"Profitless Prosperity"

Last week, as 1940 corporation earnings reports came out, Wall Street's judgment proved correct on one score: Profits were not keeping pace with production. To steelmakers and railroads, whose heavy capitalizations give them an advantage under the excess-profits tax, 1940 was a banner year (TIME, Feb. 10). But many a consumer industry found it a year of record sales, record costs, record taxes, and only moderate profits:

F. W. Woolworth Co., with its highest sales volume on record ($335,474,820), reported its lowest net income ($24,104,815) since dismal 1932. Besides a $2,400,000 tax increase, the company suffered a $3,317,900 decline in earnings from its British subsidiary.

American Can Co. reported sales of $197,515,224 (up 5%), taxes of $11,916,359 (up 37%), net income of $17,440,906 (down 5%).

Scott Paper Co. made a sales record (up 10.2% to $20,397,720). But taxes were up 56.8% (to $981,973), and net was down 8% ($1,736,522).

General Motors' preliminary report showed that earnings before income and excess profits taxes were largest in its history, $320,600,000 (1939 figure: $228,142,412). So were estimates of its sales: around $1,650,000,000. But so was its tax bill: $125,100,000, compared to $44,852,190 in 1939. So were wages: up 20% to an average of $1,804 for hourly-rated workers. Hence net income rose only about $12,000,000 to $195,500,000, a figure which G. M. has surpassed twice in the last ten years (1936 and 1937).

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