many readjustments had to be made and no doubt many are yet to follow. With the prevailing uncertainties, it is very unwise at this time to even consider any radical departures in the adoption of permanent laws and there can be no question of the advisability of continuing the present methods for at least another 2-year period.

It cannot be shown at this time that there is any need, either by labor, producer, or consumer for the enactment of a law which will place the coal industry permanently under the regulations set up in the Guffey bill. It is doubtful if this time will ever come; it is certainly not here now. Thus far no sound reasons have been advanced

showing its need.

There is no question that before the enactment of the National Industrial Recovery Act conditions in the coal industry were not good; but is this not true of other industries? Was it not true with agriculture? The antitrust laws prevented organized selling and forced the coal producers into unbridled competition.

The application of regulations to the industry as a public utility would make it onerous to small operators, would require large numbers of people engaged in policing and tend to make criminals out of small producers who are striving in an honest endeavor.

ALLOTMENT OF TONNAGE

The allotment of tonnage as proposed is based upon the history of 17 years' performance. This is manifestly unfair to the newer districts and therefore to all mines developed within that period. Within that time many very important changes have come in the use of coal. It sets aside all strides made in the development of markets. It will prove of injury to producers of coal for special purposes. It will upset the established channels of trade, where consumers have built plants to use a certain grade, which may not be available, because the quota has been exhausted. It may force the use of coal not suited or the most economical, because the regular district supplying the same has sold its quota and coal must be had from elsewhere. The constant changes in the coal markets need readjustment to meet conditions existing today or that may arise. tomorrow, they cannot be fitted and based on ancient history as proposed by the allotment plan submitted.

We have in this country some very large mines, but a much greater number of small ones. Mines which were built up from the savings of generations and operated by the descendants of the builders, likewise the employees have been with these properties for years; where will they be under the new scheme? That the allotment plan will work a hardship on the small producer cannot be denied, and what effects the owner is likewise reflected upon his employees.

The allotment plan will serve to increase the use of other fuels or sources of power, as indicated by past experience, when it was feared coal may not be available at all times. With the fluctuation in demand due to industrial condition or the seasonal changes, with the long-distance transportation by water or rail, as, for instance, the shipment to the Great Lakes, we have a situation without parallel. Quite recently the domestic stoker has brought into existence conditions and requirements entirely new and such developments will be largely lost, if the coal best suited for it is no longer available.

Allotment will reduce the incentive to hold and build up new markets by the best preparation. It will work great hardships on railroads and other carriers, who have provided facilities for an expanding market, which may not now be needed. It will compel users to go to new and more distant fields, perhaps to lower grades of coal, but yet carrying higher freight rates, because the quota of the normal source of supply has been exhausted.

It may well develop that the consumer in New England may find that the only coal available for him, on account of allotments, would have to be purchased in the mining areas of Indiana or Illinois and on a delivered cost that would be exorbitant.

The disturbances to the transportation problem is one of vital concern to our entire population. It is estimated that the loss of business to the carriers serving the southern fields, primarily West Virginia, would in the first year of operation under this bill mean a loss of approximately twenty-odd millions of dollars in the gross income.

66

The allotment plan, as provided, would have a result of a survival of the fittest" sort, which in a short time would develop a vicious monopoly in the coal industry.

The allowable production of smokeless coal from West Virginia for 1935 under the allotment plan, based on 1934 national production, would be approximately 36,663,000 tons; a loss of 5,770,000 tons compared with their production of 1934, which result could only be a loss in labor to thousands of men.

Senator NEELY. Mr. Crichton, you understand that the allocation of tonnage proposed in the bill is to be amended, do you not, in favor of West Virginia or any other region that appears to be prejudicially affected by the existing provisions?

Mr. CRICHTON. Yes, sir. I have heard that statement today, Senator, but in the light of the two types of allotment schemes that are proposed here I would like to read into the record the losses on the basis of the 1924-34 production, if I may.

Senator NEELY. Proceed.'

Mr. CRICHTON. An analysis of the tonnages to be produced by the various companies within the district, compared with their production in 1934, varies from an increase of 216,000 tons to a decrease of 1,569,645 tons, which would not fall short of the utter destruction of many companies having to suffer the losses charged against them, with the further result of affecting many small businesses in their communities directly dependent on their volume of production for their existence.

In that connection, I would like to call attention to a few of the companies in the smokeless field and show what their losses would be under this 1929-34 plan.

A company producing 2,122,254 tons would lose 748,304 tons, or about 30 percent. Another company producing 345,622 tons would lose 118,374 tons, or approximately 30 percent. Another company producing 1,579,943 tons would lose 446,826 tons, or approximately 30 percent. Another company producing 4,495,703 tons would lose 966,043 tons, or approximately 23 percent. Another company producing 1,579,943 tons would lose 446,826 tons, or approximately 25 percent. Another company producing 116,364 tons would lose 96,404 tons, or approximately 85 percent. Another company

producing 19,413 tons, would lose 16,292 tons, or approximately 85 percent. Another company producing 365,595 tons would lose 100,144 tons, or approximately 35 percent. Another company producing 156,631 tons, would lose 67,907 tons, or approximately 45 percent. Another company producing 14,427 tons would lose 11,276 tons, or about 78 percent. Another company producing 44,609 tons, would lose 30,753 tons, or about 70 percent. Another company producing 17,582 tons would lose 12,380 tons, or about 75 percent. Another company producing 91,223 tons would lose 40,620 tons, or approximately 45 percent. Another company producing 2,909,158 tons would lose 588,963 tons, or approximately 20 percent.

Senator NEELY. Of course, the losses of which you speak are utterly impossible, in view of the fact that the author of the bill and the attorney for the proponents of the measure have unconditionally agreed to an amendment which will eliminate the very objection to which you refer. I keep repeating this in the record, because there seems to be a disposition to misrepresent this matter and prejudice the people of West Virginia against the enactment of this or any other similar bill.

If this law would do what you have indicated, nobody in or from West Virginia would favor it.

I would not favor, and no intelligent person could favor, legislation that would be followed by the appalling consequences which you have indicated in the hypothetical statement you have just made.

Mr. CRICHTON. I would hardly say it was hypothetical, in view of the fact that the bill did provide that.

Senator NEELY. Do you think there is a mine in West Virginia that would lose 70 percent of its output, and that 70 percent of the miners employed there would lose their jobs, if this bill should be enacted into law as it is now written?

Mr. CRICHTON. I could not place any other interpretation on it. Senator NEELY. Will you tell me where the mine is which you think would suffer such disastrous consequences?

Mr. CRICHTON. Oh, yes. It is in the smokeless field.

Senator NEELY. Do you mean the whole smokeless field will lose 70 percent of its tonnage?

Mr. CRICHTON. No, sir; I do not. The bill does not provide in that

manner.

Senator NEELY. You read one illustration in which you said there would be a 70 percent loss in tonnage.

Mr. CRICHTON. That is right.

Senator NEELY. Where is such mine situated?

Mr. CRICHTON. It is in the smokeless field.

Senator NEELY. That takes in a great deal of territory. In what county is it located? What is the post office address of the company that will lose 70 percent of its tonnage, and in what place will 70 percent of the miners lose their jobs? I do not believe that you can name such place. If you are wrong I hope that you will admit it. Mr. CRICHTON. I will admit it if I am wrong. With your permission, I will furnish you with the mines and the loss of tonnage they will sustain under the bill as originally written.

Senator NEELY. I do not ask you to go to that trouble. You say that you know of such mines. Can you not now name one, say in

H

Fayette County or McDowell County, and give the name of the operator?

Mr. CRICHTON. Will you excuse me one moment?

Senator NEELY. Then you do not know?

Mr. CRICHTON. Yes; I do. I have it right here. I know it very well.

Senator NEELY. Very well.

Mr. CRICHTON. If I may, I would like to read these last figures quoting the names of the companies. The first one I read produced 2,122,000 tons, and would lose 758,000 under this plan, which is the Carter Coal Co.

Senator NEELY. The one about which I particularly inquired was the one that you stated would suffer a loss of 70 percent.

Mr. CRICHTON. If you will give me a moment I will find it.
Senator NEELY. We will give you all the time you want.

Mr. CRICHTON. The Malcolm Smokeless Coal Co.

Senator NEELY. Where is it located?

Mr. CRICHTON. Raleigh County.

Senator NEELY. How many miners does that company employ at the present time?

Mr. CRICHTON. I would judge 50 or 60.

Senator NEELY. And you think all but 15 would lose their jobs? Mr. CRICHTON. Of course, the mine would close down.

Senator NEELY. What was the tonnage of that mine?

Mr. CRICHTON. For last year it was 44,609 tons. That is one of the newer mines.

Senator NEELY. And you think its tonnage would drop to 16,000 tons?

Mr. CRICHTON. It would under this original plan of allotment. Senator MINTON. There was one that was worse than that, was there not? I think you said something about 85 percent.

Mr. CRICHTON. We had one that produced 116,000 tons that would suffer a loss of 96,000 tons.

Senator MINTON. Where is that? What company is that?
Mr. CRICHTON. The Pulaski Iron Co.

Senator NEELY. Is that a captive mine?

Mr. CRICHTON. No, sir. I think probably the Bureau of Mines records would show it is a captive mine, but that was many years ago.

Senator NEELY. How many miners does that operation employ? Mr. CRICHTON. I would judge probably 125 to 150.

Senator NEELY. According to your construction or interpretation of this bill, all but 20 or 25 of those miners would lose their jobs? Mr. CRICHTON. No: I think the mine would close down. Senator NEELY. Very well. You may proceed.

Mr. CRICHTON. Coal is a commodity which is only mined as sold. It is unlike oil or gas which can be stored for future use. The restriction of free distribution is just as unreasonable as it would be to say that we should not bring California oranges to the Eastern States, because by reason of geographical location these markets should use nothing but Florida oranges.

The bill further provides that no coal shall be sold at less than the average direct expense of production excluding depreciation and depletion, which immediately destroys competition of coals based on

a fuel value. This would mean that in addition to the loss suffered in the smokeless field by reason of quotas that 40 percent of the production of the field based on their costs of May 1934, at which time the field produced 3,475,267 tons, would not be able to sell their coal on account of the proposed minimum price to be fixed.

A further analysis of the cost of production figures, which have included depreciation, depletion, and selling expense, which shows that the average cost of the smokeless area for this period was $1.896 that in applying the proposed method of minimum price fixing that some sections of the smokeless fields of West Virginia would be practically entirely wiped out. To make this point more clear, in 1 field of 38 mines only 5 could remain in business.

Study and investigation to increase the use of bituminous coal are now carried on through various agencies, colleges, and State institutions. Any further agencies would only mean a duplication.

West Virginia alone, with its reserve of 160,000,000,000 of tons, could supply the entire needs of this country for over 300 years after making due allowance for mining waste, without taking into account the increasing use of other power sources. It would seem most unwarranted at this time to embark upon a scheme of buying coal lands, especially with the large reservoirs on public lands.

After the passage of the National Recovery Act discussions of a code were started in the various mining areas of the country with the thought of individual codes. However, after months of consideration we finally found ourselves with one code national in scope, adopted September 18, 1933, just a little over 17 months ago. In this short period of time it can be said that the coal industry, with an uncharted course, has traveled a long way in the stabilization which was necessary. It can further be said that the coal industry has made a sincere effort to place its house in order, and has been successful in bringing about a better condition for labor, producer, and consumer by the establishment of maximum hours of labor, with minimum day rates of pay, additional employment, fair trade practices, and the establishment of prices that are fair and reasonable to the consumer, and which latter can never be otherwise on account of the competition with other forms of fuel.

Senator MINTON. May I ask you what your experience has been with violations of the code? Do you know whether or not the code has broken down?

Mr. CRICHTON. I do not think the code has broken down.

Senator MINTON. Have you observed any instances of its violation? Mr. CRICHTON. Speaking of the group that I represent, we have had very few violations. Our violations in 1934 were less than 1 percent.

Senator MINTON. Are the prices that have been set up in the code being observed by your members?

Mr. CRICHTON. Yes, sir.

Senator MINTON. As far as your observation goes, there has not been any break-down of the code authority?

Mr. CRICHTON. No, sir.

Senator MINTON. Did you hear the testimony the other day to the effect that the code authority had practically broken down? Mr. CRICHTON. I did not. I was not here until today.