New-York tribune., 1918-03-11
Germany Lenient
In Treatment, Of
War Industries
Government Permits Retention
of Greater Part Of Excess
Profits
Tho Ne.r York Tribune

Foreign Press Bureau
The German governments treatment
of war industries has been very lcnient.
With few exceptions all industrial con-
Germs in Germany engaged directly or
indirectly on war work are making
profits greatly in excess of their pre-
war dividends, but the participation
Of the government in these dividends
is comparatively small. In the begin
ming of 1916 war excess profits tax
was passed by the Reichstag and in
creased year later and again in
/ March, 1917, but the maximum tax
collected now on profits in excess of
those made in 1913 is only SO per cent
"Obviously," says "The Globe" of
London, very large amounts have ac-
cumulated in liquid form in the hands
of the large industrial concerns. 1t is
practically impossible to CLEAN from
the available publications and from the
balance sheets of the various COM
panies to what extent the government
controls depreciations, reserves, spe-
cial reserves, ETC., in reference to this
seems that great latitude is left to
the boards Of individual companies.
Reasons for Policy
"The policy of the German govern
ment is evidently not to take too much
of the liquid means of the industrial
concerns in the form of excess profit
tax.
81. In order to encourage these con-
Germs to subscribe lavishly to the
various war loans. AS a further in
centive in this direction war loan is
being accepted in payment of excess
profit tax, the companies gaining
thereby the advantage of the dis
count at which the war loans are
issued.
2. In order to allow all industrial con-
Germs to strengthen their position as
much as possible for the transitory
period after the conclusion of peace,
and for the return to permanent
peace conditions.
"3. In order to be able at given
moment to call for a capital tax.
when, owing to the leniency shown
previously, the industrial concerns
will not be able to grumblc about
the weakening of their LIQUID re-
sources.
practically all balance sheets of the
large industrial concerns show the de-
sire to hide the profits that they are
making. and not even to allow the
shareholders to have a clear insight in
the financial position of their COM
panies..
"Comparison with previous years be-
comes more and more difficult for that
reason, and this policy is evidently
being carried on with three Objects:
81. To prevent the shareholders from
asking for large dividends
Y. For the purpose of deceiving pub
lie opinion, which is already raising
an outcry aaginst profteering.
"3. To stifle the voice of labor and Of
the Socialists, which is making it.
self heard more and more, asking
for highes wages and higher taxa
ton.
How Profits Are Shrouded
The following are some of the
methods which are used to shroud to
some extent in mystery the profits
made:
II. General expenses, taxes, ETC., are
deducted before arriving at gross
profits.
w. Depreciation is carried to extreme
limits, and in many cases not only
new plant installed during the war
has been written off entirely, but
also plant and buildings which
existed before the war, and in some
instances even the value of the
ground.
""The following are examples of this
policy:
"The Rheinische Metallwaren Fabrik
Dusse!dort, has not only put aside
t." million marks for depreciation of
new installations, but has also written
off entirely all installations belonging
TO the company, with the exception of
ground.
The Cologne Rottweil Explosives
Company has written off all expendi-
lures for special buildings, machines.
etc.
"The Mannesmann Tube Company
shows in its balance sheet for 1861
depreclat!ons amounting to almost
100000 marks.
"The A. E. G. have written off en-
tirely all plant and buildings, with the
exception of ground
Ihe Daimler Company has written
eft completely all plant, buildings, ma
chinery and even land.
IN many instances: however, no de-
tails of the depreciatons can be gath
cred from the balance sheets
80. The creation of special reserves
for the trarsitory period and for re-
turn to ~eacc conditions; also for
social and charitable purposes.
Inc IollOWlnE are examples:
THE Rheinische Metallwaren Fabrik
100000 marks.
"The Cologne Rottweil Explosives
Company, 100000 marks.
The Iron Works, Wander Zypen.
100000 marks.
100000 marks.
I'm some cases it is obvious that such
reserves have been created. though de-
tails do not apear in the balance sheets
Shareholders Participate
Various lines arc being followed hv
tho different companies both for thc
purpose of strengthening their position
and to allow the shareholders to nar.
tcipate to some extent in the prosperi-
ty OF the various concerns.
The following examples may bc