Coming back to the royalty-owner, you will see his functions are not
very onerous. He signs receipts for his royalties and occasionally
negotiates the terms of a lease. But as regards the coal-mining
industry, he "toils not, neither does he spin." I do not say that
reproachfully, for he (and his number has been estimated at 4000) is
doubtless a good husband, a kind father, a busy man, and a good citizen.
But as regards this industry he performs no essential function beyond
allowing the colliery-owners to mine his coal.
What is the total amount annually paid in coal royalties? We can arrive
at an approximate estimate in this way: Average output of coal for five
years before the war, roughly, 270,000,000 tons; average royalty, 51/2d.
per ton, which means, after deducting coal for colliery consumption and
the mineral rights duty paid to the State by the royalty-owner, roughly
£5,500,000 per annum paid in coal royalties. Regarding this as an
annuity, the capital value is 70 millions sterling if we allow a
purchaser 8 per cent. on his money (12.5 years' purchase), or 551/2
millions sterling if we allow him 10 per cent. (10 years' purchase). For
all practical purposes the annuity may be regarded as perpetual.
Now the State must acquire these royalties. That is the only practicable
solution, and a condition precedent to any modification in the structure
of the coal-mining industry so long as the participants in that industry
continue unwilling or unable to agree upon those modifications
themselves. _Why and how?_ (1) First and foremost because until then the
State is not master in its own house, and cannot make those experiments
in modifying conditions in the industry which I believe to be essential
to bring it into a healthy condition instead of being a standing menace
to the equilibrium of the State--as it was before the war, and during
the war, and has been since the war; (2) the technical difficulties and
obstacles resulting from the ownership of the minerals being in the
hands of several thousand private landowners and preventing the economic
working of coal are enormous. You will find abundant evidence of this
second statement in the testimony given by Sir Richard Redmayne and the
late Mr. James Gemmell and others before the Sankey Commission in 1919.
How is the State to acquire them? Not piece-meal, but once and for all
in one final settlement, by an Act of Parliament providing adequate
compensation in the form of State securities. The assessment of the
compensation is largely a technical problem, and there is nothing
insuperable about it. It is being done every day for the purpose of
death duties, transfer on sale, etc. Supposing, for the sake of
argument, 551/2 millions sterling is the total capital value of the
royalties, an ingenious method which has been recommended is to set
aside that sum not in cash but in bonds and appoint a tribunal to divide
it equitably amongst all the mineral-owners. That is called "throwing
the bun to the bears." The State then knows its total commitments, is
not involved in interminable arbitrations, and can get on with what lies
ahead at once, leaving the claimants to fight out the compensation
amongst themselves. This does not mean that the State will have to find
551/2 millions sterling in cash. It means this, in the words of Sir
Richard Redmayne: "The State would in effect say to each owner of a
mineral tract: The value of your property to a purchaser is in present
money £x, and you are required to lend to the State the amount of this
purchase price at, say, 5 per cent. per annum, in exchange for which you
will receive bonds bearing interest at that rate in perpetuity, which
bonds you can sell whenever you like."
The minerals or royalties being acquired by the State, what then? For
the first time the State would be placed in a strategic position for
the control and development of this great national asset. Having
acquired the minerals and issued bonds to compensate the former owners,
the State enters into the receipt of the royalty payments, and these
payments will be kept alive. We must now decide between at least two
courses: (_a_) Is the State to do nothing more and merely wait for
existing leases to expire and fall in, and then attach any new
conditions it may consider necessary upon receiving applications for
renewals? Or (_b_) is the State to be empowered by Parliament to
determine the existing leases at any time and so accelerate the time
when it can attach new conditions, make certain re-grouping of mines,
etc.? My answer is that the latter course (_b_) must be adopted. The
same Act of Parliament which vests the coal and the royalties in the
State, or another Act passed at the same time, should give the State
power to determine the then existing leases if and when it chooses,
subject to just compensation for disturbance in the event of the
existing lessees refusing to take a fresh lease.
Why is course (_b_) recommended? (i) Most leases are granted for terms
varying from thirty to sixty years. They are falling in year by year,
but we cannot afford to wait until they have all fallen in if we are
effectively to deal with a pressing problem. (ii) The second objection
to merely waiting is that some colliery-owners (not many) might make up
their minds not to apply for a renewal of their leases, and might
consequently be tempted to neglect the necessary development and
maintenance work, over-concentrating on output, and thus allowing the
colliery to get into a backward state from which it would cost much time
and money to recover it--a state of affairs which could and would be
provided against in future leases, but which the framers of existing
leases may not have visualised. I do not suggest that upon the
acquisition by the State of the minerals all the existing leases should
automatically determine. But the State should have power to determine
them on payment of compensation for disturbance.