Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1918-11-01

is no evidence upon which II fairly
can hr ohtrEed that any member
ot the aircraft boards, including MIR
Howard e. coffin, General Squier.
Colonel T.. a Deeds. Colonel Il. J..
Montgomery Colonel : u. WaIdrun,
MIR. Richard T.. Howe Mr. Harry u.
Thdler Admiral Taylor ana other
naval officers has been unlawtulN
interested IN any contract or trans.
action relating to aircraft produ'-
iiun. Indeed ls 10 TINS charge there
has at no time been ground for =
question involving any OF these gen
u"wcn except Colonel Deeds
The report showed that up to last
juno 50. more than a year after the
nation entered the war, hl'l nm
lshed airpliurs had been actually de-
lNcrcl by manufacturers including
l,1I2 elementary training planes,
l,O4G advanced training planes and
'53 combat and lohming planes. ot
the fighting machlucs, 629 wcr" De
lIINiltudS and a were OF the abdu-
don,d Bristol design.
Atrplauc engine, delivered up to
that time amounted 10 1868, or
which $3.50 were Liberty motors Tor
combat aud bombing planes, G6h-
W"rn for elementary training ma
chimes and 2.Jlp for advanced train
ing planes. The original program for
Liberty motors alone had called for
about 1000 Of these 10y June.
Plane Profits.
Turning to the QusetiOn Of profits
10y contractors for airpiaues ana mo-
tors, Mr. Hughes cited figures show
ing that manufacturers were enabled
TO make rs much as 81 600 on each
Liberty motor and from $3.50 to
$1,000 on each finished plane.
Profits In some cases were several
hundred per cent of the Investment.
the report stId.
Attorney General Gregory, In his
letter. pointed out that 80 per cent
or more Of the profits were taken by
tho government in taxes, ana CON
cudcd that "no such profits have
been allowed as to Justify IA charge
Of bad faithI
Mr. Hughes explained that the
principal orders were placed on the
basis OF cost plus "A fixed. not per
Ccntage profit. and a bonus Of 20 per
cent Of any economies uner an esu-
mated cost or DOGGY"
Tho bOgcy costs" said Mr.
Hughes, "wcre in all cases placed 80
high thnt he contractor had every
reason to expect that the actual COST
would bc much less and that throuEh
it's share In this saving, the contractor
would he able To derive an Increased
profit from economical management
1t IS apparent, however, that with
a large fixed profit guaranteed tha
incentive to economy is not so strong
as when the entire venture il at the
contractors risk"
Company Profits.
The fixed profit per plane varied
with different concerns.
The Dayton Wright company. with
contracts for 1000 DE liaviland
planes to be completed, before next
March, the report said, should make
profits Of So, 100000 and $25O.OO0
additional under minor contracts
This company was organized shortly
after the declaration of war with
paid in capital of $l,OOO,OOO. The
government financed the plant to
the extent of Sl,4O5,OOO. represented
by loans.
The Ford Motor company, with
contracts for 5000 Liberty motors,
which it expects to complete 10y the
end OF January should make prof
il Of $5,37J,O0O, MIR. Hughes de-
clared. It's fixed profit, the report
said. is more than $500 an engine
which it can produce at less than
$500 with the addition Of more
than S40O per engine as the plants
share OF thc'"bogey." This bOgey is
set at $1,000 for the Ford plant, the
companys investment is said 10 be
not more than $ll 100000.
The Fisher Body corporation, with
contracts for 1000 De Haviland ma
chimes. should make profits OF $3'-
100. 900 with 100000 additional on
other orders, said the report The
cOmpanys investment on plant en-
gagged in alrplane production is cal
loaned S2,OOO,O00 by the govern
ment.
The Packard company's profits on
5000 Liberty motors, to be com
plcted by next January, probably will
he S6,45O,OOO earned In Is months,
said the report. Other profits on
minor orders may raise tins to Vs.
600 600, it was said. The Investment |
represented Is calculated at $ll,-
SUS,O00.
Lincoln Company.
The Lincoln Motor companys pro-
fits on 5000 motors is calculated at
sG.45O. 600 with additional profits
on other contracts Of Sl,50O,00O, ac-
cnrding to the report. Investment is
reported at Si,l5O,00O, OF which |
$500. 900 represents items Of which |
the government pays 4 per cent de-
probation. Paid in capital Is $780,
900.
Attorney General Gregory's COM
mcnt on these showings was as fol-
lows
IT has been charged that exorbit-
ant profits TO contractors have been |
allowed. on their face they appear |
TO he unusually liberal but when 1t |
is remembered that 60 per cent or |
more OF them must be paid to the
as income and excess !
profits taxes, and that most OF the |
net profits invested in buildings |
which may or may not be capable
nf profitable use for an indefinite
pcriod after the termination Of the
contract, my conclusion Is that no
surh profits have been allowed ~ TO
Justify n charge OF bad faith"
or the $G91 100000 originally APP
,ronriatcd for aircraft production,
reported down to June
&c. 1915, including advances for
,uilding OF plants and outlays Of
.hc sales department. similar cN-
lenses amounted to S430,C00,0OO and
,276. 900, 900 OF the appropriation
.cmaincd unexpended at the end OF
he wear or the $l55,0O0,O0 spent