Brer Rabbit's Snare

Once upon a time, Brer B'ar was induced to take Brer Rabbit's place in a snare by the promise that he would thus make $1 a minute. Last week, U.S. corporations had Brer B'ar outclassed--and their earnings had almost reached the realm of fable. They were making $33,000 a minute. The Department of Commerce estimated that for the first six months, profits were at an annual rate of $29 billion before taxes, up $8 billion from last year and $4.5 billion above 1943's previous alltime high. Estimated profit after taxes this year would be $17.4 billion, up 28% over last year.

As company after company released its second-quarter reports last week, the estimates seemed reasonable. Increases of 100% to 300% above the strike-harassed 1946 period were not uncommon. Of 342 companies reporting at week's end, 237 showed bigger earnings, only 67 showed decreases. Oil--profiting from an unprecedented demand sufficient to outrun supply for two years--set the pace. Typical six months' earnings: Sun Oil Co., $11,360,170--up from $4,360,212; Phillips Petroleum Co., $15,459,699 v. $8,002,179; and Shell Union Oil Corp., $23,325,959 v. $15,090,389 in 1946.

Many another company in an industry where demand was still outstripping supply was doing equally well. Example: Container Corp. of America's six months' earnings of $5,664,668 were more than double the 1946 first half.

Fat Packers. Big Steel has yet to report, but the little-steel companies were fat. Sloss-Sheffield's $872,398 net was up 92% over 1946; Detroit Steel Corp.'s $2,747,433 up 63%; American Steel Foundries' $1,951,439 up 71%; Continental Steel Corp.'s $641,454 up 39%. Only Republic Steel Corp., whose second-quarter net of $5,214,820 was only half that of the first quarter, showed the rise in costs the producers complained about. Even so, its $16 million net in six months was four times its profit in the corresponding period of last year.

In the food industry, the ups & downs were even more noticeable. General Foods Corp., which had been nipped by soaring grain prices, had six months' earnings of $8,136,000, down $800,000 from last year. But the big meat packers who had not yet reported, were expected to have whopping profits. Said the New York Sun: "The market is talking such enormous profits for Cudahy that it thinks a stock split is inevitable in order to temper the impact of the income on the public mind."

Hungry Steel. After their hungry cry for another rate boost (TIME, July 14), some of the railroads turned out to be pretty well fed. Union Pacific's six months' earnings, at $20,601,834, were 51% above the 1946 period; Chesapeake & Ohio Railway's, $20,609,310, were up 57%. Some 25 roads did much better than last year--a poor year--including the New York Central Railroad Co., which made $2,053,711 v. a 1946 loss of $9,385,972.

But, for some, the cream on the boom was curdling. Eversharp Inc., which turned in a dazzling $1,074,274 last year in its second quarter, was down to $550,575. The rubber industry also had begun to feel the pinch of overproduction (TIME, June 23). Example: General Tire & Rubber Co.'s six months' earnings of $2,650,912 were down from last year's $3,237,831.

As with Brer B'ar, the profit picture held a snare for business generally; its riches were sure to bring increased pressure for lower prices or higher wages, or both. Yet there was little talk of lower prices. The talk--and worry--was all over higher prices. The steel industry had already started its own private inflationary spiral (see The Economy).

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