it is only just worth
while to work, to which the price of coal will approximate.

It follows that there is no real connection between price and cost of
production throughout the industry as a whole. It follows incidentally
that those concerns which can market their coal at an appreciably
lower cost than the marginal concerns, are likely to reap more than an
ordinary rate of profit, though royalties may absorb part of the
excess.

Sec.2. _The Various Aspects of Marginal Cost_. This relation cuts much
deeper than the particular system under which the mines are at present
owned and worked. If, for instance, we supposed that the various
mines were amalgamated together in a few giant concerns, each of which
comprised some of the richer and some of the poorer mines, the
preceding argument would need to be recast in form, but its substance
would be unaffected. For though a great coal trust could in a sense
_afford_ to sell at a price lower than the marginal cost, setting its
losses on the poorer against its gains on the better pits, is it
likely it would do so? Why should it dissipate its profits in this
way? It is clearly more reasonable to suppose that it would close down
the poorer pits (unless it could advance the price of coal), and
thereby maintain its profits at a higher figure. If, indeed, the
mines were nationalized the deliberate policy might be pursued of
selling coal at a price which left the industry no more than
self-supporting as a whole. Some coal might thus be sold at less than
its cost price, and the selling price would conform roughly to the
_average_ cost. But such a policy, though in special circumstances it
might be justified, would represent a very dangerous principle, which
could not be applied widely without the most serious results. Nothing
could be more fatal to any enterprise, whether it be in the hands of
an individual, a joint-stock company, a State department, or a Guild,
than that the management should content themselves with results which
in the lump seem satisfactory, and regard losses here or there with an
indifferent eye. That way lies stagnation, waste, progressive
inefficiency and ultimate disaster. To inquire searchingly into every
nook and cranny of the business, to construct, as it were, for each
part a separate balance-sheet of profit and loss, to expand in those
directions where further development promises good results, and to
curtail activity where loss is already evident, is t