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From Labor Action, Vol. 5 No. 51, 22 December 1941, p. 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
One aspect of the war that workers need to pay more attention to is the millions of dollars going to the “profiteers” and war contract “brokers.” First we want to talk about the “profiteers” because Leon Henderson, price administrator, has been having some rather harsh things to say on this subject and he ought to know what the facts are. Henderson says that “profiteering has cost the government $50,000,000 extra since the war preparations began.” That is, preparations up to now for participating in the Second World Imperialist War have cost the government $50,000,000 in what virtually amounts to graft. The speculators got busy and have made a killing. Congress dawdled around for four months but finally got busy with plans to have labor make more and more sacrifices. While Congress was preparing to manacle labor, the “profiteers” raised food stocks in cold storage far above the average for the past five yearn Butter stocks were increased 40 per cent, cheese 47 per cent; poultry 34 per cent, beef 38 per cent, eggs 13 per cent, frozen fruits, 58 per cent, lard 86 per cent, pork 18 per cent and mutton 47 per cent. What this means is that the “profiteers” packed huge amounts of foodstuffs away in cold storage in order to create a “shortage” and jack up the price. Therefore, the higher prices that labor is forced to pay for food is the result of hoarding, speculating, gambling and graft. The government has done nothing about this racket. No more has been done up to now than was done during the last war.
A question to be asked is: who are these “profiteers” and speculators? Virtually all of the items in the list named are products that are controlled by the big packing companies: Armour, Swift, Wilson, Cudahy and a few others. Armour and Swift are by far the biggest. This hoarding job isn’t being done by little fellows. They don’t have the capital necessary to buy up, huge supplies and neither can they pay for the extremely high price of cold storage. It’s the big fellows that are doing this robbing and stealing and grafting on the government and the public. They control the packing houses and the cold storage plants.
This organization for the wholesale robbery of the working class has been going on right under the nose of Congress while the windjammers on Capitol Hill were busy thinking up new ways to strangle labor and break up the unions.
The capitalist press has been blaming rising prices on the farmers, while the manufacturers of food products say that the high wages paid to city workers are responsible. And so, business goes on as usual: the tax burden on labor is increased by the government, while the “profiteers” hoard food to create a shortage so that the “law” of supply and demand can operate to raise prices.
The “defense brokers,” sterling patriots, are getting theirs also. By “defense brokers” we are not referring; to the “dollar a year men” in the various government bureaus such as OPM. They are a “higher order” than the fellows we are talking about right now. We are talking about the fellows who prowl around the government departments in Washington who let the billions in contracts to private firms for war material and supplies. Their job is to use the prestige that comes from former connection with the government for the purpose of getting fat contracts for the private firm employing them; usually on a commission basis; If the “contact man” himself isn’t a former government official or employee, he knows someone who was.
Not only are these “brokers” operating with companies which get contracts directly from the government, but also with companies which are sub-contractors and do work for the companies that deal directly with the government. One machine company received $65,000 from the Remington Arms Co. for shell dies. This company deducted 5 per cent of the $65,000 for its “services” and sent the balance to a company that actually had dies to sell. The second company (the one which made the dies) took out payment for the dies and then gave up to 30 per cent of the $65,000 paid out by Remington to a “contract broker.”
Now let’s see what this means in hard cash. Remington Arms Co. put out $65,000 for shell dies for “national defense.” An alleged machine company which made no dies and was therefore only a “broker,” took $3,250 of this money. This company then sent the balance; $61,750 to a company which actually made dies. But the company which actually had a plant to make dies evidently couldn’t get the contract from the “machine company” without assistance. There was a man named Leon K. Shanack standing in the way whose mitt had to be greased. Shanack got around $18,000 for getting the contract for the company that made the dies. Now let’s see where we are. The dies necessary to make shells “for the fight against Hitler and to save democracy,” cost the Remington Arms Co. $65,000, but the cost of the dies themselves was only around $43,000. The other $21,000 was brokers’ fees; $3,250 to one brokerage-firm and $18,525 to an individual “broker.”
We assure any worker who reads this that none of this came out of; our head. It was all bared in the “investigation” begun by the House Military Committee on December 2 and reported on the front page of the New York Times of December 3.
The above however is small potatoes in the “brokerage” fees for getting “defense” contracts. The best story concerns one Charles West, who at one time was a big shot in the New Deal. In fact, in 1935 West was a “contact man” for President Roosevelt. He has also been a member of Congress, under Secretary of the Interior and a member of the Treasury Department’s processing tax board of review. In all these jobs West receivedi a salary of from $7,500 to $10,000 a year.
Evidently, West saw a chance to get fat off the spending the government was doing in preparation for war entry. He got himself a job as the “representative” of the Empire Ordnance Corp. This firm, according to West, has received $70,000,000 in war orders from the government since November 1940. Now West has brought suit against the company for $700,000 which he claims is due him as a fee for helping get the $70,000,000 contract through. (West began “working” for the company in November 1940.) He claims in his suit in a New York federal court that he agreed to serve as a “business consultant and adviser” for a fee of 1 per cent of any orders that the company would “accept” during the year. The question arises just why this big ordnance company needed the services of West in dealing with the government. Why couldn’t the officers of the company negotiate contracts with the government? What influence could West wield that was denied to the officers of the Empire Ordnance Corp.? Who were West’s “contacts” in Washington?
There is one other question that must be asked. West began his connection as “business consultant and adviser” to the Empire Ordnance Corp., a private business, in November 1940 but in March 1941 according, to the New York Times, “he received his latest appointment, being named to a three man board to study and report on the nation’s existing rail, water and truck facilities. His salary again was reported at $10,000 a year.” The Times doesn’t reveal from whom he received the appointment nor who or what was paying the salary. If it was a government board, and this is probably the case, then West was drawing a salary from the government at the same time he was representing a private firm as a “contract broker.”
These revelations made in Congress and in the capitalist press don’t show much “sacrifice” on the part of the bosses and their stooges. It’s only labor that gets a demand from the bosses and Congress to bend its back and pay for the war. They want a “ceiling” on wages, but not on profits. They are ready to outlaw the closed shop for labor but the closed shop for the war profiteers and “defense brokers” is passed by with a wink.
Ernest Rice McKinney Archive | ETOL Main Page
Last updated: 24.2.2013