Nationalization, as this term is popularly understood, means financial control and management of mineral resources by the government, either through actual ownership or through measures of public control designed to eliminate private interest from the active direction of the resources. In a broader sense, it may be used to include a considerable variety of restrictive and coercive measures adopted by the government in the proposed interests of public welfare,—as illustrated by the war-time measures instituted by the United States and other governments relating to the mining and distribution of coal, and to coal prices. In this broader sense various aspects of nationalization are indicated under other headings in this and other chapters.
It is clear that other countries of the world have gone farther in the direction of nationalization of mineral resources than the United States. The tendency was manifest before the war, and has been strongly emphasized during and since the war. In the United States, notwithstanding war-time measures, the subject has not yet come prominently forward, at least by name. On the other hand, there has been growing recognition of the dependence of public welfare on the proper handling of mineral resources—particularly of the energy resources, coal and oil,—as evidenced by a variety of proposals and measures under consideration in legislative and administrative branches of our national and state governments. Even taxation, both local and national, has in effect reached a stage where private interest has become considerably minimized by the increasing burdens laid on the industry by government requirements. The immediate purpose of taxation is to raise money for the needs of the government; but in the formulation of tax measures there is clearly to be discerned a growth of underlying sentiment that natural resources belong in some fashion to the public, and that private control is to be regarded not as a sacred property right but as a trust held on sufferance of the public.
In view of the obvious trend toward nationalization in other parts of the world and the significant tendencies in the United States, it seems likely that the subject of nationalization of mineral resources will come prominently to the front in this country in the comparatively near future. If so, it is time that students of mineral resources should recognize the comprehensiveness of this problem, and should attempt to develop basic principles to serve as a guide in the direction and formulation of the numerous and complex measures which are sure to be proposed. At present there is no government or technical organization related to the industry which is studying the problem in its broader aspects and is in a position to advise wisely with public officials interested in this problem.
It is beyond the scope of this book to discuss the pro and con of an economic question of this magnitude. The writer would, however, record his belief, which is implied also in discussions in other chapters, that the discovery and intelligent management of mineral resources by their very nature and infinite variety require private initiative, and that the history of government efforts in this field in this and other countries does not promise that nationalization can supply sufficient advantages to counterbalance the loss of this element. With this view the problem of nationalization becomes one of determining what steps, if any, can be taken by a government to the advantage of public welfare, which will at the same time preserve and foster private initiative, exercised with the hope of reward, which seems alone to be capable of meeting the variable, elastic, and complex problems inherent in the development of a natural resource.
A first step toward a broad scientific attack on this problem would be the recognition of the fact that tariffs, taxes, conservation, international mineral questions, leasing laws, and various technical investigations of minerals are but parts of a great unit problem. With this recognition there should follow naturally an attempt to correlate and direct the many government agencies, legislative and administrative, now concerned with different aspects of the problem. Under present conditions, the various elements of the problem are considered by different groups of persons, without sufficient contacts or correlation to promise the development of a broad, underlying policy.
Effect of Ownership Laws on Exploration
The nature and the progress of exploration (and development) in different countries have been more or less related to the character of the mining laws.
Where the mineral resource has passed from government control into private ownership, exploration is a matter of commercial arrangement between the explorer and the owner. There is often some lag in exploration, especially where the lands are held in considerable blocks. The owner is often not inclined, or unable, to institute effective exploration himself; and even though he is willing to offer favorable exploration terms to others, the inducement is often less attractive than on government lands. For instance, it is stated that in England, due to the many requirements of law and custom, it takes on an average eight years, and in some cases even longer, to close a coal lease after the terms have been agreed upon. The slowness of exploration and development on the great land grants in the United States, and on the tracts of the large timber companies, also illustrates the retarding effect of private ownership. It is partly this situation that is making governments increasingly careful about parting with mineral ownership, and that is leading to the introduction of more or less coercive measures, either to regain control or to make it easier for the public to explore and develop minerals on privately owned lands. Under the great land grants to railroads in the United States it is becoming increasingly difficult to secure mineral patents from the government; and there has been litigation between government and grantees, as in the case of certain oil lands of the Southern Pacific Railway. The taxation in some states of mineral rights which have been reserved by large owners is indirectly resulting in appraisal of these rights by the owners and in efforts to utilize them. As long as mineral rights were not taxed independently of surface rights, they were often reserved in selling surface rights on the mere chance that mineral might be found in the future, and thereby general exploration and development were held back.
In the United States, minerals on the public domain have been open to exploration and acquirement with minimum restrictions, except for the considerable areas later withdrawn from entry. After long delay a part of these withdrawn lands are again open to private exploration, but not to fee ownership. Specified minerals—coal, oil, phosphates, and potash—may be explored for, and may be leased under certain restrictions as to amount and time of development. The effect of this act on exploration is yet to be proved; but since many of the lands have now been shown to be favorable for minerals which are in great demand, there is little doubt that exploration will be resumed on a large scale. On the whole, under the federal mining laws of the United States the individual prospector has maximum leeway,—and from the standpoint of development of resources this procedure probably has been justified.
In other countries where the mineral resources are owned by the government, there is in most cases considerable restriction, through licenses and other regulative measures, upon the activities of prospectors. This restriction, together with the fact that it is usually not possible to secure title to the land, but only to secure rights through rental or leasing, is to some extent a deterring influence on the penniless prospector. It does not follow that under these conditions exploration and development are absent. The charges imposed are light, and in the early stages require comparatively small contributions as evidence of good faith. It is to be remembered that exploration has become concentrated more and more into the hands of persons financially able to meet such conditions. Exploration is passing from the highly hazardous stage of individual effort into a systematic business with calculable returns.