U.S. At War: Wonderful Man

The Government and the people had made a tacit covenant that no one should profiteer from the war.

Last week the House Naval Affairs Committee began looking for war babies who might not have heard about the pact. It is necessary only to look at the quotations on the New York Stock Exchange (lowest in seven years) to see that business as a whole is not profiteering. But there are always exceptions. Certainly no party to any non-profiteering covenant, written or tacit, was Jack & Heintz, Inc., of Bedford, Ohio, manufacturers of airplane starters.

Plump Adelaide Bowman, who was only the boss’s secretary, testified that she had received $39,356 in salary and bonuses last year. In return: “I just work.” She took some worries off the boss’s mind, Miss Bowman explained, and added: “He’s generous and the most wonderful man in the world.”

President William S. Jack was generous. Starting in 1941 at $25,000 a year for himself, Mr. Jack got $145,854.23 before the year was out. His basic pay and the basic pay of son William Jr., and of Ralph M. Heintz (co-owners): $100,000 each. “We were only making sure that we wouldn’t go broke,” explained Mr. Jack.

No one went broke at Jack & Heintz. The assistant controller, who had left a $2,300 job got a salary of $4,800 and, to his “complete surprise” a bonus of $10,000 after less than two months. The controller got a $7,500 salary; with bonuses made $25,153.32 in 1941. Other employe bonuses, records showed, added up to some $600,000. Mr. Jack held monthly banquets, gave double-time pay for Saturdays. Last Christmas everyone got a wrist watch, a $2,500 insurance policy, and cash presents ranging from $100 to $600.

But J. & H.’s generosity stopped there. The company had received a $4,000,000 Federal loan to get started making airplane self-starters for the Army & Navy. But when the Navy asked it to reduce the price on a second contract, pointing out that J. & H. was now in mass production, J. & H. refused. Cost of making the starters, the company later admitted: $272. Price to the Government: $600. Profit per starter: $328. Revenue lost to the Government in corporate income taxes as a result of bonuses: $734,220.92.*

The company reported that its net profit was only 10%.

“. . . Disallowing exorbitant salaries, bonuses and similar expenses,” said dry, wry Committee Counsel Edmund Toland, “these profits would be about 100%.” He noted that the firm had invested $900,000 in defense bonds, observed: “They are buying Government bonds with Government money.”

Bill Jack, far from chopfallen, announced a new policy: a refund to the Government of profits above 6%; no more executive bonuses and no dividends for the duration.

*Actually the Government gets back a good bit of this in personal income taxes. On a salary of $145,000 (such as Mr. Jack’s) the tax is some $80,000. On a $39,000 salary (such as Miss Bowman’s) the tax is some $14,000. But J. & H., thinking of everything, this year was paying its employes quarterly bonuses to meet their taxes.