The Global Zeitenwende
How to Avoid a New Cold War in a Multipolar Era
THE industrial life of the modern world rests on a basis which has come to be more or less taken for granted, that is, on an abundant and cheap supply of coal. Nations which have been able to produce large supplies of coal easily have become economically great and politically powerful. On the other hand, nations with little or no coal at their command have remained economically dependent and have failed to obtain very high political rank. Thus for decades the United States, the United Kingdom and Germany have been more and more the dominant figures in world industry and international affairs. It is true that China, Canada and Russia have large coal resources --larger, in fact, than those of other countries except the United States--but so far these resources have been neither so readily accessible nor so easily available as to permit the economic development which would have followed from more favorable conditions.
It was often said prior to 1914 that the nations possessing coal and iron ruled the world, and in this pair coal, by common consent, was considered the more important. Since 1914, it has been said repeatedly that the world conflict was largely a struggle for control of coal and iron and the advantages which result from their possession. Although these statements may not be literally true, they are essentially a recognition of the fundamental fact that coal is the basis of modern economic strength, because it is the main and still the most convenient source of mechanical power.
Of late there has been a tendency to discount the future dependence of the world on coal, the claim being made that other sources of power will displace it. For example, a great shipping authority recently said: "It is generally conceded that oil must eventually supersede coal as fuel for ships." It is also maintained that waterpower will contest with coal for first place in providing industrial energy. It undoubtedly is true that these alternative sources of power already are serving many uses which previously were supplied by coal, and it is not unlikely that they may have increasing importance in the near future, notably so in the case of hydro-electric power developments. But all the oil produced in the world if used for fuel purposes would equal barely twenty per cent of the coal now consumed annually, and some of the most competent authorities are beginning to believe that the greatest oil producing nations have about reached their zenith of output. Waterpower, even where utilized through hydro-electric developments, still suffers from the fact that its use is limited to a narrowly restricted area surrounding the power site. Thus, great as these alternative sources of power may become, the dominance of coal seems sure to prevail indefinitely.
Because of this fundamental importance of coal, both to the present and future industrial prosperity of the world, it is desirable to recognize the problems related to the use of coal, to realize that these problems are growing more acute, and to admit frankly that some solution must be reached other than the false notion that an escape from vexatious coal questions may be found by turning to oil and waterpower.
The first problem which the extensive use of coal presented to industrial nations was the question of how long the supplies would last. More than fifty years ago this question was being seriously investigated in Great Britain, where the stage of large dependence on coal was first reached, and it since has engaged the attention of practically every important coal producing country. As a result of these investigations, coal-bearing regions have been pretty thoroughly surveyed and it has been determined that the question of the exhaustion of coal resources is probably a matter of several hundred years, even in the case of the less well endowed nations. This does not mean that it is not desirable to conserve coal resources as far as possible, by economies both in production and in use, but it does mean that the question of ultimate exhaustion is now of less pressing importance than some of the more recent problems in the industry. The chief of these problems are: first, an adequate output of coal; second, adjustment of cost of production and price of coal; third, the position of coal in modern trade; fourth, the control of the coal industry; and fifth, the political aspects of coal.
THE QUESTION OF AN ADEQUATE OUTPUT
Only recently has the question of securing an adequate output of coal assumed much importance. Prior to the war attention was being drawn to the fact that the world output was doubling about every eighteen years, while in the United States the period was every twelve to thirteen years. Many speculations were made as to whether this extraordinary rate of increase would continue, and, if it should, how the industry would meet the problems involved. It was, of course, quite contrary to natural tendencies of industrial expansion to assume that the rate of increase during the earlier decades of dependence on coal would or could be maintained indefinitely. Yet estimates were made that by 1950 the output in the United States would be at least three times its present figure, and in the United Kingdom at least double. These predictions may not be verified, but the rapid rate of increase already experienced indicates the seriousness of the problem of meeting the coal requirements for a world which steadily is becoming more highly industrialized.
According to the best estimates, the world's annual requirement of coal had reached about 1,400,000,000 tons when the war began. This figure may be taken as the approximate basis from which to reckon likely consumption if the industrial and commercial activities in Europe were restored to something like normal. By way of contrast it may be worth noting that this annual consumption of coal would fall not far short of the total world output for the whole decade 1861 to 1870.
In spite of this enormous increase in annual consumption, the production of coal has continued to be confined largely to three countries, the United States, the United Kingdom and Germany, which together produced eighty-one per cent of the world's supply in 1870, and in the last year before the war still contributed approximately eighty per cent of world output. Among the other producers which account for most of the remainder specific mention may be made of France, Belgium, Czechoslovakia, Russia, Canada, Japan, Australia, India, and South Africa. These nine together produce only about 200,000,000 tons a year, or barely more than two-thirds of what is credited to Great Britain alone. Almost from the beginning the bulk of the coal produced has been used in or near the coal-mining districts; and thus has been largely determined the localization of modern industrial activities, which developed to a greater or less degree in proportion to the amount of coal available. More recently, however, an increasing quantity of coal has been finding its way to more remote places, in answer to the steadily growing demand for coal in modern life. Thus British exports which were less than 5,000,000 tons a year in the 1850's, reached almost 98,000,000 tons (including bunker coal) by the end of 1913.
At no time, however, has there been any doubt as to available resources. The total reserves of coal, estimated at more than 7,000,000 million tons, are so many times greater than the amount used so far that any suggestion of impending exhaustion is not now worth considering. Assuming equal availability for all known deposits, the present rate of production could be continued for several thousand years. Even in those countries where exploitation has been most rapid the total consumption to date is an almost negligible fraction of the amounts known to exist. Thus on the basis of present output the resources in Great Britain are figured as sufficient for another four hundred years; in Germany for eight hundred; and in the United States for nearly four thousand years. And the important use of coal is barely started on its second century. Yet if one accepts the estimates that world output a century hence will have increased sevenfold, it is necessary to assume not only a greatly accelerated rate of exhaustion for the principal fields on which the world now depends, but also the necessity of turning to other fields to satisfy this stupendous requirement.
It must be recognized, however, that coal fields are not all alike, either in quality or in commercial availability. Hence it is necessary to make certain modifications of any sweeping conclusion based on general world totals. Of the three commonly recognized grades of coal, bituminous, which represents about fifty-three per cent of the known reserves, is of chief value because of its superiority for power purposes, its cooking quality, and its valuable by-products. The lower grade, consisting of lignite and sub-bituminous, is unfit for many uses without passing through some process of manufacture, like briquetting, and even then it is excluded from some uses, as in the metallurgical industries. Because of their inferior quality these coals cannot stand heavy transportation charges, and therefore their use on a commercial scale is largely restricted to the immediate vicinity of the mines. However, these less valuable deposits account for forty per cent of the world's coal reserves and the bulk of the supplies in some countries, such as Canada and Siberia. The highest grade, anthracite, also is less generally adaptable to industrial needs, and that fact, combined with its very limited occurrence, restricts its importance to a few localities. Within those limits, as in the northeastern part of the United States, the problem of anthracite supply has become chronically acute; but because that district has for a close neighbor one of the greatest of bituminous coal mining regions its anthracite problem is felt little, if any, in the general world coal situation.
There is no chance that anthracite coal will ever be more of a factor than it is today, for the deposits of its resources are too small and its uses too few. The time may come when technical advances in fuel economy make the vast deposits of lignite readily available for most purposes. But so far as one can now judge, it is the bituminous supplies which are the real basis of industry, with little chance of general substitution from other grades.
The world's resources of bituminous coal are a trifle more than half the estimated total of 7,000,000 million tons. Of this bituminous supply, North America has 2,200,000 million tons, mainly in the United States; Asia has 760,000 million tons, four-fifths of it in China; Europe has 693,000 million tons, one-fourth of it in Britain and more than a half of it in Germany.
When one considers the location of these bituminous deposits, it is difficult to see how there can be much substitution of newly-opened for old sources of coal for most consumers, since cheapness is the essence of power. In such countries as the United States and Canada, however, there are possibilities of expanding production by having recourse to newly exploited fields. But most of the coal resources of the United States, outside those near the Atlantic seaboard, have no direct significance for any other country. If used at all, the coal from the interior fields must be used there. The same holds true for the bulk of Canadian supplies, in fact for all outside of Nova Scotia and British Columbia. Similarly, Chinese and other Asiatic resources are so located as to have little external importance. By a process of elimination, therefore, it appears that readily available supplies are mainly confined to a few favored parts of the total reserves, chiefly in western Europe and in the eastern United States.
Coal's chief uses in the countries which are its heaviest consumers are, first, for manufacturing industries; second, for transportation; and third, for light and heat. In other countries the order is commonly reversed, with transportation accounting for the largest part and industrial uses coming second. In almost all these latter countries, however, persistent efforts are being made to promote industrial enterprises which will involve a larger use of coal. Moreover, the transportation requirements of these countries are far from being satisfied. It may be risky to assume great success for the ambition of countries like Argentina and Brazil to develop along manufacturing lines on the basis of imported coal, but it is perfectly safe to say that if such nations are to continue their economic progress they must expand considerably beyond present transportation facilities. In short, practically all economic growth for them involves additional requirements of coal.
It may be worth while to digress here for a moment to recall that recovery from the effects of other disastrous wars during the last century and a half was in each case materially accelerated by the opening of new areas or avenues for economic expansion. If similar help toward recovery is to be experienced today it seems most likely to come from opportunities for development in the southern continents, where in every instance added supplies of coal would be necessary.
No matter from what angle one considers the question, it is inevitable that there will be a steadily increasing demand for coal, but at what rate this increase will proceed and how far it will go in any given time is at present a pure matter of conjecture. But unless the demand should increase much more rapidly than now seems likely it presumably will not for several decades expand faster than the ability of the existing industry to meet it.
The ability to increase coal output to meet emergency requirements was fairly well demonstrated in the United States from 1914 to 1918, when the previous maximum output was exceeded by more than 100,000,000 tons. It was, of course, necessary to make sacrifices in some directions in order to accomplish the desired result so quickly, but the fact of doing it at all may be taken as proof that a far greater scale of expansion would be possible under the more gradual growth of normal uses. This opinion is also supported by the contention that the United States has more mines and more miners than present production requires, were operations conducted more efficiently. On the other hand, no important European producer since 1914 has exceeded the high level of output reached up to that time. One limiting factor in this connection is the extent to which mines are becoming too deep for the most economical operation, but that aspect of the problem is more serious in the small producing districts than in either the British or German fields.
In the present state of affairs, it is extremely doubtful whether the coal fields of continental Europe, except in Germany, are able to contribute substantially more to meet local coal requirements, much less to provide additional supplies for the outside world.
It is logical, therefore, to conclude that continental Europe's output of coal will be mainly absorbed within its borders. There is not much, if any, chance for continental Europe to draw large amounts of coal from outside sources other than Great Britain. At times considerable shipments from the United States have been bought by Europe, but even at their maximum these quantities have been relatively insignificant when compared with the total European coal requirements. It is perfectly clear that no great European industries could long afford to depend on high priced coal from America. As a result of these conditions, there is doubt about the ability of most European countries, except Germany and Britain, to do much more than they now are doing on the strength of their own coal supplies. The rest of the world, then, will have to obtain its coal largely from Britain and the United States, with small, but perhaps locally important, assistance from Canada, Australia, South Africa, and possibly China.
THE QUESTION OF COST AND PRICE
The question of the cost at which coal can be mined and the price which must be paid for it by users is almost as important as the adequacy of the supplies, for the cheapness of the power derived from coal always has been one of its greatest advantages. To a certain extent this cheapness has depended on a steadily expanding consumption, which gave every opportunity for the economies of large scale production.
The attitude of British producers and consumers gave clear recognition of this fact at the various times when agitation was started to conserve coal supplies by restricting exports. Starting from the premise that coal is the one great natural resource on which British industry is built, it is easy to conclude that large exports of coal are undermining the economic strength of the nation. But every move to restrict exports has met defeat through the argument that cheap coal is the foundation of British industrial and commercial importance, and that cheap coal would no longer be possible if the same overhead costs of operation were applied to the smaller output which would follow inevitably from curtailed exports. In a way, therefore, the export coal trade has been quite as important to the coal users of Britain as to those in the overseas countries which buy British coal.
It is an open question, however, whether expansion of production in many places has not already reached the point where the costs of putting coal into the hands of consumers begin to increase rather than decrease with added output. Certainly costs of production have risen sharply in recent years, due partly, of course, to the disturbing effects of the war period on cost and price levels in general; but this rise has some aspects which give promise of lasting more or less indefinitely. A concrete measure of the rising costs is found in the fact that both wholesale and retail prices of coal have doubled in the United States in the last ten years, and much the same holds true in England. More and more extensive workings have been necessary to furnish increasing supplies, except in the newer fields where easily accessible deposits were still undeveloped and additional mines could be opened. In some places, notably the western European field, including the deposits of France, Belgium and Germany, opportunities for new mines are few and many old mines have reached depths which in the United States are commonly regarded as beyond the limit of economical operation. Similar conditions are being approached elsewhere, with the result that further expansion of operations means expensive development work, the burden of which would be reflected in higher costs. Beyond a certain point, in any coal field, additional mines or more extensive workings of old mines involve less rather than more economy of operation.
The number of coal miners, naturally enough, has increased as the industry has grown, but for some years the increase of workers has been faster than the growth of production. In other words, the output per man has steadily diminished, notably so in Great Britain, where the output per worker dropped from 258 tons in 1913 to 182 tons in 1920. Part of this shrinkage is explained by fewer hours of work per week. But the same tendency toward smaller output existed before the seven-hour day was effective. Instead of considering a return to more working hours per week in order to increase and cheapen output, miners are talking about a five-day week, six hours per day, and the like, always with the same or a higher scale of wages. Such conditions inevitably mean dearer coal. In fact this item in itself is so important that many observers see no prospect of a return to the low cost of coal production which prevailed a generation ago.
If this mounting cost of coal were merely keeping pace with a long upward swing of costs and prices in general, the effects would be negligible. For some time, however, the price of coal has been getting out of line with the prices of many other essential commodities, and in Europe this situation has recently been greatly accentuated by the French occupation of the Ruhr. Yet some of the causes are more deep-seated and less remediable than the effects of the French Rhur policy. Miners' unions, both in Europe and America, learned during the war, if they did not know it before, how vital the coal supply is to the community at large. They discovered that labor can usually secure its demands, if the alternative is stoppage of the coal supply. They determined after the war not to return to the previous conditions, which were regarded as unsatisfactory. There may be some doubt whether up to 1914 the miner was relatively worse off than other workers, but there is no doubt that he aims to be better off in the future than he was then. If he succeeds, the effect will be dearer coal--how much dearer depending largely on what world consumption amounts to in the future.
Thus the miner constantly complains that he does not get a "living wage," while the mine owner pleads that he makes no profits. And so, ground between the upper and nether millstones, the defenseless consumer suffers from ever mounting coal prices.
The surest way of counteracting these tendencies is through greater economy both in production and in use. The former is largely a matter of more efficient mining methods, the introduction of which in most cases would be relatively simple, except insofar as opposed by labor or as locally hampered by the conditions in which the coal occurs. The chief difficulty is probably the miner himself. In the hands of labor rests the power to lower production costs,--by means of a larger output per man,--more than costs are being increased by all other causes. Greater efficiency in the use of coal is relatively more difficult to secure, because it involves modifications or complete changes in many ways in which coal is used in order that the present waste or complete loss of valuable products may be reduced. As it is now, only a fraction of the potential power is actually utilized and many of the important commodity properties of coal are lost entirely.
The method of getting coal into the hands of the user is another prime factor in the price which he pays. Transportation charges fall more or less alike on all bulky commodities, yet there is a measure of difference between coal and the others because of the very great volume of coal which must be handled and its comparatively low value per ton. For this reason a charge which would be moderate for another commodity like wheat, worth $30 per ton on the farm, might be intolerably heavy for coal, worth only $6 per ton at the mine. The problem of handling coal efficiently and cheaply is one of increasing seriousness. In fact it may be doubted whether existing methods will prove adequate to the task of transporting greatly increased amounts of coal, except at prohibitive costs, even though there were no question about quantity or economy of output from the mines.
THE QUESTION OF TRANSPORTATION
As a commodity in commerce, both internal and foreign, coal presents one of the most vital transportation problems. In domestic trade the situation is probably most acute in the United States, where coal accounts for more than one-third of the freight handled by the railroads. This represents an enormous burden, often to the disadvantage of other rail traffic. Any great increase in total traffic might necessitate a choice as to which of the commodities has the right of way, when none of those involved can conveniently be done without. The seriousness of this problem is recognized in the agitation for central power stations, to be established close to the coal mines on a scale to meet the power requirements of most of the northeastern section of the United States, thus greatly reducing the tonnage of coal handled in the district of most congested freight movement. Another suggested remedy is the zonal marketing of coal, by which every consumer would be provided from the nearest source of supply. In Great Britain and Germany the problem of internal coal traffic has been relatively less serious, partly because of smaller amounts to be hauled shorter distances, and partly because considerable advantage has been taken of waterways. In both these cases, nevertheless, the volume of coal to be handled creates the chief traffic problem which the railways have to face, and this in spite of the fact that the coal trade represents one of the chief sources of railway revenue.
However, the transportation of coal is as much of a boon to seaborne commerce as it is a burden to internal trade. The tonnage of coal shipped overseas, exclusive of bunkers, is several times greater than that of any other single commodity. It amounted to close to 100,000,000 tons in 1913. British coal represents about seventy per cent of this total and accounts for about forty per cent of the entire volume of British overseas trade. The handling of this vast coal trade requires extensive and special port facilities, provides employment for many men, and furnishes cargo for a large part of the world's merchant fleet.
In this last respect the coal traffic is an almost indispensable item of profit to vessels in certain trades. For example, the cargoes of grain and raw materials bound for the industrial districts of western Europe can be transported at reasonable rates largely because full cargoes of coal on outbound trips help to cover the cost of operating ships to the remote points from which Europe draws its supplies. At present, the cost of operating a 5,000-ton vessel from a British port to the River Plate and return requires earnings of about forty shillings a ton to cover expenses and leave even a small margin of profit. Without coal exports practically all this would have to be borne by the homeward cargoes of grain, for there is little or nothing else to provide outward freight for the amount of tonnage required for grain imports. But with coal paying an outbound rate of fourteen to sixteen shillings, the effect on the freight factor in the cost of grain is very substantial.
What is true of the Argentine grain routes is also true of the other routes over which the great supplies of bulky food products and raw materials move to satisfy the huge demands of western Europe. It is very easy to upset the nicety of balance in this reciprocal traffic. Any interference with the normal supply of coal for export reacts unfavorably on shipping facilities for homeward cargoes.
An example of this is furnished by the condition following the occupation of the Ruhr. In the first place, interference with the coal supply of certain continental districts quickly created a largely increased demand for British coal at advancing prices. This tended to curtail the amounts of coal--and therefore of shipping--going to more remote markets, and resulted in higher homeward freight rates. Presently, however, there followed a considerably diminished continental buying of grain and raw materials, with an accompanying weakness of homeward freight rates, to such an extent that tonnage for coal exports could be secured only by bidding up the rate. Thus the overseas communities lost both ways, first through the diminished demand for their exports of grain and raw materials, and second by paying more for their coal.
Any developments which permanently diminished the quantity of seaborne coal would seriously upset long-established world trade relations. A long-continued shrinkage in the output of coal from western Europe would probably involve an added drain on the surplus output of British mines, with the result that other overseas consumers would have to satisfy their needs in larger part from the United States or some of the lesser producing districts. Such a shifting of the lines of coal trade would have far-reaching effects on established trade relations in other commodities.
It is almost axiomatic to say that Europe's coal requirements cannot be economically supplied from any outside source, that economic prosperity cannot survive curtailed or too expensive supplies of coal, and that European industries cannot bear the burden of dearer foodstuffs and raw materials which would follow from redrawing the lines of the world's coal traffic. Such a realignment might ultimately be to the advantage of the United States, if one could assume that the United States would not seriously feel the resulting disadvantages to Europe. However, the volume of European trade has always exerted so much influence over trade throughout the world that no commercial nation can consider itself immune from the undesirable effects of any sustained dislocation of coal supply and the industries depending on coal in the western European countries.
THE QUESTION OF CONTROL
The question of the control of the coal industry follows naturally upon a consideration of the importance of insuring abundant supplies, of avoiding prohibitive costs to consumers, and of meeting the traffic problems involved. For many years serious consideration has been given to the corollary problems of worker's wages, producer's profits, and to the complex relations of this basic industry to the whole organization of industrial society. The disastrous consequences of labor disputes and stoppages of production have forced public attention to these matters. And the more the consumption of coal increases, the more serious and far reaching are the results of short supplies, high prices and uncertain deliveries. The growing problem of control is recognized; its relation to economic stability and prosperity is plain; but where the proper solution is to be found few profess to know.
War-time emergencies precipitated the issue by bringing what was in effect, if not actually, a period of government control. The control in Britain was more comprehensive than in the United States, but in both cases it furnished sufficient experience to strengthen the general feeling that government ownership of the industry is not the solution for any important problem of the coal question. On the other hand, agitation by labor interests in favor of nationalization of coal mines has increased since the war, both in Britain and in the United States. The protracted strike of British coal miners following de-control in 1921, and the great strike among American miners in 1922, were both regarded as part of the desire of the workers' unions to force a return to government control and eventually for the nationalization of the industry. Public opinion on this point, however, has been indicated clearly enough by the British Government's refusal to consider nationalization and by the declaration against government ownership in the report of the investigating commission appointed by President Harding last year.
Private ownership and operation of coal mines has received the stamp of approval from the most competent investigators as being best calculated to give the efficient and economical management necessary for abundant and cheap production. The public importance of the industry is so great, however, that a measure of regulation probably is inevitable. In short, it is quite as necessary to see that the supply of coal is not seriously impaired, that it is reasonably priced, and that there is a fair reward for the capital invested, as it is to see that miners' working and living conditions are as satisfactory as the nature of the industry will permit.
Among the different kinds of regulation which have been suggested the chief relate to hours of work, wages, profits, prices, traffic, and emergency control of production. As thus far put into effect, however, regulatory provisions have been in the interest of the worker, rather than of the consumer or the mine-owner. Thus the elaborate British legislation affecting the coal industry, embodied in the Minimum Wage Act (1912), the Mining Industry Act (1920), and the so-called National Agreement for settlement of the 1921 strike of coal miners, is concerned mainly with limiting hours of work and establishing minimum wage levels. Provisions in the Mining Act of 1920 even went so far as to give labor some voice in the control of the industry, but not exactly under the conditions desired, and that part of the law was allowed to lapse. Nowhere, however, has provision been made to prevent strikes, which involve heavy losses for the community and hardships for millions of people. And prices charged to consumers, like profits on the capital invested, are still the sport of widely fluctuating market conditions.
To equalize the case between effectively organized workers on the one hand and loosely organized owners and consumers on the other, it seems necessary to extend regulation beyond the sphere of wages and hours of labor. It is no exaggeration to say that the cost of meeting miners' demands in Great Britain has reached the limit which can be borne under existing conditions, either by the coal industry itself or by British industry in general. Still the miners are not satisfied, and underlying all the complex fabric of British industry and trade there consequently is an element of uncertainty about the future of the coal on which everything British depends. Other countries, like the United States, are approaching the same situation. Hence it is argued that if workers and owners can not agree to settle their differences, the state must be prepared to take over the industry until the points at issue can be decided by some properly constituted tribunal. This protection for the public is rendered the more necessary by the rumors of a sort of international agreement by which workers in one country will refuse to produce coal for shipment to another where a strike of miners is in progress. On the other hand, it is evident that owners' costs of production need to be brought regularly under review in considering prices paid by consumers as well as in determining the claims of capital to reasonable profits.
Unfortunately, the same regulations will not fit all cases, even within limited areas, on account of differences in conditions of mining. This fact has long been recognized in the United States, but one of the best concrete examples is found in recent data covering English coal fields, which show that in Lancashire a pitmouth price of 19s. 41/2d. per ton yielded a profit of barely one farthing, while nearby, in Yorkshire, a pitmouth price of 17s. 51/2d. yielded a profit of 2s. 13/4d. per ton. Under such circumstances any equitable regulation of conditions of work, wages, profits and prices becomes almost bewilderingly complex.
For the great coal producing nations, notably the United States and Great Britain, the problems of coal control annually become more pressing. But so far, unfortunately, no one seems to have discovered a plan for properly adjusting the three-cornered interests of workers, owners and the public. To date, the public directly or indirectly has paid the price for all the ills of the industry. In the long run, however, if economic strength and growth are to continue, the interest of the public must prevail. This fact will furnish the keynote of any successful policy of control.
Whereas coal has gradually come to furnish internal economic problems of the first magnitude, it has suddenly jumped into prominence, since 1918, as a factor in international politics. In this brief period the press probably has given the public more day-to-day "news" about coal than had appeared in the preceding generation.
There are good reasons for this new interest in coal as a force in foreign affairs. Political relations among important countries have become more and more the reflection of economic and commercial interests. "Dollar diplomacy" was the phrase which first brought this fact home to the mass of the American people. With the use of coal as the distinguishing feature of the new industrial, as against the old agricultural, organization of society, it was inevitable that coal should eventually figure in international questions. The lead in that direction was recognized years ago when class-rooms first began to hear the statement, "the nations which possess the coal and iron rule the world." So far had the world progressed from the days of Peter the Second, when "to control the trade of India was to control the trade of the world, and thus the world itself!" Singularly enough, the nation which did control the trade of India also controlled much coal and iron and was the first to base its economic life mainly on coal. Thus Britain verified the epigram.
The war has carried the notion a step further. First, it has been generally accepted that the chief cause of the conflict was economic and commercial ambition. The desire for "a place in the sun" is commonly translated to mean eagerness for unhampered expansion in industry and trade, and, consequently, in political influence; this expansion the use of coal made possible. Second, there is the belief that the outcome was decided when the United States, the greatest of industrial nations, entered the lists. How far other factors figured in precipitating the conflict and what other forces helped to determine the result are questions beyond the province of this discussion. The important fact in this connection is the common agreement that the natural results of industrialism based on coal were of primary consequence both in the cause and the outcome of the greatest conflict ever staged among civilized nations.
The Treaty of Versailles added the final touch in the process of making coal a first rate political issue. It was perhaps only natural that the first great economic war should be followed by a treaty in which economic consequences were provided for on a scale never dreamed of before. Reparations, in the form of specified deliveries of coal and coke to France, Belgium, and Italy, were a logical provision, first because of wilful injury done by German armies to French mines, and second because coal represented the one great exportable commodity which the Allied nations readily could take from Germany without undesirable effects on their own industries.
Provisions for "sanctions" or "productive guarantees" in the event of the non-fulfilment of treaty obligations not unnaturally opened the way for the possible occupation of the Ruhr district, partly because it is a convenient and desirable industrial center to seize, and partly because the output of the Westphalian coal field is vital not only to the reparations coal deliveries but also to the whole economic organization of industrial Germany.
Finally, the transfer of coal fields by the treaty, as in the cases of Silesia, Teschen, and the Saar basin, was in some ways an unavoidable aspect of relocating European boundaries. But in other ways it has magnified the importance of the political control of these resources. Under former conditions a certain degree of balance between the coal output and the dependent industries had been established as a result of long processes of economic adjustment. That balance of interrelations has been disturbed by the shift of boundaries.
It may be argued that as coal is a readily transportable commodity it should quickly find its way along the old channels to the points of former consumption. But in practice the matter does not seem to work out that way. The newly acquired resources of coal seem to be looked upon as a means of developing added economic strength for the countries where they now lie rather than for contributing industrial sinews to neighboring nations to which the coal formerly belonged. For the time being, therefore, the recasting of the political map of Europe has left industries without the coal by the aid of which they developed, and coal without its associated and dependent industries. The effects of this disturbance on the established economic order are seen in a disorganization of industry and the retarding of a recovery of trade just at the time when it is so badly needed to heal the scars of a devastating struggle.
In the brief space of six months the Ruhr affair has sufficiently disorganized the coal trade of western Europe to work considerable injury to almost every other line of trade. Emergency demands to fill the gap in coal production have made prices soar. In Britain, for example, where the effects of this demand have been felt most, Welsh steam coals rose from 25 to more than 40 shillings per ton, while bunker coal at British ports jumped from 21 to 35 shillings. As a result all British industries suffer, for such prices are higher than they can bear and remain prosperous. Profits are disappearing and increasing complaints are heard that the country is facing a most serious condition. The only remedy is to be found in an early correction of the whole coal situation.
However the Ruhr problem may work out, it would be absurd to ignore the possible future consequences of interfering with European coal supplies. Europe must be thought of as a vastly complex industrial organization in which coal is the indispensable factor. The various nations which are a part of that organization are separately and jointly being urged on by the driving force of economic interest to develop and satisfy national ambitions. The opportunities of all of them are largely limited by whether or not they possess coal or have freedom of access to adequate supplies of it. Supplies of coal from outside Europe unfortunately are out of the question, and alternative sources of power seem inadequate to solve the problem. In the contest for control of this cheap and convenient source of mechanical energy there is room for much trouble and future conflict.
To assume for an instant that a way out will not be found would be far too pessimistic. But it must be confessed that the question of coal supplies has ceased to be a purely economic matter of merely local interest. The coal question as it is developing in Europe is an international issue of major importance; and as Europe stands in relationship to the rest of the world today there are few nations which are not concerned in the answer.