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Some 12 or 15 years ago we conceived the idea that it would be a good thing to show our men where they could grow vegetables where the weeds had been growing around their houses.

We own about 1,700 houses. We fenced the yards around those houses. I think it was customary in West Virginia to allow the cattle to run in the streets.

We paint the houses every 3 to 5 years. We paint a certain number of towns one year and a certain number the next year in order to keep the houses in good shape.

We then started out with a system of offering prizes for the best gardens in the 15 different towns we had at that time. The first year the results were quite gratifying and the next year much more SO. Within a year or two we said, "You cannot have gardens in your front yards. You will have to have them in your back yards.” All of this was done primarily to help the people, and, secondarily, we knew if we could make good housekeepers of the wives and have good children at home we would have more willing labor. The result of that effort has been very satisfactory.

Each year judges go around to each one of these houses with a stenographer, and the stenographer takes down what the owner says about his property and about his yard. It makes a volume this year about an inch and a half in thickness. The prizes are then awarded. The results have been very satisfactory.

We have many women who have from 500 to 1,000 Mason jars in their cellars filled with fruit and vegetables that they have raised in their gardens.

In addition, their front yards are well beautified with flowers and plants. So it is no hardship to live in those towns.

Our company, I think, was one of the first, if not the first, to have a certificate from the United States Government that 100 percent of our men were drilled in first aid and mine safety, and I am very proud to have that certificate in my office in Boston. We have put a good deal of time on that. We have teams in every town. We have our annual meets. This may not be anything more than others do, but we are doing it.

We have periodical medical examinations of our men to keep out and keep down contagious diseases. Only last week, Mr. Scott, our president, in New York, showed me a letter from a very prominent physician whom he had asked to come down from New York or Baltimore-the physician might have been from Johns-Hopkins; I do not know where he was from, but he was from outside the district. He went to supervise and look over the work being done by our doctors down there. He wrote a very commendable letter.

Of course, in the mining districts one of the things we have to fight against is syphillis and these other diseases that are contagious. We are doing everything we can to block out such things.

We are also counting on extensive work among the children, in seeing that they are employed in the summertime and that during their vacations they have useful play by furnishing them recreation grounds.

Now, as to our mine, we have kept a lot of men for a good many years, and I am very happy to say that the last check that I had, which was perhaps a couple of years ago, over a thousand of our men had automobiles, because we built 1,000 garages, and I know that a thousand had them. I do not know how many more had

them. I am very glad of it, because I am very glad when men come up from the mines and they load their families in the automobiles and take them out to the hills just as you and I.

All of this, gentlemen, is tending toward a better and happier living, and if, when the end comes, we feel that we have contributed something, I shall be very happy.

Senator NEELY. I think the sentiments you have expressed do you. great credit, and I commend you for them. I have no reason to think you have not practiced what you preach.

Mr. GROSS. Thank you very much. There is another thing that I want to say. Some years ago when Senator Davis, who is a member of this committee, was Secretary of Labor there were some rather vicious reports coming out about our district. I came right down to Washington and went to see my next door neighbor, the Honorable John W. Weeks, who was then Secretary of War. He gave me a letter to Secretary Davis and went over and had a talk about this thing with him and asked him if he would not get on the train and go to West Virginia and see how vicious those damnable reports were. Of course he could not go. But I think he did send some people down there later.

I just want to say that any time any of the members of the committee are going back and forth to Huntington, if you want to stop off at Thurmond we will have automobiles meet you and take you around and show you a real plant.

STATEMENT OF WILLIAM G. CAPERTON, CHARLESTON, W. VA.

Mr. CAPERTON. Mr. Chairman and gentlemen, my name is William G. Caperton, of Charleston, W. Va.; I am vice president of Slab Fork Coal Co., of Scotia Coal & Coke Co., and of South Side Co., all producing companies. I am also vice president in charge of sales for the New River Coal Co., sales company, of Charleston, W. Va. I am president of the Smokeless Coal Operators' Association of West Virginia, and appear here as a member of a committee representing that association. The association is opposed to the Guffey bill or any legislation of that character. That association is composed of producers in the Smokeless Field of West Virginia and Virginia; that field is located in the counties of Fayette, Greenbrier, McDowell, Mercer, Raleigh, and Wyoming, W. Va., and in Tazewell County, Va.

There are 70 producing companies who are members of our association, and they produced in 1934 76 plus percent of the coal produced in the smokeless field. Mr. John L. Stembugler, of the American Coal Co., and Mill Creek Coal & Coke Co., members of the association, has already made a statement before this committee giving you his views.

Insofar as I have been able to determine, the membership of the smokeless association is overwhelmingly opposed to Senate bill 1417. I have found no one who is in favor of the bill.

We are opposed to the theory that production and distribution of bituminous coal is so affected with public interest that it can be declared a public utility. The needs of man are four in numberfood, clothing, shelter, heat. So it certainly seems that if coal, used for producing heat, is so affected with public interest as to justify

the bituminous-coal industry being declared a public utility, then everything that enters into the production of food, clothing, and shelter would likewise be affected with the same public interest.

The bill further declares that the production of bituminous coal affects interstate commerce. I cannot see how that, as a general statement, is a fact. It is possible for a mine to dispose of its entire product in the State in which it is produced, and, no doubt, there are many mines that do so sell their coal. Perhaps coal when produced will eventually move in interstate commerce, but it does not seem to me that it can be declared to be interstate commerce until it actually moves in interstate commerce. I happened to see a comment made by the Supreme Court in a case involving the question of interstate commerce, and, believing that comment pertinent, I quote it here:

If the possibility, or, indeed, certainty, of exportation of a product or article from a State determines it to be in interstate commerce before the commencement of its movement from the State, it would seem to follow that it is in such commerce from the instant of its growth or production, and in the case of coals, as they lie in the ground. The result would be curious. It would nationalize all industries, it would nationalize and withdraw from State jurisdiction and deliver to Federal commercial control the fruits of California and the South, the wheat of the West and its meats, the cotton of the South, the shoes of Massachusetts, and the woolen industries of other States, at the very inception of their production or growth; that is, the fruits unpicked, the cotton and wheat ungathered, hides and flesh of cattle yet "on the hoof", wool yet unshorn, and coal yet unmined, because they are in varying percentages destined for and usually to be exported to States other than those of their production.

The bill proposes to set up a national bituminous coal commission of 5 members; a bituminous coal labor board of 3 members; a national coal producers boards comprised of 35 members selected by the operators of the various districts and 5 members selected by the national organization of employees representing the preponderant members of employees in the industry. Twenty-four district coal producers boards consisting of 6 members each-5 producers and selected by the national organization of employees, above mentioned in such district. The total number of boards is 27, consisting of 192 members. A lot of boards, a lot of members and a lot of expense. Each district is governed by 4 boards, total membership of which is 56.

I want to comment on the set-up of one board which I submit is not set up in a fair or reasonable manner. That is the national coal producers board. That board consists of 35 producers and 5 representatives of employees. An analysis of that board shows that 12 members, or 34.2 percent of the producer membership, will come from districts west of the Mississippi River whose total production in 1934 was 8.69 percent of the total national production; in other words, 91.31 percent of the total national production would have 23 members, or 65.8 percent of the producer membership. Again, 14 members, or 40 percent of producer membership, on the board will come from districts each of which had less than 8,000,000 tons of production in 1934 (13 of the 14 districts produce less than 6,000,000 tons each in 1934) and produced only 11.75 percent of the total national production. I cannot see that the composition of the board is equitable in any respect. It is not proper that such a

small percentage of the total national production should have so many votes in the national coal producers board.

The formula set out in the bill to determine the maximum tonnage to be allotted the various districts is going to cause quite a shift of tonnage, using the 1934 production as a basis. On last Wednesday a witness appearing before your committee said that the lowvolatile district of southern West Virginia and Virginia would lose 1.51 percent, or approximately 600,000 tons. The computations made by that witness were in error. In 1934 the low-volatile district of West Virginia produced 42,433,000 tons, or 11.84 percent of the total national production. The compilation made by the Bureau of Mines working out the maximum tonnage to be allotted the various districts shows that the low-volatile district of West Virginia and Virginia would have an allotment of 10.33 percent of the national production, which means that that district would have its proportion of national production reduced 12.75 percent, as compared with its proportion of the national production in 1934. Assuming that the annual national production for 1934 was the same as for the next year or 2 years, we find that the low-volatile district would have an allotment of 37,022,000 or 5,411,000 tons less than produced in 1934. That means a loss of approximately one-eighth of its 1934 production.

Using the formula used by a witness last Wednesday, the loss of 5,411,000 tons means that 5,411 men would be thrown out of employment, or the cost of production would be so high that many mines would be unable to operate at all.

Senator NEELY. Mr. Caperton, you understand the allocation specified in the Guffey bill is to be amended, do you not,?

Mr. CAPERTON. Yes, sir.

Senator NEELY. This amendment is for the purpose of protecting West Virginia in the full enjoyment of her rights, and also for the purpose of protecting any other territory that might be prejudiced by the provisions of the present measure.

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Mr. CAPERTON. That will protect the districts. I am not speaking of the mines within the districts, where they use a different method of arriving at the quotas. Our Slab Fork mine produced last year 281,407 tons. Under the formula set out in the bill, assuming that the production of coal in 1935 and 1936 is the same as it was in 1934, that mine will lose 42,649 tons. Our Scotta mine will lose 27,000 tons, and our South Side mine will lose 10,717 tons. It has been the policy of our companies to sell coal as long as we could break even or make a profit, and when the depression came on in 1929, or very shortly after that, in the next year-1930, was not so bad, but then it began to get worse-we arbitrarily reduced the capacity of all our mines, and our company was not the only one that I know of in the district that has done that. The result is that there will be companies that will be penalized for trying to do something to help the coal industry. We lose by that 77,000 tons.

Senator NEELY. Mr. Caperton, without requesting or expecting you to endorse the bill, I ask you to favor us, at your own convenience, with an amendment that would properly protect West Virginia's allotment and her enjoyment of the quotas to which you and your associates think she is entitled.

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Mr. CAPERTON. Senator, we can try to work out a plan, but I am afraid it will meet with much opposition from other districts.

Senator NEELY. Of course, it would have to be predicated on absolute fairness to all sections of the coal-producing area.

Mr. CAPERTON. Yes, sir.

Senator NEELY. I have no idea that anyone could prepare a law affecting the coal industry that would be 100 percent satisfactory to both West Virginia and Pennsylvania. My thought is that there must be what Horace called the "golden mean " for the adjustment of differences among the various coal-producing areas of the United States. If that consummation can be achieved, the country at large ought to be satisfied.

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Mr. CAPERTON. In section 4, part I, paragraph (c), lines 1-7 on page 8 of the bill it provides that the national commission " may increase the allocation of any district upon finding that the current market requirements for the coal or coals of such district and/or the current market service of the coal or coals of such district warrant such increase in the public interest. Under such a plan one district might be hurt badly, for instance: Districts A and B have both enjoyed a part of the business in a given area. A has a lower price than B and also a lower freight rate to the market area in question. The producers in district A sell all the coal that is allotted to district A, and there still remains a large demand for coal in the market area in question. The consumers in that market area desiring to buy the cheapest fuel possible demand that they be allowed to purchase coal from district A, because of its low price and low cost of transportation instead of the higher cost of fuel from district B. The district board of district A appeals to the commission for an increased allocation. The commission might, and probably would, increase the allocation of district A on the grounds that such increase was in the public interest. District B would lose the tonnage which it had formerly had. Paragraph (f), lines 8-16, page 9 adopts the same principle to be used within the districts as that mentioned above as between districts.

Paragraph (h), lines 21-25, page 9, states that no code member may transfer his quota or any part thereof from one mine to another except upon approval of the commission. That evidently means that a producer with a single high cost mine who finds himself unable to produce and sell coal at the fixed price can do one of two things, either close his mine down and lose what he has invested or sell his mine to the national bituminous coal reserve; in either event the chances are that he will suffer a big loss.

It is not believed that the method of arriving at a minimum price is proper. The exclusion of depreciation and depletion from cost figures deprives the produced from receiving a return for machinery and equipment that is worn out in the production of coal and deprives the producer from being conpensated for the removal of coal for which he has expended money; in other words, depreciation and depletion represent in a way cost of raw material and is certainly a part of the cost of production. While the cost of selling coal perhaps is not a production cost, it is certainly a cost item in the operation of a mine; the production of coal means nothing unless the coal is sold and coal cannot be sold at no expense.

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