General character of the two studies, 320.—Crum's analysis of earning power: the "profit ratio, " 322; the "earnings ratio, " 326.—The return Upon capital invested, 330.—The proportion of profitable operations, 333.—Sloan's analysis of earnings, 334.—Frequency distribution of earnings in 1927 and 1917, 336.—The range of earnings, 339.—Relation between earnings and "especialty products, " 340.—More light needed, 342.

I. Purpose of this paper: to survey the literature, to examine current practice, and to classify the facts needed for a tenable theory, 233. — II. The heroic explanation, commonly found in biographies, 237. — Inventive abilities not so rare as commonly supposed, 241. — III. Theories of successive increments, 242. — Cumulative character of contribution and discovery, 243. — This intensified by our greater willingness both to accept and to give, 251. — IV. Organized industrial research and invention on the part of large corporations, 253. — Methods by which new devices are developed, 255. — Cooperative character of the procedure, 258. — V. Materialistic explanations, 260. — The profit motive not so essential in some instances as in others, 266. — The real question: what proportion of usable inventions comes from professional inventors? 268. — VI. Conclusion: what sort of inductive study is needed, 269.

The theory that business profits, in the long run, tend towards equality between different industries is qualified by the admission that, at any given time, variations exist. Such variations in 108 industries are examined for the year 1917. — I. Source of the data: Treasury tax returns for 26, 477 corporations, 242. — II. Variation in the earnings of these different industries and trades, and in eleven major groups of industries into which they fall, 243. — III. Range between individual firms within given industries and groups, 253. — IV. Variations in the average invested capitals per corporation, 259. — V. Earnings of the largest corporations, 261. — VI. Effect of taxation on profits. Summary, 264.

to encourage international commerce make it important to have such knowledge currently. The writer, in Novemnber i95o, requested information on their foreign holdings from more than a hundred American manufacturing corporations.2 Seventy-two companies supplied the data which are summarized in Table i. As of May I943, the Treasury study showed the foreign assets of American corporations and individuals with a 25 per cent interest or more in companies abroad, as amounting to $7,365,000,ooo. About 6,ooo corporations and indi-

Abstract In determining the investment base, several alternatives immediately occur to either the accountant or the economist. Total assets is one possibility. Total assets less intangibles is another. The sum of all items of corporate capital structure; bonded debt, capital stock and surplus and undivided profits, is a third. Still a fourth base might be the sum of capital stock and surplus, without the inclusion of funded debt. Capital assets may be stated on the basis of cost or on the basis of a valuation. Just because, in the case of any individual corporation, assets may be stated upon a cost basis or upon the basis of an appraisal, it is often believed that no valid general figures can be developed. Many small companies overvalue their property accounts. On the other hand, a number of large companies are quite conservative in their charges to depreciation, obsolescence and other reserves. If charges to depreciation are not separated from charges to other reserves, if revaluations of plant and equipment are not explained in detail in the annual report, then the task of making allowances for conservatism or extravagance in estimating such margins of error is intensified.

Journal Article Profits and Prices in Prosperity and Depression: Paton, Epstein, Mills Get access Theodore J. Kreps Theodore J. Kreps Stanford University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 51, Issue 4, August 1937, Pages 681–698, https://doi.org/10.2307/1881685 Published: 01 August 1937