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ExHIBIT No. 1114
PROFITS DURING THE WAR

Except where otherwise indicated, the source for this material is the Report of the Federal Trade Commission Regarding Profiteering, Senate Documents, vol. 20 (65th Congress, 2d session), Document No. 248. Similarly, unless otherwise indicated, matter in quotation marks is from that report.

Steel Following are data on the profits of the United States Steel Corporation:1

. Dividend . earnings violenois Adjusted nośl, of invest- paid on earnings ropert g ment (Per-| common property cent A of stock B) A 2 B C D

89,632,866 1,240,037,618 7.2% 5% 131, 155, 107 1,254,087, 247 10.5 5

45,947, 126 1,264, 417,024 3.6 3. 131,223,931 1,298,625,473 10.1 1.25 348,254,465 1, 503,624, 172 23. 1 8.75 585,494,439 1,660,995, 318 35.3 18 519,469,417 1,764,408, 642 29.4 14

1 Source: Report on Analysis of Earnings and Disposition Thereof, United States Steel Corporation, so for Director General of Railroads by Washington E. Lowe, C.P.A., James L. Dohr, C.P.A.,

uly 5, 1919, Exhibit “F”, columns 3, 4, 5, and 13.

* Earnings in column A are reported as o: by the accountants, who added to the net earnings reported by the United States Steel Corporation the following items o; deducted in the corporation's statements: Interest on bonds, etc., of subsidiary companies; inventory profits, intercompany; sinking funds on subsidiary bonds; and excess depreciation.

[Source of the following: F.T.C. Report, p. 9]

In 1918 some mills whose processes start with steel furnaces complained that the Government prices were too low for them. “A special examination of their profits by the Federal Trade Commission showed that in almost every case these objecting mills were enjoying unusual returns. The following table of percentage of return on investment in 10 mills (of this class) will show the profits in 1917:

Percent Alan Wood, Iron & Steel Co------------------------------------- 5.2. 63 Allegheny Steel Co---------------------------------------------- 78. 92 American Tube & Stamping Co----------------------------------- 40. 03 Central Iron & Steel Co----------------------------------------- 71. 35 Eastern Steel Co------------------------------------------------ 30, 24 Forged Steel Wheel Co------------------------------------------ 105. 40 Follansbee Bros. Co--------------------------------------------- 112. 48 Nagel Steel Co------------------------------------------------- 319. 67 West Penn Steel Co--------------------------------------------- 159. 01 West Leechburg Steel Co---------------------------------------- 109. 05”

Copper
[Source: F.T.C. report, p. 10]

The Federal Trade Commission reports the following profit data of 21 copper companies and notes that they include a large proportion of high-cost producers:

Range of profits Average profit percent of percent of investment investment 1913--------------------------------------------------------------------- 1- 56% 11.7% 1917--------------------------------------------------------------------- 1-107 24.4

The profits used in these computations do not include Federal income or excessprofits taxes and therefore represent sums actually retained by the companies for addition to surplus or dividends.

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Wartime profits of four copper companies

|Source: Select Committee on *: in the War Department, [Graham Committee] Expenditures of the Ordnance Department. . R. (66th Cong., 3d sess.) Report No. 1400, p. 94. earings before the Select Committee, Serial 1, vol. 3, p. 678)

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While the Federal Trade Commission reports no unusual profits in the zinc industry, it excepts the New Jersey Zinc Co. Its percentage of net earnings and dividends follow:

Company's databased Federal Trade Comon capital stock is- Inission data based sue on investment

Net earn- Dividends | Net earn- Dividends

ings ings *---------------------------------------------------- 72.5% 76% 95.9% 76% *17---------------------------------------------------- 56 46 (1) (1) * No figures available.

The Commission notes that the company's profits on common zinc are very low. Those on grade A zinc, while high, are due to the fact that the company possesses a natural monopoly of a certain high-grade ore.

Nickel
[Source: F. T. C. report, p. 11]

The International Nickel Co. produces practically the entire output of nickel in this country. The figures for its profits and dividends are:

Percent of total Percent of capital and surplus investment 1 Year Profits Dividends Divi- DiviProfits denos | Profits dénés *------------------------------- $13,557,000 || $10,575,000 ; 15.6% 40 § *------------------------------- (*) (*) 15% 12% 30% 24%

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It should be added that the increase in profits was due to the increased war output rather than to advances in price, for the company maintained prices on a prewar basis.

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Sulphur
[Source: F. T. C. report, p. 11]

During the war all the sulphur in this country was produced by the Freeport Sulphur Co. and the Union Sulphur Co. In the first half of 1917 the Union company's costs were $5.73 per ton. The average realization of the Union company during this period was $18.11 per ton, making a margin of $12.38 per ton. By June 1918 costs increased but did not reach $10 per ton, while sulphuric acid manufacturers were paying about $25 per ton and some as high as $35, making a margin of over $15 per ton for the sulphur company.

Data for Freeport Sulphur Co.:

For the 11 months ending October 31, 1917, the company's balance sheets show an operating profit of $4,301,310 or 236 percent on investment. sompany's balance sheet on Nov. 30, 1916, shows dividends declared of

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si; opany's balance sheet on July 31, 1917, shows dividends declared of

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The company's balance sheet on Oct. 31, 1917, shows dividends declared of $2,600,000.

Surplus: Nov. 1916, $1,254,000; Oct. 1917, $2,543,000.

Lumber
[Source: F. T. C. report, p. 12)

In 1917, 48 southern pine companies made an average profit of 17 percent on the net investment. This is .."; large for the industry, for the average profit in 1916 was only 5.2 percent. In 1917, 47 percent of the footage of the companies covered was produced at a profit of over 20 percent.

The margin of profit per thousand board feet in 1917 was nearly double that in previous years, the figure being $4.83, as compared with $2.11 in 1916. The 1917 figures are after deducting for Federal income and excess-profits taxes, and are the sums actually available for additions to surpluses or dividends.

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The bituminous coal operators in 1917 had much larger margins than in previous years. The margin is the sum actually received by the operator for coal sold less its f. o. b. mine cost. The increase is illustrated by figures for 23 typical bituminous coal companies in the central Pennsylvania field.

Year **** Highest margin Lowest margin 206 $0.41 136 90: 1.85 27:

Petroleum and its products
[Source: F. T. C. report, pp. 13–14]

Data secured by the Federal Trade Commission for 106 refining companies for the first quarter of 1918, supplemented in certain cases by returns for the second six months of 1917, indicate that the average profit in the oil industry was about 21 percent on the investment. This is a considerable increase over the return for pre-war years when the average profits for 1913, 1914, and 1915 were 15 percent on the investment. In 1917 over 50 percent of the estimated production was produced by companies having a profit of over 20 percent. The following table shows the percentage of net earnings on investment for a series of years:

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