The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1927-10-06
Auditors Report Gives Rea.
sons For Size Of Deficit
Says Additional Factors
Caused Loss 10 State, Farm.
! ers and Private Enterprise

els ana ITIVdlc enterprise
How the state mill and elevator
rolled UP loss Of $429,l4751 in
1926 is explained in detail by O. h.
J Lund, examiner for the state board
Of auditors, in his report on the
operations Of the institution for the
six month period ending June 80,
1927.
In addition to the usual audit and
inventory for the period under ex-
animation Lund went back into the
records to ascertain why the mill
lost such large sum the preceding
YEAR His activities, he indicates in
lis report, were due to his desire to
cooperate with tho fact finding COM
mittcc appointed BY the state SEN
ate. The committees report was
made public month ago
Indirect Losses Givcn
Although the mills losses were
large, additional losses to the state
as 4 Whole were caused by its opor-
atons in 1926, Lund ayers. In the
latter classification he places losses
sustained ny other mills due to the
fact that the state mill and elevator
sold huge quantity of flour at
from one to two dollars a barrel be-
low cost, thereby making it harder
for independent miflers to dispose
Of their product, and contribute TO
Il lowering Of the price of wheat
throughout the Northwest.
A second indirect loss mentioned
in the report is that sustained by
farmers who were unable 20 buy mill
feed from the state enterprise be-
cause it had contracted with the /.
$. Joseph company Of Minneapolis
10 deliver to it more mill feed than
it could produce.
Of the los ses which can be esti-
mated in money $35i,5ll.39 was
due to the sale to the Scaboard Flour
corporation of Boston, Mass, Of 242,-
600 barrels Of flour at from one to
two dollars less than the cost Of
production. On these sales, Lund's
report shows, the mill received
S1,5S7,525 or S39,9l1.39 less thar
the cost of the raw material.
A second principal source OF dl.
rect financial loss was the payment
to the Midland Grain company Of
$37.326.S4 in excess Of the market
price of wheat purchased from it
This sum was listed by Lund 4:
middleman's profit accruing to Thu
Midland company as the result O
its transactions with the mill.
The third principal source of I'll
rect loss was the contract with tn
/. s. Joseph company for the sale Q
1890 tons Of mill feed. This, Lun'
said, was sold at from two to thrc'
dollars below the price current a
Minneapolis when delivery of tn
feed was made. In addition to thi
loss, the state mill made cash pay
ment to the Joseph company Of $40.
654 because it was unable to fulfil
its contracts. Mill feed contract
which it was unable to fill were can
cclled by the mill at a cost Of 81 pc
ton, the report shows.
Mechanical Operation Satisfactory
After stating that the mechanics
operation Of the mill was satlsfae
tory in 1926, inasmuch as the cos
Of milling was less per barrel DARN
that period than for any prcviou
time; that the flour yield fror
wheat ground was satisfactory an
that the mill made a profit on flou
sold in North Dakota and the tel
ritory surrounding Grand Fork;
Lund says: '.The only conclusio
that can be had is that the troubl
has mostly been in the tradings.'
Minor additional causes of los
are grouped by Lund in the follow
ing paragraph Of the report: "Ther
are many smaller items that migf
be enumerated that contribute
the financial loss Of the mill, som
Of which are generally expected i
4 business of this kind, where tn
management has no personal finar
cial interest, the business more 9
less is in politics. and as is natura
there is apt to be political favorit
ISM"
Commenting on the comparatiy
records of the state mill and othe
large milling enterprises, Lund said
Zone explanation that has been giv
en- for the excessive losses at tn
state mill the last year has been tina
the year 1926 was an adverse yea
for the flour milling industry. Froi
information we have been able
gather this theory has not been SUI
stantiated.
Industry on Upgrade
due to the large increased ca
pacity of flour mills constructe
during the war, there were some bi
losses in the flour mill bushes
after the war was over. This cor
dition appears to be gradually &C
justing itself and the large mil
that survived seem to show bette
financial statements each year, an
from information available to us
would appear that the years 1872
and 1927 have been the most pros
porous for the flour milling bushes
since the q Of the war.
ITO bear this out, the followin
statements published in the Angus
81, 1927, issue Of the Northwestern
Miller or page 845, giving publ
notice Of the profits Of two Of tn
Minneapolis flour mills are cited.
"sThe Washburn Crosby CON
pany, Minneapolis, and it's suk
salaries report for the year ende
June 80 q net income Of $2,55O,89
after depreciation, interest and fed
eral taxes. After allowing for div
dent requirements on seven per cen
preferred stock, this is equivaler
to $29.98 per share earned on &c.
$50 shares Of common stock.
"sLast year the amount wa
SLABS, 726, equivalent to $14.05 0