Evening star., 1936-07-03
Report to Stockholders.

The business of Government and the
fiscal policies of Government are not
strictly comparable with those of cor
porations. But as Secretary Morgenthau
likens his annual address on the state
of the budget at the close of the fiscal
year to a report to the stockholders, the
comparison suggests a question: How
would the stockholders in private cor
poration receive an accounting from the
directors that followed the general phil
osophy of Secretary Morgenthau's sum-
mary?
We may picture the board room
crowded with anxious stockholders who
have been examining the figures of the
annual report showing a continued
deficit, despite increased revenues, and
q larger debt than ever before.
The chairman of the board rises to
assure the stockholders that they must
look beyond the mere showing OF the
figures. For instance, there were
couple of untoward events, the chairman
explains, clearing his throat The COM
pany had counted on continuation OF
revenue from one undertaking, but was
brought into court and ordered to
cease and desiSt, as the business
was illegal. Then the Board of Directors
through no fault Of its own, voted to
retire q bond issue at face value, IN
oNt
ating a drain on revenue which &C
counted for almost half of the excess
OF expenditures over receipts
There was spent, says the chairman,
about s8,5O0,0OO during the year. Three
and a half million of this amount went
toward the operating expenses OF the
CORPORATION. Three million, three hun
dred thousand went into extra dividends
tn a lot of our stockholders who were
denied other means of support. One
million, seven hundred thousand went
into the premature retirement OF that
bond issue (soldiers' bonus). In all, we
spent $4,400,000 more than We took in.
But, leaving out of consideration the re-
tirement of the bond issue, we only spent
81, zoe, 600 more than we took in.
Where did we get the $8,500,O00 that
we spent? The chairman clears his
throat again. To begin with, we had
about Sl,800000 in cash at the beginning
of the year, which we had borrowed the
wear before. We took in about $4,000 900
in revenue. Then we borrowed $780,
600. That makes the total $500, 900.
AS matter of fact, the chairman says,
wiping his glasses, we borrowed more
than S2,500000. We actually borrowed
over s5,00o,000. But we have s2,7oo,o 900
of that left over. We haven't spent 1t
yet and will have it to use on the re-
tirement of that bond issue, which, one
paragraph above, we left out OF con-
sideration.
So we are not so bad off. We have
q cash balance of s2,700,0 900 of borrowed
money, which we will consider as an
asset, although the banks look on such
things as liabilities We have $4,000 900
in q special fund with which we sta
hilize" our business when necessary, and
that will ultimately go to pay off debt.
In addition we have loaned a lot of
money, $4,O00,00O, which we hope will
some day be repaid. So, instead Of a
total debt of $33, 100000, which is what
some of the impudent minority stock
holders say 1t is, We have total debt
of only s25,Oo0,00o when you consider
these offsets" Furthermore, we have
been able to borrow money cheaper than
ever before and our revenue is on the
increase.
If one of those clamorous minority
stockholders who come to a meeting
should rise at this point and ask when
the company is going to increase its
revenues or else cut down on some of
the expenditures, regardless of whether
the expenditures are left out Of con-
sideration," he would doubtless be
shouted down and maybe thrown out.
But q lot of other stockholders would
be thinking the same thing.