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SYSTEM OF DIRECT LOADING OF COAL CARS OVER THE TRACKS BY MEANS OF COAL HOISTING AND CONVEYING MACHINE.

WHY YOUR COAL BILL IS SO HIGH

By

GEORGE H. CUSHING

THIS is not written boastfully but that you who read may know I speak with some authority. I am and have been for five years editor of a trade paper devoted exclusively to coal. What that paper has to say about coal prices is accepted in every court in the land as prima facie evidence. At the minute this is written I am under subpoena to appear in court to testify as an expert upon market conditions and prices. With that as a foundation and with deliberate intention to make every word exert its full weight, I say that the householder—the unprotected buyer; the consumer of "domestic" coal—pays far more than his share of the cost of coal production. He pays all that his coal is worth, plus part of what the user of steam coal ought to pay. This means that he pays all the profits of the coal mining companies, all the cost of making sales, all of the increased wages of the miners, all of the cost of safety appliances in mines, all of the cost of workmen's compensation, all of the increased value of coal lands, and —he consumes not to exceed {arty per cent of the coal. The user of steam coal pays no part of these -things.; .he does .not

even pay the cost of producing that coal which he uses.

One day last October I made that statement while at luncheon with a group of coal operators. They knew the facts yet no one of them raised a voice to protest or deny. What adds some emphasis is that Dr. Joseph A. Holmes, director of the National Bureau of Mines at Washington, who was sitting next to me, put in significantly:

"That's true."

Only one operator said anything and his comment was no denial:

"I'll agree to that if you make the operator the partner of the householder. I'd say it this way: 'The householder pays all the increased cost of producing coal except what the producer involuntarily absorbs and all the profits of coal mines when there are any profits.'"

I accepted the amendment then and accept it now because it makes small difference. The main point here is that the householder pays so heavily, merely because the big industries will not carry their end of the load. Yes, I mean it— the people who own homes and must use coal or freeze, pay, along with their own bills,, a coasidfirabLe jiart of the fuel bill

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of the railroads, the steel mills, the big factories, the electric light companies, et cetera and ad finitum. What is more to your liking, I will prove it before I have finished this article.

We hate winter—innately, constitutionally and cordially we hate it because it hurts us and would kill us if the coal man and his product were not at our elbows. We argue from the ill to the remedy and come to hate the cure as badly as we do the cause. We don't hate the man who sells us straw hats, light underwear, screens and electric fans, which means we feel differently about summer.

This natural passion of ours has been our undoing financially. At the behest of the paragraphers and the news writers we have come to believe that no coal man can be a Christian. On the contrary we imagine that every man who sells coal is inhumanly avaricious and unless watched will walk away with our earthly wealth. To see that he is kept in bounds we have all turned policemen, in which we are aided anil urged by the newspapers. And, all of us think we are doing a wise and praiseworthy thing.

In the role of a policeman we naturally think of invoking the law. While on the trail of the coal man we naturally think of the Sherman act which inveighs against conspiracies to restrain trade. We believe that if we can prevent coal men from combining to put up the price, we are safe. Thus we are specialized policemen who, being sent for pickpockets.

would not arrest murderers or porch climbers. In our specialty, we have no truckle with manufacturers, with steel makers, with railroads, or even with the banks and so they consolidate to their hearts' content. The result is that every other business is centralized, trustified and controlled from a central point; coal —outside the anthracite field—is as loosely bound together as chaff on the thrashing floor. You and I cannot complain about this because it is our own handiwork and if we pay it is our fault. What we have done is easily understood even if not so easily undone. Centralized industry means efficiency—efficiency in buying as well as in production et cetera. Lack of organization means the reverse—it means no united or systematic effort to produce and sell scientifically. This means that a swarm of coal men flock to the offices of these big industries to sell them coal, only to encounter a cool-headed calculating buyer who follows machine methods and gets his coal at the lowest possible price. I need but make one or two suggestions to tell you what this means. The fuel purchasing agent of the Chicago & Northwestern Railroad told me that he buys 3,500,000 tons of coal annually for his great system. One man buys all the coal used on the 13,000 miles of railroad controlled by the Pennsylvania Railroad; and one man buys for

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THE PRESENT SYSTEM MAKES OUT- M LAWS ^L OF THE POOR. Being compelled to pay the household price and a bonus be- cause ^^^ they can buy but a basketful at

a time, they rebel and organized theft in railroad yards is the result.

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Francis L. Robbins. He organized the Pittsburgh Coal Co.. which has proved that amalgamation of companies in the bituminous coal field cannot standarize prices. On the contrary, its temporary success complicated the disorder in two years.

enormous orders, he receives bids and prices not from twenty-five coal companies but from at least 500. This duplicates the situation which enriched the oil refiner and impoverished the producer of crude petroleum; which enriched the American Tobacco Company and impoverished the farmer who grew the tobacco. It pits one buyer against a multitude of producers. In coal this has resulted in a situation which gives the centralized buyer his steam coal for less than it costs to produce it.

This is not merely theory pinned to logic; it is supported by facts and is the truth. For instance, to produce Illinois coal costs $1 at the mine mouth. The

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Carl Scholz. He organized the McAlester Fuel Co. to equalize prices and when that was broken up by the Government he helped to introduce the American Mining Congress into the coal fields. That association is now struggling for the same goal.

Dering of that company not only demanding a surrender of that small profit but that the company should accept a loss. The Dering Coal Company refused and was forced into the hands of a receiver. To multiply examples adds no weight; a clear and authoritative statement of a fixed policy is better. I get it from Charles A. Lind, purchasing agent of the Commonwealth Edison Company of Chicago, who buys 3,000 tons of coal per day. He said plainly that if the time ever came when he had to pay as much for coal as the cost of production or more, his company would begin to operate mines upon the coal land which it owned. His reason for this is clear and

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easily understood and I will let him give it:

"Coal is our raw material and if any profit is to be made on it by any one, our stockholders can use it as well as the stockholders of the coal company."

Then Mr. Lind added a word or two which explains his own attitude and that of every other centralized coal buyer He said:

"I know what this thing means and I'm sorry, really sorry. However, you can't blame me for buying coal as cheaply as I can. Whether you do or not, that is the purpose for which I am hired by this company. If I can't get it cheap enough they will get some one who can. If, under this system, I get coal for less than cost it is only business."

Mr. Lind is right. It is business and what he does is the natural thing under the existing system. You and I made the system and you and I pay the piper. With this situation made clear, it requires no wizard to explain why we pay. All business concerns itself solely to make a profit. Coal companies are business units—not eleemosynary institutions —and exist solely to make a profit. If they do not get it off one thing, they get it off another. If, as a result of your and my vigil, coal companies are prevented from organizing while all their big customers are uniting or have united, it stands to reason that steam coal is at the mercy of its users and that the users put on the screws to their own advantage. That gives the coal company no hope of profit from that source—but it must have a profit. You and I are not trusts and so we who buy small lots come in handy.

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R. R. Hammond.
He was president of the Derinif Coal Co. which was crush-
ed by the United States Steel Corporation. He was
one of the financial sponsors for the Sterling Coal
Co. which was ruined by an assault made by
the big users of steam coal.

We are not centralized buyers and can't beat down the price. For that reason we must make up the loss and supply all the profit. And that is precisely what we are doing. Upon every ton of coal delivered to your cellar and mine is put a price which gives the producer what he lost on his big steam business and what he ought to have and will have as a profit on his total production.

To make this clear, I will transcribe from the columns of the coal trade paper of which I am editor, a few current market prices.

It costs $1 a ton to produce the socalled smokeless coal coming from West Virginia. The "slack" or small coal which is used to make coke for the steel mills and blast furnaces is selling for fifty to sixty cents a ton; the domestic lump is selling for $2 to $2.25, on board cars at the mines. It costs about $1 a ton to produce Franklin county, Illinois, coal. The "screenings" or small sizes sell for sixty to eighty cents a ton: the domestic lump is bringing $1.75 to $2.

It costs $1.10 to produce Hocking Valley coal in Ohio. The slack is selling for eighty to ninety cents a ton ; the domestic lump is selling for $1.50. (The spread there would be wider but for the fact this coal mines—under rigid discipline of the miners—with a greater percentage of lump than in other fields. Having more lump to sell, the producers can recover their loss on the steam coal without any excessive burden being put upon the householder.)

I prefer not to burden your mind with figures which are duplicates. The fact is enough and the fact is that the "domestic" price, at the mine, is from two to four times the steam coal price— at the time the householder wants it. And, whether used for steam making or in the house, it all has the same heat producing power. Intrinsically there is no difference in it—no practical difference. The steam coal comes down from the seam with the same shot that brings down the domestic coal that is made up of the large lumps; the steam coal consists of the small sizes and the dust. The coal is the same and—in some circles it is conceded I know something about combustion—the mixture of small lumps and dust burns better than large lumps.

Resting upon the foregoing statements alone, I might lay claim to having made my case. But, I have just begun for the reason that new developments in the coal field have just begun to lay their hand heavily upon the householder. As matters now under consideration come to fruition, the price of your coal and mine

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must go up—unless something is done. I name a few of these things and compute their cost to you and to me.

The American miner today works only 180 or 200 days in the year. This is so because the competition upon which you and I have insisted has caused so many mines to be opened they cannot possibly be worked steadily. Still, the miner must live whether he works 180 or 300 days in a year. As a consequence, he must get for his 180 days as much as another workman gets for 300 days or thirtythree and one-half per cent more per day than the man who is steadily employed. Now, the miner is complaining that his yearly income is not enough. He knows it is useless to ask for more steady employment, so he asks instead an increase in his "mining rate." We will say that he asks for ten cents a ton and compromises on seven and one-half cents or five cents.

If any increase whatever is granted, it must be paid, must it not? If it must be

paid, who is to pay it?

We all know that this money can come from only one of two sources: The producer must take it from his profit, or it must be raised by increasing the selling price of the coal. The "mining rate"—the price paid per ton to the miner— has about been doubled in the last twenty years. The producer could not absorb that increase; if he could he was either making too

A SHIPPING PIER OF THE BALTIMORE & OHIO RAILROAD AT TIDEWATER. This is an expensive modern device for transferrin? coal from cars to ships. It must make a profit: interest on the investment in it must be paid; the operating cost must be met. This is all charged against the coal—

the domestic coal.

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