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In the first place, there is no such thing as a monopoly of the bituminous-coal industry of this country. The large number of persons and corporations engaged in mining bituminous coal prevents a monopoly of that industry. The only coal industry that I have ever heard mentioned as being in the class of monopolies is the anthracite-coal industry.
Do you know that, at this time, there are over 3,500 separate and distinct persons and concerns in this country operating over 6,000 bituminous and semibituminous coal mines? Not only is this true, but not much more than 50 per cent of the coal lands of this country are owned by the men who operate the mines thereon. As a matter of fact, the great majority of the small operators and producers, and a large number of the big operators and producers, lease the lands upon which their respective mines are established and pay royalties therefor on their respective productions.
The amount of capital invested in the soft-coal mines of this country in 1909 was $1,062,000,000. The number of miners engaged in this industry is nearly 600,000. The principal bituminous coal-producing States are Pennsylvania, West Virginia, Illinois, Ohio, Indiana, Alabama, Colorado, Kentucky, Iowa, Kansas, Wyoming, Tennessee, Virginia, and Washington. The output of the mines is worth about $450,000,000 per annum. Of this amount, over $300,000,000 is paid out in wages and salaries each year.
No country in the world enjoys such cheap fuel as the United States. At this time we are shipping coal from West Virginia and placing it in the New England market, after paying the freight charges of more than $2.10 per ton, at a less price than it is sold at the pit mouth at Cardiff, Wales. There is an overproduction instead of an underproduction of bituminous coal, and, due to the present bad business conditions existing throughout the country and the great competition in this business, since the 1st of January of this year the coal mines of West Virginia have not run on an average of over two to two and one-half days a week. I am informed that conditions are similar in other States.
Competition is so great and has been so severe for the past five years that Mr. E. W. Parker, of the United States Geological Survey, in an address delivered before the American Mining Congress at Philadelphia last October stated that the profit on coal in the States of West Virginia, Illinois, Indiana, and Ohio for the year 1909 did not net 1 per cent on the capital actually invested in the plants in the four States. Business conditions in this country to-day are certainly much worse than they were in 1909. In the past 10 years railway freights, labor, and supplies used in the mines have advanced more than 50 per cent, taxes have about doubled, and other conditions pertaining to mining, brought about by State legislation, have gone toward increasing the cost of production; whereas the price of bituminous coal to-day is no higher than 8 or 10 years ago. In fact, coal is selling to-day at a lower price than at any time during the past 10 years.
Why, then, should coal be singled out for special legislation, conditions be made impossible, and the business be more demoralized? It would be far better for us to extend a helping hand to those engaged in and dependent upon this industry, so that the coal fields of the country could be conserved and profit
enough be made to enable the mine owners to pay better wages to and to throw more safeguards around the men working in the mines.
You must remember that the price of coal at the mines is but a small part of the ultimate cost to the consumer, and experience has taught us that the public has suffered more because of the "middlemen" than from those engaged in mining coal.
Section 3 is vicious, drastic, and sweeping. In my humble opinion its operation will work greater hardships than those it professedly seeks to relieve, will prove detrimental to the mining interests of the country, and will upset and make worse existing conditions, now certainly bad enough.
The small coal producer can not afford to maintain selling agencies throughout the country. He may have a superior quality of coal that he is producing, and, as you gentlemen may know who live in mining sections, there are as many different qualities of bituminous coal and as many uses to which it may be put as there are grades of and uses to which timber or cotton may be put.
Assume that I am a small operator engaged in producing coal in the State of West Virginia.
In passing I might call your attention to the fact that there are nearly 900 coal mines in the State of West Virginia devoted to the production of coal and the making of coke, which give employment to 73,000 coal miners. West Virginia produces about one-sixth of all the bituminous coal produced in this country, and upon the coal industry of that State nearly onethird of its population depends for its livelihood. The great majority of the mines in West Virginia are owned by persons or companies whose capital is not large. This is true of the coal mines generally throughout the United States. A majority of the mines in West Virginia will not average over 400 tons production per day.
Assume further that I have a superior quality of coal that I carefully mine and prepare for the market. I am trying to specialize, and my trade and business have been built up on the quality, preparation, and reputation of my coal. My output is limited. In securing my labor and in making my expenditures I am compelled to look to the future. I have four or five regular customers who have been dealing with me for years and of whose custom I am reasonably assured. Suppose that some competitor, a big corporation, with whose coal my coal is competing in some particular market, desires to injure my trade or the reputation of my coal or to deprive me of my regular customers. If this section becomes a law, I would be compelled to sell to him such portion of my output as he should apply for. I would be required, upon demand, to turn over my production to him, to work me or my coal such injury as he might elect. What is to prevent him, under this section, coming and saying to me, "I want to buy your entire output this year," and thus leave me without coal to supply any of my customers?
Mr. TALCOTT of New York. Do you think that refusal would be an arbitrary refusal to sell to competitors?
Mr. AVIS. I think, in view of section 2 of this bill, it would be. Under the circumstances just detailed, I should certainly enjoy the freedom of contract and have the right to prefer the customers whose trade I have secured by years of work and the
expenditure of large sums of money; but it is provided in section 2 of this bill
That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers, except as provided in section 3 of this act.
It is thus expressly provided that a mine owner can not and must not select his own customers.
What is meant by the words "refuse arbitrarily"? The extent of the evil of section 3 depends largely upon the words "refuse arbitrarily" and "responsible person, firm, or corporation." Yesterday, in asking questions of the gentleman from North Carolina [Mr. WEBB] relative to this section, I called his attention to the fact that the word "arbitrarily" had only been defined in one case-a West Virginia case. The court held that "arbitrarily" meant "without any reason therefor." There is also an English decision that holds that the word "arbitrary" means "not supported by fair, solid, and substantial cause, and without reason given."
Any mine owner can give a reason for refusing to sell his product. If any reason is sufficient, then the section will only be useless and unavailing. If the section means that a mine owner must give a sufficient reason for his refusal to sell his product, the language of the section is uncertain, indefinite, and confusing, and the evil effects thereof can be appreciated at a glance, because of the uncertainty of the construction that may be placed thereon by the courts.
Just look at the dangers that a mine owner will be exposed to. Some dealer might make application to him for the purchase of his product. The dealer might be perfectly responsible financially, but at the same time might be unreliable in other ways, or might have some ulterior motive and might intend to treat his coal unfairly. The mine owner might be doubtful as to his purpose and refuse to sell him his product for a reason, that to the mine owner was a good one, but which was not satisfactory to the dealer. What will the dealer do? He might immediately institute a criminal prosecution against the mine owner and expose him to the danger of a year's imprisonment in jail, or a fine of $5,000, or both; and might also bring a civil suit against him for three times the amount of damages the dealer may claim to have sustained.
Mr. FESS. Will the gentleman yield?
Mr. FESS. One of the things that puzzles me in this section is that we all know there is a wide difference between purchasers. One may be just as responsible as the other, but he may be tardy in the payment of his bills. He may allow his paper to go to protest, and one of the quickest ways to bring that kind of a man to time is to refuse to sell him under the present law, but what would you do under this law?
Mr. AVIS. Undoubtedly, that is true. That is one of the difficulties here. The words "refuse arbitrarily" are not only dangerous, but the words that you refer to-" responsible person, firm, or corporation "-are almost as dangerous. Who is a “responsible person, firm, or corporation"? What is meant by "responsible"? "Financially responsible" is not sufficient. A person may be perfectly responsible financially, but he may be my competitor; he may be unprincipled; he may want my coal
for some unfair purpose; he may want to control my output; he may want to sell it under an incorrect name or substitute it for other coals or other coals for it. In that sense he is not a "responsible" person.
Mr. BOOHER. Will the gentleman yield?
Mr. AVIS. I will.
Mr. BOOHER. I would like to ask the gentleman if he thinks it would be an arbitrary refusal to sell coal in circumstances such as detailed by the gentleman from Ohio [Mr. Fess] in the question that he just asked you?
Mr. AVIS. Hardly; but
Mr. BOOHER. Now, here is a man, according to his statement, who is known to be slow in his settlements; he permits his paper to go to protest, and he comes to you to buy your property, but you say to him, "I can not sell to you; you are poor pay; your paper goes to protest." Is that an arbitrary refusal that would haul a man into any court on earth?
Mr. AVIS. I say frankly to the gentleman that in itself I do not believe it would be. But who is to determine as to the responsibility of the person who applies to purchase? What kind of responsibility is meant?
Mr. FESS. Will the gentleman yield there?
Mr. BOOHER. Certainly.
Mr. FESS. Would not he be a responsible dealer, with plenty of ability to pay, and yet would not pay until he was forced to do so?
Mr. BOOHER. That would be one of the strongest reasons why it would not be arbitrary. If he had abundant resources and was abundantly able to pay and would let his paper go to protest, he ought not to be trusted by anybody. A man has to protect himself in business necessarily. I want to understand this section, because I think it is a very important one. Now, in the case you illustrated you mined your coal, you put it out and got it ready for sale, and you had your customers who took all your coal.
Now, you say, "Suppose a dealer comes to me and offers to buy all my coal. Under this section I am bound to sell to him. My refusal would be arbitrary." Do you think that that would be an arbitrary refusal?
Mr. AVIS. I think so, under the provisions of this section and section 2 of the bill. I can not escape that conclusion.
Mr. BOOHER. You have mined your coal for us, and you have said to the other gentleman who came, "My coal is all sold. I promised it to Mr. Smith and Mr. Jones and Mr. Brown." Now, tell me how it could possibly be considered an arbitrary refusal for you to sell your coal to us instead of to the man who came to buy that coal?
Mr. AVIS. I am glad the gentleman asked the question, and if his position is correct—and I assume that his question states his position-then section 3 is absolutely futile and unavailing in view of what the committee has stated that it seeks to accomplish. The committee has stated in reporting upon this section that the very purpose of it is to compel the mine operator to sell to the first responsible person, firm, or corporation who applies to purchase his product and not to discriminate against such person, firm, or corporation for some favorite customer that he may have. If you are aiming at an abuse, that
abuse must be the abuse of discrimination. If you are aiming at, as suggested, the big corporations that control the output of certain mines and refuse to sell, say, copper to certain manufacturers, then the section will be unavailing if they are permitted to say, "We will reserve our product for Mr. Smith or Mr. Brown or Mr. Jones," as the case may be.
Mr. BOOHER. Is not the object of the committee here the prevention of monopoly? Or do you say you have to put your whole supply in the hands of some big dealer? Is not that the thing they are trying to avoid here?
Mr. AVIS. I think so; but this section will aid the big dealer, and instead of destroying monopoly-and I am with the gentleman on that score, for I am just as much opposed to a monopoly of the coal business as anybody else is in this HouseI believe and prophesy in all sincerity that this section will destroy competition, produce bankruptcy, and in time create monopoly if it is enacted into law, with the knowledge that I have of the coal business.
Mr. FESS. Mr. Chairman, will the gentleman yield?
Mr. AVIS. Certainly.
Mr. FESS. I would like to have the opinion of the gentleman as to the latitude of the word "arbitrary." If this particular deal or that particular deal is not arbitrary, who will say whether it is arbitrary or not?
Mr. AVIS. That is what I would like to know. As I said a few moments ago, I believe the evil effects of the section depend largely upon the construction which will be placed upon the words "refuse arbitrarily." It is a dangerous thing to leave the words open without any definition of their meaning. If we take the ordinary and common definition of "arbitrary and the definition that has been given by the courts, the word means "without any reason"; and if it means without any reason, section 2 of the bill will be useless and will amount to nothing, because every mine owner can give some reason for a refusal.
Mr. FESS, Now will the gentleman yield to me?
Mr. FESS. Is it not true that the one feature of the Sherman antitrust law that has given most trouble is the feature of the "rule of reason"-the question of what is reasonable and what is not? It has been in litigation ever since the time the word was used.
Mr. AVIS. Yes. I think the majority of the Judiciary Committee is trying to overcome some alleged defect of the Sherman antitrust law; but in this instance, instead of overcoming any of the alleged defects of the Sherman antitrust law, it is my opinion and that of the coal producers from whom I have heard-and I have had letters from a large number of them who operate in West Virginia-that section 3 will eliminate or destroy every small coal producer and dealer in this country, and will ultimately build up a monopoly of the coal business.
There are three classes of coal companies. To the first class belong the large companies which have tonnage sufficient to place their product in the different markets which they can reach, and they have sales departments with branch offices located in all of the large distributing centers, and in this way