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Mr. WARRUM. The bill contains this statement (reading]:
For the purposes of this title, there is hereby appropriated the sum of $300,000,000.
This is the way it is paid.
Mr. Hill. Of course, we do not usually appropriate. That is not a serious problem, but we do not usually appropriate money--that is, a legislative committee of Congress does not usually appropriate money. That is left to the appropriations committee. We authorize the appropriations.
Mr. WARRUM. That is all right.
Mr. WARRUM. Just one word. You say that these taxes do not get into the Treasury of the United States Government?
Mr. Vinson. It is really a trust fund in essence; is it not, Judge? Mr. WARRUM. Yes.
Mr. Vinson. It is earmarked. The money comes in trust to be expended for a special purpose.
Mr. WARRUM. And that is a governmental purpose.
Mr. Vinson. But that is not the method that has always heretofore been pursued.
Mr. WARRUM. That may be. • Mr. VINSON. I think, however, that that condition could be met.
Mr. Hill. We can probably redraft that part of it and eliminate that objection. But I just wanted to call your attention to it as it is written here.
Commencing on line 14, page 43 (reading): The Secretary of the Interior and the said Commission, respectively, shall employ such technical advisers, engineers, clerks, agents, and so forth, as each may deem necessary and advisable to enable them to perform their respective duties under this title, and all such employees shall be paid from the taxes to be collected thereunder as part of the administration expenses of this title, as hereinafter provided.
In other words, you are tying up the expenditures with the particular taxes provided in the bill.
Mr. WARRUM. That is right. I think that it provides on page 46 that the taxes will be segregated and used for the following purposes
Mr. HILL. That is carrying out the same idea. You select these taxes. In other words, you sell the bonds and you get $300,000,000.
Mr. WARRUM. As a matter of fact, if anyone sells his property to the Government, he takes the bonds. If, however, the Government has to condemn property it sells the bonds and tenders the cash, as it would have to.
Mr. Hill. Do you think that is a good provision, to provide for the purchase of lands voluntarily negotiated for by the issuance of the bonds? In other words, do you think you could get as good a bargain from the Government's standpoint?
Mr. WARRUM. For cash?
Mr. WARRUM. I thought that a 2% percent 50-year bond that was accepted at par—I do not know anything about finance.
Mr. Hill. You say tax-exempt?
Mr. Hill. We have quite a sentiment in this country against taxexempt bonds.
Mr. WARRUM. I share in that sentiment; not having any bonds I am a loud advocate of that.
Mr. COOPER. But we still just keep on issuing them.
Mr. Hill. Another thing, in connection with the issuance of those bonds, you say they are to be issued by the Secretary of the Treasury?
Mr. WARRUM. That is what you would call a “hick lawyer's" method of approaching it.
Mr. Hill. I think it should be issued by the Secretary of the Treasury, but the question in my mind is—of course, you issue them for a specific purpose.
Mr. WARRUM. That is right, and the taxes are levied for a specific purpose.
Mr. Hill. You require a special authority for it, but I think if you were just issuing the $300,000,000 of bonds you would probably already have authority to do that.
Mr. WARRUM. I think that is true, but this is a special issue for a special purpose. It seemed to me that Congress would have to authorize it; that you would run up against the Treasury Department that
Mr. Hill. I rather think that we may have to change the draft on that.
Mr. WARRUM. That is all right, sir.
Mr. Hill. We might run into some legal difficulties if we say here we are going to levy taxes on a certain industry for the payment out in a certain specified way in a manner affecting that industry.
Mr. WARRUM. All right.
Mr. Hill. Or as you say here in one place in this bill, for the rehabilitation, for instance, of unemployed miners.
Mr. WARRUM. Yes.
Mr. Hill. You make a special provision there of 25 percent to be paid into a rehabilitation fund for the benefit of the dislodged miners.
Mr. WARRUM. That is right.
Mr. Hill. In other words, you are earmarking this money right along, and it does not go into the general treasury
Mr. WARRUM. At all.
Mr. Hill. We want to get away from any objection that there might be that it is not a tax.
Mr. WARRUM. Fine; I can see that. That is all right.
Mr. Hill. I think that is about all I care to say on that. I just wanted to bring up that point. While you may be absolutely sound in your theory here, there is some question in my mind.
Mr. WARRUM. From your questions, I am troubled with doubts myself, because I do not know the mechanics or the technique of this sort of bill drafting.
Mr. Hill. Pursuing it a little further, for instance, on page 46 you say (reading):
The taxes collected for the years 1936 to 1939, inclusive, shall be segregated and used for the following purposes.
Mr. WARRUM. Those are the three purpose.
Mr. WARRUM. Really (a), (b), and (c): Administration cost, the payment of the interest due, the payment into a fund to be known as the rehabilitation fund," and of course the sinking funds for the bonds.
Mr. Hill. Yes; (a), (b), and (c).
Mr. COOPER. I might say, Judge, I had that word "segregated” at the top of page 46 underlined, too. I am inclined to think we had better consider that very carefully.
Mr. WARRUM. All right.
Mr. COOPER. Because there is danger of some trouble arising in the manner given here.
Mr. WARRUM. All right.
Mr. COOPER. Now, passing on to page 47, section 11, there, will you give us a brief explanation of that?
Mr. WARRUM. That section found its way into the bill when the operators coerced us into a 4-year limitation on title I. It at once became apparent that if they secured that limitation as they have it in this draft, if nothing was done with reference to title II, it would just expire by reason of the dissolution of the agency which was charged with a great many duties in the purchase of these lands, approval, recommendations, orders, and so forth. So it seemed that it was inevitable that upon taking the bill as its text requires you to take it, if the National Coal Commission went out of existence at the end of 4 years, as title I provides, either those powers that they exercised and their duties, authority, and obligations would have to be transferred to the Secretary of the Interior, which seemed to us to be just a little bit strong, or to some other board that would have the equivalent character recommendation to Congress, a board to be created by the President that would carry on the duties of the dissolved National Coal Commission. That is the only explanation and the only reason for that.
Mr. COOPER. You provide here for a board of three members for
Mr. WARRUM. We thought three for that purpose; that if title I ends, perhaps three could carry this on.
Mr. COOPER. Passing on to the "Annex to act—schedule of districts," on page 48, and on through the remaining pages of the bill, I assume that these districts were largely taken from the coal codes under the N. R. A. Is that correct?
Mr. WARRUM. That is right.
Mr. Cooper. You just took those districts as you found them created under the N. R. A. and embraced them here?
Mr. WARRUM. That is right. And realizing that there may be some objections, if there are you can talk to the same operator 3 days and each day he has a different view on almost every subjectwe provided that the Commission would have authority to change these boundaries, to consolidate them and to extend them, upon hearing after the bill is enacted and after the Commission begins to function. I thought that was fair.
Mr. COOPER. My attention was attracted by lines 8 and 9 on page 53, Arkansas-Oklahoma, district no. 13:
The following counties in Arkansas: All counties in the State.
They do not produce coal in all counties of the State of Arkansas, do they?
Mr. WARRUM. No. It would be better "all coal-producing counties in the State," but it would not make any difference that coal was not produced.
Mr. COOPER. My attention was attracted by it because all through here you set out counties by names. For instance, on page 52 you sayIllinois. All coal-producing counties in Illinois. Mr. WARRUM. That is right.
Mr. COOPER. And Indiana all coal-producing counties in Indiana. The same is true as to Iowa. Then over on page 53 as to Arkansas you say
All counties in the State.
Mr. WARRUM. I want that corrected to say "all coal-producing counties."
Mr. COOPER. I wondered why that occurred.
Mr. WARRUM. It was intended to be as it is on the next page, "all coal-producing counties in Wyoming," and "all coal-producing counties in Utah" and so forth.
Mr. COOPER. Yes, but I think that had been followed generally through until you reached Arkansas, and then you take the whole thing.
Mr. Hill. I wish to express on behalf of the committee our appreciation of your appearance, and we hope that your experience has not been an unhappy one. You have the information that we wanted, and you have given it.
Mr. WARRUM. I want to thank you. It has been a great experience to me.
I want to thank you all for the courtesy shown me. (A brief submitted by Mr. Warrum is as follows:)
LEGAL ASPECTS OF THE GUFFEY BILL
The problems of the bituminous mining industry are approached from two angles; first, that its relation to the general welfare in the service it renders and the need of conserving these irreplaceable natural resources, require that it be regulated as an industry affected with a national public interest; and second, that the regulations of the bill relate to matters that directly affect the interstate commerce of bituminous coal.
UNDER THE SCHECHTER POULTRY CASE
That part of the recent decision of the Supreme Court in the Schechter Poultry case relating to the delegation of powers in the formation and imposition of codes, cannot reasonably be said to affect the validity of this bill. Provisions of the bill, calling for a legislative code, prescribed by Congress itself, can be fairly regarded as anticipating this decision. The bill deals with a single industry, sets out the regulation that shall govern it, and creates a commission for the administration of this legislative code.
That part of the decision that deals with the power of Congress to regulate transactions in interstate commerce, or directly affecting interstate commerce, points out that each exercise of congressional power must be determined on the
facts of each case. This subject will be dealt with later, but at this point attention is called to certain statements of the Court:
"Defendants do not sell poultry in interstate commerce. "But the code provisions, as here applied, do not concern the transportation of the poultry from other states to New York, or the transactions of the commission men or others to whom it is consigned, or the sales made by such consignees to defendants.
Neither the slaughtering nor the sales by defendants were transactions in interstate commerce.
"The poultry had come to a permanent rest within the State. It was not held or sold by defendants in relation to any further transactions in interstate commerce and was not destined for transportation to other States.
"In determining how far the Federal Government may go in controlling intrastate transactions, upon ground that they 'affect' interstate commerce, there is a necessary and well-established distinction between direct and indirect effects. The precise line can be drawn only as individual cases arise. But the distinction is clear in principle."
“It matters not that the injury may be due to the conduct of those engaged in intrastate operations. Thus, Congress may protect the safety of those employed in interstate transportation ‘no matter what may be the source of the dangers which threaten it'. Southern Railway Co. v. United States, 222 U. S. 20, 27. We said in Second Employers' Liability Cases, 225 U. S. 1, 51, that it is the 'effect upon interstate commerce', not 'the source of the injury'. which is the criterion of congressional power'. We have held that, in dealing with common carriers engaged in both interstate and intrastate commerce, the dominant authority of Congress necessarily embraces the right to control their intrastate operations in all matters having such a close and substantial relation to interstate traffic that the control is essential or appropriate to secure the freedom of that traffic from interference or unjust discrimination and to promote the efficiency of the interstate service. The Shreveport case (234 U. S. 342, 351, 352); Wisconsin Railroad Commission v. Chicago, Burlington & Quincy R. R. Co. (257 U. S. 563, 588). And combinations and conspiracies to restrain interstate commerce, or to monopolize any part of it, are none the less within the reach of the Antitrust Act because the conspirators seek to attain their end by means of intrastate activities. Coronado Coal Company v. United Mine Workers (268 U. S. 295, 310); Bedford Co. v. Stonecutters Association (274 U. S. 37, 46)."
REGULATING BY TAXATION Undoubtedly the power of Congress to levy such taxes is full and complete and cannot be thwarted because the tax also results in regulation. In numerous decisions the court has upheld the tax where it was obviously used as the legal sanction for regulation. This is directly held in the case of McCray v. United States (195 U. S. 27) where a tax was levied on oleomargarine manufactured and sold (without regard to interstate commerce) at one-fourth cent per pound if the oleomargarine was white and 10 cents per pound if it were colored so as to resemble butter. The Narcotic cases are upon the same theory; United States v. Doremus (249 U. S. 86). The Phosphorus Match Law, long in force, is said by Willoughby (Constitutional Law, vol. 2, 674) to be “a measure of hygiene and has reference to an industry over which Congress had no direct legislative power.” In the McCray case the court said:
“The judiciary is without authority to avoid an act of Congress lawfully exerting the taxing power, even in a case where to the judicial mind it seems that Congress had, in putting such power in motion, abused its lawful authority by levying a tax which was unwise or oppressive, or the result of the enforcement of which might be to indirectly affect subjects not within the powers delegated to Congress, nor can the judiciary inquire into the motive or purposes of Congress in adopting a statute levying an excise tax within its constitutional power.
Assuming that the tax must be one having some general public purpose in view, and not merely a bald regulation of a matter primarily within the control of the State, the authorities seems uniform that the tax will be sustained.
While the general welfare clause in the preamble of the Constitution is held to be the source of any substantive grant of congressional power, it can become the motive for the exercise of any of the expressed powers. And in the clause of the Constitution authorizing taxes it is textually associated with the purpose of promoting the general welfare. The bill in question is so manifestly one designed