Evening journal., 1917-02-16

udEg j. ltlos unQef Wnicn the net
profits arising out OF the manufac-
ture and sale of several articles
termed munitions are subjected 70
a tax OF 1912 per cent. in addition
to the regular income tax, which
was ae the same time increased from
per cent. TO per cent. Your COM
pany, in its accounts. has made pro-
vision for this tax in the item Fed
eral Taxes shown on the balance
sheet. This item includes the income
tax and the tax Withheld on account
Of income tax from salaries paid to
our employees This figure shows a
striking contrast with similar figures
for preceding years and equivalent
to approximately $50 per share on
the common stock, represents the
degree to which your company, and
a few others engaged in the manufac-
ture of munitions, are expected 70
contribute to the Federal revenues
out OF proportion TO taxes paid by
corporations not engaged i'm this par
ticular line.
your company proposes TO pay
this tax under protest and contest the
courts. but whether or not its efforts
in this respect are successful, IL is
obviously unjust that manufac-
turer engaged in particular line
should be deprived of one-eighth OF
the net profit resulting from con-
tracts entered into and partly per-
formed before the passage of the rev.
enue act, and therefore, beyond the
%.
er from the consumer.
Business Conducted Honestly.
"Your company's business has at
been, at all times, conducted honest
ly and in accordance with the law,
and the taxation of such business by
arbitrary selection Of certain lines Of
industry for special tax levy, with no
other basis for the selection OF such
industry than that some OF those en-
gagged in that line have prospered,
shows a trend in the exercise OF the
taxing power that can only result in
the encouragement Of pioneer enter
prise, where the risks involved neces-
state the prospect Of liberal profits.
This form Of taxation places the gov
eminent in the position OF conhscat-
ing a portion of the profits II the en-
ing the risks OF failure.
Your company has added TO it's
surplus during the year approximate
ly nine and one-hslf million dollars
this in addition to the payment OIL
dividends on the common stock to the
extent Of about seven million dollars.
What even the immediate future has
In store, II is not safe to attempt to
lot a.
who have been purchasing our pro-
ducts have brought their manueac-
turing facilities TO such point that
they are now purchasers Of raw ma
terials rather than OF finished NUM-
tions. AS a result. your company Is
forced TO pay higher prices for its
raw materials. and to accept lower
prices for it's products with exist
ing plants and an experienced organ
ization, the risk IS greatly reduced
and business can be accepted on a
much narrower margin of profit than
could have been considered eighteen
months ago.
Foreign Payments a Problem.
purchases made in this country
by foreign governments have reached
so large n total figure that payment
Abh AhANAHl RHANNdnth constitutes
quite problem, and II may be ad-
visable 20 accept deferred payments
to some extent in order to secure
further business on a profitable basis.
"Your company's officers will seek
to secure all the business that can be
handled probably giving duo con-
sideration to the many risks involved,
and the prospective profits TO be OBJ
tanned, and giving first consideration
TO the requirements OF the United
States Government, though this bus
mess usually carries a much narrow
er margin Of profit than would be ac-
ceptable on foreign business.
1T has been your company's poll
cy to distribute a large part Of the
earnings resulting from the sale of
explosives as extra divi-
bends, and this policy will probably
be continued to the extent its
earnings ore available as surplus
funds in excess of its prospective re-
quirements. Your company must.
however. maintain its finances at all
times in such a condition that il will
be able to proftably carry on what
ever business it may secure, to en-
able It to extend its business along
similar lines IL the opportunity ap-
pears. and to enable It to pass with
ease through the period OF readjust-
ment that must necessarily follow
the close OF the war. The quarterly
statements are a much more accurate
reflection OF the companys progress