will aid in bringing them all under the same wage scale and the same conditions, and we are very much in favor of the act for that reason, among others.

As a truck coal producer my worst competition comes from another truck coal producer who is not observing the State mining laws, code regulations, or anything else and is avoiding them, partly at least, on the proposition that he does not have to pay as much for his labor as I do.

There are provisions in this bill that make it a little easier for the labor organizations to bring them into the fold, and we are for that definitely.

In section 5 we would like to see the first sentence changed to read as follows:

Upon the appointment of the Commission, it shall proceed at once with the formulation of the bituminous-coal code and assist in the organization of the national and district boards, as provided for in section 4, and so forth.

In section 6, after the word "taxes ", add "and code assessments." We are suggesting no changes in sections 7 to 14, inclusive.

In section 15 a definition of "captive tonnage" should be added. However, we do not feel competent to make that definition, but we would like to make the suggestion that the act contain a definition of what is meant by "captive tonnage." It is referred to often as an important subject.

Senator MINTON. What do you understand by it?

Mr. RENWICK. It is production owned and controlled by a definite

consumer.

Senator MINTON. Who is also a producer?

Mr. RENWICK. Yes; I say production owned and controlled by the consumer. That is not a complete definition, but that is just a quick definition. However, we believe the act should specify exactly, because there are some relationships between consumer and producer that are almost on the basis of captive but possibly not quite, but the differentiation between captive and otherwise should be stated definitely in the act so as to avoid future confusion.

Title II we believe to be absolutely necessary. If it is administered with any degree of success, then the continued necessity for title I will become greater in regard to allocation and price structure and also for the labor provisions.

Companies with the reserve acreage will be anxious to open up new territory in proportion as stabilizing increases the profitable operation of mines, and there will have to be some control of that as well as the retirement of acreage from production by the application of the rules under title II. But the changes in title II recommended by the Coal Control Association of Western Pennsylvania in Mr. Hosford's statement yesterday are endorsed by us rather than in the form in which it is presented in the regular bill.

That is the extent of what I have to say, gentlemen.

Senator NEELY. Are there any questions? If not, Senator Camden is recognized.

STATEMENT OF JOHN M. CAMDEN, OF KENTUCKY

Mr. CAMDEN. Mr. Chairman and gentlemen of the committee, with your permission, I would like to make a plea in behalf of the

holding company that I represent and of which I have the honor to be president.

The holding company that I represent is the Kentucky River Coal Corporation. It was incorporated in about 1915 and embraces about 150,000 acres. About 50,000 acres are under production; that is, they are under lease. We have about 28 lessees.

In the multiplicity of things to be considered by the Guffey bill and also the committee here, there is no provision as to how the holding companies will come in on this.

I have prepared an amendment that I would like to file and have go into the record. With your permission, I shall read it.

Senator NEELY. We shall be glad to hear it.

Mr. CAMDEN. This is to amend Senate bill 1417. Amend paragraph (d), line 22, page 8, so as to read as follows:

Provided, That the mean average royalty tonnage quota of all land-holding companies receiving royalties on tonnage since 1918 and including 1934 shall be computed on the same basis as figured for the operating districts. In the case of all land-holding companies owning coal reserves, all such land-holding companies shall be permitted to open new mines, make additional leases, and/or make new leases out of their reserves to operating companies in order to maintain their royalty tonnage now and thereafter on coal mined since 1918 and including 1934.

Any increase in the quotas of a district will result in a due proportional increase in the quota of such royalty property.

Senator NEELY. Subject to that amendment, Senator Camden, do you favor the passage of the bill?

Mr. CAMDEN. Mr. Chairman, I will say that through my father I have been identified with and have a pretty good working knowledge of the coal properties, mining conditions, and so forth, going back over 40 years. Under the N. R. A., which was pretty good control but not permanent and you might say conclusive, we experienced relief. We had better conditions in the past 14 months than we have enjoyed for some time; more assurance, more confidence and peace of mind, beside a more fixed and steady income; and I feel that it would be a very stabilizing thing if that could be continued and made permanent. It looks like this bill might accomplish

that.

I am for the bill with certain amendments or provisions, which, of course, will have to be worked out. But I think it would be a beneficent thing if we can get it through under those conditions.

Senator NEELY. You believe that it would have a further stabilizing effect on the industry?

Mr. CAMDEN. I do, with those amendments or provisos that I have mentioned.

Senator NEELY. As the Chair understands it, you propose that the amendments which you have just read shall be inserted from and after the word "Board" in the twenty-second line of page 8. Is that correct?

Mr. CAMDEN. Yes; that is correct.

Senator MINTON. Will you tell us briefly what the purpose of your amendment is?

Mr. CAMDEN. The purpose of this amendment? You see we have a holding company and we are not operators.

Senator MINTON. What do you hold, the land or stock in the operating company?

Mr. CAMDEN, We hold the land, which is represented by stock. Senator MINTON. You own the coal too, do you not?

Mr. CAMDEN. Yes; this is a coal-land holding company, as distinguished from an operating company.

Senator MINTON. You own land and then lease it to the operating company?

Mr. CAMDEN. We own minerals and the land which we lease to operators through our lessees, and they pay us 10 cents a ton royalty for the coal that they take out of our lands.

Senator NEELY. Is it not the purpose of your amendment to grant holding companies' tonnage the same rights that it would enjoy if it were controlled exclusively by operating companies.

Mr. CAMDEN. Yes; exactly.

Senator NEELY. Senator Camden, do you wish to say anything further?

Mr. CAMDEN. No, sir. Thank you very much, Mr. Chairman. Senator NEELY. Before the next witness begins his statement, the Chair invites the attention of the proponents of the bill to a part of the following letter which was received by the subcommittee this morning from one who evidently opposes the legislation. It says:

Yesterday Judge Warrum. indicated that at the close of the hearing on the Guffey bill he would have several amendments to propose. These amendments should be put in before the proponents conclude their case in chief. Otherwise, the proponents may not know what it is they are called upon to meet. They will be shadowboxing. If some of those who now favor the bill might oppose it if the amendments are not to their liking, and vice versa. If this procedure is not followed, then new hearings should be had upon the amendments so that everybody could have an opportunity to express their sentiments.

Judge Warrum, have you any observations to make in response to that letter?

Mr. WARRUM. It is difficult to tell whether the writer is for or against this bill. I assume if he, or those that he represents, favor the bill in principle, he will do like most of the other witnesses are doing, so state, with such suggestions as to amendments as may occur to him.

It was my idea that at the termination of the hearing there might be some conserted action with reference to these suggestions on marketing operations, minimum prices and other things that should be the subject of more or less agreement, at least among those opposing the bill, and we could then submit them to the committee for consideration.

We want to reserve the right to suggest those amendments at the termination at least of the hearing of our witnesses.

Mr. Ellis is recognized.

STATEMENT OF W. P. ELLIS, ACTING DIVISION ADMINISTRATOR OF N. R. A., WASHINGTON, D. C.

Mr. ELLIS. I am here at the request of your committee to offer such facts and comments as I may to help in the consideration of this bill.

Senator MINTON. Whom do you represent?

Mr. ELLIS. I am divisional administrator of N. R. A. and previously had charge of the coal code through its formula, approval and administration of it.

I have given limited consideration to the provisions of S. 1417 and have the following comments to make:

Rather than even stating in only a brief way the factors which lead up to the aproval of the bituminous coal code, I will not presume to take the time of your committee, because I understand that previous witnesses have gone over that ground. However, later it might be necessary to refer to the past history in order to clarify statements which are made in connection with the provisions of this bill.

Section 1, title I, of the bill is a declaration that the production and distribution of bituminous coal are affected with a national public interest, and for specific reasons, including conservation of coal deposits, provides that the bituminous coal industry should be regulated as a public utility. The distribution of bituminous coal includes those producers who sell direct to consumers, those who sell through wholesalers, or other middle men, and in each of these instances sales are made to retail dealers for resale by them to con

sumers.

There is no reference in succeeding sections of the bill to wholesale or retail distribution and it would, therefore, appear it was not contemplated that those two activities would be brought under the terms of the act. Our experience in admin stering the bituminous coal code shows that there is a very close relationship between a producer, wholesaler, and retailer, and that it would be quite possible to defeat the purposes of the act if provision is not made to bring under the act more direct control of such means of distribution.

Section 4, part II, subsection (d) provides that the price provisions of the act shall not be evaded or violated through the use of intermediaries, and authorizes the Commission to issue rules and regulations concerning such practices.

The coal industry is interlocked in all its forms of distribution, as for example:

Producers, not only producing the coal, selling it direct to industries, but also selling it direct to consumers through their own retail outlets, either wholly or partly controlled, and other producers who perform none of the functions of distribution beyond the mining and preparation of the coal at the tipple.

The trucking of coal from mines adjacent to any consuming area has increased by leaps and bounds since the effective date of the bituminous coal code. A survey which was made by my office last year showed that at least 4,500 new mines, or old mines which were reopened, had come into the picture since the effective date of the coal code. Practically all of which were small operations dealing exclusively in trucking of coal direct to consumers from the mines. Most of this business is intrastate, but it has had a direct effect in some instances upon interstate transactions. This has had the effect so far as retail distribution is concerned in a large measure of moving the retail yard which was formerly used for storage pur-poses at destination points to the coal mine.

It is my understanding that since the survey referred to was made, large numbers of similar operations had been opened. It will thus be seen that there is a direct relationship in all phases of

the production and the distribution of coal and the establishment of a mine price will not, in my opinion, solve the problem.

Concerning the provision in section 4 of the proposed act setting up boards to determine the maximum tonnage to be allowed to districts and mines, it has been my opinion for some time that such a basic principle, if it could be practically applied to the bituminous coal industry, would serve to remove the pressure created by a market that does not anywhere nearly absorb full-time capacity production. We made an attempt last year under administration of the bituminous coal code to adopt a practice of this kind but limited it to percentages of the demand by districts only, that is, there was no specific tonnage set up for any district but percentages based upon past experience of the production of commercial coal were determined and agreed upon.

The figures which have been prepared on that basis for the calendar year 1934, which was the period covered by this agreement in the Appalachian area only, show that the departure from the percentages agreed upon were minor.

The only comment I have to make at this time on the provisions of part I, section 4, of the bill is that no provision is made for the reimbursement of the producer who fails to produce his allotment, or similarly, for any district which fails to produce its allotment. It may very well be that the portion of the market which such a district supplies does not demand coal sufficient, in the period covered, to enable it to produce its allotment, while at the same time the demand in another portion of the market increases, but will be supplied by a special purpose coal which is not produced in the district referred to. I have this comment to make on part II, section 4, of the bill wherein provision is made for the establishment of minimum and maximum prices:

No specific provision is included as to whether the average cost upon which the minimum price will be based will be a weighted average, straight average, or some other figure which might be termed an average, and what the statisticians refer to as a mode. It is also not definitely indicated whether the fair minimum price will apply to the smallest size of coal made or whether it will be on a run-of-mine basis. It is admitted that these are details, but our experience under the Bituminous Coal Code would indicate at least that they are of sufficient importance to warrant the direct and detailed authorization to be put into the bill as to just what should be covered.

The provisions of section (g) of part II, which provides that the Commission may adopt rules for fair competitive prices and practices in consuming markets, leads me to a brief discussion of the difficulties which have been encountered under the present Bituminous Coal Code. The code as first written made no provision for correlation of prices between producing districts, it being the evident purpose and intent to permit each district to establish its own price under administration approval irregardless of prices which might be established by any competing district. There is a provision in the code which permits the delegation of power by subdivisions within a division to the Divisional Code Authority.

We endeavored unsuccessfully to bring about an agreement of such delegation of power and finally in order to see that all districts were