Nau, Carl H.

Nau, Rusk & Swearingen

Rusk, Stephen G.

Swearingen, Charles L.

English

eGrove (Univ. of Mississippi)

University of MississippieGroveIndividual and Corporate Publications Accounting Archive1920Letter sent to James O Sully, January 14, 1920Nau, Rusk & SwearingenCarl H. NauCharles L. SwearingenStephen G. RuskFollow this and additional works at: https://egrove.olemiss.edu/acct_corpPart of the Accounting Commons, and the Taxation CommonsThis Article is brought to you for free and open access by the Accounting Archive at eGrove. It has been accepted for inclusion in Individual andCorporate Publications by an authorized administrator of eGrove. For more information, please contact egrove@olemiss.edu.Recommended CitationNau, Rusk & Swearingen; Nau, Carl H.; Swearingen, Charles L.; and Rusk, Stephen G., "Letter sent to James O Sully, January 14, 1920"(1920). Individual and Corporate Publications. 22.https://egrove.olemiss.edu/acct_corp/22Mr James O SullyMerchants National Bank BuildingSan Francisco CalDear SirYour letter of January 14th reached this officeduring the writer's absence from the city.It would be pretty difficult to give you a generaloutline of our profit sharing plan because it is quite com-plex, very unique, and is something more than a profit shar-ing plan. It is really an integral part of our PartnershipAgreement, a copy of which I am sending you herein..This program or piece of machinery, among otherthings, does the following:(l) It gives a partnership purely a similar continuitywhich attaches to a corporation;(2) It provides for what we believe to be an idealprofit sharing plan;(3) It holds out a future to the worth-while members ofour staff. Under its provisions, it is entirely thinkablethat the young man who starts with the organization as ajunior clerk, might, before he dies, be the senior partner ofthe firm;(4) It capitalizes and actually turns into the "coin ofthe realm" the most valuable asset an accounting organizationhas, namely, its Goodwill, and does so in a way that he whoacquires a shape in the goodwill partnership by buying intoit under the provisions of the agreement, does so withoutputting up any actual money. The mathematics of the schemeas applied to our problem, results in a capital and goodwillvalue per share, which is less than the profit distributionvalue of the share. In other words, if the organization con-tinues to do about 80% as well in the future as it has over theaverage of the past three years, each share more than earns itspurchase price with the consequent result that buying in merelymeans making figures on books and transferring balances fromone account to another. In this respect, it comes prettyclose to being perpetual motion.Cleveland January 27 1920NAU, RUSK & SWEARSINGENCERTIFIED PUBLIC ACCOUNTANTSNEW YORK CLEVELAND30 CHURCH STREET AMERICAN TRUST BLDG.- 2 -Mr J O SullyOf course the particular piece of machinery containedin this instrument may have to be modified to fit your ownsituation, but the document may, nevertheless, be suggestive inworking out your own plans. It was the result of long andcareful thought, and before it wss finally adopted, was care-fully studied and rewritten by able legal counsel.Should some of its provisions be not entirely clearto you, we will be very glad to answer any specific and concretequestions which you may care to ask.CHN-DYours very truly

Letter sent to James O Sully, January 14, 1920

https://egrove.olemiss.edu/cgi/viewcontent.cgi?article=1021&context=acct_corp

Letter sent to James O Sully, January 14, 1920

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