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STATEMENT OF H. L. FINDLAY, CLEVELAND, OHIO; VICE PRESI.
DENT, YOUGHIOGHENY & OHIO COAL CO.; PRESIDENT SIMPSON CREEK COLLIERIES CO., AND MEMBER OF SPECIAL LEGISLATIVE COMMITTEE OF THE NATIONAL CONFERENCE OF BITUMINOUS COAL PRODUCERS
Mr. FINDLAY. Mr. Chairman, my name is H. L. Findlay, Cleveland, Ohio. I am vice president of the Youghiogheny & Ohio Coal Co., which owns and operates mines in southern West Virginia, western Pennsylvania, and Ohio.
I am also president of the Simpson Creek Collieries Co., Cleveland, Ohio, with mines in northern West Virginia.
I am a member of the special legislative committee of the National Conference of Bituininous Coal Operators, who were largely responsible for the marketing provisions in the bill which you have before you for consideration. I helped to work out those provisions, and I think I am in a better position to say what they mean than many of the opponents of the bill who have appeared before you.
Opposing witnesses have asserted that these provisions will very materially raise the price of coal. They have also testified that they were satisfied with the provisions under the N. R. A., and that they helped them and the industry generally to quite an extent.
The provisions of this bill as to marketing do nothing more than was done by the bituminous coal code, except that there are real, effective enforcement measures in this bill, which were not provided for in the bituminous coal code.
The marketing provisions set up in part 2, section (a), provide that the price shall originate with the district boards, and that the district boards, shall permit prices to be later coordinated and to be the total average realization of the minimum price area. That is just the start.
Then they next go--you have the district boards coordinating the price, or they go to the commission. And when they go to the Commission for coordination the Commission then has the duty imposed upon it to take into consideration all the factors which enter into the making of the delivered price on coal. And when they get through coordinating these prices there is nothing in this bill which indicates that those coordinated prices should be any greater than the prices which have prevailed under the code.
I do not see, considering the way this is written, how it would be possible to construe it the way some of the witnesses have. The net result, for instance, in divisions number 1 and number 2, which is the minimum price area, for 10 months under the code, from April 1934, to January 1, 1935—the total cost in that area was $1.83, and the realization was $1.86, or a total margin of profit of 3 cents per ton over and above the cost.
Some proportion of that coal during that period was sold at precode prices under contracts which had prevailed prior to the code, which would probably amount to a few cents per ton more in realization than if it was all sold at code prices.
Taking that into consideration, the margin of profit for the large area which produced about 85 percent of all the coal consumed in the United States, would not exceed probably 7 or 8 cents per ton. The marketing provisions of this bill are set up so that you will have approximately the same kind of a set-up when the prices are coordinated.
There is a possibility, even with the working of this bill, that the prices will be slightly reduced. You will note the provision on page 15, that after they are coordinated they shall not increase the return per net ton by an amount that is greater than the amount that is necessary to accomplish that coordinationto the end that the return per net ton upon the higher 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.
If you take that literally, that would mean a slight reduction in the price below the code price instead of an increase, as some of the witnesses who have appeared before the committee have stated.
I am going to file this statement with the committee, which is a “Statement showing results of regulation of the bituminous industry", and which has some very illuminating figures on it.
illuminating figures on it. I will not attempt to go into any further detail on that.
Mr. Hill. If there is no objection, you may file that statement for the record.
(The statement above referred to is as follows:)
CIRCULAR LETTER No. 24
Beckley, W. Va., June 6, 1935. To Members of Executive Committee:
Below we are giving you a list of figures compiled by W. A. Richards, Bluefield, which we are sure will be of interest to you.
P. C. GRANEY, Secretary.
Statement showing results of regulation of the bituminous industry
37, 800 19, 100 20, 800
Western Pennsylvania in 1933 affected by strikes to approximately the gain shown in coal year 1934.
• Cost and realization in November and December 1933, for west Kentucky was 15 and 21 cents less respectively than average of Illinois and Indiana. Iowa in same period was
3 Totals do not include west Kentucky nor Iowa, except where shown in columns.
Adjusting for entire coal year 1934-35 by using January realization and 10 months' cost for February and March 1935, and correcting for west Kentucky and lowa on above basis, the average cost of divisions 1 and 2 becomes $1.84 and the average realization $1.87.
• Division 3 for 9 months only. December figures in January columns.
Mr. FINDLAY. In view of the fact that there apparently is some misinterpretation of the wording of the marketing provisions, we have endeavored to broaden them to an extent that will probably clear up some of the misunderstanding that some of the witnesses have had in regard to these provisions.
In order to do that, I want to suggest to you an amendment on page 11, line 9, to strike out the words "mathematically possible", and to insert the words "may be". Also, on page 11, lines 9 and 10, strike out the comma at the end of line 9 and the words "not less than" and also the comma after the word “than”, in line 10.
Then on page 15, line 15, I suggest that you strike out the words
as nearly as possible", and insert a comma and the words "and be not less than". Also, on page 15, line 8, I would suggest that you strike out the word “substantially" and insert the word "unduly" in lieu thereof.
I also have two other corrections in wording that I would like to present, as follows: On page 17, lines 3 to 14 inclusive, strike out the first two paragraphs of sub-section (e) and substitute:
(e) Subject to the exceptions provided in section 13 of this title, no coal shall be sold or delivered at a price below the minimum or above the maximum therefor approved or established by the Commission, and the sale or delivery of coal at a price below such minimum or above such maximum shall constitute a violation of the code.
Subject to the exceptions provided in section 13 of this title, a contract for the sale of coal at a price below the minimum or above the maximum therefor approved or established by the Commission at the time of the making of the contract shall constitute a violation of the code, and such contact shall be invalid and unenforceable.
Addressing myself to the statement that the price of coal will be temporarily increased, I have noted in the press that after Mr. Francis appeared before the committee there were numerous articles published throughout the country, particularly in New England, to the effect that the people in New England would have to add $20,000,000 to their coal if this bill should pass.
That is not a fact. As I recall Mr. Francis' testimony, he started with the assumption that the present market prices were 40 cents below the code price, and then attempted to account for a 60-cent increase over and above that, or a total of $1 above the present market price.
As I recall Mr. Francis' analysis of that he assumed that the passage of this act would result in the miners' present demands being granted. I do not believe Mr. Francis was justified in assuming that.
Mr. VINSON. My recollection is that was 46 cents of the 60cent increase above the N. R. A. cost.
Mr. Findlay. Yes; I think that is right. As I recall his further anaylsis, 4 cents of the 60 cents was the 4-cent tax due to the provisions in title II, and an additional 10 cents was due to the loss occasioned by the starting and stopping of operations which you would have under the 6-hour day.
Mr. COOPER. Since you have mentioned title II, would it interrupt your train of thought if I asked you a question or two about that now?
Mr. FINDLAY. No.
Mr. VINSON. Due to the 60-cent increase above the N. R. A. cost, if hours and wages were maintained as is, there would only be an item of 4 cents increase for taxes under title II.
Mr. FINDLAY. That is correct, Mr. Vinson. That was the only item of cost that in my judgment Mr. Francis really could attribute to this bill, and I do not believe he is correct in regard to that, because that might be true for the first year, as title II became operative in the higher-cost mines, yet the tonnage those mines had been producing would of necessity be produced at the lower-cost mines, and as a result you would have a lower total cost, so that the consumer, in my judgment, eventually would pay less for his coal under that than he does today. So I do not feel that Mr. Francis' reasoning along that line was correct. Mr. Francis has no assurance, even if this bill is not passed, that he will not have an increase in wages.
Mr. COOPER. Is it your thought that there will not be any increase in the price of coal if this bill should become a law?
Mr. FINDLAY. My honest judgment, Mr. Cooper, is that based on the present wage scale there will be no increase in the price of coal; in fact, I think it will be a few cents less.
Mr. COOPER. And do you think the present wage scale will be continued?
Mr. FINDLAY. I cannot say as to that. They are working on that at the Shoreham Hotel this week.
Mr. COOPER. From the common-sense viewpoint, is it reasonable to assume that the present wage scale will be continued ?
Mr. FINDLAY. Mr. Cooper, Mr. Francis and other witnesses have testified before you that the present prices prevailing for coal were all the way from 30 to 50 or 60 cents below the code price.
Mr. VINSON. I think Mr. Francis said 40 cents.
Mr. FINDLAY. Mr. Francis said 40 cents, but some other witness said 30 cents, and I tink one witness said 50 or 60 cents. You have had those varying figures.
Mr. COOPER. My only purpose is to try to get information on the question you are now discussing. I have respect for your views.
I just wanted to ask you whether it is your opinion that there will not be an increase in the price of coal.
Mr. FINDLAY. I will have to make a preliminary statement in order to make the point I want to make for you.
If we are going to continue to sell coal at from 30 to 50 cents under the code price, there is nothing left for this industry but a terrific loss.
Mr. COOPER. That is obvious.
Mr. FINDLAY. I think the vast majority of the companies feel that if we have got to do that, that it is impossible to even pay the present wage, and personally I do not think it is going to be possible to do it. You may sign a contract at the present wages, or for something else, but the economic necessity before you get through is going to force those wages down, just as has been the case in the past.
Mr. Cooper. If we enact this bill into law, is it your opinion that the present wage scale will be increased?
Mr. Findlay. There is nothing in the bill--
Mr. Cooper. Just answer my question, if you please. You do not have to argue it with me.
Mr. FINDLAY. I personally do not think they will. I may be wrong about that.
Mr. COOPER. There has been evidence presented to this committee indicating that the present wage scale is not satisfactory. Is it your