comply with certain delegated regulatory powers. If Congress has the constitutional power to regulate the bituminous coal industry as provided in this bill, it would be unnecessary to force operators to accept and agree to the regulatory prescriptions by the acceptance of a code or penalizing them for not voluntarily accepting such a code. The proponents of this bill must themselves be doubtful of its constitutionality if they resort to such a device to foist regulation on an industry by compelling them to accept regulation by a so-called "voluntary" act.

I wish to say that we are not following this up as to the legal power, but our counsel would be very glad, if it is desired, to submit a brief on it; but we will not take up time on that here.

Mr. HILL. Have you such a brief, Mr. Moses?

Mr. MOSES. We haven't it prepared, but they authorized me to say they would file it, if you desire.

Mr. HILL. We would be very glad to have your brief, if you get it in here in a reasonable time.

Mr. MOSES. It will be here tomorrow. As the quantity of the production and the operation of our captive mines is automatically regulated by the demands for our steel products and the requirements of our steel business, there can be no justifiable reason in law or in fact why we should be required to contribute to salvaging the commercial bituminous coal industry from the consequences of wasteful and uneconomic practices to which we are not a party and by which we are not affected and be severely penalized for our failure to do so.

This penalty, miscalled a tax, is not only unjustified but is onerous. The burden of this tax would be bad enough if it were the only tax provided for in the bill; but in addition there is imposed a further tax of up to 8.7 cents per ton on annual output (sec. 9 of title II); and, furthermore, subdivision B of section 4 of title I requires that members assenting to the code must pay the expenses of administering the code. The imposing of all of these taxes, penalties, and expenses on the bituminous coal industry, to say nothing of the captive mines, at the present time seems unreasonable when the present condition of the industry is considered. All of these taxes and expenses placed on captive-mine coal production of steel companies must obviously be absorbed eventually in the cost of steel products, as the industry is in no position to assume such additional burdens, and will thereby affect all of the users of steel products in the United States, to whom they will be passed and will, therefore, have the most far-reaching effect.

Under title II of the bill the proceeds of the tax therein provided for are to be used for payment into a fund for the rehabilitation and relocation of bituminous mine workers who have lost employment by reason of the withdrawal of coal properties from mining operations. The bill provides that the amount of money to be paid into said rehabilitation fund from time to time shall be equal to 25 percent of the face amount of the bonds issued under the bill. As the bill authorized the issuance of bonds up to face amount of $300,000,000, the rehabilitation fund is authorized in an amount of $75,000,000, if all the bonds are sold. That amount is unreasonable and far in excess of any expectant needs.

Section 1 of title II, in creating the so-called "National Bituminous Coal Reserve", states that it is for the purpose of conserving the Nation's bituminous coal resources; to provide the economical production of coal; to prevent and eliminate the evil of excessive and wasteful production; to assure further supplies of coal in time and war peace

of

*

As previously pointed out, none of these purposes are served by captive mines whose production is always, in times of peace as well as war, measured by the industrial demands for steel products.

The provisions respecting Bituminous Coal Code proposed by the bill to be prescribed for all owners and operators of bituminous coal properties are divided into three major subjects:

FIRST-ORGANIZATION AND PRODUCTION

These provisions, establishing, among other things, marketing agencies, have no relation to captive mines. As previously stated, the production and marketing of our captive coal involves no marketing in the common sense of the term because the purchaser and the consumer are for all practical purposes one from the point of view of their interests. Marketing agencies have no real functions to perform in any such case.

SECOND-MARKETING

There is absolutely no occasion for any regulation of marketing in respect of captive mines, as has been repeatedly said, captivemined coal is not marketed in the sense commercially understood and in the sense employed in the bill. Furthermore, the needs for price fixing stipulated by the bill is absolutely nonexistent, and to artificially impose or interject it would be establishing an entirely artificial price unrelated to fact. Here again we see that the captive mines have characteristics fundamentally different from commercially operated mines and that the two cannot be thrown into the same legislative category.

Most certainly captive-mined coal is in no way involved in the complex work of commercial price making and enforcement and therefore should not be taxed under any form of regulation for service not rendered and with which it is not involved. Prices respecting captive-mined coal are not a matter of public import and are adjusted solely as a matter of intercompany policy.

It is further submitted that any proper and adequate measure of price fixing or production allocation is impracticable, due to the wide variations in yearly demands, varying business conditions, multitudinous grades of coal, and widely separated markets therefor. Furthermore, to prescribe any standard equitably applicable to captive mines would require that such standards be predicated on the conditions and demands of the steel industry, not the bituminouscoal industry, so that two different standards would have to be made if any consideration is to be given to different and uncomparable business conditions. As the bill is made applicable to all captive mines, similar differentiation would have to be made respecting captive mines owned by the railroads, public utilities, chemical, and other industrial enterprises. In other words, you would have a com

plicated set of standards which would probably so impinge upon each other as to make all such standards impracticable to effectuate their intended objective.

THIRD- -LABOR RELATIONS

The wages, working hours, and labor conditions of the employees of the captive mines are presently the same as at the commercially operated mines. Captive mine owners were not subject to the bituminous coal code but had entered into a separate agreement with the President of the United States governing hours, wages, and working conditions. Never in the history of the operation of our captive mines have our captive-mine employees been paid less, and most of the time have been paid even more than, the prevailing rate in the bituminous-coal industry in the district in which they operate, so that no instance can be shown of labor chiseling in the operation of our captive mines and, therefore, no legislation has been or is necessary to assure the payment of prevailing rates of wages in respect of our captive mines.

The principle of collective bargaining to be prescribed for the bituminous-coal industry should be the same as prescribed for all industries. No logical reason can be advanced to support different standards or principles for collective bargaining in different industries.

Unless the principles of collective bargaining are unified in all industry, industrial labor conditions will be thrown into chaos and justice to employees and the public defeated.

The provisions in paragraph (g) of part III of section 4, that wage agreements negotiated by collective bargaining in any district between representatives of producers of more than two-thirds of its annual tonnage production and representatives of the majority of mine workers therein belonging to a recognized national association of mine workers shall be accepted as the minimum wages in such district is, if constitutional, a deprivation of all rights of a great body of employers and employees to negotiate respecting terms of employment through representatives of their own choosing. It denies to a minority of employers in point of view of their annual total production the right to negotiate and imposes upon them the will of the two-thirds of employers in tonnage production. Every employee is bound, irrespective of his own rights or desires, by any agreement concluded by a majority of those employees belonging to a recognized national association of mine workers, even though such association should only have a minority of employees in the industry. Under this provision no employee can have the right to individually or collectively bargain or protect his own interests in any subject relating to his employment unless he joins a national association of mine workers. This is clearly designed to compel all employees to join such a national association.

It prevents the practical use of employee representation plans, or any other method of collective bargaining chosen by the employees themselves regardless as to whether or not such chosen method is an effective means of collective bargaining. If one national association of mine workers represents a majority of employees, the bill then excludes any other labor organization, national or otherwise, having

less than a majority of the employees as its members, any right to represent employees who have preferred membership therein.

In view of the actual situation presently existing in the industry, known to all, the purpose is obvious to force all employees in the industry by legislative fiat into one well-known labor organization, regardless of and in spite of the wishes of the employees themselves, and to legislatively superimpose that organization as the sole and exclusive bargaining agency.

This proposal far transcends the efforts to prescribe by legislation or ruling the rule that representatives chosen by a majority of employees shall be the exclusive bargaining agency for all, regardless of the constitutionality or legality thereof. To impose union representation, in fact to even prescribe the organization or the particular kind of organization which must be chosen, is the very denial of any semblance of the right of collective bargaining through representatives of the employees' own choosing. To require negotiation of the terms and conditions of employment through any representation or agency not voluntarily chosen by the employee himself is a denial of freedom of contract.

Under the provisions of this act, it is very evident that captivetonnage coal mines, such as those owned and operated by the United States Steel Corporation, have never contributed to the lowering of wages in coal mines, but have consistently paid the going wage in any district in which they operated, giving to their labor around coal mines first-class housing, facilities for educational purposes. hospitalization, and safety practices, and first-class equipment with which to work, together with many other advantages to the workmen that were not enjoyed by the average employee in the coal industry.

As for the conservation of the resources of coal, we proudly point to the record of as high percent of recovery of coal per acre mined over as in any coal-producing company in the United States. The loss through poor methods of mining referred to is negligible at all of our properties.

We do not flood the market with coal, nor send distress coal to the market (which has a tendency to break prices), as we do not sell any coal on the open market. The coal mines of the Steel Corporation receive orders for the requirements of the consuming companies; these orders are usually assembled on Friday morning of every week, and they are transmitted to the mines on Saturday morning, and a working schedule inaugurated for the next week that will produce the actual requirements of the mills. By so doing, we only produce our requirements in weekly periods.

The safety practices of our companies, I think, are outstanding. We give to the industrial world this slogan: "Safety the first consideration." We have practiced it religiously in our mining operations. Statistics, I am sure, will prove to you that our record in accidents in the production of coal will compare favorably with any other record in accident prevention in the coal industry in the world. Mr. HILL. Thank you very much, Mr. Moses, for your statement, and your brief on the law points will be received by the committee. Mr. MOSES. Mr. Chairman, we will file with you a complete brief of our statement, corrected.

(The corrected statement and brief are on file with the committee.)

Mr. R. E. DESVERNINE. Mr. Chairman, may I just present for the record the statement of the Bethlehem Steel Co., Jones & Laughlin, and Youngstown Sheet & Tube Co., on their captive mine situation? Mr. HILL. It may be admitted.

(The statements referred to follow :)

BRIEF FILED BY CHARLES R. HOLTON, VICE PRESIDENT OF BETHLEHEM MINES CORPORATION, BETHLEHEM, PA.

Hon. ROBERT L. DOUGHTON,

Chairman Committee on Ways and Means,

JUNE 20, 1935.

House of Representatives, Washington, D. C.

DEAR MR. CHAIRMAN: I wish to take this opportunity on behalf of Bethlehem Steel Corporation to register its opposition to the bill, H. R. 8479, now under consideration by your committee, insofar as it affects the coal mines operated by Bethlehem Mines Corporation, a subsidiary of Bethlehem Steel Corporation, from which the supply of coal for the steel mills of other Bethlehem subsidiaries is obtained.

Bethlehem Mines Corporation owns or leases and operates bituminous coal mines in Washington County, Pa., and Marion County, W. Va., which produce high-volatile coal, and other coal mines in Indiana and Cambria Counties, Pa., and Preston County, W. Va., which produce medium-volatile and low-volatile coal. We also have other high-volatile coal lands, chiefly in Kanawha County, W. Va., which have never been developed.

We do not produce any coal for sale, and we do not sell any coal, except a very small quantity to our employees at or near our mines for domestic use by them. With that minor exception, the coal produced by Bethlehem Mines Corporation is used by other Bethlehem subsidiaries.

The output of our mines during the 5 years 1930-34 was as follows:

Our average output for such 5 years was 3,701,307 net tons. In 1929 we produced from our mines 9,673,036 net tons.

We most heartily concur in the position taken before your committee by Mr. Moses on behalf of United States Steel Corporation that the bill now being considered by your committee should not be made to apply to the socalled "captive coal mines" of the steel industry; that is, the coal mines owned or leased by the members of the industry and from which they secure their supply of this important raw material for their own uses. I, therefore, shall not take up the time of your committee in attempting to cover the same ground as that covered by Mr. Moses. I believe, however, that it may be helpful if I emphasize some of the points made by him and bring out a few facts which were not touched upon by him.

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The purposes of the bill as expressed therein are To stabilize the bituminous-coal-mining industry *; to provide for cooperative marketing

*; to declare the production, distribution, and use of bituminous coal to be affected with a national public interest; to conserve the bituminous-coal resources of the United States", etc. For the reasons which Mr. Moses has well pointed out, those purposes do not have any application to us. As I have stated, our coal is mined for our own use in the manufacture of iron and steel. The operations of our mines are not a part of the bituminous-coal-mining industry, but rather an integral part of our iron and steel business.

As the members of your committee know, the raw materials that enter into the production of pig iron, which in turn is made into steel, are iron ore, coal -when it is converted into coke-and limestone. Bethlehem Steel Corporation owns indirectly through subsidiary or affiliated companies its iron-ore mines and the limestone quarries from which its subsidiaries secure their supplies of those two raw materials, as well as the coal that is used by them, as I have stated. Our purpose in acquiring those mines and quarries was, of course, that we might have a sufficient supply of those raw materials of the proper quality and as advantageously located as possible for use in our