Meanwhile a change was effected. It was agreed at the end of May, 1920, that decisions of the National Coal Association would thereafter not be operative unless they were made in agreement with a “Great Commission” of the National Coal Council. If agreement is not arrived at the matter must be brought before the National Coal Council itself which thereupon decides, its decision becoming binding upon the Association.
III.—But this reform did not suffice, and the question of a complete transformation of the regulation of the coal industry was submitted to a searching examination by the Committee on Socialization. One thing was unanimously agreed upon—the existing régime could not continue. The Provisional Economic Council, in its meeting on July 24, the Cabinet of the Reich in the meeting of the Reichstag on August 5, and the Committee on Socialization declared that the coal industry must thereafter be completely subjected to the principles of collective economy; that the wage-earners and salaried employés in this industry must be included in the number of responsible directors of the industry; and that the profits obtained from the exploitation of the mines by private capital must be considerably decreased.
As for the practical means of realizing these recommendations the Committee on Socialization was not able to come to an agreement and submitted two different proposals.
The first, that of Lederer, signed by ten out of twenty-one members, demanded immediate expropriation and nationalization of all the mines. The owners of the mines would receive an indemnity in the form of bonds bearing a fixed interest, and the ownership of these mines would be transferred to an autonomous body, called “The German Coal Corporation.” This corporation is to be governed by the National Coal Council, which appoints a “directorate” to administer affairs. The right to appoint industrial heads, as well as the responsibility for the technical exploitation, passes to the National Coal Council and to the Directorate. Bonuses for production are to be given to directors, salaried employés and workers.
The authors of this proposition insist on the fact that they are not instituting state socialism for mines with all its attendant fiscal and bureaucratic dangers; and to emphasize what it is they are aiming at, they propose that the mines now owned by the Reich and by the States be taken away from them and transferred to the German Commonwealth of Coal.
Prices will be fixed by the Reich, to whose budgets will be accounted the profits of the exploitation—and undoubtedly the losses.
The second proposition, that of Rathenau and signed by eleven members out of twenty-one, does not go as far along the road of nationalization. The present owners of mines, according to this plan, provisionally retain their property, but their rights therein are strikingly reduced. The distribution and the sale of products cease to be guaranteed by the National Coal Association—which is, in fact, done away with—and are given over to the National Coal Council and to a Directorate, four out of five of whose members are elected by the Council; the fifth, the President, is appointed by the Minister of Public Economy.
The principal innovation consists in this. Whereas formerly the sale of coal was made on the basis of the individual exploitations, according to this project every mine transfers to the National Coal Council its whole output, and the net price is averaged according to the books. The National Council, therefore, has a monopoly on the wholesale trade and it fixes the selling prices. In addition to the net cost the Council credits to the mine (1) the cost of delivery and the interest and amortization of bonds of the enterprises; (2) the interest and amortization of new investments; (3) the normal fixed interest on the operating capital employed in the exploitations; (4) bonuses, fixed according to a schedule, for the increase of output of each exploitation; or deductions in case of decrease of output.
The National Council may demand the inauguration of new projects, or exploitations may propose improvements with the approval of the Council, provided that either the Council or the entrepreneur furnishes the necessary funds. Finally, in order to retain the free play of private initiative, an entrepreneur may, even in spite of the National Council, make investment but at his own risk and peril.
By these provisions the entrepreneur loses all interest in the increase of the price of coal, for commerce in it and commercial profits are denied to him. Also the fixing of high net prices does not serve him in any way, since his books are supervised by the properly empowered auditors of the National Council. The only way left him to make big profits is to improve his exploitation in its economic and social aspects. The interest or the profit which has hitherto ruled economy is retained in form, but it can no longer work except in the common interest. The situation of the manager will depend as to-day on an objective economic success.