Madison County Democrat. (London, Ohio) 19??-1958, 1952-02-19

than twice as big as year ago.
And this opens up some vexing
questions for management and
stockholders and, in the long run,
for employees, too:
/. Can present dividend rates be
maintained? 2. Must business
borrow more money for day by
day cash operations 3. Must it
borrow more to build and ex-
pand? 4Can business induce the
public to invest more money. 5.
viii this need for cash make the
money supply painfully tight by
March 15?
Most shareholders not in the
annual reports now being issued
that Uncle Sam is getting a far
higher share of the profits than
they are. He gets 50 cents of each
dollar of ordinary profit" of the
majority of corporations. And
when gross earnings top the av-
erage for the years 1946-49, the
amount above that average is
called excess, and the tax collec-
tor takes so cents more of that
excess profit" dollar.
AS a result, the net profit of
the majority of manufacturing
companies is lower for 1881 than
it was for 1850. But not all of
them. Every oil company report
ing SO far has larger net profits
than it showed year earlier. Bus
mess was very good for the oil
companies, and also they, like the
mining companies, get a special
tax allowance because of the de-
petion of their assets due to the
nature of their operations.
Other companies doing better in
1851 than in 1850 can be found in
these industries: machine tools,
coal, utilities and airlines. But
while profits went up for mines,
they went down for steel mills
and metal fabricators. They went
up for the airlines and down for
the railroads. Sales of chemical
companies scared, but profit af-
ter taxes is down. Taxes and
material controls cut earnings of
the auto and appliance makers.
Taxes and higher operating costs
clipped the profits of stores.
Because of the high tax rates,
Uncle Sam has a real stake in
trying to keep business profits
high, corporate management ar
CUES.
The treasury expects to take in
nearly % billion dollars in taxes
from business this fiscal year. In
the fiscal year starting July /,
the take is expected to be nearer
% billion dollars, because the
new higher rates were effective
nine months of the 1850 year on
which they were paid, but will be
effective all II months this year.
This huge total in the year ahead
will be almost twice the peak
amount collected from business in
any one year of World War IL
161a billion dollars.
And after Uncle Sam taxes the
income of the corporation, he then
taxes the income the individual
gets from dividends the corpora
ton pays.
In spite of paying more to the
tax men, most corporations have
maintained the dividend rate they
pay to shareholders. This has re-
suited in big drop in the amount
of profit the companies are re-
tanning to run the business. In
1850 retained earnings totalled
134 billion dollars, but last year
they are estimated to have
totalled 815 billion dollars.
Since many companies are
spending as much as ever for new
plants and equipment, the smaller
retained earnings mean more
trips to the banks or the security
markets for money.
But some companies will get in
ventory relief this year, now that
these are in better balance. It is
estimated that last year the larg-
er inventories tied up total of
eight billion dollars of corporate
funds.
The search for cash, however,
is likely to stay high on the list
of management duties. Even as
with you, it may be hard for
management to find the money
to pay both Uncle Sam and the
people you and they do business
with.