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FRIDAYY, DECEMBER 5, 1958

SUPER PROFITS BARED

_

Hit price gouge

by supermarkets’

OTTAWA—The efficiency of the new supermarkets has resulted in super-profits, not
lower food prices, Sam Walsh, Metro Toronto LPP organizer, told the Royal Commission Price
Spreads when he appeared before it.

Walsh, accompanied by Nelson Clarke, editor of the Canadian Tribune, was presenting
a brief on behalf of the LPP national executive.

The
grocery

emergence of great

chains, developing
super markets ‘is “a new fac-
tor of major importance in
increasing price spreads and
Walsh

raising food prices,”

charged.

While directing its main fire
against monopoly profits in
the retail distribution of food,
the brief emphasized the con-
tinued growth of monopoly
control in the processing in-
dustries.

An accompanying table based
on an analysis of profits made
by companies dominating the
processing field showed that
the shareholders’

the grain elevator group had

equity in

increased by 120 percent, in
flour
422 percent; in baking and con-
fectionary by 223 percent; and
in dairies by 118 percent.

milling companies by

The brief pointed out these

Profit rate of food chains
run as high as 43 percent

The 1957 financial reports of
the big chains show, these re-
markable rates of profits (be-
fore taxes) on invested capital,
according to Labor Facts for
October:

Dominion Stores, 41 percent;
Canadian Safeway, 43 percent;

Loblaws, 23 percent; Stein-
bergs, 25 percent.
These are extremely high

rates of profit by any standard.
The average rate (before
taxes) for 292 big corporations
in all industries was 16 per-
cent in 1957, according to a
compilation published by the

Financial Post last May.

The big food processors also
have their hand deep in con-
sumers: pockets. Canada Pack-
ers, for example, showed a
rate of return of 23 percent in
1957, while Canadian Brew-
eries was close behind with a
rate of 22 pereent.

It should be remembered
that these rates of profit are
calculated from the companies’
own published figures, and
do not take into account ex-
cessive depreciation figures
and other gimmicks which
have the effect of understating

profits.

In its recent submission be-
fore the Royal Commission on
Price Spreads of Food Pro-
ducts, the Canadian Labor
Congress demanded a_ probe
and “detailed knowledge” of
the financial status of the com-
panies.

The CLC submitted data for
50 companies including food
chains, dairies and food pro-
cessors. Profits before taxes, as
a percentage of shareholders
equity,’ averaged over 20 per-
cent. After taxes the profits
were 11-12 percent.

figures indicated that in ad-
dition to substantial dividend
payments, shareholders have
been able to accumulate huge
sums in undistributed profits.

As a result both the pro-
€ucers and consumers
heing “cold bloodedly gouged
by the food monopolies,”
Walsh’ charged.

He laid before the commis-
sion an exhibit’ of groceries

are

collected by a Toronto house-
wife.

Each item had a new, higher
price, pasted over the old
price. “You can’t blame this
on increased labor costs, or
on packaging,” said Walsh, “It’s
the same package, and the
only labor costs were in past-
ing on the new labels.”

The brief rejected any sug-
gestion that high food prices
are caused by too high prices
to the farmers, or too high
wages to the workers. It back-
ed the evidence alréady sub-
mitted by farm and labor or-
ganizations, asserting that the
food monopolies were. trying
to “create the maximum pos-
sible disunity and confusion
between workers and farmers,
who are natural allies in the
struggle against the big mon-
opolies.”

Walsh drew the commission’s
attention to mounting unem-
ployment in the country, and
to the fact that many families
are now cut off unemploy-
ment insurance benefits. At
the same time he pointed out
that the index for the cost of
food has risen more rapidly
in the last two years, than

the general cost of living in-
dex.

“High and still rising food
prices are driving down the
standard of living of the Cana-
dian people as°a whole,” he
said, “with tens of thousands
of unemployed suffering in-
creasing privation.

“In this situation, we must
condemn as immoral the
profiteering of the food pro-
cessing and distribution mono-
polies.”

The Labor-Progressive Party
as a socialist party, said Walsh,
was convinced that the final
solution to the problems of
price spreads lies in elimina-
tion of the profit system; “the
the food
industry, and the

nationalization - of
processing
ownership of all food distri-
bution outlets by the consum-
ers themselves, organized
through their

or in consumer cooperatives.

municipalitie$

As an immediate step, the
LPP urged the commission 10
recommend that all profits
over and above a reasonable
fixed return on capital actu7
ally invested should be taxed
away from the food processors
and distributors by the fed-
eral government,” thus elimi-
nating the incentive for thé
present rampaging drive for
super profits.”

Asked by the commissio?
what he would consider ‘“rea~
sonable” Walsh replied that
the LPP was asking the com
mission to accept this idea 1?
principle, and work out its
own recommendations.

ACTION ON UNEMPLOYMENT — Now! Shree
Hear Mona Morgan, Independent aldermanic candidate sda ee
PENDER AUDITORIUM SUNDAY, DECEMBER 7, — 2 p.m. DON GUISE. | 9

December 5, 1958 — PACIFIC TRIBUNE—PAGE °

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