Chapter VI: Appendix: To Chapter III

SOME TYPICAL WAR PROFITS

I. _The Manchester Guardian_, January 3, 1916:

BRITISH INDUSTRY IN WAR

The first full calendar year of war has been a period of unparalleled industrial activity and, generally speaking, prosperity in this country. Heavy losses and bad times have been encountered in a few important industries, but these are balanced by unprecedented profits made by a large variety of industries, whether directly or indirectly affected by the war. One frequently finds that the neutral visitor carries away with him an impression of industrial England as one great living arsenal. That is not surprising, as since July last the Munitions Ministry has erected (or improvised) and started a large number (it is not permissible to say how many) of State munitions works, and it has also mobilised the whole engineering resources of the nation to such an extent that in the first week of December no fewer than 2026 manufacturing establishments had been declared "controlled firms."

But it would be a mistake to suppose that, while war manufactures prospered, all other industry languished and decayed. To prove the contrary and show that only here and there were there heavy losses, we may quote some figures compiled by the _Economist_, which show that 720 industrial concerns publishing their reports during the first nine months of 1915, and having a capital of £531,678,701, made profits amounting to £52,881,300, or under 2-1/4 millions less than in the previous year (which in the case of almost all the reports was a year before the war).

Dissecting these figures, we find that not only iron, coal, steel, and shipping companies report enormous profits, but that increased earnings were shown by breweries, gas, rubber, oil, and trust companies, and others. The large exceptions which depressed the total profits were textile companies (other than those engaged on war contracts), catering, and cement companies. Shipping leads the van of prosperity owing to phenomenal freight rates, while iron and steel and shipbuilding, as direct and established purveyors of armaments, are close behind. As showing the industrial tendency of the year, one may quote the remarks of a trust company chairman at a recent meeting. Of 150 home investments possessed by his company, he remarked that a hundred had since the war yielded the same as in the year before war, while thirty had paid less and twenty more.

Into the circle of munition producers have been drawn cycle and motor, machinery, electrical, and many other branches of manufacture. Of other industries driven to fever heat by the war may be mentioned woollen and leather factories. Secondary effects of the war also produced a boom in several unexpected quarters. For instance, the high wages earned by war workers, and too generously spent in a vast number of cases, led to a strong demand for cheap furniture, pianos and many types of household goods which in normal times are usually out of reach of the purse of most wage-earners. But one trouble has beset all industries in common--a shortage of labour, which cannot but grow with every increase to the numbers of men drafted from the ranks of productive industry into the army or the munitions works. From all quarters comes the tale of orders, both from home and from abroad, that cannot be accepted. In the case of foreign orders that have to be refused, the labour shortage has what one fears may be lasting consequences. For custom once diverted to America or elsewhere is not easily regained.

2. _The Manchester Guardian_, March 3, 1916:

MORE GREAT PROFITS

HOLT LINE'S ENORMOUS SURPLUS

The China Mutual Steam Navigation Company (Holt Line) has had a greater year than ever. It has been supposed that regular liners were getting little benefit from the boom in freights, but a profit of £591,005, as against about £294,000 in 1914 and £386,418 in 1913, can only be explained by a very large participation in special war-time gains. The dividend and bonus on the ordinary shares make 106 per cent for the fourth year in succession, and a still larger sum is being kept in hand, £200,000 being put to the reserve, as against £50,000 for 1914 and £100,000 for each of two years before that, and the balance forward is raised from £81,014 to £201,367. Most of the Company's capital, however, only bears 6 per cent interest. The ordinary shares (which we believe are held privately) only amount to a little over £83,000.

3. _Pall Mall Gazette_, September 24, 1915:

WAR PROFITS

The other taxes are accepted by the public and traders alike as inevitable, but special interest is being taken in the excess war profits tax. That Mr. McKenna is likely to find his estimate of £30,000,000 largely exceeded is admitted. The _Daily Chronicle_ publishes a table in which the City Editor compares the last profits announced by some of our greatest undertakings, covering a considerable portion of the war period in most and some portion of it in all cases, with the average of the previous three years. It will be seen that in every instance the war has brought greatly increased prosperity.

Last Average
Profit. Previous Increase.
3 years.
£ £ £

ARMSTRONG WHITWORTH 802,000 624,000 178,000
(Engineering, Shipb., etc.)

WM. BEARDMORE 219,000 185,000 34,000
(Engineering, Shipb., etc.)

JOHN BROWN 586,000 347,000 239,000
(Engineers, Shipbuilders, etc.)

BEYER PEACOCK 83,000 35,000 48,000
(Locomotive Builders)

BRUNNER MOND 824,000 770,000 54,000
(Alkali Manufacturers)

CAMMELL, LAIRD 238,000 147,000 91,000
(Iron, Steel, and Shipb.)

HAWTHORN LESLIE 202,000 102,000 100,000
(Sh'b. & Marine Engin'ring)

KYNOCH'S 153,000 114,000 39,000
(Explosives)

LAMBERT BROS. 142,000 84,000 58,000
(Coal Exporters, etc.)

POWELL DUFFRYN 422,000 279,000 143,000
(Collieries)

SAMUEL FOX 66,000 39,000 27,000
(Engineers)

SPILLERS & BAKERS 367,000 140,000 227,000
(Millers)

VICKERS, LTD. 1,019,000 809,000 210,000
(Eng. and Shipbuilding)

This table indicates that the Chancellor may expect to receive far more than the sum he estimated from the war profits tax.

4. _The Manchester Guardian_, Feb. 28, 1916:

COAL PROFITS NEARLY DOUBLED

The tale of colliery war profits is continued by the report of North's Navigation Collieries (Glamorganshire). The output for 1915 was actually less by 87,810 tons (1,141,900 tons against 1,229,710), but the profit was nearly doubled--£130,071 against £65,578. With the £10,496 brought into the account the directors had their biggest total in recent years available for distribution. The ordinary shareholders get 10 per cent and a bonus of 2-1/2 per cent, which is the best payment since the 15 per cent paid for 1907. Advantage is taken of a prosperous year to place £35,000 to the reserve fund, which has been rather overlooked recently, only one allocation of £20,000 having been made in four years. It now stands at £155,000, against £650,000 of share capital. For depreciation, with regard to which item substantial provision is made each year, £15,000 is written off. This leaves £10,567 to be carried forward. The Company has the reputation of being well managed, and its coal properties are regarded as being very valuable. The recently opened St. John's pits are being developed satisfactorily, it appears, a further increase in output being shown.

Despite a decrease in output of nearly 400,000 tons, the Powell Duffryn Steam Coal Company is enabled to show a profit for 1915 of £438,799, as compared with £422,204 for 1914 and £364,421 for 1913. The usual 20 per cent is distributed on the ordinary shares, free of income tax, and last year's allocation of £50,000 to the reserve fund is repeated. In addition, the reserve for income tax benefits to the extent of £50,052, and there remains £120,236 to carry forward. The decrease in output, it should be noted, is due to the enlistment of the miners, and its restoration to the normal and probable increase after the war should balance the decline in profit that may be expected to attend the decreased demand.

5. The Times, May 19, 1916:

SOAPMAKERS' "RECORD" PROFITS

Presiding yesterday at the annual meeting of Joseph Watson and Sons (Limited), soapmakers, Leeds, Mr. Joseph Watson said that the company's profits for the year amounted to £122,000, or £19,000 in excess of any previous year's profits. Their turnover had largely increased because they were now supplying soap to France, Belgium, Scandinavia, and a small amount to Spain and Italy. It was not a question to-day of getting orders; it was a question of refusing them. They had at the present time three months' orders on the books.

6. _The New Witness_:

THE SCANDAL OF WAR PROFITS

It is a sinister and deplorable fact--one of the most ironical with which the continuance of the War has yet confronted us--that there has grown up in Great Britain a number of firms and businesses to whom a successful prosecution of the campaign would mean ruin, and who have an actual vested interest in the indecisive continuance of hostilities. This is due entirely to the lack of grip and resolution which the Government have displayed in dealing with the ugly phenomenon of War Profits. We know, of course, what happens to those profits at present. Half is taken by the State: half passes to the firms who are getting "rich quick" out of its necessities. In theory, it is an anomalous arrangement, indefensible in logic, and opposed to every canon alike of justice and of taxation. In practice it works out in the way we have indicated: that certain privileged firms and individuals are amassing huge fortunes out of the gravest crisis through which the nation has passed, and which will pinch us all before it is over.

Let us give some examples of the mammoth profits that some of these concerns are making. There is first of all the famous old English firm of Levinstein--Messrs. Levinstein of Manchester--to be considered. This "all-British" concern has not done badly out of the terrible situation through which we are slowly toiling. While mere vulgar English Tommies have been dying in the trenches or have returned incapacitated to England--to find that their country cannot afford them a pension--Levinsteins have been pocketing several thousands of that country's cash. Levinsteins' are dye-makers, and in 1914-15 they made a profit of £80,000 _on a capital of_ £90,000: a profit large enough to make the mouth of the deceased usurer Kirkwood dry with envy. But, while our legislature passed laws to restrain the usurer in his exactions, the "war profiteer" has no restriction placed on him. His workmen can, in certain cases, be fined or sent to prison if they absent themselves from work, and hundreds have been proceeded against under the Defence of the Realm Act. But the profiteer himself is immune! It is childish to say that the State can recover half of the profit he has wrung from the country's necessity. What right has he to the other half? In the case of Levinstein, this £80,000 profit enables the company to pay 14-1/2 years' preference dividend, to distribute a dividend of 30 per cent on its ordinary shares, and to write off £21,000 for depreciation! It is merely fatuous to pretend, or to endeavour to pretend, that the appropriation of half these profits squares matters between the community and the British firm in question.

As with Levinstein, so with other firms. Messrs. Cammell, Laird & Co. averaged profits of £146,000 for the three years before the war. Since last year those profits have risen to £237,000. Those profits, of course, are subject to war profits taxation. But most manifestly that taxation is utterly inadequate. So it is in the case of Messrs. W. Beardmore, whose profits rose from £184,000 (three years' pre-war average) to £219,000; of the British Westinghouse Co., which rose from £56,000 to £151,000; and of Beyer Peacock's, which increased from £57,000 to £109,000.

In all these cases the deduction of 50 per cent by the Government is entirely inadequate and utterly misleading. It is at once an admission that the firm in question has no right to amass huge profits out of the welter and tragedy of the European War, and that the State is content to stultify itself by surrendering the other half.

Many of these profits have been made by covering rises in raw material far in excess of the actual increases. Many have been wrung from the poor and the needy, who are now being enjoined by the Government to eat less meat. Messrs. Spillers & Baker, of South Wales, increased their profits from an average of £140,000 (three years' pre-war average) to £367,000 in 1914-15. We do not blame them. The rise in price was beyond their control. They could hardly help benefiting. But it is mere madness for the Government to leave them in possession of these vast accretions of wealth. Firms that paid 8 per cent before the war, now paying 22-1/2 per cent (such as Messrs. Richard Dickeson & Co., the Army contractors) are able to pocket tens of thousands that ought to go to strengthen the resources of the nation. Others, like the Mercantile Steamship Co., increase their dividend from 20 per cent to 35 per cent; and some are able to pay dividends actually larger than the capital of the company itself!

It is ludicrous for the Government to allow this condition of affairs to continue. Their course is quite clear. They should limit profits to the average of three years before the war, and add at the most 5 per cent. Anything short of this is a betrayal of the national interests to private firms.

7. _The New Statesman_, March 25, 1916:

An innocent person might think that when a manufacturing company is faced with an enormous rise in the cost of the principal commodity it consumes, its profits would be diminished. Some law must be in operation which has escaped the attention of economists, for so far from this being the case, what appears to happen is that the profits of manufacturers rise in a greater degree than the price of the raw material. Thus, so far from being hit by the enormous rise in the price of flour, Peek, Frean & Co., the well-known biscuit manufacturers, made a net profit of £107,478 last year, as compared with £99,578 in 1914, and £98,607 in 1913. After paying the usual 5 per cent on the £300,000 of preference shares no less than 25 per cent is paid on the £230,000 of ordinary share capital, which has been issued. This company raised its money very cheaply from the public, which paid 102 per cent for its 4 per cent debenture stock and par for the 5 per cent preference shares. The investing public does not benefit by the big dividend on the ordinary shares. These were never offered to the public, but are privately held.

Another shipping company, sister to the Court Line, mentioned in these notes last week, has issued its report. This is the Cressington Steamship Company, which owns two modern tramp steamers of slightly over 7,000 tons each. The company was very fortunate in that one of these vessels was delivered in February, 1915, it having been contracted for at pre-war prices. The profits for the year amounted to £50,015, as compared with £6,861 in 1914 (when only one vessel was trading). The dividend for the year is 15 per cent, £7,072 is allocated to depreciation, £22,000 for special war profits and income-tax, whilst about £3,000 is being carried forward. The financial position of the company is such that if its ships were sold at £2 15s. per ton, shareholders would receive the return of their capital in full. On present prices, however, they would probably fetch over £15 per ton. The shares are now quoted at 28s.

The Bengal Iron and Steel Company, whose report has also been issued during the week, has had an interesting career; it works large iron ore and coalmining areas in Bengal. At first the company did well, but then it went in for an unfortunate steel venture and fell into arrears with its preference dividend. This was overcome, and during the past few years the company has done well, particularly from its coal business. The report for the year ended September 30th, 1915, shows a working profit of £144,913, as compared with £79,200 during the previous year. This considerable improvement enables the company, after writing off various old items, to place to a general reserve £20,000, and to declare a dividend payable quarterly of 24 per cent on the £224,850 of ordinary shares, which compares with 12 per cent a year ago. By way of a change, the report states that the trading results would have been even better had war conditions not prevailed.

EMIL DAVIES.

8. _The New Statesman_, May 27, 1916:

Markets have displayed unwonted cheerfulness during the past week, and all sorts of peace rumours are in circulation. It is more than likely, however, that it is the firmness of the market which is responsible for the rumours, and not _vice versa_. There is a steady stream of orders from the Midlands and the North, where people are making money, and these have the effect of putting up prices in several of the markets. The Brazilian Funding Loan, which was recommended here on the 29th April at 74, has been noticeably firm, and is now 77-1/4. It still appears to be the cheapest Government Loan. Brazilian securities are attracting more attention, and Brazil Traction Common, which a year ago was below 50, now stands at 64. There has been a large business in Castner Kellner on the working agreement between that chemical company and Brunner, Mond & Co., the shares having jumped four or five shillings to their present price of 69s. 6d. Precisely a year ago they were recommended in these notes at 66s. 10-1/2d. Shipping shares have been exceptionally firm; Court Lines have risen another few shillings to 34s., the large business in them being probably due to the fact that they are one of the few shipping shares which can be obtained. Rubber shares are equally firm. Nobel's Explosive Company has just issued its report for last year, showing a profit of £529,738 _after_ providing for excess profits duty. The dividend is 15 per cent, free of income-tax, or 5 per cent more than last year. This increase in the dividend came as a surprise to the market, and the price of the shares (which are a favourite investment in Glasgow) jumped from 31s. to 38s. 3d.

The profits of the Oceanic Steam Navigation Company (the White Star Line) for last year have attracted a good deal of attention. They were stated as being £1,968,285, as compared with £887,548 in 1914 and £1,121,268 in 1913, which was the Company's record year; but the figure given for 1915 does not indicate the full profit, for it is arrived at "after providing for excess profits taxation and contingent liabilities." Replying to a question asked in the House of Commons by Mr. W. C. Anderson, Captain Pretyman stated that the Company informed him that the profit mentioned was before deduction of debenture interest and depreciation. Captain Pretyman added that the sum divided as dividend was £487,500, the same amount as in the year 1913 before the war. Where people are protesting against large war profits it may, at first sight, appear an adequate answer to point out that a Company is not paying out more in dividends than it did in the year preceding the war. As a statement of fact it is perfectly correct, but it has no bearing upon the amount of profit that has been made, as the following calculation will show. We now know that the 1915 profit shown in the accounts is _after_ allowing for excess profits taxation, deferred repairs, contingent liabilities, debenture interest and depreciation. Since 1913 the Company has increased its debenture issue, and last year had to pay in debenture interest £109,536, as compared with £65,211 in 1914. How much has been placed on one side for depreciation before showing the profits can only be known to very few people, but the amount the Company must have put on one side for excess profits taxation must be at least half a million, and possibly a great deal more. The actual profits for last year were therefore probably in the neighbourhood of three millions, if not more. As indicated above, out of the £1,968,285 shown as profit, only £487,500 is paid out in dividends, the remainder going to various reserves. The dividend works out at 65 per cent, but all goes to the International Mercantile Marine Company, the much-talked-of American shipping trust associated with the name of the late J. Pierpont Morgan, which holds all the Ordinary Shares. The trust was in a bankrupt condition prior to the war, but the present state of affairs is radically altering its position. It must be annoying to the American holders that a large slice of the profits of an American-owned concern has to go to the British Government in the shape of war taxation.

9. _The New Statesman_, June 24, 1916:

Another firm which has apparently benefited by the war is Ruston, Proctor & Co., the well-known Lincoln manufacturers of agricultural implements. A final dividend of 5-1/2 per cent is declared, plus a bonus of 2 per cent, making 10 per cent for the year, which still allows the Company to place £45,000 to reserve and to carry over £16,300. This dividend is 3 per cent more than was paid last year, and is the highest in the twenty-six years' history of the Company. Shipping shares remain firm, and it is almost impossible to purchase any of the best shares. As an illustration of the profits that are being made, the Nitrate Producers' Steamship Company's accounts for the year ended April 30th last show a gross profit of £404,022, as compared with £151,905 and £135,986 in 1914 and 1913 respectively. The dividend is 25 per cent, free of income tax, £100,000 is placed to reserve, £200,000 to a special fund for excess profits tax, income tax, etc., £30,000 is added to the insurance fund, and the carry forward is increased by some £7000. The Company owned a fleet of ten steamers, which has, however, been reduced to five by the sinking of one last September by an enemy submarine and by the sale of four vessels. A new vessel is under construction, and should be ready for delivery in August. The capital of the Company consists of £200,000 in Ordinary Shares and £200,000 in 5 per cent Cumulative Preference Shares.

10. _The New Witness_, June 15, 1916:

WAR PROFITS AND THE GOVERNMENT

It is essential that a determined effort should be made to rouse the nation to a sense of the gross and scandalous injustice of the huge profits that are at present being "earned" by certain firms piling up wealth which is really amazing to contemplate. This is not mere empty rhetoric; the figures support the description up to the hilt. Let us take the case of five well-known companies, all engaged in "war work," and see to what account they have turned our soldiers' sacrifices:--

FIRMS. PROFITS.

1913 1914 1915

£ £ £

Cammell, Laird 171,700 235,500 301,500

Curtis & Harvey 48,100 77,800 143,800

Projectile 14,000 40,400 192,700

Webley & Scott 9,500 16,400 61,300

Thornycroft 13,000 107,640 267,333
(6 mos.)

These figures can only be described as staggering--staggering, that is, to anyone who cherishes a faint, lingering belief that "equality of sacrifice" is to be a reality and not merely a bitter jest. Look for a moment at the tale that these profits show! The Projectile Company has multiplied its 1913 profit _thirteen times over_! Five or six years ago its affairs were in so parlous a state that 19s. had to be written off as lost from each 20s. share. Now, as Mr. Charles Duguid reminds us, "it is paying a first dividend of 50 per cent and is returning to the shareholders 3s. 6d. out of the 19s. they regarded as lost." The return on the shares, according to the same financial authority, is 400 per cent!!!

Look at the case of Thornycrofts. The profits for the first half of 1915 are twenty times as big as the profit for the whole of 1913--an increase, as Mr. Duguid reminds us, _of 3800 per cent upon the year_, a year that will spell blank financial ruin, impoverishment and destitution to the families of thousands and tens of thousands of our fighting men!

Thornycrofts are by no means peculiarly fortunate; Nobels, for instance, have managed to earn quite a tidy little profit. Their net profit for 1915 comes out, we learn, at over half a million sterling (£529,800), exclusive of £213,900 brought forward out of the large profit of the preceding year, and this makes the total amount available for distribution as much as £743,700. Even after paying a dividend of 10 per cent and a bonus of 5 per cent, making 15 per cent, all free of income tax, the Company has still £424,700 unallocated. In its most prosperous year, 1913-1914, the net profit of the Nobel Dynamite Trust did not amount to more than £381,300. We have, we need hardly say, no feeling against Nobels or Thornycrofts or the Projectile Company. We only want fair play in this matter. If this aggregation of profits is not stopped the wealth of England will be in the hands of men who will regard the triumphant conclusion of the War as spelling ruin to themselves and who will see in victory only the cessation of profits that in normal times they have never dared to contemplate.

The remedy for this is simple. The Government have refused to the workman the right to extort unearned increment out of the country in its dire necessity. The workman may not strike or cease work or even change employment without the permission of the State. Assuredly the State has the right to exact that obedience from him. But it is essential that it should, and at no distant date, lay its restraining hands also upon the employers who are earning these huge dividends, otherwise we shall have enacted in England the tragedy that we have seen in Ireland. We shall have a Government without moral authority, a Government which will, therefore, be perpetually embarrassed in the conduct of war.

11. _The New Witness_, June 15, 1916:

WILLIAM CORY & SON

This famous coal company has taken every advantage of the demand for coal, and can show a record profit. After providing for excess profits, the balance of profit is £453,136, or £237,808 more than last year. As I have again and again pointed out, I do not think the Government should allow such huge profits to be made in war time. The coal trade is in a few hands, and firms like Corys may be said to control it. The directors content themselves with raising the dividend 5 per cent to 15 per cent; but they place £100,000 to reserves, making them £500,000; £30,000 goes to staff pensions and £25,000 to a war fund for employees. The carry forward is raised £30,740 to £88,969. The steamers, tugs and barges are now to be formed as separate companies; and the French business is also to be transferred to a subsidiary. The balance-sheet shows creditors up £204,971, presumably to meet the excess profits liability. Debit balances have increased £509,840, and now include Treasury bills. War loans have been increased £280,652, and the total assets are up £451,183, at £4,541,601, and have earned 10 per cent. When all creditors have been paid the quick assets amount to £930,654, and amply protect the debentures, £900,000 which are an admirable security. I do not suppose the present Ministry will do anything to control the profits made out of the War by those who run the coal trade; and, therefore, we may expect that 1916-17 will be as good a year as that just ended. But I am not in agreement with a policy of _laissez-faire_ in war time unless the policy is carried out stringently.

HOLBROOKS

Apparently the sauce trade has not been seriously injured by the War, for Holbrooks have increased their trading profit £4,694 to £35,170; but income tax is higher, and £5,000 has been used as a special reserve for investments, so the available profit is only £23,046, as against £25,055 in the previous year. The dividend remains at 20 per cent, but £3,072 more is carried forward than was brought in, and the Board say that the unsettled state of the world justifies them in doing this. I suspect that they are building up a reserve for the purpose of attacking the Yankee trade which for so many years has been in the hands of Lea & Perrins. The business is well managed by the two managing directors, who have been in the firm since it was promoted. The alterations in the balance-sheet are not of any moment. Quick assets total £151,557 when liabilities have been met, and the assets have earned 7-1/2 per cent on their book value--not a very splendid profit for a sauce.

JAMES HINKS & SON

This famous firm of lamp makers should benefit largely by the complete absence of German competition all over the world, and the eleven months show the satisfactory profit of £13,595. The dividend for the previous thirteen months was only 6 per cent, but the report now issued declares 10 per cent and a bonus of 1s. 6d., or 17-1/2 per cent--a record distribution. Also £2,250 is placed to reserve and the carry forward is raised from £3,603 to £6,399. As long as the War lasts we may expect this remarkable prosperity to continue. The reserves are now in excess of the capital. The company has earned 7-1/2 per cent on the book value of its assets, which, in spite of goodwill and patents having been written off, looks as though they were fully valued at £179,765. The shares are a fair industrial speculation.

12. _The Manchester Guardian_, June 19, 1916:

While everybody knows that the immense disbursements on the War have led to a greater demand for labour than it is possible to meet at present and that employers have done well, in spite of their difficulties, it is perhaps not generally known how greatly the profits of nearly all the public companies have increased during the last year. They have had to pay higher wages in many cases, though not in all, their materials have been much more costly, and their foreign trade has been hampered by restrictions, in furtherance of the policy of preventing the enemy from getting goods which he requires and which it is in our power to control. Many, however, have done a large business for Allied Governments as well as our own, especially in army equipment, and the demand for coal has been greater than our power of supplying it. All our production has commanded high prices, and profit margins have in most cases been very large. It is a way that chairmen of companies have to take big profits as being in the natural order of things, and dwell mostly on the difficulties which have prevented them from showing even better results. If this has obscured the real state of affairs it is desirable that the other side of the picture should be clearly presented, for it is impossible to understand the economic side of the War without a thorough comprehension of its industrial effects.

We give below a tabular statement of profits which have been declared this year, with the figures for two preceding years added so as to show their true significance. Some are gross and others net profits, but in this we have simply followed the methods adopted by the directors in their reports, that being in practice the only way of showing how the comparison stands. In some cases the capital has been increased during the three years, but the extent to which that has occurred does not affect the tables if they are regarded comprehensively. Some did very badly in the first few months of the war, and the profits they declared in 1915 look very small in comparison with those in the first column of the tables. In those cases the third column will act as a corrective, for in the main it shows the companies' normal earnings. It will be noticed that some of these were very small. Here and there the company was in the development stage, but as a rule it may be taken that the concern was not a very profitable one in peace times. Possibly it was over-capitalised, or over-weighted with debentures, or its plant was out of date, or it could not get sufficient business to make full use of its productive capacity. We shall not attempt the invidious task of singling out which come in these categories, but we call attention to the cases in which small pre-war profits have been converted into large ones since because they are really the most instructive of the whole series.

For very large increases upon profits which were already good the most notable are the shipping companies. Our list is typical rather than exhaustive. Some of the small concerns, with only one ship, or up to half a dozen, have done better relatively than several of the big lines, as they were more at liberty to take advantage of the big freight-rates which were going. We have not set these out, however, because it does not appear to be necessary. The dividends in virtually all cases have been substantial, and in some cases very large indeed. It would be useless, however, to show these in tables, as some of the leading companies use reserves greatly exceeding their nominal capital, and quite a number have devoted a larger proportion of their profits to strengthening their position than to the payment of dividends. In the case of the Moor line we are unable to give the amount of the profit reported last year, as the balance-sheets are not issued publicly, although we have been favoured with them occasionally.

Coal, iron, engineering companies and shipbuilding companies are bracketed together because so many of them are concerned in at least two of those fields of industry. As our table shows, they have had a great revival, many having been used by the Government, while all have felt the effect of the great demand for munitions. The miscellaneous list offers an interesting field of study, and the rubber and tea companies' results are in some respects more striking still. We have only given a selection of these, but they suffice to show that rubber and tea have been very profitable since the War began. An appeal was made some time ago with a view to the "young" rubber companies being relieved of the excess profits tax, but our list shows how unnecessary it was to make any special concession to the industry they represent. In the last two months a great many of the companies have indicated that they were setting some thousands of pounds aside for the tax.

Among the other concerns which have announced their appropriations to meet the excess profits tax the most notable one that we recall is the British Oil and Cake Mills Company, which expected to have to pay £225,000. The Nitrate Producers' Steamship Company is putting £200,000 to a reserve for the excess profits duty and income tax. Most of the big companies have provided for the tax before striking the profit balance, and as this is strictly correct it would hardly be fair to say that they have concealed part of their profits. The figures would have been more striking, however, if the gross sums had been given. As we read the White Star line's figures they indicate that the company has had to pay much more than the British Oil and Cake Mills Company, but the Cunard line has probably had to pay much less.

The amount payable in any given case is the excess over the pre-war standard, which is fixed by taking the best two of the three immediately preceding years. Speaking generally, the companies do not appear to have hurried in their payment of the tax. For the year ended March last the total yield was estimated at £6,000,000, but the actual sum received was only £140,000, and the £6,000,000 has not been got yet, the yield from April 1 to June 10 being only £3,556,000. A sharp increase is bound to come, however, in the course of the financial year. The Chancellor of the Exchequer expects to get £86,000,000 in excess profits tax and munitions levies by the end of March next, and he cannot possibly have made so enormous a mistake as the receipts to date would suggest if we did not know that thousands of firms have still to pay very considerable sums.

In the tables appended the years at the tops of columns are those in which the profits mentioned were announced. A large proportion of the results shown in the 1916 columns are for the year ended December last. Some, however, are for years which have ended since then, while a few, relating to companies which carry on business abroad, are for years which began soon after the outbreak of the War:--

SHIPPING

1916 1915 1914

£ £ £

British and African 94,388 64,464 41,357
Booth Line 328,127 225,267 154,828
China Mutual 591,005 286,725 381,729
Court 137,446 25,034 23,890
Cunard 1,579,170 1,286,948 1,187,831
Cairn 152,152 85,988 102,318
Elder, Dempster 349,444 326,122 307,605
Eagle Oil Transport 325,928 302,897 92,866
Elder 66,266 55,305 38,975
Field 71,393 11,881 --
France, Fenwick 179,100 64,900 76,800
Gulf 188,093 39,436 65,014
Houlder Bros 118,802 95,587 102,893
Indo-China 109,089 16,020 45,364
India Gen 65,738 41,974 118,379
King 102,319 17,426 90,392
Leyland (Fredk.) 1,441,690 620,839 589,810
Lamport & Holt 332,897 149,108 200,691
London & Northern 586,299 118,419 135,541
Mercantile 259,159 93,391 129,946
Moor 335,349 -- 254,000
Neptune 146,718 73,310 112,563
Nitrate Producers 381,599 134,826 125,990
Pool 601,338 118,000 --
Pyman 165,078 72,504 62,413
Royal Mail 808,731 98,232 436,470
Redcroft 117,953 13,125 21,396
Sutherland 295,220 74,841 41,779
White Star 1,968,285 887,548 1,121,268

COAL, IRON AND ENGINEERING

Albion Steam Coal 44,536 36,820 24,094
Arrol (Sir W.) & Co 119,060 49,756 51,096
Brown, Bayley's Steel 32,017 1,578 29,758
Barrow Hematite 119,377 51,518 104,664
British Aluminium 180,057 156,066 154,488
Beyer, Peacock 54,177 109,783 87,843
British Westinghouse 176,752 151,627 106,494
Brit.Ins. & Helsby 295,131 277,428 247,351
Bell Bros 145,360 45,969 128,736
Bessemer (Hy.) 55,348 35,826 23,308
Cammell, Laird 303,841 237,899 174,126
Cory (W.) and Son 453,136 215,328 313,906
Cargo Fleet 162,276 131,142 124,219
Callender's Cable 113,266 98,692 91,861
Carlton M. Colliery 188,545 128,413 177,025
Clayton & Shuttleworth 72,787 44,643 53,496
Consolidated Cambrian 185,139 140,097 147,648
Crossley Bros 65,337 15,347 42,517
D. Davis 200,127 215,744 217,970
Dorman, Long 404,524 237,579 257,863
Edinburgh Collier's 64,807 17,420 63,969
Fife Coal 224,058 89,866 --
Gt. West. Colliery 137,008 111,821 158,420
Hadfields 265,403 139,301 109,513
Henley's Tel 153,224 112,898 106,380
Howard & Bullough 136,152 32,766 163,066
Jessop (W.) & Sons 103,726 60,354 87,343
Knowles (A.) & Sons 47,199 18,329 29,140
Leyland Motors 252,107 85,037 --
Lysaght (John) 414,764 313,707 330,576
Locket's Merthyr Colleries 45,635 6,229 22,238
Met'n Carriage 372,140 321,091 365,739
Newton, Chambers 60,669 4,182 89,523
N. B. Locomotive 174,241 160,644 140,889
North's Nav. Coal 130,071 65,578 100,144
Parkgate Iron 107,344 66,643 85,169
Projectile 194,136 30,739 18,880
Powell Duffryn 438,799 422,204 364,421
Pease & Partners 435,772 248,216 385,975
Rhymney Iron 127,733 52,488 131,901
S. Durham Steel 239,868 150,257 302,955
Shelton 109,554 63,465 81,185
Stewarts & Lloyds 256,308 233,420 246,065
Swan, Hunter, etc 305,083 217,498 264,124
United Collieries 216,065 57,600 100,503
Wigan Coal, etc 143,288 44,829 138,118

MISCELLANEOUS

Angus (Geo.) & Co 54,461 43,574 32,123
Burmah Oil 1,413,170 1,411,279 1,363,389
Bradford Dyers 568,623 387,923 430,081
Bleachers' Association 416,394 197,835 423,416
Bryant and May 115,159 101,616 90,158
Broxburn Oil 46,729 22,252 57,046
British Cotton and Wool
Dyers 93,524 42,297 9,290
Brunner, Mond 1,011,590 799,322 769,343
Bovril 168,796 137,584 119,813
Buttons 63,297 38,880 32,834
Borax Consolidated 205,825 195,449 235,285
Barlow & Jones 46,798 38,936 33,584
British Oil, etc., Mills 243,110 111,203 116,541
British and Argentine Meat 651,289 67,288 --
Curtis's & Harvey 143,830 77,754 48,117
Courtaulds 741,668 520,349 474,154[89]
Calico Prin. (half yr.) 176,521 -- 55,495
E. Velvet, etc., Dyers 70,833 61,161 72,467
Fore St. Warehouse 48,957 28,597 --
Forestal Land 900,947 234,065 383,362
Fine Spinners 535,854 391,057 613,415
Gas Light & Coke 604,314 449,510 522,710
Hollins (W.) & Co 105,639 65,786 65,986
Henry (A. and S.) 249,713 104,098 122,528
Imperial Tobacco 3,699,891 3,533,360 3,354,476
Lever Bros 1,265,933 1,152,107 988,238
Linen Thread 257,418 188,773 189,142
Lennards 41,300 34,457 30,377
Lister and Co 133,874 94,403 151,458
Lyons (J.) & Co 278,293 276,403 353,303
Maypole Dairy 528,274 488,026 489,643
Mandleberg (J.) 74,506 52,049 57,964
Pumpherston Oil 134,927 74,010 140,025
Rylands & Sons (half yr.) 120,032 55,179 --
Rotherham (Jer.) 104,925 74,638 59,692
Salt Union 140,524 89,443 82,791
Sears (J.) & Co 82,070 65,032 57,061
Stead & Simpson 59,898 32,762 30,357
Samnuggur Jute 299,829 44,307 86,574
Spillers & Bakers 217,416 367,866 89,351
United Alkali 341,986 217,081 193,604
Winterbottom Book Cloth 171,191 119,795 165,213
Webley & Scott 61,277 16,376 9,511
Whiteaway, Laidlaw 131,577 107,952 129,790
Watson (Joseph) 122,001 89,290 103,999
Young's Paraffin 47,953 24,139 80,152

RUBBER, &c.
1916 1915 1914
£ £ £
Anglo-Malay 121,224 76,931 104,583
Assam-Dooars 51,674 22,269 --
Amalgamated Tea 157,818 98,176 78,787
Batu Tiga 56,293 22,315 24,762
Bukit Sembawang 33,989 14,344 6,090
Consolidated Tea 479,815 289,262 247,633
Chersonese 59,602 35,019 29,081
Ceylon Tea 163,899 108,300 93,900
Damansara 48,680 30,580 29,081
Eastern Produce 126,406 71,724 69,004
Grand Central 248,201 132,019 87,554
Highlands & Lowlands 108,343 75,425 79,079
Jorehaut Tea, 64,508 43,204 34,088
Jhanzie Tea 35,881 17,286 15,113
Klanang 37,918 20,458 24,257
Kuala Selangor 47,748 42,013 32,798
Kanan Devan 208,612 120,119 106,909
Linggi 125,739 78,899 83,746
Lunuva 32,994 12,599 12,602
Malacca 252,006 144,224 131,156
Nuwara Eliya 49,915 21,921 --
Nordanal 39,658 36,686 49,344
Panawatte Tea 38,167 23,833 --
Rub. Est., Johore 42,703 22,541 10,931
Rani Travancore 63,791 35,349 32,259
Singlo Tea 68,857 36,166 31,449
Sungei Way 38,532 36,533 25,624
Straits 157,678 164,750 185,426
Sungei Kapar 59,966 39,426 42,364
Selangor 55,457 58,007 41,940
Seremban 43,410 24,198 22,471
Sunnygama 63,688 43,142 31,931

13. _The New Witness_, June 22, 1916:

The Tenth Ordinary General Meeting of the Forestal Land, Timber, and Railways Co. (Ltd.) was held on Friday last, at Winchester House, E.C., Baron Emile B. d'Erlanger (chairman of the company), presiding.

The chairman said that the share capital remained unaltered, and the debenture debt had only been decreased by the yearly amortisation. No less than £143,600 had been added to the depreciation account, making it £634,170. Credit balances had swollen by the sum of £175,589. The profit on the year was £900,947, as against £234,064 last year. On the credit side, properties stood at £4,405,917, and had increased by the new properties acquired. The live stock stood at £34,000 less than last year, due to a smaller stock of "Invernada" cattle. The stocks of extract and felled timber had risen by £115,000, principally owing to a larger stock of felled timber. Debit balances had risen to £156,000. In the profit and loss account the trading profit was £1,281,299, as compared with £614,879 last year, and, after deducting London charges, debenture interest, depreciation, and legal reserve, there was left a profit of £900,947.

14. _The Westminster Gazette_, July 15, 1916:

The accounts of the W. and C. T. Jones Steamship Company, Limited, of Cardiff, for the year ended June 30, show that, with a fleet of thirteen steamers, £524,855 profit has been earned, representing 187 per cent on the capital of £280,000.

The previous year's earnings were £87,105.

A dividend of 15 per cent, making, with 10 per cent interim dividend, 25 per cent for the year, free of income tax, is declared.

15. _The New Statesman_, July 1, 1916:

The prolonged debate in the House of Commons on the Excess Profits Tax ended on Monday in a vote which found Mr. McKenna's critics in a small though substantial minority. The point actually at issue was not very simple, and in spite of repeated explanations several of the most persistent speakers never grasped it. The demand was that all "controlled establishments" should be exempt from the excess profits tax in consideration of the patriotic services they were rendering to their country and of the "bargain" alleged to have been concluded with the Ministry of Munitions whereby any profits they may make in excess of 20 per cent above their normal profits are in any event taken by the State. This meant, of course, that a controlled firm which made a profit of £50,000 in 1914, and of £60,000 (due to war contracts) in 1916, would retain the whole of their excess profits without reduction. Mr. McKenna argued that such firms, having the advantages of practically compulsory labour and freedom from Trade Union restrictions, ought, at any rate, not to be let off more lightly than uncontrolled firms. It is amazing that such a proposition should have to be stated at all.

The point of view of the ordinary member of the public undoubtedly is that excess profits on the making of munitions simply ought not to exist. If engineering firms are permitted to maintain their old standard of profit and dividend (with fair arrangements, of course, for new capital and depreciation), they ought to be more than satisfied. Great heat was developed on the debate by the representatives of various capitalist interests, notably Sir Arthur Markham, Mr. J. M. Henderson, Sir Croydon Marks, and Sir Alfred Mond; and some of them were not even ashamed to hint that if their demands were not agreed to there might be a diminution of output. At a moment when tens of thousands of men are giving up their whole incomes as well as their savings, in order to fight for their country, it is impossible to imagine any spectacle more unedifying for the wage-earning class than that of these malcontent capitalist legislators angrily fighting for their extra war-profits. When one remembers that it was these same gentlemen who were so enthusiastic for compelling younger and poorer men to sacrifice everything they possess, it is hard to find words to say what ought to be said of them. We hope, at all events, that the names of those who voted against the Government on the division will not be allowed to be forgotten in the constituencies.

16. _Pall Mall Gazette_, January 31, 1916:

_From Our Own Correspondent._

PARIS, _Saturday_.

The trouble that has been brewing for months past at the Central Markets has now come to a head. A well-known dealer was suspended by the Prefect of Police; the Home Office thought this insufficient and revoked his licence; and there is now talk of a prosecution.

The Central Markets are not a place which the habitual Parisian cares to venture into. Apart from its own peculiar and particularly pungent odours, the markets are peopled with a class of stallkeeper who do not exactly keep their tongue in their pocket, as the French say. They have, in fact, a flow of language, and it requires a brave man to make a stand against it--and all the brave men are at the front just now.

But the Central Markets not only have a language of their own; they have ways and methods of dealing that require long years of acquaintance to fathom, so only experts venture to make head or tail of them.

All this means that between the Central Markets, at the depository, and most of all that Paris wants to eat, and the actual consumer as represented by the ordinary housewife starting out on her daily round of shopping, there move and live a host of intermediaries. Large as their number is, they cannot compare with the middlemen who squeeze in between the Central Markets and the actual grower, breeder, or producer.

With so many hands for produce to pass through, each one eager to grab all that it can for itself before it passes the stuff along, it is small wonder that prices grow, not taking into account the burden of taxes and other charges the goods have to bear on their journey from the farm to the household.

ARMY OF INSPECTORS

The police have an army of inspectors for watching and superintending the work of the markets. The rules drawn up for their regulation would more than fill an old-fashioned three-volume novel, and each one provides for penalties severer and stricter than the other. Yet the profitable game of rigging the market and everything connected with it is in full swing, and no one is more fooled than the police, unless it be the public.

Since the war broke out, the State, the city, and the public alike, backed up by the small retail trader, have done their best to get even with the Central Markets. The more they try to put things right the worse they seem to get. Prices appear to ease for a brief space, but they soon become inflated once more. Or, if they do not, the particular commodity concerned simply disappears in some mysterious fashion until the "powers that be" submit to the inevitable, and shut their eyes to scheming they are helpless to prevent.

AS MUCH FOOD AS USUAL

The worst of it is that statistics can always be produced to show that the rise in prices is purely and simply the outcome of a falling off in supplies. Arrivals of fruits, vegetables, and fish in the last quarter of the past year were exactly half the average supply of an ordinary year; eggs were two-thirds below the proper figures, meat some 4,000 tons short, butter six tons, cheeses only a ton.

Of course, the population of the city has diminished also to a certain extent, but not so much as might be expected considering that there is practically no single family that has not one or more members at the front.

They have been replaced by refugees, sick and wounded soldiers, huge war administrations of one kind and another. Paris consequently wants almost as much feeding as in ordinary times, not taking any account of the fact that portions of both the British and French Armies still buy provisions on the Paris markets.

Notwithstanding the legitimate reasons that can be put forward to explain the upward trend of prices, the authorities know well enough that all is not so innocent and above board as it appears. One or two more glaring instances than usual of manipulation have put them on the right track at last. Other steps may also be expected, for public opinion has got to the point that either the "inside ring" must be broken up or popular resentment will take a form that no Government can afford to overlook or affect to ignore.

17. _The Daily News_, August 16, 1915:

A YEAR OF ECONOMIC WAR

The _Vorwaerts_, without boasting, as Dr. Helfferich has been doing, of Germany's financial invincibility, yet sees cause for satisfaction in the economic condition of the Empire after twelve months of war.

The upheaval of the first week of war was indeed serious, and the grim spectre of unemployment was in the air. But it was soon laid.

The best results were obtained in the sphere of unemployment. At the beginning of the war it was about 22-1/2 per cent, in October only 10·9 per cent, and in May it had further sunk to 2·9 per cent. The figures for June were 2·6 per cent as against 2·5 per cent in the previous June.... Similarly the daily output of coal of the Rhenish Westphalian Coal Syndicate, which in July, 1914, reached 327,974 tons, sank in August to 170,816 tons, in September rose again to 211,995, and in October to 223,760, the figures for that month being 60 per cent of those of the previous October.... In later months, in spite of the calling up of more and more workers, it has only been 25 to 27 per cent below the normal.

The writer tells the same story of the iron and textile industries, and traces the good results to the fact that the supplies of raw materials were far greater than had been thought. For instance, there were about 700,000 bales of cotton more than are needed in a normal year. Besides which the stores of conquered countries were at the disposal of the conquerors. The only trades which really suffered were those in luxuries.

The article concludes thus:

The German trade has survived the shocks of the first year of war
better than the most convinced optimist could have hoped, and
better than the organisation of other belligerents. All fears of
immediate inevitable industrial collapse which haunted us at the
beginning of the war have been dissipated. Instead of this we meet
in all industrial circles with the consciousness [often much
exaggerated] that "We can endure."

The words in brackets are significant.

18. _Pall Mall Gazette_, November 10, 1916:

LIVING ON WAR

KRUPPS' PROFIT JUMPS FROM 1-1/2 MILLIONS TO 4-1/2

AMSTERDAM, _Tuesday Night_.

An Essen telegram states that the clear profit last year of Krupps amounted to 86,400,000 marks (£4,320,000), as compared with a profit of 33,900,000 marks (£1,695,000) in the preceding year. A dividend of 12 per cent has been distributed.--Reuter.

_19. Pall Mall Gazette:_

GERMAN DIVIDENDS

ECONOMIC POSITION OF SOME OF HER COMPANIES

The 1914 dividends of over sixty limited companies, nearly all German, and the remainder Austrian, show that in the case of sixteen companies the dividends amounted to 20 per cent or over, the average being 25-3/16 per cent. These companies (says the _Morning Post_) are mainly engaged in the production of leather, dynamite, explosives, india-rubber, arms, ammunition, and powder. In one case, that of an explosives company in Hamburg, the dividend attained 40 per cent.

Germany is still barring the Swiss frontier, and for the last five days the German post arrived at Berne very late or not at all, thus pointing to great activity in military matters beyond the German-Swiss frontier.

As further proof, if proof were needed, of the sufficiency of Germany's food supplies, it is pointed out that she now offers to send to Switzerland large quantities of potatoes.

20. _The Times_, July 5, 1916:

WAR PROFIT-MONGERS IN RUSSIA

_From our Correspondent._

PETROGRAD, _July 2_.

The clergy will to-morrow publicly anathematise the "freebooters of the rear," who are amassing huge fortunes at the expense of the public.

21. _The Westminster Gazette_, Aug. 28, 1916:

GERMAN WAR SCANDALS

700 PER CENT PROFIT FOR EAST PRUSSIAN LANDOWNERS

ZURICH, _Sunday_.

Details of several recent corrupt affairs which have come to light in Germany have reached Switzerland.

At Mainz a timber merchant was arrested for bribing army officers to secure contracts for his firm. The official investigation revealed that he had paid a total of £50,000 in bribes to army officers. Some of the individual bribes were as high as £2,500. This timber merchant, who was almost a poor man before the war, has accumulated in two years a fortune which compelled him to pay income-tax on an income of £25,000 per annum.

Another scandalous affair was discovered in Herr von Batocki's new Imperial Food Department. One of his officials, Bernot by name, was bribed by numerous East Prussian landowners to have the crops from their estates bought by the Government at exorbitant prices. Bernot pocketed some £15,000, and the landowners in question sold their wheat at a profit of 700 per cent.--Wireless Press.

FOOTNOTES:

[Footnote 89: Net loss of £276,560 in first half 1914-15.]

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