THE SITUATION IN FRANCE, ENGLAND, AND THE UNITED STATES
France has a modified form of ownership of coal resources: this was vested formerly in the Crown and now in the Republic. The government gives concessions for mining the mineral and charges a royalty. The mineral is not considered to be owned by the surface owner or by the original surface owner, as is the case in all other important countries. The concessions granted are liberal and for large areas. The royalty or rental is small and is now paid on the basis of so much per superficial unit of area (hectare) in the concession, but the chief returns received by the public are through a percentage of the net earnings, that is, earnings available for dividends. Under the conditions prevailing in France the system seems eminently fair, and the undertakings have been profitable both to the operators and to the country. The books of the company are open to inspection by government officials, and the annual reports are published in detail. The system virtually makes the government a partner in the business.
In Great Britain most of the coal ownership is vested in entailed estates, and the royalties are a shilling a ton and upwards.
Both private and government ownership exist in the United States. Throughout the greater part of the country the large operating companies own the coal rights, although in the anthracite district of Pennsylvania the fortunate owners of the surface, or their assigns, receive large royalties, 25 to 50 cents a ton. In the Middle West most of the operators have bought the coal rights from the surface owners. When leased, the royalty is relatively small, 2 to 6¹⁄₄ cents a ton. Operators in the Rocky Mountains generally own the coal they mine. The government has sold the coal rights, but the state school lands of Colorado and Wyoming have generally been leased at royalties of about 10 cents a ton. In Oklahoma the Five Civilized Tribes have until recently, under government control, leased their lands and coal rights at about 10 cents per ton, but these rights are now being sold.
In the State of Washington a considerable amount of the bituminous coal district now opened is owned by the Northern Pacific Railway, which secured these lands as grants when the railroad was constructed. The royalty is about 15 to 25 cents a ton.
In Alaska in the Matanuska and Bering River bituminous fields, and in the Nenana lignite field, the government has offered the coal for leasing purposes at 2 cents a ton for the first period, under restrictions providing for conservation of coal and reasonable prices to consumers. Some units have been taken up in the Matanuska and Bering River fields, but, as the measures are badly contorted and the coal beds difficult to trace, progress has been slow and production has scarcely begun. Temporarily, the Alaskan Railway Commission is working some mines at Chickaloon and Eska Creek, to obtain a supply of coal pending the development of other mines by lessees. Congress, in opening the coal lands in the Matanuska and Bering River fields for leasing, has reserved tracts of not exceeding 7,680 acres and 5,120 acres respectively for the use of the Navy.
The United States still owns large areas of coal and lignite lands in the western states. Most of these lands are remote from railroads and difficult of access, but they contain enormous reserves. At present, outside of Alaska, only one mine, the Gebo mine, Gebo, Wyoming, is leased by the government, but extension of a leasing system similar to that of Alaska has been recently effected.
In the United States the anthracite industry is well organized, and its railroad connections make it notably efficient and powerful. Bituminous coal, on the other hand, is so widely distributed on both public and private lands that no private organization has attempted to control the industry. Such control has always been opposed by Congress and the general public.
Except during the war, neither Great Britain nor the United States has attempted any control over commercial mining and the sale of coal. Each country created a fuel administration, and the coal was shipped under government instructions and paid for at prices fixed by the fuel administration. In the United States this government control has practically disappeared with the war, but in England the Coal Control has so far been continued, and the tendency is for the government to retain for the present a strong guiding hand on the various “key” industries. Certainly, in the final analysis, coal mining is a public utility and should be supervised and adjusted by the government accordingly, allowing free latitude for private initiative.
Of the important coal-producing countries, only the German Empire, more or less openly, has fostered in peace times the coal industry and to some extent controlled it. In France there was only an indirect control, through the control by the government of the concessions and taxation of revenues and through tacit knowledge of the operations of the French coal syndicate, which ostensibly at least obtains and disseminates information and conducts mine safety investigations. In the United States, Great Britain, and other countries free competition has been permitted. Free competition does not seem serious in countries like France, where the supply of coal is limited, but it has had more or less serious financial effects where the supply of coal has been very large. In Germany before the formation of the syndicates the coal mining industry had periods of overproduction and serious financial depression; and at other, rarer, periods there was great prosperity. In Great Britain there have been similar times of depression and prosperity, but generally the business has been profitable.
In the United States, except in the anthracite district, where for more than twenty years the operations have been in the hands of comparatively few companies, depression and prosperity have alternated rapidly. The statistics obtained by the census show that the average profits of the bituminous industry prior to 1917 were smaller than those of any other great industry, and this has had an unfortunate effect on the best development of the coal resources. The companies generally have had little or no surplus to develop properly in the lean years; hence they have mined only the best or thickest coal, and in short periods of great prosperity many mines not directly owned by the railroads and steel companies have been worked so as to lead to “squeezes” and great loss of coal. Moreover, these conditions have also been unfortunate for labor; in times of prosperity too many new mines were opened, because of the tremendous and easily accessible resources, and in times of depression the number of days the miners worked has been so reduced that their monthly or yearly earnings have been low enough to make their living a hard one. The average number of days worked per year from 1901 to 1915 was 213. Some system of limited control of trade combinations by the government would appear to be highly advantageous for both the operators and the miners, and should insure a steady supply of coal to the consumers and steady prices with reasonable profits.
As regards trade relations between the United States and other countries concerning fuel supplies, except for a possible agreement on non-subsidy of the coal-carrying shipping, any attempt at a general agreement on so vital a necessity as coal seems unwise, except for non-duplication of elaborate coal storage and rehandling plants in ports requiring small tonnages, and preventing ruinous competition by systematic “dumping” of surplus coal to drive a competitor out of business.
Of all the continents, South America has the smallest coal resources. Although there is coal in Brazil and Chile and other South American countries, it is difficult to reach, and the fields so far known do not give promise of being able to take care of the needs of the countries in which they occur.
The Coal Situation as Affected by the War.
—Immediately after the opening of the war in Europe, July 31, 1914, the German military forces attacked and advanced in the east through Russian Poland, promptly securing the important Dombrova field, which is an extension of the Upper Silesian coal fields. The German forces also advanced in the west through the Belgian coal fields and thence through the extension of these fields in northern France, at the same time seizing the important Briey iron-ore deposits north of Verdun.
The economic effect of these advances was of enormous importance in securing all the productive coal mines of Belgium, the most productive coal mines of Russia, and most of the coal fields of northern France. The French coal and iron mines seized produced one-half of the coal output of France (20 million tons out of 40 million tons), and 95 per cent. (20 million tons) of the output of iron ore. Necessarily under these conditions France had to rely upon England and the United States to meet the military and economic need for iron, leaning chiefly upon Great Britain for the necessary supply of coal. Great Britain during the war continued to supply coal to Italy; also to Spain and other neutral nations.
The armistice ended Germany’s occupation of the coal fields of Belgium and northern France. On the other hand, the French took charge of the important Saar coal field, and the Allies occupied German territory reaching to the Rhine and beyond the Rhine at certain bridgeheads, this occupation including the supervision of the mines in the coal and brown lignite basins near Aix-la-Chapelle and Cologne and the western margin of the Westphalian basin on the left bank of the Rhine.
The treaty of peace gives to the French the important iron resources of former German Lorraine, which together with imports from French Lorraine were the chief sources of iron ore for German iron works, and the ownership of the Saar coal mines.
The terms under which the Saar mines are transferred, and the future government of the district, are indicated in the following extracts from the treaty:
“As compensation for the destruction of the coal mines in the north of France, and as part payment towards the total reparation due from Germany for the damages resulting from the war, Germany cedes to France in full and absolute possession, with exclusive rights of exploitation, unencumbered and free from all debts and charges of any kind, the coal mines situated in the Saar basin.”
This is exclusive of that part of the Saar basin in Lorraine which belonged to France prior to 1870, and which now reverts to France with some minor rectifications of boundary. The treaty further specifies, “all the deposits of coal situated within the Saar basin will become the complete and absolute property of the French state. * * * The right of ownership of the French state will apply not only to the deposits which are free and for which concessions have not yet been granted, but also to the deposits for which concessions have already been granted, whoever may be the present proprietors, irrespective of whether they belong to the Prussian state, to the Bavarian state, to other states or bodies, to companies or to individuals. * * * The value of the property thus ceded to the French state will be determined by the Reparation Commission. * * * This value shall be credited to Germany in part payment of the amount due for reparation. It will be for Germany to indemnify the proprietors or parties concerned, whoever they may be.”
As concerns the government of the territory of the Saar, at the termination of a period of fifteen years, the population will be called upon to indicate their desires, and then, “The League of Nations shall decide on the sovereignty under which the territory is to be placed, taking into account the wishes of the inhabitants as expressed by the voting.” In the meantime, the territory will be governed by a commission of five members chosen by the Council of the League of Nations.
In addition to turning over the ownership of the mines and minerals in the Saar basin, Germany accords the following options for the delivery of coal to the undermentioned signatories of the present treaty:
“Germany undertakes to deliver to France seven million tons of coal per year for ten years (it is understood that this is to provide fuel for the Alsace Lorraine territory ceded back to France). In addition, Germany undertakes to deliver to France annually for a period not exceeding ten years, an amount of coal equal to the difference between the annual production before the war of the coal mines of the Nord and Pas de Calais, destroyed as a result of the war, and the production of the mines of the same area during the years in question; such delivery not to exceed twenty million tons in any one year of the first five years, and eight million tons in any one year of the succeeding five years. It is understood that due diligence will be exercised in the restoration of the destroyed mines in the Nord and the Pas de Calais.”
Besides furnishing France with coal, “Germany undertakes to deliver to Belgium eight million tons of coal annually for ten years;” and to Italy from four and one-half to eight and one-half million tons annually; and also to Luxemburg, “a quantity of coal equal to the pre-war annual consumption of German coal in Luxemburg.”
The prices to be paid for coal under these options shall be as follows:
“(a) For overland delivery, including delivery by barge, the German pithead price to German nationals, plus the freight to French, Belgian, Italian or Luxemburg frontiers, provided that the pithead price does not exceed the pithead price of British coal for export. In the case of Belgian bunker coal, the price shall not exceed the Dutch bunker price. Railroad and barge tariffs shall not be higher than the lowest similar rates paid in Germany.
“(b) For sea delivery, the German export price f.o.b. German ports, or the British export price f.o.b. British ports, whichever may be lower.
“The allied and associated governments interested may demand the delivery, in place of coal, of metallurgical coke in the proportion of 3 tons of coke to 4 tons of coal.”
Germany undertakes to deliver to France during each of the three years following the coming into force of this treaty,
| Benzol | 35,000 | tons |
| Coal tar | 50,000 | tons |
| Sulphate of ammonia | 30,000 | tons |
The price paid for coke and for the articles referred to shall be the same as the price paid by German nationals under the same conditions of shipment.
The ownership of the Saar mines is a most welcome addition to the coal resources of France; and the Saar basin, as it is capable of further development, may in the future make France more nearly self-sustaining as regards coal production.
The requirement of furnishing coal to France during the rehabilitation of the French mines wrecked by the Germans is a most equitable arrangement. Germany at first, owing to the drop in the output of the Westphalian fields, claimed not to be able to furnish coal, but this situation will no doubt right itself in time, especially as France holds the whip hand through control of the iron ores necessary for the great iron and steel plants of the Rhine district. In the meantime it is hoped Great Britain, with the assistance of the United States, will be able to supply the deficiency in the coal requirements.
The problems connected with the Russian coal fields are complicated, but at least the Dombrova coal field would seem to be in the hands of the new Poland, and this carries coal resources estimated at 2,525 million tons, with an output before the war probably exceeding 7 million metric tons per annum.
According to the terms of the peace treaty, a plebiscite will determine the political control of the Upper Silesian coal fields.
Probable Changes in Coal Trade.
—In the ocean coal trade of the world the greatest change likely is that the United States will more largely supply South America, its coal being substituted for that of Great Britain. The ocean distance is markedly in favor of the United States, particularly on the west coast of South America by vessels passing through the Canal. With the increased shipping facilities of the United States, there is every reason to believe exports of coal to South America will be equally shared between the United States and Great Britain.
At the present time, it is evident that the British coal-mining industry is in a bad way, and publicists are expressing serious alarm at the possible loss of the greater part of the export trade and the curtailment of home industries through a great decrease in production accompanied by a rapid increase in cost.
In 1913 Great Britain produced 287,000,000 long tons, and exported 77,000,000 long tons of coal. During the war, owing to the large number of miners entering the military service, the output greatly declined, but was expected to recover rapidly with the signing of the armistice and the return of the miners. But labor unrest, resulting in strikes and absenteeism, kept the output down, and on July 16, 1919, the so-called Sankey award went into effect. This award shortened the miners’ working day from eight to seven hours, exclusive of the time taken in hoisting and lowering, but inclusive of the time taken in reaching the working place. Rates were raised so that the miner received more in a day with the seven-hour day than formerly with the eight-hour day, and the Controller raised the price of coal six shillings a ton to offset the increased cost.
Sir Richard Redland, chief inspector of mines, predicted that the output for 1919 would be 230,000,000 tons, and for 1920, 217,000,000 tons, or a reduction of 70,000,000 tons from the output of 1913. Presumably, in the course of time, by using additional shifts, Great Britain may recover its former output, though manifestly at greatly increased cost; so that unless the cost in the United States goes up correspondingly, there is every probability that this country will be able to compete successfully in export business, not only in South America, but also in Mediterranean ports.
At the present time, demands for coal are reaching the United States not only from those parts of the world, but also from Scandinavia, Switzerland, Denmark, and The Netherlands. On account of nearness, however, Great Britain should be able to take care of the fuel requirements of northern Europe.
In the Pacific, it is not probable that either the State of Washington or the Territory of Alaska will produce coal in such quantity and at such a price that the output can be a general factor in the Pacific Coast trade. The demands of Alaska, Washington, and adjoining states will absorb the local production; and California will continue to import in ballast more or less coal from Vancouver Island, British Columbia, China, Japan, New Zealand, and Australia.
The immediate changes in Asia are more likely to be in the development of mines in the interior of China and in India to supply domestic needs rather than extensive exports, although, as before stated, it is possible that China will gradually get into the Pacific Coast markets.