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1920
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Some Facts About Coal
An Address
By MR. C. E. MAURER
Before
The Cleveland Chamber of Commerce
March 2nd, 1920
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Mr. President, and Members,
The Cleveland Chamber of Commerce:
Extravagance and waste of natural resources by One gener-
ation has always been paid for with compound interest by succeed-
ing generations.
We are now reaping the results of this policy in the price of
lumber, the supply of which a few years ago seemed unlimited.
Lumber to a certain extent can be replaced by other manufactured
material but at the present time nothing has been found that can
be substituted for coal.
Our great manufacturing establishments, our transportation
systems, our light, heat and power, our position among the nations
of the earth, all are dependent upon this one natural resource.
We can scarcely picture the conditions of countries that dur-
ing the war were either deprived of or greatly limited in their
supply of fuel. In Italy coal was selling at more than one hun-
dred dollars per ton. In France the price was prohibitive except
for war purposes. England was exerting every available means
not only to supply her own wants but that of her associates, with
prices under government control running from ten to twelve dol-
lars per ton. While we when we entered the war were not only
able to supply our own increased demands, but in so far as ships
were available, the demands of the allies; and at a price of two
dollars and thirty-five cents per ton at the mines for our own con-
sumption, with a slightly increased price for export.
With so much dependent upon our coal resources, and brought
so forcibly to our attention in recent years, it is important that
we give some thought to the future. We are slowly but surely
making vast inroads into our reserves. At the rate of consumption
today, one hundred and twenty thousand acres are mined per
annum. The waste is beyond measure. In some mining districts,
forty per cent. of the coal is left unmined because of the increased
cost of mining and the selling price of the coal. This vast tonnage,
practically two thousand tons per acre, can never be recovered.
It is forever lost and those who follow us will pay for our follies.
Yet the present policy makes it impossible to pursue a different
COULI'Se.
Would it not be better to draw on the present for the small
amount that would be required to save and utilize this tonnage,
rather than assess the future the immeasurable amount resulting
from our improvidence?
The public is interested at the present time, neither in the
welfare of the coal industry, nor in the future coal supply, but
because of a situation. There is a coal shortage. Plants are com-
pelled to suspend and men are thrown out of employment. This
is the primary cause that influences the public. The secondary
cause is fear that the natural law of supply and demand will
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govern, and as a consequence the consumer will be compelled to
pay a higher price for his fuel.
|% The action of the Coal Operators early in November, in agree-
ing to pay the fourteen per cent. advance to the miners, as sug-
gested by Dr. Garfield, and absorbing the cost temporarily, met
the hearty approval of the public, because it appeared to be a step
toward relieving the country from a fuel famine, and more im-
portant, meant no immediate increase in price. The fact that the
operators had accepted the proposition with the understanding that
the mining costs for nineteen eighteen were to be brought up to
date and a selling price fixed upon such costs and the further con-
dition that bona fide contracts providing that the price would ad-
vance or decline with the mining rate, would not be affected but
would carry with them the fourteen per cent. advance, was of
minor importance.
What the people wanted was fuel and it was hoped that the
coal would be supplied and that such coal as was not contracted
would not be advanced in price beyond the then Government price.
The miners in December accepted this proposition. A com-
mission was appointed to investigate the coal industry and to ar-
bitrate the question of wages. Dr. Garfield resigned and the fuel
administration ceased to function. The costs of mining for nine-
teen eighteen were not investigated and the coal operators were
committed to an agreement which they are morally compelled to
carry out, while the other party can not comply with its part of
the contract because the President has failed to either vest any
constituted authority with the power or appoint a successor to
Dr. Garfield.
The present coal commission will not make a ruling on prices
until it makes its final award. In the meantime the coal operating
companies, or at least such of them as feel morally bound to carry
out their agreement with the Government, are operating their
plants in many instances at a fearful loss and in all cases at no
profit. The railroads under Government management have com-
pletely failed. Mining plants are idle more than sixty per cent.
of the time. These plants can not be closed like other industries
but while idle require a constant force of employes to keep them
in repair. The costs are piling up with no production to meet
them. And there is no relief in sight. The breaking down of the
railroads means a continuing car shortage that cannot be relieved
this year or next. This means a much higher cost for coal, and
the public must realize that the time is now past when fuel at the
mines can be purchased cheaper than any other commodity.
During the year nineteen seventeen, when a great part of the
coal was sold under contract prior to Government intervention, at
a price far in excess of the established Government price, Dr. Gar-
field’s figures show that the average difference between cost and
selling price of coal at the mines was forty-six cents per ton and
that of this thirty cents was paid to the Government in taxes,
leaving sixteen cents to the operator as his profit. Had all the
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coal during the year been sold at the Government price as was the
coal in nineteen eighteen, the gross profit would have been less
than twenty-five cents per ton.
Compare this margin if you will with that fixed by the fair
price committee in New York when in a late ruling it held that a
margin of four dollars on a pair of shoes that cost at wholesale
four dollars and fifty cents, was not an unreasonable profit.
The coal industry is absolutely dependent upon three im-
portant elements, namely, markets, miners and transportation.
Unlike most other commodities coal cannot be mined and stocked
at the point of production. The depreciation if stocked and re-
handled at the mines, and the increased cost, make this system
prohibitive even were there facilities for stocking the coal at the
mines, but in most instances, mines are so situated in such local-
ities that lack of space prevents the storage of coal. Hence coal
can only be produced when there is a market demand.
This condition was well illustrated after the signing of the
Armistice in November, 1918. Practically every consumer of coal,
and especially such as were engaged in the manufacture of war
material, had guarded against the future by securing more coal
than their immediate wants required, and consequently had large
stocks of surplus coal. Immediately after the signing of the
Armistice, fearing that as a result business would fall off and
hoping that the price of coal would be reduced, instead of con-
tinuing the purchase of coal from the mines, the supply was used
from this reserve stock. From November until May, on account
of the market situation as a result, the mines were able to operate
less than half time.
Instead of business falling off however, there was very little
cessation. The plants that had used their reserve coal again came
into the markets demanding a normal supply. During the idleness
at the mines, many of the miners had drifted into other employ-
ment. In a very short time the railroads were over-taxed, and
only by the most strenuous methods was sufficient coal furnished
to keep the industries of this country in actual operation.
Early in January of 1919, the coal operators through their
various associations, called the attention of the public to the fact
that a mistake was being made in using up the reserve coal, and
that instead of refusing to purchase coal and keeping the mines
in operation, the fuel should be taken while it could be supplied.
Their warning however, went unheeded and as a result we have
the present condition of shortage, which could have been guarded
against had the consumer used reasonable precaution. -
At the present time the demand for coal is greater than the
production, not because the coal cannot be produced, but because
of the lack of transportation. The mines can only operate as many
hours per day and as many days as there are railroad cars in
which to load the product. These railroad cars are not accumu-
lated and placed at the mines in such a way as to give a full day’s
work during car shortages, but the available cars are distributed
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pro-rata among all the mines, and as a result a complete force of
employes is compelled to go into the mines day after day for from
two to four hours’ work.
It would be difficult indeed to conceive a condition of this
kind occurring in the industries of our own city. Imagine if you
can the great steel plants starting at seven o’clock in the morning
and quitting at nine, and the thousands of employes being re-
quired to report for work, yet this is the actual experience in the
coal industry.
As an illustration, at one mine in which we are interested, and
under the present car distribution system all other mines are
treated the same way, during the month of February, we were sup-
plied with cars sufficient to work as follows:
February 2nd, 4 hours; 3rd, 3 hours; 4th, 2 hours; 5th, no
cars; 6th, 2% hours; 7th, 2 hours; 9th, 10th, 11th, and 12th, 4
hours each; 13th, no cars; 14th, 5 hours; 16th, 7 hours; 17th, 4
hours; 18th, 4 hours; 19th, 3 hours; 20th, no cars; 21st, 4 hours;
23rd, no cars; 24th, 7 hours; 25th, 5 hours; 26th, 4 hours; 27th, 4
hours; 28th, 4 hours.
This shows conclusively the utter dependence of the coal in-
dustry upon not only markets but transportation when there are
markets.
The present condition however, must indicate to the consumers
the necessity of making storage provisions for fuel at the point of
consumption, instead of depending upon a daily supply of coal de-
livered in railroad cars.
It might be well at this time to dwell briefly on the wages of
the coal miners in our own state. The main reason given for the
miners breaking their existing contract in November and closing
down the mines was based primarily on an increased cost of living,
the employes claiming that the war contract entered into the latter
part of 1917 and known as the Washington Agreement, didn’t in-
crease their wages sufficient to meet the present increased cost of
living.
The best figures attainable indicate that the cost of living since
1914 had increased a fraction less than 80%. In order to de-
termine whether or not the miners, in actual compensation, had
received the equivalent in wages to meet this increased cost, it is
only necessary to show the total earnings of the mine employes
for the State of Ohio for each year from 1914 to date, or at least
to such date as figures are available.
The Ohio records show that in the year 1914 the mine em-
ployes received $15,817,281; 1915, $17,855,984; 1916, $27,478,784;
1917, $44,245,175; 1918, $65,193,723.
Reduced to a percentage basis, these figures show that the
earnings of the miners for this state for the year 1918 were 312%
more than in 1914; 26.5% more than 1915; 137% more than 1916;
and 45% more than 1917. During the period the number of em-
ployes had increased but three per cent.
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In our own particular district, the counties of Jefferson, Har-
rison and Belmont, where the mines of the members of the Pitts-
burgh Wein Operators’ Association are located, there are eighty
mines producing about 17,000,000 tons of coal per year, with about
17,000 employes. During the year 1914, there was a strike at
most of the mines in this district, and therefore we have eliminated
that year from the comparison.
The statistics show however that in 1915, the wages of the
miners in this district were $6,059,223; in 1916, $12,601,224; 1917,
$17,833,031, and 1918, $26,284,669.
These figures show that the wages for 1918 were 334% more
than 1915; 108% more than 1916; and 42% more than 1917, but
as the number of employes in 1917 had decreased more than
1,000 from the preceding year, the actual increase of 1918 over
1917 was 53%.
These figures for the state as a whole and for Eastern Ohio
show conclusively that the actual earnings of the miners have not
only been the equivalent of but far in excess of the increased cost
of living.
The bituminous coal commission appointed by the President
will undoubtedly make its award within a few days. The cost of
producing coal and the price received by the operators for the
year 1919, have been prepared and submitted by Jean Paul Muller,
an accountant of national repute. His statement shows that the
Pittsburgh Coal Producers’ Association of Western Pennsylvania
shipped 22,127,736 met tons of coal involving a labor cost of $29,-
997,749.00. The margin left for the members of the Association
was $5,784,852.00, or four per cent. return on the actual capital
invested. He shows further that had the 14%, which is now being
absorbed, been added to the labor cost, the net result would have
left this Association approximately one per cent. on their invest-
ment.
He shows further that if the 14% advance were applied, the
margin of the Pittsburgh Wein Operators’ Association of Ohio
would be reduced to less than one per cent. on the capital invested;
that the Southern Ohio Coal Exchange would lose $823,252.00;
the Coal Trade Bureau of Illinois would be more than $220,000.00
short of meeting expenses, and the Indiana Coal Operators’ Asso-
ciation would have a deficit of more than $1,400,000.00.
These are actual figures taken from the books of the operating
companies in the four states. With these facts before the Com-
mission, I have no hesitancy in saying that whether the miners’
wages are advanced or not, the price of coal must be and will be
increased materially. The political stories of unwarranted profits
will be exploded and I am thoroughly satisfied that the coal in-
dustry and the coal producers will be put right before the public.