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We also believe that large tonnages of coal were sold during the time since the approval of the code in direct violation of code prices. Tonnages secured by these methods should not be made the basis of permanent allocation either by districts or by mines.

Third. In making standard tonnage allotment consideration should be given to the consumer so that he may maintain his advantage in being located in or near a producing area, and full consideration should also be given to the producer in order to protect him in his service of his home market, with particular reference to fluctuations in local demand due to weather conditions, changes in operation of local plants or other local variations in the demand for coal.

Referring to section 4, part I, production (f), this covers grievances of mines as to quotas and should be amended to permit the national board to conduct the hearing and transmit the testimony and findings to the Commission for prompt action. We offer this amended form: If any code member is aggrieved by the allocation of a mine quota, he may submit his grievance to the national board, which will conduct a hearing on the matter and transmit the evidence presented at such hearing to the Commission with a recommendation, and the Commission will thereupon make a decision based on such evidence, recommendation, and the public interest.

Senator NEELY. At what place do you suggest that amendment be inserted?

Mr. RENWICK. That is an amendment to section 4, part I, production (f).

Senator NEELY. At the end of the paragraph?

Mr. RENWICK. No; that is a complete substitution for the whole section.

Senator NEELY. Then you propose to strike out all of paragraph (f) and insert what you have read in lieu thereof?

Mr. RENWICK. Yes; the next two paragraphs (g) and (h), we recommend stand as they are.

The next paragraph (i) is offered in the following amended form to conform to previous amendments suggested:

Senator MINTON. Just what is your objection to paragraph (i), briefly, without reading it?

Mr. RENWICK. We have suggested amendments to previous sections of the act that really compel a corresponding amendment to this section, and we are quoting what we think would cover the situation.

Every second year after the passage of this act new standard allocations and new quotas from mines as provided in this act shall be made in accordance with the provisions already stated, but upon the basis of actual data for the preceding 2 years. In its first annual report to the Secretary of the Interior for transmission to Congress the Commission shall report fully upon the system of allocation herein provided, with such recommendations as may be deemed proper.

There is not very much change in that, but it is simply made to conform to other suggestions that we have already made.

In the next paragraph, (j), we suggest no change.

Under the marketing and price-fixing provisions of the bill, no adequate method is proposed to have a variety of minimum prices

corresponding to differences in market values due to grades, sizes, and uses of various coals.

Senator MINTON. Do you think that is practical?

Mr. RENWICK. Absolutely; yes, sir.

Senator MINTON. And you recommend that that thought be incorporated in the bill?

Mr. RENWICK. Yes. No criteria are established by which to limit maximum prices except what the public will stand. We would prefer to see the minimum and the maximum limits determined by the Commission on definite principles and then have the district boards propose prices for the various grades, sizes, and uses of coal in their districts within those limits, with due regard to competitive conditions and the freest possible movement of coal.

Senator MINTON. That is to say, between the minimum and the maximum fixed they could sell it anywhere?

Mr. RENWICK. No; the district board would fix prices within those limits.

Senator MINTON. Do you mean an exact price?

Mr. RENWICK. No.

Senator MINTON. I do not quite understand you. You have a minimum price and a maximum price. Is that to be established by the district board-the minimum price and the maximum price?

Mr. RENWICK. Yes, sir; within certain limits determined by the Commission. I will illustrate that in figures for you. You have a minimum of $1.50 and a maximum of $2.50 established by the Commission. The district board can fix a minimum of $1.75 and $2.25. Senator MINTON. Then they could sell coal anywhere between $1.75 and $2.25?

Mr. RENWICK. Yes. To provide for competitive conditions and a free movement of coal they could fix a minimum and a maximum anywhere between the limits established by the Commission.

Some mention is made in the bill of consuming markets. We believe it practicable for the Commission to establish consuming market areas for the country (subdivided for particular uses when necessary), and to secure agreements among district boards for equitable consuming market-area prices to increase the competitive possibilities as between districts and still keep within reasonable prices to the public and maintain proper wages, working conditions, and conservative operation of mines. Our ideas on this are expressed in detail in amended section 4, part II, marketing (a) and (b), as follows:

The Commission, with the aid of the national and district boards, shall ascertain with reasonable accuracy the cost of production at the mines f. o. b. transportation equipment, including cost of labor, workmen's compensation, taxes, power, supplies, insurance, administration, depreciation, depletion, royalty, and all other direct expenses of production in each of the producing districts and subsections of districts as defined herein. The weighted average amounts of the various items expressed in the next higher even cents per ton shall be announced by the Commission not later than March 1 of each year for each of the several districts and subsections of districts. The total of the average costs of labor, workmen's compensation, and taxes, expressed in the next higher even cents per ton and the total of all such costs plus 30 percent expressed in the next higher even

cents per ton as determined for the various districts, shall constitute the limits of the minimum market prices per ton f. o. b. transportation equipment at the mines for the various grades, sizes, and uses of coal produced in the several districts.

Senator MINTON. What does the 30 percent represent?

Mr. RENWICK. That would represent naturally a profit on a certain proportion of their coal, corresponding to the loss that you would have on another percent of the coal sold at just labor, compensation, and taxes.

Senator MINTON. Just out-of-pocket expense?

Mr. RENWICK. Just part of the out-of-pocket expense.

The Commission, taking account of the objects and provisions of this act, will also proceed to set similar limits for the maximum market prices per ton f. o. b. transportation equipment at the mines for these various grades, sizes, and uses of coal produced in the several districts; the spread between minimum and maximum prices to be no greater than 50 percent of the corresponding minimum price. As soon as the Commission has determined the minimum and the maximum price limits as herein provided, they shall transit them complete to the several district boards.

(b) The several district boards, upon receipt of the minimum and the maximum price limits from the Commission, shall thereupon respectively prepare and submit for the approval of the Commission a list of minimum and corresponding maximum prices f. o. b. transportation equipment at the mines for coals of the various grades, sizes, and uses as produced in their several districts, together with the necessary information upon which the prices are predicated. Upon failure or refusal of a district board on demand of the Commission to submit such lists and necessary information, or upon the refusal of a district board to modify any prices so listed at the discretion of the Commission, the Commission is authorized to fix the same within the limits already set forth and after a public hearing. Twenty days notice in writing shall be mailed to all known code members affected by the proposed order of the Commission fixing such prices, of the hearing at which anyone in interest may be heard. Upon approval of prices submitted or order fixing the same, notice thereon shall be mailed to all known code members in the district and no coal shall be sold f. o. b. transportation equipment at the mine by any code member within the district at less than the minimum no more than the maximum prices so established: Provided, that such prices shall be for periods of 6 months ending the last day of March and September of each year.

One reason for offering this change in the price structure is simply this: If you establish one minimum price, a small producer whose operation depends on the complete sale of all the sizes that he makes will be in competition with the large producer who can use the bestgrade and the best-size coal in competition with him at the absolute minimum price and have a tendency to put him out of the picture entirely.

Senator MINTON. Is that your reason for wanting this sliding scale between the minimum and the maximum?

Mr. RENWICK. No; that is a sliding scale of minimum prices. For instance, on the basis that we have set out here your labor costs that

we include in the lowest minimum price would amount to about $1.30, Your highest minimum price, counting the 30 percent that we mentioned, would be about $2.60.

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Now, I could sell my smallest and worst grade of slack for $1.30; I would sell my largest and best grade of lump for $2.60; and the other grades and sizes between those prices. I could not sell my largest and best grade of lump at the same price that I sold my smallest and worst grade of slack in order to take business away from a competitor.

We think that is a very necessary arrangement in any price structure. There is no justice in allowing me to sell 4-inch lump coal of the best grade at the same minimum price that my competitor sells 2-inch nut slack of his worst grade. There has to be a slack there to get any justice in the picture.

Senator MINTON. Then do you propose to have the commission establish a minimum and a maximum for each grade?

Mr. RENWICK. Yes.

Senator MINTON. Where is this activity of the district board to come in and establish this in-between price that you were talking about awhile ago?

Mr. RENWICK. When the coal is ultimately delivered to the consumer there are various transportation and other charges to be added to the f. o. b. mine price. You as a consumer in Buffalo may have the opportunity of buying your coal from, we will say, Ohio, western Pennsylvania, or central Pennsylvania through a cost structure, or price structure, based on absolute cost.

Western Pennsylvania, on account of freight rates, may be ableto destroy any competitive opportunities that Ohio and central Pennsylvania have. But if you allow the fixing of prices within the wide limits by districts, then you can fix a minimum price for western Pennsylvania that will allow Ohio to compete in the Buffalo market and will allow central Pennsylvania to compete in the Buffalo market; but if you determine that minimum price on cost alone, Ohio and central Pennsylvania would be eliminated on account of freight rates and other charges in getting coal to that market.

We are suggesting no change in paragraph (c), but in paragraph (d) we would like to offer this as an amended paragraph:

The price provisions of this act shall not be evaded or violated by or through the use of yards, docks, or other storage facilities; or by or through. the use of transportation equipment owned or hired directly or indirectly by the producer; or by or through the use of subsidiaries affiliated sales agencies or other intermediaries; and the Commission is hereby authorized, after investigation and hearing upon notice to the interested parties, to issue rules and regulations concerning such practices to make this section of the act effective..

Our explanation of that is this: Under the present condition of minimum fair-market prices established by the code, I operate a truck line. The code authority establishes a minimum f. o. b. mine price for my coal. I have been selling that coal to the consumer and absorbing the transportation cost in the mine price and delivering it to that point f. o. b. mine price, simply because there has been no public tariff of transportation charges applying to the kind of equipment I use; and in the original section no mention is made of the possibility of evading the price by using your own transportation equipment. So we want that included.

As far as that goes, it we would let it stand the way it is, it would be a wonderful out for truck coal producers, but we do not want it.

The next change suggested is in section 4, part II, marketing (g), which has already been discussed under marketing-area prices. The change that we are suggesting is as follows:

Change the first sentence to read:

In order to promote the service of the public in consuming markets by competitive districts, the Commission shall establish consuming market areas throughout the United States and may adopt rules not in conflict with this act whereby district boards may provide for agreements as to competitive prices and practices in such consuming-market areas.

In other words, the district boards, with the aid and advice and consent of the Commission, will establish minimum and maximum prices so as to permit competition in a market from several producing districts. Just that thing that I was mentioning to you a moment ago. If the basis were prices simply on cost, a fellow with the nearest and lowest transportation would control a market absolutely. I do not believe that is a good thing.

Senator MINTON. How do you propose to avoid that?

Mr. RENWICK. By setting prices that districts for their coal of equal grade will sell for approximately the same price in a market. You will absorb a proportion of the difference in transportation cost by making a variation in the minimum and maximum mine prices. Senator MINTON. It will operate a little bit to the disadvantage of the consumer, though, would it not? It would make his coal cost him a little more money?

Mr. RENWICK. It will make the coal cost him a little more money, but it will give him a wider choice.

Senator MINTON. A wider choice of what?

Mr. RENWICK. Of coal. I do not want to confuse the issue with you. It is more to the advantage of the producer, possibly, than it is to the consumer, but it tends to give the producers a more stable production. If you would carry the thing to the logical conclusion, any customer within a mile of my mine could never think of purchasing coal from another producer that was 2 miles away, because I could always beat him by practically half; and my market would be limited to just a certain distance around my mine, and the other mine's market would be limited to the same thing; and there would be violent fluctuations in our production because we only had one. place to sell our coal, and we are trying to avoid that.

In section 4, part III, which relates to labor relations, we are suggesting no change.

Senator MINTON. Are your mines unionized?

Mr. RENWICK. Yes.

Senator MINTON. How long have they been unionized?

Mr. RENWICK. Since the passage of the National Industrial Recovery Act; and when I say "yes" I really should qualify that. The mines that I represent are, a good many of them, small truck mines that are operated really as family affairs, or with only 3 or 4 employees.

Senator MINTON. Do you pay a union scale there?

Mr. RENWICK. Most of them pay a union scale, but a great many of them are not signed up with the union. We believe that this act

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