restricted to demand. The balance between production and demand can be accurately maintained through the Coal Commission or coal court-a preliminary minimum annual quota deliberately placed at a figure substantially below the estimated demand (S. 1922; code, Periodic Allocations; p. 38) followed by quarterly revisions upward (pursuant to an added provision in the bill) as the volume of demand is demonstrated from quarter to quarter. If demand should unexpectedly increase during a quarter the Coal Commission or coal court could at any time announce an increase of quota for such current quarter. B. Opportunities for evasion: The strength of the quota system is principally in the fact that it does not lend itself to violation or evasion. By far the great bulk of all coal, probably 85 to 90 percent, is shipped from the mines by railroad and, as to coal so shipped, the identity and quantity of the shipments from each mine are automatically established. As to coal shipped from the mines by water and by truck, the tonnage record of such shipments is bound to be main tained by the producer since he renders his bill and collects payment for the coal on such tonnage basis. Under a Federal statute for the regulation of the coal industry, regulations would be issued by the Federal Coal Commission, requiring each producer to report each month the total volume of coal produced and disposed of during the preceding calendar month. Such reports would doubtlessly be correct and a misstatement in the report would appear to be in violation of the June 18, 1934, amendment to section 35 of the Federal Criminal Code, providing for a fine up to $10,000 and imprisonment up to 10 years for a false report “in any matter within the jurisdiction of any department or agency of the United States." C. Alleged unfairness of any quota system as among producing districts: There is no necessity that the system of allocation result in any considerable change in the proportion of tonnage contribution by each district as compared with the actual experience in the calendar year 1934. The quota formula set out in the Guffey bill would result in very material variances between the 1934 experience and the proportions of the total output allotted to the various districts. As shown on the attached exhibit A, these variances would amount to tonnage gains as large as 49 percent of the actual 1934 production and to tonnage losses as large as 21 percent of the 1934 production; as shown on exhibit A, the basis of allocation now in the Guffey bill would result in a tonnage gain as large as 7,313,000 tons in the eastern Pennsylvania district and tonnage losses up to 5,411,000 tons in the low volatile southern West Virginia district. Relief from such inequity could only be secured from the Commission which would be empowered to increase district quotas upon application and after hearing. The formula for allocation in the Guffey bill is to that exsent inappropriate and would be very much more logical if it adopted as a basis for the initial allocation the single standard of 1934 tonnage produced in each district. This is one of the two factors proposed in the Guffey bill, the other being the average annual production experience from 1919 to 1934 inclusive. This latter factor should be eliminated from the bill. It has been claimed that it is not practicable for the Commission to establish from time to time production quotas that will be fair to all the districts. Experience in Great Britain under the Coal Mines Act of 1930 is to the contrary. Under the British act, the industry is subdivided into 17 producing districts and the determination of district quotas is entirely under the jurisdiction of the central council. Any district not satisfied is entitled to claim increased allocation. If dissatisfied with the decision of the central council, the district has an absolute right to appeal to a standing impartial board of arbitration which is set up under the section. It is most significant that the annual report issued by the Mines Department of Great Britain (Coal Mines Act, 1930; report by the Board of Trade under sec. 7 of the act on the working of schemes under pt. I of the act during the year 1934) shows that the central council received during the course of the year 26 applications for increase in quota and that while a few applications were granted in full, a few applications were wholly rejected, and the remainder granted in part, the report makes this remarkable statement (p. 6, sec. 2. Allocations made by the central council): "(b) As was bound to be the case, numerous applications for increased allocations were considered by the central council during the four quarters covered by this report. It is understood that in no case was the decision of the council referred to arbitration." D. Minimum price: If quota tonnages are conservatively established by the coal commission or coal court, the natural market price would not press upon the single minimum price established under the statute, except in the event that one or more sizes or grades produced in a district or districts could not at the time be sold at the minimum price in competition with fuel other than coal, such as oil or gas, or with other forms of energy, as electric power. To meet the latter contingency, a provision should be added in the Coal Conservation Act to authorize a reduction in the minimum price under the order of the coal commission or coal court following a hearing. It is at least doubtful whether the plan of regulation would not be much improved, as well as simplified, if the provision for the fixing of minimum prices were eliminated. E. Maximum price: In addition to the control and stabilization of price through quota increase, the commission or court, would be authorized, from time to time, to establish maximum prices for any grade or size of coal. Maximum prices should be established at a level which will yield a just and reasonable profit above the average actual cost of production within the district, including the cost of selling and the amortization of capital investment. IV. RECOMMENDED CHANGES AND ADDITIONS TO S. 1417 Amplify scope of bill to include anthracite coal mining, as provided in S. 1922 (Hayden bill). Section 1, page 2, lines 11 and 12, strike out "as a public utility" and substitute "by the United States." Add additional recital and statement of purpose as contained in S. 1922, section 1. Section 2. Increase membership of Commission from 5 to 9. Strike out provision for 1 member representative of producers and 1 member representative of employees. Page 3, line 15, strike out "without regard to provisions of the civil-service laws." Section 3. Amend to conform to S. 1922, section 4 (a); change "Commissioner of Internal Revenue" to read "Coal Commission." This amendment extends the tax to apply to the sale or other disposal of coal, including coal manufactured into coke, coal manufactured into briquets, barter and exchange of coal, etc. Section 4, part I, production: Increase number of districts and district boards from 24 to 27, to include 3 anthracite districts as set out in S. 1922. Page 6, line 8: Change to read "Each district board shall consist of not less than five members nor more than eleven members, one of whom shall be a member selected by the national organization of employees, above mentioned in such district, and the remainder of whom shall be producers elected for terms of two years by the coal producers of such district, voting in the proportion of their annual tonnage output for the preceding calendar year." Page 6, line 22: Change "24" to read "27". Page 7: Change paragraph (b) to read: "(b) The National Board shall determine the standard tonnage allocation to be allotted to the various districts, which shall be based upon the total output of each district in the calendar year 1934. The total production tonnage of all the districts shall be combined and the proportions thereof for the respective districts shall fix the standard district tonnage quota and shall be employed in fixing subsequent periodic district allotments. District allocations may thus be made by the National Board, if reasonably necessary, to cover coals of district natural character or use, if suggested by any district board or boards." The reference to "maximum tonnage" and "maximum district tonnage" as incorporated in the bill is obviously a draftsman's error. What is intended is not the establishment of a maximum tonnage but simply a standard tonnage, for the purpose of determining allocations and proportions as among districts, upon which actual tonnage allocations will hereafter be based. The amendment above suggested would substitute the experience of the calendar year 1934 as a basis for district allocation. I am strongly of the opinion that 1934 lends itself as the fairest experience upon which to base such proration of output as among the various districts. It is the only year during which wages have been stable and presumably fairly related as between districts and in which the prevailing prices for coal have been established in very large measure as a result of agreement and expert supervision both within and without the Government. To the extent that 1934 production reflects in part, as it does, tonnage delivered against contracts that were made prior to the incidence of the code in October 1933, the actual experience of 1934 is to some extent distorted as compared with what would have been the experience if all coal produced in that year had been sold at prices prescribed by the code. However, it is a fact that such pre-code contracts affected the volume of production in all districts. The 1934 experience may therefore be said to reflect the actual developed demand for the various kinds of coal, in a market free from price aberrations and under stable cost of production due to wage agreements in practically all districts. Page 7, line 18: Change "marketable" to read “marketable or disposable". Page 8, line 1: After "standard allocation", insert "Provided, That with a view to facilitating the making of contracts for the sale of coal the National Board shall, whenever the period of allocation is less than 12 months, fix for each district, with the district allocation, a tonnage figure below which the district allocation in respect of the remainder of the period of 12 months from the beginning of such period of allocation shall not be fixed, and which shall be substantially below the tonnage necessary to meet the estimated demand during the remainder of the period aforesaid. The National Board shall from time to time and not less than at the end of each quarter, review and, if deemed necessary, increase the district allocation for each district for the said period of 12 months." Page 8: Change paragraph (d) to read: "(d) The district boards shall determine the proportions of the standard quotas of tonnage for each mine within the respective districts, to be based on the average annual output of the mine during the 6-year period 1929 to 1934, inclusive (or the average annual output during such part of said period as the mine was in existence), in its relation to the average annual output of all mines within the district during the said period: Provided, That in the first determination of standard mine quotas, if it appear that the mine or mines of any producer have been closed during said 6-year period and its or their market service has been transferred to another mine or mines of such producer in such district, the standard quota assignable to such closed mine or mines shall on application of the producer be added to the standard quota or quotas of such other mines of said producer remaining in operation. Separate standard mine quotas may thus be made by the district boards, if reasonably necessary, to cover coals of distinct character, if approved by the National Board." Page 9: Omit paragraph (f). There does not appear to be any good reason why the periodic quota of a single mine (as distinguished from the periodic quota of a district or of a special class of coal within the district) should be increased under any circumstances. Page 9: Change paragraph (h) to read: "(h) A code member may transfer his quota or any part thereof from one mine to another mine of such code member or from a mine of such code member to the mine of another code member. Notice of such transfer of quota shall be given to the district board. No transfer of quota shall be made from a mine in one district to a mine in another district except upon express approval by the Commission, after hearing, with due notice given the district board and representatives of the employees affected." The right of a producer to transfer mine quota within the district is one of the important features of the British Coal Mines Act of 1930. It provides a flexibility which is essential to the clear purpose of the proposed legislation; viz, to close down inefficient mines producing coal of inferior quality or at high cost and of concentrating production at other mines within the district producing coal of better quality and at lower cost. Obviously the net result is to reduce the average cost of production of all coal within the district, even after the efficient producer has paid a consideration for the purchase of quota in a mine which the inefficient or high-cost producer can better afford to accept than to attempt to operate under the statute. The provision for the free transfer of quota simply supplements title II of the bill in that both have the purpose of closing down submarginal and even marginal mines. Under title II such mines would be closed down permanently; under transfer of quota they would be closed down temporarily from time to time as their quota tonnage could be more economically produced at other mines within the district. The following statements appear in the annual report of the Mines Department of the British Government, concerning operations under the Coal Mines Act of 1930, under the caption "Transfers of Quota": 1933 (p. 5): "Owners desirous of purchasing additional quota tonnage have from time to time complained of the price asked for such tonnage. Apart from these complaints, which are limited to one or two districts, it is thought that regulation of output has been distinctly facilitated by the existence of the provisions in the district schemes whereby one owner may arrange with another for the sale or purchase of surplus quota tonnage.” 1934 (p. 8): "Advantage continues to be taken of the provisions in every district scheme that owners of coal mines may freely arrange transfers of quota. In a number of districts considerable tonnage was involved in transfers during the course of the year." Page 10: Change paragraph (i) to read: "(i) Every second year after the passage of this act the Commission shall, in accordance with the provisions hereof, make and establish new standard district tonnage quotas and new standard mine tonnage quotas; in the revision of such standard tonnage quotas the court shall give due consideration to the output of the respective districts and of each mine during the preceding period of operation under the act. In its annual report to the Secretary of the Interior for transmission to Congress the Commission shall report fully upon the system of allocation herein set up with such recommendations concerning the same as it may deem appropriate. Page 11, part II, marketing: Omit all reference to minimum prices. "(a) The Commission shall ascertain the cost of production free on board the mines, including the cost of labor, supplies, power, workmen's compensation, taxes, insurance, administration, and all other direct expenses of production, in each of the producing districts as defined herein. The average cost free on board the mines thus ascertained for the period for each district taken to the next highest even cent per ton, shall be announced by the Commission not later than March 1 of each year. The determination of cost for each year beginning April 1 shall be based on the actual costs for the preceding calendar year, adjusted, if necessary, to compensate for any changes in wage rates, hours, or other basic cost factors." "(b) Within thirty days after their election, the district boards shall respectively submit for the approval of the Commission a list of maximum prices, free on board the mines, for coal and grades of coal produced within the district. Upon failure of a district board, on demand of the Commission to submit such lists and the information upon which the prices are predicated, or upon the refusal of the district board to modify any such maximum price or prices, the Commission is authorized from time to time to fix maximum prices for any grade or size of coal. Such maximum prices shall be established at a figure or figures which will yield a just and reasonable profit above the actual average cost of production within the district, including the cost of selling and the amortization of capital investment. Twenty days' notice in writing shall be given to any code member to be affected by the order of the Commission, and at such hearing anyone in interest may be heard. Upon approval of prices submitted or order fixing the same, notice thereof shall be mailed to each code member in the district, and no coal shall be sold free on board the mine by any code member within the district at more than the maximum price so fixed: Provided, That where maximum prices are established by the Commission they shall be determined for periods of six months ending the last day of March and the last day of September of each year." If it should be decided to keep in the bill a provision for minimum prices, an amendment should be added at page 11, substantially as follows: "Upon the complaint of any district board that the minimum price established for any size or grade of coal produced within the district substantially restricts the sale of such coal in competition with other fuel or with other forms of energy the Commission shall, following hearing upon the matter, authorize such reduction in the minimum price of such coal as may be found necessary to meet said competition." Page 15. I believe paragraph (c) would be improved if it were revised to read: "(c) A bituminous Coal Labor Board, consisting of three members, shall be appointed by the President of the United States, to be assigned to the Department of Labor. The members of the Board shall be impartial persons, with no financial interest in the industry or connection with any organization of employees. The Board shall appoint a secretary and necessary clerical and other assistants. The members shall serve for a period of five years and until their successors are named and shall each receive compensation at the rate of $12,000 per annum and expenses. Decisions of the Board may be by a majority thereof." Page 17, change paragraph (g) to read: "The wage agreement or agreements, including maximum daily and weekly hours of labor, negotiated by collective bargaining in any district or group of two or more districts between representatives of producers of three-fourths of its annual tonnage production and representatives of the majority of the mine work ers therein belonging to a recognized national association of mine workers, shall be filed with the Labor Board and shall be accepted as the minimum wages for all such classes of labor by the code members operating in such district or group of districts." My view with respect to this amendment is this: There is no logical reason why maximum daily and weekly hours of work, which are entirely appropriate in, say, the eastern part of the United States, shall be made to apply to remote districts in the western part of the country (where they may be entirely inappropriate) for the reason that they have been agreed to by a majority or any other proportion of the coal producers of the Nation. The matter of maximum daily and weekly hours of work should be determined upon its merits in each district or group of districts, depending upon the established demand for coal and the actual need for longer or shorter working time to meet such demand. With respect to minimum wage scales, I am in agreement that a substantial majority of the producers in each district, based upon aggregate tonnage, should have the power to negotiate a basic wage scale which would become binding upon all code members within the district. However, in my opinion, it is not logical that this would result from the action of a simple majority, and I have suggested that it require the concurrence of three-fourths in tonnage of the producers within the district. If the purpose of the provision as drafted is not clear with respect to the following, it should be made clear that minimum wages so imposed upon the minority by the action of the majority are limited to wages paid by the hour or by the day and would not include wages paid on a piecework basis. Otherwise very serious distortions in piecework rates of pay might occur, since the conditions under piecework and the consequent opportunity for earnings might vary greatly between the employees of the majority and the employees of the minority producers. Page 18, line 1, insert "shall be filed with the Labor Board and shall be accepted by the code members operating in such district or group of districts as the minimum wages for all classifications of labor paid upon an hourly or daily wage basis." (Further recommendations for amendment to follow.) Senator NEELY. Gentlemen, in spite of the diversity of the conflicting opinions, hopes, and fears which you have made a matter of record during the progress of the long hearing which we have just concluded, it appears to the chairman of the subcommittee that the following conclusions may be confidently deduced from the evidence. 1. Expecting a brief period of abnormal prosperity which was born of the World War, the coal industry was not only poverty stricken, but in a state of chaos for at least a quarter of a century before the enactment of the national recovery law. The operators habitually waged relentless and destructive competitive war against one another. 2. Before the enactment of the recovery law and the adoption of the Coal Codes there was frequently bitter strife between the operators on the one hand and the miners on the other. 3. For many years before the enactment of the recovery law the operators proved themselves to be totally incapable of cooperating with one another in the matter of promoting the prosperity of their industry, or saving it from ruin. 4. At the time of the enactment of the recovery law, about 90 percent of the coal operators of the country were insolvent. Hundreds of thousands of miners were without employment; many thousands of miners' wives and children were utterly destitute. Under the operation of the National Recovery Act and the governmental regulation which it provided, the industry became more prosperous than it had been for many years before the passage of the law. Destructive competition among the operators was abandoned. The prices of coal and the wages of the miners were stabilized and substantially increased. The nonunion miners have been generally organized by the United Mine Workers of America; the |