Coal carloadings of principal railroads serving district 8 and adjacent districts

50-ton units)

It was to be expected that the first week's operation under the "strike every Thursday" order by the UMW would produce considerably less than a normal output. This was true because, expecting at least a strike of some duration following the miners' vacation ending July 4, many had made plans that did not permit an immediate return to work. Many mining companies had planned to shut down operations entirely, giving vacations to their foremen and office help. Many industrial firms had made definite plans to receive no coal during the week. Some confusion in getting under way naturally resulted, and the small production of 4,880,000 tons was not entirely unexpected. But the output for the week ending July 16, now given at 6,600,000 tons, has made it necessary to substantially revise previous estimates of production.

Before the restricted workweek was forced on the coal industry, hundreds of the efficient well-managed mines, particularly those in district 8 and district 7, were working close to a full-time basis. At the same time, many of the mines in other districts were working on less than a 3-day basis. Apparently, then, the difficulty of transferring needed production from those mines working full time to those needing additional orders has been greater than was anticipated. The result has been to reduce expected production of 8,000,000 tons per week to the actual figure of 6,600,000 tons per week.

If this decline in production is extended substantially into the late summer and fall, original monthly production estimates under the 3-day week will have been overstated by some 3,500,000 tons. While it is too early for experience to indicate a change in estimated consumption figures, it is apparent that the decline in estimated production will only serve to intensify expected shortages and wide maldistribution.

The full effect of the reduced production which the United Mine Workers have forced on the economy has not yet been fully appreciated by many coal customers. The lake coal buyers have had it brought home to them immediately through the difficulties that have arisen in connection with the preparing and forwarding of lake cargoes. But the all-rail customers, particularly those who have always depended on the better-grade district 8 coals, have not yet felt the full effect of the arbitrarily imposed reduced running time.

The promptness with which the lowered production has affected lake movement is brought out by the following table, especially when it is borne in mind that lake tonnage forwarded this year was well ahead of last year as of the end of June:

Lake movement of bituminous coal

1949 season through July 181948 season, same period__ July 1949 through July 18---. July 1948 through July 17__.

Tons 20, 293, 550 21, 058, 030 1,760, 000 3, 197, 565

It seems worthy of reiteration to state that the exigencies of the coal-supply situation suggests strongly that the industrial consumer should weigh carefully his needs for the year, conserve his stocks, and take delivery of whatever coal is available for his season's operation; and that the consumer of domestic coal should place in his storage bins adequate supplies of the better-grade domestic coals as quickly as they are available.

DESIGNING HOMES TO USE SOLID FUEL

The Small Homes Council of the University of Illinois has just published a circular entitled "Homes Planned for Coal or Coke." This circular was written as a result of a 3-year research program, sponsored by Bituminous Coal Research, Inc., Anthracite Institute, and the American Coke and Coal Chemicals Institute, under the guidance of Rudard A. Jones, and it is designed to give architects, builders, and home planners the latest findings on the ways to simplify the use of solid fuels in the modern home.

One of the troubles of the coal industry today is the fact that very few homes have ever been planned properly to accommodate a coal bin and to make the delivery of coal and the removal of ashes easy procedures.

This circular, which gives condensed graphic information, should be in the hands of every retail coal salesman and retail coal merchant; every effort should be made by the bituminous-coal industry to distribute these to architects and builders. ACI has a limited number of copies and will send single copies on request. Anyone desiring a larger quantity of this publication should write to the Small Homes Council, Mumford House, University of Illinois, Urbana, Ill.

"WHAT'S IN THE AIR"

There is enclosed with this bulletin a copy of a pamphlet recently published by the Bituminous Coal Institute under the title "What's In the Air." It will be found to be an interestingly developed contribution toward extending sound information on the important subject of air pollution.

During each of the past 2 weeks the rate of ingot production has shown an increase over the preceding week. The production for the week ending July 16 reflected an increase over the preceding holiday week, but the current week's gain over last week represents an actual gain, the first such gain to be registered in a normal workweek since April 16.

DEAR SENATOR MAYBANK: I understand that the hearings on the 3-day operations of the coal miners will be before your committee. We are very much interested in the price and the supply of coal. We manufacture print cloth, and it takes, roughly, 3 pounds of coal to produce 1 pound of print cloth. We have been very much handicapped each spring during the coal strikes, due to the limited storage space we have for coal. This has necessitated our using fuel oil to keep from shutting down. Fuel at this distance from the ports is very expensive. We have also been handicapped by the ever-increasing price for coal. This naturally leaves us at a disadvantage with mills in other areas which are supplied by the TVA or areas

being supplied by natural gas, where, I am told, the price has not varied since 1936.

Anything you can do to help us will be appreciated.

Sincerely,

ELLISON S. MCKISSICK.

STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

This statement is presented on behalf of the National Association of Manufacturers, representing a membership of over 15,000 predominantly small- and medium-sized employers in manufacturing industries. While its policies are in no sense binding on any individual member, the viewpoint and positions of the association in matters of national import to the manufacturing industry and the country as a whole are formulated through procedures which afford the fullest opportunity for discussion and consideration by the membership and which insure that its positions, as finally approved, have the endorsement and support of the great majority of the membership.

It is our understanding that the purpose of these hearings is to inquire into the existence and extent of economic power over trade and commerce which has been concentrated into a few hands, and the effect of this power on the smallbusiness man and on prices paid by the consumer.

More specifically, it is understood that this committee is interested in finding out the extent of power which industry-wide labor organizations have acquired, the manner in which this power is being exercised, and the effect on the various segments of our economy.

It is to this specific inquiry as to the effects of industry-wide bargaining on various segments of our economy that this statement is addressed. Thus the following discussion of industry-wide bargaining is confined to those situations where all or substantially all the employers in a single industry deal as a group with one international union in the collective establishment of terms and conditions of employment.

The National Association of Manufacturers many times has gone on record publicly in support of the policies of our antitrust laws. In the self-interest of its members it will continue to condemn all acts and practices which restrain trade, lessen competition, or create monopoly. Thus the association has long been opposed to industry-wide bargaining, first because it tends to alter the practice and procedures of collective bargaining as contemplated by our labor laws, but more basically because it is an expression of monopolistic power.

DANGERS IN INDUSTRY-WIDE BARGAINING

It will be our purpose herein to outline the dangers which exist if industrywide bargaining is permitted to grow as an accepted practice in industrial relations; the restraints of trade to which it could inevitably lead; and the threat it carries for small business enterprises and to individual employees. In considering the economic power which has been concentrated in some labor organizations, it must be recognized that labor unionism is, by its very nature, essentially monopolistic. Like any other monopoly, it cannot stand, or stand for, competition. This monopolistic tendency has been furthered and encouraged by public policy as stated in the National Labor Relations, Clayton, and NorrisLaGuardia Acts, as interpreted in their effect on the Sherman Act by the Supreme Court. That this is so has been recognized recently by the Supreme Court in Allen-Bradley Co. v. Local No. 3, I. B. E. W. (325 U. S. 797), where the Court, through Mr. Justice Black, stated (p. 810):

"It is true that many labor-union activities do substantially interrupt the course of trade and that these activities, lifted out of the prohibitions of the Sherman Act, include substantially all, if not all, of the normal peaceful activities of labor unions."

Continuing, the Court recognized also that restraints of trade by unions were permitted by Congress, saying (p. 811):

"Thus, these congressionally permitted union activities may restrain trade in and of themselves. There is no denying the fact that many of them do so, both directly and indirectly."

In connection with organized labor as being inherently monopolistic, an excerpt from Labor and the Law by Prof. Charles O. Gregory, formerly solicitor of the United States Department of Labor, is both interesting and timely :

94422-49-pt. 2-27

"Now labor unionism is a frankly monopolistic and anticompetitive institution, even if its major undertakings have been carried on and justified in the name of competition. This has been competition to suppress or combat competition, exactly as it always used to be in big business."

Union activities which restrain trade are, therefore, "congressionally permitted" restraints. Congress, not the Constitution, has thus granted to private groups the power to impose restraints upon commerce and trade; at the same time, however, Congress has denied that power to sovereign States of the Union. No comparable grant of power to private interests exists in our history. Therefore, the question is simply whether Congress shall continue a policy which can, and will, have a seriously adverse effect upon the public interest. The long-range public interest demands that all trade restraints be outlawed, whether they be imposed by management or by organized labor.

Two types of public evils are potentially present in industry-wide bargaining. First is the industry-wide work stoppage, which may be described as a "direct" evil, since its effect is directly to stop production or the supplying of a service. Second are the dangers inherent in industry-wide bargaining per se. These dangers may be described as "indirect" evils, since they are not so dramatic as the first type, but their effects are probably more harmful to the public at large. Both types result in restraints of trade or commerce as historically known at common law and under the Sherman Act. In addition, dangers to our national labor policy, to small-business men, and to individual employees are present in industry-wide bargaining.

DIRECT RESTRAINTS

The danger of direct restraints resulting from industry-wide work stoppages is too freshly in mind to warrant repeating. Quite obviously, any concerted shutdown by all the employers in an industry would be prosecuted as a violation of the Sherman Act; yet the identical effect upon the Nation's economy could be imposed with impunity through an industry-wide strike. As indicated, however, the "indirect" restraints may bear more disastrously on the long-time public interest.

INDIRECT RESTRAINTS

It is elementary that all costs entering into the production of a commodity must be reflected in the selling price of that commodity. Labor is the major item of the ultimate cost in all production. The direct labor cost at any single stage of operation may vary from 10 to 50 percent of the value of the product. However, in addition to this, there is labor cost involved in raw materials and semifinished materials which the producer at any given stage purchases from other producers. The total over-all labor cost is best measured in the national income estimates prepared by the United States Department of Commerce. The "income originating in corporations" as given in the Commerce Department studies measures the total cost of the productive services performed within the administrative framework of corporations. It is impossible to measure this accurately in unincorporated businesses. In recent years, of the total income originating in corporations, compensation of employees has represented about 75 percent. Industry-wide bargaining thus permits agreements between employers and unions covering entire industries, or major segments of an industry, on factors which conservatively affect two-thirds of the selling costs of the products.

These figures necessarily represent averages; but there can be no doubt that wage costs represent a major part of total costs of any particular manufactured commodity. It follows, of course, that absence of competition in fixing the cost of labor can greatly affect the cost of goods to the consuming public. This fact, was recognized by the Supreme Court in Apex Hosiery Co. v. Leader (310 U. S. 469), when it said:

"Furthermore, successful union activity, as, for example, consummation of a wage agreement with employers, may have some influence on price competition by eliminating that part of such competition which is based on differences in labor standards. Since in order to render a labor combination effective it must eliminate the competition from non-union-made goods (citing case), an elimination of price competition based on differences in labor standards is the objective of any national labor organization. But this effect on competition has not been considered to be the kind of curtailment of price competition prohibited by the Sherman Act."

Thus, the principal purpose of industry-wide bargaining is to remove the most important single element of total cost from competition, regardless of natural geographical advantage or other favorable production factors. It is apparent, therefore, that industry-wide bargaining brings about uniformity of costs and fosters a uniform and rigid price structure.

Under the Sherman Act "a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se" (United States v. SoconyVacuum Oil Co., 310 U. S. 150, 223). Obviously, labor is not a commodity in the sense that leather, a pair of shoes, a suit of clothes, or an automobile are commodities. The cost of labor is a far more important factor in the price of shoes, however, than is the cost of the leather that goes into them.

Not only does industry-wide bargaining tend to eliminate labor costs as a competitive factor; it also tends to increase the ultimate consumer cost in other ways, such as "featherbedding" practices, reducing competition in improving production techniques, and slowing or throttling technological advancements. The basic industrial conflict thus tends to become one between employees, in getting wages out of proportion to their productivity, and the interest of the public in getting goods at the lowest possible price. Employers therefore tend more and more to remain neutral, and usually resolution of this conflict between employees and consumers falls to the Government under statutory procedures or through Presidential intervention.

Perhaps industry-wide bargaining eventually could result in industrial peace. Industrial peace, achieved through the medium of industry-wide bargaining, however, may carry a prohibitive price tag. Uniformity in the major element entering into determination of market price could easily, and perhaps inevitably would, lead to uniformity in all cost factors. In short, it could lead to industry-wide price fixing, in itself abhorrent to a competitive enterprise system and always considered a per se violation of the Sherman Act (United States v. Socony-Vacuum Oil Co., supra). More importantly, however, such practices would constitute an open invitation to the Government to move in to protect the public interest, thus almost automatically creating a "managed economy."

The Sherman Act has been described as a charter of freedom for American business (Sugar Institute v. United States, 297 U. S. 553). The Sherman Act seeks healthy competition, free from unreasonable restraints. Its fundamental concept is that the freedom of economic action enjoyed by one person may become detrimental to the public good when practiced in combination. Therefore, the effect upon competition is the test in determining whether or not a particular restraint is unlawful under that statute. Hence, "proof that a combination was formed for the purpose of fixing prices and that it caused them to be fixed or contributed to that result is proof of the completion of a price-fixing conspiracy under section 1 of the act" (United States v. Socony-Vacuum Oil Co., supra). Whether or not industry-wide bargaining resulted in actual fixing of market prices through illegal combination, the effect of fixing, or "stabilizing," the most important element of production costs, however, would have the identical adverse effects upon the public. In other words, the legality or illegality of industry-wide bargaining, under the Sherman Act, as presently construed, is completely immaterial to a study of the effect of industry-wide bargaining on our economy. The indisputable fact remains that the public could be injured as much by removing competition in wage and related costs to the same or greater extent as would result from removing all price competition at the market place. Two examples will suffice to illustrate the point.

In American Tobacco Co. et al., v. United States, June 10, 1946, the question before the Supreme Court was whether or not the defendant cigarette manufacturers had monopolized within the meaning of section 2 of the Sherman Act. The Court, upholding the convictions, said in part:

"The verdicts show that the jury found that the petitioners conspired to fix prices and to exclude undesired competition against them in the purchase of the domestic type of flue-cured tobacco and of burley tobacco. These are raw materials essential to the production of cigarettes sold by petitioners. [Emphasis is added.]

* **

Can there be any doubt that labor is as equally essential to the production of goods as raw materials; or that it is an equally important element of price at the market place?

With reference to the reason behind the conspiracy to fix prices and exclude competition in the purchase of tobacco, the Court said: