Evening star., 1941-08-25
Corporation Earnings
Race Taxes Toward
New High Marks
Wall Street Discovers
Investors Mapping
As Industry Booms
Stock and
By FRANK MACMILLAN,

NEW YORK, Aug. 25.-IS all the
profit being taxed out of defense?
The action of the stock market,
lethargic and inclined to sinking
spells in the greatest industrial boom
in Americas history, shows most
investors think it is, or will be.
But facts assembled by the New
York Stock Exchange throw doubt
on this conclusion of investors who
use this number one market place to
register their views as to the out
look for business prospects and divf-
dends.
The first 469 companies. whose
securities are listed in the big mar
ket. which reported for the first half
of this year, showed profits 22.6 per
| cent above the same period of 1910,
and only % of them were running in
the red.
No industrial group as whole. ex-
cept the petroleum companies,
showed a loss, and gains over last
year ranged from 379 per cent for 80
railroads reporting, to $40 of per
cent for 25 paper and publishing
concerns. The group loss of the oil
companies was % per cent.
Larger Profits Left.
Based on these and similar studies,
a good many Wall Street analysts
have come to the conclusion that
taxes, higher now than during World
War No. 1, and concededly destined
to go up even farther, are not now,
nor are they likely to be under pend
ing tax legislation, enough to take
anything like all the profit out Of
the tremendous volume of business
coming, directly and indirectly, out
| of the defense program.
Rough calculations from official
sources indicate the Government
hopes to spend $500, ,000,00 on de-
fense in the year ended July /, next; /;
$40, 900 ,000, 900 in the succeeding year,
and at least $50 900, ,000, 900 the year
after that, if necessary. In the IL
months just past the rate was
about s6,O0O,000, 900.
These enormous sums, 1t has been
pointed out by economists, 60 not
only directly to the firms who will
build the necessaries of defense, but
indirectly will be turned over many
times as the money is spent by
primary contractors for supplies, and
as wages flow to merchants, amuse-
ment enterprises and the like.
This does not mean, analysts
noted, that great quantities Of the
money which Government has spent
and intends to spend in the defense
effort will not eventually flow back
to it in taxes.
A sidelight on what the already
large taxation burden has meant in
terms of company profits was Of
fered by separate study made by
the exchange of the results in the
first half of this year of 10 big COM
panies with an unusually large pro-
portion of defense orders.
The 10 companies, which include
such huge defense suppliers as Cen
eral Motors Corp, E. I. du Pont de
Nemours, United Aircraft Corp. and
United States Rubber Co., had total
sales in the first half of this year,
defense and otherwise, of $2,126, 1884,
900 compared with $1,145, 5,583, 900 in
the similar period of 1910.
Their profits, before paying their
taxes, this year were $423, $50 900
against s1s3. .972, 900 in the first half
of last year.
Taxes Boosted Sharply.
But their taxes in the first half
of this year were $222, 1876 900, while
In the first half of last year they
ran only to $35, ,402, 900. The figures
include both corporate income and