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Mr. Ellis. He would be breaking even and the other fellows would make a lot of money.

Senator MINTON. That will go right down the line?

Mr. ELLIS. Yes. That is one of the difficulties that will have to be determined. All of those figures that we have we would be glad to give to the committee or make them available, because they are facts based upon reports made to us.

Senator MINTON. In your experience, to what is that wide variance in operating costs due? Is it due to mine conditions or operating conditions, or both of them?

Mr. ELLIS. Both of them. It is due to everything you can think of.

Senator MINTON. Do you attempt under the code in price fixing of that kind to establish a minimum price?

Mr. Ellis. Our problem under the code was to approve a price set up that would permit the industry as a whole to pay the wages that were fixed under the code. That was our first problem.

Then we attempted to get the information on which we could see whether or not those prices were proper. On the average of the data that has been furnished it was indicated that the prices that were charged and being obtained were not too high, because the operators on the average were not making any money but were breaking even. That meant that some of them, as shown by these costs, were making money and others were not, and that is the difficulty of that situation.

We ran into another situation; that is, what we term captive mines. There is no question, but what if there is not some attempt to control capacity as well as control production and price, that you are going to have a lot of these properties in the hands of consumers of coal. That is the natural thing.

Senator MINTON. That is, they will buy up their own mines?

Mr. Ellis. Either buy them or lease them. That has already happened in some cases only to a very minor degree.

Senator MINTON. Does that hurt anyone particularly?

Mr. Ellis. Not except that it takes off the commercial marketing coal. So far as employment is concerned I assume that it only hurts it to the extent that those properties will naturally work a longer period of time, having a steady output, than the average of the other mines.

Senator NEELY. Is it not a fact that during the last 4 or 5 months there has been almost wholesale violations of the code provisions regarding prices?

Mr. Ellis. I would not say that, Senator. I am frank to say that I do not know, and I do not know whether anybody knows; but there was some of it; and this uncertainty about the expiration of the act and the knowledge that that was going on, the demands that were being made of purchasing agencies, naturally created a fear in everyone's mind that this thing was going haywire.

Senator NEELY. Did you not receive a number of complaints to the effect that there were widespread violations of the provisions relative to price fixing?

Mr. Ellis. Only in certain sections. In the Middle West and the South and Far West we had nothing of that kind. It was concentrated more in the far eastern area and the area in and around Ohio and Pittsburgh.

Senator NEELY. What is the attitude of the United Mine Workers in regard to this matter? Did they take any particular position on the subject?

Mr. ÉLlis. The President was very outspoken in his attitude, and I believe he spoke for his organization, and that was really the reason for this bill.

Senator NEELY. The United Mine Workers insisted upon strict observance of the code provisions, did they not?

Mr. Ellis. That is true, and I think in all fairness that could be said for the majority of the operators. They want to see something of this kind work.

Senator NEELY. We are very much obliged to you, Mr. Ellis.
Mr. Pursglove is recognized.

STATEMENT OF JOSEPH PURSGLOVE, CLEVELAND, OHIO

Mr. PURSGLOVE. Mr. Chairman, my name is Joseph Pursglove.

Senator NEELY. Please indicate briefly your knowledge of and experience with the coal industry.

Mr. PURSGLOVE. I am president of the Pursglove Coal Mining Co. I have been operating coal mines in West Virginia, Pennsylvania, and Ohio for 40 years. I am very much in sympathy with this bill being passed. I hope it will be passed. Senator MINTON. How many men do you employ! Mr. PURSGLOVE. About 900. Senator MINTON. How much do you produce a year? Mr. PURSGLOVE. In a prosperous year 1,500,000 tons. Senator Minton. What year do you refer to as being prosperous ?

Mr. PursGLOVE. Last year we had 900,000 tons. In 1929 we had 1,900,000 tons.

Senator MINTON. How long have you been unionized ?

Mr. PuRSGLOVE. We have been unionized half a dozen times in the past 40 years. Sometimes we are nonunion and sometimes union.

Senator MINTON. When did you go into this the last time?
Mr. PURSGLOVE. I think it was in 1931.

Senator NEELY. Your mines in West Virginia were organized long before the National Recovery Act was born, were they not?

Mr. PURSGLOVE. Yes.
Senator Minton. Why are you in favor of this bill?

Mr. PURSGLOVE. I do not think the coal business can get along without it. I do not think it is possible to get along without it. If you do not have a bill you will have cheap wages down around $2 a day in less than 2 or 3 years.

Senator NEELY. Will that not mean disaster for the operators as well as the miners?

Mr. PURSGLOVE. That is correct.

Senator NEELY. Has the mining business which you have conducted in Ohio and West Virginia been generally profitable during the last 20 or 30 years?

Mr. PURSGLOVE. It never has been profitable except when we had strikes or war or something of that sort.

Senator NEELY. And subsequent to the war and before the adoption of the coal code under the National Recovery Act, had not the condition of the coal industry become chaotic?

Mr. PURSGLOVE. Yes, sir; ruinous.

Senator NEELY. Operators were generally poverty-stricken, and their employees were not working at all or were working for starvation wages?

Mr. PURSGLOVE. All operators that I know of are practically bankrupt, including ourselves, and the miners have nothing that I know of.

Senator NEELY. Was not that condition general throughout West Virginia, Pennsylvania, and Ohio?

Mr. PURSGLOVE. Yes, sir.

Senator NEELY. You think the enactment of this bill would prove beneficial to the industry generally?

Mr. PURSGLOVE. I think it would be in the right direction.

Senator NEELY. Mr. Pursglove, is there anything else that you wish to state?

Mr. PURSGLOVE. No; I do not think so, unless you want to ask me something.

Senator NEELY. Is Mr. E. H. Davis of Ohio present?

STATEMENT OF E. H. DAVIS, CHAIRMAN BOARD OF DIRECTORS

OF THE NEW YORK COAL CO., COLUMBUS, OHIO

Mr. Davis. Mr. Chairman, my name is E. H. Davis. I am chairman of the board of directors of the New York Coal Co., Columbus, Ohio, and am representing at this hearing the Ohio Control Association, an association representing 80 percent of the coal production of the State of Ohio and every type of mine producer in the State of Ohio.

We merely desire to make a statement here today to the effect that we favor some permanent legislation with reference to the coal business and that we favor some of the provisions of the Guffey bill, but we have been unable up to this time to crystallize the suggestions we desire to make. We are requesting that we be given an opportunity to make this appearance before the committee is ended, with these suggestions. Other than that, we have no statement to make at this time.

Senator NEELY. You may have that opportunity. At present, would you say that you generally favor the principles of this bill?

Mr. Davis. We will have some constructive suggestions to make with reference to the production, marketing, and probably some of the labor provisions of the bill.

Senator Neely. Subject to the amendments or proposals that you have in mind, are you favorable to the bill or are you opposed to it?

Mr. Davis. We are favorable to the bill.
Senator NEELY. Is Mr. W. A. Jones of Pennsylvania present.

STATEMENT OF WALTER A. JONES, ALTOONA, PA.

Mr. Jones. Mr. Chairman, my name is Walter A. Jones. I reside at Altoona, Pa. I have been connected with the bituminous-coal industry in that area for about 18 years as secretary and treasurer of various associations.

The area produces about 37,000,000 tons a year. We find ourselves in a position similar to that stated for Ohio, due to the fact that we have been so busy on labor problems and code work that we have not had an opportunity to assemble the membership of our organization.

Informally I have discussed the bill at considerable length with the members and I am convinced that in the main they approve the the major portions of the bill. However, I would like to follow in Ohio's footsteps and reserve some time so that we may present a formal statement to your committee.

Senator NEELY. Mr. Jones, are you generally favorable to the principles of the bill?

Mr. Jones. I think in general we are.

Senator NEELY. You believe that some sort of stabilizing measure is necessary for the coal industry?

Mr. JONES. Yes, sir.
Senator NEELY. Is Mr. Berquist present?

STATEMENT OF FRED BERQUIST, BITUMINOUS COAL PLANNING

DIVISION OF THE N. R. A.

Mr. BERQUIST. Mr. Chairman, I have not come prepared to comment on the bill. I was asked a question as to whether I could supply some information with respect to the percentages of coal being sold at other than code prices. That is the only comment that I have to make.

Senator NEELY. Do you mean below code prices?

Mr. BERQUIST. At other than code prices, which means predominantly below code prices. There may be a little bit of that percentage which represents coal sold above the code prices.

Senator NEELY. Have you the requested information available there?

Mr. BERQUIST. Yes, sir; I have. I might say that our first showing of the quantity of coal that was sold at code prices—that is, for the month of November 1933–showed that about 60 percent of the coal sold was under contract at other than code prices. For division no. 1, that was about 31 percent under the code scale of prices.

As the months rolled by and contracts expired, that percentage naturally has been reduced. I might indicate, in division no. 1, the nature of that reduction. The eastern subdivision showed in April, 39 percent; May, 29.8 percent; June, 25 percent.

Western Pennsylvania decreased 35 percent to 19 percent over that period, April as compared with June; northern West Virginia from 34 percent to 28 percent; southern subdivision no. 1 from 28 percent to 22 percent; division no. 2, Illinois, from 56 to 55 percent. That is peat mines. For strip mines, 72 to 65 percent; division 3, from 63 to 45 percent. All of them indicate, I think, in each instance, some decline.

I think of particular interest are the figures showing the percentages after the 1st of July. Many of the contracts ran out at the end of the “coal year", so-called, at the end of March, and the others expired at the end of June.

The percentages for those areas that we have after July, which are probably more significant, are for the month of July, for five subdivisions of division 1; 17 percent was the amount sold under contracts at other than code prices.

In August that percentage was for four subdivisions, 18 percent; for September for four subdivisions that percentage was 15.4 percent, in division 1.

Our figures are not complete for division 2. I do not think they are particularly meaningful.

Alabama division 3 showed a marked decline, and for the month of July it showed 16.6 percent; August, 5 percent; September, 3.8 percent; and October, 5.6 percent.

As to data showing the percentage of coal that might be sold at the present time or in recent months at other than code prices, we have no data. There are no data extant that are available to us.

You have heard a great deal said about contracts and offerings being made at other than code prices. As to its extent, there is no definite knowledge, although a great deal is said about such sales being made at other than code prices.

Senator NEELY. Are you not prepared to state whether you favor the bill?

Mr. BERQUIST. We are making now a rather detailed study in terms of our statistics, of course, which we hope to have ready very shortly and which may throw some light on the matter of variable costs. I think a great deal of this matter of using average costs needs to be examined very closely. As between districts of competing coals you may find a considerable spread in the average cost. It would seem that there would be some difficulty in setting a minimum price based upon average cost between areas which are directly competitive based only on their average cost. The extent to which those variations happen to exist I am not prepared to say at the moment, and I cannot give any further statement with respect to that. We hope to have something prepared, and if the committee desires we would be glad to supply it.

Senator NEELY. Do you not believe that further regulation of the coal industry is necessary?

Mr. BERQUIST. Generally, Senator, I think everyone will agree that the coal industry needs assistance.

Senator NEELY. Are there any others present who wish to be heard this afternoon? If not, we shall adjourn until 10:30 tomorrow morning.

(Thereupon, at 4:30 p. m., the subcommittee adjourned to meet at 10:30 a. m., Friday, Feb. 22, 1935.)

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