January i, 1905.] 



THE INDIA RUBBER \A^ORLD 



119 



AFFAIRS OF THE DUNLOP TIRE COMPANY. 



AT the eighth annual general meeting of shareholders in the 

 Dunlop Pneumatic Tyre Co., Limited (London, Novem- 

 ber 25), Chairman Harvey Du Cros reviewed at length 

 the company's history, present status, and prospects. 

 The company had been formed to work a monopoly — a legiti- 

 mate monopoly — under patents granted by the Crown and cer- 

 tified by high authority to be valid. The patents, indeed, had 

 been sustained throughout their life, but the company had not 

 been able to protect itself from infringements; there had been 

 continual litigation, at great expense, which had not always re- 

 sulted in the company's favor. Hence the expected monopoly 

 had not been realized, so that, with respect to the large item of 

 "good will" figuring as an asset, the company had proved to 

 be largely over capitalized. Various measures had been pro- 

 posed for the reorganization of the company, but none of these 

 had met the sanction of the shareholders. 



But the directors, early in the history of the company, fore- 

 seeing certain probable results, had adopted the policy of with- 

 holding large sums from the company's earnings instead of 

 making the greatest possible distribution in dividends. Dur- 

 ing the first iS months the company earned nearly ^1,000,000, 

 and enough had been earned every year to pay dividends upon 

 the capital. But had all the earnings been paid out as divi- 

 dends, the business must have come to an end upon the ex- 

 piration of the patents, in 1904. Indeed, before such expira- 

 tion, the company had found itself practically in the position 

 of having no patents. Under a late judicial decision A could 

 make one portion of their patented tire, and B could make a 

 second portion, and neither would be an infringer; they could 

 sell to third parties, who could assemble the parts, and thus 

 evade prosecution by the Dunlop company, whose patents cov- 

 ered a combination of these elements. 



The directors, however, had worked with a view to continu- 

 ing in business, rather than making the largest possible distri- 

 bution of dividends from each year's profits. At first the 

 company had been in the position of middlemen— that is, buy- 

 ing goods from rubber mills and reselling them. The policy 

 of retaining the earnings of the company to a very large ex- 

 tent had enabled them, through the formation of subsidiary 

 companies, to become a manufacturing corporation, in a posi- 

 tion to meet and resist competition, at home or from abroad. 

 The chairman asserted that the company was now equipped 

 with the largest and best plants in its particular field in the 

 world. Through liberal writing off for depreciation of the man- 

 ufacturing plants these now had a very low book value as 

 compared with their actual worth, and he considered that the 

 directors had achieved a great commercial success in creating a 

 manufacturing business out of the earnings of the company. 



The business of the company had been largely identified 

 with the bicycle trade, which in late years had been passing 

 through a crisis. He believed that the limit of depression had 

 now been reached, and that an established trade in bicycle tires 

 could be expected. In any event, the Dunlop company were 

 in a position to get their share of the bicycle trade so long as 

 any existed, but they had also large hopes in respect of the 

 motor trade, which was rapidly developing in Great Britain. 

 During the fiscal year ending September 30, the company 

 manufactured 1,556,220 tires, which was a larger number than 

 they had ever manufactured before, and larger, they believed, 

 than had been manufactured by any other company. On ac- 



count of the general reduction in prices, however, the year's 

 turnover in tires had realized ^83,000 less than the same pro- 

 duct would have yielded at the prices of the preceding year. 



Having reference to the sound financial condition of the sub- 

 sidiary companies and their established position as rubber 

 manufacturers, the directors felt that the company were on safe 

 grounds as regards the future. Not only was this true in re- 

 spect of the business at home, but the subsidiary companies in 

 France and Germany — where there had never been any patent 

 protection — had grown steadily, and promised to continue to 

 grow. 



The earnings in the preceding year, the chairman said, had 

 been larger than had been anticipated. " I should explain to 

 you," he said, "that the unexpected earnings of last year were 

 due entirely to the extraordinary success that your patent pro- 

 cess [the Doughty process] for manufacturing tires has achieved. 

 We always expected it to be successful ; but the longer it is in use 

 the greater perfection it seems to achieve." There were re- 

 duced profits during the year lately closed, due to the higher 

 cost of rubber and the cut in selling prices, but the benefits of 

 the patent process had been shown in saving the company from 

 a worse showing, and doubtless the chairman's confidence in 

 speaking of the future of the company as manufacturers was 

 based upon their possession of the Doughty patent. 



As at present constituted, the capital of the Dunlop Pneu- 

 matic Tyre Co., Limited, is as follows : 



Preference shares / 994.990 



Ordinary shares 999,993 



Deferred preference shares i, 91)9,850 /3. 994.833 



The original issue of ^1.000,000 in 4 per cent, debentures has 

 been decreased by purchase to ;r4007oo. Ten per cent, divi- 

 dends have been paid yearly on the preferred shares. The only 

 dividends paid on the deferred preference shares were 10 per 

 cent, in 1S96-97 and 5 per cent, in i897-98. Dividends on the 

 ordinary shares have been as follows : 

 1896-97 85^ 1900-01 5 % 



1897-98 8?; 1901-02 5 % 



1898-99 o ;S 1902-03 6 % 



1899-1900 s% 1903-04 2'Af 



The company carry forward to the new year ^241 406, against 

 _^235 541 last year. It is pointed out that ^^109, 579, represented 

 by the undivided profits of subsidiary companies, do not figure 

 in this year's accounts, being retained for working capital. The 

 item of good will now appears at £2, 894,071, the reduction of 

 which item was strongly urged in the annual report. The di- 

 rectors asked that the shareholders in the different classes get 

 together and agree upon some form of reduction in the face 

 value of their shares, and then they would approach the courts 

 with a view of having it legalized. 



BRITAIN S DEPRESSED CYCLE TRADE. 



DISCUSSING the British cycle industry T/ie Financial 

 News (London) says : " The fortunes of cycle companies 

 are at a low ebb, and though some experts in the trade descry 

 a better time coming, after next year, even they do not expect 

 other than an unpleasant time in the coming year, and the 

 hope of ultimate improvement is based rather upon the disap- 

 pearance of a few companies in the meantime and the prosecu- 

 tion of rigid and successful economies among the survivors, 

 than upon any prospect of bigger profits in the future," 



