EARNINGS OF INDUSTRY

Press, Volume LXXXVI, Issue 26198, 23 August 1950, Page 10

EARNINGS OF INDUSTRY

WAGES AND PROFITS ANALYSED

“The terms capital and labour are constantly used as though they represented forces which are necessarily in conflict. Any such conception belongs to the Victorian dark ages, and industry has long outlived it. The truth is that capital and labour are partners in the all-important task of providing the ‘ 45,000,000 or 50,000,000 people in Britain with their daily needs. If the partners do not get together and work together, industrial chaos is inevitable.” >

The above statement is by way of Introduction to an interesting treatise on “The Earnings of Industry,” published in London recently. Although the findings are based on observations in Britain and South America, they are equaHy applicable to New Zealand, and they tend to dispel some misconceptions held about wages and profits. “Men work for payment in the shape of wages or salaries,” says the pamphlet. “The payment enables them to purchase food, clothing, house room, and the rest, for themselves and their families. Some save part of this payment, but money saved has been earned just as much as money spent. It is from this money saved that capital is provided. So capital is in effect deferred wages and is entitled to a return just as are wages. This money saved and invested has a double purpose: it provides, or should provide, security for the investor (that is why it is saved) and it pays for the capital outlay which enables other men to work and earn wages. How Much Profit? “How much profit do the proprietors of a successful business actually „take as dividend? Twenty per cent, of their receipts from production? Twenty-five percent? Some people, think so. Well, let us be more reasonable. Is 10 per cent, about right? “This question was recently put to the manufacturers of Canada, and 'the answer was 3 per cent.,” continues the writer. The raw materials of Canadian industry cost 40 per cent, of the receipts; wages and salaries, 24.4 per cent.; taxation. 10.8 per cent.; while dividends accounted for just 3 per cent. The same figure, 3 per cent., roughly covers British industry. Out of every £1 of receipts, the» owner of the equity in a successful business gets 2d, 3d, or 4d. “The need for publicising the facts becomes the clearer when it is recalled that 3000 ’black-coated’ and manual workers in a British establishment were recently asked: ‘After a factory or plant has paid for overheaos-and materials, which would you say gets the bigger share of what is left—stockholders and managements, or workers’ pay envelopes?’ Forty-four per cent, of these workers replied, ‘Stockholders and managements,’ and 19 per cent, did not know. Yet the dividends were only 9 per cent, of the amount spent on wages and less than 7 per cent, of the total spent on wages and salaries.” Percentage of Dividends An analysis of the income of 37 major companies engaged in engineering, iron and steel, textiles, chemicals, and the manufacturers of motors and aircraft, etc., showed their total gross income was allocated as follows: Per cent. Raw materials .. .. .. 47.85

Wages and salaries .. .. 31.63 Taxes, reserves, and overheads 18.38 Payment in dividends .. .. 2.14 To suggest that a big cut in dividends would materially help the factory worker, the desk man or the mill hand is, it is emphasised, sheer fantasy. Sir Stafford Cripps, speaking in 1949, said that if all dividends were cut by one quarter the workers would get no more than 4d in every £1 of wages. The pamphlet goes on to quote from the balapce-sheets of numerous large public companies (aH of which are named), and an analylsis of the figures shows that in many cases of every £1 of receipts dividends absorb only 2Jd to 4d. The predominance of small investors in the holdings of well-known public companies is also dealt with fully in “The Earnings of Industry.” It points out the fallacy of the belief held in certain quarters that the great public companies are the “property of a few rich men.” Far and away the greater proportion rejiresent the savings of men and women of relatively small means, who have put aside some of their wages or salaries year by year against old age or to provide for dependants. This statement is typified by analyses of the shareholdings of a number of wellknown companies which are given in detail. One instance is that of the firm of Guest, Keen, and Nettlefolds, Ltd. Fifty-five per cent, of the ordinary stockholders. or over 12,000 individuals, each own not more than £2OO nominal stock, and the number of members holding over £ 1000 worth is_ only 1000 out of nearly 23,000.

COMPANY NEWS

Grey and Menzies.—A recovery of £755 to £3130 in the net profit of Grey and Menzies, Ltd., aerated water manufacturers, Auckland, is shown in the accounts for the year ended June 30. This profit was struck after providing £2804 more for taxation at £3BlB. Dividends of 7 per cent, on both preference and ordinary shares are recommended, against 7 per cent, and 6 per cent., respectively, in the previous year. Dividends absorb a total of £2BOO, leaving £330 to increase the carry-forward to £5009. Gross profits from trading including income from investments, increased by £6llO to £23,841. Administration expenses, including an unspecified amount for depreciation, were £3551 higher at £16,893. . The directors report that the turnover increased during the year. A profit was again earned by the subsidiary company and a dividend paid.—(P.S.S.). Mason, Struthers.—Directors recommend a dividend of 6 per cent., plus a bonus of 1 per cent., for the year, payable September 8; books close August 29. The company paid 6 per cent, a year ago. PRICE OF TIN (N.Z. Press Association—Copyright) LONDON, August 21. Tin is quoted in London at £Bl4 10s a ton for spot and forward delivery.