Evening star. [volume] (Washington, D.C.) 1854-1972, 1943-03-20


600 in 1912, but David Lawrence
the decline in profits amounted to
almost 40 per cent.
This was due, however. to the fact
that most Of the earnings in l94l
came from foreign business on fixed
price contracts, while the earnings
IN 1912 were under the policy of
pluS-fiXed-fee contracts with
our own Government. The margin
OF profits for 1912 was only % per
cent of total sales
The tax bill for the Douglas COM
pany was s4095O, 900, an increase
OF 81 per cent, as compared with
the S25.400, 900 paid in l94l. This
means that taxes paid and accrued
in 1912 amounted to more than IS
times the dividends received by
the stockholders.
In the case of the Chrysler Corp,
which had total sales of about
$4,000 0,000, the net profit for 1912
was sl5,52s,0o0 after paying a Fed
eral income tax of $50 100000.
Face Renegotiations.
The profit for 1912 compares with
q profit Of s36,s65 900 earned by the
Chrysler Corp. on the average over
the FIVE years ending December 81,
l94l. But the interesting fact re-
vealed by the annual report of the
company is that even the s15,52e,-
600 may not be final, because the
corporation has yet to go through
the renegotiation procedure. This
is also true of the Douglas Aircraft
Co. Indeed, it is true with respect
to most corporations engaged on war
contracts.
SO the Stockholeds cannot be sure
what the 1912 profit really was, and
the year 1943 accounting will have
to reflect any reductions in earnings
developed out of the renegotiation
process. This is a highly unsatisfac-
tory way for American corporations
to handle it, as usually owners of a
business like to know what a COM
pany really earned at the end of
each year. 1t may be that some
companies will find it necessary to
withhold a substantial portion of
the dividends that otherwise would
be paid until these questions are
cleared through the War and Navy
Departments or the Maritime Com
missions boards readjusting the war
contracts.
The danger lies in the possibility
that as war contracts are scaled
down as they may be if the end of
the war appears in sight or if there
Is less need of certain products, the
companies may be caught in a Jam.
This would ensue if governmental
agencies took last years earnings
and did not renegotiate them finally
till the end of this year, for in
stance. The choas in finances that
might result from such a develop
ment, and perhaps unemployment
that might suddenly be caused, are
elements of the so-called postwar
problem which it doesn't need
planning board or any other kind
of board to foresee.
No Conception of Time.
"hcp oor+ip,o,,n
negotiation procedure was advocated
recently, as against efforts in Con-
gress to change the law. assurance
was given that these matters would
be promptly cleared and that tax
payments would be quickly deter
mined, but it is doubtful whether
those who promised such clearance
through the Internal Revenue
Bureau had the fainteSt conception
OF the time that Will be required to
settle the big contracts and assess
taxes back to previous years.
The Government has a direct IN
terest IN seeing that the corporations
DO not lose their incentive and that
stockholders do not have their saw
ings conf1scated by arbitrary
policies. Thus, the Chrysler Corp.
paid last year tax bill, which is
more than twice the net earnings
and equivalent to S814 per share, as
against 1857 per share for the stock
holders. All this, however. is before
the contracts of the corporation 90
through the renegotiation process,
and Washington has yet to hear of
n case where the War or NAVY De-
partment revised the profits of the
contract upward
incidentally labor is getting the
biggest part of the total sum dis
hurSed. In the case of the Douglas
Aircraft Co, for instance. wages &c
employees amounted To almost $780,
100000 or nearly 80 times the tota,
dividends. Likewise for every dollar
paid to stockholders in dividends
the company PAID S13 SIS in taxes.
Reproduction FlEhts Reserved.