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ones are reaping the just reward of their foresight and cleverness. To the less fortunate they are just -profiteers.

Some recent instances of profiteering will illustrate what is meant. The profits of the United States Steel Corporation were, approximately, $23,000,000 in 1914; owing to the demand created by the War they rose to $150,000,000 in 1917. The Baldwin Locomotive Company's profits rose from $350,000 in 1914 to $6,000,000 in 1916; the Niles-Bement Bond Company from $35,000 in 1914 to $5,000,000 in 1916; the Allis-Chalmers Manufacturing Company from $25,000 in 1914 to $3,000,000 in 1916. A considerable number of fortunately situated corporations were able to pay dividends on their stock of over a hundred per cent yearly. Besides this, they greatly increased their reserve funds; the Steel Corporation, for example, in four years increased its undivided surplus from $135,000,000 to $193,000,000. In November, 1919, Mr. McAdoo testified before the investigating committee of the Senate to the existence of profits in the coal-mining industry running up to two thousand per cent on the capital stock. Indeed, the coalmines were said to be yielding their owners in 1916 a billion dollars in excess profits every eight weeks.

The point is that these profits resulted only in minor degree from increased production; in some cases production was actually less than before. They resulted primarily from increased demand. Where there is a virtual monopoly, as in the case of the Standard Oil Company, the Harvester Trust, the Tobacco Trust, or the Pullman Company, the price that can be asked is limited only by the possibility that consumers can do without the article. But experience shows that monopoly is not a prerequisite of "charging all the traffic will bear.” When a wave of high prices sets in, manufacturers and dealers who have what the public needs will raise prices generally, as if by concerted action. To be sure, a reaction is apt to follow, a wave of low prices, during which many manufacturers and dealers barely subsist, and many fail—to the more or less avowed satisfaction of the consumers who have resented the high prices! But one evil does not atone for another. Neither profiteering nor bankruptcy is desirable. And the net result of these fluctuations is, in general, the increasing concentration of production and selling in the hands of a class of capitalists, who, because of their monopoly, will be in an ever more favorable position for profiteering.

According to a recent report, the amount of profits exacted from the consumers by the sugar manufacturers and dealers in 1920 was in the neighborhood of $600,000,000-an average tax of $30 on every American family. In 1913 the margin between production cost and the retail price of a pound of sugar was less than one cent; in 1920 it was ten cents or more. Even in 1917, when the retail price of sugar was seven or eight cents a pound, the beet-sugar producers earned an average of about sixty per cent profit on their invested capital, while cane sugar producers earned an average of two hundred thirtyeight per cent on their invested capital. In addition to the profits of the producers, many middlemen and retailers have been shown to have made profits on sugar running up to a hundred per cent and more.

Much the same story can be told with respect to shoes, and clothing, and scores of other articles. The American Woolen Company, for example, was shown, in an investigation by the Department of Justice, in 1920, to be making profits running up to one hundred per cent and more. A case argued before the Courts in 1919 brought out the fact that a certain Brooklyn Cloak and Suit Manufacturer who could neither read nor write had within a few years amassed a fortune of half a million dollars. The five leading meat packers of the country, who pull together and have a practical monopoly of the business, are said to have accumulated $178,000,000 in net profits during the years 1915-1917. Their rate of profit was said to be about four hundred per cent upon invested capital.

One expert estimates that the corporations of the country received $4,800,000,000 more in net profits during the years 1916-1918 than during the three preceding years—which were by no means lean years. These excess profits would amount to a tax of $240 upon every family in the country. Another expert calculates that during four years the corporations of the country gathered in total net profits (that is, profits remaining after the payment of all their taxes) of $34,000,000,000. Not all of the corporations in the country made large profits, of course; on the contrary, many corporations, not in a strategic position, earned very meagre profits, or no profits at all. This immense sum went to those corporations that were in a favorable position to exact it. Besides the corporations, many individuals and unincorporated firms made fat profits. So that it is clear that a very large part of the total income of the country within the past few years has gone, in the form of "excess profits"—that is, profits beyond what is considered the normal rate of interest upon investment-into the pockets of a comparatively few corporations and business men.

Even the summation of frankly acknowledged profits by no means completes the tale. For there are other channels by which the rewards of successful industry are distributed. 'A large sum is retained every year for the expansion of business, or for a reserve fund, or to pay off bonded indebtedness. This results ultimately in increased profits to the stockholders. Again, the declaring of stock dividends permits a really very high percentage of profit to be disguised as a normal dividend upon the amount of stock outstanding. A great deal of the capital stock of the more prosperous' concerns is nothing but "water"; that is, it represents no money invested, it is simply a claim to an income from the industry.

To some extent these great profits accruing to the fortunate industries and to the owners of natural resources are distributed among a class of stockholders. But this is not a large class of people. And the bulk of the stock is owned by a comparatively small fraction of this class. The “insiders,” also, have usually been the ones to buy the stock at a low price and so to make a large profit on their investment, whereas the other stockholders are apt to get their shares only at an advanced price and therefore to receive a smaller return for their money. Another way in which the "insiders” can increase their share of the booty is by paying high salaries to themselves as officers of the companies. For example, the American Metal Company was reported recently to be paying $1,000,000 a year in salaries to six officers. A firm of Wall Street brokers, according to the testimony of its president, was paying recently nearly a million dollars a year for the salaries of its twelve highest officers and directors; the president and first vice-president receiving $161,000 apiece, and four other officers close to or above $100,000 apiece.

There are, of course, all sorts of methods of getting big profits in business--if one has a strategic position. Perhaps the most anti-social method is that of curtailing production in order to make the article scarcer, and hence saleable at a higher price. For example, in the winter of 1917, when the world was facing famine, a combination of middlemen who had bought up a large part of the potato crop allowed a considerable percentage of these potatoes to rot in the ground, because they could make more money if there were fewer potatoes on the market. So, when cargo space was desperately wanted and available tonnage was not nearly adequate, bananas were being dropped overboard outside of New York harbor, in order not to reduce the price of that fruit by glutting the market. For a long time during which many thousands of children and babies were suffering, and actually dying, for want of milk, in the city of New York, milk dealers refused to bring into the city some two million quarts of milk produced within marketable distance and even posted notices suggesting to farmers that they cease producing this surplus milk which they did not wish to distribute. Naturally the price of milk remained very high, and babies of the

poor died.

These are not very unusual occurrences. In the South there is a recurrent crusade yearly against the "overproduction" of cotton. The Rubber Growers' Association, in 1920, suggested to plantation-owners that they reduce their tappings of rubber trees so as to effect a twenty-five per cent reduction in the output of rubber. This would have the effect of keeping the price of rubber high. The consumers would suffer, but the rubber producers would make a lot of money.

Profiteering is, of course, not a new phenomenon.

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