Peace & Personal Matters

In 1929 Congressmen treated successful men as heroes. Today, in an improved state of national morality, the New Deal looks on tycoons with much the same disapprobation that Nazis look upon Jews. Few are the important businessmen who can quit a Congressional investigation without having their hair singed. Some have gone away without their scalps. Therefore it was an event when a wealthy businessman last week met Senators and departed not only with all his hair but with a Congressional wreath upon it.

The victor was Bernard Mannes Baruch.

A minor reason for his victory was that he shrewdly took with him to Washington the publicity-wise ex-secretary of the War Industries Board, Herbert Bayard Swope, onetime executive editor of the defunct New York World. At headquarters in Washington's swank Hotel Carlton, Mr.

Swope was able to help entertain the Press after the Senate hearings.

More responsible, however, for the Baruch triumph was his double-barreled opening before the Senate Committee on Investigation of the Munitions Industry. The first barrel he aimed at Senator Long, Father Coughlin and others who have cast aspersions on him as a double-dyed Wall Streeter.

"As the question of my fitness to pass an opinion upon the grave social problem of war profits lies in a test of my character, and as it is evident that a test is to be made of my record during the service I gave my country, it seems to me the course to follow is to plunge at once into that subject, so that you may either put an end to the insinuations and innuendoes, the existence of which I would be childish to deny; or that you find me guilty of violation of the trust and confidence imposed upon me during that period."

His second barrel, with a far heavier charge, drove home the shot of the first:

"There is no question you can ask me as to my fortune that I won't answer. I am ready to state exactly what I own and what any member of my family owns. No matter how personal the question may be, I stand ready to answer."

In the committee room of the munitions investigation, love of peace is kept at white heat, but when Mr. Baruch made this declaration, the noble emotion of Senators, witnesses and onlookers alike was momentarily superseded by normal human curiosity. Mr. Baruch promptly proceeded to satisfy that curiosity. The great South Carolina-born speculator whom President Wilson made head of the War Industries Board had prepared a letter setting forth his security holdings and profits during the period of the War.

He presented photostatic copies of such of his income tax returns as the Bureau of Internal Revenue had not destroyed. Deploring that his records of nearly 20 years ago were not complete, he gave a tentative list of his Wartime holdings, estimating their value: $8,500,000 in bonds, $1.300,000 in the stock of three companies, plus cash balances which he could not recall. His tax returns showed: income of $2,301,000 and tax of $261,000 in 1916; income of $617,000 and tax of $264,000 in 1917; losses and no taxes in 1918 and 1919.

The drop of nearly 75% in his income in 1917 and the losses for the next two years he attributed to having sold below cost his shares in all but three companies and having invested the proceeds in Liberty Bonds. About 75% of his fortune was invested in Liberty Bonds. His income from them was around $200,000. Witness Baruch read from his letter:

"Never from the moment I was called to the Government service did I have a dollar's worth of interest in any concern manufacturing munitions of war. ... I divested myself of all holdings that even remotely touched on my official activities. I took this step freely and at heavy cost to my fortune. . . . From the time I entered the service until I left in July 1919, I was not a participant either directly or indirectly in any market transactions."

One exception he made to this declaration : his pre-War investment in three companies, valued at $1.300.000. These companies he listed as 1) Alaska Juneau Gold Mining Co. "which for many years had no value"; 2) Texas Gulf Sulphur Co. "which never produced an ounce of sulphur during the entire War"; 3) Atolia (tungsten) Mining Co. The price of tungsten boomed from $10 per short-ton unit (20 Ib.) to $100 and slumped back below $25. Mr. Baruch's tungsten profits in 1916 amounted to about $600,000. He could not sell this stock at any price because people were afraid that the mine would soon become exhausted (which it soon did). Of his profits from this tungsten mine after the declaration of War, Mr. Baruch explained:

''I did not resort to the subterfuge of a fake transfer. I informed certain officials in Washington, including the President of the U. S., the Secretary of War, the Attorney General, the Secretary of the Interior and my fellow Board members of this interest and also of a plan that I had devised. ... I ordered the segregation of every dollar that the mine paid me and directed that all the dividends should be paid to various charities. ... I made contributions approximately of $400.000 to the Red Cross, Knights of Columbus, Y. M. C. A.. Y. M. H. A.. Salvation Army . . . and also for other War purposes. In this period I had received Atolia dividends of approximately $300,000."

Not much was left of the anti-Baruch insinuations and innuendoes after that discharge, and Mr. Baruch proceeded to draw the attention of the committee back to its noble purpose: love of peace. With friendly candor and much play of facial expression he advocated that i) to preserve U. S. neutrality in future wars U. S. citizens and goods should be denied protection in war zones. 2) all prices should be frozen the day that the U. S. declares war, 3) a pay-as-you-fight tax program should be developed. 4) the Government has a better war-time right to confiscate property than draft men. 5) no more tax-exempt bonds should be issued.

But while he urged heavy taxation of Wartime profits, Mr. Baruch warned: "In eliminating profits we must not eliminate munitions. We must not stop production. . . . There is such a thing as taking the profits out of war at the cost of losing the war. . . ."

At Mr. Baruch's succeeding appearances the committeemen greeted him with deferential smiles. What was more, Senator Byrnes of Mr. Baruch's own South Carolina appeared to tell the Committee two things that Mr. Baruch would not tell. The first: When the U. S. entered the War it became highly necessary to send a commission abroad to co-ordinate Allied industrial policies with those of the U. S.; there were no funds available to finance the mission; Mr. Baruch paid its expenses, some $85,000, from his own pocket and later declined to be reimbursed. The second: When the War Industries Board disbanded, its hundreds of girl clerks gathered during the War from all over the U.S. were left in Washington without jobs; Mr. Baruch, again out of his own pocket, provided them with expenses home.

For a Senator to appear before a committee to laud a tycoon-witness was sufficiently impressive. For a group of inquisitors virtually to apologize for ever having thought anything ill of a tycoon-witness was even rarer. When Senator Byrnes finished speaking, Senator Nye, who chairmans the Munitions Committee, hastily interposed:

"I hope, Senator Byrnes, you have not been under the impression that the Committee was the party that was critical of Mr. Baruch's Wartime record."

The same day that Mr. Baruch was scoring this record success in Washington, a famed ship & arms manufacturer made headlines not by besting Congress but by besting his natural optimism. Charles M. Schwab, 73, chairman of Bethlehem Steel, returned to Manhattan from Europe and for the first time in his long career shocked ship news reporters by not expressing his belief that business was getting better. "We seem to be at a standstill." declared gloomy Mr. Schwab. "We don't seem to be progressing. We seem to have gone back since I have been away."

So shocked were newshawks by these lugubrious words, that they gave scant heed to two interesting observations by this rich steelmaster who grew richer out of Wartime manufacture of arms.

Of the Senate Munitions inquiry: "I regard Bernard M. Baruch as a really great patriotic American but do not wish to discuss his theories about curbing war profits. . . ."

Of the world's most famed arms tycoon, Sir Basil Zaharoff, whom he had encountered in Nice: "He is what I would term an international merchant. There is no mistaking that he is a great figure in world business. I knew him first when he headed Vickers in England and have frequently met him abroad since then. He is getting along in years, as I am myself. I told him recently that he made one mistake and that was not taking the Press into his confidence. Because he did not do so, many mysterious stories arose behind him. He is not a man of mystery at all, but a very frank man when you come to know him."

This file is automatically generated by a robot program, so reader's discretion is required.