PROFITS FROM INDUSTRY

Press, Volume XCV, Issue 28262, 27 April 1957, Page 6

PROFITS FROM INDUSTRY

Tobacco Leads

[By D. COMPTON-JAMES] The most industry in Great Britain is the manufacture of tobacco and cigarettes. It is almost a monopoly, comprising only 189 companies and firms, but between them these 189 businesses earned total net profits of £36,900,000 in the year 1954-55, an average of £195,236 for each individual concern. This figure represents the average net profit (after deducting depreciation allowance for plant and machinery) as assessed to income tax. Of course, some of the larger companies make more than £lm a year net profit, but the average is pulled down by the smaller firms who paddle along with a paultry £50,000 or so net profit. At the other end of the profit scale, the major industry of agriculture comprised 324,735 businesses, which earned total net profits amounting to £196,800,000 —an average of £606 a business. This information, and much more like it, is contained in the latest annual report of the Commissioners of Inland Revenue, not in this precise form, but with the aid of logarithm tables it is possible to obtain from the blue book quite a lot of information about the pattern of profit distribution in Great Britain.

Second on the list, but a long way behind tobacco, comes the drink manufacturing industry—beer, wines, spirits and mineral waters, in which 1952 companies and firms earned £67,100,000, an average net profit of £34,375 each. Obviously it is the mineral-water manufacturers who are the poor relations in this category. If breweries alone were included, the average net profit would be considerably higher, perhaps even higher than that of the tobacco industry. Below is a table of industries, trades, and net profits. This table is one of the most revealing financial documents ever published: indeed, in some countries it might even start a revolution. Even in England it will probably touch off some minor explosions. The tobacco-agriculture comparison alone is enough to start farmers campaigning for better profit-margins. Farmers will not be slow to point out that tobacco, shorn of its glamour, is a worthless, even an injurious product. Of course, farmers and anyone else who thinks that tobacco profits are too high, have a remedy in their own hands—they can give up smoking. Retailers and wholesalers of tobacco, too, may well compare their profit-margins with those of the manufacturers and take action designed to secure a more equitable distribution. Professional Earnings The current claim of the medical profession for an increase of pay receives unexpected support from the table. Professional men, a category which includes doctors, dentists, architects, opticians, lawyers, and accountants in business on their own account, rank very low in the list, and when one considers the initial cost of their professional training it is certainly very surprising to find that the average professional man earns less than £l2OO a year. The cry that builders charge too much for the jobs they do is a common one nowadays, but the table proves that it is certainly not the builder who is making the big money. Labour and materials are obviously the prime factors in the high cost of building. The average net profit under insurance, banking, and finance is undoubtedly pulled down by a fairly large number of small tax assessments on brokers and agents, but even so I think the figure indicates that some financial profits are escaping taxation. No doubt the large profits made in take-over bids have not yet been caught by income tax, possibly because the financiers concerned have successfully claimed that these are capital profits. But let the table speak for itself: it is interesting enough not to need a commentary:—

Total Average Business. Tobacco Earnings. Net Profit. ber. £m. £ facture 189 36.9 195,236 Drink 1,952 67.1 34,375 Iron and steel 8,845 98.7 25,670 Shipping 1,314 33.4 25,420 Chemicals 5,136 123.3 24,010 Cotton Non - ferrous 1,567 30.6 19,530 metals 1,081 17.6 16,280 Wool Elec, engineer2,713 38.0 14,005 ing 7,991 108.4 13,565 Other textiles Shi pbuilding and engin6,684 87.1 13,030 eering Treatment of 18,461 207.7 11,250 non-metals Mining and q u a r rying 7,047 52.9 7,507 (not coal) .. Storage and misc. trans-. 1,688 11.8 6.991 port Paper and 3,868 25.8 6,670 printing Water under13,858 91.4 6.600 takings 924 5.9 6,385 Metal goods .. Other manu11,524 71.4 6,196 factures Insce., banking, and fin7,194 33.2 4,615 ance Food manu- ® 19,263 86.4 4,485 facture Vehicle manu25,797 99.8 3,868 facture Dis tributive 37,654 133.9 3,555 (wholesale) 69,581 237.4 3,412 Leather trade Jewellery and precision in4,126 11.3 2,740 struments .. 7,974 18.5 2,320 Wood and cork E n tertainment 13,937 23.7 1,700 and sport .. 20.047 27.0 1,347 Professional .. Clothing manu157,962 188.5 1,188 facture 49,469 55.1 1,113 Road transport Building and 49,918 45.1 912 contracting Dis tributive 147.044 121.6 827 (retail) Agri culture and horticul542,341 419.1 772 ture 324,735 196.8 606 Other services Forestry and 287,596 160.6 558 fishing 9,328 4.9 525