31. 



THE INDIA RUBBER WORLD 



[June 1, 1911. 





At the beginning (May, 1901) the company's surplus was 

 nominal, dividends had stopped on all issues of stock, the entire 

 volume of business was but about one-quarter of the entire 

 volume at the present time, and the earnings were small. Four- 

 fifths of the product of the company was boots and shoes ; the 

 larger part being sold to jobbers. The "Property and I*lant" 

 account of the company was $47,323,355.77, and the capital 

 stock was $47,191,500. For the year ending April 1, 1901, the 

 net sales of the company were $20,853,633.94 ; and the market 

 price of its preferred stock was 59 and of its connnon stock 21. 



The continuance of the company only as a boot and shoe com- 

 pany, with its then volume of business and then amount of 

 capital stock, would have afforded little satisfaction or en- 

 couragement. 



The consumption of rubber boots and shoes in the United 

 States has not increased during the past ten years in proportion 

 to the increase in popul.ition. This result has been attributed 

 to 1 1 ) improved methods for the speedy removal of snow 

 from the sidewalks and streets of the large cities and towns, 

 <2) facilities afforded for travel by suburban street railways, 

 (3) higher selling prices for goods the past three years, necessi- 

 tated by higher cost of crude ruliber. 



In April, 1904. the volume of business and profits had grown 

 to a point where your directors felt justified in resuming the 

 payment of dividends upon the preferred stock, and, as stated, 

 in the President's Annual Report for that year : 



"This step was not taken without the firm conviction on the 

 part of your directors that the company would be able to con- 

 tinue quarterly dividends hereafter." 



In the Annual Report of 1905, under the heading of ''Divi- 

 dends," your president made the following reference to the 

 subject : 



"and your directors felt it unwise to resume dividends until 

 they could feel morally certain of maintaining them." 



At about this date it became apparent to your directors that 

 in the establishment of agencies for the sale of rubber boots and 

 shoes it was manifest that other lines of rubber goods could 

 be distributed through such agencies with economy to both, 

 and also that rubber tires, which five years before were of 

 comparatively little consequence, were becoming a most im- 

 portant article of rubber manufacture. Consequently it was 

 deemed desirable to take steps to meet these conditions through 

 the acquisition of successful concerns in these lines of busi- 

 ness, the most important being the purchase by the company of 

 the stock of the Rubber Goods Manufacturing Co. This was 

 accomplished in 1905 through the purchase of the larger part of 

 the Rubber Goods preferred stock by the issue of the first pre- 

 ferred stock of the United States Rubber Co., share for share, 

 and the purchase of two shares of the Rubber Goods common 

 stock for one share of 6 per cent, second preferred stock of the 

 United States Rubber Co. This acquisition, in the opinion of 

 your president, while fair at the time to the stockholders of 

 hath companies, has proved of great advantage, and, also, in his 

 opinion, promises to prove of still greater advantage to the 

 stockholders of the United States Rubber Co. 



During this past year the volume of business of the Rubber 

 Goods Co. was greater than that of all of the subsidiary com- 

 panies of the United States Rubber Co. in the year 1905. 



The rubber business of Canada having been in somewhat 

 close association with the rubber business of the United States 

 and the principal companies there under the guidance of Mr. 

 D. Lome McGibbon having been consolidated, early in 1907 the 

 opportunity presented itself for the United States Rubber Co. 

 to acquire, on what has proved to be a most favorable basis, 

 much more than a controlling interest in the Canadian Consoli- 

 ■dated companies. 



Canada, as is well known, is not only a prosperous and 

 growing country, but owing to its climate offers an exceptional 



field for the consumption of rubber boots and shoes. Prac- 

 tically all lines of rubber goods, including tires, are manufac- 

 tured by the Canadian Consolidated Rubber Co. 



In July, 1908, the death of Mr. Charles H. Dale, the president 

 and the practical head of the Rubbe^ Goods Manufacturing Co., 

 imposed upon your directors the difficult task of seeking and 

 finding an experienced successor competent to develop and 

 conduct the growing business of that company, and especially 

 its tire business. Upon investigation it became apparent that it 

 was most desirable to obtain the services of Mr. Flisha S. Will- 

 iams for this important position. His record with the Revere 

 Rubber Co. was proof of his ability, and in December, 1909, 

 in the course of the negotiations with Mr. Williams it developed 

 that the only way of obtaining his services was by acquiring 

 the Revere Rubber Co. itself, a successful concern manufactur- 

 ing the "Conlinental" tires, in addition to a general line of rub- 

 ber goods. This was accomplished and on January 5, 1910, Mr. 

 Williams became president of the Rubber Goods Manufactur- 

 ing Co., all to the advantage of your company fully to the ex- 

 tent anticipated in the last annual report. 



An analysis of the business and the earnings of the year just 

 closed indicates that the volume of business of the property of 

 the United States Rubber Co. acquired prior to .April 1 1905, was 

 $31,868,839.52, and that the volume of business of the proper- 

 tics acquired since April 1, 1905, was $52,142,958.21. Basing the 

 calculation upon the cost of these latter properties, the percentum 

 of profit on this business for the year just closed was more than 

 twice as large as the percentum of profit 'made in the same 

 year upon the business of the properties purchased prior to 

 April 1, 1905, estimated upon a like basis. 



It will be observed that in the acquisition of the various prop- 

 erties since -April, 1905, no common stock has been put out. 

 The small increase in the common stock from $23,666,000 to 

 $25,000,000 is represented by common stock issued at full face 

 value for actual property purchased from the Meyer Rubber 

 Co., a subsidiary of the United States Rubber Co. 



The question of the payment of dividends upon the common 

 stock of the company and of the making of quarterly reports 

 of earnings to the stockholders are subjects that have received 

 much consideration from the directors. As to the matter of 

 reports, I would say that it is the desire of your directors to 

 give to the stockholders information as to the business of the 

 company which shall be not only full, but trustworthy. Our 

 boot and shoe business is a season's business which renders 

 it difficult to make any subdivided estimate of the year's 

 profits which will not be misleading. From July, 1906, to April, 

 1908, at each quarterly divided period an estimate of the quar- 

 terly earnings was given, and was discontinued only because 

 of complaints that it was misleading. It is still the wish of the 

 management, if practicable, to make quarterly statements and 

 the same will be done when the method can be wisely worked 

 out. 



As to the business policy pursued during the past ten years 

 in the enlargement of the scope of our operations as above indi- 

 cated, in the retention in the business of reasonable surplus re- 

 serves not only to strengthen the financial condition, but to 

 fortify the value of 'its common stock, rather than weaken the 

 company by the division of such surplus earnings by way of 

 dividends to the common stock, it would seem that conservative 

 investors naturally must be of the same approving mind as the 

 great body of the stockholders. From time to time this general 

 policy has been set forth in the annual reports to the stock- 

 holders and has received their approval. In the report of 1906 

 it was sumniari/ed as follows : 



"It has been the policy of the directors to strengthen the com- 

 pany by adding to its surplus and by improving its efliciency in 

 order to give assurance of the continuance of dividends upon its 

 preferred stock before the resumption nf dividends upon the 

 common stock, it being believed that in the enii this conserva- 



