Jerzy Łazor* IMPORT AND EXPORT OF POLISH COAL IN THE INTERWAR PERIOD

Julian Tuwim starts one of his last poems before World War Two, a vitriolic attack on interwar Polish society, by addressing the wealthiest people of the republic. Manufacturers of military equipment, Łódź industrialists, and oil magnates are joined by coal producers from Silesia. e latter owe their position to the role of coal as the most important mineral resource extracted in Poland. is article explores its place in Polish foreign trade. Polish coal has a large bibliography, with Jerzy Jaros’s research at the forefront, followed by specialist interwar publications, and 20 and 21 century studies on specic issues. ese range from relations with specic countries, such as Germany, Great Britain and Scandinavian states, to transportation (both by land and sea), and the performance of individual companies engaged in the exchange.


Coal Production
A er returning to Europe's political map in 1918 Poland was dependent on coal imports, as the deposits it controlled in the Dąbrowa and Kraków Basins did not cover domestic demand. is problem was not unique to Poland, and thus the Allies founded the European Coal Commission, which distributed available coal amongst European countries 8 . Poland became self-su cient in 1922 when it received parts of Upper Silesia a er a League of Nations' plebiscite and the third Silesian uprising. From that time onwards exports (mainly from Silesia) became signi cant (Table 1). Year 1923Year 1924Year 1925Year 1926Year 1927Year 1928Year 1929Year 1930 Coal Source: Rocznik Handlu Zagranicznego Rzeczypospolitej Polskiej 1923-1927Rocznik Handlu Zagranicznego Rzeczypospolitej Polskiej i Wolnego Miasta Gdańska 1928-1938Rocznik Statystyki Rzeczypospolitej Polskiej 1930;Mały Rocznik Statystyczny 1936, 1939 During the interwar years Poland was the seventh largest coal producer in the world, a er the United States, Great Britain, Germany, France, and (in the 1930s) the Soviet Union and Japan. It exported the highest percentage of its output, which put it into the fourth place amongst the biggest coal exporters (a er Great Britain, Germany and the USA) 9 .

Table 1. Production and Exports of Hard Coal in Poland (millions of tonnes)
Polish coal was of good quality, comparable to the British coal it competed with. Extraction costs remained relatively low: deposits were thick and located near the surface, while labour costs were lower than in England and Germany, prompting the English to push for international mining regulations 10 . In 1926 the estimated average cost of extracting one tonne amounted to 18 zł, and probably did not change signi cantly in subsequent years 11 .
Transportation was not as favourable. Export by rail was feasible to Germany, Austria, Czechoslovakia, Hungary, Romania, Switzerland and Lithuania (excluding Kłajpeda). Some tranports to Yugoslavia and Italy went by rail, others by sea. e signi cant cost of reloading due to the wider track gauge in Latvia and Russia made transportation by sea to these countries more cost e ective 12 . Likewise, expansion outside Central Europe involved sea transport. First, however, the coal had to be transported approximately 600 km from the Polish mines to Gdańsk (and later also to Gdynia). Here, rail infrastructure remained an issue, as well as insu cient reloading capacity of the ports themselves. Consequently, investments in this eld were needed.

Structure of Trade
In 1918-1919 no detailed foreign trade statistics were kept in Poland, while between 1920 and 1922 the authorities only recored the volume of traded goods.
is makes long-term comparisons di cult, but is not a signi cant problem, since the period was markedly di erent than later years, a er Upper Silesia was allotted to Poland. Earlier, coal had been the main article imported apart from food, with the largest volume in 1921 (Table 2). e fact that imports were accompanied by exports resulted from compensation agreements signed by Poland, linking imports of some products with exporting coal 13 .
A er 1922 Poland imported small amounts of coal from England, Czechoslovakia and Germany (less than 1 per cent of the volume of exports). is was mainly due to demand of the Polish smelting industry for coke with speci c qualities, unobtainable on the domestic market 14 .
A er the acquisition of Upper Silesia, coal exports became important for the Polish economy. Initially, they went almost excusively to Austria, Czechoslovakia, Germany and Hungary, jointly referred to as convention countries. is name was derived from the Upper Silesian Coal Convention, an industry agreement which 11 A. Jałowiecki, Rozwój zbytu węgla z kopalń Zagłębia Polskiego w dziesięcioleciu 1925-1935, Katowice 1937  regulated sales on these markets, minimizing rivalry between Polish exporters and ensuring appropriately high prices (at the cost of petrifying the industry to a certain extent) 15 . In 1923-1925 some 86-97 per cent of Polish coal was sold to convention markets, mostly to Germany (6.7 million tonnes in 1924). Exports to Germany were made possible by the Geneva Convention of 1922, aiming to regulate the situation a er the division of Upper Silesia. e convention granted Poland the right of unlimited coal exports to its western neighbour for three years. It expired on 15 June 1925. Earlier, in January, the most favoured nation clause, granted to Poland by Germany under the peace treaties, also expired. Germany took advantage of the situation and stopped importing Polish coal, hoping to destabilize the Polish economy through a customs war, and thus to give itself a stronger hand in political negotiations 16 .
is placed Poland in a precarious position, as the export of coal was the most important item on its trade balance sheet (Table 3). Its decline would cause a signi cant trade de cit, and thus a payment de cit, which would threaten the position of the recently introduced złoty. Dimishing exports would also hurt the extraction industry, due to the limited domestic demand. is in turn would reduce employment 17 . Moreover, reducing extraction and sales, combined with high xed costs in the industry, would drive up average extraction costs, further hurting pro ts.
German plans did not come to fruition. Although the customs war was costly for Poland, it did not lead to the collapse of the Polish economy. is was partly due to the improved domestic sales 18 . More importantly, however, Polish producers started to look for possible expansion to new markets, particularly in Scandinavia, until that time 15 A. Jałowiecki, Konkurencja węglowa…, p. 79. 16 K. J. Błahut, Polsko-niemieckie stosunki…, p. 65-76; Z. Landau, J. Tomaszewski, Gospodarka Polski międzywojennejm, t. II, Od Grabskiego do Piłsudskiego, Warszawa 1971, p. 277-284;Z. Landau, J. Tomaszewski, Gospodarka Polski międzywojennej, vol. III, Wielki Kryzys. 1930-1935, Warszawa 1982 9, 11, 27, 29, 31, 31. 20 Central European markets include Austria, Czechoslovakia, Gdańsk, Germany, Romania, Switzerland and Hungary; Baltic markets: Denmark, Estonia, Finland, Lithuania, Latvia, Norway and Sweden; Western European markets: England, Belgium, France, Ireland, Iceland and Portugal; Southern European markets: Bulgaria, Gibraltar, Greece, Spain, Yugoslavia, Malta (in 1933 as "the British Territory in the Mediterranean") and Italy; Non-European markets: countries, colonies and dependencies in Africa, Americas and Asia. North African countries could be argued to fall both under Southern European (which were mostly Mediterranean, anyway) and non-European ones. I ultimately decided on the latter option to emphasize the diversi cation of Polish export markets in the 1930 s. e USSR was not included in the list, as in 1938 its share in Polish export was negligible, and it did not appear at all in o cial statistics in other years represented in the table.
e change of directions in export was not easy, "as appropriate equipment, organization and advertisement were necessary" 21 . Transportation issues needed to be resolved as well. Paradoxically, the export of Polish coal to Scandinavia was simpli ed to a certain extent by German agents. Polish rms did not begin to establish their own representatives in Scandinavia until 1927 22 .
On the Scandinavian market, Polish producers competed not just with German exporters, but also among themselves. Consequently, the prices and thus pro ts were lower than possible 23 . In July 1925 coal producers founded the Polish Coal Convention (Ogólnopolska Konwencja Węglowa) 24 , which by 1926 controlled 98 per cent of the combined Polish extraction. However, the convention continued to control prices only in exports to Hungary, Czechoslovakia and Austria, and did not intervene in rivalry between Polish rms in Scandinavia 25 .
A er the miners' strike ended, the British recommenced export to Scandinavian countries and became the main competitors for the Poles (the Germans concentrated on supplying Western Europe 26 ). As a result, in 1927 prices obtained by Polish companies were lower (Graph 1 27 ). Initially, the Poles pro ted from low concentration of British producers, with numerous independent companies 28 . is soon changed. Under the Coal Mines Act of 1930 a cartel was created controlling the extraction in speci c basins, while investments between 1931 and 1935 led to a considerable fall in extraction costs 29 . e English also bene tted from their large trade eet. "British ships delivered coal and took ore, cellulose, paper and wood back. Consequently, the transport costs were minimal. On the other hand, Poland did not have its own ships, nor su cient demand for Swedish goods" 30 . 21 A. Wysocki, Na placówce dyplomatycznej w Sztokholmie 1924: Wspomnienia, Toruń 2005 A. Jałowiecki, Konkurencja węglowa…, p. 90. 23 " e incomprehensible policy of our coal mines currently worries me the most. From the very beginning I tried to ensure the mines appeared jointly on the Swedish market and determined prices of their goods in advance. We dra ed this agreement in my o ce, celebrated with many bottles of champagne, drunk at various occasions, yet representatives of Upper Silesian mines kept ghting amongst themselves for each delivery, continually lowering the prices of coal. e construction of the port in Gdynia was a key factor in the export of coal, initially limited by the modest reloading facilities in Gdańsk 35 . e expansion of the port itself would not have helped much, if not for the rail investments at the same time. High rail prices hindered expansion to new markets, while the modest throughput of the existing railways (150 thousand tonnes monthly towards the end of 1925) prevented transportation of larger quantities of coal. A solution came with the construction of the Coal Trunk-Line (Centralna Magistrala Węglowa) between Silesia and Gdynia. It was initially nanced from the state budget, but the lack of capital and the signi cance of coal exports during the Great Depression prompted the government to approach the French. Consequently, an agreement was concluded under which the latter party supplied capital, and the newly founded Francusko-Polskie Towarzystwo Kolejowe SA was to operate the line assuring an appropriate throughput for coal. ese conditions were advantageous for the French, but enabled earlier completion of the line, which immediately led to more e ective rail transport 35 " e Swedes continued to complain that the loading in Gdańsk and Gdynia was disorganised, that ships had to wait three weeks for their turn, causing great losses, that the ships could not be adequately secured to protect them from waves, so that loading was impossible under stronger winds, that the weight of the coal was not precise, that the o ce distributing the coal and wagons was biased etc. ": A. Wysocki, Na placówce dyplomatycznej…, p. 142; cf. W. Gessner, W sprawie zwiększenia eksportu węgla drogą morską,  1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 Baltic  British exporters took Polish competition in Scandinavia (Table 5) seriously. Already in 1927, a delegation from the United Kingdom went to Silesia, in 1928 economic pressure was exerted to improve the position of British coal in Denmark 38 , and in 1930 another delegation tried to assess the situation in the Scandinavian countries themselves 39 . A true turning point came when the Bank of England went o gold in September 1931. e pound lost over 40 per cent of its value, and British coal became more competitive. Moreover, Great Britain used its position as a major importer from Scandinavian countries, as well as the threat of limiting access to its market via the Imperial Preferences system proposed at Ottawa in 1932. As a result, Scandinavian countries joined the informal Sterling zone and signed agreements, giving British exporters 80 per cent of coal imports to Denmark, 75 per cent to Finland, 70 per cent to Denmark and 47 per cent to Sweden. As a consequence, Polish coal mostly disappeared from these markets. Sweden remained an exception, with imports from Poland amounting to an average of 2.4 million tonnes annually in 1933-1938, partially owing to a trade treaty in 1933, and a coal agreement in the following year 40 . e rivalry with the United Kingdom took place during the Great Depression. e fall in demand worldwide threatened the balance of trade in many countries, causing a rise in protentionism. Consequently, the volume of world trade fell rapidly, as did prices, particularly of food and raw materials. Poland was a ected particularly hard. Domestic demand for coal plummeted, exacerbating the need for new export markets to support continued extraction and prevent unemployment 41 . Likewise, the stability of the Polish currency under the Gold Exchange Standard depended on su cient exports. e rst reaction to these di culties was a reorganization of coal exports. e Polish Coal Convention of 1931 (Polska Konwencja Węglowa, a successor of Ogólnopolska Konwencja Węglowa) was supplemented by a further Export Convention (Konwencja Eksportowa) from the same year, established with government support. It covered additional markets: Scandinavian and Baltic countries, the Netherlands, Belgium, France and Italy. Diagram 1 demonstrates that its actions were rather e ective, as the prices obtained on these markets fared realatively well. In 1934, the Export Convention was incorporated into the Polish Coal Convention 42 . e second consequence of the importance of coal exports was dumping -exporting at a lower price than the one achieved on the domestic market, at times even below production costs. e losses were partly compensated by state authorities (in the case of Scandinavia a special fund was created in 1932 43 ). As Andrzej Jałowiecki explained: Overseas markets acted like a kind of a safety valve. Sales below extraction costs allowed xed costs to be spread out over a greater quantity of coal, thereby reducing average costs per tonne. is way, pro ts grew on convention markets, where prices were higher, and these pro ts more than covered the losses from dumping 44 .
Dumping resulted in higher domestic coal prices, which indirectly had a negative e ect on the entire economy, resulting in higher production costs in the industry. e third aspect of the foreign trade policy, particularly a er the loss of Scandinavia, was the search for new markets. One direction was Western Europe, especially France, Belgium and e Netherlands 45 . Exports to France rose consistently from 1928, and in the rst half of the 1930s reached 1 million tonnes annually 46 . e rst substantial export to Belgium took place in 1931, and steadily increased (in 1931-1935 amounting to a total of 1.4 million tonnes, and in 1936-1938: 1.5 million tonnes). It was similar in the Netherlands, although here the volume was not as large. e second direction of expansion were Mediterranean markets 47 , in particular Italy, which had already imported Polish coal in the previous decade (the total export exceeding 2.5 million tonnes in [1926][1927][1928]. In 1931 it once again became an important importer, buying 2.5 million tonnes of Polish coal up to 1933. Exports to Greece or Yugoslavia were of lesser signi cance (usually below 100 thousand tonnes annually to each of these countries in the 1930 s). e countries outside Europe formed the third group of new markets, with exports growing a er 1932. ese markets included Argentina (in 1936 achieving a maximum import level of 260 thousand tonnes), French North African colonies, and Egypt. Acquisitions outside Europe did not make up a high percentage of the market, but they were also a type of safery valve. Prices obtained in these countries were low (Diagram 1), with dumping used to enter new markets. In Poland these tactics were referred to as "pioneering work". Although it was advantageous for individual exporters, it lowered the combined pro ts of the Polish industry 48 . According to Jerzy Jaros "from the end of the British strike in 1926 to the end of 1938 Poland obtained 700 million zł less for exported coal than what English exporters achieved for the same amount of coal" 49 .
On the new markets Poland had to compete with Great Britain, Germany, Turkey and coal from today's Donetsk basin (then called Stalino). England posed a particular threat with its inexpensive freight, and a series of further trade treaties with France, Lithuania, Estonia and Latvia in 1934 50 . is once again led to cut-throat competition (in 1934 Polish coal even apparead on the British market) and prompted both parties to enter negotiations. Finally, in December 1934 a coal agreement was signed in London, regulating market access. It determined the export level of Polish coal at 21 per cent of British results, provided the latter did not exceed 35 million tonnes annually. If they did, Poland could export an additional 10 per cent of the British surplus. While "the licensed quotas did not include exports of Polish coal to Czechoslovakia and by land to Austria, Hungary and Germany, nor exports of British coal to Ireland and the Americas" 51 , the agreement considerably restricted Polish export potential, preserved the status quo in Scandinavia, and, more generally, British dominance. It did not directly lead to higher prices. Consequently, it was strongly criticized. However, Jan Szymański, analysing its role in the wider context of Poland's relations with Great Britain, proves convincingly that it "rescued" Polish exports of other products to this market, and allowed a trade arrangement to be signed in 1935 52 . Nevertheless, it had a negative impact on the coal market. Economic recovery allowed a new version of the agreement to be signed in 1937. It placed considerably fewer restrictions on Polish exports 53 . e rivalry between the United Kingdom and Poland should be seen against the background of wider changes on the world coal market. Because of technological development and changes in the economy, the importance of coal as an energy reseource was decreasing (Table 6). In Europe, the use per resident fell from 310 kg in the 1920s to 270 kg in the next decade 54 . At the same time, coal extraction was on the increase, causing both a fall in demand in the countries which supplemented their production by import, 55 and an increased supply on the world market. Of particular signi cance was the increase in extraction by the ird Reich (which also improved its coal situation a er taking over the Saar Basin in 1935 56 ). Because of the fall in demand and increase in supply prices inevitably dropped, exacerbating economy-wide de ationary tendencies. In 1935 coal prices hit rock bottom -only 40 per cent of the pre-crisis average, a level like that of other raw materials and agricultural products. is shows Polish dumping in a di erent light 57 . tonnage, and systematically grew, reaching 15 per cent in 1938. In 1931-1938 these exports totalled 5.7 million tonnes, with prices lower than on other markets.

Conclusion
e interwar period was particularly bad for exporters of raw materials, with prices falling more rapidly than those of industrial goods. e export problems of Polish coal should, therefore, be regarded in a wider context of the worsening terms of trade of peripheral economies. roughout the period Polish coal producers faced a constant decrease in exports to Central Europe, initially the most important market, as well as the increase in overseas exports. is evolution was mainly due to "external causes", which "accounted for constantly deteriorating conditions for Polish exporters" 61 . From this point of view the relative stability of exports (even if thanks to dumping, however advantageous to the Polish balance of payments), is evidence of both the exibility of Polish exporters and the e cacy of generous state assistance.
Wysocki A., Na placówce dyplomatycznej w Sztokholmie 1924: Wspomnienia, Toruń 2005 Import and Export of Polish Coal in the Interwar Period e article analyses the evolution of geographical and price evolution of Polish exports of coal, and explains the much smaller imports. Using detailed statistical data, it shows how state intervention (via support for and control of cartelisation of the sector) in uenced prices achieved by Polish exporters. More generally, it places the Polish coal policy within the wider set of balance-of-payment supporting measures.