The Peak?

U.S. industry tumbled out a flood of year-end reports last week. From smeary ticker-tape bulletins to four-colored brochures, the news was golden. Despite the squeeze of taxes and rising costs, overall profits for U.S. industry in 1943 were slightly better even than richly profitable 1942.

Standard & Poor's totted up the profits of 206 representative companies, found they had edged up not quite 5%. The New York Sun rang up the net incomes of 215 companies, found they were up a bare 2%. With U.S. production up a solid 17% during the year, this was little enough to crow about -- with renegotiation still to come. But renegotiation, trimming off the lard, may not be such a hazard now: during the year, many a corporation sensibly slashed its prices to Uncle Sam. And as an additional bulwark, many companies built up special renegotiation reserves to take care of refunds.

Hope Chest. Outstanding example of this was Tom Girdler's Consolidated Vultee Aircraft Corp. It was also an outstanding example of the fact that in union there is often more money. For the year 1943 (excluding Vultee profits before the two companies merged last March), Board Chairman Girdler reported profits of $19,268,000, compared to $7,004,000 for both companies for the entire year 1942. Earnings per share of common stock jumped from $4.86 to $13.77.

But Chairman Girdler took pains to point out that this glowing record was made despite whacking reductions of $171,000,000 in the price of planes. On top of that, Consolidated funneled $80,000,000 out of profits into a special renegotiation reserve. Cautious Mr. Girdler stated that he hopes this will be sufficient to cover any refunds caused by renegotiation.

Up Rubber. Profitwise, the No. 1 surprise was rubber. After booming 1941, tire makers were hard hit by the shortage in crude. Then followed the intricate, trouble-studded job of turning out a host of new products, with tricky synthetics. But Goodyear's Board Chairman Paul W. Litchfield now revealed that volume had soared a resounding 68% during 1943. Profits had tagged along, ending up at $21,479,000 ($8.94 a share) v. 1942's $14,371,000. Percentagewise, U.S. Rubber did even better with a net of $14,164,000 v. $8,381,000.

Backyard Lode. Even Wall Street had a bonanza: the Exchange's biggest firm, Merrill Lynch, Pierce, Fenner & Beane struck gold in its own backyard. From a modest net of $147,000 in 1942, when it was desperately stripping ship to sail out of the market doldrums, Merrill Lynch kited its profits 33 times to $4,854,000. To do that, Merrill Lynch had to buy & sell $3,000,000,000 in securities and commodity contracts. The profits will not be long in pocket. Taxes, which are not computed in the net--Merrill Lynch is a partnership and taxes are paid by the individuals--will siphon off all but $1,100,000, leaving an average of $20,750 for each of the 53 partners.

Up Utilities. Even the utilities, which long ago were thought to be bumping against ceilings both as to capacity and profit, came through with a surprising rise. Commonwealth & Southern rang up $12,312,000 v. $10,375,000 in 1942. But giant A.T. & T. had harder going. To boost its net some $13,000,000 to $177,769,000, it had to heave up its gross nearly $200,000,000.

But in the great mass of corporations, both in & out of war work, many failed to boost gross fast enough to outrace rising costs. Typically, F. W. Woolworth turned in an alltime high of $439,009,000 in sales. Burly, shrewd Charles Wurtz Deyo, 63, Woolworth's up-from-the-ranks president, who broke the 10-c--top-price tradition back in 1932, found that this backbreaking upshove in gross was not enough. Woolworth profits sank to $21,952,000 v. $23,539,000 in 1942. General Electric fared little better. It announced a record volume of $1,300,000,000, up a muscular 39%, but saw profits ease off to $44,923,000 v. $45,082,000.

The poorest showing of all was made in steel. Caught between the pincers of rising costs and prices frozen at 1941 levels, profits of the ten top companies dropped, failing by a round $5,000,000 to match those of 1942. Ominously, much of the drop came in the last quarter, causing steel men to take a morose look at current earnings and cross their fingers that OPA will grant requested steel price increases.

The Way Down? All this was solid evidence to many a Wall Streeter that profits, despite the still rising curve of U.S. production, are at or near their alltime peak. From now on, they may have no place to go but down.

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