Evening Post. THURSDAY, DECEMBER 19, 1929. FOSTERING THE UNFIT

Evening Post, Volume CVIII, Issue 148, 19 December 1929, Page 8

Evening Post. THURSDAY, DECEMBER 19, 1929. FOSTERING THE UNFIT

I" In matters of British coal production one of the best-informed members of the House of Commons, and one of the most judicially minded, is Sir Herbert Samuel, who has taken i a prominent part in at least one postwar investigation of cdal-mining and markets. Of the Labour Government's Coal-mines Bill he says:

The_ .Bill creates vested interests in small inefficient mines and taxes Britain in coal prices for the benefit of foreigners.

Not having a copy of the Bill, one turns to the Ministerial statements to find on what facts this charge is based. A reference to to-day's cablegrams will show that according to the President of the Board of Trade Mr. William Graham, (1) the Bill will set up a national board representing the owners of Britain's coalmines; (2) the board will estimate the amount of coal that can be sold over a given period "at a remunerative level"; (3) the board will then allocate to each coal-mining district a definite share of coal production; (4) the allocation will be based proportionately on the district's present share in coal production. In interpreting this part of the Bill some departure has been made, in the interests of clarity, from the cabled report of Mr. Graham's remarks, but the fairness of the paraphrase will hardly be disputed. Other points in the Bill, according to the same authority, are (5) the national board may make a levy on coal-mine owners to facilitate the sale of coal for export, and (6) ihe British coal industry must be enabled to sell abroad at the world price. N0..6 is "the object"of No. 5. And yet Mr. Graham maintains that it is not proposed to "subsidise coal in the ordinary sense." As to the levy part of the scheme, consider now what Professor Giblin has said of the Australian butter levy under the Paterson Plan. There is a levy of some pence per lb on all Australian butter in order to provide a bonus of some pence per lb on the exported portion of ajl Australia's butter. The Government has no direct hand in this levy, which is fixed and collected by the Australian butter industry; thus the levy is made "indirectly and at the expense of the Australian consumer," whose i burden is convincingly shown by the disparity of prices of Australian butter in Sydney and in London. Professor Giblin points out that if marginal producers in the butter industry (those butter producers whose costs are high, probably through inefficiency, and who must sell high in order to survive) were allowed to drop out, or if production were confined to "those districts with natural advantages," the remaining producers could live on a lower oversea price; but the loss through fostering the marginal farmer (or the marginal mine) tends to grow:

The export bounty of 3d per lb on butter could be raised to 4d, sd, or Gd, ■with corresponding increases in the cost of the exports to the Australian consumer. There is always a temptation to do so. Wherever the average price is "stabilised," there will, always be a considerable number of marginal producers -who cannot make the industry pa}', and who will bo clamant for a higher bounty.

Also, the temptation will be (although Professor Giblin does not make this point) to raise the bounty to a figure beyond the point at which the industry is. prepared to make levy on the home consumer, whereupon the Government will be asked to shoulder part or whole of the burden at the expense of the taxpayer Jjust as the British taxpayer's share in contributory unemployment insurance is now being raised by another Labour Bill). It would seem that in principle there is no difference between the Paterson Plan levy to subsidise butter export and the Coal-mines Bill levy to subsidise coal export. The only question is what will be the amount of the British levy, how will it be- spent, and what will be the actual disparity between the price paid by the user of export coal and the price paid by the user of home-sold coal.

Mr. Graham, in his reply, so far as it has been cabled at time of writing, does not say that there will be no disparity of price in favour of the oversea user of the, ''facilitated" British export coal. What he says is that if it were true that the home price of coal would be raised by 4s to 5s a ton, the Government should be driven from office. The incompleteness of the disclaimer is obvious. The Bill, Mr. Graham said in his reply, seeks to enable the British I coal exporter "to compete with the

European price." If the exporter is to be enabled by a levy at home to reach down to a lower oversea price, must not the home price come up? It is by arguing along this and parallel lines that a judicial critic like Sir Herbert Samuel has been forced to conclude that the Bill "taxes Britain in coal for the benefit of foreigners." Such conclusion is hard to avoid. Then the allocation system, preserving to each district its present share of coal production, surely tends to insure the marginals; or, as Sir Herbert puts it, "creates vested interests in small inefficient mines." His remedy is the reverse—to reconstruct the coal-mining industry "with a view to reducing the number of producing units." The Conservative spokesman's points were that the Bill is an inducement to coalmining to raise prices without needed self-reform and without safeguard to the consumer.

It is to be hoped that Mr. Graham has a better reply than he has given in the speech under review; and that the British colliery industry will study the parallel of the Palerson Plan, and will note what has happened to New South Wales coal-min-ing through the inflation resultant from successive compromises between colliery owners, their employees, and Labour Governments. Postponement of deflation on the northern coalfields of New South Wales has !led to fatal shots, and may yet lead to a clash of Governments. If the British Coal-mines Bill is open to even half the indictment laid by Sir j Herbert Samuel, where stands a freetrader like Mr. Philip Snowden, and why should a cosWaising import duty be bad if a price-raising export bounty is good?