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Mr. STANLEY. The statements of the Chief Justice during the arguments in the gold cases would indicate the present attitude of the Supreme Court on the subject.

Senator NEELY. We are very much obliged to you, Congressman Ramsay.

Senator DAVIS. Mr. Chairman, I would like to be excused now, because I have just received word that Senator Connally has sent for me, and I have to attend a conference of the House and Senate conferees on the mining bill.

Senator NEELY. Senator Davis, we are sorry that you are obliged to leave us.

Senator Holt is recognized.

STATEMENT OF HON. RUSH D. HOLT, A UNITED STATES SENATOR

ELECT FROM THE STATE OF WEST VIRGINIA

Senator-elect HOLT. Mr. Chairman, I understand it is said that people in West Virginia are opposed to the proposed legislation known as the “Guffey bill.” To my knowledge this is absolutely untrue. I, as a representative of the State, feel that West Virginia would be aided materially and profitably by the enactment of this coal bill.

I realize full well the active lobby of the coal interests of my State in opposition to this bill. This is not uncommon with them, as I have watched them many, many times in their lobbying efforts against remedial and good legislation.

It is my honest opinion that West Virginia will be aided in many ways by the passage of this bill. Not only will the waste in our coal lands be materially reduced but labor relations will be helped; and in place of waste there will be conservation, and in place of strife there will be peace.

I feel that West Virginia needs and wants this bill. I would like also to add, speaking about the lobbying activities, that utilities have always taken an active interest in behalf of the coal people. This is not uncommon either, from the experience I have had in the State of West Virginia. It is my sincere hope that the bill will pass.

Senator NEELY. Senator Holt, you refer to your experience as a member of the Legislature of West Virginia !

Senator-elect Holt. That is correct. I would like to add that West Virginia in a recent year, or since the National Recovery Administration, has found labor relations much better. For a number of years in our State labor relations were at a distinct strain. This has been materially helped in the last few months, but I feel that this bill will make permanent the temporary assistance that is given toward that policy by the National Recovery Administration. I think we need that permanence, and this bill will give a much better condition regarding public relations between employer and employee that have been sadly neglected in the State of West Virginia, due to the fact that for years the coal miners in southern West Virginia have not been able to present their case owing to the fact that they have had no organization.

Senator NEELY. We are much obliged to you, Senator.
Is Mrs. Boyle present?

STATEMENT OF MRS. JOHN BOYLE, JR., REPRESENTING

CONSUMERS' COUNCIL OF WASHINGTON, D. C.

Senator NEELY. Mrs. Boyle, we shall be glad to hear from you.

Mrs. BOYLE. Mr. Chairman and gentlemen of the committee, my name is Mrs. John Boyle, Jr. I am chairman and organizer of the Consumers' Council of Washington, D. C., one of the 200 county consumers' councils operating as entirely voluntary bodies under the general direction of the National Emergency Council.

This bill has been studied by the coal committee appointed by me. The committee consists of Chester C. Gilbert, Homer J. Dodge, and Matthew F. Boyd.

Senator MINTON. Will you tell us something more about who the members of that committee are?

Mrs. BOYLE. J. shall have to ask Mr. Matthew Boyd just what Mr. Chester C. Gilbert's title is, if you do not mind.

Mr. Boyd. Mr. Gilbert is general director of the Research Corpora tion,

Mrs. BOYLE. He has had a long experience extending over a number of years in coal questions. Homer J. Dodge is with the Haskin Bureau, and has for about 18 years been interested in coal. Matthew F. Boyd is labor adviser in N. R. A.

I appear today to present the consumers' point of view upon the proposed Bituminous Coal Conservation Act of 1935, S. 1417.

The consumer's interest in coal is in the price, the assurance of uninterrupted service, and in the quality of the product.

In connection with prices, there are one or two points in the bill as drawn that need scrutiny.

On page 12, lines 5 and 6, there is a provision for price fixing. It authorizes the National Bituminous Coal Commission to set a price which " will provide a fair return upon investment."

We should prefer to have this read that the fair return upon investment shall not exceed 3 percent. It should be kept in mind that, should this bill become law, the element of capital risk is almost entirely eliminated from the industry. It becomes stabilized in the most complete manner by prorating production among all operations. It goes further by providing not only that coal shall not be sold below cost, but that the price shall in fact yield a fair return upon investment.

The bill, in effect, proposes not only to stabilize production and employment; it goes further and plans to stabilize prices and profits.

In other words, as far as is humanly possible it removes all risks of investment from the industry. Capital claims profits are its right primarily because of the risk involved. As such risks are minimized or removed, the profit rate should, and in fact does, become less.

It is illustrated by the provision in the bill itself, which proposes the issue of bonds up to $300,000,000 and sets 3 percent as the interest rate. If this is a reasonable rate for such bonds, I suggest it should apply to privately invested capital.

Senator Minton. What bonds have you reference to, Government bonds?

Mrs. Boyle. The bill proposes an issue of bonds up to $300,000,000.
Senator Minton. That is for the retirement ?
Mrs. BOYLE. Yes.

Senator MINTON. And they are, in a measure, guaranteed by the Government under this bill, are they not?

Mrs. BOYLE. I suppose so.

Senator Minton. And if they were so guaranteed, of course, that would take away all the element of risk in that kind of investment, would it not?

Mrs. BOYLE. I think that my paper discusses that a little later on.

We are doubtful about title I) of the bill, which sets up the bituminous-coal reserve.

There is no doubt this part of the bill throws upon the Commission a tremendous burden. It opens the door to possibilities of scandal on a major scale, and the fact should be faced at the outset.

In operation it means that owners of high-cost properties will seek to sell them to the United States, and they will, of course, seek to be paid maximum prices. This may not affect the consumer directly as to prices; but it will certainly affect the consumer as a taxpayer.

It seems to us that the purpose of the title is to take coal lands out of operation until such time as it becomes economically necessary to work them. It is, in other words, an effort to control production and new development.

With this we are in entire accord, but we suggest the end may be attained in a different way and one much less dangerous to the public purse. We suggest that a provision be written providing that any person desiring to open a new mine must prove to the satisfaction of the Coal Commission that it is necessary as a matter of public convenience and necessity. Upon such proof being made the Commission would issue a license, and without such license it would be impossible to begin operations.

In this there is, of course, nothing novel. It is usual procedure before public utility commissions. It is novel only in its application to coal mining

It may be desirable to set up a bituminous coal reserve. We would prefer, however, that the matter be more carefully explored. In anticipation of Government purchase it would be much better, it seems to us, first, to have the Commission survey the industry to determine the marginal producer properties in the various districts set up under the bill. It could then lay down sound lines for valuation purposes, and thereafter consider the advisability of purchase.

As I have said, we favor the general purpose of the bill. I suggest, however, it does not go far enough. We are somewhat of the opinion it would be better to provide for outright nationalization of the industry. Nothing is gained by competition between mine owners. A great deal is lost by it. But if competition is abandoned, we are certain we have to abandon private ownership also.

The industry has been sick for many years. In 1912 it was in such desperate straits that it sought to have the Government take charge of it when Dr. George Otis Smith was head of the Geological Survey.

The Government refused, and the industry blundered on into the profitable years of the war. It emerged sicker than ever, suffering from overdevelopment and without the ability or the power to effect a self-cure.

We had a long period marked by bitter industrial warfare, as the outcome of which wages were slashed and labor conditions degraded.

These evils did not cure a single ill; they intensified all ills in the industry.

N. R. A. and the bituminous coal industry code have been a godsend to the industry. For the first time the public authority stepped in, and some semblance of order has been restored. The proposed bill now being considered plans to extend that authority, and of this we are entirely in favor as being in the best interests alike of labor and of the consumer.

If there are any questions that you would like to ask, my committee is here, and we would be very glad to answer them.

Senator MINTON. I would like to know a little bit more about this 3 percent that you think is enough return upon the investment.

Mrs. BOYLE. I think one of my committee could answer that a little better than I. As I said, I am chairman of the Consumer's Council, and I get to head my committees the best people available. As I also said, we are an entirely voluntary organization.

Senator MOORE. Outside of your committee, you do not know so much about it?

Mrs. BOYLE. Outside of my committee, I do not know so much about it myself, but it is my job to see that I get people who do.

Senator NEELY. And you have expressed the views of your committee?

Mrs. BOYLE. Yes, sir. Thank you, Mr. Chairman.

STATEMENT OF H. W. SHOWALTER, PRESIDENT CONTINENTAL

COAL CO., FAIRMONT, W. VA.

Mr. SHOWALTER. Mr. Chairman, I am president of the Continental Coal Co., Fairmont, W. Va. I have been connected with the bituminous industry for about 25 years.

I was invited by Senator Guffey to give my opinion on the merits of this bill. There are two provisions in the bill which I would not care to go on record at this time as approving. One of these is the allocation of tonnage and the other is title II. I appreciate that it would be difficult to form any bill that would be entirely agreeable to every person; but the principle of this bill which creates a Federal Coal Commission for the purpose of regulating and stabilizing the industry is, in my opinion, imperative for the future security of the coal industry and the men that it employs, as well as the consumers of coal.

There is one paragraph–I have not the number of it-in this bill that provides for a minimum price for coal which is presumed to be the same as the average cost of production. I think that price should be increased probably as much as 10 cents per ton, in order to provide for depreciation and depletion.

I do not believe it is possible for the coal industry to prosper without some kind of Federal regulation.

Senator NEELY. Is it not a fact, Mr. Showalter, that the coal operators of the country generally have utterly failed to cooperate with one another and that they have engaged in injurious competition which has destroyed them financially and rendered thousands of miners destitute?

Mr. SHOWALTER. That is a fact that cannot be contradicted.

Senator NEELY. Have not the conditions in the coal industry generally improved since the enactment of the recovery legislation and the adoption of the codes under that legislation?

Mr. SHOWALTER. They have been very much improved. I should say that with very few exceptions every coal company's business was in red ink previous to the enactment of the code under the N. R. A. and since that time fortunately we have made a little bit of money.

Senator NEELY. And before the enactment of the National Recovery law and the subsequent adoption of the codes, is it not a fact that the experiments which they involve were just as vigorously opposed by some of the operators as the Guffey bill is opposed now?

Mr. SHOWALTER. The answer is “ Yes."

Senator NEELY. But in spite of their apprehensions in the past, you as an operator feel that they have been generally benefited by the enactment of the Recovery legislation and the adoption of the codes?

Mr. SHOWALTER. They have, and all admit that.

Senator Mixton. What difficulties do you see in the way of this allocation that you say you are opposed to in this bill?

Mr. SHOWALTER. That is a right large question, Senator,
Senator MINTON. I agree with you.

Mr. SHOWALTER. It would require a considerable amount of study. I can see where there would be some difficulty in allocating tonnage in a district where there are different grades, classes, and preparation of coal.

Senator MINTON. Different types of machinery in the mines and different conditions of operation?

Mr. SHOWALTER. Yes; and different equipment for its preparation and the difference in analytical content that is required by the consumer; but that is a question that I would rather not get into very deeply at this moment.

Senator MOORE. Was there an allocation under the N. R. A.?
Mr. SHOWALTER. No, sir.

Senator NEELY. I did not understand you to say, Mr. Showalter, that you are definitely opposed to this provision, but that you were not at present willing to advocate it.

Mr. SHOWALTER. I would not want to go on record as favoring it at this time.

Senator MINTON. Or as being against it?
Mr. SHOWALTER. Or being against it.

Senator MINTON. Was any effort made in the administration of the codes toward allocation?

Mr. SHOWALTER. None that I know of.

Senator MINTON. Was that responsible in any degree for the break-down of the code administration in your industry?

Mr. SHOWALTER. No; that question of allocation never came up in the operation of our codes.

Senator MINTON. Well, was the lack of allocation and the inability of the code authorities to allocate responsible, in your opinion, for the break-down of the code administration?

Mr. SHOWALTER. No; I do not think so. I think the reason for the break-down was that there did not seem to be any way of enforcing the regulations of the code.

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