Munitions Industry: September 4-6, 1934. Electric Boat Co

Leather and leather goods

[Source: F. T. C. Report, pp. 15-17]

A number of the larger tanning companies in the United States had net profits in 1916 that were in several instances two, three, four, or even five times as large as the 1915; and the 1915 net profits, in turn, showed increases of from 30 percent to more than 100 percent over those of 1914. One striking instance is a company whose net profits were reported as follows:

1914.
1915.

1916.

$644, 390. 90 945, 051. 37 3, 576, 544. 27

The tanners took advantage of the enormous demand for leather and took very high prices. During 1917 the prices of hides were advanced very rapidly, notwithstanding that during the period of advance great supplies of hides were withheld from the public.

As an indication of earnings of the big packers in the selling branch of their leather business the following is quoted from a letter of January 17, 1917, by the Eastern Leather Co., an Armour selling subsidiary, to Mr. F. W. Croll, of Armour & Co.:

"We are inclosing our check on the National City Bank, New York City, payable to Mr. J. Ogden Armour, for $915,787, same being a dividend of 53 percent on the 17,279 shares of common stock standing in his name. In addition to this, and in accordance with our conversation when in Chicago, we have set aside as a surplus $250,000, which represents 10 percent on the common stock.

We are also inclosing a check on the National City Bank for $202,145.62 payable to Mr. Armour, this being the balance due on 6,020 shares of common stock held for employees."

Flour

[Source: F. T. C. Report, p. 17]

Figures from representative mills for the four years ending June 30, 1916, indicate that the flour millers received a profit of 131⁄2 cents on each barrel of flour and 12 percent on the capital investment. In the year ending June 30, 1917, these same mills made an average of 52 cents on each barrel of flour sold and nearly 38 percent on their capital investment. For six months of the year one mill showed an average profit of $2 per barrel.

The average net profit of jobbers reporting to the Federal Trade Commission was about 15 cents per barrel for 1913 and 1914, but increased to nearly 50 cents the first half of 1917. These profits include all the pay received by the proprietors of the business for their services.

Salmon canners

[Data and quotation from F. T. C. Report, pp. 18-19]

Ninety percent of the salmon packed in 1917 was produced at a total cost that was less than $7.75. The weighted average of the 1917 opening prices for different grades of salmon was $8.29 per full case, but more salmon was sold above than below this price during the year. This indicates a margin for a high-cost canner of 54 cents per case and larger margins on the bulk of the production. Several canners having costs in the vicinity of $7.25 in 1917 made profits as follows:

These are high-cost companies. The following figures concern the average: In 1917 the average net profit on investment of 90 companies, packing 7,426,678 full cases (87 percent of the total year's pack) was $2.28 per case, or 52.8 percent on the net investment in the salmon canning business proper. This

average of 52.8 percent does not reveal the fact that some of the low-cost companies, included in the average, made over 200 percent. It is significant that some of these low-cost companies are those allied with the big meat packers.

Ordnance

[Source: Report on Expenditures in the Ordnance Department, cited above under Copper. Report No. 1400, pp. 37-39; serial 1, vol. 3, pp. 621-623. Quotation from p. 39 (623)]

American Brake Shoe & Foundry Co. had several Government contracts for howitzers and the Government furnished $5,572,945 for new buildings and machinery equipment in connection with them. The exact plans for the howitzers were apparently not definitely in hand and according to the company's statement the Ordnance officers made 30 changes in dimensions and specifications. Consequently, there were repeated delays in turning out the guns.

"As a result of these contracts, in addition to costs of every kind, including salaries of executive officers, the American Brake Shoe & Foundry Co. received a profit of $841,364.70. Included in the cost were the labor, materials, salaries, and even taxes, all of which the Government paid, and an additional item of $37,500 interest on money which the company had used in this work. The entire amount paid to the company, exclusive of its cost, amounted to, approximately, $1,000,000."