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.

Curves 3 and 5, representing the surplus for dividends, are of most interest to the stockholder. It will be recalled that when the Steel Corporation was organized in 1901, the common stock was immediately placed on a 4 per cent basis. In 1903 the disbursements to the common stock ceased altogether and even the 7 per cent upon preferred was seriously questioned. During 1906, 1907, and 1908, 2 per cent was paid on the common, and then in 1909, the rate was first raised to 3 per cent, later to 4 per cent, and finally to 5 per cent. Conservative people have always criticised the 5 per cent dividend, believing that a 4 per cent rate would be more likely to be permanent. However, a consideration of the relation of curve No. 5 with No. 6 will show that the Corporation has avoided the payment of unearned dividends throughout its career. The margin was very slim in 1903

SI 6 GRAPHIC METHODS

and 1904 and again in 1911 and 1912. As the balance of earnings for the common stock in 1911 was only 5.9 per cent and in 1912 only 5.7 per cent, a continuance for another year of such narrow margin would probably have meant the reduction of the 5 per cent rate, especially in view of the reduced appropriations for new construction and betterments, as disclosed in Fig. 226.