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Mr. FRANCIS. Congressman, I do not know whether that has anything to do with that clause or not.
Mr. TREADWAY. Would you consider it a fairly good argument for the
purchase by the Government of wide areas in Illinois, such as was testified here yesterday was expected to be done would you consider the fact that there is less demand for coal than there was previous to these other methods of heating and lighting being introduced, was the reason for the Government buying up those lands, and moving the people working in the mines to other areas of the country?
Mr. FRANCIS. No, I do not think that is a good argument for buying these lands.
Mr. TREADWAY. What is the argument, in your opinion? What argument is there for buying the lands?
Mr. Francis. The only argument for buying the lands, as I see it, is one of conservation, one of taking coal properties out of production, just like we have reduced cotton acreage and wheat acreage, and just like we have done when we have killed the pigs.
Mr. TREADWAY. Do you think those methods have been successful in reaching their objectives?
Mr. FRANCIS. I do not think, Congressman, that anything that limits the use of commodities in the hands of the people is sound, from the long-time standpoint.
Mr. TREADWAY. Then the examples we have had of these other reductions you were speaking of would not lead you to think that they had been sufficiently successful to warrant the Government now going into schemes to take the coal fields out of operation?
Mr. FRANCIS. I do not think the amount proposed to be expended is sufficient to take enough coal properties off the market to be successful, if it was sound policy. I think we will probably have to spend many times the $300,000,000.
Mr. VINSON. You have referred to the similarity, or the analogy, between taking coal lands out of production and the curtailment policy that has been in operation in connection with cotton, wheat, and the killing of pigs.
You have this distinctive factor in the removal of coal lands, and that is that those lands are to be the higher cost producing coal lands, whereas in the other fields to which you have referred, that element is not involved.
Mr. FRANCIS. That is true, Mr. Vinson, and I think that is the purpose. The law does not provide just what that shall be, whether it shall be the high cost or the low cost properties, or the undeveloped properties. But I will say this for that section of this bill, that I think if the Government is going to embark in buying up natural resources, their investment in coal lands, if widely made, would probably be a wiser investment than any of these other expenditures, because they would be buying something of real value that will grow with the ages.
But that does not help to meet the situation and relieve the problem of unemployment, as I see it today.
Mr. TREADWAY. Mr. Francis, I notice on the list of witnesses you are put down as being from Huntington, W. Va.
Mr. FRANCIS. That is true.
Mr. TREADWAY. Are you an operator, or are you representing miners? I did not hear what you told the reporter in that regard.
Mr. FRANCIS. I am president of the Island Creek Coal Co. and the Pond Creek Pocahontas Coal Co., and I represent the operators' committee as one of the witnesses against the bill.
Mr. TREADWAY. What is the tonnage of the mines with which you are connected?
Mr. FRANCIS. Our production last year was about 6,000,000 tons plus. We have a capacity of about 10,000,000 tons per annum.
Mr. TREADWAY. How many miners do those mines employ?
Mr. TREADWAY. What would be the effect, in your judgment, of the passage of this bill on your properties and on the 4,500 miners that you employ?
Mr. FRANCIS. I believe it would decrease our production, decrease our working time, increase our cost figures, and decrease the earnings of our men. That is why I am afraid of the passage of this bill.
Mr. TREADWAY. In other words, in your judgment, the bill would have absolutely opposite results from what it is intended to accomplish?
Mr. FRANCIS. I think from a practical standpoint that is what it would do to the mines in which I am interested.
Mr. TREADWAY. What percentage of the employees do you think would lose their positions by the passage of this act; that is, the employees in your area?
Mr. FRANCIS. Congressman Treadway, that would be an estimate. Immediately, the effect might be small, but we might have a gradual lessening of the use of coal, and a gradual shift in tonnage from mine to mine and from district to district, because we would have no control over it.
Mr. TREADWAY. Who would control it?
Mr. Francis. This commission to be set up here in Washington would control it. The control of our business
Mr. TREADWAY. Would be taken out of your hands?
Mr. FRANCIS. Would be taken out of our hands under this bill, as I see it. We would have very little to say, from a practical standpoint, as to the operation of our business.
Mr. TREADWAY. You could take your chances on somebody else's judgment, telling you what you could do?
Mr. Francis. That is true.
Mr. Francis. That is the way I look at it. As to this bill, while I am in favor of cooperative action within this industry, I think the different compulsory provisions of this bill would break down our industry to the point where we would not know and could not make any plans, or make any investments in new equipment, such as might be necessary.
Mr. TREADWAY. The proponents of this bill deny that there is any compulsion.
Mr. FRANCIS. I can read nothing in the bill except compulsion.
Mr. TREADWAY. You are asked to join a code voluntarily, as I understand the bill, and if you do not join it voluntarily, you are taxed 25 percent of the price of your coal.
Mr. FRANCIS. That is true.
Mr. TREADWAY. That, perhaps, is not compulsion, but you can draw your own inferences.
Mr. FRANCIS. In addition to that
Mr. Treadway. There is another feature bearing on the proposition as to whether or not it is voluntary. On page 37, section 13, there is a provision to the effect that if a person does not join the code he is denied the use of the mails or other methods of communication. Is that voluntary, do you think?
Mr. FRANCIS. I consider it compulsory. I think when you are denied the use of the mails and denied the right to do business in interstate commerce, that is compulsory.
Mr. TREADWAY. Just one other line of inquiry, because I should judge it would be difficult for you and me to get into much of an argument over this measure. I am only asking for information.
What is the market price of the coal at the mines today? What are your companies, and others like them, receiving for their product?
Mr. FRANCIS. Mr. Treadway, there are so many different kinds and sizes and qualities of coal that you cannot speak of it in any direct way, as to just what the price of coal is.
Mr. TREADWAY. Then just pass that question up.
Mr. FRANCIS. Coal is being sold for steam purposes as low as $1.25 a ton. It is being sold for other purposes, and also for steam purposes. of different qualities in different districts, for as high as $2.50 per ton,
Mr. TREADWAY. Twice as much?
Mr. FRANCIS. Yes, the B. t. u.; that is one of the things; and then there is the sulphur and ash.
Mr. TREADWAY. So really, it is a question of quality that is causing this variation in the price?
Mr. Francis. It is a question of quality, partially, and it is a question, partially, of the equipment used by the consumer.
Mr. TREADWAY. That is, what they need the coal for?
Mr. FRANCIS. What they need the coal for and what equipment they have installed, and how they approach the matter.
Mr. TREADWAY. Is there any coal from your area that is shipped into New England, or the northeastern area of our country?
Mr. FRANCIS. From the area
Mr. TREADWAY. You said something about Pocahontas coal. I have heard about Pocahontas coal, and I think I have seen it around New England.
Mr. FRANCIS. We ship millions of tons of this coal to New England from our area.
Mr. TREADWAY. Anticipating the passage of this measure, added to that $2.50, or, if you take an average, say, of about $2 per ton, the cost of transportation would be the same for one quality of coal as for another.
Mr. FRANCIS. There is no variation in that figure.
Mr. TREADWAY. What I am getting at is this: That $2 coal from the Pocahontas area would bring the cost to the consumer in New England to about how much? What would our industries have to pay for the $2 coal?
Mr. FRANCIS. You would have to pay the railroad transportation to tidewater, to Hampton Roads. Our coal goes by way of Hampton Roads from the Pocahontas field, and the cost is $2.25 a net ton. That would give you $4.25.
Mr. TREADWAY. That is without any profit to anybody?
Mr. FRANCIS. That is the transportation cost. And the new excess surcharge adds about 15 cents per ton, so really it is about $2.40 today.
Mr. TREADWAY. That is for transportation?
Mr. FRANCIS. Yes. Then you have the steamer rate, which is approximately 65 cents a ton alongside the dock. That gives you about $5 alongside the wharf. Then you have the lifting cost to get it out of the steamer, and the transpirtation cost inland, if it is not used alongside, to the various plants, whether by rail or direct.
So it would vary from about $5 a ton in the vessel alongside, up to, perhaps, $8 a ton, if it goes up into New Hampshire or Vermont.
Mr. TREADWAY. All right. With the cost ranging from $5 to $8 to the consumer in New England at the present-day prices, what in your judgment would be the added cost to the consumer in that area, were this bill in operation?
Mr. FRANCIS. Congressman Treadway, it is difficult to arrive at that, but we have two factors to be considered.
One is that most of these figures have been made as to the cost or selling price before the price in use under the codes, up to a few weeks ago.
Mr. TREADWAY. Those prices would continue to prevail with this bill in effect?
Mr. FRANCIS. In making the statement as to the condition today, those code prices for steam coals or industrial coals, and to a certain extent for domestic, household coals, were probably 40 cents a ton higher than the market.
Under this bill I think we would come back immediately as a minimum to those code prices and we would build on to them under this bill probably enough to add to those prices if we should grant the demands being made by the miners, a total of about a dollar a ton over the current selling price of coal.
Mr. TREADWAY. So that, comparing the current selling price with the probable price with this bill in operation, you would expect that the consumer would have to pay at least a dollar a ton more than he is now paying?
Mr. FRANCIS. I would.
Mr. TREADWAY. How many tons go into New England from your area, did you say?
Mr. FRANCIS. Through Hampton Roads to New England, there are sent approximately 15,000,000 tons per annum.
Mr. TREADWAY. That would be a $15,000,000 increase in cost for the consumption of that amount of coal in our area; is that correct, as nearly as you can estimate?
Mr. FRANCIS. Approximately. You also get coal in New England by rail, from Pennsylvania.
Mr. TREADWAY. Is not that mostly anthracite?
Mr. FRANCIS. No; I am talking about bituminous coal. You get a very substantial quantity of coal by rail coming from the central
Pennsylvania fields and the western fields and the Maryland fields, and the northern West Virginia fields. We do not ship practically any coal by rail to that territory, because our rail rate is something more than a dollar a ton in addition to the other rate.
Mr. TREADWAY. Do not your coal prices apply to all rail coal as well, so that in your competition for the business up there you have pretty nearly an equal price?
Mr. FRANCIS. Yes.
Mr. TREADWAY. You are considering the quantity rather the difference in figures?
Mr. FRANCIS. That is true.
Mr. FRANCIS. Approximately 20,000,000 tons of bituminous coal are used in the New England States.
Mr. TREADWAY. Of all types?
Mr. FRANCIS. Yes. It varies greatly from year to year on your industrial demand, and also depends on how much oil your plants use as a substitute for coal.
In the past few years a good many of your plants have gone to oil. They switch back, depending upon the delivery cost of the oil.
Mr. TREADWAY. Then you see about $20,000,000 additional cost to the industrial interests of New England by the passage of this bill?
Mr. FRANCIS. Yes.
Mr. Vinson. Now, then, that increase, Mr. Francis, according to your notion, would be a 60-cent-per-ton increase over the N. R. A. cost; is that right?
Mr. Francis. I think that would be approximately the additional cost, Mr. Vinson.
Mr. VINSON. You say the present market levels are 40 cents a ton below the N. R. A. levels?
Mr. Francis. On current sales that is my estimate, from the best information I can obtain. And I think that the prices today are somewhat too low.
Mr. VINSON. Are they below the cost of production?
Mr. Vinson. Do you think, considering the location of New England, favored as it has always been, that the location of any particular part of the country justifies their securing coal below the cost of production?
Mr. Francis. I do not think it is good business for the country to buy or sell this coal over any year period below the cost of production.
Mr. VINSON. As a matter of fact, the cost of production, even with the N. R. A. sales price, is comparatively a small part of the retail price of that coa) in any market?
Mr. FRANCIS. That is true. The selling price of the coal at the mines, I do not think will average, the country over, as much as 40 percent of the delivered price of coal to the consumers.
Mr. VINSON. Do you know, or can you state, what is the retail price of the coal laid down in New England between $5 and $8 cost? What does the Yankee salesman get for his coal from the consumer? I have always understood that they were good traders.
Mr. Francis. I would say he gets what the law of supply and demand will permit him to get.