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The Commoner
3Uh?, 1918
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Federal Trade Commission Scores
Profiteers
A Washington, D. C, special to the Chicago
Tribune, dated June 29, says: Extraordinary
and indefensible profiteering in the necessities
of life and materials necessary to the conduct of
the war is the charge brought against nearly
all the great Industries of the country by the
federal trade commission in a report made to
the senate today.
The report was submitted in response to a
resolution adopted by the senate following Pres
ident Wilson's assertion that the government
possesses ample evidence of profiteering which
would warrant congress in increasing tremend
ously the war taxes on excess profits and indi
vidual and corporation incomes.
While congress is preparing to exact a heavy
tribute from the profiteers in the forthcoming
war revenue bill, the report of the trade com
mission and information derived from the in
come tax returns to the treasury may be made
the basis of legislation to prevent further mulct
ing of consumers on the necessities of life and
of the government on war munitions and their
materials.
HITS CHICAGO PACKERS.
x
The findings of the trade commission' on the
profits of the principal industries may be sum
marized as follows:
Meat Packing Profits of Armour, Swift, Mor
ris, and Cudahx of war years 1915-1917 aggre
gated $104,000,000, of which $121,00.0,000 rep
resents excess over any pre-war year's profits.
Flour Milling PrGfits of 52 cents a barrel,
or 38 per cent, on investment In first half of
1917 indefensible; many millers exceeding gov
ernment maximum of 25 cents profit a barrel,
profits running as high as 45 cents a barrel on
4,000,000 barrels investigated; many millers
exceeded government maximum in hope of pass
ing income and excess profit taxes to consumer.
Steel Enriched by profits without precedent ;
net earnings of United States Steel reached 24.9
per cent on investment in 1917, net income
reaching $478,204,343, and nqt profit after de
ducting income and excess profit taxes aggre
gated $244,738,908.
Leather and Leather Goods. Unusual profits
by large proportion of tanners; profits in 191G
being two, three, four, and five times as large
as 1915, when they showed an increase from 30
to 100 per cent over profits in 1914, some of the
big meat packers, notably Armour and Swift,
sharing in these profits.
Salmon Canning Average net profit of the
industry for 1917 was 52.8 per oent on the in
vestment, while some of the big packers allied
with the meat packers made more than 200 per
cent.
Canned Milk Unusual profits, running in
some cases as high as 65 per cent.
Copper Very large earnings by high cost
companies, reaching in some cases 107 per cent
on the investment, with an average of -24.46
cents. y
Sulphur Two companies monopolizing in
dustry have taken advantage of war situation
to raiSe prices, profits in -1917 aggregating 236
Per cent on the investment.
Petroleum and Products Average profits of
oil industry advanced to 21 per cent on the in
vestment as compared with 15 per cent in pre
war years. . .
TY1!Sal'"Low cost Producers of bituminous coal
prn .v!;ry large margins under system of gov
rnment fixed prices, while high cost -producers
wf, SmaU marSins, the bulk of production,
luweyer, enjoying the large margin; average
argin on bituminous between the claimed f.
beinpR?6 C0St and actual realization from sales
aPft 1 ,cents a ton as against a pre-war aver-
T,la,rgln o from t0 15 cents.
iumber Southern pine companies in 1917
allv ioJ Prfit of 17 per cent' considered unusu
Bomn 5eA,.as average for 1916 was 5.2 per cent,
e profits running as high as 121 per cent. '
duRtJ Zmc' nickel and west coast lumber in
WoYteerinl.'0 Cla8Sed by board as non"
CHARGES BAREFACED FRAUD
ProfitP?HCOmmission haa reason to" know that
steering exists," the report says..- "MvlqH
0 0
SOME OF THE-KEASOXS FOR EXIST
ING HIGH PRICES
Four meat packers netted $140,000,
000 profit in two war years, an excess
of $121,000,000 over pre-war gains.
One steel mill's profit was 319.67 per
cent. Others with furnaces averaged
100 per cent. The net income of the
United States Steel Corporation for 1917,
after deducting federal income and excess
profit taxes, was'$244,738,90S.
The average profit in the copper in
dustry was 24.4 per cent, against 11.7
per 'cent in 1913. The International
Nickel Company's 1916 profits were
$13,567,000, or 40 per cent.
Margins of profit in the coal industry
were, in a number of cases, "two or
three times normal." The leather in
dustry's normaL profits were multiplied
by four or five.
Flour mills averaged 3S per 'cent
profit.
The Borden Company and the Hel
vetia Company influenced canned milk
companies, the average profit being 65
per cent on investment.
The salmon industry's profit was" 52.8
per cent. New York World.
of it is due to advantages taken of the neces
sities of the times, as evidenced in the war
pressure for heavy production. Some of it is
attributable to inordinate greed andx barefaced
fraud." v.- '
The commission calls, special attention, to:
"The heavy profit made by the low cost con
cern under a governmental fixed price for the
whole country.
"The heavy profit made by the meat packers
and by those allied with them, and by the flour
millers.
"The trade tendency to increase and main
tain prices against the .forces of competition."
HARDSHIPS FOR CONSUMERS.
Summing up one phase of the situation, the
commission says:
"The experience with steel, flour and coal
shows that a high stimulating fixed price, while
stabilizing an ascending market, produces an
economic situation which is fraught with hard
ship to the consuming public and with ultimate
peril to the liigh cost companies through in-
creasing the power of their low cost compet
itors." In submitting the memoranda on profits the
commission expresses the opinion that general
trade is in a high state of prosperity, that with
some exceptions has continued for several years.
"Many of the industries are making unusual
profits, some are showing outrageous ones," the
report continues. "In an hpur of national ser
vice and self-sacrifice, .profiteering may be de
fined not only as the taking of an exorbitant
profit, but should include a refusal to share in
bearing the burdens of war in the form of a
reduction in profits when the profits have been
largo in pre-war times."
CLAIMS PACKERS .HAVE MONOPOLY.
The commission is particularly severe in its
discussion of the profits of the Chicago pack
ers. "The power of dominant factors in a given
industry in maintaining prices and harvesting
unprecedented profits is shown in a survey of
the m:eat packing situation," the report cays.
"Five meat packers, Armour, Swift, Morris,
Wilson, and Cudahy and their subsidiary and
affiliated companies, have monopolized the con
trol of the meat industries and are reaching
for like domination in other products. Their
manipulations of the market embrace every de
vice that is useful ta them without regard to
law - Their reward, expressed in terms of profit,
reveals that four of these concerns havo pock
eted in 1915, 1916, 1917, $140,000,000,
"HAVE PREYED ON PEOPLE."
"Comparisons between their present profita
and those in the pre-war period arc given be
low. However delicate a definition is framed
for 'profiteering,' these packers havo preyed up
on tho people unconscionably. They arc aoott
to come under further governmental regulation
approved by executive order. '
"An exposition of the excess profits of four
of tho big meat packers (Armour, Swift, Morris,
Cudahy, omitting Wilson as not comparable) la
given in the fact that their aggregate average
pro-war profit (1912, 1913, 1914) was $19,
000,000; that in 1915 they earned $17,000,U00
excess profits over the pre-war period; in 191C,
$36,000,000 more profit than in tho pre-war
period, and in 1917, $68,000,000 more profit
than in the pre-war period. In the throe war
years from 1915 to 1917 thoir total profits liavo
reached tho astounding figure of $140,000,000,
of which $121,000,000 represents excess over
their pre-var profits."
ADMITS JUGGLING FIGURES.
A member of the trade commission ndmllted
tonight that the report compares the aggregate
profits of the packers, $140,000,000, for tho
war years of 1915, 1916, and 1917 with tho
average annual profit of the packers combined,
$19,000,000 for tho pre-war years of 1912, 1913
and 1914, in order to show an excess of $121,000,
000 ovej' pre-var profits. He did not think it
unfair to compare the total profits for tliroo
years with the profit for one year. From tho
figures given in the report it is inferred that
the aggregate profits of the packers in the three
pre-war years were $57,000,000. If, then, their
profits in the last three years aggregated $140,
000,000, the three years'netted the packers $83-,-000,000
more, instead of $121,000,000 more,
than the three pre-war years.
PROFITS JUMP 400 PER CENT.
"These great increases in profits are uot duo
solely to increased volume of business," the
report continues. "The sales of these companies
" in this period increased 150 per cent, much of
this increase being due to higher prices rather
, than to increased volume by weight, but tho
return of profit increased 400 per cent, or two
and one-half times as much as the sales.
"The profit taken by Morris & Co. for tho
fiscal year ended Nov. 1, 1917, is equal to a
rate of 18.6 per cent on the net worth of tho
company (capital and surplus) and 263.7 per
cent on the $3,000,000 of capital .stock out
standing. In the case of the four other com
panies the earned rate on common capital stock
' i& much lower from 27 per cent to 47 per
cent but the reason for this is that these com
panies have from time to time declared stock
dividends and in other ways capitalized their
growing surpluses. -
"Thus Armour in 1916 raised its capital stock
from $20,000,000 to $100,000,000 without re
ceiving a dollar more of cash. If Swift, Wilson,
Cudahy, and Armour had followed the practice
of Morris in not capitalizing their surpluses
(accumulated from excessive profits) they, too,
would show an enormous rate of profit on their
original capital.
"Rates of profit earned by these five com
panies in war years compared with the pre-war
average, based on net worth (capital and sur
plus) and on common stock as follows:
"Actual profit on net worth, pre-war aver
age 1912 1913, 1914: Armour, 6.2; Swift, 8.3;
Morris, 6.8; Cudahy, 7.3.
"War average 1915, 1916, 1917: Armour,
14.6; Swift, 21; Morris, 13.5; Cudahy, 14.1.
'.'Year 1917: Armour, 16.8 r Swift, 26.7;
. Morris, 18.6; Wilson, 23.8; Cudahy, 18.7.
"Rate on common stock 1917 : Armour, 27.1;
Swift, 47.2; Morris, 263.7; Wilson, 42. 5'r Cud
ahy, 47.
"Foreign business not included, would un
. doubtedly raise percentages. t
i BOOST LEATHER PRICES.
"The independent packers, as measured by
results compiled for 'sixty-five of the largest of
them, earned during 1914, 1915, and 1916 a
rate of profits as high, or slightly higher, than
that earned by the big packers in those years.
The profits of these, independent companies for,
1917 are not as yet available."
The commission also accuses the packers of
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