Evening star., 1948-12-24
Report Of u. ). Steel
On Profits Doesn't
Seem TO Be News
CoIumnist Says Press
HeodIined, in Comparison.
Charges Of CIO Head
By David Lawrence

BY David Laurence
When Phil Murray of the CIO
charges that corporation profits are
too high and that there must be an
excess profits tax or that prices
must come down, that's news and
1t gets headlines which is, of course,
correct. But, when management
tells the other side of the story
1t doesn't seem to be news. At
least that is what must be inferred
from an examination of a large
number of American newspapers
and press association dispatches
apropos of the testimony submitted
on Tuesday OF this week by the
United States Steel Corp. one of
the largest companies in the coun-
try.
True enough, the statement sub
mitted by E. M. Voorhees,, chair
man Of the finance committee of
United States Steel, was many
thousands of words long and it
had along with it many statisti-
cal tables and computations to cor
roborate the points made before the
Senate subcommittee investigating
the profit problem. But the COM
prehensiveneSs of the statement and
its voluminous character did not
prevent anyone who cared to do
so from selecting the really sig
nlflcant points made by Mr.. Voor-
hees which had never been disclosed
before and hence we're news.
Remarkable Comparison.
Thus it was revealed that, in the
first nine months of 1948, United
States Steel produced almost exact
ly the same number of net tons of
steel as it did in the entire twelve
months of 1910. This coincidence
provided an opportunity to make a
remarkable comparison.
In the first nine months of
l948." testified Mr.. Voorhees,, United
States Steel received from custo-
mers $1,754 100000. This was s675,-
SOC. 900 or 62.6 percent more than
was received for approximately SIM
liar quantities of goods and serv-
ices in 1940
The question is who got what
proportions of that $675, 100000 The
answer is readily obtainable by COM
pairing the cost aggregates for the
two periods"
The computations are then given
and they show that the increase due
to added payroll and higher wages
amounted to S275 100000 and the
increase due to purchases Of goods
and materials amounted to $347,-
100000, while taxes showed an in
crease of S45,70000O. Hence these
three items accounted for S668 ,200,-
900 out of the increased income from
sales, leaving s7.400,000 of the in
creased income to be explained.
But the increased cost of wear
and exhaustion" of tools that have
to be replaced when they wear out
was estimated for the first nine
months Of 1948 to be at least s33,-
400, 900 more than was allocated for
the same item for the entire year
OF 1910, so it is apparent that these
wear and tear" items which are
destined to be spent mostly as
wages when the replacement is Or
dered far exceeded the amount of
the increased money available to
meet costs
This evidence" says Mr.. Voor-
hees, INDICATES that wages and
taxes are primarily responsible for
United States Steel'S higher prices
Decline in Dividend.
Taking the amount actually
earned in the first nine months of
194S, approximately $51 100000 was
paid in dividends to the total OF
tens of thousands of stockholders
as compared with $60,00o,000 in the
entire year 1910. About $50 500, 900
was left out of profits to meet in part
an expenditure of S200, 10000 spent
to increase production facilities and
replace worn-out tools and to pay
off 100000 in debts that came
due. Toward this big item of re-
placement and expansion eXpendi-
lures there was available S105 300 900
from the wear and exhaustion"
fund but even with this added, the
depreciation fund fell short by s59,-
100000 of furnishing the amount
needed to pay the bill and this sum,
OF course, had to come out of earn
lnas Of previous years.
Such facts. said Mr.. Voorhees,,
should dispel any notion that
profits and especially profits after
dividends represent a block to the
flow of purchasing power"
What Mr.. Voorhees, might have
added was that here is a picture
of what happens to profits in one
of Americas largest industrial cor
porations and that many thousands
if not millions of workers directly
and indirectly are kept in their jobs
because the profits are plowed back
into the business so as to get more
steel produced for the tremendous
demand of our times.
1t Is a fascinating story of the
responsibilities imposed on American
business under the profit-and- loss
system. But somehow because it is
statistical and because it doesn't
happen to prove the points made,
tending to disprove radicalisms main
thesis today, it doesn't seem to get
wide currency even in the press
which is supposed to give both sides
of the fateful debate over the future
course of the private-enterprise
system in America.
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