Controlling Wartime Profits
Tom Watson Sr. Reduced World War II Profits to Less Than One Percent
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Date Published: August 30, 2021
Date Modified: March 4, 2026 |
Keeping Profits Under Control during a National Crisis
During World War II IBM voluntarily limited profits on all government contracts to 1.5%. This money was placed in a fund for the benefit of the widows and orphans of IBM servicemen who lost their lives during the war. Watson Sr. also pledged to the government to continually reduce corporate costs and, if achieved, pass those additional savings on to the federal government [There is a great story in here that is yet to be written of a series of events between Watson Sr. and Henry Morgenthau Jr., the Secretary of the Treasury during World War II].
Tom Watson controlled his wartime wages as well as the profits of his corporation.
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In 1946 after World War II, Watson Sr. told his shareholders that IBM delivered all wartime products "on schedule and nothing was rejected because of poor workmanship with an average employee absenteeism rate below 3 percent." He went on to tell them that seventy-one per cent of IBM servicemen and women—by March 1946—had returned to work. He also emphasized that IBM had employed 455 World War II veterans who had had no previous experience with the company.
It was also noted—in the IBM statement—that Watson Sr. had voluntarily given up $1,365,582 in personal commissions by insisting on an agreement that set his maximum share of company income at a 1939 level before which there had been any munitions revenue. Instead, these commissions were used to create "The Watson Fund for Supplementing the IBM Retirement Plan" which was used by the IBM board of directors to supplement the IBM employee retirement plan placed in effect in 1945. The above information is provided to document the thoroughness of IBM's commitment to the U.S. war effort and supporting our country's men and women during and after World War II. Visually, the chart below is the only chart needed to counter anyone who wants to claim that IBM profited from the war.
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Tom Watson Sr. kept his corporation's profits under control - and his personal earnings.
IBM Revenues and Profits During World War II
