Finance—Public & Private
Taxation and Industry
DURING the past fortnight we have had two important speeches from men directly -connected with industry, and in both of them there has been a noteworthy reference to the effect of Mr. Snowden's Budget, or rather, to the general policy embodied in the Budget, -upon industrial conditions and the industrial outlook. Lord Ebury, to whose speech 1 iinade a brief reference last week, is at the head of the Army and Navy Co-operative Society, and in that connexion has, of course, a very intimate -knowledge of the retail trade of the country. Lord Melchett, on the other hand, who presided last Tuesday over that great undertaking, the Imperial Chemical Industries, Limited, has an unrivalled first-hand knowledge of conditions affecting wholesale trades and industries not only of this country, but of Others.
• RATIONALIZATION.
Before referring to some of the Comments made by these two men upon the connexion between taxation and industry, I must first of all pay a tribute to the general conduct of the Imperial Chemical Industries, under Lord Melchett's chairmanship and the presidency of Sir Harry. McGowan, amidst the present conditions of admitted depression in industry: - From the outset it was evident that the Imperial Chemical Industries was an undertaking of no ordinary magnitude. Quite apart from the fact that the Company represents a nominal capital value of -about £80,000,000, the scope of its activities, the character of the various industries .which are now welded into one undertaking, and. the men who are concerned with the policy of the company show that we have here, in everything affecting chemical science as applied to industry, a _company formed on the highest system of intelligent rationalization.
PIONEER WORK-. •
It must be remembered, too, that this undertaking, which has only been in existence some three years, is not only still in its infancy, but has had to struggle against world-wide conditions of trade depression, specially acute in the agricultural industry with which the opera- .tions of the company are very largely -concerned. , In spite, however, of these handicaps, this great organization has accomplished great things : it has done a vast amount of pioneer work and by its organization and the rationalization of many industries in this country, has, so to speak, minimized the effects of industrial depression, while it has not only paid satisfactory - initial dividends to shareholders, but has laid the foundations of a per- manent and great financial undertaking by reason of its accumulation of reserves and the general conservatism of its financial policy.
PAST YEAR'S RESULTS.
Although the past year has been one of considerable depression, and one, moreover, where the company has had to earn profits to cover a greatly enlarged capital, the directors are in the position of being able to pay a final dividend of 5 per cent. on the Ordinary shares, making 8 per cent, for the year, together with 2 per cent. on the Deferred shares, the rate of dividend in the former case being the same as last year, while on the Deferred shares it is increased by per cent. Moreover, the amount carried forward is 1350,923, as compared with only £109,634 a year ago.. Not only so, but, thanks in part to the premium's received on the recent new share issue, the total Reserves now amount to no less than £16,725,000 and the General Reserve now amounts to £12,725,000, compared with £8,000,000 a year ago. The Central Obsolescence Fund now amounts to £4,000,000 against £3,009,138 a year ago, and of 'this increase £575,479 has been transferred_ out of the profits for the past year.
CHIEF ACTIVITIES.
During his long but interesting speech at the recent meeting, Lord Melchett made an -ekliiniatiVe sittve'y of two great industries in which the' company is actively engaged, namely, the dyeing industry and the production of nitrogen and other fertilizers while in connexion with his recent visit. to South Africa Lord Melchett stated that the fertilizer requirements of that great Continent were almost illimitable. It is evident also that Lord Melchett has come back from South Africa strongly impressed with the possibilities in the future of Empire trade.
SOME HANDICAPS.
At the same time, I must confess that it is difficult when reading the speeches of men such as Lord Meleheti, who are endeavouring to cope with foreign competition along the lines of rationalization and improved and up- to-date methods of production, or when following the remarks of men like Lord Ebury, who are concerned with the problem of supplying finished goods to the consumer at the lowest possible price and at the same time earning dividends for shareholders, not to feel some sympathy with the complaint that these efforts and schemes have had to contend with serious handicaps in the shape of Government legislation in various forms. Coni- menting last week in his speech at the meeting. of the Army and Navy Co-operative Society upon general con- ditions at home, Lord Ebury said that in his analysis of his Board's policy since 1923 he found a steadily rising curve of prosperity until 1926, when it was arrested by the disastrous General Strike. It is a fact, Lord Ebury added, that this business, in common with the country as a whole, never fully recovered from its effects. He further showed how, as a consequence of this interruption to the curve of prosperity, it had not been possible for the com- pany to do all that it desired to do in the way of capital expenditure for the further improvement and extension of, business. And referring to the recent Budget he said :— "To-day approximately twenty-nine million persons have the Franchise. The entire burden of the increased taxation in the new Budget has been imposed upon 500,000 or on less than two people in every hundred who vote."
LORD MELCHETT'S COMMENTS.
And in similar vein Lord Melchett commented severely upon the effect of high taxation and other of the Budget proposals upon the industry of the country. He said :— "The expenditure of the citizens' money and the manner in which it is expended, the adjustments of the burdens of taxation, the uncertainties which are created by the tariff policy of a country being violently altered with every change of Government—all these are matters which affect the price of the commodities you manufac- ture, the prosperity of your customers, the consuming capacity of your country, the directions in which you must look for -the future development of induatry -and, consequently, your capital investment,—the confidence or want of confidence which is engendered, especially the latter, which has a paralysing action on future develop- ments. All these are factors which bear heavily both on the conduct and the results of great enterprises. Neither technology and efficiency, nor commercial ability arid sagacity, can counteract the disastrous economic results which may and do arise from unwise actions of Govern- ments." I suggest that comments such as these command attention and carry weight for the reason that they emanate not from politicians or political agitators, but- from men 'whoday in and day out are striving to combat the effect of the influences Which they deplore and are organizing industries without which, and without the supply of capital on which their operations are carried out, the plight of the workers would be a sorry one.
ARTHUR W. KIDDY.
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