Evening star., 1934-12-12
NET INCOME HELD
DECREASED IN 1888
Curve Is Downward for Mil
Iionaires in U. S., OBJ
server Says.
BY DAVID LAWRENCE.

There's q story OF Iar-IchcIhhs III
portance in the ofiicial figures Just re-
leased by the Government as to how
American business survived 1882 and
1888.
It's q story Of the profit and loss
system-so often referred to merely as
the profit system. as if the profit mo-
tive never meant anything else but
greed instead Of risk. But wrapped
I'D in the figures of how business went
into the hole about $500. 100000 in
1882 and s4,5OO,OOO 900 in 1888 is a
query that the opponents Of the capl-
talistic system, as we know 1t today,
would answer in different ways.
The query is: Where did American
business get the $ll 600, 1000, 600 wnlcn
a. lost in 1892 and 1888 combined?
And what did it spend that sum Tor!
First Of all, it should be noted that
the Federal Government spent exactly
$4,000, 100000 more than 1t TOOK IN
last year, while American business
spent s4,500, 100000 in excess Oh us
own receipts.
Fails to Show Surplus.
Had American business failed 10
save and accumulate surplus In the
wears between 1922 and 1882, when
were admittedly prosperous years, II
is evident that the United states
might have suffered severe collapse
which might have caused social dlsor-
der
The $1,000, 600, 900 of expenditures
in excess of money taken IN LOT tne
years 1882 and 1888 went largely lor
wages and raw materials. Reliable
figures derived from Treasury Depart
ment data show that in the last IA
wears business earned 1862 per cent on
its investment. This means that a
little more than 96 cents out OF every
dollar went for the payment OF wages
or materials.
out of the $4,5o0, 100000 Of deficit
recorded by American business In
1893. nearly the entire amount. there
fore. went to sustain employment. Had
American business ruthlessly palanceo
its budget, there would have oeen
greater unemployment and much more
suffering.
The deficit figures may seem dis
couraging because Of their size, but
the significant thing is their trend.
To lose six and a half billion dollars
one wear and then cut the loss to
four and a half billion to a sizable
curtailment of expenses. 1t is true
that gross business fell off from 38
billion dollars in 1882 to % billion in
1888, with those businesses that showed
no profit at all. But with those which
made profit, the gross volume Jumped
from 27 to 40 billions, which is a
healthy increase in the amount OF
business done.
Figures Were Larger.
These figures aren't in it with pre-
ceding years, when the gross receipts
total ran anywhere from So billions
in 1881 to 127 billions in 1928. -
But 1t is interesting to study just
how many businesses made a profit
and how many suffered a loss
The total number of businesses on
the winning side went from 78,775
in 1882 to 104,702 in 1888. In the
former case this was about 16 per cent
of all the corporations, and in the
latter it was about Is per cent.
In other words, "a per cent OF all
corporations lost money in 1882 and
Is per cent lost money in 1888.
The total profit Of those who were
IN the black went from $l,850, ,000, 900
in 1882 to S2,500 100000 in 1888, but
this is only a small proportion as net
income usually goes with American
business. For, beginning in 1923, the
net income was more than eight
billion dollars year and 1t was as
high as 10 billion in 1928 and II
billion in 1929.
1t is true that met income" as the
Government figures it, does not al
ways mean net profit, because the
Treasury doesn't permit dividends to
be deducted or various other items
that are on the expense side before
taxes are paid. But using the met
income" as the Internal Revenue Bu-
reau calculates it, American business
earned a net income of 6.57 per cent
on the gross volume of 1882 and 6.26
per cent on the gross volume for 1888.
So while there were nearly 13 bill
lion dollars more gross receipts in
1888 than there were in 1882, Amer
lean business earned less actually in
the way of net income in 1888 than
1t did in 1882.
Contrast to U. S. Figures.
This information is an interesting
contrast to the figures seized upon by
those who stress the fact that the
number Of persons with million
dollars or more of income per year
increased from 20 to 46, and that
hence no redistribution of wealth Is
going on.
Actually, this group of taxpayers
had net income of $35 100000 in all
in 1882, and this increased to $751;
100000, but, If you really want to
know what that same group used to
get, turn back to preceding years
when the total for the year varied
between $166, 1000 900 in 1881 to ST.
2oo,0oo,Oo0 in 1929 and $1,1o8 ,0O0. 900
in 1928.
What has happened in the Million
aire class may be interesting to the
26 more individuals who are in that
income group, but so far as the total
net income of the country is con-
cerned, the millionaires got about Z
per cent in 1882 and were cut down
to less than 4 per cent in 1888, so
the curve is downward instead of
upward for them.