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Susan Green

$600 Invested – $2 Million in Profits

Cost-Plus Pays Off for Profiteers

(7 October 1946)

From Labor Action, Vol. 10 No. 40, 7 October 1946, pp. 1 & 7.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The St. Johns River Shipbuilding Corporation of Florida parted to build ships for Uncle Sam with a capital investment of $600, on which pittance the corporation reaped a profit of $2,080,000. By quiz kid figuring, or any other, this is a yield of about 3,500 per cent on invested capital. Sweet indeed are the rewards to capitalists taking big wartime “risks”!

Spectacular as this rate of profit is, the amount of profit is only chicken feed. Nineteen shipyards that “risked” at most $22,979,275 of their own money, made a wartime profit haul of $356,006,612. Something like a 1,600 per cent profit on invested capital for these paytriotic shipyard operators, these merchants of death!

This happened – and it is not all, for wartime profits for all capitalists pyramided to a new historical high – right under the nose of that most idealistic of all presidents, Franklin D. Roosevelt. Perhaps the workers will recall that FDR made a pledge to the American people: “Our present emergency and a common sense of decency make it imperative that no new group of war millionaires come into being as a result of the struggles abroad. The American people will not relish the idea of any American citizen growing rich and fat in an emergency of blood and slaughter and human suffering.”

These words were only dust in the eyes of the people being mobilized for a war they didn’t want to fight. Mr. Roosevelt was too shrewd and worldly a capitalist and politician not to understand that World War II would – just as its predecessor had, only more so – make many new millionaires and turn millionaires into billionaires.

A little more proof of this wartime transformation was given at the hearing before the House Merchant Marine Committee, at which the Maritime Commission was exposed by the General Accounting Office of the government and from where come the above profit figures. You see, when the politicians fall out among themselves, the people get a few revealing facts.

Ralph E. Casey, representing the General Accounting Office, told the House Committee: “At no time in the history of American business, whether, in wartime or in peacetime, have so few men made so much money with so little risk – and all at the expense of the taxpayers, not only of this generation but of generations to come.”

And why not, according to capitalist standards of morality! The biggest war in history, the most soldiers wounded and dead, the most civilians killed and made homeless and diseased, the most cities demolished, the most war atrocities – then why not the most money for the fewest, by capitalist standards!

How was it possible to make such huge profits on such picayune investments, since modern industrial equipment for the production of ships costs a pretty penny? Well, there was good old Uncle Sam. Shipyard operators invested $22,979,275, or rather, as Marvin Coles, counsel for the House Committee, stated: “This money of the operators was the capital which they had available and was not actual investment in the shipyards themselves.” But let’s not quibble. On the other hand, for shipyard facilities which enabled the private shipyard operators to collect $356,006,612 in profits, yes, the government spent $424,250,694.

No wonder Mr. Casey testified that the taxpayers “not only of this generation but of generations to come” will be paying the bill – and that means us workers being docked each week out of the pay envelope.

Horatio Alger Kaiser

The testimony given before the House Merchant Marine Committee on September 23 revealed that the companies owned or controlled by Henry J. Kaiser and his associates made the most money on the least investment. The Kaiser companies, namely, California Shipbuilding Corporation; Kaiser Company, Inc.; Kaiser Cargo, Inc.; Oregon Shipbuilding Corporation; Permanente Metals Corporation and Walsh-Kaiser, Inc., had a total capital investment of $2,510,000, and made profits estimated at $192,237,284.

This seems to be a yield of about 9600 per cent. Henry J. Kaiser certainly did all right by himself out of ships in which American boys went to their death. Of the nineteen companies under inquiry, Mr. Kaiser’s group, with about one-ninth of the capital invested, took home more than one-half of the bacon.

Up for questioning before the House Committee, Mr. Kaiser, smart industrialist that he is, developed a convenient case of extreme ignorance about his companies’ affairs. “I don’t know,” was a stock answer. However, he claimed that his losses in his steel mill must be charged against his profits in shipbuilding. Funny he said nothing about his profits in other wartime projects such as aircraft, aluminum and the eighteen different industries he was engaged in. He protested that he was being singled out as a scapegoat and wanted to know why the Pew family, also engaged in wartime shipbuilding, was not being investigated. Why, not?

A New Theory

Kaiser also developed a new theory of profit, in his testimony. He thinks that profit should be figured on the basis of production and not invested capital. He said that on this basis his profits were “Less than one-tenth of one per cent of the total volume of work done for the Maritime Commission,” whereas General Motors netted 6.0 per cent on production and du Pont 12.7 per cent in 1945.

In this nice scheme for concealing real profits, what, Mr. Kaiser, becomes of the claim of you and your class that you are entitled to profits because of the “risks” you take in investing your money? As, indeed, what becomes of that claim when a $600 “risk” brings $2,080,000 in profits, and your own “risk” of $2,510,000 brought your companies $192,237,284 in rewards?

To the contention of the shipyard operators that they were being paid for “know-how,” Mr. Casey said’ it sometimes appeared that “the only know-how covered by government fees to shipyard operators for engineering and other technical skills was knowing how to secure a contract from the Maritime Commission.”’

Limit to Gullibility

During the hearing, an uncomfortable listener was Admiral Emory S. Land, chairman of the Maritime Commission throughput the war. It is reported That as his conduct of the commission was being assailed, he nervously rubbed his chin and stared into space. This is the same anti-labor Land who in October 1942 told a convention of investment bankers in New York that “As far as any (union) organizers are concerned, for the duration, in my opinion, they ought to be shot at sunrise.”

Between the Roosevelts and the Lands, and capitalist war, what else could the outcome be but, on the one side, the Kaisers, du Ponts, Pews, the merchants of death, with fantastic profit yields; and on the other side, ex-war workers and ex-soldiers without any savings, with a lowered standard of living because of high prices, facing a famine situation in meat and other foods, in clothing, and in housing.

And when World War III approaches, the war President will then also pledge to the American people that there will be no “new group of war millionaires.” But there is a limit to human gullibility.

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