porary or permanent, if it is a long enough period that we do not run into the end of 2 years like we did this year when the possibility of the termination of the coal code broke down the price structure. Any legislation should not be less than 4 years, and should terminate while Congress is in session, because I feel that the industry, if this does become law, will be back requesting that it be extended at the end of that period.

It should be understood at the outset that I am not competent to express, and do not intend to be understood as expressing, any views as to the legality or constitutionality of this bill. I am concerned only as a practical coal man in the light of my experience in the industry as a miner and operator and a long experience as executive secretary and president of various associations of coal producers.

From the practical standpoint, it is obvious that if the coal industry is to be regulated successfully, it must be done by somebody having jurisdiction over the industry as a whole. This is because coal is produced in some 38 States of the Union and because coals from different States are marketed in the same consuming areas. I think this point needs no elaboration. The overlapping of competition in different States and different fields makes it essential that the industry be controlled by a national body, in my opinion.

As to why the coal industry needs regulation by the Government, the answer is that it has demonstrated its utter inability to govern itself. The bituminous coal industry was given the broadest powers of perhaps any industry under the N. R. A. It was given the power to fix fair minimum market prices, and, with such power, has been unable to maintain a price that returns a profit to the industry as a whole or to enforce compliance with the price provisions that it was permitted to set up. Not only has it proven impossible to secure compliance with the code provisions on the part of individual producers but it has proven impossible to secure compliance on the part of the code authorities themselves. An outstanding example of this is the failure of a prominent subdivisional code authority to comply with either amendment 4 or amendment 6 to the Bituminous Coal Code. This failure amounts to a defiant refusel to comply with the code, and, so far as I know, and I think I am in a position to know, the National Recovery Administration feels it is so helpless in the situation that it has not even initiated any steps to secure compliance on the part of this code authoritly, which, in a sense, is its own creature.

Senator NEELY. Mr. O'Neill, is the subdivisional code authority to which you have just referred, and which you say failed to comply with amendments numbers 4 and 6 of the Bituminous Coal Code, an authority for West Virginia or what is generally known as the southern coal field?

Mr. O'NEILL. It is not.

There seems to be no possibility of agreement within the industry. This is not necessarily because it is made up of willful and selfish men but because conditions vary so widely within the industry. It seems clear, therefore, that some superior power must impose upon the industry that degree of regulation that is necessary to secure the stabilization which is essential to the protection of all parties in interest. For the foregoing reasons those for whom I speak are of the

opinion that necessity requires the regulation of the bituminous coal industry by the Federal Government.

This group also is of the opinion that price control is necessary to the maintenance of fair minimum wages and that a standard of fair minimum wages is essential to the stabilization of the industry. This is necessarily true in an industry which is overmanned, and with so large an organzation is one national union. The combination of overcapacity to produce and more men than the industry can absorb is bound to result, through economic pressure, in the destruction of a minimum wage scale unless both price and production can be controlled.

I do not intend to introduce statistics to support the statement that the capacity of the bituminous coal industry to produce is far in excess of the demand for the product. Other witnesses have introduced such statistics, and it is a fact so well known to all that it would seem to be a waste of the committe's time for me to attempt to support the statement by figures. In any event, the United States Bureau of Mines can give them to you by the ream, if you want them and think you need them.

It seems to me to be against all human experience and all rational thought to believe that the price of bituminous coal can be artificially controlled unless something be done to remove the weight of overcapacity from the price structure. So far as I know, no price-fixing plan has ever worked unless it had back of it control of production, and under this bill control of capacity as well. To anyone familiar with the workings of the code of fair competition for the bituminous coal industry it is apparent that the pressure of tonnage on the price structure has proven too great a burden for it to bear. I dare say that 90 percent of the difficulties in correlation of prices and in all the marketing provisions of the bituminous code arise out of this factor. The group for which I speak, therefore, is of the opinion that the production control and allocation of tonnage to districts and to companies or mines within the districts are essential to the stabilization of prices.

This group recognizes that it is impossible for the coal producers of the country to agree upon a basis for allocation. It believes that a basis must be determined by a superior authority, and it has no great objection to the basis provided in the Guffey bill or to any other basis which does not unduly disturb the tonnage relationships of the various districts. But it believes that certain of the allocation provi-. sions might profitably be redrafted to clarify the intent.

I wish to say at this point that our test of the Guffey bill indicates that there will be material shifts of tonnage.

Senator MINTON. Where?

Mr. O'NEILL. From West Virginia, in the smokeless district in particular, there will be a very substantial shift of tonnage, and the people that I represent here will be one of the principal beneficiaries of that shift. That is the eastern district that I just described. We believe that the opposition that will necessarily arise from such a shift of tonnage from that district to other districts ought to be removed from the bill by finding another formula that will protect the tonnage as it was moving, say, in 1934.

Senator MINTON. Have you examined this chart that has been introduced, or the corrected copy of it?

Mr. O'NEILL. No; I have not.

Senator MINTON. Take the corrected copy.

Mr. O'NEILL. Yes, sir; this shows, I think, if I am reading it right, a loss of 5.411,000 tons to the smokeless subdivision. Is that right? Am I reading that correctly?

Senator MINTON. I am sure I do not know. I did not prepare it and have not had an opportunity to examine it.

Mr. O'NEILL. I don't know what this does mean. I will have to look at it. [After examining table:] I don't follow this table right off-hand, but I might say, Senator, that our test was not made upon the basis of the Guffey bill, but on the basis of the subdivisions as they exist under the Bituminous Coal Code, because the geography of the Guffey bill takes a good part of the western Pennsylvania subdivision and puts it in ours, principally Fayette and Westmoreland Counties, which are very large producers and which are not a part of our subdivision.

Senator MINTON. Would it appear to you to be a fair statement that the allocation used in the Guffey bill would result in a substantial dislocation of tonnage and therefore labor?

Mr. O'NEILL. Yes; and for that reason I would suggest that we use a period of current production and allow the Commission such powers as are necessary to change quotas on complaints where business is held by a subdivision of a district, or where quotas have been inflated by business taking at extraordinarily low prices and absorption of an unduly and unreasonable amount of high freight rates over the past period of years when prices were inordinately low. I think that in such cases as that there will have to be a shift of some tonnage in some districts to other districts located more near the market, because they will be unable to justify the shipment of coal to certain places or markets that they formerly enjoyed under any stabilized system of wages and prices. I think that quotas under those circumstances should be changed, so as to stop the opposition to the bill, in my opinion, because of the justification that could be set up in that large shift of tonnage that would result from the plan set up in the Guffey bill.

Senator MINTON. Are you going to offer some suggestions as to a proper formula?

Mr. O'NEILL. Do you mean this particular formula?

Senator MINTON. Yes.

Mr. O'NEILL. We had not intended to, except to call it to the attention of the committee. I will be glad to write one up if the committee would like to have it done. I will be glad to submit what we think will maintain the present current distribution of tonnage, with the probable changes of tonnage that stabilization of wages and prices will necessarily bring about over a period of time.

Senator NEELY. The chairman of the subcommittee will appreciate any amendment that will improve the bill.

Mr. O'NEILL. We will be glad to give you our idea on a formula to be inserted in the bill.

Senator NEELY. The fact that the association represented by you would, under the bill, be benefited by the transfer of tonnage from

the smokeless area of West Virginia convinces me that, at least, one amendment to the bill should be made.

Mr. O'NEILL. Our only thought is, if we are going to have regulation, it must be regulation that will be fair to everybody. We have no desire to set up a bill that will give us an undue advantage over our competitors, because we believe it would destroy the bill to begin with. I might say that in this allocation now under the Bituminous Coal Code it was found necessary to make an agreement which contained at least some of the elements of allocation between the various subdivisions in district no. 1. I might say that district no. 1 produced about 70 percent of the tonnage of the country. It is made up of 6 or 7 subdivisions, and includes the States of Pennsylvania, Maryland, West Virginia, Kentucky, and most of Tennessee and Ohio. On July 4, 1934, this subdivision found it necessary to make an agreement that they would so price their coal as to try to achieve a distribution by percentage of production through the various areas and fields in the division. That was signed by all the subdivisions in division no. 1 except Ohio.

The distribution that was agreed upon in district no. 1, was as follows: Smokeless, 18.25 percent; Appalachian area, 30.10 percent; western Pennsylvania, Pittsburgh, 17.75 percent; eastern Pennsylvania, 15.30 percent; northern West Virginia, 8.50 percent; Ohio, 8.40 percent; the Panhandle of West Virginia, 1.70 percent. The agreement was to try to maintain the normal flow of tonnage to these various subdivisions.

This group believes that there must be found some formula for the determination of minimum prices, and while it feels that it might set up a formula better calculated to its own needs than the one proposed in subsection (a) of part II of section 4 of the bill, it nevertheless is willing to recognize the requirements of other districts and willing to try out the formula therein set up.

This group is not opposed to collective bargaining nor to statutory protection of the rights of labor, but there are certain specific criticisms of some of the labor provisions set forth in part III of section 4, to which your attention will be directed later.

I shall now set forth some of the objections of this group to particular provisions of the Guffey bill, and desire to state that certain members of this group have objections to other provisions than those which I shall specify. We believe our comments will be con

structive.

The declaration in section 1 that the coal industry should be regulated as a public utility is objectionable. One of the tests whether or not a business constitutes a public utility is whether the public may acquire its products or services of right. If not, if such product or service can be acquired only with the consent or permission of the producer, the business is not a public utility. Measured by this test, the bituminous-coal industry is not and never has been a public utility.

There is sound reason why it should not be. All coal is not the same. It varies in chemical characteristics, in heat value, in burning characteristics, and otherwise. Certain uses of coal, for example, gas-producing, byproduct coke manufacturing, and many others, require certain definite characteristics and qualities. Just coal will

not do. Even in the comparatively simple process of steam generation certain coals are better suited to certain types of equipment and to certain plant conditions than others. Therefore, it is desirable, and in many instances absolutely necessary, that consumers of coal have the right to buy, and to contract in advance, for the kind of coal suited to their requirements, unhampered by the imposition of a duty on the producer to serve the public indiscrimately. There is a real distinction, which is apparent instantly, between the production and marketing of coal and the product of, or service rendered by an electric, gas, or water company, a railroad or any of the other modern public utilities.

I am not competent to discuss the legal side of this question but am advised by counsel that it is not necessary that the industry be or be not declared to be a public utility in order to permit its regulation by the overnment, but that it is sufficient that the industry be "affected with a public interest." In support of this opinion, counsel has cited, among others, the recent decision of the Supreme Court of the United States, in the case of Nebbia v. New York, 291 U. S. 502, decided on March 5, 1934.

Senator MINTON. What was the legal citation?

Mr. O'NEILL. The recent decision of the Supreme Court in the case of Nebia v. New York, 291 U. S. 502, which was decided on March 5, 1934.

Senator MINTON. What counsel cited that?

Mr. O'NEILL. Our Counsel.

Senator MINTON. Did he cite that as authority for the Federal Government to control the bituminous-coal industry?

Mr. O'NEILL. He cited it on the theory of the decisions, that if the legislation is reasonable and the evils necessary to be eliminated are great, the court can take cognizance of that.

Senator MINTON. The Court was talking about a State court in that case.

Mr. O'NEILL. Yes.

Senator MINTON. It is the action of a State legislature and not Congress.

Mr. O'NEILL. That is my understanding of the case.

This group believes that the Coal Commission provided for in section 2 of the bill and the Labor Board provided for in subsection (c) of part III of section 4, should be made up entirely of disinterested and impartial members and should not contain representatives directly connected with either producers or employees. It is apparent that the chief functions of these Boards are quasijudicial in their nature. The bill vests in the industry itself a large measure of self-control, with the commissions superimposed to settle disputes and to protect the interests of the public. We believe that this is a wise provision. I do not think it possible to draw a statute or a set of rules that will immediately solve all of the problems of the industry. I have no doubt that if progress is to be made in the stabilization of the coal industry it will be by the familiar method of trial and error and, therefore, the machinery set up should be as elastic as possible and the supervising commissions should be limited insofar as practicable to the judicial function.

Section 3 of the bill imposes a tax of 25 percent on the sale price of coal, with a drawback of 99 percent to a producer who accepts