The Dominion TUESDAY, AUGUST 1, 1939. REARMAMENT AND PROFITEERING

Dominion, Volume 32, Issue 260, 1 August 1939, Page 8

The Dominion TUESDAY, AUGUST 1, 1939. REARMAMENT AND PROFITEERING

In a speech at Folkestone a few days ago, Viscount,.Sainuel made some reference to excessive profit-making on rearmament, and recalled the fact that' the British Government had undertaken that the position would be strictly watched, and a. systematic effort made to prevent the national emergency from being improperly exploited. The Subject was also mentioned by the Government member for Eden (Mr. Anderton) in the Address-in-Reply in the House of Representatives on Thursday last. It may be recalled that the British Prime Minister expressed himself very strongly against profiteering when the Government's rearmament programme in 1936. Mi. Chamberlain has sincifreiterated his determination to check such practices as far as possible. In its White Paper of March, 1936, the Government announced that excessive profits would be limited by the regular inspection of the books of contracting firms, by adequate technical costings, by special Government audits, and by the setting up of machinery foi arbitration in the event of disputes. At the same time the Federation of British Industries set up a liaison committee to co-operate with the Government “and assist it in its determination that the needs of the nation shall not serve to pile up extravagant profits for those who are called upon to meet those needs.” It was clear that Cabinet and the committee intended to forestall a repetition of the Great War years, when large fortunes were made. ' One of the "Government’s moves to implement the decision announced in its White Paper was the inclusion in the 1937 Budget of a special 4 per cent, and 5 per cent. Profits Tax, with a duration of live-years (the period for which borrowing is authorized under the Defence Loans Act, 1937). Apart from this tax imposition, it has relied on the close scrutiny of armament contracts and the operations of manufacturing firms to check profiteering. Excessive profit-making arising from a national emergency is wholly deplorable, but, on the other hand, manufacturers are fairly entitled to adequate recompense for’vast extensions of factories and plant at heavy expenditure of capital to meet the demand for rapid production for such an emergency, as well as to provide against a future slackening of orders. The fairest test of profit-making is the average over good years and lean years.