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the mines, nor the facilities, nor the tonnage justified to maintain their own selling organizations, and rely upon us wholesalers for the distribution of their product.

We, as wholesalers, perform a service to them that includes:
(a) Financing of their pay rolls.
(b) Guaranteeing their compensation insurance premiums, and
(c) Underwriting their royalty accounts, and

(d) Are responsible to have available at their mines sufficient money each pay day to meet the pay roll when due.

It is reasonable to assert that services as above described cannot be performed unless proper compensation is allowed and provided for, and it is our opinion that bill H. R. 8479 does not at present contain such provisions, and we might be subjected to a commission in which we have no voice or so small a commission in the resale of coal that would make it unprofitable for us to continue handling the coal from these mines, with the result that these smaller operators would be compelled to shut down their properties for lack of proper distribution facilities, resulting in the unemployment of men at these mines which to a certain extent are oftentimes owned by men working within the mines.

Therefore, we are insisting that on the commission of nine provided for in said bill that at least one member of this commission be chosen .from the wholesale coal industry, so as to give us our proper place on the commission to protect our several interests.

The mines which we represent in St. Louis employ approximately 4,000 men, with a pay roll of approximately $3,750,000, no single one of which is of sufficient size in tonnage production to justify the expense of their maintaining their own sales organization. The territory in which these mines lie is adjacent to St. Louis, Mo., within a radius of approximately 80 miles of that city.

Our failure to be provided for in this bill would cause the mines which we represent to have their production curtailed to such an extent by lack of proper marketing facilities, as would eventually take these mines out of the production picture, resulting in unemployment to these men with no apparent means of livelihood provided for them.

Mr. COOPER. Mr. Brandenburger, whom did you state you represented?

Mr. BRANDENBURGER. The St. Louis Wholesale Coal Association.

Mr. COOPER. Do you concur with the views expressed by Mr. Galloway and the other gentleman?

Mr. BRANDENBURGER. Mr. Adams?
Mr. COOPER. Mr. Adams.
Mr. BRANDENBURGER. Yes, sir.
Mr. COOPER. It is on the same point which you are talking?

Mr. BRANDENBURGER. I am talking on the same point. However, he talked about the Detroit situation, and Mr. Adams about Chicago, and we about St. Louis. We will be nationally represented by a representative of the American Wholesale Coal Association, of which we are all members.

Mr. CROWTHER. I would like to ask you one question, because you seem to be qualified to answer it.

What distance is it economical to transport or truck coal from the 'nes? How many miles away can you do it economically?

Mr. BRANDENBURGER. Do you understand that I have made no reference to coal being handled by truck? This is all railroadhandled coal which we represent. The truckers have a distinct and separate organization.

Mr. CROWTHER. Do you happen to know what distance they can economically truck coal?

Mr. BRANDENBURGER. Apparently they can economically haul coal from my view of it, as much as 100 miles.

Mr. CROWTHER. One hundred miles from the mine?

Mr. BRANDENBURGER. It seems to be that way at the present time, that they can do that, although most of the trucked coal hauled, with particular reference to the St. Louis area, is hauled within a radius of not over 30 miles.

Mr. Hill. Thank you for your appearance.
Mr. Hill. Mr. Jonas Waffe. How much time do you require?
Mr. WAFFLE. Uninterrupted, 20 minutes.
Mr. Hill. Can you get along with 10 minutes?
Mr. WAFFLE. No, sir; I would like to put in my statement in full,

if I may.

Mr. Hill. You see what we are up against, and we have had a pretty full exposition on both sides. I will start you out with 10 minutes and see how we get along.

STATEMENT OF JONAS WAFFLE, TERRE HAUTE, IND., ON BEHALF

OF THE COAL TRADE ASSOCIATION OF INDIANA My appearance is on behalf of the producers of Indiana coal who are members of the Coal Trade Association of Indiana. The association membership is composed of coal-mine operators whose combined output is 90 percent of the total annual production of the Indiana shipping mines.

We desire to record objections to certain features of the bill and to recommend some changes therein. The first feature of the bill to which I will refer is the price-control provisions, included in part IIMarketing

We feel that any form of price regulations should be made as flexible and as simple as possible and should be so constituted as to extend to the producers, under reasonable limitations and restrictions, the right to conduct their business as nearly as possible along normal lines. This is essential because the marketing of coal, under the most favorable circumstances, is an intricate and difficult problem, and of course, will become more involved under any form of regulation.

The basis set up in the bill for establishing minimum prices is extremely unfair to those districts, and the producers therein, that enjoy certain natural advantages. It is unfair to the consumers who purchase coal from those districts and, in addition, we believe it is impracticable, that it will not work and that eventually price fixing under the basis provided in the bill will collapse.

The producers of Indiana coal are convinced that the proposed method of price fixing, in practical application, will actually demoralize, rather than stabilize, the bituminous coal industry in the State of Írdiana. That is the honest, conscientious opinion of the producers of Indiana coal, and in that connection I want to emphasize the fact that the men employed in the mines, the members of their families, and thousands of inhabitants of dependent mining communities, will be the principal victims of the demoralization that the price fixing provisions of the bill will create in the Indiana mining industry. addition, the mine operators, of course, will suffer irreparable financial loss,

Mr. Vinson. How many miners did you have in Indiana in 1934?

Mr. WAFFLE. About 10,000 in the shipping mines. There were approximately 4,000 employed in the haul-off-rail lines, called truck mines.

Mr. Vinson. In other words, all together, about 14,000?
Mr. WAFFLE. Approximately so; yes, sir.

Mr. VINSON. I see here in a table that the average cost per ton for Indiana last year was $1.52.

Mr. WAFFLE. That was the average cost for a 10-year period ending on January 31, 1935.

Mr. VINSON. Was that a 10-year period.
Mr. WAFFLE. That was a 10-month period.

Mr. VINSON. That is what I thought. If you have the average costs under this bill fixed as they are supposed to be, how could it hurt you with that low cost of production?

Mr. WAFFLE. If you will let me proceed with my statement I will bring that out, Mr. Vinson.

Mr. VINSON. All right.

Mr. WAFFLE. As set up, the price provisions of the bill require the maintenance of a price structure that, in our judgment, will not only be unduly prejudicial to the producers and mine workers in Indiana, but in addition will be extremely unfair to the consumers of Indiana coal for the reason that under the bill the minimum price for Indiana coal must be based, not on the lower production cost of the Indiana coal mines, but upon the higher average production cost of all the mines in the large producing area described on page 11 of the bill as minimum price area no. 1.

The average production cost of the mines in the eastern and southern districts, with which Indiana is grouped, is about 40 cents per ton higher than the average production cost in the State of Indiana. This means that the minimum prices for Indiana coal must be pegged at least 40 cents per ton higher than would be necessary if they were predicated exclusively on the average cost of production of the Indiana mines.

This method of price determination not only denies to the producers of Indiana coal their inherent right to the benefit of their lower production costs, but will actually force the consumers of Indiana coal to pay prices not justified by our average cost of production. Obviously, the pegging of Indiana coal prices 40 cents per ton higher than would otherwise be justified on the average production cost of the State of Indiana, will substantially reduce the production and sale of Indiana coal for at least two reasons:

First: It will force the Indiana price level so close to the price level of the higher grade Appalachian coals that the producers of Indiana coal will be unable to sell in competition with the Appalachian coals in the same markets. By that statement I mean that the differential that existed between the price of Indiana and Appalachian coals under and prior to the code, will be narrowed almost to the point of distinction and, therefore, create a situation where the inherently

low-grade Indiana coals cannot be sold in competition with the highgrade Appalachian coals.

The same condition would be created between our coals and the high-grade coals of the southern Illinois fields.

Second: It will force the price level of Indiana coal to a point where its producers will be unable to sell it in competition with natural gas and fuel oil, both of which have already displaced several million tons of our coai.

Our biggest market is in the Chicago district--the largest bituminous coal consuming area in the United States. This district is served by a 24-inch natural-gas pipe line from the Amarillo field in Texas; and since its entrance into the Chicago district, a large number of industries have turned from coal to gas. Notably among these is the Swift & Co. plant at Chicago, where natural gas has displaced 30 cars of Indiana and Illinois coal per day.

Mr. Vinson. When was the pipe line built into Chicago?
Mr. WAFFLE. About 3 years ago.

Mr. VINSON. Then a lot of that coal business was lost before there was increased price of coal under the code, was it not?

Mr. WAFFLE. Yes, sir.
Mr. Vinson. How much have you lost in the last year?

Mr. WAFFLE. There is still an increasingly productive loss of coal in that district. Within the past 3 or 4 months a number of large office buildings and stores in the city of Chicago have turned to natural gas. I would be very glad to file a list of that as an exhibit.

The Crane Co. plants at Chicago are another outstanding example. Only within the past 60 days, several large office buildings and hotels in Chicago have replaced coal with natural gas, and many industries are now negotiating for the installation of gas in their plants. Add 40 to 50 cents per ton to the price of Indiana coal, which this bill is certain to do, and the coal mines in our State will begin to fold up at a rapid rate and, when they do, hundreds of miners will be tramping the roads in search of work, to say nothing of the devastation that will be visited on the mining communities that depend upon these mines for their existence.

Consumers have always purchased Indiana coal at prices made in relation to the cost of its production, and we cannot conceive of any valid reasons that justify "soaking" the consumers of Indiana coal with a price based upon the cost of producing coal in central Pennsylvania, or districts located several hundred miles distant from the Indiana field where, in some instances, the production cost runs over $2 a ton, compared with an average cost in the State of Indiana of less. than $1.50 per ton, from the Indiana field.

Mr. VINSON. Before N. R. A. went into effect-and I will see that you get enough time credited you that is used up by these questionsbefore N. R. A. went into effect, did you make that same argument in regard to the N. R. A. set-up? Mr. WAFFLE. No, s.r. Mr. Vinson. Did you favor N. R. A.?

Mr. WAFFLE. That is an entirely different situation, Mr. Vinson, because under the N. R. A. all the price level went up in about the same proportion, but here you are undertaking to raise our price level about 40 cents per ton higher than it was under the code.

14420435----30

Mr. VINSON. What was Indiana coal selling for before N. R. A.?
Mr. WAFFLE. Various prices. I am unable to give you that.
Mr. VINSON. What was the average?
Mr. WAFFLE. Down around $1.50 or $1.45 per ton.

Mr. Vinson. Do you mean to say that N. R. A. only increased it 22 cents a ton?

Mr. WAFFLE. Our average realization is higher than $1.52 under the N. R. A.

Mr. Vinson. My information here is, from a table filed by Mr. Francis, for the 10 months period, that your cost per ton was $1.52.

Mr. WAFFLE. That is right.
Mr. VINSON. I thought you agreed to that.
Mr. WAFFLE. That is cost and not realization, Mr. Vinson.

Mr. Vinson. I am talking about costs. What were your costs prior to N. R. A.?

Mr. WAFFLE. Average cost per ton?
Mr. VINSON. Yes, sir.
Mr. WAFFLE. I have not those figures available.
Mr. Vinson. Could you state approximately what it was?

Mr. WAFFLE. I would say that at the least the labor cost of production has gone up approximately 15 percent since the N. R. A.

Mr. Vinson. Of course, if we cannot get some figure to discuss, go right ahead and present your statement.

Mr. WAFFLE. We therefore recommend that the primary price determination basis, set out on pages 10 to 14, inclusive, be amended to provide that the minimum prices for each individual district, as identified on pages 48 to 54, inclusive, be predicated on the average cost of production of each such district, without reference or in relation to the average production cost of the minimum-price areas described on pages 11 and 12 of the bill. This action would obviate the necessity for determining the average cost of production for the minimum-price areas described on pages 11 and 12 of this bill.

Speaking briefly on coordination of prices in common consuming markets, we do not see how it is possible, in coordinating the prices of the coals of the long-and-short-haul fields, to maintain for any long-haul field a return on all its coal equal to the average production cost of all coal in the minimum-price area, except by increasing the prices of the short-haul coals to the point of extortion, so far as the consumer is concerned, and in fact to a point so high that the shorthaul coal could not be sold in competition with competitive fuels.

This situation can well be illustrated by reference to what will happen in the coordination of the prices of western Kentucky and southern Illinois coals.

I merely use that as a convenient means of illustrating the situation.

To begin with, it is conceded, that the average cost of production in minimum price area no. 1, described on page 11 of the bill, is $1.85, which is the amount per ton that the price structure of both western Kentucky and Illinois must yield to those districts.

To the territory north of the Ohio River the freight rates from western Kentucky are 35 cents per ton higher than from southern Illinois. During the existence of the code the western Kentucky producers claimed the right to and did maintain the prices of their coal 80 cents f. o. b. mines per ton under the southern Illinois f. o. b. mine prices. This 80 cents was made up of 35 cents freight-rate

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