Our Natural Resource Problem
I
THE proper disposition of our natural resources raises one of the largest public questions which has been discussed in a half century. One might as well try to describe the course of a sailing ship as to write a connected history of the debate. It seems to have gone on a different tack with each shift of the political wind. And yet, although our discussion has pursued an erratic course and has been fitful and indifferently sustained, it remains true that it seems to have been headed toward a known goal. That fact justifies a present discussion which strives at impartiality, even though the whole subject may be embroiled in national politics long before this article can possibly reach its reader. The fact that this paper is written a considerable time before any platform declaration on the subject should serve to lift it out of the zone of politics and place it upon the higher plane it is designed to occupy.
I hope we may avoid any possibility of confusion by agreeing at the outset upon a definition of what shall be included in a proper classification of natural resources. I do not recommend my definition to the lexicographers but I trust it will serve admirably the purpose of this article while leaving others at liberty to expand its scope to serve their own purposes in their own discussions. What I mean by a natural resource is; ‘A product extracted from beneath the surface of the earth; something which is not reproductive in character — our extractive industries, so-called.’ Thus, my definition embraces all minerals, coal, and oil. It excludes water power, which is the resultant of persistent creation, and timber, which over long periods is reproductive. It excludes, obviously, all farm and animal products as they are essentially reproductive in character.
Confessedly, my definition will prove far too narrow to suit many. Even so, I believe it safe to draw my line between those things which afford but one crop in the lifetime of a race and those other things which yield a daily, an annual, or a periodical crop throughout the life of a race, no matter how long. Certainly, to put such a limitation as I have done upon the definition, serves to intensify the issue because it confines the discussion to those things the supply of which must steadily grow less and the problem over which, assumptively, must become more acute with the passage of time.
The matter of a definition having been attended to, the whole of the resulting question may be brought, quickly before the lay mind by reciting what the late Secretary Lane understood to be the point of view on natural resources of the late President Wilson. Mr. Lane seldom would trust his memory so far as to indulge in direct quotation. I never heard him quote the President. His charm lay in his ability to give to one his impressions from what he had heard. When in such a mood, his pictures were prone to be vivid because he heard all that anyone had to say to him, saw situations clearly, and had a peculiarly graphic way of phrasing what he meant. The impressions he gave me concerning Mr. Wilson’s views on natural resources were to this effect: —
Political expediency or ambition may have furnished the excuse, many times, for the world’s wars, but nearly all of them were bottomed on sterner stuff; each had some sort of an economic base. Thus, in the earlier periods of civilization, the great struggle was to obtain sufficient food to sustain the expanding population. Food products were to be found, of course, in abundance only in the fertile valleys. And the most fertile valleys were to be found generally along the larger streams. Therefore, the wars of earlier periods were fought, for the most part, to gain control of rivers. In time, these rivers became the objectives of nearly every plan of expanding military strategy.
As we elaborated our industry, by expanding more and more into manufacturing, the struggles between peoples became more concerned with those things which supply the raw materials of our manufacturing enterprises. Thus one nation could never feel quite comfortable or secure so long as it was dependent upon another nation for the raw materials necessary to its commerce and industry. The very reaching out for a controlled supply of these things affords the key to the whole of the world’s colonization schemes by the advanced nations. And it was this competitive search for raw materials which caused those bickerings which have led, through political channels, to war.
Mr. Wilson was, of course, devoted unreservedly to the cause of universal and continuing peace. To make that peace secure, he was eager to remove the most potent cause of war. And as the most effective means to that end, he was constantly contemplating the project of arranging, ultimately, an international pool of raw materials.
Mr. Wilson employed a far broader definition of natural resources than mine. He included wool and a few other things which, I believe, fall properly within quite a different classification.
Mr. Wilson’s critics are prone to say that his ideas existed in his masterful rhetoric but not elsewhere; that he talked much and beautifully about many things but never did any of them. My experience with this particular subject leads me to believe quite differently. I am convinced that Mr. Wilson gave, by the proposal just outlined, a drift to our discussion of natural resources the end of which we have not heard, and which those of us who are now alive may never hear. In addition, he did much to put his ideas into practical effect, — perhaps as much as could have been done, — and progress along his line is steady and considerable.
In detail, Mr. Baruch, representing Mr. Wilson’s War Industries Board, went to Europe in the summer of 1918 and effected, not without some difficulty, an actual world pool of naturalresource raw materials, for the period of the war. In his report Mr. Baruch tells of the resistance he had to overcome. Then he adds, naïvely, that Great Britain consented to his programme when its leading men became convinced that they could get our natural resources on no other terms.
It seems evident that Mr. Wilson realized that before a world pool of anything could possibly be effected, — before we could have international control, in other words, — a form of national control must first be exercised. That is, many nations could hardly bind themselves to an equitable division of the world’s natural resources until each controlled what it proposed to share with the others. Even to avoid war, no nation could undertake to practise that peculiar kind of selfdenial which gave away the private property of its citizens. This was never Mr. Wilson’s idea nor was it that of his principal advisers. Instead, he contemplated a speedy acquirement of national control of everything which he included under his classification of natural resources.
Thus, in September 1919, on the eve of one of his messages to Congress, I was informed that Mr. Wilson was about to recommend the nationalization of our coal industry. I at once went to Mr. Lane, his Secretary of the Interior, and asked him to go with me to see the President to discuss the whole matter. I learned then that the programme contemplated partial but growing control of one resource at a time. On Mr. Lane’s eleventh-hour recommendation, the nationalization of coal was not then proposed. However, it seems to have been held in abeyance rather than abandoned. It soon became evident that action was postponed until a far more pretentious project could be debated and, possibly, carried into effect.
II
It seems to have been in furtherance of this larger project that in May 1920 Dr. Garfield, who had been a member of the War Industries Board, formally presented to the National Coal Association a proposal that an industrial cabinet be established. His plan provided that each member of this newkind of cabinet should have control of some natural resource. He proposed that, first, a small cabinet only should be formed — preferably of five members. The members of this cabinet should meet with the House but should report directly to the President. They were, thus, to effect a direct contact between the Executive and Congress.
As we discussed it prior to its formal announcement, Dr. Garfield was particular to explain that these were not new ideas. He told me that he and Mr. Wilson had worked them out together when both were still at Princeton. Indeed, he said plainly that the whole of the elaborate war machine was but putting to a test their academic theories previously arrived at. And this experiment was designed to test their general efficacy. He believed the experiments had worked quite well and that a solution had been found for problems which disturbed the country in times of peace.
Knowing as much as I did of the Wilson history in connection with natural resources, I found it impossible to escape the belief that Mr. Wilson’s idea had dominated the action of the Conference for the Limitation of Armament, which met in Washington in December 1921, and which made disposition of certain oil resources of Asia theretofore controlled temporarily by Japan. I have found it impossible not to believe that the Wilson idea was carried into the ‘Disarmament Conference’ by Mr. Hoover, who had been a member of the War Indust ries Board and who was, at the time, a member of Mr. Harding’s Cabinet. The point of contact seems too close to ignore, especially when the accomplished fact, is so closely akin to the original theory.
Also, it now seems quite clear that Mr. Wilson’s plan for the government of certain backward countries by the more advanced nations, under mandates from the League of Nations, was directly in the interest of international control of any natural resources which these backward countries might possess. This last fact is mentioned not because it has any immediate bearing upon our own problem but to indicate the tremendous sweep of the theory as it lay in Mr. Wilson’s mind. Obviously, as Dr. Garfield said, this was no new plan — no overnight growth. It was a matured project.
Naturally, it is asking too much of the average layman to expect that he shall grasp so much of the philosophy of history as to understand Mr. Wilson’s theory as to the direct relationship between the struggle for natural resources and the outbreak of widespread wars. Mr. Wilson, with his persuasive phrasing, might have aroused in the great mass of people, a temporary sentiment for international domination of such things. But the permanent residence of any such an abstract idea is naturally in the minds of statesmen rather than in those of the public. It was clearly out of the question to keep popular sentiment alive longer than was necessary to create the machinery to do the real work. Thus, when Mr. Wilson retired and when men of less capacity tried to carry his theory into practice, they had to re-design the programme to make it fit within the scope of their own limited capacities and the mediocre actions of popular government. The immediate effect was that the discussion lost the whole of its spiritual significance. Then, through five years, it has descended from one plane to another until finally it has gravitated into ‘practical politics’ without much to lift it above the level of the sordid.
That is to say, when the War Industries Board was disbanded, its residuary legatee, so to speak, became the Council for National Defense — an exchange of live ardent crusaders for the Wilson idea for five overworked Cabinet officers, which resulted in the delegation of the work to habitually indifferent bureaucrats. The Council lived a precarious life for a year or two and, disappearing, passed the project on to a subdivision of the Department of War. Since the personnel of the latter changes rapidly, the great spiritual formula, with which the project began, had to be reduced to a code which would fit into a card index and a set of Army regulations. Thus the purpose changed quickly from a great international movement to prevent war into a mere departmental means of mobilizing the nation’s resources in event of war. Because the compilation of reports and records involved considerable expense, which had to be justified, an immediate use had to be found for the information. That search resulted in a decision to carry over into our peace-time organization two of the devices which had been found most useful to our war machine, namely, the standardization of equipment, and the efficient use of our man power. Then, as the fiscal difficulties of the nation grew, these major efforts at physical reform developed a companion, namely, the determination to commit the Government to the stabilization of all of its industries.
This seemed, at first, to have no other purpose than to enlist the Government in the service of our business men for the utilitarian purpose of increasing the profitableness of our industry. The practical effect, however, was precisely what Mr. Wilson and Dr. Garfield had in mind — it tended to bring our natural resources more and more completely under government control. Thus we have arrived at the present stage where the whole question is being paraded to serve personal political ambitions — a natural consequence, perhaps, the instant the subject had fallen from the pedestal upon which Mr. Wilson had left it.
Two developments served to keep the whole question alive even in the doubtful zone in which it had come to reside. The U. S. Coal Commission last September completed its investigations and immediately submitted to the Congress a long series of reports in most of which the coal industry was criticized severely. These reports were scanned by a nation which had been wearied with coal’s recent eccentricities and was turning to other sources of heat and power — oil in particular.
At that interesting moment, the whole method of transferring from public to private hands that oil which underlies the public lands became involved in a lively scandal. The nation’s reliance upon oil for lubricants, the fact that half of the population now rides regularly in vehicles propelled by an oil product, and the increasing use of oil for fuel made of this a question which easily challenged the public interest.
What did not appear on the surface, in the discussion of either question, was the fact that about half of the nation’s coal, and probably more than half of its oil, underlies land half of which is owned by the Federal Government. The fact that these two natural resources had challenged public attention, and that a fourth of our total deposits is owned by the Government, caused these subdivisions of the whole natural-resource subject to bo discussed earnestly by our public men.
It is too much to expect, of course, that either the censures of the coal industry by the U. S. Coal Commission or the details of the oil scandal can be kept alive long enough to make them serviceable as issues in the impending election. However, both incidents must serve to emphasize the old and generally neglected question: What final disposition are we to make of our natural resources?
III
A general policy touching these things has proved annoyingly elusive for the reason that conditions differ so radically. That is, we have so much coal under our soil that while satisfying all demands for it for more than a century, we have exhausted less than one half of one per cent of it. Coal in the ground is so abundant that it is a serious problem to maintain a solvent coal industry without depriving many owners of coal-land of the right to develop their deposits. However, the situation with respect to oil is almost precisely the reverse. Our oil supplies — those reached by wells and produced by natural-gas pressure — are so limited that although we have been working them intensively for only fifty years, we have exhausted about 42 per cent of the known deposit. And when a deposit is once opened and the oil produced, our disposition seems to be to waste it — by such processes, for example, as burning it for fuel. At least with respect to oil we face the possibility of an early exhaustion of those deposits which are produced cheaply. On the contrary, our storehouse of coal will easily outlive the dependence of the race upon it.
These two items in our catalogue of natural resources represent the extremes of the whole subject. For that reason they best illustrate the difficulty which attaches to any effort to find a national policy which can apply to the whole problem. As indicating something more of the complexity of the subject, manganese might properly be introduced into the picture. One group believes that we possess it in quantity — if we can but find it. Congress has been importuned for several years to impose a tariff — to be paid by our steel industry — to furnish an incentive for discovery and development of this resource.
Because the whole subject is far too complex for such treatment as is given to any theme in the political arena, only the more obvious aspects of the question are ever raised for public discussion. That is to say, the tendency is to debate only the kind of control which should be exercised, leaving for determination elsewhere, if at all, the larger subjects of our national policy concerning them and our international relations growing out of them. Any discussion of the form of control discloses three methods of procedure, one of which must be elected.
The programme which once had the largest number of adherents, having been followed from the beginning of modern industry, demands private ownership and private development of all such things. The result of protracted adherence to this plan is that nearly every great industrial corporation rests upon some natural resource. Those who believe that this arrangement should continue are prone to declare that the proposal for a change of policy threatens the whole institution of private business.
Because it throws some light upon this phase of the question, I shall revert momentarily to an exchange of views between Dr. Garfield and myself at the time he was advocating the creation of an industrial cabinet. He had proposed that each of the cabinet should control some natural-resource raw material. I asked him if it were not true that if anyone should actually control any raw material he must automatically control everything which grows out of it — as one who controls the roots of a tree must control its trunk, limbs, branches, and fruit. He admitted that such must be the case. I then asked if it were not true that if the Government should control the natural resources, it must, in the end, control all business. He believed that that would be the logical result. Seeing how much, assumptively, is involved, a considerable controversy is started the instant it is proposed to dissociate natural resources and private business.
A second and growing school of thought embraces those who believe in a modified system of private tenure. If the adherents of this school could be described in terms of political administration, they would be found among those who believe inherently in monarchy but who, under pressure, accept the limited monarchy as exemplified by Great Britain. Since they operate in America, they attach themselves to that finality of Federal authority which is coming to find expression in our growing commission form of government. They concede the form of private business, but insist that the policies and even the prices shall be dictated by a Federal commission. They espouse the theory — exploited in England some years ago — that natural resources should be held by the Government as trustee for the labor and capital involved. They concede that the actual development should be done by private parties, but insist that they shall work under lease and licence by which not only sovereignty but domination of procedure is retained by the Federal Government.
President Roosevelt was the author of this theory and justified it by his assertion that the proper development and conservation of such resources required large capital. He was disposed to encourage large capital but believed that the powers of government should be employed to hold its charges and practices within reason. It was, incidentally, the operation of this very plan — one might almost say the perfect exemplification of it — which led to the oil scandal of last winter. When this method of controlling our natural resources is proposed, one can imagine how intense becomes the debate.
The third school of thought embraces those who hold what are called the more extreme views. Their belief is that, natural resources are the common possession of all the people; that they should be owned by the Government, and developed only by the Government in the interest of all of the owners. It is, I believe, no longer a secret that those who attacked the oil leases did so, primarily, for the purpose of demonstrating to the public the correctness of their view that only public operation should be permitted in future.
When we thus have, seemingly, three great beliefs supported by three great groups of partisans, no possible useful purpose can be served here by espousing any one cause. Instead of trying it, I prefer to confine my endeavors to such a clarification of the real issues as will allow an approach to the truth. The logic of everything that has here been said reduces the whole discussion to two beliefs — not three.
First: The greatest good of all springs naturally only from keeping open the door of opportunity to the individual. The parable of the talents condenses the whole of this philosophy into a few words. Possession and development of property is a means by which the individual expresses himself. Property is local. Government is local. If the essential character of both is recognized, the simplest method is found when the individual is allowed the greatest, opportunity and when the nation is content to reflect the massed wealth and power of its citizens.
Second: Natural resources are the common endowment of all. Their monopolization by individuals, states, or nations, subverts the essential purpose of creation. They should be held in trust by those nearest to them, for the benefit of the entire race, and should be so administered.
Thus we are confronted by a need to choose only between private control and ultimate internationalization. That emphasizes Mr. Wilson’s contention that our natural resources should be considered as a primary cause of war and should be so administered as to remove the likelihood of war. Opposing his theory are those who contend stoutly that our natural resources should be used to promote the power and the glory of the nation which possesses them, through the indirect channel of the assured welfare of its individual citizen.
While this battle is raging between the extremists, a third group suggests that we modify the international point of view down to national supervision, and modify private control by introducing Federal regulation. Their suggestion is purely a compromise and leaves the big question open. The real battle is between private ownership and ultimate internationalization.