Up, But

The flood of first-half-year earnings that poured out last week still had that rich, clotted-cream look. With U.S. industry at peak production, it was no surprise that profits, in many cases, were higher than last year's first six months. The National City Bank of New York totted up earnings of 350 companies, found that they were up 11%. But the notable fact was that second-quarter earnings this year were but slightly better than first quarter. If the overall picture was still rosier than last year, it was due mainly to one rampaging industry: oil.

Flowing Gold. Standard Oil of New Jersey turned in a whopping $71,000,000 of estimated profit at midyear compared to $48,000,000 for the same period of 1943. Socony-Vacuum Oil Co. netted $20,000,000 v. $15,000,000, Sun Oil Co. pocketed $7,800,000 v. $5,700,000. Eyeing this flowing gold, many a Wall Streeter boldly predicted that the industry may boost its year's earnings 40% over 1943. Cracked one oilman: "We're almost ashamed the way the money rolls in."

The ability of refiners to outfoot sky-high taxes and rising costs that tripped up many another industry was due to one simple fact: they squeezed out additional capacity with but little additional manpower or equipment. Thus, they increased earnings proportionately with volume. The trend of U.S. industry, on the whole, has been just the opposite.

Still Sliding. Best example was rails. The carriers have set new freight--passenger records month after month this year--but profits have continued to slide. Southern Pacific's net slumped to $23,034,139 v. $42,550,951 in the first six months last year. Baltimore & Ohio did little better, with $12,067,993 v. $21,813,380. Pennsylvania was a standout among the big roads: profits rose to $51,869,894 v. $43,454,103. These gloomy half-year figures amply buttressed the Interstate Commerce Commission estimate that the net profits of all Class-1 railroads this year will probably fall about 22% under 1943.

U.S. Steel, which had a bad fourth quarter last year, made a lusty comeback, reporting a net profit of $32,382,533 for the first six months compared to last year's $31,086,053. But it did this by shipping more steel than in any first half-year in its history. Bethlehem Steel kept pace with Big Steel, netting $13,166,381 v. $12,842,000. But the smallish Pittsburgh Steel Co. provided the market-shocker. Its fat profit of $1,021,524 of last year turned into a dismal loss of $72,901 this year.

Up & Down. For almost all corporations, big & small, cutbacks and contract cancellations were the barometer for profits. For example, Remington Arms Co., which pocketed $2,498,000 by mid-1943, this year estimated that its profits had melted to $704,000. Similarly, White Motor Co. slumped to $866,519 v. $1,814,454 in 1943. Even General Motors, biggest U.S. war producer, had shifts in production that knocked down its volume in the second quarter. Despite this, G.M. six-months earnings were $82,769,895 against last year's $69,390,195.

By midyear G.M., along with the rest of U.S. business, was well aware that profit figures had become deceptive, mainly because of the increasing complexities of tax and reconversion problems. Actually G.M. made less this year, after taxes and renegotiation reserves, than last. Its profits were up mainly because it no longer needed to siphon off some $16,000,000 into its postwar fund, as it did the first half of last year. Few businessmen dared estimate 1944's total earnings on the basis of the first half. The end of the European war might make the most careful present estimate look nonsensical.

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