Evening star., 1947-12-04
Claims That Profits
Are Abnormal Finally
Answered by Industry
Conference Bourd Issues
Leaflets With Figures
From Federal Sources
By David Lavrence

dustry-until now strangely indif-
ferent to the distortion of economic
facts-have come some clear-cut
statements in answer to the propa-
ganda of the CIO and AFL and of
the Truman administration that
profits are abnormal.
The propaganda now is important
because the American people are
about to be subjected to demands
FOR a third round" of wage in
creases that can set off a chain re-
action and cause an economic COL
lapse in 1949 when the full effects
Of what may be done in 194s are
reflected in the price level.
There is limit to which prices
can go before the breaking point
comes, and the CIO and AFL
leaders seem bent on forcing the
issue to such breaking point. Their
main argument is that profits are
high and industry can stand the in
creases in wages. 1t seems not to
be question of whether wages are
adequate to meet living costs-for
prices have not risen beyond the
ability of wage earnings to meet
them. 1t is a question of whether
our economic system, that is based
on the principle of profit and loss,
shall be sabotaged by the use of the
strike threat at time when the
Nation cannot afford strikes or in
terruptions to much-needed produc-
ton.
Employers Aid Spiral.
Nor is it a question of employer
resistance. For the tendency of
employers in basic industries has
been to grant the wage increases
and send the prices upward to alb
sorb the new costs. In the end, the
whole spiral will bring economic
disaster.
Can reason be brought into the
debate which is so full of selfish
ness and emotion?
The National Industrial Confer
ence Board has just started publi-
cation of a series of leaflets giving
some basic facts on profits. The
conference board is a statistical and
fact-fnding body with headquar-
ters in New York City. 1t is sup
ported by the principal corporations
of the country. The new leaflets
are, however, merely a presenta-
ton of figures and data collected
by the United States Government
itself.
Thus, figures taken from the Com
merce Department records show that
American business derived after
taxes At cents out of the sales
dollar in 1916, as compared with So
cents in 1941 and cents in 1899.
Profits Cited.
The labor leaders point to the fact
that business earned $11, 900, 900
in profits after taxes in 1916. as
compared with $4,000, 100000 in 1899.
But this is due to the rise in cor
porate sales from 0.800, 900 900 in
1899 to $245, 100000, 900 in 1916.
Profits numerically are bound to
be larger when demand Is larger, but
out of those profits must come funds
to enlarge the facilities with which
to meet the demand for goods. Like
wise, the cost of construction, of
equipment, of everything needed to
enlarge facilities has risen per-
ceptibly. The profit dollar of the
corporation buys no more Or less
than the profit dollar of the worker.
Purchasing power of the dollar has
shrunk so that a profit dollar nu-
merically doesn't mean what the
purchasing power of the dollar
meant in 1889.
About 2.5 cents out Of the less than
cents per dollar Of profit margin
in 1946 had to be set aside by cor
porations, says the conference board,
for expansion of facilities "as an
offset to higher replacement costs OF
inventory, plant and equipment IN
present markets, or against un-
known contingencies" This ratio
was about the same as in l94l.
High Taxes a Factor.
Profit margins per dollar of sales
are shown, incidentally, to have
been substantially lower in 1946 than
in the years of rigid controls.
One lesson to be learned from a
study of the various tables Is that
the Government should not take
such a tremendous amount of money
in taxes. Thus, the profit margins
per sales dollar in 1946 were 7!9
cents before taxes as against At
cents after taxes. If there could
be substantial economies in the cost
OF Government, prices could be cut
and wages increased and profit mar
gins would not be materially
changed. Yet the labor leaders are
fighting tax reduction and urging
more and more Government eX-
penditures. The imitation spiral
cannot be broken that way
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