Crest of the Wave

Despite the shoals of rising costs and material shortages, U.S. industry bowled along through the third quarter with all sails set--and made port with record profits. By last week, with more than 200 reports from big corporations already in, third-quarter profits were running 45% above the same 1949 period--when business was snapping back from a recession. For stockholders, that was only half the story. Scores of companies whose dividends had not kept pace with the high profits last week boosted their regular dividends or declared extras.

Pretty Picture. To nobody's great surprise, the television set makers made one of the prettiest profit pictures. Radio Corp. of America, the biggest U.S. set maker, netted $12.4 million (v. $3.9 million in 1949), and its nine-month total of $33.3 million exceeded any full year in the company's history. Ross Siragusa's mushrooming Admiral Corp. more than tripled its net to $5.2 million for the quarter.

Almost as spectacular were the coal companies and the railroads, both hampered last year by a coal strike. Pittsburgh Consolidation, biggest U.S. coal producer, more than doubled its quarterly net to $4.2 million. Pennsylvania Railroad, which like all railroads reports monthly earnings, said that in September its net hit $4.4 million, v. a $2.8 million loss a year ago. One freight booster: the Korean war.

Oil companies had also felt the effects of Korea. Because Standard Oil of California's net was 50% above last year's (at $46 million), its directors declared an extra dividend of $1. The Texas Co., whose net of $41 million was almost one-third above last year's third quarter, was going to mail out an extra $1.50 to its stockholders.

The housing boom, now being choked off by the new credit controls, had proved a bonanza for many a supplier. Bigelow-Sanford Carpet Co., whose rug sales had slumped last year, managed to increase its net an incredible 30-fold from $61,500 to $1.9 million by merely doubling its sales. Alexander Smith & Sons Carpet Co., which boosted its nine-month net six-fold to $4 million, declared an extra dividend of 50-c-. So did American Radiator & Standard Sanitary Corp., biggest in the plumbing fixtures trade. American Radiator's net hit an alltime high of $17.7 million for the first nine months, up 77% from 1949.

Record Bill. In the auto industry, Hudson tossed out an extra dividend of 75-c- and General Motors Corp., which in 1949 chalked up yearly earnings of $656 million, the biggest in U.S. industrial history, surpassed last year's total in the first nine months alone. But the higher corporate taxes (42% v. 1949's 38%), which were retroactive to Jan.' i, took such a big bite (roughly $50 million) that G.M.'s third-quarter net of $217 million was below the second quarter. G.M. set another record: its $605 million tax set-aside for the first nine months of 1950 was the biggest tax bill in corporate history, and more than the total profits of the entire U.S. steel industry in 1949. G.M.'s extra dividend during the quarter helped boost the net of E. I. du Pont de Nemours & Co., which owns 22% of G.M. stock, to $96 million, v. $49 million a year ago.

Almost all the steel companies did better than in last year's third quarter. Bethlehem Steel Corp. made the biggest news: because its net was up nearly 50% from 1949 (to $33 million), it declared a $2 dividend, for the biggest quarterly dividend outlay ($19.1 million) in its history. But Chairman Eugene G. Grace did not want Phil Murray's steelworkers' union to be misled by this benevolence. There is "no economic justification" for a wage increase now, said Grace, since the cost of living is actually lower than it was two years ago. But, he added with a sigh, "I suppose the steel industry can't ignore what's taking place in practically all other industries. If there's another cycle of inflation because of increases in wages and prices, however, no one can say this time that the steel industry led the show." If steel wages go up, said Grace, steel prices will have to go up to cover the costs.

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