A Suggestion on Coal

IN his article ‘What Shall We Do About Coal?’ in the September Atlantic, Arthur E. Suffern has suggested a remedy through gradual extension of government control over the waste in natural resources and man-power which present mining methods entail. It is to be doubted whether many who are conversant with the industry will quarrel with his premise; there is every reason to know that there are many who, having the best interest of the industry at heart, will quarrel with his suggested remedy. Nor is the quarrel prompted exclusively by selfish motives — past experience has convinced many of the inadequate costliness of the Government’s attempt to control the industry.

It is a truism that the history of American development has been the history of wasted natural resources. Man seldom thinks of conservation until the approach of total consumption of a natural resource prompts him to do so. This is true of forests, agricultural resources, and mines. It is true of man-power and the potential possibilities of man-power, to such an extent, that it has been said that in its treatment of men America is to-day wasting her greatest natural resource.

Conservation is out of the question without the moral support of the public that consumes the product to be conserved. As long as an industry dealing with a natural resource is operated on a competitive basis, so long must waste be the key-note of operation. One mine-operator is forced, for instance, to mine the cream of his potential output, in order to meet the competition from anot her operator who is doing the same thing. He cannot mine ‘clean,’ because the cost of such mining will not permit him to meet the competition of the producer who does not mine clean.

The result is to be found in England, where to-day the pits have been worked far back, and each year sees an added cost of production, making more difficult the competition that the British producer has to meet. It is true that, if present mining methods continue in this country unchecked, America will eventually have to face the same problem.

There is no question as to the overproduction of coal in the country, caused by an over-development of mines. That, too, is the result of the basis of open competition that obtains. Good years in the industry call forth the opening of new mines, or the reopening of old ones that have been idle during dull years. What control, other than through government ownership, can the Government exercise, which will check the natural effort of one man to make money in a market where others are making it?

Admitting the evil, we believe there is a solution which, while at the further end of the social pole, will come nearer to being a solution than that proposed by Mr. Suffern. Let us first consider some of the evils which might be expected to accompany government control, and then state the suggestion.

During the ‘tight’ coal market of the summer of 1920, various attempts at control were made by the Government, directed chiefly toward forcing lower prices. These were attempted through regulation of the car-supply by priority orders favoring coal-movements. One priority order alone, however, which in effect permitted the abrogation of contracts with dock operators in the northwest, — if, in fact, it did not force that abrogation, — resulted in adding approximately $13,000,000 to the fuelbill of that section, without getting a pound more coal moved into the territory than would have moved without the orders. Other priority orders, intended to make possible greater production, resulted in a dispersion of available equipment to an extent which militated against the object in view.

As to control by the Government in other industries, the railroads and the merchant marine are eloquent of what waste is possible and actual under such direction. Not only was there an actual loss of millions of dollars during federal operation of the roads, but the loyalty of the railroad men was squandered to an almost irremediable extent. Recent figures given out by the present head of the Shipping Board show that the loss in that venture alone ran higher than $1,000,000 daily during the last fiscal year of operation.

Nor is this condition one that is due to questionable motives or willful intent. Government control lacks that personal interest which nature has decreed must underlie conservation. There is a lack of centralization of responsibility that no idealism of good intent can offset. Delegation of authority and responsibility carries with it a cost which prohibits conservation as it fosters waste. In New Zealand, where government operation of mining in the coal-industry has been tried, it has been found that production costs were higher and labor troubles greater and more frequent than under private operation. The experiment has resulted in less, rather than more, conservation of both money and good-will.

That control is necessary before conservation can be accomplished is evident, since conservation means control. May we suggest that that control can best be effected by increasing industry control, rather than lessening it through the introduction of government control? Railroad heads to-day are confronted by the evils of divided authority as the result of a paternalistic attitude on the part of Government. They are much in the state in which Browning’s Saul found himself, — ‘death gone, life not come,’ — unable to put into effect those economies that are essential if railroad transportation is to recover from its present chaotic condition. Is it not reasonable to believe that an extension of control over coal to government agencies would have a similar result in this industry?

The history of what is commonly called ‘big business’ has been marked by a degree of conservation that has not been found in other forms of industrial arrangement. Whether we take the packing industry, the steel industry, or the petroleum industry, the gathering of control into a few hands has made possible a saving and elimination of waste that never could have existed, and did not exist, under open competition between hundreds and thousands of small firms and individuals. ‘Big business’ not only has adopted modern methods of production, accounting, marketing, and ‘labor-adjusting,’ but has developed raw natural resources to the highest degree, bringing forth by-products in profusion out of what under former management had been waste. Through maximum production, which this control fostered, prices have been frequently lowered as compared with prices under competitive conditions. Monopoly, with all it is frequently said to imply, has been a benefactor to the public as well as to the industry in which it is born.

In the coal-mining industry such a monopoly would have even greater possibilities for good than in most other industries. Present overdevelopment in coal lands has resulted in wasteful dispersion of railroad equipment, increasing the cost of transportation of fuel, and, in times of emergency, cutting down the potential haulage of the roads. Were the coal lands of the country in the hands of a comparatively few well-financed corporations, new lands would be held in reserve while old ones were being developed along modern scientific lines. Without the struggle that now is frequently necessary in the attempt to meet necessary overhead expenses, it would be possible to install permanent equipment needed for economic mining; the operator would know that he could depreciate that equipment on a producing-time, rather than on a largely idle-time, basis, and would not feel the necessity to recover his investment in a year or two.

Such control would also tend to minimize the waste in man-power that accompanies present methods. Introduction of modern machinery would be one factor; but the elimination of hundreds of mines from operation would in itself release thousands of men from the industry for other employment, and at the same time tend to increase the annual working time of those who remained. Conservation would be accomplished also in the selling end of the industry, since duplication of merchandizing forces would be unnecessary.

It is true that, as in other industries, such concentration in a small circle of control of the vast coal resources of the country would carry with it possibilities of evils and dangers; but it is to be doubted whether these would be as great, from the public’s standpoint, as would the waste and inadequacy of government control. The public has not forgotten that heatless days and lightless nights were never known outside of federal control of coal, and that they happened then even after warinconveniences were past. It may have forgotten that it was government interference that gave the union miners a wage-rate which is largely responsible for the present high price of fuel; and that it was government operation of the railroads which brought about freightrates on coal that are the other real factor in present coal prices. It finds it possible under monopolistic conditions in the petroleum field to buy gasoline at a satisfactory price and with satisfactory service. It has voiced its sentiments in favor of private control of private business, and it stands ready, we believe, to back that expression, if need be, by revoking its presidential choice of 1920 if the present administration fails to deliver on its pledge.

The Government has been far more successful in coping with the evils of private monopolistic tendencies than it has been in attempts at direct control of an industry. In those fields where a few well-financed firms have gained control of the output, —as in Franklin County, Illinois, for instance, — a stability of policy tending toward efficiency is to be noted, as well as a stability of price in what may be called runaway markets. Is it not reasonable to suggest that an expansion of this control, rather than that of Government, may in the end prove the solution of the problem, and result in a real conservation of coal?