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Greenwood Coal Co., Mount Hope, W. Va.
Mr. CHARLES C. DICKINSON. I understand he wanted to file a brief.
Mr. HAWTHORNE. I would like to file a statement for Mr. Dickinson.
Mr. Hill. You may file a statement for Mr. Dickinson.
(The statement referred to follows:) ADDRESS OF CHARLES C. DICKINSON, PRESIDENT Dickinson Fuel Co., CHARLES
TON, W. VA., BEFORE THE NATIONAL RETAIL Coal MERCHANTS ASSOCIATION, ATLANTIC City, N. J., JUNE 21, 1935
It is not without some hesitancy that I undertake to talk to the members of the National Retail Coal Merchants Association about a subjeci so important to thein and to their customers as the Gutiey-Snyder coal control bill (H. R. 8479), now being considered before a House of Representatives Ways and Means subcommittee.
Nerer within the lifetime of any of us, or within the history of this Nation, for that matter, has any measure been presented to the Congress that has been so fraught with danger to the coal industry, of which you all are important factors; never, I say, has any measure proposed to lodge so much power in the hands of one politically-appointed commission; never has any measure threatened, if enacted, to establish such dangerous precedents affecting all other industries, as does this atrocious and undemocratic Guffey-Snyder bill.
The bill has been called by some of its proponents, a "little National Recovery Act” for the coal industry. But, gentlemen, I tell you that it is a “big National Recovery Act" running riot into autocracy. No such governmental control or inquisitorial powers can be found to compare with it this side of the borders of the United States of Soviet Russia. It undertakes to inquire into, and to lay down, the rules and regulations that would govern practically every phase of coal mining and marketing from the face of the coal in the mine to the consumer's bin.
This iniquitous measure even goes so far in its brazen effrontery as to provide for an initial (mark that word, "initial”) expenditure of $300,000,000 of the already-overburdened taxpayers' money for the purchase, through the Commission, of “marginal" coal acreages under the guise of “conservation", and for the rehabilitation of the miners it would inevitably throw out of work under its own terms.
The most distinctive and most outstanding difference between the “Code" proposed under the Guffey-Snyder bill and the old Code, promulgated under the now extinct National Industrial Recovery Act, is that the National Industrial Recovery Act code provided for control of the industry by the industry and for the industry, whereas this measure would attempt to define and regulate by statute, and through the almost unlimited powers given a commission, every phase and character of coal mining and marketing, including relationships with employees. Even the back-yard mine of the farmer, who, with the help of his sons or neighbors, mines a few tons of coal in an endeavor to trade the product of their labors for a few shrunken dollars in order to keep off the relief rolls, is not forgotten; the Guffey-Snyder bill would regulate him, too.
More astounding than the provisions of the measure itself, however, is the claim of its proponents that Congress has the legal right and power to enact the Guffey-Snyder bill under the commerce clause of our Constitution, and to bludgeon all producers of bituminous coal into acceptance of its destructive provisions by exercise of the Federal taxing power.
In introducing this bill in the House of Representatives at a time when the ink was hardly dry on a unanimous decision of the United States Supreme Court, clearly denying the right of Congress to control intrastate commerce, and also denying any right to an unlimited delegation of its power, the proponents of the Guffey-Snyder bill are, in effect, thumbing their impertinent noses at a basic tradition of the country which harbors them. Shall we countenance such a studied disregard of the supreme tribunal of the land?
Lawyers of outstanding reputation from throughout the United States, including the best legal minds in almost every coal-producing section, have carefully studied the Guffey-Snyder bill and are of the unanimous opinion that the measure is unquestionably illegal for many reasons.
It is worthy of note, on the other hand, that I know of no such written opinion published by the attorneys for the proponents of this measure other than one short and carefully worded memorandum, and no favorable oral opinion has been secured from any lawyer other than the few directly connected with them.
It may be significant to mention here that if, at the end of a few months, the bill is found unconstitutional by the United States Supreme Court, its authors, the United Mine Workers of America, will have been able, in the meantime, to use it as a vehicle for a contract with the coal producers of the United States, whereby they hope to secure a reduction of the work day from 7 to 6 hours, and an increase in the wage scale from $4.60 to $5 per day to $5.10 to $5.50 per day for this shorter work day, or a wage increase of about 28 percent.
I have no quarrel with organized labor as such. A properly conducted mine workers' organization, joining in a fair and properly related wage scale that will give the producers under such labor contracts an equal opportunity to share in the usual and normal markets of the producing field is a good and stabilizing factor in the mining and marketing of coal, and, so long as the mine workers' unions are conducted along those lines, I expect to cooperate with them.
I do not feel, however, that a wage scale that may be agreed upon by two-thirds of the producers should be imposed upon an unwilling minority, as provided in the Guffey-Snyder bill; nor do I think those who contract with some employee organization, other than the majority union of the Nation, should be forced to have a member of such majority union on its district marketing organization.
The bill is patterned generally after the Interstate Commerce Act, except that it is more drastic and more specific. Under it, the Coal Commission would be given complete control of the details of each coal producer's business. The Interstate Commerce Act provides for an independent, judicially minded cummission, whereas the Snyder bill specifically provides for 2 representatives from the coal producers and 2 representatives of the miners, upon a commission of 9 members.
If the two representatives of the producers are from the North or from the South, and could, through logrolling, with the assistance of the two labor representatives, get one of the disinterested members of the Commission to vote with them, they could control the industry regardless of the will of the other four disinterested members.
These members of the Commission would each be paid $12,000 per year, and would have the right to employ clerical and engineering and other assistants, ad infinitum. In addition to making some 40,000 prices for the producers throughout the United States and the correlation of these prices, together with the standards of fair competition, the Commission would also enforce the provisions in regard to labor, purchases, and management of the bituminous coal reserves and compile the tons of statistics incident thereto. In short, the Commission must be gifted with the combined wisdom of the Interstate Commerce Commission, the Department of Labor, Bureau of Mines, as well as the Department of the Interior, under which it operates.
If by chance such a commission is created, it may be expected to grow as did the little Interstate Commerce Commission of many years ago, and to also have a fine new building of its own on Constitution or Pennsylvania Avenue, followed by others for oil, copper, iron, lumber and cotton and every other industry until the Government is obliged to condemn other property along the Avenue radiating from the Capital in order that every industry may have a building for those who know more about its management than those who, through the use of their brain and energy, have developed them.
It is not my intention, and it would not be possible within the limited time at my disposal this morning, to discuss the details of thiş Snyder bill. However, I know you are particularly interested in its marketing provisions and what you would have to charge your customers for the coal which you sell them in the
event it is enacted. Frankly, I have not been able to fathom and interpret its wisdom; nor have I been able to find any of my acquaintances among coal marketing men, some of whom have served on the Coal Code Authorities from its inception, willing to make that claim.
No one, other than the bill's proponents, will agree that it is understandable and workable. Nor have I been able to find any two of its proponents who are in accord as to how it will work. Briefly, it divides the coal-producing area into nine minimum price areas. Area no. 1 includes all of that territory from the western line of Iowa to the Atlantic Ocean and from Canada to the Gulf of Mexico, excepting only Alabama. As to just why Alabama was left out, I do not know, unless it was because those boys down there know how to take care of themselves and its authors did not want to stir up a “hornet's nest.'
The measure further provides that the Commission shall accumulate all necessary information with reference to all mines in the area I have just outlined, producing, perhaps, 300,000,000 tons of coal annually, and after the assemblage of that information, through the medium of district boards, it establishes and promulgates prices on each kind, grade, and size of coal from several thousand mines, including every groundhog hole within the confines of the area.
Truly, gentlemen, they will have a herculean task, but, as earlier mentioned, this Commission is to be all wise, versatile and all pervasive in its power. little mine on Snake Root Branch of Laurel Creek of Salt River felt that it did not have a fair price on its lump coal for delivery to Sticktown, Mich., the Commission would be expected to conduct a hearing and after the evidence had been transcribed and a brief submitted by the producer, the Coal Commission attorney (a new profession) would then tell him within the course of a few weeks what price he could quote to the customer, who, in the meantime, would have contracted for his coal from the producer's competitor.
As a matter of fact and seriously, the district boards and Commission under the bill are required to establish prices on the various kinds, grades, and sizes of coal for all of the mines in each district on a basis that will return to each district in the market area an average realization equal to the average cost of producing and selling the coal without limitation in the market area.
But that is not all. After that figure is determined, the bill would require the district boards, subject to the approval of the Commission and under rules and regulations established by it, to“coordinate (note the new word) in common consuming market areas upon a fair competitive basis the minimum prices and the rules and regulations established by them, respectively, under subsection (a) hereof. Such coordination, among other factors, but without limitation, shall take into account the various kinds, qualities, and sizes of coal, and transportation charges upon coal. All minimum prices established for any kind, quality, or size of coal for shipment into any consuming market area shall be just and equitable, and not unduly prejudicial or preferential, as between and among districts. The minimum prices established as a result of such coordination shall not substantially reduce as to any district the return per net ton upon all the coal produced therein below the minimum return as provided in subsection (a) of this section, nor shall they increase such return per net ton by an amount greater than necessary to accomplish such coordination to the end that the return shall not substantially reduce as to any district the return per net ton upon all the coal produced therein below the minimum return as provided in subsection (a) of this section, nor shall they increase such return per net ton by amount greater than necessary to accomplish such coordination, to the end that the return per net ton upon the entire tonnage of the minimum price area shall approximate as nearly as possible the weighted average of the total costs per net ton of the tonnage of such minimum price area.
There it is in the words of the measure. Read the balance of the bill some night when you have nothing else to do and try to work out the puzzle.
As already stated, you coal men and your customers are more interested in the extent in which this measure will increase the cost of coal and will thereby permit the substitute of other fuels. While fully cognizant of the difficulties of such an undertaking under the wording of this bill, I feel that I should try to make that estimate, with the hope that it may be some help to you.
ESTIMATE OF THE INCREASE IN THE PRICE OF BITUMINOUS COAL IF GUFFEY-SNYDER
COAL CONTROL BILL IS ENACTED
Code administration. This bill provides for a tax of 25 percent of the selling price of coal and a drawback of 99 percent to those producers complying with provisions of the statute. The average cost of coal for area 1, comprising about 80 percent of the national production for the year 1934 was $1.84. On the basis of an average increase cost of $1 per ton, under the provisions of the bill, including the mine workers' demand, the average cost of area 1 is boosted to $2.84. One percent of 25 percent tax would equal about three-fourths of a cent per ton.
Coal reserves.—Title 2 of the bill provides for a tax on all producers of 4 cents per ton for the year 1936, increasing to 8.7 cents per ton for the year 1939, and continuing thereafter at the rate of 3.21 cents per ton until the “initial" appropriation of $300,000,000, provided for the purchase of idie coal properties, has been paid.
The sum of $300,000,000 is entirely insufficient to purchase and retire enough marginal properties to be of value in the prevention of overproduction, and these appropriations would of necessity have to be increased from time to time by Congress. For the purpose of calculation, however, we are using the figures in the bill, calculating tax for the year 1936 at 4 cents minimum and the 1939 tax at 8.7 cents maximum, or an average yearly tax of about 6 cents per ton.
Price fixing.--The marketing provisions of the bill are so confusing that it is difficult, if not in fact impossible, to translate these provisions into definite terms.
Experienced marketing men, who have worked with the code correlation committees constantly during the past 2 years, say frankly that they are unable to figure the selling price of any district or mine under the provisions in this measure. It appears to be clear, however, that the bill sets up price areas and that the average cost of prouction in those areas is to be the minimum average selling price of each district therein. For example, price area no. 1 includes all of the coalproducing States from the western border of Iowa to the Atlantic Ocean, excepting only the Alabama subdivision. This district includes 11 of the old code subdivisions, with 1934 costs ranging from $1.52 in Indiana to $3.21 in Michigan, and the average production and selling cost of that area, without limitations, must be the minimum sales price of any district therein. This scheme, if it is enacted into law, must inevitably increase the selling price of a considerable portion of this area from 20 to 30 cents per ton; and if the demands of the mine workers are acceded to, the increase in part of the territory will amount to 35 cents per ton.
Correlation.-The measure provides that the district boards, subject to approval of the Commission, shall coordinate prices in common consuming market areas upon a just and equitable basis. If this means anything, it is that within the consuming markets of area no. 1, for example, each district must be placed on a competitive basis with every other district in the consuming market of area no. l. For example, West Virginia and eastern Kentucky must be given equal opportunity with Indiana and Illinois in the Indiana and Illinois markets. The freight differential between West Virginia and Kentucky, on the one hand, and between Indiana and Illinois on the other, will average about $1.25 per ton. Correlation can only be accomplished by bringing the low-delivered-cost district up to the level of the high-cost district, for otherwise the high-cost district will not receive the field average.
Therefore, the price of Indiana and Illinois coal under the correlation provisions of the bill, after making allowance for differences in fuel value, will have to be increased about $1 per ton. This is of course absurd. But if the Commission refuses to do this, an aggrieved operator would have the right to appeal to a court of equity to require the Commission to carry out the provisions of the statute. It is confessedly difficult fer anyone to correctly interpret an unintelligent statute, but it can be reasonably stated that, while coordinating provisions of the GutievSnyder bill may not bring about any increase in selling price of some districts, in many sections it will mean an increase of 50 cents to $1 per ton to the consumer. Therefore, for the purpose of this estimate, we will use the average increase of 50 cents per ton.
Artificial costs.-The proposed bill provides that all costs of producing and selling, without limitation, shall be used in determining the average selling price. It is well known that the accounting department of railroads has become expert at the building up of costs for freight rate purposes under Interstate Commerce Commission rules. It may be reasonably expected that the coal industry, with a little education will become almost as expert at this job and that the salaries and other expenses will be so padded and built up as to bring about an increase of costs of not less than 10 cents per ton and perhaps 20 cents per ton. I am therefore using in my estimate an average of 15 cents increase on this account.
General.—While I have confessed that I am unable to correctly understand just what the authors of the bill intended to do under its provisions, I call your attention to the fact that the bill provides that five of the nine members of the Commission shall have no interest in coal and therefore I believe that I can in
terpret it as well as the majority of the Commission who have had no experience.
If you will take the trouble to add up the figures which I have given you, you will find that the increase in costs to consumers of coal will range from 0.147 cents to $1.64, or an average increase to the corsumer of 89 cents per ton. It is hardly possible that the increased selling price of any district would be as little as 0.147 cents per ton, or that the consumer would be willing to pay an increase of $1.64 without substitutirg some other form of heat energy. Nevertheless, these figures show the erractic and the unworkable nature of the marketing and correlating provisions of this bill.
In addition to the increased costs to the consumer, its provisions would inevitably result in marked increase in production in certain favorable districts and necessitate the closing down of a large part of the mines in other districts. Because of the dislocation of sources of supply and production with the resulting high cost to consumers, bankruptcy to certain producers and unemployment to labor are among the distressing features of this unworkable measure.
Wage increases.—But this is not all. The recent strike call of the United Mine Workers was based upon the demand for a reduction of the 7-hour workday to a 6-hour workday, with an increase from $4.60 and $5 per day of 7 hours, to $5.10 and $5.50 per day, of 6 hours, or an average increase of 28 percent with a corresponding increase for piecework. If the usual figures of $1 per ton be taken as the average labor cost, this will mean, in the event the miners secure their demands, an increase of 28 cents per ton. In addition to this, there will be an inefficiency and loss of time due to the starting and stopping incident to the shorter workday. This is variously estimated at from 10 to 20 cents per ton. For the purpose of our estimate, we may consider this 15 cents per ton. Moreover, the shorter workday will either mean an additional investment in equipment or reduced capacity per workday; in either event a rough estimate of this increased cost will be 5 cents per ton. It will be seen from this that the miners' demands will mean an increase of labor costs of about 48 cents per ton.
In one of the recent wage conferences, the operators estimated this additional cost as 45 cents per ton, so that the figure I have given is fairly in accord with others. If this 48 cents per ton be added to the cost of the administration, taxes for coal reserves, increase on account of marketing provisions, increase on account of correlation in some districts, and increased costs due to accounting methods, we have the astounding and almost unbelievable total increase of coal to the consumer of from 62 cents per ton to $2.12 per ton, or a figure equal in some cases to the present selling price of mine-run ccal and an average of $1.37 cents per ton.
If I stop here without offering some solution of this problem, I shall have fallen short of my obligation to the coal industry. We have been severely criticized for our inability to set our house in order. This has been the favorite pa-time, particularly of those believers in regimentation who wuld have the industry put in a bureaucratic strait-jacket in order to accomplish their selfish ends. May I call your attention to the fact that the condition of the coal industry during the past 10 years has not been due to lack of governmental laws, but to a Cnited States statute. I refer to the antitrust laws.
In 1917 an important branch of the industry attempted to set its house in order. As a result of this attempt, more than a hundred of its producers faced the penitentiary under the criminal provisions of the antitrust laws, following which experience, coal men did not dare to get together to discuss their marketing problems until a group of some 1.50 producers in the southern high volatile area, with a production of 60 to 70 million tons, openly met, with all of the records face up, for the purpose of organizing what is now known as the Appalachian Coals, Inc., and fought a test case, instituted by the Department of Justice through the United States courts to a successful conclusion. This was hailed by American industry as a new day for cooperative marketing, a plan protecting alike the producer and the consumer and enabling the industry to pay a reasonable wage to labor.
One of the first acts of Applachian Coals, Inc., was to recommend to its producers that it increase the wages of its employees, to which request a quick response was received. Unfortunately, this child was hardly able to walk before its growth was stopped by the price-fixing provisions, rules, and regulations of the Coal Code under the N. R. Å. With the passing of this act and the decision of the Supreme Court in the Schechier case, this organization is going forward with renewed vigor.
Following the Applachian decision in 1933, and prior to the N. R. A., similar marketing agencies were being organized in several of the large ccal-producing