References: P.S.1496/44 WFM/51/DJ
TO: CHIEF INSPECTOR, E.P.T.
With reference to your instructions of 21st July last and subsequently, I have now reached a stage at which I think you should see this case.
I have agreed (subject to sundry open points which do not affect the standard period) the E.P.T. computations as to profits, capital, and average capital on the normal Balance Sheet basis.
(For ease of reference I have placed these computations in a sub-file, with a separate subfile for each department of the Press with a summary.)
From the summary you will observe that:-
1. A profits standard of £57,378 (year 1936) would be the normal standard.
2. A substituted standard based on "true capital" (year 1935 being more advantageous) would amount to £87,571, i.e., 6% of £1,459,514. (This is ignoring any possible addition for the monopoly right to print the Bible and Book of Common Prayer to which I refer later in this report).
The computations are, I think, clear and self-explanatory and subject any points you may raise (the case is outside the limit in E.P. 229a,) I do not think I should have any difficulty in negotiating a settlement. The following, however, arise:-
(1) The greater part of the additional capital claimed relates to expenditure etc., incurred prior to 1924, the first year for which I have accounts available. I checked all figures subsequent to 1924 and at the interview of 22.11.44 (see correspondence sub-file) I saw and made sample checks from the detailed analyses prepared by Deloittes at Oxford. If it is considered necessary facilities for a comprehensive checking of the figures will be made available to me or some other representative this Department at Oxford, where all the available information is stored.
(2) "Going concern" Value.
You will observe the Accountants' observations on this point (Letter 30.11.44.) with which I agree. This Press is quite different from a normal trading concern and the profits made cannot be compared with what they would have been if a purely commercial policy had been followed. I assume, therefore, that no question of imposing a lower ceiling than the Section 27(5) limit will be considered.
(3) Bible and Common Prayer.
In the correspondence sub-file you will find a photographic copy of the original charter granted by Charles I in 1632. A translation of the relevant portion and a letter of explanation is attached to the Accountant's letter of 30.11.44. The sum to be added in respect of this "asset" should apparently be the value at the date of "acquisition". (I am assuming an asset obtained by gift is "acquired" within the meaning of the Act). This is obviously a problem which can only be solved by negotiation and a spirit of compromise on both sides. It is complicated by the fact that this Press did not have the sole monopoly but shared it with the Cambridge Press and the King's Printers. I have asked the Accountants to get out for me some figures for the ten years 1929-1939 to show sales, gross and net profits. From these some idea of the capital value of the monopoly could be obtained, say at 31.12.1934, and afford a basis for discussion and negotiation. I have also asked for such historical evidence as is available leading up to the acquisition of this right. Here, I would suggest, is an opportunity to meet the points in the Vice-Chancellor's letter to Sir Alan Barlow. I am, personally, in full agreement with your remarks on page 2 of your report to the Deputy Chief Inspector of 6th July, and from my conversations with Deloittes I am satisfied they also share your views. I feel sure, therefore, that if the Press could feel they were being treated well over the Bible and Common Prayer, I do not think it would be necessary to look in any other direction to "mitigate the extraordinary incidence of E.P.T." The increase in the Substituted Standard over the Profits Standard will be very considerable in any case.
To get out the information for which I have asked will, however, involve a further visit to Oxford, and the Accountants have suggested I should submit the case to you first, so that, if you have any points to raise or have any other ideas on the treatment of the Bible and Common Prayer, they may get all the information available at one time. It is then suggested that the final figures be negotiated at a conference with you in London, or with me, if I am given authority to settle.
(I am sending all my papers from 31.3.34. The remaining accounts back to 1925 are available if and when you need them).
W. F. Martin
CITY 15.
6.12.44.