War Profits and Industrial Mobilization

February 20, 1937

Report Outline
Renewed Drive for Abolition of War Profits
Inquiry and Report of War Policies Board
Recent Promotion of War-Profits Legislation
Plans for Wartime Mobilization of Industry

Renewed Drive for Abolition of War Profits

Renewal of efforts to enact tax legislation to “take the profits out of war” was foreshadowed at the beginning of February, when Senator Nye (R., N. D.), chairman of the Special Committee Investigating the Munitions Industry, reintroduced the stringent measure formulated for that purpose by his committee two years ago, which was reported in modified form by the Senate Finance Committee on June 10, 1936. At the same time, Senator Connally (D., Tex.) reintroduced the version of the bill approved by the Finance Committee at the last session. While the war-profits tax sections of the two measures differ, the bills carry the same provisions for mobilization of American industry under governmental direction and control during a war emergency. Introduction of these bills was preceded by submission of other measures providing for industrial mobilization and for curbing war profits, but none contained the detailed tax schedules appearing in the Nye and Connally bills.

Legislation to take the profits out of war is being advocated by adherents of a mandatory neutrality policy as a measure calculated to reinforce the permanent neutrality legislation expected to replace the resolution adopted for a temporary period in August, 1935, and later extended for an additional period expiring May 1, 1937. Through a policy of arms embargoes and other restrictions on American trade with belligerent nations, they seek to reduce to a minimum the chances for involvement of the United States in foreign wars. And they hold that the possibility of such an eventuality would be still further reduced if it were known in advance that participation in the conflict by this country not only would result in no economic advantage to any section of the population but on the contrary would bring about reduction or restriction of virtually all profits and all incomes.

Efforts to Obtain Universal-Draft Law, 1922–1930

While war-profits legislation has recently been pressed as an adjunct of neutrality legislation, it has been advocated as an independent objective for more than 15 years. During that period the American Legion and other veterans' organizations have again and again urged enactment of laws to insure against repetition of the experience of the World War, when labor and industry at home reaped rich gains while men at the front were risking their lives for a pittance. President Harding in his inaugural address in 1921 discussed sympathetically the ideal of a “universal-draft” law. The movement to translate the ideal into legislation was given strong impetus in October, 1922, when the national convention of the American Legion adopted a committee report proposing a bill authorizing the President in time of war to draft labor, control capital and industry, and stabilize prices.

ISSUE TRACKER for Related Reports
U.S. Preparation for World War II
Aug. 22, 1947  Industrial Mobilization
Sep. 23, 1941  War Organization of the Government
Aug. 02, 1941  Daylight Saving
Jul. 24, 1941  Conservation of Strategic Materials
Jun. 27, 1941  Atlantic Islands and American Defense
May 27, 1941  Production of War Materials
May 21, 1941  Rearmament and Work Relief
Mar. 15, 1941  War Aims
Feb. 20, 1941  War Orders and Decentralization
Feb. 05, 1941  Regulation of Priorities
Jun. 03, 1940  Methods of Financing War
Dec. 27, 1938  American Rearmament
Feb. 20, 1937  War Profits and Industrial Mobilization
Defense Industry