Good Third Quarter

U.S. corporation profits in 1941's third quarter were hay made while the sun shone. Combined profits of 200 big concerns (compiled by National City Bank) were $374,000,000, highest since 1929 and 48% above the September quarter of 1940. Nine-month profits were up 28%.

But over these cheerful figures hung a sinister statistical shadow. For the first time in U.S. financial history, Federal tax collectors got a bigger share of profits than shareholders. The National City Bank calculated that Federal income taxes on 140 concerns in the first nine months of this year were 55% of all profits, leaving only 45% for stockholders.

Paradoxically, anticipation of taxes was one of the main reasons for the good third-quarter showing. Many a supercautious firm set aside too much for taxes in the first half (TIME, Aug. 11), was therefore able to ease up in the September quarter.

Some quarterly reports:

> Oilmen turned in some of the most cheerful reports. Thanks to larger sales at higher prices, profits of 16 companies jumped 130% over 1940's third quarter to $23,673,000. Phillips Petroleum, which (together with Goodrich) is expanding synthetic rubber production, boosted profits from $2,400,000 in the September 1940 quarter to $4,326,000 this year. Independent Producer Barnsdall Oil sold some West Texas leases, lifted earnings from $561,000 to $3,144,000.

> The last-minute rush for 1941 model cars meant lush earnings for automakers. General Motors, announcing that defense items were 24.7% of its third-quarter sales (first quarter: 8.7%) showed profits of $43,022,000 v. $15,621,000 a year ago. Little Hudson Motor Car--which last week turned out its first 20-mm. anti-aircraft gun for the Navy--lifted profits from $531,000 to $1.191,000.

> Excluding those in top-notch tax brackets, machinery makers did unusually well. Third-quarter earnings of oil-well equipper National Supply soared from $77,000 to $1,775,000.

> Defense, high wages, heavy taxes and strikes pushed steel profits up, down and sideways. Wheeling Steel (garbage cans, roofing, etc.) boosted third-quarter profits 16%, nine-month profits 99%. Bethlehem, which was a defense early bird and therefore reached its earnings peak last year, saw this quarter's profits slump from 1940's $12,462,000 to only $7,911,000.

U.S. Steel earnings held steady: $34,313,-ooo against $33,103,000.

> A 25% rise in freight traffic lifted railroad net to the decade's highest level. A.A.R. estimates that first nine months' earnings of all Class I roads jumped 512% to $358,583,000. But the rise is petering out; September net was 93% above last year.

This week, as hundreds of additional reports came out, statisticians and stockholders alike wondered how long such gains would continue. In some industries --especially aircraft, shipbuilding and machinery--continuing sales increases will probably keep profits ahead of fast-running taxes. But in industries working at capacity or facing curtailment--like steel and automobiles--taxes are winning the race.

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