Using the average cost of a district the minimum price will tend to close down many of the higher cost mines and as a result of the closing down of the higher cost mines each year the average cost will be reduced and more mines will be closed and in time a monopoly will be created in each district. This will not happen in just a year or two but will eventually happen. While this process is going on more and more men will be thrown out of work. In addition to these men losing employment the producers will lose their mines or sell them to the bituminous coal reserve at a sacrifice. In every district there are coals of different qualities. All coal in a district cannot be sold at the same price. A consumer will not pay the same price for a low-grade coal as for a high-grade coal. The result will be that the producer with a low-grade coal will have to wait until all the coal in a district that is of a higher grade than his is sold before he can find a market for his coal. It might be said that that cannot happen because there is a limited amount of coal to be had. Yet, paragraph (c) on page 8 and paragraph (f) on page 9 provide for increasing allotments in districts and for increasing quotas within a district if it can be shown that such increase is in the public interest.

Using the average cost of production as the minimum price at which coal can be sold is going to disrupt marketing areas that various districts now have. It is natural to assume that a producing district having a limited amount of coal to sell will sell that coal in the markets nearest the district; and it is possible for a district to have a price lower than another district and that being the case, the low-price district might take the business that the higher-price district has enjoyed, thus forcing the higher-price district to have to sell its coal in markets that it has not had before, thereby causing confusion and higher sales expense for the higher-price district. Inability to secure coal desired by a customer is going to cause consumer to seek other sources of heat and energy, such as oil, gas, and hydroelectric power. The loss of coal to those three sources of heat and energy during the past 10 or 15 years has been terrific. It has been estimated that the loss of coal to oil, gas, and hydroelectric power has been in excess of 100,000,000 tons per year since 1919 to 1929.

One might well ask who will benefit by the legislation proposed in Senate bill 1417. The consumer will not benefit because many consumers will be forced to take coal that they do not want and perhaps are not equipped to burn.

The taxes imposed by this bill and the assessment which will have to be laid to administer the code by the 25 boards will be added to the price of coal and the consumer will have to pay it. What that will amount to no one knows. The employees will not benefit because many thousands of employees will be thrown out of employment in some districts because of the shifting of tonnage, and in all districts by the closing down of mines which will be unable to operate under the regulations set forth in bill 1417. It will not help the producers, in general, as it will cause the closing down of mines, which will either be a total loss to the producer or the mines will be purchased and put into the bituminous coal reserve, but purchased at a sacrifice price.

In the end production will balance with consumption and if that result is obtained it looks as if our national defense will be hampered. It is hoped that there will be no more wars, but if a war should develop and coal was needed to produce goods necessary to the successful operation of the war, where would the coal be produced? Abandoned mines cannot be opened overnight and the expense of putting into operation abandoned mines would be great. No matter whether the Government or private individuals undertook to put the mines in operation, there would of necessity be quite a period of time before any coal was produced. It is doubted if any individual would undertake to operate the mines because of the expense and because of the uncertainty of what would happen to those mines when the war was ended.

Since October 2, 1933, the bituminous coal industry has been operating under a code, a mere matter of 16 months. During that time many problems have developed and have been worked out and there are still many problems to be solved. It is no doubt a fact that the producers of coal know considerably more about the problems of the industry today than they did 16 months before-not only the problems of their own districts but the problems of other districts. There exists a better spirit of cooperation than ever before and no doubt that spirit of cooperation will continue to improve if given an opportunity to do so.

Notwithstanding criticism of the code, every one must admit that much good has been derived from the code. Lack of enforcement has been the chief cause for the lack of compliance. Every district in these United States is in some way related to another district, so that if one district does not comply, then the neighboring district is in a way kept from complying. The same thing happens within a district; if one group of mines does not comply, then other mines in the district cannot comply. It has been said that price-fixing under the code will not stabilize the industry. Has it ever been tried? I say it has not, because there was no enforcement, due perhaps, to the way the N. I. R. A. was drafted.

We ask that the N. I. R. A. be strengthened in view of our experience of the past 16 months, and then reenacted for 2 years and give the coal producers an opportunity to work out a scheme of self-government instead of saddling on the industry permanent legislation which is experimental in nature and which is theoretical and we contend not practical.

Senator NEELY. Is that all, Mr. Caperton?

Mr. CAPERTON. There is one witness who was to have been here today, who, owing to sickness, was unable to be here, and they sent me a statement by telegraph. May I read that in the record?

Senator NEELY. You may insert it or you may read it.

Mr. CAPERTON. Do you desire the entire telegram read, or just the portion of it relating to this bill?

Senator NEELY. Only the part that refers to the bill.

Mr. CAPERTON. It is addressed to W. Gaston Caperton, Washington Hotel, and reads as follows:

We regret that Mr. Gilbert Smith, our general manager of operations, does not feel equal to being in Washington to testify before the committee, in view of our position in opposition to this legislation, which coincides with yourself, your uncle, Mr. Morris, and others. We will be very glad to have you or one

of these gentlemen represent us if necessary before the committee, and we herewith hand you a brief statement below as to our position.

We are opposed to the bill because we believe it will destroy the small-coal operations and with them millions of dollars of investment and throw many miners out of work. It will increase the cost of production, thereby increasing the cost to the consumer, thus driving many of them to the use of competitive fuels. It will sacrifice men who have given the great portion of their lives to the development of the industry, many of them, who, starting in the mines as boys, advanced step by step from trappers to managers and owners of operations. It will create a monopoly of large producers and gradually eliminate the small enterprise. The President in his message to Congress on February 20 said "Small enterprises especially should be given added protection against discriminations and oppression."

The portion of the bill that most concerns us is that dealing with the allocation of tonnage. It is our opinion had the code administration attempted to allocate tonnage we would not have made the progress that is recorded. We do not know anything about allocation of tonnage nor do we know of anyone that is informed on this subject, and we would be unable to suggest a different plan than that outlined in the bill. It is our opinion that there is not sufficient information on hand to enable any committee to attempt to allocate tonnage.

We are now operating under the bituminous coal code and prevailing sentiment is that it is satisfactory to a very large degree. We know it has been helpful to our companies. The President in his message to Congress recommends the extension of the Industrial Recovery Act, and we believe therein lies the solution of the problem of stabilization. We believe that if the act were continued for about 2 years the experience gained by the code administration and the industry would be such as would lead to the hoped-for stabilization. To quote again from the President's message, "A great code of law, of order, and decent business cannot be created in a day or a year."

It is our opinion that this is not the time to enact such legislation. A code is in operation and probably will be extended. The miners are 100 percent organized and are working under agreements with the producers and both seem to have been able to see the other fellow's side. The consumer is getting his coal at a reasonable price.

In view of the foregoing, it is our earnest hope that the committee will report the bill unfavorably.

FIRE CREEK COAL & COKE Co., By ERSKINE MILLER, President.

STATEMENT OF W. G. CRICHTON, CHAIRMAN OF EXECUTIVE COMMITTEE, SMOKELESS COAL CODE AUTHORITY

Mr. CRICHTON. Mr. Chairman, title I, section 1, of the bill provides that the bituminous-coal industry shall be regulated as a public utility. This is an unfair and unwarranted encroachment upon the rights of private industry and would destroy and wipe out the investment of thousands of small operators whose right to a place in the sun cannot be sacrificed. It is impractical of operation and application to an industry of such innumerable units.

The National Recovery Act has been of great aid in returning our industries to more normal conditions, after one of the severest and longest depressions in the history of this country. Since this depression affected nearly every nation on the face of this earth, it required new, yes, radical measures to accomplish this result. Some of these plans were entirely untried and of necessity were more or less experimental. They required the fullest cooperation on the part of every industry and individual. The coal industry has willingly done its part and will continue to do so.

The 2 years of experience, while satisfactory, are entirely too short a period on which to base any permanent legislation. As carried on

many readjustments had to be made and no doubt many are yet to follow. With the prevailing uncertainties, it is very unwise at this time to even consider any radical departures in the adoption of permanent laws and there can be no question of the advisability of continuing the present methods for at least another 2-year period.

It cannot be shown at this time that there is any need, either by labor, producer, or consumer for the enactment of a law which will place the coal industry permanently under the regulations set up in the Guffey bill. It is doubtful if this time will ever come; it is certainly not here now. Thus far no sound reasons have been advanced showing its need.

There is no question that before the enactment of the National Industrial Recovery Act conditions in the coal industry were not good; but is this not true of other industries? Was it not true with agriculture? The antitrust laws prevented organized selling and forced the coal producers into unbridled competition.

The application of regulations to the industry as a public utility would make it onerous to small operators, would require large numbers of people engaged in policing and tend to make criminals out of small producers who are striving in an honest endeavor.

ALLOTMENT OF TONNAGE

The allotment of tonnage as proposed is based upon the history of 17 years' performance. This is manifestly unfair to the newer districts and therefore to all mines developed within that period. Within that time many very important changes have come in the use of coal. It sets aside all strides made in the development of markets. It will prove of injury to producers of coal for special purposes. It will upset the established channels of trade, where consumers have built plants to use a certain grade, which may not be available, because the quota has been exhausted. It may force the use of coal not suited or the most economical, because the regular district supplying the same has sold its quota and coal must be had from elsewhere. The constant changes in the coal markets need readjustment to meet conditions existing today or that may arise. tomorrow, they cannot be fitted and based on ancient history as proposed by the allotment plan submitted.

We have in this country some very large mines, but a much greater number of small ones. Mines which were built up from the savings of generations and operated by the descendants of the builders, likewise the employees have been with these properties for years; where will they be under the new scheme? That the allotment plan will work a hardship on the small producer cannot be denied, and what effects the owner is likewise reflected upon his employees.

The allotment plan will serve to increase the use of other fuels or sources of power, as indicated by past experience, when it was feared coal may not be available at all times. With the fluctuation in demand due to industrial condition or the seasonal changes, with the long-distance transportation by water or rail, as, for instance, the shipment to the Great Lakes, we have a situation without parallel. Quite recently the domestic stoker has brought into existence conditions and requirements entirely new and such developments will be largely lost, if the coal best suited for it is no longer available.

Allotment will reduce the incentive to hold and build up new markets by the best preparation. It will work great hardships on railroads and other carriers, who have provided facilities for an expanding market, which may not now be needed. It will compel users to go to new and more distant fields, perhaps to lower grades of coal, but yet carrying higher freight rates, because the quota of the normal source of supply has been exhausted.

It may well develop that the consumer in New England may find that the only coal available for him, on account of allotments, would have to be purchased in the mining areas of Indiana or Illinois and on a delivered cost that would be exorbitant.

The disturbances to the transportation problem is one of vital concern to our entire population. It is estimated that the loss of business to the carriers serving the southern fields, primarily West Virginia, would in the first year of operation under this bill mean a loss of approximately twenty-odd millions of dollars in the gross income.

The allotment plan, as provided, would have a result of a "survival of the fittest" sort, which in a short time would develop a vicious monopoly in the coal industry.

The allowable production of smokeless coal from West Virginia for 1935 under the allotment plan, based on 1934 national production, would be approximately 36,663,000 tons; a loss of 5,770,000 tons compared with their production of 1934, which result could only be a loss in labor to thousands of men.

Senator NEELY. Mr. Crichton, you understand that the allocation of tonnage proposed in the bill is to be amended, do you not, in favor of West Virginia or any other region that appears to be prejudicially affected by the existing provisions?

Mr. CRICHTON. Yes, sir. I have heard that statement today, Senator, but in the light of the two types of allotment schemes that are proposed here I would like to read into the record the losses on the basis of the 1924-34 production, if I may.

Senator NEELY. Proceed.

Mr. CRICHTON. An analysis of the tonnages to be produced by the various companies within the district, compared with their production in 1934, varies from an increase of 216,000 tons to a decrease of 1,569,645 tons, which would not fall short of the utter destruction of many companies having to suffer the losses charged against them, with the further result of affecting many small businesses in their communities directly dependent on their volume of production for their existence.

In that connection, I would like to call attention to a few of the companies in the smokeless field and show what their losses would be under this 1929-34 plan.

A company producing 2,122,254 tons would lose 748,304 tons, or about 30 percent. Another company producing 345,622 tons would lose 118,374 tons, or approximately 30 percent. Another company producing 1,579,943 tons would lose 446,826 tons, or approximately 30 percent. Another company producing 4,495,703 tons would lose 966,043 tons, or approximately 23 percent. Another company producing 1,579,943 tons would lose 446,826 tons, or approximately 25 percent. Another company producing 116,364 tons would lose 96,404 tons, or approximately 85 percent. Another company