Good First Quarter

The flood of first-quarter earnings reported by U.S. industry last week still had a golden look. The National City Bank of New York totted up the profits of 295 industrial corporations, found that they were 6% above last year's first quarter. But the important fact was that, with sales reported by 71 of the manufacturing corporations up a whacking 23% in the last year, profits had risen so little--with renegotiation still in the offing for some companies. Taxes and bigger operating costs were finally outpacing the swelling production of many a corporation. They are still making plenty of money, but the peak may well be past.

There were still, however, a few individual surprises. Biggest was that of Libbey-Owens-Ford Glass Co., which netted a modest $357,347 in last year's first quarter, jumped that almost seven-fold to $2,412,471 this year.* The Texas Co., prospering with the rest of the oil industry upped its net a fat 48% to $11,878,754. General Motors set the pace for the auto industry, now at top war production, with a rise from $33,074,031 to $41,060,455.

Rails Down. On the downward side, the railroads continued the slide that they started late last year. They are taking in more money but lower freight rates, taxes and higher wages leave less & less. Southern Pacific rolled up $21,685,247 in last year's first quarter, saw its profits plummet to $11,445,893 in this. Smaller roads fared no better. Pere Marquette tumbled from $1,237,421 to $693,926.

Despite loud wails from the steel industry that it is selling many basic products such as plates at less than cost, it managed to hold the line fairly well. U.S. Steel was off slightly, from $17,406,597 to $17,027,616. Bethlehem, with its profitable shipbuilding still an anchor to windward, managed to push up its net a little, to $6,432,538. Only Jones & Laughlin fell far behind, from $2,399,369 to $1,708,352.

Cutbacks, Cancellations. The great mass of corporations ding-donged along profitwise: 51% of the reporting companies were up, 49% down. Typically, General Foods dinged up to $3,627,550 v. $3,579,992 while Standard Brands donged down to $2,163,519 from $2,483,047.

But present prosperity may not last long. In most cases, first-quarter earnings last year were the year's poorest. This was partly because many corporations overestimated tax requirements, partly because the big production rise was yet to come. This year U.S. industry is bumping its head against the production ceiling, and cutbacks and contract cancellations are just around the corner. In 1944, first-quarter earnings may be the year's best.

* This was due partially to Plaskon Co. which became a Libbey-Owens division in April, 1943.

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