Evening star., 1935-04-16
HEDGING CHARGED
TOBARUCKBy NYE
Munitions Prober Would
Take Profit Out of War
to Remove Danger.
(Continued From Eighth Page)

of war, and it Is that to which wish
to devote my remaining minutes to-
night.
Does America want to take the profit
out of war? If we really want
to accomplish that prevention, be-
heve it possible. and if We do that I
am sure that we will at once accom-
plish large prevention against our be-
ing drawn into more war.
The World War witnessed the crea-
ton of $4,000 new millionaires In
America alone. Individuals and cor
porations reaped lavishly of profit,
while our boys were giving their all
in trenches for cause of flag and coun-
try. Eugene Grace of the Bethlehem
Steel Corp, for example, awarded
himself a bonus of $2,800000 in addi-
ton to his salary during the two years
we were engaged in the World War.
It is not easy to forget who is having
to pay the bill of the Bethlehem COM
pany for war supplies. bill that in
cluded this private bonus for its pres
ident. Nor can we forget that it was
this same corporation that helped
meet the cost Of sending man to the
Geneva disarmament conference to
wreck the chance of accomplishing
any measure of disarmament.
DefenselesS Against Greed.
To keep the record straight, let US
review a few of the gains which cor
porations enjoyed as result of four
years of war Before me are figures
showing the average annual profit
during the four years preceding the
World War, compared with average
annual profit during four years Of
war for a list of American corpora
tions. The Republic Iron g. Steel Co.
saw its profits grow, as result of war,
from $4,000,000 to $l7000,O00 a year,
while General Motors climbed from
s6000,000 to more than $2l.000,000;
United States Steel profits jumped from
peace-time average of $105 100000 to
$239,000,000 during the war, while
Bethlehem Steel was moving its profit
from S6,o0o,000 to $4,000, 900 a year
as a result of war. This same COM
parison shows the du Points, with an
average peace-time profit of s6,000,-
900 and an annual average wartime
profit of S55,000.00O.
The profit of the du Pont Corp. for
the four war years shows a return
upon invested capital of more than
400 per cent. Other corporations
made even larger shoWings. Individ-
uaS enriched themselves while the
world was aflre and without defense
against those who were reaping profit.
To prevent repetition of that eX-
perience is no small task, yet I be-
lieve the Senate Committee has on
its way legislative program that will
largely turn the trick Starting on
Wednesday the committee will write
up its program in legislative order,
and it hopes by early next week to
have its bill before the Senate for
consideration.
Fixing and Freezing Prices.
In light of the disclosures which
the investigation has developed, there
Is in Congress much proposed leg
islation to take the profit out of
war. This is a splendid sign, and
indicates large will to meet the chal-
lenge. A week ago the House of Rep
resentatives passed and sent to the
Senate the McSWain bill as a proposal
to take profit out of war. This bill
provides for licensing industries and
would fix and freeze prices with the
declaration Of war, using as a base
the average prices prevailing during
the years Immediately preceding the
war. At once one is struck by how
this program would have worked had
1t been in effect when the United
States entered the World War. The
war had been on for two years, and
our American price structure had
reached high. American industry
could have wanted nothing finer than
a guarantee of the prices that pre-
vailed during those years just before
our entry into war.
The Senate Munitions Committee
believes that the House bill is quite
inadequate. and that it will fail to
protect us against repetition of the
frightful practices and costs that pre-
vailed during the last war The bill
which our committee is proposing en-
tertains an entirely different ap-
proach. The devices of our proposal
are: First, taxation; second, a draft
of industrial management; third,
commodity control; fourth, control of
finances and credit during war; fifth,
power to commander necessary pro-
duction.
Let us consider these various devices
In their order. The first, that of tax
alton, is aimed at the cause of ex-
ceSsive profit. Excessive profits are
really the effect of a more profound
cause, namely the imitation which
always accompanies war. In other
words, high prices do not produce
imitation; rather imitation produces
high prices. Therefore, it is upon us
to stop imitation.
Paid Three-Borrowed Seven.
If high prices is not the cause, what
Is the cause of imitation? Imitation
proceeds from the method of financing
war. War is great business, and as
soon as it begins, tremendous new
industry is called into being. There is
at orce call for vast munition pro-
duction, costing billions. In the last
war we did not even try to pay for
these things, instead we borrowed the
money to meet the cost. In the war
we spent $33, 3,OOO,OOO,OOO. OF this we
borrowed $22 ZOO, 100000. Out of every
SO spent to fight we paid SO and bor-
rowed 81. Most of that we borrowed
is left for our children to pay.
That $4,000, 100000 poured into our
economic machine produced imitation.
Out of this flood, workers were paid.
They in turn spent their larger re-
turns in peace-time avenues for lux
uries, as well as necessaries. This
stimulation brought new competition
to the wartime industry, labor be-
came scarce, prices and earnings rose,
executives and managers boosted their
own salaries. Then workers demand
ed higher wages and there followed
higher prices, larger profits and more
wage demands. And finally this
vicious spiral reaches inflated proper
tions which naturally invite an eco
ronic wreck.
Pay as We Fight.
The only way, then, to stop imitation