There are thousands of coal miners who are having to apply for unemployment insurance benefits throughout southeast Kentucky because they have no work to do and because the mines have either suspended operations or gone permanently out of business..

We understand that 8 or 9 years ago, the importation of residual fuel oil from foreign countries into this country amounted to about 44 million barrels in 1951. Last year we understand this importation of fuel oil into the United States had grown to 118 million barrels, and so far this year the increase is greater.

I believe that the bituminous coal of America is a basic necessary industry. We cannot make steel without bituminous coal. Anything that destroys or seriously impairs this basic industry hurts all of the people of America. It is estimated that the increased importation of residual fuel oil in the last few years has displaced each year 31 million tons of coal, that it has caused the loss of revenue to the coal companies of more than $150 million each year, that it has caused the men who work in the mines the loss of more than 4 million mandays of work each year, and that it has caused the miners to lose more than $75 million in wages each year.

Closing of the bituminous mines has also directly and adversely affected the railroads of the country, and because they do not have the coal to haul as freight it is estimated they are losing $85 million in freight revenues and that railroad employees are losing $41 million in earnings and wages on account of the displaced and lost coal markets.

One of the great questions that this committee will have to determine is how far can we go with the free trade idea and where shall we draw the line to protect essential American industries and American workmen. We all know and realize that we want to cooperate and get along in a friendly manner with foreign nations, but can we as reasonable men go far enough on the free trade idea so as to disrupt our American economy? It appears to me that no reasonable country would expect us to weaken and destroy our own home production. If we open the doors wide to the free trade theory, there are some things which I believe this great committee should consider. With our high standards of living, built up through free American enterprise in this country, can we compete with the low standards of living and low wages that are paid for the production of goods in most of the rest of the world? If we do not carefully and reasonably guard and protect American industry, are we not likely to so undermine one industry here and another there until there will be a vast accumulation of unemployment and a lowering of the standards of living until we ourselves become a weak Nation not able to protect ourselves or to help our allies? Another serious basic question is can we compete upon the free trade idea with other countries of the world devaluing their currency which places products from other countries in a very advantageous position when competing with American made products.

I do not think there is any group of men anywhere better equipped to deal with these basic subjects than the Ways and Means Committee of the House, and I am sure these subjects will receive the very serious consideration of every member of this committee.

So far as the chief industry in Kentucky is concerned and the chief industry in my own congressional district is concerned, I request that this committee give us complete protection from the importation of foreign fuel oil that is closing our mines and throwing people out of employment and causing a depression in otherwise prosperous times. I also feel it is necessary that we protect our farm products from foreign imports.

The CHAIRMAN. We certainly thank you for your appearance here. I believe that one of your colleagues is very anxious to ask a few questions.

Mr. BAKER. May I first compliment Congressman Golden most highly on this fine, informative statement, and state to the committee that Congressman Golden and I represent adjoining districts that have a common boundary line of over 100 miles. That is true, is it not? Mr. GOLDEN. That is right.

Mr. BAKER. The same situation exists to a great extent, does it not, in the Second District of Tennessee?

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Mr. GOLDEN. That is true. My section of Kentucky is in the southeast section and it borders Congressman Baker's Tennessee district for more than 100 miles. He has a large number of bituminous coal mines in his section, the same that I do in mine, and some of the companies that operate in Kentucky also operate in Tennessee. I have personal knowledge of the fact that his district is affected just about the same as mine. I should say in his district that 50 percent of the mines are closed and that 50 percent of the men that work in the mines are looking for a job. I might say that in the section of Virginia that joins me, on the north, the same thing is taking place. This is not an isolated question. It is a question that spreads over the coal fields of the entire country.

Mr. BAKER. Mr. Chairman, may I make one other statement? I have just been furnished statistics by representatives of the United Mine Workers and of the operators that last year in the district I represent in Tennessee 7 large mines were closed because of lack of demand and market, throwing 980 coal miners out of employment and displacing 780,000 tons of coal.

Thank you, sir.

The CHAIRMAN. Have you concluded?

We thank you very much, sir, for your very fine statement in behalf of the coal interests.

Mr. GOLDEN. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Perkins, will you give your name and the capacity in which you appear?

STATEMENT OF HON. CARL D. PERKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY

Mr. PERKINS. Mr. Chairman, for the record my name is Carl D. Perkins, Representative of the Seventh District in Kentucky. First, I would like to ask unanimous consent that my prepared statement be inserted in its entirety preceding my remarks.

The CHAIRMAN. Without objection it is so ordered. (Mr. Perkins' prepared statement follows:)

STATEMENT OF HON. CARL D. PERKINS

I appear here today in behalf of the coal miners and coal industry that I represent in eastern Kentucky. These groups are very much concerned about the uncontrolled importation of residual fuel oil from the Venezuelan area. Legislative proposals now before the Congress would provide a necessary stabilizing effect by limiting the total quantity of residual fuel oil to be imported into the United States in any calendar quarter of any year to not more than 5 percent of the domestic demand for this product in the corresponding calendar quarter of the previous year. The sole purpose and effect is to put reasonable restraints upon the destructive flood of heavy fuel oil into this country. No lack of necessary fuel supplies would result. In the event of any genuine shortage, but only then, the President would be empowered to modify or suspend the prescribed quota if he finds that the domestic production of residual oil and coal, as supplemented by such quota, is insufficient to meet the Nation's requirements for those products.

On February 12, I introduced House bill 2973. This bill restricted imports of residual fuel oil as above outlined.

On March 5, 1953, I suggested on the floor of the House that separate hearings be held on this legislation and that it be considered separately from the renewal of the reciprocal trade agreements in general.

I am here today testifying in favor of the legislation that I, along with numerous other Members of Congress introduced, and also the provision in House bill

4294, introduced by Representative Simpson of Pennsylvania, which limits the importations of residual fuel oil.

This action is required to check tremendous increases which have occurred in the importation of residual fuel oil for consumption in the Atlantic seaboard area. Such imports in the year 1952 were nearly 3 times as great as in the first postwar year of 1946, and for the first quarter of 1953 were 10 percent above the corresponding period of 1952. To make matters worse, these imports fluctuate extremely and erratically, causing further disruptive effects upon our domestic-fuel economy, the production of coal, and employment of our miners. The consequences with respect to the coal industry are a matter of real concern. In 1952, the 128,510,000 barrels of imported residual fuel oil displaced 31 million tons of coal, resulted in the loss of coal revenues exceeding $150 million, and deprived our coal miners of more than 4,200,000 man-days of work. This was the equivalent of a complete shutdown of the coal mines for at least 3 entire weeks. With these imports for the first quarter this year running substantially above the same period last year, the impact upon coal operations and marketing in 1953 may be even greater. It is significant, also, that imports of residual fuel oil to our east coast are twice as great as the supplies which come from our own oil refineries in the gulf-coast area.

To arrive at a sound policy in this matter, it is necessary to consider why these imports have increased so tremendously. In brief, the situation has developed because oil production in the Venezuelan area has increased sharply since the end of World War II, while at the same time refinery capacity and output in Western Europe, based largely on supplies of crude oil from the Middle East, have also grown rapidly. Consequently, Venezuelan refineries which formerly counted upon Europe as an eager and major market for their residual-fuel-oil output now are flooding our Atlantic seaboard with it instead. throwing it now on that market for whatever it will bring and seriously disrupting our domestic-fuel economy. This process knows no economic limit for the reason that heavy fuel oil is treated as a residual waste byproduct by these refineries.

To make conditions worse, the refineries of the Venezuelan area, owing to a backward refining technology, produce a relatively high proportion of residual fuel oil and lesser quantities of gasoline and other high-type liquid fuel products. Also, foreign-flag tankers, not committeed to the same standards of wages and other costs as our American tankers in the coastal trades, frequently are able to furnish transportation for foreign residual oil at cut rates.

It seems clear that the present trouble has arisen because the Venezuelan refineries, which are operated largely by American companies, have not made constructive adjustments to changed conditions in the world's oil economy. The proposed limitation upon imports into this country will force them to overcome this weakness, this technological lag, and this failure to adjust to changing market conditions for oil products. But if they are permitted to continue the easy course of dumping their surplus residual fuel oil on a distress basis in the American market, they will not be under the necessity to take such constructive steps. Our own domestic fuel economy, and particularly the coal industry and our miners, would then continue to be the victims.

No ordinary problem of competition and trade relations is presented here. Cheap residual fuel oil dumped on our domestic fuel markets is not a sound foundation for beneficial international trade. The opening up of freer channels for world trade is not the real issue at all. Excessive imports of residual fuel eil present a special problem and must be treated accordingly. Under the quota limitation as proposed, imports of foreign residual fuel oil will not be shut off. They will continue to come in to supplement rather than to supplant our domestic production of fuels. Imports of residual fuel oil will help to meet our essential needs but will not be allowed, as a surplus waste product dumped at any price, to disrupt our own fuel economy.

This is not a general problem. It pertains specifically and solely to one source of oil supply from one country, where the American-owned refineries have been slow to make needed adjustments to changing conditions and now are frantically engaged in dumping practices.

We must, above all, consider this problem in relation to the indispensable importance of our coal industry and our coal miners to the essential long-range requirements of our economy and the Nation's security. In the event of a future national emergency, where will we be if we continue dependent upon erratic supplies of foreign residual fuel oil presently being dumped expediently on our shores, while our own coal industry has been permitted to languish and deterio

rate? Coal mines cannot be put in the deep freeze, ready at the opening of a door to meet large and sudden surges of demand when other sources fail. Months, at least, are required to reactivate dormant mines or open new ones. Neither can the coal industry obtain the necessary capital for financing cost-cutting economies, through greater mechanization of operations to increase productivity, if it is to be harassed and undermined by distress supplies of imported residual fuel oil. These advances of efficiency in the coal industry must go forward in order that it can meet its basic responsibilities to our fuel economy and our national security. The Nation as a whole will ultimately suffer from subjecting the coal industry to shortsighted and destructive competitive forces.

If we continue to drift on the present unsound course, conditions will get worse, not better. Adjustments with respect to residual oil from Venezuela will not occur automatically and, unfortunately, there is no sign that suppliers from that source are alert to the truly constructive steps which need to be taken to reduce the yield of residual oil. The time for intervention is now before it is too late. The way to do it is to definitely limit the amount of residual oil which may come in to supplement, but not swamp, our domestic product of fuels.

It is no answer to say that coal has lost markets, such as for railroad fuel and home heating, to other fuels within our own country. That is certainly no reason whatever to keep the essential coal industry and its workers under the additional and unfair handicap which results from the dumping of huge surplus volumes of foreign residual oil as a waste product into our Atlantic seaboard

area.

I thank you for the opportunity to appear here.

Mr. PERKINS. Mr. Chairman and members of the committee, I am thankful for the opportunity to appear here today. We do have a serious problem, and I perhaps am more optimistic than the gentleman from West Virginia, Mr. Bailey.

I am hopeful that this committee will grant relief to the coal industry. I feel that the facts of the case justify relief. I was reared in the coalfields and know something about the mining industry. I have watched the mines constantly close down during the past year, at a time when we are spending more than $50 billion annually for defense. I have watched the unemployment problem grow in the coalfields of eastern Kentucky. I have some statistics furnished to me by the Department of Social Security. I want to take one of the counties I am privileged to represent, Pike County.

For the month of March 1953, $113,960 was paid out in unemployment benefits. For the comparable month in 1952, $29,218 was paid out in unemployment benefits, an increase of more than 300 percent.

I know there are many of you on the committee who are going to argue that the residual oil has no effect on this condition. I would like to read you a statement from a letter of a coal operator. Here is what he states:

It is difficult for me to give you absolute figures to use in your testimony. We know this happens in one of the plants that we ship coal to regularly. I understand the same condition applies to a great many plants on the coast. They are governed by the price of imported oil. When the oil is cheap, they increase the quantity of it, and they reduce the quanttiy of coal used.

The tonnage that they take varies substantially, and they tell us that the reason for the variation is the fact that they are equipped to use both coal and oil, and that when the price of oil reaches a certain point, they cut down on the coal and increase the oil.

Now you gentlemen can develop that point. A law firm in Louisville sent me a statement about oil imports. I presume they represent the Standard Oil, and they requested that I read this book. It presents their side of the case ably. A careful reading of their own side of the case will convince this committee beyond any doubt that because of the technology lag, or the lack of scientific developments in the

Venezuelan area, there is a great deal of waste in the refining process in comparison with the refining in this country.

There is just no way that you can compete with such unfair competition as that.

I want to refer here a moment to a story written by Gerald Griffin, a staff writer of the Louisville Courier-Journal. It was written in eastern Kentucky last week. He makes this summation, and I think it is a very important observation because he is unbiased, and impartial, and was just trying to report the facts in this story. He says that coal men say that unrestricted importations of foreign residual fuel oil are contributing to the disintegration of eastern Kentucky's coal empire.

The coal thus displaced

He is talking about eastern Kentucky

is produced in the fields of Pennsylvania, Virginia, and West Virginia, forcing those areas into competition with eastern Kentucky for its share of the midwestern market, and coal, even without the residual oil threat, is a highly competitive business.

The unemployment problem in closing the mines has been a continuous thing in eastern Kentucky in the last year and a half. Here is what he states about several mines. He says:

The Henry Clay mine of the Allied Chemical & Dye Corp., which employed 360 men, closed down several months ago. That is in Pike County. The Beaver Coal & Mining Co. and the Clear Branch Mining Co. in Floyd County have laid off about 150 men each. The Elkhorn Coal Corp. in Floyd has laid off 192 men, and the Diamond Elkhorn Coal Corp., also in Floyd, has laid off 105. The Whitehouse Coal Co. in Johnson County has closed down its mine, throwing 85 men out of work, because of the high cost of operation.

Coal operators believe that some relief could be obtained if the importation of residual oil were curbed. The problem already has been presented to Congress. And it goes on:

Coal men point out that in 6 years, imports of foreign residual oil have increased from 45,000,000 to 129,000,000 barrels annually, and that last year's imports were equivalent to about 31,000,000 tons of coal. If this practice is allowed to continue, they foresee these leftovers from foreign refineries displacing 53,000,000 tons of coal a year. This represents more than 10 percent of the national coal production.

This year, in comparison with last year, the tonnage in the Big Sandy area is off approximately a million tons for the same corresponding period; and the production in the Hazard Field this year, in comparison with last year, is off approximately 25 to 30 percent. It is the same way in the Williamson, W. Va., field.

I know there is going to be an argument made by the big oil companies that we should not do anything about this problem. The big people are the ones that are benefiting from this program. Naturally, the little oil people are also affected.

I just do not think that we should permit them to go ahead and destroy a basic industry that means so much to the economy of this Nation.

Gentlemen, something should be done, and again I want to state that I thank you for the privilege of being here, and I am hopeful that you will correct this situation.

The CHAIRMAN. We thank you very much, Mr. Perkins, for your very fine statement.