Senator MINTON. If that was the testimony, would that be in accord with your observation and the knowledge that you have?

Mr. CRICHTON. It would be quite contrary to my knowledge and observation. I would like to add that I have heard a lot of stories running around, but I find that in these areas where the code is supposed to have been broken down so badly they have not established a statistical bureau by which to gather facts. Therefore, a good deal of it has to be hearsay.

Senator MINTON. Are you an operator?

Mr. CRICHTON. I was. I am not an operator now.

Senator MINTON. You are devoting your time entirely to this code. authority?

Mr. CRICHTON. That is right.

Senator MINTON. As a representative of the operators?
Mr. CRICHTON. That is right.

Senator MINTON. Very well.

Mr. CRITCHON. Mr. John L. Lewis, president of the United Mine Workers of America, during a recent meeting with coal producers, commented on the fact that the Bituminous Coal Code has been a boon to a suffering industry by shortening the working hours and by reason of the increase in wages to employees; and that the same had been a tremendous contribution to all concerned, and that the action of the bituminous-coal industry in its efforts for stabilization had been an object lesson for the Nation and, as such, had received public commendation from officials of the Government.

For the coal industry to have made such outstanding progress in the short period of 17 months is clearly indicative of the fact that the Bituminous Coal Code permitted the accomplishment of some of the purposes for which it was created. Never in the history of the country has any industry confronted with the apparently unsurmountable problems that faced the coal industry in the summer of 1933 made such constructive strides toward self-stabilization. These accomplishments were all made possible through the Bituminous Coal Code, and it is today the belief of a very large number of the coal producers that additional time, with strengthened enforcement provisions is all that is needed to accomplish stabilization under the industry by means of the present vehicle, the Bituminous Coal Code.

As committee chairman of the code authority have jurisdiction over the West Virginia smokeless coal mines, which in the year 1934 had an annual production of over 44,000,000 tons of coal, I feel qualified to speak on the advantages to be secured by continued operation under a code of fair competition. First, however, I should like to review the experience of our code authority in administering the Bituminous Coal Code. Our producers are no different from the producers in any other coal producing area.

They are all possessed of an equal amount of selfishness, yet when the Bituminous Coal Code became a fact and they were assured that the code was to be maintained and administered in all fairness to all persons, personal prejudices and selfish desires were cast aside in favor of cooperation with the new program. When I use the word. cooperation", it never described any situation more clearly than the manner in which the smokeless producers joined in a concerted effort to make the code of fair competition a complete success; and

66

it is our contention that the code is, and has been, successful, not only in the smokeless area but in other producing areas as well. It has been read into the minutes of these hearings on several different occasions by proponents of the Guffey legislation, that the Bituminous Coal Code needed only stricter enforcement provisions to make it a complete success.

The Smokeless Coal Code Authority consists of 15 members. Its code authority bylaws provide that a vote of 8 is necessary to pass any proposed motion. A study shows that 8 code authority members control but 19 percent of the total smokeless production, which proves conclusively that the small operator, as well as the large one, has been given equal voice and consideration. This fact alone did much toward securing the confidence of the producers under our subdivision. It is my thought, however, that any opposition to the Bituminous Coal Code because of lack of compliance can be traced to this reasoning.

The Bituminous Coal Code has been recognized by the smokeless producers as being the vehicle which possesses capabilities for stabili

zation.

Investigation shows that many of the so-called "violations" are, in reality, the propaganda of unscrupulous individuals or corporations who were hoping thereby to gain an unfair advantage in either their sales or purchases.

Many of the stories we hear about the breaking down of the code can oftentimes be traced to the purchaser himself.

Senator MINTON. Has your experience with the code authorities been confined to the smokeless area?

Mr. CRICHTON. Entirely so, Senator.

We cannot agree that the Bituminous Coal Code lost its usefulness because of lack of compliance. Compliance like success, is something which must be obtained by hard work. We believe further that the code authorities claiming that it is impossible for them to obtain compliance in their subdivisions are negligent in their duty.

Senator MINTON. Do you have some means of enforcing the code in your area?

Mr. CRICHTON. No, sir. I think it comes about for two reasons. One I have just cited: That the small producer has equal representation with the large producer on the code authority. We established a procedure of that kind, and it has operated satisfactorily. I gave up my business entirely to take over the work I am now doing, so I might do the best possible job I could. It was necessary to give up my own business. I have tried to administer alike to the big and the little. The confidence that has been instilled into the producers by such a method of carrying on is but one of the reasons for our success. The same can be done with others.

Senator MINTON. You seem to have done a good job in your particlar field. Have you never had any difficulty in enforcement?

Mr. CRICHTON. I said awhile ago that one of the things that has been lacking is that some of these code authorities have not established a statistical bureau to gather all the necessary information. And, of course, they can say by hearsay what might be done by producers, so far as violation is concerned, but they do not have the actual facts. You can get a lot of things from hearsay.

It has been with sincerity that the smokeless producers have assumed and borne their obligation under the Bituminous Coal Code. We do not feel that this same sincerity has existed in some subdivisions experiencing lack of compliance.

In discussing the success of the Bituminous Coal Code, reference is often made to the percent of total sales supposed to be moving on contracts negotiated prior to the effective date of the Bituminous Coal Code. It has further been charged that many of these contracts have been negotiated since the code became effective, thereby evading the price provisions of the code. We take exception to these statements insofar as smokeless subdivision is concerned, for shortly after October 1933 there was filed with our code authority by our producers a list of every contract then in effect, thereby foreclosing the possibility of signing fraudulent contracts. Other information received in our office proves this list as filed to be complete and no shipments at less than minimum code prices has been made except on these recorded contracts.

At this point I want to make clear on the record that coal contracts are ordinarily made from April of one year to March 31 of the following year.

Our records disclose that in the calendar year 1934 applications on pre-code contracts were the following percentage of total sales:

Total 9 months-April 1 to December 31, 1934-12.6 percent.

From the foregoing figures it can readily be seen that the evil of precode contracts does not exist in the Smokeless subdivisions.

The advantages to be secured by continuation of operation under a code of fair competition can best be cited by claiming a furtherance of the advantages already derived.

Insofar as the public is concerned the Bituminous Coal Code is a benefit. It has permitted buyers of fuel to contract for their requirements with the assurance that their competitors would not be accorded a lower price and thereby creating an unfair advantage. It also permitted large fuel users to anticipate their fuel costs over a period of time with a knowledge of the same costs to its competi tors. Code prices have eliminated from the buying public the disastrous practice of price cutting, which practice had to a great extent brought about unstabilization in allied industries.

I have only tried to show for consideration along with this measure, the advantages derived by the industry in the short period of 17 months under operation of the code, and its administration under the code authorities, which in my opinion, has been a success far in excess of the anticipated hope of its most loyal supporters. I believe further that the industry can, in the next 17 months make equal strides in further advancement with stricter enforcement. To take from the industry at this time its code of fair competition and in lieu thereof impose entirely new legislation seems to me to be synonymous to the baker who, after devoting much time in the

preparation of his dough, in an effort to save fuel, put the fire out when half-way through baking.

Senator NEELY. Some one present asked the chairman of the subcommittee about a colloquy that occurred between Mr. O'Neill, who was on the stand day before yesterday, and the chairman. In order that those who ac interested may understand what occurred, Mr. O'Neill stated, among other things:

An outstanding example of thi

meaning the failure of the code authority to obtain the desired results in all particulars

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 refusal 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 authority, which, in a sense, is its own creature.

Then the chairman of the subcommittee propounded the following question:

Mr. O'Neill, is the subdivisional code authority to which you have just referred, and which you say failed to comply with either amendment no. 4 or amendment no. 6 of the Bituminous Coal Code, a subdivisional code authority for West Virginia or what is generally known as the "southern coal field "?

To which Mr. ONeill replied:

It is not.

Tomorrow morning the chairman of the subcommittee will necessarily be absent. He has been asked to act as a pallbearer at the funeral of his beloved friend the late W. W. Bride. Therefore, Senator Minton will preside tomorrow morning, and, if necessary, tomorrow afternoon.

I have already told some one that tomorrow morning the representative of the Association of American Railways may be heard. Unless there is some reason shown to the contrary, that gentleman will be heard at 10:30, and he will be followed by the representative of the United States Steel Corporation.

The subcommittee will now adjourn until 10:30 tomorrow morning.

(Whereupon, at 5 p. m., the subcommittee adjourned until the following day, Thursday, Feb. 28, 1935, at 10:30 a. m.)

X

STABILIZATION OF BITUMINOUS COAL MINING INDUSTRY

FEBRUARY 28, 1935

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C.

Pursuant to adjournment, the subcommittee reconvened in the caucus room, 318 Senate Office Building, at 10:30 a. m., Senator A. Harry Moore presiding.

Present: Senators Moore (presiding), and Minton.

Present also: Hon. Joseph F. Guffey, a Senator from the State of Pennsylvania.

Senator MOORE. The subcommittee will be in order. Mr. Duncan, you may proceed.

STATEMENT OF C. S. DUNCAN, REPRESENTING THE ASSOCIATION OF AMERICAN RAILROADS

Mr. DUNCAN. Mr. Chairman, my name is C. S. Duncan. I am in the employ of the Association of American Railroads located here in Washington, and I have been directed to present some testimony in behalf of that association and its membership before this committee in reference to Senate bill 1417, known as the "Guffey bill."

As I have just stated, Mr. Chairman, my appearance is in behalf of the Association of American Railroads with respect to Senate bill 1417 that proposes to stabilize the bituminous-coal-mining industry, promote its interestate commerce, and to provide for cooperative marketing of bituminous coal, and other purposes.

The rail carriers that I represent are interested in the proposed legislation as producers, as consumers, and as carriers of bituminous coal.

1. As producers: The railroads, like certain other industries, own and operate bituminous-coal mines, commonly known as "captive mines." The last report by the Bureau of Mines on captive coal mines was for the year 1924, at which time the railroads owned and operated 135 mines and produced, in that year, about 27,000,000 tons, out of a total production of all captive mines amounting to slightly more than 111,600,000 tons. In commenting on the ownership and operation of captive coal mines, the Bureau said:

In general, it may be said that industries in which the cost of fuel forms only a small part of the total operating expense and which do not need a particular grade of coal have not the same incentive for operating coal mines as industries in which the cost of fuel is a major item and which require coal of special quality. (Coal in 1926, p. 469.)

It is to the last group of industries that the rail carriers belong and the reason is clearly stated for the ownership and operation by them of captive mines.