Defense Activity and Coke Prices

Abstract

The coke industry presents some interesting economic considerations at the present time because of the importance of the industry to national defense (through the iron and steel industry) and because of the problems connected with expanding production. Involved in these problems is the ubiquitous one of price control. A survey of developments in the coke industry since 1938 is a case study in industrial change in wartime and in government influence on price, cost and output. The coke industry is a striking example of technological change. All coke was originally produced in so-called beehive ovens, most of which were located in the Connellsville, Pennsylvania, district. A beehive oven produces no byproducts, simply transforming coal into coke. The location of the oven was determined therefore by the location of suitable coal mines, and coke was shipped to blast furnaces and other users almost entirely from the Connellsville district. Before World War I, however, by-product ovens, which capture light oils, tar and gases from the coking process, had been invented and their output began replacing beehive coke production. The great demand for coke during the war kept the beehive industry alive, however, and even necessitated an expansion of output. However, the concurrent stimulus to the construction of by-product ovens hastened the decline of beehive coke production to follow. During the war year of 1918 production of beehive coke amounted to 30,500,000 tons and by-product production reached 26,000,000 tons.' The superior economies of the by-product ovens made it possible to ship coal to areas where artificial gas could be marketed and to steel mills which could also use gas, and led to the virtual death of the original branch of the industry. By 1938 beehive production had fallen to 800,000 tons, while by-product output was 31,700,000 tons.2 Although the beehive ovens have usually been owned by coal-mining companies, there are two distinct branches of the by-product industry: the plants, or pig-iron producers who use the coke in blast furnaces and usually the gas in steel production; and the plants, which produce both coke and by-products for sale. The latter are commonly public utilities engaged in supplying artificial gas, although there are also a few large manufacturing concerns. In 1940 the furnace plants produced 41,500,000 tons and the merchant plants 12,500,000 tons.3 It is seen therefore that only a small percentage of coke for blast furnace use changes hands on the market, especially since most merchant coke is not intended for blast furnace use. The expanded production of iron and steel products under wartime conditions