Mr. FINDLAY. I do not think so. I think, for a number of years, coal can get approximately cost, it is about all it can stand with the competing fuels.

Mr. JENKINS. I have not observed in any of these hearings that there is any special controversy at this time between the operators and the miners in the division of what benefits will come out of this bill.

Is there any?

Mr. FINDLAY. There is not between the majority of the operators, who are proponents of the bill, along with the miners. I think there is some possible different feeling on the part of some of the opponents. Mr. JENKINS. Would it not be a fair statement to say that never in the history of the coal industry has there been such a fine feeling between the operators and the miners, in Ohio, at least, as there is today?

Mr. FINDLAY. I think that is correct. I think it is correct generally; even in the southern sections I think that is correct.

Mr. JENKINS. Is not the trouble that you have in this whole set-up due to the fact that in some locations heretofore some operators have been able to get cheaper labor, and that it might be that if this thing goes to pieces, they still will be able to get some of that cheap labor?

Mr. FINDLAY. Mr. Jenkins, I presume we have our share of human selfishness among the coal operators as well as any other industry. It is a fact that there are some rather substantial interests in the industry that I do not think are interested in having any regulation. I think they want to be free to go out and secure all the business they can and resort to ruthless competition. Those are in the minority. There are a few of them. The majority of the coal operators, I think, want stabilization in the industry.

Mr. JENKINS. Is this a fair statement to make, that as far as the general feeling among those interested in the coal industry goes, there is no desire at this time in this set-up to encourage any further reduction of wages?

Mr. FINDLAY. No, sir; there is not.

Mr. JENKINS. I think I asked Mr. Francis some questions upon which I base this: My basic questioning was on the fact that in Ohio the operators pay the miners 60 cents a ton for loading the coal. Mr. FINDLAY. I have just forgotten the detailed scale, but that is approximately right, I think.

Mr. JENKINS. Do you know whether or not there is any difference in that scale of wages paid in Ohio and that which is paid in Mr. Francis' territory, with reference to the loading of coal, which is the principal item of cost?

Mr. FINDLAY. There is some difference. I have not the figures before me, Mr. Jenkins.

Mr. JENKINS. You cannot answer that?

Mr. FINDLAY. I cannot answer that accurately; no.

Mr. JENKINS. As I understand, this sheet you handed in for the record-it shows that in Ohio the cost of coal under the N. R. A. was $1.80, and the selling price was $1.86, showing a profit of 6 cents a ton?

Mr. FINDLAY. That is correct.

You will notice, down below, the total average for the whole area was only 3 cents profit.

Mr. JENKINS. You have used the same system of computation on the other fields that you used on Ohio?

Mr. FINDLAY. That is right.

Those are computations of the N. R. A. We did not make those. Those were made by the N. R. A.

Mr. JENKINS. To sum up your whole argument, it is to this effect: You think that if this bill is passed and adhered to, you will operate just as you intended to operate under the N. R. A.?

Mr. FINDLAY. Absolutely; and with the wages on the same basis there will be no increase in the cost of coal to the consumer.

I want to clear up one other matter while I am on that subject, if I may: Several witnesses have apparently been under the impression that each district would have to get the total average cost for the entire area or the average realization of the entire minimum-price area. That is not a fact.

They start out with that; and then, in the coordination, the ones that have lower costs are given the benefit of those lower costs. Those that are at a disadvantage on transportation have that feature taken into consideration; so that when all the prices are made, based on quality, transportation, and all the factors that are set up in the bill, the industry, as a whole, will get prices that will net them approximately the total cost of producing the coal in this minimumprice area.

I want to get that across to you, gentlemen, because I think there is a good bit of misunderstanding on the part of some of the witnesses as to it.

There is just one other matter that I want to discuss briefly:

A number of witnesses have suggested as the salvation of the coal industry the Appalachian sales plan. I would like to discuss that for just a few minutes:

The history of the Appalachian Coals is an interesting one. It was brought out at a time when the industry was in desperate straits and was groping for some relief.

Various methods were suggested and tried, and finally, the Appalachian plan was agreed upon, and the industry decided to try it out and put it through the courts.

These witnesses, in presenting this, I think, have set up a straw man and tried to make him look like a big, strong, healthy man. I am saying that as a friend of the Appalachian plan, because I do not think there is another man in the coal industry, aside from Mr. Francis himself, who worked harder to make the Appalachian plan work.

My own company were members of Appalachian Coals for a southwestern Virginia operation. I was head of a committee in Ohio that organized Northern Coals, Inc., which was the second one that was organized after the Appalachian decision.

The experience with those two organizations is this: For a few months they worked fairly well, and then this same pressure of overproduction capacity and price cutting became too great, and they commenced to break down. Appalachian was on the way out when the codes came along, so far as being an effective organization for controlling the price of coal.

The code came along and revived it. Along in the fall of last year, about the time the code commenced to break down, Appalachian Coals commenced to break down. Along early in the year most of the members of Appalachian Coals resigned, including the company of Mr. Francis, who was the father of the plan.

We withdrew, and pretty nearly every other company, aside from a few, withdrew.

Mr. VINSON. Why?

Mr. FINDLAY. There were a number of companies who withdrew originally because they were not satisfied with the operation of the plan. Other companies withdrew to protect their interests, because they did not want these people that had resigned to be out on the loose later on, and they resigned to protect their interests in the proposition. About the time the activity in connection with this Guffey-Snyder bill became acute, the Appalachian group made a desperate attempt to revive Appalachian Coals.

I want to call your attention to this, in connection with this diseussion, that back in 1922 Congress had the Davis-Kelly bill before it, which was somewhat similar to the legislation presented here. The industry came to Congress and the hearings on that bill are full of this asking Congress to give the industry a chance to run its own business.

This Appalachian plan had been suggested, and they wanted an opportunity to try that out in the courts and see if it worked.

Indeed, it has not worked. If these men who have come before you suggesting this will tell you what is in their hearts, they will tell you that it has not worked and it will not work.

Mr. VINSON. The same reason applies to the Appalachian Coals as applied to N. R. A., the question of enforcement or lack of enforcement? Mr. FINDLAY. Yes, sir.

Mr. VINSON. Lack of power to enforce.

Mr. FINDLAY. Here, in their reorganization, for instance, they have submitted a new contract to their members. We have had one submitted to us as former members.

The understanding is that they must get 85 percent of the production in each district. That is not 85 percent of the total in the eight districts in Appalachian, but 85 percent in each district. They had only about 73 percent of the total in the original Appalachian. The other 27 or 28 percent practically set the market for those that were in Appalachian.

With that experience, they suggest a contract now which reads as follows:

The selling agent agrees, in the sale of coal of each producer represented by it, to make prices to meet, or to permit its subagents to meet, competition from producers for whom the selling agent or subagent does not sell, whether such producers are located in the Appalachian districts included in its sales contracts or in other competing districts.

I do not know whether you realize just what that means. That means that their members are authorized to go out and sell coal at whatever price any member outside the organization names, or any coal producer over in Pennsylvania or in Ohio or some place else in West Virginia names. There is nothing of a stabilizing nature in that kind of a set-up.

Mr. VINSON. Mr. Francis agreed to that statement. Was not that language read to him?

Mr. FINDLAY. He said that was in the contract. I am reading it right from the contract.

Mr. VINSON. He agreed that it was their function and their purpose to sell the coal in competition with coal produced by those outside the organization.

Mr. FINDLAY. It may be their duty, Mr. Vinson, but that means that the people outside the organization are going to fix the prices for the people in the organization.

Mr. VINSON. I do not say anything about that; I am just saying that Mr. Francis admitted that they would do that, that they would have to meet the competition of those outside.

Mr. FINDLAY. I think that that is correct. Then they go on in the same paragraph to provide [reading]:

To further assure equal treatment to all producers in the competitive markets, it is further understood and agreed that if the subagent or subagents of any producer and the selling agent are unable to sell sufficient coal toallow such producer to run within 90 percent of the average running time for the current calendar year of all producers represented by the selling agent, for a period of more than 45 days, such producer shall have the right to request such adjustment of his price or prices as may be necessary to sell a sufficient quantity of producer's coal to bring its fair running time up to the average running time of all producers for the current calendar year

And so on. Most of these purchasing agents are pretty bright men. They are going to know each month which fellows are behind here, and which ones are going to be permitted to sell below the established price.

Those are the ones from whom they are going to buy their coal. That is going to set the pace for contracts which we, as members, may have made prior at higher prices. Those contract customers are not going to pay us a higher price when other buyers can buy at a lower price.

So, with that kind of a provision, if that is all they have to offer in the way of an Appalachian Coals set-up, it is not going to do this coal industry any good.

You just have to have the supervision of some governmental agency that is going to tell this industry, to a greater or lesser degree, what they have to do. We want it done legally. Our attorneys tell us that this bill does do it legally.

Of course, there seems to be a difference of opinion in regard to that. I want to present just one more amendment, Mr. Chairman. There was a correction in one of the districts upon which our committee and the United Mine Workers have agreed, that we would like to present for the record, for a change in that district. Mr. VINSON. Read the amendment, please.

Mr. FINDLAY. Page 50, under heading "Southern No. 1", lines 20, 21, and 22, change to read:

Tazewell County, that portion served by the Dry Fork Branch to Cedar Bluff and from Blue Stone Junction to Bossevain on the Norfolk & Western Railway, and the Jewell Ridge Mines.

Lines 23 and 24, change to read:

Buchanan County, that portion on the headwaters of Dismal Creek east of Lynn Camp Creek, a tributary to Dismal Creek.

Page 51, under heading "Southern No. 2," lines 21, 22, and 23, change to read:

Buchanan County, except that portion on the headwaters of Dismal Creek east of Lynn Camp Creek, a tributary to Dismal Creek.

Page 52, lines 1, 2, 3, and 4, change to read:

Tazewell County, except that portion served by the Dry Fork Branch to Cedar Bluff of the Norfolk & Western Railway, and from Blue Stone Junction to Bossevain on the Norfolk & Western Railway, and the Jewell Ridge Mines.

I personally do not know anything about the details of this. I understand, however, that it is to correct a mistake in the original set-up whereby there were some high-volatile mines in a low-volatile district, or vice versa, I do not know which.

Mr. VINSON. Congressman Flannagan, a Representative from that district, spoke to me about some sort of an error that had crept into the language. I just wondered if that had been submitted to him.

Mr. FINDLAY. I think that is supposed to make that change. I understand Senator Byrd faced the same question. This was worked out to try to change that situation; to correct it.

This has been checked by a committee of two operators from that field down there, who were asked to check into it and check it along with the miners, to see if it was all right, and they assure me it is. Mr. VINSON. I would like to have someone present that to Mr. Flannagan and have his views in regard to it.

Mr. FINDLAY. That is entirely satisfactory.

Mr. VINSON. To save us that effort.

Mr. HILL. Thank you, Mr. Findlay.

(Further amendments suggested by Mr. Findlay follow:)

SUGGESTED AMENDMENTS

Page 11, line 9, strike "mathematically possible" and insert "may be"; lines 9 and 10, strike ", and not less than,”.

Page 15, line 8, strike "substantially" and insert "unduly".

Page 15, line 15, strike "as nearly as possible" and insert ", and be not less than,

Page 17, lines 3 to 14, inclusive, strike the first two paragraphs of subsection (e) and substitute:

"(e) Subject to the exceptions provided in section 13 of this title, no coal shall be sold or delivered at a price below the minimum or above the maximum therefor approved or established by the Commission, and the sale or delivery of coal at a price below such minimum or above such maximum shall constitute a violation of the code.

'Subject to the exceptions provided in section 13 of this title, a contract for the sale of coal at a price below the minimum or above the maximum therefor approved or established by the Commission at the time of the making of the contract shall constitute a violation of the code, and such contract shall be invalid and unenforceable."

Mr. HILL. Hon. Jennings Randolph, a Representative in Congress from the State of West Virginia.

STATEMENT OF HON. JENNINGS RANDOLPH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. RANDOLPH. Mr. Chairman and members of the subcommittee, I have been intensely interested in listening to Mr. Findlay and his discussion related to the probable increase in wages if this legislation for stabilization of the coal industry in enacted into law.

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