March Quarter

Next week American Telephone & Telegraph Co. will celebrate its 50th anniversary with a dignified one-hour radio broadcast. In Washington, however, the new Federal Communications Commission is preparing to mark A. T. & T.'s golden jubilee in livelier fashion. Armed with a $750,000 appropriation, the Commission is already at work on an investigation of the telephone industry for the benefit of the U. S. Senate, which discovered to its amazement that A. T. & T. had never been put under the Congressional microscope. President Walter Sherman Gifford says there are no skeletons in his closets, and last week at the annual A. T. & T. meeting in Manhattan he confined his remarks to routine business.

Not so the stockholders, who turned the meeting into a rousing capitalist demonstration. They cheered loudly when President Gifford announced that his salary was $206,250 per year. "He's worth more than that," yelled a Gifford rooter. One stockholder uprose with a plea "to end all troubles by voting the Republican ticket." Another suggested an educational program for the public and for legislators. "Did you call them legislators?'' fumed a little grey-haired man in the front row. "They're not legislators; they're inflated balloons."

But when it was suggested that A. T. & T. split its stock (last week's price: $110) so that the present $9 dividend would not draw political fire, President Gifford put down his foot. A split would merely reduce the rate, not the amount actually received by stockholders. "The company," said Mr. Gifford suavely, "should not try to hoodwink the public at all."

A. T. & T.'s first-quarter profits failed to cover first-quarter dividends by nearly $12,000,000--15th consecutive quarterly period in which A. T. & T. has had to draw on surplus to maintain its traditional $9 rate. And the succession of deficits since 1932 has eaten into the surplus of A. T. & T. and its subsidiaries to the extent of about $110,000,000. Every three months, just before the directors meet for dividend action, Wall Street nervously debates the possibility of a dividend cut. But with $250,000,000 in cash & Government bonds and surplus still above $400,000,000, A. T. & T. manages to stand the strain. Last week President Gifford was almost sanguine on the business outlook. Telephones in use registered a net gain of 112,000 in the three-month period, jumped another 22,500 in the first two weeks of April.

P: At the annual meeting in Schenectady, N. Y. last week President Gerard Swope of General Electric reported March quarter profits up 37% to $5,390,000. Business booked during the first three months increased from $38,000,000 in 1934 to $49,000,000.

P: Long-headed grocers, cramming their shelves against a rise in food prices, helped General Foods make $3,680,000 in the March quarter last year. With buying "more nearly normal" in the first three months of this year. General Foods' profits were down to $3,361,000. C. Edward J. Cornish, dour president of National Lead Co., told his stockholders last week that March quarter business was the best for that period since 1930. President Cornish declared that he could easily raise prices but that he preferred not to "squeeze" consumers. Profits from European operations were currently better than from those in the U. S. C. In a brief preliminary report, E. I. du Pont de Nemours & Co. announced that March quarter profits amounted to about 85-c- per share of common stock as against 90-c- in the same period of last year.

P: Benefiting from the slight pick-up in building, Johns-Manville Corp. operated in the black for the first March quarter since 1931. Profits were $246,000 as against a loss of $76,000 in the same three months of 1934 and a loss of $953,000 in the March quarter of 1933.

P:Better building also helped Otis Elevator turn a loss of $252,000 in the 1934 initial quarter into a nominal profit in the same period this year.

Total profits of the first 1,136 industrial corporations to report for 1934 were $982,000,000, an increase of 54% over the $635,000,000 earned by the same companies in 1933. Only important industrial groups losing ground last year were leather & shoes, sugar, textile & apparel, aircraft, shipping & shipbuilding. Even including utilities, which showed a 6% decline in profits, and railroads, which operated at a deficit, the net increase in U. S. corporate profits for the second year of the New Deal was a clear 25%.

Reports for 1934 are still dribbling in. Coca-Cola's common stock jumped ten points to $206 per share one day last week on news that last year's earnings were even more than expected--$14,300,000 as against $10,800,000 the year before. Standard Oil Co. of California reported profits up from $7,500,000 in 1933 to $18,300,000 last year. Colgate-Palmolive-Peet's profits increased tenfold to $3,744,000.*

A different story, however, was the report of Amoskeag Manufacturing Co., biggest cotton textile producer in New England. The famed old Manchester, N. H. concern was once again in the red by $1,000,000 even without any allowance for depreciation. Blamed was the decline of the New England cotton business. Boston's Frederic Christopher Dumaine, Amoskeag's treasurer and real boss, declared: "Nearly 1,000,000 New England spindles have gone to the scrap heap in the last few weeks. ... No management is competent to operate a plant like this, handicapped with . . . $2.56 [per week] average wage differential, which is particularly fatal to us as we have no mills in the South. . . . The two shift policy helps neither owners nor workers. . . . Until night work is stopped, neither the South nor the North will prosper. Domestic consumption does not warrant it, and our foreign market is vanishing."

*In Colgate's balance sheet was a unique item: "Gold held abroad--$2,032,139." Explained President S. Bayard Colgate: "Due to exchange uncertainties it seems wiser for the present to leave part of our foreign funds in a medium which has a more stable value."

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