are carrying forward in the act itself provisions of your Coal Code; so that, as I see it, the question of the delegation of power is not so much involved here, and I think it would be more helpful to give more attention to the interstate commerce question than we have, because we recognize that there were two outstanding points in the decision of the Supreme Court in the Schechter case involving the N. R. A. One was the unlawful delegation of power, and I think that you have probably done the best that could be done to meet that, and the other was the question of interstate commerce.

Mr. ESSINGTON. I will now discuss that. I am glad that you agree with us on the delegation of power. I stated, I think before you came in, that I see in the consideration of this bill no danger in regard to that specific piece of legislation on the question of delegation of powers, and that that either had been or could be brought within the decision.

Mr. COOPER. I am also aware that, in accordance with the question presented to Mr. Steinbugler this morning, as I view it, it could be strengthened further to some extent by amplifying, at least, the cost of production as one of those three standards that are set out there. I think that one standard could be broken down and amplified some further.

Mr. ESSINGTON. We agree with you perfectly on that.

Mr. COOPER. If you have any further argument to present on the delegation of power, just include that in your brief at this point and put it in the record.

Mr. ESSINGTON. I will do that.

After the discussion of the delegation of powers, which, as I said earlier, I thought settled the issue in that particular case--and the Supreme Court might have stopped there with its conclusion that there was an additional delegation of powers—then the Supreme Court, in a very carefully considered opinion, discussed this question of intrastate commerce and its bearing upon interstate commerce. I think it is not inappropriate to feel that perhaps the Supreme Court, in its wisdom and in its desire to lay down the rules and guideposts for future legislation, may have had those considerations in mind when the members formulated and agreed to the balance of the decision.

After declaring that this particular poultry was not engaged in interstate commerce, that flat decision, they asked the question:

Did the defendants' transactions directly "affect” interstate commerce so as to be subject to Federal regulation?

The decision goes on to answer the question: The power of Congress extends not only to the regulation of transactions which are part of interstate commerce, but to the protection of that commerce from injury. It matters not that the injury may be due to the conduct of those engaged in intrastate operations.

We said in Second Employers' Liability cases (223 U. S. 1, 51), that it is the "effect upon interstate commerce”, not the source of the injury”, which is "the criterion of congressional power. We have held that in dealing with common carriers engaged in both interstate and intrastate commerce, the dominant authority of Congress necessarily embraces the right to control their intrastate operations in all matters having such & close and substantial relation to interstate traffic that the control is essential or appropriate to secure the freedom of that traffic from interference or unjust discrimination and to promote the efficiency of the interstate service.

Which is simply what we are claiming in this particular situation.

And combinations and conspiracies to restrain interstate commerce, or to monopolize any part of it, are none the less within the reach of the Antitrust Act



because the conspirators seek to attain their ends by means of intrastate activities.

In that connection citing the Coronado Coal case.

In other words, it clearly states that where, in the necessary regulation of interstate commerce, it is necessary to go beyond to the intrastate commerce under certain conditions, that can be done.

Continuing with the reading of the decision:

In determining how far the Federal Government may go in controlling intrastate transactions upon the ground that they “affect” interstate commerce, there is a necessary and well-established distinction between direct and indirect effects. The precise line can be drawn only as individual cases arise, but the distinction is clear in principle.

In other words, we rely upon the situation that intrastate traffic in coal must bear directly upon the interstate coal, as in the example of the river which I gave, the direct burden of interference with the flow of commerce as against the indirect.

But where the effect of intrastate transactions upon interstate commerce is merely indirect, such transactions remain within the domain of State power. and there are plenty of examples of that.

Again quoting from the decision:

The distinction between direct and indirect effects has been clearly recognized in the application of the Antitrust Act. citing a number of cases. Again:

The distinction between direct and indirect effects on intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system.

We are of the opinion that the attempt through the provisions of the code to fix the hours and wages of employees of defendants in their intrastate business was not a valid exercise of Federal power.

The court had just a wonderful chance there if it felt that under no circumstances should wages, hours, and conditions of employment within a State be subject to governmental regulation. It just had a wonderful opportunity there to say that no attempt to fix the hours and wages of employees, or conditions, in their intrastate business, was a valid exercise, but it did not do that. It says that in this particular case in their intrastate business, which the court had previously stated was entirely intrastate, the action with reference to that individual, particular case was not valid, but not controlling in the case of bituminous coal.

Mr. Jenkins. It seems to me that the constitutionality of this, if tested, will come up on this kind of a case, where a coal man sells his coal in a small area and sells to nobody but intrastate people; maybe he sells to one dealer exclusively all his coal. In that kind of a case you would have the production, transportation, and consumption all in one State beyond any question. Then what would be the decision?

Mr. ESSINGTON. If that particular situation cannot be controlled under this bill, the entire act falls of its own weight.

May I illustrate that in this way:

A Ford dealer backing up to the court-house square with a half ton or a ton and a half of local coal, standing there on the street, will set the price for 10 carloads of coal back there on the switch track that have come in interstate.

Mr. JENKINS. Following out my illustration, then, if the sale is by a man who produces strictly intrastate, if the coal is transported strictly intrastate and if it is consumed strictly intrastate, and if transactions like that can disorganize the whole industry, then they must affect interstate commerce.

Mr. ESSINGTON. Exactly. I think that is an inevitable conclusion, and that is the basis for this attempt to control all transactions in coal.

Whether or not this practice, referring to selections of individual chickens taken from particular coops and half coopsis good or bad for the local trade, its effect, if any, upon interstate commerce was only indirect.

That is not true of coal.

The same may be said of violations of the code by intrastate transactions consisting of the sale "of an unfit chicken" and of sales which were not in accord with the ordinances of the city of New York. The requirement of reports as to prices and volumes of defendants' sales was incident to the effort to control their intrastate business.

I read that simply as a recognition by the court that that was essentially intrastate and did not have any effect upon interstate commerce.

Therefore, the court holds, The attempted delegation of legislative power, and the attempted regulation of intrastate transactions which affect interstate commerce only indirectly, are not a subject for Federal governmental regulation.

Whether taken on the facts, whether taken upon the importance of the industry, the nature of the business, the size of the business, the percentage that is engaged in interstate traffic-taken from any standpoint, I say the production and sale of bituminous coal stands in an entirely different category from that of the

killing of chickens designed for use in New York City; and therefore it is our conclusion that a declaration by Congress as cited here in paragraph 1, strengthened perhaps as has been suggested or as may hereafter be suggested by others—I may say somebody mentioned today the pride of authorship; there is no pride of authorship in this particular case. Our only desire is to provide for the industry a manner of stabilization which it so sorely needs—that a declaration somewhat as in paragraph 1, supported by the facts upon the record made in a particular case, will differentiate this bill which is under consideration today, H. R. 8479, from the Schechter case.

As I see it, the Schechter case did two things:

First of all, it declared the codes illegal under the delegation of powers, and, secondly, it held that that particular transaction was intrastate and not a subject for governmental regulation. But most important is that it lays down these guideposts, these standards, these regulations by which legislation may be measured and drawn.

In our opinion, this bill, as I say, supported by the facts upon the record, which I believe the industry can furnish, will sustain congressional action and be supported by the courts.

Mr. HILL. Thank you very much, Senator.

As I understand, that at this time, at least, completes your presentation of witnesses ?

Mr. Essington. That completes our presentation at this time. As I

say, it may very well be that modifications, amendments, and suggestions will be made which should be adopted. Our only desire is to strengthen this bill in every way possible.

Mr. Hill. The Committee will be glad to hear from Mr. H. R. Hawthorne.



Mr. Hill. State your name, address, and the capacity in which you appear before the committee, please.

Mr. HAWTHORNE. 'H. R. Hawthorne, 1 Broadway, New York; vice president, Pocahontas Fuel Co., Inc., and chairman of the operators' committee against the Guffey bill.

At the Senate hearing in February and March on S. 1417, commonly known as the "Guffey bill,” coal operators from various States and districts appeared to oppose the bill, but without any considered action or planned cooperation.

About May 1, operators from different districts and States having a common interest in protecting the industry against the paralyzing effect of the passage of the Guffey bill met in Washington and formed a producers' committee against the Guffey bill. Mr. VINSON. When was that? Mr. HAWTHORNE. About May 1. I was asked to serve as chairman of that committee.

This committee is an informal organization planned as an agency to coordinate the activities, of the coal operators in opposition to the Guffey bill and to provide a central agency through which the sentiment of the coal operators of the United States against legislation of the character proposed in the Guffey bill could be expressed.

The operators of all the major coal-producing States are represented on the committee. I file a list of the members of the committee, showing the business affiliation and the address of each member of the committee.

(The list referred to follows:)
H. R. Hawthorne, vice president, Pocahontas Fuel Co., New York City.
D. A. Thomas, president Montevallo Coal Mining Co., Birmingham, Ala.
J. G. Bradley, president Elk River Coal & Lumber Co., Dundon, W. Va.
C. C. Dickinson, president Dickinson Fuel Co., Charleston, W. Va.
J. D. Francis, president Island Creek Coal Co., Huntington, W. Va.
Eugene McAuliffe, president Union Pacific Coal Co., Omaha, Nebr.
J. Noble Snider, general manager sales, Consumers Coal Co., New York City.
Grant Stauffer, president Hume-Sinclair Coal Co., Kansas City, Mo.

Jonas Waffle, managing director, Coal Trade Association of Indiana, Terre Haute, Ind.

Edward E. Barthell, vice president, Stearns Coal & Lumber Co., Chicago, Ill.

Alex. Bonnyman, chairman of the board, Blue Diamond Coal Co., Knoxville, Tenn.

S. Dunlap Brady, Jr., president Osage Coal Co., Morgantown, W. Va.
C. A. Cabell, president Carbon Fuel Co., Charleston, W. Va.
W. G. Caperton, vice president, Slab Fork Coal Co., Charleston, W. Va.
C. T. Carney, vice president, Scandia Coal Co., Des Moines, Iowa.
J. W. Carter, president Carter Coal Co., Washington, D. C.
Ira Clemens, president Commercial Fuel Co., Pittsburg, Kans.
A. B. Crickton, president Johnstown Coal & Coke Co., Johnstown, Pa.
W. J. Cunningham, president Crummies Creek Coal Co., Crummies, Ky.
G. C. Davis, manager Stag Canon Branch, Dawson, N. Mex.

W. E. Davis, president Davis Collieries Co., Lexington, Ky. H. T. DeBardeleben, president DeBardeleben Coal Corporation, Birmingham, Ala.

Charles E. Dunlap, president Berwind-White Coal Mining Co., New York City.
Brooks Fleming, Jr., agent for trustees, Consolidation Coal Co., Fairmont,
W. Va.
Harry L. Gandy, president Sheridan-Wyoming Coal Co., Monarch, Wyo.
R. H. Gross, chairman of the board, New River Co., Boston, Mass.
C. G. Hall, vice president, Walter Bledsoe & Co., Terre Haute, Ind.
Brent Hart, president Hart Coal Corporation, Mortons Gap, Ky.
Moroni Heiner, president Utah Fuel Co.,

Salt Lake City, Utah.
Calvin Holmes, president Holmes-Darst Coal Corporation, Knoxville, Tenn.
Forney Johnston, attorney at law, Birmingham, Ala.
H. E. Jones, president Logan County Coal Corporation, Charlestown, W. Va.
H. C. Marchant, president Pinnacle-Kemmerer Fuel Co., Denver, Colo.
Carrington T. Marshall, attorney at law, Columbus, Ohio.
N. D. Moore, president Pacific Coast Coal Co., Seattle, Wash.
J. G. Puterbaugh, president McAlester Fuel Co., McAlester, Okla.
C. B. Randall, vice president, Inland Steel Co., Chicago, Ill.
C. F. Richardson, president West Kentucky Coal Co., Sturgis, Ky.
W. M. Ritter, Red Jacket Sons Coal & Coke Co., Washington, D. C.

K. A. Spencer, vice president, Pittsburg & Midway Coal Mining Co., Pittsburg, Kans.

H. J. Weeks, Durham Land Co., Chattanooga, Tenn. L. C. White, vice president, St. Louis, Rocky Mountain & Pacific Co., Raton, N. Mex. J. P. Williams, Jr., president Koppers Coal Co., Pittsburgh, Pa. L. E. Woods, president Crystal Block Coal & Coke Co., Huntington, W. Va.

Soon after the committee was organized it made a survey of the industry to ascertain the tonnage represented by operators opposed to the Guffey bill, and the tonnage represented by those supporting the bill, using the 1934 production as the experience base. This survey was carefully made through representatives located in each of the several States, or natural coal-producing districts. It at once developed that the sentiment of the industry was strongly against the Guffey bill.

That this survey might be made of current application a comprehensive resurvey was made during the past week. That survey disclosed that of the total tonnage of 358,393,000 produced in 1934, 216,404,095 tons, or 60.381 percent, is definitely against the bill.

Mr. JENKINS. Was the captive coal included in that survey? Mr. HAWTHORNE. Yes; all coal that was produced, just as captive coal was ineluded in the total of 358,000,000.

Mr. Doughton. This percentage you are giving represents the operators?


Mr. Doughton. Have you the percentages of the miners that operate in the respective industries, as to how they stand, whether for or against it? You have given the operators.

Mr. Å AWTHRONE. No. When this committee was organized by this substantial group of operators that were against the Guffey bill, the purpose of this survey was to find what sentiment there was in the industry, and whether it was the same as that represented by the industry.

Mr. Vinson. Today 100 percent is total, is it not?
Mr. HAWTHORNE. That is right. I think that is still true.

Mr. Vinson. It seems to me as if the percentages presented by you and the percentages we heard earlier in the week make more than 100 percent.

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