Why Kill the Goose: The Profit System (1955)

when our founding fathers established this Republic they created a political and economic system unique among nations a system which has led the United States to the very Pinnacle in wealth and in world leadership this series of programs is being presented to help all of us understand better our advantages under our American way of life for today's topic let's join now a group of young people at the National Education Program Workshop in Cersei Arkansas at the classroom lecturn is Dr Clifton El gayus Jr noted young history perhaps a number of you can recall the children's fable of the goose that laid the golden age eg a certain man had a goose that laid eggs of solid gold most fabulous of all the geese on the earth it assured its owner of more wealth for the necessities and luxuries of life than the possessor of any other Goose could even dream of and every morning the man would rub his hands in anticipation of the day's Golden Harvest but one day the owner conceived a brilliant idea why not get all of the golden eggs at once so he killed the goo but atas he found only a few half-developed eggs and the source of his steady stream of dated riches was destroyed the subject of our classroom discussion today is an element in our daily lives as important to all of us and our improving welfare as would be a goose that lays golden eggs we're going to discuss profit it's indispensable place in our economic system its immediate value to each individual Citizen and and its relationship to economic progress in our nation The Profit system in America is truly a goose that lays golden eggs that makes possible our abundance of so many of the material blessings of life for breakfast this morning I might have had cereal grown in Kansas and processed in Minnesota bacon produced on an Iowa farm cured sliced and packaged in Chicago homogenized milk from a dairy 50 Mi away way fruit juice from far off Hawai and eggs from an Ozark Poultry Farm this is a bigger and better breakfast than 90% of the world's people enjoyed yet you students know that a professor salary doesn't rank high on the economic ladder The Profit system with its incentives for achievement makes it possible for you and for me and for all Americans to have the advantages enjoyed by no other people under any other system the Socialist and communist and their fellow Travelers seek to undermine the confidence of Americans in their economic system they concentrate their major attack against profit and the profit system so let's examine profit our own self-interest in it and its function in American progress as you came in Jane I noticed that beautiful sweater you were wearing it looks like genuine cashmere from the Himalayas thank you Professor gayus but it isn't cashmere it's a new synthetic fiber softer lighter and warmer than cashmere if an imported cashmere sweater cost about $35 Jane would you mind telling us what your sweater cost well let's see it was $6.95 the company that made the fiber for Jane sweater spent several million dollars on Research before developing the chemical formula in the manufacturing process that made it possible and predy to get the several million dollars from profit yes from profit retaining the business to explore and expand and to develop new products it seems to me that Jane sweater with its beauty and excellence and its comparatively low cost gives us an excellent example of another value of the profit system profit in a very real sense is the fuel that motivates the Machinery of our progress providing us with better things for everyday living the opponents of the profit system center their fire on Corporation or business profits so let's take a closer look at these profits in the last year for which we have the official statistics of the Department of Commerce our national income was approximately $300 billion the net profit of all the corporations in America amounted to 5 and 9/10 per of the total income are about $17 b800 million and and here's the rest of the national income this big segment represents the personal income and taxes the tax slice incidentally was $90 billion or almost 30% of the total gross national income now let's examine this profit slice we find that a part of the net profit 9 and 910 billion was paid out in dividends to the stockholders can someone give us the figure on the number of stockholders with their dimes and dollars invest in American industry well I'd say a million and a half at least actually there are approximately 18 million stockholders so that the total dividend payment is wiely diffused throughout our population after dividends this slice is the amount that was plowed back into the business 2 and 60% are 7 and 910 billion to buy new machines to pay for research to develop new production methods and new products to expand the plant to help build new plants to make new jobs and to make the present jobs better and of special interest to the consumer public to make better products at lower cost like Jane sweater for instance we have been talking about the divisions in national income now let's have a look at profit from the Viewpoint of the sales Dollar in the last year for which we have official figures the annual sales of all the corporations in America total 58 billion 52 million now I would like to have some estimates as to the percentage of profit the corporations made on this volume of savings Professor gainus I'd say 12% I'd say 15 15% I'd say about 10% well on the $58 billion in sales The Profit after taxes total $16 b960 million 3 and 13% not 10 or 12 or 15% but 3 and 1/3 and we mustn't forget that frequently thousands of companies fail to make a profit rather they sustain a loss our syst might well be called a profit and loss system we can narrow our examination of profit still more by looking at the annual financial statement of one company I have chosen a big Packing Company dealing primarily in the processing of meat products here is the breakdown of its sales dollar this Big Slice 73 and 210 cents out of each sales dollar was paid out by the company for raw materials beef cattle Hogs sheep and so forth for this next Big Slice 13 and 1110 cents of each sales dollar was paid to employees and wages salaries and benefits shipping costs amount to 2 and 610 C supplies chemicals packaging and so forth cost the company 5 cents on each dollar one and 310 cents were nipped out by taxes plant maintenance and the other necessary surfaces for doing business cost 4 cents on each sales dollar that left in net profit this little sliver 810 of 1 cent here is a big packing company whose brand name is familiar all over the world actually making less than one penny net profit on each dollar's worth of product sold let's consider it this way if the profit margin of this packing company had been entirely eliminated a dollar's worth of meat still would have cost American housewife 99 a penny and profit from each 100 pennies of sales in fact a little less than a penny 8/10 a fraction of this packing company's profit Penny from each sales dollar was paid in dividends to the 65,000 stockholders with the other fraction company conducted a pioneering research program developed new and better products in a vast array tested and put into Operation new production methods install new Machinery kept the pace of keen competition thus improving the job security of Paul at 75,000 employees built new plans and created a host of new job opportunities each new job in American industry incidentally requires the investment on the average of $122,000 for Machinery plant working capital and so forth $122,000 for each job created with our growth growing population we must create nearly 1 million new jobs a year the big share of the money to create these jobs must come out of the profits of Corporations so we see how vitally important profits are how much they mean to every citizen how necessary profits are to every successful company and its employees and to a healthy progressing Nation we have learned that cooperation profits on the average are a great deal smaller than most people believe that the profit dollars are the profit pennies work in marvelous ways to produce material blessings for all Americans profit is truly the lifeblood of our progress the accelerator of the rising living standard In America which is the Envy of all the world our next discussion will be on freedom and security but for now fast dismissed the American Adventure series is a production of the National Education Program Cersei Arkansas Dr George S Benson director Dr Clinton Al ganus Jr was our instructor this is a continuing series based on the unique political and economic system which has made America great watch for the next presentation of the American Adventure