Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-04-09

| cuIClcnCleS OF operation. Inc priCSS fOl
| these three residuas remained the same
| for the two years compared, SO that there
| Is no change to be taken account Of there
AS to the COKE the prices ran from about
8 to 10 cents bushel, which would be
$2.56 chaldron, not ton, at the works
or $3O8 delivered; or. crushed and
screened, $3.50 at the works. or 1910 de-
| livered.
| Now. the other day there were COM
PARSONS made as to the net earnings, and
! made my calculations while was here
before you; but 1 have gone over these
figures more carefully, and will now make
| this comparison, the statements for each
year being prepared very carefully along
have included repairs and depreciation as
one of the items Of expense.
For 1907 the earnings on the basis OF
these statements-but l should say that L
would myself allow a little more Tor de-
probation and bring the earnings down
somewhat-but, taking the depreciation as
stated, on the basis of cents per thou
sand made, which also covers the money
currently expended for repairs and re-
newals, as we'll as the balance left over.
which is put in the reserve account 1or
accrued depreciation, thus the net earn
ings are $7O9, S41.36. The rate OF return,
therefore. on the securities mot the in
vestmenO, which / take at the round
figure of S5.sOO.GOO. would be rate of re-
turn of 1924 per cent. That is on the
securities, and that was for the year
1907. Now, for 1909. calculating the same
way. and calculating on the same part
of the securities which had not changed
the net profit is $685., ~ which would
cent-a small increase over the rate
stated by ME the other day.
But now, coming to the rate Of return
on the assets. which is very different
proposition. and using otherwise the same
figures using the value OF physical assets
% nd n
figures calling that $9,3O0O00, we have
return OH those assets OF lib per cent
Now. taking the total value OF the prop
erty as appraised by my firm after many
being engaged in it--and it cost some
money-the value of the property stated
then as going concern was given as
s13. OO0. 600 On that basis the return was
81 per cent.
Now. 1t il to be borne In mind that the
figures so far stated are not on the basis
Of a gas price of 80 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 erect until
the middle of the year. and therefore the
average received per thousand feet dur
ing that year was about 95.I cents per
thousand. So I have made figure TO
determine what would be the returns on
final value of the property if only 30 cents
per thousand feet had been obtained. But
before going into that anybody who UNI
derstands the business would have
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 80 cents, which was 81 cents less
than was actually received for the year
on the average, or 10 cents less than re-
ceived for the half year, then would there
not have been an increase in sales. which
would have increased the profit?' And
that would be the natural supposition.
l therefore made some comparisons to
determine what probably would be the eff
feet, and / confess l was rather surprised
to find these facts: That there is no evil
dence thai the lowering of the price, in
this particular case for the half year,
1907 to 1908 was 114.2s8 thousands, using
thousands again as my unit. or GIT per
cent; whereas, from the year 1908 to 1909
where this reduction did take place for
half year, the increase was only S1.154
thousands, or 4.46 per cent. In other
words, the year before there was an in
crease of IT per cent. and this year there
was an increase of only 4.46 per cent
Therefore, would seem to be warranted
in taking the ground that this decrease in
price for the half year had not changed
the result as to the net profit. II, there
fore, we calculate this difference of SO
cents on the total sales, the profits would
have been reduced from the figure l have
Quoting from the profits the amount of
gas sold. and multiplied into this differ
ence in price.
Now, l am not making any argument
as to what the effect would be Of the
price Of gas upon the output. but 1 think,
as a rule, and my experience has been,
that l have sometimes been too hopeful
as to what a decrease in price would give
in increase in sales. 1t is true that it
gives US a chance to sell to more people,
and also, as has been explained here,
people do not 1nd their bills much re-
duced. 1t Is human nature: it is nat
ural for the consumer, il he can buy
anything at a cheaper rate, gas, for in
questionably has been the fact in regard
to the reductions throughout the United
States. / confess that / have deliberately
calculated upon this natural reduction in
making my estimates At this reduced
rate. therefore, making the profits S546.-
216.97. which would have been the profit
so far as / can calculate, at 80 cents for
the whole year. the returns on the Sc
have been reduced from lis per cent to
941 per cent, and on the physical assets
from 1.13 per cent to 5.S7 per cent and
on the total value of the property from
81 per cent to AZ per cent
Some question was also raised with re-
gard to the surplus and working capital
and I draw the attention of the commit
tee TO page Of the last report-that is,
the report or 100. dated FEBRUARY I, 1910
which shows that the surplus is drawn
upon that year to the extent of $23S, 600
in round figures. and which, of course,
reduced the working capital. And of that
$23S, 900 the same report on the next page
| shows that $17S.0 went into extensions
, of plant. and therefore into the fixed as
sets, reducing the liquid assets work.
| ing capital. of course, to that extent. If
+! the committee desires me to do so I
have figures here. although. l am pretty
t,n< -.
| pears almost exactly as the figures ap-
pear here-namely, how ! arrive at the
net cost Of operating for the year 1909
and l will repeat them here IL the chair
man would like to have me do SO, In or
/ der to have them on the record for the
] day.
! Mr., Coudrey-I would suggest that you
| give them to the reporter. SO that they
| may appear in the record
The chafrman-Have you the complete
statement, so that we can put 1t in the
| record?
| IT. Humphreys-I do not want to give
+, all OF this to the reporter, because l need
some Of it myself. but l can write it off
/ for him.
| Mr. Coudrey-Yes, and insert it in the
| record, and then you will have copy,
F.! too.
| Mr. Humphreys will check it with
| this one; yes Now, / also find that the
other day we made a difference between
the cost OF gas in 1900 and 1907 a little
! higher than the facts warranted when we
come down to figuring out all OF the
items. Figuring on exactly the same
basis which appears in my statement
| r;xr - h.