756 KEPORT— 1888. 



§ 5. Economic Theory and the Facts of Trade. — A minimum royalty, such as 

 the above, seems to be discoverable. The materials at my command lead me to 

 suppose that the minimum royalty (the smallest met with in cases sufficiently im- 

 portant to determine the result) is in this country about Ad. a ton for both coal and 

 ironstone. And, although day by day in actual trade, it is not the expenses of 

 production on the worst mines that fix the price, and it is rather prices that deter- 

 mine what mines can continue worldug ; yet, in this way, the expenses of produc- 

 tion on the worst mines which keep goinor become a measure of prices: these 

 expenses include the minimum royalty, and the minimum royalty is thus a factor 

 in price. 



§ 6. EJ^ect of Moyalties on International Competition. — Even Ad. a ton on the 

 raw material will add considerably to the price of a product such as pig-iron — will 

 probably amount to about Is. 8(^. a ton on Cleveland pig. Hence there is groimd for 

 the assertion that royalties put England at a disadvantage in competing with foreign 

 countries. Yet there is a certain illusoriness about the so-called ' no-royalty ' 

 system abroad. It is not true that royalties are entirely absent in the cases of our 

 great competitors, France, Germany, and Spain. (1) In these countries certain 

 dues are paid to the State — almost nominal in Spain, 2 per cent, of gross value of 

 output (of coal) in Germany, 5 per cent, of net produce (coal or ironstone) in 

 France. Further, in certain districts of Germany, old seigneurial rights still exist, 

 and in France a redevance ti-efoncih-e has to be paid to the owner of the surface. 

 In most cases this is of merely nominal amount, but in other cases it is a tonnage 

 I'ent, and, in some districts {e.g. the coal mines in the basin of the Loire), is as 

 much as A^d. to Q^d. a ton. (2) A concession gives absolute ownership to the con- 

 cessionaire, who may, and often does, sublet the working of the muies at a royalty. 

 For instance, the Orconera Co. pays a heavy royalty to the original concessionaire 

 for the famous Bilbao mines. Perhaps this subletting at a royalty is commoner in 

 the case of the richer mines, and does not occur in the poor. If so, English mining 

 industry will be more heavily burdened than continental by the excess of its 

 minimum royalty over the State and other dues paid abroad. Further, it is to be 

 noted that it is not the smaller royalties that account for the recent success of the 

 ■German iron trade, but the discovery of a process of conversion into steel which 

 can be applied to the German iron. 



§ 7. Proposed Reforyns. — -The complete subversion of the present system is some- 

 times proposed. It could be carried out in either of two ways : either by the abohtion 

 of mining rents and royalties, or by their nationalisation. The'latter would enrich the 

 national exchequer without specially affecting mining industry ; the former would 

 reduce prices by the amount of the minimum royalty, and so stimulate demand, and 

 would make a present to existing lessees of the remainder of the royalties they have 

 contracted for. It woidd thus favour the lessees of good mines at the expense 



■of the lessees of poor mines, and lead to a new distribution of trade (remove, for 

 example, the coal trade of Northumberland and Durham to South Wales). For 

 this reason (apart from weightier political objections) such a measure seems un- 



• desirable. The real grievances of our present system rather appear to be in (a) the 

 royalty payment remaining the same while prices fall ; (b) the high certain 

 rents and the limitation of time for working ' shorts ' ; and (c) the tonnage 

 charges made for instroke and outstroke, shaft, and wayleave. In the last class of 

 cases the tonnage principle is out of place. The owner of a way (or of a royalty 

 next to a mine which may not be worked by shaft) has an advantage of position 

 which enables him to obtain a monopoly price. There is no pretence of fairness in 

 the contract which exacts a penny a ton (amounting, in the case referred to, to 

 600^. a year) for leave to draw stone under a field forty yards wide. Considering 

 the national importance of the mining industry, and the way in which it is bur- 

 dened by such charges. Parliamentary interference would seem as allowable here as 

 when it compels the sale of land to a railway company at a valuation. A remedy for 

 the two former grievances might be carried through without afiecting prejudicially 

 the interests of landlords, but it is doubtful whether anything but the coercion of 

 an Act of Parliament will secure its adoption. The reforms in the royalty system 

 which thus seem to be called for would be effected by a law enacting— 



