TO REGULATE INTERSTATE COMMERCE IN BITUMINOUS COAL TUESDAY, MARCH 2, 1937 UNITED STATES SENATE, The subcommittee met, pursuant to adjournment on yesterday, Monday, March 1, 1937, at 2:30 p. m., in the Capitol, Senator M. M. Neely presiding. Present: Senators Neely (chairman of the subcommittee), Minton, Moore, Davis, and Austin. Senator NEELY. The subcommittee will be in order. The Honorable Charles F. Hosford, chairman of the National Bituminous Coal Commission, is present in response to my request. Mr. Hosford, will you proceed? STATEMENT OF HON. CHARLES F. HOSFORD, JR., CHAIRMAN, NATIONAL BITUMINOUS COAL COMMISSION, WASHINGTON, D. C. Mr. HOSFORD. If I may first be permited to do so, I would like to outline just briefly the history of coal legislation which has preceded the bill, S. 1, now pending before your committee. At the first session of the Seventy-fourth Congress the Coal Conservation Act of 1935 was passed and became law upon approval by the President on the 30th day of August 1935. Lengthy hearings on the bill were held before committees of the Senate and the House. Preceding the enactment of the law, legislation for the coal industry had been considered at great length in 1932, at which time a bill generally known as the Kelly-Davis bill was submitted. The industry at that time almost unanimously opposed the principle of Federal regulation, and expressed its opinions in lengthy hearings. During the same session Congressman Lewis, of Maryland, introduced a measure which was based upon the British Mines Act, and this was discussed at great length before the Senate committee. Following the hearings a substitute bill was suggested by Senator Hayden, a member of the committee, in which were included many of the features which were finally adopted in the act of 1935. Following the enactment of the law in 1935, the present Commission, the National Bituminous Coal Commission, was appointed by the President and proceeded with the administration of the law by promulgating the Bituminous Coal Code provided for in that act, organizing the district boards of producers in the districts provided for in the act, and then proceeding with the work of price determination. At the time when the work of price determination was approximately 80 to 85 percent completed, a decision was rendered by the United States Supreme Court in the case of Carter v. Carter Coal Company et al. Senator AUSTIN. Do you remember the time? Senator AUSTIN. Thank you. Mr. HOSFORD. As a result of which decision the labor and price provisions of the act of 1935 were invalidated. In the majority opinion the conclusion was reached that the power of Congress to regulate interstate commerce in coal did not include a power to deal with the subjects of hours and wages in the industry, and the majority of the Justices held that despite the inclusion of a separability clause in the act the price provisions were so closely entwined with the labor provisions that the two could not be separated and the one sustained and the other invalidated. Following that decision, Congress being then in session, a bill was introduced in the House and a companion bill in the Senate, which substantially embodied the provisions of the act of 1935 with the deletion of those provisions that attempted to deal with labor. Senator AUSTIN. That is part III? Mr. HOSFORD. You mean, the labor provisions? Senator AUSTIN. Yes. Mr. HOSFORD. There was incorporated in the 1936 bill, as section 9, a declaration of national policy on the subject of labor relations, and part III of section 4 of the act of 1935 was entirely omitted. That bill was considered by the House of Representatives and passed. The companion bill was made the subject of hearings before the Senate Committee on Interstate Commerce and the bill was favorably reported; but before action was taken upon it by the Senate, Congress adjourned and the bill therefore failed of passage. Senator NEELY. The hearings on the second Guffey coal bill were held by the entire committee instead of by a subcommittee. Mr. HOSFORD. Yes. Senator AUSTIN. There were hearings? Senator NEELY. Printed copies of the proceedings are available. Senator AUSTIN. I notice in the minority view of the Committee on Ways and Means it is stated that no hearing had been held on it. I thought that was not true of the Senate. Senator NEELY. No. There were Senate hearings conducted by the full committee. Mr. HOSFORD. Prior to the reconvening of the present session of Congress the subject of coal legislation was again considered and the present bill, S. 1, was prepared, embodying in the main the provisions of the previous act with the labor clauses deleted, but including the changes that were made in the 1936 bill by the Interstate Commerce Committee of the Senate, and certain further changes which were suggested in the light of administrative experience. That is the bill which, as S. 1, is now pending before your committee. Senator NEELY. Will you please state briefly the difference between the present bill, S. 1, and the second Guffey coal bill which died in the Senate last year? Mr. HOSFORD. I have prepared a brief outline of the differences which might be incorporated in the record. Senator NEELY. Without objection it is so ordered. Mr. HOSFORD. The major changes, Senator, are as follows: First, the power to determine and establish minimum prices is clearly vested in the National Commission created under the bill, and the district boards are limited to the status of mere advisory organizations. The unfair-trade-practice provisions remain the same. Senator AUSTIN. Do you mind interruptions by questions? Mr. HOSFORD. Not at all, Senator Austin. Senator AUSTIN. What was the object in that to get away from the idea of competitors undertaking to legislate on prices of competitors? Was that the idea? Mr. HOSFORD. You mean, Senator, the change as to the district boards? Senator AUSTIN. Yes. Mr. HOSFORD. To begin with, under N. R. A. the coal industry had a Bituminous Coal Code which was, I believe, the most successful code in operation. The administrative organizations set up under N. R. A. constituted what were called code authorites in each of a member of coal-producing districts throughout the country. Those code atuhorities were made up of members of the producing side of the industry. When the original Guffey Act, that is, the Bituminous Coal Conservation Act of 1935, was drafted, that same organization or administrative set-up was followed. Objection was made both from a legal and a practical standpoint that here was a law which conferred upon a private industry the unregulated power to establish prices for its product. There were objections made by certain persons opposed to the law, that as a result of this provision their individual businesses were made subject to control by their competitors. Then, of course, there was the third objection, that it was an improper delegation of the power of Congress to regulate interstate commerce to have any body of industry itself perform the work of establishing prices. Senator AUSTIN. That is, it was a delegation of power to a private person instead of to a governmental agency? Mr. HOSFORD. That is correct, sir. Therefore, in order to meet all of those objections in this bill the power is clearly vested in the National Bituminous Coal Commission to determine and make effective minimum prices, with the district boards of operators acting in the capacity of advisers. Does that answer your question, Senator? Senator AUSTIN. It does, fully. Mr. HOSFORD. The language of the standards for price determination has been greatly clarified and simplified, and those standards have been broadened in such a way as to give the Commission a greater discretionary power to meet changing conditions in the industry and in the markets which it serves. In other words, under the original bill there was a certain rigidity that the Commission was bound by certain findings made by it, and it would not be permitted to vary prices to meet market conditions. In this bill that condition has been remedied by a general broadening of the discre tionary power of the Commission. But, at the same time, the standards under which the Commission must act are clearly expressed and, in my opinion, the adequately cover the various factors which must be considered in any price determination, One change from the administrative standpoint is that the statistical bureaus, which are provided to be set up in the various districts, are made part of the Coal Commission's organization and are no longer a part of the district board or the industry's organizations. That was done for two reasons. When the Carter case was heard, one of the objections made to various provisions of the bill was that under that plan confidential information of individual coal producers was submitted to a statistical bureau set up by a district board, and as a result such confidential information might fall into the hands of competitors. Then, again, there have been doubts at times as to whether in all cases the statistical bureaus operated by the district boards completely met the requirements of the Commission as to the work to be performed by them. For those two reasons this bill provides that the statistical bureaus constitute a part of the organization of the Commission and are maintained at Government expense. The price areas and the districts provided to be set up in the bill, S. 1, are the same as those provided for under the preceding act. Senator MINTON. Has not the House amended that price area provision with reference to Indiana, Illinois, and Kentucky? Mr. HOSFORD. Yes, Senator Minton; and my discussion, now, sir, is limited to the bill, S. 1, as it was originally introduced. But it is correct that the bill as reported out by the House Ways and Means Committee makes a change in the market areas proposed to be established. Senator MINTON. Do you have any objection to that change, yourself? Mr. HOSFORD. Senator Minton, here is the situation, as I see it: In my judgment as a member of the Commission, the law can function either under the set-up as provided in the original act, or with the change made by the House committee; and there is power vested in the Commission so that, if the new market area worked any unfairness or is a handicap in the administration of the law, the Commission may, after hearing upon notice to all interested parties, enter an order making such changes as it deems necessary. In view of those facts, as a member of the Commission I would certainly not presume to make any objection to the proposed change. Of course, from another standpoint, it might be better to permit the districts to stand as they were in the original bill and allow any change to be made only after notice and hearing before the Commission. I might say, sir, that I have been informed that there are a number of producers in the industry who strenuously object to the change made by the committee in the House. But I say, from my standpoint as an administrator of the present law, the law could be well administered under either of the set-ups. In bill S. 1 there has been a change in the labor provisions, section 9-A, on page 36. The section opens with a declaration of public policy, recognizing the right of collective bargaining and forbidding the interference with employees in the exercise of their rights. There was a similar declaration of labor policy in the 1936 bill, but to that has been added a provision that no bituminous coal shall be purchased by the United States or any department or agency if the coal was produced at a mine where the producer has refused to accord his employees the rights set up by subsection A; and a further provision that contracts entered into by the United States shall contain a limitation as to the coal to be used in the performance of those contracts. In a general way I believe those provisions follow the policy and provisions of the Walsh-Healey Act. The remaining changes are small changes of form, and not of substance, as I have stated. If there are no further questions, Mr. Chairman, I have had prepared for you five copies of S. 1, the bill before your committee, the text of which has been modified to conform to the bill reported out by the House Ways and Means Committee. Senator NEELY. Before you explain these changes, will you not state whether there is any substantial difference between S. 1, now before the subcommittee, and the original Guffey bill, which was passed and was in part declared unconstitutional, excepting the elimination of the labor provisions of the latter? Mr. HOSFORD. There is no fundamental change in S. 1 as compared with the act of 1935. The principal change has been the deletion of the sections relating to labor Senator NEELY. Which the Supreme Court held to be unconstitutional? Mr. HOSFORD. Yes; which the Supreme Court held to be unconstitutional. There are a very large number of minor changes, and I inquire whether it is the desire of your commi tee to have me go through and explain each of these changes. I might say to you that the House Ways and Means Committee considered this bill at great length. They held sessions daily for more than a week. I shall be very glad to proceed in whatever manner the chairman directs. Senator NEFLY. What is the pleasure of the subcommittee? Shall we read the text and the modifications made by the Ways and Means Committee and then ask Mr. Hosford to make necessary explanations? Senator AUSTIN. That is agreeable to me. (Senate bill 1, containing the changes therein made by the House Committee on Ways and Means, will be found at the end of this record.) Senator NEELY. The first change made in the bill by the Ways and Means Committee appears on page 2, in line 19. The words "whether or not bituminous coal," have been added. Mr. HOSFORD. That charge, Mr. Chairman, avoids any doubt that the term "coal" includes anthracite coal. In other words, members of this Commission are required to have no interest whatever in any of the fuels which are competitive with bituminous coal. Senator DAVIS. Does that give the right to the Commission, in your opinion, to meet competition of competitive fields? Mr. HOSEORD. Senator Davis, the language of a subsequent section which outlines the standards for the determination of minimum prices, in my judgment, very clearly takes cognizance of the compe 134705-37-2 |