Coal, government ownership or control

Contents

Chapter Page

Preface 7

I Importance of Fuel 9

Preface

Coal is a public utility. This is the viewpoint from which this book is written. To the minds of those who use the term generally, "Coal is a public utility" means simply that coal is something that is useful to the public. It means that, of course, but it means much more : it means that coal belongs to the people. On it depend -the comfort, even the life, of the people and the commercial supremacy and industrial life of the nation. To waste coal is a sin agains the whole people. Those who have bought the coal land are entitled to all the rights that go with a public utility. Their ownership is in the nature of a perpetual lease. They hold it in trust for the public use.

The lease of a coal mine always contains a provision thaf mining must be carried on without waste, and that the mine may be inspected at any time when such inspection does not interfere with the work of the mine. These provisions help the operator and safeguard the owner.

Control such as that is, in effect, the kind we have advocated for the entire coal industry. Operators who do not need control, — as many of them do not, — will not be affected and need not complain. Those who do need it must have it. The public good is paramount

For a large part of the coal land, private ownership is the best plan. The stimulus of ownership, the appeal to efficiency, and the urge to new inventories are good for any business. For one part of the coal field, however, government ownership is imperative.

A Battleship Without Fuel! Would that that cry might reach the ear of everyone who is responsible for our future efficiency on the sea! If we are to have a navy in half a century from now, we must act quickly if we are to have a proper navy fuel. The battleship Tennessee is to make a speed of 38 knots an hour. The best Bering River coal could, with the greatest difficulty, drive a ship 18 knots an hour. The best navy coal is the Pocahontas coal. As I write, an agreement made by a company to buy 24,0(X) acres of Pocahontas coal land in the heart of the field lies before me, along with an advertisement of a tract of 2,400 acres. "Our 'Navy' coal will soon be a memory."

The Author.

COAL

Chapter I Importance Of Fuel

Wood: Nearly Negligible as Fuel — Destroyed in Clearing Forests — Built into Houses and Wasted.

Natural Gas : Waste in Production and Use— Supply Declining.

Oil: Wastefully Produced— 'Nearly Exhausted in the Eastern Industrial Fields.

Wood, Gas, and Oil Fuels

When the Roman mythology made Vulcan the god of fire., iit also made him god of all handicraftsmen. ''He was the divine artist, the creator of all that was beautiful as well as of all that was mechanically wonderful in the abodes, of the gods.'' The spark that he got from heaven kindled the fires that warmed civilization into life on earth. When man began to be a fire-making and fire-using animal, he began to draw away from the other animals. Every new advance in civilization has been concurrent with new sources and new uses of heat. Fuel, then, has been a matter of large concern to mankind. Nature has been very kind to a large part of the earth. Fuel sprang unbidden from the ground in its trees and grass.

Wood As Fuel

In the largest part of the United States, the pioneers found the hills and valleys covered with timber, — a fuel ready at hand, simply beckoning to the axman to come and get it. It was his building material as well as his fuel. From it came the logs for the walls of his cabin; from it he hewed the puncheons for his floor; from^ it he split and shaved the shingles for his roof. He did not grudge the fuel that he put in his house, for it was so abundant as to be a nuisance. He did not spare it. He rolled in the back-log and fore-log, and split the kindling for the roar-

10 COAL

ing fire over which the busy housewife swung her crane burdened with its load of pots and kettles. On the wintry evening

They gathered round the fire, And piled the wood on higher, As the song and jest went round.

All these uses made small inroads into the fuel that must be sacrificed. The timber that could not be used was an encumbrance. It must be cleared away to make room for the potato patch, the ever-widening corn field, and the wheat, oats, and rye fields. It must be felled and grubbed and destroyed. The logs must be heaped together and burned. So, this is the day for the log-rolling. Came the neighbors with their oxen and log-sleds, and with freshly ground axes. Huge trees were felled, and the logs, which would be the wonder of our lumbermen, were rolled together and burned. So they went from cabin to cabin, — neighbor helping neighbor for help in return, — in this deplorable, but necessary, destruction of fuel.

To-day our hills and valleys are almost denuded of their trees. These trees are built into our houses, turned into paper, burned in our forest fires, or wasted, or destroyed. Comparatively little systematic effort has been made to reforest, and not enough to prevent and control forest fires. The price of building materials has advanced manyfold; wood as fuel is scarcely considered in a large part of the country.

Natural Gas As a Fuel

Where it is found in any special region, natural gas is the ideal fuel. It has- from one-and-a-half to ten times as great heat value as gas that is artificially produced. It, too, is following rapidly in the wake of our wasted forests. Our waste of it has been criminal. No part of thi^ crime of waste can be condoned as was the destruction of timber when it gave way to the plow. Some of the waste resulted from ignorance of a way to control the gas flow, and from a lack of pipes to carry it away.

Gas was first struck in wells which were drilled for oil. When gas was struck the discoverers did not know what to do with it, or how to control it. One of the largest gas wells in Pennsylvania, — the McGuggin well in Washington County, — was set on fire, and for months was simply a great geyser of flame, the roaring of which could be heard for miles — the Mecca to which night picnic parties made pilgrimages, to see the eighth wonder of the world.

When gas wells were drilled near a town and the fluid brought under control and piped along the streets, the open street lights were great torches that fouled the air and wasted the gas. When used in grates and furnaces, it was used without thought of economy. As there were no meters, the family burning the most gas was just that much ahead. The amount annually wasted may be rightly reckoned as a billion dollars worth.

Now the first gas wells are exhausted. The region of production is being pushed to the South and Southwest; the day of limited supply has come ; the day of exhaustion has come in some sections and is approaching in nearly all, and the pipe lines now carrying natural gas must carry artificial gas, or be useless.

Oil As Fuel

Oil, when properly burned in a furnace properly constructed, is a good fuel. More's the pity that it had not been less wastefuUy used and more prudently produced in the parts of the United States in which industrial fuel is in greatesit demand. When wells were sunk in Western Pennsylvania, which produced five thousand barrels a day of the best oil on the market, there was a mad rush to drill and get out all the oil at once. As many as thirty wells half-a-mile deep were drilled on a hundred-acre farm. The market was flooded with oil. The demand then was not nearly so great as it is now. The best Pennsylvania oil was sold for fifty cents a barrel, or less. Oil was so cheap that there was little incentive for carefulness in its

12 COAL use. Oil-saving was more expensive than oil-buying if it involved expensive change in methods of use.

Soon the great oil fields were depleted. Now the fields that were once the scene of feverish activity are almost deserted. If a new well is put down that produces a few barrels a day, the owner is satisfied; if it is a dry hole, he is not much surprised. To sink a well in a nearly exhausted field is, anyway, a gamble. Fortunately, new fields have lately been found, and new sources of outside supply have given a new lease of life to oil as a fuel supply in some parts of our country, but not in the center of the great industrial regions, which at present most need the fuel.

The new oil supply will be treated in connection with coal auxiliaries.

Chapter II Coal, The Present Fuel Of The World

Coal in Time of War: What It Did for Germany— What It Did for the Allies.

Coal in Time of Peace : Importance to England for Her Industries and Export Trade — Importance of England's Coal Export to France, Italy, and South America — ^Value of English Coal to United States When a Strike Limits Supply.

The realization of the all importance of the coal resources of the United States has come to us very slowly. In fact, the knowledge that we had any to speak of is scarcely a century old. When King Charles II gave William Penn a *'deed" to what is now Pennsylvania, he tried to reserve to the Crown a share of the valuable minerals in the ground. He reserved one-fifth of all the gold and silver. He didn't think the coal then as valuable as the two bear-skins that Penn was to give every year. In the patents to the land in Pennsylvania given by the Commonwealth in 1780 and 1790, reservation is made of one-fifth of the gold and silver, the grantors being all unconscious that the land was underlaid v>^ith a metal of great value to the State, and not underlaid with silver and gold.

A century ago, — in 1820, — but three hundred and sixty-five tons of anthracite coal were shipped in a year from mines in Pennsylvania, and in 1840 only four hundred and sixty-five thousand tons of bituminous coal. As long as wood in abundance was available for fuel, as long as the rude water-wheel ground out the grain, as long as trains of pack horses carried over the mountains what the settlers produced and brought back what they needed in exchange, they had little need of any other fuel The canoe and raft on their streams, and their wind-driven sailvessels sufficed for their commerce. Now the varied industries, the railroads, the steam-driven boats and ships

14 COAL and the miillions of homes have increased the demands of the people, until anthracite production is nearly a hundred million tons a year and bituminous more than half a billion. The National and State governments have in general taken little interest in coal. They parted title to almost all the best coal in the United States along with title to the surface, never even raising the question as to whether it was the best thing to do. Now, when they do awake to the inquiry, they find it, if not too late to remedy any part of the mistake, at least presenting a very serious situation.

Coal in War Time

Never had the all importance of coal been so impressed upon every nation in the world as during the great World War.

Germany's Great Coal Fields Fought Her Battles for Her

For years, Germany's great factories built about her coal fields had wrought with fiendish skill and ingenuity her engines of destruction in preparation for the slaughter she planned. For years her chemists extracted from her coal the explosives that shattered the shells and produced the gases that dealt death to her enemies. Cut oflf by blockade, had disaster come to her coal mines, every munition factory would have been closed, transportation of troops and supplies paralyzed. The struggle would have been over. Her coal kept Holland neutral, — indeed friendly, — since Germany furnished Holland coal in exchange for food, — and later tthe Kaiser.

An important part in her efficiency in equipment came from the byproduct ovens of Belgium and Northern France, just as the loss of the mines was an almost irreparable disaster to France.

Not only did Germany's coal fight her battles on land, but her captured coal did what fighting on sea her pirate cruisers wer0 able to do. The depredations made by such German cruisers as the Emden, Dresden and Kronprins Wilhelm-, were made possible by their ability to take coal from their captured ships at sea. Just as the submarine that did such deadly work for the Germans was an American invention, so the device that enabled their cruisers to coal from their captives was an American suggestion.

William H. Bechler, an officer in the United States Navy, was^ a naval attache at Berlin. He read a paper in 1902 describing his marine cableway, which coaled the battleship Massachusetts from a collier at sea. German papers commented at large on the paper and appealed to German engineers to solve the problem. They did solve it, and their cruisers carried apparatus by which they could take coal from another vessel at sea, both driving ahead at the rate of ten knots an hour.

We had solved the problem, and our colliers on the sea were equivalent to the addition of many destroyers to our fleet. Without being able to coal at sea, each destroyer would have been obliged to return to a coaling station every few days; and while going and coming would have been of no use to the navy, but exposed especially to attack by submarines, which made it a point to lie in wait to destroy ships on the routes to coaling ports.

Coal and the Allies

Coal was just as essential, of course, to all the other nations engaged in the war.

One of the greatest disasters to the Russian army was caused by failure of coal supply for their engines on the trains that were to bring re-enforcements and munitions.

England was hard put to it to furnish the coal that she must supply, if the Allies were to win the war. Her ships needed more coal than ever. Her factories were supplying not only her own home needs and the needs of her own armies, but were making guns and ammunitions for her allies. France had lost her northern coal fields with their normal output of 20,000,000 tons a year, together wiith factories in the regions held by the Germans. England, in time of peace, sent 20,000,000 tons to France ; now France needed not only her normal importation, but the

16 COAL

increased demand for her miunitions plants and other factories, and also to make up the twenty millions that the German army held.

Italy, practically dependent upon outside coal, almost lost the war when her munition and coal supply failed. The cry, "Men and guns and ships will win the war !'' was almost superseded by the cry, ''Coal will win the war!"

Then in England came the refusal to call miners to the colors. Soldiers were even withdrawn from the army to work in the mines, — a work as important for winning the war as fighting in France. The Home Secretary announced :

"It has been decided, in view of the importance of the national interest of maintaining the output of coal, that no person employed underground in a coal mine and no person employed on the surface as winding engineer, pumper, weighman, electrician, or mechanic is to be called upon for service in the field without consent of the Home Office."

In the United States operators and miiners vied with one another in their effort to furnish coal for battleships, for transports, for soldiers in camps, for soldiers overseas, and for our allies. Everywhere the eye met the placard : "Coal will win the war!"

Coal in Time of Peace — Coal Mining in England

When the Great War was over and England's soldiers were on their home land again, there seemed to be a feeling that coal was a kind of wartime necessity, and that now that peace was come, strenuous production was not needed. Miners did not work vigorously and efficiently, and production fell off greatly. At length, the miners struck for higher wages and shorter hours, which meant less production and higher prices. The people of England were panic-stricken. Coal for their factories and for export lies at the foundation of their ability to pay their enormous war debt, and hold their place in the world's business.

An influential English paper, with almost a wail of despair, exclaimed : "We must have coal, and cheap coal, or perish industrially."

Coal Mining in the United States When the armistice was signed, and our soldiers were brought back to the United States, we ceased to talk or think of coal, except as we classed it among the things we had to buy at a higher price than before the war. Coal is among the things we have, of course, and having these things, of course, we cease to think whether they are important or not.

It needed a new shock to stir all the people to realize that, as at present organized, we cannot live without coal. The shock came in the resolution adopted by the United Miners' Union that if the demands made by the workers were not conceded they would strike on a fixed day, — that nearly half a million men would cease to produce coal' just at the beginning of winter. Then all the people knew that coal is not alone to win wars, but is essential in time of peace ; that without it our factories will stop, millions of people will be out of employment and without the means of livelihood; most of our railroads will not be operated, and many of the people will suffer or die with cold.i

The President called it an '^impending disaster/' saying further :

When a movement reaches a point where it appears to involve practically the entire productive capacity of the country with respect to one of the most vital necessities of daily domestic and industrial life, and w^hen the movement is asserted in a time and manner calculated to involve the maximum of danger to the public w^elfare, in this critical hour of our country's life, the public interest becomes the paramount consideration. The matters v^ith v^hich we now deal touch not only the welfare of a class, but vitally concern the well being, the comfort, the very life of all the people. I feel it my duty to declare that any attempt to carry out the purpose of this strike, and

18 COAL thus to paralyze the industries of the country, with the consequent suffering and distress of all our people, must be considered a grave moral and legal wrong against the government and people of the United States. I can do nothing else than to say that the law will be enforced and the means will be found to protect the interests of the nation in any emergency that may arise out of this unhappy business.

Chapter III Strike Of The Mines

Strike of the Mines : When They Have No More Coal — We Have Wasted Our Coal in Production and in Use — Causes of Waste — Cheap Coal Land — Fierce Competition Due to Overproduction — Financial Weakness of Coal Companies — Apathy of the Public — Misleading Statement of Our "Inexhaustible" Supply. George Otis Smith's Pessimistic Speech.

If the temporary reduction in the output of coal in the United States is a disaster, what will it be when the production shall entirely and permanently cease ?

During the strike in 1919, non-union and various union m.ines worked, so that the output was maintained at from forty to fifty per cent of normal. If a falling off of fifty to sixty per cent of normal production is a calamity, what of it when one hundred per cent of production shall cease?

No strike will continue for long to cut off the entire coal supply. The people will not stand for it long. The entire people would not stand calmly by idle mines and freeze. Their helplessness and weakness in face of a strike seem to indicate that they would, but patience would reach », iimit.

However, there is coming a worse disaster than a miners' strike. It is a strike by the mines when they have no coal to give.

The American people have been spoiled by the abundance of our natural resources. We think as little of their exhaustion as of the exhaustion of the air. But it is time for legislators, statesmen, and thoughtful people to take stock of such a vital necessity as coal. It is tim.e to ask such a serious question as : *'What will be the status of the nation when all the coal in what is now the thickly settled regions of the country, — and what is now the industrial field, — is exhausted? How will it aflfect the whole

20 COAL people and the nation when the time comes, as it will in a comparatively short time in the life of a nation, when all the best coal in the United States, — in Pennsylvania, West Virginia, Ohio, and other Eastern States, — is gone, or where so little remains that its production is negligible?"

Of course, we languidly agree that coal is not like most of our other resources, that once exhausted there can be no, renewing. Much of our land whose fertility has been exhausted by unscientific farming, even whose surface has been seamed by the floods caused by reckless destruction of the timber on the hillsides, may be made fertile again by irrigation and fertilizing, or be re-forested. The farmer's flocks are followed by other flocks. Every year a new flock of 'lambkins skip upon the hillside''; every year a new ''iownng herd winds slowly o'er the lea," but the coal used or w^asted is never renewed.

Yet this essential and unrenewable resource is being used and recovered wastefully. Our waste of coal has been reckless and indefensible. Billions of tons have been practically destroyed by our methods of mining, and other billions wasted in our unwise use of it after it is mined. Some of the reasons for such waste may be stated as follows :

First, The Low Selling Price of Coal Land

In the early developm.ent of coal mining, in parts of the anthracite region of Pennsylvania, coal land containing m.any beds of the finest coal in the world was sold at four cents an acre, or leased at a rental of an ear of corn a year. In the great bituminous fields any price received vv^as so much money found by the owners. -

Even now, in some parts of the country, coal land is sold at a price which, if it does not provoke waste, does not discourage it. If it becomes expensive to mine the acres of coal that lie on the outskirts of the holdings, the mine is abandoned and a new m.ine opened. If, to support the roof so that pillars of coal can be recovered, it costs too much to give the operator enough profit^ the pillars are left undrawn and lost forever. If the roof is not good, and expensive to prop, a foot or two may be left at the top to support the roof. It is better to lose the coal than to buy and place the props. Coal is left at the bottom for a reason of expensive coal. A few tons lost counts little on the operator's ledger, if it only costs him in the land a very small fraction of a cent a ton.

Second. Unrestricted Production and Consequent Fierce Competition for a Market

The coal mines already opened in the United States have an annual capacity of more than 750,000,000 tons. In 1918 they actually produced 585,883,000 tons, working only two hundred and twenty-five days, much of the time lost being by lack of cars or lack of men. The normal demand is now, in normal times, not much above half a billion tons. Ever since the anthracite strike in 1902, v/hen production in the bituminous fields was much stimulated and many new mines opened, capacity of production has been greater than demand. The natural result has been fierce competition for sales. The operator was at the mercy of the buyer.

The price of coal was so low most of the time that it was not possible to mine any but easy coal and make a profit, and not possible to pay a decent wage to labor.

The average selling price of coal in the United States for the years 1890 to 1900, inclusive, was $1.06 a ton, with the highest value $1.16 and the lowest 95 cents.

The average number of days worked was 199, ran^in^ from 214 to 178.

The average selling price of coal in the next decade, 1901 to 1910, was $1.10, and that included the year of the great anthracite strike, when bituminous coal was highest. In 1909 in six States the amount received for the coal sold was less than it cost to produce it. The owners got nothing on the average for interest depletion, depreciation, or salary expenses. In 1914 Illinois and Indiana operators, in an agreed statement, appealed to the President

22 COAL for permission to initiate a solution for prevailing conditions — this to be subject to review by the government. The following are a few excerpts from their appeal:

The normal state of this industry for years has been such as to waste the coal reserve whkh now insures the safety of the eastern part of the country, and deprives the operators of any hope of profit. . . . The coal sells in eighteen states. The business is therefore interstate. The operators are amjenable to the anti-trust laws, which they believe forbid any co-operation among them. Because they cannot co-operate they cannot simplify their selling methods or reduce their selling and operating costs.

The mines are within these two states and the states regulate their operating methods. The effect of the nation's anti-trust laws is to cause them to compete without restraint. This has produced a decreasing selling price. The states' laws have caused a rising production cost. The rising cost of production and the falling selling price have long since madre profit impossible and now threatens the safety of the whole business structure, as well as of the miners and the public. [The requisite investment in plant and equipment has increased one thousand per cent in twenty years.] Enforced competition has opened three mines where two were needed, and employed three men where two were needed. These mines and men can find work but one hundred and seventy-five days out of three hundred; hence higher wages have to be paid than the production warrants. Their labor cost is 93 cents per ton, selling price $1.14 in Illinois and $1.11 a ton in Indiana. Out of this margin must come salaries, selling costs, land depletion, depreciation, repairs, cost of materials used in the mines and eight or ten other major expenses. This leaves no possible net profit. One obligation resting on the operators is to recover the pillar and top coal. It costs too much ; it cannot be done. For every two acres they exhaust they leave one in the ground unrecoverable. In Illinois every year twelve thousand acres are exhausted instead of eight thousand; in Indiana three thousand instead of two thousand. In the nation one hundred thousand acres instead of sixty-five thousand are exhausted.

Third. The Financial Weakness of Many Operating Companies

To make a mining operation successful, to secure a low cost operation, the mine must be well equipped. This requires a large outlay of money. Shafts and manway must be sunk and, probably, concreted. Expensive tipple, grading, siding, expensive engines, boilers, pumps, fans, etc., must be provided. It will not pay, in general, to incur these expenses unless a large acreage is bought and a long life for the mine is assured. Too often a large part of the money is obtained by mortgage or bonds. Unseasoned bonds are not much sought after by investors, and the bonds bearing a high interest rate have to be sold at a discount. At the outset the company is burdened with large fixed charges. In addition, the equipment expense not covered by the money raised from bonds, and the furnishing of working capital must be provided for by issuing stock, — often too much stock for the real equity in the property. A considerable time is consumed in getting ready to operate commercially. It takes time to sink shaft and erect tipple and install machinery. After the coal is reached by the shaft, entries and airway have to be driven and rooms turned before even a fair start has been made in production. The output is small for a long time, and costly to produce. In the meantimte, interest goes on. Soon stockholders clamor for dividends. If the mine is operated by the owners themselves, unless a large operating sum has been provided, the pinch of debt begins to be felt. Miners' and operating expenses have to be paid. The coal that is sold may be on slow payments : a new company is indulgent to buyers in order to make sales. Interest is coming due. Coal must be put out. **Easy" coal must be mined. It is wasteful, but it is a wild run to cover, to outstrip the receiver. The receiver most likely wins the race after a short run. When the new company takes possession, it finds much of the mine spoiled, much valuable coal hopelessly lost.