Saturday news. (Watertown, S.D.) 19??-19??, 1919-01-30
E DIT @ RIAL
IRMOUR IND PROFITS.

The Daily News is printing today a tabulated statement
Of the net earnings Of fourteen industrial companies, as fn'
nished by j. Ogden Armour for the press i'll his supplemental
testimony before the committee on interstate and foreign com
merce of the house of representatives of the American con
6 gress. This table shows the percentage Of profit on the capital
( stock and also on the stoal investment.
1T may be well to state at the outset that neither the public
nor the press is able to determine from Mr.. Armour's voinn-
tary offering before the committee, or elsewhere, what ratio
of profit the packers and the other companies named have
drawn from the money they have invested, Exactly what Mr..
Armour means by stotal Investment is not clear. He may
mean, in some instances, borrowed money; or he may mean
cash supplied by the stockholders other than that represented
IN capital stock; or he may mean an accumulation of dividends
declared but not drawn by the individual stockholders or he
may mean a surplus set aside from time to time, over and
above the regular or irregular dividends, as the case may be.
It's we'll to bear In mind that, SO far as MI. Arnours com
panyis concerned, and it is probably also true Of the other conn.,
panies, an ample allowance IS made for depreciation and
amortization, including interest on all borrowed capital along
with all other legitimate expenses, before taking into account
the net earnings.
The profits of the Armour company range all the wav from
1497 per cent. on the capital stock g per cent on the total IN
vestnnent according to Mr.. ArAour) M 1918 10 IS per cent. IN
1915, the latter being the ligL-water mark for profits during
the past seven years. In 1912 the net earnings were $3.50 on
the capital stock while only sos on the total investment
Perhapstha difference between the capital stock and the
investment 6 may be found IN the percentages of profit Orig
1naly the Armour people invested but a comparatively few
millions. The total net profits in 1872 We're 3d. ,6460o, rep
resenting, as stated, $3.50 OH the capital stock, which, al that
time, was twenty millions. In 1913 the company's net profits
aggregated $la247,s37, OF 14o7 per cent. on the outstandingI
capital stock, which, accordingly, must nov stand at one hun
dred and seven millions, or Whereabouts.
40 other words, the company's capital stock has increased
by upwards OF eighty odd millions during the past seven
years. Unless this increase represents cash actually paid INTO
the treasury, either by the old stockholders Or through tie
acquisition of new holders, the difference between the twenty
mllnons OF I9l2 and the one hundred and seven millions Of
l9l6s must represent ssstock dividends as an offset 10 tie
surplus which had accumulated in the treasury.
Any surplus which was distributed as stock dividends,
5s nothing more nor less than profit. Unless II may be said,
and Struthfuly, to represent a reasonable ratio OF dividends
declared but not drawn by the stockholders, it forms no part
of an Investment by either the company or the stockholders
1HGTHDf. Ina other words. If the Sfnpk Ilyidpna * gnr ir a arr