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There was a good deal of controversy among the operators themselves as to the form of those amendments, as to their character, and as to their workability. Eventually some amendments were approved by the coal industry, and a board of arbitrators was set up composed of five members, to whom were to be referred certain questions affecting the correlation of prices and other matters within the industry. That board has been meeting at headquarters at the Shoreham Hotel recently, and the evidence adduced before that board at a recent hearing justifies every assertion made here by Mr. Mahan and affirmed by myself that there is no stability in the current price structure of the coal industry; that the entire price structure is in jeopardy; that commercial chaos threatens the industry, and that it affects the stability of the wage relationships in the industry, an astonishing and a menacing situation as compared with the situation which certain witnesses before this committee would have the committee believe new exists in the coal industry. I have in my hand a report of the proceedings of the

National Coal Board of Arbitration at a hearing held in Washington, D. C., March 1, 1935, in suite 701-E, Shoreham Hotel, beginning at 10 a. m. Beginning on page 58 of that record is a report of the proceedings before the board on the subject of a resolution introduced by certain subdivisions in the coal industry further designed to effectuate stabilization and stop the collapse of the price structure. In connection with the consideration of that resolution there were various substantial operators, representatives of divisions and subdivisions in the industry who testified. Among them was Mr. Charles O'Neill, who represented the eastern Pennsylvania subdivision; Mr. Brown, in behalf of the southern subdivision no. 2; Mr. Terrio, for the marketing committee of the Ohio Code Authority; Mr. Richards, of the southern subdivision no. 1 of division no. 1; Mr. Crafts, chairman of the eastern subdivision marketing committee; Mr. Zeller, of the northern West Virginia Code Authority; Mr. Barrington, also of the northern West Virginia Code. Authority. All these gentlemen testified, according to this record, to the effect that a serious crisis now confronts the industry; that it is not questionable, but is an actual fact that the bulk of the tonnage of the industry is being sold below the accredited code prices, and at prices that will ultimately bring ruin to the industry.

Mr. Barrington stated that the industry was being ruined by the “gyppers,” and the "gyppers” should be either put out of business

” or in jail; and he thought it might be helpful to the industry if either of those things could be done to them.

Senator NEELY. Do you believe that either of those consummations suggested by Mr. Barrington can be accomplished under the code or under existing law?

Mr. LEWIS. I know that Mr. Barrington is due to be disappointed, because under the existing coal code they can neither be put into jail nor out of business. In fact, they flourish under conditions that are peculiarly profitable to them and reap a financial benefit from violating the code and being faithless in their compliance with the code and to observe its provisions.

Senator NEELY. And the operators who endeavor to obey the law and observe the provisions of the code are at the mercy of the so-called "chiselers"

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page 82.


Mr. LEWIS. Senator, that is an accurate statement.
Mr. Barrington says, on page 73:
Various tonnage is being sold at substantially lower than code prices.

When Mr. O'Neill queried Mr. Barrington as to what he meant by "substantially lower than code prices," he said he meant 15 cents a ton or more below the approved code prices. Fifteen cents a ton nieans the difference between profit and loss to the industry. It means the difference between being able to pay a living wage and secure a return on the investment,

and receivership and dissolution of the assets of the company.

I would like to offer in evidence, without burdening the committee by reading it, this record, by reference, if you please, from page 58 to

Senator NEELY. That may be done.

(The record referred to is incorporated herein by reference, and is filed with the committee.)

Mr. Lewis. Mr. Mahan referred to a letter sent out by Appalachian Coals, Inc., bearing further on that subject. I have that letter here, dated at Cincinnati, March 2, 1935. It is an informative bulletin sent to members of Appalachian Coals, Inc. On page 2 of that letter, under the subhead of marketing," appears the following:

Division members appeared for Southern subdivision no. 2, at hearings on eight formal complaints before the National Coal Board of Arbitration in Washington this week. Written and oral briefs were heard by the Board from the opposing subdivisions in each docket, and the Board's decision is expected within 10 days from the dates of the hearings.

Western Pennsylvania subdivision again declined to participate as respondents to complaints against them, but efforts are still continuing to have them brought in to division 1 proceedings.

You will note that Western Pennsylvania still refuses to participate in hearings before the National Board of Operators set up under this amendment to the coal code, and the Senators will understand that the failure of a large producing district like Western Pennsylvania to so participate will render innocuous and useless decisions of the Board affecting other subdivisions.

Continuing to read from the letter:

Chiseling has reached such an acute state, all but one subdivision of division 1 agreed that drastic measures must be taken to protect contract tonnages for those producers who are observing code prices. A resolution authorizing code authorities to permit special competitive prices to be named to protect such producers on renewals of contracts was presented to the National Coal Board of Arbitration for prompt decision. The Board, however, declined to advance this on the calendar for hearing and ruled that it must come before them as a published rule and then it will be given special consideration, due to its major importance.

I ask the Senators to observe the meaning of that proposition. That means that so many contracts have been made in the industry at less than approved code prices that it has been necessary for the industry to undertake to revise downward the contracts that were in existence based on approved code prices. In other words, the sales realization of the entire industry has been reduced below approved code prices and the industry, as a matter of fairness to its consumers who unfortunately have contracted at code prices, is now being compelled to set up machinery to reduce the prices in those contracts in the midst of the contract period. That is the ideal situation that gentlemen come before this committee and ask to be perpetuated, the marketing situation that I have just revealed.

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Well, some one may ask, what is the interest of the mine workers in this proposition? The mine workers for years and years have learned that if the operators cannot sell their coal for a price that will give them & return, they cannot pay a wage scale, and wages comprise at least 65 percent of the total cost of producing coal. Wagns is the only item of cost in wnizh there is any flexibility. If an operator has to reduce his cost, he thioks only in terms of redu ing the wage cost or the labor price. It is the only flexible item. He cannot reduce his power cost; he cannot reduce his timber cost; he cannot reduce his machinery and supply cost; he cannot reduce his taxes or his royalties. The only thing he can reduce is his labor cost, and eventually he goes out to the pit head with his tacks and tack hammer and nails up a notice on the bulletin board that the wages are reduced, because that is the only way he can reduce costs within that reduced realization of the industry.

For many, many long years the mine workers have known what that meant, and the depths of the depression which existed in the industry, the degree of human misery which existed in the industry, prior to the enactment of the National Industrial Recovery Act, have left such terrifying scars upon the minds and the hearts of the men in the coal industry that, Senators, they are fearful of a return to that situation, and they ask the Congress of the United States to stop this coal industry in its mad downward course, because it means life or death to the mining population of this country.

If these coal operators who own the mines or manage the mines are so unintelligent that they cannot of themselves function as a group, if the only law that appeals to them is the law of the jungle, and the tooth and the fang, and dog eat dog in the coal industry, then the miners and their families, who are the residuary sufferers from that situation, ask protection at the only place where they can get protection, and that is from a beneficent Government through its Congress.

The coal operators have never been able to function collectively. The composite viewpoint of the coal industry is unknown, because the operators have never been able to crystallize it. There are just as many opinions in the coal industry as there are coal operators. And the coal operator, or the camp follower in the industry, or the attaclić who poses as an expert, when they take their leadpencils and figure out that something cannot be done because it will cost perhaps & cent a ton or a dime a ton more, disregard the human element and the right of men and women to live in the industry.

Individually, the men who own the coal mines and manage the coal mines in this country are just as fine citizens and intelligent men as exist in any cross section of our population, or in any industry or profession of our Nation, but they are unintelligent and incapable of being able to function in any collective sense. They cannot protect themselves against each other. The experience of the bituminous coal code has revealed that fact and demonstrated that fact beyond peradventure of doubt.

So when we come down to the proposition that we are facing right now, a situation where there is a state of complete collapse in the price structure of the code, we find the consumers are laughing, as they have always been laughing. When I refer to the consumers, I mean the large consumers, like the steel companies, the railroads, the public utilities, and other large consumers who have always bought their coal below cost, except in time of war or some extraordinary domestic situation. They are coming here now opposing the Guffey bill, and down in their hearts they still have the desire of being able to continue doing what they have been doing so long—buying their coal at less than cost.

The bituminous coal wage contracts expire on April 1 in every mining district. And unless a new wage contract is negotiated between now and April 1, there will be no contracts after April 1, and the mine workers of this country will not have the right to work in the mines of this country after April 1 without the consent of the coal companies. Consequently, there will be no work on April 1, if there is no new contract negotiated.

What are the chances of negotiating a contract? Are the chances of being able successfully to negotiate a contract in the coal industry minimized and made more difficult by the fact that sales realization of the industry, the amount received for the tonnage of coal mined, has been reduced to approximately a point where the operators complain that they are not able to pay a reasonable wage scale or even the existing wage scale.

Senator NEELY. And that reduction is directly attributable to the chiseling practices of some of the operators to which you have referred, is it not? Mr. LEWIS. Nothing else, Senator. They have voluntarily, re

, duced their sales realization. They are now coming into the joint conference, or will come into the joint conference and show that realization is incapable of supporting the present wage scale, and then the miners of this country are affected by the failure of the operating side of the industry to compose the business relationships in their own household or even adhere to the provisions of the coal code, supposed to have the power of law.

When the Coal Code was negotiated, the operators claimed to the Government that they would be obliged to have at least a realization of $2 a ton to support the wage structure. The mine workers felt that price was too high and said so, but the Government acquiesced, saying that they thought the $2 rate for mine-run coal, by and large, throughout the country, was a reasonable rate, and that the price structure of the industry could be predicated upon such a reasonable base.

Well, what is the answer? Last year, on the 1st of April 1934, the hours in the industry were reduced from 8 to 7, and the wages were increased 9 cents a ton on the tonnage mined and 40 cents a day for the day workers. Applying that wage increase and the shortening of the hours to the wage structure, we find that the sales realization for 1934 of Appalachian Coals, Inc., which marketed about 39,000,000 tons last year, was approximately $1.75 a ton. That realization was achieved before the widespread wave of chiseling began in the industry. It shows that under the best of conditions the operations of Appalachian Coals, Inc., lacked 25 cents a ton of their annual production of achieving the goal of realization they assured the Government was necessary to uphold that wage structure.

In other words, they extended contracts, they favored some friends, they delivered some tonnage to old-time customers and protected them, and they achieved a realization of $1.75 a ton.

Since they achieved that realization this same Appalachian Coals, Inc., by vote

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of its membership, has reduced the prices at which its members were permitted to sell and in addition now is being compelled to revise its affairs so as to meet the situation revealed in this paper I have just read here. It demonstrated without question that there is no hope of the coal industry being able to stand on its own feet through the benefits of the Bituminous Coal Code.

There is no enforcement in the Bituminous Coal Code. There can be no enforcement in the Bituminous Coal Code. The life has gone out of the Bituminous Coal Code, both as to prices and as to violations of the labor provisions. Why, Mr. R. C. I way; in Harlan County,

, and his associates; the United States Coal & Coke Co., in Harlan County, a subsidiary of the United States Steel Corporation; the Western Kentucky Coal Co., in western Kentucky, a subsidiary of the Great North American Utility; the Elk River Coal & Lumber Co., of West Virginia; and the McKell interests pay no attention to the provisions of the Coal Code that they do not want to pay.

The Western Kentucky Coal Co., Senator, is one of the chief competitors of Indiana. The public utility that operates that company follows the practice of using such of its own production as it wants to use, and dumping the rest of the tonnage on a defenseless market, in order to give that company higher running time, greater volume, and reduced costs; and it does so with impunity, because it has found a Federal judge on that bench who has held that the Coal Code has no force or bearing in that field.

The Coal Code cannot be enforced under present conditions. It is not being enforced. There is no attempt being made to enforce it. The operators disregard its provisions with impunity.

The United States Steel Corporation in Harlan County employs a large number of mine guards to police its coal towns. Lynch, Ky., has a population of about 7,000 or 7,500 people. Under the feudal system maintained there, they normally have a force of 17 police officers to police that community, and no man may call himself his own in that community except by and with the consent of the superintendent of the United States Steel & Coke Co. They have recently augmented that force, to prevent meetings of mine workers, to prevent men from exercising their right to join the United Mine Workers of America instead of the company-maintained company union. They have joined in subsidizing the sheriff of Harlan County, and the sheriff of Harlan County has recently and perhaps even as I am speaking now may be maintaining a force of 191 deputies to police the roads and coal towns and camps in that county, preventing the men from holding meetings and joining the United Mine Workers of America, and preventing any attempt toward enforcement of the provisions of the Bituminous Coal Code.

The United Mine Workers have protested in vain. To whom? To the Coal Section of the N. R. A., to the Compliance Division of the N. R. A., to the Legal Division of the N. R. A., to the General Counsel of the N. R. A., to the Administrator of the N. R. A., to the N. R. A. Board, to the Federal Trade Commission, to the Department of Labor, to the Department of Justice. The net results of our protests have been nothing. And yet operators trying to observe loyally and honorably and honestly the provisions of the code, and trying to pay the wage set up under the provisions of the coal code and wage contracts, are daily being penalized by this unrestricted

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