Control of Profits

October 10, 1947

Report Outline
High Profits and the High Cost of Living
Rise of Corporate Profits Since the War
Relation of Profits, Prices, and Wages
Means of Controlling Business Profits
Special Focus

High Profits and the High Cost of Living

Probable Labor Drive for Share of Large Profits

Profits of American corporations, which have climbed to new heights since the end of the war, are attracting increasing attention in the search for a scapegoat for the mounting cost of living. The rise in corporate profits came into the limelight last winter when certain labor leaders contended that earnings were sufficient to permit a second postwar round of wage increases without increasing prices. Price rises nevertheless followed the granting of wage demands. If, as is now anticipated, labor bases demands for a third round of wage increases largely on the ground that it is entitled to a share of current high profits, the profit position of industry and its relation to the high cost of living will be subjected to close public scrutiny.

Even though government measures aimed at profits may offer little real hope of bringing down consumer prices, such measures may win more serious consideration in an election year than other counter-inflationary steps. Restoration of direct price controls would encounter formidable practical and political obstacles. Attempts to control profits also may not be practical or politically feasible, but corporate profits are apt to be a more popular target for attack than other elements of the cost-of-living problem.

Debate Over Renewal of Controls to Curb Inflation

In recent weeks restoration of price and other controls, on a general or limited basis, has been advocated by labor, veteran and consumer groups. On Sept. 25 C. I. O. President Philip Murray, in a letter to President Truman, urged an immediate special session of Congress to re-establish price control and “impose full taxes on extortionate profits.” Four days earlier the American Veterans Committee likewise had urged temporary reimposition of necessary controls along with “a vigorous campaign to expose profiteering.” And consumer representatives, testifying at hearings on prices now being held in various cities by subcommittees of the congressional Joint Committee on the Economic Report, called for renewal of price controls.

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Commercial Law