The term “profiteering” refers to the act of making a large or unfair profit by sketchy means. An example of profiteering is pay-day loans, which typically come with exorbitant interest rates that make them difficult to pay back. The company offering the loan then makes an unfair profit because of their inflated interest rates. To explore this concept, consider the following profiteering definition.
Definition of Profiteering
- The act of making a grossly exaggerated or unfair profit.
What is Profiteering?
Profiteering refers to the earning of large or unfair profits. Profiteering is not technically illegal unless it involves committing a crime. For example, profiteering exists when companies manipulate their prices, or when those in positions of authority abuse their powers.
One of the most common examples of profiteering is a gas station increasing its prices when there is a gas shortage in the area. The gas station knows people need gas and are willing to pay whatever it costs to get it, so it raises prices to make more money. Profiteering, in a way, is like an extreme exploitation of supply and demand.
Types of Profiteering
There are two main types of profiteering: price gauging and price fixing. Price gouging is the act of raising the prices on goods or services to a level higher than that which is reasonable or fair. Price gouging, as one of the types of profiteering, is exploitative to the extent of being unethical, like the gas station example above, which takes unfair advantage of supply and demand to the extreme.
Price fixing is another of the types of profiteering, and is a way of controlling supply and demand. With price fixing, companies agree to fix their prices to maintain their hold on the market. In other words, different companies may price their products at the same high price so that people have no choice but to buy it at that price, and then everyone selling that product makes a greater profit.
War profiteering is the act of making a profit off a war by charging unreasonable prices on items needed during wartime. These items included necessary things like weapons and clothing.
The term “shoddy millionaires” became a derogatory term for those individuals who serve as good example of profiteering during wartime. These individuals practiced war profiteering during the U.S. Civil War, in that they sold uniforms to the Union Army made of shoddy recycled wool (not the virgin wool they had promised) and cardboard shoes.
This war profiteering meaning may sound like an ancient term, but individuals in recent years have accused organizations like Lockheed Martin and Boeing from making unfair profits during wartime.
History of War Profiteering
The history of war profiteering in the U.S. stretches back to the American Revolution, where people were constantly engaging in food riots against merchants who were profiteering from their wares. In fact, in 1777, a mob of women in Boston beat up a merchant and took his stock after they discovered he was hoarding coffee and sugar as a means of driving up the price of both items.
The history of war profiteering continued into the Industrial Revolution, which permitted the widescale development of weapons at a much faster rate. This affected Eli Whitney, whom individuals have incorrectly credited with the idea of interchangeable weapon parts.
This belief is incorrect because Whitney had received a government contract to make 10,000 muskets in a period of less than two years, and failed to produce even one musket. His defense in spending the monies was that he created interchangeable parts…which weren’t as interchangeable as he had claimed.
The history of war profiteering continues on to modern times, with the “military industrial complex,” coined as such by President Dwight Eisenhower. The term “military-industrial complex” describes the union between military leaders and weapons merchants.
Specifically, leaders try to get higher budgets so that weapons manufacturers can fill their orders and make a substantial profit. Some believe this encourages the U.S. to go to war even when the country can avoid it for the practice of making a profit on war materials.
Political profiteers often make their profits from taking bribes and doing favors, both of which are additional profiteering examples. Throughout history, political profiteers have taken bribes and favors from companies specifically involved with producing items for war.
One of these profiteering examples is Simon Cameron, Abraham Lincoln’s first Secretary of War. Cameron resigned in 1862 after the authorities charged him with corruption regarding war contracts.
Another of these profiteering examples is Andrew J. May, a former Congressman from Kentucky and former Chairman of the Committee on Military Affairs. In 1947, the trial court convicted May on charges related to taking bribes.
Modern-day political profiteers include those who have profited off the wars in Iraq and Afghanistan. According to USA Today, the top 100 largest contractors in 2011 sold over $400 billion dollars’ worth of weapons and services.
Profiteering Example In Burglary Scheme
One of the many profiteering examples that have reached a courtroom concerns the matter of State of Washington v. Kenneth Alfred Linville, Jr. (2017). In this case, law enforcement noticed an increase in the number of residential burglaries taking place in Thurston County, Washington, and that there seemed to exist similarities among the burglaries. Ultimately, the police tied Kenneth Linville to the robberies, and recovered from his home several of the items taken during the burglaries.
The police arrested Linville, and the State charged him with a laundry list totaling 138 crimes, including first and second-degree burglary, and trafficking. During the trial, a number of co-defendants testified for the State, identifying Linville as the scheme’s leader and organizer. The jury convicted Linville on nearly all of the charges against him and sentenced him to 914 months (about 76 years) in prison.
Linville appealed his conviction to the Court of Appeals of Washington, arguing that his lawyer did not do his due diligence in representing Linville. Linville believed his lawyer had failed to move for the dismissal of those offenses not related to “the pattern of criminal profiteering activity,” which stemmed from the charge of Linville’s leading organized crime.
Perhaps surprisingly, the Court sided with Linville, arguing that his lawyer did not, in fact, provide him with effective assistance of counsel. As such, the Court reversed the trial court and remanded the case, demanding the lower court to order separate trials on the separate issues against Linville. Additionally, the Court ruled that the State failed to provide enough evidence to support Linville’s convictions of first-degree burglary.
In the Court’s Own Words
Said the Court, in its Decision:
“Linville makes several additional arguments. He argues that (1) a conviction for the first alternative means of trafficking in stolen property cannot rest on accomplice liability, (2) insufficient evidence supported the firearm sentencing enhancements, (3) his constitutional right to a unanimous jury verdict was violated when the trial court instructed the jury that it did not need to reach a unanimous verdict with respect to the means by which it found him guilty of first degree trafficking in stolen property, (4) his 39 convictions for trafficking in stolen property violate his right against double jeopardy, and (5) the trial court erred by allowing the State to amend the charging information after it rested its case, Br. of Appellant 48. Because we otherwise reverse and remand, we do not reach these issues.”
Related Legal Terms and Issues
- Contract – An agreement between two or more parties in which they make a promise to do or provide something in return for a valuable benefit.
- Trial – A formal presentation of evidence before a judge and jury for the purpose of determining guilt or innocence in a criminal case, or to rule in a civil matter.