Ending the Coal Dilemma
MENTION coal in any public forum and two groups instantly go to grips. One is a very large group led by anyone who discusses any question in broad generalities. They will say, — ‘America has four thousand billion tons of “soft,” or bituminous, coal in reserve. It is using but six hundred million tons a year. In a hundred and ten years we have mined less than three tenths of one per cent of our store. There is plenty here and it is easy to get at. The shortage, then, is purely artificial.’
From these facts, they make obvious deductions— that the proper development of coal is artificially throttled, for example. Expanding the theme to a world-basis, they say, —
‘The world has vastly more than eight thousand billion tons of coal. Nearly all of it lies north of the Equator. The intense suffering of the Allies for coal is wholly unnecessary.’
The other, much smaller group, led by men like the late Dr. Holmes of the Bureau of Mines, admit the probable accuracy of the statistical data but insist on a different interpretation. They say, Probably the larger half of America’s coal is west and south of the Missouri River, if the unmeasured reserves of Alaska are included. That, with transportation in its present state of development, means nothing to New York, Philadelphia, or Boston.
‘Also, Illinois is the third largest coal-producing state. Yet its coal is of such indifferent quality and is so difficult to manage in available furnaces, that little of it travels to market, even into the adjoining state of Indiana.
‘For these reasons, the coal question is not solved by considering the quantities in the ground. It is, in both senses, a matter of availability — of being available at the point where it is needed and of being suitable for the desired purpose.’
Expanding the American illustration to cover the shortage among the Allies, this small group says, —
‘Roughly the world-deposits are in America, Russia, China, Great Britain, Germany, France, Belgium, Japan, Australia, and some islands of the South Pacific. The deposits of China and Russia have never been developed. Japan, Australia, and the South Pacific islands are too far away. The coals of Germany, Belgium, and more than half of France were “bottled up” before December, 1914.’
These are but statements of known facts. The wealth of coal meant nothing. It was not available. The obvious truth was that the western Allies had to fall back upon the small, low-grade mines of central France and the coalfields of Great Britain. That was the situation at the beginning of December, 1914.
That state of affairs placed Great Britain in this position. An army uses, on the average, close to ten tons of steel per man per annum. It requires, on the average, about five tons of coal to produce a ton of steel. That means that, for each soldier in action, there must be produced, in round numbers, fifty tons of coal. In England, each miner produces about 350 tons of coal per annum. Therefore, one miner can supply the coal that will support seven soldiers. (In America we estimate that one miner can support about twenty soldiers, as each produces more than 1,000 tons a year.)
Great Britain did not know about this relation between soldiers and miners until a year of modern war had taught her how much her soldiers would need. She had had experience, however, in manœuvring her navy. The coal needs there were measured almost to the pound. Accordingly she commandeered enough coal for the navy, but made no specific reservation for the army. The records of the first year of war carry hardly a mention of coalsupply; and where it was bulletined as a need, the most general terms were used. Indeed, she was so hard pressed for fighters and so little impressed with the importance of coal, that she actually called miners to the colors. This reduced her coal-supply so quickly that she was forced early in 1915 to contract sharply her shipments to export markets.
Whether Great Britain or France realized it, is not material. The fact is that, whereas demand rose steadily as the army became larger and more active, the supply diminished quite steadily. Great Britain had, therefore, an acute and growing coal-shortage from the moment of her entrance into the war. Under all the circumstances surrounding the world’s sources of coal, this western European shortage could be made good by America only. So, while both countries were blissfully ignorant of its existence, the coalshortage grew in Great Britain and was transferred instantly to the broad and willing shoulders of America. Our coalproblem, therefore, has been one which we assumed in Great Britain’s behalf.
Everyone has been so easily deceived about the principal industrial problem of the Allies because no one has recognized it as a coal-shortage. Great Britain expressed it in another way, and believed that she expressed it precisely. She said that a ship of a given capacity can carry only so much freight per annum. With the number and capacity of ships limited, it would, she said, prove a waste of her most precious possession to carry five and a half tons of coal, a ton and two thirds of iron ore, and three quarters of a ton of silica sand, in order to make one ton of steel on British soil. If the steel itself were made abroad, the ships could carry more than seven times as much as could be made. So, concealed as a movement to conserve shipping, the coal-shortage of western Europe came bodily to America.
New England was among the first sections of America to manufacture munitions. It, sooner than any other section, began to work its factories full time, and then over-time. It, before any other district, began to invite in new workers. Therefore, it was first to feel the need of increased quantities of coal. It was the first place where the coal-shortage was felt. My records are conclusive that New England’s coalproblem appeared about the middle of September, 1915.
A Richelieu, a Disraeli, or a Roosevelt sitting at the head of our State Department would have seen in the heavy buying of munitions something more than Britain’s temporary unpreparedness for such a war. Especially when Lloyd George sent D. A. Thomas (later Lord Rhondda) to America to make long-time contracts for war-supplies, and to assure them even at the cost of buying equipment for American factories, a far-seeing statesman would have realized that there was some grave and basic defect in Britain’s capacity for war. He might even have analyzed back the coal-pile. Indeed, he could hardly have avoided it, since the coalshortage in America, following so closely upon the placing of orders for munitions, had appeared in the centres where this work was heaviest. Unfortunately, the American premier, Mr. Bryan, was then in no mood to consider such things as the details of organization for war.
America was confronted at once by a stern fact with which she had to deal. Her factories had sold munitions and were manufacturing them. This called for increasing quantities of coal. As it was supplied, other users, working on goods to be used at home, began to feel the lack of coal. Even household supplies were endangered. America suddenly awoke to the fact that she was running short, of the one commodity which had always been the most plentiful. The sudden transfer from too much to too little came as a distinct shock.
Western Europe was short of coal because it could not produce it. So it passed the burden to us. We too were short of coal, but could pass the burden to no one else, because we were the last resort of the world. Therefore, we must do the only thing that remained. We were forced to stimulate production. The conclusion is so obvious to everyone after three years of fumbling with the problem, that it may seem odd that our government did not at once begin to organize our mines to produce more coal.
There are two reasons why they disregarded repeated warnings and allowed coal to drift into a grave crisis. There was not in the government at that time any man sufficiently familiar with coal to recognize the gravity of the worldsituation. That is quite natural, since coal had never been considered an important commodity.
What goes deeper into our national programme is that it has never been any part of our national political scheme to stimulate in any definite way the production of anything. Whenever our political thought, had dwelt upon business, it had concerned itself with other aspects of the subject. Our protective-tariff policy, which was our most pronounced expression of opinion about business, had to do almost solely with the price at which commodities should sell.
The indirect purpose was, of course, to stimulate industrial growth, but the primary object was to keep prices above the level charged by the outside world. The Sherman law took root in another phase of the price question. It aimed to keep competition alive, that prices thereby might gravitate to the level permitted by the tariff wall. Thus, while our whole business scheme presupposed production on a large scale, we sought to procure it by the price policy adopted rather than by any direct or specific stimulus to production itself. So, when the need to provide for more coal came, the required action was wholly outside the realm of organized political thought. To suggest a fixed objective or programme to any industry was something we had never done. On dozens of occasions, to have resorted to such a programme would have solved our most perplexing problems in the easiest way. But we had never deserted the beaten path to try the experiment.
Vistas of interesting possibilities are suggested by this contrast of methods. We have had for years a growing need of transportation. The steam railways upon which we relied were disposed to satisfy the demand only on their own terms. Our political leaders consented to be drawn into a controversy over terms, when they could have solved the whole problem by a definite programme to stimulate other forms of transportation, such as electrically operated railways, barge-lines on our waterways, and motor-truck haulage on good roads.
Or, confronted by a problem in copper and other semi-precious metals, we might have encouraged the leaching process for the treatment of lean ores. Instead, our political leaders tried to whip the smelter combination into a mood to be reasonable. Again, confronted by an oil-problem, we might have stimulated by a clean-cut programme the production of oil from shales, or obtained refined oils from coal by-products, and so have served all purposes. Instead, our political leaders tried to whip the oil-refining company into a mood where it would act as the politicians desired.
The outstanding fact is that, since we had never tried so simple and so effective a remedy for any public ill, we were wholly without experience in stimulating production of anything by any fixed programme. Because our political thought moved in other grooves, no one in official life could see, in the world coal-situation, any need to do something wholly new. Or, if he did see it, no one had the courage to venture upon such an innovation as to try directly to stimulate output in orderly fashion. Still, when the world needed more coal, our clearly indicated line of action was to organize in order to produce it.
It is always interesting to inquire what any state could do in such a crisis. No act of Congress had designated any bureau to stimulate coal-production. If in an emergency any department or bureau should try to assume the leadership, it would have to contend with the jealousy of the others. Also, any such assumption of power would be opposed by both coal-producers and coalconsumers. They would resent what they choose to call bureaucratic rule.
In such a crisis it would be equally difficult to find in any government the character of leadership which would be satisfactory to a majority. The United States Geological Survey and the Bureau of Mines are manned by scientists who by nature and habit work along lines which are fundamentally sound. It would lake them some time to get started, and results would come slowly at first. Such a policy is possible in scientific bodies the personnel of which seldom changes.
The Federal Trade Commission, on the contrary, is essentially a political body, whose personnel is constantly shifting. No member’s tenure of office has covered a sufficient length of time to allow him to understand any one of the dozens of industries under inquiry so thoroughly that he could formulate a sound programme for it.
If the scientific bureaus should adopt a slow-moving but sound programme, the Trade Commission could be relied upon to complain against the absence of quick results. On the contrary, if the Trade Commission should try to force a hastily devised programme on the country, the coal men and the scientific societies would prove it unsound.
This is precisely the dilemma in which the country found itself in the first, stage of the coal-shortage — from September 15, 1915, to July 1, 1917. There was only one way out of it, and that was not adopted. The Department of Commerce has from its inception neither made enemies nor aroused suspicion. Many observers believe that, without precipitating bureau jealousies or disturbing business thought, this department might have called the transportation interests and the coal-producers into conference and persuaded them voluntarily to work in harmony. But the opportunity was neglected.
By October, 1916, the shortage had spread from New England, to embrace the territory east of a line drawn north and south through Harrisburg, Pennsylvania. It was threatening even the Ohio and Mississippi valleys, as large quantities of coal from there were being moved into the east.
Although evidences of distress were coming from every city, and although, for lack of coal, the building of the interstate Commerce Commission was closed for three days, Washington saw no need to take definite action. It was probably held back by fear of arousing bureaucratic jealousy, although it may have been awaiting some such indication of public interest as the spectacular ‘preparedness parades,’ which an effervescent public saw fit to organize to warn a complacent Congress that the country was in danger. At any rate, the country had to pass through a series of weird and ludicrous contortions before it could awaken Congress to the serious situation in coal. City officials conducted investigations, and in their reports advocated that municipalities own retail coal-yards. City newspapers printed lengthy tirades against all coal men, but in particular assailed the jobbers, whom they called speculators. County and state officials conducted lengthy public investigations, and in their reports advised governors to seize the mines. To one unfamiliar with American political methods this confusion of report and recommendation must have gone further than to show dense ignorance of a fundamental question, by hinting at the absence of any sensible directing force at the capital. As plain matter of fact, this was all part of the political game — the preliminary. Our democracy was merely informing its national representatives that our people were worried about coal.
When this uproar had continued for some six months, war with Germany was declared. Almost at once the Council of National Defense was created, and under it a committee on coalproduction, headed by Mr. Francis S. Peabody. The suggestion, both of the committee and of its chairman, was made, undoubtedly, by Franklin K. Lane, the Secretary of the Interior. No politician except the head of that, department, which contains two scientific bureaus, — the Geological Survey and the Bureau of Mines, — would have outlined the less spectacular but deadly accurate solution of a production committee. And no head of any other political department would have chosen as chairman of that committee the most conspicuous coal-producer of the country. And no head of any other department would have cut down the list of committee members until he had some twenty men, eighteen of whom were coal-producers with remarkable records.
The Lane-Peabody committee acted on the theory that, when there was enough coal for all, prices would adjust, themselves. So it centred on production, and after three months’ work was showing hopeful results.
Concurrently the Federal Trade Commission, under the authorization of Congress, was investigating the coal business. It paid attention mainly to the prices charged.
The clash between the two bodies was inevitable, with the outcome hardly in doubt. The production committee was working quietly on a programme which would bring prices down ultimately. The Commission was working somewhat noisily to bring prices down precipitately. The people were restive under the prices charged, were suspicious of coal men anyway, and were openly in sympathy with the Trade Commission. This situation led to a fatal mistake by those who were trying to do the right, thing. Rather than go to the people with a frank statement of their aims, Mr. Lane and Mr. Peabody decided to forestall the Commission, which was clamoring for price-fixing by law. To that end, they called the now notorious Lane-Peabody conference in Washington on June 26, 1917, to reduce coal prices by an understanding.
This gave the Trade Commission the very opportunity it wanted. It admitted that prices were wrong and could not be rectified by the programme then being followed. It made effective use of this tentative admission, and on the point of policy involved was able to cause a split even in the President’s Cabinet. Mr. Baker and Mr. Daniels agreed with the Commission, taking a positive stand against Mr. Lane. This discredited the whole production theory among the people, by misinterpreting, if not indeed misstating, the facts about the price understanding. That is, the public was given to understand that, the prices named were the final concession of coal men; whereas Mr. Lane and Mr. Peabody intended that they should serve only until production costs could be determined.
The downfall of the Peabody committee ended the first stage in the coalproblem. It gave way to the price-fixing programme, which was the second stage, — from July 1, 1917, to about February 1, 1918, — and which, after a six months’ trial, was commonly admitted to have failed.
If I speak plainly it must be remembered that I am dealing with a commodity which enters vitally into our warprogramme, and am reciting incidents which must have their place in history. It may be unpleasant to speak with candor, but if the truth is to be told there is no other way.
The Federal Trade Commission had a well defined ambition to control the coal-industry. Indeed, William B. Colver, now its chairman, and several of its employees had, while the Lane-Peabody conference was still sitting, appeared before a Senate committee to outline their plan of control. At about, that time, Mr. Colver had persuaded Senator Pomerene of Ohio to present his plan to Congress as an amendment to the Lever bill then under consideration. It is now a part of that statute.
Senator Pomerene later went on record in letters to the effect that it was never intended by the Senate committee to allow the President to name the Fuel Administrator. The Senate agreement was that the Federal Trade Commission should be given control of coal by law. When the Senate committee plans miscarried and the President was, by accident as it were, given power to nominate, Mr. Colver became a candidate for the position.
The provisions of the Lever bill become important under the circumstances. They call, primarily, for rigid control of coal-prices, and, in certain eventualities, for the seizure of the mines. As an alternative, the President may buy all the coal at the mine mouth and resell it through his own agency.
Mr. Garfield, upon being named Fuel Administrator, inherited a scheme of fuel-control written into the statute books to fit the ambitions of the Trade Commission. He has never been allowed to express his personal preference for methods, and cannot do so to-day. He was compelled to obey the statute. This instructed him to fix prices, and allowed him to fashion a scheme of distribution. If it did not happen to fit the emergency, the President might seize the mines.
By disregarding production, and by riveting attention on prices, the political thought of Washington was at least consistent. It expressed the same theory about production that it had in the Sherman law and tariff measures. This theory, voiced so often and so eloquently since, was in substance, ‘If the price is right, the production will come.'
This time-honored and slightly threadbare theory might have worked automatically to increase coal-output, if the railroads had been able to carry more coal to market; if demand had not grown too rapidly; if labor had been abundant; if the mines could have bought and used all the machinery they needed; or if an experimenting fuel Administration had not killed minecapacity and railroad-capacity with priority orders which bred congestion in all terminals. But no price was high enough to buy a way out of this confusion. The situation called for men who could think clearly and boldly. Mere money could not bring an automatic solution.
In the whirl of confusing events which followed immediately upon the introduction of the Trade Commission’s price-fixing plan, the need to stimulate production was lost to sight. All efforts in that direction stopped for nearly a full year. This was, perhaps, only natural under the circumstances. The politicians were in control, with tremendous powers in their hands. Coal men did not care to oppose them. Also there were, when war came, about four thousand coal-producing companies. The heads of some of them were ambitious. Mr. Peabody’s committee, however, consisted of only twenty men, so the ambitions of all operators could not be satisfied, and some jealousies arose. In time there came such ill-feeling between those who were honored and those who were ignored that, when the Peabody committee fell, its aims and ideals were buried ceremoniously with it. Since that committee had concentrated upon production, that subject became all but taboo in Washington high circles.
Thus it happened that we changed our coal-programme violently when the nation was at a critical stage in its warpreparations. Thus it happened, also, that we adopted a new and untried plan which brought, on the crisis in January, when it was necessary to suspend all business for a period.
When it is recalled that our coalshortage was borrowed from Great Britain, the event which precipitated that suspension order takes on a new and added significance. Some of the very munitions which England bought here because she did not have the coal to produce them at home, were, in January, on board ships at our Atlantic coast ports. The ships could not sail because they had no coal in their bunkers. However, an abundance of coal was at that time standing less than five miles from shore, locked in the congested railway yards. Great Britain was then preparing for the spring campaign. She needed those munitions, and was on the point of dispatching colliers to New York from South Wales carrying bunker coal. It would have proved a national disgrace if our ally had relied upon us for coal, and if we had failed to move it even to our own ports. Mr. Garfield decided to stop at nothing which would relieve those eastern ports so that the coal might get through to the waiting ships.
This congestion was the natural outcome of putting emphasis on distribution instead of production, and of trying overnight to destroy a distribution system which it had taken years to build, only to put something new and untried in its place. So the suspension order served to prove to Mr. Garfield that the Federal Trade Commission plan was a dreary failure. He could not abandon it entirely because it was written in the law. But he could, and did, modify it radically.
The gradual return of the government to the production theory of Mr. Lane and Mr. Peabody constitutes what I call the third stage in the coalproblem. This new movement began about the end of February, 1918. It is progressing slowly — and somewhat clumsily — as I write. Mr. Garfield, informed frequently that transportation was the sole key to this complex coal situation, resolved to simplify it by limiting the movement of coal from any mine to what might be considered its natural market — to points, in other words, which required but a short railhaul. His theory was and is that each group of coal mines shall become responsible for supplying the market immediately surrounding them. On this theory, he zoned the country. This was an attempt to increase production by trying to give the mines more cars to load. He believed that, if prices were attractive to operators and if cars were available, enough coal for everyone would be produced.
Our War Department, however, was then duplicating Great Britain’s mistake of taking coal-miners into the army. It was decided to allow the draft law to operate impartially. If it took coal-miners along with clerks, it could not be avoided. We would get coal somehow. This did not work well. Indeed, Mr. Garfield’s zoning plan was so beneficial to transportation, and the calling of miners to the colors was so destructive to mine-capacity, that the point was reached in spring and early summer where the railroads could carry more coal than the mines could produce. Still, on no day until the third week in July were shipments of coal to market equal to the daily requirements under the Fuel Administration’s budget.
Alarmed over the fact that the potential shortage was growing daily, the United States Fuel Administration and the National Coal Association concurrently in the first week in June appointed committees to expedite production. This incidentally was the first action, since the coal-problem became acute in September, 1915, which indicated that the politicians, the scientific bureaus, and the coal men had come to agree to anything as being the true keynote of the problem, and had concurred as to what was the right thing to do. It took us almost three years to bring this agreement. Still, the fact that the cure for a coal-shortage is more coal is so obvious, that it should have been recognized after even cursory study.
The whole trouble, I believe, arose because everyone underestimated the intricacies of the subject. Coal had been so abundant that nearly everyone thought little about it. Those who did study it formed no high opinion of the average man they found in it. Thus the opinion grew that the coal business was crude and easily understood. So little was known about its extent or complexities, in fact, that an official of a great corporation, national in scope, called me in one day to discuss with him, seriously, his proposal that his sales-organization take over, as a sideline, the distribution of all the coal of the nation. And, in the plan which it outlined to Congress, the Federal Trade Commission actually proposed that control of the railroads, the coal-mines, and the waterways be pooled under its jurisdiction. As an alternative, it proposed that all the coal should be bought by the government at the mine mouth, and should be distributed through the Federal Trade Commission’s office.
Such ridiculous proposals could spring only from dense ignorance of the complexities of any industry which enters so intimately as does the coal industry into every phase of our national life. It was ignorance of the fundamentals of coal — coupled with a failure to understand the new international significance of American coal — which led to most of the trouble and distress. Experiments and vast experience have now proved the falsities in the original conception. As our officials have come to understand the home situation fairly well, and to comprehend, after a fashion, the international coal-situation, the need to produce more coal is openly admitted. So the major part of our troubles now has been buried with our ignorance.
Having made so much progress, we must look to the future to see what still is in store. I told a Senate committee last January, and still believe, that our gravest danger lies in 1919. The production committees are, to-day, furiously at work. But being under political influence and domination, they are a bit spectacular. Old-fashioned stump speeches, with much ‘flag-waving,’ are made to the miners; half-sheet, fullsheet, and two-sheet posters, filled with political maxims and catch-phrases, are hung in the mining camps; and letters are written and dinners given to the operators. Indeed, all the hackneyed claptrap of a political campaign is employed to arouse ‘interest.’
Meanwhile some solid business questions remain to be solved by cool thinking and courageous acting. I may put the matter in this way. If the miners who remain outside the army are to work, they must have tools in good repair. Yet, it took three months of vigorous campaigning to persuade the Priorities Board to surrender control over mine-supplies to Mr. Garfield, that he might so organize distribution that repair parts would move expeditiously to the mines. As I write, the heads of Mr. Garfield’s bureau have just been appointed.
If the miners are not available, their places must be taken by new machines or by an intensified use of the old ones. Nothing up to the date when this is written — August 1, 1918 —has been done, either to increase the supply of new machines or so to modify the rules of the miners’ union as to allow constant use of the old ones.
If the machinery, finally, is to be supplied and utilized, either the old mines must be expanded or new ones must be opened. Nothing, to date, has been done along that line.
Finally, if the mines are fully manned and equipped mechanically to produce the needed coal, they must have arrangements for temporary storage of coal at the mines, to offset the irregular arrival of cars under the ‘tipple.’ The mines to-day have no such devices, and nothing is being done to provide them.
But, assuming that these matters are all attended to finally, it yet remains to provide cars and engines to carry that coal to market. It is safe to estimate that to keep the mines running requires fifteen times the number of cars that are required to hold the output of one day. That is, it takes each car, on the average, at least fifteen days to make the round trip from the mine to market. So the railroads must have and use fifteen cars for every car that the mines can load in a day. So far, this orderly adjustment of carrying capacity to needed coal output has not even been discussed.
Because of this complete lack of methodical preparation, I still believe that our worst coal experience will come in 1919. We can hardly hope to pass through another disaster like that of last year without a sharp change away from the present form of coal-control. Therein lies even a greater danger than we now face. Already in Washington one hears much of an impending decision to seize the mines. Indeed, sentiment at present is setting so strongly in that direction, that it would seem to require but an insignificant clash of interests in coal and the government to precipitate that action. It may come at any time.
With what I believe to be at least a fair understanding, of coal-mining, I venture to say that, if one tenth of the mistakes are made in operating the mines which were made when experimenting with distribution, we shall lose more production in six months than this nation can develop in six years. I say that understandingly. Mines are like bridges. Their strength lies in the observance of their engineering rules. Each mine has its own engineering problem. Unless worked according to its own engineering key, it will destroy itself very quickly. To tamper with the operation of these mines, without a thorough understanding of their engineering problems, is to invite disaster and to get results fatal to the American industry at the very moment when Great Britain, short of coal, is relying upon us for it. Indeed, if we do not supply it, no one else can.