GENERAL FARM PROGRAM 



841 



quarter were far above the average prewar yearh- sales, as were net profits — 

 which were also greater than for the full j^ear of 1947. 



It is the final quarter of 1948 which really sets the pace for 1949. It shows 

 the kind of profit that can be taken, now that postwar expansion, modernization, 

 and speed-up are having full eiTect. A-C President Walter Geist admitted this 

 when the Wall Street Journal (January 15, 1949) reported his statement that 

 the company "looks forward to some improvement in earnings in the current 

 year (1949) with plant expansion, increased efficiency from reorganization, and 

 availability of materials all playing a part." 



"Some improvement in earnings" is the way a wary corporation president 

 admits that earnings on a quarterly level of 5.6 million dollars add up to 22.4 

 million dollars net profit for a year. This is a very minimum estimate of the 

 ■company's profit potential in 1949. 



It also represents a very direct payment on the capital expenditures made by 

 A-C since the war. Around $8,000,000 was spent during 1948, Geist reported, 

 compared to 8.4 million dollars in 1947 and 12 million dollars in 1946. Expected 

 expenditure during 1949, he said, "will be considerably less than 1948." To 

 date total postwar plant and equipment expenditure amounts to about 27.4 

 million dollars and 1948 profit was only a small measure of the way this investment 

 is expected to pay off. 



Acres of new factories and machines are a guaranty of high-level future profits. 

 But the.se fine new facilities could also .stand idle in the next depression. Exor- 

 bitant profit for a few big shots is the fuse that sets off the depression depth bomb. 

 If workers continue to receive smaller and smaller portions of the wealth they 

 produce, there is certain danger ahead. Already mass lay-offs and growing 

 unemployment warn that the fuse has begun to sputter. 



Allis-Chalmers workers speak for their OAvn needs and that of their country 

 when they demand wage increases out of these huge profit stacks. 



The balance sheet of Allis-Chalmers shows over-all strength of the company 

 and its substantial growth in resources. In the 10-year period from 1939 to 

 1949, total assets have more than doubled, earned surplus (plowed-back profit) 

 has almost tripled, and the company now has almost .$6,000,000 in reserves. 



The surplus, which is available for any purpose the company sees fit (including 

 wage increases) amounted to $35,000,000 at the close of 1948. It is made up 

 of profit which has been left over, year by year, after dividend payments and 

 plowed back into the company. The reserves are just another form of hoarded 

 profit and bring the total to more than $40,000,000. 



Protection against practically all eventualities is an A-C motto — so far as the 

 corporation is concerned. (The desire to protect workers is considerably less 

 strong.) For the corporation, protection is sought even against its own folly. 

 The major part of the reserves — -$5,000,000, to be exact — is a so-called inventory 

 reserve — to protect the company against the consequences of its own high price 

 policy. The cycle goes like this: Raise prices, make tremendous profits, conceal 

 some of these profits in an inventory reserve to cushion the bumps when the 

 high-price policy kills the market and prices tumble. 



Allis-Chalmers workers (like the U. S. Treasury itself), cannot consider these 

 reserves legitimate. The sums so built up would be put to much better use 

 providing protection against workers' risks. They could very well be utilized 

 to provide pensions for overaged workers and social securit.v for A-C workers 

 who become injured or ill. If that sum is not sufficient, it could be supplemented 

 out of surplus. The plain truth is that past and present profits are more than 

 ample to meet workers' needs for higher wages and pensions. 



Below are selected balance sheet items : 



