Chips of a gold‐silver alloy were made by orthogonal cutting with apparatus which permitted the determination of the chip geometry and cutting forces. From these data the stresses and strains and the shear and friction energies were calculated. Three rake angles were used to obtain different shear strains. The energy stored in the chips was determined as the difference in the heat effects associated with the dissolution in liquid tin of samples of cold worked and annealed chips in an isothermal calorimeter of high precision. With increasing strain the stored energy increased, but the ratio of the stored energy to the shear energy decreased.