Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1920-05-27
Two Companies and President
Of Both Named in IA Counts
Returned by Federal Grand
Jury in New York City.
PROFITS 800 TO 400
PER CENT ABOVE 1919
Charges Brought Under Lever
Act-Case Regarded as One
Of Most Important Since
Amendment of Law.

New York, May 26.--The Ameri,
can Woolen company of New York
the American Woolen company o.
Massachusetts, and ] William M
Wood, president of both companies
were charged with profiteering il
woolen cloth, in an indictment re
turned here today by the fedora
grand jury. :
The indictments contains l.
counts, charging IA individual viola.
tons of the Lever act in the sal,
of cloth at unjust and unreasonable
prices. N-
The first count in the indictmen'
charged the company with the SAL
on January 7, 1920, of 70 yards o
cloth, which cost $225 yard, TO
$3.671-2 yard. Another coun
alleges that piece of cloth whici
cost $l.62 yard was sold on Jan
uary II, 1920, for $325 a var,
Other counts charge similar tran.
actions.
IS Per Cent Profit.
1t developed, Assistant Distrie
Attorney H. H. Smythe said, tha
the company was receiving IS pc
cent profit above cost, althoug
Mr.. Wood claimed the profit pre-
posed by the company for its 1872
business was IL IL per cent. Tn.
amount of profits which the com
pany was realizing, he said, ex
ceeded ION an average from 800 I
200 per cent, those of 1919"
Mr.. Wood in a state11ent mad
in Boston, April %, declared.
There is absolutely no ju.
ground for the suggestion that thi
company has charged excessi,
prices for its cloth or has game
an unreasonable or excessivs
profit"
"The American WooIen con
pany," Mr.. Smythe said, "is I'll
largest manufacturer of woole
cloth in the United States and
a large extent, dominates the trade
The department therefore fee
that it has unearthed one OF the mo.
important cases of profiteerir
known since the amendment to II
Lever act went into effect" he sait
Adopt Cost Plus Plan.
The investigation disclosed :.
most astounding condition of affai.
with regard to those companies an
their president" he added.
,Ihe cost-plus system of fxir
prices. apparently was adopted T.
the company for the first time II,
year, according to Mr.. Smythe. Pro
its increased on an average of 81
per cent as a result, he asserted. ]
view of this increase Mr.. Smyti
said, and Notwithstanding that II.
manufacturing and selling comp;
nies are subjected to an expense, o.
account Of the same man being pre-
ident of both companies, of near.
81 100000 compensation for connie
slons and salaries, the 1920 statemci
should prove most interesting des
ument if the companies are permit.e
to carry on this campaign of prof.
eering which they so boldly startc
cut to inaugurate at the beginnir,
of this year"
Charles Evans Hughes has bec.,
retained as counsel for the d
PENDANTS. -
Lever Act Upheld.
The Lever act was declared CO.
stitutional as a war measure in :
opinion Handed down late today
the United States circuit court of al
peals in the case of c. A. Weed I
Co., Buffalo ,clothiers.
The opinion, written by JUDI.
Martin D. Manton, affirmed the d
cision of Federal Judge Hazel, WI
refused to enjoin Federal Distri4
Attorney Lockwood of the western
district of New York state froi
proceeding against the COMPANY
charged with prohteering.