EXCURSUS I
COAL
The question of coal has always considerable importance for Reparation, both because (in spite of the exaggerations of the Treaty) it is a form in which Germany can make important payments, and also because of the reaction of coal deliveries on Germanyʼs internal economy. Up to the middle of 1921 Germanyʼs payments for Reparation were almost entirely in the form of coal. And coal was the main topic of the Spa Conference, where for the first time the Governments of the Allies and of Germany met face to face.
Under the terms of the Treaty Germany was to deliver 3,400,000 tons of coal per month. For reasons explained in detail in The Economic Consequences of the Peace (pp. 74–89) this total was a figure of rhetoric and not capable of realization. Accordingly for the first quarter of 1920 the Reparation Commission reduced their demand to 1,660,000 tons per month, and in the second quarter to 1,500,000 tons per month; whilst in the second quarter Germany actually delivered at the rate of 770,000 tons per month. This last figure was unduly low, and by the latter date coal was in short supply throughout the world and very dear. The main object of the Spa Coal Agreement was, therefore, to secure for France an increased supply of German coal.
The Conference was successful in obtaining coal, but on terms not unfavorable to Germany. After much bargaining the deliveries were fixed at 2,000,000 tons a month for six months from August 1920. But the German representatives succeeded in persuading the Allies that they could not deliver this amount unless their miners were better fed and that this meant foreign credit. The Allies agreed, therefore, to pay Germany something substantial for this coal, the sums thus received to be utilized in purchasing from abroad additional food for the miners. In form, the greater part of the sum thus paid was a loan; but, since it was set off as a prior charge against the value of Reparation deliveries (e.g., the ships), it really amounted to paying back to Germany the value of a part of these deliveries. Germanyʼs total cash receipts[21] under these arrangements actually came to about 360,000,000 gold marks,[22] which worked out at about 40s. per ton averaged over the whole of the deliveries. As at this time the German internal price was from 25s. to 30s. per ton, the German Government received in foreign currency substantially more than they had to pay for the coal to the home producers. The high figure of 2,000,000 tons per month involved short supplies to German transport and industry. But the money was badly wanted, and was of the utmost assistance in paying for the German food program (and also in meeting German liabilities in respect of pre–war debts) during the autumn and winter of 1920.
This is a convenient point at which to record the subsequent history of the coal deliveries. During the next six months Germany very nearly fulfilled the Spa Agreement, her deliveries towards the 2,000,000 tons per month being 2,055,227 tons in August, 2,008,470 tons in September, 2,288,049 tons in October, 1,912,696 tons in November, 1,791,828 tons in December, and 1,678,675 tons in January 1921. At the end of January 1921 the Spa Agreement lapsed, and since that time Germany has had to continue her coal deliveries without any payment or advance of cash in return for them. To make up for the accumulated deficit under the Spa Agreement, the Reparation Commission called for 2,200,000 tons per month in February and March, and continued to demand this figure in subsequent months. Like so much else, however, this demand was only on paper. Germany was not able to fulfil it, her actual deliveries during the next six months amounting to 1,885,051 tons in February 1921, 1,419,654 tons in March, 1,510,332 tons in April, 1,549,768 tons in May, 1,453,761 tons in June, and 1,399,132 tons in July. And the Reparation Commission, not really wanting the coal, tacitly acquiesced in these quantities. During the first half of 1921 there was, in fact, a remarkable reversal of the situation six months earlier. In spite of the British Coal Strike, France and Belgium, having replenished their stocks and suffering from a depression in the iron and steel trades, were in risk of being glutted with coal. If Germany had complied with the full demands of the Reparation Commission the recipients would not have known what to do with the deliveries. Even as it was, some of the coal received was sold to exporters, and the coal miners of France and Belgium were in danger of short employment.
The statistics of the aggregate German output of pit coal are now as follows, exclusive of Alsace–Lorraine, the Saar, and the Palatinate, in million tons:
| 1913. | 1917. | 1918. | 1919. | 1920. | 1921 (first nine months) | |
| Germany exclusive of Upper Silesia | 130.19 | 111.66 | 109.54 | 92.76 | 99.66 | 76.06 |
| Germany inclusive of Upper Silesia | 173.62 | 154.41 | 148.19 | 117.69. | 131.35. | 100.60 |
| Per cent of 1913 output | 100.00 | 88.90 | 85.40 | 67.80 | 75.70 | 77.20 |
The production of rough lignite (I will not risk controversy by attempting to convert this into its pit–coal equivalent) rose from 87.1 million tons in 1913 to 93.8 in 1919, 111.6 in 1920, and 90.8 in the first three–quarters of 1921.
The Spa Agreement supplied a temporary palliative of the anomalous conditions governing the price at which these coal deliveries are credited to Germany. But with the termination of this Agreement they again require attention. Under the Treaty Germany is credited in the case of coal delivered overland with “the German pithead price to German nationals” plus the freight to the frontier; and in the case of coal delivered by sea with the export price; provided in each case this price is not in excess of the British export price. Now for various internal reasons the German Government have thought fit to maintain the pithead price to German nationals far below the world price, with the result that she gets credited with much less than its real value for her deliveries of Reparation coal. During the year ending June 1921 the average legal maximum price of the different kinds of coal was about 270 marks a ton, inclusive of a tax of 20 per cent on the price,[23] which at the exchange then prevailing was about 20s., i.e., between a third and a half of the British price at that date. The fall in the mark exchange in the autumn of 1921 increased the discrepancy. For although the price of German coal was substantially increased in terms of paper marks, and although the price of British coal had fallen sharply, the movements of exchange so out–distanced the other factors, that in November 1921 the price of British coal worked out at about three and half times the price of the best bituminous coal from the Ruhr. Thus not only were the German iron–masters placed in an advantageous position for competing with British producers, but the Belgian and French industries also benefited artificially through the receipt by their Governments of very low–priced coal.