A glance at the chart shows that, during 1905-6-7, gross earnings tended to increase faster than operating expenses, which is again true in 1909 and 1910. In 1908 and 1911, it proved impossible to reduce operating expenses to conform to the reduction in gross earnings, with the result that profits were sharply reduced in both these years. In 1912, a unique situation occurs. Curves 1 and 2 run practically parallel, showing that although the gross earnings were largely increased, operating expenses kept pace. The largest factor in operating expenses is naturally labor, and the reports of the corporation

CORPORATION FINANCIAL REPORTS

@

Dollars

200, OOO, OOO

ISO, OOO, OOO

I60, OOO, OOO

140, OOO, OOO

120, OOO, OOO

lOO, OOO, OOO

so, OOO, OOO

60, OOO, OOO

*40, OOO, OOO

20, 000, 000

'02 '03 '04 '05 '06 '07 'OS '09 '10 'II '12

Fig. 225. The Surplus Earned and the Dividends Paid by the United States

Steel Corporation

Curve 5. Surplus earned available for dividends Curve 6. Preferred and common dividends paid

These curves are the same as Curve 3 and Curve 4, respectively. The data are depicted here on a large scale so that the relation of dividends to surplus earned may be seen clearly

throw the necessary light on this item. The average wages per man in 1907 were $765 per annum, and in 1912, $857. It has been shown that gross earnings in 1912 were less by $12,000,000 than in 1907, yet operating expenses in 1912 were $45,000,000 more than in 1907, being, as the curve shows, over $600,000,000 for the first time in the Corporation's history.