(c) crown copyright
Catalogue Reference:CAB/24/78
Image Reference:0001
BOARD OF
TRADE,
7, W H I T E H A L L
GARDENS,
LONDON,
S.W.1.
GOAL INDUoTHf C O ^ S ^ l O f t
I c i r c u l a t e , f o r the i n f o r m a t i o n of my c o l l e a g u e s ,
the a t t a c h e d Memorandum by the Coal C o n t r o l l e r .
The p o i n t s r e q u i r i n g C a b i n e t d e c i s i o n are
(1) The d a t e from which the owners are to be charged
with the increased wages.
(2) The d a t e from ; h i c h an amended Agreement or new Act
i s t o become
operative.
(3) Whether the p r o f i t s of Ocke Ovens and Bye p r o d u c t
P l a n t s are to be
included.
(4) Whether any allowance i s to bo made f o r
additional
c a p i t a l expended on the mines s i n c e 1 9 1 3 .
A. C. GUBBUS,
1 5 t h A p r i l , 1919.
Por the Q a b i n e t .
GOAL
IjjHJgjg
COMMISSION.
i n t l r i m mm
mm.
Memorandum on the interpretation
on the arrangements necessary to
of the I n t e r i m R e p o r t and
give effect to i t s r e c o m ­
raeDelations as regards the limitation of the profits of the
Coal Owners.
The I n t e r i m Sankey Report p r o v i d e s ­
(1)
That wages are to he i n c r e a s e d by 2 / - per day f o r men
and 1 / - p e r day for h o y s , which i s equal to about £3Q,00C,0CO
p e r annum.
(2)
, That from J u l y 16th n e x t 7 h o u r s i s to be s u b s t i t u t e d
f o r 8 h o u r s as t h e ' d a y ' s work making a r e d u c t i o n of
which i s e s t i m a t e d t o ' r e d u c e t i e o u t p u t by 10)6. t h i s b e i n g
e q u i v a l e n t t o a r e d u c t i o n of prof i t s " by £ 1 3 , 0 0 0 , 0 0 0 f o r 6
m o n t h s , on an o u t p u t of 2 5 0 , 0 0 0 , 0 0 0 tons p e r annum, o r a t
the r a t e of £ 2 6 , 0 0 0 , 0 0 0 p e r annum i f the r e d u c t i o n i n o u t ­
put continue.
(3)
12f/
0t
That i n o r d e r p a r t l y to meet tlie i n c r e a s e d c o s t , the
p r o f i t s to bo r e t a i n e d by owners are to" be l i m i t e d to an
average of 1 4 d . p e r t o n of c o a l r a i s e d , , which on an o u t p u t
o f 258 0 0 0 , 0 0 0 tons i s a p p r o x i m a t e l y £ 1 5 , 0 0 0 , 0 0 0 .
It is
e s t i m a t e d i n t h e R e p o r t t h a t the s u r p l u s p r o f i t s over the
Sankey s t a n d a r d , if" the r a t e of p r o f i t for the September
q u a r t e r of 1918 c o n t i n u e s f o r the y e a r 1919, w i l l " p r o v i d e
£30 0 0 0 , 0 0 0 t o w a r d s t h e i n c r e a s e d c o s t .
I t should be n o t e d
t h a i t h e g r e a t e r p a r t of tlie s u r p l u s p r o f i t s would under
the p r e s e n t F i n a n c e A c t s be c o l l e c t e d ' b y the S t a t e i n J f t c e s s
P r o f i t s Duty and would t h e r e f o r e to t h a t e x t e n t not be p a i d
by t h e Owners but by t h e S t a t e .
The e f f e c t of t h e a d o p t i o n of tbs Sankey R e p o r t on the
c o s t t o the S t a t e i s shewn" i n the Appendix to t h i s memoran­
durc.
In o r d e r to c a r r y the recommendations of the r e p o r t i n ­
to e f f e c t the p r e s e n t ' C o a l Mines C o n t r o l Agreement arid Con­
£ i r a a t i o n A c t , 1 9 1 8 , w i l l have to be amended o r a new K n a c t ­
ing B i l l passed through P a r l i a m e n t ,
I t i s a g r e e d t h a t the Average Rate of 14d. p e r ton i s
t o ba d i s t r i b u t e d among i n d i v i d u a l u n d e r t a k i n g s by r e d u c i n g
t h e i r p r e - w a r s t a n d a r d s i n t h e same p r o p o r t i o n t h a t
£15 0 0 0 , 0 0 0 b e a r s to the a g g r e g a t e Pre-war P r o f i t s S t a n d a r d
of the whole i n d u s t r y . The d e t a i l s of t h e - m e t h o d of d i s t r i ­
b u t i o n and i t s a d j u s t m e n t s are now bein^r d i s c u s s e d w i t h the
Owners and a r e nor l i k e l y to l e a d to d i f f i c u l t y .
The R e p o r t i t s e l f does not give any d e f i n i t i o n of
" P r o f i t s " , n o r does i t s t a t e what the 1 4 d . i n c l u d e s . I t
i s h e l d by Mr. J u s t i c e Bankey to i n c l u d e t h e p r o f i t s of
(Joke Ovens and B y e - P r o d u c t P l a n t s , which a r e e x c l u d e d
from the p r e s e n t ' C o a l Mines Agreement, and a l s o to i n ­
c l u d e i n t e r e s t on Loan C a p i t a l and r e m u n e r a t i o n f o r Oap­
i t a l i x p o n d i t u r e on t h e Mines t h e m s e l v e s i n c u r r e d s i n c e
1913 o r p r e v i o u s l y .
The f o l l o w i n g i m p o r t a n t q u e s t i o n s a r i s e f o r
(1)
decision;­
-The d a t e from which the Owners a r e to he charged
w i t h the i n c r e a s e d wage. I t i s c l e a r l y u n d e r s t o o d
t h a t a s f a r as the men are concerned i't i s t o he p a i d
from J a n u a r y 9th l a s t .
(2)
The d a t e from which the amended Agreement or iSnact­
i n g B i l l , whichever may be a d o p t e d , i m p o s i n g the new
l i m i t a t i o n of p r o f i t s "and the c o n s e q u e n t i a l a l t e r a ­
t i o n s i s to'become o p e r a t i v e .
(3)
Whether the P r o f i t s of Coke Ovens and B y e - P r o d u c t
P l a n t s a r e to he i n c l u d e d in the new s t a n d a r d of 14d.
p e r ton of c o a l r a i s e d .
(4)
Whether any a l l o w a n c e i s to be made f o r a d d i t i o n a l
C a p i t a l expended on the Mines s i n c e 1913. The 14&.
i s b a s e d oh the average p r o f i t s of t h e 5 p r e - w a r
years.
(1)
fjti fots
froty.wfe.igli
to
Qmm m fa k s
togsA
with
It is contended by the Owners ­
(a)
That although i t was understood, so far as the
men were concerned, that any increased wage awarded
was to date back to January 9 t h , they were no party
to this Agreement, and were not consulted.
(b)
That although the Goal Controller can order any
increase of wage to bo paid and charged against
expense i t has not hitherto-been done without a
compensating increase in the prico of coal nor has
i t been done retrospectively for more than a few
weeks.
(c)
That the Government must themselves pay this
money both for the arrears and future payments and
get i t back through the operations of the Goal
ffimes Agreement, so far m there are profits avail­
able.
It'has bees arranged with the Coal Owners that the
Government w i l l provisionally advance the money without
prejudice as to who i s to be liable for i t s eventual pay­
The q u e s t i o n s t o be s e t t l e d t h e r e f o r e a r o ; ­
fa) .v.re tho Government or the Owners t o bo l i a b l e for
i t s e v e n t u a l payment a s from January 9th l a s t
u n t i l such date as i s imposod or agreed, upon
for the determination of tho p r e s e n t Agreement?
1
(b) Are the Government t o continuo paying t h i s money
weekly i n future a s required and t o t r e a t i t
a s an advance to bo receovorod out of any
p r o f i t s i n e x c e s s of the Standard? or
(c) Will tho Government f i x a date a f t o r whioh the
Owners themselves must f i n d tho money and charge
i t a s an orponso of the b u s i n e s s ?
I t should be c l o a r l y understood t h a t from the date
a t which tho now Standard becomes o p e r a t i v e i t i s
immaterial whether the a d d i t i o n a l wago i s payable by
tho Government"or by the Owners.
Tho Owners would,
i n c i t h e r o a s o , r e t a i n in the aggregate 14& por ton
of o u t p u t .
I t i s l i l c o l y , t h e r e f o r e , t h a t i f t h e y wore
r e l i e v e d of the l i a b i l i t y for the artra wago u n t i l
tho now .'greoment or ,,ot oomos i n t o f o r c e they would
accopt the l i a b i l i t y from t h a t timo onwards.
(2)
The date from which the new Agreement or Act i s to
- - - - - - come
i n t o force'.'.
1
Under the p r e s e n t Agreement the Owners are
e n t i t l e d to the p r o f i t s ^ t n r ^ w ? of the f i n a n c e (No.2)
. . c t , 1915.
Under the Cankey llo^ort t h i s standard
w i l l have t o bo reuucod to TMQ u q u i v a l e n t of tho
14d. per t o n on tho a c t u a l o u t p u t , both boing a d j u s t e d
i n accordance with tho p r o v i s i o n s of tho Agreement
r e g u l a t i n g the guaranteed S t a n d a r d s .
Tho Owners contend t h a t thoy aro e n t i t l e d to tho
b e n e f i t s of tho p r e s e n t :.grooment u n t i l i t i s
terminated by n o t i c e .
The agreement p r o v i d e s that a f t o r a c e r t a i n dato
(which has boon passed) i t can bo torminated by tho
C o n t r o l l e r of Coal Kino a a t any timo without n o t i c e .
The date of t e r m i n a t i o n cannot bo made r o t r o s p o c t ­
i v o except by Agreement or by ,*ot of P a r l i a m e n t .
I t i s suggostod that i t would be I n o a u i t a b l o to
mako tho ;.gxooment r e t r o s p e c t i v e to the 1 s t January,
tho Sankoy Beport boing accepted by tho Miners o n l y
on .:-.pril 1 5 t h , u n l e s s an allowance bo made to the
Owners for tho period from tho 1 s t January t o the
15th A p r i l of tho d i f f e r e n c e between the Sanfcey Standard
and the guaranteed standard under tho Coal L i n e s
Control agreement.
If t h i s be conceded i t i s
b e l i e v e d t h a t tho Owners would agree to c o n t i n u o to
operate tho mines under an amended agreement, pending
tho d o c i s i o n of tho Government on tho l a r g e r q u e s t i o n
of n a t i o n a l i s a t i o n and c o n t r o l a f t e r the Second
Report of tho Sankey Commission.
In considering this important question it must bo
borne in mind that at present the Government take
all the profits over the Finance Acts Standard (subject
to an allowance of 12$ for additional capital employed
in ox-cess of that employed in the., standard period),
except fffi of the excess, and that by fixing the date
of the application of the now Standard as 15th Aprul,
instead of malting it retrospective to the 1st January,
they would only suffor to the extent, approximately,
of the difference between the two Standards for 3-g­
months; which would bo equal to about £3,000,000.
Whether the profits of Cojra Ovens and Bye ?roftugt
flanls, wCTch are part jjjTjTToIiiery ^ldo^tTlfinf.;,u are,
totooinoludod in tho^l4d, joor'Toh*
i
(c)
The Coal Industry Commission Act brings witin
the terms of reference of the Commission not only
the Coal Industry but any industry commonly carri^e;
on in connection therewith, or as ancillary or
incidental thereto.
nr. Shortt stated in the
House of Commons .in the Committee StaQ-e of the
Coal Industry Commission Sill as follows:
"The
intention is that in addition to enquiring into
the coaling operations of the industry the Commissi
should also be able to go into the question of
coking ovens and any other bye-products ancillary
to the Coal industry."
..." The average 5 year pre-war profits of 1/- per
- t o n upon which llr* Justice Sankey based his
standard of
*jr\ include the profits of such
Coke Cvens and Bye-Product Hants as were then
in operation, but they were net included in the
estimated profits of £54,000,000 upon which he
based his calculations as to the deficiency.
This question has been fully discussed between
Lr. Justice Sankoy, Sir Robert H o m e and Sir
Tvan Jones. "JSr. Justice Sankey states that ho
meant -the Profits of those Coke Cvens and ByeProduct Plants which are under the same ownership
as the Coal Lines to be included as part of tho
profits of coal raisod, but that this would not
apply to those Plants which, although thoy may lo
situated at the Colliery, would not bo under the'
same ownorship.
He agreoe, howover, it would b.e
just that an allowance should bo made for interest
on Capital o;.ponded since 1913, or expended
previously, but which had not bcoome productive
until after 1913, on Coke Ovens and Bye-Product
Plants, as an addition to the Standard Rate of 146
por ton or its oquivalont as tho case may be.
The following points should be taken into
consideration:­
(a) Coke Ovens and Bye-Product Plants are dealt
with as a distinot and separate industry
and are separately assessed by the Inland
Revenue both for the purpose of Income Tar
and Excess Profits Duty.
(b) The Report states that the average standard
Profit of 14dist** ton of coal raisod and ii
f include t^o profits of
is n^t n^nr^nnrf
coke ovens and bye product plants.
j0
(c)
The C o l l i e r i e s havingOoke Ovens would t h e r e f o r e have
l i t t l e inducement t o c o n t i n u e t ? work them, a s t h e y
would s t i l l be e n t i t l e d to a p p r o x i m a t e l y t h e same
s t a n d a r d p r o f i t p o r ton of c o a l r a i s o d i f they s t o p p e d
t h e i r Coke Ovens.
(d)
The g r e a t development-of Coke Oven and B y e - r r c d u c t Plai
d u r i n g the Mar was p r i m a r i l y due to t h e u r g e n t v/ar
n e c e s s i t y f o r t h e s e p r e d i c t s , and t h e i r e r e c t i o n and
development were a c t i v e l y encouraged by t h e Government
and c o n t r o l l e d i n the i n t e r e s t s of t h e ' R a t i o n .
Their
p o s t - w a r development i s e q u a l l y i m p o r t a n t ,
(e)
The Coke Ovens a r e e x p r e s s l y e x c l u d e d from the Goal
iiines C o n t r o l Agreement ( C o n f i r m a t i o n ) i i c t .
(f)
Although the P r o f i t s of the Coke Ovens f o r the 5 p r e ­
war y e a r s ' a v e r a g e wore i n c l u d e d i n the I / - p e r t o n
a v e r a g e p r o f i t of c o a l r a i s e d , t h e y amounted o n l y
of c o a l they r e p r e s e n t e d a b o u t 6fd p o r t o n of c o a l r a i s e d ,
which would be i n c l u d e d i n the p r o f i t s l i m i t e d to 14d
per ton.
(g)
The C o a l Owners s t r o n g l y p r o t e s t a g a i n s t t h e i r i n c l u s i o n ,
and d e f i n i t e l y s t a t e i t w i l l k i l l the i n d u s t r y a s f a r a s
t h e y a r e o o n c e r r e d . They l a y s p e c i a l s t r e s s on t h e i a o ]
t h a t t h e y a r e d e f i n i t e l y e x c l u d e d from t h e Coal ,lines
C o n t r o l iigreoment by a c l a u s e i n t h e A c t , and p o i n t out
t h a t t h e C a p i t a l i n v e s t e d i n the Coke Ovens i s i n tho
c a s e of some C o l l i e r i e s a s much, if n o t more t h a n , t h a t
i n v e s t e d i n t h e Minos; and f u r t i e r , t h a t only a s m a l l
p r o p o r t i o n of the t o t a l number of C o l l i e r i e s have Coke
O v e n s and t h a t "in consequence a v e r y i n v i d i o u s d i s ­
t i n c t i o n w i l l be drawn a g a i n s t t h o s e Owners who had e r e c t e d
Coke Oven P l a n t s .
t
I f i t i s d e t e r m i n e d t h a t the Co3?e Ovens and B y e - P r o d u c t s P l a n t s
a r e t o be i n c l u d e d lender the new Agreement t h e amount of i n t e r e s t
t o be a l l o w e d in c o n s i d e r a t i o n of t h e e x p e n d i t u r e of a d d i t i o n a l
c a p i t a l s i n c e 1 9 1 3 . r e q u i r e s to be d e t e r m i n e d . Under t h e
F i n a n c e A c t , 1918 the f a t e a l l o w e d f o r iixcess P r o f i t s Dutv
purposes is 9$.
V/Jhether any a l l o w a n c e i s t o be made f o r a d d i t i o n a l , C a p i t a l
expended s i n c e 1913,
*
I t i s c l a i m e d by the owners t h a t i n t e r e s t s h o u l d be a l l o w e d
on c a p i t a l now employed i n e x c e s s of t h a t employed i n t h e p r e ­
war p e r i o d .
I n so f a r a s the c a p i t a l h a s i n c r e a s e d t h e e a r n i n g
c a p a c i t y of the u n d e r t a k i n g t h o Coal u i n e s C o n t r o l -Agreement
p r o v i d e s f o r i t t o be r e w a r d e d , i i o r e o v e r , i n f i x i n g l i d a s the
s t a n d a r d of p r o f i t a s compared w i t h tho o r e - w a r a v e r a g e of 1 / ' - ,
Hr, J u s t i c e oahkey h a s t a k e n i n t o a c c o u n t t h e i n c r e a s e in t h e
c a p i t a l employed i n the m i n e s .
I t s h o u l d be p o i n t e d out t h a t c a p i t a l i n v e s t e d in
development s h o u l d l e a d to i n c r e a s e d o u t p u t and so to
an i n c r e a s e in t h e a g g r e g a t e of t h e s t a n d a r d s p r o v i d e d
for by Mr. J u s t i c e Sankey, but the owners contend
t h a t t h e Sankey S t a n d a r d of P r o f i t s i s n o t s u f f i c i e n t
t o r e n d e r t h e i n t r o d u c t i o n of f u r t h e r c a p i t a l r e m u n e r a t i v e
e i t h e r f o r t h e p u r p o s e , of m a i n t a i n i n g the e x i s t i n g
o u t p u t of m i n e s o r ' f o r new d e v e l o p m e n t s .
1
As a m a t t e r of. f a c t the Sankey R e s o r t i s a l r e a d y
h a v i n g a marked e f f e c t i n a r r e s t i n g d e v e l o p m e n t .
In r e g a r d t o t h e G e n e r a l q u e s t i o n of t h e s u f f i c i e n c y
of t h e s t a n d a r d of 14d p e r ton of c o a l r a i s e d , as
recommended by t h e Sankey Report , i t i s p o i n t e d out by
t h e Owners t h a t t h e p r e s e n t reduced v a l u e of money as
compared w i t h t h e p r e - w a r v a l u e h a s not been t a k e n i n t o
a c c o u n t and t h a t the v a l u e of 14d today c o n s e q u e n t l y
b e a r s no r e l a t i o n t o the value of 14d oefore t h e w a r .
To p l a c e
in r e l a t i o n to
pre-war years
f o r every V -
t h e owners on t h e same b a s i s of p r o f i t
t h e rjurchasing powers of money as i n t h e
i t would be n e c e s s a r y t o a l l o w 2 / - today
ia 1913.
EYAIf j).
J0KT.S.
C o n t r o l l e r of Coal Mines,
15.4.19.
(6)
fi'1
01
Appendix.
Sankey I n t e r i m R e p o r t .
The Cost t o t h e S t a t e .
The Sankey R e p o r t e s t i m a t e s £ 5 4 , 0 0 0 , 0 0 0 as t h e p r o f i t
of t h e Coal I n d u s t r y f o r 1919.
This f i g u r e i s arrived a t as f o l l o w s : The p r o f i t s f o r t h e q u a r t e r e n d i n g 3 0 t h September,
1916, were e s t i m a t e d a s e q u a l t o 3 / 7 d , p e r t o n on t h e ­
a c t u a l o u t p u t of t h e whole i n d u s t r y .
I t was assumed t h t ; t f o r t h e y e a r 1919 t h e o u t p u t
would be i n c r e a s e d t o 2 6 4 , 0 0 0 , 0 0 0 t o n s which would have
t h e e f f e c t of r e d u c i n g t h e c o s t p e r t o n and t h e r e f o r e
increasing the p r o f i t ' p e r ton by'6d.
I t ms t h e r e f o r e e s t i m a t e d t h a t , assuming t h e a v e r a g e
s e l l i n g p r i c e of c o a l ( i n c l u d i n g e x p o r t e d c o a l ) was m a i n ­
t a i n e d " t h e p r o f i t of t h e w h o l e " i n d u s t r y f o r t h e y e a r 1919
would be 2 6 4 , 0 0 0 , 0 0 0 x ( 3 / 7 d . * 6 d . ) 4 / 1 - £ 5 4 , 0 0 0 , 0 0 0 .
The 4 / l d , p e r t o n i s e x c l u s i v e of t h e p r o f i t s of Coke
Ovens and Bye P r o d u c t P l a n t s , b u t i n c l u s i v e " o f t h e i n t e r e s t
on Loan C a p i t a l .
From t h e £ 5 4 , 0 0 0 , 0 0 0 t h u s a r r i v e d a t t h e Sankey R e p o r t
d e d u c t s £ 9 , 0 0 0 , 0 0 0 , e q u a l t o an a v e r a g e p r o f i t of 8d p e r
t o n over t h e wiiole o u t p u t , f o r t h e p r o b a b l e t a i l i n g off i n
t h e p r o f i t s on Coal e x p o r t e d , which might; be due ' e i t h e r
t o a reduction in t h e q u a n t i t y exported or t o a f a l l i n
t h e p r i c e or t o both; thus bringing the t o t a l estimated
p r o f i t s f o r 1919 down t o £ 4 5 , 0 0 0 , 0 0 0 - o u t of which i t
a l l o w s £ 1 5 , 0 0 0 , 0 0 0 t o be r e t a i n e d by t h e Owners, l e a v i n g
£ 3 0 , 0 0 0 , 0 0 0 a s a v a i l a b l e t o w a r d s t h e c o s t of t h e i n c r e a s e d
wage and r e d u c e d h o u r s , which t h e r e p o r t e s t i m a t e s a t
£43,000,000.
T h i s e s t i m a t e of £ 4 3 , 0 0 0 , 0 0 0 i s Me up of £ 3 0 , 0 0 0 , 0 0 0
f o r one y e a r and £ 1 3 , 0 0 0 . 0 0 0 f o r incrca$ei
for increased
ed c o s t i o r s i x months due t o r e d u c e d o u t p u t f o l l o w i n g
the reduction i n hours,
I t h a s been e s t i m a t e d t h a t a r e d u c t i o n of I2ir& i n t h e
working h o u r s
r e s u l t i n a r e d u c t i o n of 10& i n t h e o u t ­
p u t w h i c h . TTotild i n c r e a s e c o s t s and r e d u c e t h e p r o f i t s by
about £ 1 3 , 0 0 0 , 0 0 0 f o r 6 m o n t h s .
As the shortened hours do not come into operation
until July - the report estimates as the oost for this
year (i.e. up to Deo. 31st. 1919);*
— - £30;000,000.
Increase of wages, for 1 year
Less of output for six m o n t h s - — £ 1 5 . 0 0 0 0 0 0 .
£43,000,000.
Less amount to he recovered by
limiting profits
£30,000,000.
1
- Deficiency
-
£13,000,000.
It must be carefully noted that this is on the assurcp­
tion that the abrurmal profits ma&i in the third quarter
of 1918 will be maintedned, less the 8d per ten allowed
for a falling off in the profits of the Export !Erade.
fhe Sankey Report speculates' (p. 11 ) on a decrease in
the estimated reduction of output, and on savings by
economies in production, etc.
As regards the first,
although in course of tins seme decrease may be looked for,
it is not safe to make any allowance on this account in
present calculations.
As regards the second, the limitation
of Profits to a fixed rate per ton While it provides an
incentive to
reased outputi, gives no inducement to economy
in working.
Since Owners can be sure of their equivalent
of 14d. per ton profit, even with antiquated methods, and can
in no casetretain more, the oost of production becomes
immaterial, and there is nothing to induce them to expend
further Capital on improved methods or even to cheok
extravagance or waste,
further the same effect will be
produced in oomneroial transactions. The price to be obtained
for the ooal will be immaterial to the seller.
In order to arrive at the oost to the State which
will b e involved in the maintenance of the new guaranteed
standard, after providing- for the oost of the increased
wages and decreased output, the figures, for one whole year
will be as follows, assuming the price to the home consumer
is not raised;Profit assumed by Sankey Report
Deduct - Increase in wages
(1 year)
£45,000,000
£30,000,000
Decrease in output
(1 year)
£26.000,000
£56,000,000
Lose
£11,000,000-
Owners Guaranteed Standard
£otal deficiency
£15,000,000.
£26,000,000.
The amount which should be provided in the estimate for
1919-20 T r i l l depend on the decision as to the date when the
new, Sankey Standard of Profit is to come into operation.
Assuming this date is made retrospective to 1st January so
as to coincide approximately with the payment of the increas
ed wages, the amount should be:Increased wages - 9th Jan: 1919 to
31st Dec: 1919
"
£30,000,000
1st Jan: 1920 to
31st Mar: 1920
11
7,500,000
Decrease in Output - 1st July 1919 to
31st Dec: 1919
. "
"
"
- 1st Jan: 1920 to
31st Mar: 1920
13,000,006
6,500,000
l^ooo^oT
Estimated Profits on basis
of September quarter of 1918,
for year to 31st Dec., 1919 - £45,000,000
Do, on f i r s t three months
'
for 1920
- £11,250,000
n
m
£56,250,000
Less Owners Guaranteed
Standard for l i years
- £18,750,000 37,500,000
Amount required to
meet deficiency
'
­
£19,500,000
If on the other hand it is decided that the Sankey
standard shall not be applied to the omera until some
subsequent date.'then for every month i t is so deferred
approximately £1,000,000 must be added to the Estimate.
a L
These estimates are on.the assumption that the
assumed Sankey Profit .*.t the rate of £45,000,000 per annum
^will be realised and they are subject to increase or decrease
in proportion to any variation in this assumed profit.
The cost M the State should be regarded from the
point of view that the l a c k o f incentive to economy w i l l
be cumulative in i t s effect, and it is not reasonable to
expect that the profits w i l l be maintained at the level
of 1918. On the contrary, it should be considered that
the maximum profits to be retained by the Owners w i l l
become the maximum prof i t s of the industry, even if they
would be maintained at that l e v e l .
.BVAN D. JONES.