The Coal Crisis in Britain

The Canadian Forum/Editorial/1921-07

The Coal Crisis in Britain written by Herbert Trevor Tracey

A Letter of Travel

From The Canadian Forum, July 1921, p. 294

The Coal Crisis in Britain
a side light on the european economic situation

Through the decision of the Miners' Federation of Great Britain, representing 1,200,000 workers, to reject a series of wage-reductions proposed by the federated mine-owners, the British mining industry was brought to a standstill three months ago. More significance attaches to this dispute than a summary statement of the wage issue involved would seem to warrant. It presents, on a reduced scale, a conspectus of the whole European situation in both its political and its economic aspects. The causes of the coal crisis are, in fact, to be sought, not within the mining industry itself, but in the general collapse of the European system and the practical failure of the statesmen of Europe to re-establish political and economic stability by the treaties of peace.

The actual crisis in the British mining industry was precipitated by the action of the Lloyd George Government, startled by the discovery of the industry's insolvency, in relinquishing control of the mines, five months in advance of the original date contemplated in the Coal Industry Act. This Act, which came into operation in August, 1920, and in which modifications of the earlier system of control established in 1916-17 were embodied, fixed the date upon which control would end on August 31st, 1921. Negotiations were proceeding between the mine-owners and workers upon a scheme for the future regulation of the industry when control ceased, at the moment when the Government announced its intention to decontrol on March 31st, five months earlier than was anticipated by either the mine-workers or the owners. There was a reasonable expectation that an agreed plan would have been formulated in ample time if control had continued; and indeed both sides had agreed to present their proposals to the Government not later than March 31st, expecting that the time allowed after that date would enable them to have their complete joint scheme in readiness to come into operation at the end of August. How far the negotiations had then gone is indicated by the fact that both sides had agreed that the owners should receive a fixed standard profit representing a percentage of the aggregate wages bill; the surplus profits remaining after wages and standard profits — plus, of course, the usual working costs — had been paid, to be divided in stated proportions between the owners and miners, the latter's share to be an addition to their standard wage It was also agreed that joint audits of the books should be made by accountants representing both sides to obtain the data necessary for the periodical determination of wages. The chief difficulty outstanding at the moment when negotiations were interrupted was an issue of vital principle which, when the crisis actually arrived, proved to be [p. 295] an almost insurmountable obstacle: the question, namely, whether as the owners insisted wages should be settled on a district basis, in strict relation to each area's ability to pay, or whether as the miners contended the whole industry should be treated as a single economic unit, in order that an approximate equality of wages should be established between one district and another.

With the removal of control, the owners found it necessary to issue notices to the workpeople terminating existing wage contracts, and to put forward new wage proposals for each district. These proposals revealed extraordinary variations between the wages payable in different districts if these were to be determined solely by each district's capacity to pay. Over the whole industry there was an increasing monthly deficit, which for March amounted to no less than 5¼ millions ($25,250,000), being the difference between the amount obtained for the commercially disposable coal and the amount expended in wages and other production costs, allowing nothing for owners' profits, nothing for depreciation and renewals, debenture interest, or royalties. The existence of the deficit explains the Government's decision to decontrol the industry earlier than was originally intended; but the deficit itself must be attributed not merely to high production costs, but to the complete collapse of the export coal trade, which reacted with disastrous effect upon the coalfields which are normally the most prosperous in the country, notably South Wales and Northumberland. Thus the mine-workers were confronted with the economic paradox that the proposed wage-reductions were the largest in those districts which were accustomed to high rates.

The loss of the export coal market was unquestionably due mainly to the operation of the Spa Agreement relating to the delivery of German coal to France, Belgium and Italy. Not only did the British coal exporter lose these markets; he found these countries, having more coal than they required, coming into competition with him in other markets; and he had also to face in the Scandinavian and South American markets the competition of the cheap coal exported from the United States. To show that this had become a serious matter it is enough to say that the export of American coal to European markets alone rose from less than half a million tons before the war to over thirteen million tons last year. Against such competition, with high production costs and a decreasing output, the British mining industry has been at a great disadvantage. But high costs of production and restricted output are not to be attributed to slackness and inefficiency on the part of the British mine-worker. The British industry is old. Coal has now to be got at greater depths, it lies farther from the pit bottom, and more men are required to handle it than are engaged in the actual process of cutting it from its bed. In South Wales the piece work coal-hewers, form only 30 per cent. of the workers engaged in and about the mines, and it is probably true to say that there are two men engaged in handling the coal to one hewing it; but the wages of all the men have to be borne upon the ton.

This, summarily stated, is the economic background of the wage-conflict in the British mining industry. The conflict concerns both the amount and the method of determining the mine-workers' wages. Over the whole industry, the owners proposed an average reduction of 5s. 4d. ($1.30) per shift, in order to readjust the industry to the new conditions resulting from the loss of the export trade. But the reductions varied enormously from one coalfield to another: they ranged from a maximum drop in South Wales of 11s. 7¾d. ($2.87) per shift, to 1s. 1¾d. ($0.28) per shift in the Derby, Notts. and Leicester coalfield. This meant that the wages of a large number of mine-workers would be less than those fixed in what are called the "sweated" trades, by the Trade Boards, and less than most agricultural workers were receiving under the determinations of the Agricultural Wages Boards. Having regard to the high level of prices, which stood when the crisis began at 141 per cent. above the level of 1914, the proposed reductions involved a positive degradation in the mine-workers' pre-war standard of life; the real value of the wage offered under these terms to a hewer in South Wales, normally one of the highest paid workers in the industry, was about 25s. a week, to a surface worker in the same coalfield about 18s. or less.

Without hesitation, the Miners' Federation rejected the proposals. They declared that it was impossible to ask the South Wales miner to accept a reduction of nearly 12s. ($2.92) a day, whilst men in other districts doing identical work were required to lose only about a shilling a day; particularly when the South Wales miner during the period of control had been content to accept wage advances considerably below what he would have been entitled to receive under the old sliding-scale scheme which related wages to selling price, in order that the workers in all other coalfields should have the same flat-rate additions to their standard rate whilst the industry was prospering. The Federation contended that as wage-additions, under control, had been made on the flat-rate principle, the necessary reductions to be made when the industry was decontrolled should also be on the flat-rate principle.

What the miners claimed was that the industry should be treated as a single service and that the basis on which wages should be determined should be the capacity of the industry as a whole, not that of individual districts, which may be working coal of poor quality, or which may temporarily have lost a market abroad. District determinations of wages necessarily mean inequalities between men who are [p. 296] doing the same kind of work under practically the same conditions of hardship and risk. The miners, therefore, insisted that wages must be settled nationally, by a National Wages Board; and they proposed the creation of a central fund, or "pool," to be formed by a levy on the tonnage produced in each district, to be used to redress the balance between the earnings of the workers in the various coalfields. Both the purpose of the "pool" and the method of collecting it were misrepresented. The miners did not demand the pooling of all profits, and they have not claimed that there must be an absolute equality of wages between one district and another; fundamentally, what they have been fighting for on the wage aspect of the question is the regulation of all future wage-adjustments on the flat-rate principle throughout the industry. They have not denied the necessity of a fall in wages in this period of abnormal depression; they were prepared to accept a reduction over the whole industry of 2s. ($0.49) a day, which meant a decrease in the total wage bill of thirty millions for the year; they asked the owners to make a similar sacrifice by foregoing their claim to standard profits until the industry recovered, and the surrender of profits, at the rate of 1s. 8d. ($0.41) on the ton would have contributed another 18 millions to meeting the deficit, leaving the Government to find the balance at the rate of another thirty millions for the year.

These proposals manifestly required national machinery for their application. But it was precisely the demand for a national regulation of wages that the owners were resolved to resist. The later negotiations have all revolved around this point of vital principle. Both the Government and the owners have been compelled practically to admit the justice and wisdom of the workers' proposals; the Government has recognized the claims of the industry to the extent of offering a subvention of ten millions and the owners have intimated their readiness to forego their claim to standard profits — in those districts only where the Government would be required to help to maintain wages. But these concessions fall short of what is required. At the time of writing the Federation executive is taking a ballot in the coalfields upon proposals made by the owners which appear from the fragmentary information contained in the cables published in the Canadian press to be merely a modification of their original terms retaining the principle of district settlements. Under the ruling of the miners' president the ballot must yield a majority of two-thirds against these terms if the stoppage is to continue. It is possible that this majority will not be registered, for the miners' organization is bankrupt of funds and most of the district associations are heavily in debt, having borrowed from other unions to pay the allowances, reduced now to fifty per cent, of the usual amount, to the miners and their dependents. There may be an opportunity later to examine in these pages the nature of the settlement under discussion, in regard to its effects upon the wage-system and the permanent organization of the mining industry from the point of view of the workers engaged therein.

Herbert Tracey.