Headache of the Week

Business headache of the week was the soft-coal strike, with 400,000 miners still idle and negotiations snarled at week's end over removing the 40-c- wage differential in Southern fields. Coal carloadings dropped to 58,841 for the first week of April (41,785 below the same week in 1940) then skidded to 31,592 the next week, to an estimated 28,000 last week. When the strike began there was enough coal above ground to supply the U.S. for 36-38 days. By this week some industries were only a matter of hours from the end of their stockpiles.

Behind the wage-differential dispute was the Southern operators' contention that without it they could not compete with Northern coal, mined closer to the nation's great industrial markets. For years Southern operators have fought for lower freight rates, protested that they suffer from unfair freight differentials. Last year they maintained that freight differentials discriminated against them, tried unsuccessfully to have ICC cut Chesapeake & Ohio's rate 50%. Railroad executives answer that mile for mile the Southern mines enjoy the lowest freight tariffs in the world. But the fact remains that the cost averages 35-c- a ton more to move coal to tidewater and Great Lakes regions from Virginia, eastern Kentucky and northern Tennessee than from western Pennsylvania and Ohio. The rail-and-water rate from the South to New York Harbor is $3.08; from Pennsylvania $2.70.

Present differentials have remained almost constant since 1920, when the railroads were allowed increased rates following World War I's Government control. Tariffs in the Northeast were upped 40%, those in the South 25%. This 15% difference improved the competitive position of Southern mines and played a large part in stimulating Southern mining.

Southern mines, being newer, are easier to work, have more mechanized equipment. Production costs (60% labor) in the Virginia, eastern Kentucky, northern Tennessee region are $2.03 a ton to bring coal to the mine mouth, compared to $2.21 in western Pennsylvania. This Southern area, which produced 21.1% of the nation's coal in 1923, upped that figure to 31.01% last year; central and western Pennsylvania dropped from 31.08% to 26.54% in the same period. But freight rates ordinarily add 100% or more to the mine-mouth price of coal, and Southern mine operators insist that so long as they have to pay more freight they must pay less wages. Last week President Roosevelt indicated that the whole question of freight rates in the South might be reopened: he told a press conference that ICC was looking into the matter.

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