[Diskussionsbeitrag zum Kohlenbergbau, Bd. I, S. 304, Nr. 15]

Emil Lederer: Intervention on Coal Mining (1920)

This brief official commission speaking turn addresses a proposed system of cost-based pricing in coal mining. Lederer asks a supplementary question rather than presenting a developed alternative. His central concern is whether controlling production costs and adding markups can restrain prices when the pricing rule itself gives producers an interest in raising the costs on which their remuneration depends.

He introduces American wartime industry as a precedent for the proposed arrangement:

Es ist ja bekannt, daß die amerikanische Kriegsindustrie vornehmlich auf dieser Basis gearbeitet hat, wie sie hier vorgeschlagen wird, nämlich auf der Basis einer Kontrolle der Selbstkosten, zu denen Zuschläge gemacht wurden.

English translation: It is well known that American war industry operated primarily on the basis proposed here, namely on the basis of monitoring production costs, to which markups were added.

The comparison supplies a practical objection: according to the reports available to Lederer, this system failed to curb rapidly escalating costs. He carefully distinguishes reported knowledge from conjecture. He assumes, but explicitly does not know, that incentives rewarding lower costs were also employed. His claim is therefore not that every safeguard demonstrably failed, but that the American experience raises doubts about the proposed mechanism.

The intervention culminates in a distinction between exceptional managerial performance and the general incentives created by a pricing system:

Ich meine, es besteht ein starkes Interesse nicht nur einzelner Werke, welche von besonders fähigen Direktoren geleitet werden, sondern allgemein dafür, die Gestehungskosten zu steigern, wenn man in der Preisstellung von den Gestehungskosten abhängig ist.

English translation: I think there is a strong incentive, not merely among individual plants managed by particularly capable directors but generally, to increase production costs when price-setting depends on production costs.

Lederer thus redirects attention from administrative oversight to the economic interests generated by its rules. Cost control may document expenditure without counteracting the incentive to enlarge it. The contribution’s significance lies in this compact institutional critique; it neither establishes the American case in detail nor specifies a replacement pricing scheme.