Mr. HENDERSON. No. Mr. MILLS. Less than that? Mr. HENDERSON. Yes. Mr. MILLS. About $6,000,000,000 a year? Mr. HENDERSON. Yes. Mr. MILLS. This year we will possibly spend fifteen to eighteen to twenty billion dollars on defense, will we not? Mr. HENDERSON. Yes. Mr. MILLS. I believe you made that statement? Mr. MILLS. And these profits are likely to show a greater increase for 1941 over 1940, than they did in 1940 over 1939? Mr. HENDERSON. No; the increase will not be proportionate, because the increase represented going from a low level of production to a high level of production. Take the case of the steel companies, where you see it most accurately reflected. Their increase in profits came from the increased business and the lowered unit cost, neither of which will take place this year, because the steel industry is up to, or close to, capacity. Mr. MILLS. Was it in 1940? Mr. HENDERSON. No. Mr. MILLS. Well, there would be that much difference. Mr. HENDERSON. There would be some difference. But there is a bigger tax rate. Mr. MILLS. Ten percent. Mr. HENDERSON. Well, the amount that will be available as profit, if we assume a continuance of present production, would be just about the same maybe a little more, since it will be the difference between the rate of operation last year and this. Mr. MILLS. This list that I quoted from includes net profits of 2,590 leading corporations, representing 93.7 percent of all corporate income in 1939 and 89.2 percent of all corporate income in 1940. I have another bit of information on net profits in the first half of 1940 and of net profits in the first half of 1941, also taken from the National City Bank Bulletin. It is quite interesting to note here that of 19 automobile-equipment concerns reporting, the percentage increase in profit in the first half of 1941 over 1940 was 32.6 percent. That of 10 railway-equipment concerns, the increase in profit for the same period was 37.4 percent. That of 4 office-equipment concerns, the increase in profit over the same period was 40.4 percent, and so on. The only industry filing reports with the National City Bank that failed to show an increase in profits in the first half of 1941 over 1940 was the petroleum-products industry, which showed a 4.1 percent decrease in profits. All the others showed an increase. The 304 corporations reporting reported an average increase in profits for the first half of 1941 over 1940 of 20.4 percent; that is, net profits after depreciation, interest, taxes, and other charges-reserves but before dividends. Mr. Chairman, May I insert this in the record? TABLE 34.-Corporation profits1 [In millions of dollars] TABLE 35.-Profits of leading corporations for the half year1 [In millions of dollars] 1939 The net profits of 2,590 leading corporations reported after depreciation, interest, taxes, and other charges and reserves but before dividends. Represents 93.7 percent of all corporate income in 1939 and 89.2 percent of all corporate income in 1940. Source: National City Bank Bulletin, April 1941. Mining, quarrying, miscellaneous. Total.. 508, 672 1,518, 099 762, 743 67, 109 110,658 597, 261 3, 564, 542 1940 141, 070 12, 220 61, 915 42, 863 4, 664 830, 368 1,610, 279 896, 621 76, 211 209, 236 4, 252, 817 16, 377 8, 232 116, 701 20, 354 621, 387 2 8, 787 8, 389 652, 128 1941 $7,608 39, 194 9,088 10, 654 4,515 7,892 94, 021 135, 227 14, 807 126, 111 11, 519 47, 662 6,373 21, 204 11, 557 13, 051 125, 860 14, 293 29, 603 18, 119 748, 358 2 2,698 29.649 29,536 5,982 8, 317 784, 540 Percent change +63.2 +6.1 +17.6 +13.6 +89. 1 +5.5 +19.3 Percent change -4.5 +12.1 +11.8 +35.5 +14.7 +2.1 -4.1 +21.2 +52.9 +11.2 +36.6 +29.5 +-40.4 +37.4 +7.8 +32.6 +45.4 +82. 2 +20.4 +9.8 +2.8 +72.9 9 -. +20.3 1 Net profits are as reported, after depreciation, interest, taxes, and other charges and reserves, but before dividends. The National City Bank of New York Bulletin, August 1941. * Before certain charges. Mr. MILLS. It seemed to me, after I saw those figures, that possibly our tax system was not taking out of the purchasing power of the country enough of these excess profits going in from the defense program. That prompted my questions. You do not, however recommend that in this legislation we consider the question of regulating profits? Mr. HENDERSON. No. Mr. MILLS. You made a statement that you thought that was a proper subject for the Ways and Means Committee. You do recommend, however, that they make some further study of it? Mr. HENDERSON. I continue to make that statement, and I have said it at least once a day in these hearings. Mr. MILLS. Mr. Henderson, some of the members of Congress who have textile industries in their districts have suggested to me that in fixing a ceiling on textile products the ceiling should be fixed so that it fluctuates in relation to the variables that go in to make up the cost. Theoretically, such a suggestion might be sound, but I can understand the impractical side of the administration of it. You would not have in mind fixing that ceiling so that it would fluctuate from day to day or from week to week, or anything of that sort? Mr. HENDERSON. It would be a very difficult one to administer. If you had a situation where there were forces over which you had no control, and they were jiggling the price every day, you might have to approach it through the control of mill margins. I am hoping, as I said, for a flattening out at this level. As Dr. Galbraith said, we have a better balance in prices at the present time than we have had for many years, and I know just how much better off we would be if we could keep it somewhere near where it is now. Mr. MILLS. Mr. Henderson, there is just one question about the bill that I want to ask. It concerns section 205 (c), where the licensing power is provided for. I know you discussed this but, in reading that particular part of the bill, the thought occurred to me as to whether or not the administration needs any additional power in this respect. It seems to me we have almost enough on the books now, where it can put almost anybody out of business if they do not do as they should, through the S. E. C. and other governmental agencies. Mr. HENDERSON. I am glad you brought that up. If that is the case, how do you suppose they made all those profits if we are engaged inwhat was that phrase one of the gentlemen used on me the other daya wrecking crew? How do you suppose we got to the highest level of employment and production, this tremendous increase in profit, and tremendous increase in income generally? Mr. MILLS. Have you concluded that statement, Mr. Henderson? Mr. HENDERSON. Well, I can make a speech on that, if you wish. Mr. MILLS. I do not think we should take the time now. The time is getting late. You only intend to use this licensing power, as I understand from your previous testimony, to see that businesses conform with and to the regulations that you can issue under the bill. Mr. HENDERSON. That is correct. Mr. MILLS. Mr. Henderson, would the different businesses throughout the country be required to give you reports from month to month, or weekly, or twice a year, or yearly? Mr. GINSBURG. There is a regular reporting provision contained in the bill, but it is hard to make any generalization as to what you need. We have got reports in some cases, even now, under our scrap schedule, and I believe one or two of the other schedules. But unless you need current information, it is a thing to avoid like the plague, because it keeps on coming in. Mr. MILLS. What would you do if you had a man running a business under a license and you asked him to make reports every so often, and he does not make them? Would you take the license away from him? Mr. HENDERSON. I think we would talk to him. We would write him letters. I would send somebody around to see him. If the reason why he was not sending in reports was a particularly bad one, we might recommend a revocation of his license. Mr. MILLS. You could take his license away from him. Mr. GINSBURG. You have to put out a warning and a notice first and tell him that he has been violating the provisions of the license before you can even move against him. Mr. MILLS. I understand that. The reason I ask the question is that some of my folks have trouble enough keeping up with the 2-percent State sales tax, and I do not know whether they would be able to keep up with reports on food prices or not. And I would not want any of them to go out of business because they had failed to file a report. Now, Mr. Henderson, I appreciated the other day your very frank statements on the manner in which you intend to deal with any employee in your agency who, it would appear after investigation was made, might tend somewhat toward communism. I have no thought in my mind whatsoever of your being anything more than, I will say, a liberal, which I hope I am also. But in view of some things that appeared in the Congressional Record that have not been brought out here, I want to discuss with you, not yourself, but one of your men who apparently has either been unjustifiably smeared or else he is not entitled to work for any Government office. I want you to understand that I am bringing the matter up solely for the purpose of helping you to win the confidence-not you personally but your organization-because I think you have the confidence of the majority of the people; to help you bring about a confidence in those folks that are working for you, the people who are going to be contacted by those who come in and talk to you. You have a man on your pay roll, I noticed on page 476 of the hearings, of August 12, where you listed the employees of your organization who is listed as a per diem consultant, Mr. Robert A. Brady. You do not remember offhand what you consult him about, do you? Mr. HENDERSON. Yes. He is a consultant in the Consumer Division. He is consulted on standards. We have problems of simplification and the Department of Commerce has had a great interest in that, continued since the last war, but quite submerged in recent years. And in our part of the work, with O. P. M. and with the industries, he is working on standards. Mr. MILLS. Mr. Henderson, do you know anything about his background other than what you know about me, without knowing very ! much? Mr. HENDERSON. As I recall, he was in the consumer division of the N. R. A., and I think he has been employed by other Government organizations as a consultant over a period of time. I might say also that nearly everyone of these individuals who have been mentioned has been in and out of the Government service for quite some time. He is a professor from the University of California, and the University of California, I am quite sure, would not keep on its pay roll anyone identified with any activity seeking to destroy the Government of the United States. Mr. MILLS. The reason I am asking you this question is that in the June 25 issue of the Congressional Record, the gentleman from New York, Mr. Taber, talks about a book, The Spirit and Structure of German Fascism, by Robert A. Brady, and for fear that you might think I was doing your organization an injustice, I did not talk to Martin Dies; I got the book. I just wondered if this fellow that is working for your concern is the same Robert A. Brady who was associate professor of economics of the University of California. Mr. HENDERSON. That is correct. He is the author of that book. Mr. MILLS. Have you ever read it? Mr. HENDERSON. I think I ran through it in connection with about four or five others at the time it came out. Mr. MILLS. You do not agree with what he says in this book, do you, as you recall it? Mr. HENDERSON. I do not agree in toto with anything that anyone ever wrote in a book. I mean, I have never yet seen a book, outside perhaps of the Bible and I have a few reservations on a couple of passages in there that I would agree with in toto. Mr. MILLS. I am glad to hear you say that, because I do not agree with all the things I see in books. Mr. HENDERSON. And I never wrote a book myself, either. Mr. MILLS. This man makes this statement, on page 327 of his book, and it is quite interesting to me: In the changed modes of life which the industrial system has compelled, and under which increasing masses of people are herded together within the confines of giant cities, the old security reserves of family and return to the land are denied to all except the occasional few. There is nothing left for those who remain except idleness, privation, and the charity dole. Nothing else except revolt. I am just wondering if you know him well enough to tell me what he meant by that. Mr. HENDERSON. I have not seen him since he has been back in town. Let me say this. From what I know of Bob Brady-I know of his earnestness and his attempt to be a scholar in his profession and attempt to report things as he sees them-I think he would not feel for a minute that he was acting other than as a qualified observer of conditions in making a statement. My guess would be that if he were going to advocate a revolt, he would not put it in a book. He would not put it in a book that is difficult to read. Mr. MILLS. This is not difficult to read. Mr. HENDERSON. Well, it is difficult for people to buy who are going to attempt Mr. MILLS. You cannot buy it. This is issued by the Left Book Club. It says Left Book Club Edition, not for sale to the public. It would be impossible to buy it. I just happened to stumble on to this copy, and because of the fact that it was not for the general public, I just wondered what he meant and to whom he was addressing this book. Mr. HENDERSON. The book was published. I know I bought it. I did not buy it from any Left Book Club either, or anything like that. Mr. MILLS. Mr. Henderson, do not think that I am criticizing you. I want to say this to you and to the other members of the committee. I think you are intensely patriotic. There is no question, not one iota, |