Mr. HAWTHORNE. That is what I referred to. You say the retail price? We produce. We do not sell at retail.

Mr. VINSON. I was referring, of course, to the employers.

Mr. HAWTHORNE. To the producers' price?

Mr. VINSON. Yes.

Mr. HAWTHORNE. We, of course, were dissatisfied with the detail of that, but, speaking broadly, considered that our code authority did a very good job in the way they handled it.

Mr. VINSON. And that the industry as a whole was benefited?
Mr. HAWTHORNE. Yes.

Mr. VINSON. I would like to have you, as a practical coal man, point out the differences, if any, between the minimum price set forth in H. R. 8479 and the minimum price under the code.

Mr. HAWTHORNE. Mr. Vinson, that was a subject that, to conserve your time, I was going to leave to someone else, but I would be very glad to speak generally of it in saying that this law that you are considering writing into a code here, as you are pleased to call it, provides a fixed, ironclad method by which the basis for that minimum price is fixed, and the code had no such provision in it. The code was an operation of industrial control under the supervison of the Government authority. This statute proposes certain standards by which minimum prices may be fixed, and leaves finally the absolute discretion as to the determination of any matters of discretion to a Government board. It provides for the Government not to supervise industrial operation, but for the Government itself to control and decide controversial question and problems in the industry.

Mr. VINSON. Will you care to make any suggestions as to any other method of arriving at a minimum price?

Mr. HAWTHORNE. So far as the general plan, or as Judge Warrum would say, the philosophy of this bill is concerned, I think that it is absolutely beyond the realm of reasonable possibility of consideration because it is unconstitutional. You are attempting to do something that cannot be done, in my opinion, under the law.

Mr. VINSON. I will be glad to hear you on the constitutional point, but I was asking you about any suggestion that you might care to make in respect of any other method of arriving at a minimum price. Mr. HAWTHORNE. If you mean that I should answer with reference to a formula that you might write into the law, my answer to that is "no", and the answer that I just made, I thought, was responsive in explanation.

Mr. VINSON. It may have been.

Mr. HAWTHORNE. I do not think that it is either the function or under the Constitution the province of the Congress to undertake to write a formula for the minimum price, and I do not think that as a practical matter it can be worked out.

At least, I am thoroughly persuaded that the plan that is proposed in this bill cannot be practically applied.

Mr. VINSON. Do you feel that Congress should make no effort to recognize the situation that has obtained in the coal industry, and that will most probably obtain, and just permit that to eventuate? Mr. HAWTHORNE. I, myself, am unable to suggest how the Congress can change the conditions in the industry. I have given a great deal of consideration to the matter of whether or not Congress could legislate, and if so, the form that that legislation should take. It is my conclusion that you cannot do it. It is my conclusion that if the

Constitution permitted you to do it, the plan that is proposed here is so far afield that no suggestion that I could make that might be considered a modification or amendment of that could make it practical. Mr. VINSON. Have you any other suggestion to make of any other legislation?

Mr. HAWTHORNE. Just now, and this is not entirely responsive, if you will pardon me; I think perhaps if you are trying to get my views I will state them.

Mr. VINSON. All right.

Mr. HAWTHORNE. Just now there is a definite movement in the industry to establish and reestablish the operation and functioning of sales agencies such as the Appalachian group, and such as are being definitely under consideration in other fields-my own smokeless field of southern West Virginia, for instance; as I understand it, eastern Pennsylvania; and Ohio, I believe, already has one or proposes to establish such agencies. One has just been formed in Alabama, and one is being formed in Indiana, and perhaps there are already in course of formation-I am not accurately advised as to that. I just have general knowledge about it.

Mr. VINSON. That is, a sales agency patterned after the Appalachian Coal?

Mr. HAWTHORNE. Yes.

Mr. VINSON. In that connection, your statement about the unconstitutionality of H. R. 8479 called to my mind the attitude of the legal profession particularly after the decision in the Circuit Court of Appeals on that Appalachian Coal case.

Mr. HAWTHORNE. The doubt that might have existed there was resolved by the Supreme Court.

Mr. VINSON. Yes. But at that time, even after the Circuit Court of Appeals had stated that it was unconstitutional by unanimous decision, as I recall, there did not seem to be a great deal of doubt in the minds of coal operators and lawyers with whom I came in contact about the constitutionality. However, the Supreme Court did reverse the Circuit Court of Appeals.

Mr. HAWTHORNE. I think that there was a substantial, able body of opinion that supported the idea throughout as to what the Supreme Court would do.

Mr. VINSON. But the question of the decision in the Schechter case has been in the limelight and, as I recall it, the lower court in that case except as to wages and hours upheld the validity of the act. Now, of course, everybody knows that the National Industrial Recovery Act was unconstitutional when it was passed, but as a matter of fact, the lower court upheld its validity. But that is, of course, by the way.

Mr. HILL. Are you opposed to the principle of standard minimum prices as relates to the coal industry?

Mr. HAWTHORNE. As fixed by statute?

Mr. HILL. No; not as fixed by statute; the principle of a fixed minimum price in the coal industry.

Mr. HAWTHORNE. If you mean fixed on some basis for the coal industry as a whole, I would have to say "yes", because from my knowledge of the coal industry it would be an entirely impractical thing. I think there should be standard guides and methods of cooperation. Perhaps you should give the industry under proper supervi

sion some further cooperation than they have now. But I think the matter of the minimum price is simply a commercial matter that needs the elasticity and free play necessary and common in commercial transactions.

Mr. HILL. Under the code you did not have any fixed minimum price as a part of the code provision?

Mr. HAWTHORNE. No, sir.

Mr. HILL. And that is one of the reasons, I take it, why you might have favored the N. R. A. but are opposing this proposed legislation? That is one of the things?

Mr. HAWTHORNE. Yes; one of the things which I object to in this legislation.

Mr. HILL. You object to the principle of a fixed minimum price on any basis that is fixed by statute?

Mr. HAWTHORNE. Yes, sir.

Mr. HILL. Or fixed by agreement among the units of the coal industry?

Mr. HAWTHORNE. I think that is an impossible thing. I think that that should be left as a matter of management and control in the industry for proper protection of the rights of the parties in interest, by statute, and not be made the matter of a straitjacket in which you might undertake to mold the industry.

Mr. HILL. If we did not have any provision in this bill looking toward the fixing of a minimum price, woul you still be opposed to the principle of a minimum price, even though it might be by agreement, entirely apart from the statutory requirements, by statutory authority?

Mr. HAWTHORNE. If you mean fixed, rigid, my judgment would be against that.

Mr. HILL. It is your idea that each operating company should control for itself the minimum price, or the price which it might obtain as to that industry, insofar as it can control it?

Mr. HAWHTORNE. As I suggested a moment ago, I think that problem promises to be constructively worked out through these cooperative agencies, through which the individual units of the industry are permitted to plan with each other, within limits, as to the basis for price maintenance.

Mr. HILL. As the law now stands, could such a cooperative agreement be worked out without running head-on into the antitrust laws? Mr. HAWHTORNE. The general prevailing opinion, so far as I know it, is that such agreements may be worked out for districts, and limited territories, such as the Appalachian group, but if we went beyond that and went too far in working out cooperation between those groups, as I understand it, under the present law, we would be beyond our legal rights.

Mr. HILL. Is the price-fixing feature in this legislation the main offensive feature from your standpoint?

Mr. HAWTHORNE. As I see it, there are two practical provisions in the bill. The other provisions are set up as the building in which those two functions may operate. One is the price fixing and the other is the provisions with reference to control of labor in the industry, the method and manner in which or through which contracts may be made, and extended in their application beyond the field of those who entered into the contracts, and in my own mind this is an

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unsound principle. So that I would say that I think both provisions of the bill are not desirable and if you take those two things out then, as I see it, nothing would remain, unless it would be the fair practice provisions, and I personally do not believe it necessary that you should pass a statute to undertake to lay those down for the industry. Mr. HILL. You had section 7(a) in the N. R. A. It probably did not work out as the labor element anticipated it would or should. Yet, it did have some force and effect.

Mr. HAWTHORNE. What I said, in perhaps too brief a way to distinguish there, was between 7(a) and the other provisions that are added in this bill, that says that when contracts are negotiated under certain conditions, and by certain percentages of the operators and certain percentages of the mine workers, that they shall apply in their application beyond the group that makes the negotiation.

As I recall it, it says that if you have a contract with two thirds of the industry as to hours, it shall apply to all of the industry as to hours, and a somewhat different provision as to wages. Those provisions, while I, except for your question, would have made no particular point about it, I am trying to give you a frank answer as to how I feel about the bill.

Mr. HILL. That is what we appreciate. I want to know your main objection to this legislation, and get your viewpoint about it. That is what we are after.

Mr. HAWTHORNE. That is what I am here to give you.

Mr. HILL. Speaking of the labor provisions, you have reference more particularly, I presume, to part 3 of the bill, beginning on page 23. That has to do with labor relations. You are opposed to that feature of the bill?

Mr. HAWTHORNE. What I referred to particularly was the provisions on page 26, that it seemed to me to be unsound from the legislative standpoint.

Mr. HILL. Are you opposed to the principle of collective bargaining? Mr. HAWTHORNE. NO.

Mr. HILL. Just how far would you be willing to go in carrying out that principle?

Mr. HAWTHORNE. That is a rather comprehensive question.

Mr. HILL. Does this provision here go beyond the point where you are willing to go in that respect? If so, just point it out to us.

Mr. HAWTHORNE. What I have in mind generally as to collective bargaining is that the employees, any group of employees, might associate themselves together for that purpose, and should have full and free protection in bargaining collectively with their employer or employers. That is substantially, without refinement as to details, your principles of 7a.

Mr. HILL. Do you think they should have this free opportunity of bargaining and be entirely free from any influence of the employer as to what organization they might join, or as to whether they should join any organization?

Mr. HAWTHORNE. I think that they should be free from the influence, any outside influence of the organization, that they might join, which would include the employer. I think the man should be free to associate himself with his fellows for the purpose of collective bargaining, as his own free judgment might dictate.

Mr. HILL. Do you approve the provisions of section 7a in the N. I. R. A., as written into that act?

Mr. HAWTHORNE. I think in that matter, with reference particularly to the last point on which you touched, that the provisions in that were unduly restrictive as to interference by the employer. That provision, if it were to be inserted as to restrictions or interference by any other agencies, I mean, otherwise, speaking generally, I would subscribe to the principle of 7a.

Mr. HILL. Now, as I understand it, briefly stated, you have two main objections to this proposed legislation. One is the provision as to price fixing, and the other is as to the labor provisions in the proposed legislation.

Mr. HAWTHORNE. I think those are two major provisions of the bill, and I think they are both objectionable. That, of course, if we stopped there, would leave title II without being mentioned.

Mr. HILL. There would not be much left in title I, if you took that out, would there?

Mr. HAWTHORNE. That is what I am stating, making the assumption that there would not be much left in title II if you took that out. Mr. HILL. What is your attitude toward title II?

Mr. HAWTHORNE. I think it is entirely improper to undertake to tax the consumers of coal to make sound the bad investments that may have been made in the industry, and I cannot see that it can be applied in a practical way to attain the ends that are sought for it in the broad sense, that is to say, in some place at which there is an overdeveloped part of the property.

Mr. HILL. From your viewpoint, the tax on coal would be passed on to the consumer?

Mr. HAWTHORNE. Yes.

Mr. HILL. It would be a consumers' tax?

Mr. HAWTHORNE. Yes.

Mr. HILL. I think Mr. Mahan testified here that from his viewpoint the taking out of the market of the 10 percent, we will say, of marginal production, would so affect the operation of the 90 percent remaining in production as to give that 90 percent a longer working time or a greater working time, and really would be beneficial in a financial way to the 90 percent beyond, over and above or in excess of the tax that is imposed on the coal, and that that could very well be absorbed by the producers and still be ahead in the matter of price received.

Mr. HAWTHORNE. The tax that is imposed on the coal is a very real and a very definite item of cost, once it is imposed. I am inclined in my own view to think that Mr. Mahan's theory-and it is only a theory is simply something that he dreams might result, if title II were ideally applied. I have no delusions in expecting that it would be ideally applied.

Mr. HILL. That is all.

Mr. COOPER. Mr. Hawthorne, you made reference to certain parts of the bill with which you are in disagreement. What are your views as to section 13, page 37? I can read it to you, because it is short [reading]:

Every corporation engaged in mining bituminous coal which ships its coal in interstate commerce either directly or through a subsidiary or an agent, or which uses the mails or other means of communication in interstate commerce to dispose of such coal, shall be subject to, and as a prerequisite to its right to incorporate to engage in interstate transactions shall file with the Commission its acceptance of, the provisions of title I of this Act.