The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1926-02-24
REPORT REVEALS
HOW HUGE FORD
PROFITS ARE HID
100 Per Cent Returns
Concealed by Term
BY JAMES 4. poLsEN.

the enormous profits being made in
the preparation of food products by
the big manufacturing concerns is
concealed from the observation of the
ordinary person. Note, say from the
ordinary worker. This is because to
him the bookkeeping terms used in
such report are strange language.
1t is only by an analysis that we can
realize their significance and connec-
ton with our everyday life.
The net earnings of this company
for 1925, after all manufacturing
charges, depreciation, allowances, ETC.,
were $5,5O2,74S. After the payment
of dividends on the preferred stock
there remained enough to give each
Of the common stockholders 1888 on
each share held. This is at the rate
Of nearly 10 per cent on hundred dol
lar share. Such a return is consider
ed very good by investors when the
conservative character Of the business
is considered.
Where the coneeaIment Enters.
Here is where the concealment
comes in. Suppose now the employees
of the company ask for higher wages.
The directors would at once reply
that they could not afford an increase.
Ten per cent is not an exorbitant re-
turn they would contend.
Some time ago, however, the Quak-
er Oats Co. had a much smaller CAPT
talization. Then it was decided to in
crease the stock. Each of the old
stockholders was given four Of the
new shares in exchange for his old
stock which had par value of 500.
The new stock has no par value. The
exchange cost the shareholders moth
ing. AS an ordinary worker, unaware
of the intricacies of high finance, you
might wonder what was its value.
Return Swells to 90 Per Cent.
Here is where the purpose of the
transfer becomes evident. Each of
the new shares gets dividend of
$3.50. Thus the OWNER under the old
arrangement of $1OO share of common
stock really receives four times the
1888, or nearly $40 as his dividends
for last year. In other words, we now
see that the profit of the stockholders
was really close to 40 per cent in
stead of the ten pen cent which it
appeared to be. Surely this should be
satisfactory return for any invest
or, you might conclude. But do not
be too hasty! The analysis Of the fl
nancial report will increase it consid-
erably. The unfamiliarity Of the
worker with the bookkeeping terms
used in business blinds him to the pic
ture they give of his own exploitation.
Real Profit Becomes Apparent.
After. each stockholder got his 40
pct. dividend there was still $3,O72,-
74S left in net profits. This was added
to the surplus" account. If distribut-
ed to the stockholders this would have
given them about 81 more on each of
the present shares, or S2S additional
on their original 500 stock. 1t is now
clear that between $50 and $40 was
made in clear profit in the single year
1925 for stock of par value of only
$780, The rate of profit was approx
imately &C 2-3 per cent. The enormous
productiveness Of the business to its
owners is more easily realized when
the &C 2-3 per cent yearly return is
compared with the four per cent paid
/ by banks to the workers for the use
Of their savings.
Padding Accounts to Hide Profits.
OF course, the actual profit made
was much higher than this, incredible
tho it may appear. For example, a
million dollars in bank loans were
paid out Of receipts; S4,202,077 were
paid for the properties Of the Aunt
Jemima Mills company. 1t would take
a detailed analysis of the amounts ap-
portioned to depreciation, etc, to dis
cover how much these accounts were
padded. This latter is common
method used especially by the rail-
ways to absorb their real income. 1t
would be safe to assume that the con-
Germ realized at least a hundred per
cent profit on its business last year.
The profits for 1924 were even larger.
Nor is the concern an isolated
small producer, especially favored
by circumstances. II is a huge cor
poration with a great business which
reaches not only to all sections of
America, but to every part of the
world. The processes Of capitalist ac-
emulation are to be seen operating
here before our very eyes. No won
der Morgan Is reaching out to control
the food supply Of the nation!
The Inevitable classification.
Yearly a rapidly increasing proper
tion Of our food substances are pass.
ing thru complicated manufacturing
processes to prepare them for the ulti-
mate consumer. Whoever can control
the corporations handling this end of
industry will own in fact the very
life blood Of the people. The Morgan
crowd is clever enough to know that
all such attempts must at the present
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