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ISSUE DATE: September 15, 1967; Vol. LXXVI, No. 4 FORTUNE The famous vintage large sized business magazine -- with in-depth features and many pages of vintage ads -- Exclusive MORE MAGAZINES detailed content description, below! * IN THIS ISSUE:- [Detailed contents description written EXCLUSIVELY for this listing by MORE MAGAZINES! Use 'Control F' to search this page.] * This description copyright MOREMAGAZINES. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Fortune's Cover, Designed By Crosby/Fletcher/Forbes, A London Design Group, And Photographed By Bloch-Laine, Is An Assemblage Of Some Of The Most Common International Equivalents Of The Familiar "Corp." And "Inc ," Designating Various Forms Of Limited-Liability Corporations. Included Are N.Y. (Naamloze Vennootschap), Which Means "Nameless Company" In Dutch; Gmbh (Gesellschaft Mit Beschrankter Haftung), German For "Company With Limited Liability"; Ab (Aktiebo/Ag), Swedish For "Stock Company"; Ag (Aktiengesellschaft), German For "Stock Company"; A/S (Aktieselskapet, Aktieselskab), Norwegian And Danish For "Stock Company"; Pty. (Proprietary), Used In Australia And South Africa; Spa (Societa Per Azioni), Italian For "Company [Owned] Through Stock"; And Sa (Sociedad Anon/Ma, Societo Anon Yme, Sociedade Anon/Ma), Spanish, French, And Portuguese For "Anonymous Company." The Japanese Characters, Pronounced "Kabushiki-Kaisha," Mean Stock Company. Subjects in this issue: The World Economy, by Lawrence A. Mayer. Why the Climate Is Changing for U.S. Investment by Walter Guzzardi Jr. The New World of Industry (A Portfolio). A Decade of Dazzling Growth, by Edmund K. Faltermayer. Portraits by PAUL HOGARTH. The Declining Art of Concealing the Figures, by Robert Ball. The Fortune Directory of the 200 Largest Industrials Outside the U.S. A Burst of Togetherness. Businessmen in the News. The Globalists. Editors Desk. Editorial: Toward "One World" of Business. INSIDE THE 200: Governments in Business. Fruit from a Bonsai. British Socialism's Last Grasp. Talent for Survival. The Tentacles of lRl. The Bigness Kick in Europe. A Dash of Curacao. Organic Change at Solvay. Marriage, European Style. The Cosmopolitan Brew. Split Personalities. Driving Lessons. Personal Investing: The Stocks of the 200. FORTUNE's WHEEL, A review of this issue: THE WORLD'S ECONOMY: The key economies of the U.S., Britain, Germany, and France, which account for two-thirds of the non-Communist world's industrial production, are currently stopped in their tracks. The situation does not add up to a worldwide recession-the U.S. slowdown has been mild and Japan and Italy are still booming-but it is serious all the same. Germany is having a full-fledged recession, with industrial pro- duction off 7 percent. It is particularly worrisome because it is infectious; some trading partners within the Common Market do more than 20 percent of their foreign business with Germany and have been especially hard hit by the drop in demand there. Many countries outside the Common Market have been affected as well. Some observers think a return to easy money can generate an easy recovery. But it may be that after the exceptionally rapid growth rates of recent years a transition to slower, "more normal" rates of growth is in process. A series of charts beginning on page 31 graphically trace the movements of some key indicators in the world economy. WHY THE CLIMATE IS CHANGING FOR U.S. INVESTMENT: A new spirit is now guiding the relationship between the American business community and the foreign countries in which it is investing so heavily. American investment is entering another time of welcome-particularly in Western Europe-that will match in warmth the great days of the mid-1950's. Europeans are shedding their recent coolness toward additional U.S. investment partly because they recognize results. Everyone admits that widening rings of benefit have spread from the influx of U.S. capital-increases in employment and productivity, greater export opportunities, improvement in standards of living, larger tax revenues. (Ironically, in building enterprises to deal with the Common Market as a single entity, the Americans have outpaced the Europeans in their pursuit of Europeanism.) A more educated and experienced American view of Europe has also hastened the dissolution of suspicion and fear. American impatience with the frustrations of European business practices been replaced with a more measured appraisal. And in a perverse way, the well-publicized reverses suffered by some U.S. foreign subsidiaries have humanized American companies in European eyes. THE NEW WORLD OF INDUSTRY: Industry goes where the markets are, and today the markets are everywhere. The names of some of the places evoke memories of other days-Dunkirk, Tokyo Bay, Manila. Others evoke a sense of the exotic-Kitwe, Kharg Island, Mount Tom Price. The new industries, bustling where nothing stood before, stir the imagination and widen the sense of belonging to the modern world. To catch the look, the spirit, and the new technology, FORTUNE has assembled this ten-page photographic portfolio. A DECADE OF DAZZLING GROWTH: All but ten of the 200 largest industrial corporations outside the U.S. are based in eleven nations: the six Common Market countries, plus Britain, Sweden, Switzerland, Canada, and Japan. During the past decade, this "world of the 200" has more than doubled its per capita G.N.P., considerably narrowing the U.S. lead. Since 1957, when FORTUNE published its first list of foreign industrials, the sales of the top ninety-six companies in those eleven countries have risen 129 percent. Over the same period, sales of the top ninety-six companies on FORTUNE'S list of the 500 leading U.S. industrial companies increased only 83 percent. Still, the largest companies abroad do not loom as large in their own national economies as their American counterparts do in the much larger U.S. economy. A lot of production abroad is still taking place in small, inefficient enterprises, and industry in both Europe and Japan still has a lot of shaking out and consolidation ahead of it. But, thanks to its own growth and ambitions, there appears to be no danger that foreign business is doomed to fall hopelessly behind the U.S. THE DECLINING ART OF CONCEALING THE FIGURES: Corporate reporting practices abroad fall far short of what an American stockholder or financial analyst would consider minimally adequate. With no agency like the Securities and Exchange Commission to monitor disclosure practices, most foreign companies use a variety of ploys to conceal true earnings-and losses. Some 15 percent of the companies on the FORTUNE 200 list do not fully consolidate sales, and seventeen omit sales altogether from their annual reports. But secrecy is rapidly giving way. The U.K., Germany, and France have recently enacted stiffer disclosure laws. A committee of experts has recommended the adoption of uniform regulations throughout the Common Market-possibly to be enforced by a body like the SEC. And companies themselves are voluntarily providing more information, aware that secrecy deprives them of badly needed capital because it discourages investors. THE FORTUNE DIRECTORY OF THE 200 LARGEST INDUSTRIALS OUTSIDE THE U.S.: The 1967 directory of the 200 largest industrial corporations outside the U.S. clearly shows how hard profit margins were hit last year in the faltering ectnomies of Western Europe. While only about one-eighth of the companies on the list showed a decrease in sales, almost half of them suffered a decline in earnings or actually lost money. As a group, the 200 reported a slim 0.7 percent increase in total profits, but this would have been a decline had it not been for the outstanding gain reported by the thirty-four Japanese companies listed both this year and last; they increased their profits by 34.5 percent and sales by 18 percent. Second only to the Japanese in profit performance were the seven Italian firms on the list, with a 16.9 percent earnings increase; their sales were up 20.5 percent. In contrast, fifty-two British companies showed a 5.1 percent increase in sales, but a 13.3 percent decline in profits. Twenty-six German firms posted a sales rise of almost 5 percent; profits, though, fell some 10 percent. And twenty-two French firms increased sales by 18.3 percent, but their profits dropped 10.9 percent. PERSONAL INVESTING: THE STOCKS OF THE 200: Wall Street's interest in foreign stocks is currently at a low point. The interest equalization tax, introduced to stem what had become an alarming flow of American investment dollars abroad, has done its job only too well, and most foreign industrials would appear unattractive even if there were no tax to hurdle. Most of the companies in the top 200 are well down from the highs they reached in the early Sixties, and they seem to be going nowhere. European stock markets have slumped far more severely than is warranted by the economic facts. They collapsed in tandem with the great Wall Street break in mid-1962, and they haven't recovered since. The big German industrials have dropped an aver- age of 42 percent below their highs for the decade. Averages on the Milan and Zurich exchanges are off about 40 percent. And the Paris Bourse, in the words of Premier Georges Pompidou, has become "cadaverous.". A BURST OF TOGETHERNESS: Since 1957, when the European Common Market was founded, some thirty nations have become members of common markets or free-trade areas, and at least another score are considering entry into some form of regional trading organization. Commerce among the members of the trade blocs-in Central and South America as well as in Europe-has increased much faster than the average for the rest of the non-Communist world. Though the blocs often seem to be movements toward group protectionism, goods flow through the world as never before, and, on balance, the new combinations have helped create the prosperity on which trade depends. Where integration has fallen short so far has been outside the heartland of the industrialized West. It is there, though, among the emerging nations, that most of the current organizational activity is taking place. A plan to forge an all-inclusive Latin- American common market by 1985 faces imposing obstacles, but could be the key to economic progress scarcely imagined by most Latin Americans. THE GLOBALISTS: The worldwide effort to build a single global business community is animated by a few leading businessmen whose influence extends far beyond the bounds of their own company affairs-through their governments in international business organizations, or in informal contacts with counterparts in other nations. FORTUNE has selected twenty such men as The Globalists of 1967. The twenty include representatives of the major Western nations and Japan, as well as of such less industrialized countries as Argentina and India. Despite the diversity of their backgrounds, these men share an 151 opposition to restrictions that hinder the free flow of goods, money, and companies across national borders. INSIDE THE 200: Behind the statistics and footnqtes in the 200 list lies a fascinating global panoply of intriguing business situations. Some of the most striking are detailed in a dozen articles. Among them are explanations of why the two biggest companies have headquarters in both Britain and the Netherlands, and how this corporate schizophrenia affects operations (page 200); how Union Miniere prospers despite nationalization of its copper mines in the Congo (page 187) ; and how two successful auto makers exist in a country of only 7,800,000 people (page 215). The fifteen companies on the 200 list carrying the footnote "government owned" are discussed on page 182; they range from Italy's lively oil giant, ENI, to the British National Coal Board, which lost $69 million last year. * NOTE: OUR content description is GUARANTEED accurate for THIS magazine. Editions are not always the same, even with the same title, cover and issue date. This description copyright MOREMAGAZINES. 18 19 20 21 22 23 24 25 26 27 28 29 30 31 BIG, HEAVY, Oversized magazine, Approx 10" X 13". COMPLETE and in VERY GOOD condition. (See photo)
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