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POLITICAL AND COMMERCIAL
GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES

McGraw-Hill Book Co. Inc.

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POLITICAL AND COMMERCIAL
GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES

A SERIES OF STUDIES BY SPECIALISTS

J. E. SPURR, Editor

First Edition
Second Impression

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PREFACE

The purpose of the accompanying series of studies is to shed light upon the vast importance of commercial control of raw materials by different powers, or by the citizens of those powers, through invested capital. The question of domestic and foreign governmental policies of the United States is closely involved. It appeared to many of us who were engaged (as all the authors of these papers were) in studying the mineral problems during the war, that our Government had never grasped the vast political significance of commercial domination, and especially of the control of mineral wealth; and that other more seasoned nations had done so, and thereby affected the interests of America and her policy very deeply, without her being aware of the circumstance.

With the rapid increase of the world’s population and the exploring and exploiting of the hitherto undeveloped natural resources, competition for this wealth has become and will still become keener. In past ages war, pestilence, and starvation held down the earth’s population; and in the last few years all these grim spectres have returned in force, suggesting the possibility of a permanent return of the old primitive days. Nevertheless, modern science and organization, if not quenched by vast social disorders, will so safeguard life, as in recent times, that the world is in a fair way to become crowded. All of us, like Germany, yearn for our “place in the sun,” and our share of comfort and power. Of all the fundamental necessities for this, nothing is so much in the nature of a fixed and unmultipliable quality as the metals; they constitute the basis and foundation of our modern civilization and power over man and natural forces. Other raw materials are of vegetable or animal origin; they propagate and duplicate themselves in successive incarnations according to the law of life; they are born in some magical fashion of air and water, with a minimum of the earth, and they return their loans faithfully to air and water and earth with the passing of each generation and the dawning of a new. There is the hint of such a law of growth in the mineral kingdom, but it is so vastly slow that the evanescent animal man has no personal interest in it; for all his purposes and by all his standards of measurement it is inert, and these riches, once dug and used, will never again be available. The treasures of commercially valuable ore-deposits have been hid by nature whimsically throughout the earth, here and there, by no rule of geography or latitude, and with a great disregard of equality. A nation’s needs or desires for mineral wealth have no stated relation to its actual mineral possessions; what it needs is often in the territory of another nation which does not need it. Commerce is thus born, and the nation which must have the metal or ore in question backs up its commerce and helps it to fasten its claims for permanent control of the deposits in question, by legislation, by diplomacy, and, if need be, by war. In the case of war, the metallic prize falls to the strongest—usually the nation which before, through its necessities, exercised only commercial control, but which, as the result of the trial of strength, now frankly asserts its sovereignty.

Have we as Americans realized these forces? Absolutely not, I should say. How many realize that the Alsace-Lorraine question is and was not a sentimental one, but a struggle for the greatest iron deposits of Europe and the second largest in the world, which gave Germany her immense growth and power, and may now transfer that wealth and power to France? That the dispute between Poland and Germany as to Upper Silesia is not a question of nationality, sentiment, or even territory, but concerns the greatest coal field of Europe as well as great deposits of lead and zinc? If Poland gets this, she may rival Germany in wealth and importance; if Germany loses it, she may drop into the position of a second-rate power, now that she has also had to give up Alsace-Lorraine. To submit such a question to the vote of the native population is of the same order of fitness as tossing a coin for it; but how many of us have understood this? Population shifts and changes, swells or shrinks, may be at one time predominantly Polish and at another time mainly German; but the coal deposits are fixed. To clarify these things we should in place of Silesia say Coal, in the place of Alsace-Lorraine, Iron, and so on.

The reason we have not realized these facts is on account of our own vast mineral wealth, so abundant that not till recently has American capital and enterprise found it necessary to adventure into the outside world, as the European nations had long ago done. Their natural wealth was limited so that they have become familiar with those fundamental principles and laws of which we have been unconscious. From this has arisen European foreign policies, the protection of their national commerce and national capital in foreign enterprises and consequently at home; governmental participation in business combinations, as in Germany, England, France, and Italy; while the United States has been engaged in “trust-busting” and has neglected the protection of its investors in foreign countries. This illustrates the difference between European diplomacy and American guilelessness. How well this played into the hands of foreign powers it is unnecessary to explain. The spectacle of the United States maintaining a Monroe Doctrine of protection over Latin-American republics which she took no vigorous steps to unite with her by the powerful bonds of commerce, must well have excited the amusement of those European commercial nations like Germany who have been strengthening themselves in those countries by the closest commercial, and hence political, ties.

This volume simply takes up the study of the actual situation, as to the distribution and ownership of mineral supplies in the world, and the author of each chapter is a well-known specialist.

First is considered the question of petroleum, source of power and light, the key to the mastery of the air, and, on account of its fluid and easily transportable condition, of extraordinary future importance. Next are taken up the great fuel mineral, coal, and its ally, the great metallic mineral, iron, which must go together for the manufacture of iron and steel, the backbone of all our mechanical achievements. Next come those metals indispensable in steel making and in the manufacture of specially hard or tough steels. These are of great importance, and include manganese, chromium, nickel, tungsten, vanadium, antimony, molybdenum, uranium, and zirconium. Radium is closely associated with uranium and is considered with it. Closely allied with zirconium are thorium and mesothorium, and their treatment therefore closely follows that of zirconium.

The next great group is that of the major metals, other than iron and the ferro-alloy metals: copper, lead, zinc, tin and mercury, and aluminum. Aluminum ores are used not only as sources of the metal, but for the manufacture of refractories and abrasives. Therefore they are classed partly with the metallic and partly with the non-metallic minerals; and the other non-metallic minerals, used likewise for abrasives, refractories, and other uses—such minerals as emery and corundum, magnesite, graphite, mica, and asbestos—follow.

The next great group is that of the fertilizer minerals—phosphate rock, potash, nitrates and nitrogen, and pyrite and sulphur, all essential for agriculture.

The last group is that of the precious metals, gold, silver, and platinum, essential for coinage and in the arts.

These various studies are essentially both inclusive and elementary: together they form almost the first contribution to the branch of investigation—that of the relation of geology to industry, commerce, and political economy—which they cover; and it is natural that beginnings should be rather crude. Moreover, many of the chapters were written a year or more previous to the publication of the volume, and although brought to date to the extent possible in the brief time available, are considered inadequate by the authors themselves. Apologies for shortcomings and possible inaccuracies are therefore very much in order. Nevertheless, it is felt that the volume merits publication, and that the beginning here made is far better than no start at all.

Josiah Edward Spurr.

CONTENTS

POLITICAL AND COMMERCIAL GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES

CHAPTER I
PETROLEUM
By John D. Northrop[1]

[1] In this article, prepared in June, 1918, by Mr. Northrop, have been incorporated certain notes and additions; as, for example, information furnished by E. Russell Lloyd, of the United States Geological Survey; A. G. White and W. E. Perdue, of the Bureau of Mines, and others. (J. E. S.)

INTRODUCTION
By J. E. Spurr

Coal and iron are the backbone of industrial civilization, and should be considered first in any attempt to analyze the ownership and control, as between nations, of the world’s mineral resources. Kin to coal in growing importance, however, is the lighter, fluid and volatile mineral substance, petroleum, whose significance is vast and as yet not wholly defined. More easily transportable than coal, and yielding refined products whose explosive action in internal-combustion engines furnishes greater power in proportion to weight than was once deemed possible, petroleum and its products, apart from their immense direct economic importance, may, in the automobile, the submarine, and the air plane, and through numerous other applications, control strategically, from a nationalistic standpoint, the more inert foundations of civilization. Moreover, the use of crude petroleum as fuel, especially for ships, is of the most vital importance in these days of greater competitive plans for expanding world-wide commerce, and establishing the strength and ready efficiency of navies. Great maritime nations must have, for their oil-burning ships, oil-bunkering stations under their own control in all parts of the world where they wish their commerce to dominate, and their navies to protect their interests efficiently.

The recognition by certain strong and aggressive nationalities of this critical factor has brought about a situation that is perhaps unparalleled in the mineral history of the world. Coal and iron have always been decidedly static as to control—they have remained largely under the supervision and direction of the countries in which they occur. Transportation costs, the conjunction of iron and coal deposits, and other factors have prevented these minerals, in spite of their vast importance, from being fully used as a world commodity. By contrast, petroleum is coming to be universal, like gold, in its acceptance and applicability; but, unlike gold, it is essential in the highest degree to the advance of modern civilization. The fluidity of this mineral, its consequent amazingly cheap transportation and handling by pipe lines, the completeness with which it can be utilized, all combine toward making it in the future the crucial factor of commercial and of political control. Moreover, this fluidity of form and ease of application facilitate the control of petroleum by vast commercial organizations, like the Standard Oil of America, and others in various parts of the world; and even make its world control feasible and probable. Recognizing this tendency, many nations, like England, France, Holland, Argentina, and Mexico, have taken steps looking toward a partial nationalization of their petroleum resources, in order to protect themselves against foreign commercial aggression in this particular. England has gone farthest in this direction, and has reached and is reaching out aggressively into other countries to secure, through commercial control, backed where necessary by political pressure, a world empire of petroleum to serve her world-wide colonial empire. The United States, on the other hand, has dominated the world’s petroleum industry through her own vast resources, worked by interests which have grown without conscious governmental help or even in spite of governmental and popular opposition, and have reached out and secured footholds in other countries.

In the past the mineral development of the world has led to great changes in political sovereignty. Important as these have been, the events that may result from the nationalistic competitive exploitation and control of the world’s petroleum supply bid fair to exceed in importance all similar changes of the past. The perception of the problem and of the necessity, and the advantage of the initiative, naturally belongs to those nations with restricted area and resources, that have grown great by trading and by exploiting the resources of other countries. Such a nation, for example, is England, a country that is fortunately the natural ally of the United States. By contrast, in the United States, a nation concerned hitherto only with the development of its own vast resources, commercial enterprise in foreign countries has been backed by no fixed national policy, and indeed has often been treated as unworthy. In the new international era that was initiated by the World War, however, this policy of Chinese self-sufficiency and exclusion can not be safely continued, and the United States must not only perceive clearly the tendencies and movements of other nationalities, but consider how best to direct its own commercial and political plans so as to uphold its independence and power. Such a policy would naturally lead to international agreements as to the distribution and division of petroleum lands, resources, and production, and probably no one thing would contribute more to the promotion of frank understanding between nations and the removal of obstacles to permanent peace.

Mr. Northrop’s paper follows:

USES OF PETROLEUM

In its crude or semi-refined state, petroleum is extensively utilized as fuel under locomotive and marine boilers and to a small extent in internal-combustion engines of the Diesel type. Certain grades of petroleum are utilized in the crude state as lubricants.

The principal use of petroleum is for the manufacture of refined products, of which the number and uses are legion. The lightest gravity, etherial products are employed as anaesthetics in surgery. The gasolines are the universal fuels of internal-combustion engines, and the naphthas are widely used as solvents and for blending with raw casinghead gasoline in the manufacture of commercial gasoline. The kerosene group includes a variety of products utilized primarily as illuminants, but in annually increasing quantities as fuel in farm tractors. The lubricating oils and the greases derived from petroleum are indispensable to the operation of all types of machinery. The waxes derived from petroleum of paraffin base are utilized in many forms as preservatives and as sources of illumination, and in the last three years have become indispensable constituents of surgical dressings in the treatment of burns. Petroleum coke, because of its purity, is in demand for use in certain metallurgical processes and for the manufacture of battery carbons and arc-light pencils. Fuel oils obtained as by-products of petroleum refining satisfy the fuel needs of many industrial plants, railroads and ocean steamers. Road oils, as the name implies, are employed for minimizing dust on streets and highways; and artificial asphalt, a product of certain types of petroleum, has in many localities superseded the use of other forms of asphalt for paving purposes.

Substitutes.

—For petroleum as a fuel under boilers in the generation of steam there are numerous substitutes, including wood, charcoal, coal, peat, natural gas, artificial gas, and electricity; as a fuel in internal-combustion engines some demonstrated substitutes are natural gas, artificial gas, benzol, and alcohol, and in the Diesel type of engine certain vegetable and fish oils can be utilized.

For illuminating purposes, animal fats, oils distilled from coal, natural gas, artificial gas, acetylene gas and electricity may be substituted for kerosene.

For certain types of lubrication carefully refined vegetable and mineral oils are acceptable, but for lubricating high-speed bearings and for all lubrication in the presence of high temperature and of steam no satisfactory substitutes for mineral lubricants derived from petroleum are known.

Substitutes for petroleum asphalt are available in the form of native asphalts, bituminous rocks, and coal-tar residues. For petrolatum, animal fats and vegetable oils can be substituted, and for paraffin wax, ozokerite might be made to satisfy such essential requirements as could not be met by refrigeration or by vegetable and animal oils.

CHANGES IN PRACTICE

Probable changes in practice that may be expected to affect the petroleum industry within the next ten years include an increased dependence by oil producers on geologic investigations in advance of drilling, the development of methods for deeper drilling than is now practicable, and the more efficient handling of individual wells and of entire properties, with a view to the ultimate recovery, at minimum cost, of a higher percentage of the oil originally present.

The tendency toward amalgamation of individual producing, transporting, refining and marketing interests into strong units capable of competition in domestic and foreign markets on relatively equal terms with each other and with pre-existing combinations of equivalent strength will doubtless increase, and with the growing strength of the several units will come an efficient and thorough quest for petroleum in all parts of the world.

In the refining of petroleum it is probable that methods will be devised and perfected for recovering more of the light-gravity products from low-grade petroleum and for the conversion of the less-salable products of petroleum into products of greatest current demand. Moreover, it is believed that internal-combustion engines will be so modified as to run successfully on petroleum products of lower volatility than gasoline. The use of petroleum as railroad, marine, and industrial fuel is destined to increase enormously in the next decade.

Although an important contributor to the oil-supply of Great Britain, the shale-oil industry has received little attention in recent years outside of Scotland. Investigations by the United States Geological Survey have demonstrated that the United States contains vast deposits of oil shale in Utah, Colorado, Wyoming and Nevada, much of which will average higher in oil content than the Scottish shale. Efforts already begun to develop methods for the recovery of shale oil on a commercial scale in the United States will undoubtedly result in the establishment of a shale-oil industry in this country within the next two or three years. The future growth of this industry will depend largely on the rapidity of the decline in the domestic production of petroleum.

GEOLOGICAL DISTRIBUTION

Commercial accumulations of petroleum are everywhere restricted to strata of sedimentary origin. In the United States petroleum is produced commercially from strata of all periods from Cambrian to Quaternary, the most prolific sources being in strata of the Carboniferous and Tertiary systems. The geological age of the chief sources of petroleum production in each of the other oil-producing countries of the world is indicated in the table following:

Table 1.—Geologic Age of Petroleum-bearing Formations

From the foregoing table one might conclude that a direct relation exists between the distribution of Tertiary rocks and the supply of petroleum, but in the United States, which produces two-thirds of the world’s current supply, the quest for petroleum has, under scientific direction, included the entire range of the stratigraphic column, and has found petroleum in considerable quantities in the rocks of each geologic system younger than the Cambrian.

The fact that seeps and other surface indications of petroleum are generally more pronounced in the relatively younger Mesozoic strata than in the older Paleozoic formations, and the further fact that geologic exploration for oil and gas in countries other than the United States has been restricted in the main to areas containing the most pronounced indications of petroleum, tend to account for the predominance of the Tertiary system in the foregoing table and to indicate the fallacy of attempts to estimate the world’s reserves of petroleum on stratigraphic evidence alone.

Despite the broad geologic range of petroleum, its occurrence in specific members, formations, groups, series or systems is by no means universal. On the contrary, its occurrence is restricted to specific localities in which are fulfilled certain variable relations, as yet but little understood, that involve (1) the constitution, sequence and content of organic matter of the sediments; (2) the nature and degree of metamorphism they have undergone; (3) their structure; and (4) their degree of saturation with salt water. Because the most detailed geologic work is insufficient to provide a basis for the appropriate evaluation of the numerous factors involved, and because only a relatively small percentage of the areas of sedimentary rocks in the world have been examined geologically in appreciable detail, any estimate of the future supply of petroleum in the world is peculiarly hazardous.

GEOGRAPHICAL DISTRIBUTION

The geographical distribution of petroleum is as wide relatively as its geologic range. The oil fields of present commercial significance are situated, in the order of their importance as contributors to the world’s production of petroleum in 1917, in the United States, Russia, Galicia, Mexico, Dutch East Indies, India, Persia, Japan and Formosa, Roumania, Peru, Trinidad, Argentina, Egypt, Germany, Canada, Venezuela and Italy. Small quantities of petroleum have also been reported from Guatemala, Honduras, Costa Rica, Panama, Haiti, Porto Rico, Bolivia, Chile, Spain, Arabia, China, Australia, Papua, Philippine Islands, Nigeria, Belgian Congo, Gold Coast, Madagascar, and elsewhere. The geographical distribution of petroleum in the world is shown on the accompanying map. ([Plate I].)

Plate I.—Geographical distribution of the producing petroleum fields of the world. By John D. Northrop.

In the opinion of the author the most conspicuous developments of the world’s supply of petroleum in the next decade will take place in the countries that border the Caribbean Sea and the Gulf of Mexico. The trend in this direction is unmistakable. From 1913 to 1917, the annual production of petroleum in Mexico increased from 21,000,000 barrels to 56,000,000 barrels, and the potentialities of future production in that country have been demonstrated to be almost beyond comprehension. The output, originally considered valuable only as a source of fuel oil, is now yielding, by modern refining methods, increasingly important percentages of illuminating oils and gasoline. The only obstacles to enormously increased production are unsettled political conditions and inadequate facilities for marine transportation. These obstacles will doubtless be overcome within the next few years, and barring unforeseen contingencies Mexico will soon rank second among the oil-producing countries of the world.[2] Judged by the results of exploratory work already done in Venezuela and Colombia, both of those countries are destined to contribute appreciably to the world’s supply of petroleum within the next decade. Recently Colombia has given enough evidence of ability to furnish high-grade petroleum from wells of large individual capacity to warrant the large interests holding concessions there to exert every effort to overcome the adverse natural conditions that have so long barred the way to exploitation. Enough drilling has already been done in Venezuela to demonstrate that the resources of heavy-gravity asphalt-base petroleum in that country are large, and the recent installation of a modern petroleum refinery for the treatment of these oils on the island of Curacao, off the Venezuelan coast, has provided the market necessary to active field development.

[2] Mexico ranked second in 1918 and 1919.

In Trinidad the production of petroleum exceeds 1,500,000 barrels a year and has doubled in the last few years. With the increased facilities for ocean transport of petroleum that are becoming available, a large output is assured.

Cuba is not expected to become an important producer of petroleum, and present knowledge concerning the petroleum resources of the Central American countries is not such as to warrant the belief that oil fields of material consequence will be developed in any of them.

Petroleum production in the United States is expected to reach its maximum within the next two or three years and to decline steadily thereafter, although this country is expected to remain the leading oil-producing country of the world for the greater part, if not all, of the coming decade.

As regards those oil-producing countries of North and South America that have not been already mentioned, no significant changes in their present status are anticipated.

The petroleum resources of Russia (including Asiatic Russia) are believed sufficient to assure that country retaining its position as the leading producer of petroleum in the Eastern Hemisphere far beyond the next decade. During the last few years the output has been obtained under increasing difficulties, and as a consequence there has been no measure either of present productive capacity or of potentialities. Concerning the future of Russia as a source of petroleum Arnold[3] says: “Such large areas, both in European and Asiatic Russia, yield unmistakable evidence of the presence of oil in large quantities that it is to this country, among those of Europe and Asia, to which the future must look for a supply.”

[3] Arnold, Ralph: “The World’s Oil Supply”: Report Am. Min. Cong., 19th annual session, 1917, pp. 485-486.

Russia being endowed with petroleum reserves, both proved and prospective, of great magnitude, the ultimate position of that country as the leading oil-producer of the world seems reasonably assured. Its immediate future is too intimately dependent on the progress from political turmoil to warrant a forecast.

The oil fields of both Roumania and Galicia are believed to have passed their maximum yield, and the possibilities of opening new fields of consequence in those countries are not considered large enough to justify a forecast of anything but a moderate decline of production in future years. No material change in the status of the negligible oil fields of Italy or of Alsace is anticipated at any time in the future.

With regard to the situation in Asia, the writer believes that the next decade will witness a steady increase in the output of petroleum in India, and the probable development of one or more important oil fields in Persia and possibly of fields in Asia Minor, Turkestan and China. In Oceania the same period will doubtless witness a material increase in the production of petroleum in Japan and Formosa and in the Dutch East Indies, together with the possible opening of new fields in Papua. Africa will doubtless receive considerable attention from oil operators in the next ten years, but on the basis of available evidence the results obtained in that period will probably not be large enough to affect the petroleum situation of the world.

POLITICAL CONTROL OF PRODUCTION

The status of the political control of the world’s output of petroleum in 1917, as determined by the best data now available, is indicated in the [table] following.

The accompanying diagram ([Figure 1]) shows the proportion of the world’s production of petroleum contributed annually by each of the principal producing countries in each of the last ten years.

Table 2.—Political Control of the World’s Production of Petroleum in 1917

Fig. 1.—Proportion of the world’s output of petroleum contributed annually by each of the chief producing countries, 1908-1917.

Aside from the control exercised by Great Britain through its protectorate relation over the petroleum resources of Egypt, control of the petroleum resources of the various countries is mainly by virtue of state sovereignty. This political control is in proportion to the strength of the government in the country exercising it. Recent developments whereby the British government becomes the majority stockholder of a corporation controlling the oil resources of Persia, practically transfer the political control, as well as the commercial control, of Persian petroleum from Persia to England. Mexico’s recently attempted firm political control of her vast petroleum resources depends for its success upon her diplomatic ability in dealing with the stronger governments of England and the United States, whose nationals have acquired a commercial control that is threatened by Mexico’s new and decided nationalistic policy.

COMMERCIAL CONTROL OF PRODUCTION

The commercial control of the world’s production of petroleum, as far as nations are involved, is determined in the main through direct ownership, of lands, leases and concessions, or by the control, through holding corporations, of subsidiary companies holding fee, leases, mineral rights or concessions of petroleum land. Except in Argentina, where the domestic petroleum industry is owned and operated by the state; in Germany, where the government participates directly in the financing of petroleum enterprises through the Deutsche Bank; and in Persia, where the British government owns a substantial interest in a company owning and operating extensive concessions, the commercial control of the petroleum industry is determined almost wholly by aggregations of private capital acting in their own interests.

Table 3.—Nationality and Extent of Control of Dominant Interest

[4] By control of refining facilities.

So far as the author is aware, Canada is the only country in which the petroleum industry may be said to be controlled by foreign (United States) interests, this control being by virtue of an essential monopoly of pipe-line and refining facilities.

The preceding [table] shows, according to the best information available, the nationality and approximate extent of control exercised by the dominant interest in each of the principal oil-producing countries of the world in 1917.

POLITICAL AND COMMERCIAL CONTROL OF RESOURCES

The accompanying diagram ([Figure 2]) shows graphically the approximate commercial control of the world’s production of petroleum in 1917.

Fig. 2.—Approximate commercial control of the world’s production of petroleum in 1917.

Commercial control of the petroleum industry in the United States is in the hands of the so-called “Standard Oil Group” of companies, through their control of most of the great pipe-line systems of the country, of probably 75 per cent. of the refining facilities and of a substantial part of the actual production. Other domestic interests having important shares in the control of the petroleum industry in the United States include the Southern Pacific Railroad Co., Cities Service Co. (Doherty interests), General Petroleum Corporation, Gulf Oil Corporation, Ohio Cities Gas Co., Cosden & Co., Sinclair Oil & Refining Corporation, The Sun Co., the Texas Co., the Tide Water Oil Co., and the Union Oil Co. Foreign interests in the United States include purely British companies, which control a production of about 2,000,000 barrels a year; British-Dutch companies represented by the Royal Dutch-Shell Syndicate, which control a production of about 9,000,000 barrels a year, together with refining and marketing facilities; and Franco-Belgian companies controlling a yearly production of about 1,000,000 barrels. Aside from the very probable holdings by individual Germans of shares in companies engaged in one or more phases of the petroleum industry of the United States, the author is aware of no organized German interest in any phase of the domestic industry.

Commercial control of the petroleum industry of Russia is, under the political conditions now existing in central Europe, largely a matter of speculation. As nearly as can be ascertained, the dominant control is in the hands of purely British, Franco-British, and British-Dutch (Royal Dutch-Shell Syndicate) interests. Certain of the second-named interests are allied closely with an additional group of capitalists represented by the firm Nobel Bros., of much importance, the present control of which is by no means clear, from the literature available on the subject. Though originally Swedish, the financial interests now involved in Nobel Bros. are believed to include representatives of financial groups in England, France, and Germany as well, with control probably lying with the Anglo-Swedish interests. Before the war, direct German interest in Russian petroleum included control by the Deutsche Bank through a Belgian company (the Petrole de Grosny) of the important producing and refining company, A. I. Akverdoff & Co., control of which is now in British or British-Dutch hands. As in the United States, a considerable part of the actual production of petroleum in Russia is distributed among a large number of individually weak companies, dominated, through the control of pipe-line or refining facilities, by one or another of the principal groups.

Of considerable importance in Russian petroleum affairs at one time was the European Petroleum Union, organized for combat in the world markets with the Standard Oil trust. This union included among others such important petroleum operators as Nobel Bros., the Rothschild interests (now Dutch-Shell), Mantaschoff (now Russian General Oil Corporation) (British), and the Deutsche Bank, the latter controlling Akverdoff and Spies in Russia, together with important companies in Roumania and Galicia. How far this union controlled the affairs of its constituent companies is not evident from available data, and its present influence on companies now operating in Russia is uncertain.

Conditions in Russia make impossible any definite statement on the petroleum situation. A decree of the Bolsheviki government, dated June 20, 1918, on the nationalization of the petroleum industry, declared as the property of the state all movable and immovable property employed in and belonging to that industry. Trading in oil was declared a state monopoly and was delegated to the chief petroleum committee of the fuel department of the supreme Council of National Economy. As the chief producing areas are now under British military control, this decree is ineffective.

Commercial control of petroleum in Mexico is divided among United States, British, and British-Dutch interests, which controlled about 65, 30 and 2 per cent., respectively, of the production in 1917. The interests of the United States include the Doheny group, operating principally as the Huasteca and Mexican Petroleum companies; the Standard Oil Co. of New Jersey, operating as the Penn-Mex Fuel Co.; the Sinclair interests, operating as the Freeport and Mexican Fuel Oil Co.; the Texas Co.; Gulf Co.; Southern Pacific Railroad; and others. The British interests are represented by the Pearsons, operating as the Mexican Eagle Oil Co.; and the British-Dutch interests by La Corona Petroleum Co., and Chijoles Oil, Ltd., controlled by the Royal Dutch-Shell Syndicate. No exclusively German interests are known to hold a substantial portion of any important company operating in Mexico.

Formerly concessions were freely granted to foreign individuals and companies for the exploitation of mineral deposits, and oil lands were sold by the native owners to foreigners. Article 27 of the constitution of 1917 expressly forbids any but Mexican companies acquiring directly or operating directly petroleum lands in Mexico.

All recent concessions for the exploitation of oil properties contain a provision stating that the concession will be declared null if any of the rights are transferred to any foreign government. The provisions and the intent of a series of presidential decrees issued on February 19, 1918, July 8, 1918, July 31, 1918, and August 1, 1918, are to nationalize all petroleum lands and to permit them to be worked only by Mexican citizens or by companies that agree to consider themselves Mexican and further agree not to invoke the protection of their governments. A bill was presented in December, 1918, to carry out Article 27 of the new constitution, but thus far no action has been taken in the matter. The decrees and legislation growing out of Article 27 have been protested by the chief petroleum companies operating in Mexico and by their respective governments.

Commercial control of the petroleum resources of the Dutch East Indies is in the hands of the Royal Dutch-Shell Syndicate and is essentially absolute by reason of the restrictions contained in the Netherlands East India Mining Act and subsequent supplements on foreign acquisition of mining rights in the East Indian Archipelago. Actual control is in the hands of the Bataafsche Petroleum Maatschappij, which has a capital of $56,000,000 divided into five shares, three of which are owned by the Royal Dutch Petroleum Co., and two by the Shell Transport Trading Co. (British). Purely British interests control an inconsequential production of petroleum in British North Borneo and in Sarawak.

Prospecting licenses and concessions are granted only to Dutch subjects and to Dutch companies. It is officially stated that the object of these restrictions is not to exclude foreign capital; this is precisely their effect, and on account of the economic monopoly which the Royal Dutch-Shell now has of the petroleum industry of the Dutch East Indies, it would be very difficult for any new enterprise to gain a foothold.

Commercial control of the petroleum resources of India is exercised by the Burma Oil Co. through its dominance of production, refineries, and pipe-line facilities, and by reason of agreements as to marketing with its principal competitor, the British Burma Petroleum Co., both controlled by British capital. The Burma Oil Co. is allied with, if not directly controlled by, a group of British financiers, one or more of whom is interested in companies in Trinidad and in Persia.

During the war the petroleum industry of Roumania was temporarily wholly in control of German and Austrian interests. The advanced stage of development of the oil fields prior to the war and the intentional damage, much of which is irreparable, wrought in the fields by British detachments in 1916, when capture of the fields by Austro-German forces became inevitable, are believed, however, to have deprived Germany of a large part of the fruits of her conquest, as it is considered doubtful if the Roumanian fields can ever again be made to yield petroleum at the pre-war rate of 12,000,000 barrels per annum.

The American Petroleum Institute states that “Roumania is considering the erection of a state monopoly of both production and distribution on the ruins of the monopoly which Germany sought to establish there but was compelled by the armistice to renounce.”

Prior to the war Dutch or rather British-Dutch (Dutch-Shell) interests controlled about 30 per cent. of the annual production of petroleum in Roumania, German interests about 26 per cent., United States interests (Standard Oil Co. of New Jersey) about 18 per cent., French interests about 16 per cent., purely British interests about 6 per cent., and Belgian and Roumanian interests the remainder.

Through the Austrian “Society Gaz” and the German “Deutsche Erdoel Aktien-gesellschaft,” German interests have dominated the petroleum industry of Galicia for years through the direct control of the larger producing and refining interests and by reason of the fact that the smaller scattered interests were dependent almost entirely on the two leading companies, the Galizische Karpathen Petroleum A. G. (controlled by Society Gaz), and the Premier Oil & Pipe Line Co. (controlled by the Deutsche Erdoel A. G., which is in turn controlled by the Diskonto und Bleichroeder, a branch of the Deutche Bank) for their transportation and refining facilities. British and Dutch capital were involved in the Galician fields prior to the war, but not, it is believed, to a controlling extent in either of the dominant companies.

The petroleum industry of Japan is controlled wholly by Japanese interests and to a preponderant extent by a single company, the Nippon Oil Co. So far as the author is aware, no foreign interests share in any way in the development or control of the Japanese petroleum industry.

Commercial control of the petroleum industry of Peru is exercised by the Standard Oil Co. of New Jersey through its subsidiary, the Imperial Oil Co. of Canada. This control involves about 70 per cent. of the annual production, the remaining 30 per cent. being divided in the ratio of 27 to 3 between British and Italian interests respectively. So far as is known no other interests are involved.

The interests engaged in the petroleum industry of Trinidad include financial groups purely British, controlling about 57 per cent. of the production; British-Dutch interests (Dutch-Shell) controlling about 23 per cent., and United States interests (General Asphalt Co.), controlling the remainder. The leading operator in Trinidad is the Trinidad Leaseholds, Ltd., a British company that in 1917 produced about 42 per cent. of the petroleum output credited to Trinidad that year.

Commercial control of the petroleum resources of lower Alsace has been in the hands of the Vereinigte Pechelbronner Oelbergwerke Gesellschaft and the Deutsche Tiefbohr A. G. Both of these companies are believed to be controlled by the Deutsche Bank through the Deutsche Erdoel A. G., and the Diskonto und Bleichroeder. The negligible production of petroleum in Hanover is doubtless under the same financial control, although data that would warrant a positive statement to that effect are not at hand.

The petroleum reserves of Argentina, which comprise the only areas from which petroleum is being commercially produced in that country, are operated by the state through the Comodora Rivadavia Petroleum Commission. German interests are thought to have been involved in two or three unsuccessful efforts in the last decade to obtain petroleum on tracts adjacent to the government reserves in the Comodora Rivadavia district.

The petroleum industry in Egypt is controlled wholly by British-Dutch capital operating as the Anglo-Egyptian Oilfields, Ltd., a subsidiary of the Royal Dutch-Shell Syndicate, through the Anglo-Saxon Petroleum Co., the last-named company being predominantly British.

Commercial control of the petroleum industry in Canada is exercised in effect by the Standard Oil Co. of New Jersey, through its subsidiary the Imperial Oil Co. of Canada. This control is exercised through a virtual monopoly of pipe-line and refining facilities, and by the producing interests, though British and Canadian, being individually small and unorganized.

The production of petroleum in Italy, which is small, represents the output of two companies, the Petroli d’Italia, in which French capital is predominant, and the Petrolifera Italiana, which is believed to be essentially Italian.

Financial groups interested in petroleum in Venezuela include the Royal Dutch-Shell Syndicate (British-Dutch), the General Asphalt Co., (United States), and a group of British financiers who control properties in Trinidad as well as the most important group of companies, other than Nobels and the Dutch-Shell, in Russia.

United States interests, including the Standard Oil Co., the Doherty interests, the Texas Co., the Gulf Corporation, and the Island Oil Transport Corporation, are predominant in the quest for petroleum in Colombia. The Venezuelan Oil Concessions, Ltd., an English company operating in Venezuela, is reported to have obtained a concession to explore for oil in the northwest district of British Guiana.

The Sinclair interests (United States) are particularly active in the search for petroleum in Costa Rica and Panama; and the Sun Co. (United States) is understood to be investigating petroleum possibilities in other Central American republics.

The Pearson interests (British) have expended considerable effort in the quest of petroleum in Algeria and Morocco, and in the former country American interests (E. E. Smith) are reported to have recently sought petroleum concessions from the French government.

British interests, including the British government, control extensive petroleum concessions in Persia, from which oil in unreported quantities is now being produced.

The most promising oil territory of Persia has recently been closed to American activity through the granting of a concession aggregating approximately 500,000 square miles to a British concern, the Anglo-Persian Oil Co., a majority of whose voting stock is owned by the British government. This concession runs until 1961. The importance of the oil territory is indicated by its reported potential capacity of 30,000,000 barrels yearly, with tremendous reserves undeveloped.

United States interests (Standard Oil Co. of New York) are understood to still retain control over the petroleum rights in certain provinces in China, where active prospecting in two or three localities a few years ago was reported to have yielded unfavorable results.

Petroleum in small quantities is produced in New Zealand by purely British interests.

POSITION OF THE LEADING POWERS

United States.

—As regards probable developments in the petroleum industry within the next decade, the United States, thanks to the enterprise and foresightedness of financial interests of domestic origin, seems to have a strong position. United States interests are practically supreme in the commercial control of the petroleum resources of the Western Hemisphere, dominating the petroleum industry in the United States, Canada, Mexico, and Peru, holding substantial interests in Trinidad and Venezuela and in the prospective petroliferous areas in Central America and Colombia. Its only competitors are British and British-Dutch interests, which control the petroleum situation in Trinidad and are not only strongly intrenched in the United States, Mexico, and Venezuela, but are aggressively seeking to enlarge their holdings in those countries and to gain footholds elsewhere. Unless the United States adopts measures, such as Federal operation of the trunk pipe-lines, to limit the aggressions of foreign capital in this country, and erects a firm forward-looking governmental policy toward the protection of investments of its citizens in petroleum properties in other countries, particularly Latin-American countries, it may witness its commercial supremacy in petroleum affairs wane and disappear, while it is yet the largest political contributor to the world’s supply of petroleum.

As contrasted with the strongly nationalistic and deliberately aggressive governmental policy adopted by Great Britain, France, Holland and some other nations, the United States has never adopted any policy founded on recognition of the importance of political and commercial control of petroleum. American companies may not own and operate oil lands in the British Empire, in the French possessions, or the Dutch colonies, but the only American restrictions on foreign activity in the petroleum industry are those which cover all minerals contained in public lands. Only American citizens, or those who have declared their intention of becoming American citizens, can apply for patents to such land. However, after the application is made, there is no restriction on transfer of the mineral rights thus secured.

Great Britain.

—British and British-Dutch interests easily dominate the petroleum situation in the Eastern Hemisphere by supremacy in the petroleum industries of Russia, Persia, India, and the Netherlands East Indies. Domination of the petroleum situation in Russia alone is believed tantamount to dominion of the petroleum situation in the entire Eastern Hemisphere for the greater part of the next century. The strength of Great Britain’s present position in the world’s petroleum affairs lies in a strong governmental policy and in the wide scope of British petroleum investments, embracing practically every country where petroleum is an important product and nearly every country where it is a product of potential importance. The general policy of the British Empire seems to be to control all oil development and restrict operations by foreign capital. In Australia licenses are required for the exploitation of oil lands, and only companies incorporated in the United Kingdom or a British possession may receive such licenses. The Governor General has the right of pre-emption of all oil produced and in case of war may take control of all oil properties. In Canada, in those western provinces where minerals are the property of the Crown, petroleum and natural gas lands may be leased only to British companies. A similar restriction exists in Burma. In Burma a monopoly of the petroleum industry for 99 years was granted to the Burma Oil Co. in 1865. This grant seems to have been inspired by fear of the Standard Oil Co. of the United States, for the agreement between the company and the government stipulates that the former shall not amalgamate with other oil companies. Regulations of like effect exist in other British colonies where oil exists; in Barbados the British government has the right of pre-emption of all oil residues; in British Guiana, non-British companies can only hold lands by special license of the Governor; in British Honduras all mineral oil is reserved to the Crown; in southern Nigeria, the Gold Coast, Trinidad, and Tobago the British government has the right of pre-emption over all petroleum.

The recent granting of a concession amounting to a monopoly in the most promising oil district of Persia (a region that many oil experts believe likely to become one of the most important in the world) to a British company controlled directly (by stock ownership) by the British government, signifies an aggressive policy of England, outside of her own dominions, to secure and hold, under government control, oil lands in all parts of the globe.

It is understood that the best-known oil territories in Venezuela are already covered by concessions that are practically all controlled either directly or indirectly by British interests, chiefly the Dutch-Shell Syndicate.

So far as observed, German interests actually dominate the petroleum industry in Galicia and at home. Whether forced back on its own petroleum resources or on these reinforced by those of Galicia, Germany will obviously have an inadequate supply, and in consequence German interests are likely to be particularly aggressive in seeking petroleum in Mesopotamia, Africa and South America.

France.

—Since control of the petroleum interests of the Rothschilds passed into the hands of the Royal Dutch-Shell Syndicate (British-Dutch), the influence of French finances in petroleum affairs has been negligible, outside Galicia and Italy, where its potency was not great. French capital will undoubtedly participate in efforts to determine the petroleum reserve of the Barbary States, French dependencies, but it will hardly be much involved in organized efforts to control the world situation with respect to petroleum.

The French mining law holds that oil and gas belong to the state, and may be exploited under concessions, the area and time limit of which are matters of negotiations between the applicant and the authorities. It is understood that the French government is unwilling to grant oil concessions except to companies the majority of whose stock is held by French citizens. A company incorporated recently to work the Algerian oil fields contains in its articles of incorporation the provision that 60 per cent. of its stock must be held by French citizens.

Japan.

—Japanese investments in the world’s petroleum industry have not yet attained significant proportions outside Japan itself, though the Japanese government is officially alive to the importance of Japanese investments in petroleum properties in Mexico, particularly Lower California and Sonora; China; and undoubtedly Russia. Hence large investments of Japanese capital in the petroleum industry in one or all of those countries may be expected in the near future.

SUMMARY

Petroleum in its crude or semi-refined state is used as fuel under locomotive and marine boilers and as a lubricant. The principal use of petroleum, however, is in the manufacture of numerous refined products. Some of the more important products and their uses are as follows: ether, as an anæsthetic in surgery; gasoline, as fuel in internal-combustion engines; naphthas, as solvents and in the manufacture of commercial gasoline; kerosene, as an illuminant and as a fuel for farm tractors; lubricating oils; waxes, as preservatives, illuminants, and surgical dressings in treatment of burns; petroleum coke, in metallurgical processes and in the manufacture of battery carbons and arc-light pencils; heavy fuel oils; road oils; artificial asphalts, for pavements. The use of petroleum and its products as fuel, as a lubricant, and for illumination may be considered essential. Substitutes for most of these uses are known, but they are either inefficient or not readily available.

The most prolific sources of petroleum are in sedimentary strata of the Carboniferous and Tertiary periods. Because the most detailed geologic work is insufficient to provide for the appropriate evaluation of the numerous factors involved in the occurrence of petroleum, and because only a relatively small percentage of the areas of sedimentary rocks throughout the world have been examined geologically in any appreciable detail, it is difficult to estimate the future supply of petroleum or to predict that large accumulations will be discovered in any particular region.

The principal countries contributing to the world’s production of petroleum rank as follows in general order of importance: United States, Russia, Mexico, Dutch East Indies, Roumania, India, Persia and Galicia. Other countries produce less than 2 per cent. of the annual total. The greatest change that is likely to come in the geographical distribution of production is a larger output from the countries bordering the Caribbean Sea and the Gulf of Mexico, and from the Persian and Mesopotamian fields. Mexico now ranks second to the United States, and South American countries promise to become more important contributors to the world’s production than they now are. Russia is expected to become ultimately one of the chief producers of petroleum.

Within the next decade, through improved methods of production and through the further amalgamation of producing, transporting, refining, and marketing companies into strong units, the output will undoubtedly be larger and will be more economically produced. In the refining of petroleum it is probable that improved methods will make possible the recovery of a larger percentage of lighter products from low-grade petroleum. Internal-combustion engines are being modified so as to run on petroleum products of lower volatility than gasoline. The use of petroleum as fuel under railroad and marine boilers is expected to increase enormously in the next decade. As the output of the producing fields declines, the vast deposits of oil shale in the western United States will be developed as a source of oil.

So far as is known, political control of the petroleum resources of the world is determined by state sovereignty (see [Plate I], page 7). In normal times, the United States controls politically over 66 per cent. of the present output of petroleum. Russia and Mexico ranked second and third in 1917, controlling 13.6 per cent. and 10.9 per cent., respectively. The remaining 9 per cent. was controlled by Great Britain, Holland, Persia (British government owned), Roumania, Austria-Hungary, Japan, Peru, Germany, Argentina and Italy in the order named.

The [table] showing the nationality and the approximate extent of the commercial control exercised by the dominant interests in each of the principal oil-producing countries, and [Fig. 2] (page 12) are the best possible summaries of commercial control. United States capital is supreme in the commercial control of the petroleum industry of the Western Hemisphere. British and British-Dutch interests easily dominate the petroleum situation in the Eastern Hemisphere. France no longer exercises control over any important fields. Japanese interests, controlling at present all the oil fields of Japan, may be expected to make large investments in the petroleum fields of Mexico, China and Russia.

CHAPTER II
COAL
By George S. Rice and Frank F. Grout

USES OF COAL

Coal is among the most important of all minerals. It furnishes power and heat, and its distillation yields a great number of useful materials, such as gas for lighting and fuel, explosives, ammonia, aniline dyes, etc. Coke, which is bituminous coal with the more volatile constituents removed by distillation, is used for smelting metallic ores; and thus the contiguity of fields of high-grade coking coal and of iron ore determined the location of the centers of steel industry, which are the very main-springs of our modern machine-made civilization. Near such coal districts, other manufactures of all kinds naturally developed, the coal being cheaply available for power and constituting practically the only source of power in regions where cheap hydro-electric power is not available. About 66 per cent. of the coal mined goes to the production of power, including transportation; about 12 per cent. to coking and the by-products; and about 22 per cent. to the heating of buildings.

Commercial coal is of three varieties: (1) anthracite (Pennsylvania anthracite is popularly termed hard coal), and semi-anthracite containing a high percentage of fixed carbon and a relatively low percentage of the volatile constituents (3 to 12 per cent.); (2) bituminous (ambiguously termed “soft coal” in the United States), containing less fixed carbon and more volatile matter (12 to 40 per cent.); and (3) lignite, containing a still smaller proportion of fixed carbon and a large proportion of water. Of the bituminous coals, some coke satisfactorily, but many do not, so that good coking coals are highly prized. Anthracite, because it makes no smoke, is in great demand for house heating; whereas bituminous coal is chiefly used for power production, including locomotive and steamship firing. Lignites as a rule are used only where the better grades of coal are not available.

Coal was first used for heating before steam power came into use, and iron was smelted with charcoal instead of with coke as at present.

Ship bunkering calls for the best grades of bituminous coal, low in ash and preferably high in fixed carbon, because the use of low-grade coals would require carrying larger amounts, leaving less space for cargo. However, no country that has enough coal to bunker ships, need be dependent on foreign supplies; the low grade of coal would simply reduce efficiency and thus increase expense.

Substitutes.

—The proportion of coal used for power, as distinct from that used for heat and coal products, is increasing, and is now two-thirds of the total. As a source of power there is really no complete substitute for coal. All the great industrial nations, like England, Germany and the United States, have developed their industries on the basis of large coal supplies. Some countries make large use of hydro-electric power, but for most it is an insufficient substitute. Wood and other fuels are rarely sufficient to maintain an industry built up on a supply of coal. Oil is being successfully substituted in some industries, notably in shipping, but the importance of coaling stations will no doubt persist.

CHANGES IN PRACTICE

The technique of coal mining in many districts, and the development of heat, power and coal products are not far advanced. Wasteful methods are used, mostly as a result of competition and lack of co-operation and organization among producers. Economies are being advocated, however. Labor-saving machinery has been installed in many mines. A number of power plants have been erected near the mine mouth and the power distributed electrically, thus eliminating freight charges on coal. Central heating and power plants that can burn coal efficiently will no doubt be more popular and numerous in a few years. Government control and legislation may be expected to hasten the changes. In Europe the technique of coal mining, except in undercutting machinery, is further advanced than in the United States, as regards mining all the coal and in supporting the surface.

Improvements in coking ovens may soon make possible the manufacture of some sort of coke from almost any bituminous coal. While all coke may not be satisfactory for modern blast-furnace practice, any future lack of coke will probably be offset by the development of electric smelting, so the seriousness of the metallurgical need is doubtful. The proportion of by-product coke ovens, which make for cheaper coke by providing for other marketable products, is increasing.

GEOLOGICAL DISTRIBUTION

Coals are found in the sedimentary deposits of several geological eras: Paleozoic, Mesozoic, and Tertiary. The Paleozoic era, embracing the Carboniferous period, is by far the most important as regards quality and availability of its coal resources; but the lower-grade and chiefly lignitic coals of the Mesozoic and Tertiary are of great importance locally, and there are enormous reserves that exceed in quantity the generally higher-grade coals of the earlier periods.

The geologic distribution of coal is described in “The Coal Resources of the World,” the most important and comprehensive compilation on coal reserves ever made, which was undertaken by the Executive Committee of the Twelfth International Geologic Congress, held in Canada in 1913. As the compilation was made with the assistance of geological surveys and mining geologists of the several countries of the world, it is cited in this paper as authoritative on geologic distribution and resources.

The geographic distribution of the chief coal fields of the world is shown in [Plate II].

In North America the most important coals in the Central and Eastern part are of Paleozoic age, but in the Rocky Mountain region vast quantities of coal occur in the Cretaceous (Mesozoic) strata. In the Gulf province and in the Northern Great Plains province of the United States, which extends into Canada, are coals of Triassic (Mesozoic) age that are relatively unimportant at present.

In beds of the Eocene period of the Tertiary era are large deposits of brown lignite locally converted by mountain-building forces into bituminous and semi-bituminous coal, and also a little anthracite under difficult mining conditions. Such locally altered beds are found in the State of Washington, in British Columbia, and in Alaska.

The limited coal resources of South America, in those deposits east of the Andes and in southern and eastern Brazil, are of Paleozoic age. Small areas of Tertiary coals are found in southern Argentina and in Chile.

Key to Plate II.

World’s Coal Reserves as of 1916—Coal Fields in Solid Black.

1. Countries possessing coal reserves of the first magnitude (4,000,000 million to 1,000,000 million tons): The United States (3,527,000 million), Canada (1,234,000 million), and China (1,500,000 million).

2. Countries possessing coal reserves of the second degree of magnitude (500,000 million to 100,000 million): The British Isles (189,533 million), Germany (before the war) (423,356 million), Siberia (173,879 million), and Australia (165,572 million).

3. Countries possessing coal reserves of the third degree of magnitude (80,000 million to 16,000 million tons): France (before the war) (17,583 million), Alaska (16,293 million), Colombia (27,000 million), Austria-Hungary (before the war) (55,553 million), Russia in Europe (before the war) (60,106 million), India (79,001 million), Indo-China (20,000 million) and South Africa (56,200 million).

4. Countries possessing coal reserves of the fourth degree of magnitude (16,000 million to 6,000 million tons): Spain (8,768 million), Japan (7,970 million), Belgium (11,000 million), Spitzbergen (8,750 million).

5. Countries possessing coal reserves, but of inferior magnitude (less than 4,000 million tons): Brazil, Argentina, Chile, Peru, Ecuador, Venezuela, Greenland, Holland, Denmark, Sweden, Italy, Bulgaria, Turkey, Greece, Roumania, Asia Minor, Persia, Arabia, various islands of Malaysia and various countries in Africa. Coal fields shown in black—country not shaded.

Plate II.—Geographical distribution of the coal deposits of the world, and relative reserves. By F. F. Grout.

In Europe the principal coal deposits occur in the Carboniferous system, either in the upper or the lower part. The Lower Carboniferous is the principal series in which coals occur in Scotland, whereas the most important coals in England and in Wales lie in Upper Carboniferous rocks. In northern France, in Belgium, and in Westphalia, Germany, the middle Carboniferous measures contain the most important reserves. Mesozoic coals are found in northern Australia and in central France. The lignites or brown coals of middle Europe are locally very important in Germany; those of Austria are found in numerous small but thick deposits of the Tertiary age.

Fig. 3.—Coal output of the chief coal-producing countries, 1880-1916.

The principal coal resources of Africa are in the southern part of the continent and are chiefly in deposits whose ages range from Carboniferous to Triassic.

In Asia the coal fields are not well defined. There are coal basins of note in India and China. In China important coals are found in the Upper Carboniferous. Coals of the Lower Carboniferous are found east of the Urals and also in Turkestan. In Japan the Mesozoic coals are important. Tertiary coals are widely distributed in Asia but are not high-grade nor of importance.

It may be safely stated that geological reconnoissance has covered the world so well that further development is not likely to disclose coal resources of great magnitude not now known with more or less exactitude. Estimates of resources of some regions will undoubtedly be revised many times, especially those of reserves in the middle portion of Africa, in South America, and China.

COAL PRODUCTION OF THE WORLD IN 1913

As the great World War began on July 31, 1914, the last normal production figures were for 1913. The following [table] of the world’s production of coal for the years 1911-1914 is from “Mineral Resources” of the U. S. Geological Survey, the compilation being credited by Mr. Lesher, of the Survey, to Mr. Wm. G. Gray, statistician of the American Iron and Steel Institute, and Prof. G. A. Roush, editor of “Mineral Industry.”

The output (1880-1916) of the chief coal-producing countries of the world is shown graphically in [Figure 3].

Table 4.—The World’s Production of Coal (in Short Tons)

[5] Estimated.

[6] Transvaal included Natal and Cape of Good Hope.

[7] Approximate.

Table 5.—Reserves

Total coal reserves in millions of metric tons have been estimated, by continents, as follows:

The countries on pre-war basis having the greatest reserves are as follows:

Fig. 4.—Coal reserves of chief producing countries, according to “Coal Resources of the World,” in millions of metric tons. Squares are to scale: lines showing relative production are not on same scale as squares.

The reserves of the principal productive coal fields are graphically shown in [Figure 4].

The distribution of the coal deposits of the world and the estimated reserves in these deposits are shown in [Plate II].

GENERAL WORLD SITUATION

The districts with coal for export have been chiefly the British Isles, United States and Germany; there might be included also New South Wales, British South Africa, Japan, French Indo-China, Canada, New Zealand and Spitzbergen. China, with her large reserves, may become an exporter in the future; or, if her industries develop, may find use for her coal at home.

Anthracite of good grade is found in large amounts in Pennsylvania and South Wales only. Poorer supplies are known in Germany, France, Italy, Indo-China, and also in the states of Colorado and New Mexico.

Coking coals in large amounts are found in the eastern United States, Germany and the United Kingdom and are coked extensively. Smaller amounts of coke are made in France, Belgium and old Austria. Relatively very small amounts are made in Canada, Chile, New South Wales, Japan and Spain.

The coal reserve of a country bears no direct relation to its present production, for the latter, which has to be developed in competition with other countries, depends upon relative facility of transportation and proximity of iron-ore deposits, which render steel making and other industries economically feasible.

Great Britain is particularly favored through the possession of high-grade coal immediately adjacent to coast ports, as in the North of England, Scotland and Wales. Hence Great Britain became a great exporter of coal. First, coal for heating purposes traveled by sea from Newcastle to London; next coal was carried to European ports, and finally to all parts of the world. The possession of easily worked iron deposits in the north of England and the discovery that iron could be smelted with coke rapidly accelerated the development of the coal industry in Great Britain, so that by the middle of the nineteenth century Great Britain had a commanding lead.

No other country possesses high-grade coal in such quantity immediately adjacent to the coast, and this fact has enabled Great Britain to remain the great exporter. The average length of haul of export coal, from mine to ship, is less than 20 miles. In Germany coal for ocean export must be hauled 118 miles to 168 miles; in the United States from 150 to 375 miles, except for Washington coals, which are within 40 miles of tidewater, but are small in quantity and of indifferent quality.

After the war with France in 1871, when Germany annexed Alsace and Lorraine, the coal industry of the German Empire developed with tremendous rapidity, largely through the discovery—from the investigations of Thomas, of Great Britain—of a method of utilizing the high-phosphorus iron ores of German and French Lorraine, and the nearness of these iron-ore deposits to the high-grade bituminous coals of Westphalia. The coal industry was also developed by fostering the export trade with adjacent countries, which have small coal resources or none, this trade nearly all going by rail.

However, the long rail haul and the correspondingly high cost of mining have retarded the ocean export business of Germany, in spite of the fostering care of the government. With the transfer of practically all its iron deposits and its important Lorraine potash deposits, as well as the ownership of its Saar coal mines, to France, and the possible loss of its Upper Silesian coal and zinc deposits to Poland, the balance of commercial prosperity, as well, may be handed over.

No other countries except the United States, Canada, Australia and China have reserves for extensive export trade. In Canada the coals are mostly inland, and those near the coast, as on Vancouver Island and in Nova Scotia, are limited in quantity and difficult to mine, so that export business is perforce restricted.

One change that seems likely is a rapid increase in output of coal in China. The resources are enormous, the reserves of the higher classes of coal being surpassed by those of no country but the United States. The ambitious and aggressive Japanese, with their strategic neighboring location, have given every indication that they will take advantage of an opportunity to develop such a resource. It may be a question how soon Chinese coal will be developed, but great changes are inevitable when development begins. Some of the coal fields are so near the coast and have coals of such good quality as to permit an extensive development of export business in the Orient.

Australia, particularly in Queensland and New South Wales, has coal resources that are considerable, in comparison with the needs of the small population. In New South Wales the coals are excellent and are adjacent or close to harbors, so that the coal is extensively supplied for bunkerage and export trade to the South Pacific and has become a large factor in the ocean trade of that part of the world.

A large factor in the coal trade of the Pacific Ocean is the carrying of coal as return cargo. This is also important in South American trade. South Africa during the war sent considerable coal to the western Mediterranean, but its coal cannot be a large factor in ocean trade in normal times.

Of all the continents South America is the poorest in coal resources. There is coal in Brazil and Chile and other South American countries, but it is difficult to reach and the fields so far known do not give promise of being able to take care of the needs of the countries in which they occur. The total annual production of South America is less than two million tons, mostly from Chile. It is probable that for the next generation South America will continue to import coal as it has in the past, to the extent of 15 million tons or more per annum, although developments in Brazil are now promising for that country’s future supply. For estimates of reserves, see [Table 5].

Summary.

—By way of summary, it may be said that the United States leads the world in coal resources; moreover, its resources are most immediately available, because of their shallow depth and general undisturbed (geologic) condition and their accessibility through railway systems. This is particularly true in the Appalachian region, which contains by far the best coal, is the nearest to the coast, and hence is the most available for ocean trade. On the other hand, the average haul to export points, as already noted, is far greater than that of Great Britain and greater than that of Westphalia; but to offset this the coal has been and can be mined more cheaply than in either Westphalia or Great Britain. The resources of Upper Silesia are large, and the coal is easily mined, but the output will all be needed for central Europe. As regards both quality and quantity, Pennsylvania anthracite is unique; nevertheless, the home needs will continue to be a brake on extensive exports. United States steam and coking coals available for shipment average a little poorer than the corresponding coals of Great Britain, but are superior to the German coals.

The total resources of Great Britain, possible, actual, and probable, are only 190,000 million tons, as contrasted with 423,000 million tons in the old German Empire and 3,838,000 million tons in the United States.

Probable Future Production.

—The possible depletion of coal resources is of course important in considering the future, but it can be safely stated that in none of the principal fields now being mined are the resources so depleted that the output therefrom will be reduced for another generation at least.

Of the great coal-producing countries, Great Britain, with its increasing rate of production, most nearly approaches the point of ultimate depletion, but that point has been variously placed at one hundred to several hundred years in the future, much depending upon whether with better methods of use the output will continue to increase at the same rate as in the past. Meantime, certain areas in Great Britain with shallower coal beds will be depleted much sooner and the remaining coal will become more and more difficult to get, because of the increasing depth of mining, which in turn will cause a continually increasing cost.

Although the exhaustion of coal is a distant prospect, there are clear signs of the approaching exhaustion of certain grades of coal. It has been estimated that the output of American anthracite will seriously decline in 60 to 100 years. Probably this will result in a change in practice, the use of coke, and other methods of house heating. If the rate of production continues to increase, high-grade American steam coal, New River and similar grades, will probably be exhausted in a little over 150 years. American coking coal of the best Connellsville quality is of equally short duration. British coal of similar high grade may last longer than American, as the production rate is less rapid, even though the total American coal should last much longer than the British.

POLITICAL CONTROL

In several countries state ownership of coal mines is established; as, for example, in parts of Prussia, Australia, Chile and Bulgaria. In others the undeveloped coal lands are still largely owned by the government, as in Alaska and the western United States. In some countries the government retains control of all mineral rights, simply leasing the property and granting a mining concession. Many governments have a department or administration of mines. In every country, of course, in an emergency, the sovereign state would exercise control of coal resources as fully as was necessary. Where the state owns mines, and favors organization, as in Germany, the more drastic regulation of war time is easily effected. It is quite possible that coal may in time be generally considered a public utility.

In England a movement toward nationalization of mines, with miners as well as the government having a hand in the control, seems to be making progress.

England’s colonies excel all others in extent of coal resources. There is coal in Australia, Canada, India, New Zealand, South Africa, Rhodesia, Newfoundland, South Nigeria and British North Borneo—the total being many times greater than that in the British Isles. The colonies and possessions of France, Denmark, Portugal, United States and Japan have relatively small amounts of coal.

Coal resources, along with other raw materials, have been influenced by some trade treaties. However, no permanent advantage in commerce has been secured to any nation by a trade treaty. Nearly all such treaties are made for short periods and renewed. If not satisfactory to one party they are soon corrected. Various informal or tacit agreements might be mentioned. When shipping was scarce during the war, England and the United States divided the coal business of South America according to the requirements of ship economy. Germany made agreements to send coal to Austria-Hungary and Switzerland during the period of the war. England had agreements with France, Spain, Portugal and Italy, these agreements changing with conditions, about supplies of English coal.

COMMERCIAL CONTROL

Although the ownership of mines in most countries is nominally open to citizens and aliens alike, exceptions and restrictions tend to keep the control in the hands of citizens. For example, it is impossible for foreigners to control any mining company in Japan. Concessions in Holland and the Dutch colonies are limited to Dutch subjects and in Bolivia to Bolivian citizens. The legislation suggested since the outbreak of the World War may develop a similar condition in the possessions of Great Britain and those of her allies.

In peace the relations of two countries may be largely determined by the ownership of property; owners of property in a foreign country may strongly influence the policy of the two governments toward each other. In emergencies, the political and the commercial control are put to the test, and there results either a deadlock or the victory of one over the other.

An important commercial relation exercising political influence is the incorporation of companies under the laws of different countries. Mining companies in China, like the Kailan Mining Administration, organize at Hong Kong to obtain British protection and are thus subject to British control, in spite of the fact that Belgian money finances the company. Some companies organized in Japan may also own Chinese coal mines.

As relatively few regions of the world have coal in excess of their own needs, the larger number are dependent on imports. If a country with coal controls also steamship lines, it may completely control the coal situation in the importing country. England, with about half the total world’s shipping and a good supply of seaport coal, has been in a position to dominate coal exports, even to handling the excess American coal. During the last three or four years the scarcity of shipping has given increased importance to American and Japanese shipping, but the English still exert a strong influence. Their docks and storage facilities are the best, and their ships are still numerous.

Railroad shipping rights over the National Lines in Mexico give a certain amount of control over the coal industry. The National Lines are state owned and have a special agreement giving trackage rights to two companies, the American Smelting and Refining Co., and the Peñoles Company, of German ownership. Since the Mexican railway service has been disturbed, the German company has been operating with cars and engines of its own. It has many coke ovens and large coal reserves, and has been the chief competitor of the American company in Mexican metallurgy.

No patent is likely to limit coal industries, except as regards the by-products of coke. Before the war, coal-tar products were largely developed by Germans, who patented their processes in many countries, but offered no such protection to foreign inventions by patents in Germany. They limited production chiefly to their German plants, and exported about $50,000,000 worth a year.

During the war, these patents in the United States were taken over by the Alien Property Custodian, and the American industries that sprung up in consequence may be permanently protected. Other allied countries took the same steps to free themselves from German control, which has retarded the development of the by-product coke industry in non-German countries.

In Germany the large mining companies generally own the coal rights. The only government that has mined coal on a commercial scale and for commercial purposes is Germany, and even there the government production covered only a small part of the total output of the German Empire. Mines of the Saar coal field and a group of mines in the Upper Silesian field owned by the Prussian government have been the only extensive state-operated mines of the world, and now, under the terms of the Treaty of Peace, the ownership of the Saar mines will pass to France. (The details are given on [p. 39]).

On the other hand, the government exercised a quiet but real control over the whole German coal industry. Through its ownership of the Koenigen Louise mines it acted as a member of the Upper Silesian coal syndicate. Formerly, through its ownership of the Saar mines, it was also a member of the Westphalian coal syndicate, but whether a member or not it practically approved the syndicate operations and the fixing of prices in advance; also, it co-operated with the syndicate in hauling the latter’s coal over state-owned railway systems. In certain undeveloped coal fields in Germany, the northern extension of the Westphalian field, the Prussian government retains most of the coal rights.

The Rhenish Westphalian coal syndicate is a classic example of a great interlocking trade combination. Capitalized at $571,000, it covered an enormous capitalization of individual members. The mines have votes in proportion to production, which in turn is limited for certain periods. Prices are fixed and coal is marketed for the syndicate as a unit, but other affairs are left to the companies. The syndicate as a whole is a member of a transporting and exporting combine, and disposes of its product through a combine of coal dealers. The several minor combines interlock and are practically merged in a larger organization, the Kohlen Kontor. Thus the combination had exceptional power to study the various problems of the industry, and became very powerful. It maintains a research department and an explosion testing gallery near Dortmund. In several countries German companies through the control of advertising contracts have been able to influence the editorial policy of the leading newspapers, even during the war. Over half of the German coal mined before and during the war was syndicate coal. All of the 600 other German cartels have not been as moderate in their action and regulations as the coal syndicate. When the coal syndicate, however, at one time, found it could not supply its German market with coal, it is reported to have bought inferior British coal for its customers, so that they would not themselves get good British coal and refuse to return to the German supply.

Efforts were made by the cartel to absorb and control foreign coal trade, where political and financial reasons served to render this advisable, and therefore these efforts were out of all proportion to the intrinsic value of the trade. When it was planned to capture such a trade, the German-invented “dumping” system was used, coal being sold cheaper abroad than it could be sold or produced at home, the difference being met by export bonuses. This German dumping became so serious in some countries, as Canada, New Zealand and South Africa, that special import duties were imposed to counteract it. When desirable, the syndicate purchased collieries abroad, including even a South Yorkshire plant in England, the Heraclea collieries, in Turkey, and many mines in Australia.

In Great Britain is a powerful coal combine, the Cambria, closely allied with great shipping concerns. An important trade asset in this organization, like that in the German cartel, is a banking connection by which the combine can offer long-term credit.

Coal syndicates are mentioned in Belgium. Some sort of central organization interested in coal is known in Italy, Russia, Austria-Hungary, Sweden, Greece, Argentina, Chile, and Ecuador.

THE SITUATION IN FRANCE, ENGLAND, AND THE UNITED STATES

France has a modified form of ownership of coal resources: this was vested formerly in the Crown and now in the Republic. The government gives concessions for mining the mineral and charges a royalty. The mineral is not considered to be owned by the surface owner or by the original surface owner, as is the case in all other important countries. The concessions granted are liberal and for large areas. The royalty or rental is small and is now paid on the basis of so much per superficial unit of area (hectare) in the concession, but the chief returns received by the public are through a percentage of the net earnings, that is, earnings available for dividends. Under the conditions prevailing in France the system seems eminently fair, and the undertakings have been profitable both to the operators and to the country. The books of the company are open to inspection by government officials, and the annual reports are published in detail. The system virtually makes the government a partner in the business.

In Great Britain most of the coal ownership is vested in entailed estates, and the royalties are a shilling a ton and upwards.

Both private and government ownership exist in the United States. Throughout the greater part of the country the large operating companies own the coal rights, although in the anthracite district of Pennsylvania the fortunate owners of the surface, or their assigns, receive large royalties, 25 to 50 cents a ton. In the Middle West most of the operators have bought the coal rights from the surface owners. When leased, the royalty is relatively small, 2 to 6¹⁄₄ cents a ton. Operators in the Rocky Mountains generally own the coal they mine. The government has sold the coal rights, but the state school lands of Colorado and Wyoming have generally been leased at royalties of about 10 cents a ton. In Oklahoma the Five Civilized Tribes have until recently, under government control, leased their lands and coal rights at about 10 cents per ton, but these rights are now being sold.

In the State of Washington a considerable amount of the bituminous coal district now opened is owned by the Northern Pacific Railway, which secured these lands as grants when the railroad was constructed. The royalty is about 15 to 25 cents a ton.

In Alaska in the Matanuska and Bering River bituminous fields, and in the Nenana lignite field, the government has offered the coal for leasing purposes at 2 cents a ton for the first period, under restrictions providing for conservation of coal and reasonable prices to consumers. Some units have been taken up in the Matanuska and Bering River fields, but, as the measures are badly contorted and the coal beds difficult to trace, progress has been slow and production has scarcely begun. Temporarily, the Alaskan Railway Commission is working some mines at Chickaloon and Eska Creek, to obtain a supply of coal pending the development of other mines by lessees. Congress, in opening the coal lands in the Matanuska and Bering River fields for leasing, has reserved tracts of not exceeding 7,680 acres and 5,120 acres respectively for the use of the Navy.

The United States still owns large areas of coal and lignite lands in the western states. Most of these lands are remote from railroads and difficult of access, but they contain enormous reserves. At present, outside of Alaska, only one mine, the Gebo mine, Gebo, Wyoming, is leased by the government, but extension of a leasing system similar to that of Alaska has been recently effected.

In the United States the anthracite industry is well organized, and its railroad connections make it notably efficient and powerful. Bituminous coal, on the other hand, is so widely distributed on both public and private lands that no private organization has attempted to control the industry. Such control has always been opposed by Congress and the general public.

Except during the war, neither Great Britain nor the United States has attempted any control over commercial mining and the sale of coal. Each country created a fuel administration, and the coal was shipped under government instructions and paid for at prices fixed by the fuel administration. In the United States this government control has practically disappeared with the war, but in England the Coal Control has so far been continued, and the tendency is for the government to retain for the present a strong guiding hand on the various “key” industries. Certainly, in the final analysis, coal mining is a public utility and should be supervised and adjusted by the government accordingly, allowing free latitude for private initiative.

Of the important coal-producing countries, only the German Empire, more or less openly, has fostered in peace times the coal industry and to some extent controlled it. In France there was only an indirect control, through the control by the government of the concessions and taxation of revenues and through tacit knowledge of the operations of the French coal syndicate, which ostensibly at least obtains and disseminates information and conducts mine safety investigations. In the United States, Great Britain, and other countries free competition has been permitted. Free competition does not seem serious in countries like France, where the supply of coal is limited, but it has had more or less serious financial effects where the supply of coal has been very large. In Germany before the formation of the syndicates the coal mining industry had periods of overproduction and serious financial depression; and at other, rarer, periods there was great prosperity. In Great Britain there have been similar times of depression and prosperity, but generally the business has been profitable.

In the United States, except in the anthracite district, where for more than twenty years the operations have been in the hands of comparatively few companies, depression and prosperity have alternated rapidly. The statistics obtained by the census show that the average profits of the bituminous industry prior to 1917 were smaller than those of any other great industry, and this has had an unfortunate effect on the best development of the coal resources. The companies generally have had little or no surplus to develop properly in the lean years; hence they have mined only the best or thickest coal, and in short periods of great prosperity many mines not directly owned by the railroads and steel companies have been worked so as to lead to “squeezes” and great loss of coal. Moreover, these conditions have also been unfortunate for labor; in times of prosperity too many new mines were opened, because of the tremendous and easily accessible resources, and in times of depression the number of days the miners worked has been so reduced that their monthly or yearly earnings have been low enough to make their living a hard one. The average number of days worked per year from 1901 to 1915 was 213. Some system of limited control of trade combinations by the government would appear to be highly advantageous for both the operators and the miners, and should insure a steady supply of coal to the consumers and steady prices with reasonable profits.

As regards trade relations between the United States and other countries concerning fuel supplies, except for a possible agreement on non-subsidy of the coal-carrying shipping, any attempt at a general agreement on so vital a necessity as coal seems unwise, except for non-duplication of elaborate coal storage and rehandling plants in ports requiring small tonnages, and preventing ruinous competition by systematic “dumping” of surplus coal to drive a competitor out of business.

Of all the continents, South America has the smallest coal resources. Although there is coal in Brazil and Chile and other South American countries, it is difficult to reach, and the fields so far known do not give promise of being able to take care of the needs of the countries in which they occur.

The Coal Situation as Affected by the War.

—Immediately after the opening of the war in Europe, July 31, 1914, the German military forces attacked and advanced in the east through Russian Poland, promptly securing the important Dombrova field, which is an extension of the Upper Silesian coal fields. The German forces also advanced in the west through the Belgian coal fields and thence through the extension of these fields in northern France, at the same time seizing the important Briey iron-ore deposits north of Verdun.

The economic effect of these advances was of enormous importance in securing all the productive coal mines of Belgium, the most productive coal mines of Russia, and most of the coal fields of northern France. The French coal and iron mines seized produced one-half of the coal output of France (20 million tons out of 40 million tons), and 95 per cent. (20 million tons) of the output of iron ore. Necessarily under these conditions France had to rely upon England and the United States to meet the military and economic need for iron, leaning chiefly upon Great Britain for the necessary supply of coal. Great Britain during the war continued to supply coal to Italy; also to Spain and other neutral nations.

The armistice ended Germany’s occupation of the coal fields of Belgium and northern France. On the other hand, the French took charge of the important Saar coal field, and the Allies occupied German territory reaching to the Rhine and beyond the Rhine at certain bridgeheads, this occupation including the supervision of the mines in the coal and brown lignite basins near Aix-la-Chapelle and Cologne and the western margin of the Westphalian basin on the left bank of the Rhine.

The treaty of peace gives to the French the important iron resources of former German Lorraine, which together with imports from French Lorraine were the chief sources of iron ore for German iron works, and the ownership of the Saar coal mines.

The terms under which the Saar mines are transferred, and the future government of the district, are indicated in the following extracts from the treaty:

“As compensation for the destruction of the coal mines in the north of France, and as part payment towards the total reparation due from Germany for the damages resulting from the war, Germany cedes to France in full and absolute possession, with exclusive rights of exploitation, unencumbered and free from all debts and charges of any kind, the coal mines situated in the Saar basin.”

This is exclusive of that part of the Saar basin in Lorraine which belonged to France prior to 1870, and which now reverts to France with some minor rectifications of boundary. The treaty further specifies, “all the deposits of coal situated within the Saar basin will become the complete and absolute property of the French state. * * * The right of ownership of the French state will apply not only to the deposits which are free and for which concessions have not yet been granted, but also to the deposits for which concessions have already been granted, whoever may be the present proprietors, irrespective of whether they belong to the Prussian state, to the Bavarian state, to other states or bodies, to companies or to individuals. * * * The value of the property thus ceded to the French state will be determined by the Reparation Commission. * * * This value shall be credited to Germany in part payment of the amount due for reparation. It will be for Germany to indemnify the proprietors or parties concerned, whoever they may be.”

As concerns the government of the territory of the Saar, at the termination of a period of fifteen years, the population will be called upon to indicate their desires, and then, “The League of Nations shall decide on the sovereignty under which the territory is to be placed, taking into account the wishes of the inhabitants as expressed by the voting.” In the meantime, the territory will be governed by a commission of five members chosen by the Council of the League of Nations.

In addition to turning over the ownership of the mines and minerals in the Saar basin, Germany accords the following options for the delivery of coal to the undermentioned signatories of the present treaty:

“Germany undertakes to deliver to France seven million tons of coal per year for ten years (it is understood that this is to provide fuel for the Alsace Lorraine territory ceded back to France). In addition, Germany undertakes to deliver to France annually for a period not exceeding ten years, an amount of coal equal to the difference between the annual production before the war of the coal mines of the Nord and Pas de Calais, destroyed as a result of the war, and the production of the mines of the same area during the years in question; such delivery not to exceed twenty million tons in any one year of the first five years, and eight million tons in any one year of the succeeding five years. It is understood that due diligence will be exercised in the restoration of the destroyed mines in the Nord and the Pas de Calais.”

Besides furnishing France with coal, “Germany undertakes to deliver to Belgium eight million tons of coal annually for ten years;” and to Italy from four and one-half to eight and one-half million tons annually; and also to Luxemburg, “a quantity of coal equal to the pre-war annual consumption of German coal in Luxemburg.”

The prices to be paid for coal under these options shall be as follows:

“(a) For overland delivery, including delivery by barge, the German pithead price to German nationals, plus the freight to French, Belgian, Italian or Luxemburg frontiers, provided that the pithead price does not exceed the pithead price of British coal for export. In the case of Belgian bunker coal, the price shall not exceed the Dutch bunker price. Railroad and barge tariffs shall not be higher than the lowest similar rates paid in Germany.

“(b) For sea delivery, the German export price f.o.b. German ports, or the British export price f.o.b. British ports, whichever may be lower.

“The allied and associated governments interested may demand the delivery, in place of coal, of metallurgical coke in the proportion of 3 tons of coke to 4 tons of coal.”

Germany undertakes to deliver to France during each of the three years following the coming into force of this treaty,

The price paid for coke and for the articles referred to shall be the same as the price paid by German nationals under the same conditions of shipment.

The ownership of the Saar mines is a most welcome addition to the coal resources of France; and the Saar basin, as it is capable of further development, may in the future make France more nearly self-sustaining as regards coal production.

The requirement of furnishing coal to France during the rehabilitation of the French mines wrecked by the Germans is a most equitable arrangement. Germany at first, owing to the drop in the output of the Westphalian fields, claimed not to be able to furnish coal, but this situation will no doubt right itself in time, especially as France holds the whip hand through control of the iron ores necessary for the great iron and steel plants of the Rhine district. In the meantime it is hoped Great Britain, with the assistance of the United States, will be able to supply the deficiency in the coal requirements.

The problems connected with the Russian coal fields are complicated, but at least the Dombrova coal field would seem to be in the hands of the new Poland, and this carries coal resources estimated at 2,525 million tons, with an output before the war probably exceeding 7 million metric tons per annum.

According to the terms of the peace treaty, a plebiscite will determine the political control of the Upper Silesian coal fields.

Probable Changes in Coal Trade.

—In the ocean coal trade of the world the greatest change likely is that the United States will more largely supply South America, its coal being substituted for that of Great Britain. The ocean distance is markedly in favor of the United States, particularly on the west coast of South America by vessels passing through the Canal. With the increased shipping facilities of the United States, there is every reason to believe exports of coal to South America will be equally shared between the United States and Great Britain.

At the present time, it is evident that the British coal-mining industry is in a bad way, and publicists are expressing serious alarm at the possible loss of the greater part of the export trade and the curtailment of home industries through a great decrease in production accompanied by a rapid increase in cost.

In 1913 Great Britain produced 287,000,000 long tons, and exported 77,000,000 long tons of coal. During the war, owing to the large number of miners entering the military service, the output greatly declined, but was expected to recover rapidly with the signing of the armistice and the return of the miners. But labor unrest, resulting in strikes and absenteeism, kept the output down, and on July 16, 1919, the so-called Sankey award went into effect. This award shortened the miners’ working day from eight to seven hours, exclusive of the time taken in hoisting and lowering, but inclusive of the time taken in reaching the working place. Rates were raised so that the miner received more in a day with the seven-hour day than formerly with the eight-hour day, and the Controller raised the price of coal six shillings a ton to offset the increased cost.

Sir Richard Redland, chief inspector of mines, predicted that the output for 1919 would be 230,000,000 tons, and for 1920, 217,000,000 tons, or a reduction of 70,000,000 tons from the output of 1913. Presumably, in the course of time, by using additional shifts, Great Britain may recover its former output, though manifestly at greatly increased cost; so that unless the cost in the United States goes up correspondingly, there is every probability that this country will be able to compete successfully in export business, not only in South America, but also in Mediterranean ports.

At the present time, demands for coal are reaching the United States not only from those parts of the world, but also from Scandinavia, Switzerland, Denmark, and The Netherlands. On account of nearness, however, Great Britain should be able to take care of the fuel requirements of northern Europe.

In the Pacific, it is not probable that either the State of Washington or the Territory of Alaska will produce coal in such quantity and at such a price that the output can be a general factor in the Pacific Coast trade. The demands of Alaska, Washington, and adjoining states will absorb the local production; and California will continue to import in ballast more or less coal from Vancouver Island, British Columbia, China, Japan, New Zealand, and Australia.

The immediate changes in Asia are more likely to be in the development of mines in the interior of China and in India to supply domestic needs rather than extensive exports, although, as before stated, it is possible that China will gradually get into the Pacific Coast markets.

POSITION OF LEADING COMMERCIAL NATIONS

United States.

—The United States has the best coal reserve of any country—about 3,527,000 million out of a total world reserve of 7,900,000 million tons—and good reserves of each of the several classes of coal. For many years there will be no danger of a shortage except for anthracite, good coking coal and the highest grades of steam coal, which are now actively mined. About 600,000,000 tons a year, or nearly 40 per cent. of the annual output of the world, is mined in the United States.

In contrast with the reserves and production, the exports in 1913 were only about 12 per cent. of the exports of coal from all countries; and a large part of the American exports goes to Canada by rail. Of sea-borne coal, the United States sent out only 4 per cent. This small proportion of international trade is due to the distance of our coal from seaports, the lack of organization and related shipping organizations; and, further, to the relative independence of the United States, which, from most countries, requires only a small amount of import as a return cargo for coal-carrying ships. We use our coal at home, but the advantage of exporting a considerable quantity of coal for its effects on increasing trade relationships with other countries is now becoming evident.

Correlated with the large supply and small export of coal is the remarkable development of home industries using our own coal. From the curves of production (shown in [Figure 3]) it seems that within a century the United States will surpass all Europe in coal production. As our industries have kept pace with coal production, our consumption of coal is indicated roughly by the production curve. Hence it seems that the United States is likely to be a center of manufacturing and wealth; and with this will come an equally certain continual increase in population and power.

The second great world supply of coal is likely to be that of China. To be sure, European production is large, but it will be divided among several powers. The main part of the world’s power and industry for the next century is so definitely located by the coal deposits (and by associated iron in most cases) that the part the United States should take in the world’s program is clear. Every precaution should be observed to have the Chinese resources controlled by powers that will not abuse them to make the world “unsafe for democracy.”

The war opened several foreign markets, especially in South America, to United States coal. Some of these markets may be permanent, but Welsh coal is still likely to dominate sea-borne trade. The United States has coaling stations as far away as Manila and the Samoan Islands, but little coal reaches them from this country. American coal supplies our government coaling stations in Alaska; Hawaii; our home ports, both Atlantic and Pacific; Cuba; Porto Rico; Nicaraguan ports; Panama Canal ports; Mazatlan, Mexico; and some South American ports. No attempt seems to have been made to establish strategic ports around the world, such as may be needed if the present increase in American shipping is to be maintained under the American flag.

No foreign control has been influential in mining or handling coal in the United States. The ownership of coal mines by aliens has been possible, but apparently has not become important.

American coal resources are so great that no single organization, foreign or domestic, has been able to dominate the situation. The lack of a strong trade combination made it possible (in 1916) for a combination of British shippers to fix the price of bunker coal in Atlantic ports, so that the mines got even less for it than for industrial coal. This was the result of competitive bids, and the lack of organization here, but it is expected that organization will develop now.

Since the war began the development of industries based on coal tar has been remarkable. There are signs, however, of an unhealthy competition in this country, and the government should be careful that internal squabbles do not open the door for German control again.

England.

—The British Isles have only one-fortieth of the total world’s supply of coal, but this is of better than average quality. High-grade steam coal is abundant and there is a fair supply of coking coal. The annual production, 300 million tons, is about one-fifth the world’s production, and is second only to that of the United States. England before the war exported about one-fourth of the production, overseas exports from England being six times as much as from any other country in the world. Coal has constituted about three-fourths of all English exports. The coal mines are near seaports, and ocean freight rates are low, because the demand for imports gives return cargoes to England from all parts of the world. There are large supplies of coal also in the colonies, especially India, Australia and South Africa.

The coal business and shipping of Great Britain grew up together. About one-fourth of the coal shipped goes for bunkering. In 1916 England owned 40 per cent. of the world’s shipping and exported nearly 70 per cent. of the world’s sea-borne coal. The maintenance of the shipping requires bunkering ports all around the world. Coal from Wales and British colonies was sufficient to supply them all, and they constitute by far the most strategic system that any country possesses.

England, Gibraltar, Greece, Malta, Suez, Port Said, Aden, Maskat, Colombo, Singapore, Bombay, Hong Kong, Shanghai, Sydney, Fiji Islands, Vancouver, Valparaiso, St. Lucia, Jamaica, Halifax, Newfoundland, St. Helena, Bermuda, Cape Town and Durban, and others encircle the globe. France, Japan, Holland and the United States have each a few stations, but no such comprehensive system. The German proposals of terms of peace (during the war) recognized the importance of these stations by specifying that England should give up Aden, Malta and similar ports.

Trade arrangements between Great Britain and other countries have been such as to grant “most favored nation” treatment to both parties, even with Germany, where no formal treaty was in force. The free-trade policy of England is well established, and on that basis England’s commercial growth has been very great. Studies since the war began show that Germany took advantage of the freedom in British countries and the protection at home. For example, German capital controlled some collieries in South Yorkshire, through Mr. Stinnes, one of the largest components of the German Kohlen Kontor. This organization had branches in Newcastle, Cardiff, Glasgow, Hull, and many foreign ports. The French also had purchased an English colliery before the war, the Stonehall colliery, at Lydden, near Dover.

The Australian colonies and probably others found that German financiers owned and controlled most of the mines when war broke out. It took some time to destroy this influence. Early in the war, British sentiment seemed to call for action against all such German commercial aggression, and at an Allied Economic Conference at Paris in June, 1916, plans were suggested for protection by tariff and exclusion of alien ownership in allied countries. More recently it seems that the British plan is to keep British certain key industries at all hazards and at any expense, but not to abandon free trade or in any way decrease the amount of trading done.

Commercial control of the Welsh steam-coal export trade is largely in the hands of the Cambria Coal Combine, but in the trade there are several other large combinations. The anthracite industry of England is not as well organized as that of America.

Commercial control of coal exported from Wales is largely in the hands of the large combinations of British shippers, in agreement with the Cambria. Even when the war interfered with shipping, it is estimated that two-thirds of the South American coal trade was in British control.

Many instances of British financial control of coal in countries other than British colonies have not been noted. British capital is invested in a few mines in Siberia and there are extensive holdings in China.

Germany.

—The reserves of coal in Germany before the war were greater than those in England, counting possible reserves, and of fair quality. Germany formerly controlled 70 per cent. of the coal on the Continent. Austrian coal was controlled, and the coal of Spitzbergen has been claimed, though now in British and Norwegian control.