The matter of rising costs is a serious problem taken by itself but add to that the reported pros- pect of an excess profits tax, and Du 16 48 no person in my position could help having grave misgivings about our expansion program at Toledo. I am frank to state that if Congress CIAL 47 should pass an excess profits tax, all plans for expanding our com- L pany would immediately have to be reconsidered. Mr. Dunlop described Sun Oil's post-war profits as "reasonably adequate to permit us to fulfill INDUSTRY SEEN HIT the responsibility resting upon us of maintaining and expanding our facilities to help meet the, in- BY TALK OF TAXES creased demands of the public and of the armed forces for petroleum products." The company retained for busi- ness purposes 61 per cent of its Heads of Corporations Report earnings in 1940, 70. per cent in 1941, 82 per cent in 1946, the same Fear for Excess Profits to in 1947, and 88 per cent in the first Congressional Group six months of 1948. To supplement the depreciation reserve, Sun Oil also set aside $4.- 800,000 in 1947 and $3,500,000 in EXPANSION PLANS CHECKED the first half of this year as an additional reserve toward the re- placement of fixed assets. Plant Investment Up Dunlop of Sun Oil, Vance of Mr. Vance, giving a similar fl- lustration for Studebaker, said Studebaker, Holman of Stand- "There has been an increase of $23,- ard Oil Before Committee 000,000 in our net plant invest- ment from Jan. 1, 1945, to Sept. 30, 1948. In that period, our net profit, after taxes, aggregated special to THE NEW YORK TIMES. 15 $26,745,000. In the same period we paid dividends of $5,880,000, leav- Spokesmen for two of the automo- smaller WASHINGTON, Dec. ing $20,865,000 for reinvestment in companies in the oil and today the business. As our business ex- industries argued panded, however, our working bile against an excess profits tax on or capital needs increased. Conse- quently we borrowed a total of grounds that it would arrest $18,000,000. retard essential industrial growth, "If we had had to pay the war- of them declaring that even time excess profits tax throughout one talk of such a tax was "proving the period involved, our earnings, a disruptive force." after taxes, would have been re- duced by more than $12,000,000. The subcommittee headed of Ver- -by speakers before a joint eco- Assuming that we had paid the nomic Senator Ralph E. Flanders pres- same dividends (incidentally, our were Robert G. Dunlop, and stockholders have received less mont of Sun Oil Company, than 20 per cent of our profits in ident S. Vance, chairman and presi- the last fourteen years), we would H. of the Studebaker Corpora- Eugene have had to borrow not $18,000,000 dent Another witness was but $30,000,000 to carry out our tion. Holman, president of the Standard post-war expansion program. How- Oil Company (New Jersey). ever, I am sure that if the war- Mr. Dunlop told the committee this time excess profits tax were still excess profits tax at effect in effect, it would have been im- that an would have the same fur- possible for us to borrow all these time directly prohibiting funds. Therefore, we would have as a law industrial expansion. Mere had no choice but to sharply cur- ther of a tax already is causing of tail our program." talk doubts about the wisdom plant Mr. Vance said Studebaker had told its dealers that the time will grave moving ahead with projected said. come when the friends they make expansion programs, he As an example, Mr. Dunlop company said, today will be valuable and that it ago our was "good business not to charge all the traffic will bear." He said "some scheduled time an expenditure of $16,- the that where dealers have fla- 000,000 of our refinery at of to improve and expand Toledo, rantly violated that policy their facilities The original cost estimate risen to contracts have been canceled. Mr. Holman contended "the truly Ohio. program has since that it ignificant measure of profit is that $18,000,000, and it appears our people's needs Applying the go to $20,000,000 before may plans can be completed. Continued on Page 49, Column 6 Cost Rise a Problem