The San Francisco call., 1897-01-06

tary had at hand the statements OF the
Bethlehem Company as to their gross
receipts, net receipts, dividends paid ana
surplus from 1889 to 1896 inclusive. This
inform alton was all from the company
itself, and therefore i'm mportant. From 1t
the Secretary prepared statement show
Ing that whatever may have been me cost
OF the armor plant and the gun plant,
Whatever may have been paid for the
secrets of manufacture or for patents, or
whatever may have been the interest on
the working capital, all those and other
charges have been paid from the gross
earnings of the company, and the results
show the company's investment in the
plant to make armor and gun steel Tor the
Government have been returned with ~
per cent thereon.
The Secretary, in another form, states
the account of the Bethlehem Company
with the Government as a profit aud loss
account, based on the reports to the Audi
tor-General of Pennsylvania, which are
from the com pany statements from NO
vemb Der l, 1889, to Move n Der l, 1885, show
ing balance of profit, 1889 to 1896 in
elusive, OF S672, 728. The reports made by
the Carnegie Company, however, were so
indefinite as to be practically OF no value,
and 1t was necessary for the Secretary tc
resort to the best evidence obtalnable Tor
the purpose OF showing: First, the value
OF its plant; second, the price of labor
and material entering into ton OF armor;
third, the amount that should be allowed
the company for maintenance, and the
amount OF the plant upon which main
tenance should be allowed; and the ac-
count OF the Carnegie Company with the
Government IS stated in several ways, one
table allowing a valuation of $1,000 900 for
the plant, another at $2,5OO,OO0, and a
third of $1,000, COO.
On a $3,000,000 valuation OF the plant.
allowing 5 Per cent for maintenance, the
rate claimed by the company. and per
cent on a working capital OF $750,O0O, and
allowing dividend to the company OF 10
per cent per annum on outstanding capl-
tai, the Secretary shows that the entire
cost of the plant is practically extin-
guished upon the comp pletlon OF existing
contracts.
Assuming the cost of the plant to be
81, 600, 600, and allowing 10 per cent thereon
Tor maintenance, insurance, etc., and B
per cent on working capital, and allowing
1013 per cent diviaend on outstanding cap
ital invested in the plant, applying the
surplus OF the net earnings, after deduct
ing dividends for each period OF six
months TO the extinguishment of the cost
of the plant, the Secretary shows that the
Carnegie Company will have been on the
1st day OF July, 1897, repaid every dollar
it claims TO have expended on its plant,
and, after the allowance noted above, will
have made profit on its investment up
to the time when that investment was ex-
tinguished by the repayment OF the
money of Is per cent.
The statute under which the report of the
Secretary is made requires a report not
only as to what is the actual cost of manu-
featuring armor, but also what sum ought
h lryf ka, f<, ffo,~
In dealing with this question the Secre-
tary sets forth fully the great risk involved
bythese companies when their plants were
erected, OF having work for only short
time, and that for many reasons their
profits were necessarily expected to be
laree. He also shows that the Govern
ment, having really created these plants,
ought to perpetuate them, as such indus
tries are necessary in order TO enable this
country to be independent In the impor-
tant matter of public defense. He is of
the opinion that the Government should
pay for armor in the future a price suffi-
GENTLY liberal to justify the contractors
IN Ike. ping their plants in order and ready
at all times 10 manufacture armor when
occasion requires.
He concludes that in view of all the cir
cumstances regarding the uncertainty of
future contracts it would not be inequita-
profit upon the cost of manufacturing
armor for the three ships now under con-
tract. Adding 80 per cent to $3.50 per ton
of armor gives 1915. But the Secretary
recommends that, as the nickel is now
furnished by the Government, which
makes an addition of $40 per ton in the
price of armor, it would be better in the
future to have the contractors furnish this
material, which would bring the price up
to 1895 per ton; and allowing something
for keeping nickel on hand, he suggests
that $400 per ton would be fair and
equitable price to pay for the armor for
the Wisconsin, Alabama and Illinois.
Ending his report, the Secret tary recon-
mends that if Congress shall determine
upon any limit of price to be paid it shall
also give the Secretary OF the Navy power
10 erect or buy an armor plant and gun
plant, ana, if need be, to lease such plant
or plants until it can construct one of its
own.