Mostly Bad, Some Good

The forgotten man of World War II, the U.S. shareholder, last week received some expected bad tidings.

Third-quarter earnings of 225 large American corporations were down 23% from the third quarter of 1941, according to a survey of the National City Bank. Losers included some of the biggest contributors to the war effort:

> E. I. du Pont de Nemours down from $24 million to $16 million.

> General Motors down from $43 million to $36 million.

> U.S. Steel down from $34 million to $13 million.

> Westinghouse Electric down from $4 million to $3 million.

Reason for the generally bad showing was taxes, which in the first nine months took 72% of net as against 54% a year ago. But a few companies bucked the tide in the third quarter. Crucible Steel got into its stride with a $2 million net, up 27% over last year. Sprawling Aviation Corp., top holding company for Vultee (which now controls Consolidated Aircraft) was up 50%. The earnings of one prime peace baby, Continental Baking, rose 58% over last year.

Compared with second quarter, earnings in the third quarter of 1942 were up by some 24%. This was mostly just bookkeeping. U.S. corporations through the first half of the year put aside huge tax allowances because they feared that the Treasury's tax theories would become law. Congress instead put through a milder bill (TIME, Oct. 26) and earnings reflected the change.

But though most U.S. corporations closed their third-quarter books after this Congressional windfall, they declared their dividends before it was assured. The New York Stock Exchange reported dividends down 5% from the June quarter, and 9% from last year's first nine months.

Real test of the stockholders' take will not come till fourth-quarter dividends, usually big, are announced. Meanwhile, digesting the earnings news and finding it, if not good, at least no worse than to be expected, the market last week held close to the year's best levels--such as they were.

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