PROFITEERING. This word came into colloquial use early in the World War, and, having been included in the title of an Act of Parliament in 1919, may be considered to have received official recognition as part of the English language. It signifies the making of an unreasonably large profit on the sale of goods or services, particularly those in common use. The practice has always been liable to arouse intense indignation among the public, and the word profiteer is a term of abuse deriving its sting partly from implied contrast with the word volunteer.
In normal times before the war, opportunities for making unrea sonably large profits were to a great extent restricted by the play of competition, and in fact competitive prices were widely regard ed as being prima facie reasonable. When competition was excluded, the possibility of unreasonably large profits being made was obviously increased, and there was a widespread tendency on this ground to regard monopolies with suspicion. Some industries which could not ordinarily be run on competitive lines, or which tended to become monopolies, were consequently carried on as public undertakings, or were controlled by public authority as regards rates and conditions of trading.
Before the war there had been a tendency for competition to be excluded to a greater or less extent in an increasing number of industries through the formation of trusts or combines. Though the selling prices fixed by such organisations were not in all cases higher than those which would have prevailed under competitive conditions, they were certainly higher in many cases ; while even when they were not, a feeling was apt to arise where large profits were being made that the trust or combine in question was taking for itself an unduly large share in the economies effected by the elimination of the wastes of competition. The belief that unrea sonably large profits were being made was undoubtedly the most powerful motive in the campaign for the control of trusts and combines in various countries.
Various measures were taken during the war to restrict profiteer ing, especially in belligerent countries. These included the fixing of maximum prices, and in some cases of profit margins at each stage of production and distribution. Rationing of prime neces saries served to distribute supplies evenly and to prevent them from being sold to the highest bidder. The weapon of taxation was also employed in the form of highly graduated income taxes, excess profits taxes, etc., to secure for the public revenue a sub
stantial part of the high war-time profits made by private interests.
As the result of inflation, profiteering was in some cases more rife after the war than during its continuance. Under condi tions of extreme inflation, such as occurred in Germany in 1923, profiteering became widespread. The rise of prices was so rapid that profits of hundreds or thousands per cent. could be made by holding goods even for a few days. That, however, was a profit in paper marks, and it was obvious that paper marks, while circu lating as currency, were entirely untrustworthy as a standard of value. The true position did not become clear until after a stable currency had been reintroduced. It was then seen that while a comparatively small number of persons had made and retained fortunes, a vast mass of people had been reduced to penury.