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In 1920, 80 percent of the steamships receiving bunker fuel at the three Gulf ports of New Orleans, Mobile, and Pensacola used coal; in 1934, 10 percent used coal and 90 percent, fuel oil. There were 3,716 sailings from these ports in 1934, or 28 percent more than the 2,910 sailings in 1920. The bunker coal supplied in 1920 was 963,797 tons, and in 1934, 155,940 tons, or 84-percent less.
Table 1 shows the coal and oil supplied to vessels serving the ports of New Orleans, Mobile, and Pensacola. I wish to call your attention particularly to the tremendous decline in the use of coal at these ports and the increased use of fuel oil. TABLE 1.-Steamship sailings and bunker-coal deliveries at Gulf ports, New Orleans,
Mobile, and Pensacola, 1925-34
1 Last quarter estimated. Authority: Gull Bunker Exchange.
NOTE.-In 1920, 80 percent of steamships from these ports were coal burners; 20 percent. oil burners. In 1934, 10 percent of steamships from these ports were coal burners; 90 percent, oil burners. Sailings from these ports in 1934 were 30 percent more than in 1920; and bunker coal supplies, 84 percent less.
Table 2 shows the total coal production of Alabama, as compared with other States which are recognized as competitive to Alabama, and for the years 1917 to 1934, inclusive.
TABLE 2.-Coal production, Alabama and competitive Staies, showing increase or
decrease since 1917
(1) 34, 002, 192 -4. 37 38, 443, 665 --21. 97 35, 249, 266 -14.81 42, 353, 190 - 36. 25 36, 048, 596 -8. 12 47, 010, 949 +2. 47 50, 811, 585 -3.91 49, 704, 000 -. 03
59, 981, 000 +5.36 68, 713, 203 - 1. 10 74, 907, 365 -11.55 67, 471, 338 -9.79 65, 868, 064 -21. 59 56, 339, 423 -41. 59 44, 618, 269 -61.51 38, 837, 464 -56. 33 39, 874, 430 -53.20 40, 500,000
(1) 86, 441, 667 13. 06 89, 935, 839
3. SO 79, 036, 553 24. 56 89, 970, 707 6. 02
72, 786, 996 38. 26 80, 488, 192 49. 44 107, 899, 941 46. 18 101, 663, 000 73. 22 121, 488,000 102. 10 143, 509, 340 120. 30 145, 122, 447 98. 44 132, 952, 159 93. 72 138, 318, 855 65.70 121, 472, 638 31. 22 101, 471, 281 14. 22 85, 608, 735 17. 27 94, 343, 350 19.11 * 100,000,000
(1) 10, 087, 031 +4.04
10, 289, 808 -- S. 57 9, 326, 830 +4.08 11, 378, 606 -15. 80 7, 492, 378
-6. 89 10, 491, 174 +24. 83 11, 761, 643 +17.61 10, 693, 000 +40. 54 12, 455,000 +66. 02 14, 133, 386 +67.88 12, 916, 042 +53. 81 11, 900, 933 +60.24 12, 748, 306 +10.53 10, 907, 377 +17. 39 9, 698, 640
- 96 7, 692, 180 +9.14 8, 178, 642 +15. 692 9,325,000
(1) +2.00 -7.54 + 12.80 - 25. 72
+4.01 + 16. 60
+6.01 +23. 48 +40. 11
+ 28.05 +11.79 +20. 38 +& 13 -3.85 - 23. 74 -18. 92
Tons produced, per day, per man, in 1933: Alabama, 3.26; east Kentucky, 4.70; west Kentucky, 5.61; West Virginia, 5.20; and Illinois, 6.
Alabama has to wash more than 70 percent of the coal mined, which represents approximately 30 percent of the total coal washed in all States.
We direct your attention to the tremendous decline of Alabama's production. During this same period the competitive States show an increase. The major tonnage loss in Alabama production is due largely to development of hydropower and the increased use of oil and natural gas. We maintain that any allocation of tonnage or production control as may be contemplated and for which a study is provided in the bill will not correct the competitive fuel situation and will cause further heavy losses of coal tonnage from Alabama inines to its lowercost coal-producing neighbors and to laborless substitutes. Prior to June 16, 1933, the coal industry of district 12 (division III) had been engaged in a struggle against greater odds than any coal-producing district east of the Mississippi. Beginning in 1903, fuel oil became its first competitor after wood. The southwestern railroads began conversion from coal to oil in 1915, and in 1920 the use of oil in ship bunkers became a reality. Gradually the marketing frontiers were forced back across the Mississippi and away from the Gulf coast. The distribution system of hydroelectricity begun in 1914, traverses Alabama and the adjacent States with a network of transmission lines more complete than in any similar region in the United States. Natural gas, after earlier experiments with highpressure pipe lines, was delivered from the Monroe (La.) field to New Orleans in 1928, to Memphis in 1929, and to Birmingham and Atlanta in 1930. The major item of cost of these competitors is capital expense and not labor expense. Coal fields of eastern Kentucky and northern Tennessee, greatly overdeveloped during the World War, began, in the post-war period, when northern markets declined, to dump their surplus to railroad and industrial consumers of district 12. Production in these competitive fields in 1926 was double the war tonnage and never declined again to that level, while that of district 12 fell to half of the warperiod production. These competitive factors, increasing annually, combined with the general depression to force the production from this area to its lowest point in 30 years, 1932 production being only 39 percent of the 1926 peak, while the United States reached a low of 54 percent of its 1926 production. Deflation of productive capacity which is sought in this bill has been forced on Alabama, and owners have taken their losses. Title II states that the purchase of coal lands shall bear a reasonable relation to the taxes collected from each district. How can this be accomplished equitably as to Alabama?
This situation has also materially reduced the employees of the coal mines of Alabama, and this is illustrated by the fact that in 1923 there were employed in the coal-mining industry in our State 29,690 men in 255 mines. On July 24, 1934, this figure was 16,706 men in 76 mines. Some of these employees have obtained employment in other classes of work, but there is an excess of between 1,000 and 1,500 employees in the industry, and approximately 5,000 are on public relief or working at subnormal wages in truck mines.
The main problems of the coal industry in division III were well defined and understood in the conception and administration of the Coal Code:
First. To prevent a recurrence of the exploitation of labor. This problem is one which definitely is being solved.
Second. To reduce production costs to meet the competition of other coals and forms of energy and heat production. This problem is possible of solution by the management of industry, if no impassable barriers are raised by outside agencies.
Third. To provide for the excess of employees above the ability of the industry and of the market to support or the capacity of present mine facilities to serve. This is a problem toward which Alabama producers have always felt a moral responsibility but under changed conditions are now convinced that the permamanent displacement of employees, due to irretrievable loss of business to laborless fuels is a public, and not an industry, problem.
Fourth. To increase consumption of coal. This problem deals entirely, insofar as the coal industry of division no. III is concerned, with the banishing market, due principally to the competition of fuel oil, natural gas, and hydroelectricity.
Since the bill H. R. 8479 makes mandatory the application of uniform limitation of hours, and the sponsors of this bill have demanded the 6-hour day, this feature will be considered in discussion of the production problems of Alabama.
The application of a national law regulating the coal industry of the United States, and especially a uniform limitation of hours, would have a disastrous effect upon the coal industry of Alabama, on account of its peculiar natural handicaps of production.
The many coal seams of Alabama vary greatly in thickness, the thinner seams of clean coal ranging from 26 to 36 inches, and coal seams of greater thickness being interspersed with many partings of foreign material, with a thickness total ing 24 inches or more in some of the seams. Variations in dip occur from 0° to 60°. In many of the seams which are comparable to the flat-lying seams in other areas, there are many rolls and faults, necessitating heavy grades or frequently three of four systems of transportations from the working face to the surface. In all of the mires where the seams are not flat-lying and natural drainage is not obtainable, various amounts of water add still further to the cost of production. In one instance, 16 tons of water are pumped for very ton of coal produced. Under these conditions, the Alabama coa industry has been unable to increase its daily production per man to the point reached in competitive fields.
The hourly productive ability of coal miners in district 12 under the bill (Alabama and southern Tennessee and Georgia) having been increased when the 8-hour day was put into effect, and further stretched, in a much less degree, when the 7-hour day was established, is not susceptible to further augmentation, except by the installation of mechanical aids. Inefficiencies that existed under the 8-hour day were of necessity remedied during operations under the 7-hour day, leaving little hope of improvement from this source.
The physical characteristics peculiar to the coal seams of this area do not permit, except in the most favorable locations, in the cleaner but thinner coal seams, any substantial mechanization. Presence of thick partings of rock preclude any opportunity of miners loading additional coal per hour at many mines. It is indisputable, therefore, that the 6-hour day will decrease the daily production of Alabama coal mines at least 15 percent, additional to the decrease suffered when the 7-hour day became effective.
Thin pitching seams, and the thicker seams with many inherent impurities, necessitates high capital investment per ton of capacity, and high maintenance and operating costs. The capacity of housing facilities, hoisting engines, preparation and washing plants, slopes, shafts and other transportation facilities is based in most instances on 8- to 10-hour operating cycles.
During the first 9 months of operation under the 7-hour day Alabama coal mines lost at the annual rate of $250,000. There is no hope of increasing the realization by increasing the present sales price, which prices have not proven compensatory, because of the competition of oil, natural gas, and hydroelectricity on all sides. To further increase cost by decreasing working hours, resulting in further curtailing production would be economic death to the coal industry of Alabama.
The only alternative would be to make major capital investments in transportation equipment in every mine to the end that output might be maintained and cost increases minimized. This would entail heavy capital expenditures, beyond the financial ability of the individual companies.
The steady loss of commercial tonnage in this field from 13,900,000 tons in 1926 to 6,800,000 tons in 1934 has been accompanied by severe capital losses. During 1934 and 1935 to date several mines have been forced from the aforementioned causes to discontinue operations. No further capital is available for the speeding up of production in an industry in which conditions still existing have forced the abandonment of the utilization of practically half of its productive capacity in the past decade. This is definitely true since the commercial mines of Alabama (excluding captive) lost 272 percent in tonnage in 1934, as compared to 1933; while the coal production of the country as a whole gained 7 percent.
The market problems of the Alabama coal fields must be taken into consideration if an additional burden of cost as contemplated in this bill, both in the form of taxes and in the practical effect of shorter hours and increased wages, is to be imposed upon it.
The territory into which Alabama ships its coal consists principally of five States: Alabama, Florida, Georgia, Mississippi, and Louisiana. Higher wages and greater production costs are not paid by the producer, but by the consumer, and the ability of this consuming area to pay a higher price for the coal consumed is the measure of increase or decrease in hours and wages which may be made and yet continue to operate. Such a determination cannot be made nationally to fit the needs or desires of the producers and miners in the larger producing areas where the limit of the market to absorb a higher cost has not been reached.
In the consuming area of Alabama coal fields the average hourly common-labor rate is 31 cents; as against the hourly outside common-labor rate in the Alabama coal industry of 40 cents.
This area contains 9 percent of the population of the United States; and, where in the United States as a whole 56 percent of the population is urban and 44 percent rural, in the Alabama consuming area only 32 percent is urban and 68 percent is rural.
Of this population 38 percent is Negro; while only 9.7 percent of the population of the United States is Negro.
In this consuming area only 34 percent of the families own their homes; while in the United States as a whole 48 percent are home owners.
In 1933, which is the latest year for which the figures are available, the Alabama consuming area paid only 2 percent of the income taxes of the United States, and the value of its manufactured products was only 3.4 percent of the value of the manufactured products of the United States.
In former years the production of electric power has been a great outlet for Alabama coal. The use of coal from our coal field for this purpose has declined so rapidly that it has reached a point which must be given serious consideration in the application of any regulation which will further prevent the use of coal. In 1933 this area produced 542 percent of the total electric production of the United States. Of the electric production in this area, 60.50 percent was produced by water power, 22.22 percent was produced by gas, 15.92 percent was produced by fuel oil, and only 1.33 percent was produced by coal.
With such a market condition confronting it the coal industry of Alabama must look with alarm upon any agency tending to further increase the cost of production, which must necessarily be reflected in an increased price. With the lowest wage rate it has the highest cost and the highest selling price east of the Mississippi River. This high selling price is not high enough to meet the cost, but it cannot be increased because it is dangerously near the point where Alabama's customers, using at least 1,500,000 tons of industrial coal, will convert to competitive fuels. With the loss of this there will be an added loss of 500,000 tons of resultant domestic sizes. This annual loss certain to result from any increase in price means 800,000 less man-days for Alabama coal miners and between 4,500 and 5,000 more miners will be on public relief. In the years immediately preceding the code the Alabama coal industry has struggled valiantly and in a vain effort to meet the competition of other fuels. For the period of operation under the code it has distributed its capital in the form of wages, as represented by an operating loss of over a quarter of a million dollars, and depleted its reserves of coal without profit.
Neither our coal seams, our markets, our conditions, or our competition permits a wage scale equal to the other regions. The inevitable and persistant drag of a national organization such as established by this bill is to simplify by making uniform. Our experience with the National Recovery Administration demonstrated that, and this bill bristles with the same idea. We survived then under an injunction. We do not propose to submit ourselves to that situation again. Bill H. R. 8479 states in title I, section 1, its policy “to prevent
the establishment of disparate labor costs detrimental to fair competition.” Our experience of the past 2 years leaves no doubt as to its intent and confirms our fear of its design to adjust permanently differentials which have been created by many years of commercial necessity, and will be altered in the years to come by new and ever-changing commercial requirements. It attempts to level economic inequalities between different sections of the country without recognizing that these economic inequalities are caused by geographical position, climatic conditions, freight-rate structures, and other factors that are entirely outside and beyond the control of the coal industry. In setting up machinery of administration by strong central governmental commission, by artificial curtailment of production, by allocation, by governmental purchases of coal properties, and by rigid control of wages and hours it will, in our fixed opinion, effectively defeat the purpose of stabilizing the industry--work serious detriment to the people engaged therein--and greatly increase the cost to the consumers of fuel, especially to those least able to bear the same, viz, the householder who is dependent on coal for heat and comfort of himself and members of his family.
The minimum price based on the average cost of any district for all sizes, grades, and qualities of coal will have the effect, within the district, of increasing the production of higher quality coal at the expense of those mines mining the lower qualities and to the extent that the allocation to the individual mines will permit. As between districts the district having the lower cost will extend its markets far into those areas now being served by the higher cost producing districts.
The basis of allocation of production control set out in the bill, section 16 (5), in which a plan will be recommended for all districts and producers on January 6, 1936, leaves the producers in doubt and dread as to their probable standing in the future.
Whatever plan may be proposed it must be on a nationalized basis and can have only one ultimate result. This result would be that the producing districts
having the lower cost and consequently the lower minimum price would increase its production at the expense of its higher-cost neighbors up to its allotment. Thus it is assured that there would be concentration of tonnage in the more fortunate areas and the larger districts would become larger and the smaller districts would become smaller. We are a small district and a high-cost district, but it is in the public interest that we should survive, and we intend to take our stand to that end.
It cannot be hoped that the various boards and commissions can be depended upon throughout a long period of years to preevnt injustices. Politics and governmental control have never been divorced in the public interest. Tribunals of this sort set up in the public interest are susceptible to political or regional influence where overwhelming majorities are involved in the national set up. Pressure will inevitably be brought upon any central governmental board in the interests of heavy volumes of production or large percentages of employees or of special consumer blocs. Succumbing to such pressure these boards then become the champions of the larger groups and the interests of the smaller groups are subordinated.
The industry, which includes both the producers and labor, is extremely selfish and short-sighted if it does not consider the man who pays the bill. To the consumer of Alabama coal there would be an increased coal bill amounting to not less than $2,000,000 per year, if the demands for shorter hours and increased wages by the sponsors of this bill were made mandatory and further taxes imposed by legislation as the bill under consideration provides and permits.
The consumer is not bound by this law, if enacted, and in the Alabama consuming area will turn all the more quickly to the competitive fuels, such as natural gas, fuel oil, and wood and to coal mined in other States where a lower cost of production obtains, all of which are so readily available for industrial and domestic uses.
In conclusion we believe that it is inconceivable that any effort to solve the problems of industry will seriously contemplate the sudden and drastic readjust. ment and regimentation of industrial districts which will result from the enact. ment of this bill.
We believe that a combined political and economic control is not practical or constructive.
We believe that before owners will see their mines abandoned, their employees idle and their properties condemned to liquidation, or before the miners will see their means of livelihood vanish there will be many agreements in violation of this bill and to the further detriment of those who would be duty bound to a Federal statute.
We believe that the Code of Fair Competition under the National Industrial Recovery Act has gone a long way toward self-improvement of the industry and at no injustice to the consumer-and, in passing, let me say that the coal operators of Alabama did voluntarily and are continuing to observe and comply with the provisions of the code, notwithstanding the recent decision of the Supreme Court.
The helpless condition of the coal industry, which was years in the making, cannot be remedied in a short time. The road to recovery may yet have many rough places ahead and the outlook may be discouraging, but it is obvious that from the depths of the depression in which we now find ourselves that we cannot see through the fog of uncertainty and with a clear vision look into the future. Certainly, at this time we cannot see clearly enough from a long range perspective to chart a rigidly and arbitrarily defined course for the bituminous coal industry such as is stipulated in the bill under consideration by your honorable committee, and which, if enacted into law, will prove so disastrous to the coal, coke, iron and steel industries, the workmen dependent thereon for a means of livelihood, and the consumers of fuel in the trade territory accessible to the coal fields of Alabama.
Mr. Hill. I will state for the record that the following-named firms have sent wires to me stating that they were placed on record as favoring the Guffey coal bill, and advising that they are not in favor of it, and want their names registered as opposing the measure:
Kemmerer Gem Coal Co., Norton Va.