LORRAINE IRONFIELDS

Dominion, Volume 14, Issue 300, 13 September 1921, Page 9

LORRAINE IRONFIELDS

FRANCE’S DISILLUSIONMENT . OBJECTION TO REMOVAL OF SANCTIONS When France acquired by the Treaty of Versailles tho rich ironflelds of Lorraine and its associated steel industry* together with the ownership of the Saatt coalfield and the power, if not, indeed, the right, to incorporate the Saar for 15 years into her economic system, it was not unnatural or apparently over-sanguine for many'Frenchmen to entertain dreams of a France so profiting by this treasure as to inherit Germany's succession as the chief industrial Power in Europe, eays a correspondent of the ''Manchester Guardian," writing from Rhineland on July 22. Events have proved the dream ,to be nq more than a dream. Tho rearrangement of the frontiers has done irremediable economic damage to the territories acquired by France. In this fact and the French disillusionment and French attempts to remedy the irremediable lies the key to much that would otherwise be unintelligible in French policy. i Before the war the minette ore field of German Lorraine, Luxemburg, and French Lorraine was, outside America, the most productive iron region in the world. Minetto is a low-grade ore, yielding a posphorio pig-iron that has to bo dealt with by the Thomas process. It requires huge blast furnaces,, requiring in their turn, from the weight of, the charge, a coke of exceptional hardness which can

only be'supplied by coal from tho Ruhr. Saar coal is quite unsuited to the purpose. In 1913 Herman Lorraine produced gome 14 million tons of ore; Luxemburg, which was then in the German economic i orbit, another 7.8 millions, French Lorraine produced from' 12 to 15 million tons of a slightly better minette, very ' largely for German consumption. The total approached 40 million tons. Some five or six million tons were carried down the Rhine to Westphalia; some four or five million tons to Belgium. But the bulk of it was converted on Hie spot into phosphoric pig-iron, and although German policy for strategic reasons very largely favoured the further conversion of the pig into steel in Westphalia rather /than fn Lorraine, too close to an exposed frontier, nevertheless there were great German steel , works in Lorraine, including some of the most modern and scien-tifically-equipped in the world. It should be added that the German-owned works In Luxemburg and German Lorraine were big purchasers of French oto ns well as their own. Germany’s production of steel, which put her second in the world only to tho United States—it was nearly twice as great as that of England, which held the Ithird position—was 'based principally, though not entirely, on thia minette field, for sho also imported from Sweden and Spain. Why Production Has Shrunk. Sfnce Lorraine reverted to France, production has slowed down almost incredibly. Its iron and steel production Is between a quarter and a third of what it wfts in 1913. Only a small proportion of the blast-furnaces remain actually in blast. / Only | an engineer, perhaps, Can fully realise what that means. As for the Steel Works which have been acquired by French interests, it is rumoured that these interests are endeavouring df not actually to soil them book to the Germans at least to secure co-operation. All are being run at a loss. What is the explanation? Apart from the’ transfer of sovereignty and the actual inter-position of a frontier, there is one special reason. Tile overlooking of this reason was the root . fallacy , of the . economists of • the Paris Conference, iron ore in itself, without an effective market for the iron contained in it, amounts to very little. Pigs of iron or even steel billets are nothing in themselves unless there is a,vast and complex industry already in ’’existence for working up the steel into machinery, and upon that again and intermixed with it a general industry that requires and sustains the engineering industries that employ the steel. The economic

chain, in short, is something like the » story of the house that Jack built; France simply haa not got that elaborate steel-using industry; in other words*the market. Nor ‘can she' build it up in a day or even in ono or two generations, whereas the Gorman capacity for working up steel into its innumerable finish-

ed products remains unimpaired. ! | Thanks to her cheap labour, now the cheapest highly-skilled labour in tho world, but still mdro to the superb training, .knowledge, and ability of her engineers, the excellence of her technical schools and laboratories, and her extremely efficient" factory and power plants, Germany remains, and will still remain, the workshop of this continent. Tho lesson is being brought home that skilled workmen, (skilled brains, education, and tho special industrial i temperament uro even more valuable assets than simplo natural resources. The French cannot even run the equipments they have taken over. Now this complex industry, the intricacy of processes by which the steel is Worked up, was not to any considerable extent conducted in the territories ceded to France by the Peace Treaty. Lorraine has lost Its market. ' There is another fact that weighs) upon the French mind. Even as it is the Lorraine iron and, steel industry is being kept alive on coke from the Ruhr delivered under 'the provisions of , the Peace Treaty. For seven to ten years to come Germany .will be under thjs obligation to deliver- coal and coke from

the Ruhr.' After that these deliveries will cease. When that takes place the < position in Lorraine may, well become . catastrophic, l the more so as, even though the French have a very large coalfield near at hand in tho Saar Valley, this Saar coal will not yield a coke sufficiently hard and dense for use in the very; big blast-furnaces of tho Lorraine district. The reports that appear from time to time in tho French Press of the discovery by French scientists or engineers of pew methods of obtaining a coke from Saar coal equivalent in hardness to thjit from Ruhr coal may bo dismissed as mere "stunt'” journalism. From an engineering point of view these re. ports are meaningless. Germany Importing Other Ore*. Besides the loss of the German steel market and the dependence upon German coke, there is a third factor. The great advantage of Lorraine minette ore was its cheapness. This, by the way, was largely ovzing to the German employment before the war of cheap Italian labour at something equivalent to what would be now three to throe and a half francs a day. Wages at the present moment in the ore mines is 15 francs a day or more, and tho repercussion upon the price of minette, more particularly upon the German market, where the adverse rate of exchange has to be taken into account, has been so great as to make it no longer as attractive to tho German steelmaker as it used to be. In fact with present freight rates, it is on the whole more profitable to import and treat Spanish ore.

Steel is the tissuo and substance of modern industry. German steel production Irefore the war was, roughly, 19 million tons a year. To-day, mainly as the result of the loss of Lorraine, it has fallen to about seven million tons. Yet it can probably be brought up again to, say, 14 or 15 million tons either by purchaseing pig-iron from France or importing foreign ores. Now German ore fields are beginning to bo exploited. Many inter-

eats driven out of Lorraine, such as the Lothringen Hutton Verein. Boechling, Rhombacher Hutte, the Spater group, have re-established themselves in Germany proper by tho purchase of coir cerns, and are expending enormous sums of money, being in turn largely compensated by the Reich. It is also reported that they are acquiring, through intermediaries. mining properties in Spain, which ore now to bo had for a more song, and also in the Spanish zone of Morocco; countries where labour is plentiful and cheap. At any rate, the iron and steel industry of Rhenish Wtestphalia is becoming more and more independent of minette ore, and is nt this moment favouring tho Import of Spanish cres, which have the advantage of requiring very iriuch lees fuel than minette —an important consideration in these days, when the conditions of German fuel supply are 'critical. Swedish ore is also arriving through a community of interests between certain German and Swedish groups, though it is unlikely that the demand for Swedish ore will be as great as before the steel from it having been used almost exclusively for gun-making and 1 armaments. For general steel-making purposes this ore is too expensive.

A British Expert's Gloomy View. What will come out of all this? That the French interests concerned will try to como into contact with the Germans may be assumed.' Many observers declare that They have been actually in contact already for a long time past, and that much of the talk about the reparation problem has, in fact, been concerned with this more actual one of reviving the steel industry both of Lorraine andl faf Germany in its interconnected stages. As an illustration of what is being thought I may here quote almost verbatim the gloomy views of a well-informed British engineering expert whom I have by chance encountered in this region. I give it with a proviso against, first, its angle of view, and secondly, its excessive pessimism: "Tho great danger which threatens British industrial supremacy is the possibility of French and German interests combining, ostensibly with a view to facilitating a solution of the reparations problem, but really to dominate economically the whole continent of Europe. The French are buying German industrial securities ota. a very large scale. Tho French banks which, as you know, act as 'share-pushere,' are advising their clients to buy shares such ns Harpen, Gelsenkirchen, and other wellknown features in the German stock markets. In the gamble at present in progress on the Berlin Stock Exchange French banks and speculators are said to have a hand. The great prize far which Germany-is lying in wait is thj reconstruction of Russia. Plans of action are being carefully workeel out and may como into operation, maybe, in. a couple of years’ time.’ After a somewhat exaggerated reference to the personality, influence, and activities of Stinnes, this engineer emphatically declared: "Germany to-day i» not being run by ’he Berlin Government, but by the 'big interests, who have matters in their hands so completejv as to reduce the Government to tual impotence.” And he continued'. "German capitalists are, on the whole, favourable to an 5 understanding with us whereby Great Britain would do tho financing and, Germany the work. But the Germans have received so many re buffs of late and have been let d,°wn hv frequently by us that they are gradually veering round to the idea that, after it>. their fiercest andlmost relentless enemy is tho French, andl that if they are w expect any real relief it is to them that they‘must turn." . • t u Since Btr. Rathenau first met M. Louoheur in Wiesbaden last month (June) a new atmosphere had come into existence between the French capitalist represented by M. Loucheur and the Germans. "In fact, some French politicians now go so far as to declare that ’the reparations problem can only Iw solved satisfactorily by Franco establishing an economic tutelage over Germany —whatever that may mean--' and this m reason why the French refuse even to discuss the question of removing the Sanctions— why, on ttho contrary., they are determined to maintain them at any cost and however serious their insistence may be to tho stability of the Entente as a whole These Sanctions will lie changed and modified to suit tho circumstances. They will undergo modi, fications, perhaps, but tho aim will never be lost sight ot-namely, to secure that economic ascendancy over Germany which the more ambitious elements in Fran'ce have in contemplation This policy is deliberately aimed at British and American interests, and has as its ultimate objective the securing of the whole continent of Europe, including Russia, as their market.” . , „ Against this view it might bo well urged that another possible issue mlgnt be rather a German economic ascendancy over Franco. But that it represents fairly accurately a certain French trend is more than probable.