DOCUMENTS BY WAR POLICIES COMMISSION

ANALYSIS OF TESTIMONY

(Prepared by the executive secretary of the Commission)

NOTE. For a complete list of the witnesses examined and a verbatim record of the testimony presented, see House Document No. 163, Seventy-second Congress, first session.

A. SCOPE OF COMMISSION'S TASK

Under the direction given the Commission by Congress there appears to be almost no subject directly or indirectly connected with the conduct of war which was not included in the scope of the Commission's authorized investigations. The language of the resolution includes the statement, "together with a study of the policies to be pursued in the event of war", while in its preamble appear the words, "To promote peace." It is apparent, however, that the principal purpose in creating the Commission was to develop methods for preventing profiteering and for equalizing, to the greatest extent possible, the burdens and sacrifices of war.

While not unmindful of the futility and horrors of war, the Commission considered that its task was essentially a practical one, laid down for it in the hope that should this Nation again have to resort to arms, the burdens of defense would fall equitably on all elements of our citizenry. The Commission, therefore, was not concerned primarily with causes of war, and made no attempt to develop a panacea for preventing war. Neither did it study, except incidentally, those phases of preparation for war that involve the organization, maintenance, and training of military and naval units and reserve forces.

A few witnesses protested strongly against any type of so-called 66 war preparations ", or, in fact, against a study of war policies, on the ground that to consider now measures to be applied in the event of war was not in consonance with our country's expressed attitude toward the abolition of war.

Most of the witnesses, however, were of the opinion that a study of the type herein indicated, and administrative preparation by the United States, could not be resented by any other government. They doubted that such activities would attract any attention whasoever. To a considerable extent this work deals in intangibles; it seeks to fix upon the national policies that should be pursued in emergency, and not to accumulate specific quantities of military force and material for use under such circumstances.

Dr. Arthur Deerin Call, secretary of the American Peace Society and editor of the Advocate of Peace, extended this thought to include

the present military training program in the United States. He said:

I am quite of the opinion that the "reasonable defensive posture ", as phrased by President Washington, remains still a necessary posture on the part of our people. So long as our Army is as small as it is, I cannot see how any major power in the world can look upon us as in any sense a danger. It is true, I believe, that we could not wage a war in a foreign country by the Navy alone; it has to be waged by the Navy in cooperation with the Army. Since our Army is as small as it is, I am of the opinion that our Military Establishment as it does not constitute, therefore, a menace to the peace of the world and that it is not necessary to think that it does.

In 1924 President Hoover, then Secretary of Commerce, presented his views in a letter which concluded:

War is an unhappy business * and the more evident it is that the whole Nation will be put in the storm and made to bear its share of the sacrifice the less likely we will be to go to war.

Inaugurating the hearings of this Commission, in March 1931, Secretary Hurley said:

It is quite generally conceded that the elimination of excessive profits will be a iong step toward the insurance of peace. Certainly all must be agreed that it is unjust and unpatriotic to require one man to die in defense of his Nation while another is reaping tremendous profits from his war activity.

It was almost universally agreed that the aim expressed in these two quotations can be attained only through the development in peace of an applicable system that will prevent in any war a recurrence of the conditions that in 1917-18 led to injustice, profiteering, and inefficiency.

B. PEACE-TIME PREPARATION

One great aim of peace-time preparation is to adopt and follow constructive measures to insure that, in the event of another war, preventable errors in the utilization of economic assets will not occur. Mr. Baruch, speaking out of an unusual experience, fully described the deficiencies in the preparations for the World War and strongly recommended adequate peace-time preparation. He said: We must plan in such a way that if war comes we shall meet the enemy with our maximum effectiveness, with the least possible injury and violence to our people, and in a manner which shall avoid inflation and waste. Our plans should eliminate war profiteering, and they ought to provide that each man, thing, and dollar shall bear its just proportion of the burden. It should be designed to avoid the prostrating economic and social aftermath of war.

In more specific fashion, in his final report as chairman of the War Industries Board, he urged, in the following words, the necessity for detailed planning work within the War Department:

The experience of the Board in this respect suggests the thought that there should be established a large unit of specially qualified officers of the War Department devoted in time of peace to studies of supply programs for sup positious military undertakings. As these programs would always have to be based upon obtainability of the supplies outlined, the Bureau should be required to go deeply into a study of the industrial resources and the possibilities of the country as they relate to war needs.

When this country entered the World War the majority of our people would have subscribed to the slogan, "We must win, regardless of cost.". No one had a more intimate knowledge of what was

done in 1916 and 1917 than Mr. Gifford, whose comment on the general feeling at that time is significant. He said:

I would suggest that this Commission might very well express, in a resolution, or recommend the expression in a resolution of Congress, that it shall be the purpose of this coutnry in case of another war to take the profits out of war and insofar as possible, equalize the burdens of war. Perhaps had that been expressed before us in the Council of National Defense and Advisory Commission before we entered the late war, I think somewhat more attention would have been paid to it. We had plenty to do as it was, but I do not recall directing particular attention on the part of this particular group to the question of trying to equalize the burdens, or the question of trying to take the profits ou of war. We were engaged in trying to get production and getting the supplies the Army needed and to organize satisfactorily the Council of Defense, and all these myriad of committees that had to work on the different lines of endeavor in order that the whole picture of carrying on the war could be carried out.

Specifically, peace-time planning will assist to eliminate the following administrative errors in war, all of which tend to increase prices, promote profiteering, and create injustices:

(a) Placing of munitions contracts without prior investigation of capacity of the facility to fulfill the contract.

(b) Placing of contracts in excess of needs.

(c) Placing of cost-plus percentage contracts. (d) Delay in initiating war production.

(e) Unequal distribution of the production load throughout the country, which creates congestion in particular areas and disturbances in price patterns.

(f) Competitive bidding by Government agencies for the products. of industry.

The history of the World War shows that without efficient peacetime planning all of these mistakes are sure to occur in war when time is at a premium. In addition, planning can provide, in the unhurried atmosphere of peace, for the policies to be observed and the organization to be used in controlling prices, establishing priorities, conserving materials, regulating trade, and so on. The War and Navy Departments have, in cooperation with many civilian agencies, made progress along this line.

Later in this summary there will be listed some of the suggestions made for improving this work.

C. INFLUENCE OF WOULD-BE PROFITEERS IN BRINGING ON WARS

The Commission had before it, in the form of the conclusions of congressional committees and other competent evidence, ample proof that in the World War and previous wars so-called "profiteering” existed to an enormous extent. Nothing further was required to establish the proposition.

The opinion, however, that the activities of would-be profiteers help to bring on wars was seriously questioned by many witnesses. The following statements are typical:

Mr. Baruch said:

That any human could be persuaded by the prospect of personal gain, however magnificent, to invoke the horrors of modern war is almost unthinkable. He suggested, nevertheless, some statute

the very existence of which would be a constant warning to everybody that never again in America will any man make as much profit in war as he can make in peace.

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Newton D. Baker also was emphatic in his statement that he did not regard the lure of profits as a controlling factor making for war. He said:

I am thinking back, now, to 1918, and I feel confident that I am right when I say that no appreciable part of the devotion of America to the war was based on anticipated profit.

Later he cited instances of drastic price declines in several major items of war supply after the United States entered the conflict. Tucker Smith, secretary of committee for abolition of militarism in education, said:

In the first place, you have been asked to take the profits out of war. There is back of that assumption the thought that the desire of a small group of individuals for excessive profits has a great deal to do with the making of a war. A great many people say, for example, "If we could take all of the Wall Street capitalists and all of the Washington politicians and line them up against a wall and shoot them, or draft them into the front-line trenches where they would be killed first, we would not have any more wars." That is the common man's crude way of expressing his thoughts on the blame for war; that is his statement of war guilt, if you please. He believes you will make war less probable by a rigid elimination of the profits. It seems to me that assumption is fundamentally unsound, because wars in our day do not come out of the machinations and the deviltry of a few men in Washington or of a few men in Wall Street; they come, rather, out of the long-time and broad national policies of imperialism and militarism and all of their ramifications, which bring nations to a point that may make it possible for small groups of individuals to be unusually influential. The thing the public should understand is this-that these particular policies to which they subscribe and which they in the main are in favor of carrying on in peace time are the real causes of modern war, and that the mere catching of a few lucky profiteers will not make a fundamental difference in the making or in the frequency of war.

Nevertheless, strong arguments were presented by those who have formed the conviction that profiteers help bring on wars.

Representative McSwain, who long has been one of the most vigorous advocates of a national policy to curb war profiteering, repeatedly emphasized this aspect of the inquiry in his examination of witnesses. He said:

It has been charged, and I think with some truth, that certain interests are sometimes reckless in rushing the country into war in the prospect of making enormous profits for themselves, at least believing that if they can escape the harshness of personal military service they cannot personally suffer from war. They have been willing, therefore, to take the chances of unduly exciting the public mind about matters which otherwise might be relatively trivial and of arousing public sentiment to war fever.

This same idea has been presented often since the World War in the statements and writings of prominent men. It is probably quite generally believed, and the existence of this belief is in itself a sufficient reason for attempting now to devise a program under which everyone will be on notice that war profits are a thing of the past. Wars have raised plentiful crops of those who have made more money because of the wars than they would have made if the wars had not occurred. It is exceedingly difficult to divide those who so profited into two classes-" innocent profiteers" and "bad profiteers." We, of course, exclude all questions of fraud or corruption, because opinion is unanimous that this class of offenders should be punished as criminals.

Many of those who made their big profits innocently and without the slightest advance knowledge were patriotic citizens. During

most wars wheat and cotton advanced rapidly in price, but growers of wheat and cotton and other annual crops, who did not foresee war conditions when they planted their crops, certainly were innocent beneficiaries and not deserving of the ugly charge that they were war profiteers.

It is apparent that efforts should be devoted toward preventing any type of profiteering. There should be no realized war profits; consequently there should be no profiteers, innocent or blameworthy. Many witnesses stressed that when and if we should be drawn into another war, our activities and resources must be so correlated and administered that the whole human and material strength of the Nation will be utilized to the highest degree.

Most of these believed that it can be made practically impossible for anyone to profit unduly by a war, either during or afterward. They urged also that a full discussion of the subject in peace will serve to interest and arouse public opinion and so facilitate the adoption of measures to eliminate war profits. After a war starts such discussion will not lead to satisfactory results. If war itself is to be deplored and made unpopular, even though the causes are held to arise from moral principles, there can be no excuse for any individual to enrich himself while his neighbor dies.

It is evident that public sentiment will support legislation looking to the complete elimination of war profits.

D. CONFISCATION OF PRIVATE PROPERTY

The weight of public opinion is definitely opposed to confiscation of private property at any time. A constitutional amendment to permit a taking of property without compensation was advocated by only a very few witnesses.

In some of the discussions before the Commission there were brought out some of the implications in the idea of "taking property without compensation."

In attempting to apply the principle of property confiscation the Government would necessarily take possession of essential factories, transportation systems, and other facilities, and would operate these while continuing to pay normal wages to employees. Tax receipts would diminish rapidly. Lacking receipts the Government would cease paying employees, and would eventually have to feed, clothe, house, and supervise every individual in the country. Thus the whole Nation would soon be on a demonetized socialistic basis. It is obvious that the upheaval certain to accompany any attempt to undertake, under the stress of emergency conditions, such a gigantic experiment in socialization would result in confusion and stagnation of industry, and would so paralyze our productive and military efforts as to make us easy prey to the external enemy.

Mr. Baruch, speaking of World War experiences, had the following

to say:

The "draft everything proponents seem to think that confiscation of productive facilities promises a more effective use of them in the interests of government and for the purposes of war. During the World War, government had power to commandeer factories and to operate them under bureaucratic direction. I do not recall a single important industrial enterprise that was thus taken over. This does not mean that the use of the power was never advocated.