Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-10-13
COAL COMBINATIONS
Many Years Required to Effect
Present Amalgamation.
THE WORK OF MORGAN
COMMUNITY OF INTEREST PLAN
A COMPLETE SUCCESS.
Industrial Commission Reports Present
Interesting Conclusions on
Anthracite Question.

naturally arises In the mind of the at
| ficted public to how the coal mine OPP
orators and coal railroads reached their
| present apparently perfect state OF organ
| izaton and singleness of purpose. That
| the present understanding between the
| mine owners seems to be invincible has
| been singularly impressed upon~the mind
| of this public. That this perfect organiza-
| ton Is the result of many years Of expert
menting with various plans and schemes
| whereby the output and price of anthracite
coal might be controlled is at this time,
therefore. a most interesting bit of history
and has been presented as such by the late
| industrial commission In the last volume
of its report.
1T cannot be long" the report says DE
fore the anthracite coal business of the
United States. in all its enormous extent
and commercial value, will be entirely mo-
nopoifzed by few powerful financial In
terests, and the only safeguard for the
public against exorbitant prices must be
found either in the competition of other
fuels. in enlightened self-interest on the
part of the railroads or in the immediate
application of governmental regulation
The commission does not suggest what
this governmental regulation shall consist
of. but 1t does give a most interesting &C
count of how these few financial interests
have through years of endeavor and after
the repeated failure of many plans and
| combinations. hit on Community Of own
ership' plan which has at last seemed to
meet the looked-for requirement of making
possible complete control both regarding
price and output.
Morgan Did the Work.
The financial work of putting this COM
munity of interest plan into operation is
credited in the report almost exclusively
to the banking house of J. P. Morgan &
Co. The commission places the Reading
road as a Morgan road. This road is de-
clared to control 63 per cent of all the I'M
mined anthracite coal in the state Of Penn
sylvania. Other roads under the Morgan
control are given as the Lehigh Valley the
Erie, and through 1t the Susquehanna and
Western. the Lackawanna, the Delaware
and Hudson and the Pennsylvania The
only roads which are entirely Independent
oil the Morgan interests, according to this
report. are the Ontario and Western and
the Delaware. Susquehanna and Schuylkill
and these two roads together control but
slightly over per cent Of the total ship
mentS.
According to the shipments of 1895, esti-
mates were then made by the Pennsylvania
coal waste commission that the Ontario
and Western road had but nine years sun
ply OF anthracite. but this reserve has been
increased by purchase The Erie system
owned twenty-one years supply: the New
York, Susauehanna and Western. eight
cen years; Delaware and Hudson twenty
six years; Pennsylvania Coal COMPANY
| forty-hve years; Delaware L.ackawanna
and Western. fiftyfour years; Pennsylva-
MA railroad. sixty-three years: Lehigh
Valley. one hundred and sixteen years
and the Reading. two hundred and sixteen
years. The average of all these compa MES
gives reserve supply which will last one
hundred and nine years.
The First Combination.
The anthracite coal business since the
| early part of the century has been marked
| by efforts to restrict production and to pre-
| scribe prices by artificial means. The first
| of these efforts was induced by the attempt
| of the Philadelphia and Reading railway
| in 1871, under the leadership of Mr. Gowen
| to buy up all the Independent coal lands
! In sight. In short time at an enormous
cost. one-third of the coal lands Of this
| whole region were acquired. Within six
| years the company was involved In debt
| OF s'N.oOoOOO incurred for the purchase of
| these coal lands. The existence of this
| enormous burden of debt upon this most
| important company, involving the conse-
| quent necessity of acquiring business at
| any cost in order to meet interest charges
| serves to explain many of the subsequent
| events.
| Tn 1878. with a demand for 16, 600 900 tons
| at paying prices. coupled with productive
capacity of 100000 or G, 900 600 tons in ey-
| cess of this figure, came the first great
| combination. This simply took the form
of an agreement to control the amount
| shipped and the price, with a definite alot-
| ment under the control Of the presidents of
| the six railroads concerned. This lasted
until 1876. when certain new features were
| introduced. Provision was made that in
case of excess of production the company
| at fault should pay $50 ton to those
| which were short of their allotment.
Was Not Success.
| This action. undoubtedly in violation of
| state laws. coupled with the stubborn indie
ppp1epce of tho Syly 7 ;,t,
Valley railroads. broke the combination
| Coal prices fell from something above s.
| to less than So in New York The war OF
rates lasted for about sixteen months
| Prices scarcely more than half those which
| ranged under the combination prevailed at
the end of 1877. In January of the follow
ing year new attempt at combination was
| made, this time to include not only ship
| ments to tidewater, but inland as well
| The determination Of the price was still
| cess production was to be taken from
! deposit made in advance. The difficulty in
| this scheme lay in fixing the percentage of
allotment. the Reading being particularly
| lnsistent upon an Increase, on the basis Of
! its large percentage of ownership Of the
unmined coal. This agreement lasted less
| than a year. and prices broke again. In
some cases going below s. in New York in
i 1879 Prosperity returned In the foffbwing
| year with the general revival of trade and
! lasted for some time. - - e
| l. lie Years loou 10 1854 WERE characterized
by great increase in shipments which
| rose rapidly from about % 900 900 TONS in
! 1880 to $4,000 900 tons in 1888. The result
| of this increase in demand was that each
company greatly extended it's capacity and
enlarged its equipment in order to partici-
pate in the increased demand. The effects
were Immediately apparent with the cessa-
ton of general business activity in 1884.
Another Agreement Tried.
The following year was marked by a new
agreement to allot the 10000 900 tons of de-
mand on the old percentage plan Of 1878.
This time, Also there was no agreement
respecting prices, while at the same time
the continued independence of the Penn
sylvania railroad which had always refused
| to come into any agreement, engendered
bitter rivalry. Imperfect as was the sue
cess of the combination, 1t was renewed in
1887. Popular hostility had been aroused
| in the meanwhile. and investigation by the
New York legislature and cases in rthe
Pennsylvania courts together with appre-
henson as to the effect of the new inter-
state commerce act prohibiting pooling. led
! to the abrogation of any formal agreement
| Down to 1891 business was apparently con-
! Quoted on the basis Of tacit, although in
formal, agreement between all the Darties