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both, at the discretion of the court, in such amount and for such time as the court shall see fit and proper, but in no single case shall the fine exceed $100,000 or the term of imprisonment one year.

The CHAIRMAN. The committee will come to order, please.
We will dispense with the roll call for the time being.

I want to state to the committee that the national commander of the American Legion and the national legionary representatives are not in the city today-at least, that Colonel Taylor is not. We will not be ready to go on this morning with that part of the hearing.

I also had a long-distance telephone conversation with Mr. Bernard M. Baruch, in New York, who said that he was so situated that he could not appear before the committee until Thursday. Gen. Hugh S. Johnson will appear with him on Thursday. He said that he could not appear until Thursday. I wrote to the Secretary of War, inviting him to appear, but I have not heard from him.

I wrote to General MacArthur, the Chief of Staff, inviting him to appear, and I have this letter from him, dated January 21, 1935:



OFFICE OF THE CHIEF OF STAFF, Washington, D. C., January 21, 1935.

Chairman Committee on Military Affairs,

House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: I have your letter of January 17, inviting me to appear before your committee to discuss the provisions of H. R. 3, a bill to take the profits out of war. Study of this subject, so far as the War Department is concerned, is an included part of the problem of preparing for an industrial mobilization, and is, under the law, a responsibility of the Assistant Secretary of War. The General Staff and the Chief of Staff do not, as such, have any official connection with it. Only the Secretary of War, the Assistant Secretary of War, or some subordinate who has made a study of the matters involved in this important subject can properly express the War Department views thereon.

War Department recommendations on the general subject of eliminating profits from war were recently requested by the Senate committee headed by Senator Nye. In response to that request, the Secretary of War designated as his representative Lt. Col. C. T. Harris, of the office of the Assistant Secretary of War. Colonel Harris appeared before the committee and delivered a statement, to which the Secretary of War gave his approval. I am attaching a copy of his presentation and make the suggestion that if further amplification is desired that Colonel Harris appear before you at your convenience. I assure you of my desire to further the general objective sought in the bill you kindly forwarded for my inspection.

Very sincerely,


General, Chief of Staff.

I will state further that I invited General MacArthur because I noticed a statement in the newspapers that he was one of three constituting a committee designated by the President to suggest the form of machinery to accomplish this aim. It seems that he misunderstood my letter of invitation, because his letter does not respond to that aspect of the invitation.

I also invited the Secretary of the Navy to appear, and I have a letter from him dated January 21, 1935:


Washington, January 21, 1935.

House of Representatives, Washington, D. C.

MY DEAR MR. MCSWAIN: I received your letter of January 18 advising me that the Committee on Military Affairs of the House of Representatives will hold

hearings on H. R. 3, to take the profits out of war, beginning tomorrow, Tuesday, January 22.

In reply will say that I was a member of the joint committee of the Senate and House which investigated this question several years ago, when a report was made as to their findings and conclusions. I was not present when the report was signed, but as soon as I returned from Europe I read the report and concurred in it.

This report presented the views of the committee very fully and completely. As I recall, you were also a member of this committee. I believe that if you will, in your hearings, consider this report of the joint committee you will reach the opinion that any views I might have are fully and completely presented. However, if the committee should desire specially to hear me, I will be at their disposal any time next week.

With kind regards and best wishes, I am

Sincerely yours,


Now, I beg to state that here are the hearings conducted by the War Policies Commission in 1931 and the report to which the Secretary of the Navy referred is here. I will ask Mr. Hill to read that report for our information, because it is the result of the year's study made by the War Policies Commission, consisting of 3 Members of Congress and 7 Members of the Cabinet.

Mr. Hill read to the committee the report of the War Policies Commission, dated March 3, 1932, as follows:

(Mr. Hill read to the committee the report of the War Policies Commission, dated March 3, 1932, as follows:)

[Immediate release]


March 7, 1932.


The final recommendations of the Commission created by a congressional resolution entitled "Joint resolution to promote peace and to equalize the burdens and to minimize the profits of war" have been submitted by the Commission.

Twelve of the fourteen members of the Commission signed the recommendations. Of the 2 members not signing, 1 is attending the Disarmament Conference in Geneva and the other prepared a minority report.

On December 4, 1931, there was submitted to the President a preliminary report concerning the Commission's activities. An extension of time for the preparation of conclusions and recommendations was requested and granted in order that certain studies concerning constitutional law could be carried to completion. The Attorney General and others have carefully investigated the legal phases of the questions involved, and their conclusions were considered by the Commission in formulating its final report.

During the course of its deliberations the Commission held a series of open hearings, at which many witnesses advanced diverse proposals and opinions bearing upon the intricate problems that presented themselves for study. The names of these witnesses and the complete testimony submitted by each accompanied the preliminary report.


MARCH 3, 1932.

The Commission appointed under Public Resolution No. 98, Seventy-first Congress, entitled "Joint resolution to promote peace and to equalize the burdens and to minimize the profits of war", respectfully submits the following report and recommendations:

First, we recommend, in order to eliminate all doubt concerning the extent of the power of the Congress to prevent profiteering and to stabilize prices in time of war, that a proposed constitutional amendment clearly defining such power be submitted by the Congress to the States.

Second, we further recommend that until a constitutional amendment be adopted clearly defining the power of Congress to prevent profiteering and to

stabilize prices in time of war, the following program be adopted as governmental policy in order effectively to minimize the profits of war and to distribute its burdens and sacrifices equitably:

(a) That the Congress should empower the President, in the event of war, to institute a program under which prices may be stabilized and thereafter adjusted at such levels as will minimize inflation and will secure to the Government the use of any private property needed in the prosecution of the war without affording the owner thereof profit due to the war. It should be clearly stated that such a program will not be placed in operation until Congress specifically directs it as a necessary measure in the conduct of the war. (b) The Congress should empower the President to make, in war, such readjustments in, and additions to, the executive departments of the Government as are necessary to assure adequate control of all national resources. The President should be empowered also to fix the status, for the period of the war, of personnel transferred under this authority, from one bureau or department of the Government to any other.

(c) Existing law empowering the President to compel acceptance of war orders and to commandeer property should be continued.

(d) In addition to all other plans to remove the profits of war, the revenue law should provide that, upon any declaration of war and during the period of such emergency, individuals and corporations shall be taxed 95 percent of all income above the previous 3-year average, with proper adjustments for capital expenditures for war purposes by existing or new industries.

(e) In time of peace continuous planning by the Federal Government, particularly by the War and Navy Departments, should be directed toward insuring:

(1) That upon declaration of war there shall be immediately available to the Congress accurate and detailed estimates concerning the man power and material needs of the military and naval services, together with detailed studies and recommendations concerning the most applicable methods for mobilizing the necessary men and procuring the required munitions.

(2) That there shall be no competitive bidding between Government agencies for the products of industry.

(3) There shall be no placing of contracts in excess of needs.

(4) That cost-plus percentage methods of purchase shall be eliminated. (5) That the munitions production load shall be distributed properly over the United States.

(6) That the governmental organizations required in the administration of war functions shall be set up promptly.

(7) That the necessary controls respecting prices, raw materials, transportation, priorities, war trade, finance, and related matters shall be continuously studied, so that in the event of war the will of Congress may be promptly and efficiently administered.

(f) Plans prepared in the War and Navy Departments for the accomplishment of the above should be continuously revised to meet changing national and international conditions, and should be thoroughly examined and revised at least every 2 years by appropriate congressional committees.

Third. We recommend that no constitutional amendment to permit the taking of private property in time of war without compensation be considered by the Congress.

Respectfully submitted.

Patrick J. Hurley, chairman; David A. Reed, vice chairman; Joe T. Robinson; John J. McSwain; Arthur H. Vandenberg; William Mitchell; C. F. Adams; R. P. Lamont; Wm. P. Holaday; Arthur W. Hyde; W. N. Doak; Lindley H. Handley, secretary. (Absent: Senator Claude A. Swanson, attending the conference in Geneva.) Mr. MAY. Is that the purpose of this bill (H. R. 3), to meet the point raised in paragraph (a) of that report?

Mr. HILL. Yes; it is one of the purposes.

And here is the minority report, signed by Mr. Ross A. Collins, as former Member of the House, as you will recall.

Mr. Hill read the minority report referred to, as follows:


The purpose in creating the so-called "War Policies Commission was to “study and consider amending the Constitution of the United States to provide

that private property may be taken by Congress for public use during war and methods of equalizing the burdens and to remove the profits of war, together with a study of policies to be pursued in the event of war."

I take it that the object of the resolution creating the Commission deals solely with the purpose of eliminating profits that accrue to certain classes of individuals and corporations during war and that "a study of policies to be pursued in the event of war" relates to policies to be prescribed by Congress either through a constitutional amendment or by legislation for the purpose of eliminating war profits.

As the Constitution of the United States is now drawn, I am convinced that the only way to eliminate war profits is through the adoption of a constitutional amendment so as to enable Congress to pass legislation creating an agency to fix prices of commodities either for the purpose of keeping profits at a minimum or the entire elimination of them. I heartily favor the adoption of a constitutional amendment to carry out this object.

I do not believe it was the intention of Congress that the power to fix prices of commodities should be delegated to military men. I believe that such administrative matters should be entirely in the hands of civilians and I object to any recommendation that would tend to confer upon military men the power to regulate prices or the activities of the civilian population during war or at any other time. I am firmly convinced, whether intended or not, that any war planning as now carried on by the War Department will in the end result in the administration of price-fixing laws and the regulation of civilian activities by military and naval officers if the recommendations of the majority members of the Commission are finally adopted by Congress.

I regret that I am unable to follow the majority of the members of the commission upon all of their proposals and respectfully submit to you this dissent. Very respectfully,


The CHAIRMAN. The report of the War Policies Commission, the letter of the Secretary of the Navy, the letter of the Chief of Staff, General MacArthur, and the memorandum by Lieutenant Colonel Harris on behalf of the War Department will be included in the hearings.

The hearings held by the War Policies Commission will be included by reference but not reprinted unless there should be a special request for a sufficiently large number-more than are now available. Mr. MAY. Are those available?

The CHAIRMAN. Let me ask Captain Persons how many of these printed reports of the hearings held by the War Policies Commission are available in the War Department.

Captain PERSONS. I would have to check up in order to be certain, but I understand that there are a very few left.

Mr. KVALE. There is a very limited number, Captain?

Captain PERSONS. There is a very limited number. I think that practically all of them have been mailed out.

Mr. KVALE. Mr. Chairman, I suggest that they should be reprinted.

The CHAIRMAN. Do I hear a motion that that be done?

Mr. KVALE. I make that motion; that those hearings be printed as a part of the proceedings before this committee, as a separate volume, for the information of the committee.

The CHAIRMAN. I hear a motion that the testimony taken before the War Policies Commission in 1931 be reprinted as a part of the proceedings before this committee, as a separate volume, for the information of the committee.

The motion was duly seconded and carried.

The CHAIRMAN. Captain Persons, I read, before you came in, a letter from the Chief of Staff, saying that only the Assistant Secre

tary of War, who is charged with procurement under the law, could properly present the views of the War Department on the subject of Industrial mobilization."

I will ask you if you will please convey for us an invitation for the Assistant Secretary of War, or such person as he might designate, to come before us at the earliest possible date, this week if possible, to present the views of the War Department on that subject.

Captain PERSONS. Very well, sir.

The CHAIRMAN. I also call attention to the hearing had before the Committee on Military Affairs in 1924 on universal mobilization for war purposes. It is a 246-page volume, which is practically out of print. There are only a half a dozen or more in the possession of the committee. I do not know what would be your pleasure about that. I do not know whether it would be especially valuable or not. I would not make any recommendations.

Mr. FITZPATRICK. Mr. Chairman, there was a resolution introduced in the Seventy-second Congress, which was referred to a special committee, in relation to the surplus supplies, and the American Legion and the Red Cross and others were interested in that. Did they make a record of the hearing?

The CHAIRMAN. Mr. Thomason was the chairman of that subcommittee.

Mr. FITZPATRICK. I will tell you the reason why, because it would show the prices on the supplies averaged anywhere from 300 to 700 percent. I recall very well that the underwear that the boys wore cost 75 cents to produce and the Government paid $4 for it. And out of the $19,000,000,000 that was spent in 1918, or during the period of the war, to take the average of the prices, the gloves, the shoes, the socks, and other garments, there was an average of 300 to 1,700 percent profit made, which would go to show that out of that $19,000,000,000 there was at least $14,000,000,000 of profit to the people that sold the supplies to the Government.

That was in our hearings. I do not know whether there is a printed record of it.

Mr. THOMASON. I will say, Mr. Chairman, that I was the chairman of the subcommittee that handled that. My recollection is that the reporter took down the testimony; but my record also is that those hearings were not printed. I may be mistaken. Perhaps the records of the clerk will show.

The CHAIRMAN. I am quite sure that they were not printed.

Mr. FITZPATRICK. I think it is possible to get that record and show the profits made, because at the present time over in the Senate committee hearing they are bringing out the profits on munitions. This was on clothing and on other supplies.

The CHAIRMAN. It may be that those hearings can be found. The committee has moved since then and there has been quite a change. If the transcript can be found, we will exhibit it to the committee at the next meeting and we can decide then.

Mr. FITZPATRICK. It was shown that for all such wearing apparel we paid many times the cost to produce.

The CHAIRMAN. Is Mr. James R. Turner present?

(There was no response.)

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