Evening star., 1935-04-15
CRASHDUR|NG WAR
SEEN BY BARUCH
IN FLYNN PLAN"
Senate Arms Probers Told
Profit ScaIping Would
Ruin Country.
COMMITTEE TO QUIZ
BEN SMITH ON DEAL
Seek to Determine if He Had "In.
side Information" of Ship
building Program.
BY the Associated Press.

Bernard M. Baruch today aSSaNci
the Flynn plan" advanced by the
Senate Munitions Committee to take
the profits out of war. He said it
would abolish the present economic
system in war"
John T. Flynn, writer on economic
subjects and adviser to the committee,
has drawn a plan to limit industrial
profits during war to per cent and
individual incomes to $4,000. Cap
tains of industry would be under
Army discipline, and could be sent to
the trenches if they failed to CO.
operate"
Called a plan to ''pay as you fight"
the program was attacked by Baruch
in these words:
"It is clear that business and in
dustry is in large part activated by
the spending and investment Of in
come and that if a war Government
takes all of income, it will not have to
worry about paying for the war. 1t
will not be there to pay for it. Either
It's COllQucIO1O VI tAlC NOAAAiAu4AC WAL
have that problem.
McSwain Plan Has House o. X.
Baruch, a New York financier who
headed President Wilson's World War
Industries Board, has proposed plan
of his own to recapture excess war
profits, and his ideas were drawn upon
in the drafting of the McSwain bill,
which has passed the House. Baruch
heads President Roosevelt'S committee
studying the question OF war profits.
In his statement sent to the COM
mittee today. Baruch expressed re-
sentiment over ISLANDERS" he said were
directed at members of the War In
dustries Board. He decried 'insinua-
tions' that members Of the board
were there to advance their private
interests"
Il am willing to let the whole rec
ord speak for ITSELF" he said
His statement was received as the
Munitions Committee prepared to
question Ben Smith, Wall Street oper-
ator, as to his share in a transaction
| said to have put the control of New
York Shipbuilding Corp. into new
hands shortly before a S238,000,000
naval building program was launched
early in the Roosevelt administration.
Bought Half Interest.
| Previous testimony to the commit
| tee was that Smith and Tom Bragg.
another operator, acquired a so per
/ cent interest in the corporation, while
| the Cord Corp. acquired the balance.
Committee investigators said they
sought to determine whether Smith
had any inside information about
the shipbuilding program.
OF the Flynn plan Baruch said:
Plainly, the result would not be
merely to skim off the profits due to
war. 1t is. with insignificant ex-
ception, to abolish the present eco-
nomic system in war.
II am not debating here whether
the profit motive is right or wrong.
I am only insisting that we recognize
reality and what is here proposed.
And. am saying that the advent of
modern war and threatened national
| destruction, when the fate of the peo-
pie, as at no other time. depends on
the efficient operation at high speed
pressure, of its industrial system, is
not the moment to select to switch
from the fundamental base of our
economic system to a new and wholly
experimental system which was never
adopted at any time in the worlds
history in peace or war without an
immediate result of collapse and ruin"
Redefines Own Plan.
Baruch redefined his own plan. In
simplest terms" he said, it proposed:
To make it unlawful to raise prices
in any war from the day of declara-
ton COR thereabout) except as may be
permitted by the President and to
penalize both seller and buyer for in
fraction. This puts a ceiling
over the price structure, but permits
| fluctuations downward as freely as
before. No price is fixed. Nothing
Is frozen"
ITO take, by special taxes. 100 per
cent Of all profits ard income in war
above the average of the preceding
three years of peace. This skins of
every cent of profit due to war"
"At the same time, to increase the
regular individual and corporate in
come tax to the absolute point of
diminishing returns. This takes all
other available revenue that can be
taken without slowing or stopping
the flow Of munitions to the 'front.'"
No Profit Increase Seen.
Emphatically Baruch denied that
his plan would foster increased war
profitS-as Flynn asserted.
1T is my deliberate and considered
Judgment" Baruch said, that the
Flynn plan would insure an exag-
gerated imitation far greater than If
there were no plan at all, paralyze war
production and render this Nation
practically helpless against a major
attack by any enemy possessing an
economic and industrial system fairly
comparable with our own.
Much as it may be deserted, the
cold fact remains that ours is an
economy activated by profits. A cer-
tain return on money Is necessary to
make our industrial system work"