18 
LAND 6? WATER 
September 26, 1918 
« 
Profiteering: By Hartley Withers 
PROFITEERING" is one of the words whicli war 
has made familiar to many thousands of people 
who had never heard of it Ijefore. It is not one 
of those which the war has invented ; but its 
use was rare in old days, and was chiefly confijicd 
to those who thought that working for profit was an evil 
basis for society's productive and distributive activities, and 
wanted to introduce some new and better system of stimula- 
ting our energies. Since the war the word has come to mean, 
in the minds of most of those who use it, making an undue 
or unfair or unreasonable profit at the expense of the needs 
of the country, or of the general consumer, at a time when 
most of the things that they want are more or less scarce. 
The prejudice against such unfair advantage being taken of 
a world-wide crisis is a very natural and healthy one; but, 
unfortunately, it will be seen at once that the common defini- 
tion of profiteering contains a word or words which are very 
difficult to tie down to an exact meaning. Who is to decide 
as to how much profit is "unfair" or "undue" ? A rough- 
and-ready standard has been introduced by the provisions 
of the Excess Profits Dtity, which took pre-war earnings as 
the standard, and laid it down that anyone who earned any 
excess over that standard should be mulcted of a certain 
proportion of the excess which they should pay over to the 
State. This proportion began at 50 per cent., was then 
raised to 60 per cent., and finally to 80 per cent. The tax 
was based on a principle to which no e.xception could be 
taken — that is, the notion that when the best of our manhood 
is fighting for us or being trained to do so, it is not fair that 
those who are left behind in safety at home should be able 
to earn huge profits out of a war which is calling for such 
terrible sacrifices from the pick of our nation. But its 
application was unequal and so inequitable. It was not 
— for some reason that has never been explained — applied 
to professional men. Those who are doing the most useful 
work that can be done behind the firing line — that is, turning 
out the stuff that is needed for the war — have to pay the 
tax, if they are organisers or employers. On the other hand, 
professional men, such as lawyers, are let off scot free, though, 
owing to the many complications that arise in all kinds of 
business owing to the war, many of them have had an excep- 
tional amount of highly profitable work to do, and have been 
relieved of competition by the fact that the best and fittest 
of them have gone into the Army. Moreover, the tax was 
not applied to wages. It was not possible to do so because 
few, if any, of the wage-earners would be likely to have kept 
accurate records of their pre-war earnings. As every one 
knows, there have been in many cases quite sensational 
advances in the sums that wage-earners can make in the 
course of a week's work in war time ; and even when' we have 
set against this the accompanying depreciation in the buying 
power of money, the fact remains that profiteering — if this 
means earning more in war time than before it — has been 
by no means confined to the \Vell-to-do and employing classes. 
Thus, the attempt to apply an obviously sound principle 
and make it a practical basis for taxation has been haltingly 
and partially made, letting ofi many people who have been 
able to establish themselves on quite a different plane of 
livelihood owing to war profits, while taxing certain classes 
with a severity that is considered excessive by some of those 
who are best qualified to judge of its results. 
Causes of Unrest 
It is merely folly to expect ordinary humanity to behave 
like angels, because it cannot do so, and will not be able to 
for many generations, if ever. If it had been possible to 
enact, and make sure, that no one was to benefit from the 
war, the war's history, on its financial and material side, 
would have been a much pleasanter spectacle. But it was 
not possible, though much more might have been done by 
a more vigorous policy of taxation in the early years of the 
war.' As it is, the wage-earning classes have seen big profits 
made by employers and a large part of the war's cost met 
by loans raised at high rates of interest, and have come to 
the conclusion, which 1 believe to be incorrect, that the 
well-to-do classes have become richer owing to the war, 
in spite of the increase in direct taxation that has been laid 
upon them. This feeling accounts for much of the industrial 
unrest that has produced such unfortunate results in the 
way of bad time-keeping and strikes. 
fe« In America, also, the question of profiteering i^ attracting 
much attention. The August Circular of the National City 
Bank of New York makes some interesting observations on 
the subject. "Profiteering," it says, "is something readily 
denounced, biit not so easily defined, and all those who 
, discourse upon the subject have not demonstrated their 
capacity to judge of profits with practical sense and dis- 
crimination." A Federal Trade Commission has been 
calling attention to the heavy profit made by the "low cost 
concern" (that is, the concern that does its work cheaply), 
under a governmental fixed price, and apparently implying 
that these low-cost concerns are more or less reprehensible. 
The National City Bank points out that it is surely not a 
revelation to business men that low-cost producers make 
large profits under prices which permit hish-cost concerrrs 
to operate, "nor does it seem proper to single out Ihe low- 
cost producers for criticism. If, as is usually the case, their 
low costs are due to conditions which Ihey themselves have 
created, they are not responsible for the fact that prices 
are high ; they have done their part towards lowering them, 
" and they show the way to the others. If , all producers would 
do as well, prices would be lower. It is the low-cost producer 
who is rendering the best service to the public. He is the 
leader, the explorer, the path-finder, in industry. When he 
makes mistakes he bears the cost of them alone, and both 
his mistakes and his discoveries show the way to his less 
enterprising competitors." 
Inducements to Production 
"If," asks th^ same very practical critic, "a farmer, by 
under-draining and fertilising his land, gets 30 bushels of 
wheat to the acre instead of 15, and thereby reduces the ccst 
per bushel, is he under obligations to sell it for less than the 
growing price, and would there be arry public gain from 
having such a rule established ? " Obviously, if such a rule 
were established, and if whatever were the cost of produc- 
tion, the profit to be kept by the producer were'to be made 
the same, all inducement to reduce the cost of production 
would vanish, until a new race of human beings could be 
somehow developed which would, merely for the pleasure of 
working for others or for the State, put as much zest into 
their daily toil as they do now under the stimulus of earning 
higher profits or higher wages. That such a race may seme 
day be produced is quite possible, but until it has come info 
being it would evidently be very dangerous to assume that, 
as things are, it would be safe to take away the stimulus of 
profit and expect some other to do its work. The 
high rate of the Excess Profits Duty has had, in many cases, 
the effect of making those on whom it falls feel little inclina- 
tion to make fresh exertions and undertake new obligations, 
since the tax takes four-fifths of what they may make above 
their pre-war earnings. Among the wage-earners cases have 
been quoted of men who have limited their work so as not to 
earn enough to make themselves subject to income-tax, 
comparatively low as its rate is on small incomes. 
These facts are very relevant in view of the belief held by 
many earnest and sincere seekers after social reform that 
profit is a bad basis for the reward of human effort. Every- 
body must grant that the system produces many anomalies 
ana injustices, and that the reward of work done is largely 
governed by convention and habit, and often bears little 
relation to the benefit produced by the work. A scientist 
who makes a discovery that may save thousands of lives is 
likely to die poor ; the proprietor of a trashy newspaper of 
a kind that tickles the fancy of a sufficient number of ignorant 
people with pennies to spend will found a county family. 
These and many other evils of the system are obvious. But 
what is the alternative ? At present, every one gets the 
best price that he can for his work, and it is ultimately the 
fault of the consuming public and the state of education in 
the countrj', that the results of the system are so fault}. 
Should we be better off if the whole industry of the country 
was in the hands of the State which apportioned his reward 
to each worker ? Judging from the experiences of the war, 
mistakes and injustice, and consequent discontent and friction, 
would be at least as common as they are now. And if each 
were given an equal reward, whatever the extent of his 
exertion, is it likely that work would be done with the same 
energy ? It is possible that if each worked for all a new 
spirit would be created that would trahsform the outlook 
of every worker. But as things are it would seem to be 
extremely dangerous to rel}- on such a transformation until 
normal human nature has been raised to a higher 
plane. 
