Taxes & Profits

Not long before Franklin D. Roosevelt was nominated in Chicago in 1932 cool-headed investors could have bought stock in Chrysler Corp. for $5 per share. Last week the Chrysler directors assembled in their board room on the 56th floor of Manhattan's Chrysler Building, declared a dividend of $4 per share. That was the highest single payment ever voted in Chrysler history, equal to twice the amount paid all last year and within 50-c- per share of total dividends for the four years through 1934. Announced after the stockmarket had closed in Manhattan, the news touched off a twilight boom in San Francisco that lofted Chrysler stock to $121.50 per share, highest price since 1929.

For their open-handed treatment of their 31,500 stockholders the Chrysler directors had good business reasons. In the June quarter the company paid off the last $10,000,000 borrowed from the banks to retire the bonds inherited from the Dodge Brothers deal in 1928. That left the corporation debt free. In the treasury was $67,000,000 in cash, $14,000,000 in marketable securities. Furthermore, Chrysler sold more cars (578,000). made more money ($29,000,000), in the first six months of 1936 than in any first half since Walter P. Chrysler took over old Maxwell Motor Corp. in 1925.

Like the directors of every other profitable U. S. corporation, the Chrysler board must think about the new Federal tax on undistributed profits. Chrysler was one of the few companies to allow for the new tax in reporting for the first half of this year, adding some $4,000,000 or nearly $1 per share to Chrysler's usual estimates of tax deductions. The undistributed profits tax cannot be accurately computed until the end of the year, since profits for one accounting period may be paid out in the next. That was the case with Chrysler. When the fat $4 dividend is actually paid in September, the company will have passed out nearly all its first-half profits, although dividends paid up to June 30 failed by $18,600,000 to absorb Chrysler's astonishing earnings.

What Chrysler will do with the money it hopes to make in the last half of the year the directors did not say. But with corporate earnings running at the highest levels since Recovery set in, observers thought that the Chrysler action last week marked the beginning of a widespread business move to get profits into the hands of stockholders before the year end.

Meantime these typical corporations have reported for the first six months of 1936:

P: Price wars in roofing materials held Johns-Manville's income for the March quarter down to a measly $176,000. But the No. 1 U. S. asbestos company turned in a thumping second quarter, finished the half-year with profits of $1,474,000 compared to $798,000 in the same six months of 1935.

P: Smart young Walter Paepcke's Container Corp. of America boosted earnings from $432,000 in the initial six months last year to $481,000 for the first half of this year.

P: With sales up 97% largely because of the success of its "One Twenty," Packard Motor was in the big money once again with six months' profit of $3,520,000. In the first half of last year the figure was only $290,000.

P: Libbey-Owens-Ford Glass had the best half-year in its history, made $5,102,000 as against $4,284,000 in the first six months of 1935.

P: John Hay ("Jock") Whitney's Freeport Texas reported semi-annual income of $1,014,000 as against $550,000 in the initial half of last year.

P: Otis Elevator lifted its half-year earnings from $114,000 in 1935 to $934,000 in 1936.

P: National Cash Register cashed in on its 90% control of the U. S. market to the extent of $1,159,000. In the first half of last year the figure was $697,000.

P: Finishing its best quarter in more than six years, Westinghouse Electric & Manufacturing reported half-year income of $7,937,000 as against $6,265,000 in the first six months of 1935.

P: With orders up 30% General Electric reported profits of $16,592,000 for the half year as against $11,541,000 in the same period of 1935.

P: Bon Ami topped its showing of $494,000 for the initial six months last year with a 1936 figure of $587,000.

P: Cream of Wheat made $577,000 for the half as against $479,000 in the first six months of 1935.

P: For Union Carbide & Carbon the second quarter of 1936 was the best in six years. Profits for the half were $15,439,000 up 45% from the first six months of last year.

P: National Distillers Products, which makes flavorings for candy and ice cream, as well as hard liquor, was one of the few U. S. corporations to show a drop in earnings for the first half--$2,760,000 as against $2,882,000.

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