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balance wheel upon the other. If the operators became arbitrary with their miners the union encroached; if on the other hand the union became arbitrary, as was the case of the Jacksonville wage agreement and the famous or infamous slogan of "No backward step in wages”, then the nonunion fields encroached upon the union, as it should be.

In carefully going over part III-Labor Relations--I visualize a large and expensive tent built and held by many stays and paid for out of taxpayers' money, that the United Mine Workers of America may be protected and be made to grow. I see also Miss Perkins skipping around the great tent with a tear gas gun that she may protect the great and mighty from being contaminated by the presence of some poor fellow who desires to be a free American citizen.

I say if they cannot stand up on their own merit, let them fall.

I feel it only fair to state that we have, serving the smokeless fields of West Virginia, not only fair and reasonable administrators of the United Mine Workers of America, but I have learned to personally like them-I even like their lawyer-so but for the policy committee of the United Mine Workers of America which I fear might sacrifice us to the North, in spite of our local friends in the United Mine Workers of America, I predict we will willingly remain union; but should the policy committee try further favoring the North, it will soon find its hold on the South is weak indeed.

I thank you. Mr. Hill. We regret we cannot hear you more at length, Mr. Mead, but we must adjourn now.

(The statement submitted by Mr. Mead follows:) STATEMENT OF C. H. MEAD, BECKLEY, W. VA., REPRESENTING AS PRESIDENT:

C. H. MEAD COAL Co., MEAD SMOKELESS Coal Co., FAITH SMOKELESS Coal Co., ALL PRODUCERS OF SMOKELESS COAL; MilginS FORK SMOKELESS COAL LAND CO., A LESSOR OF SMOKELESS COAL; RAVENCLIFFS DEVELOPMENT, A COMPANY, A PRODUCER OF NATURAL Gás.-REFERRING TO WHOLLY

CAPTIVE PROPERTIES, TITLE II, AND 25 PERCENT Tax on Coal PRODUCED To the Honorable Chairman and Members of the Ways and Means Committee of

the House of Representatives, GENTLEMEN: Being a coal operator of the West Virginia smokeless field and greatly desiring stability for the industry, I feel we will commit a fatal mistake unless we adopt title IỈ of H. R. 8479, which will make it possible to control captive mines, and I am sure that unless we amend the bill to exempt all wholly captive mines, we will return to chaos in the coal industry.

All captive mine owners are bitterly opposed to this bill, and we could eliminate great opposition by exempting them. Should we not do so, they might well retaliate by opening their smokeless mines for commercial purposes; and a representative of one large such interest has told me he thought his company would do just this. In event they should do this, I have figured that they would in producing each hundred tons, get 54 tons of slack, and 46 tons of prepared sizes, which at $2.59 (the code price) would bring them $119.05, with which amount they could buy 72 tons of slack at code prices of $1.65, resulting in their receiving 126 tons for the same amount they are now paying the commercial operators for 100 tons of slack. See compilation attached.

I am not familiar with the smokeless fields of Pennsylvania, but am very familiar with the smokeless coal reserves held by the United States Steel Co. in West Virginia. This coal could be produced at an extremely low cost, some of it being so thick that it could be loaded with small electric shovels. Should United States Steel decide to open their mines, the Bethlehem and other steel companies would be forced to open also, as I presume no steel company could exist with others in the same industry having an advantage of 26 percent in coal costs. With this condition existing, some of the steel companies not having such coal

reserves might be forced out of business, and the smokeless operators would so lose all the steel business, which would naturally bring on heavy competiton between high- and low- volatile fields, and I feel this would be disastrous both to labor and to the operators.

In order that you may realize this is very possible, I beg to advise that the reserve by-product tonnage in West Virginia of the

Net tons United States Steel Co. is approximately

500,000,000 Of other captive companies is approximately -

200, 000, 000 Total ---

700,000,000 which I am confident is very considerably more smokeless by-product coal reserves than are held by all commercial mines combined.

I am advised the Bethlehem Steel and other captive properties in Pennsylvania have large reserves of smokeless byproduct coal but I have not been able to get the figures.

I have felt that these large companies have dealt fairly and wisely, as they have not disturbed the coal situation and they have shown foresight enough to deny themselves a small profit for the time being, that they may preserve their byproduct smokeless coal reserves for a time when they will be vitally needed.

If we exempt the wholly captive mines, I feel certain no new captive property will be bought except lands carrying reserves of special kinds of coal. For example, any industry buying captive mines for its own use would be put in a very poor economic position as follows:

Run as a wholly captive mine, coal would have to be ground and then billed the parent company at the cost price of run-of-mine, while any commercial mine could furnish coal at the code price for slack, resulting in a large saving to the buyer.

if run as a commercial mine, there would be an added cost of approximately 872 cents per ton, covered by the tax, as follows: Estimated annual tax for marginal lands.-

$0.060 Estimated administration fund..

.020 Estimated 25-percent tax of the drawback on $2 coal...

. 005 Total.-

. 085 And it has been many years since the profits of the coal business have averaged 872 cents per ton. The above all refers to smokeless byproduct coal. I give below an example of how this works with Ohio high volatile coal:

Code prices 43 tons lump at $2.70..

$116. 10 21 tons egg at $2.80..

58. 80 10 tons stove at $2.45.

24. 50 26 tons slack at $1.65..

42. 90

Per ton

100 tons..

(1) From the above figures it will readily be seen that an industry owning its own mine would, by producing its own coal, get 146 tons of coal for the same amount of money its competitor would under the code prices get 100 tons. This would force the competitor to also buy a mine or go out of business. This being so, there would be a rush to purchase coal mines, and no doubt many poor mines would be unloaded on industries at high prices. Each industry so conducting its affairs would lessen the market for commercial mines to an extent that the output of commercial mines would be reduced and their cost correspondingly increased until the mines would have to close. This would, of course, ruin the commercial coal industry and soon a number of the industries which bought mines for their own use would awaken to the fact that they had been badly stung.

The Guffey bill will be the saving of the coal industry if the above evils are avoided, and this may easily be done by retaining title II if only to be used as an inducement to have captive mines remain wholly captive mines, and this may be accomplished by something like the following provision being included in the bill, "wholly captive mines shall not be subject to this act." 1 $242.30 divided by 1.65 equals 146.8 tons.

1

I feel sure the tax above mentioned will prevent the purchase of mines by industries for their own use, and I hope some mines now partially commercial will return to wholly captive, for if the mines produce smokeless coal with the usual percentage of approximately 65 percent screenings and are forced to pay a tax of 842 cents per ton on the total output, it would hardly pay them to sell the 35 percent of prepared sizes, and also by not doing so they would conserve their coal reserves.

Regarding the by-product coal reserves of the Steel Companies, I say "why twist the tiger's tail?"

Regarding the high volatile situation, I say why invite competition which can only result in ruin to commercial mines?

These items are so vital that unless wholly captive mines are exempted from H. R. 8479 and title II is retained in H. R. 8479, I will vigorously oppose the bill, and feel reasonably sure the Winding Gulf district of West Virginia will do likewise, thus leaving the “solid South” opposed to the bill, as well as all steel and railway companies and other captive property owners. Respectfully yours,

C. H. MEAD. Pocahontas coal, code prices 10 tons lump at $2.70.

$27. 00 18 tons egg at $2.80.

50. 40 11 tons stove at $2.45.

26. 95 7 tons nut at $2.10.

14. 70 54 tons slack at $1.65.

89. 10

100 tons.

1 208. 15

REFERRING TO 25 PERCENT Tax on BITUMINOUS Coal Page 5. Tax on bituminous coal.

This tax is of course placed to force compliance by all producers of commercial coal. This or some other provision equally potent is necessary that operators in States using more coal than they produce cannot destroy the purpose of the act by holding their business all intrastate. I am advised that the State of Ohio produces 20,000,000 tons of coal annually and uses 80,000,000 tons. No doubt Pennsylvania, Illinois and Indiana do something like the same. If such operators are not brought under the act, such States as Kentucky, Virginia, and West Virginia must perish, and Congress can never stabliize the coal industry unless Congress can regulate all commercial coal produced. Respectfully submitted.

C. H. MEAD.

IMPORTANT-IN SUPPORT OF TITLE II AND IN OPPOSITION TO PROPAGANDA

Being SENT OUT TO INFLUENCE PURCHASERS OF COAL AGAINST H. R. 8479

Unfortunately I have been able to hear but little of the testimony given before this comn ittee but have heard sufficient testimony and have read enough letters mailed by opponents of H. R. 8479 to know that a great amount of propaganda has gone out for the purpose of scaring the public into opposing H. R. 8479. In this connection, I quote from address of Charles C. Dickinson, president, Dickinson Fuel Co., Charleston, W. Va., before the National Retail Coal Merchants Association, Atlantic City, N. J., June 21, 1935:

"If you will take the trouble to add up the figures which I have given you, you will find that the increase in costs to consumers of coal will range from 0.147 cent to $1.64, or an average increase to the consumer of 89 cents per ton. It is hardly possible that the increased selling price of any district would be as little as 0.147 cent per ton, or that the consumer would be willing to pay an increase of $1.64 without substituting some other form of heat energy. Nevertheless

, these figures show the erratic and the unworkable nature of the marketing and correlating provision of this bill."

1 have the temerity to disagree with the gentleman to the full extent of the $1.64, as may well be explained by the following paper captioned,

WHY I FAVOR THE PURCHASE OF MARGINAL PROPERTIES (1) During all times of depression in the coal business the irresponsible operator has folded his tent, and in sections such as the Winding Gulf district 1 $208.15 divided by 1.65 equals 126.1 tons.

of West Virginia where there is practically no employment except in the mines he has added the burden he has laid down to the burden of the responsible operator, that of caring for the people. This burden is a heavy one and adds to the losses suffered by the responsible operators. The burden is so carried until the law of supply and demand increases the sale price of coal to a profitable basis, whereupon the irresponsible operators, and frequently in large numbers, immediately reopen their mines and gobble the profits of the industry to such extent that the responsible operators are frequently prevented from recouping their losses suffered under depressed times and another depressed time is very soon brought upon the industry by overproduction caused by "fair-weather producers. This is manifestly unrair and, if corrected, I feel sure will result in a saving to the industry of several cents per ton.

(2) I have repeatedly heard that the purchase of marginal properties would increase the price of coal. In this I cannot concur, for if the provisions of the Guffey bill are properly carried out it will result in a purchaser getting just the value he pays for. If this is so, it will necessarily follow that business in the future will be dictated and directed by service, and the sales cost'will be materially lessened, as in most cases a customer once gotten will remain a customer so long as he gets service. In my opinion this will result in a sales cost saving of several cents per ton, and I also feel that this favorable reaction to the industry will be further augmented by coal encroaching upon oil, gas, etc., largely by reason of the better preparation and service the operators will have to maintain. It is hard to estimate this indefinite value to the coal industry but it may be very material indeed.

(3) I further contend that the irresponsible operator is responsible for the heavy and frequent fluctuations in the production of coal, thus largely increasing the cost of coal to an extent I am confident will amount to several cents per ton.

(4) I have heard that such marginal properties would be bought by the Government at unreasonably high prices. In this connection, one gentleman on our committee told me that in his district many coal properties are in the hands of the banks as frozen assets and his opinion is the banks would hasten to make such assets liquid, and at a price much below the actual value of the properties, thus setting a low-cost yardstick for such purchases.

(5) The leasing at the proper time of such properties would result in huge profits to the Government.

In conclusion, I beg to say that I regard the purchase of marginal properties much in the light of any army burying its dead, which is of course proper, but I feel the districts directly benefited should stand such part of this expense as would be in proper proportion to the benefits accruing to them. Respectfully yours,

C. H. MEAD.

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GENERAL SUGGESTIONS-FOR THE IMPROVEMENT OF H. R. 8479 1. I suggest that section 2, page 3, be changed in such manner that the National Bituminous Coal Commission be comprised of 1 coal operator from either the North or the South, 1 miner from the opposite direction, 1 representative of the buyer's of industrial coal, 1 representative of the distributors of coal, and 5 disinterested persons.

2. I am much opposed to marketing agencies as I feel they will eventually result in monopolies.

3. On page 19, line 22, the act provides for the Commission to prescribe a reasonable price allowance to distributors. I suggest that the Commission give due consideration to the testimony of two representatives of distributors made this the 26th day of June 1935, that a part of the service rendered the coal industry was furnishing the producers money to finance pay rolls.

4. On page 6, line 23, Part I, Organization and Production, I suggest that all district boards be composed of as few members as may be absolutely necessary, this to prevent impartial boards. Respectfully submitted.

C. H. MEAD.

BAD-UNDER PART III-LABOR RELATIONS On page 26, line 9, we find the following:

"The wage agreement or agreements negotiated by collective bargaining in any district or group of two or more districts, between representatives of pro

I feel sure the tax above mentioned will prevent the purchase of mines by industries for their own use, and I hope some mines now partially commercial will return to wholly captive, for if the mines produce smokeless coal with the usual percentage of approximately 65 percent screenings and are forced to pay a tax of 8% cents per ton on the total output, it would hardly pay them to sell the 35 percent of prepared sizes, and also by not doing so they would conserve their coal reserves.

Regarding the by-product coal reserves of the Steel Companies, I say "why twist the tiger's tail?”

Regarding the high volatile situation, I say why invite competition which can only result in ruin to commercial mines?

These items are so vital that unless wholly captive mines are exempted from H. R. 8479 and title II is retained in H. R. 8479, I will vigorously oppose the bill, and feel reasonably sure the Winding Gulf district of West Virginia will do like wise, thus leaving the "solid South” opposed to the bill, as well as all steel and railway

companies and other captive property owners.
Respectfully yours,

C. H. MEAD. Pocahontas coal, code prices 10 tons lump at $2.70.

$27.00 18 tons egg at $2.80.

50. 40 11 tons stove at $2.45.

26. 95 7 tons nut at $2.10.

14. 70 54 tons slack at $1.65.

89. 10

100 tons.

1 208. 15

REFERRING TO 25 PERCENT Tax on BITUMINOUS COAL Page 5. Tax on bituminous coal.

This tax is of course placed to force compliance by all producers of commercial coal. This or some other provision equally potent is necessary that operators in States using more coal than they produce cannot destroy the purpose of the act by holding their business all in trastate. I am advised that the State of Ohio produces 20,000,000 tons of coal annually and uses 80,000,000 tons. No doubt Pennsylvania, Illinois and Indiana do something like the same. If such operators are not brought under the act, such States as Kentucky, Virginia, and West Virginia must perish, and Congress can never stabliize the coal industry unless Congress can regulate all commercial coal produced. Respectfully submitted.

C. H. MEAD.

IMPORTANT-IN SUPPORT OF TITLE II AND IN OPPOSITION TO PROPAGANDA

Being SENT OUT TO INFLUENCE PURCHASERS OF COAL AGAINST H. R. 8479

Unfortunately I have been able to hear but little of the testimony given before this comn.ittee but have heard sufficient testimony and have read enough letters mailed by opponents of H. R. 8479 to know that a great amount of propaganda has gone out for the purpose of scaring the public into opposing Ħ. R. 8479. In this connection, I quote from address of Charles C. Dickinson, president, Dickinson Fuel Co., Charleston, W. Va., before the National Retail Coal Merchants Association, Atlantic City, N. J., June 21, 1935:

“If you will take the trouble to add up the figures which I have given you, you will find that the increase in costs to consumers of coal will range from 0.147 cent to $1.64, or an average increase to the consumer of 89 cents per ton. It is hardly possible that the increased selling price of any district would be as little as 0.147 cent per ton, or that the consumer would be willing to pay an increase of $1.64 without substituting some other form of heat energy. Nevertheless, these figures show the erratic and the unworkable nature of the marketing and correlating provision of this bill."

1 have the temerity to disagree with the gentleman to the full extent of the $1.64, as may well be explained by the following paper captioned,

WHY I FAVOR THE PURCHASE OF MARGINAL PROPERTIES (1) During all times of depression in the coal business the irresponsible operator has folded his tent, and in sections such as the Winding Culf district 1 $208.15 divided by 1.65 equals 126.1 tons.

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