Evening star., 1926-03-21

Mr.. Michael also declared that in
his opinion equally determined and
honest efforts had been made to pun
ish fraud" adding that SO far as he
knew every case of alleged fraud
which had been referred to the de-
partment had either been carefully
investigated-and where the evidence
warranted it indictments had been
sought-or is i'm the course of inveSt-
CATION"
I'VE are inclined to believe" added
the director of the war tranSact ctionS
section. that both the effort to detect
and the effort to punish fraud might
have been made with greater eff
cheney. and that some additional frauds
might have been discovered and pun
ished. but we are not at all convinced
that the results would have been radi
cally different.
Proiteering Widespread.
"We believe that profiteering. as
the term is popularly understood. was
widespread, but that fraud in its
technical sense of conduct, which con-
stitutes a violation of the criminal
laws, or, if not criminal, involves
moral turpitude in the eyes of the law.
was neither prevalent nor as serious
in its consequences to the Govern
ment as has been supposed. We be-
lieVe that the appearance of fraud
was much greater than the existence
of fraud. We believe that the appear
ance of fraud resulted inevitably from
the incompetence, ineXperience and
bad judgment Of many of the agents
of the Government from the wasteful-
ness and extravaganza which char.
acterized many Of the war activities
f,-oy tho Ia nrOfitS which tho
war made possible"
Reviewing the gigantic task which
confronted the Government, which he
declared was "unprepared," for war,
Mr.. Michael told of the mobilization,
involving huge quantities of war ma
terial and munitions, and declared
the primary consideration in the
minds of the responsible Government
officials was speed rather than econ
omy. 1t was probably in
evitable that men should have been
assigned to tasks which they were
not fitted to perform either by expert
enCe, training or innate ability.
Source of Large Profits.
THE policy of obtaining practically
ell war supplies and material by pNr-
chase was adopted and the war thus
became the source of private profit,
6Ito OIlCll VI NCly lol sc piOheos IL
was believed to be impossible to make
purchases on a competitive basis and
competition was eliminated, SO that
the Governments only protection lay
in the patriotism and honesty of war
contractors and the good judgment
and integrity of Government agents.
There were some contractors so
patriotic that they were willing to
supply the Government without
I,@ 81 h.,
Others treated their transactions with
the Government as ordinary CONNER
cial transactions and, while entirely
honest, according to accepted business
standards, attempted to make the best
bargains they could. Some of them,
overcome by the desire for profit, took
advantage of the Government neces-
sity to drive exceedingly hard bar
gains.
Most of the Governments agents
were honest and conscientious men,
eager to serve their country well.
Many of them, however. as was per-
haps inevitable, possessed neither the
experience nor the capacity to enable
them to do the work intruSted to them
or to deal on an equal footing with
the more experienced and aStute con-
tractors with whom they came in con-
tact, so that it was often a simple
matter TO take advantage OF tnelr
ignorance and ineXperience.
T.. S. Not Protected.
Contractors were called upon to
render services and to furnish supplies
which they had never before perform
ed or furnished, and they We're un-
willing to take the risk of loss. The
cost-plus contract was therefore adopt
ed and became a convenient instru-
ment for over-reaching the Govern
ment. Bad judgment was often dis
played by representatives of the Gov
ernment in estimating the Govern
ment's requirements. and unneces-
sarily large quantities of supplies of
various kinds were contracted for on
G2y terms obtainable. Most of the
war contrass5 were drafted by repre-
sentatives oe the Government and
ERny of them were poorly and vague
" drawn and failed to contain terms
necessary for the adequate protection
of the Government.
''The conditions which we have de-
scribed persisted after the cessation
of hostilitieS and characterized to a
greater or less degree the settlement
of war contracts and the sale of sur
plus war property. When the time
came to settle war contracts the war
was over. Contractors endeavored
to settle their contracts on the best
possible terms and were often able
TO get better terms than they were on
titled to. without reSorting to fraudu-
lent methods. Similarly, purchasers