Evening star., 1942-01-21
The Vinson Report

The Vinson Report
The fortnight language and the
evident impartiality of the House
Naval Affairs Committees report on
defense profits serve to enhance the
Importance and the value of this pre-
liminary appraisal of the early days
of Americas emergency production
program. The committee majority,
basing it's report chiefly on question
naires returned by industry and
labor, criticizes what it terms Eek
cessive and unconScionable" profits
by management on some naval con-
tracts and, at the same time, con-
demns labor unions not only for
strikes which have han1pered pro-
duction but for piling up "tremen-
dous financial gains" during the de-
tense period A minority disagreed
with the majority's findings regard
ing labor.
Some of the excessive and uncon-
scionable" industrial profits described
by the committee previously had
been brought to public attention. In
several instances contractors already
have agreed to renegotiation of con-
tracts and, on the basis of recalcula-
tions, voluntarily have consented to
return large sums to the Govern
ment. It was inevitable, in the first
rush of defense activity, that there
should be errors in cost estimates
and the committees report discloses
that these errors have worked to
the advantage of some contractors
and to the disadvantage of others.
Thus, while several cases are cited of
profits far above the maximum of
10 per cent regarded as permissible
by the Navy, other cases were found
where contractors made negligible
profits or actually suffered losses.
Viewing the situation as a whole,
the report stated that fifteen COM
panies which held more than $2,000,-
100000 of defense contracts averaged
2 per cent less than the 8 per cent
profit allowed under the original Vim
son Act, insofar as completed con-
tracts were concerned, while on un-
completed contracts the profits have
averaged 878 per cent. 1t is evident,
therefore, that the excessive profits
referred to by the committee were
the exception rather than the rule.
Moreover, as one manufacturer point
ed out, the profits cited in the report
do not take into account taxes yet
to be paid. The success of the rene
gotiation plan prompted the COM
mittee to recommend that provision
for this procedure be included in all
future war contracts. This seems to
be sound advice.
The committee properly criticized
labor for strikes which impeded pro-
duction in recent months. Strikes,
the majority declared. "have con-
stituted the greatest single cause
of delay in the defense program"
The effects of these strikes are still
being felt in some instances and will
continue to be felt. the report as
serted And to show that others than
employers profited from defense
work. the committee succinctly called
attention to the astounding picture
Of concentration of wealth" in the
treasures of big labor unions-a con-
dition In the past usually associated
only with management. The COM
mittee is thoroughly justified in sug-
gesting that Congress give careful
study to this hupe accumulation of
tax-free funds held by organized
labor. The committee also recon-
mends that unions, as we'll as other
special interest groups" be required
to register with some Federal agency
and supply full information as to
leadership, members and financial
status. It is difficult to see why this
should not be done.
The committee says that this re-
port is preliminary, but it contains
plenty Of data on which. to base
plans for legislative or administra-
tive action to prevent war profiteer-
ing by any group-whether of man
agement or labor The full story of
excesses will not be available, how
ever, until public hearings are held.