War Without Profit

When the U. S. went to war in 1917, critical citizens declined to take at face value President Wilson's pronouncements of an idealistic national purpose. Right or wrong, they insisted that the country had been driven into the fight for selfish economic reasons. Bankers who had made large military loans to the Allies were charged with seeking to protect their investment. Industrialists whose factories already hummed filling foreign munitions contracts were accused of fostering U. S. participation to increase their own profits. After the Armistice this skepticism of U. S. war motives was increased by the presence of Government contractors who had grown inordinately rich, big corporations from which the U. S. could never recover excess war profits. Veterans, drafted to fight in France at $30 per month, returned to the U. S. in disgruntled amazement to find free workers drawing $300 per month in safe factories. Bankers seemed more prosperous than ever.

W. P. C. Growing with the years, this dissatisfaction with the last War has crystallized into a demand to take the profits out of the next. The American Legion has agitated for what it calls the "Universal Draft." Oftener and oftener is heard the suggestion that Capital and Labor, as well as mere soldiers, be conscripted hereafter. So politically insistent has this movement become that the last Congress created a War Policies Commission. The duties of the W. P. C. were to investigate the details of the last war and prepare legislation "to equalize the burdens and minimize the profits of war."

Secretary of War Patrick Jay Hurley was named the Commission's chairman and with him sat the Secretaries of the Navy, Agriculture, Commerce, Labor, the Attorney General, four Senators, four Representatives. In March the Commission held a short series of hearings at which it went straight to the economics of war. Last week it returned to the task of devising ways & means of conducting the next armed struggle more efficiently, more economically, without profit to anyone.

Baruch Plan. Most important proposal before the W. P. C. came from Bernard Mannes Baruch, astute white eagle of Wall Street. As chairman of the War Industries Board, which mobilized and controlled business to supply the Army during the War, Mr. Baruch learned from experience all about war profiteering. To eradicate it he proposed a Federal command of still-pond-no-more-moving. "In modern warfare," he testified, "administrative control must replace the law of supply and demand. To measure inflation of price and profit we must have some norm. The obvious norm is the whole price structure as it existed on some antecedent date near to the declaration of war. . . . That determined, we need a method of freezing the whole price structure at that level. The obvious way to do this is simple: By proclamation to decree that every price in the whole national pattern as of that determined date, shall be one maximum that thenceforth may be charged for anything--rents, wages, interest rates, commissions, fees, in short, the price of every item and service in commerce. . . . Such a system would reduce the cost of war by 50% . . . eliminate war profits and inflation . . . conserve the country's resources and preserve the morale of its people. . . ."

Pocket Flaps; Cajolery Impressed was the W. P. C. by Mr. Baruch's account of the activities of his War Industries Board: "Had the War gone on another year our whole civil population would have gradually emerged in cheap but serviceable uniforms. Types of shoes were to be reduced to two or three. The manufacture of pleasure automobiles was to cease. Flaps for pockets and unnecessary trim in clothing would have disappeared. Steel had already been taken out of women's corsets. . . . "We withheld Swedish iron from the Central Powers by buying it ourselves, persuaded Chile to disgorge nitrates by the discovery that her gold reserve was sequestered in a Berlin bank, cajoled from Spain the mules she had refused us by dangling before her a supply of ammonium phosphate for which she was starving, procured jute at a reasonable price by threatening to cease the withdrawal of silver dollars from circulation, which we had done to stabilize Indian currency." "Freezing." Mr. Baruch's plan to "freeze" prices at a war's outbreak became the focal controversy before the W. P. C. Newton Diehl Baker, Wartime Secretary of War, opposed it on the ground that wars and their economic management could not be deliberately arranged in advance. Said he: "Laws passed in anticipation of war hampered more than helped the prosecution of the World War." But last week Mr. Baker's colleague, Benedict Crowell, Wartime Assistant Secretary of War, declared enthusiastically: "The freezing of prices is one of the most important factors . . . and I am heartily in favor of it. I don't see how the Baruch plan can be improved upon." While he favored price-fixing for a few essentials like metals, textiles and chemicals, Col. Leonard Porter Ayres, Cleveland economist, doubted if the Baruch plan would reduce war costs more than 10%. William Green, president of the American Federation of Labor, opposed any "freezing" which might hold down the workman's war wage. Last week the War Department, in the person of General Douglas MacArthur, Chief of Staff, threw itself against the Baruch "freezing" idea. Said he: "Injustice and hardship would develop to such an extent as to incite papular dissatisfaction and create distrust toward governmental orders and programs. . . . Attempts along this line have fostered subterfuge and evasion and dried up the sources of supply." The only alternatives which critics of the Baruch plan had to offer were heavy taxes, voluntary agreements among producers and public opinion, all of which they admitted had failed to curb the excess profits of the last war.

Conscript Labor. So politically powerful is the A. F. of L. that it compelled Congress to exclude specifically from the W. P. C.'s considerations the question of conscripting labor. Nevertheless this question continued to bob up at the hearings despite the efforts of Chairman Hurley to suppress it by citing the constitutional prohibition against involuntary servitude. What some witnesses could not see was the difference between "military slavery" in the trenches and "industrial slavery" at home. Nevertheless the weight of authoritative testimony was against drafting labor. General MacArthur, speaking for the War Department, opined: "The enforced employment of labor would not receive the support of public opinion and even if tolerated would be so resented by the workers that they would not lend their best efforts to the production of needed supplies."

Armies. Last week General MacArthur revealed to the W. P. C. the General Staff's arrangements for a general mobilization. Registered for the draft would be all men from 18 to 45 (the World War draft age was 21 to 30). There would be no exemptions, only deferments. Six field armies totalling 4,000,000 men would be in service within a year, leaving a reserve force of 7,000,000. A new wartime contract to eliminate excess profits would be used for industrial procurement. In readiness are 15,000 manufacturing plants to which the War Department can go immediately for the 4,000 items on its "shopping list." (The 1918 list was 700,000 articles.) Great cantonments would not be constructed but "full utilization of Federal, State, county and municipal buildings will be made as troop shelters." This program, according to General MacArthur, would give the country "victory, immediate and complete."

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