3d Session SENATE No. 323 STABILIZATION OF COAL INDUSTRY EXTRACTS FROM REPORT OF THE ROYAL COM- TOGETHER WITH EXTRACT FROM SPECIAL CIRCULAR NO. 744, PRESENTED BY MR. BULKLEY FEBRUARY 17 (calendar day, MARCH 3), 1931.-Ordered UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1931 SECTION I. APPENDIX No. 24 THE COAL INDUSTRY IN VARIOUS COUNTRIES, WITH SPECIAL REFERENCE TO ATTEMPTED SCHEMES OF REORGANIZATION The following statement on the coal industry in Great Britain, Europe, and the United States of America has been prepared from publications by the economic committee of the League of Nations, supplemented by information received in response to inquiries instituted abroad on behalf of this commission, and by notes from other available sources. Other information was before the commission but, being confidential, can not be published. WORLD POSITION There are only three important countries of export-the United Kingdom, Germany, and Poland-so that the international problem is confined mainly to Europe. The export trade of the United States in normal circumstances is concerned mainly with Canada. In spite of the progress made in recent years in the matter of mechanization, wages necessarily constitute a higher proportion of total costs than in most other industries. At the same time the opening up of new mines or the sinking of new shafts is an expensive and lengthy process which can not be readily undertaken in response to any sudden change in demand. As a result of these facts, any increase in demand has led in normal times to a rapid and substantial rise in profits, and any decrease to an equally rapid and substantial reduction. Profits, and wages under certain systems of remuneration, tend to fluctuate to an exceptional degree; and as the margin for immediate economies except out of wages is a small one, any depression in the industry is likely to affect wages or employment with exceptional rapidity and force. The statistics of consumption in recent years show that the demand for coal is unusually steady and is but slowly affected by changes in price, and the uninterrupted and rapid growth in the output of coal during the quarter century which terminated with the general economic boom in 1913 was accompanied, except in the United States of America, by a steady upward trend of prices. In these circumstances, the profits reaped from coal mining were such as to induce a constantly accumulating number of companies to enter into the field of competition. Little incentive was given to economy in mining, to coordinated production or marketing, and to the study of alternative sources of power or alternative uses of coal. Owing to the effects of the war the price of coal in 1919 and 1920 soared to unprecedented heights. A powerful incentive was then given to consumers to search for every means of economizing its use, and for every available alternative source of energy. The most important post-war change which has led to the existence of a coal problem is the exceedingly slow increase in the world consumption of coal in the post-war period as compared with pre-war years. In the period 1886 to 1913 world consumption increased at a rate of rather more than 4 per cent per annum. In 1928, however, the world consumption of coal and lignite was only 4 per cent greater than in 1913 ("world consumption" here being taken as equivalent to world output). It follows that during the whole 15-year period world consumption of coal has increased by an amount not exceeding the normal pre-war expansion in one year; whereas in the same period the production of new materials, foodstuffs, and world trade has increased by over 20 per cent. The most important factors contributing to this falling off in the general demand for coal are, firstly, the progress of technical improvements resulting in the economy of fuel in power production (for instance improved methods of combustion; increasing indirect instead of direct use of coal for the generation of gas and electricity; and modern processes which make it possible to employ inferior grades of coal formerly considered as waste products); and, secondly, the development of the use of substitutes for coal in power production. The growth in the competition of oil fuel also has been very marked since the war. The cumulative effect of these lines of development, namely, the practical application of science resulting in a diminution in the demand for coal, and the exploitation of their own resources during the war by countries hitherto dependent on external supplies for coal, has been the steady widening of the gap between demand and the immediate productive capacity. It is this surplus capacity which is the root of the present coal problem. By "capacity" is meant the immediate power of existing mines to produce coal without the investment of any additional fixed capital. The "surplus capacity" is equal to the difference between the amount which existing mines, without any additional investment of fixed capital, could produce and the amount of actual output. The lack of balance between capacity and consumption is thus responsible for the difficulties encountered in the European coal industry, and has led to the coordination of effort for the rationalization of production set out hereunder. An account has been prepared of the principal features of the coalmining industry, the difficulties that have arisen, and the measures adopted to overcome them, in the chief producing countries of the world, arranged in alphabetical order. BELGIUM Coal consumption in Belgium in 1927 amounted to 34,000,000 tons, whereas domestic production there reached only 27,000,000 tons. Costs of production are high, owing to the geological characteristics, which make working conditions extremely difficult. Before the war the coalfields in the south were the only ones worked. After the war, the new Campine coal field in the north was opened up and is already responsible for 9 per cent of the total Belgian production, and is far from having reached its maximum output. |