Mr. McCULLOUGH. I could not answer for the coal operators of Washington State. Mr. BOUTELL. Or of the Central West or the Rocky Mountain districts? Mr. McCULLOUGH. I do not think it would hurt them at all. Mr. McCULLOUGH. No, sir. Mr. BOUTELL. Or those in the Wyoming or Colorado coal fields? Mr. MCCULLOUGH. They would not be affected one way or another. It is too far away. There are very good coal mines in British Columbia, at Crows Nest Pass, but I think it is pretty nearly all used on their own railroads, and for their own purposes. Mr. BOUTELL. But you think it would be injurious to the coal operators of Washington! Mr. McCULLOUGH. I think so; yes, sir. Mr. NEEDHAM. Where do the coals from the fields of the State of Washington go? Mr. McCULLOUGH. A good deal of it goes to San Francisco and a good deal of it is taken for local consumption. There is much Australian coal used there. Mr. NEEDHAM. It is all consumed in that section? Mr. McCULLOUGH. I think so. They do not export much of it, because the Vancouver Island coal can be mined cheaper and it is better coal. Mr. NEEDHAM. How does the quality of the Washington coal compare with the Australian coal? Mr. McCULLOUGH. The Australian coal is the best in the world for making gas. It has less ash. It has driven us out of South Africa altogether. Mr. HILL. As a matter of fact they do not compete? Mr. McCULLOUGH. Scarcely any. Mr. HILL. Does not the Australian coal sell in San Francisco for more than double the price of the Washington coal? Mr. McCULLOUGH. I do not know what the prices are there. Mr. HILL. What did you say was the price of the Nova Scotian coal delivered in Boston? Mr. McCULLOUGH. Three dollars and fifty cents alongside. Mr. HILL. I find that in 1903, when we began to import, the prices were $3.30 for Nova Scotian coal, and that the export rose from 5,000,000 tons to nearly 9,000,000 tons in 1904. The prices had gone down from $2.78 to $2.50, delivered in Boston. During the coal famine we exported more than we imported. Mr. McCULLOUGH. It was high-grade steam coal. Mr. HILL. Are not the Nova Scotian mines owned largely in Boston? Mr. MCCULLOUGH. There is considerable Boston capital in the Dominion Coal Company, but I think the majority of it is owned in the Dominion. Mr. DALZELL. Where is the market for Wyoming coal? Mr. McCULLOUGH. It is largely local. Some of it goes across the border. Mr. DALZELL. Into Canada? Mr. McCULLOUGH. Yes; into some of the southern Provinces of the Dominion. I do not remember the names. Mr. DALZELL. It does not go out as far as the Pacific coast! Mr. McCULLOUGH. No, sir. Mr. FORDNEY. In your opinion, would the price to the New England consumer be reduced by this reciprocal trade arrangement that you suggest between the United States and Canada? Mr. MCCULLOUGH. It would be slightly reduced. Mr. FORDNEY. It could not be reduced until the Nova Scotians had driven you out of the New England market, could it? Mr. McCULLOUGH. It would be automatic, so to speak. They would reach in and reduce prices by 67 cents per ton, which would drive us out in spite of ourselves. Mr. FORDNEY. With a profit to you of only 15 cents per ton, you could not be driven out of that market until they got a supply, because they could not furnish the coal until they increased their supply. Mr. MCCULLOUGH. Trade cuts channels, and it takes some time to divert trade. It would take two or three years before that would happen. They would have to increase their capacity considerably. Mr. FORDNEY. Finally, when we removed the duty from the coal, the New Englander would buy that much cheaper, and thus give up the New England market for the market in Canada. Mr. McCULLOUGH. No; I would not say that. We would not give up without considerable of a struggle. In Pennsylvania and West Virginia there are 200,000,000 tons of coal produced per annum, and we are paying enormously high wages. Wages would be the first thing to suffer, because we would have to insist on lower prices. We would say to the laboring people that they would have to work for less money. Mr. FORDNEY. Labor would be the first to receive the reduction? Mr. McCULLOUGH. You must not figure that capital must have nothing, because capital is getting very little now. It is down to almost nothing. Mr. FORDNEY. If you retained the New England market, with the duty on coal as it is to-day, you could pay labor the same price that you are paying now? Mr. McCULLOUGH. Yes. There is no intimation of reducing wages. We are satisfied with a small profit, and the miner is satisfied with his big pay. We have not had a hitch in our region for more than a year. Mr. UNDERWOOD. What percentage of the products of your mine is going to New England, and what percentage is retained? Mr. McCULLOUGH. I could not answer that without access to the figures. I would not like to hazard a guess. It is a small end of the business. Mr. UNDERWOOD. You mean that portion going to the New England market? Mr. McCULLOUGH. Yes, sir. Mr. UNDERWOOD. You have a market in Pennsylvania; and Pennsylvania would not be affected by the Canadian coal? Mr. McCULLOUGH. They would be along the seaboard. Mr. UNDERWOOD. But in the interior they would not be? Mr. McCULLOUGH. No. Mr. UNDERWOOD. Therefore if this were put on it would only affect a small portion of your business by the change? Mr. McCULLOUGH. In the coal business it does not take much percentage to effect a change. The only way to make money is to distribute the fixed charges if you increase the cost of the material. Mr. UNDERWOOD. The percentage of the new market with which you would have to compete would bring up your present standard? Mr. McCULLOUGH. That is correct. The CHAIRMAN. What would happen if we would put coal on the free list? You would not undertake to withdraw? Mr. McCULLOUGH. We would be driven out. The CHAIRMAN. You do not expect to be driven out? Mr. McCULLOUGH. I think we would be driven out in the course of time. The CHAIRMAN. You would not be if the government statistics are right in reference to the price of coal. Mr. MCCULLOUGH. I would rather take my own experience than to take any government report. Mr. GAINES. You were asked in reference to the importation of Nova Scotia coal during the time we had coal on the free list, and you answered that it took time for trade to readjust itself. Don't you think it would be much more accurate to say that in the space of a year new mines could not be developed? Instead of trade following the tariff the fact was that Nova Scotia presumably was selling her output, as she had no surplus and could not get one in one year's time. Mr. McCULLOUGH. I do not think that that is quite it. I think that her productive capacity was great, and it is still far ahead of her market. The big business was in the season of 1903. It only takes a short time to develop it from a slope, but it will take a year or two years with the shift. You can not bring it up to its full productive capacity on account of the narrow work. The entrance prevents its being done, even if you had three years. The progress is slow and you can not produce the coal until you get the narrow work completed. Mr. GAINES. I understand that; and that is the reason I asked the question. Then you assign as a reason for not having greater importations in 1903 and 1904 the fact that it takes a longer time. than the time when coal was on the free list to develop the mines? Mr. McCULLOUGH. The market was there and they sold more than if there had been competition. Mr. FORDNEY. In reference to these high prices prevailing in 1903, were they early in the spring or late in the winter of 1903. Mr. McCULLOUGH. Things began to be normal about the middle of 1903-I mean relatively normal. The anthracite people put up prices about $1 per ton. The bituminous industry can not do that. In the bituminous mines it is every man for himself. That regulates the prices in the bituminous mine. Mr. FORDNEY. Matters became normal about March or April? Mr. McCULLOUGH. I think it was about the middle of the summer. Mr. HILL. I think you said that the labor cost is substantially the same as it is in Pennsylvania, being controlled by the United Mine Workers? Mr. McCULLOUGH. Yes. Mr. HILL. Is not the question of labor a greater part of the cost? Mr. McCULLOUGH. No. Mr. HILL. Is not coal exported to Canada? Mr. HILL. Do you know what the price is? Mr. McCULLOUGH. I do not. Mr. HILL. You simply know the import price at Boston? Mr. HILL. Do you think the amount as stated in the customs report is fair? Mr. McCULLOUGH. But you must remember that in sending it into Canada they have two duties. Mr. HILL. I know, but the United States statistics give the value of it when exported to Canada. Mr. McCULLOUGH. But it does not give the value of the slack coal nor the value of the nut. Mr. HILL. Bituminous coal is the item given at the point of export; and the average cost for the last year was 8,000,000 tons at $2.56. Mr. DALZELL. In that do they count the shale and slack? Mr. McCULLOUGH. They count everything. Mr. HILL. It gives here the collections on bituminous coal. Probably the export would be very little. Mr. McCULLOUGH. It is not large; it is 14 cents a ton, and the duty is 53 cents. Mr. GAINES. There is a duty on the culm and slack? Mr. McCULLOUGH. All that goes into Canada is the same. They count all that will go through a three-fourths screen. Mr. HILL. The amount collected was $22,000, at $2.56, as against an import price from Canada of $3.14. As a matter of fact, is there any coal mined in Canada between Nova Scotia and the Rocky Mountains? Mr. McCULLOUGH. Some coal is mined in the provinces of New Brunswick at Pictou. Outside of that there is none, so far as I know, mined between Nova Scotia and the Crows Pass. Mr. HILL. You supply cheaper to the East than you do to the West? Mr. McCULLOUGH. Yes, sir. Mr. HILL. The East is your market by location. The eastern part of the country is within the zone of Nova Scotia by reason of location. It is protective by reason of the differential and the freight rates. If you are entitled to the whole Central West, why are not the people of New England entitled to the advantage of Nova Scotian prices by reason of their location? Mr. McCULLOUGH. That is a hard question to answer. Mr. HILL. It is. Mr. McCULLOUGH. The object is to protect an American industry. We are 400 miles from the seaboard, and we feel that we are entitled to that protection, because we can not move our mines up. If we were at the seaboard, we could command the world. Mr. GAINES. It makes a difference whether you are buying the raw material or the finished product. Mr. McCULLOUGH. In New England they are strong on free raw material, but high protectionists on the finished goods. Mr. COCKRAN. As I understand you, the cost in laying the product down in New England is $3.60 and in Canada it is $3.50. Mr. McCULLOUGH. Three dollars and seventy-five cents. Mr. COCKRAN. I thought that was the selling price. Mr. McCULLOUGH. Yes. Mr. COCKRAN. As I understand you, your product is superior to the Canadian product. Mr. MCCULLOUGH. It is for making gas; it is worth 70 cents more. Mr. COCKRAN. Then, if it is superior to the Canadian product, what is your purpose in asking this advantage for the New England market? Mr. McCULLOUGH. If they charge $3.50 and we charge $3.75 and there is an economical difference of 70 cents, that leaves 25 cents above our price, or rather to their advantage. Mr. COCKRAN. What do you call the economical value? Mr. McCULLOUGH. If you take off 67 cents, that would leave us on the wrong side of the account. Mr. COCKRAN. You can put your article in Canada at $3.60? Mr. COCKRAN. The Canadian article comes in at $3.50, duty paid. There you are at a disadvantage of 10 cents. Mr. McCULLOUGH. If you spell it "c-o-a-l," we are at a disadvantage of 10 cents, but when you come to the question of qualityMr. COCKRAN. You say that you have a superiority in quality to the extent of 70 cents? Mr. McCULLOUGH. Yes, sir. Mr. COCKRAN. Therefore your advantage is 60 cents a ton? Mr. COCKRAN. What more do you want? Is not 60 cents enough? Mr. McCULLOUGH. You eliminate the idea that I am arguing against a reduction of 60 cents per ton in their prices. What you ought to figure would be 70 cents and not 60 cents. Mr. COCKRAN. I must say that I can not see that. As the matter stands now you go into their market at a cost of $3.60 and they come into competition with you at $3.50, making a cost, duty paid, of $3.50. Mr. McCULLOUGH. But when a man pays $3.50 he gets something that is worth 70 cents more than the Canadian coal. Mr. COCKRAN. That is what I say. You are practically on the same terms with the duty off. Mr. McCULLOUGH. No; at $3.38 we would be. Mr. COCKRAN. You take 70 cents off and your price is $2.90. What is your idea about that 70 cents? Mr. McCULLOUGH. That is economical value. Mr. COCKRAN. I do not know what you mean unless you mean that for commercial purposes the intrinsic value of your coal is 70 cents more than theirs. Mr. McCULLOUGH. Yes, sir. Mr. COCKRAN. Then, if you add 70 cents to theirs or take 70 cents off yours, you are on equal terms with them. Mr. McCULLOUGH. No; not if you take 67 cents off their prices. The cost is $3.50, duty paid. Duty off, it would be $2.83. Mr. COCKRAN. That would make a difference of 7 cents. 75941-H. Doc. 1505, 60-2-Vol 6 -49 |