June 2, 1917





RECORD   AND   GUIDE





757





COAL  PRICE  INCREASE  HITS   PROPERTY   OWNERS

Probability that Advance Will Reach Fifty Per Cent. More Than
Last  Year—Corporations  Do Not  Fear  Federal Investigation





By J. D. EDDY





EVERY building owner and manager
in the United States is going to pay
approximately fifty per cent, more for
his coal supply this year. Why? Be¬
cause the mine owners and operators
have so decreed.

There is just one chance that the in¬
crease will not be so great as fifty per
cent. That chance is that the threatened
prosecution of the mine operators by the
Federal Department of Justice will have
the effect of stopping the raise in price
which is now demanded.

Already the Federal attorneys have
taken action. The ITnited States Grand
.Jury in New York, on March 6, indicted
109 coal companies and 65 individual
dealers, charging a violation of the
Sherman anti-trust law. Similar action
was taken in  Cleveland.

It might also be added that this radi¬
cal and. so far as logic can determine,
uncalled for increase in price may be
revoked because of fear that the hard¬
ship it will work on the people of the
country may bring about some effort
toward .government ownership of coal
properties. Such a revolutionary action,
however, is so remote that it cannot be
seriously considered.

Attitude   of   Large   Corporations.

But evidently there is little belief
among large corporations in the efficacy
of Federal prosecution to bring about a
change in the situation. Many of the
big railroads, the largest consumers of
coal, have not given this phase of the
auestion serious consideration, because
they are going right along making con¬
tracts for their coal supplies. And they
are paying an increase of fifty per cent,
and more over the 1916 contract price. _

If the railroads, considering their
close relationship to the coal industry,
believe it necessary to stand for the
price increase, what chance has the
owner or manager of a building, be it
office or apartment, to do anything but
likewise?

Mine owners and managers in raising
the price of the output of their mines
have not the present-day excuses for
their action. Labor costs them no more,
because the miners are now working
under a wa.ge agreement, which has an¬
other year to run. They cannot plead
a shortage of croo. because the con¬
sumption is way below the possible pro¬
duction. Thus the increase is not to be
excused by basin.g it on the law of sup¬
ply and  demand.

Bituminous   Coal   Capacity.

The present capacity of the bituminous
coal mines of the United States, the
mines which supply steam, or power,
producing coal, is 664,000,000 tons an-
nttallv. Durincr 1916 the output was
.509,000,000, or 155,000,000 tons less than
can be produced should the mines be
worked to capacity. There can be no
fear of the immediate exhaustion of the
supply, either, as exnerts estimate that
there is enough coal under ground in
the United States to supply the coun-
trv's needs for hundreds of years.

The price of coal is what is called a
"place price." That is. the distance from
the source of supply governs the price
the consumer has to pay. On an aver¬
age, however, the cost of coal at the
mine mouth is about half the cost de¬
livered to the consumer. Thus if coal
costs J3 a ton delivered into the build-
incr. the cost at the mine would be about
Jl 50. The average increase in price the
minf owners are demanding is from 50
to 100 per cent. In consequence, the
price to the consumer or the building
owner will be raised from 25 to 50 per
cent.

Fisurcs compiled on the cost of op-
pfatinp' t>ui1ding.= show that the average
cost of fuel is about 10 per cent, of the
total operating expense.   Using this per-





"DECENT action of the coal mine
■*-^ owners and operators, who
have radically raised the price of
their output, means that the cost of
operating office and apartment
buildings will be materially in¬
creased during the coming year.
The effects of the boost will be
more far-reaching than merely in¬
creasing the price of the annual fuel
supply in that the basts of nearly
every industrial activity is coal.
The raise is arbitrary, as no one
seems to be able to find even a
shred of an excuse for it, but,
nevertheless, it has been done.
This article discusses the action, its
effects and tells something of what
the Federal Govemment is doing
to relieve the situation, which
promises to work great hardship
upon nearly every person in the
country, the owner in particular.





centage as a basis, the owner or mana¬
ger must expect to see his operating
cost go up from 25^2 to 5 per cent.

The increased price of coal, too, will
have a more far-reaching effect than ap¬
pears on the surface. The companies
which supply electric light, and power
for the dynamos, have been hit by the
rise in the price of fuel. It stands to
reason that consumers of this power will
be called upon to make up the additional
cost. Railroads, also, now that they have
been made to pay tribute to the coal
mine owners, are clamorino: to the Inter¬
state Commerce Commission for per¬
mission to raise freight rates. It ap¬
pears to be an endless chain, this action
of the coal men, and there is no telling
where it will stop.

The alleged facts produced by As¬
sistant Attorney-General Frank M.
.Swacker. before the Federal Grand
Jury in New York City, had to do only
with the owners and operators of those
coal fields in West Virginia known as
Pocahontas and North River. These
fields produce what is called "smoke¬
less" coal. It is especially desirable in
lara-e cities, because it is bituminous,
and in consequence is a good steam coal,
and at the same time does not produce
(he smoke which is prohibited by many
mtmicipal  codes.

Tt was claimed that before these West
Virginia operators got together some
time in Tanuarv this coal sold at the
mine for about !M.25 a ton. The elimina¬
tion of comnetition. it is declared, made
it possible for these operators to raise
the price to around $3 a ton, or more
than 100 ner cent. The men and com¬
panies indicted, it was allesred. control
22.000.00n tons of the 35,000,000 tons
these fields oroduce annualy. The in¬
crease in price netted these operators
$38,500,000 more than they received for
(he same quantity of coal a year ago, a
sum that seems to be worth a court
battle.

Private consumers, corporations, rail¬
roads and others have been deprived of
the benefits of competition, the indict¬
ments states, and are now naving double
the former price for coal at the mine
mouth. Buyers of "spot coal," or coal
for the open market, are paying a much
greater price.

A Chicaeo newspaper is authority for
lhe followincr statements regarding con¬
tracts for coal for the year 1917 made by
railroads durintr the first part of the
ni'^ntb nf March:

The New York Central Railroad
bought 600,000 tons of Southern Illinois
conl. pavinsj $2 'a ton at the mine for
steam lump roal. Last year it paid for
the same coal $1.35 a ton.

The. Southern  Railroad  at  about  the





same _ time purchased 900,000 tons of
what is known as Big Seam coal, paying
$1.65 a ton. The price asked a year ago
was $1.12H. The mine operators stood
out for $2 a ton for coal wanted by this
company, but finally dropped the price
to the contract figure when the railroad
agreed to cancel its former contract,
which had yet four months to run.

The Louisville & Nashville Railroad
bought 1,000,000 tons of Alabama coal at
$2 a ton. It paid last year $1.23^ for
the same kind of coal.

The coal docks of the upper lakes
bought 400,000 tons of Pocahontas coal,
egg and lump, at $3.75 a ton. The price
a year ago was $1.60 for the same grade.
Six hundred thousand tons of mine run
Pocahontas coal, purchased by the same
interests, cost $3 a ton, as against $1.65
in  1916.

These cases can be multiplied indefi¬
nitely, the same source declares, and
asks the question "If corporations such
as these, which buy millions of tons of
coal at the mine mouth, are charged
such prices, what is the prospect for the
small consumer? What will be the ef¬
fect on the cost of living?"

During the past winter some coal op¬
erators deliberately broke contracts on
various pretexts. Now they are reluc¬
tant to make contracts, evidently believ-
ingthat they can get better prices by
selling in the open market next fall and
winter.

Elements Affecting Price.

There is another element which will
enter into the price of coal next winter.
That is the cost of delivery from the
cars or yards to the buildin.g. The in¬
creased cost of living is having an ef¬
fect upon the cost of all kinds of labor.
It stands to reason that these increases
will apply to the coal wagon drivers and
cnal handlers. These men in Chicago
have alreadv secured a raise of 15 cents
a ton. which, of course, is added to the
price of the coal.

What constitutes the cost of cbal has
been answered verv thoroughly by Gen.
Otis Smith and C. E. fresher, of the
United States Geological Survey, who
recently prepared a paper on the sub¬
iect for a meeting of the American Min¬
ing Congress. Just who gets the money
that is paid for a ton of coal and the
proportions that go to the producer, the
railroads and the men who handle the
coal i.s shown. This paper, it should be
kept in _ mind, was prepared before the
recent increase in price made by the
coal mine owners. The analysis of
these two men follows:

Cost   of   Production.

The price of coal is a matter of vital
concern to the average citizen. No less
important, however, is the question what
our coal actually costs to produce, and
the interest in this subiect is typical of
the popular interest in the large produc¬
tive enterprises of the country. As citi¬
zens we recognize the consumer's de¬
pendence upon the producer and are
takin.ff advanced ground as to their rela¬
tive riehts. In few industries does this
dependence seem more vital or the con¬
sumer's eqtiitv appear larger than in
that of producing and selling coal. The
per capita annual expenditure for the
useful metals is roughly equivalent to
that for coal, but few citizens purchase
pig iron or bar copper, whereas of the
urban population only the dwellers in
apartments, boardine houses and hotels
are spared the necessity of buying coal'.

The consumption of coal in the United
States for heating and cooking is be¬
tween 1 and Ij^ tons per capita. A
careful estimate for 1915 is 1.1 tons,
which happens to be identical with the
figure determined for similar consump¬
tion in Great Britain in 1898. This, noti-
industrial consumption is greatest in
cities,   and   in   Chicago   in   1912   it   was