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are shuffled and dealt we are going to come out with a poor hand and somebody else is going to have the business.
The matter of contracting for next year's coal has got us all by the ears. Contracts for coal usually begin in April and run for a year. We all are afraid that we are going to be left. That is very natural. There is no way to correct it except by setting up some predetermined basis for participation.
The tax of 25 percent would effectively prevent the production of an excess of coal. As Judge Warrum pointed out this morning, it would amount to 50 cents per ton, and there is hardly anybody who could afford that out of the price he could get for his coal.
Senator NEELY. Is it not fair to deduce from all you have said that in your opinion the enactment of this bill will be highly beneficial to the coal industry and all those who are engaged in it?
Mr. STEINBUGLER. I feel very confident of that.
Senator NEELY. Do you believe that the Supreme Court would hold as unconstitutional, that section of the bill which declares that a company engaged in the production and distribution of bituminous coal shall be considered a public utility ?
Mr. STEINBUGLER. Well, whether the Supreme Court would declare that a public utility is certainly, let us say, uncertain; but I think the Court would not be limited to that declaration of purpose. I think the Court would go on.
I think this introduction can be improved. I think in Senator Hayden's bill the declaration of purpose and policy goes further than this. I think it has a better foundation for the declaration of Congress. But even under this I think the Court would see the intent and the purpose.
Senator MINTON. If in fact there was a constitutional purpose, the Supreme Court would brush aside any intention of unconstitutional purpose ?
Mr. STEINBUGLER. Yes; I think the Court would sustain it.
Mr. STEINBUGLER. I think this bill or a bill like it has a good chance in the Supreme Court. I think this bill could be improved. I shall have some suggestions later for changes. Substantially the bill is sound. Industry is either going to go back where we were or we are going to have a bill like they had in England. In Germany the coal business has been regulated since 1893, and they cannot understand why we here with a large production have not yet got into the hands of the Government.
Senator MINTON. We are rugged individualists.
Senator NEELY. One's urge for rugged individualism somewhat abates after he and his plants all get into the bankruptcy courts, does it not?
Mr. STEINBUGLER. Some of my friends have come to me within the year and have been good enough to say that they concluded that we must have, some kind of very specific regulation of this nature; that we were right after all; and while they once opposed it, they now concluded that they were mistaken.
Senator NEELY. The committee adjourns until 10:30 o'clock tomorrow morning.
(Thereupon, at 5 p. m., the subcommittee adjourned until 10:30 a. m. Thursday, Feb. 21, 1935.)
STABILIZATION OF BITUMINOUS COAL MINING
THURSDAY, FEBRUARY 21, 1935
UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE,
Washington, D. C. The subcommittee met, pursuant to adjournment, in caucus room, 318 Senate Office Building, at 10:30 a. m., Senator A. Harry Moore presiding.
Present: Senators Moore (presiding), Minton, and Davis.
Senator MOORE. The hearing will be in order. The first witness, I understand, is Mr. Roberts.
STATEMENT OF N. W. ROBERTS, ACTING DEPUTY ADMINISTRA
TOR N. R. A., IN CHARGE OF BITUMINOUS COAL CODE
Mr. RORERTS. Mr. Chairman, I have no prepared statement to make. I came here at the request of Senator Neely and would like to be of any assistance I can to the committee.
Senator MOORE. What position do you occupy now?
Mr. ROBERTS. Acting Deputy Administrator in charge of the bituminous-coal code.
Senator MOORE. From your experience, do you believe that Government supervision is necessary in the coal industry?
Mr. ROBERTS. Yes, sir; I believe the industry itself, both on the part of labor and on the part of the producers, recognize that it is essential.
Senator MOORE. Why? · Mr. ROBERTS. Well, I think it is pretty well known as to the condition the industry was in prior to the enactment of the Recovery Act and prior to the bituminous-coal code. The industry at that time, not wishing to repeat, was in a very chaotic condition. If you like, I will be very glad to give some of the details of the administration of the bituminous-coal code.
Senator Moore. That would be very good, if you could give us your experience and the benefits, if any, of the code.
Mr. ROBERTS. The bituminous-coal code has no national code authority similar to other codes. It has what is called a “ vertical" set-up, and is so organized as to care for all angles of the industry, It has its own regional labor boards; it has its national bituminouscoal labor board. The code authority consists of a total of 22 divisions and subdivisions, and connected with each one of these divi. sions and subdivisions is a presidential member. There are 10 of such presidential members, and one, in addition, is a member of the administration and performs certain special duties in the field.
The industry has been particularly fortunate in having very highcaliber men as presidential members. It is particularly fortunate in having had, almost since the inception of the code, Deputy Administrator W. P. Ellis in charge of the code. Mr. Ellis is now Division Administrator. He is a man of very high character and caliber and one who has especially the problems of the industry at heart, and a man of very high ability. The code itself has always had the sympathy and the interest of the officials of N. R. A., and I understand that the same may be said of the President, so any manipulations or administrations of the code have been what we consider 100 percent.
Senator MOORE. What was the effect of the code on the industry?
Mr. ROBERTS. There is no doubt of the improvement. The results speak for themselves. The industry prior to the inception of the code was probably at low ebb, with really starvation wages, selling below cost of production, with the corporations themselves almost all “in the red.” That has been transferred to just the opposite. The companies themselves, or a good many of them, are in the black.” The hours per day and per week have been shortened. There has been an increase in employment, and they have been given a decent standard of wages.
Senator MOORE. So that practically all they would get under this bill they now get under the code?
Mr. ROBERTS. Well, I would not say that. It has come to a point now where there is really a turning of the way.
Senator MOORE. Why
Mr. ROBERTS. Compliance and enforcement have to be increased in efficiency and efficacy. The industry itself has proven in our minds that it not only needs supervision such as it has had but intensely increased supervision and regulation. Instances of that can be had in this one point. It is pretty generally recognized and has been stated and is on record that some sort of price control is necessary. The industry so far has been allowed to establish prices more or less voluntarily; that is, the industry itself has been the group to establish those prices, subject to review and subsequent action of the Administration. It has been pretty difficult at times to get the industry to agree. There are certain groups, for reasons well known to themselves and we do not question the honesty of them-that have been threatening to“ kick over the traces." Those small groups, and one or two important ones are included in that, can bring about the real destruction of the code.
Senator MOORE. They have already “kicked over the traces”, have ther not?
Nr. ROBERTS. They have already“ kicked over the traces”, and if rumors can be believed, they intend to go still further. In the establishment of those prices the industry has endeavored to cooperate to the extent of perhaps 90 percent, but the other 10 percent has not. As I say, the perhaps 90 percent want to establish prices and a yardstick of basis upon which those prices could rightly be formed, both for the protection of the public and the consumer; but the other 10 percent, figuratively speaking, will not allow a reasonable yardstick or price or basis to be established, and they do not care to have the Administration do it. Until that is done, no fair minimum can be established.
Senator MOORE. Does the fact that the code was about to expire this year have any effect upon the violations?
Mr. ROBERTS. A great deal. That contributed in large part to it. Not very many weeks ago there was a general scramble for the renewal of contracts—taking in of new contracts for future delivery. Those contracts, we understand, were taken at far below the minimum fair market price as established under the code. That does not contribute in any gentle way to the successful administration of the code. In that respect I might say that although we have stated that those contracts-certain ones, at least-are in violation of the code, particularly since the new amendment was made in the code, in spite of that fact only one case has been submitted to the Administration for subsequent action. That was in the form of a purchase memorandum. There were so many that had taken these contracts that I presume there was some hesitancy on the part of the code authority to pass them in to the Administration for action. There was also a hesitancy, I believe, because of one or two of the subdivi, sions not policing their districts in the manner in which they should, with unfortunate results that would come to other subdivisions that might be living up to the code.
Senator Moore. Could you say that price control could be established without production control?
Mr. ROBERTS. Personally, I think that both are necessary. I think some sort of production control should be established, and that there should also be control or establishment of prices. Particularly is that true if a decent standard of wage scale is to be maintained.
I might say also, Senator, if you don't mind, that these views I am expressing are personal, from my experience in administering the code. Whatever the President's views are, and whatever the subsequent action of the Administration shall be, that will be my view from an administrative standpoint.
Senator MINTON. Do you think the administration of the code has broken down?
Mr. ROBERTS, I would not want to say it has got to the point of breaking down, but something has got to be done, something in the way of legislation or strengthening the machinery to give more power to Government regulation or supervision.
Senator MINTON. Do you mean a strengthening of the code or some other form of legislation?
Mr. ROBERTS. Well, as long as the code shall continue on a voluntary basis-as long as the attitude of some of the divisions, some of the groups, is as it is–I cannot see where the code can be successfully administered. If it could receive 100-percent support from the industry, almost any reasonable machinery or agency would clear it up; but, unfortunately, the 100 percent is not fair. Many of these gentlemen of high-caliber, high-salaried, and important positions have labored and struggled and spent weeks at a time down here, and they have used every effort to try to make the code a success, but there are some groups that are recalcitrant and for reasons of their own do not go along with that. Some sort of legislation, it seems to me, is essential and necessary.
Senator MINTON. The code as at present constituted depends for its success upon the cooperation of the operators, does it not?
Mr. ROBERTS. Yes, sir.
Senator Minton. If you do not have that 100 percent, disintegration of the whole plan begins?
Mr. ROBERTS. Yes, sir. A certain few percent might be likened to a cracked link in a chain-the chain is useless without it. For instance, one subdivision might have markets stretching out in all directions-north, east, south, and west-and if it should not function properly with the proper correlation to other subdivisions it upsets the whole structure.
Senator MINton. Do you recommend this Guffey bill as a substitute?
Mr. ROBERTS. I cannot pass on all the merits of it, because I have not had the time to study it, but in substance I would say “yes.”
Senator MOORE. Have you anything further?
STATEMENT OF JOHN B. BRUNOT, REPRESENTING IRWIN GAS
COAL CO., GREENSBURG, PA.
Senator MOORE. You may proceed with your statement. First, give your name and whom you represent.
Mr. Brunot. My name is John B. Brunot, from Greensburg, Pa. I am vice president of Irwin Gas Coal Co., a bituminous producing company with mines in western Pennsylvania.
Senator Davis. How long have you been in the coal business!
Mr. Brunot. I have been in the coal business approximately 20 years.
Senator Davis. Did you ever work in a mine? Mr. BRUNOT. No, sir. Senator Davis. You have always been on the operating side ? Mr. Brunot. Always on the producing, sales, or operating end of the business.
Senator MOORE. You may proceed.
Mr. Brunot. I am here as the representative of one of the smaller bituminous-coal producers, with mines in western Pennsylvania, that produces industrial coal.
I appear in support of the Coal Conservation Act, S. 1417, because, under the unrestrained competitive practices of the past, the smaller producers are being exterminated, and trend is toward control of the industry in the hands of a few large interests. I believe the proposed act, with some modifications, can prevent the trend toward monopoly.
Consideration has been given to this bill from the practical viewpoint, for the assuring of an equality of opportunity to the producers of bituminous coal and to the employees engaged in the industry.
Referring to “ title 1, Tax on Bituminous Coal, section 3," there is here provided a tax 25 percent on the sale price of coal at the mine, with a drawback equivalent to 99 percent of the amount of such tax in favor of producers who agree to accept the bituminous-coal code.