Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-11-22
FAIR PLAY FOR THE PEOPLE
AS WELL AS FOR THE v. G. l..
Contract Rights Of Gas Consumers Are
as Sacred as the Rights OF
Gas Producers


| 1NHE prcdcamcnt in which the United Gas
l. Improvement Company finds itself In
| this city il similar to that in which every
| other producer Of n commodity sold at n
| fixed price has become involved through the
! increase IN the cost of labor and raw ma
tcras.
| Relief however. is in sight, both for the
L. q. !. and for all other producers. The
| peak of high prices has been passed. The
| coal used in the manufacture of gas. which
n few months ago was selling for $40 and
| $12 n ton. has recently been offered at 50
and 80 n ton. The prices Of food and cloth
ing are coming down. This means that the
rate of wages will br reduced as the pur-
chasing power of the dollar Is restored to
something like its prc-war state.
Yet. in spite Of the general tendency
downward of all the materials used in tn"
production and distribution of gas. Mr..
Bodine. president Of the gas company, is
asking for revision of the terms OF the
lease. lie hns informed the Mayor that the
company is losing S1O.OOO day on its
Philadelphia business. This is at the rate
Of S".G50. 900 a year. lie says that no COM
pany, however strong. can sustain such a
loss for any considerable period.
No one is inclined to dispute him on this
proposition. although IL is known that the
holding company has Il book surplus of S3i.-
OOO.O 900. being the accumulated and In
vested earnings of the company not paid out
in dividends Tho survey. which Mr.. Bodine
asks for. should be made in the interests of
the whole community and not alon" in the
interest of the L. G. |.
Now let us consider for a moment the
lease the terms Of which Mr.. Bndinc wishes
to have modified. The lease was entered into
in 1897 for period of thirty "cars. Under
it the company was required to invest Sl5,-
000, 900 in improvements within the first
three years and 81 900 900 more within the
succeeding twenty seven years. And it was
to supply public buildings and street lights
with gas without charge to the city. In
return it was to receive eighty five cents for
every 1000 cubic feet sold to private con-
Sumcrs until January !. 1913: eighty cents
until January /. 1OlS. md thereafter
seventy five cents. The consumers are
charged 81 for every 1000 cubic feet The
difference between the sum paid by the con
sumner and the contract price Is turned over
to til" city treasury and to that extent re-
duccS the amount which must be raised by
taxation. Under this arrangement little
more than $50 600. 900 has been paid in
during the twenty three years since the
agreement went into effect
In the early years OF the contract it was
possible to manufacture gas for about
thirty five cents n thousand feet. This left
fifty cents to the company to pay overhead
expenses and dividends. For five years the
company continued to have this money. For
the next five years it had forty five cents
left above the actual cost of production.
The prices OF raw materials began to go up
when the price the company received for its
product was reduced to seventy five cents.
The net earnings of the company amounted
to $4,000 800 in 1917. the year before the
last reduction in price, and after paying
dividends there was n surplus of S2.O1T.T5O.
In 1918 the net earnings were SJ,Stil 800,
and the surplus above dividends fell to
1910 OBJ. Lnst year the earnings fell $303.-
O44 short of being enough to pay the divi-
dcnds. But the usual per cent dividend
was paid as 1t had been paid for years.
These figures represent the earnings of
the company not in Philadelphia alone but
in all the forty cities In which it is engaged
In business. Mr.. Bolinr Is. of course, anx-
ious to continue to pay dividends on the
shares of the company. Yet, as the company
is paying ont to its shareholders at the rate
of : per cent on every dollar invested the
sum of 81. .SS2,3 ,3S4 every year. 1t will be np-
parent that IL the loss of $40. 600 n day
in Philadelphia should continue for a year
it would not exhaust the sum set aside for
tho shareholders.
\ reduction in the dividends would affect
the profits of the shareholders Their trus-
tees. the president and directors Of the L.
G.. l., would prefer that the people should
pay higher price for gas rather than that
the profits of the shareholders should be
reduced 1t is the business OF the Mayor
and the Council, who are trustees of the
people. to be as solcitous of the interests
of the people as Mr.. Bodinc is of the inter
ests of his shareholders.
When the gas CorpOratiOns profits are
threatened the president Of that corporation
has no hesitation in suggesting modifica-
tiou in the terms of n contract with the peo-
pie He does not insist on the sanctity Of
agreements for apparently an agreement
affecting the public interest is inviolable
only when the private parties to it are
making money out of It. If the public suf-
fers. as it is suffering under the contracts
Of the i. II. II. with the underlying transit
companies, IL is outrageous to suggest that
those contracts should be modified. Haven't
certain lawyers and certain bankers been
saying this for mOnths?
Yet the survey of the L. G. l. which Mr..
Bodino has asked should be made In the
interest of fairness. That survey, however,
should not BE- confined to the business of the
company for the past twelve months. It
should go back to the beginning of the con
tract, in 1897, and should disclose the profits
made in the early years. when it cost only
thirty five cents per 1000 cubic feet to
produce gas.
Expert accountants should be put on the
books in order that the earnings of the
company in this city may be discovered for
every year from the beginning and SO that
the probable profits for the remaining seven
wears of the life of the contract may be
computed. Then facts will be available from
which trustworthy opinion may be drawn
concerning the propriety of going to the
relief Of the company in the present tenn
porary and disappearing crisis.
The mere fact that the company is losing
money this year is not sufficient to Justify
n demand that 1t be allowed to retain for
itself a larger part Of the price paid by the
consumers of gas, II it shall appear after
investigation that the average profits for the
life Of the contract are reasonable, then the