year, which lower 939 or 1940. Answering the question of whether profits are ever too high socially, he said, "they perhaps might be if the investor was unduly 11,1948 rewarded at the expense of other classes in the community, or if the profit contributed unduly to the cost of living. CIAL "However, I challenge you to find any evidence that the owners of General Foods have received anywhere near the fruits of their investments that have gone to em- FRANCIS OPPOSES ployes, government, etc. Dollars have been competing for goods instead of goods competing for dollars. We are emerging from CURBS ON PROFITS that era. Soft spots are now oc- curring and more will come." He told the committee, headed by Senator Ralph E. Flanders of Vermont, that "there certainly General Foods Chairman Tells have been periods in the last few years when our total profits could Congress Group Net on Fair have been materially increased if Dealing Can't Be Too High We had been willing to charge what the market would bear. This is true of our dessert products, for instance. It would not have been NEW FINANCING DISCUSSED true in the case of flour." $35,000,000 Added Since War General Foods raised in the do- mestic market since the war, Reinvested Earnings Regarded through the issuance of securities, as 'Costless Capital' Adding about $35,000,000 net in new capi- tal. Of this amount, about $25,- Safety Factor to Shares 000,000 was equity capital, which the company raised early in 1947 through an issue of $3.50 preferred stock practically at the peak of the By JOSEPH A. LOFTUS market. The company issued $25,- Special to THE NEW YORK TIMES. 000,000 of long-term notes in 1945 WASHINGTON, Dec. 10-Clar- but used $15,000,000 of the pro- ence Francis, chairman of General ceeds to retire $4.50 preferred Foods Corporation, told a joint stock. Congressional economic committee In the last four years, Mr. Fran- today he believed profits "cannot cis said. "we have raised nearly be arithmetically too high if they $34,000,000 through earnings re- are made competitively in fair tained in the business. Thus the dealings in a competitive econ- net amount raised in the security omy." market since the beginning of 1945 Mr. Francis said his company is almost identical with the amount charged less than the traffic would secured through retained earnings. bear on some products, thus reduc- I have no idea what it might have ing total profits, and that he be- cost us to issue common stock. Its lieved the peak in food prices had cost would have made it unattrac- been passed. live, and we did not seriously con- Answering a committee question der it.' of why the company reinvested The committee asked, "is the profits since the war instead of selling common stock, Mr. Francis small proportion of profits paid out said candidly that reinvested earn- in dividends itself'a deterrent to ings are "costless capital." The obtaining equity capital through cost of an issue of common stock the capital market?" would have made it unattractive, Mr. Francis replied: "Our an- he said. He acknowledged that re- swer is yes, even though we could investment of earnings made the probably sell more common stock plant worth more and added a provided we don't care what new safety factor to the outstanding equity capital costs us. Here again, stock although not necessarily rais- however, a generalization is dan- ing its book value. gerous considering how many other factors have been affecting all Sees 8.1% Profit for 1948 stock market prices." Mr. Francis reported estimated The hearing will be resumed on net profits for 1948 as 8.1 per cent Wednesday, on invested capital, the highest in éleven years. Net profits based on net worth were estimated. at 17 per cent than in