Wartime controls on coal prices, consumption and profits in the United Kingdom during the First World War (1914-1918)

Source: The British Coal-Mining Industry During the War, Redmayne, 1923.

Sir Richard Redmayne, great grandfather of the actor Eddie Redmayne, held a series of civil service positions during the War including chief inspector of mines, head of the production department and chief technical adviser to the coal controller. After the war, he wrote the definitive history.

“[In 1915] The price of coal (more especially the retail price) had been steadily rising in the large towns, London and the south of England in particular.

London retail prices for best Derbyshire coal

Date                                     Price per ton

16 June 1914                      26 shillings

26 September 1914           27

21 November 1914            28

12 December 1914             29

19 December 1914             30

7 January 1915                   31

28 January 1915                 32

29 January 1915                 33

17 February 1915               35

On 7 June 1915, the Home Secretary at instigation of the President of the Board of Trade requested the Coal-mining Organization Committee to consider desirability of setting a limit on the selling price of coal, and the committee’s favourable report was delivered on 8 July 1915.

On 29 July 1915, the Price of Coal (Limitation) Act became law. Limits applied to prices at the pit mouth. Increases were restricted to no more than 4 shillings per ton above the corresponding price for the corresponding date in the 12 months before 30 June 1914. Other provisions controlled increases in the price of freight. Law remained in effect until the end of March 1921.

In May 1915, the Board of Trade reached voluntary agreement with London retail coal merchants to limit prices, agreeing to a maximum profit margin of 7 shillings and 6 pence per ton to cover their gross expenses, delivery charges and profit. Voluntary arrangement was later extended to some of the larger provincial towns with a letter sent to local authorities detailing the London scheme and inviting them to reach their own local agreements.

Munitions of War Act (1915) permitted the government to fix the “standard amount of profits” for controlled industries. Standard profits were defined as the average of the best of any two of the three preceding financial years, or a 6% return on capital, whichever was higher. Excess profits above this standard amount were taxed at 80% with the company retaining 20%.

In 1916, coal owners argued for a special adjustment to permit returns of up to 12% on capital invested for their industry, and eventually secured a rate of 9 or 10%.

“[Critics argued] the effect of the tax would be to discourage development out of revenue. … But on the other side, it must be observed, the times were abnormal; the effect of the War was to put some branches of industry in a peculiarly profitable position, a fact which was likely to conduce to a state of industrial unrest, and it was unfair to the public generally that any branch of industry should be able to make great profits out of the special circumstances created by the War. On looking back, however, in the light of experience gained from subsequent events, it appears doubtful whether, at any rate in regard to certain branches of industry, of which mining is essentially one, it would not have been more politic to have recovered the excess of earnings by way of individual income tax, for though the national exchequer would probably at the time have suffered somewhat in respect of receipts it would have ultimately reaped a richer harvest due to the better maintenance of the industry. Of course there had to be taken into consideration the unsettling effect on the employees if unrestricted profits were permitted to the owners; but, as we now know, considerable unrest did exist even under the revised conditions, and at the time of writing many of the colliery owners are ‘high and dry’ for lack of capital, trade is stagnant, and wages falling.”

In 1916, the Coal-mining Organization Committee drafted a series of ‘Hints to Householders’ on how to economise on the use of coal at home. A million copies were printed by the Parliamentary War Savings Committee in the form of a leaflet but with doubtful effectiveness. “General self-denial in the unnecessary use of coal, as in respect of other forms of self-indulgence, is rarely secured by preaching only.”

On 10 August 1917, the Household Coal Distribution Order (1917) was issued under the Defence of the Realm Regulations. Coal rationing was initially applied only to the Metropolitan Police District of London. The order had three purposes: (1) establish minimum reserve stocks; (2): prioritise distribution in case of shortages for smaller coal consumers; (3) restrict coal consumption in excess of normal average requirements for homes of different sizes. The order set coal allowances for houses, flats and tenements according to the number of rooms they contained and time of year (October-March and April-September).

In August 1918, the restrictions were extended throughout England and Wales through the Household Fuel and Lighting Order (1918). In September, the restrictions were applied to Scotland, starting from October 1918.

The metropolitan order was intended to regulate distribution rather than reduce consumption. Allowances were based on surveys of coal merchants and households. But the nationwide orders of the following year were intended to cope with an expected shortfall in the volume of coal available equal to around 25% of pre-war consumption. The scale of allowances was reduced but targeting the larger consumers.

“Curiously enough, the provision of an allowance for poorer consumers of 2 cwt per week resulted in an increase in the quantity of coal consumed by the working classes. There is no doubt that before the War, the working classes could not in many instances afford a reasonable allowance of coal, and could not obtain it even if they could afford it, but with the inauguration of the control and the general rise in the level of wages of work-people, the working classes were able to demand the coal which the Controller attributed to them. The total demand for coal was not therefore reduced so much as might have been expected with the introduction of the rationing scheme.

The Wholesale and Retail Coal Prices Order (1917) issued in September 1917 cancelled all existing contracts for inland coal consumption and established new allowances for selling prices based on a fixed margin over costs. In the case of retailers, the margin for net profit was fixed at 1 shilling per ton.

In the summer of 1917, the government’s coal controller intensified a public relations fuel economy campaign. “The proposals were largely in the nature of pious opinions, and the advice given might or might not be followed. The proposals were in the nature of war measures and necessarily temporary in character. … Schemes of coal rationing are prompted not so much from the motives of preventing extravagance as for the purposes of sustaining supplies for small consumers. In other words, the supply for domestic consumption was limited, and the coal scheme sought to make the supply go round so that everyone might have a fair share.”

The fuel economy campaign was intensified in 1918 when the government urged consumers to switch from coal to wood where possible. The Board of Trade wrote to churches pointing out the serious shortage of coal and suggesting church services be held in daylight.

In June 1918, pit mouth coal prices were raised under the Price of Coal (Limitation) Act of 1915 by increasing the fixed margin over pre-war prices from 4 shillings to 6 or 9 shillings depending on the area. By another order issued in July 1918, wholesale and retail prices were increased by 1 shilling and 6 pence for all domestic consumption.

“The threatened coal famine was averted, though in August [1918] the situation was so grave that the government decided to recall some miners from the [armed services] to work in the collieries.  .. The signing of the Armistice eased the position, enabling as it did, in a very short time a still further number of miners