The Washington times., 1910-04-09


course. comes in at once, because we
always figure the net cost of coal by
taking the gross cost and deductlnS
from that the returns from the Iesi0u-
als-tar. coke. and ammonia There
fore II IS necessary to determine not
only the price paid for coal ana re-
ceived for residuals. but also what mas
been the net return from Eeslo udls5
and so the net cost OF coal Thus you
learn as to the prices paid ana re-
celved, and also the relative EN-
cienCieS OF operation. the prices LoI
these three residuals remained the
same for the two years compared, 50
that there Is no change 70 DC taken
account OF there. As 70 the COKE me
prices ran from about TO 10 cents
bushel. which would be 500 a cnai-
dron, not a ton, at the WORKS, OF sS-yt
delivered; or, crushed and screened
$500 at the works, or So-fo delivered
Now. the other day there were com
PARSONS made as TO the net earnings,
q nj I made my calculations Whlie
WIS here before you; but L have gone
over these figures more carefully ana
viii now make this comparison tne
statements for each year being pLs-
pared very carefully along tne same
lines, and IN both OF which have IN
cIuded repairs and depreciation as one
of the items Of expense
For 1907 the earnings on the OASIS q
these statements-but shOEld say tlldt
would myself allow a little more IoI
deu-eciation and bring the earnings
down somewhat-but, taking the oepre-
De. thousand made, which also cOFeLs
the money currently expended Tor re-
pairs and renewals as wen as the oaI-
auce left over which Is put II the IT,
serve account for accrued depreciation
thus The net earnings are SfsBs4l-Se- ne
rate Of return therefore. on the secuIl-
ties mot the iuvesJmentl. Ynich 1 az
at the round figure OF S3sS5S,y1o, eou5 -, =
a rate Of return Of PA per cent - -
Is on the securities, and that was loL
the wear 1907. Now, for Is19, calcuiatlIls
the same way, and c@lcIldlilis - -
same part Of the securities ~illS 80, ,. % a.
not changed. the let profit IS go, -
which would show a return On - ..-
Of ia per Cent-a small lIlcIe1-ss "
the rate stated by me the oIneI uay.
But now, coming TO the rae q s -S.,---
on the assets. which is a very - -
r,roDOsition. and using other wise N
same figures using the value OF pIlSs So
assets brought up 10 june ~ 1Si5. -. 60, 80
in round figures calling that Sss5JefvttI -
lTay-a a return on those assets OF a-L5
nor cent Now, taking the total Fat10
Of the property as appraised by ny - - -
after many months o. Wcrk. Lle :.
offce force being engaged in 1t-and u
cost some money-the value OF the prop
a-fv stated then as a going concern Wa
szIven as 81. Go0.O00- on that basis the r.
turn was 81 per cent -
Now. II Is TO be borne II MIND tEal N
drr7ras so far stated are not on ths
5,4sis If A gas price OF % cents a Il0U-
sand feet They are on the bass OF -
figures as they actually e1isted' ia o.
cr words, the rsducuon u ply - -. -
take effect until the middle OF tne J ear,
and therefore the average receiver -
thousand feet during that gSaL -
about 81 cents Ter thousand % IA,
made a figure to determine what NOuld
7-s-r17a -ar7rruS On these same securities
physical assets, and maj NaiuS u -
-,-o7er-v II only 90 cents per CnOuSaLiu
feet had been obtained But beIore %
ing into that. anybody VINO HIlleis -e-iiils
the business would have question nat
r1raIIy raised IN his mind al once he
would saw IF YOU are going TO take
the same receipts and / an tdhli,S
rFeun-"and then calculate that upon -
cents which was Sd cents less J1ah SaS
actually received Tor the year on Lils
average or ten cents less than received
Tor the nasF wear, then would there not
have been an increase in sales WflcI
would have increased the pToTI- Aro
chat would be the natural supposltlon- 1
therefore made some CON Par sons 70
7-terr1fr-e what probably would be the
effect. and / confess / vas retneF sur
urised TO find these facts mat mere
is no evidence that the lowering OF lne
price in this particular case Tor ne
half wear. increased the sales The in
cree Se from 1917 TO 1893 was 1l4,zo5 thou
sands. using thousands again a. my
unf-- OF I'll per cent whereas from me
year 1913 20 Ioe- where this reduction
did take place for half q year the in
crease was only S4,s54 Thousands or 4 40
per cent In other words, the year be-
and this year there was IN increase OF
only F-15 per cent Therefore. / would
seem 10 ne warranted III taking the
ground that this decrease n price for
me half year had not changed the re-
suit as 20 the net profit If, there
fore. ne calculate this difference OF 80
cents on the total sales the profits
would have been reduced. from the ng-
ure I have given. 10 ST.. 5lC-gi- That IS
simply deduCIinE from the profits the
amount Of gas sold, and multiplied into
this difference in price
Now, am not making any argument
as 10 what the effect would be OF the
price Of gas upon the output, but l
think as a rule and my experience has
been, that I have sometimes been too
hopeful as to what q decrease in price
would tive in increase in sales Il is
true that il gives Us a chance TO sell TO
more people, and also, Is has been ex-
nIafned here people do not find their
bills much reduced Il IS human ma
ture. il IS natural for the consumer. #
he can buy anything at a cheaper rate,
gas. Ter instance 10 DUN more OF IL
and that unqUestionably has been the
fact in regard 10 . the reductions
throughout the United States I con-
fess that I have deliberately calculated
upon tbs natural reduction in making
my estimates At this reduced rate,
therefore. making the profits &5sS-Z1599-
which would have been the profit, 50
far as can calculate. at - cents for
the whole year. the returns on the Sc
g-y7ritieS namely. of S5-S0o 0(1, would have
been reduced from 11-S per cent TO 81
per cent. and on the physical assets
from -I3 per cent to 5-S7 per cent, ana
on the total value Of the property from
81 per cent to - per cent
Some question was also raised with
regard 10 the surplus and working CAPT
tai ard I draw me attention Of the
committee to page of the last report
thai IS the report Of 1873, dated Febru-
arN T. 1e1A-which shows that the sur
plus Is drawn upon that year TO the eX-
tent Of S23S go in round figures, and
which Of course, reduced the working
cauitaI And Of that S23S,000 the same
report on the next page shows that
Sis 004 went into extensions Of plant.
and therefore into the fixed ssSets- re-
ducin- the liquid assets OF working
capital. OF course. TO that extent II
the committee desires me 10 do 50. I
have figures here. although 7 am pretty
sure that the record already made ap-
pears almost exactly as the figures an
near Eere-nameiy. how ] arrive at the
net cost of operating for the year 1909
and I will repeat them here II the chair
man would like to have me do so, in
order to have them on the record for the
( dsv.
Mr.. Coud-ey-I would suggest that
Won give the TO the reporter. so that
they Faav appear in the record
The Chairman-HsVe YOU the com
plete statement. so that we can put It