The Washington herald., 1910-04-09


90 the advantage OF the company TO lay
services out beyond the curb, because
what it will have to pay for cutting and
renewing the pavement will cost more
than VIII he recovered from the consumer
for tho laying Of the pipe
Now, the question was brought up the
other day relative TO the price of coal
between 1867 and 1909 / take 1907 for my
comparison because that was the year
that 1 made a close investigation OF the
.comDanys plant and affairs.
In 1907 the price of gas coal at the
East and West stations both was sos.
The price in 1909 was $3.50 at the East
station and Sc. IS at the West station In
1907 and 1909 the prices for anthracite
were the same-S4S5 al the East station
and S at the West station That, Of
course. shows that there was a slight
increased cost in the price of coal. and l
shall refer 10 that again 20 show how
very readily We can deceive ourselves by
taking isolated statements to the effect
that there had been practically an in
creased cost 10 the company per thousand.
oil, on the other hand, has been reduced
from Al cents to 33s cents. The question
Of Tesiduals, Of course. comes In AT once.
because we always figure the net cost Of
coal by taking the gross cost and deduct
ing from that the returns from tie
residuals-tar. coke. and ammonia. There
fore, II is necessary TO determine not only
the price paid for coal and received for
residuals. but also what has been the net
return from residuaIs. and so the net
cost Of coal Thus you learn as TO the
prices paid and received and also the
relative ehiciencies Of operation. The
prices for these three residuals remained
the same for the two years compared. so
that there is no change to be taken &C
count Of there. AS to the coke, the prices
ran from about 10 10 cents a bushel.
which would be $256 a chaldron. not a
ton, at the works. or sos delivered: or,
crushed and screened. $50 at the works.
or $40 delivered
Now. the other day there were COM
Parsons made as TO the net earnings, and
1 made my calculations while / was here
before you; but I have gone over these
figures more carefully, and Will now make
-A4-2 I'm pa A'-f tlE statements Atl tct-il
year being prepared very carefully along
the same lines, and in both of which I
have included repairs and depreciation
as one of the items Of expense.
For 1897 the earnings on the basis OF
these sJatements-but I should say that 7
would myself allow a little more for
depreciation and bring the earnings down
somewhat-but. taking the depreciation as
stated. on the basis of Z cents per thous-
and made. which also covers the money
currently expended for repairs and re-
Eewals, as well as the balance left over,
which IS put in the reserve account for
accrued depreciation, thus the net earn
ings are S09.Sn.96. The rate of return,
therefore. on the securities mot the in
vestmenD. which I take at the round
figure Of S5So3G00, would be a rate
of return Of 1924 Per cent. That is on
the securities, and that was for the year
1901 Now. for 1909. calculating the same
way, and calculating on the same part
of the securities which had not changed,
the net profit is 1852, 91A92. which would
show return on securities Of ia per
cent-a small increase over the rate
stated BY me the other day.
But now, coming 10 the rate OF return
on the assets, which is a very different
proposition, and using otherwise the same
figures; using the value OF physical assets
brought up to June 80. 1909. and in round
figures calling that 100000. we have a
return on those assets Of rs per cent
Now, taking the total value OF the prop
erty as appraised by my firm after many
months of work. the whole once force
being engaged in it-and II cost some
mOney-the value of the property stated
then as going concern was ,iven as
SlS.OO0000 On that basis the return was
81 per cent
Now, It is TO be borne IN mind that the
figures so far stated are not on the basis
Of a gas price of 90 cents a thousand feet
They are on the basis Of the figures as
they actually existed: in other words. the
reduction IN price did not take effect until
the middle of the year, and therefore the
average received per thousand feet dur
ing that year was about 957 cents per
thousand. So I have made a figure to
determine what would be the returns on
these same securities, physical assets. and
final value Of the property If only % cents
per thousand feet had been obtained. But
before going into that. anybody who
understands the business would have a
question naturally raised in his mind at
once. He would say: 'If you are going
to take the same receipts"-and I am
taking them-"and then calculate that
upon 30 cents, which was 81 cents less
than was actually received for the year
on the average, or ten cents less than
received for the half year, then would
there not have been an increase in sales.
which would have increased the proft?"
And that would be the natural supposi-
ton. I therefore made some comparisons
to determine what probably would be the
effect. and ! confess I was rather sur
prised TO find these facts: That there Is
no evidence that the lowering Of the price.
In this particular case for the half year.
increased the sales. The increase from
1907 TO 1908 was 1925 thousands. using
thousands again as my unit. or 6I7 Der
cent. whereas. from the year 1908 10 1909.
where this reduction did take place for
half a year. the increase was only S7.14
thousands, or AS per cent In other
words, the year before was an increase
Of Gil per cent, and this year there was
an increase of only 446 per cent. There
fore. 1 would seem to be warranted in
taking the ground that this decrease in
price for the half year had not changed /
the result as 70 the net profit. If, there
fore. We calculate this difference Of 6.6I
cents on the total sales, the profits would |
have been reduced. from the figure I |
nave given. to S54s. 2O5.S7. That Is simply |
leducting from the profits the amount of |
gas sold, and multiplied into this differ |
ence in price.
Now. I am not making any arrument |