World War II

FROM THE TIME that Adolf Hitler began the campaign that led to the outbreak of World War II[Page 870] in Europe in 1939, most Americans realized that U.S. involvement was a distinct possibility. On Sunday morning, December 7, 1941, the Japanese attacked Pearl Harbor in Hawaii with a devastating loss of American lives and property. The following day, President Franklin Roosevelt asked Congress to declare war. From that time until the war ended in August 1945, the Unites States was in a state of emergency. The president believed that the burdens of war should be shared equally among the population.

While he was sincerely dedicated to eradicating profiteering during World War II, Roosevelt also used anti-profiteering policies to pacify isolationists who used profiteering as one reason for remaining neutral. When FDR sent legislation to Congress asking for increased military spending, it was usually accompanied by legislation for the “prevention of profiteering and equalization of the burdens of a possible war.” In October 1942, Roosevelt issued an anti-profiteering executive order limiting personal salaries to $25,000 after taxes except for movie stars and sports figures, but Congress repealed it the following year. Roosevelt considered and then discarded a 100 percent tax on excess profits. In order to prevent possible cheating in reporting excess profits taxes, around 6,400 federal auditors were employed to monitor tax fraud.

Roosevelt was determined to find ways to curtail profiteering without handicapping the American military. He knew that it was also necessary to differentiate between legal and illegal war profits, while rewarding superior performance in military production. The president charged the Office of War Mobilization with eliminating all illegal war profiteering in the United States. In 1941, the Office of Price Administration (OPA) was created and was given responsibility for preventing speculation, hoarding, profiteering, and price manipulation. Roosevelt believed that controlling wages, rents, and prices would curb inflation and serve to mitigate war profiteering. The chief task of the OPA, therefore, was to stabilize rents and prices and to oversee the quality of war-related materials. The national government used price controls as a major tool in anti-profiteering from 1941 until the end of World War II and pursued violators vigorously.

After price controls were put into effect in the United States, black markets sprang up almost overnight to provide Americans with goods that were rationed or restricted at prices that ignored legal price limits. Black market goods included meat, tires, gasoline, silk stockings, sugar, refrigerators, automobiles, washing machines, and radios. Because black market goods were illegal, no ration stamps were required to purchase them. The Roosevelt administration established severe penalties for black market activities that included injunctions, fines, and prison sentences.