General 1 Squirer, Col. E. A. Deeds, Col R. E' 1 Montgomery, Col $. D. Waldron, MT. Richard F. Howe, MT Harry E. Thayer, l Admiral Taylor and other naval officers, | has been unlawfully interested in any | contract or transaction relating to air I craft production. Indeed, as to this charge, there has. at no time, been ground for question involving any or these gentlemen except Colonel Deeds. The report showed that up to last <, June 30, more than year after the nation entered the war, 6171 finished airplanes had been actually delivered | by manufacturers, including 4572 ele- mentary training planes. 1046 advanced training planes and 553 combat and 1 bombing planes. Of the fighting ma chimes, 529 were DeHavilands and "A were of the abandoned Bristol design. 1 Airplane engines delivered up to that time amounted to 12,6S3, of which 239o were Liberty motors for combat and bombing planes, 1862 were for element ary training machines and 2579 for ad- yanced training planes. The original
 programme for Liberty motors alone | called for about 1000 of these by June.
 BIG PROFITS
 Turning to the question of profits by
 contractors for airplanes and motors
 Mir Hughes cited figures showing that manufacturers were enabled to make as lmuch as 5000 on each Liberty motor. land from S75O to $500 on each finished plane Profits in some cases were sew ,eral hundred per cent of the investment, i the report said
 Attorney General Gregory. in his let ter. pointed out that 50 per cent or more
 of the profits were taken by the gov
 ernment in the taxes, and concluded | that mo such profits have been al- lloked as to justify charge or pad | faith"
 1 MT. Hughes explained that the prin- cipal orders were placed on the basis lplus a fixed, not a percentage, profit, | and a bonus of 25 per cent of any econ
 omies under an estimated cost or 1 ''bogey."
 ''The 'bogey' costs" said Mir. Hughes l "were in all cases placed so high that the contractor had every reason to ex-
 pect that the actual cost would be much less and than through it's share in this saving, the contractor would be able tc desire an increased profit from eco nomical management. It Is apparent however, that with large fixed profit guaranteed, the incentive to economy Is not so strong as when Lne eutlTc SeH' ture is at the contractors risk"
 FIXED PROFIT VARIES
 The fixed profit per plane varied witt
 different concerns.
 The Dayton Wright company. witt lcontracts for 4009 DeHaviland planes to be completed before next March, thu
 report said, should make profits o
 $6,10O,000 and $250,000 additional un
 der minor contracts. This compan.
 was organized shortly after the declara.
 tion of war with paid-in capital of s1, 1 900, 900. The government financed thu lplant to the extent of $1.405,000 repre- jsented by loans
 } The Ford Motor company, with con . tracts for 5000 Liberty motors. whicl t expects to complete by the end of Jan uary, should make profit of s5,375. 900, MT. Hughes declared It's fxe' profit, the report said. is more than $60' : an engine, which it can produce at les than s3200, with the addition of nor , than s400 per engine as the plant
 share of the "bogey" This "bogey is set at $25,Oo0 for the Ford plant. Tn company's investment is said not t
 be more than $11,800,000.
 The Fisher Body corporation, wit [ contracts for 4000 DeHaviland machines 2 La IL. c q | IA