extremely high cost of $14.50 is disregarded to $0.82 per ton for company No. 5.14 The possibility of large production of anthracite at more moderate costs and prices, raises a question as to the validity of the argument for high prices as a stimulant to production in times of shortage. Even though anthracite is a dwindling natural resource, there seems to be no public interest served by exploiting the last ton of high-cost production at the present time. Before it becomes necessary to advance prices to a point justifying such mining methods, substitution of other fuels or technical improvements may gradually take place which might relieve the public of the necessity of ever paying such prices. In times of shortage, the sale of even a small proportion of anthracite at the mine at high premium prices becomes a highly disturbing factor in the trade and affords an opportunity for speculative wholesale and retail price levels, because that part of the necessary supply with the highest cost tends to become the general market price level to the consumer. The fact that the railroad companies, apparently to prevent undue inroads of other fuels, and also to avoid drastic regulation, voluntarily restrict the upward movement of their prices, strengthens the argument against burdening present consumers with high prices in times of shortage merely because such high prices can be obtained. Questionable also, in view of the possible discovery of satisfactory substitutes for anthracite or technical improvement, is the idea that present consumers should pay high prices in order that high-cost coal deposits may be worked to-day and the maximum quantity of the dwindling supply conserved for future generations. Section 5. Gross profit of wholesalers on anthracite. In July, with the probability that there would be a strike when the anthracite union wage contract expired on August 31, 1923, a strongly speculative premium market developed. The United States Coal Commission, therefore, requested wholesalers to report weekly prices paid to operators and the gross profit realized on all cars or cargoes of anthracite of domestic sizes sold by the reporting wholesaler at $10 or more per gross ton and on the pea size sold at $8 or more per gross ton, f. o. b. mines. Wholesalers were also requested to report tonnages, prices, and the gross profit for all steam coal handled irrespective of prices paid or received for it. These reports began with the week ended August 4, and were discontinued with the week ended September 15, 1923. As previously stated, upon termination of the coal commission, on September 22, 1923, the Federal Trade Commission took up the same work and continued the compilation of reports of wholesalers, which were submitted in response to its request for the same information as that requested by the coal commission. This work was carried on by the Federal Trade Commission until the end of January, 1924. VARIATIONS IN THE AMOUNT OF GROSS PROFIT.-The following table shows the percentages of the total number of cars of premium domestic and pea sizes and of steam sizes reported during each two 14 Comparison of the high-cost collieries with those having a high yield of prepared sizes (egg, stove, nut, and pea) disclosed a small percentage of correlation; in other words, high quality of coal obtained would not explain mining at a high cost. week period from the middle of September, 1923, to January 26, 1924, that were sold by wholesalers within specified ranges of gross profit, i. e., the difference between the price paid and the price received per ton f. o. b. mines. From his gross profit the wholesaler must deduct his expenses to arrive at his net profit. In other words the gross profit is the amount added by the wholesaler to his purchase price. TABLE 6.-Percentages of total number of carloads of premium anthracite 1 reported by wholesalers as sold at specified ranges of gross profit by two weeks' periods, September 15, 1923, to January 26, 1924 1 Includes only domestic sizes sold at $10 or more; pea sold at $8 or more per gross ton and steam sizes irrespective of prices at which sold as reported by wholesalers. 2 One week, Sept. 16 to 23 only. The percentages shown in Table 6 cover a representative sample of the anthracite which was sold at high premium prices. Although this quantity was only a small proportion of the total output, due to the panic demand it resulted in a general high price level to the consumer. No premium anthracite sold by the producer directly to the retailer or consumer is included. The above table and Chart 2, on page 21, show that during the week ended September 22, 1923, immediately after the strike, wholesalers added a gross profit of $1 or more per ton on almost 11 per cent and one of over 75 cents on 29 per cent of the premium anthracite reported to the Federal Trade Commission. During the last half of September and October wholesalers exacted gross profits of 75 cents per ton, and over, or from about 10.6 to 29 per cent of the anthracite handled; while in the months of December and January, due to the large output and the publicity given to the facts, the percentage sold by wholesalers at the excessive gross profit of 75 cents or more per ton greatly decreased, and were from 1 to 2.5 per cent of the reported sales of premium anthracite. For domestic and pea sizes there was also, during the period covered, a marked tendency for the percentages sold at a gross profit of 50 cents or more per ton to decrease, with a corresponding increase in percentages sold at a gross profit of less than 50 cents per ton. During the week ended September 22, 1923, 66 per cent of the Chart No 2 WHOLESALER'S GROSS PROFIT ON ANTHRACITE premium anthracite reported was handled at a gross profit of 50 cents or more per ton, as compared with 10.4 per cent so handled for the week ended on January 26, 1924. 53476-25-4 The same situation is shown for steam sizes, but for these sizes the bulk of sales throughout the period were made at a gross profit of less than 25 cents per ton. During the last four weeks covered the proportion of steam anthracite handled at a gross profit of 25 cents or more per ton showed a marked decrease, and no sales whatever were reported at a gross profit of 50 cents or more per ton. For both steam and premium anthracite there was a marked grouping of the sales reported at certain specified gross profits. For domestic and pea sizes the heaviest concentration of tonnage occurred at gross profits of 25 cents, 50 cents, 75 cents, and $1 per ton. For steam sizes the largest tonnages were handled at 10 cents, 15 cents, 20 cents, and 25 cents per ton. Table 7 shows the proportions of the total tonnages reported that were handled at specified amounts of gross profit. Chart 3 shows that the gross profit realized by wholesalers on both premium domestic and pea sizes of anthracite and on steam sizes tended to approach a level of 25 cents per gross ton during the latter part of the period as the pressure of panic demand decreased. For the pea size the average gross profit was somewhat higher than that for the domestic sizes for each month excepting August. TABLE 7.-Percentages of total reported tonnages of domestic and pea and of steam sizes of anthracite which were handled by wholesalers at specified amounts of gross profit per ton by two-week periods, September 22, 1923January 26, 1924 It will be noted that as the market became easier the great bulk of sales of premium domestic and pea sizes were made at a gross profit of 25 cents per ton, which appears to be generally recognized as a fair, or at least a customary, amount for anthracite of domestic sizes Chart No.3 AVERAGE GROSS PROFIT PER TON REALIZED BY WHOLESALERS ON PREMIUM ANTHRACITE COAL of Domestic and Peasizes and of Steam Colby Months August 1923 to January 1924 CENTS DOMESTIC SIZES PER LENTS TON AUG. SEPT OCT NOV DEC JAN, AUG SEPT OCT NOV DEC JAN. AUG SEPT. OCT. NOV. DEC. JAN TON AUG. SEPT. OCT. NOV DEC. JAN. AUG.SEPT OCT NOV DEC JAN. AUG. SEPT OCT NOV DEC JAN. PEA STEAM by the railroad companies in their dealings with wholesalers. The increase in the proportion sold at 25 cents was attended by marked decreases in the proportions handled at a gross profit of 50 cents, 75 cents, and $1 per ton. |