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Show 5 Washington Snapslwts The 14 million men and women who have savings invested in shares of American companies could learn a lot by studying the 1948 annual report of one of the big oil companies. The report shows why many corporations earning millions of dollars have had to hold down dividendsdividends div-idendsdividends on which shareholders share-holders rely to buy food and clothing cloth-ing perhaps to send a boy or girl to college, or to pay doctor bills. Phantom Profit The company's report said, first: earnings were being reported in dollars worth only about half as much as. pre-war. Second: earnings included $14 million of profit reported from the sale of oil that had risen in value during storage. On paper that looked O.K., but the profit wasn t real because the money had to be spent for more oil at 1948 prices. Vor Machinery Third: machinery and equipment for drilling wells and refining oil had worn out, in terms of replacement replace-ment prices, to the tune of $96 million mil-lion However, since it had cost only $62 '2 million years ago, the company expects to be short $34 million when it goes shopping for new equipment. Because of these factors, the annual an-nual report said, the company plowed back $285 million of 1948 earnings, borrowed $55 million, and still had nearly $26 million less cash and securities than at the end of 1947. That's one reason why the shareholders didn't get larger dividends. div-idends. The profits had to be plowed plow-ed back into the business to insure in-sure its future. |