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we include in the lowest minimum price would amount to about $1.30. Your highest minimum price, counting the 30 percent that we mentioned, would be about $2.60.

Now, I could sell my smallest and worst grade of slack for $1.30; I would sell my largest and best grade of lump for $2.60; and the other grades and sizes between those prices. I could not sell my largest and best grade of lump at the same price that I sold my smallest and worst grade of slack in order to take business away from a competitor.

We think that is a very necessary arrangement in any price structure. There is no justice in allowing me to sell 4-inch lump coal of the best grade at the same minimum price that my competitor sells 2-inch nut slack of his worst grade. There has to be a slack there to get any justice in the picture.

Senator MINTON. Then do you propose to have the commission establish a minimum and a maximum for each grade?

Mr. REXWICK. Yes.

Senator MINTON. Where is this activity of the district board to come in and establish this in-between price that you were talking about awhile ago?

Mr. RENWICK. When the coal is ultimately delivered to the consumer there are various transportation and other charges to be added to the f. o. b. mine price. You as a consumer in Buffalo may have the opportunity of buying your coal from, we will say, Ohio, western Pennsylvania, or central Pennsylvania through a cost structure; or price structure, based on absolute cost.

Western Pennsylvania, on account of freight rates, may be able to destroy any competitive opportunities that Ohio and central Pennsylvania have. But if you allow the fixing of prices within the wide limits by districts, then you can fix a minimum price for western Pennsylvania that will allow Ohio to compete in the Buffalo market and will allow central Pennsylvania to compete in the Buffalo market; but if you determine that minimum price on cost alone, Ohio and central Pennsylvania would be eliminated on account of freight rates and other charges in getting coal to that market.

We are suggesting no change in paragraph (c), but in paragraph (d) we would like to offer this as an amended paragraph:

The price provisions of this act shall not be evaded or violated by or through the use of yards, docks, or other storage facilities; or by or through the use of transportation equipment owned or hired directly or indirectly by the producer; or by or through the use of subsidiaries affiliated sales agencies or other intermediaries; and the Commission is hereby authorized, after investigation and hearing upon notice to the interested parties, to issue rules and regulations concerning such practices to make this section of the act effective.

Our explanation of that is this: Under the present condition of minimum fair-market prices established by the code, I operate a truck line. The code authority establishes a minimum f. o. b. mine price for my coal. I have been selling that coal to the consumer and absorbing the transportation cost in the mine price and delivering it to that point f. o. b. mine price, simply because there has been no. public taríff of transportation charges applying to the kind of equipment I use; and in the original section no mention is made of the possibility of evading the price by using your own transportation, equipment. So we want that included.

As far as that goes, it we would let it stand the way it is, it would be a wonderful out for truck coal producers, but we do not want it.

The next change suggested is in section 4, part II, marketing (g), which has already been discussed under marketing-area prices. The change that we are suggesting is as follows:

Change the first sentence to read:

In order to promote the service of the public in consuming markets by competitive districts, the Commission shall. establish consuming market areas throughout the United States and may adopt rules not in conflict with this act whereby district boards may provide for agreements as to competitive prices and practices in such consuming-market areas.

In other words, the district boards, with the aid and advice and consent of the Commission, will establish minimum and maximum prices so as to permit competition in a market from several producing districts. Just that thing that I was mentioning to you a moment ago. If the basis were prices simply on cost, a fellow with the nearest and lowest transportation would control a market absolutely. I do not believe that is a good thing.

Senator MINTON. How do you propose to avoid that?

Mr. RENWICK. By setting prices that districts for their coal of equal grade will sell for approximately the same price in a market. You will absorb a proportion of the difference in transportation cost by making a variation in the minimum and maximum mine prices.

Senator MINTON. It will operate a little bit to the disadvantage of the consumer, though, would it not? It would make his coal cost him a little more money?

Mr. RENWICK. It will make the coal cost him a little more money, but it will give him a wider choice.

Senator MINTON. A wider choice of what?

Mr. RENWICK. Of coal. I do not want to confuse the issue with you. It is more to the advantage of the producer, possibly, than it is to the consumer, but it tends to give the producers a more stable production. If you would carry the thing to the logical conclusion, any customer within a mile of my mine could never think of pure chasing coal from another producer that was 2 miles away, because I could always beat him by practically half; and my market would be limited to just a certain distance around my mine, and the other mine's market would be limited to the same thing; and there would be violent fluctuations in our production because we only had one place to sell our coal, and we are trying to avoid that.

In section 4, part III, which relates to labor relations, we are sug. gesting no change.

Senator MINTON. Are your mines unionized ?
Mr. RENWICK. Yes.
Senator MINTON. How long have they been unionized ?

Mr. RENWICK. Since the passage of the National Industrial Recovery Act; and when I say “yes” I really should qualify that. The mines that I represent are, a good many of them, small truck mines that are operated really as family affairs, or with only 3 or 4 employees.

Senator MINTON. Do you pay a union scale there?

Mr. RENWICK. Most of them pay a union scale, but a great many of them are not signed up with the union. We believe that this act will aid in bringing them all under the same wage scale and the same conditions, and we are very much in favor of the act for that reason, among others.

As a truck coal producer my worst competition comes from another truck coal producer who is not observing the State mining laws, code regulations, or anything else and is avoiding them, partly at least, on the proposition that he does not have to pay as much for his labor as I do.

There are provisions in this bill that make it a little easier for the labor organizations to bring them into the fold, and we are for that definitely.

In section 5 we would like to see the first sentence changed to read as follows:

Upon the appointment of the Commission, it shall proceed at once with the formulation of the bituminous-coal code and assist in the organization of the national and district boards, as provided for in section 4, and so forth.

In section 6, after the word “taxes ", add “and code assessments." We are suggesting no changes in sections 7 to 14, inclusive. In section 15 a definition of " captive tonnage " should be added. However, we do not feel competent to make that definition, but we would like to make the suggestion that the act contain a definition of what is meant by “captive tonnage.” It is referred to often as an important subject.

Senator MINTON. What do you understand by it?

Mr. RENWICK. It is production owned and controlled by a definite consumer.

Senator MINTON. Who is also a producer?

Mr. RENWICK. Yes; I say production owned and controlled by the consumer. That is not a complete definition, but that is just a quick definition. However, we believe the act should specify exactly, because there are some relationships between consumer and producer that are almost on the basis of captive but possibly not quite, but the differentiation between captive and otherwise should be stated definitely in the act so as to avoid future confusion.

Title II we believe to be absolutely necessary. If it is administered with any degree of success, then the continued necessity for title I will become greater in regard to allocation and price structure and also for the labor provisions.

Companies with the reserve acreage will be anxious to open up new territory in proportion as stabilizing increases the profitable operation of mines, and there will have to be some control of that as well as the retirement of acreage from production by the application of the rules under title II. But the changes in title II recommended by the Coal Control Association of Western Pennsylvania in Mr. Hosford's statement yesterday are endorsed by us rather than in the form in which it is presented in the regular bill.

That is the extent of what I have to say, gentlemen.

Senator NEELY. Are there any questions? If not, Senator Camden is recognized.

STATEMENT OF JOHN M. CAMDEN, OF KENTUCKY

Mr. CAMDEN. Mr. Chairman and gentlemen of the committee, with your permission, I would like to make a plea in behalf of the holding company that I represent and of which I have the honor to be president.

The holding company that I represent is the Kentucky River Coal Corporation. It was incorporated in about 1915 and embraces about 150,000 acres. About 50,000 acres are under production; that is, they are under lease. We have about 28 lessees.

In the multiplicity of things to be considered by the Guffey bill and also the committee here, there is no provision as to how the holding companies will come in on this.

I have prepared an amendment that I would like to file and have go into the record. With your permission, I shall read it. Senator NEELY. We shall be glad to hear it.

Mr. CAMDEN. This is to amend Senate bill 1417. Amend paragraph (d), line 22, page 8, so as to read as follows:

Provided, That the mean average royalty tonnage quota of all land-holding companies receiving royalties on tonnage since 1918 and including 1934 shall be computed on the same basis as figured for the operating districts. In the case of all land-holding companies owning coal reserves, all such land-holding companies shall be permitted to open new mines, make additional leases, and/or make new leases out of their reserves to operating companies in order to maintain their royalty tonnage now and thereafter on coal mined since 1918 and including 1934.

Any increase in the quotas of a district will result in a due proportional increase in the quota of such royalty property.

Senator NEELY. Subject to that amendment, Senator Camden, do you favor the passage of the bill?

Mr. CAMDEN. Mr. Chairman, I will say that through my father I have been identified with and have a pretty good working knowledge of the coal properties, mining conditions, and so forth, going back over 40 years. Under the N. R. A., which was pretty good control but not permanent and you might say conclusive, we experienced relief. We had better conditions in the past 14 months than we have enjoyed for some time; more assurance, more confidence and peace of mind, beside a more fixed and steady income; and I feel that it would be a very stabilizing thing if that could be continued and made permanent. It looks like this bill might accomplish that.

I am for the bill with certain amendments or provisions, which, of course, will have to be worked out. But I think it would be a beneficent thing if we can get it through under those conditions.

Senator NEELY. You believe that it would have a further stabilizing effect on the industry?

Mr. CAMDEN. I do, with those amendments or provisos that I have mentioned.

Senator NEELY. As the Chair understands it, you propose that the amendments which you have just read shall be inserted from and after the word “Board " in the twenty-second line of page 8. Is that correct?

Mr. CAMDEN. Yes; that is correct.

Senator MINTON. Will you tell us briefly what the purpose of your amendment is?

Mr. CAMDEN. The purpose of this amendment? You see we have a holding company and we are not operators.

Senator Minton. What do you hold, the land or stock in the operating company ?

119739—35---7

Mr. CAMDEN, We hold the land, which is represented by stock. Senator MINTON. You own the coal too, do you

not? Mr. CAMDEN. Yes; this is a coal-land holding company, as distinguished from an operating company.

Senator MINTON. You own land and then lease it to the operating company?

Mr. CAMDEN. We own minerals and the land which we lease to operators through our lessees, and they pay us 10 cents a ton royalty for the coal that they take out of our lands.

Senator NEELY. Is it not the purpose of your amendment to grant holding companies' tonnage the same rights that it would enjoy if it were controlled exclusively by operating companies.

Mr. CAMDEN. Yes; exactly.

Senator NEELY. Senator Camden, do you wish to say anything further?

Mr. CAMDEN. No, sir. Thank you very much, Mr. Chairman.

Senator NEELY. Before the next witness begins his statement, the Chair invites the attention of the proponents of the bill to a part of the following letter which was received by the subcommittee this morning from one who evidently opposes the legislation. It says:

Yesterday Judge Warrum indicated that at the close of the hearing on the Guffey bill he would have several aniendments to propose. These amendments should be put in before the proponents conclude their case in chief. Otherwise, the proponents may not know wbat it is they are called upon to meet. They will be shadowboxing. If some of those who now favor the bill might oppose it if the amendments are not to their liking, and vice versa. If this procedure is not followed, then new liearings should be had upon the amendments so that everybody could have an opportunity to express their sentiments.

Judge Warrum, have you any observations to make in response to that letter?

Mr. WARRUM. It is difficult to tell whether the writer is for or against this bill. I assume if he, or those that he represents, favor the bill in principle, he will do like most of the other witnesses are doing, so state, with such suggestions as to amendments as may occur to him.

It was my idea that at the termination of the hearing there might be some conserted action with reference to these suggestions on marketing operations, minimum prices and other things that should be the subject of more or less agreement, at least among those opposing the bill, and we could then submit them to the committee for consideration,

We want to reserve the right to suggest those amendments at the termination at least of the hearing of our witnesses.

Mr. Ellis is recognized.

STATEMENT OF W. P. ELLIS, ACTING DIVISION ADMINISTRATOR

OF N. R. A., WASHINGTON, D. C.

Mr. Ellis. I am here at the request of your committee to offer such facts and comments as I may to help in the consideration of this bill.

Senator MIntox. Whom do you represent? Nr. Ellis. I am divisional administrator of N. R. A. and previously had charge of the coal code through its formula, approval and administration of it.

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