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The toiler. (Cleveland, Ohio) 1919-1922, June 04, 1920, Image 3

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The Toiler
$1.50. I $1.00 Per Hundred I 75c.
Address all mail and make all checks parable to
3207 Clark Ave., Cleveland, Ohio.
Entered as Second Class Matter, under the name o The Ohio
Socialist, February 21, 1917, at the Post Office at Cleveland, 0,
Under Act of March 3, 1879.
EDITOR - Elmer T. Allison
Published Weekly by The Communist Labor Party of Ohio at
Cleveland, Ohio.
Telephone: Harvard 3639.
Proletarian Science History
An economic interpretation of history especially arranged for use as a
text-book for study classes, or for home study.
Copyright 1920. By W. E R.
Beirinninar Invention of the steam engine.
Tools and Weapons ...Hand tools, steam and power-driven machinery.
Subsistence .
(ireatlv improved fire arms and other ordinance.
On land, railroads with steam power. On water,
steam and improved sailing vessels.
Cooked and preserved foods of great variety.
Buildings of brick, stone, power-sawed lumber.
Beginning of use of concrete with steel frames.
Machine made fabrics of wool, cotton, silk, flax
.md other fibre.
Advanced machine agriculture. Center of in
dustry transferred from home to factory
Cities connected by railroad and steamship lines.
Man's control over natnral environment en
abled him to inhabit all climates.
Monarchical and representative political govern
ment, with armies, navies and police. Serfdom
and feudalism supplanted by a fuller develop
ment of the wages-system. Greater development
of trade and labor unions based upon craft
and skill. Beginning of the separation of
church and state.
Arts and Institutions. Beginning of wire communication. Postal service.
Public school system. Concentration in the
ownership of industry.
Civilization. Middle or Machine Age.
The middle age of civilization, bogan with the ap
pearance of the steami engine, invented bv James Watt
in 1763. A. D.)
The invention of the steam engine gave a mighty
impetus to the development of power-driven machinery
anld this machinery in turn substantially modified the
entire plan of our industrial and social relations. Tho
hand tools of a farmer age here gave way to the power
driven machines of the new era.
The difference between a tool and a machine con
sists in the method of the application of power. If the
power is directly applied, the implement is a tool. If the
application of power is indirect, then the implement is
a" machine. A scythe in the hands of the reaper is a
tool. The modern self binder is a machine.
Steam engines and power-driven machinery did not
develop by chance, but were the natural result of the
economic urge of the age. The multiplication of the race
in excess of the sources of local food supply made in
creased speed in the methods of production and transpor
tation imperative.
The rapid devekpiTKnt of the Western Continent
along agricultural and industrial lines, made necessary
the concentration of vast masses of people in cities in
order to supply the necessary tools and machinery with
which to carry on the settlement of a continent. This
gave an impetus to manufacture and transportation.)
The commerce between the cities of the coast and
the rapidly developing inetrior made the old hand-tool
methods of production and ox -cart methods of transpor
tation totally inadequate, with the result that power
driven machinery and transportation was an econmic
necessity. Power machinery forced out the shop of the
artisan and instituted the modern factory system.
In every age of human evolution, the methods of de
struction have kept even pace with the methods of pro
duction, hence in the machinery age we find guns of mon
strous power, range and destructivity.
The machine ago witnessed the application of steam
power to every branch of industry, especially to trans
portation on both land and sea.
The subsistence of this age was similar to the age
preceding it, with the addition of the canning factory
and the further development of the art of chemical pre
servation of food.
Concrete and steel frame structures were a further
evolution of the building art of this age.
Homespun garments gave way in tins age to factor'
made clothing, thereby greatly modifying domestic
The machine age transferred industry from the
homo to the factory. It took from the home such in
dustries as spinning, weaving, dyeing, knitting, tailoring,
soap-making, tanning, boot, shoe and harness-making,
laundering, baking, canning, fruit-drying, candle-making
The machine age worked a revolution in the home,
transforming it from an industrial to a social unit.
Factory production with its social labor led to n
groat concentration of wealth. The perfection and exten
sion of the wages-system led to the clearer division of
society along class lines.
The concentration of wealth with the resultant in
vestment of capital in foreign lands, made necessary the
extension of naval and military power for the protection
of these investments. Concentrated capital now invaded
tho halls of representative government, transforming
those organizations from bodies representative commit
tees for the dominant class. The tightening of the class
lines forced the development of labor unions, based upon
craft and skill.
War Profits of American Profit
When the coa! controversv was at its hi
former Secretary of the Treasury McAdoo stfl
the nation by declaring that in 191" the mine of
made shocking and indefensible profits on bitue
coal. He stated that their income tax returns rei
that thev were making earnings on their capital
ranging from 15 to 2.000 per cent and that ear
of from 100 to 'AW per cent on capital stock
not uncommon. Mr. McAdoo drew his facts regar
the profits of coal operators from Senate Document
No. 2o9. a report of the Secretary of the Treasury :n
response to a Senate resolution requesting all facts in
possession of the Treasury Department relative to
profiteering. Great objection to the printing of this
report was made by reactionary Senators, who wanted
to conceal these facts from the people: and only after
a hard fight by Senators Borah and La Follettt was
an agreement finally secured to print a small edition.
As the result of this partial suppression, tbia im
portant report, which should have been made avail
able ij every American citizen, has been obtainable
only with the greatest difficulty. In this article are
presented the startling facts which it contains.
In the publication of this report every effort
was apparently made to conceal from the reader all
facts which would reveal the profiteering of the
great corporations and trusts. The report contain
pages. In the first .'160 pages you will find not a
single corporation with more than $10,000,000 capital
ization, and very few with more than a few hundred
thousand; but beginning on page 361 you will find
all the big trusts for which reports are given lumped
indiscriminately with little corporations with capital
stock as smali as $1,000. An inconspicuous note on
page 5 states that the tables beginning at page 361
relate to returns on which computation had not been
completed when the preceding tables were sent to
the printer. Was it an accident that all the big corpo
rations were held back while the data on more than
30.000 small companies were compiled and sent to
the printer. Whatever the reason may be, the fact is
that any ordinary citizen examining this repo.-t
would be led to believe that all the profiteering was
done by the small companies. Some question might
also be raised by inquiring citizens as to why this
roport does not include the big copper companies
which in 1916 and 1917 made auch stupendous profits,
and why other notorious prefiteers were omitted. But
putting aside all such defects, the report still con
tains an enormous mass of information of the greatest
vadue to tho American people.
Profits in Coal
An examination of the report shows that Sec
retary McAdoo was entirely too conservative ,when
he stated that the profits of the coal operators
tanged as high as 2,000 per cent. He should have
said that the profits ranged as high as 7.856 per ?ent.
He stated that profits as high as 100 per cent on
capital stock were not uncommon. The fact is that
nearly half the coal companies ( 185 out of 404) act
ually earned profits on their capital stock ranging;
from 100 per cent to 7.S56 per cent. In other words,
the prices paid by the American people for their
coal in 1917 were so high that nearly half the mines
reported were paid profits equal to their entir
capital stock, and at least one of the mines was paid
profits equal to 78 times its capitalization.
It is a notorious fact that in many of the mining
corporations the greater part of the capital stock
represented nothing but water. The stock was given
as bonuses to the buyers of bonds, and nobody ex
pected that the stock certificates would ever be worth
more than a faw cents on the dollar. Nevertheless
we find ti nt in 1917 the net income of the 404 coal
companies reported was $78,000,000 or nearly 4j
per cent of their total capital stock of $175,000,000.
This net income is after the deduction of interest,
Oil bonds ar.d all the over-generous allowances for
depreciation and depletion provided for in the ex
cess profits tax law. Furthermore, these figures are
based on the original returns of the companies, an'l
take no account whatever of millions of dojU&s. of
tax evasions which were revealed by the lnte:nal
Revenue Bureau in auditing the returns.
Witt these facts before us, and making due all
owance for smaller profits in 1918 nnd 1919, it is
absolutely certain that it would have been cheaper
for the American people to have bought the coal
mines ci:trigl.t when we entered the war so that
eon could have been sold to the people at a low
c;at, than to have paid the enormous profits of the
last three years. To put the matter in a different
way, in the last three years the American people
have paid in ne' oprfits every dollar's worth of
stock of the coal companies.
Some Other Profiteers
The coal operators are not the only ones who
wore profiteering while this nation was at war and
every loyal citizen was paring his expenditures te
the bone in order to buy Liberty Bonds and provide
for the necessity of our soldires and sailors. While
the coal operators were making profits ranging as
high as 7.356 per cent on their capital stork, the
meat packers were making profits ranging as high
as 4.244 jer cent, canners cf fruits aad vegetables
Electricity was first applied to the systems of com
munication in the machine age. The telegraph and tele
phone systems came into existence in response to the
economic needs of a commercial age. The postal system
is also an outgrowth of these same forces. The operation
of the machines and the necessity for keeping records,
made the arts of reading and writing an industrial re
quirement. It was in response to this economic necessity
that the public school came into existence, championed
by organized labor and fought by the church. The church
has ever and everywhere been the foe to progress.
The duration of this age was less than one hundred
) The steam engine in its primitive state was known as early as
130 B.C. In the " Pnetimntiea" of Alexandria is mentioned th
neolipile, but it was not until the derate following its invention by
Watt that it became a commercial possibility.
) See page 13 of tho Communist Manifesto by Marx and Engels.
commencing with the words, "The discovery of America," etc. Read to
last paragraph on pngo 19.
Middle Civilization.
1. What invention marks the beginning of the machine aget
2. What was tho effect of power-driven machinery upon the
socinl structurel
3. Explain tho difference between a tool and a machine?
4. Name the underlying economic causes for the substitution of
mncbines for tools?
15. Name some of the changes in home life induced by the factory
6. What wa the economic advantage of tho railroad! The steam
and home.
7. Explain the difference in division of labor botweon the factory
5. What was the molt of the factory system upon subsistence?
9. Were "skyscrapers" pnssiblo before concrete and steel f
10. Explain the difference between homespun and factory made
11. What is meant by the term 'socinl ttnit'f
12. Wl.ich is more productive, individual or social lalorf
13. What is social labor!
)4. Explain the effect of concentrated enpitnl upon representative
15. Why do foreign investments require an army and navyt
16. Explain the origin of the public school system.
17. When was electricity first applied to communication f
18. Did economic necessity have anything to do with the exten
sion of postal system? ,
19. What Iiar been the attitude of the church towaris progressive
2 032 per cent, woolen mills 1,770 per cent, furniture
manufacturers 3,295 per cent, clothing and drv jjoo l
stores 9,826 per cent, and to rap the climax, steel
mills as hijfL as 2099 per cent.
A profit of 290,999 per oeut seems incredible,
hut here a.e the facts. This steel company (pag
?7 of the Treasury reports had a capital stock of
$".000; :& ;si; i( reported to the Troasurv Depart
ment net income of $14,519,952. After paying its
eress profits tax, its nt income ft ill amounted to
212,584 pe cent on its capital stock. This corporation
did not make any report of its invested capital
Owing to 'he secrecy which shrouds the income and
excess profits tax reports, nobody except the officials
of the Treasury and of the company itself knows
what companv thi was. No explanation of these
sensational facts can therefore be given. It mav
have ken a ease of getting a fat contract from
this government or some foreign government and
selling the right to another corporation for some
$15,000,000. The company may have been formed by
the inside officials and financiers of some big corp
oration as a means of concealing profits and plunder
ing the other stockholders. Nobody knows; but this
corporation did make this unbelievable profit of
290,999 per cent while this nation was at war; and
so far as I have been able to discover neither ths
Attorney Genera! nor any committee of Congress has
ever made any attempt 'to ascertain who this king
vf profiteers WSJ. This steel company did not stand
entirely alone, for there is another corporation
reported on the same page as earning 20,180 per
cent on it-: capital stock.
What Did the Steel Trust Make?
What profit, did the Steel Corporation, which
has denied Its workers the right to organize, report
tothe Treasury in 1917? I tried to find out. On page
.'(07 found a stcei company with n capital stoe';,
ef 4888,583,600. There is only one corporation in the
world with that amount of capital stock th,'
Doited States Steel Corporation. I thought I had
fcund it. 1 looked to see what net income it had
reported to the Treasury Department in 1917 and I
found the amount recorded as $155,854,568 before
the deduction of income and excess profits taxes.
This seemed incredible, as the net income before tho
deduction of taxes reported bv the corporation in
its published report was o4 78,204,342. It appeared
as though $322,000,000 of the Steel Corporation's
income was bcinsr concealed from Uncle Sam. It did
not eeem possible, so I went to the Secretary of the
Treasury and asked permission to see the return of
the United States Steel Corporation in order to veri
ly the facts. Section 5 of Treasury Dcision No 2016
states that the Secretary of the Treasury shall per
mit the inspection of the return of anv corporation
listed on the stock exchange. T was told by an of
ficial of the Treasury Department that this decision
was now in force nnd covered the inspection of
returns Yet access to the return of the Steel Corp
oration was denied me, and after a day's delay I
received a long memorandum, three pages of which
were taken up with telling me that althought this
was the only decision on the subject, it was rot now
in torce, having been modified by one of the later
revenue acts. The last paste of' the memorandum,
while refusing to state whether the facts which I
had quoted from the report of the Treasury Depart
ment applied to the United States Steel Corporation
or not, set up a hypothetical ease to explain how
this apparent discrepancy of $322,000,000 might
have occurred. It was stated that in the case of a
holding company reports of the subsidiaries were
made separately, and the only income reported by
he holding company was that accruing directly to it
1 before that this statement is corrected and that
t.ie Steel Corporation reported its income correctly
to the Treasury Department, bat neither nor any
other American citizen has anv means of knowing DO
ntively what the facts are. So far as the income and
excess pre fits taxes are concerned the Trearnry De
partment is an impenetrable veU through which no
citizen is permitted to see.
For this reason the net income of the teel Cor
poration c.-.nnot be stated on the basis of the Treasury
Department's figures; but on the basis if it, own
fiftftS To1,0-1' I? "1 l)ro,lt" in th two years
1016 and 1917, after the payment of interest on
bonds and after allowance for all charges growing
out of the installation of special war facilities
amounted to W88,M1.511. This is $20,000,000 mo
than he total capital stock of the Steel Corporation.
In Other words, In 1018 and 1017 everv dollar of ,!,e
capital stock of the Steel Corporation was paid for
m net profits. In tins connection it should be v
mem hcrod t,,at when the Steel Corporation was form
ed its entire $r,00.000.000 worth of common stock
represented nothing but water.
Ji t",,"''lt'"1 the returns of industries on
paged in manufacturing and selling the Drineinal
necessaries of life. Thrr, is not . .fajle one 'o h'."
ranches f ,ndustry and trade in which there was
n A at Ieasr one establishment making 100 per cent
or mow n its capital stock. 0t of 508 flour mills
capital stock, and one companv reported 8.628 nr
r at The 1 bread and bakery companies were not
quite so fortunate, but out of 27of thorn, 34, 0
more than ono-acventh, made more than 00 per
, 'Yapital 8,0ck' ln,, m or more than
two-third, made over 20 Per cent on their invested
The Story of the Packers.
The newspapers have carried advertisements ros
ing millions of dollars telling how little profit is
made by the meat packers. The Treasury Depart
ment's report., show that out of 122 meat packers,
.'0, or one out of every four, made more than 100
per cent profit on their capital stock. One of these
companies, rot one of the "Hig Five," made the
nice litle profit of 1,244 per cent on its enpital
stock in 1917. In this conned ion I discovered one
i.itercsting and significant thing while examining
this report of the Treasury Department. On page 305
I found a meat, packing corporation with a capital
Meek of $100,000,000 in 1017. There were only two
in; at packing corporations with capital stock of
$100,000,000 n 1917 Armour &. Companv and
Swift & Company, The corporation thnt is mentioned
rbove reported to the Treasury Department a nc
income in 1917 of 146.139,147; after the pt.vment of
income and excess profits taxes it still had a net
income of $.3,10,9S4. Looking at the published re
ports of Armour and Swift 1 find that Armour re
ported to the public, profits of onlv !'!0,fi28,157 in
1917, ami Swift reported profits of onlv $34,fi50.0n0.
1 do not know which of these companies is re
presented j.i the Treasury Deportment's report, but
1 do know that whichever one it is concealed from
iue public either $9,000,000 or $1,3,000,000 net income
which it reported to the Treasury Department. In
id her words, the Treasury Department's report ro
veals beyond question thnt one of these companies
has falsified its report to the public and to its
stockholders. Tf the public had the access to the tax
leporH to wMch it is entitled by every rule of
justice and by every precedent of the American
government, there would be no difficulty in ascer
taining Vbleh of these companies was guilty of this
offense. As i'. is both of then, must lie under su
spicion. While the war wns at its height and Ihe federal
government was bending every energy to sell Liberty
DOndl to pnv the henvy COtt the Federal Trade
Commission, in connection with its investigation of
Ihe pnekers, called upon Armour Company to
furnish a sworn statement of their subsidiary South
American beef companies. No reply was received from
Armour ft Company; but one morning Federal Tr.tdo
Commissioner 3, rranklin Port former governor of
New Jersey, received a visit from n noted Chicngo
corporation lawyer, lie said thnt he was there rep
resenting Armour ft Company and wanted Governor
Fort to use his influence with the other Federal
Trade Commissiorers to recall their demand for a
sworn statement of thje profits of Armour ft Com
pany's South American subsidiaries. He stated thnt
if they were obliged to mske a truthful and accurate
statement of such profits and if these reports were
made public by the commission it would result in
great increase in th" taxes, which the companies
would have to pay in South America, and further that
i' would reveal unreported income amounting to
millions on which Armour ft Company would have to
ray income and excess profits taxes here. Commis
sioner Fort indignantly spurned this attempt to use
him as a too! of Armour ft Company, and ordered the
lawyer to leave his office. The facts were reported
to the Treasury Department, hut so far as 1 have
1'een able lo ascertain no successful attempt has yet
heen m:de to punish .1. Ogden Armoir or any other
official of Armour ft Company for this confessed
attempt to defraud the United States Treasury of
taxes or for this bare-faced effort to induce govern
ment officials to defeat the ends of justice. A written
-Intement signed bv Governor Fort detailing every
I'iic.irastance of this transaction is on file with the
donate Committee on Agriculture, where it is effect
ively bnried under 1 wagonload of documents obtained
from the Federal Trade Commission at the same time,
M'hieh serve effectively to conceal it from the
Knowledge of tte public.
The Treasury Department reports give the re
turns of AS woolen and worsted mills, one of which
earned 1,770 per cent on its capital stock. Out of the
fortv-five, seventeen reported profits of more than
100 per cent- on their capital stock. Among the woolen
mills we also have a case similar to that of the meat
lookers, of concealment of income from the eyes of
tne public. On ,age 88(1 of the Treasury report is
flown the income of a woolen companv capitalized at
Sf0.000.000 So far as I have been able to ascertaia,
tbeie is onlv one woolen companv in the United
States capitalized at that amo,int the America:!
Woolen Company. The Treasury Department's report
shows that in 1917 this sixty-million-dollar woolen
ciuipany reported r.ct income of $28,560,342. The
aanual report of the American Woolen Company for
1917 shows a net income before taxes were deducted
of only $13,383,155. If this sixty-million-dollar woolen
sompany is in fact the American Woolen Company
aid the evidence seems to be conclusive it is clear
that the American Woolen Company in 1917 concealed
from its stockholders and from the public profits of
nearly $15,090,000. In other words, the actual profits
of the American Woolen Company in 1917 appear
from this comparison to have been more than twico
as great as the company acknowledged in its an
nual report and in its statements tot the American
Woolen Company have every reason to demand an
accounting from the officers of that corporation to
ascertain whether or Dot $15,000,000 of profits were
tctually concealed, as these facts seem to indicat,
and if so what disposition was made of that enor
mous sum of money.
It must not be imagined that manufacturers were
tho only ones who reaped enormous profits while
the nation was at war. The report of the Treasury
Department shows 2,008 clothing and dry goods stores,
one of which earned 9,826 per 'cent on its capital
stock and nearly 10 per cent of the tLtire -.lumber
earned more than 100 per cent on their capital stock.
Oat of 313 department stores, one earned 757 per cent'
on its capital stock, and 26 earned more than 100 per
cent. There are 577 furniture stores reported, of which
soventy-cigLt, or nearly 15 percent, earned 781 per
cent. We have heard a great deal about the high
cost of buildine in the last few years. In nearly everv
case an attempt is made to attribute the high cost
to the wages paid building labor, but this report
shows that cut of 809 contractors and construction
companies, 154, or more than 15 per cent, earned
profits of over 100 per cent on their capital stock,
and one of them earned 1,390 per cent, or nearly
fourteen times its capital in a single year,
War Profits Equal Capital Stock.
In a recent speech before the Senate, Senator
Capper of Kansas made the statement that during
the war the American people paid for the coal mines, "
the steel mills, the textile factories, and every other
essential branch of industry. Senator Capper did nit
give the facts vpon which his statement rested, an 1
d0,,bt lf no knew how literally true that sensational
statem-jnt was but the fa.-t is and this report of
the Treasury Department proves it beyond any doubt
that the Amen, an people during the war did pav
:n net profits for the entire capital stock of the cor
porations in the essential lines of industry and trade
In other words, it is clear that if the national
government at the beginning of the war had taken
over the essentia! lines of industry, and the American
f'e.1 Da 11 required to pay the prices which
F'lvate manufacturers ;.nd merchants have charged
them, th-rr would have been sufficient profit to pav
for every dollar a worth of capital stock, and leave the
nation today in possession and control of practically
a'l its manufacturing plants.
If this had I ten done, and the maanfaeturlni
Officials and employes had performed their duties
as efficiently for the government as for the private
v.rporitions-and every citizen has a right to assume
that neither 'he manufacturing officials nor the other
employes would deliberately sabotage their govern
"1;'.nwe hmM ve today, instead of a debt of
M,000,0W,m, ., lar,-e par, f which wont to pav
lor the products of these industries a debt of onlv
the bilhons aecossary to cover the expenses of our
government, the pay of our soldiers, nnd the loans to
our al bos. In addition we should have vested in the
federal government the ownership of billions of dol
lars worth of nnnufa. hiring and commercial property
This opportunity now seems to be lost, but the
pL''.!".re, ?f American profiteering revealed bv this
ofl.crn! document of the Treasury Department 'should
indelibly fixed in the mind of everv Americaa
citizen. '
Is without doubt tho finest and most intensely
interesting Labor story cvvr written. From the ac
count of his boyhood on his island home to the
accomplishment of his manhood's work in the labor
movement, you will heartily onjoy every page of
2 large volumes. $2.00 the volume.
Address The Toiler.
William C. Bullitt 's testimony before the Semite
C.MiniiiMor im i'.Mvkn U latum, . Contains much
valuable nnd interesting information about the at
titude of President Wilson and the Peace Conference
and why poace with Russia was denied.
bOc a copy
Address The Toiler.
By Ralph Chaplin
Kvi r worker should read the conspiracy of tho
lumber interests of the North Went to destroy tho
I. W. W. nnd how that conspiracy resulted in tho
tragedy at Centralia on Armistice Day.
50c postpaid
Address The Toiler.

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