it has to prohibit is in the exercise of the police power that goes with the power to regulate, and such police power can be exercised only to protect interstate commerce and not to prohibit it as to articles which are not inherently harmful or detrimental to the public morals and welfare.

THE PROHIBITION AGAINST THE GRANTING BY THE INTERSTATE COMMERCE COMMISSION OF A CERTIFICATE OF CONVENIENCE AND NECESSITY AUTHORIZING THE EXTENSION OF RAILROAD FACILITIES FOR THE SERVICE OF ANY MINE PRODUCING BITUMINOUS COAL EXCEPT UPON THE APPROVAL OF THE NATIONAL BITUMINOUS

COAL COMMISSION

Section 12 of title I provides as follows:

"No certificate of convenience and necessity authorizing the extension of railroad facilities shall be made by the Interstate Commerce Commission for the service of any mine producing bituminous coal for the commercial markets except upon the approval of the National Bituminous Coal Commission.” It will be noted that this section grants to the National Bituminous Coal Commission the power to approve or not approve the extension of railroad facilities and sets up no standards to govern the Commission in so doing. Nor are such standards provided in any other place in the act. This is clearly an unconstitutional delegation of power falling within the condemnation of such delegation of power by the Supreme Court in the Schechter case. This seems to be so plain as to not be arguable.

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PROHIBITION OF EMPLOYMENT OF LABOR EXCEPT ON TERMS AGREED UPON BY REPRE SENTATIVES OF THE MAJORITY OF THE MINE WORKERS (IN A GIVEN DISTRICT OR DISTRICTS) BELONGING TO A RECOGNIZED NATIONAL ASSOCIATION OF MINE WORKERS" Subsection (g), part III, of section 4 provides:

"Whenever the maximum daily and weekly hours of labor are agreed upon in any contract or contracts negotiated between the producers of more than two-thirds the annual national tonnage production for the preceding calendar year, and the representatives of more than one-half the mine workers employed, such maximum hours of labor shall be accepted by all the code members. The wage agreement or agreements negotiated by collective bargaining in any district or group of two or more districts, between representatives of producers of more than two-thirds of the annual tonnage production of such district or each of such districts in a contracting group during the preceding calendar year, and representatives of the majority of the mine workers therein belonging to a recognized national association of mine workers, shall be filed with the Labor Board and shall be accepted as the minimum wages for the various classifications of labor by the code members operating in such district or group of districts."

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It will be seen that under this section operators of coal mines are prohibited to employ labor except upon terms that may be agreed upon by a majority of the mine workers in a given district "belonging to a recognized national association of mine workers." Of course, this means that all miners in a given district must work on the terms agreed to by the United Mine Workers of America, it being the only recognized national association of mine workers", although the majority of the mine workers in a given district belonging to such an organization may be only a small minority of the total mine workers therein. The unfairness of such a provision is apparent, but it is not our purpose to discuss the fairness of the provisions of the act but only the legality thereof. We will not enter into an extended discussion of this question, but call attention to the fact that the right to contract for the sale of one's services is protected by the Constitution and Congress may not interfere therewith. This was expressly held in Adkins v. Children's Hospital (261 U. S. 521).

CONCLUSION

In the foregoing we have briefly discussed some of the individual provisions of the act, but we wish to conclude as we began by insisting that fundamentally the regulation of the production and distribution of bituminous coal is beyond the power of Congress. If Congress may regulate an industry which is inherently local in character, such as the mining of coal, by declaring it to affect interstate commerce, then the power of Congress reaches to the regulation of all the activities of life and not only our dual form of goverument, but also

our constitutional government, is at an end. In this connection we quote from Kidd v. Pearson (128 U. S. 1, the following):

"No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufactures and commerce. Manufacture is transformation-the fashioning of raw materials into a change of form for use. The functions of commerce are different. The buying and selling and the transportation incidental thereto constitute commerce; and the regulation of commerce in the constitutional sense embraces the regulation at least of such transportation. The legal definition of the term as given by this court in County of Mobile v. Kimball (102 U. S. 691-702), is as follows: Commerce with foreign countries and among the States, strictly considered, consists in intercourse and traffic, including in these terms navigation, and the transportation and transit of persons and property, as well as the purchase, sale and exchange of commodities.' If it be held that the term includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all productive industries that contemplate the same thing. The result would be that Congress would be invested, to the exclusion of the States, with the power to regulate, not only manufactures, but also agriculture, horticulture, stock raising, domestic fisheries, mining-in short, every branch of human industry. For is there one of them that does not contemplate, more or less, clearly, an interstate or foreign market? Does not the wheat grower of the Northwest and the cotton planter of the South, plant, cultivate, and harvest his crop with an eye on the prices at Liverpool, New York, and Chicago? The power being invested in Congress and denied to the States, it would follow as an inevitable result that the duty would devolve on Congress to regulate all of these delicate, multiform, and vital interests-interests which in their nature are and must be local in all the details of their successful management. "It is not necessary to enlarge on, but only to suggest the impracticability of such a scheme, when we regard the multitudinous affairs involved, and the almost infinite variety of the minute details.

"The demands of such a supervision would require, not uniform legislation generally applicable throughout the United States, but a swarm of statutes only locally applicable and utterly inconsistent. Any movement toward the establishment of rules of production in this vast country, with its many different climates and opportunities, could only be at the sacrifice of the peculiar advantages of a large part of the localities in it, if not of every one of them. On the other hand, any movement toward the local, detailed, and incongruous legislation required by such interpretation would be about the widest possible departure from the declared object of the clause in question."

As pointed out in the concluding paragraph of the foregoing quotation, it is impossible to lay down a rule for uniform application in a country as vast as this, with as many varying conditions. To attempt to set up a board or commission which will make different rules for different sections of the country, thereby shifting prosperity from one section to another, is to impose a strain upon the machinery of government that if continued and applied to other like industries might well ultimately result in the breaking down of the Government itself. No such legislation has ever heretofore been tried and this proposed legislation is a departure not only from precedent but from the constitutional principles pursuant to which our Federal Government is a government of limited and delegated powers and the exclusive control over such local affairs as mining and manufacturing is reserved to the States.

This bill is unconstitutional both in its fundamental aspects and as to individual sections. It is unconstitutional in its fundamental aspects in that it undertakes to extend the Federal power to subject matter not within its jurisdiction. It is a plain attempt to accomplish an unconstitutional purpose by the exercise of Constitutional powers. It is clearly in conflict with the very recent opinion of the Supreme Court in the Schechter Poultry case. For Congress to now enact such legislation would only create chaos because its validity would be at once attacked and many mines would close until the question could be settled, while others would attempt to operate in defiance of it. The result can only be an injury to the public welfare and an ultimate decision of the Supreme Court holding the act unconstitutional. Respectfully submitted,

J. V. NORMAN,

Attorney for Committee Against the Guffey Coal Bill.

WASHINGTON, D. C., June 21, 1935.

STATEMENT OF THOMAS MOSES, PRESIDENT H. C. FRICK COAL CO.

Mr. Moses. I am representing the United States Steel Corporation's captive mines, home address Pittsburgh.

Mr. Chairman and gentlemen, we have prepared and will file a schedule concisely showing the captive-mine operation by us and our subsidiaries, the districts in which such operations were conducted, and the production of bituminous coal for the past 5 years through said operations. Said schedule will show that in the 5 years from 1929 to 1933, inclusive, our captive mines produced and we consumed the following aggregate amounts of coal:

The above statement will show that approximately 86 percent of bituminous coal consumed by us and our subsidiaries was produced by our own captive mines. Our vital interest in any legislation affecting them is, therefore, obvious.

These captive mines were acquired and are operated as an integral and essential part of our manufacturing operations and necessary to the economic and efficient production of our manufactured products. They represent a substantial investment of many millions of dollars, which was made and is only justifiable to facilitate the efficient and economical production of steel products.

Conservatively estimated, the United States Steel Corporation and its subsidiaries produce over 50 percent of the total captivemine coal produced in the steel industry.

It needs no argument to conclusively establish the integrated relationship between our bituminous coal production and our steel business and it is submitted that no logical reason can be advanced why this single element in the manufacture of steel products should be segregated and given special legislative treatment. As a matter of fact, it is demonstrable that such segregation might practically destroy the effectiveness of the integrated unification of operations. As shown by the preceding table, the fluctuations that occur in the amount of coal produced by our captive mines and our requirements for coal in our business are substantially the same and show the interdependence of the two as inseparable parts of a single business.

The integrated relationship of our captive-coal-mine production to our steel production is shown by the relationship between the fluctuations in the production of our captive-mine coal and our steelingot production. In 1929 our steel-ingot production was 90.4 percent of capacity and, for the purpose of comparison, taking our 1929 captive-coal production also at 90.4 percent, the following comparative fluctuations are clear:

The captive mines owned or leased by us and our subsidiaries and the coal produced therefrom, coked or processed, are used exclusively and solely in our business and said coal is not sold by us to others in the commercial markets in competition with commercial bituminous coal.

This conclusively establishes that these captive mines are being operated only as part of our steel business. As a matter of fact, we and our subsidiaries are obliged even to purchase bituminous coal in the open market when conditions require certain qualities or grades of coal or when certain deliveries and demands make the purchase of such coal necessary or more advantageous than that which our captive mines can readily then supply.

In other words, it is clear

First, that the operation of our captive mines is limited to the necessities and requirements of our steel business, as such, and is an essential and integrated and inseparable part thereof; and

Second, that our captive mines are not operated competitively with the general commercial operation of bituminous mines.

Therefore, the bill must be considered and analyzed from a special point of view in respect of captive mines and your committee must be fully informed as to the especial characteristics and requirements of captive mine operations and the effects of any legislation affecting them on their integrated and related industries.

We will, therefore, proceed to such an analysis of the bill and attempt to briefly summarize and present the effects of the bill on the steel industry by virtue of its necessary operation and use of captive mines.

Certain recitations in the preamble of the bill of some of the objects and purposes of the bill clearly show the general inapplicability of the objectives of the bill to captive mines. To illustrate, the purposes of the bill, amongst others, are stated to be:

"to provide for cooperative marketing of bituminous coal";

"to conserve the bituminous coal resources of the United States *

and

"to declare the production, distribution, and use of bituminous coal to be affected with a national public interest."

Section 1 of title I is a legislative declaration that, in accordance with the preamble, the production and distribution of bituminous coal in the United States is affected with a national public interest and is a public utility in that the public interest is affected by the conservation of the coal resources of the United States, and that their operation is in the public interest and that the same affects general labor conditions.

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The primary objects and purposes of the bill are not served by the inclusion of captive mines in the bill, and, in fact, are not even related or applicable thereto. The coal resources of the Nation are not unnecessarily or uneconomically depleted or wasted through the operation of our captive mines, because coal is taken from them only when and to the extent actually required by our consumptive needs-that is to say, to meet the actual and immediate requirements of our steel business. Commercial coal mines are operated for a totally different purpose, to wit: The commercial marketing of coal for sale. The operation of our captive mines and the commercially operated mines are dedicated, therefore, to two absolutely distinctive purposes.

Competition and the struggle for markets can produce an unpredictable overproduction. No element of competition enters into the production of captive coal. In the case of our captive mines the immediate demands and requirements of our steel business determine the amount of coal mined so there can be no uneconomic or wasteful exploitation of or overproduction from the captive mines. No production control in the public interest and for the conservation of the national coal resources is necessary, as such control is insured automatically and naturally by the immediate industrial requirements of the related company.

The public cannot be said to be affected in the same way in respect of our captive mines as in the case of the commercially operated mines. The public is neither the purchaser nor consumer of our captive-mine coal. How then can it be held that the public interest is even affected remotely? A mere legislative declaration that an enterprise is a public utility or affects the national public interest does not necessarily make it so, and the Supreme Court has so held.

It cannot be doubted that our captive-mine coal will be scientifically and economically mined, as it will only be produced to meet the personal demands of its related consumer and therefor every economy will be practiced and no extravagances or waste occasioned to meet competition.

Furthermore, it cannot be said that there would be any unfair trade practices in the production and marketing of this coal because the. producer and consumer are, for all practical purposes, one from the point of view of their interest. Therefore, legislation to eliminate unfair trade practices in operation of captive mines is unnecessary. Therefore, it would appear that the objects and purposes of the bill, no matter how meritorious in respect of commercially operated bituminous coal mines, are not furthered by the inclusion in the bill of our captive mines, and that, in fact, our captive mines are clearly foreign to the declared objects of the bill, and are simply an inte grated part of a private business not affected with any public

interest.

The tax of 25 percent on the sale price of coal at the mine with a provision of a 99-percent drawback for those producers who accept the code, established by section 3 of title I, is obviously intended solely to force every bituminous coal producer, whether operating a commercial mine or a captive mine, to accept the code. This is clearly not a logical and proper exercise of the taxing power and is entirely unrelated to the raising of revenue for a public purpose, but is an attempt to legislatively establish a penalty for failure to