Page:Walter Renton Ingalls - Wealth and Income of the American People (1924).pdf/231

Rh about writing off for depreciation and depletion, but such improved accounting has probably fallen far short of making the necessary economic adjustments, and the tax gatherers would not permit them even if the corporations were minded to attempt it. My thought refers to conditions when entire industries, or important parts of them, have to be thrown away as being of no further use.

It will be agreed that a corporation accomplishes nothing by earning a surplus and investing it in new plant for which there is no use. The object of any industrial undertaking is to make money. If it can not make money, either currently or prospectively, the plant has nothing but salvage value, which usually is very small.

Let attention be directed to some broad examples of this nature, which are quite independent of recent wartime conditions. A metallurgical company possesses a group of smelteries dependent for their ore supply upon the mines of a certain region. While those mines furnished adequate ore the smelteries were valuable plant. Upon failure of the mines the smelteries ceased to have any value although as plants they had been maintained in a high state of efficiency. This was an obsolescence arising from change in geographical conditions.

During the last 10 years an immense amount of capital has been invested in plants for the building of automobiles. Concurrently with the rise of the auto- mobile the use of the carriage and wagon has waned and a huge amount of plant previously employed for carriage and wagon building has become useless and has had to be written off from the capital assets of