Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-08-21
TINE National Bituminous Coal Com
mission, having survived one false
start, is now making a second at
tempt to rationalize the country's

start, is now making a second at
tempt to rationalize the countrys
craziest industry.
Essentially, the function OF the commits
sion is to prescribe a minimum price for
coal which will return to the producers
their actual cost of production. No at
tempt is being made to guarantee profit,
, the assumption being that if the coal pro-
ducers can be assured of breaking even
year in and year out they will be able to
pick up profits when unusual circumstances
combine to favor the industry.
The plan is 1ank attempt at price
fixing on national scale-by all odds the
most ambitious undertaking of this Gov
eminent in that direction. 1t may work
and it may not but if it does there will
be few to deny that prices can be fixed
successfully in any industry
Task Is Enormous One.
A most casual investigation of the prob
lens confronting the commission is suf-
ficient to reveal the enormity of the task
confronting it. There are some 1000 coal
producers in the country and the individual
difficulties of each must be studied and ad-
justed to the problems of the industry as
understanding the coal men have never
been able to do for themselves despite the
pressure of being continually in the red.
Before the job is completed it is not at all
unlikely that approximately 100000 different
prices will have to be prescribed. And
even when that is done, machinery will
no RI ho IN ~, tbo fyo6
prices with a minimum of delay or the
little fellow" in the industry will soon
be driven to the wall.
Public opinion is by no means soldly be-
hind the commission and its detectives.
One of the objections most frequently
heard is that the plan contemplates Gov
ernment-supervised monopoly and the
fundamental truth of that proposition can
hardly be debated Critics of the President
argue that the New Deal is guilty of an
Inconsistency in fostering monopoly in
the coal industry with one hand and ham,
mering away at private monopolies with the
other through the antitrust division of
the Department of Justice.
But, whatever the merits of that con-
tCliuiOl, eAiSAC 40 1lo SoSdpAls VIC 1dSt tlldI
the critical illness of the coal industry
called for drastic treatment unless 90 per
cent Of the existing producers were to be
driven out of business under the system of
free competition and virtual monopoly
vested in the relatively few survivors.
Facts Should Be Remembered.
Before passing judgment on the wis
dom, or perhaps the folly, of fixing coal
prices some facts pertaining to the history
Of the industry should be born in mind.
The story of bituminous coal mining,
source of 90 per cent of the coal used in
the country, has been an unhappy one for
many years. Since 1929 the industry has
lost close to $4,000 0,000-a staggering def
icit that threatened to increase as time
went on. The operators have been staying
. In business by depicting their reserves and
ecsnomizing where and when they could
Gamblers at heart, they have chung to their
spraying holes in the ground-hoping for
repetition of some of the lucky breaks
OF the past.
One of those came in 1920 with the
British coal strike, when production jumped
oyer 1000 900 tons in a single year, and
when coal mined at cost of SITS ton
brought $40 ton on the docks at Norfolk,
Va.
Those boom years have been few and
far between, however, and during the in
tervals the producers have been hard put
to get rid of their mined COAL averaging
roughly 100000 tons a day. Since it is
almost impossible to store coal except at
ruinous cost, the producers have resorted
to devices to move their product that seem
fantastic at first glance.
Make Money by Losing Money.
Some Of the mine owners, for example,
have managed to make money by losing
money. That may sound ridiculous, but
its true
In the operation of coal mine there
are certain fixed charges that must be met
and which cannot be reduced by shutting
down the mine unless the owner is prepared
to abandon it. These include taxes cost
Of maintaining equipment, expenses of the
general staff that must be kept on hand
and the cost of keeping the mine pumped
free Of water. These costs are charged
against production. They might average
10 cents a ton if the mine produced a
million tons, but if production should be
cut to half million tons
To illustrate the way that works in prac-
Teal effect, assume that an owner has Sc
cured an order for enough coal to keep his
mine operating three days a week. If he
mines that coal at cost of Its ton and
sells at $1.90 he has profit of Is cents
ton but that profit is affected by the fixed
charges which must be met for the remain
Ing three days of the week. Therefore, it
behooves him, if he can, to find a buyer for
his potential output for the rest OF the
week. If necessary, he can (and often
does) sell that coal at 81 go a ton, IS cents
below the cost of production for the first
three days, but equal to his cost of produce
ton for the entire six days. 1t follows,
therefore. that his profit on the production
for the first half of the week has been
increased to 80 cents ton because he is
enabled to spread his fixed charges over six
days output instead of three.
Often Sell Slack at Loss.
Producers slso often sell the grade of
coal known as slack at prices which ordi-
narily would represent losses in order to
dispose of the higher priced prepared or
sized" Goals.