Emil Lederer: Discussion Contribution on Coal Mining (1920)

This recorded speaking turn, published in volume II of the coal-mining commission proceedings, pp. 592–597, presents Lederer’s defense of the first Socialization Commission’s majority proposal and his criticism of the alternative associated with Rathenau. Its central distinction is between regulating private enterprise and transferring productive property to the community. Lederer argues that effective socialization requires the latter, while remaining compatible with professional management, monetary accounting, and trade within a predominantly capitalist economy. The contribution moves from institutional objections through the economic meaning of socialization to a substantial, explicitly personal proposal for compensating dispossessed owners.

Lederer first challenges the analogy between the proposed Reich Coal Council and a municipal assembly whose members vote mechanically along party lines. Coal-industry participants would bring both expertise and direct involvement: their livelihoods connect them to the decisions under discussion. Such a council should therefore possess at least the competence and engagement of a cartel, without making private interests its primary purpose. This claim depends on expropriation preceding the new organization:

Namentlich fällt der Interessengegensatz zwischen Kapital und Lohnarbeit weg.

English translation: In particular, the conflict of interests between capital and wage labour disappears.

The sentence expresses an institutional premise, not simply a hope for cooperation. Public ownership would remove the capital–labour antagonism that otherwise structures representation. Lederer likewise rejects the objection that a directorate accountable to the council would lack executive authority. Successful management could draw support from both the council and the wider public. Socialized administration must still demonstrate economic success; accountability need not prevent decisive leadership.

His next move separates the outward forms of capitalist business from their economic function. Retaining wages does not, he argues, invalidate socialization. Wages can become an accounting device specifying workers’ shares of the social product at a given price level, rather than evidence that production remains directed toward private profit. Their continuation also accommodates relations with unsocialized industries and the world economy. State authority over coal prices is similarly a transitional arrangement; eventually, price decisions would belong to the central body directing the national economy.

Against Rathenau’s distinction between socializing economic relations and leaving technical operations intact, Lederer insists that any consequential reorganization must affect production itself. The alternative does not sufficiently alter entrepreneurial power. Prewar coal syndicates already constrained individual owners and rewarded lower operating costs with higher profits; extending syndicate organization therefore cannot by itself establish a new property regime. Owners, including passive investors, would continue receiving gains from favourable market conditions. Lederer condenses the disagreement into a contrast between supervision and ownership:

Letzten Endes reduziert sich die Gegensätzlichkeit der Anschauungen immer darauf, daß die Vertreter des Systems Rathenau mit einer Kontrolle auskommen zu können glauben, während wir der Ansicht sind, daß eine zweckmäßige gemeinwirtschaftliche, wirksame Neuorganisation des Kohlenbergbaues die Überführung des Eigentums an den Produktionsmitteln in der Hand der Allgemeinheit zur Voraussetzung hat.

English translation: Ultimately, the opposition between the views always comes down to this: the representatives of Rathenau’s system believe they can manage with supervision, whereas we hold that a purposeful and effective reorganization of coal mining in the common economic interest presupposes transferring ownership of the means of production into the hands of the community.

Technical rationalization would encounter resistance wherever private interests expected injury, whether justified or not. Mere supervision could restrain entrepreneurial initiative without giving public authorities effective control. The resulting dual administration would add costs and produce mutual paralysis. Lederer’s pointed preference for unrestricted private capitalism over this ineffective overorganization underscores that regulation is not necessarily progress toward socialization.

He also rejects the claim that one industry cannot be socialized within a capitalist economy. The proposed directorate would conduct business through existing market forms, rather than operate as a bureaucracy capable only of simple tasks. Coal’s principal difficulties are technical more than commercial, and technical progress no longer rests primarily on competition or private acquisitiveness. Dependence on foreign credit might create transitional problems elsewhere, but Lederer considers this objection inapplicable to coal. His argument thus combines a decisive change in ownership with continuity in commercial procedures.

The final section addresses monetary instability and compensation, qualifying his endorsement of the majority report. Currency depreciation and exchange-rate fluctuations have changed the problem since that report was prepared. Lederer carefully distinguishes this extension from the collective position:

Ich möchte nebenbei betonen, daß diese Ausführungen über die Entschädigungsfrage zunächst meine persönlichen Gedanken zum Ausdruck bringen. Ich hatte noch keine Gelegenheit, mit den anderen Herren darüber zu sprechen.

English translation: I would like to emphasize in passing that these remarks on the question of compensation express, for now, my personal thoughts. I have not yet had an opportunity to discuss them with the other gentlemen.

Fair compensation should approximate what an owner could obtain through a normal sale. A stock-market valuation alone is unreliable: anticipated expropriation might drive prices upward, whereas an earlier reference date might neglect depreciation. Historical investment costs would undervalue the mines, while replacement costs would overvalue them. Lederer instead proposes averaging two components: mean book values from balance sheets dated 1 January 1919 and 1 January 1920, and twelve and a half times average earnings over the last seven peacetime years, excluding the best and worst. Recent investments would receive additional consideration, with expert valuation where their operational worth exceeded book value.

He then offers two possible adjustments for monetary depreciation. An index multiplier should reflect costs as well as selling prices; a common multiplier could partly equalize differential rents. Alternatively, former owners could receive a temporary extraction royalty linked to industry-wide surpluses, retaining an incentive for active participants to continue working. This could be sharpened at establishment level:

Um diesen Anreiz zu steigern, wäre es durchaus möglich, diesen Förderzins auf die in den einzelnen Werken erzielten Überschüsse abzustellen.

English translation: To increase this incentive, it would certainly be possible to base this extraction royalty on the surpluses achieved at the individual mines.

Substantial price movements could trigger adjustments, but not when they resulted from coal-price policy pursued for broader economic purposes. Compensation capital would take the form of 4 percent amortizing bonds, with any supplementary annuity paid in cash. The contribution’s significance lies in joining public ownership to practical questions of governance, valuation, and incentives: Lederer treats these as conditions of workable socialization, not substitutes for changing who owns production.