Profit into Loss?

RENEGOTIATION

Cleveland's Jack & Heintz, the Katzenjammer Kids of U.S. industry (TIME, April 6, 1942, et seq.) were last week playing a new role. Famed for their fantastic bonuses to "associates" (employes), as well as for their bang-up job of turning out plane equipment, they were putting up a noisy fight to hang on to their money. The War Department had ordered their 1942 profits pared by $7,000,000 ($5,250,000 has already been collected in taxes).

In the Red. Ebullient, hard-working President William S. Jack flatly stated, in half-page newspaper ads in Manhattan and Cleveland, that this major operation would leave the company $2,826 in the red for the year. He murmured darkly to reporters that the "Roosevelt administration is flirting with revolution," predicted that soldiers would come home to "the worst mess in the nation's history" if industry is not left enough funds to provide postwar jobs. Certainly, he affirmed, there would be no jobs at Jack & Heintz if the renegotiation board had its way. Furthermore, Jack explained that the $75,000 each collected by him and Vice President Ralph M. Heintz had shrunk to $33,000 each after taxes.

He added that Jahco had offered to return $1,200,000 of its 1942 profit after taxes and plunk the remainder in a postwar fund. The offer was rejected.

In the Black. Under Secretary of War Robert P. Patterson smoothly answered Bill Jack with a barrage of figures. He pointed out that Jahco had started in 1940 with an original investment of $100,000, boosted this to $354,000 through war profits by the beginning of 1942.

Said Patterson: "The 1942 profit of $8,361,000 (before taxes) was over 23 times what the owners had in the business at the beginning of the year and more than 35c on each dollar of sales. It must be remembered that the company's business is financed principally by the Government." On Patterson's figures, Jahco had approximately $375,000 more profit before taxes and renegotiation than was shown in company figuring.

Red & Black. The profit & loss dispute depended on who put what in the profit column. Under Secretary Patterson listed as profit $375,000 of the total J. & H. salaries and other items such as $13,000 for turkeys for nonemployes. Bill Jack listed all this as "expenses," although the Internal Revenue Department disallowed them.

But was $375,000 an adequate profit on $23,000,000 worth of business? Bill Jack felt sure it was not. In the next few weeks, he plans to plaster the U.S. with ads in 49 newspapers condemning renegotiation and asking for the law's repeal.

This file is automatically generated by a robot program, so reader's discretion is required.