Evening star., 1946-10-27
Miners Face Danger
OF Running Industry
Rising Costs Imperil Competitive
Position of Coal Producers


by John L. Lewis will be awaited by
most people as a test of his ability to
dictate working conditions to the Gov
ernment-the miners present employer.
Mr.. Lewis probably will not find it too
difficult to bring the Government to
terms, for in that contest the cards are
stacked in his favor. He faces more
difficult problem, however, in coping
with the economic facts affecting the
coal industry.
Some of the economic aspects of this
question are discussed in an article in
the London Economist, and because Of
its significant bearing on the present
dispute the article is reprinted here.
The present rate of output of bitum-
inous coal III the United States Is at the
peak rate established in 1914, when the
mines produced 100000, 900 tons. But
this years production to date, owing to
the unrest and strike of mine workers
during the spring, Is % per cent under
1914 and IT per cent under 1945 in the
corresponding period. The present high
demand for coal is due to accelerating
industrial activity and the replenishing
of seriously depleted stocks. Miners
are receiving higher incomes and oper-
ations are being pushed to the limit.
Company earnings, although generally
providing a meager return on invest
meet and showing tendency to de-
cline since 1943, have been higher than
In many prewar years, when annual
losses were common.
The .present abnormally high pro-
trends of grave Importance to the in
dustry. In this connection, certain his
torical facts are pertinent. After 1890,
coal production rose rapidly to a peak
of 579 900 900 tons in 1918. followed by
slow irregular downward tendency
not counteracted until World War II,
when the 1918 peak was exceeded.
- 4
The coal industry has failed to grow
with industry in general since World
War l. In 1910 industrial production,
according to the Federal Reserve Board,
was 81 per cent greater than in 1920,
while coal production was 10 per cent
less In 1914 industrial production was
213 per cent greater than in 1920, while
coal production was up only per cent.
Between 1920 and 1910 consumption of
coal for various purposes declined In
many leading States, while fuel oil and
natural gas consumption grew rapidly.
Coal consumption in 1945 was divided
as follows: Railroads. % per cent;
coke, II per cent: electric utilities, 13
per cent: industrial, 26 per cent; re-
tailers, % per cent.
Coal is one of large class of prod
ucts for which the competition between
many producers and many buyers de-
termines the price in a free market.
Combustion engineers have been learn
ing how to spread it thinly over the
work to be done and have increased the
use of substitute fuels. The electric
utilities, railroads, steel mills and manu-
featuring industries have steadily re-
duced the amounts of coal required to
do given units of work, such as a ton
mile or kilowatt hour-since 1917,
reductions in the amount of coal re-
quired to do various units of work have
ranged between Is per cent and 81 per
cent. AS conservation measure, in
creased combustion efficiency is COM
mendable, but it suggests that coal
has been losing its advantage of econ
omy This, in fact, is exactly what has
happened.
If allowance Is made for changes in
the general level of prices from 1890
to the. present, the real mine price of
coal fell slowly, reaching its lowest level
in 1915, while coal consumption, under
this stimulation increased rapidly. tReal
prices Of coal are those prices which
would be realized If the general level
of prices were constant) On the other
hand, by 1945, real coal prices at mines
were 80 per cent higher than in 1916.
and coal consumption declined until
World War II in contrast with the
growing use of other fuels. From 1880
to 1945 the real price of coal at the
mines rose AZ per cent, the real price
of fuel oil at the refineries increased
only 33 per cent and the real price of
delivered industrial natural gas fell 20
per cent. In terms of their caloriflc
values. 1945 real prices per million BTUs
were Ill cents for coal, 43.7 cents for
fuel oil and 81 cents for industrial
natural gas The real price of domestic
natural gas was approximately SO cents
per million BTUs, decrease of 19 per
cent since 1880.
Why have coal prices risen so much
while other fuels have improved their
competitive position? The answer lies
IN the costs of production and distribu-
ton. The increasing use of cutting,
cleaning and loading machinery has
brought about long, steady decline
in the labor required to produce coal,
from $50 nlan-hours per ton in 1890
to 139 in 1899, reduction of sc per
cent. Although this downward ten
dency was arrested during the war,
coal operators mays take just pride in
their long, sustained accomplishments
III Saving ldUOl. AL 1910, O1V,OoV AilSil
mined 579,0Oo,o0O tons, while in 1s45
only $4,000 men mined 576,000,0OO tons,
a reduction of 40 per cent in men re-
quired for an equivalent output.
The reduction in manual labor per
ton has been more than offset by rising
labor costs. The real labor cost per
man hour increased by 1T per cent
from 1917 to 1914, offSetting the reduc-
ton in manual labor per ton. Conse