cubic feet. Subtracting this from the 121.7 cents of approximate annual receipts gives 53.5 cents as the approximate total cost of putting each 1,000 feet in the burner in 1891, or a reduction of 8 cents below the cost in 1887.

On May 31, 1893, the Consumers' Gas Company made application to list $314,000 more of bonds, having already listed $3,832,000 July 22, 1890, and $200,000 May 25, 1892. As part of the application the secretary, C. K. Wooster, stated that the gas sold in 1892 was 1,103,704,302, and the gross receipts were $968,530.86, or 45.81 cents. The rebate to the city was $18,173.69, or 1.64 cents. The amount of taxes, interest and insurance was $210,493.64. The interest at 5 per cent. was fully $197,000. The taxes were evidently very close to $11,600, or 1.05 cents. This would make the total rebate and tax 2.65 cents, which, added to the .03 cents insurance and the 45.81 cents operating expenses, gives 48.53 cents as the entire cost per thousand feet of the gas in the burner. Since the Consumers' Gas Company, however, bought about onefourth of its gas of other companies at the exorbitant price of 60 cents in the holder, and on the other hand saved somewhat in distribution expenses by selling a rather larger amount to other companies, conclusions as to cost can not be so accurately drawn from the official report of this company as from that of the Chicago Gas Light & Coke Company, next to be mentioned. The mileage of mains January 1, 1893, was 92, the meters in use, 9,522, and the street lamps, 123.

Among the undisputed affidavits of Mr. Ketcham was one giving the operations of the Equitable Gas Light & Fuel Company for 1892 in itemized form. The total cost was 37.13 cents per thousand feet. To be sure, this figure did not include taxes, and the expenses of distribution were low because fourfifths of the gas was sold to other companies. But these factors were entirely offset by the fact that the cost of putting gas in the holder, instead of being 34.85, as reported by the Equitable, was, in the case of the other gas companies, only about 24 cents, according to these same undisputed affidavits and copies of the reports of the companies, only a few of which are printed in the Appendix.

The cost in the holder for the Equitable was only 27.98 cents for the 593,688,000 feet made at its own works, and was brought up to nearly 35 cents merely by the purchase of 162,241,400 feet of similar gas from other companies at the exorbitant price of 60 cents. Thirty-seven cents therefore remains as a reasonable cost, based on the figures of the Equitable company. The distribution expenses and the taxes of the various Chicago companies month after month, according to the Ketcham papers, was from 10 to 15 cents. So we may conclude that 40 cents is the maximum cost of 24-candle power gas in Chicago aside from depreciation and profit, and with oil at 2 to 212 cents and anthracite coal and coke at $4 to $4.60 a ton.

On May 31, 1893, the Chicago Gas Light & Coke Company applied to the New York Stock Exchange to list the last $552,000 of its $10,000,000 first mortgage 5 per cent. gold bonds. In making application for this privilege the following statement of operating expenses for 1892 was signed by the then president of the company, E. J. Jerzmanowski:

A few computations quickly reveal the fact that the average operating expenses were 43.95 cents per thousand feet delivered in the burner, although the "receipts from other sources" reduce this to 42.09 cents.

In another portion of the statement of President Jerzmanowski the outstanding bonds on which interest was being paid at 5 per cent. was given as $8,908,000. Subtracting the interest on this sum, to-wit, $445,400, from the total of bond interest and taxes, $487,167.03, gives the yearly taxes as $41, 767.03. This, added to the city bonus above given of $70,374.46, gives a total tax of $112,141.49, or 5.9 cents per thousand feet of annual sales. This, added to the 42.09 cents, gives 47.99 cents, or say 48 cents, as the total cost, including taxes, of putting gas in the burner in 1892, according to the official statement of the Chicago Gas Light & Coke Company.

This is not, however, a fair indication of the real cost of putting the gas in the burner in Chicago in 1892, for two reasons: First, during part of the year oil was bought for 3 3-16 cents per gallon, though the market value was about 2 cents. People interested in an oil company, the Manhattan, controlled the award of contracts of the gas companies. This meant an extra cost of 6 cents a thousand feet of gas. In the second place the Chicago Gas Light and Coke Company bought, for 60 cents in the holder, about one-fifth of the gas it sold, although its own expenses for putting gas in the holder were under 30 cents, even with the abnormal price of oil just mentioned. A very modest allowance for these two items would reduce the above cost of 48 cents to 38 cents, and even an allowance of 10 cents per thousand feet for depreciation would bring the cost only to 48 cents per thousand feet in the burner.

The most reliable indication of the cost of gas manufacture in Chicago is furnished by the reports to the New York Stock Exchange of the People's Gas Light and Coke Co., which has a virtual monopoly in most of the West Division of the city, and whose accounts had not been complicated by the purchase of gas at exorbitant prices from other companies or the sale of gas to them. This People's Gas Light and Coke Co. submitted a statement to the New York Stock Exchange on October 10, 1888, over the signature of its Pres

ident, Mr. C. K. G. Billings. This statement, quoted in the New York Commercial and Financial Chronicle, December 15, 1888, gives the following figures for 1887:

A simple process of division reveals the fact that the operating expenses of this company, including, apparently, taxes in 1887, were 59.82 cents.

This same company, on applying to the New York Stock Exchange to list additional bonds, made a statement October 2, 1893, Mr. C. K. G. Billings being still President. This statement, printed November 25 of the same year in the New York Commercial and Financial Chronicle, contains the following statement:

"Sales of gas, gross and net receipts for the year 1892, annual interest charges, mileage of mains and of meters and public lamps in service.

A simple process of division will show that the operating expenses were 40 cents per thousand feet of gas sold. Subtracting from this the 234 cents earned from other sources, such, probably, as rentals for real estate not used for gas manufacture, and adding 6 cents, the sum total of taxes, bonus to the city and insurance, gives 43.3 cents as the total cost of gas per thousand feet in 1892, according to the company's own statements. This is a reduction, it will be observed, of 15 cents below the cost in 1887. Doubtless there has been some reduction since 1893. Whether the 43.3 cents includes depreciation or not does not appear, but it probably does include some expenditures for renewals of pipe, etc. Fifty cents would seem to be a high estimate for all

costs including taxes and a liberal allowance for depreciation in 1892, in the case of both the Peoples' and on the Chicago Gas Light and Coke Companies. Quite likely 45 cents would cover all these items today.

A prominent citizen of Chicago, who is a stockholder in the Milwaukee Gas Company, which furnishes a good quality of gas, reports the total cost in that city in 1896, aside, probably, from depreciation, as only 35 cents per thousand feet in 1896.

Thus the Peoples' Gas Light and Coke Company officially gave its entire cost of gas manufacture and distribution in 1892, including taxes, as 43 cents per thousand feet, while the Chicago Gas Light and Coke Company placed its cost at 48 cents, but included therein items of oil and gas purchased from other companies at exorbitant prices. Consequently a very conservative estimate would allow this company no higher cost than that claimed by the Peoples' Gas Light and Coke Company, viz.: 43 cents. According to statements made to this Bureau by the high officials of both companies, some allowance for depreciation is included in operating expenses. That is, the cost of renewing of old mains and machinery is thus included. Few companies, however, make sufficient allowance for depreciation, although quick to criticize the management of public-owned enterprises for not doing so. The common practice in gas and street railway companies is to make the more costly renewals of old or out-of-date machinery and equipment from bonds or from surplus earnings, which later are capitalized. The true method, that which least deceives either the investor or the public, is to use as much of the yearly earnings for extensions and renewals as a liberal allowance for depreciation would require, only capitalizing extensions beyond this point.

One of the most eminent gas authorities of to-day, Mr. Eugene Vanderpool, for a time president of the American Gas Light Association, considers that 10 cents a thousand feet should be set aside for depreciation in large companies. In companies of all sizes 3 per cent. on the actual cost of the entire plant is a fair allowance under this head.

In view of the partial provision for depreciation in the case of the Chicago gas companies, the addition to the operating expenses, given by the Peoples' Gas Light and Coke Company, of about 7 cents per thousand feet, or enough to bring the total cost of gas in the burner up to 50 cents, is evidently a liberal provision. Every evidence seems to indicate that in Chicago all charges for gas above 50 cents, and possibly above 45 cents, are profit.

Three dollars a thousand feet, we have seen, is an ample capital for the Chicago companies. If we assume one-half of this in the form of 5 per cent. bonds and the other half in 7 per cent. stock, or an average return of 6 per cent. on the investment, we have 18 cents as an ample profit. This added to 50 cents means that 68 cents is a sufficient charge for gas, even with the present high salaries, legal and political expenses, etc. This would be about the same as 75 cents for illuminating purposes and 60 cents for the city and for fuel purposes. In the south part of the city the trust, following the lead of the Mutual Gas Company, has been selling gas at 72 cents for fuel purposes for over four years.

A curious corroboration of the foregoing conclusions is found in the following: It has been shown that "during the interregnum of dividends on the Chicago gas certificates, from 1895 to the latter part of 1896, there had accumulated a surplus of about $2,000,000, making it comparatively certain that the holders of these certificates will henceforth get 5 or 6 per cent. dividends."

It has also been shown that the average interest on the $26,346,000 of bonds is 512 per cent. It would seem, therefore, perfectly safe to assume that the annual earnings of the trust amount to 512 per cent. on the entire capitalization of $51,346,000, or $2,824,030. Allowing 6 per cent. as a fair return on the real investment of $15,000,000, and 2 per cent. for depreciation, aside from the amount so credited and spent under operating expenses, or 8 per cent. in all, we have $1,200,000 as a fair return to the company. Taking this from the $2,824,030 which the consumers of gas pay over and above the cost of production, distribution and taxes, there is left $1,624,030 as the total overcharge, which, divided by 5,300,000,000, the number of feet of consumption in 1896, gives 30.64 cents overcharge per thousand cubic feet. There are indications that the real net revenue would be more were it not for some contracts more in the interest of directors or to placate politicians than for the direct benefit of the public or the stockholders.

CHICAGO GAS COMPANIES.

Despite the enormous expansion in the capitalization of the Chicago gas companies composing the so-called trust from $25,084,200 in 1886 to $51,346,000 in 1896, the assessment for taxes has actually declined in that time from about $1,500,000 to about $1,300,000. Exact data for the smaller of the companies are not fully given in the reports of the State Auditor. The two companies supplying over two-thirds of the gas sold by the trust are the Chicago Gas Light and Coke Company and the People's Gas Light and Coke Com

pany.

The total equalized assessments of these two were as follows:

Meantime the bonds of the first named company had increased from nothing to $10,000,000, and of the People's from $4,600,000 to $9,500,000. On account of the peculiar financial methods of the companies composing the gas trust, any attempt to discover the relative amount of taxes paid by them is beset with difficulties. The State Board of Equalization bases its assessment upon the amount of capital stock of each company, nominally outstanding, although this was long ago retired, and has now no apparent excuse for existence except to serve as a basis for taxation.