davidaulloa/AmericanStories huggingface dataset:
New-York tribune., 1918-08-04
Must File Dormant
Capital Tax Return
Collector Edwards Makes a
Statement to Clarity Levy on
Undistributed Profits

william IA. Edwards, internal rev.
enue collector for the Second or Wall
Street District. yesterday gave out a
statement to clarity the new tax on
undlstrfbuted profits or what Is known
as dormant capital. Blank forms,
known as Form 1112, for a return Of
this tax were distributed early in July,
and Mr.. Edwards has been besieged
since for information as to this new
tax. Following is his statement:
Form 1112 must be flied by every
corporation, whether domestic or for
eign, which reported net income for
the calendar or fiscal year ended in
1917, regardless of whether or not it is
subject to the tax imposed under this
section Of the law.
"A common misunderstanding among
a large group of taxpayers is that if
corporations meet the requirements
under which this tax does not apply
they are not required to file return. 1t
is evident that the taxable or non-tax-
able status of a corporation under this
section of the law can only be deter
mined by the filing of q return on
Form 1112.
"In preparing this form for calen-
dar year the average man will have
Eo"'Pat atlVeiy easy saliinS, prOVlOeO ne
doesn't try to deduct all the earnings
of 1917 in dividends as distributed dur
ing the first six months or prior to
July l, 1918.
"lf he has on hand December 81,
1917. $4,000 of earnings and distrib-
utes $4,000 during the first six
months of 1918, one would naturally
think he was distributing the balance
Of the 1917 income, but the law DEGREES
that the 1913 income must be distrib-
uted first.
IF the department finds, however,
that you have deducted and set aside
an amount in excess of the reasonable
requirements of the business, then
your tax is Is per cent of such amount
"Deductions are also allowed in OBJ
legations of the United States govern
ment issued after September /, 1917.
such as Liberty bonds, certificates Of
indebtedness, war savings stamps, ETC."
New-York tribune., 1918-08-04
Price Doubt Checks
Cotton Cloth Trade
War Board Has Yet to Set
Figure on Many
Lines

Many cotton goods prices are yet to be
announced by the government price-fx-
ing board, and trading is being done
in anticipation of the further revision
to be announced this week. On cloths
that have been priced, such as sheet
ings, twills and duck, mills are accept
ing few orders and are not able to
book as much business aa the demand
calls for, owing to the volume Of old
orders untitled and the constant in
crease in government requirements.
Preparations are underway for the
ALLEGATION Of orders for 4,8oo, 900 sheets
and 100000 pillow cases. and further
huge quantities of bandage cloths and
other hospital requirements. The large
orders for mapped cottons for medical
purposes have been distributed among
the mills, nearly 3O,OO0,00O yards in
all, and. with the limited production
OF mills due to labor conditions, it is
expected civilian needs will have to be
subme rged. Jobbers are buying very
moderately and retailers are hesitat-
ing:
The cotton condition report Of tho
Week mas leSSened the belief OF q large
crop that may be followed by low
prices, and merchants think it will help
to steady the views of traders who
have been anticipating much lower
cloth prices than seem possible in the
near future. Some jobbers have be-
gun to revise their domestic goods
prices In keeping with the basis of
value suggested by the government,
but this has not become general as
yet. The initial orders for wash goods
for spring have been fair. but not up
to expectations.
Prices quoted are very irregular, as
follows: Print cloths, 2S-inch, 64x64s,
Is cents; 64x60, 1914 cents; 3S1a inch,
64x64s, 1874 cents; brown sheetings,
southern standard .277a cents; den
inns, $2.20; Southern indigo, 371s cents:
tickings, 8 ounces, 421a cents; prints,
22 cents; staple ginghams. 22z cents :;
dress ginghams, 27h and 321a cents.
New-York tribune., 1918-08-04
Distribution of South
Africa 8 Wool Clip
Largo Shipments Made to
United States and
Japan

Regarding the wool clip in South
Africa for the year 1918 the Min
lister Of Agriculture gave the colonial
figures and information regarding the
sales to the British government, &C.
cording to "The Cape Argus" as fol-
lows:
"The number Of bales offered in tho
first instance to the imperial govern
ment was 190,669. The number of bales
withdrawn from the scheme, duplicate,
and bogus, registration was 1885. The
number Of bales valued up to March 81
last was 93,346, leaving a balance of
26,037 bales still to be appraised. The
average price paid for the wool valued
was 1850. (27 cents) per grease pound.
The number of bales Of wool at the
ports awaiting shipment July 81, 1917
was 107,731. The estimated clip for
the season 191718 was 100000 bales
This estimate is arrived at by taking
the average quantity of bales exported d
from South Africa during the last five
years, which. owing to the season
throughout the Union having been ex-
ceptionally good, is likely to exceed
100000 bales. Number of bales left in
.iio RoVeililieHt SCnemo after with.
drawals, 1883; number of bales OF
last seasons wool left in open market
478,348.
'"The quantity Of grease wool sold In
open market and shipped during the
period August /, 1917, and March 81
1918, was 194,247 bales, or 66,o44lo7
pounds, valued at s4,910,s92 (s23, ,899.
S4O), average price 17.S9d. (36 cents
per pound, of which l01 1853 bales were
sshpped to America, 8o,337 bales te
Japan and 2,276 to the United Kingdom
The quantity Of secured wool shipped
during the same period was s,429 .O94
pounds, value f1,401,97O ($6,8226a5)
average price 39.93d. (Sl centsJ pe,
pound, Of which 1852 pounds went
+ to America and 986,735 pounds tr
Japan, making total grease and
secured equivalent to bales of grease
Of 266,080. The quantity sold in open
market and awnting shipment was
equivalent to 108,592 bales in grease
and the number of bales at ports fo,
open market unsold March 81. 1918
was equivalent In grease to s5.774
bales. The estimated balance of WOO
for open market still up country is
1902 bales"
New-York tribune., 1918-08-04
German Pig Iron Tax

"A government tax of ten marks
!S1.aol !S per manufactured ton Of pig
iron is expected in Germany, ACCORDING
to the Swedish Trade Journal" This
publication says that confidential dis
cussions have been going on in Berlin
between tho government and the iron
industry. On Germany's present pro-
duction. the tax should be approxi-
mately about 200,0o0,O00 marks (s47.-
ooo OoO) yearly. Foreign purchasers
OF German iron and steel must neces-
sarliy bear this tax, AS we'll as the
recently introduced coal tax of 20 per
cent of its value. The prices Germany
IN the future may demand for its iron
and steel will be dependent no doubt
on what its competitors demand.
New-York tribune., 1918-08-04
lniquity Of Low Cost Production
A Trade Commission Discovery
Startling New Economic Theory That the Efficient Business Man
Should Sell Below the Market Price Fixed by "Margna"
Producer, Seen by the National City Bank


sell his goods below the open. natural
market rate as determined by free COM
petition, or below the rate determined
by the authorities as necessary to pro-
duce the required supply; or would the
public interests be best served by such
rule?
If the farmer, by undertaking and
fertilizing his land gets thirty bushels
Of wheat to the acre instead Of fifteen,
and thereby reduces the cost per bushel.
is he under obligations to sell 1t for
less than the going price, and would
there be any public gain from having
such a rule established? In the long
run. would the public get Its wheat
at lower price as q result of such q
rule7 And, finally, would it be practi-
cable to attempt to regulate the SELL
ing price of wheat on the market TO
correspond to the varying costs to DIFF
ferent producers, and to follow the
regulation through all the transfers Of
wheat and -four on the way to the con-
sumer7 Is 1t conceivable that differ
ences In the original cost Of wheat
could be maintained through all hand
lings, 50 that bread Of the same quality
would be sold to consumers at different
prices7
New-York tribune., 1918-08-04
Big Profit Makers.
But Not Prohteers

Elsewhere we have referred to th.
tact that the surplus earnings of the
twelve Federal Reserve banks, after
paying. 8 per cent dividends, in the
nrst SIX months OF 1918 averaged 25
per cent Of their paid-in capital. and
tor the full yeAr will exceed SO Der
tens' ~ is true that the surplus earn
.hgs OF these banks inure eventually to
the public treasury; nevertheless, the,e
earnings afford a clear demonstration
that exceptional profits may be made
IN the ordinary course Of large bust
ness as the result Of fortuitous con-
ditlons and without any intention Of
'protiteering" or any act of extortion
or improper conduct.
Almost everybody Is doing what ho
can just now to promote a spirit Of
unity and cooperation throughout the
country. and ill-considered utterances.
under the color of authority. which
exaggerate old suspicious and intan.
seify class prejudices are peculiarly
inopportune. They throw sand into
the bearings at time when the high-
est efficiency is needed.
Moreover, looking forward to the
period following tho war, # tho in
dustrial activities Of this country ar.
to be hampered by narrow paternal-
ism which does not understand the
,eiaIlon between industrial profits and
industrial progress, or the relation be-
tween Industrial progress and social
progress, the outlook will be a gloomy
one. There is no way Of realizing the
hopes and ambitions Of the people ex-
:cept by industrial progress, and this
10 not only stimula lated but financed by
the industrial savings achieved by low
cost producers, which are first realized
as profits and then used as capital.
without these savings industry will
stagnate and society will have nothing
to expect but disappointment, confu-
4ior and <vryoAf1
New-York tribune., 1918-08-04
Lynching the
Packing Industry

Ihe large meat packers come in for
the most severe denunciation. Five
concerns who are named ara .a,d ~
nave monopolistic control Of the meat
industry" and to be reaching out for
ike domination IN other products. and
their manipulations Of the market am.
brace every device that is useful to
tnem' without regard to law" "Hov.
ever delicate definition is etven To
pronteer1ne." says the commission
these packers have preyed upon the
public unconscionably.n
Tho commission report te,1. ra+h,.
about tho profts Of tho meat packing
companies that was not known ~
everybody who reads tho printed ~.
ports sent to their thousands ~ .to.%-
holders, and summarized IN An.r.,o,
columns. but 1t makes omissions and
comments which might mislead a
reader unfamiliar with such affairs
and without other sources Of info,.
nation. All emphasis Is laid unon
aggregate profits, but among business
men tho test Of whether business
profits are large or small Is in the,r
relation to the volume Of business
handled, the capital employed and the
character OF service rendered. Judred
oy these factors, the meat packing In
dustry for many years has made a
remarkably creditable showing. The
commission does not give figure. 4or
gross business or percentage Of profit
thereon, but we gave last month tho
figures for Armour's profits in 1917
upon all food products, which aver
aged 22l cents on the dollar of sales.
This 's upon business IN perishabls
products. Of huctuating value, involv.
ing vast detail incidental to the manu-
facture of numerous by-products. II
1t Is proAteering no line Of business
IN the country can escape the charro.
Armour q Co. are accused OF
making profit Of 1873 per cent upon
their net worth in 1917. against an
average OF So per cent In the three
years 1912-14, but no account is taken
Of the fact that the company was en-
ploying a great amount Of borrowed
capital upon which it was entitled TO
earn profit. At the close of the year
it was employing $133,404,ooo Of bor-
rowed money. Indeed. tho company
has been 80 much in need Of capital
TO handle tho expanding business that
it has lately offered on the market
$eo,ooo,ooo OF bonds, convertible into
preferred stock. 1t Ia a familiar fact
that tho percentage Of profit to capital
may be notably Increased in any bus,-
ness by borrowing money TO handle
an increasing volume, but in such cases
the percentage should be calculated
upon all the capital employed, includ-
ing that borrowed.
The actual distribution Of profits by
Armour d Co. last year WAS 2,0O0, 900,
upon q business Of 3b76, ,000, 900. and In
New-York tribune., 1918-08-04

DROF1T TEERING is something
readily denounced but not so
easily defined, and all those who
discourse upon the subject have not
demonstrated their capacity to judge
of profits with practical sense and dis
elimination.
In theory there would seem to be a
field for the Federal Trade Commits
sion. in which useful work might be
done. Its functions are supposed to be
those Of a semi-judicial body, with
powers to investigate competitive prac-
tices and other business methods and
conditions, with a view to procuring
for tho public an authoritative and
reliable account Of such affairs, In or
der that, largely by publicity and
partly BY legal procedure. fair play
and honest dealings may be maintained
AS the rule In business life, and unfair
and dishonest practices suppressed. In
view Of the magnitude and complexity
Of business operations in these days,
the great powers undoubtedly pos
SeSSeo ny Co1poIatIouo VI large CdPA-
tai, the dependence Of the public upon
such corporations for many necessary
services. and the suspicion and An
tagonism often felt toward them, It
would seem to be very desirable that
there should be an official body hav-
ing at It's command the facilities for
Investigation, able to make and charged
With making an impartial. instructive,
informing report upon matters which
may be In controversy.
New-York tribune., 1918-08-04
Why Criticise
Emciency2

The same general conditions apply to
other products sold on tho market
There 1s a grcater degree Of justice in
the general rule that the benefits Of OK
ceptionally low-cost production belong
OF right to the producer than will be
achieved by any attempt to distribute
them to the ultimate consumer, and in
the long run public interests will be
best served by this disposal Of them.
1t 10 at the point where improvements
Of general benefit are achieved that re-
ward and stimulus should be given, and
as We have seen, the public has It's own
gains from every improvement In
methods OF production, independent Of
those within the control Of tho pro-
ducer.
II. then, It Is the accepted rule that
low-cost producer who supplies only
part OF the market Is entitled to the
general market price-if that is the
recognized custom throughout the busi-
ness world-if any other policy is i'm.
practicable as a general ruls-is 1t
proper to critlcise individuals and hold
them up to scorn for following this
c0urse7 Is there anything to be gained
Tor tho public by discrediting the low
cost producer, minimizing his services
or taking away from him any share Of
the rewards which naturally flow Co
hlm7 Is there any likelihood that
others to whom his natural gains might
De arbitrarily distributed would make
better use Of them. from the stand
point Of public interests, than the indt.
vidual who by the very circumstances
OF tho case is shown to be an industrial
leader7
New-York tribune., 1918-08-04
Hankow Needs Steel Products

1t is reported from China that at
present there is fairly large demand
in the Hankow district for steel prod
ucts, especially galvanized iron sheets,
angle bars and reinforced concrete
materials such as corrugated bars.
New-York tribune., 1918-08-04
Numerous and
Successful Competitors

The commissions report says that 1t
compiled the earnings of sixty-five Of
the largest of the independent packers
tor the years 1914, 1915 and 1916, and
found that their profits were as high
as or slightly higher than those of the
Dig five packers for the same years,
which seems to impair the theory that
the big five have a monopoly, partcu-
iariy when it is known that there are
All the states. The truth about the
business is that there is nothing to
prevent anybody from going into it,
or from succeeding in it, except the
fact that competition is sharp, the
margin of profit very small and COM
petent management is required. The
country is dotted with the wrecks o.
lll-advised ventures. but there are
enough successes to show that success
ls matter of location and manage
ment. The big packers are big largely
because they started in a good location.
haVo been growing for long time and
nave had capable management. Their
competitors are numerous enough and
successful enough to demonstrates that
competition can live, and If the profits
were exceptional such competition
would rapidly increase.
BUSINESS Is being done at the present
time under great difficulties and un-
certalnties and profits are not CLOSELY
calculated in advance. Many expert
enced dealers prefer to restrict their
operations and even retire from active
business rather than take the chances of
loss. The profits of this period cannot
be finally calculated until the war and
perlod Of readjustment is over. Up to
this time fortuitous circumstances
have been favorable to profits. but ex-
perience has taught that the profits
winch como under such conditions are
needed In the long run to meet the
losses which come In the same manner.
The favorable turn Of a year does not
warrant departure from the usual
business methods, nor can ideas which
no one adopts in his own affairs save
under exceptional conditions, of which
he would insist upon being tho sole
Judge, De successfully set up as an
official standard Of conduct. The the
ory that business man is under ohli-
cations to Sell his labor or product
at an arbitrary price below that fixed
ny the natural play of economic forces
IN free and open market has never
been established in practical affairs or
even as theoretical ideal. Certainly
no general rule can be laid down for
Its application, and this being so il
would seem that the subject should
be treated officially in a temperate
New-York tribune., 1918-08-04
An Unique
"Rcvelahon"

The Trade Commission begins its re-
port upon proAteering with tho an
nouneement that the outstanding rev.
elstion which accompanies "the work
OF cost finding is the heavy profit made
by tho low-eost concern under q gov
ernmental fixed price for tho whole
country" and the report consists Of a
showing up Of these ubiquitous offend
cre.
That low1cost producers makeq large
profits under prices which permit high
cost concerns to operate is surely not
. revelation TO business men generally,
nor does It seem proper to single out
tho low-cost producers for criticism.
II. as Is usually the case, their low
costs are due to conditions which they
have created, they are not responsible
for the fact that prices are high; they
have done their part toward lowering
them and they show tho. way to the
others. II all producers would do as
well, prices would be lower. It Is tho
iow-cost producer who 10 rendering the
best service to the public He is the
leader, tho explorer, the pathfinder in
industry. When he makes mistakes he
bears the cost Of them alone, and both
his mistakes and his discoveries show
the way 70 his less enterprising COM
petitors. Any advantages which he
may gain arc temporary, because after
he has set the example the entire VOL
ume Of production may be placed on
tho Same basis. Moreover. tho public
can better AFFORD TO pay a given price
TO . low-cost producer than to one who
makes little or no profit The former.
by doing his work with p lower ex-
penditure Of labor. releases labor Tor
other work, a consideration quite a.
important as price. Furthermore, his
profits are subject TO taxation, and
what remain TO him at this time arc
probably inverted for the most part In
Liberty bonds or employed in increas-
ing the production Of things vitality
needed. His service 10 the public Is in
comparably greater at this critical time
than that OF the producer who. selling
his goods at tho sarne price, makes no
profit.
II there any principle Of Justice
which Yequires'a low-cost producer 10
New-York tribune., 1918-08-04
Increases Capitalization

TRENTON, N. j., Aug. s.-Thc swar-
yenbsch, Huber Company. Spring and
Oak Streets, Hoboken, to-day filed a
certificate with the Secretary of State
increasing it's capital $9,5O0,0 900, bring
ing the total capital to $11,OOO, 900.
New-York tribune., 1918-08-04
which s156,ooo,0 900 Of their own capital
and $133,00o,oo0 of borrowed capital
were employed.
Capital Stock VS..
Real Capital

Neal capital
The commission states that the profits
OF Morris & Co. in 1917 were 263.7 per
cent of the capital stock, while admit
ting that they were only 1876 per cent
Of the capital and surplus. All of
the other packing companies, it alleges,
have been likewise guilty Of incrcas-
ing their capital out Of earnings. It
is safe to say upon this point that In
any community of this country bust
ness concerns of large capital can be
found which have grown up from small
beginnings. 1t is one of the things
of which communities are usually
proud. and, indeed, the fact that they
have achieved such success, instead Of
being evidence of unconscionable meth
DDS, is usually accepted as showing that
they have played useful part in the
community and enjoyed public favor.
Many great merchants of New York
and other cities who have been re-
spected by their fellow citizens began
their business careers with their en-
tire stock of goods on their backs.
They accumulated out Of earnings the
capital which III later years they en-
ployed, but if the logic of the Federal
Trade Commission is correct, they were
HeVeT entlIled 10 make IN one year
more than interest on their original
capital. The packing business is no
different from other lines of business
in the fact that some men have accu-
mulated capital in it, while other men
have sunk their capital in it.
Morris & Co. at the beginning Of
their last fiscal year had $3,O0O,000 Of
issued stock and s32,142,O0O of surplus.
This was the owned capital with
which they entered the year, but they
were also employing $2O,O0O,O00 of bor-
rowed capital, and at the end of the
year were employing $36OOO,00O Of
borrowed capital. These are the sums
upon which they were entitled to make
earnings during the year, and the
profits actually realized under excep-
tionally favorable conditions were S.
100000. WV
The fact that only $4,000 900 of capt.
tai stock has been issued has nothing
whatever to do with fair Judgment Of
their profits in the year under review.
That the commission should refer to
the $3,000.000 of capital stock is un-
fortunate, because it is suggestive Of
bias and of desire to make point
which the facts do not sustain.