The Nonpartisan Leader Newspaper, October 20, 1919, Page 5

/ HOldll/fi Uothe Handsof 't‘he Profiteer - How Hoover Protected Packers’ Profits When Federal Trade Commission ' in Report Denounced Excessive Returns 7 JERBERT HOOVER is sore be- cause a senate resolution has just dragged into the light the fact that he helped the Big Five , meat packers to grab something like $25,000,000 to $30,000,000 more profits last year than they otherwise would have taken from the American people. As usual, Hoover assumes the role of a savior ofhis country and brags of the amount of cash he will return to the treasury from the fund .of $100,000,000 which he induced congress to appro- priate, after the armistice, for feeding Europe. But not even his work as a distributor of food abroad will entirely blot out the fact that at the crisis of the war, when the profiteers were sinking their beaks into the veins of the people and drink- ing up their strength, it was Hoover who_jumped between the profiteers and the threatening hand of the government and insisted that the people must be robbed. The letters which show how the federal trade commission demanded that the profits of the pack- - ers,; as allowed by Hoover, be cut down, and how . Hoover induced the presldent to suppress the fed- eral trade commission’s report on this peint, for more than a year, are to be found in the Congres- sional Record for Wednesday, September 24. Three reports made by experts for the federal trade com- mission—the Chase report, the Morse report and the Walter Y. Durand report—analyzing the Hoov- er regulations of the meat packers and proving that under these regulations the big packers would be per- mitted to take something near $100,000,000 in profits in 1918, whereas under decent regula- tion they would take ‘no more than $50,000,000 profits, are printed in a senate document which will soon be ready for distribution. CRY FOR CONTROL OF STOCKYARDS SILENCED It was just at the climax of the Heney investigation of the meat packing combine that Hoover took control of the food business of the nation and proceeded to pack his execu- tive staff with high-salaried men from Swift & Co., Morris & Co., Armour & Co., etc who were authorized by him to help protect the public against the profiteers, and to see that sufficient supplies of food for the army were produced and sent to Europe. A great cry had gone up, all over the coun- try, that the government take over the stockyards and even the packing plants, and run the business in the public in- terest during the war. The president was finally compel- led to appoint a special com- mittee to discuss this ques- tion. The committee was load- . ed with friends of “competi- tion” as exemplified by the big packers. They voted down representatives of the federal trade commission, but as a sop to public sentiment they asked that the federal trade commis- sion should advise the presi- dent, before July 1, 1918, as to the profits that should be permitted meat packers, and the regulations to be enforced. upon them. This report—or rather the three reports above named—reached the pres- ident during the week prior to July 1, 1918. The president referred them to Hoover, who wrote back, on July 8, a long ar- __ gument opposing the rec- % N Leaq . - ommendations of the commission that the rate of profits for the Big Five should be reduced, and declaring that if the principle for regu- latmg profits which the federal trade commis-' . sion recommended should be adopted as a pre- cedent, “it would produce an absolute state of panic in the United States.” 1. What was this rule which threatened to cause a panic? It was a rule that a corporation which borrows large sums of money to extend its business should not be allowed to make a big profit on this borrow- ed money, beyond the interest rate paid for it, but should be allowed a profit on the “net worth” of the business. Packer business was divided- into eclass 1, which included the meat business and its main by- products; class 2, including leather, soap, ete., using animal raw materials in quantity; and class 3, including poultry, butter, eggs, cheese, fresh and canned fruits and vegetables, cotton seed-oil, stock- . yard companies, foreign slaughtering companies, etc. On class 1 the Big Five were permitted to make 9 per cent on their invested capital and bor- rowed money; on class 2 the limit was 15 per cent; on class 3 there was no limit. Now, when the federal trade commission looked into the packers’ books,in the spring, of 1918, they reported to President earnings on net worth allowed under the present regulation, based on estimates, is: Class 1, 13 to 17 per cent, covering from 60 to 78 per cent of the packers’ investment; class 2, 24 to 34 per cent; ITS A BLESSING TO us ) THAT THE NONPARTISAN e ~—Drawn expressly for the Leader by Congressman John M. Baer. Above is Congressman Baer’s third cartoon in the series xllustratmg some of North’ Dakota’s new lq\vs, passed by the farmer leglslature. Many farmers in the state are thankful to the v'for !4 fig‘ protection they received in one of the most disastrous years in the state’s history. And many farmers, who believed the opposition’s lies and tefused to g come under the state msnranee, are now regretting: their gulllblhty. PAGE FIVE Wilson that “The rate of’ class 3, 28 to 42 per cent, excluding Armour & Co., excluded because their figures exclude foreign business. - “The average rate allowed on net worth for all classes'is about 19 per cent. “The packers’ estimated rate of profit for 1918 is from two to three times-their pre-war rate.” E. Dana Durand, adviser to the packers, -gave away the fact, according to testimony before the senate committee on agriculture, that the packers knew exactly what they were ‘doing when'’ they induced Hoover to discover a new economic “law,” that full profits must be allowed on all borrowed money that can be pumped into a business venture. He is testi- fied to have admitted that the way to hoodwink the public as to~ profiteering that the Big Five planned was to double up their real investment by loans, and announce that they must have the 9 and 15 per cent rate of profit on “total” investment. That wasg_the game they played. HOOVER URGED REPORT WITHHELD; FEARED “PANIC” ~ When ~Hoover read the federal trade commis- sion’s figures, showing how big was the loot the packers were carrying off in the midst of the war, he sent to the president his letter denouncing the “net investment” rule and talking about a panic. “T realize fully that in the discussion of this mat- ter, any sentence uttered that can be interpreted as in support of the profits of the packing industry ‘ A FARMER WHO STUCK subjects one to the charge of corrupt influence,” he wrote, “and, on the other hand, I rec- ognize the equally easy road to popularity through denunci- ation of -these profits. It is, however, our duty to separate the emotional aspects in these matters from justice and na- tional necessity to secure war results.” ‘And finally, HoovVer begs the issue by declaring that the ex- cess profits of which the com- mission complains can be tak- en back by the government through excess profits taxation! To this specious plea the commission answered, in a let- ter to the president: “We dis- sent from the theory of taking back 30 cents or 50 cents or 60 cents or 80 cents from a dollar improperly -taken from the . people as consumers, er from the government. It is attempt- ing to lift oneself by one’s bootstraps, and losing 60 or 50 or 20 per cent of the energy employed.” This warning was given the president in vain. He took Hoover’s advice, that the whole report be sup- pressed while congress should be considering action. The Big Five held their swollen profits. They were al- lowed, on their own showing of business done, to take as high as $100,000,000 in profits; they - actually took about $80,000,000 profits for 1918, not counting their forelgn business. : And they used many mil- lions of dollars of profits not shown here, as “expenses of operation,” to buy the support of the press of the entire Unit- ed States for their lobbying operations in congress and in the states. Hoover helped the packers. They got away with the loot in war time. Now the senate dis- with the presiden /t. But the senate does mnot~“recover the money for the people. / Mvmfmmu—mmmm s closes the methods he umed™ s . — 3 RIS PRTT ATy aR v }