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Frank Demby

Prosperity Around the Corner?

(August 1940)

From Labor Action, Vol. 4 No. 18, 12 August 1940, p. 3.
Table from p. 1.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

As usual, the important news is being buried by the capitalist press in the corners of their financial pages. While you and the average worker may be worrying about how to feed your families decently, how you are going to pay the rent and send the family on a much-needed vacation at the same time, while 9,000,000 (latest official figure) unemployed are still gazing wistfully at “No Help Wanted” signs; and, incidentally, while the Government is spending billions and billions of dollars on “Defense” and occasionally worrying about where the money is to come from, the big corporations of the country are raking in profits at a terrific rate – reminiscent of the boom days of 1929.

What? You didn’t receive your quarterly dividend check? The mailman must have mistakenly given it to your neighbor. Better check up on him tomorrow.

Just in case you belong to the 90% of the population who don’t own stocks and clip coupons for a living and the almost equally large proportion of the population who have never been educated to the importance of reading the financial pages, I’ve drawn up a few figures and comments for you to mull over in your mind after a good, heavy dinner (see box below).

That the corporations listed are by no means exceptions is shown by the fact that the first 100 companies reporting earnings for the first half of 1940, according to a compilation made by The New York Times, had an aggregate net income of $113,658,828 – or a net gain of 60.5% over the first half of 1939. An Associated Press compilation of the first 150 corporations to report for the second quarter of 1940 shows an aggregate net income of $168,902,000 – or a net gain of 39% over the second quarter of 1939. Excluding A.T.&T., the net gain becomes 52%. And this, mind you, excludes such great corporations as General Motors, which, during the previous ten (depression) years made over $1,000,000,000 net profit.

While, to quote The New York Times’ comment, “The tone of corporation executives’ letters to their stockholders, which accompanied the earnings statements, was predominantly optimistic,” union demands for increased wages have almost uniformly been met with a categorical “No!”

At the same time, activity on the New York Stock Exchange during the month of July declined to the lowest figure in more than two decades!

What does it all mean? First, note that the more corporations that are included, the smaller becomes the increase in the rate of profit. In simple English, this means that every year fewer and fewer of the great corporations are making more and more of the profits.

The Story of Steel

If further proof of this fundamental fact is needed, let us look more closely at the statement of U.S. Steel. One might think that with an increase of 1,743 per cent in profits there might be, if not a corresponding increase in wages, then, at least a substantial increase in wages, For the first half of 1940, U.S. Steel employed 242,144 workers with a total payroll of $198,871,911. For the corresponding period of 1939, the figures were 208,133 workers with a total payroll of $163,461,751. What are the workers bellyaching about, anyway, Mr. Stettinius and his successor, Mr. Olds, undoubtedly want to know? Didn’t we pay out over $36,000,000 more in wages this year?

Aside from the fact that these figures are for employees, which includes high-salaried executives, so that it is impossible to figure out the real average wage per worker, THESE FIGURES REVEAL AN INCREASE OF ONLY $40 PER EMPLOYEE. That is to say, by hiring a few thousand more workers, paying them an average of less than $7 per month more than they got in 1939, PRODUCTION WAS STEPPED UP OVER 94% OF CAPACITY AND PROFITS ROSE SKY-HIGH.

The story of U.S. Steel is symbolic and representative of what is happening in American industry today, and also what ails this country today. During the last decade, American industry has gone through such a tremendous process of rational lotion, introducing the most up-to-date labor-saving devices that very small increases in the laboring force and in wages result in tremendous increases in production and absolutely phenomenal increases in profits. Millions of workers are now permanently useless to the industrial process under capitalism. The recovery in profits is not only the story of the remarkable technical skill and efficiency of American industry but equally the story of millions of unemployed and even more millions trying to eke out a living on starvation wages. In other words, PROFITS ARE LITERALLY BEING COINED OUT OF WORKERS’ SWEAT AND BLOOD.

The recovery in profits is due to many factors, but the factor which dominates at the present time is the war. It is significant that the big profits are being shown by the heavy industries and the railroads. The U.S., following the example of Europe, has entered upon an armaments economy. What this means, I shall try to show in detail in subsequent articles. For the present, let me conclude by pointing out that the abnormally low volume of sales on the Stock Exchange in the face of these unusually high profits merely reveals that Wall Street is well aware of the fact that the “prosperity” in this country is based on the war and the continuation of the war, and during July Wall Street was unable to make up its mind whether the war was going to continue or not. Perhaps Messrs. Molotoff, Hitler, Churchill and Roosevelt will furnish them with an affirmative answer.

You Earned It – They Got It


Net Profits
First Half
of 1940


First Half
of 1939



United States Steel




Remington Arms




Republic Steel




Tidewater Oil




Glen Martin Aircraft








Minnesota Paper Co.




Atlantic Refining








Douglas Aircraft




Commercial Solvents




Libby-Owens-Ford Gloss




General Electric




Caterpillar Tractor








E.I. DuPont de Nemours




General Motors




American Telephone and Telegraph




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