THE FACTS ABOUT PROFITS
The Facts About Profits RANDOLPH E. PAUL, who was until recently general counsel for the U. S. Treasury, lately wrote a series of articles revealing that Big Business is rolling up record-breaking...
...He showed that as a result of tax law loopholes and Government-granted concessions, corporations have gathered in the "largest profits in all history" and at the same time tucked away some $42,000,-000,000 in cash assets for future operations...
...Investigations in the past, although incomplete and desultory, have disclosed incredible shenanigans on the part of the Wall Street lords of finance...
...One of the worst hazards to a free and democratic economy is continued banker control of American industry...
...The results on that basis show that Mr...
...If these reports are true, and the Government is determined to go to the mat with the Money Trust, it constitutes one of the most welcome stories to come out of the nation'sycapital in many years...
...Mr...
...As our system now works an industrial enterprise is in hock to some powerful banking group long before any of its production wheels begin to turn...
...All other figures from U. S. Treasury Statistics of Income reports or U. S. Department of Commerce...
...There can be no doubt that we are badly in need of a thorough airing of America's whole rotten financial structure and a reawakening of our people to the necessity of a complete change in its methods of operation...
...Certainly no fair-minded person could dispute the essential soundness of this procedure...
...There is little hope that with the two major political parties in this country also in hock to Wall Street that a mere trust-busting campaign against the investment bankers will be productive of any lasting reforms...
...But the Department of Justice should be supported in its move, if for no other reason than that it may furnish sufficient educational material to bring the control of money and credit back into the hands of the people where it' has always belonged.ESTIMATED PROFITS BEFORE AND AFTER TAXES IN RELATION TO NET WORTH OF ALL CORPORATIONS IN U. S. (in millions of dollars, 000,000 omitted) Net worth Profits be- % of Profits % of Year end of year (1) fore taxes net worth after taxes net worth 1929 _________ 160,369 9,153 5.7 7,972 5.0 1930 ___________ 161,282 1,979 1 2 1,279 0.8 1931__________________ 141,585 725 0.5 129 0.1 1935 ________________ 138,931 2,407 1.7 1,672 12 1938 ________ 133,469 5,089 3.8 3,898 2.9 1937 __________ 141,634 5,173 3.6 3,897 2.8 1938 _ ____ 137,435 2,375 1.7 1,515 1.1 1939 __________ 136,863 5,320 3.9 4,088 3.0 1940 _________ 138,386 7,390 5.3 4,847 3.5 1941 _________ 142,000 (2) 14,498 10.2 . 7,331 5.2 1942 ________ 146,000 (2) 19,987 13.7 8,535 5.8 1943 150,000 (2) 22,817 15.2 8,963 6.0 (1) These net worth figures are not exactly comparable in every year due to changes in methods of reporting, but they are sufficiently accurate to show the trend, (t) Estimated...
...Certainly profit "margins" are bound to be lower on the fantastic total of war production, including that turned out by private corporations in Government-owned plants...
...Such an expose might well furnish the impetus for the discard of our whole outmoded system of private manipulation of money and credit...
...Thus, Frederick C. Crawford, chairman of the board of the NAM, has issued a "report" which "proves" that profits have "lagged behind normal ratios...
...The Facts About Profits RANDOLPH E. PAUL, who was until recently general counsel for the U. S. Treasury, lately wrote a series of articles revealing that Big Business is rolling up record-breaking war profits...
...This device, of course, is grossly unfair...
...Paul is ineontestably right and Mr...
...The table below, based on official figures, show that the profits after taxes of all corporations in 1943 amounted to about six per cent of the total net worth, or double the percentage in 1936 and about double that of 1939...
...Now, the National Association of Manufacturers is always alert to blast back at the slightest suspicion that the country's corporations are making any money out of the war...
...Most Wall Street institutions, including the National City Bank, use the fair and meaningful ratio between net profits and capital invested or net worth, which is the sum of capitalization and the surplus or undistributed profits which have been left in the business, in determining the extent of profits...
...Crawford completely wrong...
...Without investing one dollar of their own money, the bankers distribute the securities of the company at a handsome profit and then hold the business in eternal bondage by dictating who shall sit on the board of directors...
...The Department of Justice could make an invaluable contribution by a thorough and definitive expose...
...Welcome News IT IS REPORTED from Washington, although not officially confirmed by the Department of Justice, that the Government will soon launch antitrust proceedings against Wall Street investment bankers for what the New -York Times, with its magnificent talent for understatement, calls "alleged restraint of trade...
...Boiled down to one simple, essential fact, the table shows that while taxes took as much as 60 per cent of profits in 1943 and 57 per cent in 1942, the dollars profits after taxes in each of these two years were still the highest on record...
...Crawford and the NAM statisticians were able to arrive at this remarkable conclusion by tabulatirfg profits after taxes in relation to the gross volume of the business done...
Vol. 8 • October 1944 • No. 40
