The Economic Aspect of Geology

by C. K. Leith

Post-war Condition of the Mineral Trade

The mineral industry has by no means reverted to its pre-war condition. The old movements have been only partially resumed, and new elements have entered. Shipping is still disturbed. Governments have been coöperating in various ways in the liquidation of government stocks of minerals. The German commercial control of minerals outside of its boundaries, as noted above, has been much weakened. The Reparations Committee created by the Peace Treaty has enormous powers over the use and distribution of the mineral resources of Germany, which directly and indirectly affect the mineral supplies of Europe and all the world. The terms of the Peace Treaty changed in fundamental ways the international channels of mineral movement.

The mineral situation of Europe is in such a state of chaos that the combined efforts of governments will be necessary for many years to bring order. This will be accomplished partly through the Reparations Committee, but may require other forms of coöperation. An international coal commission has already been formed to look after the distribution of coal through Europe. International coöperation in mineral distribution is not merely a theoretical possibility for the future,—it is now the outstanding fact with reference to the European situation.

The recognition of their dependence on neighbors for important mineral resources has led to earnest efforts on the part of nations to supply deficiencies. The great activity of the British government in acquiring oil is one example. The falling off of gold production the world over, together with the increased disparity between gold reserves and the currency issued against them, is causing serious consideration of government action to encourage the gold industry by financial measures tending to increase the profit of the miners (see pp. 224-225).

Before and since the war most countries of the globe, outside of England and the United States, have gone far in the exercise of the right of eminent domain over mineral resources within their own boundaries. Even in England the recent movement to nationalize the coal and oil resources is an indication of the general tendency. In the United States the movement has manifested itself thus far only in the increasing reluctance on the part of the government to part with mineral resources on the public domain,—as is clear from the terms of its new leasing law to cover oil, coal, gas, potash, and phosphates on public lands.

Before the war only the German government was clearly identified with private interests in international trade and in the acquirement of mineral reserves. Since the war all governments except that of the United States are taking an active part in these fields, both directly and in coöperation with private capital. The British government has taken a direct financial interest in certain companies, such for instance as the Anglo-Persian and Shell Oil Companies, and in some cases is actively interested in the acquirement of selling contracts. In England there is a wider use of voting trusts in controlling private companies, with the purpose of preventing the control from falling into alien hands. Government control of shipping in certain countries is involving various degrees of control of mineral movements. Also, through loans and bonds, mineral resources in certain countries have been tied up by the loaning governments. There has been wide extension of government control of minerals in mandatory territories and elsewhere through many new loans and regulations. These steps are in effect closing important parts of the world to private initiative, and particularly to nationals of other countries. Whether these activities of governments are economically desirable or not, they are the actual conditions, not theories.

If this situation continues, it raises the question whether our government will not be forced, in protection of its own mineral industries, also to take a direct part; for under present conditions, our importers and exporters find themselves dealing single-handed with governments or with private groups so closely identified with governments as to have much the same power. In matters of shipping, credits, exchange, tariffs, embargoes, and opportunity to acquire foreign reserves, the actual and potential disadvantage to American interests is obvious.

TENDENCIES TOWARD INTERNATIONAL COÖPERATION AND POSSIBILITY OF INTERNATIONAL CONTROL[59] OF MINERALS

Under the pre-war conditions, unrestricted competition in world trade by private enterprise had led to a certain kind of internationalization of mineral deposits based on natural conditions of availability. There is a natural tendency to work back as quickly as possible to this condition, but new elements have entered which seem to make it difficult for governments to keep their hands off. The participation of governments in world mineral trade, when not modified by international coöperation or some other higher form of control, seems to be having a tendency in the opposite direction—to be closing the doors of equal opportunity and preventing the natural world use of the world's resources.

These new conditions, together with others outlined in the preceding section, have made it necessary to pay more attention to the possibilities of international coöperation than ever before,—not as a restrictive measure, except temporarily in regard to the Central European powers,—but as a means of insuring open channels of movement for raw materials, and of insuring equal economic opportunities to all. Many of our mineral industries have already appealed to our government for coöperation and aid in their international dealings. Further, mineral industries in private hands in the various Allied countries have attempted to get together to arrange for private coöperation, and appealed to the Peace Conference for authority to do so. In certain cases the necessity for coöperative action became so apparent that pressure was brought to bear on the Peace Conference for the forming of some sort of international economic body which would make possible some of these steps. These movements were all dictated by considerations of self-interest, but self-interest broadened and educated by a knowledge of the world's situation.

Just as the increasing size of the units engaged in the mineral trade within national boundaries has led to discussion of the possibilities of government control in the interest of the public, so the increasing size of the units in the international mineral trade, the units in many cases being governments, is leading to discussion of the possibility of some international or supernational control in the interest of the world good. Just as national interest is the lengthened shadow of individual interest, so international interest may be regarded in some aspects as the lengthened shadow of national interest.

The general purpose of the suggested control is to minimize international friction; but more specifically it has been suggested that some sort of international coöperation is necessary in order to insure equality of opportunity among nations, both in supplies and in markets, and thereby to prevent the crowding of the weaker by the stronger nations. This is the gist of one of the famous fourteen points. The purpose might be accomplished by direct allocation of supplies or by control of tariffs and exchange.

One of the conditions which seems to require international coöperation is the exploitation of mineral deposits in backward countries. Unrestricted competition among nations in such exploitation has been an important cause of international controversy. It was planned at Peace Conference that the mineral resources in countries taken over by the great powers under mandatories should be developed and used in the interest of the group of nations, rather than for the special interest of the nation taking the mandatory. One of the natural functions of any international or supernational organization would be the adjustment and settlement of difficulties arising from this provision.

This topic brings up the question as to the right of any nation or group of nations to exert any force on weaker nations in the exploitation of mineral resources. On the principal of self-determination and of the complete freedom of action of nations, this procedure seems unjustified. On the other hand, whether rightly or wrongly, civilization has created great material demands which must be satisfied. The individuals, companies, and governments which use force to exploit resources in weaker countries are merely the agents in supplying the demand created by all of us. While their methods are often indefensible, the exploiters cannot be regarded merely as irresponsible buccaneers who are projecting themselves unnecessarily into somebody else's business. Whatever the sentimental and ethical aspects of the question, it seems almost inevitable that the demands of civilization will continue to require the exploitation of weaker countries; and in proportion as these countries are backward in coöperating, they must feel the world pressure. An agreement for international coöperation in such matters, therefore, is not to be regarded as merely a cold-blooded attempt to rob weaker nations,—but rather as a means of improving methods in satisfying the actually existing material demands of civilization. For illustration, the criticism of England's attempt to develop the oil industry of Mesopotamia and Persia has to a large extent confused the methods with the aim sought for. It is the writer's view that development of these resources is inevitable, and that criticism should not be directed toward nations and groups attempting to attain these results, but rather to the methods applied. For the purposes of this discussion, it is not necessary to go beyond the acceptance of the fact of demand, nor to argue the question as to whether the material demands of civilization should be curbed and progress restricted to matters of mind and human happiness.