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to promote the general welfare that the child labor tax case can have no reasonable application to it.
The earliest resort to the taxing power was in the second act adopted by Congress in 1789 providing for customs duties. Whatever political theory may be held with regard to this form of taxation, the legal view is that it can be levied not merely to provide revenue but to promote the growth of industry and employment of labor. Hampton v. United States (276 U. S. 394).
The Cotton and Tobacco Acts regulate production by allocation through discriminatory taxes.
The drawback on the tax by those complying with prescribed regulations, is a device of taxation used in the first Customs Act and found in the present Customs Act. The merchant marine drawback (or discount) is not different in nature from the drawback provided in the bill.
The drawback, or difference in the taxes paid by producers operating under the code provided in the bill, and those refusing to be bound by the same, can form no basis for legal objection. Any method of regulation by taxes involves a discrimination. This was true in the oleomargarine case. In the Head Money case (Edye v. Robertson (112 U. S. 580)), the court said in the constitutional requirement of uniformity:
“The uniformity here prescribed has reference to the various localities in which the tax is intended to operate.”
Credits on taxes allowed for certain situations are familiar. The credit device to promote a public policy underlies the proposed unemployment-insurance plan. It operates under the Federal Inheritance Tax Act which was sustained in Florida v. Mellon (273, U. S. 12). The power of taxation (unless constitutionally restrained of any government carries the power of exemption, both being subject to the rule of public purpose.
That the bituminous coal mining industry is affected with a national public interest and can be so declared and regulated by Congress, seems obvious. In Hebbia v. New York (291 U. S. 502), the court speaking of a State statute regulating milk prices said:
"The statement that one has dedicated his property to a public use is, therefore, only another way of saying that if one embarks in a business which public interest demands shall be regulated, he must know that regulation may ensue.
The phrase, affected with a public interest,' can, in the nature of things, mean no more than that all industry, for adequate reasons, is subject to control for the public good.
If the law-making body, within its sphere of government, concluded that the conditions or practices in an industry make unrestrained competition an inadequate safeguard of the public interest, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulations adopted fix prices reasonably deemed by the legislature to be fair to those engaged in the industry or to the consuming public.'
That certain industries, though privately conducted, may become affected with a national public interest seems inescapable. In Board of Trade v. Olsen (262 U. S. 1), the act of Congress had declared operations on grain exchanges (which the Supreme Court had previously held to be matters of local or State regulation) were impressed with a national public interest, and the Supreme Court respected this declaration. It is plain that the decision in the Nebbia case by implication recognizes that there may be a national public interest in all business, trade, or industry.
UNDER THE INTERSTATE COMMERCE CLAUSE
The power of Congress over interstate commerce is complete and supreme. While the State has the reserved power to regulate commerce or business within the State, yet, if the exercise of the Federal power, to be effective, requires control of transactions intrastate in nature, that control can be exercised by Congress otherwise the supreme power of Congress would be lost. As early as Gibbon v. Ogden (9 Wheat, 197, p. 203), speaking of this reach of coligressional power as affecting health laws, inspection laws, quarantine laws, and the like, primarily under the jurisdiction of the State, the Court said by Chief Justice Marshall:
“They (such laws) are upon the subject before it became an article of foreign commerce, or of commerce between the States and prepared it for that purpose.
“No direct general power over these objects is given to Congress; and consequently they remain subject to State legislation. If the legislative power of the Union can reach them, it must be for national purposes.
It is obvious that the government of the Union in the exercise of its expressed power, that for example, of regulating commerce with foreign nations and among the States, may use means that may also be employed by a State in the exercise of its acknowledged powers; that, for example of regulating commerce within the
In the Minnesota rate case (230 U. S. 398); and in the Shreveport case (Houston & Texas Ry. v. United States (234 U. S. 342)), it was held that authority over interstate commerce might draw in its train the regulation of intrastate com
Also Teamsters Union v. United States (291 U. S. 293). This rule is not confined to domestic commerce, but extends to all domestic or intrastate “transactions." Under the Schechter decision the only question is, do such transactions directly affect interstate commerce in coal.
In Hill v. Wallace (259 U. S. 44), the Supreme Court held the Futures Trading Act to be unconstitutional as an attempt to regulate memberhsip in and dealing on grain exchanges, on the declared ground that these were not transactions in interstate commerce and were subject only to regulations by the State. Thereafter the Grain Futures Act was passed by Congress in which it declared that all such transactions were affected with a national public interest and if unregulated would tend to obstruct and burden interstate commerce. In the Hill case the Court has said:
"It follows that sales for future delivery on the board of trade are not, in and of themselves, interstate commerce. They cannot come within the regulatory power of Congress as such, unless they are regarded by Congress, from the evidence before it, as directly interfering with interstate commerce so as to be an obstruction or burden thereon."
In the later Olsen case (262 U. S. 1) the Court said:
“By reason and authority, therefore, in determining the validity of this act we are prevented from questioning the conclusion of Congress that manipulation of the market for futures on the Chicago Board of Trade may, and from time to time does, directly burden and obstruct commerce between the States in grain, and that it recurs and is a constantly possible danger. For this reason, Congress has the power to provide the appropriate means adopted in this act by which this abuse may be restrained and avoided.”
In the Olsen case the Supreme Court said, “The question of prices dominate trade between the States.' In the case of Appalachian Coal (288 U. S. 344), the Court recognized that the disorders of the bituminous industry were due to disordered prices and trade practices and, as against the antitrust laws, permitted a combination which the lower court had held illegal. The philosophy of the decision is that a healthy commerce involves a healthy industry.
No approach to the ills of this industry can be made that does not require consideration of two factors: (1) the excess mining facilities with its overhanging surplus; and (2) that the labor cost of production is 65 percent of the production cost, with its inescapable bearing on prices and trade practices. The first is the cause of the reckless competition which for years, as the Court said in the Appalachian case, has made the soft coal market “a purchasers market.” The second factor above noted has resulted in shameless wage cutting to secure contracts.
Wage scales under collective bargaining are based on interstate competitive relations, and are so negotiated, for the objective must be to give each field its fair opportunity to enter the market with respect to labor costs. From the miners' point of view this simply means a fair chance for the workers in each field to have work. In the absence of a union and collective bargaining, the labor cost becomes the field in which competition operates ruthlessly, and tonnage contracts are secured by incessant wage cuts and other devices to sweat wages, such as the denial of check-weighmen, compulsory ding at company stores and lengthening of hours.
In the second Employers' Liability cases (223 U. S. 1 (p. 47)) the Court said of the commerce clause:
“To regulate, in the sense intended, is to foster, protect, control, and restrain, with appropriate regard for the welfare of those who are immediately concerned and of the public at large.”
In the case of Stafford v. Wallace (258 U. S. 495), the constitutionality of the Packers and Stockyards Act was involved. It provided Federal regulation of business done in the stockyards by commission men and dealers. Congress declared in the act that the business sought to be regulated is one affected by a public interest and that it so directly affected interstate commerce as to make its regulation necessary for the protection of such commerce. The Supreme Court said:
“It was for Congress to decide from its general information and from such special evidence as was brought before it, the nature of the evils actually presented or threatened, and to take such steps by legislation within its power as it deem proper to remedy them.
“The reasonable fear by Congress that such acts, usually lawful, and effecting only intrastate commerce when considered alone, will probably and more or less constantly, be used in conspiracies against interstate commerce, or constitute a direct and undue burden on it, expressed in this remedial legislation, serve the same purpose as the intent charged in the Swift indictment to bring acts of a similar character into the current of interstate commerce for Federal restraint. Whatever amounts to more or less constant practice, and threaten to obstruct or unduly to burden the freedom of interstate commerce, is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and meet it. This court will certainly not substitute its judgment for that of Congress in such matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent."
The impact of the unregulated domestic production both on the problem of conservation and of a healthful interstate commerce, is obvious. This is also true of the reaction of unfair and disparate wages on fair competition in the interstate markets, and of labor disputes on the flow of coal in interstate commerce. These labor disputes, though they did not interfere with the actual shipment of coal or its sale in other States, have been often the subject of injunctions and other suits under the Federal antitrust laws. And this judicial recognition of the direct and immediate relation between these industrial disputes and the interstate commerce in coal affords an additional promise for the labor provisions of the bill.
POWER OF CONGRESS EXERCISED OVER LABOR AT COAL MINES
In 1890 Congress enacted the Sherman antitrust laws under its authority with respect to interstate commerce. Under this act miners have been enjoined by Federal district courts in all the large coal fields east of the Mississippi-not for interfering with shipment or sales but for combining through strikes to interfere with production, that is, mining as such.
Finally, the case of Red Jacket Coal Co. et al. v. United Mine Workers came before the United States Circuit Court of Appeals for the Fourth Circuit (18 Fed. 2d 840). In that case the Miners' Union issued a call inviting the miners of West Virginia to join the strike prevailing in the union fields. Certain coal companies of West Virginia secured a permanent injunction in the district court against organizing activities of the union in pursuance of the strike. Jurisdiction was wholly based on the act of Congress referred to.
The circuit court of appeals considered the opinions holding that mining in itself was not interstate commerce, and then decided as follows:
“Interference with the production of these mines as contemplated by defendants would necessarily interfere with the interstate commerce in coal to a substantial degree. Moreover, it is perfectly clear that the purpose of defendants in interfering with production was to stop the shipment in interstate commerce. It was only as the coal entered into interstate commerce that it became a factor in the price and affected defendants in their negotiations with the union operators. And, in time of strike, it was only as it moved in interstate commerce that it relieved the coal scarcity and interfered with the strike."
The Supreme Court declined to review this decision on certiorari, and it became the authority for a general resort to the Federal district courts by operators seeking to enjoin strikes and protect their established labor relations with employes. In Pittsburgh Terminal Coal Co. v. United Mine Workers of America (22 Fed. (20) 557), the Court said:
“In the case vf the International Organization, United Mine Workers v. Red Jacket Coal Co., (18 Fed. (2nd) 830), the Circuit Court of Appeals of the Fourth Circuit, having before them facts similar to the facts recited in the bill of complaint in this case, held that the United States courts clearly had jurisdiction to restrain the interference of the United Mine Workers with the operation of coal mines, and held further that the interference with the production of the mines in question, as contemplated by the United Mine Workers, would necessarily interfere with interstate commerce in coal to a substantial degree."
Now the philosophy underlying these decisions is that Congress had by a law, as the courts interpreted its reach, denounced certain conduct or practices as directly affecting interstate commerce, though these practices in a general sense related only to the processes of mining and in a specific sense only to the labor relations involved in production.
Our point here is, that if Congress has, under the interstate Commerce clause, created a jurisdiction in the Federal courts to intervene between the Miners' Union and coal operators in the familiar economic struggle which has wages and conditions of employment as its admitted motivation, Congress may not be denied the right to further legislate upon the subject.
Can it be said that Congress has exhausted its power in the act which the courts say had brought the activities of the Miners' Union within their jurisdiction? If Congress may legislate at all with reference to the labor struggle at the mines, because of the impact that struggle has on commerce, it must have power to deal with the conditions which make that struggle inevitable. The suppression of organization, the denial of collective bargaining, the enforcement of yellow-dog contracts, the demand of miners for checkweighmen, the arbitrary hours and the constant paring of wages to keep up with the cut-throat competition, all these practices on the one hand and the recurring strikes upon the other, were the stigmata of a distempered commerce. In the Red Jacket case alone, 316 companies secured an injunction that insulated 40,000 miners from contract with the Union. Similar labor injunctions have been issued in other fields, and all on the promise that a power exerted by Congress in the antitrust acts covered labor relations at the mines since; while the miners thought a stoppage of production may result in better wages and working conditions, it also resulted in the restraint of commerce.
The ills of this industry came before the Supreme Court in Appalachian Coal v. United States (288 U. S. 344), decided shortly before the enactment of the National Industrial Recovery Act. A group of operators shipping a large tonnage to the principal markets of the country had adopted a scheme for agreed prices and trade practices, which the lower court enjoined under the Sherman Act. This judgment was reversed by the Supreme Court, which said:
"It is therefore necessary in this instance to consider the economic condition peculiar to the coal industry, the practices which have obtained, the nature of defendants' plan, the reason which led to its adoption, and the probable consequences of carrying out that plan in relation to market prices, and other matters affecting the public interest in interstate commerce in bituminous coal.
"In the graphic summary of the economic situation the Court found that ‘numerous producing companies have gone into bankruptcy or into the hands of receivers, many mines have been shut down, the number of days of operation have been curtailed, wages to labor have been substantially lessened, and the States in which coal-producing companies are located have found it increasingly difficult to collect taxes.'
“When industry is grievously hurt, when producing concerns fail, when unemployment mounts, and communities dependent upon profitable production are prostrated, the wells of commerce go dry.”
The Supreme Court was considering conditions that reached back of transportation-into the minnig industry itself. The Court plainly had in mind the conditions and practices that prevail in the mines which are the wells of commerce. The Court said:
“The industry was in distress. It suffered from overexpansion and from a relative decline through the growing use of substitute fuels. It was afflicted with injurious practices within itself-practices which demanded correction.”
Mr. Hill. I notice the next three witnesses here are Mr. Charles O'Neill, Mr. T. G. Essington, attorney, and Mr. John L. Steinbugler, attorney, who are designated as coal operators. I am wondering if it is necessary to have all of these witnesses appear, or shall one speak for the three and conserve a little time of the committee and the witnesses. Who can speak for them?
Mr. John L. Lewis. They are conferring now.
Mr. Hill. We will call Mr. O'Neill.
Mr. O'NEILL. Mr. Chairman, we would prefer in order to save the time of the committee to have one man speak for us. We would like to have Senator Essington appear on our behalf.
Mr. Hill. We are leaving that to you. Are you Mr. O'Neill?
Mr. Hill. You may come forward, Mr. O'Neill. We will hear your statement.
STATEMENT OF CHARLES O'NEILL, CHAIRMAN OF THE LEGISLA
TIVE COMMITTEE, NATIONAL CONFERENCE OF BITUMINOUS COAL PRODUCERS
Mr. O'NEILL. Mr. Chairman, we will expedite it, and I will simply introduce ourselves and then ask, Senator Essington to make our statement.
Mr. HILL. Very well.
Mr. O'NEILL. I appear here as chairman of the legislative committee of the National Conference of Bituminous Coal Producers. My name is Charles O'Neill, of New Rochelle, N. Y. I am vicepresident of Peale, Peacock, & Kerr, miners and shippers of bituminous coal, with mines located in Cambria, Clearfield, and Indiana Counties of Pennsylvania.
Mr. VINSON. What is this organization to which you first referred?
Mr. O'NEILL. This organization is an organization of bituminouscoal producers which was
called together by a group of us who believed that special legislation was necessary for the stabilization of the bituminous-coal industry.
Mr. VINSON. What is known as the “Shoreham conference"?
Mr. O'NEILL. We called ourselves the “National Conference of Bituminous Coal Producers."
lir. Vinson. But it has been referred to here in the hearings as the "Shoreham conference"?
Mr. O'NEILL. That is right.
Mr. Vinson. Are you in position to present for the consideration of the committee those persons who conferred, who were represented in the Shoreham conferences?
Mr. O'NEILL. I have here a list of 288 companies, which produced, in 1934, according to the registrations, 150,000,000 tons of bituminous coal. When Mr. Findlay appeared before your committee on the N. R. A. resolution, we had 175,000,000 tons, but three large companies in western Pennsylvania withdrew at the closing conference.
Mr. Vinson. Did you favor the 2-year extension of the N. R. A.?
Mr. O'NEILL. We favored the 2-year extension of the N. R. A. except as to bituminous coal.
Mr. VINSON. Then you did not favor it as affecting bituminous coal?
Mr. O'NEILL. That is right.
The production in the United States for 1934, was 358,000,000 tons, and 50,000,000 of that was wholly captive, or coal produced by their owners for their own use.
The Bureau of Mines advised me that about 20,000,000 tons in 1934 was produced by what are called “wagon” or “truck” mines