A Few Little Sins

For a country that likes to think of itself as Europe's citadel of unfettered free enterprise and trade liberalism, West Germany has been acting mighty odd. In the latest of a series of attempts to set prices and regulate trade, roly-poly Economics Minister Ludwig Erhard last week announced a stiff tax on fuel oil: $7.14 per metric ton (about $1 per bbl.). The punitive tax, which Erhard himself describes as a "sin" against his free-market theories, is designed to discourage the use of oil, thus ease Germany's steadily mounting coal surplus of 17 million tons.

The tax will replace another government attempt to reduce oil use by setting up an oil cartel. Under the cartel, which Erhard also admitted was one of his little sins, major oil companies last December were pressured by Bonn to fix prices at $22 per metric ton (about $3 per bbl.) and not to advertise. But cheaper oil flooded in from neighboring nations and Iron Curtain lands. Small, noncartel companies cut oil prices as low as $15 per ton, tripled their market share to 25%. Last week giant Esso A.G., a subsidiary of Standard Oil Co. (New Jersey), alarmed because its share of the market had dropped from 35% to 25%, stomped out of the cartel rig; out followed Shell, Mobil Oil, British Petroleum.

Other German attempts to prop coal have also flopped. Last February Bonn put a $4.76-per-ton tariff on all coal imports exceeding 5,000,000 tons a year, mostly from the U.S. That only irritated U.S. producers. The tariff halved imports from the U.S. to 3,100,000 tons in the first six months of 1959, but German surpluses went up by almost 5,000,000 tons.

To free enterprisers, the obvious solution would be to unshackle the fuel market. That would probably cut production of the uneconomic coal industry, rather than the fast-growing, efficient oil industry. West German miners dig only two tons a day (v. twelve tons for a U.S. miner), and domestic coal still sells in German port cities for $4.75 a ton more than U.S. coal, despite the tariff. West German coal production of 132 million tons a year far exceeds its needs, and its exports are heading down because surpluses in France run to 11,100,000 tons, in Belgium to 7,900,000 tons.

But Bonn is committed to preserve the jobs of most of West Germany's 306,000 coal miners, fears the power at the polls of the 600,000-member union of coal, iron-ore and potash miners. This makes little sense to German economists, who point out that the booming country has a labor shortage in many other industries, now has only 215,000 unemployed, fewer than ever before.

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