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business. When one stops to consider the purposes for which such mines were acquired by us—and in that respect we do not believe that we in any way differ from other members of the steel industry—it becomes apparent that the purposes of the bill, as expressed therein and to which I have referred, cannot in any way be served by making the captive coal mines of the steel industry subject thereto, any more than the purposes of a similar bill relating to iron ores or limestone would be served by making subject to such similar bill the mines and quarries of the steel industry from which its members secure their supply of those products.
We mine only the coal which we need, just as we mine only the iron ores and quarry only the limestone that we need. As I see it, it would be little short of absurd for one to claim that legislation of any kind is necessary in order to conserve our supplies of iron ore and limestone. The demands of the markets for iron and steel in turn, of course, result in a demand upon our mines and quarries for iron ore, coal, and limestone. The quantities of raw materials mined or quarried therefrom depend only upon such demand.
During the years 1917 to 1920, inclusive, when the demand for steel was very heavy, we, as well as other manufacturers of pig iron and steel, found it quite difficult to procure sufficient coal of satisfactory quality to meet our needs and we decided that it was inexpedient and unsafe, with our huge invest. ments in blast furnaces, steel plants, and rolling mills, to depend upon the bituminous coal-mining industry for our supply of high-grade coals. Accordingly thereafter, as opportunities presented themselves, we made substan. tial investments in coal properties to provide not only for our then present requirements, but also for our requirements for a considerable period of time. We have followed the same policy with regard to iron ore and limestone which, with bituminous coal (the latter converted into coke) are, as I have said, the principal raw materials that enter into the manufacture of pig iron and steel.
Because of the fact that the quality of coal that is used in the manufacture of pig iron and steel must be better than that which may be used in the generation of steam and for other fuel purposes, it was necessary carefully to select our coal properties—and the same must be true of the coal properties owned by other members of the steel industry-to the end that the coal produced therefrom might have the most advantageous properties from the point of view of our industry. Most of the coals which go to the steel plants are used in the making of coke for the blast furnaces. In addition to having an ash content as low as possible, they must be reasonably free from sulphur and phosphorus. Besides different coals produce different qualities of coke and the efficient operation of our steel plants requires that we give most careful attention to the securing of definite fixed mixtures of coals in proper portions adapted to the specific use.
Moreover, in our case, at least, it has been necessary for us in selecting our supply of coal to secure it from mines which are so located with reference to the location of our steel plants that the coal produced therefrom shall be usable from the point of view of the cost of transportation of the coal from such mines to our plants. That was necessary because our coal supply for our steel plants is transported to them chiefly by rail. Coal being a bulky, heavy material, the freight charges when compared with the value of the coal itself are very large : in some cases the transportation cost per ton exceeds the market value of the coal at the mouth of the mine.
Furthermore, having a very large investment in coal properties, the coke ovens at our steel plants have been designed and built with a view to producing therein from the coals from our own properties a satisfactory quality of coke for use in our blast furnaces. It is a recognized fact that in the making of coke certain kinds of coal will expand and other kinds contract, more or less, according to the character of the coal; hence, in the designing and building of our coke ovens the kind and character of the coal that is used therein had to be kept in mind and the ovens made accordingly. In addition, our coke plants represent a very large investment; they cannot readily be altered to take care of changing coal mixtures; and they cannot be rebuilt without prohibitive cost.
In conclusion, I should like to leave with you the two thoughts that I have tried to emphasize, first, that the express purpose of the bill which you now have under consideration cannot in any way be served by making it apply to the captive coal mines of the steel industry; and, second, that such mines, which constitute important investments of the members of the industry, have been carefully selected with respect to their use in the industry, and that the use for
which they were selected should not be interfered with by any legislation; at
BETHLEHEM MINES CORPORATION,
PROTEST AND BRIEF OF THE JONES & LAUGHLIN STEEL CORPORATION AND ITS
SUBSIDIARIES, THE VESTA COAL CO. AND SHANNOPIN Coal Co.
To the Subcommittee on Internal Revenue Taxation of the Ways and Means
Committee of the House: The Jones & Laughlin Steel Corporation, on its own behalf and on behalf of its wholly owned subsidiaries, the Vesta Coal Co. and Shannopin Coal Co., owners and operators of captive coal mines, respectfully submits the following facts and arguments in opposition to House bill 8479:
1. The Vesta Coal Co. is a corporation of the State of Pennsylvania and is the owner of a contiguous tract of approximately 23,000 acres of bituminous coal situate in the county of Washington, in the State of Pennsylvania, and owns no other coal or coal lands.
2. Shannopin Coal Co., likewise, is a corporation of the State of Pennsylvania and is the owner of a contiguous tract of approximately 13,000 acres of bituminous coal situate in the county of Greene, State of Pennsylvania, and owns no other coal or coal lands.
3. The Jones & Laughlin Steel Corporation, likewise a corporation of the State of Pennsylvania, is the fourth largest producer of steel and steel products in the United States and has steel plants located on the Monongahela River in the city of Pittsburgh, Pa., and at Aliquippa, on the Ohio River, in the county of Beaver, Pa., and in the conduct of its manufacturing business in normal times employs approximately 20,000 men. The said Jones & Laughlin Steel Corporation is the owner of the entire capital stock of the Vesta Coal Co. and of Shannopin Coal Co., and the ownership, mining, and transportation of said coal by its subsidiaries is an integral part and a necessary adjunct to the manufacturing business of the parent company, the Jones & Laughlin Steel Corporation. The entire output of all the mines of both of said subsidiary companies is consumed in the manufacturing operations of the Jones & Laughlin Steel Corporation-no coal is sold except to employees of said subsidiaries.
4. The said The Vesta Coal Co. has now and for a long period of time has had in operation upon its properties, as aforesaid, three mines, and employs from 3,000 to 3,500 men. The annual production of coal from said mines for the years 1929 to 1934, inclusive, is as follows:
4,088, 832 1830
3, 689, 768 1931
2, 162, 394 1932
1, 249, 927 1933
1, 527, 400 1934.
2, 256, 322 5. The said Shannopin Coal Co. had for some years past, in operation upon its properties as aforesaid, two mines, and employed approximately 500 men. The mines of said Shannopin Coal Co. have not operated since August 31, 1934, because its production of coal was not required for the manufacturing business of the Jones & Laughlin Steel Corporation. The annual production from said mines for the years 1929 to 1934, inclusive, was as follows:
643, 335 1330
570, 834 1931
472, 696 1932
289, 355 1933.
279, 812 1934..
211, 190 6. All the mines of said the Vesta Coal Co. and said Shannopin Coal Co. are what are known as “ captive” mines; that is, mines whose entire production is used and consumed by the owner as an integral and necessary part of its business of manufacturing. All the mines of said the Vesta Coal Co. and of said Shannopin Coal Co. are and since September 30, 1933, have been operated under the terms and provisions, covering hours, wages, and working conditions, of a certain agreement entered into with the President of the United States by all steel companies owning and operating “ captive" coal mines; and the said the Vesta Coal Co. and said Shannopin Coal Co., at all times since the signing of said agreement, have and are now faithfully complying with said agreement.
7. The United States Steel Corporation, on behalf of its subsidiaries owning and operating captive coal mines, has submitted and filed with the House committee a brief setting out at length and in detail the grounds and reasons of protest of captive coal mines against the enactment of House bill 8479. The undersigned have read said brief and studied it carefully. The statements of fact therein contained and the grounds of protest therein set forth against the enactment of said bill apply with equal force and effect to the captive mines of the Vesta Coal Co, and Shannopin Coal Co., subsidiaries of the Jones & Laughlin Steel Corporation, and with the consent of the United States Steel Corporation the undersigned hereby adopt said brief as their own.
The undersigned respectfully ask your honorable committee that said brief so filed, except as to figures, be taken and considered as part of the undersigned's protest against the enactment of said bill.
Supplementing said brief so filed, the undersigned desire to all the following statement, which applies to the captive mines of the undersigned :
All the coal lands of the Vesta Coal Co. and of Shannopin Coal Co, are situate in the State of Pennsylvania; their mining operations are all in the State of Pennsylvania; the coal is transported to the plants of the Jones & Laughlin Steel Corporation in the State of Pennsylvania, where it is all consumed-in all its phases a purely intrastate operation. Respectfully submitted.
JONES & LAUGHLIN STEEL CORPORATION,
THE VESTA COAL Co.,
SHANNOPIN COAL Co.,
By M. COUGLOCH, President. JUNE 21, 1935.
BRIEF FILED BY C. G. ROBINSON, REPRESENTING THE YOUNGSTOWN SHEET &
To the subcommittee of Committee on Ways and Means:
The Youngstown Sheet & Tube Co. desires to enter its opposition to H. R. 8479 and respectfully submits :
The Youngstown Sheet & Tube Co., on its own behalf and on behalf of its subsidiaries, the Buckeye Coal Co. and the Youngstown Mines Corporation, owners and operators of captive coal mines, respectfully submits that the bill, instead of accomplishing what is claimed to be its purpose, will, if passed, result in serious difficulties rather than in bringing about peace in the coal industry.
The bill provides, in effect, for Government price fixing as against price fixing by industry. It leaves the allocation provisions to be built up by the Coal Commission, and the plan that may be agreed upon may not prove at all fair to the consuming public.
It is particularly objectionable to include captive coal mines in this bill. It is submitted that the production of coal from captive coal mines is not related to the production from the commercial mines. Production at captive coal mines of steel companies depends entirely upon the marketing of the company's steel products. Its production of coal has to be based on its steel operations and rise and fall accordingly, and is an essential and integrated and inseparable part thereof. This operation is entirely private and does not affect commercial coal sales. It is not reasonable to regulate the consumption of one's private property for private purposes.
Many provisions of the bill would seem to be unconstitutional and it has been so admitted by some of its proponents. If unconstitutional, the coal industry would return to its former state.
The bill creates a monopoly and the tendency will be to still further increase the price of coal, a necessity, to consumers.
The provisions for four partisan members on the Commission representing producers and United Mine Workers, respectively, is, it is believed, indefensible, and the provision for the United Mine Workers representative on boards in districts in which that organization may have a minority of employees should not be allowed. The bill is an obvious effort to build up that single special interest. That special interest is not restrained from using coercion or undue influence and no provision is made to require it to assume financial or legal responsibility for its acts.
The purchase of marginal coal mines and lands will withdraw valuable properties from State taxation. This loss will have to be met by added State taxes. It is believed that the Government would have to continue to purchase coal properties, and that the inevitable, and perhaps intended, result would be nationalization of the industry.
It is firmly believed that no good will come from the enactment of the bill, but on the contrary much harm, and it is because of this belief, backed up by long experience in the industry, that it is so strongly opposed. If coal reserves should be protected, let it be done in an orderly and constitutional manner, after due study, separated from any effort to nationalize a great industry, confiscate private rights, legislate in favor of any irresponsible special group, and raise prices unbearably to the consuming public.
THE YOUNGSTOWN SHEET & TUBE Co.,
By C. G. ROBINSON, Vice President.
STATEMENT OF JAMES WALTER CARTER, REPRESENTING THE
COMMITTEE OF SMOKELESS COAL OPERATORS OF VIRGINIA AND WEST VIRGINIA
Mr. CARTER. I am James Walter Carter. My residence is Stevenson, Md. I am the president of the Carter Coal Co., which company operates mines in Virginia and southern West Virginia. I appear before you on behalf of my company and also on behalf of a committee of coal operators organized to oppose the enactment of the bill H. R. 8479 now being considered by you.
Mr. Hill. Of whom does this committee consist, that you represent here in opposition to the bill?
Mr. CARTER. I was appointed by a committee of operators in the so-called “smokeless fields” of Virginia and West Virginia. I am also a member of the committee opposing the Guffey bisi.
Mr. Hill. What tonnage does this organization represent?
Mr. CARTER. Mr. Hill, Mr. Hawthorne, who has preceded me as a witness, compiled from operators some information as to their position.
Mr. Hill. Do you represent the same committee that Mr. Hawthorne represents?
Mr. CARTER. I am trying to answer your question somewhat more completely. That tabulation is a recent one. The opposition of the group of which I was originally a member has grown substantially and is more or less merged with the large group opposing the enactment of this bill.
This bill is substantially similar in scope and purposes to a bill, S. 2481, now pending in the United States Senate, namely the socalled “ Guffey coal monopoly bill.” When a subcommittee of the Senate Interstate Commerce Committee held hearings on the original Guffey coal monopoly bill, I appeared before them and opposed the with me,
bill. My testimony is, of course, a matter of record, and is available to you, and while I believe that much of my testimony before that Senate subcommittee is pertinent here, I shall endeavor to avoid mere repetition, in order that I may conserve the time of your committee.
I hope, however, that I may, while appearing before your committee, contribute some information in addition to that which I attempted to give to the Senate subcommittee, because there are certain differences both in substance and form between the original coal monopoly bill as it was at the time of my testimony in February and the present Snyder coal monopoly bill. It may be that in discussing the Snyder coal monopoly bill I shall, perhaps inadvertently, perhaps for emphasis, repeat some of the things concerning which I have previously testified, but if I do I hope you will be patient
The Snyder coal monopoly bill must seem a startling proposal to any thoughtful American
Mr. Hill. Where do you get the name “Snyder coal monopoly bill?
Mr. CARTER. It does establish effectively a monopoly.
Mr. CARTER. That is my own designation and the designation of many others.
Mr. Hill. All right.
Mr. CARTER. Reared in the traditions of this Nation, but probably only some of us who have some knowledge of the relationships existing in the bituminous-coal industry can fully grasp the implications in this scheme for legislation.
I should like to file at this time, as an exhibit to my testimony, two news items from the New York Times of Sunday, June 16. I could file with the committee other, or additional press statements to illustrate the matter I desire to bring to your attenion, but I believe that the articles referred to will illustrate the point as well as would a greater number.
I now read certain excerpts from the article by Mr. Malcolm Ross appearing in the Sunday New York Times under the caption “ Coal Truce Allows Congress Time to Act”, as follows [reading]:
The last-minute postponement of the bituminous coal strike, which was scheduled to begin on Sunday night, represents another move by which the United Mine Workers hope to rescue the Guffey coal stabilization bill from the Washington legislative whirlpool. Three weeks ago it seemed a nea rer reality, this bill to grant the coal miners the gains they made under their N. R. A. code. Then the Supreme Court threw Congress into a confusion in which nothing could be a certainty.
Congress was not in a mood to pass the Guffey bill on April 1 when the code wage agreements lapsed. The truce made at that time kept the status quo for 10 weeks more, in which time either a new N. R. A. code or the Guffey bill might have been enacted. When the former hope went glimmering, the union issued, on June 1, the strike order designed to service notice that the Guffey bill must be had.
I now read certain excerpts from the article by Mr. William T. Martin, also appearing in the Sunday New York Times, under the caption “Mine Owners Like Bill ”, as follows [reading]:
By now it is generally understood that the Guffey bill largely came from the United Mine Workers and the western Pennsylvania operators were the first to get behind it.