Coal produced is, therefore, approximately 61 percent of the amount consumed.. The Youngstown Sheet & Tube Co. for a long time purchased all of its coal, but it soon became evident that, in order to be sure of the necessary quality of metallurgical coal and a steady and regular supply, backed by proper reserves, it was imperative that a large proportion of its requirement should be owned and the operation of its mines governed by its needs for fuel in accordance with its sale of manufactured steel products. The company, therefore, acquired a large coal acreage which, in due time, was opened up and fully equipped. In addition, it established a large washing plant so that there would be, as far as possible, full control as to quality. All of this was done at heavy expense to the company. The consumption of coal at its different works varies greatly with the publicdemand for steel products. It is a physical impossibility, at all times, to keep the different units of its works in exact harmony, and it is often necessary, for economical operations and proper consideration of costs, to produce more coke than the active blast furnaces would at the same time consume.

The company has from time to time sold a portion of this coke, but these sales have been made with due regard to proper market conditions and have not militated against the so-called "commercial mines." A study of the consumption as shown herewith very clearly shows that it has purchased from outside sources coal largely in excess of that which entered into the production of the coke so sold. A high standard of wages has been maintained. Living conditions have been of the highest, as shown by a report of the United States Coal Commission in 1923. Safety has ever been uppermost with the management. That conservation has been considered carefully is shown by a recovery of coal of well over 90 percent.

For the reasons stated in the summary presented by Mr. Thomas Moses we believe it is impracticable, unfair, and unnecessary to include captive mines in the proposed legislation.

THE YOUNGSTOWN SHEET & TUBE CO., By C. G. ROBINSON, Vice-President.

STATEMENT OF CRUCIBLE STEEL Co. OF AMERICA AND SUBSIDIARIES AND AFFILIATES AS OWNERS OF CAPTIVE MINES IN OPPOSITION TO THE PROPOSED 'BITUMINOUS COAL CONSERVATION ACT OF 1935", INTRODUCED AS S. 1417 To the subcommittee of the Committee on Interstate Commerce of the United States Senate:

The Crucible Steel Co. of America and its subsidiaries and affiliates appear in opposition to S. 1417, cited as "Bituminous Coal Conservation Act of 1935", introduced by Senator Joseph F. Guffey of Pennsylvania, January 21 (calendar day, January 24), 1935, and respectfully submit the following facts and arguments in opposition to said bill as the same affects them as owners of "captive mines." In the 5 years from 1929 to 1933, inclusive, the captive mines owned by us, our subsidiaries, and affiliates, produced and we consumed the following aggregate amounts of coal:

The above table shows the close relationship between the coal produced in our captive mines and the amount consumed in our business. During the first of the 3 years covered by the above table the fluctuations are almost identical and it is to be noted that in the last 2 years, the Cornell mines were not in operation. During those last 2 years, and also to a certain extent in earlier years, we and our subsidiaries have been obliged to purchase bituminous coal in the open market, particularly when conditions require certain qualities or grades of coal or when certain deliveries and demands make the purchase of such coal necessary

or more advantageous than that which our captive mines can readily supply, A small amount-approximately less than 10 percent of the coal produced at our captive mines has been sold by us, but that practice is being discontinued and the problems of our captive mines can therefore be considered on the basis of their entire production now being used in our steel business. Our vital interest in any legislation affecting our mines is therefore obvious.

The captive mines owned or leased by us and our subsidiaries and affiliates and the coal produced therefrom, coked or processed, are to be used exclusively and solely in our business and the coal is not to be sold by us to others in the commercial markets in competition with commercial bituminous coal. This conclusively establishes that these captive mines are being operated only as a part of our steel business and that coal is to be taken from such mines only when and to the extent actually required by our business needs. They constitute an integrated part of our steel business, and to impose rigid regulations upon them as though they were a separate and distinct commercial coal business will only destroy their use as a part of a steel business and prevent the economy and business efficiency which can be obtained by operating them as a part of our steel business.

In other words it is clear

1. That the operation of our captive mines is limited to the interests and requirements of our steel business as such and is an essential and integrated and inseparable part thereof; and

2. That our captive mines are not operated competitively with the general commercial operation of bituminous coal mines.

We, therefore, wish to refer to the analysis made by the United States Steel Corporation and its subsidiaries of the various provisions of the bill; and particularly to refer to their analysis of and objections to (a) the declared objects of the bill insofar as they relate to captive mines; (b) the tax on bituminous coal; (c) the proposed Bituminous Coal Code and its provisions regarding the production, marketing, and labor relations. We also wish to particularly refer to the general observations in said statement of United States Steel Corporation and its subsidiaries made respecting the advisability of adopting the proposed bill and its constitutionality and legality. Such analysis of the aforesaid problems presented by the bill point out many major defects and demonstrate its impracticability and injustice, which are equally applicable to our captive mines as they are to the captive mines of the United States Steel Corporation and its subsidiaries. In order to avoid duplication, we are not again analyzing the bill in detail, but respectfully request that you consider the objections to the bill set forth in the statement made to you by the United States Steel Corporation and its subsidiaries as being equally applicable and burdensome upon the operation of our captive mines as fully as though we had specifically made the same objections herein.

Dated, New York, March 1, 1935.

Respectfully submitted on behalf of Crucible Steel Co. of America and its subsidiaries and affiliates.

FRANK K. BOAL,

Secretary to Senator James J. Davis:

By F. B. HUFNAGEL, President Crucible Steel Co. of America.

PHILADELPHIA, PA., March 8, 1935.

Regarding your telegram of yesterday I give you here in abbreviated summary in lieu of brief requested. If such direction and discipline of bituminous coal industry is deemed necessary by Congress, then I recommend that it should be; One, temporary and limited definitely as to time; two, directed entirely by financially disinterested American citizens with control and responsibility vested in one man; three, that it should include production control of individual mines based upon past production and present physical productive capacity, as well as control over new mines; four, that it shall regulate all wages and that wages should be based on approximate commercial value of coal f. o. b. mines which have been fairly well-determined by code authorities; five, that there shall be a comprehensive national effort instituted at once to regulate the forces, the disintegration of which makes such legislation essential. I feel that any regulation should be based upon the ideal of equal opportunity for all. I do not think this can be accomplished with code authorities consisting of men interested financially in almost every decision.

A. K. ALTHOUSE.

[Telegrams]

SENATOR M. M. NEELY,

HARRISBURG, PA., March 5, 1935.

Chairman Subcommittee of Committee on Interstate and Foreign Commerce,

Senate Office Building:

Realizing the importance of S. 1417, introduced by Senator Joseph F. Guffey of Pennsylvania, I endeavored to arrange my affairs to personally appear before the Subcommittee of the Committee on Interstate and Foreign Commerce in support of this bill which I consider one of the most important and constructive pieces of legislation before the present Congress. Affairs of state involving and requiring emergency legislation, however, prevent my appearing personally befor your committee. I take advantage of this opportunity to say to your Committee that as Governor of Pennsylvania, the largest bituminous-coal-producing State, I strongly urge passage of the Guffey bill, because I believe that real stability can only come to the bituminous-coal industry through the enactment of such meritorious and timely legislation. The public-utility features of the bill, the marketing provisions, the labor and code provisions, as well as the provisions for the protection of natural resources, the creation of the commission, the establishment of a real labor board, and the taxing methods proposed appeal to me strongly, and the passage of this bill by the Federal Congress would be a great accomplishment and will undoubtedly bring to the basic bituminous-coal industry of this country real stability, peace, and justice to all concerned.

GEORGE H. EARLE, Governor of Pennsylania.

STABILIZATION OF BITUMINOUS COAL MINING

INDUSTRY

THURSDAY, MARCH 7, 1935

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE, Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10:45 a. m.,. in the committee room, 412 Senate Office Building, Senator M. M. Neely (chairman) presiding.

Present: Senators Neely (chairman) and Minton.

Present also: Hon. Joseph F. Guffey, a Senator from the State of Pennsylvania.

There were also present the following-named representatives of the United Mine Workers of America: Mr. John L. Lewis, president; Mr. Philip Murray and Mr. Van A. Bittner, vice presidents; Mr. Henry Warrum and Mr. Earl E. Houck, counsel.

The following operators were also present: Mr. T. G. Essington, of Illinois; Jr. Richard Emery, Jr., of Ohio; Mr. Robinson, of Ohio; Mr. Liveright, of eastern Pennsylvania; Mr. Charles O'Neill, of eastern Pennsylvania; Mr. Edward Mahan, Mr. Charles F. Hosford, Jr.; former Senator C. W. Watson, Mr. C. E. Smith and Mr. C. C. Dickinson of West Virginia, and many others.

Senator NEELY. Gentlemen, have the friends and foes of the Guffey bill during the progress of the hearing harmonized their differ-ences of opinion?

Mr. WARRUM. We had one meeting, not with the opponents of the measure, but with a group of operators that have favored the passage of this bill. There have been some amendments that have been agreed upon which relate almost exclusively to textual corrections. I imagine I should not bu4den the committee with those.

Senator NEELY. No; that will not be necessary. Has there been any agreement on any of the fundamentals that were in dispute?

Mr. WARRUM. In relation to these fundamentals of allocation, marketing provisions, minimum price provisions, correlation of prices there has been no agreement so far as to allocation. While I cannot even speak for all of the operators who have appeared as proponents of the bill, the general drift of opinion seems to be that the suggestion of Mr. O'Neill is perhaps the most practicable. The formula from 1923 to 1934 plus the 1934 formula would seem to result in a shift of tonnage, and he suggested that in each district there might be an allocation of quotas not less than the 1934 output. That seems to have the most adherents.

Senator NEELY. Have you reached any agreement with any considerable number of operators as to the basis for district allocation? One prominent operator suggested to me last night that the

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allocation ought to be based on the highest output of any 2 years during the last decade, including 1934, with permission to the operator to select the 2 years which he considers most favorable to himself.

Mr. WARRUM. Do you mean the allocation to the mines or to the districts?

Senator NEELY. I am speaking of the mines in a particular district. Mr. WARRUM. The quotas to those mines?

Senator NEELY. Yes; mine quotas.

Mr. WARRUM. There has been no general agreement. The plan that seems to me to meet with the most favor and there may be operators here who are for the bill who may object to that, and if so they can say so-is that in any event there should be a provision that no mine should be allotted less than its 1934 production.

Senator NEELY. Judge Warrum, an objection was made to that, and I am not passing upon it, but submitting it for the consideration of those present. The objector said;

I have been scrupulously observing the code provisions. I have been living up to the National Recovery Act. Some of my competitors have been taking orders that result in violation of the provisions of the code, and they have also been scandalously cutting prices. My production has decreased because I have obeyed the law.

He showed me figures to prove that in 1 year before the National Recovery Act went into effect the output of one of his mines was over 600,000. But last year the output of that mine was only 230,000 tons. This reduction of tonnage was caused almost exclusively by the cutthroat competition of those who were not living up to the code or the law.

The objector further said:

Unless you let me go back to the time prior to the operation of the recovery act and the code you will be penalizing me for having maintained the proper wage scale, for having lived up to the law that my competitors have violated. You should not permit the law-abiding operator to be penalized to the advantage of his cut-throat competitor, who will probably use 1933 and 1934 as a basis of allocation.

Have you given any consideration to such a suggestion as that? Mr. WARRUM. That is satisfactory to us, and may prove to be satisfactory to a good many operators, with the idea in view that 1929 might represent the output of certain producers based on their chiseling operations, under the formula set up in the measure, and perhaps it should be an average from 1929 down to 1934. That had the same purpose in view, to bring about the same result. So the suggestion that was made and that you are passing on, as you say, in relation to quotas to mines, to let them select an average for 3 years or 2 years, or anything of that kind, is satisfactory to the mine workers and may be satisfactory to most of these operators. I see nothing wrong with it. The trouble is the difficulty of getting them to agree at all.

Senator NEELY. Does anyone else present object to that suggestion? If there are no objections to it, the chairman will consider that you favor it.

Mr. EMERY. Mr. Chairman, off-hand I think Ohio would object to that. I think I will have to reserve the right to object. The main reason for taking the annual average, if you will look at Ohio's statement you will find the tonnage has steadily decreased for 5 or 10 years. You will also find a lengthy strike in 1932 caused an upset figure,