U.S. WAR PROFITS

Nelson Evening Mail, Volume 76, 14 October 1941, Page 8

U.S. WAR PROFITS

BITTER STRUGGLE OVER TAXES , KOOSEVKI.T VERSUS WALL STRUCT A bitter political struggle between ! President Roosevelt and Wall Street 1 is being waged behind the .scenes at Washington to curb American war ' profiteering, which is last becoming ' a major scandal, writes Richard, j Hughes from Wa hington to the Mel- t bourne “Argo The fight, which:, revives Jill the fierce antagonisms of; i the early day of the New Deal, j I began with the refusal of the House j a of Representatives Ways and Means i Committee and the Senate Finance r Subcommittee to accept the Treasury 1 <• recommendations for heavier taxation of excess war profits. That initial reverse has not been accepted by the Administration.; which is now bringing strong under-! cover pressure to bear to reopen tax- < . alien proposals. 1 learned to-day I* that the situation is viewed soU gravely that Mr Morgenthau, Sec- c retary to the Treasury, will again j present his demands to the House Committee cither in the form of a l ' new Bill or as a rider to the General m Appropriations Bill as soon as the M, effects of Administration pressure can be appraised. Lobbying by big business interests , secured first defeat of the profits . taxation. Only most realistic, vigorous counter-measure by the Ad- ■ ministration will upset that deleat. . s The present situation is dangerou , ' even explosive. Defence profiteering is already making the last war look like ni national thrift campaign. Net profits j ( of most big industrial corporations L have risen by from 100 to 400 per L cent, in the last year. General Motors, for instance, was able to distribute 53,000,000 dollars in dividends alone j for the second quarter of 1941. an increase of 9.000.000 dollars over the! ( corresponding period of 1940. This! was after 39,000,000 dollars had been j l , paid in income tax. NUT PROMTS PUR WORKER Following figures show net profitsl • per worker employed by big defence , industries: U.S. Steel, 393 dollars per j ( worker; Telephone Telegraph Co., 725 dollars; General Motors, 973 dollars; Du Pont. 1393 dollars; Standard I Oil, 1620 dollars. These war profits'! are still rising and must continue to ' rise as the defence effort expands. Impudently overriding the earnest 1 recommendations of Treasury officials. I ' however, Congress finance commit-jj tees have rigged the scale of war! profits taxation in favour of corpora-L tions which have been earning big! profits in past, years. This has been! achieved by the ingenious provision j < that profits in excess of “necessary) normal return'’ on invested capital are not subject to excess taxation unless these profits also represent an increase over average profits in the years 1936 to 1939. The outcome has I j been that only 5 of 12 large integrated) steel companies, for instance, will be! subject to excess profits on 1940 in- j come although all companies have i received huge defence orders. Astonishing inequalities have followed the generous, warm-hearted . < granting of a minimum credit of <". > per cent, on invested capital. Mr 1 Morgenthau points out sourly, ‘'One! company whose 1940 profits were more than 3000 per cent, larger than , 1939 was not subect to excess profit tax whatever, and this is a company: which has thus far received more it than 7U.000.000 dollars in defence) I orders. "Another large industrial company; which has received more than 250,-: 1 000.000 dollars in defence contracts and had earnings in 1940 nearly 200' per cent, higher than in 1939 will also! , escape all excess profit tax.’’ WAR PROFITEERS ENCOURAGED By rejecting the Treasury’s recom- 1 mendations for a reduction in 3 per' > cent, credit on invested capital and! I for taxation of all profits above a ] stated percentage (regardless of aver-! age earnings in 1936-1939), the finance sub-committee have protected ! and encouraged war profiteers andi' passed up a chance of gathering increased lax revenue of 1,198,000,000 j , dollars more. This profiteering attitude is largely responsible for labour unrest. Union leaders are vigorously demanding ' their share of “pork.” War profiteer- i ing is also delaying desperately need- [ ed action to check rising prices, which 1 cannot be properly controlled unless I wages are also stabilised. And no union is going to consider wage- { pegging unless and until war profits .. have been pegged. Smooth, slick representative Jere Cooper, Ten- . nessee tax expert, and one oi the most effective wirepullers and fixers on Capitol Hill, is now working persuasively on Bob Doughton, burly South Carolina chairman of the House Ways and Means Committee, which tossed out the original antiprolitecring clauses. Treasury experts are also discreetly “exploring objections” of individual members of the committee, party leaders arc “exchanging ideas” with Congressmen: and Roosevelt’s pet columnists and newspaper kitefliers are organising a great blast of propaganda to sway Congress opinion. If these discreet methods of persuasion fail Roosevelt will not hesitate to use the big stick over the heads of rebellious Democrats. He is becoming increasingly impatient with snipers inside the parly. And he knows that he will have the country behind him in any showdown with Wall Street over war profiteering.