The World in Chains

J >> John Mavrogordato >> The World in Chains

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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 L453,136, or L237,808 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 L100,000 to reserves, making them L500,000; L30,000 goes
to staff pensions and L25,000 to a war fund for employees. The carry
forward is raised L30,740 to L88,969. 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
L204,971, presumably to meet the excess profits liability. Debit
balances have increased L509,840, and now include Treasury bills. War
loans have been increased L280,652, and the total assets are up
L451,183, at L4,541,601, and have earned 10 per cent. When all creditors
have been paid the quick assets amount to L930,654, and amply protect
the debentures, L900,000 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 L4,694 to L35,170; but
income tax is higher, and L5,000 has been used as a special reserve for
investments, so the available profit is only L23,046, as against L25,055
in the previous year. The dividend remains at 20 per cent, but L3,072
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 L151,557 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 L13,595. 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 L2,250 is placed to reserve and the carry forward is
raised from L3,603 to L6,399. 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 L179,765. 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
L225,000. The Nitrate Producers' Steamship Company is putting L200,000
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 L6,000,000, but the actual sum received was
only L140,000, and the L6,000,000 has not been got yet, the yield from
April 1 to June 10 being only L3,556,000. A sharp increase is bound to
come, however, in the course of the financial year. The Chancellor of
the Exchequer expects to get L86,000,000 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

L L L

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
L L L
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 L143,600 had been added to the depreciation account, making it
L634,170. Credit balances had swollen by the sum of L175,589. The profit
on the year was L900,947, as against L234,064 last year. On the credit
side, properties stood at L4,405,917, and had increased by the new
properties acquired. The live stock stood at L34,000 less than last
year, due to a smaller stock of "Invernada" cattle. The stocks of
extract and felled timber had risen by L115,000, principally owing to a
larger stock of felled timber. Debit balances had risen to L156,000. In
the profit and loss account the trading profit was L1,281,299, as
compared with L614,879 last year, and, after deducting London charges,
debenture interest, depreciation, and legal reserve, there was left a
profit of L900,947.

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, L524,855 profit has been earned, representing 187 per cent on
the capital of L280,000.

The previous year's earnings were L87,105.

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
L50,000 in 1914, and of L60,000 (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:

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