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From Labor Action, Vol. 11 No. 12, 24 March 1947, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The industrialists, the same people who profited most from the war program, are getting most of the benefits from the sale of surplus war property by the War Assets Administration. In a recent three-month period, industrialists bought 59.1 per cent of the surplus capital goods sold, and 33 per cent ($282 millions) of the total goods sold. Veterans (most of them businessmen) picked up 23 per cent of the total surplus capital and consumers goods sold, or $201 millions. Wholesalers accounted for $209 millions. The federal government accounted for $52 millions, retailers for $42 millions, state and local governments for $22 millions, foreign governments for about $13 millions, exporters and UNRRA and unclassified for about $23 millions.
The National Association of Machine Tool Builders has had tough sledding since the end of the war. With the government offering billions of dollars of surplus machine tools for sale cheap, the tool builders’ market has contracted sharply. So the association has been conniving with its friends in the Army and the War Assets Administration, and has drafted a bill which will shortly be presented to Congress. It’s a lulu!
The bill calls upon the government to take 250,000 surplus machine tools in WAA stocks and place them into a proposed “defense reserve” for a five-year period. With these tools off the market, Sales of the machine tool builders would mount. Naturally, the association has the highest patriotic motives for urging the government to spend billions in this way. “The industry does not want to be placed again in the position of building enormous quantities of tools at a high cost to the government within a short space of time,” says A.G. Bryant, vice-president of the Machine Tool Builders Association.
In 1939 there were an estimated 1,000,000 machine tools in the United States. During the war years approximately 800,000 more were built; in 1942, the peak production year, tools amounting to $1,300 millions were built. Today production in the industry is running at $300 millions, compared with a pre-war average of $100 millions.
After a brief pause in January, commodity prices have again continued to climb, taking new bites out of workers’ paychecks with each upward step. Since the end of OPA controls, the price of cotton piece goods has risen 40 per cent. Rayon crepes are up 30 per cent. Lead prices have reached an all-time high of 14 cents a pound. The price of silver has gone up 5 cents an ounce in recent days. Textiles are up. Hog prices in Kansas City and Chicago have reached $30 a hundredweight, some $9.25 over the December 19 price which was the post-OPA low. Pork products immediately went up six cents a pound at the retail stores.
Federal Housing Expediter Creedon has authorized higher rents for apartments to be built in Chicago and New York, setting maximum rents of $30 to $32 a room. “The higher rents might be extended to other areas later,” he said.
Cotton prices, which plummeted last fall as a result of liquidation of the Jordan-holdings, are scrambling upward for the fifth week in a row ... The full impact of these higher commodity prices hasn’t reached the public yet. When it does, the pressure upon the unions to launch a fight for another round of wage increases will be irresistible.
The apologists for Big Business are hard put to justify such outrageous profiteering. They twist, and turn, and excuse, and lie. An example is a talk made by Dr. Jules Backman, professor of economics at New York University, delivered before a recent conference of the American Management Association in Chicago. The professor had to admit that there are some sectors of the economy where profits are large enough to permit wage increases or price decreases. (Actually almost all industries could do both.) “Where such situations prevail,” said the professor, “the national interest, as well as that of the company or industry affected, will best be served if the alternative of lower prices is adopted.”
The businessmen snickered at that one, and the next day the Journal of Commerce weekly index of 110 commodity prices hit a hew high. Backman of course attacked the CIO theory that a general 25 per cent wage increase can be paid without raising prices. In fact, he said, wage increases will mean higher prices – even though he had admitted earlier that industrialists could raise wages without raising prices.
The N.Y. Journal of Commerce, dropping all pretense that Big Business is going to be satisfied with present prices and profits, no matter how high, soothes us with the theory that “the country may be in for a final speculative whirl in commodity prices before supply and demand adjustments will cause prices to find a more normal post-war level.” This is the same paper that argued for the end of OPA on grounds that “supply and demand adjustments” would prevent price rises.
Never in history has business been so profitable as now for the Sixty Families. The du Pont de Nemours & Co. reports the largest per share earnings in its history for 1946, equal to $9.44 a share compared with $6.29 in 1945. American Tobacco Co. reports “a substantial increase” over the $3.69 a share reported in 1945, with 1946 dividends estimated at around $5.50. Profits of B.F. Goodrich Co. soared to a record high in 1946 and brought dividends of $17.69 a share, compared with $7.84 in 1945. United Fruit Co. reported consolidated net income of $39 millions for 1946, compared with $19 millions a year ago. Last year’s dividends totaled $6.46 a share on $2,925,000 shares. There was a 3-for-l split-up last May, and still each share earned $4.51 in 1946, so fabulously high were the profits. Goodyear Tire & Rubber reports earnings of $16.07 a share in 1946, compared with $5.87 in 1945. Here is a building materials firm, Celotex Corporation, of Chicago, with earnings up 400 per cent over a year ago. Here is National Distillers Corporation with a 239 per cent rise in net profits for 1946 over the previous year. And so it runs, through industry after industry.
The N.Y. Journal of Commerce realizes such profit reports don’t sit well with industry’s insistence on continuing to boost prices and to reject wage increases. “Special pains must be taken” to explain the situation to the public, the Journal editorializes. First the Journal points out that “the large profits are not excessive because they yield only a moderate rate of return on the capital invested.” But this does not always clinch the argument, continues the Journal. Present high profits “grossly exaggerate the true earning power of many a business, because of the 80 per cent rise in the commodity price level,” it states. Then, it is doubtful whether many industries can maintain present profits much longer “because competition is bound to increase.” Then, “current profits are not nearly as large as unconventional accounting methods make them out to be.”
The more the Journal tries to explain, the less it explains. Every argument they advance to justify the exhorbitant profiteering of Big Business can be advanced by the workers to justify sharp increases in wages. But this is just what the Journal fears. “It is altogether unrealistic to base wage policies upon a level of earnings that Is, at best, going to prove temporary,” it concludes. What would truly be unrealistic would be for the unions to lay back and fail to retaliate against the profiteering. Big Business has shown conclusively that there are no limits to its appetite for profits.
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