ECONOMICS, TRADE, AND FINANCE [EDITORIAL NOTE: No statement made in Parliament since the opening of the war has been more commented upon than Sir Auckland Geddes's review of the coal situation. Readers who have followed the campaign for the nationalizing of the British coal mines, will be interested in Sir Auckland's frank statement of the British position.] WHAT THE RISE IN THE COST OF COAL WILL MEAN TO GREAT BRITAIN SIR AUCKLAND GEDDES (President of the Board of Trade) said the subject they had to debate raised issues as grave as any that had been raised even during the period of the war. Last week the government announced that it was necessary to increase the price of coal by no less a sum than 68. a ton. He knew of no ground whatever for the suggestion that this increase was based upon political considerations. (Cheers.) It was based upon nothing but a realization by the government of the very serious position by which the country was faced. We were faced by a serious reduction in the amount of coal which was available for use. The causes that had been assigned to the reduction of output were numerous, and the causes which were operative were certain. It was quite wrong to suggest, as had been suggested, that all these causes were to be found inside the coal industry itself. Among the most important of the causes external to the coal industry was the present transport position in the country. There was not the slightest doubt that output was being checked at many mines because wagons were not forthcoming as required, and that failure to get wagons to the pits was in some cases extraordinarily serious. There were many reasons operating to strangle the flow from the collieries, and one of them was that the coal, after it had been loaded on the wagons, was longer in them than it used to be, because they could not be cleared at their destination. The reason for the difficulty of clearing and emptying the wagons arose as the result of the institution of the eight-hour day on the railways because there was less work being done, and new men who were being taken on were not yet trained or so expert. There was also a reason associated with the eighthour day in factories. Then there was the delay in getting wagons back because not so many hours were worked per day. Next he mentioned the enormous freights charged for coastwise services. They had got much higher wages; they had got in some cases less work being done. He rather laid stress on these points, because he wished to emphasize the one vital fact for the country that less work being done in one industry reacted through that industry on others, and they could not go on to anything like their pre-war state if the work of the country was not done. (Cheers.) The work of the country, for one reason or another, was not being done. There was a most pernicious doctrine being preached, that if a man did less work there would be more work for others. (Cheers.) If a man did less work it meant that there was less work for others to do. (Cheers and Labor dissent.) Mr. Sexton (Lab, St. Helens): Who has preached that doctrine? Tell us .one. (Cries of 'Order.') Sir A. Geddes: One fact was that less work was being done in the mining industry. It was right that the fact of the interdependence of industry was complicated by other factors. The drought of the early summer had lessened the amount of cartage available, because of the scarcity of fodder and the high prices of hay, so that the railway wagons were not cleared. Not only was the flow of the coal industry limited by the conditions of industry outside, but it was actually limited from outside causes in its production. It was affected by the lack of steel rails, machines, tubs, etc., which could not be obtained. As a result of the operations in the steel trade, it was not possible to get the supplies of manufactured steel that were required. In short, one might say that they could not take an old country like ours and suddenly change all the conditions under which its people lived and worked without causing widespread disturbances outside the industries themselves. Inside the coal industry there were factors at work which could only tend to reduce output. The coal owners, as a result of the government adoption of the Sankey Commission report, had their profits fixed at 1s. 2d. per ton. It did not matter to them now how much coal costs rose although it mattered to them how many tons were raised. Wages were very high, and it was freely alleged that there were men who, after they had earned enough, did not go on to make more. (Hear, hear.) He alluded to the increase of absentees and the fall in the output. An unused passage for output still existed in the miners themselves. It had been suggested that there should be a campaign to get more output, and that proved that an unused passage existed. They had there something that could not be put right by any one man, but which was a national question and a vital matter which had to be put right. (Hear, hear.) Dealing with prices, he said one result of the reduction in output was an increase in prices. He would show how the money which was being paid for coal at the pitmouth was going up. In 1913 the average pit price of coal raised was 10s. 111⁄2d.; the same figure to-day was 26s. 02d.; per ton sold, 118.; to-day, 29s. 31⁄2d. The 10s. 11⁄2d. was made up: Labor, 6s. 4d.; timber and stores, 1s.; other costs, 11d.; royalties, 52d.; owners' profits, 1s. 5d. The corresponding figures to-day were: Labor, 198. 512d.; timber and stores, 38. 214d.; other costs, 18. 211⁄2d.; royalties, 634d.; owners' profits, 1s. 2d.; compensation to owners for workings which would otherwise be abandoned, 34d.; another penny for administrative purposes, and required in connection with coal control, and also 14d., which was surplus per ton. After July 16 the following would be the state: Labor per ton, 21s. 1034d.; timber and stores, 3s. 7d.; other costs, 1s. 44d.; royalties, 72d.; owners' profit, 1s. 32d. As the result of increase of wages and reduction of output labor costs had increased by 138. 111⁄2d. per ton raised, or 15s. per ton sold, out of a total increase of 15s. 11d. per ton raised, or 18s. 3d. per ton sold. The figures were taken from the evidence given to the Sankey Commission by the Coal Mines Department. They were sifted by the Commission, and the actual figures were those for the September quarter of last year. To those figures had been added the necessary amounts to cover such increases as those resulting from the application of the Sankey payments, and the increased cost resulting from the return of men to the mines, who, although back, were not sharing to the same extent as those who were there before in output. Proceeding to trace the cost of coal through from the coal seller to the consumer in London, he said that taking 29s. 3d. as the cost of the coal at the pitmouth, he found that that coal should be sold in London and was sold in London for 49s. 6d. £1 0s. 3d. marked the increase in the cost, and that was distributed as follows: Price, 298. 3d.; railway rates, average, 6s. 4d.; wagon hire, 1s. 6d.; loaders' charges, 1s. 9d.; carmen's wages, 1s. 10d.; other cartage charges, 2s. 7d.; loss on smalls, 7d.; sacks and replacements, 5d.; railway siding rents, demurrage, etc., 1d.; salaries, establishment charges, and administrative costs, 3s. 6d.; profit between two or even three factors and the retailer, 1s. 8d. In 1913 the pit price was 138.; the London price 278.; railway rates were exactly the same, 68. 4d.; wagon hire, 1s.; loaders' wages, 112d.; carmen's wages, 101⁄2d.; other cartage charges, 1s. 04d.; loss on smalls, 4d.; sacks, 18. 11⁄2d.; railway siding rates, etc., 1d.; salaries and establishment charges, 2s. 411⁄2d.; profit, 1034d. That profit excluded 18. 2d. fixed profit allowed to the coal owner. He was satisfied that these figures were reliable. In the last group of figures, the price of delivery to the consumer, there was as yet no allow ance for any increase in carriage resulting from the various increases in cost with which the railway was faced, one of which was the present increased price of coal. The present price of delivery of coal into London or any town or port in Great Britain was a subsidized price. These figures were actually the effective figures of what we in this country had to pay. Not only was delivery subsidized, but the actual coal-getting was subsidized still, and would be, not by the state, but by the foreigner, because we were carrying into these figures still a subsidy derived from the export profits, and that subsidy was falling in amount day by day (hear, hear) - very rapidly. An Honorary Member: It will disappear altogether shortly. Sir A. Geddes: I trust it won't. If it does the price of coal will be up another 1s. 4d. at once. One and fourpence was the subsidy they were counting on to keep the increase at 6s. We had got at present to face a rise in the price of our pig-iron of anything from 15s. to 20s. a ton or perhaps more; of steel and finished iron from 25s. to 30s., and perhaps more; coke, about 10s.; spelter £2; gas, 6d. to 9d. per 1,000 feet; electric power, 1-5d. per unit; paper, 10s. per ton; glass, 5 to 10 per cent; textiles, about 4 per cent; bricks, about 5 per cent; machinery, about 12 per cent; chemicals generally, about 10 per cent, some of them varying to 20s., 30s., and 50s. a ton, so that the question of the increase of price of coal was a question of the most grave and serious nature for the whole nation. (Hear, hear.) Not only were we losing our subsidy from export coal, but we were going to lose our national earnings from exports. Listen to these figures: Rails in Great Britain before the rise in coal, £16 a ton, after the rise, £17 10s., and in the United States to-day £10 a ton; ship plates, £17 15s. before the rise, £19 the probable new price, the American price £14; crown bars, £21 a ton before the rise, £22 10s. the probable new price. American price £11 15s.; pig-iron, Cleveland No. 3 foundry before the rise £8, after the rise £9, No. 2 Pittsburg £6. Those figures, he thought, must make eyeryone realize how grave was the crisis, because we lived by our exports and nothing else. Our export trade was gravely threatened by the position which had arisen. It was with no light heart, no thought of temporary political advantage (hear, hear) — but because they were compelled, that the government decided to raise the price of coal. They could only estimate what the output of coal would be for the next twelve months on actual experience. It was of no use to base it upon a pious hope, nor to pretend to see things different from what they actually were. (Hear, hear.) They had figures upon which to base an estimate. They could either take in this year a period of twenty weeks, one of twenty-six weeks, or a selected recent period of four weeks. No work on the part of the miners could get the output of coal we wanted, but they could go a long way toward it until all other things were put right. They were bound to look at the factors surrounding the coal industry in deciding the estimate to be made. If they put it on the basis of twenty weeks in the early part of the year they arrived at an estimate of 217,000,000-odd tons. If they took the first twenty-six weeks of the year they got a figure of 216,000,000 tons, and if they took a selected four weeks, with all the factors concentrated upon the output, they got an estimate of 214,000,000 tons. That involved one of. the factors they got in the Sankey report, but they were reducing the actual hours by 121⁄2 per cent and only counted a reduction of 10 per cent. They had the authority of the Coal Commission for that, but with these factors operating he was not sure that 10 per cent might not be rather optimistic. Taking the estimate of 217,000,000, there was shown a deficiency of 46,600,000 tons on the working of the coming year. Those figures were handed in to the Coal Commission, and although they had been before the public for weeks there had been no serious criticism of them. He thought they were fair and right figures. They represented 4s. 3d. per ton on all coal raised. He admitted that all those concerned with the estimate must 'don a white sheet.' The coal used in the collieries, the miners' coal, and the coal used for export and bunker amounted in all to 32,000,000 tons, and was not affected by the 68. rise. According to their methods of calculation it was absolutely necessary to bring up the increased cost to 5s. 10/2d. per ton, and they had added 11⁄2 d. in order to get a slight margin. Taking the estimate of 216,000,000 tons, and knocking off 18,000,000 for use at the collieries and 6,000,000 for miners' cottages, there remained 192,000,000 tons for commercial disposal. The cost of raising that amount was £280,000,000. Domestic and industrial uses absorbed 157,000,000 tons. The present average pithead price was 228. per ton, equal to £172,700,000. That left a balance of £107,350,000 to be attained from the sale of coal for export and bunkers. For this purpose there was only 35,000,000 tons available. At present the prices of export and bunker coals ranged from 15s. a ton for the poorer small broken coal to 90s. a ton. The average was 298. last year, and at present the average was 398. But, unfortunately, the diminished exportable quantity was having the effect that the average composition was deteriorating. According to the trade returns for June, 1917, we exported 535,000 tons of small coal and 2,000,000 tons of large, the ratio being 1 to 4. This year we exported 724,000 tons of small and only 1,500,000 tons of large, a ratio of 1 to 2. Therefore, the average price for export coal was falling. The government were estimating for a price of |