COMMERCIAL CONTROL
Although the ownership of mines in most countries is nominally open to citizens and aliens alike, exceptions and restrictions tend to keep the control in the hands of citizens. For example, it is impossible for foreigners to control any mining company in Japan. Concessions in Holland and the Dutch colonies are limited to Dutch subjects and in Bolivia to Bolivian citizens. The legislation suggested since the outbreak of the World War may develop a similar condition in the possessions of Great Britain and those of her allies.
In peace the relations of two countries may be largely determined by the ownership of property; owners of property in a foreign country may strongly influence the policy of the two governments toward each other. In emergencies, the political and the commercial control are put to the test, and there results either a deadlock or the victory of one over the other.
An important commercial relation exercising political influence is the incorporation of companies under the laws of different countries. Mining companies in China, like the Kailan Mining Administration, organize at Hong Kong to obtain British protection and are thus subject to British control, in spite of the fact that Belgian money finances the company. Some companies organized in Japan may also own Chinese coal mines.
As relatively few regions of the world have coal in excess of their own needs, the larger number are dependent on imports. If a country with coal controls also steamship lines, it may completely control the coal situation in the importing country. England, with about half the total world’s shipping and a good supply of seaport coal, has been in a position to dominate coal exports, even to handling the excess American coal. During the last three or four years the scarcity of shipping has given increased importance to American and Japanese shipping, but the English still exert a strong influence. Their docks and storage facilities are the best, and their ships are still numerous.
Railroad shipping rights over the National Lines in Mexico give a certain amount of control over the coal industry. The National Lines are state owned and have a special agreement giving trackage rights to two companies, the American Smelting and Refining Co., and the Peñoles Company, of German ownership. Since the Mexican railway service has been disturbed, the German company has been operating with cars and engines of its own. It has many coke ovens and large coal reserves, and has been the chief competitor of the American company in Mexican metallurgy.
No patent is likely to limit coal industries, except as regards the by-products of coke. Before the war, coal-tar products were largely developed by Germans, who patented their processes in many countries, but offered no such protection to foreign inventions by patents in Germany. They limited production chiefly to their German plants, and exported about $50,000,000 worth a year.
During the war, these patents in the United States were taken over by the Alien Property Custodian, and the American industries that sprung up in consequence may be permanently protected. Other allied countries took the same steps to free themselves from German control, which has retarded the development of the by-product coke industry in non-German countries.
In Germany the large mining companies generally own the coal rights. The only government that has mined coal on a commercial scale and for commercial purposes is Germany, and even there the government production covered only a small part of the total output of the German Empire. Mines of the Saar coal field and a group of mines in the Upper Silesian field owned by the Prussian government have been the only extensive state-operated mines of the world, and now, under the terms of the Treaty of Peace, the ownership of the Saar mines will pass to France. (The details are given on [p. 39]).
On the other hand, the government exercised a quiet but real control over the whole German coal industry. Through its ownership of the Koenigen Louise mines it acted as a member of the Upper Silesian coal syndicate. Formerly, through its ownership of the Saar mines, it was also a member of the Westphalian coal syndicate, but whether a member or not it practically approved the syndicate operations and the fixing of prices in advance; also, it co-operated with the syndicate in hauling the latter’s coal over state-owned railway systems. In certain undeveloped coal fields in Germany, the northern extension of the Westphalian field, the Prussian government retains most of the coal rights.
The Rhenish Westphalian coal syndicate is a classic example of a great interlocking trade combination. Capitalized at $571,000, it covered an enormous capitalization of individual members. The mines have votes in proportion to production, which in turn is limited for certain periods. Prices are fixed and coal is marketed for the syndicate as a unit, but other affairs are left to the companies. The syndicate as a whole is a member of a transporting and exporting combine, and disposes of its product through a combine of coal dealers. The several minor combines interlock and are practically merged in a larger organization, the Kohlen Kontor. Thus the combination had exceptional power to study the various problems of the industry, and became very powerful. It maintains a research department and an explosion testing gallery near Dortmund. In several countries German companies through the control of advertising contracts have been able to influence the editorial policy of the leading newspapers, even during the war. Over half of the German coal mined before and during the war was syndicate coal. All of the 600 other German cartels have not been as moderate in their action and regulations as the coal syndicate. When the coal syndicate, however, at one time, found it could not supply its German market with coal, it is reported to have bought inferior British coal for its customers, so that they would not themselves get good British coal and refuse to return to the German supply.
Efforts were made by the cartel to absorb and control foreign coal trade, where political and financial reasons served to render this advisable, and therefore these efforts were out of all proportion to the intrinsic value of the trade. When it was planned to capture such a trade, the German-invented “dumping” system was used, coal being sold cheaper abroad than it could be sold or produced at home, the difference being met by export bonuses. This German dumping became so serious in some countries, as Canada, New Zealand and South Africa, that special import duties were imposed to counteract it. When desirable, the syndicate purchased collieries abroad, including even a South Yorkshire plant in England, the Heraclea collieries, in Turkey, and many mines in Australia.
In Great Britain is a powerful coal combine, the Cambria, closely allied with great shipping concerns. An important trade asset in this organization, like that in the German cartel, is a banking connection by which the combine can offer long-term credit.
Coal syndicates are mentioned in Belgium. Some sort of central organization interested in coal is known in Italy, Russia, Austria-Hungary, Sweden, Greece, Argentina, Chile, and Ecuador.