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demand made in a single month by working about 95 percent full time.
Mr. Hill. Thank you very much.
(Mr. Suender subsequently submitted the following extension of his remarks:)
The Consolidation Coal Co. is opposed to the enactment of this bill (H. R. 8479) or any other form of special legislation which substitutes complete governmental control for industrial management of a basic industry.
We do not believe that the mining and distribution by the producers of bituminous coal is affected with a national public interest to such extent that it is subject to Federal regulation under the commerce clause of the Federal Constitution, any more so than the production and distribution of oil, gas, lumber, anthracite, agricultural products, and many other commodities. Producers, especially of the commodities specifically named, could argue with equal force with those who favor this legislation that they too are entitled to similar Federal protection. Press reports indicate that groups in the textile industry have already_studied the Guffey bill and believe its principles are applicable to their industry. Furthermore, if production and distribution by producers of bituminous coal are affected with a national public interest, is not the final distribution and consumption similarly affected? As a layman, I think so.
We do not believe that the bill, if enacted and sustained by the courts, car be enforced to assure that degree of market stability, which is so highly desirable in all industry. Congress passed the antitrust laws, which make it difficult for industry to maintain stable markets. These laws were passed in the public interest, and now it is proposed that if these laws are set aside for this particular commodity and the Guffey bill is passed, that that will be in the public interest. We do not think so.
It is true that under the control of a Coal Commission of 5 impartial representatives, 2 of the producers and 2 of the mine workers, it is proposed to police the industry and thus protect the public interest. Consumers of bituminous coal have a right to fear a possible collusion of the representatives of the producers and the mine workers, and the acquiescence of at least one of the five impartial members in their joint viewpoint. The personnel of the proposed Commission, from the consumers' standpoint, will be considered not only fantastic, but bold in purpose. Administration and enforcement, by a Washington commission of nine men, of the provisions of this bill is practically impossible, even with the army of accountants, clerks, engineers, investigators, and arbitration boards that will be required to control and regulate the production of 500,000,000 tons of coal produced throughout 26 States. Investigations and fishing expeditions into every avenue, from the mine face to the smoke stack of the consumer, will be found to be necessary.
The market provisions of the bill are unworkable, and if enacted into law and held Constitutional, it will be impossible of enforcement against thousands of small producers, and not a few of the more substantial ones. Any law that encroaches on the rights of individuals cannot be enforced unless a very substantial majority of those affected favor such law.
The passage of the bill will result in greatly increased prices to the consumers and not lower prices over a period of 10 years as stated by Congressman Snyder. We think this increase will approximate 50 cents per ton. Every increase in selling prices brings its crop of small producers. Thousands of truck mines came into production after code prices under N. R. A. became effective.
Increased selling prices always result in tonnage losses to rival fuels. Tonnage losses result in higher costs, and in turn, under the provisions of this bill, higher prices to consumers; then a futher loss of tonnage, and a consequent continuing, upward spiral of prices to the consumer.
Over 60,000,000 tons annual production of bituminous coal was lost to other sources of power over a period of 10 years. That loss alone would, if regained, mean full employment for 30 days for all of the industry's present productive capacity, a most convincing reason for maintaining the lowest selling prices: consistent with reasonable hours of employment, wages, and working conditions for our employees.
The smaller producers, with costs of production in excess of the weighteď average cost of the field or minimum price area, will under the provisions of this bill be forced out of business; thus it discriminates mostly against the small enterprises.
If the bill is passed and held constitutional, it will require all of a year to iron out its present unworkable provisions, and during that time there will be confusion and conflict. If the act is not sustained, much damage will have been done.
The labor provisions are not fair to either the producers or the employees as a whole, regardless of the question of constitutionality of that section of the act.
Title 1, section 1, from line 19 on page 2 to the end of line 13 on page 3 reads:
“That the excessive facilities for the production of bituminous coal have led to practices and methods of production and distribution that waste the coal resources of the Nation and burden and obstruct its interstate commerce, so that control of such production and regulation of prices realized by the producers thereof are necessary to promote its interstate commerce, remove burdens and obstructions therefrom, and protect the national public interest therein: That practices prevailing in the production of bituminous coal directly affect its interstate commerce and require regulation for the protection of that commerce, and that the right of mine workers to organize and collectively bargain for wages, hours of labor, and conditions of employment should be guaranteed in order to prevent constant wage cutting and the establishment of disparate labor costs detrimental to fair competition in the interstate marketing of bituminous coal, and in order to avoid those obstructions to its interstate commerce that recur in the industrial disputes over labor relations at the mines.”
Now let us examine into this charge of excessive facilities, which presumably is largely the claimed necessity for the enactment of this bill.
Judge Warrum and Congressman Snyder both testified before this committee that over a period of 20 years the industry had a productive capacity or an overdevelopment that would have enabled it to deliver 50 percent more tonnage than the consumptive demand. This is not a fact. It is true that for various reasons the industry formerly had development and facilities for approximately 125 percent of consumptive demand, and not 150 percent; but today, after the abandonment of many mines—brought about, mark you, by low selling prices over a period of years and recent reduced schedules of working hours per week-its excess productive capacity over consumptive demand will not exceed 5 percent.
The industry must of necessity have development and facilities to serve the trade satisfactorily in the months of peak demand, and if in such months it requires full time to satisfy the demand we submit that there is no overdevelopment; and conversely, if such peak demand can be satisfied with 50 percent working time, then the development in excess of consumptive demand is 50 percent.
The test of over-development is not the comparison of annual production with annual capacity, but rather peak demand against capacity. That the industry is not now overdeveloped is clearly shown in the Department of Interior production figures for the months of peak demand in March 1934 and March 1935, when the industry worked close to full time, producing in each month less than 40,000,000 tons, or about 9,000,000 tons more than the average monthly demand in the 17-month period, January 1934 to and including May 1935.
When normal business conditions prevail, the peak monthly demand will exceed 50,000,000 tons. A demand of 50,000,000 tons will require additional development and equipment in excess of that now available; and yet this bill proposes, in the light of such facts, to set up a national coal reserve through the purchase of $300,000,000 worth of mines, leases, and lands; levy a tax on production; and authorize the producer to add such tax to the selling price. In other words, the consumer of bituminous coal is, in effect, purchasing $300,000,000 worth of cats and dogs and presenting them to the United States Government for the creation of a national coal reserve; so that the producer who made a bad investment may have his losses mitigated or repaid to him in full. If the consumer of bituminous coal must mitigate or make good the losses of bituminous producers that speculate in mining ventures, why should not producers of many other commodities demand similar treatment?
The proposal is preposterous and we believe unconstitutional. It would remove vast areas of coal lands from State taxation, and seriously affect schooldistrict revenues; and will not, in our judgment, accomplish its intended purpose. It will, we believe, eventually lead to the nationalization of the bituminous coal industry.
The bill proposes to have a Commission of nine men investigate “The economic operation of mines with the view to the conservation of the national coal resources. Can it be possible that anyone considers seriously that this Act, known as “The Bituminous Coal Conservation Act of 1935”, should it become a law, enable nine men to improve on the brains and effort expended by manage
ment in this great industry in their continuous study and search for the maximum economical extraction and the efficient operation of their mines, over a long period of years-a study and search that never ends? Those who write glibly on this subject give little consideration of the cost to the consumer, and the fact that higher prices mean loss in tonnage. Certainly we can get a greater extraction if cost to the consumer is not to be considered.
The price of bituminous coal in many areas is definitely fixed by the price of oil, natural gas, and hydroelectric power. Our tremendous coal reserves, plus our unharnessed waterpower sites, do not warrant maximum extraction at considerably higher prices to the public.
Furthermore, if we are to interest ourselves in conservation of coal, we counteract this objective if we purchase marginal mines and abandon them for, say, 15 to 20 years. Many of such mines would never be reopened, and much of such abandoned tonnage would be permanently lost. This opinion is confirmed in the United States Coal Commission's Report of 1923.
The statement was made by Congressman Snyder and others before this committee that producers with 65 to 70 percent of the national production favor this bill. We believe that over 60 percent of the national tonnage is produced by those who definitely oppose this bill.
Section 13 of the bill provides that every corporation engaged in mining bituminous coal which ships its coal in interstate commerce or which uses the mails or other means of communication in interstate commerce to dispose of such coal shall be subject to and as a prerequisite to its right as a corporation to engage in interstate transactions shall file with the Commission its acceptance of the provisions of title 1 of the act. Neither Hitler, Mussolini, or Stalin could improve on this provision.
Congressman Snyder stated to this committee that the bill is offensive only to those interests who welcome a return to cutthroat markets in the hope that they may survive. We challenge that statement. It is not true. The Consolidation Coal Co. resents that charge, and I am sure every other producer who opposes the enactment of this bill, if given the opportunity, would brand that statement as without foundation in fact. We admit its sensationalism, but we trust that not one member of your honorable committee will give it serious consideration. The statement was, we believe, grabbed out of thin air. We never heard of a single producer who wanted a return of cutthroat markets; on the contrary, those who oppose the bill, along with some who favor it, are busily engaged now in organizing central sales companies, patterned after the plan of Appalachian Coals, Inc., which has the approval of the Supreme Court.
In addition to Appalachian Coals, Inc., functioning since April 1933, which includes tonnage in the southern high-volatile fields in Virginia, West Virginia, Kentucky, and Tennessee, an area producing over 70,000,000 tons under present business conditions, we understand that similar sales companies have been organized or are now organizing in Alabama, Pennsylvania, Ohio, northern West Virginia, Indiana, Illinois, Iowa, Colorado, and the smokeless fields of West Virginia. We believe that when such sales companies are organized and functioning in all districts, that a fairly high degree of market stability will prevail,
Congressman Snyder further stated to this committee that the producers were unwilling to make a wage contract in the absence of legislation which assures a stable market, or words to that effect. A wage contract was offered in March 1935 after market prices as determined by code authorities under N. R. A. broke down. A wage contract will be made, we hope, regardless of the disposition of this bill. We now have collective bargaining contracts covering 95 percent of bituminous mine workers. We do not now and have not for the past 6 months enjoyed stable prices. There is no reason in our judgment why such contract cannot be renewed from time to time. All that is necessary is agreement on reasonable hours, wages, and working conditions. The passage of this bill is not a necessity in the making of such a contract. Its passage would create a condition of uncertainty as to labor relations and markets that would make it more difficult to negotiate a wage contract and probably necessitate producers to insist on negotiating wage contracts in each district rather than groups of districts as is now the custom.
It has been my experience that collective bargaining contracts have been made year after year through periods of stabilized as well as unstabilized markets.
This bill does not give the consumer sufficient consideration. This fact is brought out clearly in a short broadcast on May 15 by Mr. Boake Carter, a copy of which I desire to make a part of the record.
This legislation, in our judgment, is a most amazing proposal.
EXCERPT FROM BOAKE CARTER BROADCAST OF May 15, 1935, SPONSORED BY
PHILCO OVER COLUMBIA BROADCASTING SYSTEM Sometimes it seems that some of the experience that has been taught through efforts to apply planned economy in the last 2 years, has gone for naught. Instead, when a plan blows up, the theory is to produce a bigger and better plan. Now the latest plan is to rescue the bituminous coal industry and between soaking the consumers, offering a new paradise for jobholders and creating monopolies, the Guffey coal bill, which the Senate may have to consider before it goes home, is one of the fanciest plans produced among all the plans of the last 2 years. Officially it is tagged as a stabilizer for the bituminous coal industry and a conservator of coal. Being a user of coal and fearing that, as the bill hints, the United States was about to run out of coal, we made anxious investigation, to find that the Federal Trade Commission in 1926 reported that at the then rate of national consumption America's coal supplies would last only the very short time of 7,000 more years. Can it be that the planners of the Guffey coal monopoly bill suspect we shall all become a nation of Methusalah's and might run out of coal in our old age, that they propose to protect us in 1935 from running out of coal by 2635 A. D. Or is it that they spy new ways to take care of more jobholders for the next 7,000 years? For it proposed a national commission and then a string of district boards of coal producers tied to the strings of the national commission, and from the national commission would issue learned decisions on how to and how not to operate the bituminous coal business. It is not hard to foresee that superintendents, district inspectors, divisional supervisors, field agents, clerks, typists, stenographers, geol. ogists, maybe, offices, filing cabinets, desks for the parking of tired jobholders' pedal extremities, chairs, soon fastening themselves on the public pay rolls to become another bureaucracy fastened barnacle-like to the bottom of the ship of American economy. Among other things the head commission could do under the terms of the measure, would be to cut production, establish quotas by districts.
Business could not be carried on without first getting august permission from the supreme powers. The commission could fix prices, although the Senate and the House have just voted in the N. R. A. extension to kick price-fixing out of the window. Members who joined up would be rewarded by exemption from any public responsibility by being freed from the antitrust laws, although the present Congress has raised the roof about this very thing among all other code experiments of the last 2 years. To copper bottom the bribe, for that is what it is and why not call it so by its right name, the planners propose to fine those who don't join up a 25 percent tax, and then split 99 percent of the revenue up among the ones who might join. Dick Turpin and Jesse James were pikers, in their day.
Sometimes one wonders if the slippery tories of the high, wide, and handsome day of 1928 and 1929 hadn't better look to their laurels. Also the bill returns to that un-American, unpleasant principle of official boycotting, which backfired so disconcertingly in official faces when boycotting became a 9-day wonder in 1933 Not content with thus creating one of the most amazing government sponsored monopolies of all time, the climax is reached with the proposal that Federal authorities be authorized to spend 300 millions and buy up all the coal mines and properties which might interfere with the operation of such a monopoly. Thus it can be seen that the Guffey coal plan is a plan of plans, indeed. It kills so many birds with one stone, cares for the jobholders for 7,000 years; advances in seven-league boots toward state socialism; takes care of the monopolists; provides for more taxes. And as usual, the luckless “Johnnie Q. Public', taxpayer and consumer, is to be taken over the hurdles. He kicks in with the 300 millions to buy up the mines as his gift to the monopolists, and then pays for higher-priced coal the monopolists will hand him for his cellar furnace. It is hard to imagine a more astonishing piece of legislation proposed in all seriousness.
STATEMENT OF C. H. MEAD, REPRESENTING THE C. H. MEAD
Mr. MEAD. Mr. Chairman and gentlemen of the committee, my name is C. H. Mead, representing as president C. H. Mead Coal Co.; Mead Smokeless Coal Co.; Faith Smokeless Coal Co., all producers of smokeless coal; Milams Fork Smokeless Coal Land Co., a lessor of smokeless coal; and Ravencliff's Development Co. a producer of natural gas. I think generally I represent about 80 percent of the
tonnage of the Winding Gulf district. I do not know that they are in accord with my views, but I think they are.
Knowing that my time will possibly be limited, I have prepared a statement which I would like to file with the committee. I have divided it into certain captions. The first one is vital, as I see it. It refers to “Wholly captive properties, title II, and the 25 percent tax on coal producers.”
The next I have is “Important; in support of title II and in opposition to propaganda being sent out to influence purchasers of coal against H. R. 8479."
The next I have listed is "General suggestions for the improvement of H. R. 8479." I will read those:
First, I suggest that section 2, page 3, be changed in such manner that the National Bituminous Coal Commission be comprised of 1 coal operator from either the North or the South, 1 miner from the opposite direction, 1 representative of the buyers of industrial coal, 1 representative of the distributors of coal, and 5 disinterested persons.
Second, I am much opposed to marketing agencies, as I feel they will eventually result in monopolies. I do not think there is any question about that.
Third, on page 19, line 22, the act provides for the Commission to prescribe a reasonable price allowance to distributors. I suggest that the Commission give due consideration to the testimony of two representatives of distributors made this the 26th day of June 1935, that a part of the service rendered the coal industry was furnishing the producers money to finance pay rolls.
Fourth, on page 6, line 23, part 1-Organization and ProductionI suggest that all district boards be composed of as few members as may be absolutely necessary; this to prevent impartial boards. We had boards under the code that were, I think, partial.
I have another one listed down here as “bad”. Possibly I had better state first, Mr. Chairman, that I do not know whether I am for this bill or not. If you can remove two things from this bill, that is, the captive tonnage and the "bad" part I am going to read under "labor relations”, I am for the bill. If those two are not removed, I am against the bill.
I want the whole captive tonnage exempted from the provisions of the bill, and this one provision under part III, Labor Relations, changed. I am going to read that. The other can go on file.
On page 26, line 9, we find the following:
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.
Under this provision two union miners could impose their will upon a thousand or more miners who did not desire to work as union miners. This is so manifestly unfair and unreasonable that surely the United States Government would not impose upon a free people such an injustice.
In this connection, beg to say that I have always thought that part of the country should be union and part nonunion, each acting as a