BRITISH INDUSTRY IN WAR
The first full calendar year of war has been a period of unparalleled industrial activity and, generally speaking, prosperity in this country.
Heavy losses and bad times have been encountered in a few important industries, but these are balanced by unprecedented profits made by a large variety of industries, whether directly or indirectly affected by the war. One frequently finds that the neutral visitor carries away with him an impression of industrial England as one great living a.r.s.enal.
That is not surprising, as since July last the Munitions Ministry has erected (or improvised) and started a large number (it is not permissible to say how many) of State munitions works, and it has also mobilised the whole engineering resources of the nation to such an extent that in the first week of December no fewer than 2026 manufacturing establishments had been declared "controlled firms."
But it would be a mistake to suppose that, while war manufactures prospered, all other industry languished and decayed. To prove the contrary and show that only here and there were there heavy losses, we may quote some figures compiled by the _Economist_, which show that 720 industrial concerns publishing their reports during the first nine months of 1915, and having a capital of 531,678,701, made profits amounting to 52,881,300, or under 2-1/4 millions less than in the previous year (which in the case of almost all the reports was a year before the war).
Dissecting these figures, we find that not only iron, coal, steel, and shipping companies report enormous profits, but that increased earnings were shown by breweries, gas, rubber, oil, and trust companies, and others. The large exceptions which depressed the total profits were textile companies (other than those engaged on war contracts), catering, and cement companies. Shipping leads the van of prosperity owing to phenomenal freight rates, while iron and steel and shipbuilding, as direct and established purveyors of armaments, are close behind. As showing the industrial tendency of the year, one may quote the remarks of a trust company chairman at a recent meeting. Of 150 home investments possessed by his company, he remarked that a hundred had since the war yielded the same as in the year before war, while thirty had paid less and twenty more.
Into the circle of munition producers have been drawn cycle and motor, machinery, electrical, and many other branches of manufacture. Of other industries driven to fever heat by the war may be mentioned woollen and leather factories. Secondary effects of the war also produced a boom in several unexpected quarters. For instance, the high wages earned by war workers, and too generously spent in a vast number of cases, led to a strong demand for cheap furniture, pianos and many types of household goods which in normal times are usually out of reach of the purse of most wage-earners. But one trouble has beset all industries in common--a shortage of labour, which cannot but grow with every increase to the numbers of men drafted from the ranks of productive industry into the army or the munitions works. From all quarters comes the tale of orders, both from home and from abroad, that cannot be accepted. In the case of foreign orders that have to be refused, the labour shortage has what one fears may be lasting consequences. For custom once diverted to America or elsewhere is not easily regained.
2. _The Manchester Guardian_, March 3, 1916:
MORE GREAT PROFITS
HOLT LINE"S ENORMOUS SURPLUS
The China Mutual Steam Navigation Company (Holt Line) has had a greater year than ever. It has been supposed that regular liners were getting little benefit from the boom in freights, but a profit of 591,005, as against about 294,000 in 1914 and 386,418 in 1913, can only be explained by a very large partic.i.p.ation in special war-time gains. The dividend and bonus on the ordinary shares make 106 per cent for the fourth year in succession, and a still larger sum is being kept in hand, 200,000 being put to the reserve, as against 50,000 for 1914 and 100,000 for each of two years before that, and the balance forward is raised from 81,014 to 201,367. Most of the Company"s capital, however, only bears 6 per cent interest. The ordinary shares (which we believe are held privately) only amount to a little over 83,000.
3. _Pall Mall Gazette_, September 24, 1915:
WAR PROFITS
The other taxes are accepted by the public and traders alike as inevitable, but special interest is being taken in the excess war profits tax. That Mr. McKenna is likely to find his estimate of 30,000,000 largely exceeded is admitted. The _Daily Chronicle_ publishes a table in which the City Editor compares the last profits announced by some of our greatest undertakings, covering a considerable portion of the war period in most and some portion of it in all cases, with the average of the previous three years. It will be seen that in every instance the war has brought greatly increased prosperity.
Last Average Profit. Previous Increase.
3 years.
ARMSTRONG WHITWORTH 802,000 624,000 178,000 (Engineering, Shipb., etc.)
WM. BEARDMORE 219,000 185,000 34,000 (Engineering, Shipb., etc.)
JOHN BROWN 586,000 347,000 239,000 (Engineers, Shipbuilders, etc.)
BEYER PEAc.o.c.k 83,000 35,000 48,000 (Locomotive Builders)
BRUNNER MOND 824,000 770,000 54,000 (Alkali Manufacturers)
CAMMELL, LAIRD 238,000 147,000 91,000 (Iron, Steel, and Shipb.)
HAWTHORN LESLIE 202,000 102,000 100,000 (Sh"b. & Marine Engin"ring)
KYNOCH"S 153,000 114,000 39,000 (Explosives)
LAMBERT BROS. 142,000 84,000 58,000 (Coal Exporters, etc.)
POWELL DUFFRYN 422,000 279,000 143,000 (Collieries)
SAMUEL FOX 66,000 39,000 27,000 (Engineers)
SPILLERS & BAKERS 367,000 140,000 227,000 (Millers)
VICKERS, LTD. 1,019,000 809,000 210,000 (Eng. and Shipbuilding)
This table indicates that the Chancellor may expect to receive far more than the sum he estimated from the war profits tax.
4. _The Manchester Guardian_, Feb. 28, 1916:
COAL PROFITS NEARLY DOUBLED
The tale of colliery war profits is continued by the report of North"s Navigation Collieries (Glamorganshire). The output for 1915 was actually less by 87,810 tons (1,141,900 tons against 1,229,710), but the profit was nearly doubled--130,071 against 65,578. With the 10,496 brought into the account the directors had their biggest total in recent years available for distribution. The ordinary shareholders get 10 per cent and a bonus of 2-1/2 per cent, which is the best payment since the 15 per cent paid for 1907. Advantage is taken of a prosperous year to place 35,000 to the reserve fund, which has been rather overlooked recently, only one allocation of 20,000 having been made in four years. It now stands at 155,000, against 650,000 of share capital. For depreciation, with regard to which item substantial provision is made each year, 15,000 is written off. This leaves 10,567 to be carried forward. The Company has the reputation of being well managed, and its coal properties are regarded as being very valuable. The recently opened St.
John"s pits are being developed satisfactorily, it appears, a further increase in output being shown.
Despite a decrease in output of nearly 400,000 tons, the Powell Duffryn Steam Coal Company is enabled to show a profit for 1915 of 438,799, as compared with 422,204 for 1914 and 364,421 for 1913. The usual 20 per cent is distributed on the ordinary shares, free of income tax, and last year"s allocation of 50,000 to the reserve fund is repeated. In addition, the reserve for income tax benefits to the extent of 50,052, and there remains 120,236 to carry forward. The decrease in output, it should be noted, is due to the enlistment of the miners, and its restoration to the normal and probable increase after the war should balance the decline in profit that may be expected to attend the decreased demand.
5. The Times, May 19, 1916:
SOAPMAKERS" "RECORD" PROFITS
Presiding yesterday at the annual meeting of Joseph Watson and Sons (Limited), soapmakers, Leeds, Mr. Joseph Watson said that the company"s profits for the year amounted to 122,000, or 19,000 in excess of any previous year"s profits. Their turnover had largely increased because they were now supplying soap to France, Belgium, Scandinavia, and a small amount to Spain and Italy. It was not a question to-day of getting orders; it was a question of refusing them. They had at the present time three months" orders on the books.
6. _The New Witness_:
THE SCANDAL OF WAR PROFITS
It is a sinister and deplorable fact--one of the most ironical with which the continuance of the War has yet confronted us--that there has grown up in Great Britain a number of firms and businesses to whom a successful prosecution of the campaign would mean ruin, and who have an actual vested interest in the indecisive continuance of hostilities.
This is due entirely to the lack of grip and resolution which the Government have displayed in dealing with the ugly phenomenon of War Profits. We know, of course, what happens to those profits at present.
Half is taken by the State: half pa.s.ses to the firms who are getting "rich quick" out of its necessities. In theory, it is an anomalous arrangement, indefensible in logic, and opposed to every canon alike of justice and of taxation. In practice it works out in the way we have indicated: that certain privileged firms and individuals are ama.s.sing huge fortunes out of the gravest crisis through which the nation has pa.s.sed, and which will pinch us all before it is over.
Let us give some examples of the mammoth profits that some of these concerns are making. There is first of all the famous old English firm of Levinstein--Messrs. Levinstein of Manchester--to be considered. This "all-British" concern has not done badly out of the terrible situation through which we are slowly toiling. While mere vulgar English Tommies have been dying in the trenches or have returned incapacitated to England--to find that their country cannot afford them a pension--Levinsteins have been pocketing several thousands of that country"s cash. Levinsteins" are dye-makers, and in 1914-15 they made a profit of 80,000 _on a capital of_ 90,000: a profit large enough to make the mouth of the deceased usurer Kirkwood dry with envy. But, while our legislature pa.s.sed laws to restrain the usurer in his exactions, the "war profiteer" has no restriction placed on him. His workmen can, in certain cases, be fined or sent to prison if they absent themselves from work, and hundreds have been proceeded against under the Defence of the Realm Act. But the profiteer himself is immune! It is childish to say that the State can recover half of the profit he has wrung from the country"s necessity. What right has he to the other half? In the case of Levinstein, this 80,000 profit enables the company to pay 14-1/2 years" preference dividend, to distribute a dividend of 30 per cent on its ordinary shares, and to write off 21,000 for depreciation! It is merely fatuous to pretend, or to endeavour to pretend, that the appropriation of half these profits squares matters between the community and the British firm in question.
As with Levinstein, so with other firms. Messrs. Cammell, Laird & Co.
averaged profits of 146,000 for the three years before the war. Since last year those profits have risen to 237,000. Those profits, of course, are subject to war profits taxation. But most manifestly that taxation is utterly inadequate. So it is in the case of Messrs. W.
Beardmore, whose profits rose from 184,000 (three years" pre-war average) to 219,000; of the British Westinghouse Co., which rose from 56,000 to 151,000; and of Beyer Peac.o.c.k"s, which increased from 57,000 to 109,000.
In all these cases the deduction of 50 per cent by the Government is entirely inadequate and utterly misleading. It is at once an admission that the firm in question has no right to ama.s.s huge profits out of the welter and tragedy of the European War, and that the State is content to stultify itself by surrendering the other half.
Many of these profits have been made by covering rises in raw material far in excess of the actual increases. Many have been wrung from the poor and the needy, who are now being enjoined by the Government to eat less meat. Messrs. Spillers & Baker, of South Wales, increased their profits from an average of 140,000 (three years" pre-war average) to 367,000 in 1914-15. We do not blame them. The rise in price was beyond their control. They could hardly help benefiting. But it is mere madness for the Government to leave them in possession of these vast accretions of wealth. Firms that paid 8 per cent before the war, now paying 22-1/2 per cent (such as Messrs. Richard d.i.c.keson & Co., the Army contractors) are able to pocket tens of thousands that ought to go to strengthen the resources of the nation. Others, like the Mercantile Steamship Co., increase their dividend from 20 per cent to 35 per cent; and some are able to pay dividends actually larger than the capital of the company itself!
It is ludicrous for the Government to allow this condition of affairs to continue. Their course is quite clear. They should limit profits to the average of three years before the war, and add at the most 5 per cent.
Anything short of this is a betrayal of the national interests to private firms.