The Nonpartisan Leader Newspaper, October 18, 1920, Page 15

Armour & Co. Write Us Again Try to Explain Swollen Profits of Packers and Get Their - Feet in Their Mouths Once More 7z]E HAVE another letter from the publicity de- partment of Armour & Co., in vreply to the charges of C. A. Buethe, a Leader correspondent, that the Armours had made profits of 134 per cent during the war, as com- pared with their announced annual div- idends of 2 per cent. In reply to a previous letter the Leader pointed out, in the issue of Au- gust 28, that the enormous profits of Armour & Co. were represented, not by their 2 per cent dividends, but by their stock dividends. The Armour stock was $20,000,000 prior to 1916. In that year $80,000,000 stock divi- dends were declared and later a $300,- 000,000 stock dividend was authorized, to bring the total stock to $400,000,~ 000. R. D. MacManus, publicity director of Armour & Co., wrote us a three- page, closely typed letter this time in an effort to “explain” the enormous profits. It is too long to be printed in full, but here is the gist of it: “You muddy the waters by holding forth the belief that maybe our 2 per cent dividends are declared four times a year,” writes Mr. MacManus. “The straw at which you grasp is impotent. " Qur 2 per cent dividends are not de- clared quarterly —they are annual .dividends and they truly represent the return which the stockholders of Ar- mour & Co. receive from their invest- ments in the business.” { We are willing to accept as fact Mr. MacManus’ statement that the 2 per cent dividend is an annual one. In view of what Mr. MacManus and his own boss, J. Ogden Armour, go on to say about the profits of their business we can not accept the latter statement that this represents the return to stockholders. CAPITALIZATION JUMPS FROM $20,000,000 TO $400,000,000 Mr. MacManus disputes his own statement by proceeding to “explain” the first stock dividend of $80,000,000. He says: “In 1916 we were capitalized for the : nominal sum of $20,000,000, though the actual investment at that time was more than $100,000,000. The differ- ence between the nominal capital stock and the actual investment was _carried on the books as surplus, though it was capital and represented bricks, mortar, machinery, ete, just as did the capital stock. The so-called stock dividend of 1916 merely trans- ferred $80,000,000 from the surplus ac- count to the capital stock account. “Somewhat the same procedure has been followed in this most recent financial reorganization. While au- thorization has been secured to issue stock to the amount of $400,000,000, our company will’ not be capitalized for that amount until every dolar of that amount has been invested. At the present time there is issued and outstanding only about $150,000,000 in stock, though the investment, due to the reinvestment of earnings, is much larger than that.” Mr. MacManus does mnot say just how much larger the actual assets of Armour & Co. are than the $150,000,- 000, but we will tell him. Mr. Mac- Manus’ boss, J. Ogden Armour, in his last annual report stated: “The total assets as of November 1, 1919 (the close of the company’s fiscal year), were $490,809,643.34.” Now, putting two and two together, what do we find ? If we compare the actual stock is- —~sued in 1916 ($20,000,000) with the ac- / tual stock issued in 1920 ($150,000,000) we find an increase of $130,000,000 in the four years, an increase of 650 per cent for the four years, or 182% per cent per year, in addition to the nomi- nal 2 per cent annual dividends, which Mr. MacManus tries to claim “repre- sent the return which the stockholders * of Armour & Co. receive from their in- vestments in the business.” HOW ASSETS GREW DURING THREE YEARS Mr. MacManus, however, is prob- ably right in his contention that the actual assets of Armour & Co. were around $100,000,000 in 1916, though they tried to conceal them by having a stock issue of only $20,000,000. Comparing the $100,000,000 assets of 1916 with the $490,809,643.34 re- ported by Mr. Armour in 1919, we find an increase of $390,809,648.34 in these three years, 890 per cent for the three years, or 130 per cent per year, in ad- dition to the nominal 2 per cent annual dividend. When the nominal dividend is added to this it almost exactly tal- lies with the 134 per cent annual prof- its cited by Mr. Beuthe. Does Mr. MacManus think he can fool people into believing that Axmour & Co. make only 2 per cent a year profits? Liberty bonds can be bought on the market today to yield 6% per cent interest. If J. Ogden Armour is making only 2 per cent why doesn’t he say to the government: “Take over my darned old packing plants and give me Liberty bonds in- stead.” Liberty bonds are largely exempt from taxation. Mr. Armour wouldn’t have any further worries. He could discharge Mr. MacManus and save his salary, besides saving hundreds of thousands in advertising spent with so-called “farm journals” and daily papers in an attempt to defend the Big Five and prevent government control. We will be glad to receive further letters from Mr. Armour’s publicity agents and promise to give them prompt attention. LIKE THE LEADER Editor Nonpartisan Leader: like the Leader very well. 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