Document 413w14g0y9b865JdYG8KnLka

What is the rate of return to the people who have invested their savings in corporate busi ness? The table below shows that for the past three years the rate of return on both sales, and investment has been substantially below tho return achieved in earlier postwar years. The rate of return on stockholders' investment is higher now than it wa9 in 1939. But this is primarily because today's profits are reported in terms of today's prices, whereas much of the investment in plant facilities is still carried on the books, at prewar prices, which are substantially below the cost of re placement. The current rate of return, meas ured aB a percentage of total corporate sales, !b below prewar levels. Corporate Profits After Taxes Per Cent of Total Seles Per Cent of Stockholders' Equity 1929 e.t 1939 4.1 ' ....... w....... ................b*.............. 1948 1949 6.3 4.4 1950 5.3 . 1951 4.1 1952 S.6 1953# 3.7 NA 4.0 14.8 [ average ; 11.8 10.8 10.8 * Manufacturing eorparotinua only NA Not avallablo # Annual rata, Brat ala montha In considering these figures, it should be remembered that they are averages for all corporations. Some companies make more than the average, and many make no profit at all. In every year since 1916 at least 26% of all corporations have operated at a loss. In 1939, 68% of all corporations were losing money. This year the figure will probably be at least 30%. The improvement since 1939 shows a much healthier economy. But it docs not Indicate that profits are easy to make. How Big a Share of the Fief The most important Bingle fact about profits is that they now represent a smaller share of national income than they have in past years of normal prosperity. For the past three 1031 years, profits have taken a smaller shared the pie than in 1939, and considerably ssmmaallell than in the early postwar years. Here, as t,,h,,'ei chart at the beginning shows, is the record 1929 1939 1947 1948 1949 1960 1961 1952 1963* Corporate Profits Alter Texei^r^rA Percentage of National In'tonus ''i 9.6 ft9 * 6.a 9.3 7.5 9.4 7.2 &4 6.6 S' ............. ................... A? >* .Annual rate, first six months The main reason for tho declining corpoi?, rate share of national Income is, of course,^! the increasing Bhare taken by the federalv government in the form of taxes. The waget earners' Bhare is also higher than in 19393d But the really startling increase is in federal;'? taxes. Taxes on profits now equal almost 8%-t| of the national income, compared to only 2% in 1939. Why This Is Important It is important that these facts about profits! and taxes be widely understood. At its next? session, Congress must consider what to do about the emergency taxes on profits enacted ' after the outbreak of the Korean War. The so-called excess profits tax is scheduled to die hj! on January 1, 1964. In tho absence of new legislation, the rate of the corporate income tax will drop from 62% to 47% on April 1. ' Many factors, including the revenue needs of; the government, must enter into the decision' whether or not to reduce taxes. But one fact . stands out clearly: By comparison either with past years or with the total national 1 income, corporate profits today are rela- ' tively low. PIPING SYSTEM H ditcuiwd by Chief Mox Morjholl. rjoM, wllh DouglM Hufltr, -r -a_,,i. _ _l__ -- ,aa Aftfl IWWISI At ISMt-- fl VBfi lO TRAINING OPERATORS... Tho second article in this series will discuss what corporations do with their profits. I- M(Graw-Hill Publishing Company, bit- $ POWER NOVEMBER j- w ^NOVEMBER 1933 iW 43-week training program of three one-hour periods a weak lessons given on company time, with overtime pay e Supervisors teach courses e Former engineering-instructor guides lesson planning Total estimated cost of $25,000 proves good Investment Over 600 pages of text and drawings are given to trainees TURN PAGE turn opuauon ano MAmntuKce section in M S