Rich Black

The first big batch of returns came in last week. And U.S. industry found that, despite strikes, shortages and controls in 1946, actual profits lived up to the great expectations. The big boost came in the final quarter of 1946. Then, the Department of Commerce estimated, production had increased to such a peak that the national income (wages, rents, net corporate profits, etc.) was at a rate of $173 billions annually v. $164 billions for the whole year.

To no one's great surprise, steel, the basic industry that supported this tremendous production, turned in some boxcar profit figures. U.S. Steel Corp., which shipped more steel (4,902,742 tons) in the last quarter of 1946 than in any peacetime year, ended up with a whopping net of $88,683,530 for the year, more than 50% better than in 1945. In the last quarter alone, net profit was $31,215,636 v. $13,267,300 in the same period of 1945. Strikes hurt Big Steel less than expected because it charged off the cost--some $29,000,000--against reserves piled up during the war.

Most of the other big steel companies also did well, with profit boosts ranging as high as 68% over last year. Poorest performer on the books was Bethlehem. Its net profit for the year was only 19% better than in 1945. But it was still Bethhem's best showing in six years.

Up P. & G. The oil industry had its best year in over a decade. As first reports came in, Wall Streeters guessed that the industry would net 25% more in 1946 than in 1945--and 1947 earnings are expected to be another 15% better. Outstanding example: the Atlantic Refining Co. reported a net profit of $9,634,000 for 1946 ($3.26 a share) compared to only $1,507,148 in 1945 (34-c- a share). Returns from the motor industry were not yet in. But most of the big automakers, Wall Street guessed, were at last making tidy profits.

Consumer industries, notably those making food and household products, were not far behind the basic producers. In the last quarter many cashed in heavily on OPA's death. Typical was Procter & Gamble: for the six months ending December 31 it netted $16,300,341 v. $9,456,033 in the same period of 1945. (And P. & G. had laid aside $14,500,000 to take care of any inventory loss if prices dropped.)

Even the troubled railroads, overwhelmed by rising costs and falling traffic, did not do as badly as they had dourly predicted. Most of the 28 roads reporting last week were in the black. Notable exception: for the first time in its 100 years of operation, giant Pennsylvania Railroad wound up with a deficit--about $9.5 million.

Up D.J. There were other companies still losing money because of 1) low production caused by material shortages or 2) rising costs. And with the seller's market turning into a buyer's market, manufacturers were afraid to boost prices higher. But even some of the laggards were suddenly doing well. Western Union, which had cried recently that it could not help but go into receivership, turned in a profit of $500,000 in the last quarter.

To all this good news, the stock market reacted as expected. The Dow-Jones industrial averages rose 5.53 points to 180.88, highest point since just before the market collapsed in September.

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