Felix Somary, Die Rentabilität der Aktiengesellschaften (1910)

Published in Bank-Archiv in 1910, Felix Somary’s article examines how statistics should measure the profitability of joint-stock companies. It moves from criticism of existing research to accounting principles, stock-market yields, and a programme for corporate statistics. Reliable measurement, he argues, requires commercial knowledge and a distinction between company earnings and investor returns.

Somary contrasts the abundance of published accounts with their limited scientific use:

Man sollte meinen, dass die Bilanzpublikationen der Aktiengesellschaften zur Bearbeitung geradezu auffordern: in Wirklichkeit ist dieses für die Forschung so wichtige Material in den meisten Staaten der Wissenschaft verloren gegangen.

English translation: One should think that the balance-sheet publications of joint-stock companies positively invite treatment: in reality this material, so important for research, has been lost to science in most states.

Official statistics have neglected modern capital, while existing inquiries often reflect fiscal priorities. Somary credits Körösy with encouraging research but challenges Dermietzel’s and Moll’s methods. His first objection concerns the denominator of profitability calculations: paid-in share capital cannot straightforwardly establish the general return on industrial investment. When private enterprises become corporations, capitalization may incorporate earlier earnings and therefore differ from the resources originally invested in production.

A second objection concerns the definition of shareholder income:

Diese Betrachtungsweise ging von der Anschauung aus, dass die Dividenden das einzige Einkommen des Aktionärs darstellen.

English translation: This way of looking at the matter proceeded from the view that dividends constitute the shareholder's sole income.

For Somary, dividends are only the directly distributed portion of the continuing shareholder’s gain. Allocations to reserves and retained earnings also increase that shareholder’s interest in the enterprise. Conversely, losses diminish it when they occur, not only when liquidation or a formal reduction of capital gives them legal recognition. He presents the opposing view as a failure of commercial understanding:

Jeder im praktischen Geschäftsleben Stehende wird diese Ansicht ohne weiteres als Irrig erklären; um so verwunderlicher ist es, dass sie sich in den Arbeiten Dermietzels und Molls wiederfindet.

English translation: Everyone who stands in practical business life will without further ado declare this view to be erroneous; the more astonishing is it that it recurs in the works of Dermietzel and Moll.

This criticism concerns the chronology of profits and losses. Assigning accumulated losses entirely to the year of liquidation would obscure the crisis in which they arose and distort comparisons across periods. Earnings subsequently used to cover earlier losses must likewise be recognized as current profit. Statistical accuracy requires more than a correct cumulative total: gains and losses must be assigned to the appropriate business years.

Somary’s proposed calculation adds dividends, allocations to reserves, and profits carried forward, removes carryovers from the preceding year, and deducts current losses without counting previously recorded losses again. Net earnings are related to paid-in equity, including issue premiums. Subscription-right gains occupy a distinct position because they accrue to shareholders without constituting company earnings. Aggregate profitability should be supplemented by distributions, extremes, and modal values. Sustained series could illuminate business cycles, support comparisons with fixed-interest securities, and correct both inflated expectations of corporate profits and pessimism inherited from speculative crises.

The article then separates accounting profitability from the yield offered by shares at current market prices. Dividend relative to market value answers a different question from company profit relative to paid-in capital. A high corporate profit rate indicates strong earnings, whereas a high dividend yield may reflect a depressed share price. Conversely, low current yields can accompany expectations of appreciation. Market yields therefore require interpretation, not mechanical ranking.

For quotation statistics, Somary favours regularly traded securities on central exchanges over indiscriminate inclusion of sporadic provincial transactions. Broader coverage does not necessarily improve representativeness. Without turnover figures, monthly and annual average quotations provide an approximate practical solution. His proposed dividend-yield statistics exclude non-dividend-paying companies and supplement sector averages with maximum, minimum, and modal yields.

The concluding programme encompasses company formations, liquidations, bankruptcies, year-end capital, sectoral earnings, exchange listings, market values, and dividend yields. It distinguishes contributions in kind from newly supplied capital and shareholder losses from creditor losses. A breakdown of assets into land, buildings, machinery, inventories, and receivables would connect corporate accounts to estimates of national wealth. Throughout, Somary treats statistical categories as economic judgments: each measure must answer a defined question, preserve the timing of economic events, and rest on informed knowledge of business practice.