¹ The resources available for development under the German Empire consisted mainly in a food surplus in the East, iron ore in Lorraine, the cheap North-South river transport, and the fuel deposits and timber reserves. The rate of development must be studied as the response of Germans to opportunity set by these resources on the one hand and conditions outside Germany (development of technology, markets, and supplies of materials) on the other. Tlic Ruhr production accounted for 44 per cent of the Reich's coal output in 1871, and rose steadily to 56 per cent in 1903 and 60 per cent in 1913.-Verein fiir die bcrgbaulichcn Intcrcsscn im Dortmund, O.B.B., Die wirtschafrl. Entwiclkelitng des niederrh,-wesrf. Sieinkohlenberghaues (Merlin: J. Springer, 1904), I, 52–54Google Scholar; and Stalislischet Heft (Essen, 1914).

² A trustworthy general description of the geography of the Ruhr area and the characteristics of Ruhr coal is given in Pounds, N. J. G., The Ruhr (Bloomington: Indiana University Press, 1952Google Scholar), chaps. 1, 2, 5. See also Harris, C. D., “The Ruhr Coal-Mining District,” The Geographical Review. XXXVI, No. 2 (1946), 194–221.Google Scholar References to the German sources arc given by Pounds and also in the bibliography of an unpublished doctoral dissertation, “Fuel Supply and Industrial Strength” (Harvard University, 1951Google Scholar) by the present writer. The following discussion draws heavily on this dissertation, cited hereafter as Parker, Fuel Supply; data and further references on most of the subjects treated here are given in this source. The most comprehensive bibliography of the Ruhr literature is that of Corsten, H., Bibliographic des Ruhrgebietet, das Srhrifhimtüer Wirtsclmjt tmd Verwaltttng, 10 parts (Essen, 1941–1944), available in the United States in the Library of Congress and the New York Public LibraryGoogle Scholar.

³ List, F., Über ein sächsisches Eisenbahntystem als Grundlage tines allgemeinen deuttchen Eisenbahnsysums (1843). Besides this famous project, the two volumes of List's Schriften zum Vtrkfhrtwettn (Ust-Gesellschajt edition, Berlin: Hobbing, vol. III, 1939Google Scholar, 1931) contain plans for other rail systems for Germany, France, Hungary, and the United States, with exhortations to all and sundry to build them. On List's estimate of the importance of coal, see ibid., I Teil, 351-53-

⁴ Description of the rings, clubs, and Vereine prior to the formation of the Coal Syndicate is given in the economic volumes of the trade association's great work: bergbaul, Ver. f.d.. Interres-sen. Ilirtschaftl. Entwickelung (Berlin: J. Springer. 1904), II. 87–291Google Scholar.

⁵ The most often cited study in English of the Syndicate, Stockder, F., Regulating an Industry: the Rhcnish-Westphalian Coal Syndicate, 1893-1929 (New York: Columbia University Press, 1932Google Scholar J, is an excellent digest of the several German monographs, mentioned in its Bibliography. A penetrating early study was prepared in 1904 by Francis A. Walker, Monopolistic Combination in the German Coal Mining Industry, for the American Economic Association. See also the discussion in Michels, R. K.. Cartels, Combines, and Trusts in Post-War Germany in Columbia University Studies in History, Economics and Public Law, No. 306 (New York: Columbia University Press. 1928), pp. 67–105Google Scholar.

⁶ The so-called “Hüttenrzechenfrage” is the subject of two monographs: Pilz, A., Die Mitten-zechen/raae im Rtihrbezirl^ und Richtlinien für cine Ernenernng des Rheinisch-Westjalischen Kohlen-Syndikates (Essen: Gluckauf, 1910Google Scholar). also published serially in the magazine Glückauf. and leclesmann, E.Die Organisation des Ruhrbergbaues unter Berücksichtigung der Beziehun-gen znr Eiseninduftrie (Berlin and Leipzig: de Gruzter, 1927). pp. 99–124Google Scholar.

⁷ Reichtgeselzblalt 342 and 1449 (March 23 and August 23. 1419). Of the numerous commentaries on the Kohlcnwirtschajtsgesetz. and studies oi its effects, that of Loose, K., Vorge-schichtt. Gettaltung. und Auswirkjung des Kohlenwirtschajtsgesctzes (Hcinn: 1930), is specially pertinent to the present study. See Parker, Fuel Supply, pp. 115-25, and the references there citedGoogle Scholar.

⁸ Even the judicious, but essentially very favorable, studies of , T. Transfeldt, Die Preisentwicklung der Ruhrkphle, 1893-1925 (Leipzig: 1926), and H. Luthgcn, Das Rheiniseh-Wesljä, lischet Kohlen-Syndi at in der Vorlriegs Kriegs, und Syanegszeil und seine Hauptprohlemc (Leipzig: 1926), put forward no such claim. It seems likely that the Syndicate's policy resisting reparation shipments and deliveries to new customers during the British cual strike in 1926 was directed toward the long-run interests of the coal industry. This, however, is a different matterGoogle Scholar.

⁹ The annual reports (if the Syndicate show a control of between 80 and 90 per cent of the basin's output in the period between 1893 ar"l '9M- The expansion in coal output between these years was about 300 per cent and in coke output about 550 per cent.

¹⁰ The Syndicate did not directly intervene in a company's decisions alxut coking. The existence of a separate coke quota, however, had the effect of controlling quantities of coking coal used for this purpose, where production was fur sale. See Lcdcrmann, Organisation, pp. 124-32. The system described here, however, was much simplified in the Syndicate contracts of 1926 and 1027. The cullrctul Syndicate contracts have brcn published for the years 11893-1931. , Rheinisch-Westfälisches, Kohlcn-Syndikat. Die Syndikatsveräge des Rhcinisch-West-fälisihen Kohlen-Syndiliites (Essen: Cluckliaut, 1933)Google Scholar.

¹¹ Data given in an annual output summary of the mines, Ver. f. d. bergbaul. Interessen, Die Bergtverle und Salincn im niederrheinisch-westfalischen Bergbaubezirk (Essen: Glückauf), have been grouped according to mine ownership.

In these percentages, the quota for sales through the Syndicate and consumption in the owners' works have been combined. The rise in Ruhr steel's percentage came about wholly through a rise in the sales quotas of the steel mills' mines, so that in 192; their sales quotas also exceeded those of the independent mines. Furthermore, a number of mines, nominally independent, may have been under the control of the combines by that time.

¹² The analysis of these years, especially the inflation period, would provide some of the reasons for the growth of the steel combines, and for their investment program in mining and coking; these developments have been treated by Warriner, D., Combines and Rationalisation in Germany, 1924-1928 (London: P.S. King:, 1931Google Scholar), and Bcrkenkopf, P., Die Keuorganisatlon der deutschen Grosseiseniniustrie sett der Währungs-SlabHisierung (Essen: Baedeker, 1928)Google Scholar.

¹³ The coke-pig iron ratio can be varied no more than ± 20 per cent in the short run by changes in the quality of coke and in the iron content of the ore-flux mixture i n the blast furnace change. Such variations arc undesirable, since they may affect the quality of the pig iron. In the long run, changes in the blast furnace construction wil l alter the ratio somewhat. The itecl-cokf ratio may be changed, however, by change-over from converters to open-hearth furnaces and by variation in the scrap-pig iron ratio in the open hearths, that is, by changin g the amoun t of pig iron required per ton of steel.

Some data taken from the records of the Vereinigte Stahlwerke show that in the late 1920's coke formed between 30 and 3s per cent of the cost of pig iron, excluding axes and depreciation from total costs, and using the Syndicate's coke price as a basis of assessing charges.

¹⁴ Some means of manipulation are suggated in Section IV below.

¹⁵ This observation is probably more nearly true for the United States or Britain than for Germany. Developments in underground haulage, in washing, in processing, and in coke byproduct utilization were rather rapid in Germany, especially in the early twentieth century. Nevertheless, the strongest initiative does seem in many instances to have come from entrepreneurs outside the industry: railroad, promoters, shippers, and bankers in the 1850's and 1860's, later from fuel consumers in steel, chemicals, and electricity. On the Special features of German entrepreneurship, see the preliminary suggestions contained in “Entrepreneurial Opportunity and Response in the German Economy,” Explorations in Entrepreneurial Hitlory, October 1954, and the somewhat similar conclusions of Bowen's, Ralph article, “The Rules of Government and Private Enterprise in German Industrial Growth,” The Journal of Economic History, X (1950), 68–81CrossRefGoogle Scholar.

¹⁶ Vcr. f. d. bcrpbaul. Intcrressen, Winschafrl. Enwickelung. II, 238-49. The rise in the coke price in 1900 and 1901 is especially significant.

¹⁷ See Parker, Fuel Supply, Statistical Appendix, Tables C4C. CKt, ami CK2.

¹⁸ The merger of the Gelscnkirehener Bergwerks A. G. in the Vercingte -Stahlwcrke in 1926.

¹⁹ See Parker, Fuel Supply. Appendix 1, based on a collation of official and trade association data.

²⁰ On the situation in the steel industry in the late 1910's, sec the report of the so-called Enquete-Ausschuss, Die denttche eisenerzengende Industrie (Berlin: Mittler, 1930), pp. 11–42, 98-108Google Scholar.

²¹ , Warriner, Combines and Rationalisation, gives a general picture of this movement. The well-known study of the National Industrial Conference Board, Rationalization of German Industry (New York: N.I.C.B., 1931Google Scholar), identifies rationalization with cartelization, but see pp. 1-6 for references on technical aspects of the movement. The dissertation of Morguet, R. M., Rationalisicrtmg im deutschen Steinkphlenbergbau nach dem Kriege bis 1929 (Freiburg, 1936), pp. 64–83Google Scholar, condenses the data for the Ruhr and gives further references.

²² The heat economy of a cokery-steel mill installation has been the subject of careful research, especially by the so-called “Warmestelle” (Energie-und Betriebsu/irtschajtsstelle) of the Verein deutschcr Eisenhiittenlcutc under the direction of the late Dr. Kurt Rummel. See his Anhalts-zahlcn jür die Wärmewirtschaft, insbesondere anf Zisenhiittenwerken (4th ed.; Dusseldorf: Stahl und Eiscn, 1947), pp. 178–91Google Scholar.

²³ The annual reports of this organization, Ruhrgas A. G. (before 1928, A. G. für Kohlenver-weriung), give information on this development, the plans for which are sketched out in the company's published memorandum. Deutsche Grossgasversorgting (Essen, 1927Google Scholar). One dissertation by Runte, T., Die Gasversorgung der Prorinz Westfalen (Essen, 1931Google Scholar) is most useful. Enquete-Ausschuss, Die deutsche Kohlenwirtschaft, pp. 26–60Google Scholar, also describes this development

²⁴ This was true at least of the small coke produced jointly with blast furnace coke and sold largely to households. See , Parker, Fuel Supply, pp. 136–48Google Scholar, 162-88, and the diagrams, showing price and yield data taken from the Syndicate records (Diagrams 4-13 to 4-37).

²⁵ Ibid., pp. 132-33.

²⁶ This can be established from the data on coke output and consumption by the coat-steel combines. Their output in 1929 was 20.8 million tons, of which over 16 million was certainly of blast furnace size; their consumption of blast furnace coke in that year was only 11 million tons, leaving 5 million tons or more in excess of their own requirements. Data on coke consumption are obtainable in official Statistisches Reichsamt data and in the trade association booklet: Statistitchei Jahrbuch für die Eisen-und Stahlindtistrie (Düsseldorf, 1929-1931). See Parker, Fuel Supply. Statistical Appendix, Table C4C. In earlier years, this surplus may have been much smaller, however.—Ibid., Table 4A(s).

²⁷ A careful use of official German rail and waterway transport data yields better results for regional analysis than the data on foreign trade. Total coke shipments from the Ruhr to destinations outside Germany averaged 8 million tons a year in both the 1909-1913 and 1925-1929 periods. The postwar shipments were steadier in volume while the prewar shipments rose from 5.4 million tons in 1909 to 10.4 in 1913.- Ibid., Table 3AO4-17). Blast furnace and small coke are not separated in these data, but records of Syndicate sales in the “competitive market” show that sales of small coke there were negligible. —Ibid., Diagrams 4-39, 4-40.

²⁸ The average yield in Syndicate sales of small coke was over 60 per cent above that for blast furnace coke, and the differential in the accounting prices credited the delivering mines on the Syndicate's books was about 35 per cent. —Ibid., Diagrams 4-17, 4-28.

²⁹ It is not passible here to substantiate these impressions except by genera! references. An inquiry into the financial position of the mines relative to a wage dispute, the so-called “Schmalenbach Report” (Berlin, 1928), after a reasonably impartial questionnaire, concluded that depreciation allowances were too low and stated profit figures too high. The , Enquete-Ausschuss, Die dtutsche Kohlenwirtschajt (Berlin: Mittler, 1929), pp. 125–50Google Scholar, 166-71, points to the conclusion that yields were excessively low. A study by a disciple of Spicthoff, C. Wilhelms, Die Uberzeugung im Ruhrlkohlenbergbau. 1913 bis 1032 (Jena, 1938), based on data of 10 Ruhr mines, is of interest but not conclusive. The League of Nations Economic Committee came to a similar conclusion about the whole European coal industry in a study made in 1929 (League of Nations Publications, II. Economic and Financial. 1929, II, 19. The Problem of the Coal Industry, Geneva, 1929). See also the 1932 report: The Coal Problem (League of Nations Publications, II. Economic and Financial. 1932, II, R 4. Geneva, 1932). Finally, data available in the annual reports of the Mining Division of the Vereinigtc Stahlwerke indicate a low profit figure, which fell with the output expansion between 1927 and 1929. See Parker, Fuel Supply, pp. 195-218, for a full treatment of these data.

³⁰ Rejection of a number of plausible explanations is required to establish the explanation of this behavior in terms of the industry's entrepreneurial structure. Since the central fact is the continued sale of blast furnace coke to foreign steel mills at low prices, several alternative explanations for these exports, which must be rejected, should be examined. These include the following: (a) reparations shipments, (b) degree of co-operation among national groups within International Steel Cartel, (c) possible differences of interest among the combines with respect to fuel output and sales, (d) subsututability of Northern French and Saar coke for Ruhr coke in the French market Examination of relevant material on the first two topics indicates that they had little influence on German behavior in this period. See Marches, H., Le Charbon, element de reparations (Lorient, 1933), pp. 165–85Google Scholar, and Darmonncl (pseud.), L'Offtce del houillierei sinistreet (Paris: Jauve, 1933), pp. 71–73. In 1927 one finds a system of import licensing for German coal established by France and protested by the Coal Syndicate. On the functioning of the International Steel Cartel seeGoogle ScholarHexner, E., The International Steel Cartel (Chapel Hill: University of North Carolina Press, 1943Google Scholar), and Nattan-Larrier, C.. La Production sidhurgique de I'Europe conlinentale et I'entente Internationale de Voder (Paris: A. Rousseau, 1929), PP. 278–316. It is not apparent that the 1927-1930 steel cartel diminished the aggressiveness of the German group, although their interest was mainly directed toward expanding their internal markets. SeeGoogle Scholar, Hexner, International Steel Cartel, pp. 78–79.Google Scholar As among the combines themselves, the assumption of an identity of interest with respect to fuel sales would seem to be essentially accurate. Size yields and quality of coal were certainly similar; concerning cost conditions, no satisfactory statement can be made. The surplus above a combine's own requirements available for sale is the crucial point; on this the relation of a combine's consumption to its sales and coke sales quota in the Syndicate may be taken as a guide. A rough comparison between the Vcreinigte Stahlwerke and the five smaller Ruhr combines is shown by the following data for 1929:

Differences among the five smaller combines (Mannesmann, Hoesch, Krupp, GutehofTnungshutte, Klöckncr) are not much greater than those shown above. All the combines possessed sizable sales and coke sales quotas, and so were interested in the fuel market. This does not explain, however, why such large fuel interests were acquired and whether the combine would not hare been better served with coal and coke holdings that did not involve an expansion in the total output of the region. See Parker, Fuel Supply, Table C3a.

The final point-substitutability of Northern French for Ruhr coke-involves a question of the ability of the Ruhr Syndicate to affect foreign steel producers by raising prices and curtailing coke exports. Detailed treatment of this complex question, which involves the whole structure of the Lorraine-Luxembourg fuel market, is not possible here; in the long run, with expansion of French coal production, development of mine or mill cokeries in France, changes in blast furnace design, and improved mixing of coals for coking, the “dependence” of Lorraine-Luxembourg producers on Ruhr fuel could be diminished. A different export policy in the Ruhr could have set such a train of events in motion; the result of such a challenge to French entrepreneurs might have been ultimately stimulating to French development. Instead. German Syndicate policy not only made coke relatively cheap but fixed a sales price for coking coal that did not encourge foreign cokeries to buy it for coking outside the Ruhr. Such a time horizon, however, was almost certainly not available to the Ruhr steel concerns, and on a short-run basis interruption of coke exports would have seriously upset foreign producers. The continued large coke exports were the result of a large Ruhr coke and gas industry, and that was a situation not intended by anybody but simply the result of the industry's entrepreneurial structure as described in Section IV below.

A fifth objection to this line of argument-that the coke exports were necessary to the steel mills in order to obtain Lorraine ore in exchange-is based on a misconception of the economic interrelations between these two areas and is not borne out by the statistics for this period.

³¹ See the sources referred to above. Notes 5, 6, 7, 8. On the Vereinigte Stahlwerke, see B. Dietrich, Vereinigte Stahlwerke (Berlin, 1930), and on its coal holdings, F. Didier, Die Brteiligung ier Gelsenkirchener Bergwerks Kartell, A.G. an der und Trtisthildnng (Cologne, 1931Google Scholar). and the annual reports of the Abteiluvg Brrghan of the combine.

³² This summary of the Syndicate structure is based on the Syndicate contracts of 1926 and 1927 (R.W.K.S., Syndikau-verträgc) and on descriptions contained in Lüthgen, Das R.W.K.S., Part I, passim.

³³ The coal and coke sales quotas of the whole postwar period were inflated above the mines combined capacity. The percentage of the annual quota on which deliveries were actually called for ran between 50 per cent and 60 per cent during 1925-1929. Parker, Fuel Supply, Diagram 4-3, based on Syndicate data.

³⁴ A good description of the internal accounting practices of the Syndicate is contained in H. Walther, Die Entwicklung des Abrechnungsverlahrens des Rheinisch-Westjalischen Kohlen-Syndikfltes tind seine Preispolitik, (Essen: typewritten, 1933); this work is a Diplomarbeit, available in the Bergbau-Bibliothek in Essen.

³⁵ The noncompetitive area was defined to include Germany west of the Elbe, excluding the North Sea coast where British coal could compete, and including Berlin. Nearly all the sales in the competitive area were exports to Western European countries.

³⁶ This levy was the source of a series of disrupting disputes within the Syndicate. It meant n i effect that mines shipping mainly to the German market were subsidizing the export trade. The attempt to avoid this by splitting the accounts of sales between the two markets and imposing a separate levy on each was made in the contract of 1926, but the administrative difficulties proved impossible. More serious was the dispute over the imposition of the levy on those quantities delivered by the steel mills' mines to the combine's furnaces under the consumption quota. That the mills, after having resisted this steadily up to 1927, agreed to it in the contract of that year, is a puzzling indication of the persistent influence of the mining interests in the Syndicate. Ledcrmann, Organisation, pp. 117-21, 156-63.

³⁷ Table 1 is drawn from the Syndicate contracts, descriptions of the combines organization, the histories of the Syndicate already cited, and the author's own discussions with former Syndicate and combine officials. It is not intended as a detailed and definitive organization plan of this structure but simply as a suggestion of the important elements.

³⁸ After having written this concluding statement, I made the mistake of buying a small book entitled, The Ant World (Penguin Books, 1953), by Derek Wragge Morley, an English “ant man.” On page 161 occurs the following disturbing passage:

The time has come to enter the dangerous realms of ant psychology, to try to draw a rounder and perhaps more definite picture of the mental world in which they live. The adaptability of some ants is remarkable. The dullness, obtuseness, and seeming unchange-ablcncss of the behavior of other ants is, in comparison, equally astonishing. This variability can be seen even within the limits of a single colony. A Chinese student by name of Chen studied the different capabilities of different workers in a colony of Camponotut. The particular species he studied builds its nest in the ground. All of the workers in each colony were capable of digging a nest on their own, but the rate at which they worked differed. Some individuals worked more slowly than others. Some were just bone lazy and did scarcely any work when left to fend for themselves, while others beavcrcd away at a great pace, like a dog searching for a buried bone.

It would appear that, at least for ants, my sentence may overstate my case.