Evening star., 1937-05-15


year was less #% 3 l!gk
than three $s#&%s
fourths of cent
per gallon of pc
troleum products sold"
This margin of three-fourths of
cent was smaller than "the least on
erous of the gasoline taxes, that of
cent per gallon collected by the
Federal Government" And, curiously
enough, the average of both Federal
and State taxes per gallon was nearly
eight times the company's net earn
1ngs per gallon"
What is most revealing is that not
Withstanding the fact that commodi-
ties are at a higher level than they
have been in recent years retail gaso-
line prices along the Atlantic Coast
we're approximately so per cent less
last year than they were 10 years
ago excluding, of course, taxes.
This Is a tribute to the efficiency
Of oil producers generally and an in
teresting commentary ON what
large slice Of the gasoline price to the
consumer is now going to the tax
collectors.
But apart from the big tax pay
ments on gasoline, the Standard Oil
Co. managed to accumulate for 1896
about $84,813,00O of profits out of
that three-fourths of cent per gal
Ion margin. The company had about
$4,000 900 of profits from other ac-
tiNties, but it is significant thing
that small margin on big volume
brought return to the stockholders
Of about $373 per share.
Interesting Points Raised.
Several interesting points suggest
themselves. Could the prices of gaso-
line be kept so low to the public and
could any companies of much smaller
size operate successfully on margin
of three -fourths of cent a gallon?
Clearly the competition in the oil
business is keen and there are COM
panies OF varying sizes operating at
profit, but the major companies have
the major share of the market and
they apparently can operate at fair
margin of return on their investment
on a large scale of transactions
An enterprise like the Standard Oil
Co. Of New Jersey cannot, of course,
continue to become more and more
efficient and keep its prices down if it
cannot make the necessary improve
ments in its processes of production,
refinement and distribution. Hence it
A. to in "a 10
report plea for q better system OF
taxes.
Your management" says the report,
Sfeels that this plea for simplification
Of and soundness in Federal revenue
laws and their administration Is in the
long run just as important to the
Governments revenues as it is to the
corporate taxpayer. We must and
desire to contribute our full share OF
khe needed national revenue, but we
> could do better job of future plan
ming and employment II we could rely
on the continuance of certain basic
principles Of tax system and could
compute and budget tax costs on
eertainties rather than gueswork."
The company is particularly pointed
n its criticism of the undistributed
surplus tax as an impediment to the
expansion of its business and the i'm
povements that can be made for the
publics benefit in the furnishing of
fuel for Americas motor cars. The
report adds:
Excessive and Penalizing.
'If the surtax on undistributed
earnings remains as 4 part of the law,
then the following results appear to be
inescapable.
81. Corporate earnings will bear an
excessive and larger tax burden than
any other kind of income
%. Returns on corporate invest
ments will be penalized and new capi-
tal for private enterprises will be
more and more difficult to obtain.
"3. The -honored and Gus
tomary securing of working capital
by loans or bond issues will cease be-
cause such debts cannot be paid out
Of future earnings without prohibitive
lax penalties.
q. A company with no backlog, or
Inadequate reserves, will be hurt
frst. Those with greater reserves will
be vitality affected when capital needs
have absorbed their available cash
resources.
IS. It is an economic fallacy to
compel q company either to pay out
h the form of dividends each year
. money it needs as working surplus
10 afoiv ,11,
on penalty OF sacrificing stable per-
eentage OF it through surtax Reha-
bilitation or expansion programs, ade-
<~ouate reserves for loss periods, the
continued security of employment for
workers and the beginning or develop
uent of new industries, all will suffer"
Finally, it might be asked, who is
The Standard Oil Co. of New Jersey?
The report answers that question
thus:
SAT the close of 1886 there were
l20.63o shareholders. The average
number of shares owned was 2l7 OF
the individuals on the books, 60,780
were men and 49,371 women. Be-
sides these individuals, great many
fduciary and philanthropic trusts
looked to Standard Oil Co. dividends
for dependable income"
The whole report is an enlightened
document on many other aspects OF
modern business, including labor re-
lations and a discussion of the re-
sponsibility Of large scale business to
the public and is a significant exam
pie of how companies predominantly
owned by the public are manifesting
. deep sense of their obligation to
the public interest.
(Copyright 1872