Historical Newspapers of South Carolina

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8 Lydia Pap KAfT^ \ 1 K&? INVESTMENT An original investment in equipment and products puts him in business. All Saturday morning, Wayne Hairston, Lydia Community Paper Boy, made the rounds of homes along his route ? pencil in one hand, route book in the other. "Collect for the Greenville News," he'd say as the front doors opened. Wayne had paid his paper bill the day before. Now the money was beginning to come in from his subscribers. Twothirds of the way along Feachtree Street he had collected enough to make up the U ^ UoJ cl I I 1 v J Lt 1 1 I lit: Ilctu 1UI pdpers. He rattled the change in his pocket and smiled. "Ought to make a nice Profit this week," he said to himself. And he thought about the new motor bike he was going to buy. Wayne didn't know much about the American economic system. Terms like assets, liabilities, dividends, valuation and capital investment meant very little to him. But he knew a lot about one factor that's vital to every business operation, from a paper route to a multi - million dollar corporation: the factor of Profit. To him Profit was simply the money left over after he had paid his expenses. It's the same in every business. Whatever remains from income after all costs, including taxes, have been paid is Profit. The functioning of the Profit motive is what makes Some Coarse . . . Some Fine . TEEN-AGERS "Son," said Dad sternly, "how is it your grades are lower in January than in December?" "Well. Dad," answered the resourcelul lad, everything is marked down after the Christmas holidays. Right?" * * * ECONOMICS A man needed $.3 for a train ticket. He had only a $2 bill. He took it to a pawn shop and pawned it for $1.50. Then he sold the pawn ticket to his friend for $1.50 and bought his ticket for $3. * * * OVERHEARD . . . "He was so crooked that the wool he pulled over my eyes was 50^ cotton." er Boy Pr< I M EXPECTED LOSS He expects that some customers will leave town without notifying him . . . for business success?or failure. The way the Profit system is attacked and criticized would make you think that it is somehow discreditable for a company to make money. The word "Profit" has been falsely associated with greed ? as though a company's Profit found its way into the pockets of the president and members of the board of directors. Nothing could be further from the truth. What does happen to Prof ltr when a company succeeds in making more money than it spends, where does the difference go? First of all, it belongs to the owners of the company; not the officers but the stockholders. It is distributed in one of two ways as dividends to the stockholders, or as reinvestment in the business. One of the big problems of the company management is to maintain a healthy bal 1. _1 il i _ _ TkT ance Deiween me iwo. neglecting either one means trouble. Dividends must be large enough to attract investors. Otherwise the company wouldn't be able to get any new capital it needs. On the other hand, enough Profit must be reinvested in machinery and facilities?the tools of the industry ? to keep pace with new developments. Any business, in order to exist, has to meet competition. To cZAyu.i . . Some with a Different Twist By the time most men learn to behave themselves, they're too old to do anything else! * * "Maw! Maw!" cried the Kentucky mountaineer, racing into his cabin. "I learned how to write." Wild I CI %y*'U VV I 1 LC, IT civ/. asked his wife gazing with admiration at the scrawls on the paper. "Don't rightly know." the old man replied. "Ain't learned to read yet." * * # HOW TO SUCCEED IN MARRIAGE ... A husband should always help his wife with housework. For instance, holding the step ladder while she paints the ceiling. THE CLOTHMAKER )ves Princ ti ? ! I vf^lRL -.VVL ^ . SB UNEXPECTED LOSS . . . but he didn't expect to lose revenue by throwing the paper on the roof! do that it must expand, develop new products or services and increase its efficiency. It's easy to see how important a part is played by Profit in this scheme of business just by looking at what happens when Profit recedes. Reinvestment has to be cut. with the result that plans for modernization are slowed down or stopped and competitors begin to edge ahead. This means fewer sales, smaller income, and still less Profit. Dividends go down, too ? and this is quickly noticed by investors looking for a place to put their money. They go elsewhere with it. Quite possibly they buy a competitor's stock and the whole downward trend is given still another push. Ideally, dividends and reinvestment for expansion of the business should be the only two uses to which Profit dollars are put. Actually, companys have to meet a third obligation. They're forced to divert Profit to help pay for depreciation?replacing worn out equipment and facilities. Unless this is done they can't even maintain present production, much less try to meet added competition. The original cost of equipment can be charged off as an expense before Profit starts. The law provides this as a depreciation allowance. How over, because oi lniiation new IN DUTCH "Our flag is red, white and blue because of our taxes," said the Dutchman. "We get red when we talk about them, white when we get our tax bills, and we pay them until we're blue in the face." "Same with us," said the American. "Only we see stars too, more stars all the time." * * * I don't mind scrimping to spend, it's that scrimping to save that I hate. * * * ' 1 he easiest way to keep up with the Joneses is to listen while their children talk." * * * Frankie: "What did you do when your boyfriend proposed last night?" Earnestine: "Stopped twisting his arm." * * * People continually complain about the number of cars on the road, but think of how much harder it would bo to find a parking space if there weren't. iples of E ^_ -? J RE-INVESTMENT Profits are applied to the purchase of a new bike. Now he can cover a larger route faster. equipment costs much more than the equipment it replaces. The difference has to come out of Profit and it's a top priority item. In the oil industry, depreciation is especially significant. It occurs every time a barrel of oil is taken out of the ground. A provision in federal law called "percentage depletion" (also called the depletion allowance) does for oil companies roughly the same thing "depreciation allowance" does for a manufacturer. If percentage depletion is reduced ? and such a move has many advocates outside the industry ? the chance of making a Profit in the already risky business of finding oil is reduced also. No Profit, no investors. No investors, no exploration. No exploration, no oil. It's as simple as that. Whatever the industry or business, the power that keeps it going is Profit. The benefits. though, are spread much fnrtlior than thp pnmnanv it. self. To begin with, stockholders in today's companys are a cross-section of the people. Working men. farmers, business men, retired people?all are part owners of American business. The whole economy is affected when thev spend their dividends on food, clothing, homes, cars, appliances, MEMORY TEST At Albuquerque, a tourist was introduced to an Indian with a reputedly perfect niciiiui v. ois.u-jjm.ui, me iuuiist asked: "What did you have for breakfast on November 10, 1921?" "Eggs," the Indian answered. "Oh, everyone eats eggs for breakfast," said the scoffer. "He's a fraud." A few years later he visited Albuquerque again, and there was the same Indian on the station platform. "How," the traveler greeted him jovially. "Scrambled," came the Indian's reply. * * + Patrolman, to motorist: "How did you knock him down?" "1 didn't, sir," replied the motorist. "I stopped to let him walk across the road and he fainted." TIP , . . Never argue with your doctor. He's got inside in formation. FEBRUARY. 1961 c o n o m i c s DIVIDENDS He, the stockholder, is paid a dividend out of profits and buys a long-wanted baseball glove. entertainment or anything else. A company's reinvestment dollars ? the second portion of Profit?benefits others, too. When a company buys new equipment or builds a new plant, much of the money goes to wage earners ? construction workers, or employees of the equipment manufacturers. In fact, it has been estimated that about three quarters of every Profit dollar in all industry now flows ultimately into the hands of employees. Wayne, collecting along his route on a Saturday morning, has no reason to be ashamed of the fact that he takes in more money than he pays out. Without his Profit he wouldn't be a paper bov. Nor should American business be ashamed. The president of the Iron and Steel Institute, Benjamin Fairless, has said something about profit that shows its true value. In his words: "In my opinion we are just now at the door-step of a new warehouse for America, filled with greater wealth, more new things from more new processes in the next five years than we have ever seen before in our history?as the result of research and development financed by American industry, made possible because of PROFITS." The marble tournament was in mil swing, une little boy had missed an easy shot and let slip a real cuss word. "Edward." called a preacher from the spectators' bench, "what do little boys who swear when they are playing marbles turn into?" "Golfers," was the prompt reply. * * * Political Definitions Socialism: You have two cows and give one to your neighbor. Communism: You have two cows. The government takes both and gives you the milk. Fascism: You have two cows. The government takes both and sells you the milk. New Dealism: You have two cows. The government takes both, shoots one, milks the other and throws the milk away. Capitalism: You have two cows. You sell one and buv a bull. * * Quality remains long after the price has been forgotten.