War Babies

By-product of the boom in U. S. air-crafting is a sensational airplane plant building boom. At Paterson (N. J.) Curtiss-Wright's Wright Aeronautical Corp., flush with $7,000,000 of new Army business, got ready last week to build 300,000 sq. ft. of new floor space. In California --at Inglewood, San Diego, Hawthorne--North American Aviation, Consolidated Aircraft, Northrop, planned new buildings. Newest centre of U. S. aircraft's effort to reach the stature of a mass instead of unit producing industry is Detroit, where 27 companies have been officially approved as parts suppliers for war planes.

Last month The Iron Age reported from Detroit that Stinson Aircraft, having just taken $1,853,451 of Army business, was planning to expand its Wayne (Mich.) plant. Continental Motors Corp., at work (with RFC and new private money) on plane engines, was erecting two buildings at Muskegon (Mich.). A few weeks ago, Pratt & Whitney gave a green light to famed Detroit Architect Albert Kahn, who had blueprints ready on a Wednesday, received bids Thursday on 1,800 tons of structural steel for a plant in Detroit.

Latest Michigan entry into the war game is Hayes Body Corp., which has had a less than mediocre record since 1929, when it lost the job of making Chrysler bodies. Having just refilled its till with about $300,000 of new private money and $450,000 of RFC money, Hayes proposes to pay back this arm of the Government by selling to another arm--the War and Navy Departments. Its new lines: aircraft parts, ordnance, armored truck bodies. To help win a place on Assistant Secretary of War Louis Johnson's clubby suppliers' list, Hayes Body went last week and got a new president, veteran Munitions Salesman John W. Young.

Until a few years ago, Young, who could be taken for a missionary (which his brother Paul, who has occasionally cooperated with him, is), was making quite a thing out of the Latin American and domestic market for munitions. He was engaged in "Protection Engineering" as president of Federal Laboratories, Inc., whose sales zoomed during NRA days as vendors of tear gas and machine guns to corporations involved in labor difficulties. Senator Nye's Munitions Committee and Senator La Follette's Civil Liberties Committee both investigated Mr. Young. Choice reports to Young publicized by the Committees: from Missionary Brother Paul in Ecuador, "Indian work . . . needs a great deal of prayer. Yesterday I saw the Minister of War again and made arrangements to demonstrate. . . ." From a Los Angeles salesman, "I think someone should get out a restraining order on the President of the United States to prevent him from stopping all of these strikes."

By the end of 1937, Young, who considers tear gas a humanitarian substitute for bullets, was out of the spotlight. He was still President of Federal Laboratories, but Federal Laboratories had become the subsidiary of a much more obscure company. Name of its corporate parent was Breeze Corporations, of which Munitions Salesman Young became executive vice president, and a director.

Obscure were the origins of Breeze Corps., excellent its connections. Created in 1926 by Super-Salesman Joseph J. Mascuch (rhymes with "shoe"), who was formerly in the bumper business. Breeze established itself in Washington as an accepted supplier of aircraft parts to the Government (sales, 1927: $136,805; first nine months of 1938: $2,200,065). Adaptable and efficient, it succeeded also in getting an order for 12,000,000 lbs. of equipment for the stacks of the U. S. Government's Archives Building.

Not for long, however, did Breeze remain obscure. In March 1938 Breeze elected two other directors, representatives of a Wall Street group, headed by Securities Salesman John J. Bergen, which had sold Breeze common stock to the public. In August 1938, SEC slapped down a stop order, charged that Breeze had overstated the value of its patents and its future sales prospects, implied that such rapid expansion should inspire conservatism in the corporation's statement of its worth. After subsequent amendments, the order was lifted.

Early this year, 79 stockholders brought a stockholders' suit against the Breeze management, applied for a receiver for the company. They did not sue Vice President Young. Some of their more colorful charges:

1) That Mascuch told stockholders late in 1937, early in 1938 that earnings would be $1.50 a share; a 50-c- dividend was paid; but earnings were only 30-c- a share.

2) That Salesman Mascuch, whose salary was running at about $6,000 to $12,000 a year, had drawn $88,000 for "sales expenses" in that time without accounting for any of it; that the company was carrying him for an additional $21,000, other individuals for other loans; that it had guaranteed a debt of its subsidiary, Federal Laboratories.

3) That inventory in April 1938, after the merger, was overstated by about $72,000 because of the presence of items not in existence.

Last May U. S. Attorney John T. Cahill had Mascuch arrested on a charge of perjuring himself in a SEC hearing about his stock-selling activities.

Last week Vice President Young, who resigned from Breeze in July, went to Grand Rapids to start anew as a munitions salesman, hoped to make Hayes Body a regular contractor to the U. S. Government.

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