Open Collections

BC Sessional Papers

COAL AND PETROLEUM PRODUCTS COMMISSION (BRITISH COLUMBIA) VOLUME III. Report of the Commissioner The… British Columbia. Legislative Assembly 1938

Item Metadata

Download

Media
bcsessional-1.0307539.pdf
Metadata
JSON: bcsessional-1.0307539.json
JSON-LD: bcsessional-1.0307539-ld.json
RDF/XML (Pretty): bcsessional-1.0307539-rdf.xml
RDF/JSON: bcsessional-1.0307539-rdf.json
Turtle: bcsessional-1.0307539-turtle.txt
N-Triples: bcsessional-1.0307539-rdf-ntriples.txt
Original Record: bcsessional-1.0307539-source.json
Full Text
bcsessional-1.0307539-fulltext.txt
Citation
bcsessional-1.0307539.ris

Full Text

 COAL AND PETROLEUM PRODUCTS COMMISSION
(BRITISH COLUMBIA)
Volume III.
Report of the Commissioner
The Honourable Mr. Justice M. A. Macdonald
relating to
Paragraph 3 of the Terms
of the Commission
December 5th, 1938
VICTORIA,  B.C. :
Printed by Charles F. Banfield, Printer to the King's Most Excellent Majesty.
1938.  Victoria, B.C., December 5, 1938.
To His Honour the Lieutenant-Governor in Council:
May it Please Your Honour:
I, the undersigned Commissioner, appointed under Your Honour's Royal Commission,
dated the 28th day of November, a.d. 1934, to cause inquiry to be made into and concerning
the matters therein referred to, have the honour to submit my final report thereon.
In due course I will make return of the Evidence and the Exhibits filed in the Inquiry.
I have the honour to be,
Sir,
Your humble and obedient servant,
(Signed)  M. A. MACDONALD.
Commissioner.  " PUBLIC INQUIRIES ACT."
His Honour the Lieutenant-Governor in Council has been pleased to appoint the Honourable Mr. Justice M. A. Macdonald, one of His Majesty's Justices of Appeal of British
Columbia, a sole Commissioner under the " Public Inquiries Act" to inquire into the following
matters:—■
1. The following matters respecting coal mined in or imported into British Columbia and
used for fuel purposes in British Columbia:—
(a.)   The cost of production:
(6.) The manner and cost of preparation for the wholesale and retail trades respectively :
(c.)  The cost of transportation:
(d.)  The cost to dealers in British Columbia:
(e.)  The cost to consumers in British Columbia:
(/.) The profits made by persons or corporations owning or operating coal-mines in
British Columbia:
(g.) The profits made by persons or corporations engaged in the business of buying
and selling coal in British Columbia.
2. The following matters respecting petroleum products, that is to say, gasoline, fuel-oil,
lubricating-oil, kerosene, and other petroleum products imported into or refined or produced
in British Columbia and used or designed for use therein for fuel purposes, lighting purposes,
or in the operation of internal-combustion engines:—
(a.)   The cost of importation or production:
(6.)   The cost of refining or preparation for use:
(c.)   The cost of transportation:
(d.)  The cost to dealers in British Columbia:
(e.)   The cost to consumers in British Columbia:
(/.) The profits made by persons or corporations engaged in the importation of
petroleum products into British Columbia, or in refining, producing, or supplying petroleum products for use in British Columbia.
3. Generally, all matters tending to show the comparative value of coal and petroleum
products for economic use as aforesaid in British Columbia, and the value to the economic
welfare of British Columbia of the development of industry based upon the production of the
fuels enumerated, or tending to show whether or not the prices charged for coal and petroleum products respectively are unjust or unreasonable; and all such further matters as the
Commissioner may consider to be incidental to any of the foregoing matters of inquiry.
A. W. GRAY,
Acting Provincial Secretary.
Provincial Secretary's Office,
November 29th, 19SU.  PREFACE.
This is the final report based upon specific questions in respect to the Coal and Petroleum
Industries: it is the necessary sequel to Volumes I. and II. where certain findings there made
are now co-related and applied to the questions considered in this volume, viz., the comparative value of coal and petroleum products in their economic uses and in relation to public
welfare (involving the relative position of two rival fuels—coal and fuel-oil). In Chapter
IX. will be found a general review of the findings in the three volumes.
In Volume I. we were concerned with: (1) The British Columbia business operations of
the oil companies; (2) Whether or not, having regard to a fair profit, gasoline as a separate
commodity, regardless of the type of crude from which it was processed, was sold at excessive
prices in British Columbia; (3) If other major products of crude, viz., fuel-oil (light and
heavy) were sold at a just and reasonable price; (4) A similar inquiry in reference to other
products of crude processed in British Columbia, e.g., kerosene and lubricants. All these
products are manufactured in this Province from crude, an imported raw material.
A " just and reasonable price " in respect to gasoline had an important aspect, viz., the
price to the consumer; that is so because it does not stand in a relationship to any other
product, the subject of this Inquiry. There would be no point to a discussion of the comparative value of gasoline and coal. A " just and reasonable " price in respect to fuel-oil, however,
has a duel aspect inasmuch as it is linked with a similar inquiry concerning coal. The dual
aspect is (1) Price to the consumer, domestic or industrial—is it just and reasonable? and (2)
Its relation to the selling-price of coal. Coal and fuel-oil should be placed on a footing of
equality—both sold at just and reasonable prices. If these rival products are not sold at
" just and reasonable " or as it is called in this report—" economic prices," meaning a price
that bears a uniform relation to reasonable costs of production and distribution and which
also includes a reasonable profit on a reasonable investment, one product might unfairly drive
the other from the market. Again, apart from relative position, if either product, standing
alone, is sold below cost some other product is unfairly burdened with the loss: hence the
necessity of finding a just price for coal and a just price for gasoline and fuel-oil.
There is no doubt that in the public mind—it was so represented to me—the impression
prevailed that not only was gasoline too dear but also, for reasons unknown, at that stage,
domestic and industrial consumers were turning from coal, a local product, to fuel-oil, processed from an imported product. Whether this displacement of a local product was due, on
the one hand, to the fault of the coal industry itself, coal prices too high, inefficient methods,
inflated capital structures; or, on the other hand, due to similar conditions in respect to the
British Columbia operations of the oil companies, was unknown at the outset of the Inquiry.
The purpose was to find the facts and the object to place both fuels, as intimated, on a basis
of equality; not penalizing fuel-oil because of its foreign origin or favouring coal as a local
product because of its local origin.
Referring to both Volumes I. and II. we found that coal and heavy fuel-oil (there is no
such finding in respect to light fuel-oil used in homes, etc.) were not sold at economic prices
and were not therefore on a fair relative basis of equality. Reasons in respect to coal were:
(1) Mining costs too high; (2) Inflated capital structure; (3) Financial methods; (4)
Treatment of depreciation; and (5) Want of modernized mining methods and in respect to
heavy fuel-oil that it is sold below cost.
The Inquiry concerned that part of the business of the oil companies carried on in
British Columbia. Because, however, of the costing system followed by integrated oil companies it was necessary to explore many avenues to reach conclusions in respect to costs of
production and distribution in this Province.
The ramifications of the Petroleum Industry apparently give rise to misconceptions as
to the method of approach in determining whether or not petroleum products manufactured
in this Province are sold at reasonable prices. I refer in this connection to a public statement, typical of others, in October, 1938.    It reads as follows:—
" One of the problems of price fixing is obvious in connection with the Petroleum Industry.
The product to be regulated in price is to be extracted from raw materials of necessarily foreign
origin.    How could these primary costs be determined by an authority within this Province."
It can best be answered with an illustration.    Let us assume cheese factories are located
in this Province and the only place the companies could secure their raw material—viz., milk viii. PREFACE.
—-is from the State of Washington (crude comes from California, Peru, etc.); in other words,
visualize a condition where no milk at all is produced in this Province. Let us assume that
not only cheese, but butter, buttermilk and whey is manufactured or processed in British
Columbia from the imported raw material (milk). The task is to find if the prices of these
products to the consumer in British Columbia are just and reasonable. The starting point
would be the laid-down cost of imported milk at the cheese-factory door. From that point we
would find costs of manufacture, wholesale distribution, together with all necessary elements
in respect to plant equipment, depreciation, etc. If these companies had other cheese factories all over the world we would not of course investigate prices to consumers elsewhere.
If, too, books and records were kept relating to business activities in this Province no difficulty
would be encountered. If, however, the Sales Realization System, as employed by the oil
companies, should be used it would be necessary to recast their cost accounting for the
purpose of allocating to each individual product manufactured in British Columbia the costs
attributable to it. In the Petroleum Inquiry we were assisted in this task through the fact
that leading executive officials from Toronto and California appeared and testified in this
Province, and the further fact that our Chartered Accountants investigated the books of the
companies in Ontario and California in respect to that part of the companies' activities
relating to this Province. If they failed to convince us that we should adopt their system of
cost accounting they did greatly assist in the difficult task of applying the evidence to British
Columbia operations.
The illustration might be carried further to elucidate another aspect. Let us assume
that the companies doing business in this Province and in other provinces and countries processing imported milk owned the dairy herds in Washington in addition to the factories in
British Columbia, also owned pipe-lines or a fleet of trucks to transport the milk from the
dairies to Seattle. Let us further assume that this integrated company owned tank steamers
to transport its milk from Seattle to the factory or factories on Burrard Inlet; also that they
owned and controlled, directly or indirectly, all distribution facilities in this Province. If we
were asked to find whether or not these companies with world-wide operations in respect to
their British Columbia business only, were selling: butter and cheese, both manufactured in
this Province, from an imported raw material (milk) at a fair price we would again start with
the laid-down cost of milk at the cheese-factory door wholly unperturbed by the question as
to how it got there, or the financial or other history prior thereto or the magnitude of the
business outside this Province. Ramifications of the companies' activities do not add to or
subtract from the price of the raw material in the form of milk required for that part of its
business of manufacturing local products carried on in British Columbia. There is no need
therefore for confusion of thought in approaching the problem.
We found in Volume I. that gasoline could be sold at a fair profit at 18 cents a gallon, or
if the public want to tolerate the present system of retail distribution designed to maintain
prices and prevent competition it could be sold for 23 cents. I refer to this further fact, only
recently discovered as a result of information furnished by Mr. 0. C. Labrie. I instructed
A. W. Fisher, barrister, of Vancouver, to investigate through the Land Registry Office, etc.,
the statement made by Mr. Labrie that Imperial Oil, Limited, owned a lot of property in
Vancouver and vicinity upon which no service-stations were erected, pursuant, in my opinion
to the policy of maintaining prices and preventing competition. It was disclosed by this
investigation that (with one exception) corner lots in Vancouver and vicinity amounting,
according to transfer values, to nearly a quarter of a million of dollars were purchased in a
period of four years (1927-1931). I have not delayed the report by making inquiries in
other parts of the Province. This is enough, if more is needed to disclose the method followed.
While I do not recall a specific question in respect to advance purchases of real estate by
the oil companies certainly the information was not volunteered; a full statement of these
purchases, together with transfer values and assessments before and after purchase, also
certificates, will be found in Appendix 51.
The facts just referred to—one that has arisen since the taking of evidence ended—leads
me to make another reference. Statements of alleged losses said to have been incurred by the
oil companies in respect to that branch of their business carried on in this Province have also
been made since the public sessions of the Inquiry were completed. Mr. R. M. Pidgeon, B.C.
manager of Imperial Oil, as reported October 12th, 1938, stated that "evidence was presented PREFACE. ix.
to Dr. Carrothers indicating that the industry is losing money in British Columbia." This is
presumably apart from any proposed reductions in gasoline prices. It is not stated whether
there was any diminution in the volume of sales—or if costs were higher. The purchase of
the idle property referred to might possibly represent the " loss " or part of it. These purchases ought really to indicate a lucrative business in this Province.
I would not accept these statements of alleged losses for the following reasons. Certainly there was no evidence of it in the course of the Inquiry:—
(a.)  No statement of losses based on the Sales Realization System can be accepted.
(6.)  Local managers of oil companies took the position in evidence in the Inquiry
that they had not (and it was true) separate books or records showing British
Columbia costs,
(c.)   Mr. Kenmuir, manager of Union (p. 4189), said "we are only the marketing
end:   we have no costs on commodities and even the freight paid here is calculated in the head office of the Company"  (California),
(d.)   To enable the Commission to determine these questions in respect to purely
British Columbia business our Chartered Accountants had to, and did, pursue
inquiries at head offices in Ontario and California.
It was also asserted that great loss will occur if gasoline prices  should be  reduced.
There will be a reduction in revenue to the Oil Companies from gasoline sales, only however
on the assumption that sales at reduced prices will not be increased.    As often pointed out
heavy fuel-oil is sold in this Province below cost.    That fact has been found by this Commission, supported by the Tariff Board, and finally, if any further proof is needed, admitted by
the Imperial Oil,  Ltd., through its representative in  a  statement  given to the  Economic
Council.    All major companies now operating in British Columbia   (Imperial, Union, Shell
and Home—no reference here to Standard as it came into British Columbia later) sold to the
people in 1934 a grand total of 39,734,326 gallons of gasoline and 116,168,762 gallons of heavy
fuel-oil.    In view of the fact that on the whole they sold and dealt with over five times as
much heavy fuel-oil as gasoline (the former " regardless of cost ") the reader may estimate
what adjustment in prices would absorb any diminution of revenue consequent upon a reduction in gasoline prices.    The foregoing statement is based on  1934 figures.    There is no
reason to assume that this general relation has not been virtually maintained in subsequent
years.
The method followed in Volume II. is comparatively simple. Our findings principally
relate to Canadian Collieries (Dunsmuir), Ltd. No substantial objection is taken to the setup, financial or otherwise, or prices of any other, including the Crow's Nest Pass Coal Company
in East Kootenay. We provided for a return of 8 per cent, on a capitalization of $5,000,000
and on that basis, with proper depreciation charges and all necessary allowances, found that
all grades of coal could be sold to the consumer in Vancouver and Victoria at $8.10 per short
ton and under other conditions at the prices outlined in Tables 77, 78, 79 and 80 in Chapter
XL, Volume II., at $7.25, $6.50, and $6.00 a short ton. The reader will find therein reasons
why we suggested coal distributing depots. It may be of interest to say that after making
this suggestion in Volume II. we find from a report by Forster, Brown and Rees, Mining
Engineers of Cardiff, Wales, only recently produced, that they made the same recommendation
28 years ago. Nor is our recommendation criticized by Canadian Collieries. Not only
would it result in lower prices for the consumer; it would also enable coal (and this is the
point I wish particularly to mention) to compete with heavy fuel-oil in many markets, that
without it will be beyond its reach. It would result, too, in more production, more work for
miners, and more labour in actual distribution to the consumer.
I invite the reader's attention to a perusal of Chapter X. containing our answer to a
criticism of the Coal Report by the Canadian Collieries. The criticism is inserted in full
as Appendix 49. I need not refer further to the contents of that chapter beyond directing
attention to it. The reader will find in Section 10 of that chapter a useful discussion on
reduction of mining costs through modernized methods where the views of Dr. Gray, of the
Nova Scotia Dominion Coal Company, and Mr. G. W. Evans, Consulting Mining Engineer,
are disclosed, together with reasons for my acceptance of the latter's views. Some interesting
letters also are appended. PREFACE.
As stated, the basic principle in the three Reports is equality of treatment so far as coal
and fuel-oil are concerned. That here has not been that equality in the past is obvious.
There is no question either as to the consequences to the coal industry flowing from this
inequality of treatment. I direct the reader's attention to the following statement made by
Senator J. W. deB. Farris, K.C., in the course of the Inquiry (Counsel for Canadian Collieries (Dunsmuir), Ltd.), quoted in Chapter IX. It is not an exaggerated statement, except
that I would not apply the word " foreign " to the Petroleum Industry if it carries the suggestion that it should be penalized on that account—
".    .    .    where a foreign commodity is invading the field of fuel in the shape of fuel-oil and is
threatening the complete destruction of the native industry and means the wiping out of some very
prosperous cities and towns in this Province and I may add throwing hundreds of miners out of
employment."
I was, in the course of the Inquiry, disturbed by the fact that domestic and industrial
consumers of fuel in this Province discarded coal for fuel-oil either without tests or any
adequate investigation, scientific or otherwise, into the question of suitability, cost, and use,
or by enlisting the aid of combustion engineers. As an illustration—Pacific Mills, Limited,
using from 60 to 70 thousand tons of coal a year, changed to the use of heavy fuel-oil
without adequate investigation from the standpoint of cost and efficiency. If it procured
heavy fuel-oil processed at the refineries in this Province some local employment would be
given; instead, however, the coal was displaced by fuel-oil imported direct to the plant from
California.    The facts in this connection are given in Chapter V.
Railways in this Province use much heavy fuel-oil—including the P.G.E. and the E. & N.
on the Island. One reason assigned is alleged fire-hazard. That need no longer prevent the
use of coal although patrols, not required where oil is used, would be ordered on the same
basis, however, as in Eastern Canada where coal is almost exclusively used. So, too, in
Government institutions, schools, etc., fuel-oil is found. Chapter VII. is devoted to fire-
hazards. It was read and approved by Mr. C. D. Orchard, of the Forestry Department.
The conclusions will be found at the end of that chapter.
Having found just and reasonable prices for coal and heavy fuel-oil, or as we call it
" economic prices," we proceeded to inquire into the value and efficiency of each fuel to the
domestic and industrial consumer. It is obvious that one cannot by an inquiry, however
scientific, tell the home-owner, apartment-house dweller, owners of power plants, industrial
concerns, railways, etc., whether or not from the standpoint of cost and efficiency coal or
heavy fuel-oil is superior if the price fluctuates from day to day. It is also clear that if
they are to be treated as public utilities the price would necessarily be fixed on the basis
already referred to. This fact is not altered by the circumstances that because heavy fuel-oil
may be imported into this Province paying a 17% cents a barrel customs duty its prices
cannot in justice to local refineries manufacturing it in this Province be advanced—notwithstanding it is just that it should be advanced—until local authorities are protected by the
knowledge that a dumping duty will be applied to the imported products. In our opinion
the Dumping Act applies.
This Report on the whole is favourable to coal only because the facts warrant it. With
abundant coal resources it is in the economic interests of the people of this Province to take
every legitimate step to encourage its use and to place it on a footing of equality with
heavy fuel-oil. It was suggested by Mr. L. C. McCloskey, of Imperial Oil, that coal is an
out-moded fuel; that this is not so is clearly revealed in this Report. It is also in the
interests of industry to have at its disposal two rival fuels. At present, as pointed out
elsewhere, a private body or company controlling the price of gasoline (and consequently
of heavy fuel-oil) can virtually destroy the coal industry. Regulation therefore by a public
body is highly desirable in its interest and in the public interest.
Readers of the Report will observe our indebtedness to the Commercial Testing and
Engineering Company of Chicago. This firm was highly commended to us by the American
Institute of Mining and Metallurgical Engineers. The tests made by them, as outlined in
Chapters IV. and V., were translated and applied to British Columbia coals. After this was
done we submitted our conclusions in full with all supporting data to that firm of engineers
and secured their approval.
As in the Coal and Petroleum Reports no findings were made nor any important decisions
reached without the most exhaustive collaboration and assistance of the best technical and PREFACE. xi.
professional advice procurable. I am greatly indebted to the following for assistance of
this character: George Watkins Evans, Consulting Mining Engineer; D. 0. Lewis, M.E.I.C,
M.Inst. C.E.; Professor W. F. Seyer, Ph.D.; K. Moodie, M.E.I.C.; R. W. Hartley, LL.B.;
R. Rolleston West, B.A., A.M.Inst. C.E.; H. J. McCreery, B.A.Sc; Professor F. W. Vernon,
B.Sc, A.M.I.Mech.E.; Messrs. J. Haydn Young, C.A.; H. G. Hinton, C.A.; G. W. Clarke,
C.A.; H. B. Pratt, of George A. Touche & Co.; Commercial Testing and Engineering Company of Chicago; W. A. McAdam, Acting Agent-General for the Province of British
Columbia; Officials of the Northern Pacific, Missouri Pacific, New York Central, Atcheson,
Topeka & Santa Fe, Southern Pacific, Union Pacific, Chicago, Rock Island & Pacific
Railways; Dr. Camsell, Deputy Minister of Mines and Resources and other members of his
Department; C. C. Stibbard, Chief Operating Officer, Board of Transport Commissioners;
Officials of the United States Department of Agriculture and of the United States Bureau of
Mines; F. Hull, of the Vancouver General Hospital; W. N. Bee, of the University of British
Columbia and Mr. Adamson of the British Columbia Sugar Refining Co. Ltd.
For convenience a general summary of the findings in the three volumes will be found
in Chapter IX. and a summary of this volume at the first of the report.
M. A. MACDONALD,
Commissioner.
Victoria, B.C., December 5, 1938.  SUMMARY.
(These brief notes show in a general way the nature of the findings made in this Report.
A better understanding thereof will be had by reading the portions of the Report relating
thereto.)
1. The Commission was directed to inquire into the cost of production and distribution
of coal and petroleum products, principally coal, gasoline, heavy fuel-oil and light fuel-oils,
in the light of their comparative value to the economic welfare of the Province, and the
development of industry therein; also into the profits made by persons engaged therein;
and finally to ascertain if the prices charged for such products were just and reasonable to
the consumer.
2. The foregoing involved finding economic delivered prices (viz., just and reasonable
prices) of each of these major products; as to coal and heavy fuel-oil, both used for similar
purposes in many ways, it involved a comparison of their respective merits as fuels.
3. In the Petroleum and Coal Reports we found economic costs of production and distribution of coal, gasoline, and heavy fuel-oil and other less important petroleum products. Those
findings, in so far as they affect coal and heavy fuel-oil, have been used in this Volume to
arrive at their comparative value as economic fuels.
4. Economic delivered prices (viz., just and reasonable prices to the consumer) must
include a reasonable profit upon the necessary capital invested in reasonable production and
distribution services, without which the product cannot be produced and marketed. We have
dealt in this Volume with cost, selling price and profit.
5. Selling price is the most certain and definite of the three, in that the price received is
an actual fact and a thing certain; profit is described as the margin between cost and selling
price. Reasonable cost must first be found in order to determine whether the selling price is
just and reasonable; but whether it is just and reasonable is determined by the profit shown
upon an invested capital found to be reasonably required.
6. To find economic costs, therefore, we were compelled to inquire into methods of costing, depreciation, distribution and capital structure, and as to coal, method of mining. As
crude oil or petroleum (from which gasoline, heavy and light fuel-oils are processed in this
Province) is not produced here we were not directly concerned with its cost of production;
we accepted the oil companies' stated laid-down costs thereof in British Columbia as the
basic figure upon which to commence the above-mentioned inquiries into the cost of production and distribution of gasoline and heavy fuel-oil.
7. With the economic costs as found in the Coal and Petroleum Reports and as supplemented in this Report we studied the comparative value of coal and heavy fuel-oil as economic
fuels in this Province.
8. The relative merits of coal and heavy fuel-oil as fuels were judged by the evaporation
results actually obtained under comparable operating conditions and related to the B.T.U.
value of each fuel. The number of barrels of a designated heavy fuel-oil equivalent to one
ton of a designated coal was determined therefrom, apart from any cost or price factor.
9. The respective values of coal and heavy fuel-oil as economic fuels were then obtainad
by applying their respective economic delivered prices as found, together with other comparative costs, such as labour, depreciation and maintenance charges.
10. No comparative tests between the two fuels as fuels were available in this Province.
11. Competitive prices could not be used because they bear no uniform relation to costs
of production and distribution; furthermore, they may vary and fluctuate so much from
month to month or from year to year that no reliable comparison could be obtained thereby
within the terms of this Commission. SUMMARY.
12. We found in general, in so far as their relative merits as fuels alone are concerned,
apart from any cost or price factor, that:—
(a.) British Columbia coals are a suitable and convenient fuel adaptable to modern
and efficient methods of use and consumption.
(6.) A coal of known physical and chemical properties selected by reason thereof for
a specific use in a boiler-furnace designed and constructed for the specific use
and for the consumption of a coal of such characteristics, and fired in a manner
to develop the maximum combustion for the required operating conditions, is
at least equal to a designated heavy fuel-oil similarly selected and utilized.
(c.) In general, about the same efficiency may be expected from either coal or heavy
fuel-oil in stationary plants, provided design and operating conditions are
equally superior. There are a few specialized uses for which the characteristics of one fuel or the other may be more suitable with present knowledge of
fuel uses.
(d.) As crude oil (from which heavy fuel-oil is derived) is not produced in British
Columbia while coal is produced and may be produced in much greater abundance, coal is the logical and economic fuel to be used in this Province, wherever
it is at all suitable for use. It is good engineering and good economics to so
design steam plants as to use the fuel nearest at hand.
(e.) On the question of flexibility (ability to raise steam rapidly) we believe the
difference between coal and heavy fuel-oil is more a matter of convenience,
especially in stationary plants.
13. We find in particular, taking into account both the relative merits of the two fuels
as fuels and their economic delivered prices as found, that in building heating plants, such as
office buildings, hotels, departmental stores, institutions and such like, coal can be used with
a substantial annual saving.
14. The superiority of coal as a fuel in this respect was definitely established in the tests
conducted by the Commercial Testing & Engineering Company in the Eastgate and St. Clair
Hotels in Chicago; full details thereof will be found in Sections 1 and 2 of Chapter IV.
hereof; and it is of interest to note that a check on the performance of the two hotels under
several months' operating conditions showed greater savings in favour of coal than were
shown in the actual tests.
15. The Chicago tests were made when the contentions of the Chicago Coal Merchants'
Association as to the superiority of coal were challenged by a firm of Architects and Engineers; as a result of the tests the two hotels changed over from heavy fuel-oil to mechanically
fired coal.
16. With the approval of the Commercial Testing & Engineering Company and our technical advisers in this Province, we have translated the results of these tests to British
Columbia fuels and operating conditions, and have come to the approved conclusion that if
similar tests were conducted in building heating plants in this Province the resulting coal
superiority should be shown as not materially different.
17. In stationary and industrial power plants we find that substantial savings can be
effected in the use of coal, whether pulverized or mechanically stoked. In plants of this
nature, also, we were greatly assisted by various tests conducted by the Commercial Testing &
Engineering Company, detail of which will be found in Chapter V. hereof.
18. Coal is chemically a very complicated substance; its chief constituent is carbon, but
other elements are combined with the carbon, notably hydrogen and oxygen. Oil, on the other
hand, is essentially a mixture of hydrocarbons, the result of chemical combinations of carbon
and hydrogen.
19. This Report indicates the important place that properly qualified Engineers should
occupy in the selection of coal and in advising upon the type of equipment most suitable to
obtain the maximum combustion and efficiency under operating conditions in its various uses. SUMMARY. xv.
20. Until industrial and power plants and building heating plants as well as the domestic
consumer are governed by the advice of competent and experienced Engineers, both as to the
coal to be used and type of equipment suitable, it is not to be expected that the real value of
coal as a fuel will be as generally recognized as it should be.
21. We have found in one instance, referred to in Chapter V. hereof, where a power
plant using 60,000 to 70,000 tons of coal annually, changed over to heavy fuel-oil in circumstances where the use of coal should have been equal, if not superior, to the use of heavy
fuel-oil. The change took place because this Company was able to buy cheap California
fuel-oil and import it direct at " dumping " prices.
22. Instead of coal being a decadent fuel, as was suggested by the Building Owners and
Managers Association of Vancouver, the experience in Great Britain, the United States and
elsewhere shows that it presents one of the most fruitful fields for commercial research.
23. It is of importance that in British Columbia, possessing a great abundance and
variety of coal, its scientific study should be encouraged. We see the necessity for co-operation in this respect between the coal companies, the Provincial Mines Department and the
University of British Columbia.
24. Coal and heavy fuel-oil are not in competition in private dwelling-houses. Diesel or
furnace oil is there used, which it is admitted does not compete in price with automatically
fired coal even on to-day's competitive prices.
25. A large market has been lost to Vancouver Island coal because of its high cost of
production and distribution. Alberta coals have made substantial inroads in Vancouver due
to lower prices, despite the freight rate from Alberta. Thousands of sawdust burners in
Vancouver and Victoria have also reduced Vancouver Island coal consumption for the same
reason.
26. Reduced distribution charges to building heating plants in which the usual retail
distribution charges apply, should not be made by " loading " all or some of these charges
upon the domestic consumer and increasing his distribution charges thereby.
27. We have approached the domestic coal distribution problem on the premise that automatic coal-burning equipment sold at reasonable prices and on low monthly payments should
supplant hand-fired furnaces because of the saving in fuel costs, elimination of physical
labor and the convenience of automatic control.
28. Automatic coal-burning equipment should result in the preponderating use of pea
and slack coal, creating a market therefor in place of the larger sized coals which can be and
are now crushed into the smaller sizes. The domestic consumer, however, should be protected
against increases in prices of pea and slack coal, by reason thereof, to the $10.50 and $10.75
prices we found to prevail for lump coal.
29. In Section 9 of Chapter IV. hereof we analyzed the prices of coal as found in the Coal
Report in relation to the economic delivered price of heavy fuel-oil, with the resulting conclusion that the establishment of central coal distributing depots, or some modification of that
principle, was the only effective way in which the present high distribution charges could be
reduced to a point where coal could compete effectively in building heating plants with heavy
fuel-oil, if the latter is sold at economic delivered prices as found.
30. We do not regard a delivered price of coal as economic which includes charges for a
variety of retail services which we found can be dispensed with to the advantage of the
community by the establishment of central coal distributing depots.
31. Both private dwelling-houses and building heating plants should be constructed so
as to receive coal in bulk (unsacked) and to store it conveniently for use in automatic coal-
burning equipment. We find that surprisingly little thought is given to these considerations
in much of the construction now proceeding. xvi. SUMMARY.
32. We find that buildings are constructed to burn heavy fuel-oil without either Architects or Engineers studying the advantages that may be obtained by burning coal. This
merits emphatic public comment by reason of the great coal resources of this Province, and
the successful manner in which coal can be burned as shown by tests conducted by the Commercial Testing & Engineering Company in Chicago.
33. The objects of these findings is not to favour coal as such, but rather to set out in
concise form a general statement of the studied results of a comparison between coal and
heavy fuel-oil. A purpose of the Commission was to determine the comparative value of the
two fuels in terms of economic price relationship.
34. Once the merits of the fuels for a particular use are established by tests conducted
by competent fuel-testing Engineers and the economic delivered prices of each fuel are found,
the ensuing comparison should enable the prospective consumer to decide which fuel, with
equal services, will cost him less at the end of the year.
35. In railway operation in British Columbia the use of coal and heavy fuel-oil is dictated, not by the merits of these fuels for locomotive use, but rather by their competitive
prices. Heavy fuel-oil is purchased by the railways at prices much below the economic cost
of production and economic delivered prices as found.
36. If heavy fuel-oil and coal were sold at economic delivered prices the use of coal in
railway locomotives should result in substantial annual savings. In the year 1936, 44,057,660
gallons of heavy fuel-oil were consumed in railway locomotives in British Columbia, as compared with only 2,871,923 gallons in all the rest of Canada.
37. The railways advanced an argument that the use of heavy fuel-oil was required in
railway locomotives in this Province because of its mountainous character as compared with
the Prairies. This contention has been disposed of in a thorough analysis in Sections 3 to 6
of Chapter VI. hereof.
38. No objection would be raised by the Forestry Department or by the Board of Transport Commissioners to the use of coal in railway locomotives in this Province on the ground
of fire-hazard: Patrols, however, would be ordered, but only on the same basis as in Eastern
Canada, where coal is exclusively used.
39. No locomotive tests of coal and heavy fuel-oil have been made in this Province by
either railway. Such a test was conducted by the Canadian Pacific Railway between Calgary
and Red Deer, Alberta, in 1931. The results of the said test applied to British Columbia
operating conditions in so far as they may be, without an actual locomotive test in this
Province, would indicate no reason why coal cannot be as efficiently used in British Columbia
railway locomotives as it is in fact by the Northern Pacific Railway.
40. We find that recent coal tests on locomotives made on the Mohawk Division of the
New York Central Railway Company showing efficiencies from 70% to 85% within the
operating range of the locomotive were obtained with one of the Company's latest design
stoker-fired coal burning locomotives.
41. It is not possible to find in the evidence presented that coal as a fuel in logging
operations is as safe as oil in respect to fire danger.
42. Notwithstanding the foregoing statement, coal appears to be safely used in logging
operations in the State of Washington and on one part of Vancouver Island.
43. It should not be accepted as a final and settled fact that coal cannot be safely used
in logging operations in this Province. An open mind should be maintained and exhaustive
tests made to settle the question. SUMMARY. xvii.
44. Through the good offices of Mr. W. A. McAdam, Acting Agent-General in London,
we have been given considerable information, which is incorporated in Chapter VIII. hereof,
regarding the successful use of mechanically coal-stoked passenger vessels in the coastal
waters of Great Britain. Study thereof convinced us of the danger of coming to a conclusion
without more authentic information.
45. The greater use of cargo space and the longer time required for refuelling were two
of the main objections presented against the use of coal in British Columbia coastal waters.
How good these objections are in the light of experience elsewhere is a subject for further
inquiry. In view of the abundant supply of Vancouver Island coal, we remain to be convinced
that heavy fuel-oil is a more economic fuel for this use until it is shown that mechanically
coal-stoked passenger vessels cannot be operated in these coastal waters as successfully as in
Great Britain.
46. While Diesel-engined tugs appear to have an advantage, a doubt exists as to whether
coal or heavy fuel-oil is superior in coastal tugs. Evidence was presented in favour of each,
but as pointed out during the hearings neither the tug companies, the coal companies nor the
oil companies saw fit to present us with records of performance of either or both fuels under
comparable operating conditions.
47. In our investigation of the cost of production and distribution of heavy fuel-oil we
found that the oil companies used a method of apportioning the costs of the various products
of crude petroleum, which admittedly did not show the actual costs of producing heavy
fuel-oil. This method was rejected by the Tariff Board of Canada as well as by this Commission. In arriving at the costs of heavy fuel-oil we used the Product Cost method approved
by George A. Touche & Company, internationally known chartered accountants.
48. In our investigation of depreciation and depletion charges, we found in the case
of Canadian Collieries that depreciation was charged largely according to the discretion of
the directors; in addition large sums were withdrawn from the Company's depreciation
reserves and used for other purposes. We recast this method and treated the excessive depreciation charges as profit. We followed a method approved by leading Coal-Mining Engineers,
Economists and Chartered Accountants, including Price, Waterhouse & Company and George
A. Touche & Company, in British Columbia.
49. Our findings in respect to the capital structure, profit position and return upon
investment of Canadian Collieries were likewise made in accordance with principles generally
accepted by leading Coal-Mining Engineers, Economists and Chartered Accountants, including
Price, Waterhouse & Company and George A. Touche & Company, in British Columbia.
50. Our findings in regard to reducing costs of mining coal on Vancouver Island were
made after careful study by Mr. George Watkin Evans, internationally known Coal-Mining
Engineer. In Section 10, Chapter X., hereof, it is shown that Mr. Evans has successfully
reduced the cost of mining in other coal-mines. In the same section we published a letter
from Mr. Evans, wherein he states that he is willing to advise ways and means for reducing
cost of mining on Vancouver Island and to supervise the operation thereof, if requested so
to do.
51. The excessive use of heavy fuel-oil in British Columbia indicates the existence of a
unique condition in this Province; although it is a great coal-producing Province, more heavy
fuel-oil is consumed as a substitute for coal than in any other Province of Canada; also, in
addition to the heavy fuel-oil processed here, more heavy fuel-oil was imported into British
Columbia in 1936 than into all the rest of Canada.
2 SUMMARY.
52. Despite our comparatively small population, the Province of British Columbia consumed in 1936 one-third of the heavy fuel-oil used in Canada. According to reported figures,
British Columbia consumed in 1936:
17% times as much as the Irish Free State;
nearly 4 times as much as New Zealand and Belgium respectively;
nearly 3 times as much as the Dominion of South Africa; and
nearly 1% times as much as the Dominion of Australia.
53. The reported figures also disclose that in 1936 the Province of British Columbia alone
consumed half as much heavy fuel-oil as Italy; three-tenths the consumption of France, Germany and Japan respectively and one-fifth the consumption of the United Kingdom. These
extraordinary figures indicate that an economic condition exists in British Columbia that does
not exist elsewhere in Canada.
54. Reference is made in Section 13 (e) of Chapter IX. to some incidental matters;
these, and other matters, provide a fruitful field of study as occasion demands and as interest
grows in the more economic and efficient use of fuels.
55. It is essential that provision should be made for the testing and grading of all
petroleum products under a qualified supervisor, as pointed out at page 126 and elsewhere
in the Petroleum Report. The Chemistry Department of the University of British Columbia
presents an opportunity in this respect that we judge should be of advantage to the Province,
the University, the industry and consumers alike.
56. It is contrary to the economic welfare of the Province that depreciation reserves
should be withdrawn in cash from a company; as such reserves are created for the purpose
of maintaining the equity of the original investment, these reserves should remain in the
Province and in the company for that purpose.
57. The costs of production and distribution of coal have been found to be too high, with
resulting uneconomic prices to consumers. The cost of production and distribution of heavy
fuel-oil as stated by oil companies, on the contrary, has been found to be too low and not
to reflect or represent the economic cost thereof, also with resulting uneconomic prices to
consumers. The oil companies have been able to pursue this course by using a method of
allocating costs whereunder the losses incurred in heavy fuel-oil have been " loaded " on to
gasoline, thereby increasing its alleged costs of production.
M. A. MACDONALD,
Commissioner.
December 5th, 1938. GENERAL INDEX.
CHAPTER I.—INTRODUCTORY CHAPTER RELATING TO  SOME ASPECTS  OF
COAL   AND   PETROLEUM   PRODUCTS   TO   BE   CONSIDERED   UNDER
PARAGRAPH 3 OF THE COMMISSION	
Sec.   1.—Terms of the Royal Commission	
Sec.
Sec,
Sec.
(a.
(b.
(c.
(d.
2,
(a.
(b.
(c.
3.-
(a.
(b.
(c.
(d.
(e.
4,
(a.
(b.
Sec.   5.—Some Factors entering into a Comparison of the Relative Merits of Coal
and Heavy Fuel-oil	
Sec.
(a.
(b.
(e.
(d.
7,
(a.
(b.
(c.
Sec. 8.-
(a.
(6.
9.-
(«.
(6.
(c
(d.
(e.
Sec.
(a.
(b.
(e.
Summary of Commission Terms	
Petroleum and Coal Reports already filed	
Matters to be considered in this Volume	
Outline of scope of Paragraph 3 of Commission Terms	
-Some Conditions existing in this Province which gave rise to the Questions
in Paragraph 3 of the Commission Terms       3
Provincial Production of Coal and Heavy Fuel-oil       3
Decrease in British Columbia Coal Production	
Legislation relating to Fuel-oil and Economic Council Hearings
-The course the Inquiry has taken	
Evidential Hearings	
Original Plan of calling Evidence	
Fuel-oil   Consumption   in   British   Columbia   compared  with  the  Rest  of
Canada	
Some Conclusions in the Petroleum Report	
Failure of Coal Companies to cross-examine Officials of Canadian Pacific
and Canadian National Railways  7
-Is Coal a Modern Economic Fuel as compared with Heavy Fuel-oil?  7
Imperial  Oil  Observations  concerning  Failure of  Coal  Industry to keep
Abreast of Modern Fuel  7
Coal is not in fact a Decadent Fuel  7
Necessity of a Method of Comparison
Losses of Energy in a Fuel  	
(a.
(6.
(c.
(d
(e.
Sec.   6.—Nature of the Evidence adduced
Evaporation results reflect Energy actually obtained from each Fuel   8
Cost Factors in Fuel Comparisons  9
Laid-down Prices of Fuel to be studied in their Relation to Economic Costs 9
  9
  9
  10
Plants and Industries from which Evidence obtained	
Classification thereof	
Comparisons based upon the Money paid out for Fuels
     10
Hand-fired Coal Plants do not provide a Reliable Comparison     11
-The Evidence presented shows that the Advances made in the Use of Coal
during the last Fifteen Years have not been given due Consideration     11
Observations concerning increased Efficiency obtained from Coal     11
Lack of Information concerning  Coal  due partly to lack of Technically
Qualified Persons 	
Necessity for Coal Research-work	
-The problem of Change-over from Heavy Fuel-oil to Coal-
Reasons that Change-over Costs not considered further	
Limitations of Discussion	
-Fuel-oil and its Uses	
Distillate Fuels .... 	
Certain Heavy Fuel-oil Characteristics	
Furnace-oils	
British Columbia Conditions	
Other uses of Straight-run Heavy Fuel-oiL
Sec. 10.—Coal and its Uses
B.T.U. Value	
Automatic Coal-burning..
Pulverized Coal	
12
12
12
12
13
13
13
13
14
14
15
15
15
16
16 GENERAL INDEX.
CHAPTER I.—Continued. PAGE-
Sec. 11.—Reference to Modern Methods of Production and Distribution of Coal with
1934-1936 Figures of Heavy Fuel-oil Use in British Columbia  17
(a.)  Modern Coal Use Methods  17
(6.)  Statistics of classified Heavy Fuel-oil used in British Columbia  17
CHAPTER II.—ANALYSIS OF THE EVIDENCE RELATING TO THE BURNING
OF COAL AND OIL IN HEATING PLANTS IN PRIVATE DWELLING-
HOUSES,    HOTELS,    OFFICE    BUILDINGS,    HOSPITALS,    SCHOOLS,
APARTMENT-HOUSES AND SUCH LIKE  19
Sec.   1.—Use of the Light Fuel-oils or Distillate Oils such as Diesel-oil, Furnace-oil,
and Stove-oil in Relation to Coal  19
(a.)   Furnace-oils   19
(6.)   Good Combustion sacrificed in many Coal Furnaces   19
(c.)  Evidence of saving in use of Coal compared with Furnace-oil  19
(d.)  Further Evidence thereon  20
(e.)  Janitor Problem in Apartment-houses  20
(/.)  Greenhouse Evidence  20
(g.)  Comparative Tables of Stoker Coal and Furnace-oil Costs  20
(h.)   Further Tables thereon  21
Sec.   2.—Hospitals, Hotels and Institutions  22
(a.)  Domestic and Building Heating Plants Fuel-oil Consumption  22
(6.) Vancouver General Hospital  22
(c.)   Hotel Vancouver and Empress Hotel  23
(d.)  Further Consideration thereof in relation to other Building Heating Plants 23
Sec.   3.—Departmental Stores  24
(a.)  David Spencer, Limited, Vancouver and Victoria  24
(6.)   Hudson's Bay Company, Vancouver and Victoria  25
Sec.   4.—Business Blocks 1  25
(a.)  Building Owners and Managers' Association of Vancouver  25
(6.)  Reference to Coal Costs and Prices  26
(c.)  Advantages of Modern Coal-burning Equipment  27
{d.)  Royal Trust Company Memorandum  27
Sec.   5.—Schools  28
(a.) Vancouver School Board  28
(6.)  Cost variations in Schools  29
Sec.   6.—Summary of Automatically Fired Coal and Heavy Fuel-oil uses compared
in this Chapter  29
(a.)  Summary thereof  29
(6.)   Short Analysis of such Evidence, generally Favourable to Coal Use  30
(c.)  Authentic Evaporation Results Necessary to enable Comparison of Coal
and Heavy Fuel-oil  30
Sec.   7.—Factors requiring Primary Consideration '_ 31
(a.)  Amount of Energy actually obtained and Economic Prices essential Elements of Comparison  31
(6.)  Fuel Comparison Method explained  31
Sec.   8.—Some Illustrations of the Factors discussed in Section 7  31
(a.)   Chemical Analysis of Fuels Indispensable  31
(6.)  Competitive Prices do not assist in Real Comparison  32
CHAPTER   III.—ECONOMIC   DELIVERED   PRICES   OF   COAL   AND   HEAVY
FUEL-OIL IN BRITISH COLUMBIA  35
Sec.   1.—Cost of Production of Coals of varying B.T.U. Values from Separate Mines 35
(a.)  Introductory Remarks  35
(6.)  Separate Mine Costs  35
(c.)  Weighted Average Mine Costs  36
(d.)  Reasons for taking Weighted Average Mine Costs  36 GENERAL INDEX. xxi.
CHAPTER III.—Continued. *•*<«■
Sec.   2.—Comparison of Comox and Michel Mine Costs  37
(a.)  Remarks thereon .  37
(6.)   Nanaimo, Comox and Wellington detailed Comparative Costs  37
(c.)   Comox and Michel Comparative Detail Costs  41
(d.)   Conclusions thereon   .. ,  45
Sec. 3.—Economic costs of distribution of Coal to Building Heating Plants, Industrial and Power Plants Plants, Locomotives and Bunkers  45
(a.)  Distribution Systems  45
(6.)  Economic Price of Vancouver Island Coal delivered Vancouver Building
Heating Plants, 1935 . .  46
(c.)   Retail Distribution Costs  47
Sec.   4.—Methods used in the Petroleum Report to arrive at an Economic Cost of
Production of Heavy Fuel-oil  47
(a.)   Introductory Remarks .  47
(6.)   Detail Vancouver Posted Price Heavy Fuel-oil, 1935  48
(c.)   Cost of Production, Heavy Fuel-oil at Refinery  48
(d.)   Method of bringing Fuel-oil Cost of Production up to date  48
Sec.   5.-—California   Dumping   Prices   dominate   Heavy   Fuel-oil   Prices   in   British
Columbia  48
(a.)   Heavy Fuel-oil Prices not based on Cost of Production and Distribution  48
(6.)   British Columbia Processed Heavy Fuel-oil has to compete with Imported
California Fuel-oil  49
Sec.   6.—Imperial  Oil   Statements  concerning effect  of  California  Heavy  Fuel-oil
Dumping Prices     50
(a.)  Heavy Fuel-oil imported from Seattle at less Price than Vancouver Posted
Prices      50
(6.)   Excerpts from Correspondence between Imperial Oil, Limited, Head Office
and Vancouver Office relating to California Fuel-oil Competitive Prices  50
Sec.   7.—The Dumping Duty Provisions have not been enforced against Importations
of California Heavy Fuel-oil                                         . .     50
(a.)   The 75-cent California Export Heavy Fuel-oil Price was a Dumping Price 50
(&.)  The Dumping Duty was not enforced against California Fuel-oil  51
(c.)  British  Columbia Processed  Fuel-oil unable to  compete with California
Dumping Prices  51
(d.)   Continuation thereof  51
Sec. 8.—Comparison of Imperial Oil Heavy Fuel-oil Prices in Vancouver with Laid-
down California Prices  52
(a.)  Manner in which California Fuel-oil imported  52
(&.)   Influence   of   California   Fuel-oil   Prices  on   British   Columbia   Industrial
Prices  52
(c.)  Average British Columbia Heavy Fuel-oil Prices, 1934-1935  53
Sec,   9.—Competition   between   British   Columbia   Processed   Heavy   Fuel-oil   and
imported California Heavy Fuel-oil  57
(a.)  Imperial Oil Correspondence relating thereto  57
(6.)  California and Washington Fuel-oil could be imported for Lower Price
than loco Heavy Fuel-oil  58
(c.)  Breakdown of imported California Fuel-oil Prices as laid down in Vancouver
in 1935  59
gec- io.—Economic Heavy Fuel-oil Prices delivered at Consumer's Plant in Vancouver 59
(a.)  Economic Delivered Price of Heavy Fuel-oil to Vancouver Building Heating
Plant, 1935  59
(6.)  British   Columbia   Costs   of   Heavy   Fuel-oil   accepted   in   preference   to
Imported Prices  .  60
(c.)  Reasons therefor ,  61 GENERAL INDEX.
Page.
CHAPTER IV.—THE  TRUE  COMPARISON  OF  COAL AND  HEAVY FUEL-OIL
CONSUMED   IN   BUILDING   HEATING   PLANTS   OF   THE   NATURE
DESCRIBED IN CHAPTER II  63
Sec.   1.—Tests  between  Coal  and  Heavy  Fuel-oil  conducted  in  the  Eastgate  and
St. Clair Hotels, Chicago, in November and December, 1930  63
(a.)   Conditions under which the Tests arose  63
(6.)  Detail of Chicago Tests  63
(c.)  Analysis thereof in respect to Fuel Superiority .  67
(d.)  Detail of Actual Operation compared to Tests  67
(e.)  Explanation thereof ..  71
Sec.   2.^Discussion of Costs arising from Labour and Ash Removal in the St. Clair
Hotel since Installation of Coal-burning Plant  71
(a.)  Ash Removal Costs   71
(6.)   Extra Labour in Coal-burning Plants discussed  71
Sec.   3.—Remarks upon Chemical Analysis of Mid-western  (U.S.)  and Vancouver
Island Coals   72
(a.)   Introduction  I 72
(6.)   Analyses of Nanaimo and Comox Coals  72
Sec.   4.—Discussion of the Methods adopted in applying the Results obtained in the
Chicago Tests to Building Heating Plants in this Province  73
(a.)  Description of Coals and Heavy Fuel-oils      73
(6.)   Basis upon which Chicago Tests apply to British Columbia Building Heating Plants  73
(c.)   Method of Application  74
(d.)  Approval  of  Commercial   Testing  &  Engineering  Company  and  British
Columbia Technical Advisers  74
(e.)   Coal and Heavy Fuel-oil give more or less Equal Results  75
Sec.   5.—Reduction of Coal and Heavy Fuel-oil to Equivalent Quantities based on
Evaporation Results related to B.T.U. Value  75
(a.)  Method  75
(6.)   Calculations  pursuant  to   Method  75
(c.)   Continuation thereof  76
(d.)  Continuation thereof  76
Sec.   6.—Depreciation and Maintenance in Coal and Heavy Fuel-oil use in Building
Heating Plants  77
(ft.)   Nature of Depreciation  77
(b.)  Maintenance, Renewals and Replacements  77
(c.)   Life of Coal Burning and Oil Burning Equipment  77
Sec.   7.—Depreciation and Maintenance as applied to Coal and Heavy Fuel-oil Burning Equipment in Building Heating Plants  78
(a.)   Method  78
(b.)  Comparative Capital and Operating Costs of fully mechanized Coal and
Heavy  Fuel-oil  Burning Plants,  comparable to  Eastgate  and  St.  Clair
Hotels with Fuel Consumption equivalent to 500 Tons of Coal per Annum 78
(c.)  Discussion  thereof  79
(d.)  Applied to British Columbia  79
Sec.   8.—Wherein we arrive at a Comparision of the Heat Value of a Designated
Coal and a Designated Heavy Fuel-oil in Building Heating Plants  80
(a.)   Detail thereof  80
(b.)  Superiority of Coal as Fuel ascertained  80
(c.)   Comparision of the two Fuels in Terms of Economic Prices  80
(d.)  Conclusions that Nanaimo and Comox Coals are Superior to Heavy Fuel-oil 81
(e.)   Remarks upon Results from above Comparisons   82
(/.)  Results compared in terms of Economic Prices   82 GENERAL INDEX.
CHAPTER IV.—Continued. Pace.
Sec.   9.—Retail Distribution Charges of Coal must be substantially reduced if it is to
compete with Heavy Fuel-oil sold at Economic Delivered Prices to Building
Heating Plants  82
(a.)  Different Types of Purchasers considered  82
(6.)  Discussion of Retail Distribution Charges as affecting Economic Delivered
Prices  83
(c.)   Analysis   thereof  84
(d.)  Results flowing therefrom  84
(e.)  Results show necessity for Central Coal Distributing Depots  85
(/.)   Further remarks thereon  85
(g.)  Continuation thereof  86
(h.)   More or less similar Recommendation by Forster, Brown & Rees, Cardiff,
Wales, Mining and Civil Engineers, in 1910  86
(i.)  Conclusion  86
CHAPTER V.—ANALYSIS OF THE EVIDENCE TOGETHER WITH COST TABLES
RELATING TO THE BURNING OF COAL AND HEAVY FUEL-OIL FOR
INDUSTRIAL AND MANUFACTURERS'  HEATING  AND  FOR  POWER
PURPOSES IN STATIONARY PLANTS  87
Sec.   1.—Nature  and  Extent of  Comparative  Use  in  this  Province  of  Coal  and
Heavy Fuel-oil for Industrial and Manufacturers' Heating and for Power
Purposes  87
(a.)   Extent of Use  87
(&.)  Pulp and Paper Mill Annual Consumption of Heavy Fuel-oil  87
Sec.   2.—Inquiry as to whether there was a Lack of Continuity of Coal Supply which
caused the Pulp and Paper Companies to change from the use of Coal to
Heavy Fuel-oil  88
(a.)   Statement of issues raised by Pulp Companies  88
(6.)   Powell River Company, Limited, 1921 Incident  88
(c.)  B.C. Pulp and Paper Company, Limited, Port Alice Incident  89
Sec.   3.—Study of alleged Lack of Continuity of Coal Supply put forward by Pacific
Mills, Limited  89
(a.)  Pacific Mills incident  89
(&.)   Result thereof     90
Sec.   4.—Discussion of the Evidence put forward by the Pulp and Paper Companies
alleging that Coal as a Fuel was not as efficient as Heavy Fuel-oil   91
(a.)   B.C. Pulp and Paper Company, Limited Statement analysed  91
(6.)   Analysis Pacific Mills, Limited, Evaporation Results  91
(c.)   Continuation thereof  ....   92
(d.)  Particulars of Chicago Power Plant and Industrial Tests  92
(e.)   Analysis thereof  93
(/.)   Conclusion relating to Coal and Heavy Fuel-oil compared as Fuels  94
Sec.   5.—Analysis of Evidence put forward by Pulp and Paper Companies that Coal
costs more than Heavy Fuel-oil  94
(a.)  Competitive prices  94
(&.)  Breakdown  Pacific  Mills,  Limited,   Coal  and  Heavy  Fuel-oil  Delivered
Prices  95
Sec.   6.—British  Columbia  Production  Cost  Figures  as  found in  the  Petroleum
Report are accepted as Basis for Coal Comparision instead of Imported
Heavy  Fuel-oil  Figures  96
(a.)  Pacific Mills California Heavy Fuel-oil Price  96
(b.)  Continuation thereof  96
(c.)  Continuation thereof  97
Sec.   7.—Economic Delivered Prices of Heavy Fuel-oil and Vancouver Island Coals
at Ocean Falls  97
(a.)  Economic Delivered Prices of Coal and Heavy Fuel-oil at Ocean Falls,
1935  97
(b.)  Distribution Charges of Heavy Fuel-oil delivered at Ocean Falls    98 xxiv. GENERAL INDEX.
CHAPTER V.—Continued. Page.
Sec.   8.—Ash Removal and Extra Coal Labour Costs considered     99
(a.)  Pacific Mills Comparative Personnel in Coal and Heavy Fuel-oil use     99
(b.)  Ash Removal Costs    99
Sec.   9.—Depreciation and Maintenance Cost Factors applicable to Fuel Comparisons in Industrial and Stationary Power Plants  100
(a.)  Comparative Cost of Pulverized-fuel-fired, Stoker-fired and Oil-fired Boiler
Units as supplied by Commercial Testing & Engineering Company  100
(6.)  Depreciation and Maintenance Costs therein compared  101
Sec. 10.—Comparison of Coal and Heavy Fuel-oil in Industrial and Stationary Power
Plants based on Analysis of Pacific Mills Statements  101
(a.)  Discussion Economic Delivered Prices at Pacific Mills Plant of Coal and
Heavy Fuel-oil  101
(6.)  Comparison thereof in Terms of Economic Price Relationship  102
(c.)   Savings in cost in use of Coal in Industrial and Stationary Power Plants
where Delivery direct from Mine and Refinery to Plant  103
(d.)   Results applied to Pacific Mills Example  103
(e.)  Conclusions therefrom  104
(/.)  Continuation thereof  104
Sec. 11.—Use of Pulverized Coal in Industrial and Power Plants as compared with
Automatic Coal-firing and Heavy Fuel-oil  104
(a.)  New construction favours Pulverized Coal Use  104
(6.)  Discussion thereof  105
(c.)  Some Advantages of Pulverized Fuel over Stoker-fired Coal  106
(d.)  Fly-ash Disposal  106
(e.)  B.C. Sugar Refinery, Limited  106
(/.)   Advantages of Pulverized Coal in Out-of-town Power Plants  107
CHAPTER VI.—ANALYSIS OF THE EVIDENCE RELATING TO THE CONSUMPTION OF COALS AND HEAVY FUEL OILS IN RAILWAY LOCOMOTIVES IN BRITISH COLUMBIA  109
Sec.   1.—Consumption of Heavy Fuel-oils in Railway Locomotives in the Province in
relation to Coal   109
(a.)   Extent of Railway Locomotive Fuel-oil Consumption  109
(6.)   Discussion as to why so much Heavy Fuel-oil used in Railway Locomotives
in this Province  109
(e.)   Number  of  Oil-burning  and   Coal-burning  Railway  Locomotives  in  the
Province  110
(d.)  Railway Locomotives Heavy Fuel-oil and Coal Consumption  110
Sec.   2.—Outline of Reasons given by Railway Officials for use of Heavy Fuel-oil in
Locomotives in British Columbia .  111
(a.) Witnesses „  111
(6.)  Arguments advanced in favour of Heavy Fuel-oil -.  112
(c.)  Evidence  relating to  Preponderating use  of  Heavy  Fuel-oil  in  British
Columbia Railway Locomotives  112
Sec.   3.—Analysis of Canadian Pacific and Canadian National Railways' evidence
relating to convenience for Faster and more Regular Service by the Use of
Heavy Fuel-oil in Railway Locomotives in British Columbia  114
(a.)  Analysis of evidence  114
(b.)  Evidence of Northern Pacific Railway Official in reply thereto  115
(c.) Canadian Pacific Reasons founded on Competition with American Railroads 116
Sec.   4.—Study of the Physical Characteristics of British Columbia in relation to the
Use of Coal and Heavy Fuel-oil in Railway Locomotives  116
(a.)  Canadian  Pacific  Argument for  Heavy  Fuel-oil based  on  Mountainous
Character of Province  116
(6.)  Memorandum from Mr.  D.  O.  Lewis  comparing Railway  Gradients  in
British Columbia with those in the Prairie Provinces  117 GENERAL INDEX.
CHAPTER VI.—Continued.
Section 4—Continued. Page.
(c.)  Analysis Canadian National Railway grades -  123
(d.)  Analysis Canadian Pacific Railway grades  123
(e.)  Reference to Supplementary Memorandum on Statement of D. 0. Lewis  123
(/.)   Conclusions thereon  124
Sec. 5.—Study of the Physical Characteristics of the Country through which Canadian Railways operate as compared with the Northern Pacific  124
(a.)  Comparison Northern Pacific Railway Profile with Profiles of Canadian
Pacific and Canadian National  124
(6.)  Comparative Passenger Train Schedules Canadian Pacific, Canadian National and Northern Pacific Railways  129
Sec.   6.—History of Coal and Heavy Fuel-oil use in Railway Locomotives in British
Columbia  130
(a.)  Canadian Pacific  130
(6.)   Canadian National  131
(c.)   Heavy Fuel-oil Prices at Material Times  131
Sec.   7.—No Comparative Tests of Coal and Heavy Fuel-oil in Railway Locomotives
have been conducted in British Columbia  131
(a.)  Analysis of Evidence thereon  131
(6.)   Only tests were Amount paid out for Fuel at End of Year  132
(c.)  Canadian National did not conduct any Tests in British Columbia  Lj
Sec. 8.—Analysis of Canadian Pacific Railway Tests in Alberta between Coal and
Heavy Fuel-oil and application thereof to Comox Coal and British Columbia Heavy Fuel-oil  133
(a.)  Description of Enman Tests  133
(6.)  Conclusions therefrom  134
(c.)  Applicability of Canadian Pacific Alberta Tests to British Columbia Operating Conditions  134
(d.)   Continuation thereof  135
(e.)   Northern Pacific Railway 1935 Tests  135
(/.)  Missouri Pacific Lines Tests  136
Sec. 9.—Wherein we discuss Competitive Prices of Coal and Heavy Fuel-oil for
Railway Locomotive Use and find the  Economic  Delivered  Prices  that
should apply  136
(a.)  Canadian Pacific Railway 1935 stated Laid Down Competitive Price at
Vancouver of Coal and Heavy Fuel-oil  136
(6.)   Economic Delivered Price of Comox Coal at Vancouver for Railway Locomotive Use in 1935  136
(c.)   1935 Economic Delivered Price of British Columbia Processed Heavy Fuel-
oil at Vancouver for Railway Locomotive Use.  137
Sec. 10.—Coal sold at Economic Delivered Prices costs less than Heavy Fuel-oil for
Railway Locomotive Use in British Columbia  137
(a.)   Saving shown in use of Coal if both Fuels sold at Economic Delivered
prices  137
(6.)   Saving shown on Coal  consumed in Locomotives  on  Basis of  Economic
delivered Prices of both Fuels  138
Sec. 11.—Consideration of Canadian National Toronto-Sarnia Locomotive Fuel Tests 139
(a.)  Canadian National Toronto-Sarnia Tests  139
(6.)  Canadian National Tests not conclusive .  139
Sec. 12.—Conclusion ,  139
(a.)  Other Cost Factors to be considered  139
(6.)  Final Conclusion  140
CHAPTER VII.—FIRE-HAZARDS  141
Sec.   1.—General Observations . .  141
Sec.   2.—Conflicting Opinions  142 GENERAL INDEX.
CHAPTER VII.—Continued. Page-
Sec.   3.—Tests  142
Sec.   4.—Tests on American Railways  144
Sec.   5.—Fire-hazards in Fuel-Oil-burning Locomotives  145
Sec.   6.—Laboratory and Research Work  145
Sec.   7.—A General Survey of Evidence as to Fire-hazard from Coal-burning Locomotives  146
Sec.   8.—Evidence indicating that there is Little Danger of Fire from Stack of Coal-
burning Locomotives properly equipped  146
Sec.   9.—Evidence indicating that there is Danger of Fire escaping from Stacks of
Coal-burning Locomotives  149
Sec. 10.—Danger of Fire from Ash Pans in Coal-burning Locomotives   150
Sec. 11.—General  151
Sec. 12.—Logging Locomotives and Stationary Equipment in Logging Operations  152
Sec. 13.—Conclusions  155
CHAPTER VIII.—COMPARATIVE  USE  OF  COAL AND  HEAVY FUEL-OIL IN
BRITISH COLUMBIA SHIPPING  157
Sec.   1.—Use of Heavy Fuel-oil in British Columbia Coastal Shipping  157
(a.)  Vessels operated by Canadian Pacific  157
(6.)  Vessels operated by Canadian National  157
(c.)   Vessels operated by Union Steamships  158
(d.)  Heavy Fuel-oil Consumption in Coastal Waters, 1934  158
Sec.   2.—Reasons stated by Canadian Pacific Steamships in favour of Heavy Fuel-oil
Consumption in Coastal Vessels  158
(a.)  Time taken to fuel with Coal  159
(6.)  Bunkering Coal would interfere with loading of Automobiles and Cargo  159
(c.)   Cargo Space on Alaska Ships  159
(d.)  Heavy Fuel-oil more Comfortable for Passengers  159
(e.)   Other Reasons advanced  159
Sec.   3.—Reasons given by Canadian National and Union Steamships for burning
Heavy Fuel-oil instead of Coal in Coastal Shipping  159
(a.)   Canadian National could not maintain existing Services with coal Burners 159
(6.)   Union Steamships advanced same Argument  159
Sec.   4.—Analysis of the Argument for use of Heavy Fuel-oil in Coastal Ships as
set out in Sections 2 and 3, supra  160
(a.)   Tacit Admission by General Manager, Canadian  Collieries,  of  Shipping
Viewpoint above outlined  160
(6.)   Analysis of Arguments advanced in the Light of Experience of Mechanically Stoked Vessels in Great Britain  160
(c.)   Reference to Mechanically  Stoked " Duke of York," of Heysham-Belfast
Service  161
Sec.   5.—Reference to Mechanically Stoked Coastal Vessels recently constructed in
Great Britain  161
(a.)  Description of " Duke of York "  161
(6.)  Discussion of Cargo Space Argument  162
(c.)   Summary of Shipping Statements obtained from Great Britain  163
(d.)  Further Discussion thereof  163
Sec.   6.—Tugs and Towboats  164
(a.)  Outline of Evidence  164
(6.)  Opinion divided as to Comparative Merits of Heavy Fuel-oil and Hand-
fired Coal  164
(c.)   Conclusions  165
Sec.   7.—Use of Coal and Heavy Fuel-oil in Ocean-going Vessels .  166
(a.)  Coal-burning Cargo Vessels  166
(6.)  " Empress of Asia " and " Empress of Russia " burn Coal  166
(c.)   On the Atlantic  167 GENERAL INDEX. xxvii.
CHAPTER VIII.—Continued.
Section 7—Continued. Page.
(d.)   Canadian National Australia and West Indies Services  167
(e.)   As to reduction in Stokehold Personnel when Mechanical Stokers used  167
Sec.   8.—Use of Coal and Heavy Fuel-oil in Ferries and Fishing Vessels  167
(a.)  Ferries  167
(6.)  Fishing Vessels  168
Sec.   9.—Discussion of Comparative Economic Values of the Use of Coal and Heavy
Fuel-oil in the British Columbia Coastal Service  168
(a.)   Summary thereof  168
(6.)  Conclusions  168
CHAPTER IX.—REVIEW SUMMARY AND CORRELATION OF FINDINGS ON
THE EVIDENCE PRESENTED TO THE COAL AND PTROLEUM PRODUCTS COMMISSION "  169
Sec.   1.—Preliminary  Conclusions  as to  Suitability of British  Columbia  Coal  for
Modern Use  169
(a.)   Thoroughness of Basic Cost Inquiries  169
(6.)  British Columbia Coals Suitable and Convenient Fuels adaptable to Modern
Uses  169
(c.)   Coal and Heavy Fuel-oil are in general Equally Suitable, subject to Design
and Operating Conditions  170
(d.)  Advantage rests with Coal if both Fuels sold at Economic Delivered Prices 170
(e.)   It is good Engineering and good Economics to design Steam Plants to use
the Fuels nearest at hand  170
Sec. 2.—Necessity for Regulation of the Price of Gasoline on the basis of a uniform
and adopted Costing Method if the Coal Mining Industry is to be saved
from extinction  170
(a.)  Introduction  170
(6.)  Oil Companies have Coal Mining Industry virtually at their Mercy  171
(c.)   Definition of Just and Reasonable Price  171
(<£)   Explanation of Product Sales Method employed by Oil Companies  172
(e.)   Explanation of Product Cost Method accepted by Commission  172
(/.)   Economic Gasoline Prices as found in Petroleum Report  173
(g.)  Application of Petroleum Report Cost Tables to Present Prices  173
(h.)  Price Regulation to be based  on  Adopted  Costing  Method under which
Prices will not be subject to expediency nor fixed in an Arbitrary Manner 174
(i.)   Extent of Consumption of Heavy Fuel-oil in British Columbia, compared
with other Portions of the World  174
Sec. 3.—Drastic Reduction of Gasoline Service-stations is an Important Element in
the Reduction of Gasoline Prices and Consequent Preservation of the Coalmining Industry  174
(a.)  General Demand for Regulation of Gasoline as a Public Utility  174
(6.)   Oil Companies control 93 per cent, of Service-stations and Gasoline Outlets 175
(c.)   Service-station Dealers for the most part were making a Bare Existence
even at the Excessive Spread   (Retailer's Margin)   existing all over the
Province  176
(d.)  No Real Loss of Employment need be expected from Drastic Curtailment
of Service-stations  176
(e.) If the Price of Gasoline is reduced to the Extent it should be, Heavy Fuel-
oil will be bearing its own Fair Share of Cost and compete with Coal on a
Fair Comparative Costs basis  177
Sec.   4.—The Commission Terms are Premised on the Principal that Sales below Cost
are Uneconomic—effect thereof on Costing method  178
(a.) The Price of Gasoline is now and has been fixed for many years by the Oil
Companies, with no relation to Reasonable Costs of Production and Distribution  178 GENERAL INDEX.
CHAPTER IX.—Continued.
Section 4—Continued. Page.
(5.)  The Commission Terms are based on the Premise that Sales below Cost are
contrary to Economic Welfare  178
(c.) Canadian Collieries are particularly associated with the Principal of Sales
below Cost  178
Sec.   5.—Costing and Distribution Problems of Different Kinds exist in the Coal and
Oil Industries  179
(a.)   Remarks on Costing Methods  179
(6.)   Remarks  on  Methods  of  Distribution  179
Sec.   6.—Depreciation Charges in the Coal-mining Industry  179
(a.)  Canadian Collieries  179
(6.)   Continuation thereof  179
(c.)   Continuation thereof  180
Sec.   7.—Marketing and Distribution of Heavy Fuel-oil and Coal  180
(o.)   Two classifications of Distribution  180
(6.)  Where delivery is made direct to Consumer's Plant      181
Sec.   8.—Necessity for Reduction of Mining Costs in Vancouver Island Coal Mines.— 181
(a.)  Problem originally presented  181
(b.)  Report of George Watkin Evans  182
(c.)   Some Conclusions therefrom  183
Sec.   9.—Canadian Collieries Coal Sales below Stated Cost at Mine—analysis thereof
with some Conclusions  183
(a.)  Canadian Collieries showed 50 per cent, of its Sales below Cost of Production   183
(6.)  Domestic Consumer has Complaint    183
(c.)   Continuation thereof  183
Sec. 10.—Importance of a Fair and Uniform Return upon Capital reasonably and
necessarily invested in relation to Just and Reasonable Prices to the Consumer  184
(a.)  Return on Investment is included in ascertainment of Reasonable Capitalization  184
(6.)   Price Regulation in assuring Adequate Returns on Capital would be apt to
attract Capital  184
Sec. 11.—Coal not sold at Economic Delivered Prices cannot compete in Building
Heating Plants with heavy Fuel-oil sold at Economic Delivered Prices  185
(a.)   Heavy Fuel-oil does not compete with Coal in Household Use  185
(6.)   For Coal to compete with Heavy Fuel-oil in Building Heating Plants Reductions in Mining and in Distribution costs must take place  185
(c.)  Present Coal Distribution Spreads assist in greater use of Furnace-oil and
Heavy Fuel-oil  185
Sec. 12.—Coal Sales to Domestic Consumers—Economic Delivered Prices thereof
related to Character of Distribution Service when compared with Building
Heating Plant Deliveries  186
(a.)  The Delivered Price to the Domestic Consumer should not be loaded with
Charges attributable to Lower Delivered Prices to Larger Consumers  186
(6.)  Reasons for High Coal Distribution Charges  186
(c.)  Coal Problems approached on more General Use of Automatic Coal-burning Equipment  187
Sec. 13.—Application of the Conclusions reached in the Coal Report and in the Petroleum Report to the Comparision of Coal and Heavy Fuel-oil as Economic
Fuels  187
(a.)  Economic Prices and not Competitive Prices had to be used for Fuel Comparision t  187
(6.)  Fuel Comparision in Industrial and Stationary Power Plants and Railway
Locomotives _.„..      187
(c.)  Fuel Comparision in Coastal Vessels and Tugs .    188 GENERAL INDEX. xxix.
CHAPTER IX.—Continued.
Section 13—Continued. Page.
(d.)  Difference in Coal and Heavy Fuel-oil flexibility is more a Matter of Convenience  188
(e.)   Reference to other Incidental Matters  188
(/.)  Necessity for Coal Research and Scientific Study  189
CHAPTER X.—ANSWER TO CIRCULATED STATEMENT OF CANADIAN COLLIERIES (DUNSMUIR) LIMITED OBJECTING TO CERTAIN FINDINGS
IN THE COAL REPORT  191
Commissioner's Introductory Statement  191
Sec.   1.—Objections to Coal Report as contained in Reply received 20th October, 1938
from Canadian Collieries  (Dunsmuir), Limited  193
(a.)  Analysis of Coal Company's Main Objections  193
(6.)   Study thereof does not alter any Conclusions in Coal Report  193
Sec. 2.—Further Discussion of the Objections to the Coal Report advanced by Canadian Colleries  194
(a.)   Conclusions in Coal Report relating to Capital Structure, approved by Price,
Waterhouse & Company and George A. Touche & Company  194
(6.) Conclusions in Coal Report relating to Depreciation and Profit Position
approved by Price, Waterhouse & Company and George A. Touche &
Company       194
(c.) Canadian Collieries' Reply not vouched for by Independent Chartered Accountants  195
(d.)  Reference to some Secondary and Minor Objections made by Coal Company 195
Sec.   3.—Relating to Canadian Colleries' Contention that $11,000,000.00 was a Fair
Purchase Price in 1910 and that accordingly the 1920 and Present Capital
Structure is justified thereby  195
(a.)   $8,000,000.00 paid for Coal Rights in 1910    195
(b.)  This fact supports Coal Report Conclusions as no reasonable Expectation
of Mining said Coal Rights for forty years in the Future  196
(c.)  Alleged Tonnage covers Estimated Reserve for 625 Years in the Future  196
(d.) $8,000,000.00 was borrowed at 5 per cent, interest to pay for Coal Rights
which could not reasonably be expected to be mined for Forty Years in the
Future    197
Sec.   4.—The 1910 Coal Rights Valuation was in fact written off in 1920  198
(«.)   This is shown by 1920 Records  198
(6.)   Corresponding $8,000,000.00 Bond Liability raised to purchase these Coal
Rights was not correspondingly written off     198
(c.) In the 1920 Reorganization the Bond-holders elected to remain as Mortgagees in Possession  198
Sec. 5.—The Valuation of the Coal Lands (as distinct from Coal Rights for which
$8,000,000.00 was paid) as found in the Coal Report is strengthened by
the Further Information submitted in Canadian Collieries' Reply  199
(a.)  Coal Report and other References thereto 1    199
(6.)  If Crow's Nest Pass Coal Company Capital  Structure built on similar
Principles,  it would be $144,000,000.00     199
(c.)   Analysis of Western Fuel Valuation by George Watkin Evans as stated
in  Canadian  Collieries'  Reply  199
Sec. 6.—Speculative Values of Intangible Assets should not be included in Capitalization of a Producing Coal Mining Company  200
(a.)  Opinions of George Oliver May expressed before United States Federal
Trade Commission thereon  200
(6.)   Such Intangible Assets should be excluded from Capitalization  200
(c.)  Purchase   and   Inclusion   of   these   Intangible   Assets   in   Capitalization
increased Cost and Selling Price of Coal  201 GENERAL INDEX.
CHAPTER X.—Continued. PAGB-
Sec.   7.—Depreciation Questions raised in Canadian Collieries' Reply  201
(a.)   Statement of Coal Company's two Main Objections  201
(6.)   Answer to Criticism of Method of Depreciation  201
(c.)  Answer to Objection that no Accurate Estimates can be made of Coal Recoverable from any particular Mine Opening  202
Sec.   8.—Canadian Collieries' Objection to Profit Position as found in Coal Report— 203
(a.)   Statement of Coal Company's two Main Objections  203
(6.)   Answer to Coal Company's Objection to inclusion of Bond Interest and
Bond Redemption Payments in Profit Position  203
(c.)   Continuation   thereof  204
Sec.   9.—Canadian Colleries charged Excessive Depreciation and used it for Other
Purposes  205
(a.)   Analysis of Depreciation Reserves as charged compared with 1934 Value
of Depreciating Assets      ....     205
(6.)   Large Depreciation Reserves forwarded in Cash to Montreal Office  205
(c.)   Company's  conduct  showed  that  Depreciation   Reserves  allowed  in   Coal
Report were not too Low when treated purely as Depreciation Reserves  205
Sec. 10.—Canadian  Collieries  have  not  substantiated  their  Objection  to  the  Coal
Report Finding, that Mining Costs can be reduced  206
(a.)  Preliminary Remarks thereon  206
(6.)  Dr. Gray does not assert that some Savings in Cost cannot be made  206
(c.)   Explanation of Table 69 Roslyn and Comox Flow Sheets  208
(d.)  Dr. Gray's Opinion is neither Specific nor Conclusive  208
(e.)  Mr. G. W. Evans is prepared to outline Ways of reducing Costs at Comox
and direct and supervise such a Programme, if requested  209
(/.)  Letters from Austin Corbin, Paul Shoup, Col. Sherwood Lett, and George
Watkin Evans  209
Sec. 11.—Reference to some Secondary Matters in Canadian Colleries' reply in addition to the Supplementary Memorandum    .   211
(o.)   Answer to Canadian Collieries Objections to Coal Company's Costs per Ton
.as stated in Coal Report ....   211
(6.)   Answer to Coal Company's Objection that Coal Rights under E. & N. Land
Belt were an Asset of Wellington Colliery Co., Ltd.  211
(c.)  Answer to Coal Company's objection to Coal Land Acreage at Nanaimo  212
Sec. 12.—Conclusion  212
(a.)  Preliminary statement  212
(6.)   Policy of Canadian Collieries' Bondholders to remain as Mortgagees in possession is a Source of Criticism  212
(c.)   Failure of Canadian Colleries to produce 1910 reports of Forster, Brown &
Rees, W. L. Coulson and Price, Waterhouse & Co., is a Source of Criticism 213
(d.)   Canadian  Collieries failed to  re-act favourably to  Carefully  Considered
suggestions regarding Reduced Costs of Mining  214
Supplementary Memorandum:
Answering in detail Specific Allegations of Error in Secondary Matters  215
Letter from George A. Touche & Company, 25th November, 1938, to effect
that no Accounting Principles, Figures or other Data submitted in
Canadain Collieries' reply in any Material Way refutes the Soundness
of the Conclusions arrived at in the Coal Report and Chapter X., now
concluded      220
APPENDICES   223
LIST OF EXHIBITS NOT LISTED IN COAL REPORT, VOLUME II.   481 INDEX TO TABLES IN VOLUME III.
Table
Number. Subject-matter. Page.
1. Fuel-oil Deliveries by Provinces, 1934-1936  5
2. Importation of Light and Heavy Fuel-oil, 1934-1936  5
3. Railway Locomotive Fuel-oil Consumption, 1934-1936  5
4. Specific Uses of Fuel-oil in British Columbia, 1934-1936  17
5. Specific Uses of Fuel-oil in British Columbia based on Deliveries and Consumption,
1934-1936  17
6. Cost of Heating 100 Square Feet of Radiation during Season  21
7. Table 6 adjusted to Recast Prices  21
8. Comparative Furnace-oil, Stoker Coal and Hand-fired Coal Heating Costs  21
9. Table 8 adjusted to Recast Prices  21
10. Table 9 adjusted to Improved Combustion with Automatic Coal-firing     22
11. Summary of Total Costs of Separate Mine Production per Short Ton Canadian Col
leries, 1932-1936     35
12. Summary of Nanaimo Wellington and Comox Coal Production available for sale per
Short Ton, 1932-1936     39
13. Comparison Comox and Michel Costs of Production, 1932-1936     43
14. Economic Price of Vancouver Island Coal per Short Ton in 1935 delivered Building
Heating Plants     47
15. Comparison of Laid-Down Vancouver Imported Heavy Fuel-oil Prices with Imperial
Oil Prices, 15th July, 1935     52
16. Union Oil 1934 and 1935 Heavy Fuel-oil Prices at Vancouver     55
17. Breakdown of Laid-Down Prices in Vancouver of imported California Heavy Fuel-oil
in Cargo Lots, July, 1935    59
18. Economic Price of Heavy Fuel-oil delivered to Building Heating Plants in Vancouver
July, 1935, where Delivery could not be made direct from Refinery to Plant     60
19. Comparative Tests of Coal and Heavy Fuel-oil conducted in the Eastgate and St.
Clair   Hotels,   Chicago,  by   Commercial   Testing  &   Engineering   Company   in
November and December, 1930, and January, 1931     65
20. Comparative Operating Results in the use of Coal and Heavy Fuel-oil as shown by
the Eastgate and St. Clair Hotels, Chicago  69
21. Average Analyses of Nanaimo Coals February 15th to March 15th, 1935  72
22. Average Analyses of Samples of Comox Coals during the Month of February, 1935 _ 73
22-A. Comparative Capital and Operating Costs of fully Mechanized Coal and Heavy
Fuel-oil Burning Plants, comparable to Eastgate and St. Clair Hotels with Fuel
Consumption equivalent to 500 Tons of Coal per Annum  78-9
23. Recapitulation Coal Delivered Prices 1936 basis, pages 294-301, Coal Report     83
24. Fuel-oil   Deliveries   for   Industrial   and   Manufacturers'   Heating   and   for   Power
Purposes     87
25. Comparative Merits of Coal and Heavy Fuel-oil as disclosed by Analyses of Pacific
Mills Limited Evaporation Figures     92
26. Comparative Merits of Coal and Heavy Fuel-oil as disclosed by Analyses of Evapora
tion in the Three Plant Tests conducted by Commercial Testing & Engineering
Company in Chicago  93
27. Pacific Mills Limited Breakdown of Heavy Fuel-oil Delivered Costs compared to Coal 95
28. Recast of Table 27 with Economic Delivered Prices at Ocean Falls  97
29. Gasoline Tanker Delivery Rates per Barrel ex loco  98
30. Pacific Mills Comparative Personnel in Coal and Heavy Fuel-oil Use   99
31. Comparative Cost of Pulverized-fuel-fired, Stoker-fired and Oil-fired Boiler Units  100
32. Comparative Capital Costs and Operating Costs of the Plants referred to in Table 31.. 101
33. Depreciation and Maintenance compared in Pulverized Coal, Stoker-fired and Heavy
Fuel-oil Plants  101
34. Method of finding equivalent number of Barrels of Heavy Fuel-oil of Designated
B.T.U. Value per Short Ton of Coal of Designated B.T.U. Value on Premise that
1,000 B.T.U.'s of Heavy Fuel-oil and Coal give equal Evaporation Results ._" ___. 103 INDEX TO TABLES.
Table
Number. Subject-matter. Page.
35. Analysis of Number of Industrial Power Plants, Central Stations and Paper Manu
facturing Companies which are mechanically stoked or burn Heavy Fuel-oil or
Pulverized Coal respectively  105
36. Heavy Fuel-oil consumed by Railway Locomotives in Canada, 1934-1936   109
37. Railway Locomotives in use in British Columbia, 1935  110
38. Railway Locomotive Consumption of Heavy Fuel-oil in British Columbia, 1934  111
39. British Columbia Coal reported as purchased for Railway Locomotive Consumption,
1936    111
40. Comparative Profiles of Canadian Northern, Canadian Pacific, Grand Trunk Pacific,
Great Northern, Northern Pacific, Union Pacific, Chicago-Milwaukee and Santa
Fe Railways  119
40a. Map showing Portions of Western Canada and Western United States above and
below 3,000 Feet Elevation, respectively  121
41. Comparative Profiles of Canadian National, Canadian Pacific and Northern Pacific
Railways  125
42. Profile of Northern Pacific Railway superimposed on respective Profiles of Canadian
National and Canadian Pacific Railways ■.  127
42a. Comparative Passenger Train Schedules, Canadian Pacific, Canadian National and
Northern Pacific Railways  130
43. Detail of Canadian Pacific Railway Locomotive Tests Calgary-Red Deer, May, 1931— 134
44. Canadian Pacific Calgary-Red Deer Locomotive Tests applied to Comox Coal and
British Columbia Processed Straight-run Heavy Fuel-oil  (Appendix 44 hereto)   433
45. Extension of Table 44 (Appendix 44 hereto)  433
46. Canadian Pacific Railway 1935 stated Laid-down Competitive Prices at Vancouver,
of Comox Coal and Heavy Fuel-oil  136
47. 1935 Economic Delivered Price of Comox coal at Vancouver for Railway Locomotive
use   137
48. 1935 Economic Delivered Price of British Columbia Processed Heavy Fuel-oil at
Vancouver for Railway Locomotive Use  137
49. Aproximate Comparison of Comox, Middlesboro, Coalmont, Coal Creek and Michel
Estimated Costs with Heavy Fuel-oil for Railway Locomotive Use, based on
Canadian Pacific Red Deer-Calgary Tests  138
50. Detail  of  Northern  Pacific  Railway  Coal  and  Heavy  Fuel-oil  Locomotive   Tests
(Appendix 45  hereto) _•_ 435
51. Particulars  of  Missouri  Pacific  Lines  Coal  and  Heavy  Fuel-oil  Locomotive  Tests
(Appendix  46  hereto)  437
52. Extension of Table 51 (Appendix 46 hereto)  437
53. General Summary of Canadian National Railway Toronto-Sarnia Locomotive Tests
May-June, 1932 (Appendix 11 hereto)  265
54. Canadian National Locomotive Tests in greater detail (Appendix 47 hereto)  439
55.
■ Table Numbers overlapped
Comparative  Forested  Mileage  in  relation  to   Special  Fire  Patrols  Required  by
Provinces  142
59. Related Particulars of Losses from Railway Fires  142
60. Total Number of Steam Locomotives owned and Damage Claims paid for Fires along
Rights of Way alleged to have been set by Steam Locomotives (Missouri Pacific
Lines)  148
61. New York Central Railroad Record of Fires 1924-1931  149
62. Railway and Forested Mileage by Provinces 1930-1936  151
63. Total Railway Fires in Canada with Related Particulars 1930-1936 _   151
64. Canadian Pacific Coastal Vessels (British Columbia)  157
65. Canadian National Vessels (British Columbia)  157
66. Union Steamships, Limited, Coastal Vessels  158 INDEX TO TABLES.
Table
Number. Subject-matter. Page.
67. Canadian Pacific, Canadian National and Union Steamships Consumption of Heavy
Fuel-oil in Coastal Waters, 1934  158
68. Heavy Fuel-oil consumed in British Columbia for Bunkering 1934-1936  158
69. Diagram of Flow Sheets of Coal from the Face of Workings in Roslyn and Comox
Mines to the Railway Cars  207 INDEX TO APPENDICES IN VOLUME III.
Distinguishing
Number. Subject-matter. PAGE.
1. Statement from Chief Inspector of Mines relating to Output of Coal in B.C. Coal
Mines, 1876-1934   (Exhibit 632)  223
2. Summary of Representations made to Provincial Economic Council October, 1934
(Exhibit 783)  225
3. Correspondence  relating  to   Tariff  Board  Reference  No.   84  respecting  Petroleum
and its Derivatives  237
4. Transcript  of  Evidence,  pages  6817  to  6831,   relating  to  failure  of   Counsel  for
Canadian Collieries to Cross-examine Railway Witnesses  239
5. Vancouver School Board Oil-burning and Coal-burning Statements  (Exhibit 619)  245
6. Memorandum from Chief Engineer, Vancouver School Board, regarding Fuel Com
parisons   (Exhibit  694)  247
7. Fuel-oil Deliveries by Provinces (Exhibit 784)  251
8. Table showing Comparison of Coal and Fuel-oil on Various Price Bases and Various
Types and Sizes of Plants as presented by Canadian Collieries (Exhibit 703)  253
9. Memoranda by Messrs. D. 0. Lewis and K. Moodie on Canadian National Railway
Toronto-Sarnia Locomotive Fuel Tests (Exhibits 805-807)  255
10. Memorandum   from   David   Spencer,   Limited,   Vancouver   respecting   Coal-burning
Plant  (Exhibit 704)  263
11. Summary of  Canadian  National  Locomotive  Tests  Toronto-Sarnia   (Exhibit  595)
(Table  53)  265
12. Vancouver School Board Fuel Purchase Statement (Exhibits 617-618) .  267
13. Report of Commercial Testing & Engineering Company, Chicago, dated 22nd August,
1938, on Tests conducted in the Eastgate and St. Clair Hotels (Exhibit 788)  269
14. Analyses of British Columbia Coals  (Exhibit 786)  277
15. Contract between Union Oil Company of California and Imperial Oil, Limited, dated
2nd January, 1932, with Supplementary Letters  (Exhibit 358)  279
16. Contract between Union Oil Company of Canada, Limited, and  Canadian Pacific
Railway, dated 27th December, 1934 (Exhibit 410) _.  289
17. Imperial Oil Heavy Fuel-oil Cargo Prices from 1st January, 1930 (Exhibit 426)   295
18. Report of Commercial Testing & Engineering Company, dated 22nd August, 1938,
on Stationary Power Plants   (Exhibit 788)   299
19. Report of Commercial Testing & Engineering Company, dated 22nd August, 1938, on
Pulverized Coal  (Exhibit 788)  313
20. Computation of Heavy Fuel-oil Equivalence with Nanaimo Coal on basis of Evapora
tion as referred to in Section 8 (c), Chapter IV  317
21. Computation showing Economic Factors included in difference in favour of Nanaimo
Coal compared with Heavy Fuel-oil consumed in a Building Heating Plant and
based on Economic Delivered Prices (refer Section 8 (c), Chapter IV.)  319
22. Chemical Analyses of Comparative Coal and Fuel-oil Pacific Mills, Limited (Exhibit
790) .  321
23. Computation of Heavy Fuel-oil Equivalence and Coal based on Evaporation  (refer
Section 4  (c), Chapter V. hereof)  323
24. Detail of Canadian Pacific Railway Calgary-Red Deer Tests (Exhibit 592)  325
25. Proximate Analysis various Coals used in Canadian Pacific Railway Locomotives m
British Columbia and Statement showing Fuel-oils used in its Locomotives in
British Columbia  (Exhibit 582)  329
26. Canadian National Railway Comparison Laid-down Costs of Vancouver Island and
Alberta Coals (Exhibit 593-A)  333
27. Reprint from "Marine Engineer," July,  1935, relating to  S.S. "Duke of York"
(Exhibit 776-B) _  335
28. Correspondence with Agent-General's Office in London, relating to use of Coal by
S.S. "Duke of York" (Exhibit 777)  341
29. Photographs of Boiler House, Interior of Boiler House and Pneumatic Ash-ejector,
University of British Columbia  345 INDEX TO APPENDICES. xxxv.
Distinguishing
Number. Subject-matter. Page.
30. Correspondence relating to Northern Pacific Railway Locomotive Tests   (Exhibits
798 and 799)._._  349
31. Correspondence with Missouri Pacific Lines relating to comparison of Coals versus
Oils for Locomotive Use (Exhibit 800)  351
32. Analysis of Coals used on 20th Century Passenger Train between New York and
Chicago, New York Central (Exhibit 772)  357
33. Excerpts from Evidence relating to Known Coal Reserves of Canadian Collieries and
Western Fuel with Acreage and opportunity of Mining same, etc  359
34. Extract from Pages 8024-8043 of Evidence of Roger Rolleston West, B.A., A.M.Inst.
C.E., relating to Improvements in the Use of Coal  377
35. Report of Smith, Emery & Company, San Francisco, 9th October, 1936, relating to
Methods adopted in Recovery and Preparation of Crude oils, with particular
reference to Natural Gasoline   (Exhibit 752)  383
36. Memorandum from  Commercial  Testing &  Engineering  Company,  3rd  November,
1938, relating to Depreciation and Maintenance of various Types of Heating
Plants (Exhibit 820)  393
37. Supplementary Memoranda to Memorandum of D. O. Lewis, M.E.I.C, M.Inst. C.E.,
relating to Physical Characteristics of British Columbia Railroads (Exhibit 823)  401
38. Correspondence  with  Commercial   Testing  &  Engineering  Company  in  respect  to
Depreciation and Maintenance Charges in Building Heating Plants   (Exhibit
826)  409
39. Memorandum relating to Standard Oil of British Columbia, November, 1938 (Exhibit
837)  411
40. Detailed Chemical Analysis Comox Coal (refer Appendix 25)   (Exhibit 846)  413
41. " Coal Resources of Southern Vancouver Island," by J. D. Mackenzie, June 1st, 1923
(Exhibit 164)  415
42. Proximate Analyses of 20 Samples of Vancouver Island Coals from September 1st,
1936, to October, 1938  (Exhibit 840)  429
43. Carload Rate in Cents per Hundred Pounds of Coal in effect May, 1935  (Exhibit
344)  431
44. Detail of Canadian Pacific Railway Tests as contained in Tables 44 and 45  433
45. Northern Pacific Railway Tests as contained in Table 50   435
46. Missouri Pacific Lines Locomotive Tests as determined by  Standing Evaporation
Tests, as contained in Tables 51 and 52  437
47. Canadian   National   Railways,   Toronto-Sarnia   Locomotive   Tests   as   contained   in
Table 54 ,  439
48. Comparison between Canadian National Railways Heavy Fuel Oil-burning Freight
Locomotive Tests Nos. 10 and 11, and Canadian Pacific Railway Calgary-Red
Deer Coal-burning Freight Locomotives (refer Appendix 47 and Table 43)     _ 441
49. Statement of Canadian  Collieries   (Dunsmuir),  Limited, upon report of Coal and
Petroleum Commission   (Exhibit 814) :.  443
50. Boiler-furnace Efficiency and Evaporation Curves from New York Central Railway
(Exhibit 849)  463
51. List  of  certain  Vacant  Properties  in   Greater  Vancouver  registered  in  name   of
Imperial Oil, Limited  471
52. Copy of letter 27th July, 1938, from Commissioner to Mr. H. G. Hinton, Branch
Manager Victoria, of George A. Touche & Company  479 

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
https://iiif.library.ubc.ca/presentation/cdm.bcsessional.1-0307539/manifest

Comment

Related Items