Profit & Loss

Like a well-spread buffet lunch, there was food for every thought in last week's business figures. The stockmarket slipped badly one day, steadied the next, ended about on the same level (140.24 on the Dow-Jones industrial averages) it had maintained for two weeks. Some thought this was a lull before a reaction, others declared it a pause while business caught up. Meanwhile, steel production rose again, reaching 39.8% of capacity, an eleven-point rise since prices were cut June 24. Lumber production and wholesale food prices were also up. Freight loadings were off more than seasonally, as was power production. Wheat prices broke to new lows for the year and bank clearings slipped $700,000,000 from the previous week, were 14.6% under a year ago.

Last week there was confusion about the future and present, but none about the past. With a few meaty exceptions, semiannual statements showed that the U. S. had been buffeted indeed by Depression II. Samples:

First six months

Durable Goods 1937 1938

U. S. Steel $64,735,215 d$6,302,577 Bethlehem Steel 18,316,707 1,145,213 Westinghouse 11,331,772 4,500,602 Railroads Chesapeake & Ohio 15,462,607 5,523,568 Chicago, Burlington & Quincy 452,639 d 3,235,581 Building Materials Johns-Manville 2,881,334 d 24,897 U. S. Gypsum 3,401,253 2,181,219 Chemicals Du Pont 38,836,234 18,937,605 Union Carbide & Carbon .. 20,452,852 7,931,058 Automobiles General Motors 110,454,266 33,020,019 Chrysler 24,456,609 5,709,599 Packard 3,819,056 d 1,244, 965 Utilities Commonwealth & Southern 8,122,997 5,576,287 Consolidated Edison 7,831,954 9,487,423 Food & Drink General Foods 6,868,823 6,193,578 Standard Brands 5,721,352 4,266,261 National Distillers 2,792,938 2,766,353 Petroleum Union Oil Co. of California. 5,200,000 4,950,000 Tide Water Associated. . . 7,696,701 5,992,705 Shell Union 8,480,927 5,830,437 Aircraft Douglas 525,822 1.093,149 Martin 526,307 1,372,600 Cinema Paramount 4,290,000 1,225,811 Twentieth Century-Fox (26 weeks) 3,755,483 3,419,658 d=deficit The gloominess of some of these earnings was somewhat lessened when they were broken down. General Motors, for example, made $24,786,002 in the second quarter of 1938 compared to only $8,234,017 in the first quarter. With a similar improvement from $2,109,969 in the first quarter to $3,559,631 in the second, Chrysler's President K. T. Keller reported "a rapid liquidation of dealers' stocks of new and used cars."

All told, the net for the second quarter averaged an estimated drop of 70% in corporate profits from a year ago. For the nation as a whole, the Department of Commerce reported last week, income was off 8% from the first half of 1937, to $30,630,000,000. Should income in the next six months keep this pace, the 1938 total of $61,000,000,000 will be only $8,000,000,000 less than 1937--a smaller drop than anticipated.

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