Profitless Prosperity

Chicago's Marshall Field & Co. sold $45,000,000 worth of dry and other goods in the first six months of the year. That was a fat $10,000,000 more than it sold in 1933's first half. Nevertheless, it did not make money; it lost nearly $2,000,000.

"The results . . . are disappointing but not hard to understand," President John McKinlay told his stockholders. "Our sales failed to increase to the extent necessary to cover the increased burden put upon us by NRA and other national and local governmental agencies. During the second quarter our payroll was $1,008,000 more than a year ago and our taxes were $626,000 more. . . ."

Field's is not a store to trim its sails to every wind of circumstance. It regards itself as an Institution. The shades on its great plate glass windows are drawn on the Sabbath and no advertising for the main Field store is ever seen in a Sunday newspaper. Beer is served only in the Men's Grill; hard liquor, in no Field restaurant at all. And for the benefit of Gold Coasters, whether or not they are in a buying mood, Field maintains an inventory of every kind of expensive thing.

There is only one store in the world bigger than Field's and that is Macy's in Manhattan. Its Brothers Straus might grouse about taxes and codes if their store failed to earn a profit on a $45,000,000 turnover but they would be expected also to effect a quick turnover in executives. But Field's does not fire executives; it raises them from the ribbon counter to old age. Of such is President McKinlay, a quiet, determined gentleman with a love for traveling, who was born 60 years ago in Scotland, only 40 mi. from the birth place of his predecessor, able James Simpson, who left Field's to solve the troubles of Insulland (TIME, June 13, 1932). And as long as President McKinlay's store sells more goods than any other in the U. S.--Macy's excepted--he is content to let other merchants debate whether an Institution can be a store.

Motors. A more conclusive example of profitless prosperity was furnished by General Motors' quarterly report, published last week. GM sold 130,000 more autos than in 1933's second quarter and a correspondingly larger number of refrigerators, Diesel engines, spark plugs, vacuum cleaners. Translated into dollars, its three-month sales jumped to $303,000,000--an increase of no less than $100,000,000. Yet wages and the cost of materials jumped even faster. So GM did its additional $100,000,000 of business without a nickel's profit. Indeed its three-month profit of $40,000,000 was actually $1,000,000 less than in the same period last year.

Consolidated Gas stock broke through its 1932 Depression low last week, coasted down to $25 per share. Gross revenues of $53,000,000 for the second quarter were practically unchanged from the year before. But profits were down from $12,200,000 to $7,400,000, which per share of common stock meant a drop from 83-c- to 41-c-. Though the dividend was pared from $3 to $2 annually only last April, the quarterly dividend payment of 50-c- was not earned. The drop in profits was caused wholly by the rise in the cost of doing business. For the first half of this year taxes and operating expenses were up 10.9% from last year. For the June quarter they were up 14.4%.

All business today is running a hair-raising race with rising costs but the utilities are apparently boxed. A shot of still bigger volume or higher prices or both might help the industrials to win. An expansion in carloadings would send in the railroads at a walk, and there is some public sympathy for their talk of higher rates. But power & light companies confront not only regulatory bodies dead set against a rate rise but also public agitation for lower rates.

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