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Notes of the month

The Truman and Vinson Reports

(February 1942)

From The New International, Vol. VIII No. 1, February 1942, pp. 5–7.
Transcribed & marked up by Einde O’Callaghan.

Several weeks have passed since the Truman Senate Committee investigating the war effort made its report. Washington was shocked by its disclosures. The press was startled, but only for a moment. The labor movement chuckled with an “I told you so” attitude, while big business denounced the “one-sided” nature of the report, charging that the senators had only a political interest in making their report. But it was only a matter of days when the Vinson Naval Committee tendered a report in which it was shown that industry was making “unconscionable profits” at the expense of the government. In the hands of a labor-hating chairman, this committee then proceeded to make the pernicious charge that the trade union movement, too, was making “unconscionable profits” out of the war effort.

Since the reports were made public the atmosphere has been cleared. The President’s action in appointing Donald M. Nelson completely in charge and personally responsible for the war effort was taken to ward off the growing criticism of the OPM, headed by the now deflated William Knudsen. Knudsen was promoted by being made a lieutenant general of the Army, in charge of war production.

The Truman committee investigation differs from past committees occupied with similar tasks in that its work and report came at an early stage of America’s participation in the war – not years afterward. Thus, it has the appearance of an intervention while “something can be done about it.” Its findings, in their general content, are not unlike those of similar congressional committees, after the last war. Wittingly or not, the Truman report substantiates everything we have said about the war effort since the conflict broke out in Europe in 1939.

Big business in America reaps enormous profits from the war program. It controls every major field of war production. Unmonopolized business, the small producers, are completely discriminated against by the representatives of the huge monopolies in charge of the OPM. Big business had so contrived matters, through its monopolistic stranglehold on production, as to artificially increase prices, create false shortages, control markets and hold up the government on contracts until its profit demands were met.

The Big Business Mind

All of this was accomplished, says the Truman report, because the giant monopolies controlled the OPM, and were aided and abetted by the “big business minds” in the War and Navy Departments. In hurling the lie at the manufacturers, who said that there are “no real profits in big defense contracts because of the heavy tax program,” the committee showed, as an example, that the three largest automobile manufacturers, Ford, Chrysler and General Motors, had aggregate profits for the first nine months of 1941, of $430,604,778, as compared with $408,212,589 in 1940 and $296,075,775 in 1939.

The Truman committee likewise disclosed that the copper, lead and zinc monopolies had withheld increases in production so as to obtain increased prices and larger profits. Despite this fact, the government subsequently signed contracts with these monopolies allowing a 42 per cent increase in the price of copper, 33 per cent in the price Of zinc and 62 per cent for the total production of these metals above the level of 1941! To complete this picture, the committee “observed” that these metal corporations enjoyed a 30 per cent increase in profits during the first nine months of 1941 as compared to the corresponding period of 1940.

In explaining the conduct of the dollar-a-year men who fill the offices of the OPM, the report says:

... the companies loaning the services of dollar-a-year and no-compensation men obtain other and less tangible, but perhaps even more important benefits. All important procurement contracts must be approved by these men, which means that contracts must conform to their theories of business. Since they represent the largest companies, this means that the defense program in all its ramifications must obtain the approval of the large companies.

It is only natural that such men should believe that only companies of the size and type with which they are associated (the big monopolies) have the ability to perform defense contracts; that small and intermediate companies ought not to be given prime contracts; that the urgencies of the defense program are such that they have no time to consider small companies for defense contracts; that the large companies ought not to be required to sub-contract items which they could profitably manufacture and as to which they express lack of confidence in the productive facilities of smaller concerns; that the producers of strategic materials should not be expected or required to increase their capacities, even at government expense, where that might result in excess capacity after the war and adversely affect their post-war profits; and that large companies should not be expected or required to convert their existing facilities into defense plants, where they prefer to use their plants to make the profits from their civilian business and, at the same time, to have additional plants directly or indirectly paid for by the government; which they can operate profitably on terms dictated by themselves. (Emphasis mine – A.G.)

But Nothing Can Be Done

This statement of the Truman committee explains pretty nearly everything one wants to know about the OPM. But what did this august body propose to overcome the situation? Only that the dollar-a-year and no-compensation men be paid by the government and sever their monetary relationship with their companies. A knobby proposal, indeed. The OPM men are not merely “representatives” of their companies; they are the companies themselves. On top of that, the committee already precluded any change to be accomplished by such a step when it declared:

The dollar-a-year and no-compensation men subconsciously reflect the opinions and conclusions which they formerly reached as managers of large interests with respect to government competition, with respect to taxation and amortization, with respect to the financing of new plant expansion, and with respect to the margin of profit which should be allowed on war contracts. (Emphasis mine – A.G.)

Nothing else need be said on this point, since the new director of the war effort, Donald M. Nelson, already said it. He is going to retain all the dollar-a-year men, because one cannot expect to obtain the services of such qualified persons by asking them to sacrifice (!) their private incomes for government salaries of about $10,000 a year! Nelson maintains that they are irreplaceable! Especially the private incomes!

The great objections of the capitalist press to the Truman report is that is generalized too much! It should have named names, said the press, for otherwise the report was in the nature of an indictment of capitalism! There’s the rub. Big business is ready to indict individual members of its class when there is a requirement for it, but be careful, they say, that in doing so you don’t indict the whole class and the profit system.

The Vinson Report

When this point was made, the Vinson Naval Affairs Committee came in with its own report on a specific aspect of the war program, naval construction. The section of the report dealing with profits was simple enough. It stated that big business had been earning “excessive and unconscionable profits” out of construction for an enlarged two-ocean Navy. Profits ran as high as 247 per cent on a small contract, 24.5 per cent on many large contracts running into millions of dollars, and that General Motors, Cleveland Diesel Engine Division, earned profits of from 12 to 27 per cent on fifteen separate contracts ranging from §1,000,000 to $18,000,000. Bethlehem Steel Co. earned profits of 20.7 per cent. In general, more than half of the contracts reported on showed profits in excess of 7 per cent, others 8.7 per cent, with the tendency upwards.

The real significance of this aspect of the report was revealed by Pearson and Allen, who disclosed that, in response to a House investigation committee questionnaire on profits accruing from naval contracts, arid in anticipation of the Vinson report, companies voluntarily (!) made refunds to the government in the amount of $27,000,000.

Having made its exposure of the greed for profits on the part of big business, the Vinson Naval Affairs Committee proceeded to couple the labor movement with big business, showing that it, too, had earned “fabulous profits” as a result of the war program. How? Well, the labor unions increased their membership, increased their dues payments and assessments and thus enriched themselves. This could not have happened without the war program. The reactionary, labor-hating members of the Vinson committee presented figures showing that the AFL, CIO and all independent unions had total assets of $82,594,939, an increase of 14.85 per cent from October, 1939, and this increase occurred despite liabilities of $18,103,878. These figures reveal that for every paid-up member of all the trade unions, the treasuries of these unions have $14 to pay a variety of benefits, cover expenses and carry on union work. Thus the committee concludes:

The tremendous financial gains made by labor organizations during the period of the defense effort and the vast amount of funds and assets in their treasuries, present an astounding picture of concentration of wealth, a situation heretofore usually associated only with industry and finance. (Emphasis mine – A.G.)

You may well ask yourselves: Are these people stupid, ignorant and vicious? Are they merely malicious? Or is there something more fundamental behind this insulting report? Consider the comparisons made by the intellectual giants comprising the House Naval Affairs Committee. The AFL, CIO, and independent unions with a membership of 10,000,000 workers who pay dues and assessments, have $82,000,000 in their treasuries, or an average of $8.00 for all members. The union movement has in its ranks one-fourth of the proletarian population of the United States, or 13 per cent of the entire population. On the other hand, big business represents an infinitesimal percentage of the population. The significance of the report becomes clear when one observes that in this monopoly dominated country, 200 out of 250,000 non-banking corporations possess 62 per cent of all corporate assets. Here are a few examples:

American Telephone & Telegraph Co., $5,385,000,000; Pennsylvania Railroad Co., $2,781,000,000; United States Steel Corp., $2,279,000,000; Standard Oil Company of New Jersey, $1,827,000,000; General Motors Corp., $1,313,000,000; Electric Bond & Share Co., $1,231,641,000; and Cities Service Co., $1,194,450,000.

These figures are several years old. The war has had the effect of increasing the incomes, profits and assets of giant corporations. These seven companies, out of 250,000, own between them some $15,000,000,000 in corporate assets! And the Vinson report has the colossal impudence to denounce the unions as “an astonishing picture of the concentration of wealth”!

The Aim of the Vinson Committee

The purpose of the Vinson committee is twofold:

  1. Divide the attention of the masses; make it appear as if everyone is guilty of utilizing the war program to make large profits, that labor is as guilty as business. This would steal the thunder of the workers and forestall demands for sharing in the profits of the bosses by showing that labor has already an unwarranted share; it would temper the criticisms directed against big business.
  2. Accomplish the passage of anti-labor legislation now pending in Congress, especially those which call for supervision of the books and finances of the unions.

Vinson, a poll-taxer from Georgia, is the sponsor of one of the most vicious anti-labor bills in the House. The committee’s counsel, Edmund Toland, was counsel associated with the Smith committee whose bill passed the House, and it is he who led the fight for repeal of the Wagner Act. It becomes clear that the main aim of this committee was not to indict profiteering big business but to push through the reactionary anti-labor bills in the House.

Thus we have seen two investigating committees report to the House and the Senate on the war effort. Neither report produced anything fundamentally new or striking. They permitted a little steam to be blown off. The culprits who have “hindered” the war effort were promoted. A new person has been put in charge of the war program. Big business, having been chastised but feeling less chastened, continues to enrich itself from the war. The working class, and the people in general, face more difficult times ahead with the prospect of a higher cost of living, greater taxation, inflation and rationing. A few senators and congressmen received national publicity which they hope will be remembered by the “peepul” at home in the next elections. And the President – he is blissfully confident of the future! Everything was taken care of in good stride.

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